10QSB 1 ctd10qsb12001.txt CTD 10QSB 1ST QTR 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, 2001. ____ 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. f/k/a Cyclodextrin Technologies Development, 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.) 3713 S.W. 42nd Avenue, Suite 3, Gainesville, Florida, 32608-6581 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 352-375-6822 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 11, 2001, the Company had 4,204,168 outstanding shares of its common stock. Transitional Small Business Disclosure Format (Check One): No. F-1 PART I: Financial Information CTD HOLDINGS, INC. CONSOLIDATED BALANCE SHEET (Unaudited)
ASSETS March 31, 2001 -------------- CURRENT ASSETS Cash and cash equivalents $ 11,252 Accounts receivable 42,072 Inventory 50,944 Notes receivable 17,681 Other current assets 428 -------- Total current assets 122,377 -------- Property and equipment, net 409,646 -------- OTHER ASSETS Intangibles, net 24,452 -------- TOTAL ASSETS $ 556,475 =========
(Continued) F-2 CTD HOLDINGS, INC. CONSOLIDATED BALANCE SHEET (Unaudited) (Concluded)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, 2001 -------------- CURRENT LIABILITIES Accounts payable and accrued expenses $ 201,867 Current portion of long-term debt 19,407 Line of credit 23,161 Due to shareholder 79,047 --------- Total current liabilities $ 323,482 --------- Long-term debt, less current portion 172,139 --------- STOCKHOLDERS' EQUITY Class A common stock, par value $.0001 per share, 9,900,000 shares authorized, 3,991,220 shares issued and outstanding 399 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 1,898,503 Accumulated deficit (1,838,048) ----------- Total stockholders' equity 60,854 ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 556,475 ==========
See Accompanying Notes to Financial Statements. F-3 CTD HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, ----------------------------- 2001 2000 -------------- ------------ PRODUCT SALES $ 92,182 $ 181,549 COST OF PRODUCTS SOLD 16,105 52,209 ---------- ---------- GROSS PROFIT 76,077 129,340 CONSULTING SERVICES AND OTHER OPERATING REVENUE - 200 -------- --------- TOTAL OPERATING REVENUE 76,077 129,540 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 91,940 143,183 ---------- --------- LOSS FROM OPERATIONS (15,863) (13,643) ---------- --------- OTHER INCOME (EXPENSE) Investment and other income (loss) 2,353 80 Interest expense (14,148) (6,288) --------- --------- Total other income (expense) (11,795) (6,208) --------- --------- NET LOSS (27,658) (19,851) ========= ========= NET LOSS PER COMMON SHARE $ (.01) $ (.01) ========= ========= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 3,991,220 3,481,154 ========== ==========
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, -------------------------- 2001 2000 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (27,658) $ (19,851) ------------ ------------ Adjustments to reconcile net loss to net cash used for operating activities: Depreciation and amortization 8,711 5,181 (Increase)in accounts receivable (33,347) (111,166) Decrease in inventory 5,374 18,060 Decrease in other current assets 6,670 3,501 Increase in accounts payable and accrued expenses 19,449 47,558 --------- ---------- Total adjustments 6,857 (36,866) ---------- ---------- NET CASH USED FOR OPERATING ACTIVITIES (20,801) (56,717) --------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of equipment and leasehold improvements - (22,746) Repayment of employee loan 2,463 7,257 ---------- ---------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 2,463 (15,489) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Borrowing (Payment) on line-of-credit (2,031) 12,190 Payment on notes payable (6,697) (5,367) Repayment from stockholder on loan (21,628) (6,729) ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 12,900 94 ------------ ------------ NET DECREASE IN CASH AND CASH EQUIVALENTS (5,438) (72,112) CASH AND CASH EQUIVALENTS, beginning of period 16,690 73,425 ------------ ------------ CASH AND CASH EQUIVALENTS, end of period $ 11,252 $ 1,313 ============ ============
(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, -------------------------- 2001 2000 ------------ ------------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for interest $ 7,638 $ 6,288 ============ ============ SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES 2001 2000 ---------- ----------- Stock issued to officer in satisfaction of bonus accrued $ - $ 7,800 =========== =========== Stock issued to consultant for prepaid public relations services $ - $ 40,000 =========== =========== Stock issued for rights to intellectual property $ - $ 10,000 =========== ===========
See Accompanying Notes to Financial Statements. F-6 CTD HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (Unaudited) The information presented herein as of March 31, 2001, and for the three months ended March 31, 2001 and 2000, 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, 2001, are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. 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, 2000. (2) GOING CONCERN: As shown in the accompanying financial statements, the Company incurred a net loss of ($27,658) during the three months ended March 31, 2001, and as of that date, the Company's current liabilities exceeded its current assets by $201,105. Those factors, create an uncertainty about the Company's ability to continue as a going concern. Management of the Company is reducing expenses and attempting to increase revenues to return the Company to a profitable position. Additionally, management is working with creditors to work out agreeable payment plans, until the cash flow position improves. The ability of the Company to continue as a going concern is dependent on the Company achieving these plans. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. (3) NET LOSS PER COMMON SHARE: Net 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 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. F-7 CTD HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (Unaudited) (Concluded) (4) SEGMENTS: The Company has two segments, Cyclodextrin products and mushroom products. Information specific to these two segments follows: Three Months Ended March 31, --------------------------------------------------------------- 2001 2000 ----------------------------- -------------------------------- Cyclodextrins Mushrooms Cyclodextrins Mushrooms ------------- --------- ------------- --------- Sales $ 88,040 $ 4,142 $ 174,149 $ 7,400 Income (loss) from operations $ (5,644) $(22,014) $ 61,149 $ (81,000) March 31, 2001 ------------------- Cyclodextrins Mushrooms ------------- --------- Total assets $ 489,036 $ 67,439 F-8 Item 2. Management Discussion and Analysis or Plan of Operation (MD&A) Management Discussion & Analysis As of 3/31/01 CTD Holdings, Inc. Management Discussion and Analysis Liquidity and Capital Resources As of March 31, 2001, the Company's working capital was ($201,105) compared to $115,854 a year ago and ($128,750) at December 31, 2000. Working capital continued to decrease as a result of continued losses in the first quarter ($34,188), to about half the loss for the fourth quarter, 2000 ($67,173). Reduction in quarterly losses should continue through the second quarter, with operational profitability achieved in the third or fourth quarter. By enforcing stringent expense reduction policies and concentrating on sales of cyclodextrins by CTDI, management expects liquidity to improve and provide sufficient profitability to improve the Company's working capital by the end of the second quarter. The Company has put on hold until the 3rd quarter a plan with a University of Florida investigator to identify and quantify the content of ajoene and eritadenine (two anti-cholesterol agents) in its shiitake mushrooms based on the findings from its preliminary studies with that same investigator of shiitake mushroom extracts. The Company is in the final year of a two year extension of its lease for its existing 3000 square - foot office and lab facility. Rent for the space remains at just under $2000 per month. The Company has begun to transfer its laboratory facility into its own building and expects to have that move completed by the end of June, 2001. The office will be moved before the November lease end. In keeping with its commitment to use the internet as its major advertising and public relations outlet, the Company has entered into an agreement with its current, local ISP and web site managing Company, Livewire, to significantly upgrade its current web site. The Company has created an asset of $30,000 for this upgrade, which includes substantial cosmetic and operational alterations and expansion of the revenue producing databases. The upgraded site became "live" in late October replacing the old site. As a result of this upgrade, the Company has been enjoying revenue of approximately $1000 per month during 2001. Results of Operations Sales of cyclodextrin and related manufactured complexes are historically highly volatile. In efforts to offset this volatility, the Company continues to expand its revenue producing activities in CD related research and development services for unrelated companies and expand its line of manufactured products. During the last quarter of 2000, the Company reduced operations at NSME to maintenance only. The Company expects to return the NSME operations to approximately 25% of its previous levels in the 3rd quarter of 2001. Total product sales increased ($92,182 from $71,460) from the 4th quarter, 2000, to the 1st quarter, 2001, but on an annualized basis, 2001 sales should be as good as 2000's sales ($347,200). The Company has reduced its NSME operation to maintenance status and will focus on the cyclodextrin (CTD Inc.) operations. CTDI's product sales for the first quarter ($88,040) were approximately half the same value for the first quarter of 2000, but approximately equal on an annualized basis to the total sales for 2000 ($347,000). Again, the great volatility on a quarter to quarter basis from year to year makes such comparisons difficult to interpret. The Company's SG&A expenses were about the same ($98,470) as those of the fourth quarter, 2000 ($95,906) but much reduced from the SG&A expenses ($143,183) of the same quarter in 2000. The slight increase in the SG&A expenses from the previous quarter was caused by the normal first quarter increases in professional fees. The comparison of these expenses for the same period last year ($98,470 vs. $143,183) is a much better indicator of management's aggressive action to reduce expenses. With the greatly reduced expenses implemented for 2001, management expects to attain a better financial condition by June and certainly by the fourth quarter assuming a conservative annual sales rate of $250,000. Product sales of CTD are primarily to large pharmaceutical and food companies for research and development purposes. Sales of both products and services continue to be concentrated among a few large customers. Even with a substantial reduction in sales to its largest customer, seen in the first quarter, the Company continues to produce adequate revenue to support its trimmed down operations. With the reduction in the operational activities of the NSME subsidiary, the Company's gross profit margin (GPM) has returned to its more normal 80 % range (82.5% in first quarter, 2001) from the 56.5% reported in the fourth quarter, 2000. The Company will continue to introduce new products through its subsidiaries that will enhance profitability; and it will continue to implement its strategy of creating or acquiring operational affiliates and/or additional subsidiaries that will use CD's in herbal medicines, waste-water remediation, pharmaceuticals, and foods. PART II: Other Information Item 2. Changes in Securities and Use of Proceeds None. 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 3, 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 (b) Reports on Form 8-K: None * Filed Herewith 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. Dated: April 30 2001 /s/ C. E. RICK STRATTAN ----------------------- C. E. RICK STRATTAN President, Chief Executive Officer, Chief Financial Officer