UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
CTD HOLDINGS, INC.
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
CTD HOLDINGS, INC.
NOTICE OF ACTION TAKEN BY
WRITTEN CONSENT OF MAJORITY SHAREHOLDER
DEAR SHAREHOLDERS:
We are writing to advise you that CTD Holdings, Inc. will file an
amendment to our Articles of Incorporation authorizing a class of "blank check"
preferred stock consisting of 5,000,000 shares and creating a series of Series A
Preferred Stock consisting of one share. This action was approved on May 26,
2004 by our Board of Directors. In addition, Mr. C.E. "Rick" Strattan, our CEO
and Chairman and the holder of a majority of our issued and outstanding common
stock, has advised us that he will approve this action by written consent in
lieu of a special meeting in accordance with the relevant sections of the
Florida Business Corporation Act. This action will not be effective until after
we file the Articles of Amendment with the Florida Secretary of State. We intend
to file the Articles of Amendment on or about [ ], 2004, which is 20 days after
the date this information statement is first mailed to our stockholders.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
No action is required by you. The accompanying information statement is
furnished only to inform our shareholders of the actions described above before
they take place in accordance with Rule 14c-2 of the Securities Exchange Act of
1934. This information statement is first mailed to you on or about [ ], 2004.
Please feel free to call us at should you have any questions on the
enclosed Information Statement. We thank you for your continued interest in CTD
Holdings.
For the Board of Directors of CTD
HOLDINGS, INC.
/s/ C.E. "Rick" Strattan
C.E. "Rick" Strattan, CEO
[ ], 2004
CTD HOLDINGS, INC.
27317 N.W. 78 Avenue
High Springs, Florida 32643
INFORMATION STATEMENT REGARDING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY SHAREHOLDER
IN LIEU OF A SPECIAL MEETING
WE ARE NOT ASKING YOU FOR A PROXY,
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
GENERAL
This Information Statement is being furnished to the shareholders of CTD
Holdings, Inc. in connection with the adoption of an amendment to our Articles
of Incorporation by written consent of our Board of Directors and the written
consent of the holder of a majority of our issued and outstanding voting
securities in lieu of a special meeting of our shareholders. On May 26, 2004 our
Board of Directors approved an amendment to our Articles of Incorporation (the
"Amendment") authorizing a class of "blank check" preferred stock consisting of
5,000,000 shares, designating one share of this new preferred stock as Series A
Preferred Stock and setting forth the designations, rights and preferences of
the Series A Preferred Stock. Our Board of Directors is comprised of Mr. C.E.
"Rick" Strattan, our CEO and Chairman, and George L. Fails, our Operations
Manager. This action will become effective upon the written consent of the
holder of a majority of our issued and outstanding voting securities and the
filing of the Amendment with the Secretary of State of Florida in accordance
with the relevant sections of the Florida Business Corporation Act. Mr.
Strattan, the holder of approximately 50.36% of our outstanding common stock,
which is in excess of the required majority of our outstanding voting securities
necessary for the adoption of this action, has advised us that he will execute a
written consent approving the Amendment on or about [ ], 2004. The Amendment
will be effective upon filing with the Secretary of State of Florida. We
anticipate that we will file the Amendment on [ ], 2004.
The elimination of the need for a meeting of shareholders to approve
this action is made possible by Section 607.0704 of the Florida Business
Corporation Act which provides that the written consent of the holders of
outstanding shares of voting capital stock, having not less than the minimum
number of votes which would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted, may
be substituted for such a meeting. In order to eliminate the costs involved in
holding a special meeting, our Board of Directors voted to utilize the written
consent of the holder of a majority of our outstanding common stock.
This information statement is first being mailed on or about [ ], 2004
to shareholders of record. This information statement is being delivered only to
inform you of the corporate actions described herein before they take effect in
accordance with Rule 14c-2 of the Securities Exchange Act of 1934. In addition,
Florida law requires us to notify those shareholders who have not consented in
writing to the adoption of the Amendment within 10 days after obtaining the
written consent for the approval of the Amendment from the holder of the
required majority of our outstanding voting securities. This information
statement satisfies this notice requirement.
No dissenters' rights under Florida law are afforded to our
shareholders as a result of the taking of the corporate actions described in
this information statement.
The entire cost of furnishing this information statement will be borne
by us. We will request brokerage houses, nominees, custodians, fiduciaries and
other like parties to forward this information statement to the beneficial
owners of our voting securities held of record by them and we will reimburse
such persons for out-of-pocket expenses incurred in forwarding such material.
OUR PRINCIPAL SHAREHOLDERS
Our voting securities are currently comprised of our common stock. The
holders of our shares of common stock are entitled to one vote for each
outstanding share on all matters submitted to our shareholders. The following
table contains information regarding record ownership of our voting securities
as of June 30, 2004 held by:
* persons who own beneficially more than 5% of our outstanding common
stock,
* our directors,
* named executive officers, and
* all of our directors and officers as a group.
A person is deemed to be the beneficial owner of securities that can be
acquired by such a person within 60 days from June 30, 2004 upon exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants and convertible
securities that are held by such a person (but not those held by any other
person) and are exercisable within 60 days from that date have been exercised.
Unless otherwise indicated, the address of each of the listed beneficial owners
identified is 27317 N.W. 78 Avenue, High Springs, Florida 32643.
Name of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class
C.E. "Rick" Strattan(1) 3,665,412 50.36%
George L. Fails (2) 47,654 *
All officers and directors
as a group (two persons)(1)(2) 3,713,066 51.00%
* represents less than 1%
(1) The shares of common stock beneficially owned by Mr. Strattan includes
1,000,000 shares which are held by Strattan Associates, Ltd., of which Mr.
Strattan is the general partner. Strattan Associates, Ltd. is a limited
partnership established by Mr. Strattan for estate tax purposes and is not
otherwise engaged in business.
(2) The shares of common stock beneficially owned by Mr. Fails includes 7,654
shares which are issuable to Mr. Fails pursuant to the terms of his
employment agreement.
THE AMENDMENT
The Amendment will create a class of "blank check" preferred stock, par
value $0.001 per share, consisting of 5,000,000 shares, designate one share of
this new preferred stock as Series A Preferred Stock and set forth the
designations, rights and preferences of the Series A Preferred Stock. The text
of the Amendment is attached to this information statement as Appendix A. Other
than the creation of the class of "blank check" preferred stock and the
designation of the Series A Preferred Stock, both of which have the effect of
amending Article IV, Capital Stock, of our Articles of Incorporation to
eliminate the current provision that the voting rights of our shareholders lie
solely with our common shareholders, the Amendment makes no other changes in our
Articles of Incorporation. The Amendment will not result in any change in our
business, assets, liabilities or net worth.
The "blank check" preferred stock
The term "blank check" preferred stock refers to stock for which the
designations, preferences, conversion rights, and cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof, are determined by the board
of directors of a company. As a result of the adoption of the Amendment, our
Board of Directors will be entitled to authorize the creation and issuance of up
to 5,000,000 shares of preferred stock in one or more series with such
limitations and restrictions as may be determined in the sole discretion of the
Board of Directors, with no further authorization by shareholders required for
the creation and issuance of the preferred stock. After issuance of the one
share of Series A Preferred Stock, 4,999,999 shares of preferred stock will
remain undesignated and available for issuance. Any preferred stock issued would
have priority over the common stock upon liquidation and might have priority
rights as to dividends, voting and other features. Accordingly, the issuance of
preferred stock could decrease the amount of earnings and assets allocable to or
available for distribution to holders of common stock and adversely affect the
rights and powers, including voting rights, of the common stock.
The Board of Directors believes the creation of the preferred stock is in
the best interests of our Company and its shareholders as it believes it
advisable to authorize such shares to have them available for, among other
things, possible issuance in connection with such activities as public or
private offerings of shares for cash, acquisitions of other companies, pursuit
of financing opportunities and other valid corporate purposes.
The increased financial flexibility which will be available to our company
through the possible issuance of preferred stock in these types of transactions
may provide us with certain advantages in negotiating the terms of these
transactions thereby increasing our ability to secure capital or close
acquisitions, both of which will benefit the growth of our company and help us
to increase our revenues and profits. For example:
* the availability of "blank check" preferred stock will permit our
Board of Directors to negotiate the precise terms of an equity
instrument by simply creating a new series of preferred stock at will
without incurring the costs and delay in obtaining prior shareholder
approval. This may permit our company to more effectively negotiate
with, and to satisfy the financial criteria of, an investor or a
transaction in a timely manner; or
* dividend or interest rates, conversion rates, voting rights,
liquidation preferences, terms of redemption (including sinking fund
provisions), redemption prices, preemptive rights, maturity dates and
similar characteristics of a series of preferred stock could be
determined by the Board of Directors without obtaining prior
shareholder approval, thus reducing the time and costs involved in
consummating a transaction.
The availability, however, of "blank check" preferred stock which the Board of
Directors can designate into various series without shareholder consent can be
dilutive to our common shareholders and our shareholder's will be solely reliant
upon the business judgment of our Board of Directors regarding the various terms
and conditions which may be ascribed to any series of preferred stock created in
the future.
Notwithstanding the potential dilution to our common shareholders in voting
powers and equity investments, our Board of Directors believes that if it can
grow our company's revenues and earnings, this growth may be reflected in the
trading price of our common stock and the market liquidity of the securities,
both of which will benefit our public shareholders. At June 30, 2004 the closing
price of our common stock as reported on the OTCBB was $0.16 per share and our
stock is thinly traded.
We do not, however, currently have any plans, commitments, arrangements or
agreements, written or otherwise, to issue or designate any of the "blank check"
preferred stock to be authorized by the Amendment, other than the issuance of
one share of Series A Preferred Stock to Mr. Strattan, nor can we assure our
shareholders that the market price of our common stock will rise in the future.
The Series A Preferred Stock
The Amendment will also designate one share of this new preferred stock
as Series A Preferred Stock, and will set forth the designations, rights and
preferences of the Series A Preferred Stock. ^The designations, rights and
preferences of the Series A Preferred Stock include:
* the stated value of the share is equal to its par value of
$0.001,
* the share does not pay any dividends,
* the share is likewise not entitled to any dividend rights in the
future,
* in the case of a liquidation or winding up of CTD Holdings, the
holder of share of Series A Preferred Stock is entitled to a
liquidation preference of $0.001 per share,
* the share is not redeemable by us without the consent of the
holder,
* the share is convertible into shares of our common stock at our
sole option based upon a conversion ratio to be determined by CTD
Holdings and the holder at the time of conversion, and
* the share votes together with the holders of the common stock on
all matters submitted to a vote of our 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
our 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 51% of the total of all votes entitled to be cast by our
shareholders.
Following the filing of the Amendment with the Florida Secretary of State,
we will issue the one share of Series A Preferred Stock to Mr. C.E. "Rick"
Strattan, our CEO and Chairman, in exchange for 1,029,412 shares of our common
stock presently held by him. Upon such exchange, the shares of common stock
tendered by Mr. Strattan will be returned to our treasury with the status of
authorized but unissued shares. The 1,029,412 shares of our common stock which
Mr. Strattan will exchange for one share of Series A Preferred Stock represents
approximately 28.1% of the shares of our common stock presently owned by him and
approximately 14.1% of our total issued and outstanding common stock at June 30,
2004. The voting power of the 1,029,412 shares of our common stock being
exchanged by Mr. Strattan presently represents approximately 14.1% of voting
power as compared to the 51% voting power he will have upon the issuance of the
one share of Series A Preferred Stock.
Why we are creating the Series A Preferred Stock
In our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2003, as well as other filings we have made with the Securities and Exchange
Commission, we have described a strategy to grow our company which involves the
acquisition of additional companies. It is likely that these acquisitions would
involve the issuance of additional shares of our common stock. In addition, we
may seek to raise additional working capital through the sale of securities. Mr.
Strattan is the founder of our company and has served as our President and CEO
since inception. At June 30, 2004 Mr. Strattan controlled approximately 50.36%
of our outstanding common stock. It is possible that securities issued by us in
the future in an acquisition or a capital raising transaction or series of
transactions could result in a change of control wherein Mr. Strattan no longer
has voting control of our company. Because our business operates in a highly
specialized field in which Mr. Strattan has significant expertise, we believe
that his continued control is necessary in the foreseeable future as we
implement our business model and grow our company to ensure that our operational
and strategic decisions have the greatest chance of success.
The purpose of the Series A Preferred Stock is to ensure that Mr. Strattan
retains voting control of our company for the foreseeable future^. We are not,
however, currently a party to any agreement or understanding which provides for
the issuance of shares of securities for either an acquisition or business
combination or in a capital raising
As our Board of Directors had first determined that the goal providing a
mechanism to ensure Mr. Strattan's continued voting control was in our company's
best interests, the number of methods available to us to achieve that goal were
somewhat limited. In evaluating options, we placed the most emphasis on the
immediate impact on our financial statements and the potential for immediate
dilution to our common shareholders. Before determining to create the Series A
Preferred Stock and ascribing the voting rights to it, we considered issuing Mr.
Strattan a significant number of shares of common stock for minimal
consideration. This strategy would have resulted in a significant expense to our
company based on the fair market value of the stock on the date of issuance, and
would have been immediately dilutive to our other common shareholders. In
addition, it may have resulted in only a temporary solution to the problem, and
could have required additional issuances to Mr. Strattan in future periods to
ensure the perpetuation of his voting control.
After considering the options, our Board determined that the issuance of
the one share of Series A Preferred Stock best achieved the goal of ensuring
that Mr. Strattan retains voting control of our company. The Company will not
recognize any expense related to the issuance of the one share of Series A
Preferred Stock, as its basis will be equal to the basis of the shares of common
stock which will be exchanged for the Series A Preferred Stock, and as the stock
does not presently have any conversion feature it will not be included in the
computation of outstanding common stock when computing earnings per share.
Notwithstanding that the creation of the Series A Preferred Stock directly
benefits Mr. Strattan, one of the two members of our Board of Directors, our
Board did not solicit or obtain a fairness opinion from an independent third
party regarding the action as a result of the anticipated costs of such an
opinion as compared to its limited resources.
Proforma Principal Shareholder Table
The following table contains information regarding record ownership of
our voting securities as of June 30, 2004 held by:
* persons who own beneficially more than 5% of our outstanding
voting securities,
* our directors,
* named executive officers, and
* all of our directors and officers as a group.
giving proforma effect to the issuance of the one share of Series A Preferred
Stock to Mr. Strattan and the return by him to the treasury of 1,029,412 shares
of our common stock held by him, as if those transactions had occurred on June
30, 2004.
A person is deemed to be the beneficial owner of securities that can be
acquired by such a person within 60 days from June 30, 2004, upon exercise of
options, warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options, warrants and convertible
securities that are held by such a person (but not those held by any other
person) and are exercisable within 60 days from that date have been exercised.
Unless otherwise indicated, the address of each of the listed beneficial owners
identified is 27317 N.W. 78 Avenue, High Springs, Florida 32643.
Title of Name of Amount and Nature of Percentage Percent of
Class Beneficial Owner Beneficial Ownership of Class Voting Control (1)
----- ---------------- -------------------- ----------- --------------
Common Stock
C.E. "Rick" Strattan(2) 2,636,000 42.95% 21.00%
George L. Fails (3) 47,654 * *
All executive officers
and directors as a
group (two persons)(2)(3) 2,683,654 43.71% 21.42%
Series A Preferred Stock
C.E. "Rick" Strattan (2) 1 100% 51.00%
George L. Fails (3) 0 - *
All executive officers
and directors as a
group (two persons)(2)(3) 1 100% 51.00%
* represents less than 1%
(1) Percentage of Voting Control is based upon the number of issued and
outstanding shares of our common stock and Series A Preferred Stock on a
proforma basis on June 30, 2004. Giving proforma effect to the issuance of
the one share of Series A Preferred Stock to Mr. Strattan and the return to
our treasury by him of 1,029,412 shares of our common stock, at June 30,
2004 we would have had an aggregate of shares of our common stock and one
share of our Series A Preferred Stock issued and outstanding. These two
classes of securities, which will represent our voting securities, vote
together on all matters submitted to a vote of our shareholders. The
holders of our outstanding shares of common stock are entitled to one vote
and the holder of the Series A Preferred Stock is entitled to one vote more
than one-half of all votes entitled to be cast by all holders of voting
capital stock of CTD Holdings on any matter submitted to our 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 51% of the total of all
votes entitled to be cast by our shareholders.
(2) The shares of common stock beneficially owned by Mr. Strattan includes
1,000,000 shares which are held by Strattan Associates, Ltd., of which Mr.
Strattan is the general partner. Strattan Associates, Ltd. is a limited
partnership established by Mr. Strattan for estate tax purposes and is not
otherwise engaged in business.
(3) The shares of common stock beneficially owned by Mr. Fails includes 7,654
shares which are issuable to Mr. Fails pursuant to the terms of his
employment agreement.
Anti-takeover Effect
We have no present intention to use the"blank check" preferred stock for
anti-takeover purposes, nor is the Amendment in response to any effort by any
person or group to accumulate our stock or to obtain control of CTD Holdings by
means of a merger, tender offer, solicitation in opposition to management, or
any other means. Our Board of Directors decided to adopt the Amendment at this
time as we are actively seeking acquisition targets and financing transactions
to expand our operations, although we are not a party to any agreements or
understandings at this time for any such transactions. By adopting the Amendment
at this time, and creating and issuing the Series A Preferred Stock to Mr.
Strattan prior to beginning negotiations for any acquisitions or financing
transactions, our Board of Directors is better able to undertake opportunities
which may become available to us in a timely manner.
However, the issuance of the Series A Preferred Stock or other shares of
preferred stock could prevent any action to acquire control of the Board or to
meet the voting requirements imposed by Florida law with respect to a merger or
other business combination involving us. The issuance to Mr. Strattan of the one
share of Series A Preferred Stock constitutes, and the future issuance of any
series of "blank check" preferred stock could constitute, anti-takeover
measures. The issuance to Mr. Strattan of the one share of Series A Preferred
Stock results in his perpetual control of our company until such time as he
disposes of the share. In addition, future issuances of series of the "blank
check" preferred stock may prevent a non-negotiated acquisition by the company
by diluting the ownership interest of any substantial shareholder, increasing
the total amount of consideration necessary for a person to obtain control of
the Company, increasing the voting power of friendly third parties and other
similar events. The Amendment could therefore deprive shareholders of benefits
that could result from such a takeover attempt, including a possible realization
of a premium over the market price of our common stock that such an attempt
could cause. Because of the absolute control of CTD Holdings which Mr. Strattan
will have upon the issuance of the Series A Preferred Stock, this action could
make it more difficult to remove incumbent management and directors from office
even if this change would be favorable to our shareholders generally.
Mr. Strattan's Conflicts of Interest
The creation of the "blank check" preferred stock and the issuance of the
one share of Series A Preferred Stock to Mr. Strattan in exchange for a portion
of the shares of common stock owned by him will allow Mr. Strattan to retain
control of our company in:
* any situation where our company issues additional shares of common stock
in a financing transaction or issues additional shares in acquisitions; or
* even if Mr. Strattan sells all of the shares of common stock that he will
retain after he exchanges a portion of his current common stock holdings for the
one share of Series A Preferred Stock.
Although Mr. Strattan has fiduciary duties to our company and our
shareholders, the creation and issuance of the one share of Series A Preferred
Stock to Mr. Strattan creates certain conflicts of interest between his
interests and those of our company and our shareholders, including:
* Mr. Strattan's continued control of our company:
The issuance of the one share of Series A Preferred Stock to him will
result in his continued control of our company so long as the shares
are outstanding. As a result of its voting rights, notwithstanding that
our common shareholders are entitled to vote on matters submitted to
our shareholders, so long as the Series A Preferred Stock is
outstanding Mr. Strattan will have the power to elect all of our
directors and to otherwise control our company.
* The designations, rights and preferences of the Series A Preferred Stock
could be amended in the future to include conversion rights:
The terms of conversion of the Series A Preferred Stock have not been
fixed and are determinable by our Board of Directors in its sole
discretion. Mr. Strattan is one of two members to our Board of
Directors. There is no limit on the number of shares of common stock
into which the Series A Preferred Stock could become convertible into
in the future, subject to the availability of authorized but unissued
shares of common stock. In addition, if our Board of Directors
determined in the future to fix conversion rights for the Series A
Preferred Stock, as a result of the designations, rights and
preferences of the Series A Preferred Stock, our Board (which includes
Mr. Strattan as one of the two members) could fix conversion rights for
the Series A Preferred Stock without the consent of our shareholders.
In addition, as no shareholder consent is required to fix the
conversion rights of the Series A Preferred Stock, we would not be
required to provide our shareholders with an information statement or
other prior notice regarding the action, if taken.
As the Series A Preferred Stock upon issuance will lack any conversion
feature, it will not be included in the calculation for earnings per
share by our company. However, if conversion rights were to be
established in the future, our earnings per share in future periods, if
any, could be reduced in proportion to the increase in the as yet
undeterminable number of shares of common stock into which the Series A
Preferred Stock may become convertible.
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
We are required to file annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
document we file at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C., and at its offices in New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for more information on the
operation of the public reference rooms. Copies of our SEC filings are also
available to the public from the SEC's web site at www.sec.gov.
CTD HOLDINGS, INC.
By: /s/ C.E. "Rick" Strattan
C.E. "Rick" Strattan, CEO
EXHIBIT A
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
CTD HOLDINGS, INC.
Pursuant to Section 607.1006 of the Business Corporation Act of the
State of Florida, the undersigned, being the President of CTD HOLDINGS, INC., a
corporation organized and existing under and by virtue of the Business
Corporation Act of the State of Florida (the "Corporation"), bearing document
number L93224, does hereby certify that the following resolutions were adopted
pursuant to the authority of the Board of Directors and the holder of
outstanding common stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted as required by Section
602.1003 of the Florida Business Corporation Act:
RESOLVED, that Article IV Capital Stock which appears in the
Corporation's Articles of Incorporation, as amended, be and hereby is deleted in
its entirety and substituted with the following:
ARTICLE IV. CAPITAL STOCK
The total number of shares of capital stock that this Corporation shall
have the authority to issue and to have outstanding at any one time is one
hundred million (100,000,000) shares of common stock, par value $0.001 per
share, and five million (5,000,000) shares of preferred stock, par value $0.001
per share. Series of the preferred stock may be created and issued from time to
time, with such designations, preferences, conversion rights, cumulative,
relative, participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions providing for the creation and
issuance of such series of preferred stock as adopted by the Board of Directors
of the Corporation pursuant to the authority in this paragraph given. Cumulative
voting by any shareholder is hereby expressly denied. No shareholder of this
Corporation shall have, by reason of it holding shares of any class or series of
stock of the Corporation, any preemptive or preferential rights to purchase or
subscribe for any other shares of any class or series of this Corporation now or
hereafter authorized, and any other equity securities, or any notes, debentures,
warrants, bonds or other securities convertible into or carrying options or
warrants to purchase shares of any class, now or hereafter authorized, whether
or not the issuance of any such shares, or such notes, debentures, bonds or
other securities, would adversely affect the dividend or voting rights of such
shareholder.
Series A Preferred Stock
The Corporation hereby designates one (1) share of the authorized
shares of preferred stock as Series A Preferred Stock. The rights, preferences,
privileges, restrictions and other matters related to the Series A Preferred
Stock are as follows:
1. Stated Value and Dividends. The stated value of the Series A Preferred
Stock shall be $0.001. The holder of share of Series A Preferred Stock shall not
be entitled to receive dividends.
2. Liquidation Preference. In the event of any liquidation, dissolution or
winding up of this Corporation, either voluntary or involuntary, the holder of
Series A Preferred Stock may at his sole option elect to receive, prior and in
preference to any distribution of any of the assets of this Corporation to the
holders of common stock by reason of their ownership thereof, an amount per
share equal to $0.001 for the outstanding share of Series A Preferred Stock.
Upon the completion of this distribution and any other distribution that may be
required with respect to series of preferred stock of this Corporation that may
from time to time come into existence, if assets remain in this Corporation the
holders of the common stock of this Corporation shall receive all of the
remaining assets of this Corporation. For purposes of this Section 2, a
liquidation, dissolution or winding up of this Corporation shall be deemed to be
occasioned by, or to include, (i) the acquisition of the Corporation by another
entity by means of any transaction or series of related transactions including,
without limitation, any reorganization, merger or consolidation but, excluding
any merger effected exclusively for the purpose of changing the domicile of the
Corporation or any transaction in which the Corporation is the surviving entity
or (ii) a sale of all or substantially all of the assets of the Corporation
unless the Corporation's shareholders of record as constituted immediately prior
to such transaction will, immediately after such transaction (by virtue of
securities issued as consideration in the transaction) hold at least 50% of the
voting power of the surviving or acquiring entity. Whenever a distribution
provided for in this Section 2 shall be payable in securities or property other
than cash, the value of such distribution shall be the fair market value of such
securities or other property as determined and agreed to by the Board of
Directors of this Corporation.
3. Redemption. The Series A Preferred Stock is not redeemable without the
prior written consent of the holder of such Series A Preferred Stock.
4. Conversion. The share of Series A Preferred Stock shall be convertible,
at the sole option of the Corporation, at any time after the date of issuance of
such share at the office of this Corporation into such number of fully paid and
non-assessable shares of common stock of the Corporation as is determined by
mutual agreement of the Corporation and the holder of the Series A Preferred
Stock at the time of conversion.
5 Voting Rights. The holder of the share of Series A Preferred Stock shall
have the following voting rights:
(a) The holder of the share of Series A Preferred Stock shall
be entitled to vote on all matters submitted to a vote of the shareholders of
the Corporation, voting together with the holders of the common stock and of any
other shares of capital stock of the Corporation entitled to vote at a meeting
of shareholders as one class, except in cases where a separate or additional
vote or consent of the holders of any class or series of capital stock or other
equity securities of the Corporation shall be required by these Articles or
applicable law, in which case the requirement for any such separate or
additional vote or consent shall apply in addition to the single class vote or
consent otherwise required by this paragraph.
(b) As of each record date for the determination of the
Corporation's shareholders entitled to vote on any matter (a "Record Date"), the
share of Series A Preferred Stock shall have voting rights and powers equal to
the number of votes that entitle the holder of the share of Series A Preferred
Stock to exercise one vote more than one-half of all votes entitled to be cast
as of such Record Date by all holders of capital stock of the Corporation so as
to ensure that the votes entitled to be cast by the holder of the share of
Series A Preferred Stock shall be equal to at least fifty-one percent (51%) of
all votes entitled to be cast.
(c) Without the written consent of the holder of the share of
Series A Preferred Stock at a meeting of the shareholders of this Corporation
called for such purpose, the Corporation will not amend, alter or repeal any
provision of the Articles of Incorporation (by merger or otherwise) so as to
adversely affect the preferences, rights or powers of the Series A Preferred
Stock.
6. Status of Redeemed Stock. In the event the share of Series A Preferred
Stock shall be redeemed pursuant to Section 3 hereof, or converted pursuant to
Section 4 hereof, the share shall be cancelled and returned to the status of
authorized but unissued shares of preferred stock.
7. Taxes. This Corporation will pay all taxes (other than taxes based upon
income) and other governmental charges that may be imposed with respect to the
issue or delivery of the share of Series A Preferred Stock.
The foregoing amendment was duly adopted by the unanimous written consent
of the Board of Directors as of May 26, 2004 and by the written consent of the
holders of outstanding capital stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted effective [ ],
2004.
IN WITNESS WHEREOF, the undersigned, being the President of this
Corporation, has executed these Articles of Amendment as of [ ], 2004.
CTD HOLDINGS, INC.
By:
C.E. "Rick" Strattan, President