SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB/A
__X__ Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934 for the Quarterly Period Ended: March 31, 2004.
____ 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.
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 30, 2004, the Company had outstanding 7,384,207 shares of its common
stock.
Transitional Small Business Disclosure Format: No.
PART I: FINANCIAL INFORMATION
Item 1 Financial Statements
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(as restated)
(Unaudited)
ASSETS
March 31, 2004
--------------
(as restated)
CURRENT ASSETS
Cash and cash equivalents $ 106,354
Accounts receivable 47,327
Inventory 77,613
Deferred tax asset 25,000
Loan to shareholder 3,361
Prepaid Expenses 1,530
--------
Total current assets 261,185
--------
PROPERTY AND EQUIPMENT, NET 398,649
--------
OTHER
Intangibles, net 14,327
Deferred tax asset 200,000
--------
Total other assets 214,327
--------
TOTAL ASSETS $ 874,161
=========
(Continued)
F-2
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 2004
--------------
(as restated)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 62,111
Current portion of long-term debt 10,297
Current portion of stockholder loan 20,000
---------
Total current liabilities $ 92,408
---------
LONG-TERM LIABILITIES
Long-term debt, less current portion 158,154
Due to stockholder, less current portion 49,925
----------
Total long-term liabilities $ 208,079
----------
Common stock payable $ 18,000
----------
STOCKHOLDERS' EQUITY
Class A common stock, par value
$ .0001 per share, 100,000,000 shares
authorized, 5,891,220 shares
issued and outstanding 590
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 2,069,388
Accumulated deficit (1,514,304)
-----------
Total stockholders' equity 555,674
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 874,161
===========
See Accompanying Notes to Financial Statements.
F-3
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
-----------------------------
2004 2003
-------------- ------------
(as restated)
PRODUCT SALES $ 133,179 $ 50,547
COST OF PRODUCTS SOLD 23,365 7,923
----------- ---------
GROSS PROFIT 109,814 42,624
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 135,702 49,226
----------- ---------
INCOME (LOSS) FROM OPERATIONS (25,888) (6,602)
----------- ---------
OTHER INCOME (EXPENSE)
Investment and other income 1,719 2,101
Interest expense (3,193) (6,913)
----------- ---------
Total other (expense) (1,474) (4,812)
----------- ---------
NET INCOME (LOSS) BEFORE INCOME TAXES (27,362) (11,414)
INCOME TAXES - -
----------- ---------
NET INCOME (LOSS) (27,362) (11,414)
=========== =========
NET INCOME (LOSS) PER COMMON SHARE (.00) (.00)
=========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,798,912 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,
--------------------------
2004 2003
------------ ------------
(as restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (27,362) $(11,414)
------------ ------------
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 6,983 5,911
Stock issued for services 40,000 -
Decrease in accounts receivable 86,695 11,241
Decrease (Increase) in inventory 1,570 (5,118)
Increase in prepaid expenses (1,530) -
Increase in accounts payable and
accrued expenses 17,278 10,527
Increase in common stock payable 15,030 -
----------- -----------
Total adjustments (decrease) 166,026 22,561
----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 138,664 11,147
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment and building improvements (23,213) (8,250)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on notes payable (2,493) (2,881)
Payment on stockholder loan (11,000) (10,000)
Loan to shareholder (3,500) -
Received from shareholder 139 -
------------ ------------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (16,854) (12,881)
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 98,597 (9,984)
CASH AND CASH EQUIVALENTS, beginning of period 7,757 46,244
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 106,354 $ 36,260
============ ============
(Continued)
F-5
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Concluded)
Three Months Ended
March 31,
--------------------------
2004 2003
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 2,235 $ 4,248
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITY
Common stock issued under one year consulting
Contract $ 40,000 $ -0-
============ ============
See Accompanying Notes to Financial Statements.
F-6
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
The information presented herein as of March 31, 2004, and for the three months
ended March 31, 2004 and 2003, 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.
The Company restated its March 31, 2004 financial statements to write off
previously deferred consulting fees in the amount of $48,854 and to reflect the
restatement of its Form 10-KSB for the year ended December 31, 2003. As a
result, the reported net loss increased by $20,156 and there was no effect on
net loss per share for the three months ended March 31, 2004.
Operating results for the three month period ended March 31, 2004, are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004. 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, 2003.
(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,
2004 due to its net loss for the period.
4) CONCENTRATIONS
Sales to three major customers were 70% of total sales for the three months
ended March 31, 2004. Sales to two major customers were 58% of total sales for
the three months ended March 31, 2003.
Substantially all 2004 inventory purchases were from one vendor. Substantially
all 2003 inventory purchases were from three vendors.
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.
F-7
(5) EMPLOYMENT AGREEMENTS
The Company has employment agreements with two employees for total monthly
salaries of $4,900. In addition, the employees are issued the stock equivalent
of $6,000 each month computed based on eighty percent of the average bid and ask
price on the last day of the month for the Company's stock for the preceding
month. The stock is subject to trading restrictions under Rule 144.
Approximately 60,000 shares of common stock were due under these agreements at
March 31, 2004.
(6) CONSULTING AGREEMENT
In March 2004, the Company entered into a one-year agreement with a consultant
regarding 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. The stock was registered using Form S-8. The consultant is related to
the president and majority shareholder of the Company.
(7) SUBSEQUENT EVENTS
In April, 2004, the Company finalized the acquisition of a sports
card/memorabilia collection (Collection), from its President and major
shareholder, appraised at $400,000 by an independent authority engaged by the
consultant described below. The President agreed to accept $280,000 in
unregistered common stock of the Company valued at 80% of the average of the bid
and ask price at the end of the next full trading day; which is 1,029,412 shares
of common stock. The Company is currently evaluating the appropriate accounting
and financial reporting treatment of this transaction.
The Company also engaged a consultant to liquidate the Collection on a "best
efforts" basis.
The Company agreed to compensate the consultant, solely at its discretion, in
cash or common stock. The common stock would be registered on Form S-8. The
consultant would earn a minimum of $100,000 and could earn as much as $200,000
if sales quotas were met during the one-year term of the agreement. The
consultant has the option to purchase the Collection at any time during the term
of the agreement for $200,000. The consultant agreed to pay for the appraisal,
insurance required, and transportation costs; to liquidate at prices not less
than 75% of the values published in auction-house guidebooks and/or reputable
trade publications and price guides. The agreement also requires a detailed
itemization of transactions presented to the Company on a monthly basis.
The Company issued 250,627 shares of common stock to the consultant valued at
$100,000, based on the trading value of the stock. The stock was registered
using Form S-8 and the transaction recorded as a prepaid asset amortized over
the term of the agreement.
The consultant also obtained an option to acquire during the term of the
agreement 100,000 shares of the Company's stock at $.50/share. The option price
was more than the trading value of the underlying stock at issuance, therefore
no compensation expense will be recorded.
The Company also entered into a three-month agreement with a consultant
regarding capital raising and strategic options. The agreement automatically
renews for three-month successive terms unless canceled by either party with 30
days notice. The Company paid $15,000 upon entering the agreement and will pay
$3,500 per month, for each month the contract is in force. The Company is
required to pay 7.5% of any capital raised and 5% of any other non-financing
capital transaction to the consultant resulting within two years of the
introduction by the consultant.
F-8
Item 2. Management's Discussion and Analysis or Plan of OperationManagement
Discussion and Analysis Liquidity and Capital Resources
Our cash and cash equivalents increased to approximately $106,000 as of March
31, 2004 compared to approximately $8,000 as of December 31, 2003. This increase
was primarily due to the collection of a large sale from the fourth quarter of
2003.
As of March 31, 2004, our working capital was approximately $169,000 compared to
approximately $170,000 at year-end 2003 and only approximately $90,000 a year
ago. Working capital includes a $25,000 deferred tax asset.
Our cash flow from operations was approximately $139,000 compared to ($20,000)
for the previous quarter and $23,000 a year ago. This increase was due to
collections on previous quarter sales and noncash expenses in excess of the loss
reported for the period.
Controlling expenses is and will always be management's primary fiscal tool.
Since control also includes the application of expenditures, we feel that it is
appropriate during the current growth stage to engage consultants that can help
the Company in areas outside its expertise, knowing full well that these fees
will significantly impact our operating statement. We anticipate increases in
revenues to balance these new expenses, but cannot be sure that revenues will be
sufficient in the short term to sustain financial performance like that of the
past nine quarters.
During 2003, we began improvements and renovations of our corporate office and
have invested $66,000 through March 31, 2004. Another $25,000 will be incurred
during the remainder of 2004.
Three consulting agreements have been entered into since the beginning of 2004 -
one in March and two in April. Two of the consultancies will produce future
revenues should they result in acquisitions for the Company.
The third consultancy was entered into by the Company as part of a package
designed to create additional revenue for the Company. The package presented by
the President included a collection of sports cards and memorabilia appraised at
$400,000 and the consultant that would liquidate that collection for not less
than 75% of its book value or would purchase it for $200,000. The President
agreed to sell the collection to the Company at 70% of the appraised value and
negotiated a contract with the consultant. The President accepted unregistered
stock of the Company valued at $280,000 using a 20% discount from market value
(approximately 1,000,000 shares) and the consultant was paid $100,000 with stock
at market value (approximately 250,000 shares) registered using Form S-8. This
transaction is expected to start producing monthly revenue immediately.
It is unlikely that the revenue produced from the sales of the sports cards and
memorabilia will be sufficient to offset the the initial consulting expenses
incurred.
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. Management will also look for opportunities to create additional
revenue from underutilized assets. Our product sales are primarily to large
pharmaceutical and chemical supply companies for research and development
purposes. To manage this unpredictability, we maintain a constant line of
communication with our major customers and their related Cyclodextrin research
and development, while monitoring closely our expenses.
Total product sales for the first quarter 2004 were approximately $133,000
compared to approximately $169,000 in the prior quarter and approximately
$51,000 in the first quarter of 2003. While our sales were significantly greater
compared to the same quarter last year, they benefited greatly from the momentum
created by the record sales of the previous quarter.
Our gross profit margin of 82% remains consistently strong for the first quarter
2004 compared to 88% for all of 2003 and 84% for the same period a year ago. Our
SG&A expenses increased to approximately $134,000 from approximately $122,000 in
the prior quarter, but increased greatly compared to the approximately $49,000
for the same period a year ago. The substantial increase from the year before
can be accounted for in large part by the increased expenses associated with
greater attention to the Company's PR/IR requirements ($40,000), increased
professional fees and travel expenses ($9,000) associated with
merger/acquisition activities, and non-cash increases in Officers' salaries
($18,000). As we become better able to predict our sales due to diversification
of revenue sources, we will be better able to predict and control our operating
expenses. The decrease in our SG&A expenses from the prior quarter resulted
primarily from a slight reduction of overhead costs.
As a result of the explained increase in our SG&A expenses, we recognized a net
loss of approximately $27,000, compared to an $11,000 net loss during the same
period in 2003.
In 2004 we will continue to utilize the CTD Website to emphasize the company's
unmatched knowledge of the emerging CD industry; in it we will be explaining
more about how CTD's customers are using CD's and what evidence we have that
major industries have focused on CD's because of their great commercial
diversity. We will continue to identify new products and new uses for CD's. We
intend to explore even closer ties with our European partner, Cyclolab; in 2004
management intends to aggressively pursue an even more formal relationship that
may include ownership. In 2004 we intend to focus on asset enhancement through
merger and acquisition strategies.
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.
Item 3. Controls And Procedures
(a) Evaluation of disclosure controls and procedures.
The Company's principal executive officer and principal financial officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Exchange Act Rule 13a-14(c)) within 90 days prior to the filing
of this report, has concluded that, based on such evaluation, the Company's
disclosure controls and procedures were adequate and effective to ensure that
material information relating to the Company, including its consolidated
subsidiaries, was made known to them by others within those entities,
particularly during the period in which this Quarterly Report on Form 10-QSB was
being prepared. Changes in Internal Controls. There were no significant changes
in the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, nor were there
any significant deficiencies or material weaknesses in the Company's internal
controls. Accordingly, no corrective actions were required or undertaken.
(b) Changes in internal controls.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
their evaluation, nor were there any significant deficiencies or material
weaknesses in the Company's internal controls. Accordingly, no corrective
actions were required or undertaken.
Item 6. Exhibits and Reports on Form 8-K
(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 *
* Filed Herewith
(b) Reports on Form 8-K:
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this Amendment No. 1 of the Quarterly Report on Form 10-QSB for the
period ending March 31, 2004, to be signed on its behalf by the undersigned,
thereunto duly authorized.
CTD HOLDINGS, INC.
Date: August 19, 2004 By: /s/ C. E. RICK STRATTAN
-------------------------------
C. E. RICK STRATTAN
President, Chief Executive Officer
Chief Financial Officer