U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-KSB
(Mark One)
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (Fee Required)
For the fiscal year ended December 31, 2002
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (No Fee Required)
For the transition period from _________ to _________
Commission file number 0-24930
CTD HOLDINGS, INC.
(Name of small business issuer in its charter)
FLORIDA 59-3029743
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
27317 N. W. 78th Avenue, High Springs, FL 32643
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 386-454-0887
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
Class A Common Stock
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
----.
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB ( )
State issuer's revenues for its most recent fiscal year: $522,372.
State the aggregate market value of the voting stock held by non-affiliates
computed by reference at the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $175,970 based on the average high and low price (reflecting only one
sale) as of March 17, 2003, of $.09 per share.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: 4,791,220 shares of Common Stock
as of March 17, 2003.
DOCUMENTS INCORPORATED BY REFERENCE
None
Transitional Small Business Disclosure Format (Check One): Yes No X
PART I
Item 1. Description of Business
CTD Holdings, Inc. ("Us" or "the Company") was organized as a Florida
corporation on August 9, 1990, with operations beginning in July 1992. We sell
cyclodextrins ("Cyclodextrins" or "CDs") and related products to the food,
pharmaceutical and other industries. We have recently shut down our mushroom
growing operation. We also provide consulting services in the area of CD
applications commercialization.
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 that the application of CDs in both OTC and ethical ophthalmic
products provides the greatest opportunity for the successful and timely
introduction of CD containing preparations for topical drug use.
We provide consulting services for the commercial development of new
products containing CDs. Our revenues are derived from consulting, the
distribution of CDs, the manufacturing of selected CD complexes, and sales of
its own manufactured and licensed products containing CDs.
CD Product Background
CDs are donut shaped circles of glucose (sugar) molecules. CDs are formed
naturally by the action of bacterial enzymes on starch. They were first noticed
and isolated in 1891 by a French scientist, Villiers, as he studied rotting
potatoes. The bacterial enzyme naturally creates a mixture of at least three
different CDs depending on how many glucose units are included in the molecular
circle; six glucose units yield Alpha CD ("ACD"); seven units, beta CD ("BCD");
eight units, gamma CD ("GCD"). The more glucose units in the circle, the bigger
the circle, or donut. The inside of this "donut" provides an excellent resting
place for "oily" molecules while the outside of the donut is significantly
compatible with water enabling clear stable solutions of CDs to exist in aqueous
environments even when an "oily" molecule is carried within the donut hole. The
net result is a molecular carrier that comes in small, medium, and large sizes
with the ability to transport and deliver "oily" materials using water as the
primary vehicle.
CDs are manufactured in large quantities by mixing appropriate enzymes with
starch solutions, thereby reproducing the natural process. ACD, BCD and GCD can
be manufactured by an entirely natural process and therefore are considered to
be natural products. Additional processing is required to isolate and separate
the CDs. The purified ACD, BCD, and GCD are referred to collectively as natural
CDs (NCD's).
The chemical groups on each glucose unit in a CD molecule provide chemists
with ways to modify the properties of the CDs, i.e. to make them more water
soluble or less water soluble, thereby making them better carriers for a
specific chemical. The CDs that result from chemical modifications are no longer
considered "natural" and are referred to as chemically modified CDs ("CMCD's").
Since the property modifications achieved are often so advantageous to a
specific application, the Company does not believe the loss of the "natural"
product categorization will prevent its ultimate commercial use. It does,
however, create a greater regulatory burden.
Our strategy is to sell CDs and to introduce products with little or no
regulatory burden in order to minimize product expenses and create profitable
revenue.
We currently sell our products for use in the pharmaceutical, food and
industrial chemical industries.
CD Market
The food additive industry has been experimenting with CDs for many years.
Now that commercial supply of these materials can be assured and regulatory
approval is in place, the Company believes that the food additive industry will
continue to increase its use of CDs.
CDs have been used in a variety of food products in Japan for over 25
years. In 1999 the economic impact of CD's on the Japanese economy was reported
to be $2.6 billion. Within the last five years, more European countries have
approved the use of CDs in food products. In the United States, major starch
companies are renewing their earlier interest in CDs as food additives. Oral
arguments for regulatory approval by the United States Food and Drug
Administration ("FDA") have been accepted. As of November 3, 1997, BCD use as a
food additive in 10 categories of food products was confirmed to be generally
recognized as safe (GRAS).
Applications of CDs in personal products and for industrial uses have
appeared in many patents and patent applications. Proctor & Gamble uses CDs in
Bounce(R), a popular fabric softener and Febreze. 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 10 times that of the CD itself.
CD Products
Our CD products include Trappsol(R), Aquaplex(R), and AP(TM)-Flavor product
lines. The Trappsol product line consists of approximately 200 different
varieties of CDs and the Aquaplex product line includes more than 60 different
complexes of active ingredients with various CDs. In addition to these product
lines, the Company introduced Garlessence(R) in the fourth quarter of 1995.
Garlessence is the first ingestible product containing CDs to be marketed in the
U.S. The Company also provides consulting services, research coordination, and
the use of CD Infobase(TM), a comprehensive database of CD related information.
The Company has protected its service and trade marks by registering them with
the U.S. Patent and Trademark office. The following trademarks have been
approved and are in use: Trappsol(R), and Aquaplex (R). These properties add to
the intangible asset value of the Company. Since 2000, our Web Site at
http://www.cyclodex.com, a major tangible asset has grown to be a leading
Cyclodextrin information site on the Internet.
CTD purchases CD's from commercial manufacturers around the world
including: Wacker Chemie - Munich, Germany; Ensuiko Sugar Refining Co., Ltd. -
Yokohama, Japan; 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 goods and services.
From inception through the current year, sales of CDs and CD derivatives
have been sufficient to provide the necessary operational profitability to
sustain the Company. Since these materials were simply purchased and resold,
they had the least value-added attributes.
Presently, sales of CD complexes represent 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. While the bulk price of commercialized CD's has
gone down, it appears that our strategy of expanding the CD product line has
compensated for the necessary competitive price reductions. We have doubled our
list of major customers from 3 to 6 thereby reducing our dependency on sales to
a very small core of repeat purchases.
We intend to increase our business development efforts in the food additive
and personal products industries while continuing to build on our successes in
the pharmaceutical industry.
Business development on behalf of the Company's clients will include the
following: (i) negotiation of rights and/or licenses to CD-related inventions;
(ii) consultation with manufacturers to establish customized manufacturing
specifications; (iii) patentability assessments and strategic planning of patent
activities; (iv) trade secret strategies; (v) regulatory interface; and (vi)
strategic marketing planning.
The Company believes its competitive advantage lies in its experience and
know how in the use and application of CDs, areas in which it believes it has
few equals.
In addition to its licensing efforts, the Company intends to coordinate
research studies in which it will retain a portion of the rights created as a
result of the research work supported.
Assuming the availability of funds, the Company will negotiate licensing
rights to its own selected inventions. Because of its comprehensive technical
and patent database for CD-related inventions, the Company believes it is
uniquely positioned to take advantage of constantly evolving licensing
situations.
Marketing Plan
We believe that the failure of businesses to exchange information about CD
molecules has hindered a more rapid commercialization of CDs as safe excipients.
We believe that our philosophy of partnering and sharing will act as a catalyst
to create momentum overcoming the inertia created by the previous conservatism
and secrecy.
Our sales have always been direct, volatile and driven by the acceptance of
CD's as beneficial excipients. Arrangements with large laboratory supply
companies and several diagnostic companies have provided a strong sales base,
that continues to diversify.
The Company has taken advantage of the propensity of researchers to use the
Internet to gather information about new products by establishing a WEB Page and
"site" on the world-wide web and obtaining a unique and descriptive domain name:
"cyclodex.com".
We intend to work with clients in countries whose current regulatory views
include CDs as natural products acting as excipients to introduce beneficial
pharmaceuticals improved by CDs.
Along with the new products themselves, the Company has created a
licensable mark that may be used by other manufacturers wishing to take
advantage of the improved aqueous delivery afforded by Trappsol CDs.
We intend to generate additional revenue through obtaining rights to
certain patents that we will sublicense to appropriate organizations or that we
will use to develop our own proprietary products. Revenue would then be expected
to result from sub-licensing royalties, sales of CD complexes to be used in the
newly developed pharmaceuticals, and finally from the sales of the products to
end-users.
Assuming an ongoing successful process of development, approval and
adoption of CDs and CMCDs for pharmaceutical applications, the Company's
objective is to initiate dialogue and be well prepared for partnerships with
major food companies. Price is a primary concern in this market, but unlike
pharmaceuticals where FDA permission for clinical testing may be obtained before
actual FDA product approval, food companies cannot feed experimental
formulations to test panels of consumers until the ingredients, i.e., the CDs,
receive approval for human consumption. Therefore, the Company will work with
the food companies and key university food research groups to initially evaluate
non-taste applications. These questions will initially be explored using NCDs
since commercial adoption will depend heavily upon the price of the CD selected
and NCDs will always be the least expensive. The benefits derived from the use
of CDs with expensive ingredients (e.g., flavors, fragrances)have already become
accepted commercial uses for CMCDs (chemically modified CSk's) and (naturally
modified CD's) NMCDs.
Competition
The Company is currently a leading consultant in determining manufacturing
standards and costs for CDs and CMCDs. However, there will always exist the
potential for competition in this area since no patent protection can be
comprehensive and forever exclusive. Nevertheless, there is a perceived barrier
to entry into the CD industry because of the lack of general experience with CD
complexation procedures. The Company has established a strong business
relationship with one of the experts in this field -- Cyclolab in Hungary -- and
has utilized the services and expertise of this laboratory. The Company believes
this relationship provides a significant marketing lead time, and combined with
a strong marketing presence, will give the Company a two to three year lead time
advantage over its competitors.
We intend to form a more formal business relationship with Cyclolab in
Hungary by creating a Cyclolab-USA laboratory facility and thereby strengthen
our competitive advantage. Discussions between the principals of Cyclolab and
CTD have been ongoing for more than 5 years. Potential relationships which have
been discussed include joint venture arrangements, the Company's outright
acquisition of Cyclolab and the employment of Cyclolab personnel to create
Cyclolab-USA. There is no assurance that the Company will be able to reach a
formal business relationship with Cyclolab.
Government Regulation
Under the Federal Food, Drug and Cosmetic Act ("Food and Drug Act"), the
Food and Drug Administration ("FDA") is given comprehensive authority to
regulate the development, production, distribution, labeling and promotion of
food and drugs. The FDA's authority includes the regulation of the labeling and
purity of the Company's food and drug products. In the event the FDA believes
that any company is not in compliance with the law, the FDA can institute
proceedings to detain or seize products, enjoin future violations or assess
civil and/or criminal penalties against that Company.
The FDA and comparable agencies in foreign countries impose substantial
requirements upon the introduction of therapeutic drug products through lengthy
and detailed laboratory and clinical testing procedures, sampling activities and
other costly and time consuming procedures. The extent of potentially adverse
government regulations which might arise from future legislation or
administrative action cannot be predicted.
Under present FDA regulations, FDA defines drugs as "articles intended for
use in the diagnosis, cure, mitigation, treatment or prevention of disease in
man." The Company's product development strategy is at first to introduce
products that will not be regulated by the FDA as drugs because all of its
ingredients are natural products or are generally regarded as safe (GRAS) by the
FDA. The Company is continually updated by counsel as to changes in FDA
regulations that might affect the use of and claims for these products. There is
no assurance that the FDA will not take the position that the Company's food and
nutritional supplement products are subject to requirements relating to drug
development and sale. The effect of such determination could be to limit or
prohibit distribution of such products.
Employees
In 2002 the Company employed four persons on a full time basis. None of the
Company's employees belong to a union. The Company believes relations with its
employees are good.
Item 2. Description of Properties.
In 2000, the Company bought approximately 40 acres in Alachua County,
Florida, for a purchase price of $210,000 which was paid for in part by a
new first mortgage of $150,000. The property had been developed in part as
a mushroom growing facility. The Company has discontinued mushroom growing
operations, but continues to use the property as its corporate
headquarters. Its present 6,000 sq.ft. facility is expected to be adequate
to house the Company's operations for the foreseeable future.
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
In October 1994, the Company's securities began trading on the OTC Bulletin
Board and in the over-the-counter market "pink sheets" under the symbol CTDI. In
2000, CTDI did a 2 for 1 split of its common shares from approximately 2.3
million to 4.6 million issued and outstanding. In conjunction with that
restructuring, we changed the name of CTDI to CTD Holdings, Inc; CTDI was then
incorporated as a Florida corporation and became a wholly owned subsidiary of
CTD Holdings, Inc. 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
2000 First Quarter $ $
Second Quarter $ 0.438 $ 0.313
Third Quarter $ 0.313 $ 0.203
Fourth Quarter $ 0.203 $ 0.203
2001 First Quarter $ 0.141 $ 0.141
Second Quarter $ 0.15 $ 0.11
Third Quarter $ 0.15 $ 0.07
Fourth Quarter $ 0.11 $ 0.10
2002 First Quarter $ 0.086 $ 0.086
Second Quarter $ 0.082 $ 0.076
Third Quarter $ 0.065 $ 0.065
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 March 17, 2003, 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 66.
Dividend Policy
The Company will not pay any cash dividends on its common stock in 2003
because it intends to retain its earnings to finance the expansion of its
business. Thereafter, declaration of dividends will be determined by the Board
of Directors in light of conditions then existing, including without limitation
the Company's financial condition, capital requirements and business condition.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
Our cash and cash equivalents increased to approximately $46,000 as of December
31, 2002 compared to approximately $8,000 as of December 31, 2001. This increase
was primarily a result in improvement of cash flows from operations of
approximately $48,000 offset by purchases of property and equipment of
approximately $17,000 plus net proceeds on our existing debt totaling
approximately $7,000.
As of December 31, 2002, our net working capital was approximately $115,000
compared to approximately ($103,000) at the end of 2001. The improvement in
working capital resulted from increased sales, and a 17% reduction in SG&A
expenses. The reduction in SG&A expenses resulted from the elimination of costs
during 2002 from our discontinued mushroom business, and the consolidation of
all operational components and low overhead costs associated with operating for
a full year in one location, our 40-acre property in High Springs, FL.
We believe that working capital will continue to improve in 2003 as a result of
the continued expansion of the Cyclodextrin industry while maintaining overhead
costs at a minimum.
Results of Operations
Sales of cyclodextrins and related manufactured complexes are historically
highly volatile. In efforts to offset this volatility, we continue to expand our
revenue producing activities in cyclodextrin related research and development
services for unrelated companies while expanding our line of distributed
products. Our product sales are primarily to large pharmaceutical and food
companies for research and development purposes.
Total product sales for 2002 were $522,000, an 80% increase over 2001 sales of
$289,000. This change is certainly in large part due to the normal volatility of
our sales; however this group of large customers is growing. In 1999 and 2000 it
was 3 or 4 customers accounting for 80% of our business; in 2002, six companies
accounting for 80% of our business. These major companies continue to buy from
us and they're continuing to buy more.
During 2002, we further reduced our dependency on just two or three major
customers by increasing sales to a few more significant customers. While the
same six companies accounted for 70-80% of our total sales in both 2001 and
2002; four of them purchased a combined total of approximately $213,000 more
product in 2002 while the other two's purchases remained fairly constant. This
$213,000 increase accounted for more than 90% of our increase in sales in 2002.
This growing business from repeat customers (43% from 2001-2002) occurred with
the smaller volume customers as well. In 2002, 83% of the Company's customers
either increased or maintained their purchase levels.
Our gross profit margin of 84% remained consistently strong for 2002 compared to
88% for 2001. The slight decrease from the prior year is primarily due to
fractionally smaller margins associated with larger quantities purchased.
Our SG&A expenses decreased to approximately $231,000 in 2002 from approximately
$279,000 in 2001 as a result of the elimination of the costs associated with the
discontinued mushroom operations and controlling of overhead costs associated
with consolidating all operations in one location.
Total other expenses decreased slightly to approximately $32,000 in 2002
compared to approximately $33,000 in 2001. This slight improvement was primarily
associated with a loss on the disposal of certain equipment related to the
discontinued mushroom business of approximately $24,000; offset by an increase
in investment income of approximately $14,000 due to our large cash reserves
maintained throughout the year.
As a result of these improvements in sales and reduction of SG&A expenses the
company recognized net income of approximately $166,000 in 2002 compared to a
net loss of approximately ($114,000) in 2001.
We will continue to introduce new products that will increase sales revenue and
continue to 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. In 2002, we became the exclusive distributor in North America of
the CD products manufactured by Cyclolab Research Laboratories in Budapest,
Hungary.
In keeping with its commitment to use the internet as a major advertising and
public relations outlet, we are utilizing the local ISP and web site managing
Company, ITG Inc. Early in 2002, we again upgraded our Web Site. This more than
$30,000 asset has been instrumental in creating and maintaining a worldwide
leadership role for us in the implementation of research and commercialization
of CD applications. We believe that the maintenance and growth of our Web Site
will return that investment many times.
Forward-looking Statement
All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to update publicly
any forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties, including, but not limited to, the following:
demand for Cyclodextrins; changes in governmental law and regulations
surrounding various matters, such as labeling disclosures; production and
pricing levels of important raw materials; and difficulties of delays in the
development, production, testing and marketing of products; product margins and
customer product acceptance.
Item 7. Financial Statements
[LETTERHEAD OF JAMES MOORE & CO.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
CTD Holdings, Inc.:
We have audited the accompanying consolidated balance sheet of CTD Holdings,
Inc. and subsidiaries as of December 31, 2002, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 2002 and 2001. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CTD Holdings, Inc.
and subsidiaries as of December 31, 2002, and the results of its operations and
its cash flows for the years ended December 31, 2002 and 2001, in conformity
with accounting principles generally accepted in the United States of America.
/s/James Moore & Company
January 23, 2003
Gainesville, Florida
F - 1
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46,244
Accounts receivable 36,282
Inventory 64,146
-------------
Total current assets 146,672
PROPERTY AND EQUIPMENT 335,016
INTANGIBLES 3,229
OTHER 4,854
-------------
TOTAL ASSETS $ 489,771
=============
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-2
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
(Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 23,195
Current portion of long-term debt 8,876
-------------
Total current liabilities 32,071
-------------
LONG-TERM LIABILTIES
Long-term debt, less current portion 152,513
Due to shareholder
108,900
-------------
Total long-term liabilities 261,413
-------------
STOCKHOLDERS' EQUITY
Class A common stock, par value $.0001 per share, 100,000,000 shares
authorized, 4,791,220 shares issued
and outstanding 480
Class B non-voting common stock, par
value $ .0001 per share, 10,000,000 shares -
authorized, 0 shares issued and outstanding
Additional paid-in capital 1,954,498
Accumulated deficit (1,758,691)
-------------
Total stockholders' equity 196,287
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 489,771
=============
The accompanying notes to consolidated financial statements are an integral part
of this statement.
F-3
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
2002 2001
------------- -------------
PRODUCT SALES $ 522,372 $ 289,425
COST OF PRODUCTS SOLD 84,483 34,026
------------- -------------
GROSS PROFIT 437,889 255,399
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 240,536 279,110
------------- -------------
INCOME (LOSS) FROM OPERATIONS 197,353 (23,711)
------------- -------------
OTHER INCOME (EXPENSE)
Investment and other income 23,251 2,605
Interest expense (30,924) (35,435)
Loss on disposal of equipment (24,100) -
------------- -------------
Total other income (expense) (31,773) (32,830)
------------- -------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 165,580 (56,541)
INCOME TAXES - -
------------- -------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS 165,580 (56,541)
Loss from discontinued operations - (37,228)
Impairment allowance on assets of
discontinued operations - (20,113)
------------- ------------
NET INCOME (LOSS) $ 165,580 $ (113,882)
============= ============
NET INCOME (LOSS) PER COMMON SHARE:
From continuing operations $ .03 $ (.01)
From discontinued operation $ - $ (.01)
------------ ------------
Net Income (Loss) $ .03 $ (.02)
============ ===========
Weighted average number of
common shares outstanding 4,791,220 4,388,922
============ ===========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-4
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
COMMON STOCK ADDITIONAL TOTAL
PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- ----------- ------------ ------------- ------------
Balance, December 31, 2000 3,991,220 $ 398 $ 1,898,503 $ (1,810,389) $ 88,512
Shares issued for services 800,000 82 49,918 - 50,000
Shares issued for company
expense by stockholder - - 6,077 - 6,077
Net loss - - - (113,882) (113,882)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2001 4,791,220 480 1,954,498 (1,924,271) 30,707
Net Income - - - 165,580
165,580
------------ ------------ ------------ ------------ ------------
Balance, December 31, 2002 4,791,220 $ 480 $ 1,954,498 $(1,758,691) $196,287
============ ============ ============= ============ ============
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-5
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECEMBER 31, 2002 AND 2001
Increase (Decrease) in Cash and Cash Equivalents
2002 2001
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 165,580 $ (113,882)
----------- -----------
Adjustments to reconcile net income (loss) to
net cash provided by (used for) operating
activities:
Depreciation and amortization 24,190 51,293
Loss on disposal of equipment 24,100 -
Valuation allowance 12,907 -
Stock issued for services - 50,000
Stock issued by stockholder for company expense - 6,077
Increase in accounts receivable (18,575) (17,035)
Decrease (Increase) in inventory (32,181) 24,353
Decrease in other current assets 1,305 5,793
Decrease in accounts payable
and accrued expenses (129,195) (30,027)
----------- -----------
Total adjustments (117,449) 90,454
----------- -----------
Net cash provided by (used for) operating
activities 48,131 (23,428)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (17,877) (9,295)
Other 748 9,687
----------- -----------
Net cash provided by (used for) investing activities (17,129) 392
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments on line of credit (19,631) (5,561)
Proceeds from loan to stockholder, net 13,005 38,128
Payment on long-term debt (8,199) (18,031)
Proceeds from sale of equipment 21,877 -
----------- ----------
Net cash provided by financing
activities 7,052 14,563
------------ ----------
Net increase (decrease) in cash and cash equivalents 38,054 (8,500)
CASH AND CASH EQUIVALENTS, beginning of year 8,190 16,690
------------ ----------
CASH AND CASH EQUIVALENTS, end of year $ 46,244 $ 8,190
============ ==========
F-6
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECEMBER 31, 2002 AND 2001
Increase (Decrease) in Cash and Cash Equivalents
(Continued)
2002 2001
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 30,924 $ 35,435
=========== ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITY
Common stock issued for company expenses
paid by stockholder $ - $ 6,077
=========== ============
Common stock issued for services $ - $ 50,000
============ ============
The accompanying notes to consolidated financial statements are an integral part
of these statements.
F-7
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the more significant accounting policies of CTD
Holdings, Inc. and Subsidiary (the Company) that affect the accompanying
consolidated financial statements:
(a) ORGANIZATION AND OPERATIONS - The Company was incorporated in August
1990, as a Florida corporation with operations beginning in July 1992. The
Company is engaged in the marketing and sale of cyclodextrins and related
products to food, pharmaceutical and other industries. The Company also provides
consulting services related to cyclodextrin technology. In 1999, the Company
formed Nature Spirit Mushroom Enterprises, Inc. (NSME), a 99% owned subsidiary,
to grow mushrooms and to develop and market a line of mushroom based products.
The Company discontinued its mushroom growing operation in the first quarter of
2001.
(b) BASIS OF PRESENTATION - The consolidated financial statements include
the Company and its 99% owned subsidiary. All intercompany accounts and
transactions have been eliminated.
(c) CASH AND CASH EQUIVALENTS - For the purposes of reporting cash flows,
the Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
(d) 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. Depreciation on leasehold improvements is computed on
the straight-line method over the lesser of the term of the related lease or the
estimated useful lives of the assets. In accordance with Statement of Financial
Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," the Company periodically reviews
its long-lived assets to determine if the carrying value of assets may not be
recoverable. If an impairment is identified, the Company recognizes a loss for
the difference between the carrying amount and the estimated value of the asset.
(f) INVENTORY - Inventory consists of cyclodextrin products purchased for
resale and chemical complexes. Inventory is recorded at the lower of cost
(first-in, first-out) or market.
(g) INTANGIBLES - Intangible assets consist of loan costs recorded at cost.
Intangible assets are amortized using the straight-line method over their
respective estimated useful lives. Accumulated amortization is $993 at December
31, 2002.
(h) REVENUE RECOGNITION - Revenues are recognized when products are
shipped.
(i) ADVERTISING - Advertising costs are charged to operations when
incurred.
(j) START-UP COSTS - Start-up costs are expensed as incurred.
(k) 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.
F-8
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(l) RECLASSIFICATIONS - Certain amounts in the 2001 financial statements have
been reclassified for comparative purposes to conform with the 2002
presentation.
(m) 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:
On May 31, 2001, the Company entered into a one-year employment contract with
its president with an annual salary of $30,000. In conjunction with the
employment agreement, the Company issued 800,000 shares of common stock valued
at $50,000 for salary earned under the agreement plus bonuses.
During the third quarter of 2001, the Company entered into a financial services
agreement with a consultant. The Company paid $2,500, and the Company's
president issued 50,000 shares of common stock valued at $9,200 on behalf of the
Company. The value of the common stock was based on the trading value on the
date of award less a discount for lack of market float for the stock. The 50,000
shares of common stock were obtained from the Company's president for $3,125,
and the difference of $6,075 was recorded as an increase to additional paid - in
capital. The Company charged the total consultant compensation of $11,700 to
expense in 2001.
Rent expense under all operating leases was $11,251 and $30,868 for 2002 and
2001, respectively.
(3) PROPERTY AND EQUIPMENT
Property and equipment as of December 31, 2002, consists of:
Land $ 80,000
Buildings and improvements 207,706
Machinery and equipment 69,823
Office furniture and equipment 53,411
------------
410,940
Less: accumulated depreciation 75,924
------------
Property and equipment, net $ 335,016
=============
The carrying value of the remaining idle long-lived assets related to the
mushroom farming operations was approximately $ 130,000 at December 31, 2002.
(4) CONCENTRATIONS OF CREDIT RISK:
Significant concentrations of credit risk for all financial instruments owned by
the Company, are as follows:
(a) DEMAND DEPOSITS - The Company has demand deposits in a financial
institution that are insured by the Federal Deposit Insurance Corporation up to
$100,000. At December 31, 2002, the bank balance was $13,641. The Company has a
money market account with a financial institution with a balance of $40,344,
which is not insured by the Federal Deposit Insurance Corporation. The Company
has no policy of requiring collateral or other security to support its deposits.
F-9
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
(b) ACCOUNTS RECEIVABLE - The Company's accounts receivable consist of
amounts due primarily from food and pharmaceutical companies located primarily
in the United States and the United Kingdom. The Company has no policy requiring
collateral or other security to support its accounts receivable.
(5) MAJOR CUSTOMERS AND SUPPLIERS:
Sales to four customers (Ben Venue Laboratories, Sigma Chemical Company. Dade
Behring and AstraZeneca, Inc.)in 2002 represented approximately 75% of total
sales. Sales to three customers (Sigma Chemical Company. Dade Behring and
AstraZeneca, Inc.) in 2001 represented approximately 63% of total sales.
Purchases from four suppliers in 2002 represented approximately 69% of total
costs of products sold. Purchases from two suppliers in 2001 represented
approximately 24 % of total costs of products sold.
(6) LONG-TERM DEBT:
Long-term debt consists of the following as of December 31, 2002:
Mortgage note payable to bank, payments of $1,782 due monthly including
principal and interest at 7.95%, collateralized by land and buildings
with a cost of $210,000 $ 161,389
Less current portion 8,876
-----------
Long - term debt, less current portion $ 152,513
===========
Maturities on long-term debt as of December 31, 2002 over the next five years
are as follows:
Year ending
December 31, Amount
2003 $ 8,876
2004 9,607
2005 10,400
2006 11,257
2007 12,185
2008 and thereafter 109,064
---------
$ 161,389
=========
(7) RELATED PARTY TRANSACTIONS:
The majority shareholder periodically advances the Company short-term loans and
defers receipt of salary. The Company owes the shareholder $ 108,900 at December
31, 2002. The loan is unsecured, long-term, and interest accrues at 10%.
Interest expense related to the loans totaled $ 11,263 and $8,652 for the years
ended December 31, 2002 and 2001, respectively.
F-10
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
(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 the financial instruments
disclosed herein is not necessarily representative of the amount that could be
realized or settled, nor does the fair value amount consider the tax
consequences of realization or settlement. The following table summarizes
financial instruments by individual balance sheet account as of December 31,
2002:
CARRYING FAIR
AMOUNT VALUE
---------- ---------
FINANCIAL ASSETS
Cash and cash equivalents $ 46,244 $ 46,244
Accounts receivable 36,282 36,282
---------- ---------
Total financial assets $ 82,526 $ 82,526
========== =========
FINANCIAL LIABILITIES
Accounts payable and accrued expenses $ 23,195 $ 23,195
Long-term debt 161,389 161,389
Due to shareholder 108,900 108,900
---------- ---------
Total financial liabilities $ 293,484 $ 293,484
========== =========
The fair value of all financial instruments approximates carrying value due to
the short-term maturity of the instruments.
(9) INCOME TAXES:
The Company has available at December 31, 2002, unused operating loss
carryforwards totaling approximately $ 1,592,000 that may be applied against
future taxable income. If not used, the carryforwards will expire as follows:
Year Ending
December 31, Amount
----------------- -----------------
2009 $ 839,000
2010 195,000
2017 206,000
2020 281,000
2021 71,000
-----------------
Total $ 1,592,000
=================
If all of the operating loss carryforwards and temporary deductible differences
were used, the Company would realize a deferred tax asset of approximately $
495,000 based upon expected income tax rates. Under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", the deferred tax
asset should be reduced by a valuation allowance if it is likely that all or a
portion of it will not be realized. Realization depends on generating sufficient
taxable income before the expiration of the loss carryforwards. Management has
established a valuation allowance equal to the amount of the deferred tax asset
due to uncertainty of realization of the benefit of the net operating losses
against future taxable income.
F-11
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
2002 2001
----------- ------------
Current income tax expense $ 53,000 $ -
Tax benefit of temporary differences (5,000) (56,000)
Tax benefit of operating loss carryforwards (48,000) -
Effect of increase in valuation allowance - 56,000
----------- ------------
Total net tax expense $ - $ -
=========== ============
(10) DISCONTINUATION OF MUSHROOM FARMING OPERATIONS:
During the first quarter of 2001, the Company discontinued its mushroom growing
operation. The fair values of the long-lived assets related to the mushroom
farming operations were evaluated based on an estimate of discounted cash flow
analysis or recent sales information of similar assets. As of December 31, 2001,
the Company determined there was no impairment of land, property or equipment
related to the mushroom farming operations. However, the Company determined
there was an impairment in the carrying value of goodwill and other intangible
assets related to the mushroom farming operations. Therefore, the Company
recorded an impairment expense of $20,113 during 2001.
(11) SUBSEQUENT EVENT:
In January 2003, the Company announced a repurchase program as of December 31,
2002, under which the Company would buy back common stock up to a
maximum of 1,000,000 shares. The purchase price would be at $0.01 premium to
market not to exceed $0.10 per share. This offer expires on April 15, 2003. As
of January 23, 2003, no shares have been purchased by the Company under this
program.
F-12
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None
PART III.
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
Two (2) directors, constituting the entire Board of Directors, serve until the
next Annual Meeting of shareholders, or until a successor shall be elected and
shall qualify: Principal Occupation Year First and Other Major Became Name, Age
Age Affiliations Director
C.E. Rick Strattan 56 President, CEO and Chairman 1990
George L. Fails 57 Operations Manager 2001
C.E. Rick Strattan, President, CEO and Director since its 1990. Mr. Strattan
served as treasurer of the Company from August, 1990, to May, 1995. From
November 1987 through July 1992, Mr. Strattan was with Pharmatec, Inc., where he
served as Director of Marketing and Business Development for CDs. Mr. Strattan
was responsible for CD sales and related business development efforts. From
November, 1985 through May, 1987, Mr. Strattan served as Chief Technical Officer
for Boots-Celltech Diagnostics, Inc. He also served as Product Sales Manager for
American Bio-Science Laboratories, a Division of American Hospital Supply
Corporation. Mr. Strattan is a graduate of the University of Florida receiving a
B.S. degree in chemistry and mathematics, and has also received an MS degree in
Pharmacology, and an MBA degree in Marketing/Computer Information Sciences, from
the same institution. Mr. Strattan has written and published numerous articles
and a book chapter on the subject of Cyclodextrins.
George L. Fails, Operations Manager CTD, Inc. since 2000. Mr. Fails currently
serves as Operations Manager for CTD, Inc. Prior to joining the Company, Mr.
Fails served as a Detective Sergeant with the Veterans Administration Hospital
in Gainesville, Florida, with special duties as a Predator Officer with the US
Marshall's Service. From 1965 until his retirement in 1986, Mr. Fails served
with the US Army Special Forces, including several tours in Viet Nam, Salvador,
and Angola. Mr. Fails also served two years with a United States intelligence
arm. Mr. Fails received his BA from the University of the Philippines, and has
also received degrees from 43 Military schools, as well as the Federal police
Academy in Little Rock, Arkansas.
Directors, including directors also serving the Company in another capacity and
receiving separate compensation therefore shall be entitled to receive from the
Company as compensation for their services as directors such reasonable
compensation as the board may from time to time determine, and shall also be
entitled to reimbursements for any reasonable expenses incurred in attending
meetings of directors. To date, the Board of Directors has received no
compensation, and no attendance fees have been paid.
Item 10. Executive Compensation.
SUMMARY COMPENSATION TABLE
(three fiscal years ended December 31,2000, 2001 and 2003)
Annual Long Term
Compensation Compensation
--------------------------------------------------------------------------
Year Salary Bonus Compensation Compensation
Name and Principal
Position
C.E. Rick Strattan 2002 $ 33,346 -0- -0- $ -0-
CEO, President 2001 $ 835 -0- -0- $ 59,687(1)
2000 $ 32,918 -0- -0- $ 40,000(2)
George L. Fails 2002 $20,000 -0- -0- $ -0-
2001 $20,000 -0- -0- $ -0-
2000 $10,000 -0- -0- $ -0-
(1) Reflects grants of 800,000 shares
(2) Reflects grants of 336,000 shares
On May 31, 2001, the Company entered into a one-year employment agreement
with Mr. Strattan at an annual salary of $30,000 per year. The Agreement
authorized the payment of $100,000 of Mr. Strattan's accrued salary by the
issuance of the Company's common shares at a rate of $.125 per share. No written
agreement presently exists between Mr. Strattan and the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table shows the ownership of the Common Stock of the Company
on March 17, 2003, by each person who, to the knowledge of the Company, owned
beneficially more than five percent (5%) of such stock, the ownership of each
director, and the ownership of all directors and officers as a group. Unless
otherwise noted, shares are subject to the sole voting and investment power of
the indicated person.
Names and Address of Individual or .........Amount and Nature of Approximate %
Identity of Group ..........................Beneficial Ownership of Class
C.E. Rick Strattan(1)....................... 2,836,000 59.192%
4123 N.W. 46th Avenue
Gainesville, FL 32606
George L. Fails............................. 40,000 0.008%
All Officers and Directors as a group ...... 2,876,000 60.000%
(1) Held by Strattan Associates, Ltd., of which Mr. Strattan is the general
partner. Strattan Associates, Ltd. is a limited partnership established by Mr.
Strattan for estate tax purposes and is not otherwise engaged in business.
Strattan Associates, Ltd. is the owner of the 500,000 shares of CTD stock. Mr.
Strattan is the President/CEO/CFO and Director of the Company.
Item 12. Certain Relationships and Related Transactions.
On May 31, 2001, the Company entered into a one-year employment agreement with
Mr. Strattan at an annual salary of $30,000 per year. The Agreement authorized
the payment of $100,000 of Mr. Strattan's accrued salary by the issuance of the
Company's common shares at a rate of $.125 per share. No written agreement
presently exists between Mr. Strattan and the Company.
Mr. Strattan periodically advances the Company short-term loans and defers
receipt of salary. The Company owes the shareholder $ 108,900 at December 31,
2002. The loan is unsecured, long-term, and interest accrues at 10%. Interest
expense related to the loans totaled $ 11,263 and $8,652 for the years ended
December 31, 2002 and 2001, respectively.
PART IV.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits Page
(1) Reports of Independent Certified Accountants F-1
(2) Financial Statements F-2
Exhibits required by Item 601, Regulation S-B:
(3) Articles of incorporation and by-laws
(a) Articles of Incorporation filed August 9, 1990 * None
(b) By-Laws. * None
(c) Certificates of Amendment to the Articles of
Incorporation filed November 18, 1993 and
September 24, 1993. * None
(4) Instruments defining the rights of security
holders, including indentures
(a) Specimen Share Certificate for Common Stock. * None
(9) Voting Trust Agreement None
(10) Material Contracts
(10.1) Agreement of Shareholders dated November 11, 1993
by and among C.E. Rick Strattan, Garrison Enterprises,
Inc. and the Company. * None
(10.2) Lease Agreement dated July 7, 1994**. None
(10.3) Consulting Agreement dated July 29, 1994 between
the Company and Yellen Associates. * None
(10.4) License Agreement dated December 20, 1994 between
the Company and Herbe Wirkstoffe GmbH. * None
(10.5) Joint Venture Agreement between the Company and
Ocumed, Inc. dated May 1, 1995, incorporated by
reference to the Company's Form 10-QSB for the
quarter ended June 30, 1995.** None
(10.6) Extension of Agreement between the Company and Herbe
Wirkstoffe GmbH.*** None
(10.7) Lease Extension+
(10.8) Loan Agreement with John Lindsay+
(10.9) Small Potatoes Contract+
(10.10) Employment Agreement with C.E. Rick Strattan dated
May 30, 2001++
(11) Statement re: Computation of Per Share Earnings Note 1(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
(99.1) Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002****
(b) Reports on Form 8-K:
None
* Incorporated by reference to the Company's Form 10-SB filed with the
Securities and Exchange Commission on February 1, 1994.
** Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on March 29, 1997.
*** Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on March 28, 2000.
**** Filed herewith.
+ Incorporated by referenced 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.
Item 14. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer, after evaluating the
effectiveness of our "disclosure controls and procedures" (as defined in the
Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c) as of a date (the
"Evaluation Date") within 90 days before the filing of this annual report, have
concluded that, as of the Evaluation Date, our disclosure controls and
procedures were adequate and designed to ensure that 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.
(b) Changes in internal controls.
There were no significant changes in our internal controls or in other factors
that could significantly affect our internal controls subsequent to the
Evaluation Date.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized on March ______, 2003.
CTD. HOLDINGS, INC.
By:__________/s/____________________
C.E. RICK STRATTAN,
Chief Executive Officer
Chief Operating Officer
SIGNATURE TITLE
____________/s/___________________ Chief Executive Officer
C.E. RICK STRATTAN Chief Operating Officer, Director
____________/s/_____________________ Director
GEORGE L. FAILS
CERTIFICATION
OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
I, C.E. RICK STRATTAN, certify that:
1. I have reviewed this annual report on Form 10-KSB of CTD HOLDINGS, INC.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the
period in which this annual report is being prepared; b) evaluated the
effectiveness of the registrant's disclosure controls and procedures as of a
date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"); and c) presented in this annual report my conclusions about
the effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date; 5. I have disclosed, based on my most
recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions): a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and b) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant's internal controls; and 6. I have
indicated in this annual report whether there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 25, 2003
_______/s/____________________________
C.E. RICK STRATTAN
Chief Executive Officer
Chief Financial Officer