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

                                   FORM 10-QSB

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

    [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER: 0-18718

                          CT HOLDINGS ENTERPRISES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                    DELAWARE                        75-2242792
       (STATE OR OTHER JURISDICTION OF           (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)          IDENTIFICATION NO.)

      TWO LINCOLN CENTRE, SUITE 1600, 5420 LBJ FREEWAY, DALLAS, TEXAS 75240
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                 (214) 520-9292
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


Indicate  by check mark whether the issuer (1) has 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 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 [ ]

Indicate  by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [X]  No [ ]

Indicate  the  number  of  shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.

Class                                          Outstanding at November 17, 2006

Common Stock, Par value $.01 per share                      58,545,928

Transitional Small Business Disclosure Format  Yes  [ ]  No  [X]


<PAGE>
<TABLE>
<CAPTION>
                               CT HOLDINGS ENTERPRISES, INC.
                                        FORM 10-QSB
                                     QUARTERLY REPORT
                               FOR THE QUATERLY PERIOD ENDED
                                    SEPTEMBER 30, 2006

Table of Contents                                                                      Page
<S>            <C>                                                                      <C>
PART I - FINANCIAL INFORMATION

Item 1   Financial Statements                                                            3

               Unaudited Balance Sheets as of September 30, 2006 and December 31, 2005   3

               Unaudited Statements of Operations for the three and nine months
                 ended September 30, 2006 and 2005                                       4

               Unaudited Statements of Cash Flows for the nine months
                 ended September 30, 2006 and 2005                                       5

               Notes to Unaudited Interim Financial Statements                           6

Item 2.  Management's Discussion and Analysis or Plan of Operation                      11

Item 3.  Controls and Procedures                                                        19

PART II - OTHER INFORMATION

Item 1   Legal Proceedings                                                              19

Item 3   Defaults Upon Senior Securities                                                21

Item 6.  Exhibits                                                                       21

Signatures                                                                              22
</TABLE>


                                        2
<PAGE>
<TABLE>
<CAPTION>
PART I  FINANCIAL INFORMATION
Item 1.  Financial Statements

                                        CT HOLDINGS ENTERPRISES, INC.
                                          UNAUDITED BALANCE SHEETS

                                                                              SEPTEMBER 30,    DECEMBER 31,
                                                                                  2006             2005
                                                                             ---------------  --------------
<S>                                                                          <C>              <C>
                                     ASSETS
                                     ------
CURRENT ASSETS
  Cash                                                                       $          197   $         197
                                                                             ---------------  --------------
  TOTAL ASSETS                                                               $          197   $         197
                                                                             ===============  ==============


                     LIABILITIES AND STOCKHOLDERS' DEFICIT
                     -------------------------------------
CURRENT LIABILITIES
  Accounts payable and accrued expenses                                      $      464,640   $     387,654
  Convertible secured note payable to related party including accrued
    interest of $772 and net of deferred debt discount of $250,290 at
    December 31, 2005                                                                     -          21,630
  Demand note payable to Citadel including accrued interest of
    $97,644 and $76,784                                                             322,644         301,784
  Payable to Citadel                                                                680,000         650,000
  Advance from an officer                                                            30,000               -
  Note payable to shareholder including accrued interest of
    $7,379 and $6,128                                                                16,379          15,128
  Accrual for litigation including accrued interest of $1,404,590
    at December 31, 2005                                                          1,250,000      4,404,590`
                                                                             ---------------  --------------
  Total current liabilities                                                       2,763,663       5,780,786

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
Preferred stock, $0.01 stated value per share; 1,000,000 shares authorized;
  no shares issued or outstanding                                                         -               -
Common stock, $.01 par value per share; 60,000,000 shares authorized;
  58,545,928 shares issued and outstanding                                          585,460         585,460
Common stock pending issuance                                                       600,000         600,000
Additional paid-in capital                                                       57,661,749      57,661,749
Accumulated deficit                                                             (61,610,675)    (64,627,798)
                                                                             ---------------  --------------
Total stockholders' deficit                                                      (2,763,466)     (5,780,589)
                                                                             ---------------  --------------
  TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                $          197   $         197
                                                                             ===============  ==============
</TABLE>

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


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                      CT HOLDINGS ENTERPRISES, INC.
                                   UNAUDITED STATEMENTS OF OPERATIONS

                                                       THREE MONTHS ENDED          NINE MONTHS ENDED
                                                         SEPTEMBER 30,               SEPTEMBER 30,
                                                      2006          2005          2006          2005
                                                  ------------  ------------  ------------  ------------
<S>                                               <C>           <C>           <C>           <C>
Revenue                                           $         -   $         -   $         -   $         -

General and administrative expense                     14,426        19,154       136,986       123,940
Reversal of litigation accrual                     (3,333,852)                 (3,333,852)
Interest expense                                       48,760       106,695       460,102       317,751
Debt settlement gain                                        -             -      (280,359)            -
                                                  ------------  ------------  ------------  ------------
Income (loss) before income taxes                   3,270,666      (125,849)    3,017,123      (441,691)
Provision for income taxes                                  -             -             -             -
                                                  ------------  ------------  ------------  ------------
Net income (loss)                                 $ 3,270,666   $  (125,849)  $ 3,017,123   $  (441,691)
                                                  ============  ============  ============  ============
Net income (loss) per share - basic and diluted   $      0.05   $      0.00   $      0.04   $    ( 0.01)
                                                  ============  ============  ============  ============
Weighted average common shares outstanding
  - basic and diluted                              67,245,928    67,245,928    67,245,928    67,245,928
                                                  ============  ============  ============  ============
</TABLE>

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


                                        4
<PAGE>
<TABLE>
<CAPTION>
                              CT HOLDINGS ENTERPRISES, INC.
                            UNAUDITED STATEMENTS OF CASH FLOWS

                                                                    NINE MONTHS ENDED
                                                                      SEPTEMBER 30,
                                                                    2006         2005
                                                                ------------  -----------
<S>                                                             <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income(loss)                                              $ 3,017,123   $ (441,691)
  Adjustments to reconcile net income(loss) to net cash
    used in operating activities:
      Debt forgiveness gain                                        (280,359)           -
      Amortization of deferred debt discount                        250,290       75,000
      Accrual for litigation and related interest                   179,262      208,770
      Reversal of litigation accrual                             (3,333,852)           -
      Changes in operating assets and liabilities:
        Accounts payable and accrued expenses                       137,536       87,950
        Payable to Citadel                                           30,000       55,000
                                                                ------------  -----------
  NET CASH USED IN OPERATING ACTIVITIES                                   -      (14,971)

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from advances and notes payable to related parties             -       11,000
                                                                ------------  -----------
  NET CASH PROVIDED BY FINANCING ACTIVITIES                               -       11,000

Net change in cash                                                        -       (3,971)

  Cash and cash equivalents at the beginning of the period              197        4,168
                                                                ------------  -----------
  Cash and cash equivalents at the end of the period            $       197   $      197
                                                                ============  ===========


Supplemental cash flow information:

Non-cash financing items:
  Payment of liability by officer recorded as an advance        $    30,000   $        -
                                                                ============  ===========
</TABLE>

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


                                        5
<PAGE>
CT HOLDINGS ENTERPRISES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2006

NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements and Basis of Presentation

These unaudited interim financial statements have been prepared on the
historical cost basis in accordance with accounting principles generally
accepted in the United States and in the opinion of management, reflect all
adjustments (consisting of normal, recurring adjustments) necessary to present
fairly, the financial position, results of operations and cash flows of CT
Holdings Enterprises, Inc. ("CT Holdings" or the "Company").  On March 13, 2006
the Company changed its name from CT Holdings, Inc. to CT Holdings Enterprises,
Inc.

Some information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
in the United States have been condensed or omitted pursuant to rules and
regulations promulgated by the Securities and Exchange Commission (the
"Commission").  The results of operations for the interim periods shown herein
are not necessarily indicative of the results to be expected for any future
interim period or for the entire year.  These statements should be read together
with the audited financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 2005 on file with the
Commission.

Description of Business

CT Holdings provides management expertise including consulting on operations,
marketing and strategic planning and a single source of capital to early stage
technology companies. The Company was incorporated in Delaware in 1992. The
business model is designed to enable the companies with whom the Company
acquires or invests to become market leaders in their industries. The strategy
over the years has led to the development, acquisition and operation of
technology based businesses with compelling valuations and strong business
models. The goal is to realize the value of these investments for the Company's
shareholders through a subsequent liquidity event such as a sale, merger or
initial public offering of the investee companies.

At December 31, 2005 the Company held investments in two companies, Parago, Inc.
("Parago") and River Logic, Inc. ("River Logic"). On May 22, 2006 the Company
and CITN Investment Inc. ("CII"), an affiliate of the Company's CEO, entered
into a settlement, pursuant to which CII agreed to release the Company from
indebtedness and accrued interest under the Amended and Restated Secured
Convertible Promissory Note (the "Amended Note") of $271,148 plus accrued
interest of $9,211 through May 22, 2006, in exchange for the delivery to CII of
the shares of Parago and River Logic owned by the Company. The carrying value of
these shares was zero at the settlement date as the investments had been written
off in prior periods due to continuing operating losses, lack of cash flows
generated from the investments and other factors.  The Company, therefore, has
recorded a $280,359 gain on debt settlement for the nine months ended September
30, 2006.  CII has agreed to return to the Company the excess, if any, of the
proceeds realized from a future sale of the shares over the amounts owed at May
22, 2006 under the Amended Note plus any costs related to the sale of the shares
or collection of the proceeds. While CII has agreed to return the excess, if
any, of the proceeds realized from a future sale of the shares over amounts owed
under the Amended Note plus any costs of sale of the shares or collection of the
proceeds, there can be no assurance that a future sale will occur, nor that the
Company will receive any proceeds following the sale of the shares.  In addition
CII has an option to purchase 51% of the Company's fully diluted shares of
common stock pursuant to the terms of the settlement for a period ending the
earlier of May 18, 2011 or the 60th day after a reverse stock split is
implemented.

Liquidity

The Company has incurred recurring operating losses and has a significant
stockholders' deficit at September 30, 2006 of approximately $3 million. At
September 30, 2006 there is a cash balance of $197 and current liabilities total
approximately $3 million. The Company has limited access to capital at September
30, 2006, no plans to raise capital,


                                        6
<PAGE>
and management has not identified sources of capital at September 30, 2006. Past
funding needs of the business have been provided by financings through notes
payable, cash advances and additional investments from related parties,
including the Company's CEO and CII, an affiliate of the Company's CEO, however
there can be no assurance that such funds will be available from these related
parties in the future. The Company has been and continues to be dependent upon
outside financing to perform its business development activities, make
investments in new technology companies and to fund operations.

The Company will continue to require working capital to fund operating expenses.
At  September 30, 2006 the Company has not identified sources of capital nor
does the Company have any plans to raise sufficient amounts of capital to settle
liabilities or to fund business development activities.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

Net Income/Loss per Common Share

Basic net income/loss per common share is computed by dividing net income/loss
to common shareholders by the weighted average number of shares of common stock
outstanding during the period.

Included in the weighted average number of common shares outstanding for the
three and nine months ended September 30, 2006 and 2005 are 2,700,000 shares
that would have been issued when a shareholder exercised his right to convert a
note payable to common stock and 6,000,000 shares that would have been issued to
the Company's CEO when he exercised his right to exchange Parago shares for CT
Holdings' shares if the Company had the available authorized shares.  These
shares have been included in the computation from the dates that they would have
been issued.  The effect of stock options for 2,917,500 shares of common stock
outstanding at September 30, 2006 and 2005, have been excluded from the weighted
average shares computations as they are antidilutive.  At September 30, 2006 and
2005, the Company does not have any outstanding stock options or warrants that
have an exercise price below market value.

Stock-Based Compensation

On January 1, 2006, the Company adopted the modified prospective method of SFAS
No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"), which is a
revision of SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS No.
123").  SFAS No. 123R supersedes APB Opinion No. 25, and amends SFAS No. 95,
"Statement of Cash Flows". SFAS No. 123R requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro forma disclosure is no longer
an alternative. Under the modified prospective application, SFAS No. 123R is
applied to new awards and to awards modified, repurchased or cancelled after the
effective date. Compensation cost for the portion of awards for which requisite
service has not been rendered that are outstanding as of the effective date is
recognized as the requisite service is rendered on or after the effective date.
The compensation cost for that portion of awards is based on the grant date fair
value of those awards as calculated for pro-forma disclosures under SFAS No.
123.  All awards outstanding at September 30, 2006 had been fully vested in
periods prior to the first quarter of 2006 and therefore, the financial
statements do not reflect any compensation expense related to stock-based
compensation.

The Company does not have any employees or significant operations and does not
anticipate issuing any share-based payments in the future, therefore the SFAS
123R is not expected to have a significant effect on the Company's financial
condition, cash flows or results of operations. However should the Company's
operations change, and include the issuance of share-based payments, SFAS No.
123R would require the recording of stock compensation expense in the future.


                                        7
<PAGE>
Prior to January 1, 2006, the Company accounted for stock-based employee
compensation arrangements in accordance with provisions of Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and
complied with the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure, an amendment of FASB
Statement No. 123". Under APB Opinion No. 25, compensation expense for employees
is based on the excess, if any, on the date of grant, of the fair value of the
Company's stock over the exercise price and is recognized on a straight-line
basis over the vesting term of the option.

The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of SFAS No. 123 and SFAS No. 148 and Emerging
Issues Task Force Issue No. 96-18, "Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services." All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more reliably measurable. The measurement
date of the fair value of the equity instrument issued is the earlier of the
date on which the counterparty's performance is complete or the date on which it
is probable that performance will occur.

If the Company had recognized compensation expense in accordance with SFAS No.
123R for the three and nine months ended September 30, 2005, the pro forma
effect on net loss would not have differed from reported net loss.

NOTE B - NOTES PAYABLE TO SHARHOLDERS

The Company has presented $600,000 as "Common stock pending issuance", a
separate component of Stockholders' Deficit at September 30, 2006 and December
31, 2005. This represents 2,700,000 shares of CT Holdings that were to be issued
upon the conversion of a note payable to a shareholder in 2003. Due to the lack
of available authorized shares, the shareholder has waived his right to receive
these shares until such time as the shares become authorized.

The Company has a note payable which was originally due June 30, 2002 for $9,000
to a shareholder which was in default at September 30, 2006 and December 31,
2005 and because it is in default, bears interest at 18% per annum. Accrued
interest on the note payable was $7,379 and $6,128 at September 30, 2006 and
December 31, 2005, respectively.

NOTE C - RELATED PARTY TRANSACTIONS

On May 24, 2004, the Company was advanced $200,000 by CII pursuant to a loan
agreement and evidenced by a Secured Convertible Promissory Note (the "Note").
In December 2005, the Company and CII entered into the Amended Note. Pursuant to
the Amended Note, the principal was increased to $271,148 resulting from the
combination of the principal and accrued interest from the original note with
CII and advances of $43,800 plus accrued interest of $1,222 through the issue
date of the Amended Note. The Amended Note accrued interest at 8% per annum, was
due the earlier of May 24, 2006 or demand by CII.

The conversion price of the Amended Note of approximately $0.00113 per share was
below the fair value per share of the common stock at the date the note was
issued. Accordingly, the Company recorded the fair value of the beneficial
conversion feature of the note payable of $271,148 as debt discount. The
amortization of the debt discount is a component of interest expense on the
statements of operations. The debt discount was amortized over the life of the
Amended Note through its settlement and was fully amortized in May 2006. As a
result, no amortization expense was recorded during the three months ended
September 30, 2006 which compares to $25,000 of amortization expense recorded
for the three months ended September 30, 2005. Debt discount amortization was
$250,920 and $75,000 for the nine months ended September 30, 2006 and 2005,
respectively. The Amended Note was recorded net of deferred debt discount of
$250,290 at December 31, 2005.


                                        8
<PAGE>
On May 22, 2006 the Company and CII entered into a settlement, pursuant to which
CII agreed to release the Company from indebtedness and accrued interest under
the Amended Note of $271,148 plus accrued interest of $9,211 through May 22,
2006, in exchange for the delivery to CII of the shares of Parago and River
Logic owned by the Company. The Company recorded a debt forgiveness gain related
to this transaction in the amount of $280,359 in the second quarter of  2006.
CII has agreed to return to the Company the excess, if any, of the proceeds
realized from a future sale of the shares over the amounts owed at May 22, 2006
under the Amended Note plus any costs related to the sale of the shares or
collection of the proceeds. While CII has agreed to return the excess, if any,
of the proceeds realized from a future sale of the shares over amounts owed
under the Amended Note plus any costs of sale of the shares or collection of the
proceeds, there can be no assurance that a future sale will occur, nor that the
Company will receive any proceeds following the sale of the shares.

During the nine months ended September 30, 2006, the CEO advanced the Company
$30,000 which is presented on the balance sheet at September 30, 2006 as an
advance from an officer.

In April 2003, CT Holdings obtained $225,000 from Citadel to pay a legal
settlement for an unsecured Note Payable to Citadel due on demand and bearing
interest at 12% per year. The accrued interest on the note payable at September
30, 2006 and December 31, 2005, was $97,644 and $76,784, respectively.

During 2005, the Company's CEO advanced $38,800 and in December 2005, this
amount plus a $5,000 note due to the Company's CEO were converted to principle
in the Amended Note previously discussed. In October 2004, the Company obtained
a $5,000 90-day note, bearing interest at 5% per year, from the CEO of the
Company. In December 2005, these amounts were converted into the Amended Note
previously discussed.

Pursuant to the terms of the transition services agreement with Citadel Security
Software Inc., ("Citadel") the Company has agreed to pay Citadel $10,000 per
quarter (reduced in July 2005 from $7,500 per month) for the services of its
CEO, CFO and accounting and information management staff, as well as office rent
and indirect overhead expenses. The Company has a liability recorded for
$680,000 and $650,000 for amounts payable to Citadel under this agreement at
September 30, 2006 and December 31, 2005, respectively. The transition services
agreement expired in May 2006.  Currently, Citadel provides services to CT
Holdings on a month-to-month basis.

In June 2001, the Company's CEO and a director funded and guaranteed CT
Holdings' participation in the Parago bridge loan. In consideration for this
funding and guarantees, CT Holdings has agreed to permit the CEO to exchange up
to 5,000,000 (pre 1:1000 reverse stock split) Parago shares into up to 6,000,000
shares of CT Holdings' common stock. The CEO exercised the exchange right in
February 2004. The CEO waived his right to receive the shares of CT Holdings
until the authorized shares become available.

NOTE D - COMMITMENTS AND CONTINGENCIES

In August 1998, Janssen-Meyers Associates L.P. (JMA) filed a lawsuit against the
Company arising out of an alleged 1995 contract with the Company's predecessor
(Old Citadel). The suit alleged that Old Citadel breached a letter of intent
dated September 1995 and/or a Placement Agency Agreement dated November 1995
between JMA and Old Citadel. As its damages, JMA claimed that it was entitled
to, among other things, the cash value of warrants to purchase 1.8 million
shares of CT Holdings common stock at an exercise price of $0.89 per share,
valued during May 1996. According to JMA's valuation of those warrants,
potential damages were alleged to exceed $40 million. The Company vigorously
disputes that it breached either the letter of intent or the Placement Agency
Agreement or that it is liable to JMA. The lawsuit was styled Janssen-Meyers
Associates, L.P. v. Citadel Technology, Inc., and was filed in the Supreme Court
of the State of New York, County of New York. The Company removed the case to
federal court in the Southern District of New York.

Following mediation in July 2000, the Company entered into a settlement term
sheet, to attempt to resolve the disputes between it and JMA, pursuant to which
the Company and JMA agreed in principle to settle the lawsuit for an


                                        9
<PAGE>
aggregate of $3 million, in a combination of $1.5 million in cash and 300,000
shares of the Company's common stock with a guaranteed value of $5 per share as
of January, April and October 2001 (with respect to 100,000 of the shares for
each period). The settlement was subject to execution of definitive settlement
documents and approval of the boards of directors of both parties.

However, the Company and JMA were unable to negotiate the final definitive
settlement agreement. The case was dismissed in August 2000 without any
resolution of this issue. On March 27, 2001, JMA attempted to reopen this
matter, but the Court hearing the JMA lawsuit issued a Summary Order denying
JMA's motion to enforce the settlement term sheet and confirmed the prior
dismissal of the lawsuit. The Court further ruled that JMA would either have to
bring an action on the proposed settlement or move to re-open the dismissed
case. The Court stated that it did not express any view with respect to the
merits of the settlement that brought about the dismissal of the case. There was
no activity on the case from March 2001 through August 2001. On August 27, 2001
JMA refiled its lawsuit with a federal court in New York, and the Company filed
its motion to dismiss the case because the plaintiffs lacked the required
diversity jurisdiction to pursue the claims in federal court. On October 31,
2001 the case was dismissed in federal court. In December 2001, the plaintiffs
refiled the lawsuit in the state court seeking to enforce the proposed
settlement term sheet. The case was filed in Supreme Court of New York, that
state's trial court, in a case styled Roan Meyers v. CT Holdings. CT Holdings
has filed counterclaims for breach of the term sheet as well as breach of the
placement agency agreement. Cross motions for partial summary judgments have
been argued but on June 9, 2004 the court entered judgment in favor of
Roan-Meyers in the amount of $3,000,000 and granted interest at the rate of 9%
from October 31, 2000 through the date of final judgment, and thereafter at the
statutory rate allowed by law. The Company appealed the final judgment but the
appellate court affirmed the trial court's decision. The Company is assessing
its alternatives and intends to vigorously defend this case.

On April 8, 2005, Meyers Associates, L.P. f/k/a Roan/Meyers Associates, L.P. and
f/k/a Janssen-Meyers Associates, L.P. ("Meyers") filed a lawsuit in the Court of
Chancery of the State of Delaware, in New Castle County, against the Company,
Citadel Security Software, Inc. (Citadel) including Steven B. Solomon, the Chief
Executive and a Director of the Company, Chris A. Economou, a Director of the
Company, Lawrence Lacerte, a former Director of the Company, and Phillip J.
Romano, a former Director of the Company (the "Individual Defendants"). The suit
alleges that in connection with an action filed in the Supreme Court of New
York, New York County, to enforce a Settlement Term Sheet executed on July 7,
2000 by Meyers and CT Holdings, Meyers was awarded a judgment against CT
Holdings in the amount of $3 million plus interest on the judgment at the rate
of 9% from October 31, 2000 until the date of entry of that judgment and
thereafter at the statutory rate (the "Judgment"). The suit alleges that CT
Holdings' May 2002 spin-off of its interests in Citadel to CT Holdings'
shareholders rendered CT Holdings insolvent and constituted a fraudulent
conveyance to defraud CT Holdings' creditors, including Meyers. The suit asserts
fraudulent conveyance claims against Citadel and CT Holdings pursuant to
Delaware statutory and common law. The suit also asserts a claim against Citadel
for successor liability as the alleged successor in interest or alter ego of CT
Holdings. The suit alleges that the Individual Defendants who were officers
and/or directors of CT Holdings at the time of the spin-off breached fiduciary
duties allegedly owed to creditors of CT Holdings, including Meyers, by
approving and allowing the spin-off transaction. The suit seeks to void the
spin-off transaction or alternatively to hold Citadel liable for the Judgment
including interest, to recover damages against the Individual Defendants in an
amount not less than the Judgment including interest, plus an unspecified amount
of punitive, consequential and incidental damages, as well as attorneys' fees
and costs.

On August 23, 2006, CT Holdings and certain other parties entered into a Release
and Settlement Agreement ("Agreement") by and among Meyers and their related
parties (collectively, the "Meyers Released Parties") on the one hand and
defendants CT Holdings Enterprises, Citadel Security Software Inc., Steven B.
Solomon, Chris A. Economou, Lawrence Lacerte, Mark Rogers, Phillip J. Romano,
Axel Sawallich, George Sharp and Gilbert Gertner (collectively "Defendants") on
the other hand. The Agreement provides for the settlement of litigation filed by
Meyers Associates against defendants Citadel, CT Holdings Enterprises, certain
of Citadel's current and former directors and officers Steven B. Solomon, Chris
E. Economou, Lawrence Lacerte, Mark Rodgers, Phillip J. Romano and Axel
Sawallich in the Court of Chancery of the State of Delaware in and for New
Castle County (the "Delaware Action") asserting


                                       10
<PAGE>
various claims, and other litigation against CT Holdings and its former officers
and directors (the "Actions"). Pursuant to the Agreement, Citadel Security
Software shall pay the sum of $1,250,000 to Meyers Associates in two payments,
the first payment of $250,000 upon signing of the Agreement the second payment
of $1,000,000 no later than November 1, 2006. The Defendants will be released by
the Plaintiffs from all claims in the actions 91 days after receipt of the
payments, subject to the terms and conditions of the agreement. The first
payment of $250,000 was made by Citadel in August 2006. If Citadel fails to make
the second payment of $1,000,000 the defendants are not entitled to offset or
reduce the settlement by the initial payment of $250,000. Accordingly, the
Company reduced its liability for this legal claim to $1,250,000 at September
30, 2006. The second payment of $1,000,000 was made by Citadel on November 1,
2006 therefore pursuant to the Agreement, the Company is expected to be released
from any further claims under this lawsuit.


The Company may become involved from time to time in litigation on various
matters which are routine to the conduct of our business. The Company believes
that none of these actions, individually or in the aggregate, will have a
material adverse effect on our financial position or results of operations,
though any adverse decision in these cases or the costs of defending or settling
such claims could have a material adverse effect on our business.

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

The following discussions should be read in conjunction with our audited
financial statements and related notes included in our Annual Report on Form
10-KSB for the year ended December 31, 2005.  Our year ends on December 31, and
each of our quarters end on the final day of a calendar quarter (March 31, June
30, and September 30).  The following discussions contain forward-looking
statements.  Please see Cautionary Statement Regarding Forward-Looking
Statements and Risk Factors for a discussion of uncertainties, risks and
assumptions associated with these statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-QSB contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. CT Holdings
Enterprises, Inc. ("CT Holdings" or the "Company") bases these forward-looking
statements on its expectations and projections about future events, which CT
Holdings has derived from the information currently available to it. In
addition, from time to time, CT Holdings or its representatives may make
forward-looking statements orally or in writing. Furthermore, forward-looking
statements may be included in CT Holdings' filings with the Securities and
Exchange Commission or press releases or oral statements made by or with the
approval of one of CT Holdings' executive officers. For each of these
forward-looking statements, CT Holdings claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. These forward-looking statements relate to future events or
CT Holdings' future performance, including but not limited to:

     -    possible  or  assumed  future  results  of  operations;
     -    future  revenue  and  earnings;  and
     -    business  and  growth  strategies.

Forward-looking statements are those that are not historical in nature,
particularly those that use terminology such as may, could, will, should,
likely, expects, anticipates, contemplates, estimates, believes, plans,
projected, predicts, potential or continue or the negative of these or similar
terms. The statements contained in this Report that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future.
Forward-looking statements are subject to certain known and unknown risks and
uncertainties that could cause actual results to differ materially from those
expressed in any forward-looking statements. These risks and uncertainties
include, but are not limited to, the following important factors with respect to
CT Holdings:

     -    the uncertainty of general business and economic conditions;
     -    the financial performance of our investments;
     -    adverse developments, outcomes and expenses in legal proceedings; and


                                       11
<PAGE>
     -    those described under Risk Factors included in this document.

Forward-looking statements are only predictions as of the date they are made and
are not guarantees of performance. All forward-looking statements included in
this document are based on information available to CT Holdings on the date of
this Report on Form 10-QSB. Readers are cautioned not to place undue reliance on
forward-looking statements. The forward-looking events discussed in this Report
on Form 10-QSB and other statements made from time to time by CT Holdings or its
representatives may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about CT
Holdings including without limitation those discussed elsewhere in this Form
10-QSB under the heading Risk Factors as well as those discussed elsewhere in
this Form 10-QSB, and the risks discussed in our Securities and Exchange
Commission filings. Except for their ongoing obligations to disclose material
information as required by the federal securities laws, CT Holdings is not
obligated to publicly update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. In light of these
risks, uncertainties and assumptions, the forward-looking events discussed in
this Report on Form 10-QSB and in other statements made from time-to-time by CT
Holdings or its representatives might not occur.

RISK FACTORS

Investing in our common stock involves a high degree of risk.  Any of the
following risks could materially adversely affect our business, operating
results and financial condition and could result in a complete loss of your
investment.

In addition to the other information in this Report, the following factors
should be considered carefully in evaluating the Company and its business.  This
disclosure is for the purpose of qualifying for the safe harbor provisions of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  It contains factors that could
cause results to differ materially from such forward-looking statements.  These
factors are in addition to any other cautionary statements, written or oral,
which may be made or referred to in connection with any such forward-looking
statement.

The following matters, among other things, may have a material adverse effect on
the business, financial condition, liquidity, or results of operations of the
Company.  Reference to these factors in the context of a forward-looking
statement or statements shall be deemed to be a statement that any one or more
of the following factors may cause actual results to differ materially from
those in such forward-looking statement or statements.  Before you invest in our
common stock, you should be aware of various risks, including those described
below.  Investing in our common stock involves a high degree of risk. You should
carefully consider these risk factors, together with all of the other
information included in this Report, before you decide whether to purchase
shares of our common stock. Our business and results of operations could be
seriously harmed by any of the following risks. The trading price of our common
stock could decline due to any of these risks, and you may lose part or all of
your investment.

GENERAL RISKS

WE HAVE RECEIVED A GOING CONCERN REPORT FROM OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM, HAVE A HISTORY OF NET LOSSES AND WILL NEED ADDITIONAL FINANCING
TO CONTINUE AS A GOING CONCERN.

We received a report from our independent registered public accounting firm for
our year ended December 31, 2005 containing an explanatory paragraph that
describes the uncertainty regarding our ability to continue as a going concern
due to our recurring operating losses and our significant working capital
deficiency. Historically, we have incurred recurring operating losses and have a
significant stockholders' deficit at September 30, 2006 of approximately $3
million. We had a cash balance of $197 at September 30, 2006 and current
liabilities total approximately $3 million. We have limited access to capital,
no plans to raise capital, and we have not identified sources of capital at
September 30, 2006. Our past funding needs of the business have been provided by
financings through short-term notes payable and additional investments from
related parties, including our CEO and CITN Investment Inc. ("CII"), an entity
of


                                       12
<PAGE>
which our CEO is an officer, director and 50% shareholder, however there can be
no assurance that such funds will be available from these related parties in the
future. The Company has been and continues to be dependent upon outside
financing to perform its business development activities, make investments in
new technology companies and to fund operations.

OUR BUSINESS FOCUS IS THE DEVELOPMENT AND ACQUISITION OF EARLY STAGE COMPANIES;
HENCE, WE WILL ENCOUNTER NUMEROUS RISKS ASSOCIATED WITH OUR BUSINESS FOCUS AND
OUR PRIOR OPERATING HISTORY MAY NOT BE A MEANINGFUL GUIDE TO EVALUATING OUR
FUTURE PERFORMANCE.

Our business model is designed to enable the companies in whom we invest or
acquire to become market leaders in their industries.  Our strategy over the
years has led to the development, acquisition and operation of technology based
businesses with strong business models and compelling valuations. We believe
that the anticipated growth in technology creates strong opportunities for us to
increase shareholder value by investing in early stage ventures well positioned
for growth in their respective marketplaces.  Our business strategy seeks to
increase the value of each investee by providing management, marketing and
financial expertise along with financial capital and then realize this new value
through a subsequent liquidity event such as a sale, merger or initial public
offering of the investee companies.  However, the impact of any advice and
expertise may be limited due to a lack of a significant ownership percentage in
any of our investees and the lack of available capital.

In May 2002, we were successful in spinning off of Citadel Security Software
Inc. ("Citadel") into a standalone company through the pro-rata dividend
distribution of Citadel common stock to shareholders of CT Holdings. At the time
of the spin-off, which was first considered in November 2001, Citadel was losing
substantial amounts of money and the investee assets of CT Holdings were more
valuable than the assets in Citadel. At December 31, 2005 we held investments in
two companies, Parago and River Logic. The respective carrying values of the
investments in Parago and River Logic were written down in prior periods and
have no carrying value at December 31, 2005 and were transferred to CII
following a settlement in May 2006. See Note C to the financial statements for a
description of the transaction. The lack of availability of private and public
capital available to us has prevented us from making any additional investments
and there can be no assurance that the availability of capital will improve so
that we can execute our business plan.

We have a limited history in executing our business strategy.  As a consequence,
our prior operating history may not provide a meaningful guide to our prospects
in emerging markets.  Moreover, our business model and prospects must be
considered in light of the risk, expense and difficulties frequently encountered
by companies in early stages of development, particularly companies in new and
rapidly evolving markets. We may be unable to execute our strategy of developing
our business due to numerous risks, including the following:

  -  We may  be  unable  to  identify  or  develop  relationships  with emerging
     companies.

  -  Any companies  that we are able to attract may not succeed and the value of
     our  assets  and  the price of our common stock could consequently decline.

  -  Our business  model is unproven and depends on the willingness of companies
     to  participate in our business development model and collaborate with each
     other  and  us.

  -  Our expenses  may  increase  as  we  build  the infrastructure necessary to
     implement  this  model.

  -  We face  competition  from  other  incubators,  some  of which are publicly
     traded companies, venture capital companies and large corporations; many of
     these  competitors  have  greater  financial  resources  and  brand  name
     recognition  than  we do, which may make it difficult for us to effectively
     compete.


                                       13
<PAGE>
  -  We will  require  additional  capital  resources  in order to implement our
     business  model  and  we  may  not  be  able  to  obtain these resources on
     attractive  terms,  if  at  all.

WE MAY INCUR SIGNIFICANT COSTS TO AVOID INVESTMENT COMPANY STATUS AND MAY SUFFER
OTHER ADVERSE CONSEQUENCES IF WE ARE DEEMED TO BE AN INVESTMENT COMPANY.

We may incur significant costs to avoid investment company status and may suffer
other adverse consequences if we are deemed to be an investment company under
the Investment Company Act of 1940.  Some of our contemplated equity investments
in other businesses may constitute investment securities under the 1940 Act.  A
company may be deemed to be an investment company if it owns investment
securities with a value exceeding 40% of its total assets, subject to certain
exclusions.  Investment companies are subject to registration under, and
compliance with, the 1940 Act unless a particular exclusion or Securities and
Exchange Commission safe harbor applies.  If we were to be deemed an investment
company, we would become subject to the requirements of the 1940 Act.  As a
consequence, we would be prohibited from engaging in some businesses or issuing
our securities and might be subject to civil and criminal penalties for
noncompliance.  In addition, certain of our contracts might be voided, and a
court-appointed receiver could take control of us and liquidate our business.
Following the Distribution of Citadel, we may be deemed to be an investment
company unless we qualify for a safe harbor within the time permitted under the
1940 Act.

Unless an exclusion or safe harbor was available to us, we would have to attempt
to reduce our investment securities as a percentage of our total assets. This
reduction could be accomplished in a number of ways, including the disposition
of investment securities and the acquisition of non-investment security assets.
If we were required to sell investment securities, we may sell them sooner than
we may otherwise have preferred. These sales may be at depressed prices and we
might never realize anticipated benefits from, and may incur losses on, these
investments.  Some investments may not be sold due to contractual or legal
restrictions or the inability to locate a suitable buyer.  Moreover, we may
incur tax liabilities when we sell assets.  We may also be unable to purchase
additional investment securities that may be important to our operating
strategy.  If we decide to acquire non-investment security assets, we may not be
able to identify and acquire suitable assets and businesses.

OUR STOCK IS TRADED IN THE OVER THE COUNTER MARKET.

Our common stock was de-listed from the NASDAQ SmallCap Market on May 17, 2001,
because we did not meet the NASDAQ's requirements for continued listing. Our
common stock now trades on the OTC Bulletin Board.  The OTC Bulletin Board is
generally considered to be a less efficient market, and our stock price, as well
as the liquidity of our common stock, may be adversely impacted as a result. The
OTC Bulletin Board requires that listed companies remain current in their
filings with the Securities and Exchange Commission.  If we are unable to remain
current in our SEC filings, due to lack of funds or personnel or otherwise, we
could be delisted from the OTC Bulletin Board, and our stock would trade, if at
all, on the pink sheets.

WE ARE INVOLVED IN LEGAL PROCEEDINGS THAT COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR BUSINESS

We are involved in legal proceedings as described in PART II Item 1. Legal
Proceedings and from time to time, we may be subject to other legal proceedings,
including but not limited to claims that we have infringed the intellectual
property rights of others, product liability claims, or other claims incidental
to our business.  While we intend to defend such lawsuits, adverse decisions or
settlements, and the costs of defending such suits, could have a material
adverse effect on our business.


                                       14
<PAGE>
IF WE LOSE THE SERVICES OF CITADEL UNDER THE TRANSITION SERVICES AGREEMENT, OUR
BUSINESS WILL SUFFER.

We are dependent on the services provided by employees of Citadel under a
transition services agreement.  Our business would be negatively impacted if we
were to lose the availability of these services.  Citadel has entered into an
asset purchase agreement pursuant to which Citadel has agreed to sell
substantially all of its assets and wind down its operations subject to certain
closing conditions.  There can be no assurance that Citadel will continue to
provide services to us if the closing occurs under the asset purchase agreement.

MEMBERS OF OUR BOARD OF DIRECTORS MAY HAVE INTERCOMPANY CONFLICTS OF INTEREST
AFTER OUR SPIN-OFF.

Members of the board of directors and management of CT Holdings own shares of
both Citadel and CT Holdings common stock after the spin-off of Citadel to our
shareholders. In addition, following the spin-off, three of the four directors
of CT Holdings are also directors of Citadel, and the Chief Executive Officer
and Chief Financial Officer of CT Holdings also continue to serve as Chief
Executive Officer and Chief Financial Officer of Citadel. These relationships
could create, or appear to create, potential conflicts of interest when our
directors and executives are faced with decisions that could have different
implications for Citadel and CT Holdings. Examples of these types of decisions
might include the resolution of disputes arising out of the agreements governing
the relationship between CT Holdings and Citadel following the spin-off. Also,
the appearance of conflicts, even if such conflicts do not materialize, might
adversely affect the public's perception of CT Holdings following the spin-off.

OUR EARNINGS AND STOCK PRICE ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.

Due to the factors noted in this Report, our earnings and stock price have been
and may continue to be subject to significant volatility, particularly on a
quarterly basis.  We have experienced no revenue or earnings which have had an
immediate and significant adverse effect on the trading price of our common
stock.  This may occur again in the future.

FAILURE TO QUALIFY AS A TAX-FREE TRANSACTION COULD RESULT IN SUBSTANTIAL
LIABILITY

In May 2002, CT Holdings effected a pro rata distribution of the common stock of
Citadel to Stockholders of CT Holdings in a ratio of one (1) share of Citadel
common stock for every four (4) shares of CT Holdings common stock.  CT Holdings
and Citadel intend for the Distribution to be tax-free for U.S. federal income
tax purposes.  Neither CT Holdings nor Citadel has requested an advance ruling
from the Internal Revenue Service, or any opinion of their tax advisors, as to
the tax consequences of the Distribution.  No assurance can be given that the
Internal Revenue Service or the courts will agree that the Distribution is
tax-free.

If the Distribution does not qualify for tax-free treatment, a substantial
corporate tax would be payable by the consolidated group of which CT Holdings is
the common parent measured by the difference between (1) the aggregate fair
market value of the Citadel Shares on the Distribution Date and (2) CT Holdings'
adjusted tax basis in the Citadel Shares on the Distribution Date.  The
corporate level tax would be payable by CT Holdings.  However, Citadel has
agreed under certain circumstances to indemnify CT Holdings for all or a portion
of this tax liability.  In addition, under the applicable treasury regulations,
each member of CT Holdings' consolidated group (including Citadel) is severally
liable for such tax liability.

Furthermore, if the Distribution does not qualify as tax-free, each CT Holdings
stockholder who received Citadel Shares in the Distribution would be taxed as if
he had received a cash dividend equal to the fair market value of his Citadel
Shares on the Distribution Date.

Even if the Distribution qualifies as tax-free, CT Holdings could nevertheless
incur a substantial corporate tax liability under Section 355(e) of the Internal
Revenue Code of 1986, as amended (the Internal Revenue Code or the Code), if CT
Holdings or Citadel were to undergo a change in control (whether by acquisition,
additional share issuance or otherwise) pursuant to a plan or series of related
transactions which include the Distribution.  Any transaction which occurs
within the four-year period beginning two years prior to the Distribution is
presumed to be part of a plan or series of related transactions which includes
the Distribution unless CT Holdings establishes otherwise.  Under certain


                                       15
<PAGE>
circumstances, Citadel would be obligated to indemnify CT Holdings for all or a
portion of this substantial corporate tax liability under the tax disaffiliation
agreement.

OUR BUSINESS

CT Holdings Enterprises, Inc. provides management expertise and sources of
capital to early stage companies.  We were incorporated in Delaware in 1992. On
March 13, 2006 the Company changed its name to CT Holdings Enterprises, Inc. Our
business model is designed to enable the companies in which we invest or acquire
to become market leaders in their industries. Our strategy is expected to lead
to the development, acquisition and operation of technology based businesses
with compelling valuations and strong business models. We believe that the
anticipated growth in technology creates strong opportunities for us to increase
shareholder value by investing in well-positioned early stage ventures. Our goal
is to realize the value of our investments for our shareholders through a
subsequent liquidity event such as a spin-off, sale, merger or initial public
offering of the investee companies.

At September 30, 2006 our lack of available capital has limited our ability to
raise sufficient capital to invest in additional companies and technologies that
could offer us and our shareholders a reasonable rate of return on their
investment in the foreseeable future. We expect that if and when capital becomes
available to us, we may continue our business development and investment
activities, however there can be no assurance that any capital will be available
to us. Until such time as capital becomes available the Company's business
activities will be limited to reviewing investment opportunities, filing of
compliance documents and defending the lawsuits disclosed in Part II, Item 1 -
Legal Proceedings.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosure of contingent assets and liabilities.  On an
ongoing basis, we evaluate our estimates, including those related to our
investments in our investee companies and commitments and contingencies. We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities.
Actual results may differ from these estimates under different assumptions or
conditions.

We believe the following critical accounting policies are most important to the
presentation of our financial statements and require the most difficult,
subjective and complex judgments.

IMPAIRMENT CHARGES

We periodically evaluate the carrying value of our ownership interests in our
investee companies for possible impairment based on achievement of business plan
objectives and milestones, the value of each ownership interest in the investee
company relative to carrying value, the financial condition and prospects of the
investee company, and other relevant factors.  The business plan objectives and
milestones we consider include, among others, those related to financial
performance such as achievement of planned financial results or completion of
capital raising activities, and those that are not primarily financial in nature
such as obtaining key business relationships or the hiring of key employees.  If
an indication of impairment exists with respect to the carrying value of an
investee company, we perform an evaluation by comparing the estimated fair value
of the asset with its carrying value.  Fair value is determined by estimating
the cash flows related to the asset, including estimated proceeds on
disposition, if any.  If the fair value is less than the carrying value a loss
is recorded.


                                       16
<PAGE>
COMMITMENTS AND CONTINGENCIES

From time to time, we are a defendant or plaintiff in various legal actions. We
are also a guarantor of various third-party obligations and commitments.  We are
required to assess the likelihood of any adverse judgments or outcomes to these
matters as well as potential ranges of probable losses.  A determination of the
amount of reserves required for these contingencies, if any, which would be
charged to earnings, is made after careful analysis of each individual issue.
The required reserves may change in the future due to new developments in each
matter or changes in circumstances, such as a change in settlement strategy.
Changes in required reserves could increase or decrease our earnings in the
period the changes are made.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AS
COMPARED WITH THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005

Our operations consist of costs and expenses for providing services to our
investee companies and the activities to identify additional technologies and
companies, in which we might invest, as well as legal defense costs and costs
associated with SEC reporting.  We do not generate any direct revenue and
because our investee companies are not consolidated, we do not report revenue
from investee businesses.

GENERAL AND ADMINISTRATIVE EXPENSE

During the three and nine months ended September 30, 2006, general and
administrative ('G&A") expenses were $14,426 and $136,986, respectively,
compared to G&A expenses of $19,154 and $123,940 for the three and nine months
ended September 30, 2005.  The $4,728, or 25%, decrease in G&A expense for third
quarter 2006 compared to third quarter 2005 is primarily due to a decline in
professional fees in the third quarter of 2006.  The $13,046, or 11%, increase
in G&A expense for the nine months ended September 30, 2006 compared to the same
period in 2005 is primarily due to higher investor relations fees and higher
legal fees in the nine months ended September 30, 2006.

LITIGATION ACCRUAL

On August 27, 2001 JMA refiled its lawsuit with a federal court in New York, and
the Company filed its motion to dismiss the case because the plaintiffs lacked
the required diversity jurisdiction to pursue the claims in federal court. On
October 31, 2001 the case was dismissed in federal court. In December 2001, the
plaintiffs refiled the lawsuit in the state court seeking to enforce the
proposed settlement term sheet. The case was filed in Supreme Court of New York,
that state's trial court, in a case styled Roan Meyers v. CT Holdings. CT
Holdings filed counterclaims for breach of the term sheet as well as breach of
the placement agency agreement. Cross motions for partial summary judgments have
been argued but the court entered judgment in favor of Roan-Meyers in the amount
of $3,000,000 and granted interest at the rate of 9% from October 31, 2000
through the date of final judgment, and thereafter at the statutory rate allowed
by law.

On August 23, 2006, CT Holdings and certain other parties entered into a Release
and Settlement Agreement ("Agreement") by and among Meyers and their related
parties (collectively, the "Meyers Released Parties") on the one hand and
defendants CT Holdings Enterprises, Citadel Security Software Inc., Steven B.
Solomon, Chris A. Economou, Lawrence Lacerte, Mark Rogers, Phillip J. Romano,
Axel Sawallich, George Sharp and Gilbert Gertner (collectively "Defendants") on
the other hand. The Agreement provides for the settlement of litigation filed by
Meyers Associates against defendants Citadel, CT Holdings Enterprises, certain
of Citadel's current and former directors and officers Steven B. Solomon, Chris
E. Economou, Lawrence Lacerte, Mark Rodgers, Phillip J. Romano and Axel
Sawallich in the Court of Chancery of the State of Delaware in and for New
Castle County (the "Delaware Action") asserting various claims, and other
litigation against CT Holdings and its former officers and directors (the
"Actions").


                                       17
<PAGE>
Pursuant to the Agreement, Citadel Security Software shall pay the sum of
$1,250,000 to Meyers Associates in two payments, the first payment of $250,000
upon signing of the Agreement the second payment of $1,000,000 no later than
November 1, 2006. The Defendants will be released by the Plaintiffs from all
claims in the actions 91 days after receipt of the payments, subject to the
terms and conditions of the agreement. The first payment of $250,000 was made by
Citadel in August 2006. If Citadel fails to make the second payment of
$1,000,000 the defendants are not entitled to offset or reduce the settlement by
the initial payment of $250,000. Accordingly, the Company reduced its liability
for this legal claim to $1,250,000 at September 30, 2006. The second payment of
$1,000,000 was made by Citadel on November 1, 2006 therefore pursuant to the
Agreement, the Company is expected to be released from any further claims under
this lawsuit.

DEBT SETTLEMENT GAIN

On May 22, 2006 the Company and CII, an affiliate of the Company's CEO, entered
into a settlement, pursuant to which CII agreed to release the Company from
indebtedness and accrued interest under the Amended Note of $271,148 plus
accrued interest of $9,211 through May 22, 2006, in exchange for the delivery to
CII of the shares of Parago and River Logic owned by the Company. The carrying
value of these shares was zero at the settlement date as the investments had
been written off in prior periods due to continuing operating losses, lack of
cash flows generated from the investments and other factors.  As a result, in
the second quarter of 2006, the Company recorded a $280,359 gain on debt
settlement.

INTEREST EXPENSE

Interest expense for the three and nine months ended September 30, 2006 was
$48,760 and $460,102, respectively representing interest expense on litigation
accrual, advances and notes payable to officers and shareholders, the demand
note payable to Citadel and the convertible note payable to CITN Investment Inc.
("CII").  Interest expense of $41,311 and $179,262 related to the judgment
entered by the court for JMA in June 2004 was recorded in the three and nine
months ended September 30, 2006, respectively.  Interest expense also includes
amortization of the beneficial conversion feature associated with the CII note
and amended note settled in May 2006.  Amortization of the beneficial conversion
feature was $250,290 for the nine months ended September 30, 2006.  The
remaining interest expense is associated with the advances and the notes payable
and was $7,449 and $30,550 in the three and nine months ended September 30,
2006, respectively.

Interest expense for the three and nine months ended September 30, 2005 was
$106,695 and $317,751, respectively, representing interest expense on litigation
accrual, advances and notes payable to officers and shareholders, the demand
note payable to Citadel and the convertible note payable to CII.  Interest
expense of $70,082 and $208,033 related to the judgment entered by the court for
JMA in June 2004 was recorded in the three and nine months ended September 30,
2005, respectively.  Interest expense also includes amortization of the
beneficial conversion feature associated with the CII note and amended note
which totaled $25,000 and $75,000 for the three and nine months ended September
30, 2005, respectively.  The remaining interest expense is associated with the
advances and the notes payable and was $11,613 and $34,718 in the three and nine
months ended September 30, 2005, respectively.

LIQUIDITY AND CAPITAL RESOURCES

We received a report from our independent registered public accounting firm for
our year ended December 31, 2005 containing an explanatory paragraph that
describes the uncertainty regarding our ability to continue as a going concern
due to our recurring operating losses and our significant working capital
deficiency. Historically, we have incurred recurring operating losses and have a
significant stockholders' deficit at September 30, 2006 of approximately $3
million. We had a cash balance of $197 at September 30, 2006 and current
liabilities total approximately $3 million. We have limited access to capital,
no plans to raise capital and we have not identified sources of capital at
September 30, 2006. Our past funding needs of the business have been provided by
financings through short-term notes payable and additional investments from
related parties, including our CEO, and CII however there can be no assurance
that such funds will be available from these related parties in the future. The
Company has been and continues to be dependent upon outside financing to perform
its business development activities, make investments in new technology
companies and to fund operations.


                                       18
<PAGE>
Our plans to continue to support and expand our business development activities
are limited due to a lack of identification and availability of near term
capital. As a result, it is unlikely that the implementation of the Company's
business strategy will generate positive cash flow in the foreseeable future.
We have no plans at September 30, 2006 to raise additional capital to invest in
new business opportunities. To do so we estimate that we will need to raise up
to $3 million to settle recorded liabilities at September 30, 2006 after which
we may then need to raise additional funds to support our incubator and business
development activities. However there can be no assurance that we will raise
additional funds needed to settle our liabilities.

There can be no assurance that management's plans will be successful or what
other actions may become necessary.  There can be no assurance that the Company
will ever achieve liquidity for its investments.  Until we are able to create
liquidity from an additional inflow of new capital, we will continue to require
external sources of working capital to fund our operating expenses. Our
inability to raise capital could have a material adverse effect on our business
and operations that could be material to our results of operations.

Cash Used in Operating Activities

Net cash used in operating activities was $0 for the nine months ended September
30, 2006 resulting from net income of $3,017,123 offset by the non-cash net
impact of the reversal of the Company's litigation accrual of $3,154,590
($3,333,852 reversal of the litigation accrual net of $179,262 current year
interest) and by a $280,359 gain related to the settlement of the Amended Note
with CII.   Cash used in operating activities also included the non-cash
amortization of deferred debt discount of $250,290 recorded as interest expense
and a change in operating liabilities of $167,536.

For the nine months ended September 30, 2005 the net cash used in operating
activities was $14,971. This is the result of a net loss of $441,691 for the
nine months ended September 30, 2005 and non-cash adjustments for the
amortization of debt discount of $75,000 recorded as interest expense and an
accrual for interest related to litigation of $208,770 and an increase in
operating liabilities of $142,950.

Cash Used by Financing Activities

Net cash provided by financing activities for the nine months ended September
30, 2005 was $11,000 representing proceeds from an interest free demand note
from the CEO of the Company for payment of audit fees.

CONTRACTUAL OBLIGATIONS

At September 30, 2006 we have a demand note payable to Citadel of $225,000 plus
accrued interest of $97,644, and a $9,000 unsecured note payable plus accrued
interest of $7,379 to a shareholder which is in default at September 30, 2006.
There are no other long-term debt obligations, capital lease obligations,
operating lease obligations or long-term capital purchase commitments. However
at September 30, 2006 we have accrued for payments to Citadel under the
transition services agreement and demand note payable, none of which may be paid
until such time as the Company has sufficient cash to pay these obligations. The
asset purchase agreement that Citadel has entered into contemplates, that we
will enter into a release agreement with Citadel, pursuant to which we would be
released from the amount we owe to Citadel (approximately $1 million dollars).

ITEM 3. CONTROLS AND PROCEDURES

The Company's management, including the Company's principal executive officer
and principal financial officer, has evaluated the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13(a) - 15(e)
and 15(d) - 15(e) under the Securities Exchange Act of 1934) as of the nine
months ended September 30, 2006, the period covered by the Form 10-QSB. Based
upon that evaluation, the Company's principal executive officer and principal
financial officer have concluded that the disclosure controls and procedures
were effective as of September 30, 2006 to provide reasonable assurance that
material information relating to the Company is made known to management
including the CEO and CFO.


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<PAGE>
There were no changes in the Company's internal control over financial reporting
that occurred during the Company's last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

INHERENT LIMITATION ON THE EFFECTIVENESS OF INTERNAL CONTROLS

The effectiveness of any system of internal control over financial reporting,
including CT Holdings', is subject to inherent limitations, including the
exercise of judgment in designing, implementing, operating, and evaluating the
controls and procedures, and the inability to eliminate misconduct completely.
Accordingly, any system of internal control over financial reporting, including
CT Holdings', can only provide reasonable, not absolute assurances. In addition,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may
deteriorate. We intend to continue to monitor and upgrade our internal controls
as necessary or appropriate for our business, but cannot assure you that such
improvements will be sufficient to provide us with effective internal control
over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Set forth below are litigation matters to which we are a party. We believe that
we have meritorious defenses and will vigorously defend ourselves.  However, an
unfavorable resolution of, settlement, or defense costs related to one or more
of these lawsuits could have a material adverse effect on our business, results
of operations or financial condition.

In August 1998, Janssen-Meyers Associates L.P. ("JMA") filed a lawsuit against
the Company arising out of an alleged 1995 contract with the Company's
predecessor ("Old Citadel"). The suit alleged that Old Citadel breached a letter
of intent dated September 1995 and/or a Placement Agency Agreement dated
November 1995 between JMA and Old Citadel. As its damages, JMA claimed that it
was entitled to, among other things, the cash value of warrants to purchase 1.8
million shares of CT Holdings common stock at an exercise price of $0.89 per
share, valued during May 1996. According to JMA's valuation of those warrants,
potential damages were alleged to exceed $40 million. The Company vigorously
disputes that it breached either the letter of intent or the Placement Agency
Agreement or that it is liable to JMA. The lawsuit was styled Janssen-Meyers
Associates, L.P. v. Citadel Technology, Inc., and was filed in the Supreme Court
of the State of New York, County of New York. The Company removed the case to
federal court in the Southern District of New York.

Following mediation in July 2000, the Company entered into a settlement term
sheet, to attempt to resolve the disputes between it and JMA, pursuant to which
the Company and JMA agreed in principle to settle the lawsuit for an aggregate
of $3 million, in a combination of $1.5 million in cash and 300,000 shares of
the Company's common stock with a guaranteed value of $5 per share as of
January, April and October 2001 (with respect to 100,000 of the shares for each
period). The settlement was subject to execution of definitive settlement
documents and approval of the boards of directors of both parties.  However, the
Company and JMA were unable to negotiate the final definitive settlement
agreement. The case was dismissed in August 2000 without any resolution of this
issue. On March 27, 2001, JMA attempted to reopen this matter, but the Court
hearing the JMA lawsuit issued a Summary Order denying JMA's motion to enforce
the settlement term sheet and confirmed the prior dismissal of the lawsuit. The
Court further ruled that JMA would either have to bring an action on the
proposed settlement or move to re-open the dismissed case. The Court stated that
it did not express any view with respect to the merits of the settlement that
brought about the dismissal of the case. There was no activity on the case from
March 2001 through August 2001. On August 27, 2001 JMA refiled its lawsuit with
a federal court in New York, and the Company filed its motion to dismiss the
case because the plaintiffs lacked the required diversity jurisdiction to pursue
the claims in federal court. On October 31,


                                       20
<PAGE>
2001 the case was dismissed in federal court. In December 2001, the plaintiffs
refiled the lawsuit in the state court seeking to enforce the proposed
settlement term sheet. The case was filed in Supreme Court of New York, that
state's trial court, in a case styled Roan Meyers v. CT Holdings. CT Holdings
has filed counterclaims for breach of the term sheet as well as breach of the
placement agency agreement. Cross motions for partial summary judgments have
been argued but on June 9, 2004 the court entered judgment in favor of
Roan-Meyers in the amount of $3,000,000 and granted interest at the rate of 9%
from October 31, 2000 through the date of final judgment, and thereafter at the
statutory rate allowed by law. The $3,000,000 judgment as well as the interest
from October 2000 through September 30, 2006 of $1,612,623 has been accrued. The
Company has appealed the final judgment, and the appellate court affirmed the
trial court's decision. The Company intends to vigorously defend this case.

On April 8, 2005, Meyers Associates, L.P. f/k/a Roan/Meyers Associates, L.P. and
f/k/a Janssen-Meyers Associates, L.P. ("Meyers") filed a lawsuit in the Court of
Chancery of the State of Delaware, in New Castle County, against the Company,
Citadel Security Software, Inc. (Citadel) including Steven B. Solomon, the Chief
Executive and a Director of the Company, Chris A. Economou, a Director of the
Company, Lawrence Lacerte, a former Director of the Company, and Phillip J.
Romano, a former Director of the Company (the "Individual Defendants"). The suit
alleges that in connection with an action filed in the Supreme Court of New
York, New York County, to enforce a Settlement Term Sheet executed on July 7,
2000 by Meyers and CT Holdings, Meyers was awarded a judgment against CT
Holdings in the amount of $3 million plus interest on the judgment at the rate
of 9% from October 31, 2000 until the date of entry of that judgment and
thereafter at the statutory rate (the "Judgment").  The suit alleges that CT
Holdings' May 2002 spin-off of its interests in Citadel to CT Holdings'
shareholders rendered CT Holdings insolvent and constituted a fraudulent
conveyance to defraud CT Holdings' creditors, including Meyers. The suit asserts
fraudulent conveyance claims against Citadel and CT Holdings pursuant to
Delaware statutory and common law. The suit also asserts a claim against Citadel
for successor liability as the alleged successor in interest or alter ego of CT
Holdings. The suit alleges that the Individual Defendants who were officers
and/or directors of CT Holdings at the time of the spin-off breached fiduciary
duties allegedly owed to creditors of CT Holdings, including Meyers, by
approving and allowing the spin-off transaction. The suit seeks to void the
spin-off transaction or alternatively to hold Citadel liable for the Judgment
including interest, to recover damages against the Individual Defendants in an
amount not less than the Judgment including interest, plus an unspecified amount
of punitive, consequential and incidental damages, as well as attorneys' fees
and costs.

On August 23, 2006, CT Holdings and certain other parties entered into a Release
and Settlement Agreement ("Agreement") by and among Meyers and their related
parties (collectively, the "Meyers Released Parties") on the one hand and
defendants CT Holdings Enterprises, Citadel Security Software Inc., Steven B.
Solomon, Chris A. Economou, Lawrence Lacerte, Mark Rogers, Phillip J. Romano,
Axel Sawallich, George Sharp and Gilbert Gertner (collectively "Defendants") on
the other hand. The Agreement provides for the settlement of litigation filed by
Meyers Associates against defendants Citadel, CT Holdings Enterprises, certain
of Citadel's current and former directors and officers Steven B. Solomon, Chris
E. Economou, Lawrence Lacerte, Mark Rodgers, Phillip J. Romano and Axel
Sawallich in the Court of Chancery of the State of Delaware in and for New
Castle County (the "Delaware Action") asserting various claims, and other
litigation against CT Holdings and its former officers and directors (the
"Actions"). Pursuant to the Agreement, Citadel Security Software shall pay the
sum of $1,250,000 to Meyers Associates in two payments, the first payment of
$250,000 upon signing of the Agreement the second payment of $1,000,000 no later
than November 1, 2006. The Defendants will be released by the Plaintiffs from
all claims in the actions 91 days after receipt of the payments, subject to the
terms and conditions of the agreement. The first payment of $250,000 was made by
Citadel in August 2006. If Citadel fails to make the second payment of
$1,000,000 the defendants are not entitled to offset or reduce the settlement by
the initial payment of $250,000. Accordingly, the Company reduced its liability
for this legal claim to $1,250,000 at September 30, 2006. The second payment of
$1,000,000 was made by Citadel on November 1, 2006 therefore pursuant to the
Agreement, the Company is expected to be released from any further claims under
this lawsuit.

The Company may become involved from time to time in litigation on various
matters which are routine to the conduct of our business. The Company believes
that none of these actions, individually or in the aggregate, will have a
material adverse effect on our financial position or results of operations,
though any adverse decision in these cases or the costs of defending or settling
such claims could have a material adverse effect on our business.


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<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

At September 30, 2006 and December 31, 2005, the Company was in default on the
following indebtedness:

     -    $9,000,  an  8%  note  payable  to  shareholder. The note continues to
          bear  interest  at  8%  with accrued interest at September 30, 2006 of
          $7,379.

ITEM 6.  EXHIBITS

EXHIBIT
NUMBER                                           DESCRIPTION
-------  -----------------------------------------------------------------------

31.1     Certification  of  Principal  Executive  Officer,  filed  herewith.

31.2     Certification of Principal Financial Officer, filed herewith.

32       Certification of Chief Executive Officer and Chief Financial Officer
         Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906
         of the Sarbanes-Oxley Act of 2002, filed herewith.


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<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Quarterly Report on
Form 10-QSB to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date: November 17, 2006               CT HOLDINGS ENTERPRISES, INC.

                                        By:/s/ STEVEN B. SOLOMON
                                        ----------------------------------------
                                        Steven B. Solomon, President and Chief
                                        Executive Officer (Duly Authorized
                                        Signatory and Principal Executive
                                        Officer)


                                        By:/s/ RICHARD CONNELLY
                                        ----------------------------------------
                                        Richard Connelly, Chief Financial
                                        Officer (Duly Authorized Signatory and
                                        Principal Accounting and Financial
                                        Officer)


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