10QSB 1 ctd10qs6302003.txt CTD HOLDINGS 2QTR 2003 10QSB 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, 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 June 30, 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 Item 1 Financial Statements (unaudited) CTD HOLDINGS,INC. CONSOLIDATED BALANCE SHEET (Unaudited)
ASSETS June 30, 2003 ------------- CURRENT ASSETS Cash and cash equivalents $ 50,691 Accounts receivable 8,835 Inventory 68,608 ------------ Total current assets 128,134 PROPERTY AND EQUIPMENT, Net 357,290 INTANGIBLES 3,089 OTHER ASSETS 4,854 ----------- TOTAL ASSETS $ 493,367 ===========
(Continued) F-1 CTD HOLDINGS, INC. CONSOLIDATED BALANCE SHEET (unaudited) (Concluded)
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, 2003 ----------- CURRENT LIABILITIES Accounts payable and accrued expenses $ 18,046 Current portion of long-term debt 11,948 Current portion of shareholder loan 10,000 ----------- Total current liabilities 39,994 ----------- Long-term Liabilities Long-term debt, less current portion 158,803 Stockholder loan, less current portion 89,081 ----------- Total long-term liability 247,884 ----------- STOCKHOLDERS' EQUITY Class A common stock, par value $ .0001 per share, 9,900,000 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 (1,749,489) ----------- Total stockholders' equity 205,489 ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 493,367 ===========
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, ----------------------- ----------------------- 2003 2002 2003 2002 ----------- ---------- ----------- ---------- PRODUCT SALES $ 89,482 $ 130,995 $ 140,029 $ 326,844 COST OF PRODUCTS SOLD 17,215 25,796 25,138 60,887 ----------- ---------- ----------- ---------- GROSS PROFIT 72,267 105,199 114,891 265,957 SELLING, GENERAL AND 46,761 56,758 95,987 120,174 ADMINISTRATIVE EXPENSES ----------- ---------- ----------- ---------- INCOME FROM OPERATIONS 25,506 48,441 18,904 145,783 ----------- ---------- ----------- ---------- OTHER INCOME (EXPENSE) Investment and other income 956 1,108 3,057 1,483 Interest expense (5,846) (6,877) (12,759) (15,311) Gain (Loss) on disposal of equipment - 10,000 - (25,678) ----------- ---------- ----------- ---------- Total other income (expense) (4,890) 4,231 (9,702) (39,506) ----------- ---------- ----------- ---------- NET INCOME BEFORE INCOME TAXES 20,616 52,672 9,202 106,277 Income Taxes - - - - ---------- ---------- ----------- ---------- NET INCOME $ 20,616 $ 52,672 $ 9,202 $ 106,277 =========== ========== =========== ========== NET INCOME PER COMMON SHARE Net income per share $ .00 $ .01 $ .00 $ .02 =========== ========== =========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 4,791,220 4,791,220 4,791,220 4,791,220 =========== ========== =========== ========== 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, -------------------------- 2003 2002 ---------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 9,202 $ 106,277 ---------- ----------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,292 11,870 Loss on disposal of equipment - 25,678 Increase or decrease in: Accounts receivable 27,447 (74,704) Inventory (4,462) (5,961) Other current assets - 1,305 Accounts payable and accrued expenses 33 (41,751) ------------ ----------- Total adjustments 35,310 (83,563) ------------ ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 44,512 22,714 ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (19,545) (17,877) Repayment of note receivable - 2,536 ----------- ----------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (19,545) (15,341) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on long-term debt (5,520) (4,019) Net proceeds (payments) on line of credit - (19,631) Net proceeds (payments) on loan payable to stockholder (15,000) 14,389 Proceeds from sales of equipment - 20,300 ------------ ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (20,520) 11,039 ------------ ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,447 18,412 CASH AND CASH EQUIVALENTS, beginning of period 46,244 8,190 ------------ ----------- CASH AND CASH EQUIVALENTS, end of period $ 50,691 $ 26,602 ============ ===========
(Continued) F-4 CTD HOLDING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents (Unaudited) (Concluded)
Six Months Ended June 30, ------------------------ 2003 2002 ---------- --------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ 7,578 $ 15,311 ========== ========= SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES Purchase of vehicle with note payable $ 14,881 $ - ========== =========
See Accompanying Notes to Financial Statements F-5 CTD HOLDINGS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2003 (Unaudited) The information presented herein as of June 30, 2003, and for the three and six months ended June 30, 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 and six month periods ended June 30, 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 and six months ended June 30, 2003 and 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-6 Item 2. Management's Discussion and Analysis or Plan of Operation Management Discussion & Analysis Liquidity and Capital Resources Our cash and cash equivalents increased to more than $50,000 as of June 30, 2003 compared to approximately $36,000 as of March 31, 2003. The increase resulted from improvement of our cash flows due to increased sales and continued reduction of expenses (5%) from the previous quarter. We also invested approximately $20,000 to improve the business operations physical facilities. We expect to invest up to an additional $20,000 to complete these improvements. As of June 30, 2003, our working capital was approximately $88,000 compared to approximately $90,000 at the end of the previous quarter. The working capital stability from the previous quarter can be primarily attributed to improved sales and profitability, less cash investing in improving our physical facilities. We will continue to closely monitor our working capital and maintain a good liquidity position and capital resources for the remainder of 2003 while holding overhead costs at a minimum. Results of Operations Sales of Cyclodextrins and related manufactured complexes continue to be highly volatile. In efforts to offset this volatility, we continue to expand our revenue producing activities in Cyclodextrin-related research and business development services for the Company and other outside companies while expanding our line of distributed products. Our product sales are primarily to large chemical supply and pharmaceutical companies for research and development purposes. To manage this volatility, we have begun to market more aggressively the business development aspect of our CD expertise with existing and new customers. Total product sales for the second quarter 2003 were more than $89,000 compared to approximately $51,000 in the prior quarter. While our YTD 2003 sales are significantly less compared to the same time period last year ($140,029 vs. $326,844), our second quarter 2003 sales increased substantially over the previous quarter. The improvement on an annualized basis from 39% to 54% of 2002's sales brings the Company's product sales in line with its projected sales of $250,000-$300,000 for 2003. Our gross profit margin of 82% remains consistently strong for the first half of 2003. Our SG&A expenses decreased to approximately $47,000 from approximately $49,000 in the prior quarter. The decrease in our SG&A expenses results primarily from controlling overhead costs and reducing interest expense whenever possible. Total other expenses were approximately the same ($5,000) as the first quarter; 2003 YTD other expenses are approximately $10,000 compared to approximately $40,000 for the same period in the prior year as a result of our 2002 loss on disposal of equipment related to our former mushroom farming operation. With the increase in sales, we recognize a net income of approximately $21,000 during the second quarter of 2003 compared to net income of approximately $53,000 during the same period in 2002. In 2003 we continue to utilize the CTD Website to emphasize the company's unmatched knowledge of the emerging CD industry; we have included in our Website (What's New) how CTD's customers are using CD's and what evidence we have that major industries have focused on CD's for products now being commercialized. We will continue to identify new products and new uses for CD's. We intend to create 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. 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 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 * * Filed Herewith (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 ----------------------------- August 13, 2003 C.E. Rick Strattan, President Chief Executive Officer, Chief Operating Officer and Chief Financial Officer