United States

                       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

                   For the fiscal year ended December 31, 2005

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

              For the transition period from _________ to _________

                         Commission file number 0-24930

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

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

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

                     Issuer's telephone number: (386) 454-0887

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

         Title of each class          Name of each exchange on which registered

                                      None

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

                              Class A Common Stock
                                (Title of class)

     Check  whether  the issuer is not  required  to file  reports  pursuant  to
Section 13 or 15(d) of the Exchange Act. (_)

     Note - Checking the box above will not relieve any  registrant  required to
file  reports  pursuant  to Section 13 or 15(d) of the  Exchange  Act from their
obligations under those Sections.

     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  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 (_).

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

     State issuer's revenues for its most recent fiscal year:  $454,360.

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

     Note:  If  determining  whether a person is an  affiliate  will  involve an
unreasonable  effort and expense,  the issuer may calculate the aggregate market
value of the common  equity held by  non-affiliates  on the basis of  reasonable
asumptions, if the assumptions are stated.

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest  practicable  date:  14,112,616 shares of Common
Stock as of March 15, 2006.

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


CDs
     Cyclodextrins  are  molecules  that bring  together  oil and water and 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
have  developed  CD-based  applications  in  stabilization  of flavors  for food
products; elimination of undesirable tastes and odors; preparation of antifungal
complexes  for foods  and  toiletries;  stabilization  of  fragrances  and dyes;
reduction of foaming in foods; cosmetics and toiletries;  and the improvement of
quality, stability and storability of foods.

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

     We  believe  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.

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

<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 (NCDs).

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

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

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

<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 in place,  the Company  believes  the food  additive  industry  will
continue to increase its use of CDs.

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

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

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

<PAGE>

CD Products

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

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

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

Business Strategy

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

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

<PAGE>

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

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

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

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

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

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

<PAGE>

Marketing Plan

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

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

     The Company has taken advantage of the propensity of researchers to use the
Internet to gather information about new products by establishing a website with
the unique and descriptive domain name "cyclodex.com".

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

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

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

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

<PAGE>

Competition

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

     In 2002 we  became  the  exclusive  North  American  distributor  of the CD
products  manufactured  by  Cyclolab.  We  intend  to form  additional  business
relationships  with  Cyclolab in Hungary by creating a  Cyclolab-USA  laboratory
facility and thereby strengthen our competitive advantage.  The Company believes
that it will be able to acquire, and is currently negotiating to acquire, all of
the  outstanding  equity  interest in  Cyclolab  for a total  purchase  price of
$1,525,000.  The Company anticipates that in connection  with its acquisition of
Cyclolab, it would issue options to Cyclolab's current owners to purchase shares
of CTD Holdings for a purchase price of $0.01 per share.

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
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 to first introduce a product
that will not be regulated  by the FDA as a drug because all of its  ingredients
are natural  products or is  generally  regarded as safe (GRAS) by the FDA.  The
Company is continually  updated by counsel as to changes in FDA regulations that
might  affect the use of and claims for these  products.  There is no  assurance
that the FDA will not take the position that the Company's food and  nutritional
supplement products are subject to requirements relating to drug development and
sale.  The  effect  of  such  determination   could  be  to  limit  or  prohibit
distribution of such products.

Employees

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

<PAGE>

Item 2.  Description of Property.

     In 2000,  the  Company  bought  approximately  40 acres in western  Alachua
County,  Florida,  (the  "Property")  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.  While  the  Company  has
discontinued mushroom growing operations on the Property,  the Company 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.

     The  Company  holds  title to the  Property  in fee  simple,  subject  to a
purchase money mortgage securing repayment of a promissory note with a principal
balance due of $147,196 as of December 31, 2005. The principal amount due on the
note accrues interest at a rate of seven and one-quarter (7.25) percent per year
and neither the note nor the mortgage  have a prepayment  penalty.  The maturity
date of the note is December 5, 2005.  The Property is not subject to any lease,
option,  purchase,  or sales  contracts,  nor are there any  immediate  plans to
renovate,  improve, or further develop the Property. The Property is in a region
that is  experiencing  moderate  population  and  development  growth  which has
increased  the market value of the Property.  Management  believes the limits of
insurance coverage are adequate for the Property.

     The Property has a 6,000 sq.ft.  facility  from which the Company  operates
its corporate offices. The anticipated  remaining useful life of the facility is
undetermined,  but in  Management's  estimate  exceeds 25 years.  The Property's
federal tax basis, rate, and method are,  respectively,  $162,000, 40 years, and
straight-line.  The realty  tax rate and annual  realty  taxes  assessed  on the
Property for the year ended  December 31, 2005,  are 23.8378 mils and $3,127.52,
respectively.


Item 3.  Legal Proceedings.
         None


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

<PAGE>
Part II

Item 5.  Market for Common Equity and Related Stockholder Matters.

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

                                    High               Low


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

2005          First Quarter        $ 0.075           $ 0.071
              Second Quarter       $ 0.074           $ 0.073
              Third Quarter        $ 0.076           $ 0.072
              Fourth Quarter       $ 0.049           $ 0.047


     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,  2005,  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 80.

         Dividend Policy

     The Company  will not pay any cash  dividends  on its common  stock in 2005
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.

<PAGE>

                    Recent Sales of Unregistered Securities
                   Sale of Unregistered Class A Common Stock

<TABLE>

  Date           Shareholder         Number of        Transaction        Consideration
                                      Shares
                                      Issued
--------   -----------------------   ---------   ---------------------   -------------
<S>        <C>                       <C>         <C>                     <C>

04-28-04   C.E. Rick Strattan        1,029,412   Sportscard Collection   See Note 1 (below)
12-17-04   Aspatuck Holdings, Ltd.   3,500,000   Stock Purchase          $ 0.001/share
12-30-04   George L. Fails             161,922   Employment Services     See Note 2 (below)
12-30-04   C.E. Rick Strattan          809,611   Employment Services     See Note 2 (below)
12-31-05   George L. Fails             240,525   Employment Services     See Note 2 (below)
12-31-05   C.E. Rick Strattan        1,202,626   Employment Services     See Note 2 (below)

</TABLE>

Notes to Recent Sales of Unregistered Securities Table:

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

Note 2 -- The Company has  employment  agreements  with two  officers  for total
monthly  salaries of $4,900.  In addition,  the  officers are awarded  shares of
common stock each month.  The number of shares due is equal to $6,000 divided by
eighty  percent of the closing price of the  Company's  common stock on the last
day of each month. The Company  recognizes an expense equal to the fair value of
the stock determined using the average stock closing trading price for the month
multiplied by number of shares  awarded for that month.  The stock is subject to
trading  restrictions  under Rule 144. For 2005, the Company  awarded  1,443,151
shares  and  recognized  an expense of $92,000  for stock  awarded  under  these
agreements.  For 2004,  the Company  awarded  971,533  shares and  recognized an
expense of $109,000 for stock awarded under these  agreements.  Both  agreements
have been extended through December 31, 2006.

<PAGE>

Item 6. Management's Discussion and Analysis or Plan of Operation

Introduction

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

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

In 2004, we amended the Company's Articles of Incorporation authorizing a series
of "blank check"  preferred stock  consisting of 5,000,000 shares and creating a
series of Series A Preferred Stock,  setting forth its designations,  rights and
preferences.  The more significant right is Series A Preferred shareholders vote
with the  holders  of common  stock on all  matters  submitted  to a vote of our
shareholders.  Share of Series A Preferred  Stock are  entitled to one vote more
than one-half of all votes  entitled to be cast by all holders of voting capital
stock of the Company on any matter  submitted to holders of common  shares so as
to  ensure  that the votes  entitled  to be cast by the  holder of the  Series A
Preferred  Stock  are  equal to at least a  majority  of the  total of all votes
entitled  to be cast by the  holders of common  shares.  In 2004,  we issued one
share of Series A Preferred Stock to C.E. Strattan,  our majority shareholder in
exchange for 1,029,412  shares of common stock held by him, which he voluntarily
surrendered to the Company and were cancelled.  Effective  August 11, 2005, C.E.
Strattan  transferred the one  outstanding  share of Series A Preferred Stock to
Eline Entertainment Group, Inc. (Eline), effectively transferring control of the
Company to Eline.  The agreement with Eline provides  advances to the Company of
up  to  an  aggregate  of  $1,500,000  to  acquire  Cyclolab,  at  Eline's  sole
discretion.  The terms of any such advances are currently unspecified.  Eline is
also an SEC reporting company.

Liquidity and Capital Resources

Our cash and short-term  investments  increased to approximately  $162,000 as of
December 31, 2005  compared to  approximately  $135,000 as of December 31, 2004.
Our cash flow from  operations  for 2005 was  $129,000  compared to $205,000 for
2004.  While we  reported a net loss in 2005 of  $172,000,  we had  $449,000  in
noncash expenses and a noncash gain of $203,000 in 2005.

The  increased  cash flow from  operations is due primarily to the decreased net
loss in 2005 compared to 2004. The decreased loss is due primarily to a $164,000
decrease in operating  expenses.  The largest  decrease was in  consulting  fees
($229,000 decrease), which was offset by a $30,000 stock bonus to our President.

We believe our working  capital is sufficient  to run our  operations at current
and expected  future  operating  levels into the near future.  We do not require
capital in the next twelve  months for normal  operations.  However,  we require
additional funding to implement our acquisition strategy. During 2005, we signed
a letter of intent to acquire a majority  interest in  Cyclolab by December  31,
2005.  Our  first  acquisition,  Cyclolab,  located  in  Hungary,  will  require
approximately  $1,500,000  in cash and up to  25,000,000  shares  of our  common
stock. Both parties have signed an extension to the letter of intent agreeing to
close  the  acquisition  by April 1,  2006,  as the  parties  conduct  their due
diligence. We believe we can fund the initial ancillary costs of the acquisition
from existing working capital.  We intend to issue stock in a private  placement
to raise  the  $1,500,000.  We  anticipate  the  synergistic  merger  of the two
operating units will create  sufficient cash flow for normal operating costs and
planned capital  improvements.  We intend to minimize  operational  expenses and
increase our now combined  revenues as a result of improved sales efficiency and
marketing.

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

During 2004, we acquired a sports memorabilia collection from our President.  We
obtained an appraisal on the  collection  for  $400,000.  We issued stock with a
fair value  equal to  approximately  70% of the  appraised  value (we bought the
Collection at a 30% discount from the appraised  value). We also engaged a third
party consultant to liquidate the Collection,  which concluded in March 2005. We
received  net  receipts of  approximately  $5,000 and $37,000  from sales of the
collection in 2005 and 2004,  respectively.  We continue to seek a buyer for the
remaining collection.

Beginning in 2003, we began improvements and renovations of our corporate office
and have invested  $123,000 through December 31, 2004. During 2005, we suspended
our improvement and renovations  program to redirect our financial  resources to
the CycloLab  acquisition.  We remain  committed to a Research Park facility for
the 40-acre site. The office  renovations will be followed by improved  security
operations and modest guest  facilities.  Contingent on the Company's ability to
financially  support modest  expansions that will lead to a formal site plan, we
anticipate  spending  at least  another  $100,000  over  the  next two  years to
position the Company to initiate a 5-year plan for a new  Cyclodextrin  Research
Park.

In December 2004, the Company  issued  3,500,000  shares of its common stock for
$3,500 to a financial consultant. The Company recognized an expense of $206,500,
which is the difference  between the amount paid and the fair value of the stock
issued based on the trading price on the date of the stock purchase. The Company
had agreed to register the stock.  The Company had agreed to issue an additional
175,000  shares  of  common  stock  for each  month or part  thereof  until  the
registration  statement is filed or becomes effective.  The Company believes the
financial  consultant has breached the conditions of the sale,  which restricted
the  financial  consultant's  sale of the stock.  Management  believes  it is no
longer  subject  to the  terms of the  agreement,  does not  intend  to file the
registration  statement,  and  also  believes  the  penalty  provisions  of  the
agreement are no longer effective.

In April 2004, we acquired a collection of sports  memorabilia from our majority
shareholder  and  President in exchange for  1,029,412  shares of common  stock.
While we received a $400,000 appraisal on the collection, we recorded this asset
for $106,000,  which represents our majority  shareholder's  cost basis. We also
engaged a consultant  under a one year contract to liquidate the  collection for
not less than 75% of its book value as stated in any of the leading collectibles
industry guide books.  This agreement  expired in April 2005. The consultant was
issued 250,627  shares of common stock valued at $100,250,  which we expensed in
2004. We also agreed to an option whereby the consultant  could have acquire the
entire  collection  for  $200,000.  We  recorded  the fair value of this  option
($204,000)  as a  liability  and a charge  to  operations  in  2004.  In 2005 we
recorded a $204,000 gain when the option expired.

We issued  1,443,151  shares and 971,533 shares of our common stock to employees
for  compensation  earned  under  employment  agreements  for  2005,  and  2004,
respectively.

We have no off-balance sheet arrangements as of December 31, 2005.

Results of Operations and Critical Accounting Policies and Estimates

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

Baseball Memorabilia Collection Asset

The  recoverability  of our baseball  memorabilia  collection asset is evaluated
annually or more  frequently  if  impairment  indicators  exist.  Indicators  of
impairment  include losses realized on sales and our future  operating plans. If
impairment  indicators exist, we evaluate the  recoverability of the asset using
an overall  collection  basis based on  undiscounted  expected future cash flows
based  on  individual   collection   piece  values  published  in  auction-house
guidebooks and/or reputable trade publications and price guides,  less estimated
costs to sell the  collection.  The  recorded  value for the  collection  is not
expected to be recovered through  undiscounted future cash flows is written down
to current fair value, which is generally  determined from estimated  discounted
future net cash flows.  We recorded an  impairment  allowance  for $42,000 as of
December  31,  2005.  Should  the fair value of these  assets  decline or if our
future  operating  plans  change,  we  may  be  required  to  record  additional
impairment charges that could be significant.

Long-lived Assets

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

At December 31, 2005, we have idle buildings located on the same property as our
corporate offices that were used in our former mushroom farming  operation.  The
carrying value of these idle long-lived  assets is $100,000.  We have determined
the fair value of these assets  exceeds this carrying value based on recent real
estate  appraisal.  We continue to  depreciate  the assets over their  estimated
useful  life.  Should the value of these assets  decline,  we may be required to
record an impairment charge that could be significant.

Valuation Allowance on Deferred Tax Assets

SFAS 109,  "Accounting  for Income  Taxes"  requires that deferred tax assets be
evaluated  for future  realization  and reduced by a valuation  allowance to the
extent we believe a portion will not be realized.  We consider many factors when
assessing  the  likelihood  of future  realization  of our  deferred  tax assets
including our recent  cumulative  earnings  experience,  expectations  of future
taxable  income,  the  carry-forward  periods  available to us for tax reporting
purposes, and other relevant factors. At December 31, 2005, our net deferred tax
assets are $400,000,  comprised  principally of net operating loss carryforwards
(NOLs),  with the  remaining  portion  related to temporary  timing  differences
between tax and  financial  reporting.  Classification  of  deferred  tax assets
between  current and  long-term  categories  is based on the expected  timing of
realization, and the valuation allowance is allocated on a prorata basis.

We reported a financial net loss of $(172,000),  but reported  taxable income of
$30,000 for 2005. We increased our valuation  allowance to 100% from 48%,  which
resulted in income tax expense of $225,000.  In 2004, we increased our valuation
allowance  from 43% to 48%.  The range of  possible  judgments  relating  to the
valuation  of our deferred tax asset is very wide.  For example,  we  determined
the weight of available  evidence did not support a decision that a portion
of our deferred tax assets will be realized, resulting in the income tax expense
of $225,000.  Alternatively,  if we had  concluded  that the weight of available
evidence  supported a decision that substantially all of our deferred tax assets
may be realized, we would have a substantial income tax benefit in our statement
of operations.

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

2005 Compared to 2004

Total  product  sales for 2005 were  $454,000,  a 2% decrease over 2004 sales of
$465,000.  Our major customers  continue to be repeat  purchasers.  In 2005, our
four largest customers accounted for 68% of our sales; the largest accounted for
27% of sales.  In 2004,  our four  largest  customers  accounted  for 62% of our
sales; the largest accounted for 24% of sales.

Our gross profit margin of 85% remained consistently strong for 2005 compared to
83% for 2004.  Changes in the product mix in sales has a  significant  effect on
our overall gross profit percentage,  but management expects our gross profit to
remain in the 80% range.

Our SG&A expenses decreased to $500,000 in 2005 from $665,000 in 2004, primarily
as a result of stock  based  compensation  to  officers  and  consultants.  Cash
expenses  increased  due to additional  consulting,  legal and  accounting  fees
incurred as a result of the  Company's  issuing of common  stock,  and increased
merger  and  acquisition   activity.   We  have  evaluated  several  acquisition
opportunities for which we engaged consultants, legal counsel and accountants to
evaluate the  opportunities  and advise us regarding the terms and conditions in
potential  contracts.  We also incurred  additional  expenses (travel,  lodging,
etc.) to visit with selected  targets and traveled more  frequently to meet with
the proposed candidates for acquisition.

For 2005 and 2004, the Company has employment  agreements  with two officers for
total  monthly  salaries of $4,900.  In  addition,  each month the  officers are
awarded  shares of common  stock  restricted  by Rule 144.  The number of shares
awarded is equal to $6,000 divided by eighty percent of the closing price of the
Company's common stock on the last day of each month. The Company  recognizes an
expense equal to the fair value of the stock  determined using the average stock
closing  trading price for the month  multiplied by number of shares awarded for
that month.  The stock is subject to trading  restrictions  under Rule 144.  For
2005, the Company awarded  1,443,151 shares and recognized an expense of $92,000
for stock awarded under these agreements.  For 2004, the Company awarded 971,533
shares and  recognized  an expense of  $109,000  for stock  awarded  under these
agreements. Both agreements have been extended through December 31, 2006.

In August 2005, the Company issued  1,000,000  shares of common stock registered
under Form S-8 to  financial  consultants  and  charged an expense of $60,000 in
2005,  which  equaled the fair value of the stock on the date of the award.  The
Company also issued 500,000 shares of common stock  registered under Form S-8 to
its  President  and  majority  shareholder  and charged an expense of $30,000 in
2005, which equaled the fair value of the stock on the date of the award.

In April 2004, we acquired a collection of sports  memorabilia from our majority
shareholder and President.  We engaged a consultant to liquidate the collection.
The  consultant  was issued  250,627  shares of common stock valued at $100,250,
which was expensed.  This contract expired in March 2005, and the unsold portion
of the  Collection  was  returned  to the  Company.  The  Company  is  currently
exploring  its options  regarding  whether to continue  its  liquidation  of the
Collection.  In 2004,  we issued the  consultant an option to acquire the entire
collection for $200,000. We recorded the fair value of this option ($204,000) as
a charge to operations during 2004. In 2005, this option expired and we recorded
a gain of  $204,000.  We received  net  proceeds of $5,000 and $37,000  from the
sales of items from the collection in 2005 and 2004, respectively.

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

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

In 2005, we increased the valuation  allowance on our deferred tax asset to 100%
from 48%, resulting in an income tax expense of $225,000 for 2005. This increase
was based  primarily  on net  operating  losses  realized in 2005 and 2004.  Our
deferred tax asset is based on our net operating loss carryforward. For 2004, we
incurred a loss and an additional  NOL. We increased  our  valuation  allowance,
resulting  in no income tax  expense or  benefit or change in the  deferred  tax
asset for 2004.

We  recognized  a net  loss  for 2005 of  $(172,000)  compared  to a net loss of
$(561,000) for 2004.

We will continue to introduce new products that will increase  sales revenue and
implement  a strategy of creating or  acquiring  operational  affiliates  and/or
subsidiaries  that will use CD's in herbal medicines,  waste-water  remediation,
pharmaceuticals,  and foods.  We also intend to pursue  exclusive  relationships
with  major  CD  manufacturer(s)  and  specialty  CD  labs to  distribute  their
products. We continue to be the exclusive distributor in North America of the CD
products manufactured by Cyclolab Research Laboratories in Budapest, Hungary. We
have a letter of intent to acquire a majority interest in Cyclolab in 2006.

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

Forward-looking Statement

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

<PAGE>

Item 7.  Financial Statements.

             Report of Independent Registered Public Accounting Firm

To the Board of Directors
CTD Holdings, Inc.
Gainesville, Florida

We have  audited  the  consolidated  balance  sheet of CTD  Holdings,  Inc.  and
subsidiary as of December 31, 2005,  and the related  consolidated  statement of
operations,  stockholders' equity and cash flows for the year ended December 31,
2005.  These  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the financial position of CTD Holdings,  Inc.
and subsidiary as of December 31, 2005, and the results of their  operations and
their cash flows for the year ended  December 31, 2005, in conformity  with U.S.
generally accepted accounting principles.

Baumann, Raymondo & Company, PA
Tampa, Florida
February 15, 2006

<PAGE>

                               CTD HOLDINGS INC.
                           CONSOLIDATED BALANCE SHEET
                               December 31, 2005

                                     ASSETS

                                                               December 31,2005
                                                               ----------------
CURRENT ASSETS
 Cash and cash equivalents                                         $     31,026
 Certificate of deposit                                                 131,381
 Accounts receivable                                                     36,402
 Inventory                                                               54,585
 Investment due from related party                                       25,000
                                                                   ------------
  Total current assets                                                  278,394
                                                                   ------------

PROPERTY AND EQUIPMENT, net                                             423,609
                                                                   ------------

OTHER ASSETS
 Intangibles, net                                                        11,872
 Sports memorabilia collection                                           50,402
                                                                   ------------
  Total other assets                                                     62,274
                                                                   ------------

TOTAL ASSETS                                                       $    764,277
                                                                   ============

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

                                       F-1

<PAGE>


                               CTD HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEET

                                December 31,2005


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                              December 31, 2005
                                                              -----------------
CURRENT LIABILITIES
 Accounts payable and accrued expenses                             $     28,091
 Current portion of long-term debt                                        6,182
 Current portion of shareholder loan                                      3,467
                                                                   ------------
  Total current liabilities                                              37,740
                                                                   ------------

LONG-TERM LIABILITIES
 Long-term debt, less current portion                                   148,745
                                                                   ------------

STOCKHOLDERS' EQUITY
 Common stock, par value $ .0001 per share, 100,000,000
  shares authorized; 13,899,669 shares issued
  and outstanding                                                         1,390
 Preferred stock, par value $.0001 per share,
  5,000,000 shares authorized;
  Series A, 1 share issued and outstanding                                    -
 Additional paid-in capital                                           2,797,298
 Accumulated deficit                                                 (2,220,896)
                                                                   ------------
  Total stockholders' equity                                            577,792

                                                                   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $    764,277
                                                                   ============

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

                                       F-2

<PAGE>


                               CTD HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 For the years ended December 31, 2004 and 2005

                                           2005                            2004
                                     ----------                      ----------


PRODUCT SALES                        $  454,360                      $  464,692

COST OF PRODUCTS SOLD                    66,657                          78,827
                                     ----------                      ----------
GROSS PROFIT                            387,703                         385,865
                                     ----------                      ----------
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE                  500,316                         664,779
                                     ----------                      ----------
SPORTS MEMORABILIA COLLECTION
  Gain on sales                           2,902                          25,332
  Other income (expenses)               161,470                        (307,720)
                                     ----------                      ----------
                                        164,372                        (282,388)
                                     ----------                      ----------

OTHER INCOME (EXPENSE)
  Investment and other income            14,736                          14,688
  Interest expense                      (13,956)                        (12,027)
  Loss on disposal of equipment               -                          (2,852)
                                     ----------                      ----------
   Total other income (expense)             780                            (191)
                                     ----------                      ----------
NET INCOME (LOSS) BEFORE INCOME
 TAXES                                   52,539                        (561,493)

Income Taxes Benefit (Expense)         (225,000)                              -
                                     ----------                      ----------

NET INCOME (LOSS)                    $ (172,461)                     $ (561,493)
                                     ==========                      ==========

NET INCOME (LOSS) PER COMMON
 SHARE                               $     (.01)                     $     (.08)
                                     ----------                      ----------

WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING           12,017,790                       7,232,194
                                     ==========                      ==========

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

                                       F-3


<PAGE>

CTD HOLDINGS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>

                                 COMMON STOCK        PREFERRED STOCK
                             -------------------- --------------------
                                SHARES      PAR    SHARES    PAR    ADDITIONAL   ACCUMULATED      TOTAL
                                           VALUE            VALUE    PAID-IN       DEFICIT     STOCKHOLDERS'
                                                                     CAPITAL                      EQUITY

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

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

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

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

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

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

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

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

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

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

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

Shares issued under
employment agreements           1,943,152     194        -       -      122,110             -        122,304

Shares issued for services      1,000,000     100        -       -       59,900             -         60,000

Net Loss                                -       -        -       -            -      (172,461)      (172,461)
                             ------------ ------- -------- ------- ------------ -------------  -------------
Balance
December 31, 2005              13,899,669 $ 1,390        1 $     - $  2,797,298 $  (2,220,896) $     577,792
                             ============ ======= ======== ======= ============ =============  =============
</TABLE>


<PAGE>

                               CTD HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                           December 31, 2004 and 2005

                                                             2005          2004
                                                       ----------    ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                      $ (172,461)   $ (561,493)
                                                       ----------    ----------
Adjustments to reconcile  net income to
    net cash provided by (used in) operating
    activities:
  Depreciation and amortization                            35,011        27,762
  Gain on sale of sports memorabilia collection            (2,902)      (25,332)
  Loss on disposal of equipment                                 -         2,852
  Deferred income taxes                                   225,000             -
  Fair value adjustment-sports memorabilia coll.           42,000             -
  Stock issued for services                                60,000       363,906
  Expiration of call option-sports memorabilia coll.     (203,470)            -
  Stock compensation to employees                         122,304       109,000
  Call option-sports memorabilia collection                     -       203,470
  Fair value of stock options issued                            -         4,000
  Increase or decrease in:
    Accounts receivable                                    22,620        75,000
    Inventory                                              (3,586)       28,184
    Accounts payable and accrued expenses                   4,251       (21,951)
                                                       ----------    ----------
        Total adjustments                                 301,228       766,891
                                                       ----------    ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES       128,767       205,398
                                                       ----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Proceeds from sale of sports memorabilia coll.            4,545        37,287
  Purchase of property and equipment                      (22,576)      (80,882)
  Purchase of certificate of deposit                      (91,048)      (40,333)
  Loan costs incurred                                      (3,872)            -
  Investment with related party                           (25,000)            -
                                                       ----------    ----------
NET CASH PROVIDED BY (USED IN)
 INVESTING ACTIVITIES                                    (137,951)      (83,928)
                                                       ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Payments on long-term debt                               (6,114)       (9,903)
  Proceeds from sale of stock                                   -         3,500
  Payments on loan payable to stockholder                 (50,131)      (26,369)
  Loan to Shareholder                                           -        (3,500)
  Received from shareholder                                 2,084         1,416
                                                       ----------    ----------
NET CASH USED IN FOR FINANCING ACTIVITIES                 (54,161)      (34,856)
                                                       ----------    ----------
NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                                     (63,345)       86,614

CASH AND CASH EQUIVALENTS, beginning of period             94,371         7,757
                                                       ----------    ----------
CASH AND CASH EQUIVALENTS, end of period               $   31,026    $   94,371
                                                       ==========    ==========

                                      F-4

<PAGE>

                               CTD HOLDINGS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                           December 31, 2004 and 2005

                                                     --------------------------
                                                             2005          2004
                                                     ------------  ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                               $     13,686  $      8,996
                                                     ============  ============
Cash paid for income taxes                           $          -  $          -
                                                     ============  ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
 FINANCING ACTIVITIES

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

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

Common stock issued for services                     $    182,304  $    472,906
                                                     ============  ============




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

                                       F-5

<PAGE>

                               CTD HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2005 and 2004

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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

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

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

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

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

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

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

     (h)  SPORTS  MEMORABILIA  COLLECTION  - The sports  memorabilia  collection
(Collection) was acquired from the Company's President and majority  shareholder
in 2004 in  exchange  for  common  stock  of the  Company  (see  Note  10).  The
Collection  consists  principally of baseball cards, but also includes a variety
of other collectible sport memorabilia.  The Collection was recorded at the cost
basis of the  President  and  majority  shareholder,  which  was  less  than the
estimated  fair value.  The Company  records gains as the Collection is sold and
cash is received,  net of expenses.  The cost of the  Collection  is expensed at
26.5%  of  gross  proceeds  from  the sale of the  Collection.  The  26.5%  cost
allocation  is based  on the  recorded  cost of the  Collection  divided  by the
estimated fair value of the  Collection.  The Company  periodically  reviews the
fair value of the Collection for  impairment.  At December 31, 2005,  management
determined  the  Collection  was impaired  based on its  difficulty in finding a
buyer and  recorded an  impairment  charge of $42,000.  Management  believes the
Company will be able to realize at least $50,000 from the sale of the collection
after selling expenses.

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

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

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

     (l) NET INCOME (LOSS) PER COMMON SHARE - Net income (loss) per common share
is computed in  accordance  with the  requirements  of  Statement  of  Financial
Accounting Standards No. 128 (SFAS 128). SFAS 128 requires net income (loss) per
share  information  to be  computed  using a simple  weighted  average of common
shares  outstanding  during  the  periods  presented.  For stock  awarded  under
employment agreements (see Note 2), the monthly stock award is treated as issued
on the 15th day of each month  earned for  purposes of  computing  the  weighted
average outstanding shares.

     (m) RECLASSIFICATIONS  - Certain amounts in the 2004  financial  statements
have  been  reclassified  for  comparative  purposes  to  conform  to  the  2005
presentation.

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

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

(2)  COMMITMENTS AND CONTINGENCIES

In August 2005, the Company issued  1,000,000  shares of common stock registered
under  Form S-8 to  financial  consultants  and  charged  an expense in 2005 for
$60,000, which equaled the fair value of the stock on the date of the award. The
Company also issued 500,000 shares of common stock  registered under Form S-8 to
its President and majority  shareholder and charged expense in 2005 for $30,000,
which equaled the fair value of the stock on the date of the award.

The  Company has  employment  agreements  with two  officers  for total  monthly
salaries of $4,900. In addition, the officers are awarded shares of common stock
each  month.  The  number of shares  due is equal to  $6,000  divided  by eighty
percent of the closing  price of the  Company's  common stock on the last day of
each month.  The Company  recognizes  an expense  equal to the fair value of the
stock  determined  using the average stock  closing  trading price for the month
multiplied by number of shares  awarded for that month.  The stock is subject to
trading  restrictions  under Rule 144. For 2005, the Company  awarded  1,943,152
shares and  recognized  an expense of  $122,304  for stock  awarded  under these
agreements.  For 2004,  the Company  awarded  971,533  shares and  recognized an
expense of $109,000 for stock awarded under these  agreements.  Both  agreements
have been extended through December 31, 2006.

In December 2004, the Company  issued  3,500,000  shares of its common stock for
$3,500 to a financial consultant. The Company recognized an expense of $206,500,
which is the difference  between the amount paid and the fair value of the stock
issued based on the trading price on the date of the stock purchase. The Company
had agreed to register the stock.  The Company had agreed to issue an additional
175,000  shares  of  common  stock  for each  month or part  thereof  until  the
registration  statement is filed or becomes effective.  The Company believes the
financial  consultant  breached the conditions of the sale, which restricted the
financial  consultant's sale of the stock.  Management  believes it is no longer
subject  to the  terms  of the  agreement  and  does  not  intend  to  file  the
registration statement and also believes the penalty provisions of the agreement
are no longer effective.

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

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

The  consultant  is related to the  president  and majority  shareholder  of the
Company.

In 2004,  the Company  entered  into an agreement  with a  consultant  regarding
capital  raising and strategic  options.  The agreement was  terminated  January
2005. The Company paid the consultant $39,500,  which was expensed.  The Company
was  required to pay the  consultant  7.5% of any  capital  raised and 5% of any
other capital transaction  resulting within two years of the introduction by the
consultant.  No amounts  are due or have been paid under  this  agreement  as of
December  31,  2005;  and the  Company  does not  expect to make any  additional
payments under this agreement.

Rent  expense  under  all  operating  leases  was  $4,000  for  2005  and  2004,
respectively.

<PAGE>

(3)  PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2005 consists of:

            Land                                        $    80,000
            Buildings and improvements                      351,483
            Machinery and equipment                          79,307
            Office furniture and equipment                   54,980
                                                        -----------
                                                            565,770
            Less: accumulated depreciation                  142,689
                                                        -----------
                                                            423,081
            Construction in progress                            528
                                                        -----------
            Property and equipment, net                 $   423,609
                                                        ===========

The  carrying  value of remaining  idle  long-lived  assets  related to a former
mushroom farming operation was approximately $ 100,000 at December 31, 2005.

(4)  CONCENTRATIONS OF CREDIT RISK:

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

            (a) DEMAND AND  CERTIFICATE OF DEPOSITS - The Company has demand and
certificate  of  deposits  in  financial  institutions  that are  insured by the
Federal Deposit Insurance  Corporation up to $100,000. At December 31, 2005, the
demand and  certificate  deposit bank balance was  $165,000.  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.  Three  customers  accounted  for  76% of the
accounts  receivable  balance at December  31,  2005.  The Company has no policy
requiring collateral or other security to support its accounts receivable.

            (c) INVESTMENT  WITH RELATED PARTY- The Company has an agreement for
investment  services with a nonprofit  organization.  The Company's president is
also the president of the nonprofit organization.  The funds are invested by the
nonprofit in a money market account.  The Company earns a proportional  share of
the  interest  earned in the  account.  The Company  has no policy of  requiring
collateral or other security to support this amount.

(5)  MAJOR CUSTOMERS AND SUPPLIERS:

In 2005, three major customers  accounted for  approximately 58% of total sales.
In 2004, four major customers accounted for 62% of total sales.

Purchases from three major suppliers in 2005  represented  approximately  98% of
total  costs of  products  sold.  Purchases  from two  major  suppliers  in 2004
represented approximately 80% of total costs of products sold.

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

<PAGE>

(6)  LONG-TERM DEBT:

Long-term debt consists of the following as of December 31, 2005:

          Mortgage note payable to bank, payments of
          $1,166 due monthly including principal and
          interest at 7.25%,collateralized by land
          and buildings with a cost of $210,000                  $  147,196

          Note  payable to  financing  company,  payments
          of $288 due  monthly, including  principal and
          interest, at 6%,  collateralized  by vehicle with
          a cost of $14,881                                           7,731
                                                                 ----------

          Total long-term debt                                      154,927
          Less current portion                                       (6,182)
                                                                 ----------
          Long-term debt, less current portion                   $  148,745
                                                                 ==========

Maturities  on  long-term  debt as of December 31, 2005 over the next five years
and thereafter are as follows:

          Year ending
          December 31,                                               Amount
          -----------                                           -----------

                 2006                                                 6,182
                 2007                                                 6,932
                 2008                                                 5,362
                 2009                                                 4,238
                 2010                                                 4,556
                 2011 and thereafter                                127,657
                                                                 ----------
                                                                 $  154,927
                                                                 ==========

(7)  RELATED PARTY TRANSACTIONS:

The President (and formerly the controlling stockholder) had previously provided
loans to the Company.  The Company owes the  stockholder  $3,467 at December 31,
2005.  The loan is unsecured  and interest  accrues at 4.17%.  Interest  expense
related to the loan totaled  $1,301 and $3,031 for the years ended  December 31,
2005 and 2004, respectively. The outstanding amount is due on demand.

(8)  FAIR VALUE OF FINANCIAL INSTRUMENTS:

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

<PAGE>

(9)  INCOME TAXES:

The Company follows the provisions of Statement of Financial Accounting Standard
No. 109 "Accounting for Income Taxes."  Differences between accounting rules and
tax laws cause  differences  between the basis of certain assets and liabilities
for  financial  reporting  purposes  and tax  purposes.  The tax effect of these
differences,  to the extent they are  temporary,  is  recorded  as deferred  tax
assets and liabilities.  Income tax expense is the tax payable or refundable for
the period  plus or minus the change  during the period in  deferred  assets and
liabilities.  Temporary  differences  which give rise to deferred tax assets and
liabilities   consist  of  net  operating  loss  carryforwards  and  accelerated
depreciation methods for income tax purposes.

The  Company  has  available  at  December  31,  2005,   unused  operating  loss
carryforwards  totaling  approximately  $ 1,578,000 that may be applied  against
future taxable income. If not used, the carryforwards will expire as follows:

          Year ending
          December 31,                                               Amount
          -----------                                            ----------

                 2009                                            $  760,000
                 2010                                               195,000
                 2017                                               206,000
                 2020                                               280,000
                 2021                                                71,000
                 2024                                                66,000
                                                                 ----------
                Total                                            $1,578,000
                                                                 ==========

If all of the operating loss carryforwards and temporary deductible  differences
were used,  the  Company  would  realize a deferred  tax asset of  approximately
$400,000  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.

In 2002,  Management determined that a 100% valuation allowance was appropriate.
For 2003 and 2002,  the Company  realized net income and utilized  approximately
$240,000 of its net operating loss carryforward to offset its current income tax
liabilities.  In 2003,  Management  determined that a reduction in the valuation
allowance  to 43% from 100% of the future tax  benefit  was  appropriate,  which
resulted in the  recognition  of a $225,000  deferred tax asset and a income tax
benefit. In 2004, Management increased its valuation allowance percentage to 48%
resulting  in no income tax  expense or  benefit or change in its  deferred  tax
asset.  At December 31, 2005,  Management  increased the valuation  allowance to
100% due  primarily to net losses  realized for 2004 and 2005.  This resulted in
income tax expense of $225,000 for 2005.

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

                                                      2005               2004
                                                ----------         ----------

Current income tax benefit (expense)            $   (7,000)        $   30,000
Tax benefit (expense) of temporary
  differences                                      (14,000)           (13,000)
Tax benefit of operating loss carryforwards          7,000                  -
Decrease (increase) in valuation allowance        (211,000)           (17,000)
                                                ----------         ----------
Total net tax benefit (expense)                 $ (225,000)        $        -
                                                ==========         ==========

(10)  ACQUISITION OF SPORTS MEMORABILIA COLLECTION

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

The Company  recorded  sales and related  expenses of the Collection as gains or
losses from operations as Collection pieces are sold.

Concurrent with the  acquisition of the  Collection,  the Company entered into a
one-year contract with an unrelated  consultant to liquidate the Collection on a
"best efforts" basis. The Company issued the consultant 250,627 shares of common
stock  registered  on Form S-8 valued at $100,250 on the date the  contract  was
executed.

The Company  expensed the $100,250 in 2004. This contract expired in March 2005,
and the unsold  portion of the  Collection  was  returned  to the  Company.  The
Company is currently  exploring its options to continue its  liquidation  of the
Collection.

The  consultant  had an option to purchase the Collection at any time during the
term of the agreement  for $200,000  less any sale proceeds  already paid to the
Company.  The  Company  computed  the fair value of this call  option  using the
Black-Scholes stock option pricing model. The following assumptions were made in
estimating  fair value:  risk-free  interest  rate of 3.5%;  no dividend  yield;
expected life of one year. The fair value calculated resulting from the issuance
of this option was  determined  to be $203,470 at December 31,  2004,  which was
recorded as a liability and charged to operations.  The Company recalculated the
fair value of the option at the end of each reporting  period and recognized any
change as through  operations and adjust its liability  accordingly.  The option
expired in March 2005,  and the Company  recorded the  expiration  of the option
liability as a $203,470 gain in 2005.

The consultant  was issued an option to acquire  100,000 shares of the Company's
stock at  $.50/share  during the  one-year  term of the  agreement.  The Company
follows SFAS 123 in accounting  for stock options  issued to  nonemployees.  The
fair value of each option  granted is estimated  using the  Black-Scholes  stock
option pricing model.  The following  assumptions  were made in estimating  fair
value:  risk-free interest rate of 3.5%; no dividend yield; expected life of one
year;  standard  deviation of  historical  stock return  44.03%.  The fair value
calculated  resulting  from the  issuance  of this option was  determined  to be
$4,000, which was expensed in 2004. This option expired in March 2005.

The Company recorded net receipts of approximately $5,000 and $37,000 from sales
of the collection in 2005 and 2004 respectively.

(11)  CORPORATE CHANGES

In 2004, the Company amended its Articles of  Incorporation  authorizing a class
of "blank check"  preferred stock  consisting of 5,000,000  shares thus creating
the series of Series A Preferred  Stock and set forth its  designations,  rights
and preferences. The more significant right is the Series A share votes together
with the  holders  of the common  stock on all  matters  submitted  to a vote of
Company  holders of common  stock,  with the share of Series A  Preferred  Stock
being  entitled to one vote more than one-half of all votes  entitled to be cast
by all holders of voting capital stock of CTD Holding on any matter submitted to
common  shareholders  so as to ensure that the votes  entitled to be cast by the
holder of the Series A  Preferred  Stock are equal to at least a majority of the
total of all votes entitled to be cast by holders of common stock. Each share of
Series A Preferred  Stock has a liquidation  preference of $.0001.  In 2004, the
Company  issued  one  share of the  Series  A  Preferred  Stock to its  majority
shareholder  in  exchange  for  1,029,412  shares  of common  stock  held by the
majority  shareholder,  which were  surrendered  to the company  and  cancelled.
Effective  August 11, 2005,  the  outstanding  share of the  Company's  Series A
Preferred Stock was acquired by Eline Entertainment Group, Inc.

(12)  SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

During the fourth quarter of 2005, Management determined the valuation allowance
on its deferred tax asset  resulting from net operating loss  carryfowards to be
higher than previously recorded due to net operating losses incurred in 2004 and
2005. Management increased the valuation allowance from 43% to 100% resulting in
an income tax expense of $225,000 in the fourth quarter of 2005.

Also in the fourth quarter of 2005, Management determined the sports memorabilia
collection  to be  impaired  due  to  lack  of  marketability  and  recorded  an
impairment charge of $42,000 in the fourth quarter of 2005.



<PAGE>
Item 8.  Changes In and Disagreements With Accountants on Accounting
         and Financial Disclosure.

On July 19, 2005, the Company engaged Baumann,  Raymondo & Company,  P.A. as its
independent  auditors for the year ending December 31, 2005, to replace the firm
of James Moore & Co., P.L.  which was dismissed as its auditors  effective  July
19, 2005. The decision to change auditors was approved by the Company's Board of
Directors.

The reports of James Moore & Co. on the financial  statements of the Company for
the years ended  December  31,  2003,  and  December 31, 2004 did not contain an
adverse opinion or a disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles.

There were no disagreements  with James Moore & Co., P.L., which  disagreements,
if not  resolved  to the  satisfaction  of James Moore & Co.,  P.L.,  would have
caused it to make  reference to the subject  matter of the  disagreement  in the
report,  on  any  matters  of  accounting  principles  or  practices,  financial
statement  disclosure or auditing  scope and  procedures in connection  with the
audits of the  Company's  consolidated  financial  statements  for the  two-year
period  ended  December 31, 2004,  or with regard to the  Company's  most recent
10-QSB filed May 13, 2005.


Item 8A.  Controls and Procedures.

(a) Evaluation of disclosure controls and procedures.

The Company's  management,  recognizes its  responsibility  for establishing and
maintaining  internal  control over financial  reporting for the Company.  After
evaluating the  effectiveness  of our  "disclosure  controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as
of December 31, 2005 (the  "Evaluation  Date"),  the  Company's  management  has
concluded,  as of the  Evaluation  Date, the Company's  disclosure  controls and
procedures were adequate and designed to ensure the  information  required to be
disclosed in the reports filed or submitted by us under the Securities  Exchange
Act of  1934  is  recorded,  processed,  summarized  and  reported  with  in the
requisite time periods.  Although the Company's existing disclosure controls and
procedures  are  adequate,  the  Company's  management  acknowledges  a material
weakness may exist in those  controls and  procedures in that i) the  accountant
employed  by the  Company has no training  regarding  financial
reporting  and  presentation  rules  and  regulations  of the  SEC;  and ii) the
Company's President/CEO, who oversees all the accountants' work and provides all
internal  control  functions,  while  possessing  a MBA from the  University  of
Florida,  has no  training in matters of  accounting,  financial  reporting,  or
presentation rules and regulations of the SEC.

(b) Effectiveness of Internal Control

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

(c) Changes in internal controls.

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


Item 8B.  Other Information.

None.
<PAGE>
PART III.

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

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

Name                   Age        Principal Occupation         Year First Became
                                                                      Director

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

George L. Fails         59        Operations Manager                      2001

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

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

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

Audit Committee Financial Expert

No one  on our  Board  of  Directors  can be  deemed  to be an  audit  committee
financial  expert.  Our business model is not complex and our accounting  issues
are straightforward. Responsibility for our operations is centralized within our
executive  management,  which is  comprised of two  persons.  We recognize  that
having  a person  who  possesses  all of the  attributes  of an audit  committee
financial  expert  would be a  valuable  addition  to our  Board  of  Directors,
however,  we are not, at this time, able to compensate such a person  therefore,
we may find it difficult to attract such a candidate.

Code of Ethics

We have  adopted  a code of  ethics  that  applies  to our  principal  executive
officer,   principal   financial  officer,   principal   accounting  officer  or
controller,  or persons performing similar functions. Our code of ethics will be
provided  to any  person  without  charge,  upon  request.  Requests  should  be
addressed to Investor Relations Department,  c/o CTD Holdings,  Inc., 27317 N.W.
78th Avenue, High Springs, Florida 32643.

<PAGE>

Item 10. Executive Compensation.

<TABLE>

                           SUMMARY COMPENSATION TABLE

                                                                                          Long-term compensation
                                                                          ........................................................
                                         Annual compensation                         Awards               Payouts
                                 --------------------------------------   ----------------------------    ---------
<S>                       <C>        <C>         <C>           <C>            <C>              <C>           <C>         <C>
                                                                                         Securities
                                                        Other annual    Restricted       underlying      LTIP       All other
Name & principal         Year     Salary      Bonus     compensation   stock awards     options/SARs    payouts   compensation
                                    ($)        ($)          ($)            ($)               (#)          ($)          ($)
===================    ========  ========  ===========  ============  ==============     ============   =======   ============

C.E. Rick Strattan       2005    $ 36,000  $ 30,000 (5)     -0-       $ 76,290.00 (1)        -0-          -0-          -0-
President, CEO           2004    $ 36,000        -0-        -0-       $ 90,833.33 (2)        -0-          -0-          -0-
Chairman                 2003    $ 36,000  $ 50,000 (6)     -0-                -0-           -0-          -0-          -0-


George L. Fails          2005    $ 16,478        -0-        -0-       $ 15,384.00 (3)        -0-          -0-          -0-
Operations Manager       2004    $ 22,800        -0-        -0-       $ 18,166.67 (4)        -0-          -0-          -0-
                         2003    $ 20,836        -0-        -0-                -0-           -0-          -0-          -0-

   (1) Reflects grant of 1,202,626 shares
   (2) Reflects grant of 809,611 shares
   (3) Reflects grant of 240,525 shares
   (4) Reflects grant of 161,922 shares
   (5) Reflects grant of 500,000 shares
   (6) Reflects grant of 1,000,000 shares

</TABLE>

     On October  14,  2003,  the  Company  entered  into a  one-year  Employment
Agreement  with C.E.  Rick  Strattan,  the Company's  president,  with an annual
salary of  $36,000  and  $5,000  per month in  restricted  common  shares of the
Company based on the closing  value of the  Company's  shares on the last day of
the month in which the shares are  awarded.  The  Company has agreed to register
Mr. Strattan's shares awarded pursuant to his employment contract. This contract
was extended through December 31, 2006.

     Effective  January 1, 2004, the Company entered into a one-year  Employment
Agreement  with George L. Fails to serve as  Operations  Manager.  Mr.  Fails is
compensated $1,900 monthly, plus $1,000 per month in restricted common shares of
the Company,  based on the closing value of the Company's shares on the last day
of the month in which the shares are awarded. This contract was extended through
December 31, 2006.


Item 11.  Security  Ownership of Certain  Beneficial  Owners and  Management and
Related Stockholder Matters.

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

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

C.E. Rick Strattan   .......................   3,448,237 (1)          24.43%
4123 N.W. 46th Avenue
Gainesville, FL 32606

George L. Fails.............................     442,447 (2)           3.14%
2420 N.W. 142nd Avenue
Gainesville, FL 32609

Aspatuck Holdings, Inc. ....................   2,750,000              19.49%

All Officers and Directors as a group ......   3,890,684              27.57%

   (1) Includes 1,202,626 common shares issued pursuant to Employment Agreement.
   (2) Includes 240,525 common shares issued pursuant to Employment Agreement.

<PAGE>

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

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

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

Notes to Equity Compensation Plan Table:

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


Item 12.  Certain Relationships and Related Transactions.

     Mr. Strattan  periodically advances the Company short-term loans and defers
receipt of salary. The Company owes the stockholder $3,467 at December 31, 2005.
The loan is unsecured and interest  accrues at 5%.  Interest  expense related to
the loan  totaled  $1,301 and $3,031 for the years ended  December  31, 2005 and
2004, respectively.
<PAGE>

Item 13.  Exhibits.

(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++

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

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

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

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

    (18)  Letter on change in accounting principles                         None

    (22)  Subsidiaries of Registrant                                        None

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

    (24)  Consents of Experts and Counsel                                   None

    (25)  Power of Attorney                                                 None

    (27)  Financial Data Schedule

    (28)  Additional Exhibits                                               None

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

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

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

(b) Reports on Form 8-K:

        Filed July 20, 2005: Item 4.01

        Filed August 16, 2005: Item 1.01, Item 5.01

        Filed September 22, 2005: Item 1.01, Item 8.01

        Filed September 22, 2005: Item 1.01


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

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

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

   ****  Filed herewith.

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

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

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


Item 14. Principal Accountant Fees and Services.

Audit Fees

The  aggregate  fees billed for the last fiscal year for  professional  services
rendered by the principal accountant,  Baumann, Raymondo & Company for the audit
of the Company's annual financial  statements and review of financial statements
included in the Company's Form 10-QSB or services that are normally  provided by
the  accountant  in  connection   with  statutory  and  regulatory   filings  or
engagements for those fiscal years was $6,000.

The aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal  accountant,  James Moore & Co., P.L. for the
audit of the  Company's  annual  financial  statements  and review of  financial
statements  included in the Company's  Form 10-QSB or services that are normally
provided by the accountant in connection  with statutory and regulatory  filings
or engagements for those fiscal years was $37,155.

Audit-Related Fees

No fees were billed  during the last fiscal year for any  assurance  and related
services by Baumann,  Raymondo & Company that are not reported under the caption
"Audit Fees".  The nature of the services  comprising the fees disclosed  under
this  category  was  for  accounting  assistance  with  merger  and  acquisition
activities.

The aggregate fees billed in each of the last two fiscal years for assurance and
related  services by James Moore & Co., P.L. that are reasonably  related to the
performance of the audit or review of the Company's financial statements and are
not reported  under the caption  "Audit Fees" was  $1,695.  The nature of the
services  comprising the fees  disclosed  under this category was for accounting
assistance with merger and acquisition activities.

Tax Fees

No fees were  billed  during  the last  fiscal  year for  professional  services
rendered by Baumann,  Raymondo & Company for tax compliance,  tax advice, or tax
planning.

The aggregate fees billed in each of the last two fiscal years for  professional
services rendered by James Moore & Co., P.L. for tax compliance, tax advice, and
tax planning was $3,610.

All Other Fees

No other fees were billed during the last fiscal year for professional  services
provided by Baumann, Raymondo & Company.

The aggregate  fees billed in each of the last two fiscal years for products and
services  provided by James Moore & Co., P.L., other than the services  reported
above were $356 in paragraphs  (e)(1)  through (e)(3) of this section.  The
nature of the services  comprising  the fees  disclosed  under this category was
software training and assistance with payroll tax reporting.

<Page>

                                   SIGNATURES

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

                                              CTD. HOLDINGS, INC.


                                            By:  /s/ C.E. RICK STRATTAN
                                               ---------------------------------
                                                  C.E. RICK STRATTAN,
                                                  Chief Executive Officer
                                                  Chief Operating Officer
                                                  Principal Accounting Officer
                                            Date: March 30, 2006

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.


                                            By:  /s/ C.E. RICK STRATTAN
                                               ---------------------------------
                                                  C.E. RICK STRATTAN
                                                  Chief Executive Officer
                                                  Chief Operating Officer
                                                  Principal Accounting Officer
                                                  Director
                                            Date: March 30, 2006

                                            By:  /s/ GEORGE L. FAILS
                                               ---------------------------------
                                                  GEORGE L. FAILS
                                                  Director
                                            Date: March 30, 2006