U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-KSB

(Mark One)

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

                   For the fiscal year ended December 31, 2001

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

              For the transition period from _________ to _________

                         Commission file number 0-24930

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

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

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

                     Issuer's telephone number: 386-454-0887

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

         Title of each class          Name of each exchange on which registered

                                      None

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

<PAGE>

                              Class A Common Stock

                                (Title of class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No

----.

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB ( )

     State issuer's revenues for its most recent fiscal year:  $289,425.

          State  the  aggregate  market  value  of  the  voting  stock  held  by
     non-affiliates  computed by  reference  at the price at which the stock was
     sold, or the average bid and asked prices of such stock,  as of a specified
     date within the past 60 days: $ 181,694.  based on the average high and low
     price (reflecting only one sale) as of March 5, 2002 of $.09 per share.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practical date: 4,791,220 shares of Common Stock
as of March 5, 2002.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None

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




<PAGE>

PART I

Item 1.  Description of Business

     CTD Holdings, Inc. ("the Company") was organized
as a Florida  corporation on August 9, 1990, with  operations  beginning in July
1992.  The Company sells  cyclodextrins  ("Cyclodextrins"  or "CDs") and related
products  to the food,  pharmaceutical  and other  industries.  The  Company has
recently  began  growing  and  selling  mushrooms.  The  Company  also  provides
consulting services.

CDs

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

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

     The Company  believes that the  application  of CDs in both OTC and ethical
ophthalmic  products  provides the greatest  opportunity  for the successful and
timely introduction of CD containing preparations for topical drug use.

     The Company provides consulting services for the commercial  development of
new products containing CDs. The Company's revenues are derived from consulting,
the distribution of CDs, the  manufacturing of selected CD complexes,  and sales
of its own manufactured and licensed products containing CDs.

<PAGE>

Mushrooms

     On May 7, 2000, the Company  created  Natural Spirit  Mushroom  Enterprise,
Inc.,  a  Florida  corporation,  for the  purpose  of  growing,  developing  and
marketing  mushroom-based  products,  some  of  which  would  be  combined  with
cyclodextrin to be used in herbal,  cosmetic and alternative medicines.  Natural
Spirit  acquired the rights to certain  proprietary  methods of exotic  mushroom
cultivation from a defunct mushroom producing company.  CTD issued 26,500 shares
of its common stock to investors and promoters of the defunct  company for their
rights to certain processes expected to be used by Natural Spirit.

     Natural  Spirit's  operations  were  financed  by CTD.  CTD made an initial
direct investment of approximately  $80,000 to acquire approximately 40 acres of
land,  building and equipment  formerly used as a Mushroom  Farm. The funds came
from profits from operations and $50,000 in new CTD stock sold between March and
June of 2000.

     The Company discontinued mushroom growing operations in early 2001.

<PAGE>

       CD Product Background

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

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

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

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

     The Company  currently  sells its products  for use in the  pharmaceutical,
food and industrial chemical industries.

<PAGE>

CD Market

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

     CDs have  been  used in a  variety  of food  products  in Japan for over 25
years.  The  market  for the use of CDs in food  products  in 1997 in Japan  was
estimated at $150 million.  Within the last five years, more European  countries
have  approved  the use of CDs in food  products.  In the United  States,  major
starch  companies are renewing their earlier  interest in CDs as food additives.
Oral  arguments  for  regulatory  approval  by the United  States  Food and Drug
Administration  ("FDA") have been accepted. As of November 3, 1997, BCD use as a
food additive in 10 categories of food products was confirmed to be GRAS.

     Applications  of CDs in  personal  products  and for  industrial  uses have
appeared in many patents and patent  applications.  Proctor & Gamble uses CDs in
Bounce(R),  a popular fabric softener.  Avon uses CDs in its dermal preparations
using its Age Protective System APS(R). These uses will grow as the price of the
manufactured  CDs decrease or are  perceived as  acceptable in view of the value
added to the products.

     In Japan at least twelve pharmaceutical preparations are now marketed which
contain  CDs.  The CDs permit the use of all routes of  administration.  Ease of
delivery and improved bioavailability of such well-known drugs as nitroglycerin,
dexamethasone,  PGE(1&2),  and cephalosporin permit these "old" drugs to command
new market share and sometimes new patent lives. Because of the value added, the
dollar  value  of the  worldwide  market  for  products  containing  CDs and for
complexes of CDs can be 2 to 3 to 4 times that of the CD itself.


<PAGE>

CD Products

     The  Company's  CD  products  include  its  Trappsol(R),  Aquaplex(R),  and
AP(TM)-Flavor product lines. The Trappsol product line consists of approximately
15 different  varieties of CDs and the Aquaplex  product line includes more than
three dozen  different  complexes  of active  ingredients  with  various CDs. In
addition to these product lines, the Company  introduced  Garlessence( R) in the
fourth quarter of 1995.  Garlessence is the first ingestible  product containing
CDs  to be  marketed  in  the  U.S.  The  Company  believes  that  by  marketing
Garlessence it has demonstrated  industry leadership.  The Company also provides
consulting services,  research coordination,  and the use of CD Infobase(TM),  a
comprehensive database of CD related information.  The Company has protected its
service and trade marks by registering  them with the U.S.  Patent and Trademark
office.   The   following   trademarks   have   been   approved:    Trappsol(R),
Garlessence(R),  and Aquaplex (R). These  properties add to the intangible asset
value of the Company.

     CTD  purchases  CD's  from  commercial   manufacturers   around  the  world
including:  Wacker Chemie - Munich, Germany;  Ensuiko Sugar Refining Co., Ltd. -
Yokohama, Japan; Nihon Shokuhin Kako - Tokyo, Japan; Roquette Freres - Le Strem,
France;  American-Maize Products - Hammond IN, USA. CTD purchases specialty CD's
on occasion from Cyclolab R&D Company in Budapest, Hungary. The Company does not
manufacture cyclodextrins.

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

<PAGE>

       Business Strategy

     The  Company's  strategy  has  been  and will  continue  to be to  generate
profitable revenue through sales of CD related goods and services.

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

     Presently,  sales of CD complexes represent all  of  the  Company's product
sales revenues.  Transition to the more value-added  complexes  continues and is
desirable for increased profitability since higher margins can be maintained for
these products.  However, it appears that the distribution  oriented business of
CD sales has eroded.  Combined with price reductions dictated by the market, the
revenues from the sales of  distributed  products have  decreased as much as the
revenue from CD complexes has increased.  The Company  continues to be dependent
on just a few major  customers  for the majority of its revenue.  In response to
this  situation  the Company has  expanded  its  original  business  strategy of
parlaying its leadership  position in the presently quite small CD industry as a
supplier of CDs, CD derivatives, CD complexes to include:

(1)  Marketing  and  launching a dozen OTC and  naturaceutical  products  (e.g.,
     dietary  supplements)  utilizing  CD delivery  benefits.  For  example,  by
     extracting specific  ingredients from the garlic clove and complexing these
     ingredients  with  Trappsol(R)  B (beta  cyclodextrin)  Garlessence(R)  was
     created.  Similar  products  can be  created  with any of the other  herbal
     ingredients such as ginseng, echinacea, ginkgo, cat's claw, and melatonin.

(2)  Licensing the use of the Trappsol(R)symbol for use by others wishing to use
     CD delivery  technology.  This  strategy is  reflected  in the  Garlessence
     package  which,  in  addition  to  the  Garlessence  trademark,  carries  a
     Trapposol  trademark.  This symbol will be promoted as an indication that a
     Trappsol(R)cyclodextrin is used with the product within and thereby assures
     the user of the quality of the aqueous delivery system. This symbol will be
     licensed in the same way as the MLB (Major League  Baseball)  symbol is for
     baseball related products and the  Nutrasweet(R)symbol  is for artificially
     sweetened products containing Nutrasweet(R).

<PAGE>

    The Company  intends to increase  its business  development  efforts in the
food additive and personal products  industries while continuing to build on its
successes in the pharmaceutical industry.

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

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

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

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

Marketing Plan

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

     The  Company's  sales have always been  direct,  volatile and driven by the
acceptance of CD's as beneficial excipients.  Arrangements with large laboratory
supply companies and several  diagnostic  companies have provided a strong sales
base, but at the price of dependency on a few customers.

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

     Rather than trying to push companies to introduce CD products,  the Company
intends to pull them into the  market by  launching  approximately  seven new CD
containing  products  of its own into the U.S.  market over the next five years.
These products will address needs in the relatively unregulated areas of natural
medicine, topical OTC (over the counter) preparations,  veterinary products, and
home gardening.

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

<PAGE>

     Along  with  the  new  products  themselves,  the  Company  has  created  a
licensable  mark  that  may be  used  by  other  manufacturers  wishing  to take
advantage  of the  improved  aqueous  delivery  afforded by Trappsol  CDs.  This
protected mark has the capability of generating  revenues in a manner similar to
the  Nutrasweet(R)  (artificial  sweetener)  and MLB(R) (major league  baseball)
logos.

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

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

<PAGE>


Competition

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

     The  Company  intends  to form a more  formal  business  relationship  with
Cyclolab in Hungary by creating a Cyclolab-USA  laboratory  facility and thereby
strengthen  its  competitive  advantage.  Discussions  between the principals of
Cyclolab  and  CTD  have  been   ongoing  for  more  than  5  years.   Potential
relationships which have been discussed include joint venture arrangements,  the
Company's  outright  acquisition  of  Cyclolab  and the  employment  of Cyclolab
personnel to create Cyclolab-USA. There is no assurance that the Company will be
able to reach a formal business relationship with Cyclolab.

Government Regulation

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

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

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

nutritional  supplement  products are subject to  requirements  relating to drug
development  and sale.  The  effect of such  determination  could be to limit or
prohibit distribution of such products.

<PAGE>

Employees

     In 2001 the  Company  employed four  persons on a full time basis.  None of
the Company's  employees belong to a union. The Company believes  relations with
its employees are good.

Item 2.  Description of Properties.


          On June 4, 2000, the Company bought  approximately 40 acres in Alachua
     County,  Florida,  for a purchase  price of $210,000  which was paid for in
     part by a new first  mortgage of $150,000.  The property had been developed
     in part as a  mushroom  growing  facility.  The  Company  has  discontinued
     mushroom  growing  operations,  but  continues  to use the  property as its
     corporate headquarters. Its present 6,000 sq.ft. facility is expected to be
     adequate to house the Company's operations for the foreseeable future.

Item 3.  Legal Proceedings.
         None

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

Part II

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

     In October 1994, the Company's securities began trading on the OTC Bulletin
Board and in the  over-the-counter  market "pink  sheets" under the symbol CTDI.
Since the commencement of trading of the Company's securities, there has been an
extremely limited market for its securities. The following table sets forth high
and low bid  quotations  for  the  quarters  indicated  as  reported  by the OTC
Bulletin Board.

<PAGE>

<TABLE>

<S>           <C>                  <C>               <C>
                                    High               Low
1999          First Quarter        $ 0.406           $ 0.115
              Second Quarter       $ 0.437           $ 0.156
              Third Quarter        $ 0.25            $ 0.187
              Fourth Quarter       $ 0.468           $ 0.156
2000          First Quarter        $                 $
              Second Quarter       $ 0.438           $ 0.313
              Third Quarter        $ 0.313           $ 0.203
              Fourth Quarter       $ 0.203           $ 0.203
2001          First Quarter        $ 0.141           $ 0.141
              Second Quarter       $ 0.15            $ 0.11
              Third Quarter        $ 0.15            $ 0.07
              Fourth Quarter       $ 0.11            $ 0.10

</TABLE>

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

         Holders

     As of  December  31,  2001,  the  number of  holders of record of shares of
common stock,  excluding the number of beneficial  owners whose  securities  are
held in street name was approximately 56.

         Dividend Policy

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

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

Liquidity and Capital Resources

As of December 31, 2001, the Company's  working capital was negative  ($102,544)
compared to negative  ($128,751) at the end of 2000. The  improvement in working
capital  was  primarily  the  result of  $38,476  in  additional  loans from the
majority  shareholder,  which  are  classified  as  long-term  in the  Company's
financial statements.

The Company no longer  operates  the mushroom  cultivation  company,  NSME.  The
losses attributable to this discontinued operation were $37,228 and $197,402 for
2001 and 2000, respectively.

The Company moved out of its previously  leased office and lab space in November
of 2001 to the office complex on its 40-acre property in High Springs, FL.

Management believes that working capital will continue to improve in 2002 as the
result of normal sales and a continued emphasis to monitor and control expenses.
The Company has already  experienced an increase in product orders for the first
quarter of 2002.

Results of Operations

Sales of cyclodextrin and related manufactured complexes are historically highly
volatile. In efforts to offset this volatility,  the Company continues to expand
its revenue producing activities in CD related research and development services
for unrelated  companies and expand its line of manufactured  products.  Product
sales of CTD are  primarily  to large  pharmaceutical  and  food  companies  for
research and development purposes.

During 2001, the Company  improved its dependency on major  customers.  In 2001,
three  customers   represented  63%  of  total  sales.  In  2000,  one  customer
represented  52% of sales.  The result of this  diversification  in customers is
expected to have some stabilizing effect on the Company's annual revenue.

Total product sales for 2001 were $289,425, a decrease of 17% from 2000 sales of
$347,201. This change is due to the normal volatility of the Company's sales.

The Company's  gross profit margin of 88% for the 2001 improved on 2000's GPM of
83%. The Company expects to realize a similar gross profit margin in 2002.

The Company's SG&A expenses decreased to $279,110 in 2001 from $381,398 in 2000.
With the greatly reduced expenses implemented for 2001,  management has improved
the financial  condition of the Company to begin 2002.  Management will continue
to hold expenses to a minimum in 2002.

The Company and its  subsidiaries  will  continue to introduce new products that
will enhance profitability and continue to implement its strategy of creating or
acquiring  operational  affiliates and/or additional  subsidiaries that will use
CD's in herbal medicines, waste-water remediation,  pharmaceuticals,  and foods.
The  Company  also  intends  to pursue  exclusive  relationships  with  major CD
manufacturer(s) and specialty CD labs to distribute their products.

In keeping with its  commitment to use the internet as a major  advertising  and
public relations outlet,  the Company continues to utilize the local ISP and web
site  managing  Company,  Live Wire. In April,  2000,  the Company had Live Wire
upgrade the Company's  Web Site.  This $30,000  asset has been  instrumental  in
creating  and  maintaining  a worldwide  leadership  role for the Company in the
implementation of research and commercialization of CD applications. The Company
believes  that the  maintenance  and  growth  of its Web Site  will  return  the
investment many times.

Forward-looking Statements

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

Item 7.  Financial Statements

<PAGE>

                        [LETTERHEAD OF JAMES MOORE & CO.]

                          INDEPENDENT AUDITORS' REPORT

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



We have audited the  accompanying  consolidated  balance  sheet of CTD Holdings,
Inc.  as of  December  31,  2001,  and the related  consolidated  statements  of
operations, stockholders' equity and cash flows for the years ended December 31,
2001 and 2000. These consolidated financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.  We  believe  that  our  audits  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of CTD Holdings,  Inc.
as of December 31, 2001,  and the results of its  operations  and its cash flows
for the years ended  December 31, 2001 and 2000, in conformity  with  accounting
principles generally accepted in the United States of America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements,  the Company has  experienced a significant
operating loss and has a working  capital  deficiency.  These  conditions  raise
substantial doubt about its ability to continue as a going concern. Management's
plans  regarding  those matters also are  described in Note 2. The  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.

/s/James Moore & Company
January 24, 2002
Gainesville, Florida

                                      F - 1

<PAGE>


                               CTD HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001

<TABLE>
<CAPTION>

                                     ASSETS

<S>                                                     <C>
CURRENT ASSETS
 Cash and cash equivalents                               $     8,190
 Accounts receivable                                          25,760
 Inventory                                                    31,965
 Note receivable                                              10,456
 Other                                                         1,305
                                                        -------------
     Total current assets                                     77,676

PROPERTY AND EQUIPMENT                                       387,025

INTANGIBLES                                                    3,510
                                                         -------------
TOTAL ASSETS                                             $   468,211
                                                         =============
</TABLE>

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

                                       F-2

<PAGE>


                               CTD HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001

                                   (Continued)

<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                    <C>
CURRENT LIABILITIES
 Accounts payable and accrued expenses                   $    152,390
 Current portion of long-term debt                              8,199
 Line of credit                                                19,631
                                                         -------------
     Total current liabilities                                180,220
                                                         -------------
LONG-TERM LIABILTIES
  Long-term debt, less current portion                        161,389
  Due to shareholder                                           95,895
                                                         -------------
     Total long-term liabilities                              257,284
                                                         -------------

STOCKHOLDERS' EQUITY
 Class A common stock, par value $.0001 per share,  9,900,000 shares authorized,
  4,791,220 shares issued

  and outstanding                                                 480
 Class B non-voting common stock, par
  value $ .0001 per share, 10,000,000 shares                        -
  authorized, 0 shares issued and outstanding
 Additional paid-in capital                                 1,954,498
 Accumulated deficit                                       (1,924,271)
                                                         -------------
     Total stockholders' equity                                30,707
                                                         -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $   468,211
                                                         =============
</TABLE>

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

                                       F-3

<PAGE>


                               CTD HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
 <TABLE>

<CAPTION>                                               2001        2000
                                                   -------------   -------------
<S>                                                        <C>             <C>
PRODUCT SALES                                       $  289,425       $  347,201

COST OF PRODUCTS SOLD                                   34,026           58,239
                                                   -------------   -------------
GROSS PROFIT                                           255,399          288,962

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES           279,110          381,398
                                                   -------------   -------------
LOSS FROM OPERATIONS                                   (23,711)         (92,436)
                                                   -------------   -------------
OTHER INCOME (EXPENSE)
 Investment and other income                             2,605            2,304
 Interest expense                                      (35,435)         (28,294)
                                                   -------------   -------------
     Total other income (expense)                      (32,830)         (25,990)
                                                   -------------   -------------
LOSS FROM CONTINUINING OPERATIONS
  BEFORE INCOME TAXES                                  (56,541)        (118,426)

INCOME TAX EXPENSE, net                                     -          (195,000)
                                                   -------------   -------------
NET LOSS FROM CONTINUING OPERATIONS                    (56,541)        (313,426)

Loss from discontinued operations                      (37,228)        (197,402)
Impairment allowance on assets of
  discontinued operations                              (20,113)               -
                                                    -------------   ------------
NET LOSS                                              (113,882)        (510,828)
                                                   =============   =============

NET LOSS PER COMMON SHARE:
     From continuing operations                      $    (.01)     $      (.09

     From discontinued operations                    $    (.01)     $      (.05)
                                                    ============    ============

     Net Loss                                        $    (.02)     $      (.14)
                                                     ============    ===========
Weighted average number of
  Common shares outstanding                          4,388,922        3,702,203
                                                     ============    ===========

</TABLE>

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

                                       F-4

<PAGE>

<TABLE>
<CAPTION>

                                                          CTD HOLDINGS, INC.
                                            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                            FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000

                                       COMMON STOCK             ADDITIONAL                     TOTAL
                                                                 PAID-IN        ACCUMULATED   STOCKHOLDERS'
                                    SHARES        AMOUNT         CAPITAL        DEFICIT        EQUITY
                                  -----------   -----------   ------------  -------------   ------------
<S>                             <C>            <C>            <C>           <C>           <C>
Balance, December 31, 1999         3,175,220    $      316    $  1,765,785  $ (1,299,561)  $    466,540

Shares issued for services           736,000            74          92,726             -         92,800

Shares issued to acquire
 rights                               40,000             4          29,996             -          30,000

Shares sold                           40,000             4           9,996             -          10,000

Net loss                                  -              -               -        (510,828)     (510,828)
                                  -----------    -----------    -----------    -----------   -----------
Balance, December 31, 2000         3,991,220           398       1,898,503      (1,810,389)       88,512

Shares issued for services           800,000            82          49,918             -          50,000

Shares issued for company expense         -              -           6,077             -           6,077
 by stockholder

Net loss                                        -              -               -  (113,882)     (113,882)
                                 ------------   ------------   ------------   ------------   ------------
Balance, December 31, 2001         4,791,220     $      480    $ 1,954,498    $ (1,924,271)  $    30,707
                                  ============   ============   =============  ============   ============
</TABLE>

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

                                    F-5

<PAGE>

                               CTD HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           DECEMBER 31, 2001 AND 2000
                Increase (Decrease) in Cash and Cash Equivalents

                                                           2001          2000
                                                        -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                               $ (113,882)  $ (510,828)
                                                        -----------  -----------
 Adjustments to reconcile
   net loss to net cash used
   for operating activities:

   Depreciation and amortization                            51,293       26,414
   Loss on disposal of equipment                                 -          425
   Valuation allowance - other                                   -        4,111
   Valuation allowance deferred income taxes                     -      195,000
   Stock issued for services                                50,000       78,330
   Stock issued by stockholder for company expense           6,077            -
   Decrease (increase) in accounts receivable              (17,035)      12,539
   Decrease in inventory                                    24,353       28,931
   Increase in other current assets                          5,793        5,593
   Increase (decrease) in accounts payable
      and accrued expenses                                 (30,027)     130,783
                                                       -----------   -----------
        Total adjustments                                   90,454      482,126
                                                       -----------   -----------
    Net cash used for operating activities                 (23,428)     (28,702)
                                                       -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                         (9,295)     (97,007)
 Note receivable to employees                                    -         (910)
 Collection of note receivable to employee                   9,687       19,259
                                                      ------------   -----------
Net cash provided by (used for) investing activities           392      (78,658)
                                                      ------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
 Net proceeds from (payments for) line of credit           (5,561        21,898
 Proceeds from loan to stockholder                         38,128        32,096
 Payment to stockholder on loan                                 -        (8,372)
 Proceeds from sale of stock                                    -        30,000
 Payment on long-term debt                                (18,031)      (24,997)
                                                     -----------     -----------
Net cash provided by financing activities                  14,536        50,625
                                                     ------------    -----------
Net decrease in cash and cash equivalents                  (8,500)      (56,735)
CASH AND CASH EQUIVALENTS, beginning of year               16,690        73,425
                                                      ------------  ------------
CASH AND CASH EQUIVALENTS, end of year                  $   8,190     $  16,690
                                                      ============  ============

                                       F-6

<PAGE>


                               CTD HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          DECEMBER 31, 2001 AND 2000
                Increase (Decrease) in Cash and Cash Equivalents

                                   (Continued)

                                                         2001         2000
                                                     ------------  ------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest               $   35,435       $  28,294
                                                     ===========   ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
 FINANCING ACTIVITY

  Common stock issued for company expenses
    paid by stockholder                              $    6,077        $      -
                                                      ===========   ============
  Common stock issued for services                   $   50,000       $  78,330
                                                     ============  ============
  Common stock issued to acquire rights              $        -       $  10,000
                                                     ============  ============
  Acquisition of property and equipment with debt    $        -       $  12,845
                                                     ============  ============

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

                                       F-7

<PAGE>

                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31,2001 AND 2000

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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

     (a)  ORGANIZATION  AND OPERATIONS - The Company was  incorporated in August
1990,  as a Florida  corporation  with  operations  beginning in July 1992.  The
Company  is engaged  in the  marketing  and sale of  cyclodextrins  and  related
products to food, pharmaceutical and other industries. The Company also provides
consulting  services  related to cyclodextrin  technology.  In 1999, the Company
formed Nature Spirit Mushroom Enterprises,  Inc. (NSME), a 99% owned subsidiary,
to grow mushrooms and to develop and market a line of mushroom  based  products.
The Company  discontinued its mushroom growing operation in the first quarter of
2001.

     (b) BASIS OF PRESENTATION - The consolidated  financial  statements include
the  Company  and  its 99%  owned  subsidiary.  All  intercompany  accounts  and
transactions have been eliminated.

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

     (d)PROPERTY  AND  EQUIPMENT - Property and  equipment are recorded at cost.
Depreciation   on  property  and  equipment  is  computed  using  primarily  the
straight-line  method over the estimated useful lives of the assets, which range
from three to forty years. Depreciation on leasehold improvements is computed on
the straight-line method over the lesser of the term of the related lease or the
estimated useful lives of the assets.

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

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

     (g) REVENUE RECOGNITION - Revenues are recognized when products are
shipped.

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

     (i) START - UP COSTS - The initial costs incurred to organize the Company's
subsidiary were expensed as incurred.

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

        (k) RECLASSIFICATIONS - Certain amounts in the 2000 financial statements
have  been  reclassified  for  comparative  purposes  to  conform  with the 2001
presentation.

                                       F-8

<PAGE>

                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000


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

(2) CONTINGENCIES:

As shown in the  accompanying  consolidated  financial  statements,  the Company
incurred a net loss of $113,882 for the year ended  December 31, 2001, and as of
that date,  the Company's  current  liabilities  exceeded its current  assets by
$102,544.  Those factors  create an uncertainty  about the Company's  ability to
continue as a going concern.  Management of the Company is reducing expenses and
attempting to increase revenues to return the Company to a profitable  position.
Additionally, management is working with creditors to work out agreeable payment
plans,  until the cash flow  position  improves.  The  ability of the Company to
continue as a going concern is dependent on the Company  achieving  these plans.
The financial  statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.

(3) COMMITMENTS:

The future minimum lease payments under all operating leases are as follows:

                    YEAR ENDING
                    DECEMBER 31,                     AMOUNT
                    ------------                   -----------

                       2002                           7,108
                       2003                           3,947
                       2004                              -
                       2005                              -
                       2006                              -
                                                   -----------
                   Total                           $ 11,055
                                                   ===========

Rent  expense  under all  operating  leases was $30,868 and $28,606 for 2001 and
2000, respectively.

                                       F-9

<PAGE>


                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

(3) COMMITMENTS:  (Continued)


The Company issued 200,000 shares of common stock to its President in 2000, that
were awarded and expensed in 1999.

On March 1, 2000, the Company entered into a one year public relations  contract
with a consultant.  The Company issued the  consultant  200,000 shares of common
stock. The Company valued the shares at $40,000, approximately 50% less than the
bid price on the contract date. The Company recorded a prepaid asset of $40,000,
which was amortized over one year, the life of the contract.

On April 1, 2000,  the  Company  adopted a stock  bonus  plan for the  Company's
president.  The amount of stock due each month is equal to $5,000 divided by 50%
of the lowest  stock trade  amount for that month.  The  Company  issued  75,566
shares and expensed $45,000 during 2000.The  plan  was  discontinued  at the end
of 2000 in  favor  of a new  employment agreement with its president.

On May 31, 2001, the Company  entered into a one-year  employment  contract with
its  president  with an  annual  salary  of  $30,000.  In  conjunction  with the
employment  agreement,  the Company issued 800,000 shares of common stock valued
at $50,000 for salary earned under the agreement  plus bonuses.  At December 31,
2001, the Company owes it's president $9,687 of accrued salary.

During the third quarter of 2001, the Company entered into a financial  services
agreement with a consultant. The Company paid $2,500 and the Company's president
issued  50,000 shares of common stock valued at $9,200 on behalf of the Company.
The value of the  common  stock was  based on the  trading  value on the date of
award less a discount for lack of market float for the stock.  The 50,000 shares
of common stock were obtained from the Company's  president for $3,125,  and the
difference  of $6,075  was  recorded  as an  increase  to  additional  paid - in
capital.  The Company  charged the total  consultant  compensation of $11,700 to
expense in 2001.

(4) PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2001, consists of:

         Land                                          $    80,000
         Buildings and improvements                        249,604
         Machinery and equipment                           131,772
         Office furniture and equipment                     59,247
                                                       ------------
                                                           520,623
         Less: accumulated depreciation                    133,598
                                                       ------------
         Property and equipment, net                   $   387,025
                                                       =============
                                             F-10




<PAGE>


                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

(5) CONCENTRATIONS OF CREDIT RISK:

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

     (a) DEMAND  DEPOSITS - The  Company has demand  deposits in a local  branch
bank  that  is  insured  by the  Federal  Deposit  Insurance  Corporation  up to
$100,000. At December 31, 2001, the bank balance was $14,211. The Company has no
policy of requiring collateral or other security to support its deposits.

     (b) ACCOUNTS  RECEIVABLE - The  Company's  accounts  receivable  consist of
amounts due primarily from food and  pharmaceutical  companies located primarily
in the United States.  The Company has no policy  requiring  collateral or other
security to support its accounts receivable.

(6) MAJOR CUSTOMERS AND SUPPLIERS:

Sales to three customer in 2001  represented  approximately  63% of total sales.
Sales to one  customers in 2000  represented  approximately  52% of total sales.
Purchases  from two suppliers in 2001  represented  approximately  24 % of total
costs of products sold. There were no major suppliers in 2000.

(7) LONG-TERM DEBT:

Long-term debt consists of the following as of December 31, 2001:

         Mortgage note payable to bank, payments of $1,782 due monthly including
          principal and interest at 7.95%, collateralized by land and buildings

          with a cost of $210,000                                   $  169,588


              Less current portion                                       8,199
                                                                    -----------
              Long - term debt, less current portion                $  161,389
                                                                    ===========

Maturities  on  long-term  debt as of December 31, 2001 over the next five years
are as follows:

         Year ending

         December 31,                                   Amount

            2002                                       $  8,199
            2003                                          8,876
            2004                                          9,607
            2005                                         10,400
            2006                                         11,257
            2007 and thereafter                         121,249
                                                       ---------
                                                      $ 169,588

                                                      =========
                                      F-11

<PAGE>

                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

The  Company  has a $25,000  unsecured  line of credit  with a local  bank.  The
monthly minimum  payment is calculated  based on the  outstanding  balance.  The
interest rate is prime plus 3%(7.75% at December 31, 2001).  The credit line can
be canceled and payment of the outstanding  amount due can be required on demand
by the bank at any time. At December 31, 2001, $ 19,631 was outstanding and owed
to the bank.

(8) RELATED PARTY TRANSACTIONS:

The Company has the following  note  receivable due from an employee at December
31, 2001:

         Mortgage  receivable,  payments  of  $454  due  semi-monthly  including
            principal  and  interest  at  8%,   collateralized   by  a  personal
            residence, maturing in 2002                               $  10,456
                                                                      ==========


The majority shareholder  periodically advances the Company short-term loans and
defers receipt of salary.  The Company owes the shareholder $ 95,895 at December
31,  2001.  The loan is  unsecured,  due on demand,  including  interest at 10%.
Interest  expense  related  to the  loans  totaled  $ 8,652  for the year  ended
December 31, 2001.

(9) FAIR VALUE OF FINANCIAL INSTRUMENTS:

Statement of Financial  Accounting  Standards  No. 107  "Disclosures  about Fair
Value of Financial  Instruments" requires disclosure of fair value to the extent
practicable  for financial  instruments  which are recognized or unrecognized in
the balance sheet. The fair value of the financial  instruments disclosed herein
is not  necessarily  representative  of the  amount  that could be  realized  or
settled,  nor  does the fair  value  amount  consider  the tax  consequences  of
realization or settlement.  The following table summarizes financial instruments
by individual balance sheet account as of December 31, 2001:

                                                CARRYING            FAIR
                                                 AMOUNT             VALUE
                                               ----------         ---------
FINANCIAL ASSETS
  Cash and cash equivalents                   $   8,190         $    8,190
  Accounts receivable                            25,760             25,760
  Note receivable                                10,456             10,456
                                               ----------         ---------
         Total financial assets               $  44,406         $   44,406
                                               ==========         =========
FINANCIAL LIABILITIES
  Accounts payable and accrued expenses       $ 152,390         $  152,390
  Line of credit                                 19,631             19,631
  Long-term debt                                169,588            169,588
  Due to shareholder                             95,895             95,895
                                               ----------         ---------
         Total financial liabilities          $ 437,504           $  437,504
                                               ==========         =========
                                      F-12

<PAGE>



                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

The fair value of all  financial  instruments  classified  as current  assets or
liabilities  approximates  carrying value due to the short-term  maturity of the
instruments.

(10) INCOME TAXES:

The  Company  has  available  at  December  31,  2001,   unused  operating  loss
carryforwards  totaling  approximately  $ 1,800,000 that may be applied  against
future taxable income. If not used, the carryforwards will expire as follows:

           Year Ending

           December 31,                               Amount

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

             2009                               $     998,000
             2010                                     195,000
             2017                                     206,000
             2020                                     281,000
             2021                                     130,000
                                                -----------------
             Total                              $   1,810,000
                                                =================

If all of the operating loss carryforwards and temporary deductible  differences
were used,  the  Company  would  realize a deferred  tax asset of  approximately
$447,000

based upon expected income tax rates.  Under  Statement of Financial  Accounting
Standards No. 109,  "Accounting for Income Taxes", the deferred tax asset should
be reduced by a valuation  allowance if it is likely that all or a portion of it
will not be  realized.  Realization  depends on  generating  sufficient  taxable
income  before  the  expiration  of  the  loss  carryforwards.   Management  has
established a valuation  allowance equal to the amount of the deferred tax asset
due to uncertainty  of  realization  of the benefit of the net operating  losses
against future taxable income.

                                                  2001          2000
                                             -----------   ------------
Current income tax expense                   $       -      $       -

Tax benefit of temporary differences             (56,000)     (71,000)

Effect of increase (decrease) in valuation
   allowance                                      56,000      266,000

                                             -----------   ------------
Total net tax expense                        $       -     $  195,000
                                             ===========   ============




                                      F-13

<PAGE>

                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

(11) PRIVATE PLACEMENT OF STOCK:

Beginning in 1999,  the Company  began  offering a total of 1,300,000  shares of
common stock under a private placement  memorandum that expired on September 30,
2000. During 2000, 40,000 shares were sold for $30,000.

(12) DISCONTINUATION OF MUSHROOM FARMING OPERATIONS:

During the first quarter of 2001, the Company  discontinued its mushroom growing
operation.  In accordance with Statement of Financial  Accounting  Standards No.
121  "Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to Be Disposed Of," the Company reviewed the long-lived assets related to
the mushroom farming  operation to determine if the carrying value of the assets
may not be recoverable. When an impairment is identified, the Company recognizes
a loss for the difference between the carrying amount and the estimated value of
the asset.  The fair values of the assets evaluated were based on an estimate of
discounted cash flow analysis or recent sales  information of similar assets. As
of December 31, 2001,  the Company  determined  there was no impairment of land,
property or equipment related to the mushroom farming operations.  However,  the
Company determined there was an impairment in the carrying value of goodwill and
other intangible assets related to the mushroom farming  operations.  Therefore,
the  Company  recorded  an  impairment  expense of  $20,113,  which  reduced the
carrying value of goodwill to zero at December 31, 2001.

The  carrying  value of the  remaining  idle  long-lived  assets  related to the
mushroom farming operations was approximately $172,000 at December 31, 2001.

                                      F-14

<PAGE>

<TABLE>
<CAPTION>

                                                      SUMMARY COMPENSATION TABLE
                                      (three  fiscal  years ended  December  31,
                                      1999, 2000 and 2001)

                                          Annual                     Long Term
                                          Compensation               Compensation
                                 ---------------------------------------------------------



Other              All

                                                                             Annual            Other
Name and Principal Position                Year    Salary      Bonus      Compensation      Compensation
<S>                                        <C>     <C>        <C>             <C>           <C>

C.E. Rick Strattan                         2001    $   835      -0-           -0-            $59,687(1)
Chief Executive Officer, President         2000    $32,918      -0-           -0-            $40,000(2)
                                           1999    $42,000      -0-           -0-            $ 7,800(3)

</TABLE>
     (1) Reflects grants of 800,000 shares
     (2) Reflects grants of 336,000 shares
     (3) Reflects grants of 200,000 shares


     On November 15, 1995, the Company  adopted a  non-qualified  employee stock
purchase plan pursuant to which employees may purchase  restricted shares of the
Company's  common stock at a price of 50% of the current bid price of the shares
in  amounts  not to exceed  the  employee's  gross  pay.  Pursuant  to the plan,
employees have elected to purchase  33,400  shares,  of which 15,800 shares have
been purchased by Mr. Strattan.

     On May 31, 2001, the Company entered into a one-year  employment  agreement
with Mr.  Strattan  at an annual  salary of  $30,000  per  year.  The  Agreement
authorized  the  payment of  $100,000 of Mr.  Strattan's  accrued  salary by the
issuance of the Company's common shares at a rate of $.125 per share.

Performance-Based Stock Compensation

     On January 28, 2000,  the Board of Directors  authorized a bonus of $10,000
and 250,000 common shares to Mr.  Strattan and 1,500 shares to Lisa Stephens for
their work in 1999.  The Company  believes  Ms.  Stephens  shares were issued in
error.

     On April 5, 2000, the Board of Directors approved the repurchase of 106,474
common  shares  from  Burckhardt  and  Company  for  a  total  consideration  of
$6,388.44.

     On November 3, 2000,  the Board of Directors  authorized a bonus of 100,000
common shares to C.E. Rick Strattan in  consideration of his work in 2000. These
shares were issued in 2000.

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

     The following  table shows the ownership of the Common Stock of the Company
on March 29, 2000,  by each person who, to the  knowledge of the Company,  owned
beneficially  more than five (5%) of such stock, the ownership of each director,
and the  ownership of all directors  and officers as a group.  Unless  otherwise
noted,  shares  are  subject  to the sole  voting  and  investment  power of the
indicated person.

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

C.E. Rick Strattan(1).......................      2,772,400            57.86%
4123 N.W. 46th Avenue
Gainesville, FL 32606

All Officers and Directors as a group ......      2,772,400            57.86%



     (1) Held by Strattan Associates, Ltd., of which Mr. Strattan is the general
partner.  Strattan Associates,  Ltd. is a limited partnership established by Mr.
Strattan  for estate tax  purposes  and is not  otherwise  engaged in  business.
Strattan  Associates,  Ltd. is the owner of the 500,000 shares of CTD stock. Mr.
Strattan is the President/CEO and Director of the Company.

Item 12.  Certain Relationships and Related Transactions.

     On March 10, 2000, the Company  adopted a resolution  whereby 10,000 shares
of the  Company's  common  stock,  issued in the name of Gregory V.  DeLong,  be
returned to the  Company's  treasury  stock as authorized  but unissued  shares,
pursuant to a Stock Power retained by the Company.

     On August 10, 2000,  the Company  purchased  10,000  shares of common stock
from Atlanta  Syndication  Network,  Inc. for $5,000. The shares were originally
issued in April 1997. The shares were canceled after the Company bought them.

     On November 24, 2000,  the Company  issued 106,474 shares to Burckhardt and
Co. for its services performed in 2000.

     On January 28, 2000,  the Board of Directors  authorized a bonus of $10,000
and 250,000 common shares to Mr.  Strattan and 1,500 shares to Lisa Stephens for
their work in 2000.

     On April 5, 2000, the Board of Directors approved the repurchase of 106,474
common  shares  from  Burckhardt  and  Company  for  a  total  consideration  of
$6,388.44.

     On November 3, 2000,  the Board of Directors  authorized a bonus of 100,000
common shares to C.E. Rick Strattan in  consideration of his work in 2000. These
shares were issued in 2000.

On March 13, 2000,  CTD entered into an agreement  with Randy  "Lazarus"  McAtee
d/b/a "Small Potatoes" to provide  financial  public relations  services for CTD
for one  year.  CTD has  compensated  Mr.  McAtee  by the  transfer  of  100,000
restricted shares.

<PAGE>

<PAGE>

PART IV.

Item 13.  Exhibits and Reports on Form 8-K.

(a) Exhibits                                                                Page

    (1) Reports of Independent Certified Accountants                        F-1

    (2) Financial Statements                                                F-2

    Exhibits required by Item 601, Regulation S-B:

    (3) Articles of incorporation and by-laws

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

       (b) By-Laws. *                                                       None

       (c)    Certificates of Amendment to the Articles of
              Incorporation  filed November 18, 1993 and

              September 24, 1993. *                                         None

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

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

    (9)  Voting Trust Agreement                                             None

    (10)  Material Contracts

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

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

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

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

        (10.5)  Joint Venture Agreement between the Company and

                Ocumed, Inc. dated May 1, 1995, incorporated by

                reference to the Company's Form 10-QSB for the
                quarter ended June 30, 1995.**                              None

        (10.6)  Extension of Agreement between the Company and Herbe
                         Wirkstoffe GmbH.***                                None
        (10.7)  Lease Extension+
        (10.8)  Loan Agreement with John Lindsay+
        (10.9)  Small Potatoes Contract+
        (10.10) Employment Agreement with C.E. Rick Strattan dated
                 May 30, 2001++

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

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

    (18)  Letter on change in accounting principles                         None

    (22)  Subsidiaries of Registrant                                        None

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

    (24)  Consents of Experts and Counsel                                   None

    (25)  Power of Attorney                                                 None

    (27)  Financial Data Schedule

    (28)  Additional Exhibits                                               None

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

(b) Reports on Form 8-K:

         No Form 8-K was filed for the quarter ended DECEMBER 31, 2000.

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

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

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

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

    ++  Filed herewith.

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

(Registrant)                       CTD HOLDINGS, INC.


                                    /S/ C.E. Rick Strattan
By (Signature and Title)            _______________________________________
                                    C.E. RICK STRATTAN, President,
                                    Chief Executive Officer, Chief

                                    Operating Officer and

                                    Director

Date: March 29, 2002