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: June 30, 2005.
____ Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the Transition Period From ____ to ____
Commission file number: 0-24930
CTD HOLDINGS, INC.
(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
As of August 3, 2005, the Company had outstanding 11,169,465 shares of its
common stock.
Transitional Small Business Disclosure Format: No.
PART I: Financial Information
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
ASSETS
June 30, 2005
--------------
CURRENT ASSETS
Cash and cash equivalents $ 48,161
Certificate of deposit 129,478
Accounts receivable 39,506
Inventory 56,635
Deferred tax asset 25,000
Loan to shareholder 404
--------
Total current assets 299,184
--------
PROPERTY AND EQUIPMENT, NET 438,445
--------
OTHER
Intangibles, net 12,081
Deferred tax asset 200,000
Sports memorabilia collection 92,402
--------
Total other assets 304,483
--------
TOTAL ASSETS $ 1,042,112
=========
(Continued)
F-1
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2005
--------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 13,971
Current portion of long-term debt 8,441
Stockholder loan 33,748
---------
Total current liabilities 56,160
---------
LONG-TERM LIABILITIES
Long-term debt, less current portion 149,010
----------
STOCKHOLDERS' EQUITY
Class A common stock, par value $.0001
per share, 100,000,000 shares authorized,
11,615,446 shares issued and outstanding 1,162
Preferred stock, par value $.0001 per share,
5,000,000 shares authorized; series A, 1 share
issued and outstanding (See Note 5) -
Additional paid-in capital 2,662,222
Accumulated deficit (1,826,442)
-----------
Total stockholders' equity 836,942
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,042,112
===========
See Accompanying Notes to Financial Statements.
F-2
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ---------- ----------- ----------
PRODUCT SALES $ 135,656 $ 120,250 $ 254,200 $ 253,429
COST OF PRODUCTS SOLD 11,994 12,257 29,468 35,622
----------- ---------- ----------- ----------
GROSS PROFIT 123,662 107,993 224,732 217,807
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 104,610 95,497 210,025 231,199
----------- ---------- ----------- ----------
SPORTS MEMORABILIA COLLECTION
Gain on sales - - 2,902 -
Other income - - 203,470 -
Expenses - (311,250) - (311,250)
----------- ---------- ----------- ----------
- (311,250) 206,372 (311,250)
----------- ---------- ----------- ----------
OTHER INCOME (EXPENSE)
Investment and other income 6,541 2,434 7,859 4,153
Interest expense (4,075) (3,336) (6,945) (6,529)
----------- ---------- ----------- ----------
Total other income
(expense) 2,466 (902) 914 (2,376)
----------- ---------- ----------- ----------
NET INCOME (LOSS) BEFORE
INCOME TAXES 21,518 (299,656) 221,993 (327,018)
Income Taxes - - - -
----------- ---------- ----------- ----------
NET INCOME (LOSS) $ 21,518 $ (299,656) $ 221,993 $ (327,018)
=========== ========== =========== ==========
NET INCOME PER COMMON SHARE
Net income per share $ .00 $ (.04) $ .02 $ (.05)
=========== ========== =========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,454,731 7,173,648 11,346,100 6,501,024
=========== ========== =========== ==========
See Accompanying Notes to Financial Statements
F-3
CTD HOLDINGS,INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Six Months Ended
June 30,
------------------------
2005 2004
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 221,993 $ (327,018)
---------- ----------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 15,900 13,941
Gain on sales of sports memorabilia
collection (2,902) -
Stock awarded to employees 47,000 30,060
Gain on expiration of option - sports
memorabilia collection (203,470) -
Stock issued for services - 140,250
Call option-sports memorabilia collection - 207,000
Fair value of stock options issued - 4,000
Increase or decrease in:
Accounts receivable 19,516 43,774
Inventory (5,636) 6,638
Other current assets - (1,530)
Accounts payable and accrued expenses (9,869) (3,222)
---------- ---------
Total adjustments (139,461) 440,911
---------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 82,532 113,893
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment and building improvements (22,382) (33,719)
Purchase of certificate of deposit (89,145) -
Proceeds from sale of collection 4,545 -
---------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (106,982) (33,719)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term debt (3,590) (5,020)
Net proceeds (payments) on loan payable
to stockholder (19,850) (22,690)
Loan to shareholder - (3,500)
Received from shareholder 1,680 559
---------- ---------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (21,760) (30,651)
---------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (46,210) 49,523
F-4
CTD HOLDING, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
(Concluded)
Six Months Ended
June 30,
--------------------------
2005 2004
---------- ----------
CASH AND CASH EQUIVALENTS, beginning of period 94,371 7,757
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 48,161 $ 57,280
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
Cash paid for interest $ 4,075 $ 4,819
========== ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Common stock awarded to officers $ 47,000 $ 36,000
========== ==========
Stock issued in acquisition of sports
memorabilia collection $ - $ 106,000
========== ==========
Common stock issued for consulting services $ - $ 40,000
========== ==========
Common stock issued in connection with
liquidation of sports memorabilia collection $ - $ 100,250
========== ==========
See Accompanying Notes to Financial Statements
F-5
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2005
(Unaudited)
The information presented herein as of June 30, 2005, and for the three and six
months ended June 30, 2005 and 2004, 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 and six month periods ended June 30, 2005, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2005. 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, 2004.
(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
For 2005, no income tax expense or benefit was reported for the three and six
month periods ended June 30, 2005 due to its realizing a tax loss for the
periods. The gain recognized by the Company on the expiration of the call option
on the Sports Memorabilia Collection is not taxable for income tax purposes. The
Company increased its deferred tax asset valuation allowance for the increase in
the deferred tax asset as a result of its tax loss.
For 2004, no income tax expense or benefit was reported for the three and six
month periods ended June 30, 2004 due to its net loss for the periods. The
expense recognized by the Company on the issuance of the call option on the
Sports Memorabilia Collection is not deductible for income tax purposes. The
Company increased its deferred tax asset valuation allowance for the increase in
the deferred tax asset as a result of its tax loss.
F-6
(4) CONCENTRATIONS
Sales to four major customers were 74% of total sales for the three months ended
June 30, 2005. Sales to three major customers were 58% of total sales for the
three months ended June 30, 2004.
Substantially all 2005 inventory purchases were from two vendors. Substantially
all 2004 inventory purchases were from one vendor.
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.
(5) COMMITMENTS AND CONTINGENCIES
The Company has employment agreements with two officers for total monthly
salaries of $4,900. In addition, the officers are awarded shares of common stock
each month. The number of shares is equal to $6,000 divided by eighty percent of
the closing price of the Company's common stock on the last day of each month.
The Company recognizes an expense equal to the fair value of the stock
determined using the average stock closing trading price for the month
multiplied by number of shares awarded for that month. The stock is subject to
trading restrictions under Rule 144. For the six months ended June 30, 2005 and
2004, the Company awarded approximately 659,000 and 183,000 shares,
respectively, and recognized an expense of $47,000 and $36,000, respectively for
stock awarded under these agreements. The stock awarded under these agreements
is presented as outstanding in the accompanying financial statements. Both
agreements expire December 31, 2005.
In December 2004, the Company issued 3,500,000 shares of its common stock for
$3,500 to a financial consultant. The Company has agreed to register the stock
by filing a registration statement by June 19, 2005 with an effective date no
later than August 19, 2005. If the registration is not filed and effective by
the dates indicated, the Company is required to issue an additional 175,000
shares of common stock for each month or part thereof until the registration
statement is filed or becomes effective. By mutual agreement with the financial
consultant, the Company's obligations under this agreement were suspended.
The Company entered into an agreement with two financial consultants in May
2004. The Company issued 343,137 shares of common stock registered under Form
S-8 to the consultants under terms of the agreement and charged expense for
$17,157 the fair value of the stock for the three and six months ended June 30,
2004.
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 in the first quarter of 2004. The stock was registered using Form S-8.
The consultant is related to the president and majority shareholder of the
Company.
F-7
The Company is required to pay a consultant 7.5% of any capital raised and 5% of
any other capital transaction resulting within two years of the introduction by
the consultant. No amounts have been paid or are due at June 30, 2005.
The Company's Series A Preferred Stock has significant rights including the
right to vote together with the holders of the common stock on all matters
submitted to a vote of Company shareholders, with the share of Series A
Preferred Stock being entitled to one vote more than one-half of all votes
entitled to be cast by all holders of voting capital stock of CTD Holding on any
matter submitted to common shareholders so as to ensure that the votes entitled
to be cast by the holder of the Series A Preferred Stock are equal to at least a
majority of the total of all votes entitled to be cast by the common
shareholders. Each Series A Preferred Stock share has a liquidation preference
of $.0001. There is one share of the Series A Preferred Stock outstanding.
(6) ACQUISTION OF SPORTS MEMORABILIA COLLECTION
In April, 2004, the Company finalized the acquisition of a sports memorabilia
collection (Collection), from its President and major shareholder. The
Collection was appraised at $400,000. The President was issued 1,029,412 shares
of unregistered common stock of the Company for the Collection. The number of
shares was determined using 70% of the appraised value ($280,000) divided by 80%
of the average of the bid and ask price for the Company's stock on April 14,
2004. Since the acquisition of the Collection was from the Company's President
and controlling shareholder, the Company recorded the Collection at $106,000,
which was the acquisition cost basis of the President and controlling
shareholder.
The Company records sales of the Collection as gains or losses from operations
as Collection pieces are sold.
Concurrent with the acquisition of the Collection, the Company entered into a
one-year contract with a consultant to liquidate the Collection on a "best
efforts" basis. The Company issued the consultant 250,627 shares of common stock
registered on Form S-8 valued at $100,250 on the date the contract was executed.
The Company expensed the $100,250 for the three and six months ended June 30,
2004. This contract expired in March 2005, and the unsold portion of the
Collection was returned to the Company. The Company is currently exploring its
options to continue its liquidation of the Collection.
The consultant had the option to purchase the Collection at any time during the
term of the agreement for $200,000 less any sale proceeds already paid to the
Company. The Company computed the fair value of this call option using the
Black-Scholes stock option pricing model. The following assumptions were made in
estimating fair value: risk-free interest rate of 3.5%; no dividend yield;
expected life of one year. The fair value calculated resulting from the issuance
of this option was recorded as a liability and the expense was charged to
operations. The amount charged to expense for the three and six month periods
ended June 30, 2004 was $207,000. The Company recalculated the fair value of the
option at the end of each reporting period and recognized any change through
operations and adjusted its liability accordingly. The option expired in March
2005, and the Company recorded the expiration of the option liability as a
$203,470 gain in the first quarter of 2005.
The consultant was issued an option to acquire 100,000 shares of the Company's
stock at $.50/share during the one-year term of the agreement. The Company
F-8
follows SFAS 123 in accounting for stock options issued to nonemployees. The
fair value of each option granted is estimated using the Black-Scholes stock
option pricing model. The following assumptions were made in estimating fair
value: risk-free interest rate of 3.5%; no dividend yield; expected life of one
year; standard deviation of historical stock returns 44.03%. The fair value
calculated resulting from the issuance of this option was determined to be
$4,000, which was expensed for the three and six month periods ended June 30,
2004.
The Company recorded gross receipts of $4,545 from sales of the Collection for
the six months ended June 30, 2005. There were no sales for the six months ended
June 30, 2004.
F-9
Item 2. Management's Discussion and Analysis or Plan of Operation
Introduction
CTD Holdings, Inc. (referred to as the "Company," "CTD," or in the first person
notations of "we," "us," and "our") began operations in 1990. Our revenues are
principally derived from the retail sales of cyclodextrins and cyclodextrin
complexes. Our sales are primarily to major chemical supply houses around the
world, pharmaceutical companies, and food companies for research and development
and to diagnostics companies. We acquire our products principally from outside
the United States, largely from Japan and Hungary, but are gradually finding
satisfactory supply sources in the United States. While we enjoy better supply
prices from outside the United States, rising shipping costs are making domestic
sources more competitively priced. To add value to our products, we maintain a
comprehensive database of patented and patent pending uses of cyclodextrins from
the United States. We also maintain a less comprehensive database that includes
patents issued in many other countries including Japan and Germany. This
information is available to our customers. We also offer our customers our
knowledge of the properties and potential new uses of cyclodextrins and
complexes.
As most of our customers use our cyclodextrin products in their research and
development activities, their ordering from us is unpredictable with regard to
timing, product mix and volume. We also have four major customers who have a
significant effect on our revenues when they increase or decrease their research
and development activities that use cyclodextrins. We keep in constant contact
with these customers as to their cyclodextrin needs so we can maintain the
proper inventory composition and quantity in anticipation of their needs. The
sales to major customers and the product mix and volume of products sold has a
significant effect on our revenues and gross profit. These factors contribute to
our significant revenue volatility from quarter to quarter and year to year.
Liquidity and Capital Resources
Our cash and certificate of deposit increased to $178,000 as of June 30, 2005
from $94,000 at December 31, 2004 compared to $57,000 as of June 30, 2004. Our
cash flows from operations was $82,000 and $113,893 for the six months ended
June 30, 2005 and 2004, respectively. Our cash increase is due to normal
operations.
As of June 30, 2005, our working capital was $243,000 compared to $16,000 at
December 31, 2004 and ($30,000) at June 30, 2004. Our increase in working
capital from June 30, 2004 is due to the expiration of a $200,000 call option
liability in March 2005 and continued profitability.
We believe our working capital is sufficient to run our operations at current
expected future operating levels into the near future. We do not require capital
in the next twelve months for normal operations. However, we require additional
funding to implement our acquisition strategy. Our acquisition strategy includes
raising $1,500,000 in the next twelve months. Our first acquisition will require
approximately $500,000. We believe we can fund the initial costs of raising
capital and start our acquisition strategy from existing working capital.
Controlling cash expenses continues to be management's primary fiscal tool.
However, growth requires increased expenditures and we feel that it is
appropriate during the current growth stage to engage consultants that can help
the Company in financial areas outside its expertise, accepting that these fees
will act to reduce profitability. We are working hard to increase revenues to
balance these new expenses, but cannot be sure that such effort will be enough
in the short term to sustain profitable financial performance. Our cash SG&A
expenses for 2005, as a percentage of sales, have decreased from 2004.
During 2004, we acquired a sports memorabilia collection from our President. We
obtained an appraisal on the collection for $400,000. We also engaged a third
party consultant to liquidate the Collection, which has provided us with
additional cash flow with minimal associated cash expenses. During March 2005,
this agreement expired. We are currently exploring options to continue to
liquidate the Collection, but there are no assurances we will be able to
successfully or profitably do so.
During 2003, we began improvements and renovations of our corporate office and
have invested $145,000 through June 30, 2005. We are committed to a Research
Park facility for the 40-acre site. Contingent on the Company's ability to
financially support modest expansions that will lead to a formal site plan; we
anticipate spending at least another $100,000 over the next four quarters to put
the Company in a position to initiate a 5-year plan for a new Cyclodextrin
Research Park.
In December 2004, the Company issued 3,500,000 shares of its common stock for
$3,500 to a financial consultant. We recognized an expense of $206,500, which is
the difference between the amount paid and the fair value of the stock issued
based on the trading price on the date of the stock purchase. We have agreed to
register the stock by filing a registration statement by June 19, 2005 with an
effective date no later than August 19, 2005. If the registration is not filed
and effective by the dated indicated, the Company is required to issue an
additional 175,000 shares of common stock for each month or part thereof until
the registration statement is filed or becomes effective. By mutual agreement
with the financial consultant, the Company's obligations under this agreement
were suspended.
We have filed Form S-1 with the U.S. Securities and Exchange Commission for a
shelf registration of 10,000,000 shares of common stock to be used for business
acquisition purposes. We are currently evaluating our options to determine
whether or not to proceed with this filing.
We have no off-balance sheet arrangements as of June 30, 2005.
Results of Operations
Total product sales for the second quarter 2005 were $136,000 compared to
$120,000 in the second quarter of 2004. Our major customers continue to be
repeat purchasers. In 2004, three of our major customers accounted for 70% of
our sales. So far in 2005, these customers are purchasing at approximately the
same annualized rate.
Our gross profit margin of 91% remains consistently strong for the second
quarter 2005 compared to 85% for the first quarter of 2005. A change in the
product mix of sales has a significant effect on our overall gross profit
percentage, but management expects our gross profit to remain in the 80% range.
Our SG&A expenses were the same ($105,000) for the first two quarters of 2005
compared to $95,000 for the second quarter of 2004. This increase is due
primarily to professional fees in 2005 related to preparing a registration
statement filed with the SEC.
In April 2004, we acquired a collection of sports memorabilia from our majority
shareholder and President. We also engaged a consultant to liquidate the
collection. This agreement expired in March 2005. For the three months ended
March 31, 2005, we recognized a gain on sale of Collection items of $3,000 and
recognized a $200,000 gain on the expiration of a call option liability
previously issued to the consultant. There were no gains or losses recognized in
the quarters ended June 30, 2005 or 2004. We are currently exploring our options
to continue to liquidate the Collection, but there are no assurances we will be
able to successfully or profitably do so.
We expect significant increases in future legal and accounting fees as the
result of implementing our planned merger and acquisition strategy.
We recognized net income of $22,000 for the three months ended June 30, 2005
compared to a net loss of ($300,000) for the three months ended June 30, 2004.
We will continue to introduce new products that will increase sales revenue and
implement a strategy of creating or acquiring operational affiliates and/or
subsidiaries that will use CD's in herbal medicines, waste-water remediation,
pharmaceuticals, and foods. We also intend to pursue exclusive relationships
with major CD manufacturer(s) and specialty CD labs to distribute their
products. We continue to be the exclusive distributor in North America of the CD
products manufactured by Cyclolab Research Laboratories in Budapest, Hungary.
In keeping with its commitment to use the internet as a major advertising and
public relations outlet, the Company continues to maintain its web site. This
asset has been instrumental in creating and maintaining a worldwide leadership
role for us in the implementation of research and commercialization of CD
applications. We believe that the maintenance and growth of our web site will
return that investment many times.
Forward-looking Statements
All statements other than statements of historical fact in this report are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, and are based on management's current expectations of the
Company's near term results, based on current information available and
pertaining to the Company. The Company assumes no obligation to update publicly
any forward-looking statements. Actual results may differ materially from those
projected in the forward-looking statements. These forward-looking statements
involve risks and uncertainties, including, but not limited to, the following:
demand for Cyclodextrin; 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 management, recognizes its responsibility for establishing and
maintaining internal control over financial reporting for the Company. After
evaluating the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as
of June 30, 2005 (the "Evaluation Date"), the Company's management has
concluded, as of the Evaluation Date, the Company's disclosure controls and
procedures were adequate and designed to ensure the information required to be
disclosed in the reports filed or submitted by us under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported with in the
requisite time periods. The Company's management acknowledges a material
weakness exists in its controls and procedures, in that i) the accountant
employed by the Company, while a third year student pursuing a degree in
accounting at the University of Florida has no training regarding financial
reporting and presentation rules and regulations of the SEC; and ii) the
Company's President/CEO, who oversees all the accountants' work and provides all
internal control functions, while possessing a MBA from the University of
Florida, has no training in matters of accounting, financial reporting, or
presentation rules and regulations of the SEC.
(b) Effectiveness of Internal Control
The Company's management is reviewing the Company's internal controls over
financial reporting to determine the most suitable recognized control framework.
The Company will give great weight and deference to the product of the
discussions of the SEC's Advisory Committee on Smaller Public Companies (the
"Advisory Committee") and the Committee of Sponsoring Organizations' task force
entitled Implementing the COSO Control Framework in Smaller Businesses (the
"Task Force"). Both the Advisory Committee and the Task Force are expected to
provide practical, needed guidance regarding the applicability of Section 404 of
the Sarbanes-Oxley Act to small business issuers. The Company's management
intends to perform the evaluation required by Section 404 of the Sarbanes-Oxley
Act at such time as a framework is adopted by the Company. For the same reason,
the Company's registered accounting firm has not issued an "attestation report"
on the Company management's assessment of internal controls. The Company's
management acknowledges a material weakness exists in its controls and
procedures, in that i) the accountant employed by the Company, while a third
year student pursuing a degree in accounting at the University of Florida has no
training regarding financial reporting and presentation rules and regulations of
the SEC; and ii) the Company's President/CEO, who oversees all the accountants'
work and provides all internal control functions, while possessing a MBA from
the University of Florida, has no training in matters of accounting, financial
reporting, or presentation rules and regulations of the SEC.
(c) Changes in internal controls.
After evaluation by the Company's management, the Company's management has
determined there were no significant changes in the Company's internal controls
or in other factors that could significantly affect the Company's internal
controls subsequent to the Evaluation Date.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.
NONE
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Description Page
----------- ----
(2) Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession None
(3-i) Articles of Incorporation **
(3-ii) Bylaws **
(4) Instruments defining the Rights of Security Holders None
(10) Material Contracts
(11) Statement re: Computation of Per Share Earnings Note 2,
Financial
Statements
(15) Letter re: Unaudited Interim Financial Information None
(16) Letter on Change in Certifying Accountant ***
(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
(31) Certification of Chief Executive
Officer and Chief Financial Officer *
(32) Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 *
(99) Additional Exhibits None
* Filed herewith.
** Incorporated by reference to the Company's Form 10-SB filed with the
Securities and Exchange Commission on February 1, 1994.
*** Filed as an Exhibit to the Company's Form 8-K filed with the Securities
and Exchange Commission on July 20, 2005.
(b) Reports on Form 8-K:
Item 4.01 on Form 8-K: Changes In Registrant's Certifying Accountant.
A letter on change in certifying accountant was filed as an Exhibit to the
Company's Form 8-K filed with the Securities and Exchange Commission on July
20, 2005. (See Exhibit 16, herein).
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.
/s/ C.E. "Rick" Strattan Date: August 5, 2005
-----------------------------
C.E. Rick Strattan, President
Chief Executive Officer,
Chief Operating Officer and
Chief Financial Officer