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: September 30, 2000.
____ 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.)
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
befiled by Section 12, 13 or 15 (d) of the Exchange Act after the distribution
ofsecurities under a plan confirmed by a court. No.
Applicable only to corporate issuers
As of November 10, 2000, the Company had outstanding 3,979,195 shares of
its common stock.
Transitional Small Business Disclosure Format
(Check One):
No.
<PAGE>
PART I: Financial Information
CTD HOLDINGS INC. CONSOLIDATED BALANCE SHEET (Unaudited)
ASSETS
September 30,2000
--------------
CURRENT ASSETS
Cash and cash equivalents $ -
Accounts receivable 54,044
Inventory 60,576
Deferred tax asset 15,000
Notes receivable 20,603
Other current assets 20,520
------------
Total current assets 170,743
------------
Property and equipment, net 436,028
------------
OTHER ASSETS
Intangibles, net 26,172
Deferred tax asset 180,000
------------
Total other assets 206,172
------------
TOTAL ASSETS $ 812,943
============
(continued)
F-1
<PAGE>
CTD HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, 2000
------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 188,117
Current portion of long-term debt 26,003
Line of Credit 25,501
Due to Shareholder 13,175
-------------
Total current liabilities 252,796
-------------
Long-Term debt, less current portion 179,309
-------------
STOCKHOLDERS' EQUITY
Class A common stock, par value $.0001 per share,
9,900,000 shares authorized, 3,835,958 shares issued
and outstanding; Class B non-voting common stock, par
value $.0001 per share, 10,000,000 shares authorized,
0 shares issued and outstanding 384
Additional paid-in capital 1,883,519
Accumulated deficit (1,503,065)
--------------
Total stockholders' equity 380,838
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 812,943
=============
See Accompanying Notes to Financial Statements
F-2
<PAGE>
<TABLE>
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---------- ---------- ---------- ----------
PRODUCT SALES $ 76,302 $ 125,810 $ 313,130 $ 399,060
COST OF PRODUCTS SOLD 18,664 19,199 94,556 44,984
---------- ---------- ---------- ----------
GROSS PROFIT 57,638 106,611 218,574 354,076
CONSULTING SERVICES AND OTHER - 431 - 8,221
OPERATING REVENUE
SELLING, GENERAL AND 122,179 105,067 407,561 287,900
ADMINSISTRATIVE EXPENSE
---------- ---------- ---------- ----------
INCOME(LOSS)FROM OPERATIONS (64,541) 1,975 (188,987) 74,397
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Investment and other income(loss)
(159) 2,308 118 (695)
Interest expense (3,224) (4,952) (14,633) (5,826)
---------- ---------- ---------- ----------
Total other income (expense)
(3,383) (2,644) (14,515) (6,521)
MINORITY INTERESTS IN - 1,239 - 1,558
SUBSIDIARY --------- ---------- --------- ----------
INCOME(LOSS)BEFORE INCOME TAX
(67,924) 570 (203,502) 69,434
INCOME TAX EXPENSE - 0 - 17,000
----------- ---------- ---------- ----------
NET INCOME (LOSS) $ (67,924) $ 570 $(203,502) $ 52,434
=========== ========== ========== ==========
NET INCOME (LOSS) PER
COMMON SHARE $ (.02) $ 0.00 $ (.06) $ 0.03
=========== ========== ========== ==========WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES OUTSTANDING
3,763,440 1,551,577 3,639,392 1,516,724
=========== ========== ========== ==========
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
F-3
<TABLE>
CTD HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
Nine Months Ended
September 30,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (203,502) $ 52,434
------------ ------------
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation and amortization 16,444 10,923
Minority interests in subsidiary - (1,558)
Loss on sale of investments - 3,122
Stock issued for services 30,000 23,656
Increase in accounts receivable (32,780) (59,083)
Decrease (increase) in inventory 24,673 (57,675)
Decrease (increase) in other current assets 25,500 (15,468)
Decrease in deferred income taxes - 17,000
Increase in accounts payable and
accrued expenses 129,351 61,521
------------ ------------
Total adjustments 193,188 (17,562)
------------ ------------
NET CASH PROVIDED BY (USED FOR)
OPERATING ACTIVITIES (10,314) 34,872
----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (105,687) (116,012)
Repayment of employee loan 15,387 -
Proceeds from sale of investment - 10,261
------------ -----------
NET CASH USED IN INVESTING ACTIVITIES (90,300) (105,751)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long term debt - 32,494
Payments on long term debt (18,243) (29,043)
Net proceeds on line-of-credit 22,207 0
Payments on loan payable to stockholder (6,775) 0
Proceeds from sales of stock 30,000 44,721
Stock repurchase - (6,389)
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 27,189
41,783
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (73,425) (29,096)
CASH AND CASH EQUIVALENTS, beginning of period 73,425 36,883
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ - $ 7,787
============ ============
</TABLE>
(Continued)
F-4
<PAGE>
CTD HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWSIncrease
(Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 14,633 $ 4,952
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Purchase of Land, building and equipment with
debt financing $ 13,160 $ 204,756
=========== ============
Acquisition of goodwill by issuing common stock $ 10,000 $ 14,000
=========== ============
Common Stock issued for services $ 30,000 $ -
=========== ============
Stock issued to officer in satisfaction of bonus
Accrual $ 7,800 $ -
========== ============
Stock issued to consultant for prepaid public
relations services $ 40,000 $ -
========== ============
</TABLE>
See Accompanying Notes to Financial Statements
F-5
<PAGE>
CTD HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2000(Unaudited)
The information presented herein as of September 30, 2000, and for the six
and nine months ended September 30, 2000, and 1999, is unaudited.
(1) BASIS OF PRESENTATION:
The accompanying financial statements include CTD Holdings, Inc., (formerly
known as Cyclodextrin Technologies Development, 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 nine month period's ended September 30,
2000, are not necessarily indicative of the results that may be expected for the
year ending December 31, 2000. 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, 1999.
(2) PRIVATE PLACEMENT OF STOCK:
Beginning in 1999, the Company began offering a total of 1,300,000 shares
of common stock under a private placement memorandum to expire September 10,
2000. In 1999, 40,000 shares were sold for $15,000, less direct offering costs
of $ 5,279. For the nine months ended September 30, 2000, 20,000 shares were
sold for $ 30,000.
In 1999, the Company also sold 160,000 of common stock for $35,000.
(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-6
<PAGE>
CTD HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(4) COMMITMENTS AND CONTINGENCIES:
On March 1, 2000, the Company entered into a one year public relation
contract with a consultant. The Company issued the consultant 200,000 shares of
common stock. The Company valued the shares at $40,000, approximately 50% less
than the bid price on the contract date. The Company recorded a prepaid asset of
$40,000, which is being amortized over one year, the life of the contract.
On April 1, 2000, the Company adopted a stock bonus plan for the Company's
president. The amount of stock due each month is equal to $5,000 divided by 50%
of the lowest stock trade amount for that month. The Company issued 75,566
shares and expensed, $15,000 and $30,000 during the three months, and nine
months ended September 30, 2000.
(5) CORPORATE CHANGES:
In April 2000, the Company changed its name to CTD Holdings, Inc. from
Cyclodextrin Technologies Development, Inc.
Also in April 2000, the Company effected a 2 for 1 stock split of its
outstanding common stock.
The accompanying financial statements and notes have been restated for all
periods presented to reflect these changes.
(6) SEGMENTS:
During the second quarter of 1999, the Company began cultivating exotic
mushrooms and herbs. The Company now has two segments, Cyclodextrin products and
mushroom products. Information specific to these two segments follows:
<TABLE>
Nine Months Ended
September 30,
---------------------------------------------------------------
2000 1999
----------------------------- --------------------------------
<S> <C> <C> <C> <C>
Cyclodextrins Mushrooms Cyclodextrins Mushrooms
------------- --------- ------------- ---------
Sales $ 289,052 $ 24,078 $ 399,060 $ -
Income (loss)
from operations $ 4,998 $(208,500) $ 74,397 $ -
September 30, 2000
-------------------
<C> <C>
Cyclodextrins Mushrooms
------------- ---------
Total assets $ 425,000 $ 388,000
</TABLE>
F-6
<PAGE>
Item 2. Management Discussion and Analysis or Plan of Operation
PART II: Other Information
(MD&A) Management Discussion & Analysis As of 9/30/00
CTD Holdings, Inc.
Liquidity and Capital Resources
As of September 30, 2000, the Company's working capital was ($82,053)
compared to $120,186 at December 31, 1999. Working capital continued to decrease
as a result of continued losses in the third quarter ($68,000); however the
magnitude of the third quarter loss was reduced significantly (41%)from the
second quarter loss ($115,500. This loss reduction came about as a result of a
$20,000 reduction in expenses (primarily personnel costs) and a $20,000 increase
in sales over the previous quarter. Management intends to maintain this trend of
increasing product sales and decreasing expenses in the fourth quarter, with the
goal of achieving a near positive working capital situation by year end 2000.
The Company operates two business segments, cyclodextrin products (CTD) and
mushroom cultivation (NSME). The Company continues to experience volatility in
CTD sales. The Company's CTD sales at September 30, 2000 ($289,000) were only
72% of 1999 sales ($399,000), but management forecasts that a strong fourth
quarter will allow the Company to achieve total sales for 2000 to exceed
$400,000 but to be less than 1999 total sales of $557,000. Combined with
continued reduction in expenses, management expects CTD sales to increase
coupled with increased revenue from NSME sales for the remainder of 2000, to
improve liquidity.
The Company has completed a preliminary analytical study of the ingredients
in its Shiitake and Reishi mushrooms extracts. The goal of these studies is to
prove the existence in these extracts of certain natural ingredients that are
known to have medicinal properties. Depending on the conclusions reached after
evaluating the results of these analytical experiments, the Company hopes that
it will be able to move to the next phase of its project to create complexes of
these natural ingredients and begin clinical trials.
The Company is in the first 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 will probably not move from
this facility into the building on its newly purchased property until 2001. Part
of the office staff has already moved to the new facility. The timing of the
completed move will depend on the availability / allocation of funds necessary
to complete the needed renovations. The Company intends to sublet its existing
space when that move is completed, certainly before the end of the two year
extension, November, 2001.
<PAGE>
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 invested $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 expects the
site to begin generating revenue of approximately $1000 per month by the end of
the year.
In early May of this year, the Company responded to increased demand for
its stock by authorizing and implementing a 2 for 1 forward split of its common
stock (May 1 - date of record; May 20 - pay date; May 22 - execute date).
Management believes that this action is a good way to begin to alleviate the
mechanical trading problem of too small a float in the market of its common
stock. Management believes that an increase in the Company's market
capitalization will enhance the probability of the Company's success in
acquiring other companies, implementing one part of its strategic plan to file
for NASDAQ listing in 2001.
To further enhance the successful implementation of its strategic plan, the
Company changed the name of Cyclodextrin Technologies Development, Inc. to CTD
Holdings, Inc. New stock symbol (CTDH). The Company created a new subsidiary,
Cyclodextrin Technologies Development, Inc. (CTD) to operate its cyclodextrin
business entity. The Company's other subsidiary, NSME, Inc. (NSME) operates a
mushroom cultivating farm. The resulting holding company structure will
facilitate the legal implementation of future acquisitions and stock
transactions.
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 1999, the Company began the start up of a mushroom
farm that will ultimately provide products for the rapidly expanding $5 billion
natural medicinals industry, thereby diversifying its revenue base into an even
greater number of manufactured products.
The Company has completed the start-up phase of its natural medicinals
venture on its 40-acre farm in High Springs, Florida acquired in 1999. Through
its subsidiary, NSME, Inc. (NSME), the company has successfully established a
growing sales base for its edible exotic mushrooms. In the third quarter of
2000, NSME sold more than $9,000 of certified organic Shiitake mushrooms and
produce. At the end of July, NSME had one of two new grow houses on line for a
total of three; the fourth grow house became operational in early August. The
added capacity will allow the Company to produce 2,000 lbs. of mushrooms per
month by the end of 2000. The Company has instituted a new management structure
that is responsible for meeting prescribed production quotas and is undertaking
a new investigation of the demand that can be expected over the next two year
for its mushroom production.
Total product sales increased from $55,000 in the second quarter to $76,630
in the third quarter of 2000; however, year to date sales are only 78% of the
sales total for the nine months of 1999. Again, the volatility of CTD's sales
continues to be unpredictable and primarily responsible for the decrease. Sales
of CTD products for the fourth quarter are expected to exceed $100,000 . Even
so, management expects to reach only 80-85% of 1999 sales levels for the year
2000.
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.
Sales of NSME products are currently to local restaurants and produce
distributors. The demand by these users will exceed NSME's ability to supply
them for the immediate future. Even so, NSME is beginning to introduce its
products to national distributors and larger supermarkets. NSME is also selling
its exotic mushrooms through an Internet portal at www.mushroomshoppe.com to
high-end customers including one 5-star restaurant.
<PAGE>
The Company's gross profit margin (GPM) increased from the second quarter
(57 %) to the third quarter (75%); however, for the nine months ended September
30,2000, the GPM was 69% versus 89% for the same period in 1999 This decrease is
due to a combination of a change in the Company's product mix from 1999 to 2000,
and as a result of lower margins on the NSME products. The Company does not
expect its GPM to decrease below 50% for the remainder of 2000 as a result of
these changes. SG&A expenses decreased ($121,179, vs. $ 142,399) from the second
quarter 2000 to the third quarter 2000. SG&A for 2000 is up significantly
compared to 1999 due to the addition of the NSME operations at the end of 1999.
Management intends to use the existing levels of expenses as a not-to-exceed
target for future growth of subsidiaries and addition of new subsidiaries.
The Company's operating loss for the three months ended September 30, 2000
was $67,924 compared to the loss of $115,726 for the three months ending June
30,2000. The decrease in loss is due to the slight increase in sales experienced
by CTD from the second quarter to the third quarter ($55,000 vs. $76,630)
combined with the $20,000 reduction in expenses (primarily personnel costs)for
the same period. The Company had a loss of ($203,502) for the nine months ended
September 30, 2000 compared to net income of $52,434 for the nine months ended
September 30, 1999. The primary reason for the decrease in profitability is due
to the impact of start-up of the NSME operations beginning at the end of 1999.
Management has moved NSME out of the start-up phase into the operating phase and
will maintain expenses at a level necessary to support efficient operations;
combined with increased revenues from greater production of mushrooms,
management intends to reduce NSME's losses substantially during the remainder of
2000 to a level that will permit the company to realize a net profit for the
fourth quarter.
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 subsidiaries
that will use CD's in herbal medicines, waste-water remediation,
pharmaceuticals, and foods.
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 statement. 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 and mushrooms; changes in governmental laws and
regulations surrounding various matters, such as labeling disclosures;
production and pricing levels of important raw materials; and difficulties or
delays in the development, production, testing and marketing of products;
product margins and customer product acceptance.
<PAGE>
Item 2. Changes in Securities and Use of Proceeds
The following common shares were sold by the company on the date shown and
for the consideration stated in reliance on Section 4(2) of the Securities Act
of 1933:
<TABLE>
<S> <C> <C> <C>
Shareholder No. Shares Consideration Date
C.E. Rick Strattan 32,051 Bonus 7/13/2000
C.E. Rick Strattan 31,250 Bonus 8/5/2000
C.E.Rick Strattan 35,461 Bonus 9/7/2000
C.E. Rick Strattan 38,461 Bonus 10/3/2000
</TABLE>
<PAGE>
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
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.
CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
SIGNATURE TITLE DATE
_______ /S/_______ President, November 4, 1999
C.E. Rick Stratton Chief Officer,
Chief Financial Officer
