SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
__X__ Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934 for the Quarterly Period Ended: March 31, 2003.
____ 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.
(Exact name of registrant as specified in its charter)
Florida 59-3029743
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
27317 N.W. 78th Avenue, High Springs, Florida 32643
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 386-454-0887
Former name, former address and former fiscal year, if changed since last
report: N/A.
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 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
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. No.
Applicable only to corporate issuers
As of May 1, 2003, the Company had outstanding 4,791,220 shares of its
common stock.
Transitional Small Business Disclosure Format (Check One):
No.
PART I: Financial Information
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
March 31, 2003
--------------
CURRENT ASSETS
Cash and cash equivalents $ 36,260
Accounts receivable 25,041
Inventory 69,264
--------
Total current assets 130,565
PROPERTY AND EQUIPMENT, NET 337,426
INTANGIBLES 3,159
OTHER ASSETS 4,854
--------
TOTAL ASSETS $ 476,004
=========
(Continued)
F-2
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 2003
--------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 31,062
Current portion of long-term debt 9,113
---------
Total current liabilities $ 40,175
---------
LONG-TERM LIABILITIES
Long-term debt, less current portion 149,394
Stockholder loan 101,562
----------
Total long-term liabilities $ 250,956
----------
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 (1,770,105)
-----------
Total stockholders' equity 184,873
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 476,004
===========
See Accompanying Notes to Financial Statements.
F-3
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
-----------------------------
2003 2002
-------------- ------------
PRODUCT SALES $ 50,547 $ 195,849
COST OF PRODUCTS SOLD 7,923 35,091
----------- ---------
GROSS PROFIT 42,624 160,758
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 49,226 63,416
----------- ---------
INCOME (LOSS) FROM OPERATIONS (6,602) 97,342
----------- ---------
OTHER INCOME (EXPENSE)
Investment and other income 2,101 375
Interest expense (6,913) (8,434)
Loss on disposal of equipment - (35,678)
----------- ---------
Total other (expense) (4,812) (43,737)
----------- ---------
NET INCOME (LOSS) BEFORE INCOME TAXES (11,414) 53,605
INCOME TAXES - -
____________ _________
NET INCOME (LOSS) (11,414) 53,605
=========== =========
NET INCOME (LOSS) PER COMMON SHARE (.01) .01
=========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 4,791,220 4,791,220
=========== ==========
See Accompanying Notes to Financial Statements.
F-4
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Three Months Ended
March 31,
--------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (11,414) $ 53,605
------------ ------------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Loss on disposal of equipment - 35,678
Depreciation and amortization 5,911 6,189
Decrease (Increase)in accounts receivable 11,241 (53,787)
Decrease (Increase) in inventory (5,118) 2,741
Decrease in other current assets - 1,305
Increase (decrease) in accounts payable and
accrued expenses 10,527 (32,731)
----------- -----------
Total adjustments 22,561 (40,605)
----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 11,147 13,000
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (8,250) (2,820)
Repayment of note receivable - 2,482
Proceeds from sale of equipment - 10,300
---------- ----------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES (8,250) 9,962
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on line-of-credit - (489)
Payment on notes payable (2,881) (1,991)
Proceeds from stockholder loan - 14,785
Payment on stockholder loan (10,000) -
------------ ------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (12,881) 12,305
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (9,984) 35,267
CASH AND CASH EQUIVALENTS, beginning of period 46,244 8,190
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 36,260 $ 43,457
============ ============
F-5
(Continued)
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Concluded)
Three Months Ended
March 31,
--------------------------
2003 2002
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 4,248 $ 5,391
============ ============
See Accompanying Notes to Financial Statements.
F-6
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2003
(Unaudited)
The information presented herein as of March 31, 2003, and for the three months
ended March 31, 2003 and 2002, is unaudited.
(1) BASIS OF PRESENTATION:
The accompanying financial statements include CTD Holdings, Inc. and its
subsidiaries.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Rule 10-01 of Regulations S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal required
adjustments) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2003, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report of Form 10-KSB for
the year ended December 31, 2002.
(2) 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. SFAS 128 eliminated the previous requirement that earnings per share
include the effect of any dilutive common stock equivalents in the calculation.
(3) INCOME TAXES
The Company recorded no income tax expense for the three months ended March 31,
2002, due to the availability of a net operating loss
carryforward.
(4) STOCK BUY-BACK
The stock buy-back offered by the Company effective January 15, 2003 expired
April 15, 2003. There were no shares offered by shareholders for buy-back. The
terms offered by the Company were $.01 per share greater than the quote on
BigCharts.com at the end of the day on which the request to sell was received by
the Company, or $.10 per share, whichever was smaller.
F-7
Item 2. Management's Discussion and Analysis or Plan of Operation
Management Discussion and Analysis
Liquidity and Capital Resources
Our cash and cash equivalents decreased to approximately $36,000 as of March 31,
2003 compared to approximately $46,000 as of December 31, 2002. This decrease
was primarily the result of purchases of property and equipment of approximately
$8,000 to improve the business operations facilities along with the paydown of
certain long-term obligations of approximately $12,000. The decrease was offset
by a slight improvement of our cash flows from operations of approximately
$10,000 as cash flows were carefully managed in the face of a reduction in our
sales.
As of March 31, 2003, our working capital was approximately $90,000 compared to
approximately $115,000 at year-end 2002 and only approximately $5,000 a year
ago. The working capital decrease from the previous quarter can be primarily
attributed to our utilization of cash to improve our business operation
facilities and paydown of certain long-term obligations. The working capital
increase from the prior year can be primarily attributed to an improvement in
our operations to profitability last year as a result of our increase in sales
while reducing selling, general and administrative costs. We will continue to
closely monitor our working capital and work to improve our liquidity and
capital resources in 2003 while maintaining our 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 and as a result can be
unpredictable. To manage this unpredictability, we maintain a constant line of
communication with our major customers and their related Cyclodextrin research
and development, while keeping a tight rein on our expenses.
8
Total product sales for the first quarter 2003 were approximately $51,000
compared to approximately $59,000 in the prior quarter and approximately
$196,000 in the first quarter of 2002. While our sales were significantly less
compared to the same quarter last year, they were fairly consistent with the
prior quarter and were not unexpected.
Our gross profit margin of 84% remains consistently strong for the first quarter
2003 compared to 84% for all of 2002 and 82% for the same period a year ago. Our
SG&A expenses decreased to approximately $49,000 from approximately $72,000 in
the prior quarter and approximately $63,000 compared to the same quarter last
year. As we are better able to predict our sales due to our improved customer
communications, we are also better able to predict and control our operating
expenses. The decrease in our SG&A expenses results primarily from controlling
overhead costs.
Total other expenses decreased to approximately $5,000 for the first quarter
compared to approximately $44,000 for the same period in the prior year as a
result of our loss on disposal of equipment related to our former mushroom
extraction operation.
As a result of our decrease in sales, we recognize a net loss of approximately
$11,000 during the first quarter of 2003 compared to net income of approximately
$54,000 during the same period in 2002.
In 2003 we intend to utilize the CTD Website to emphasize the company's
unmatched knowledge of the emerging CD industry; we will be writing more about
how CTD's customers are using CD's and what evidence we have that major
industries have focused on CD's for products to soon be commercialized. We will
continue to identify new products and new uses for CD's. We intend to explore
even closer ties with our new European partner, Cyclolab; in 2003 management
intends to aggressively pursue an even more formal relationship that may include
ownership. Also in the year 2003, along with profitability, we intend to focus
on asset enhancement.
Forward-looking Statements
All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to update publicly
any forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties, including, but not limited to, the following:
demand for Cyclodextrin; changes in governmental laws and regulations
surrounding various matters, such as labeling disclosures; delays in the
development, production, testing and marketing of products; product margins and
customer product acceptance.
9
Item 6. Exhibits and Reports on Form 8-K
None.
(a) Exhibits
Exhibit Description Page
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession None
(4) Instruments defining the Rights of Security Holders None
(10) Material Contracts None
(11) Statement re: Computation of Per Share Earnings Note 2,
Financial
Statements
(15) Letter re: Unaudited Interim Financial Information None
(18) Letter re: Change in Accounting Principles None
(19) Report Furnished to Security Holders None
(22) Published Report re: Matters Submitted to Vote of
Security Holders None
(23) Consents of Experts and Counsel None
(24) Power of Attorney None
(27) Financial Data Schedule
(99) Additional Exhibits None
99.1 Certification of CFO and CEO
99.2 Section 1350 certification
(b) Reports on Form 8-K:
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CTD HOLDINGS, INC.
DATE
/s/ C.E. "Rick" Strattan
----------------------------- May 14, 2003
C.E. Rick Strattan, President
Chief Executive Officer,
Chief Operating Officer and
Chief Financial Officer
Exhibit 99.1
CERTIFICATION
OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
I, C.E. RICK STRATTAN, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of CTD HOLDINGS, INC.;
2. Based on my knowledge, this quarterly 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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. The registrant's other certifying officers and I are 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 us by others within those entities, particularly during the
period in which this quarterly 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
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
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. The registrant's other certifying officers and I have indicated in this
quarterly 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: May 14, 2003
______/s/____________________________________
C.E. RICK STRATTAN
Chief Executive Officer
Chief Financial Officer
Exhibit 99.2
CERTIFICATION PURSUANT TO
SECTION 1350, CHAPTER 63 OF TITLE 18
OF THE UNITED STATES CODE,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CTD Holdings, Inc. (the "Company") on
Form 10-QSB for the period ending March 31, 2003, as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, C.E. Rick
Strattan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002, that: (1) The Report fully complies with the requirements of Section 13
(a) or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.
___/s/________________________________
C.E. Rick Strattan
Chief Financial Officer
May 14, 2003