S-1

As filed with the Securities and Exchange Commission on June 27, 2019

Registration No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              CTD HOLDINGS, INC.                              

(Exact name of registrant as specified in its charter)

Florida	2833	59-3029743
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

6714 NW 16th Street, Suite B

Gainesville, FL 32563

(386) 418-8060

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

N. Scott Fine
Chief Executive Officer

CTD Holdings, Inc.
6714 NW 16th Street, Suite B

Gainesville, FL 32563
(386) 418-8060
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of Communications to:

Alison Newman, Esq.
Zev M. Bomrind, Esq.

Fox Rothschild LLP

101 Park Avenue

New York, New York 10178

(212) 878-7997

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company)	Smaller reporting company [X]
	Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Exchange Act.

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered (1)		Proposed Maximum Offering Price Per Share(2)		Proposed Maximum Aggregate Offering Price(2)		Amount of Registration Fee
Common stock, par value $0.0001 per share		60,899,000	$	0.43	$	26,186,570	$	3,173.81

(1)

In accordance with Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.

(2)

The proposed maximum offering price per share and the proposed maximum aggregate offering price have been estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities Act of 1933 on the basis of the average of the high and low prices of the Common Stock on the OTC Markets on June 21, 2019, a date within five trading days prior to the date of the filing of this registration statement.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED JUNE 27, 2019

60,899,000 Shares of Common Stock

This prospectus relates to the offering and resale by the selling shareholders identified herein of up to 60,899,000 shares of Common Stock issued or issuable to such selling shareholders in connection with a private placement completed on May 31, 2019, including:

● 29,770,000 issued and outstanding shares of Common Stock;

● 29,770, 000 shares of Common Stock issuable upon exercise of Warrants (the “Investor Warrants”); and

● 1,359,000 shares of Common Stock issuable upon exercise of placement agent warrants (the “Placement Agent Warrants” and together with the Investor Warrants, the “Warrants”). 

We will not receive any proceeds from the sale of these shares by the selling shareholders. Upon the exercise of the Warrants for an aggregate of 31,129,000 shares of Common Stock by payment of cash however, we will receive the exercise price of the Warrants, or an aggregate of $9,338,700.

The selling shareholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Please see the section entitled “Plan of Distribution” on page 42 of this prospectus for more information. For more information about the private placement, please see the section entitled “May 2019 Private Placement” on page 33 of this prospectus. For a list of the selling shareholders, see the section entitled “Selling Shareholders” on page 34 of this prospectus. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.

Our Common Stock is quoted on the OTCQB under the symbol “CTDH.” On June 27, 2019, the closing price per share of our Common Stock as quoted on the OTCQB was $0.[__] per share.

We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments or supplements carefully before you make your investment decision.

Investing in our Common Stock involves risks. You should carefully read the “Risk Factors” beginning on page 3 of this prospectus before investing.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Prospectus dated [●], 2019.

TABLE OF CONTENTS

Prospectus Summary	1
Risk Factors	3
Disclosure Regarding Forward-looking Statements	8
Use Of Proceeds	8
Market Price for our Common Stock and Dividends	9
Our Business	10
Description Of Property	15
Legal Proceedings	15
Management’s Discussion And Analysis Of Financial Condition And Results Of Operation	16
Management	23
Executive Compensation	25
Security Ownership Of Certain Beneficial Owners And Management	27
Certain Relationships And Related Party Transactions And Director Independence	29
Description Of Securities	30
May 2019 Private Placement	33
Selling Shareholders	34
Plan Of Distribution	41
Legal Matters	43
Experts	43
About This Prospectus	43
Where you can find more information	43
Index to consolidated financial statements	F-1

The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, governmental publications, reports by market research firms or other independent sources. Some data are also based on our good faith estimates.

You should rely only on the information contained in or incorporated by reference into this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information provided in this prospectus is accurate as of any date other than the date on the front of this prospectus.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our securities. You should read carefully the entire prospectus, including “Risk Factors” and the financial statements and notes thereto, before making an investment decision.

Unless otherwise indicated or the context otherwise requires, all references to the “Company,” the “registrant” “we,” “us” or “our” and similar terms in this prospectus refer to CTD Holdings, Inc. and its subsidiaries.

CTD Holdings, Inc.

We were organized as a Florida corporation on August 9, 1990, with operations beginning in July 1992. In conjunction with a restructuring in 2000, we changed our name from Cyclodextrin Technologies Development, Inc., or CTDI, to CTD Holdings, Inc. CTDI was then incorporated as a Florida corporation and became a wholly owned subsidiary of CTD Holdings, Inc.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) in 2014 for our lead drug candidate, Trappsol^® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Type C disease (“NPC”). NPC is a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. In 2015, we launched an International Clinical Program for Trappsol^® Cyclo™ as a treatment for NPC. In 2016, we filed an Investigational New Drug application (“IND”) with the FDA, which describes our Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study will evaluate the safety of Trappsol^® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 14-week treatment period of intravenous administration of Trappsol^® Cyclo ™ every two weeks to participants 18 years of age and older. The IND was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol^® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017.

We have also filed Clinical Trial Applications for a Phase I/II clinical study with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The European Phase I/II study will evaluate the safety of Trappsol^® Cyclo™ along with a range of clinical outcomes, including neurologic, hepatic, and respiratory, in addition to measurements of cholesterol metabolism and markers of NPC. The European study is similar to the U.S. study, providing for the administration of Trappsol^® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial. The first patient was dosed in this study in July 2017

Preliminary data from our clinical studies suggests that Trappsol® CycloTM crosses the blood-brain-barrier in individuals suffering from NPC. Following intravenous administration of Trappsol® CycloTM to study subjects, it was detected in subjects' cerebrospinal fluid. The clinical significance of these findings will be determined as part of the final analysis of both clinical trials.

We are also exploring the use of cyclodextrins in the treatment of Alzheimer's disease under a collaborative arrangement with Kerwin Research Center, which is funding this project. In January 2018, the FDA authorized a single patient IND expanded access program using Trappsol® Cyclo™ for the treatment of this disease, and in October 2018, we filed a patent application with respect to the use of hydroxypropyl beta cyclodextrins in the treatment of Alzheimer's disease.

We also continue to operate our legacy fine chemical business, consisting of the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business that had been primarily reselling basic cyclodextrin products.

Our principal offices are located at 6714 NW 16^th Street, Suite B, Gainesville, FL 32563, and our telephone number is (386) 418-8060. We maintain a website at www.ctd-holdings.com. Information contained on our website does not constitute part of this prospectus.

1

The Offering

The following summary contains basic information about the offering and the securities being registered hereunder and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the securities we are offering, please refer to the sections of this prospectus titled “Description of Capital Stock.”

Securities Being Offered by the Selling Shareholders:	60,899,000 Shares of Common Stock, including (i) 29,770,000 issued and outstanding shares of Common Stock, (ii) 29,770,000 shares of Common Stock issuable upon exercise of Investor Warrants, and (iii) 1,359,000 shares of Common Stock issuable upon exercise of Placement Agent Warrants.
Trading Market	The Common Stock offered in this prospectus is quoted on the OTCQB under the symbol “CTDH.” We have filed an application to have our Common Stock listed on the Nasdaq Capital Market. However, we may not be successful in having our shares listed on the Nasdaq Capital Market.
Shares of Common Stock Outstanding Before the Offering:	121,034,463(1)
Shares of Common Stock Outstanding After the Offering:	152,163,463(2)
Use of Proceeds:	We will not receive any of the proceeds from the sale of the shares of our Common Stock being offered for sale by the selling shareholders. Upon the exercise of the Warrants for an aggregate of 31,129,000 shares of Common Stock by payment of cash however, we will receive the exercise price of the Warrants, or an aggregate of approximately $9,338,700.
Plan of Distribution:	The selling shareholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Registration of the Common Stock covered by this prospectus does not mean, however, that such shares necessarily will be offered or sold. See “Plan of Distribution.”
Risk Factors:	An investment in our securities involves a high degree of risk and could result in the loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 3 of this prospectus.

(1) The number of shares of Common Stock shown above to be outstanding before this offering excludes (i) 29,700,000 shares of Common Stock issuable upon exercise of the Investor Warrants, (ii) 1,359,000 shares of Common Stock issuable upon exercise of the Placement Agent Warrants, (iii) 32,192,294 shares of Common Stock issuable upon exercise of warrants issued to investors in previous private placements conducted by the Company, and (iv) 1,868,147 shares of Common Stock issuable upon exercise of “Unit” warrants issued in connection previous private placements conducted by the Company.

(2) The number of shares of Common Stock shown above to be outstanding after this offering is based on 121,034,463 shares outstanding as of the date of this prospectus and assumes the exercise of the (i) Investor Warrants into an aggregate of 29,700,000 shares of Common Stock, and (ii) Placement Agent Warrants into an aggregate of 1,359,000 shares of Common Stock.

2

RISK FACTORS

An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors in addition to other information in this prospectus before purchasing our securities. The risks and uncertainties described below are those that we currently deem to be material and that we believe are specific to our company, our industry and our securities. In addition to these risks, our business may be subject to risks currently unknown to us. If any of these or other risks actually occurs, our business may be adversely affected, the trading price of our common securities may decline and you may lose all or part of your investment.

Business and Financial Risks

We have suffered recent losses and our future profitability is uncertain.

We have incurred net losses of approximately $4.3 million and $3.8 million for the years ended December 31, 2018 and December 31, 2017, respectively, and $1.9 million for the quarter ended March 31, 2019. Our recent losses have predominantly resulted from research and development expenses for our Trappsol^® Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol^® Cyclo™ in the treatment of NPC. As a result, we expect our operating losses to continue until such time, if ever, that product sales, licensing fees, royalties and other sources generate sufficient revenue to fund our operations. We cannot predict when, if ever, we might achieve profitability and cannot be certain that we will be able to sustain profitability, if achieved.

We are largely dependent upon the success of our Trappsol® Cyclo™ product, which may never receive regulatory approval or be successfully commercialized.

While we sell cyclodextrins for use and research in numerous industries, our lead drug candidate, Trappsol^® Cyclo,™ is the focus of much of our management team’s development efforts. The product is currently designated as an orphan drug in the United States and Europe. We plan to make substantial investment in continued research and development of our Trappsol^® Cyclo™ product in connection with obtaining approval for marketing the product for the treatment of NPC. The potential population of patients is small, and our ability to market the drug for use other than research is severely constrained by regulatory restrictions. In the course of its development, our Trappsol^® Cyclo™ drug product will be subject to extensive and rigorous government regulation through the European Medicines Agency in the E.U. and through the Food and Drug Administration (FDA) in the United States. Regulatory approval in any jurisdiction cannot be guaranteed. There can be no guarantees that our product will be deemed by the regulatory agencies of any jurisdiction to be effective and safe in the treatment of NPC or any other disease. Despite the time and expense involved in developing a drug candidate, failure of a drug candidate can occur at any stage of development and for many reasons, including without limitation negative or inconclusive results from pre-clinical data or clinical trials. Failure to comply with applicable regulatory requirements in any jurisdiction, either before or after product approval, may subject us to administrative or judicially imposed sanctions.

The report of our independent registered public accounting firm expresses substantial doubt about our ability to continue as a going concern.

Our auditors, WithumSmith+Brown, PC., have indicated in their report on our consolidated financial statements for the fiscal year ended December 31, 2018, that conditions exist that raise substantial doubt about our ability to continue as a going concern due to our recurring losses from operations and significant accumulated deficit. In addition, we continue to experience negative cash flows from operations. Our ability to continue as a going concern will depend upon the availability of equity financing which represents the primary source of cash flows that will permit us to meet our financial obligations as they come due and continue our research and development efforts. 

We will need additional capital to fund our operations as planned.

For the year ended December 31, 2018, our operations used approximately $3,188,000 in cash, and for the quarter ended March 31, 2019, our operations used $1,225,223 in cash. This cash was provided primarily by cash on hand and net proceeds of $4,102,000 from equity issuances.  Although we completed a private placement in May 2019 in which we generated gross proceeds of $7,442,500, before deducting placement agent fees and offering expenses, we will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products. We will seek such additional funds through public or private equity or debt financings and other sources. We cannot be certain that adequate additional funding will be available to us on acceptable terms, if at all. If we cannot raise the additional funds required for our anticipated operations, we may be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current shareholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock. 

3

Later discovery of previously unknown problems could limit our ability to market or sell Trappsol® Cyclo™, even if it is initially approved, and can expose us to product liability claims.

Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with any third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: 

● refusals or delays in the approval of applications or supplements to approved applications;

● refusal of a regulatory authority to review pending market approval applications or supplements to approved applications;

● restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory product recalls or seizures;

● fines, warning letters, or holds on clinical trials;

● import or export restrictions;

● injunctions or the imposition of civil or criminal penalties;

● restrictions on product administration, requirements for additional clinical trials, or changes to product labeling requirements; or

● recommendations by regulatory authorities against entering into governmental contracts with us.

Discovery of previously unknown problems or risks relating to our product could also subject us to potential liabilities through product liability claims.

If we do not obtain required approvals in other countries in which we aim to market our products, we will be limited in our ability to export or sell the products in those markets.

Our lack of experience in conducting clinical trials in any jurisdiction may negatively impact the approval process in those jurisdictions where we intend to seek approval of Trappsol® Cyclo™. If we are unable to obtain and maintain required approval from one or more foreign jurisdictions where we would like to sell Trappsol® Cyclo™, we will be unable to market products as intended, our international market opportunity will be limited and our results of operations will be harmed.

We rely upon third parties for the manufacture of Trappsol® Cyclo™ and are dependent on their quality and effectiveness.

Our primary drug candidate requires precise, high-quality manufacturing. The failure to achieve and maintain high manufacturing standards, including the failure to conform to c-GMP (current Good Manufacturing Practice), or to detect or control anticipated or unanticipated manufacturing errors or the frequent occurrence of such errors, could result in discontinuance or delay of ongoing or planned clinical trials, delays or failures in product testing or delivery, cost overruns, product recalls or withdrawals, patient injury or death, and other problems that could seriously hurt our business. Contract drug manufacturers often encounter difficulties involving production yields, quality control and quality assurance and shortages of qualified personnel. These manufacturers are subject to stringent regulatory requirements, including the FDA’s c-GMP regulations and similar foreign laws and standards. If our contract manufacturers fail to maintain ongoing compliance at any time, the production of our product candidates could be interrupted, resulting in delays or discontinuance of our clinical trials, additional costs and loss of potential revenues.

4

We rely in part on third parties for research and clinical trials for products using Trappsol® Cyclo™.

We rely on contact research organizations, academic institutions, corporate partners, and other third parties to assist us in managing, monitoring, and otherwise carrying out clinical trials and research activities. We rely or will rely heavily on these parties for the execution of our clinical studies and control only certain aspects of their activities. Accordingly, we may have less control over the timing and other aspects of these clinical trials than if we conducted them entirely on our own. Although we rely on these third parties to manage the data from clinical trials, we will be responsible for confirming that each of our clinical trials is conducted in accordance with its general investigational plan and protocol. Our failure, or the failure of third parties on which we rely, to comply with the strict requirements relating to conducting, recording, and reporting the results of clinical trials, or to follow good clinical practices, may delay the regulatory approval process or cause us to fail to obtain regulatory approval for Trappsol^® Cyclo™.

We face competition from well-funded companies in the use of cyclodextrins to treat NPC.

We face competition from other entities, including pharmaceutical and biotechnology companies and governmental institutions, that are working on supporting orphan drug designations and clinical trials for different classes of cyclodextrins for the same NPC indications. Some of these entities are well-funded, with more financial, technical and personnel resources than we have, and have more experience than we do in designing and implementing clinical trials. If we are unable to compete effectively against our current or future competitors, sales of our Trappsol^® Cyclo™ product may not grow and our financial condition may suffer.

One of our customers accounts for a substantial portion of our revenue, and the loss of this customer would have a material adverse effect on our results of operations and reduce our ability to service our debt obligations.

Our single largest customer accounted for 18% of our total sales in fiscal 2018. Our largest four customers collectively accounted for 57% of total sales in fiscal 2018 and 76% of total sales for the quarter ended March 31, 2019. We have a supply contract with only one of our major customers. The loss of any one of these customers would have a material adverse effect on our financial results if we were unable to replace such customers.

We are dependent on certain third-party suppliers.

We purchase the Trappsol^® cyclodextrin products we sell from third-party suppliers and depend on those suppliers for the cyclodextrins we use in our Aquaplex® products. We are also dependent on outside manufacturers that use lyophilization techniques for our Aquaplex® products.   We purchase substantially all of our Trappsol^® products from bulk manufacturers and distributors in the U.S., Japan, China, and Europe. Although products are available from multiple sources, an unexpected interruption of supply, or material increases in the price of products, for any reason, such as regulatory requirements, import restrictions, loss of certifications, power interruptions, fires, hurricanes, war or other events could have a material adverse effect on our business, results of operations, financial condition and cash flows. 

We may be negatively affected by currency exchange rate fluctuations.

Our earnings and cash flows are influenced by currency fluctuations due to the geographic diversity of our suppliers, which may have a significant impact on our financial results.  As we buy inventory from foreign suppliers, the change in the value of the U.S. dollar in relation to the Euro, Yen and Yuan has an effect on our cost of inventory, and will continue to do so. We buy most of our products from outside the U.S. using U.S. dollars. Our main supplier of specialty cyclodextrins and complexes, Cyclodextrin Research & Development Laboratory, is located in Hungary and its prices are set in Euros. The cost of our bulk inventory often changes due to fluctuations in the U.S. dollar. These products represent a significant portion of our revenues. When we experience short-term increases in currency fluctuation or supplier price increases, we are often not able to raise our prices sufficiently to maintain our historical margins and therefore, our margins on these sales may decline. If the U.S. dollar weakens against foreign currencies, the translation of these foreign currency denominated transactions may adversely affect our results of operations and financial condition.

5

We are dependent on our executive officers, and we may not be able to pursue our current business strategy effectively if we lose them.

Our success to date has largely depended on the efforts and abilities of our executive officers, namely N. Scott Fine, our Chief Executive Officer, Jeffrey L. Tate, Ph.D., our Chief Operating Officer, and Dr. Sharon Hrynkow, our Chief Scientific Officer. Our ability to manage our operations and meet our business objectives could be adversely affected if, for any reason, such officers do not remain with us.

We do not have an independent board committees.

Our audit, compensation and governance committees are not comprised exclusively of independent directors.  Although we intend to implement independent committees consistent with Nasdaq Listing Standards in connection with our application to list our Common Stock on the Nasdaq Capital Market and our directors are subject to the fiduciary duties imposed on Board members pursuant to Florida law, our shareholders do not currently have the protection afforded by a board independent committees which are some of the traditional procedural safeguards that protect the interests of minority shareholders.  

Risks Related To Our Common Stock and This Offering

We are significantly influenced by one person who controls a significant majority of our voting stock.

As of June 1, 2019, C.E. Rick Strattan, our founder and one of our directors, held the beneficial power to vote 20,608,385 shares of Common Stock (including 630,738 shares of Common Stock owned by a tax exempt organization over which Mr. Strattan has sole voting and dispositive power), or approximately 17% of the issued and outstanding shares of Common Stock. Accordingly, Mr. Strattan has the power to influence the outcome of important corporate decisions or matters submitted to a vote of our shareholders. Although Mr. Strattan owes the Company certain fiduciary duties as a director of the Company, the personal interests of Mr. Strattan may conflict with, or differ from, the interests of other holders of our capital stock. Under a Voting Agreement between Mr. Strattan and us dated February 19, 2014, he has agreed to vote his shares of Common Stock for the slate of directors nominated by the Company’s Board for seven (7) years, which slate will be required to include two representatives of investors in the private placement consummated on the same date. This arrangement could have the effect of preventing a change of control of the Company. So long as Mr. Strattan has the power to vote a substantial number of shares of our Common Stock, he will have the power to significantly influence and/or control all our corporate decisions and will be able to effect or inhibit changes in control of the Company.

Broker-dealers may be discouraged from effecting transactions in our Common Stock because it is considered a penny stock and is subject to the penny stock rules.

Our Common Stock currently constitutes “penny stock.”  Subject to certain exceptions, including the listing of the security on a national securities exchange, such as the Nasdaq Capital Market, for the purposes relevant to us, “penny stock” includes any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share.  Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a “penny stock.”  In particular, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse), must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission (“SEC”) relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

6

As an issuer of “Penny Stock” the protection provided by the federal securities laws relating to forward looking statements does not apply to us.

Although the federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, if we are a penny stock, we will not have the benefit of this particular safe harbor protection in the event of any claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. 

We have a limited market for our securities.

Although certain market makers facilitate trades of our Common Stock on the OTCQB tier of the OTC Markets Group, there is currently a limited market for shares of our Common Stock and we cannot be certain that an active market will develop.  The lack of an active public market could have a material adverse effect on the price and liquidity of our Common Stock.  Broker-dealers often decline to trade in OTCQB stocks given that the market for such securities is often limited, the stocks are more volatile, and the risk to investors is greater. Consequently, selling our Common Stock may be difficult because smaller quantities of shares can be bought and sold, transactions can be delayed and securities analyst and news media coverage of our Company may be reduced. These factors could result in lower prices and larger spreads in the bid and ask prices for shares of our Common Stock as well as lower trading volume. Investors should realize that they may be unable to sell shares of our Common Stock that they purchase. Accordingly, investors must be able to bear the financial risk of losing their entire investment in our Common Stock.

Future sales of our Common Stock could reduce our stock price.

Sales by shareholders of substantial amounts of our Common Stock, or the perception that these sales may occur in the future, could materially and adversely affect the market price of our Common Stock. Furthermore, the market price of our Common Stock could drop significantly if our executive officers, directors, or certain large shareholders sell their shares, or are perceived by the market as intending to sell them.

Because we do not expect to pay dividends for the foreseeable future, investors seeking cash dividends should not purchase shares of Common Stock.

We have never declared or paid any cash dividends on our Common Stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors seeking cash dividends should not purchase our shares.

Provisions of our certificate of incorporation, bylaws and Florida law may make a contested takeover of our Company more difficult.

Certain provisions of our certificate of incorporation, bylaws and the Florida Business Corporation Act (the "Florida Act") could deter a change in our management or render more difficult an attempt to obtain control of us, even if such a proposal is favored by a majority of our shareholders. For example, we are subject to the provisions of the Florida Act that prohibit a public Florida corporation from engaging in a broad range of business transactions with a person who, together with affiliates, owns 10% or more of the corporation’s outstanding voting shares (an "affiliated Shareholder"), unless the transaction is approved in a prescribed manner or meets certain requirements. In addition, the Florida Act contains a control-share acquisition statute which limits the voting rights of “control shares” acquired in a “control-share acquisition” which is intended to deter hostile takeovers of publicly held Florida corporations. Our certificate of incorporation also includes undesignated preferred stock, which may enable our Board of Directors to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise. Florida law and our charter may, therefore, inhibit a takeover.

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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

The information contained in this prospectus contains certain forward-looking statements. All statements other than statements of historical facts contained or incorporated by reference in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “will,” “may,” “future,” “plan,” “intend” and “expect” and similar expressions generally identify forward-looking statements. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Although we believe that our plans, intentions and expectations reflected in the forward-looking statements are reasonable, we cannot be sure that they will be achieved. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements include: our history of losses; our inability to receive regulatory approval for our products; later discovery of previously unknown problems; reliance on third parties; competition between us and other companies in the industry; delays in the development of products; our ability to raise additional capital; continued services of our executive management team; and statements of assumption underlying any of the foregoing, as well as other factors set forth under the caption “Risk Factors” on page 3 of this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

USE OF PROCEEDS

Our Common Stock currently trades on the OTCQB under the symbol CTDH. Since the commencement of trading of the company’s securities, there has been an extremely limited market for its securities. The following table sets forth high and low bid quotations for the quarters indicated as reported by the OTCQB.

We will not receive any of the proceeds from the sale of the shares of our Common Stock being offered for sale by the selling shareholders. Upon the exercise of the Warrants for an aggregate of 31,129,000 shares of Common Stock by payment of cash however, we will receive the exercise price of the Warrants, or an aggregate of approximately $9,338,700. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock. Brokerage fees, commissions and similar expenses, if any, attributable to the sale of shares offered hereby will be borne by the applicable selling shareholders.

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MARKET PRICE AND DIVIDENDS

Market Price for our Common Stock

Our Common Stock currently trades on the OTCQB under the symbol CTDH. Since the commencement of trading of the company’s securities, there has been an extremely limited market for its securities. The following table sets forth high and low bid quotations for the quarters indicated as reported by the OTCQB.

		High		Low
2017	First Quarter	$	0.80	$	0.41
	Second Quarter	$	0.62	$	0.37
	Third Quarter	$	0.55	$	0.27
	Fourth Quarter	$	0.51	$	0.25
2018	First Quarter	$	0.45	$	0.25
	Second Quarter	$	0.40	$	0.25
	Third Quarter	$	0.77	$	0.30
	Fourth Quarter	$	1.18	$	0.50
2019	First Quarter	$	0.84	$	0.56
	Second Quarter (through June 27, 2019)	$	0.83	$	0.33

Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.

Holders

As of June 12, 2019, the number of holders of record of shares of Common Stock, excluding the number of beneficial owners whose securities are held in street name, was approximately 170.

Dividend Policy

We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of our Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board deems relevant.

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OUR BUSINESS

Overview

CTD Holdings, Inc. (“we” “our” “us” or “the Company”) was organized as a Florida corporation on August 9, 1990, with operations beginning in July 1992. In conjunction with a restructuring in 2000, we changed our name from Cyclodextrin Technologies Development, Inc., or CTDI, to CTD Holdings, Inc.; CTDI was then incorporated as a Florida corporation and became a wholly owned subsidiary of CTD Holdings, Inc.  

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) in 2014 for our lead drug candidate, Trappsol^® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Type C disease (“NPC”). NPC is a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. In 2015, we launched an International Clinical Program for Trappsol^® Cyclo™ as a treatment for NPC. In 2016, we filed an Investigational New Drug application (“IND”) with the FDA, which describes our Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study will evaluate the safety of Trappsol^® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 14-week treatment period of intravenous administration of Trappsol^® Cyclo ™ every two weeks to participants 18 years of age and older. The IND was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol^® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017.

We have also filed Clinical Trial Applications for a Phase I/II clinical study with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The European Phase I/II study will evaluate the safety of Trappsol^® Cyclo™ along with a range of clinical outcomes, including neurologic, hepatic, and respiratory, in addition to measurements of cholesterol metabolism and markers of NPC. The European study is similar to the U.S. study, providing for the administration of Trappsol^® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial. The first patient was dosed in this study in July 2017.

Preliminary data from our clinical studies suggests that Trappsol^® Cyclo™ crosses the blood-brain-barrier in individuals suffering from NPC. Following intravenous administration of Trappsol^® Cyclo™ to study subjects, it was detected in subjects' cerebrospinal fluid. The clinical significance of these findings will be determined as part of the final analysis of both clinical trials.

We are also exploring the use of cyclodextrins in the treatment of Alzheimer's disease under a collaborative arrangement with Kerwin Research Center, which is funding this project. In January 2018, the FDA authorized a single patient IND expanded access program using Trappsol^® Cyclo™ for the treatment of this disease, and in October 2018, we filed a patent application with respect to the use of hydroxypropyl beta cyclodextrins in the treatment of Alzheimer's disease.

We also continue to sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business that had been primarily reselling basic cyclodextrin products.

Cyclodextrins

Cyclodextrins are molecules that bring together oil and water, making the oily materials soluble in water, and have potential applications anywhere oil and water must be used together. Successful applications of cyclodextrins have been established in biotechnology, pharmaceuticals, agrochemicals, analytical chemistry, cosmetics, diagnostics, electronics, foodstuffs, and toxic waste treatment. Stabilization of food flavors and fragrances is the largest current worldwide market for cyclodextrin applications. We and others have developed cyclodextrin-based applications in stabilization of flavors for food products; elimination of undesirable tastes and odors; preparation of antifungal complexes for foods and pharmaceuticals; stabilization of fragrances and dyes; reduction of foaming in foods, cosmetics and toiletries; and the improvement of quality, stability and storability of foods.

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Cyclodextrins can improve the solubility and stability of a wide range of drugs. Many promising drug compounds are unusable or have serious side effects because they are either unstable or poorly soluble in water. Strategies for administering currently approved compounds involve injection of formulations requiring pH adjustment and/or the use of organic solvents. The result is frequently painful, irritating, or damaging to the patient. These side effects can be ameliorated by cyclodextrins. Cyclodextrins also have many potential uses in drug delivery for topical applications to the eyes and skin.  In 2010, Trappsol^® Cyclo™ was designated an orphan drug by the U.S. Food and Drug Administration for the treatment of NPC.  Trappsol^® Cyclo™ is the first use of a cyclodextrin as an active pharmaceutical and not just as an inactive formulation excipient.

Cyclodextrin Product Background

Cyclodextrins are donut shaped rings of glucose (sugar) molecules. Cyclodextrins are formed naturally by the action of bacterial enzymes on starch. They were first noticed and isolated in 1891. The bacterial enzyme naturally creates a mixture of at least three different cyclodextrins depending on how many glucose units are included in the molecular circle; six glucose units yield alpha cyclodextrin; seven units, beta cyclodextrin; eight units, gamma cyclodextrin. The more glucose units in the molecular ring, the larger the cavity in the center of the ring. The inside of this ring provides an excellent resting place for “oily” molecules while the outside of the ring is compatible with water, allowing clear, stable solutions of cyclodextrins to exist in aqueous environments even when an “oily” molecule is carried within the ring. The net result is a molecular carrier that comes in small, medium, and large sizes with the ability to transport and deliver “oily” materials using plain water as the solvent.  It is the ability of molecular encapsulation of compounds that makes cyclodextrins so useful chemically and pharmaceutically.

Cyclodextrins are manufactured commercially in large quantities by mixing purified enzymes with starch solutions. A mixture of alpha, beta, and gamma cyclodextrins can be manufactured by this enzymatic modification of starch with purified natural enzymes and therefore are considered to be natural products. Additional processing is required to isolate and separate the individual cyclodextrins. The purified alpha, beta and gamma cyclodextrins are referred to collectively as natural or native cyclodextrins.

The hydroxyl chemical groups on each glucose unit in a cyclodextrin molecule provide chemists with ways to modify the properties of the cyclodextrins, i.e. to make them more water soluble or less water soluble, thereby making them better carriers for a specific chemical. The cyclodextrins that result from chemical modifications are no longer considered natural and are referred to as chemically modified cyclodextrins. Since the property modifications achieved are often advantageous to a specific application, the Company does not believe the loss of the natural product categorization will prevent its ultimate pharmaceutical use. It does, however, create a greater regulatory burden.

Use of Cyclodextrins to Treat NPC

Natural cyclodextrins have been confirmed to be generally recognized as safe (GRAS) in most of the world, including the U.S. Moreover, approvals of products containing cyclodextrins by the FDA since 2001 suggest that regulatory approval for new products may be easier to obtain in the future. In 2001, Janssen Pharmaceutica, now a subsidiary of Johnson & Johnson, received FDA approval to market Sporanox®, an antifungal which contained hydroxypropyl beta cyclodextrin as an excipient. In 2009, one of our products was used in an FDA approved compassionate use investigational new drug protocol for the treatment of NPC. Under the Orphan Drug Act, companies that develop a drug for a disorder affecting fewer than 200,000 people in the United States may seek designation as an orphan drug. If such designation is approved, a company will have the ability to sell the drug exclusively for seven years following FDA drug approval, and the company may receive clinical trial tax incentives.  On May 17, 2010, the FDA designated Trappsol^® Cyclo™ as an orphan drug for the treatment of NPC. We have also obtained Orphan Drug Designation for Trappsol^® Cyclo™ in Europe. Trappsol^® Cyclo™ has been administered to more than 20 NPC patients in compassionate use programs around the world, including in the U.S., Brazil and Spain. The doctors and patients participating in these programs, including patients that have been administered Trappsol^® Cyclo™ intravenously for more than five years, have made their data available to us, which we used to design our clinical studies in the U.S. and abroad.

Other Cyclodextrin Uses

Applications of cyclodextrins in personal products and for industrial uses have appeared in many patents and patent applications. Cyclodextrins are used in numerous brand-name household goods, including fabric softeners and air fresheners. With increased manufacturing capacity and supply, the prices of the natural cyclodextrins have decreased to the point that use of these materials is considered in even the most price sensitive goods.

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In Japan, at least twelve pharmaceutical preparations are now marketed which contain cyclodextrins; there are also multiple products in Europe and the United States.  Cyclodextrins permit the use of all routes of administration. Ease of delivery and improved bioavailability of such well-known drugs as nitroglycerin, dexamethasone, PGE(1&2), and cephalosporin permit these “old” drugs to command new market share and sometimes new patent lives. Because of the value added, it is management’s opinion that the dollar value of the worldwide market for products containing cyclodextrins and for complexes of cyclodextrins can be substantially greater than that of the market sales of the cyclodextrin itself. 

Our Cyclodextrin Products

Substantially all of our revenues are derived from our legacy fine chemical business, consisting of the sale of cyclodextrins, including cyclodextrin complexes, the resale of cyclodextrins manufactured by others for our clients to their specifications, and our own licensed cyclodextrin products. We have trademarked certain products under our Trappsol^® and Aquaplex^® product lines. The Trappsol^® product line includes basic cyclodextrins, and cyclodextrins with different chemical adducts resulting in more than 261 different cyclodextrins products available for sale from us. The Aquaplex^® product line includes various cyclodextrins combined with more than 80 different active ingredients that, only as a complex, then become water soluble; we currently list for sale more than 116 different Aquaplex® products. Historically, substantially all of our sales of Aquaplex^® products were to one chemical supply house, Sigma-Aldrich Fine Chemical.  Sales of Trappsol^® and Aquaplex^® comprise approximately 88% and 12%, respectively, of our 2018 product sales.  The Trappsol^® and Aquaplex^® products can be used in many industries, the largest being the food and pharmaceutical industries.  We do not have any other registered trademarks and do not have any patents or licenses.

We have protected our Trappsol^® and Aquaplex^® trademarks used in our legacy fine chemical business by registering them with the U.S. Patent and Trademark Office.  These trademarks add additional visibility to our products and reputation as a leader in the industry. Our website at www.cyclodex.com has grown to be an important cyclodextrin information Internet site.

Natural and chemically modified cyclodextrins are available from at least four major commercial manufacturers around the world, including Wacker Biosolutions, a division of Wacker Chemie AG (Germany), with a production facility located in Adrian, Michigan; Mitsubishi Chemical Corporation (Japan); Roquettes Freres (France); and Hangzhou Pharma and Chem Co. (China).  Prior to 2008, we purchased all of our Aquaplex^® cyclodextrin complex products from Cyclodextrin Research & Development Laboratory, which is located in Budapest, Hungary; there are few, if any, other sources in the world for commercial quantities of current Good Manufacturing Practice (c-GMP) cyclodextrin complexes.  While we continue to purchase many of our cyclodextrin materials from Cyclodextrin Research & Development Laboratory, we also produce our own Aquaplex^® materials. Additionally, we use third party manufacturers, such as Equinox Chemical in Albany, Georgia, to develop cyclodextrin complexes.   We historically have not had difficulties obtaining natural and chemically modified cyclodextrins from our suppliers and we do not expect to experience any difficulties obtaining adequate cyclodextrins for our current and expected expanded future needs.  

 Customers

We currently sell our legacy fine chemical products directly to customers in the pharmaceutical, diagnostics, and industrial chemical industries, and to chemical supply distributors.  For the year ended December 31, 2018, our revenues consisted of 17% biopharmaceuticals, 71% basic natural and chemically modified cyclodextrins, and 12% cyclodextrin complexes.

Our cyclodextrin sales historically involve small quantities (i.e., less than 1.0 kg).  We sell directly to our customers, package the orders at our facility and ship using common carriers.  

The majority of our revenues are from five to ten customers who have historically been repeat purchasers. In 2018 and 2017, one customer (UNO Healthcare, Inc.) accounted for 15% and 23% of our total revenue, respectively.  Sigma-Aldrich Fine Chemical, Inc. accounts for almost 95% of our 2018 and 2017 annual sales of Aquaplex®. In a given year, we typically sell to fewer than 200 individual customers. Our industrial customers buy products from us as needed primarily for product research and development purposes.  Therefore, it is difficult to predict future sales from these customers, as it is dependent on the current cyclodextrin related research and development activities of others, which we have monitored in the past by following  the issuance and applications of patents in the US and elsewhere.

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We intend to continue promoting the use of Trappsol^® and Aquaplex^® products in the research and product development activities of existing and new customers and clients.

Competition 

We face competition in the commercialization of our Trappsol^® Cyclo™ orphan drug product. An effort to pursue a similar product has been announced by another company, and the disclosed team is composed of professionals in the finance and pharmaceutical industries. We believe our longstanding efforts, our close connections with patient advocacy groups in the U.S. and Europe, and the fact that we have a finished product currently in use in human patients all give us a competitive advantage.

We have also noted increased competition for the distribution of small quantities of cyclodextrins. Those we have examined are small operations or small offerings of a larger distributor that lack the focus and depth of expertise offered by the Company. They are also most often not price competitive with our products. We believe there is a perceived barrier to entry into the cyclodextrin industry because of the lack of general experience with cyclodextrins. We have established business relationships with many of the producers and consumers of cyclodextrins worldwide and, over more than 30 years, we have developed an unmatched experience database. We believe these relationships and market knowledge provide significant business advantages.

Research and Development

We are currently pursuing clinical programs in the U.S., Europe and Israel in an effort to gain market authorization of our bio-pharmaceutical product for the treatment of NPC. We have made a substantial investment in the research and development of our Trappsol^® Cyclo™ product as we seek approval for marketing the product for the treatment of NPC. We are also exploring the use of cyclodextrins in the treatment of Alzheimer's disease. We will continue to expend substantial funds in support of these efforts with the progression of our clinical trials, which we commenced in 2017. Research and development expenses increased to approximately $2,711,000 in 2018, from $2,293,000 in 2017.

We also conduct research and development focused on the improvement of our manufacturing processes. We occasionally initiate research to develop a new product such as a novel cyclodextrin complex that has promising applications and is not otherwise available.  We do not currently conduct, nor have we historically conducted, research and development activities or on behalf of or jointly with our customers.  Our clients bear their own research and development costs.   

Government Regulation

The development, production and marketing of biological products, which include the proposed use of Trappsol^® Cyclo™ to treat disease, including NPC, are subject to regulation for safety, efficacy and quality by numerous governmental authorities in the U.S. and other countries. In the U.S., the development, manufacturing and marketing of pharmaceuticals are subject to extensive regulation under the Federal Food, Drug, and Cosmetic Act. The FDA, and comparable agencies in foreign countries, not only assesses the safety and efficacy of these products but also regulate, among other things, the testing, manufacture, labeling, storage, record-keeping, advertising and promotion of such products. The process of obtaining FDA and foreign regulatory approval for a new pharmaceutical is costly and time-consuming.

Under the Federal Food, Drug and Cosmetic Act, the FDA is also given comprehensive authority to regulate the development, production, distribution, labeling and promotion of food and food additives. The FDA’s authority includes the regulation of the labeling and purity of our food additive and nutraceutical products. In the event the FDA believes any company is not in compliance with the law, the FDA can institute proceedings to detain or seize products, enjoin future violations or assess civil and/or criminal penalties against that Company.

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Trappsol^® Cyclo™ has been granted orphan drug status by the FDA. It has been used by a limited number of customers for the treatment of NPC under the supervision of a physician following an Investigational New Drug (IND) protocol approved by the FDA. All of our other products are sold for our customers’ research and development purposes only, and do not require FDA approval. Any use in humans as a drug or food product would require compliance with FDA regulations. Under present FDA regulations, FDA defines drugs as “articles intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease in man.” In 2014, the Company submitted a Type II Drug Master File (DMF) to the FDA for Trappsol^® Cyclo™ and it was accepted for filing. This DMF (#028889) can now be cited by researchers seeking IND approval for use of Trappsol^® Cyclo™ in the treatment of disease. This same product is also the focus of a clinical program to achieve market authorization in Europe. As such it will be subject to the regulatory authorities in that jurisdiction including, but not limited to, the European Medicines Agency (EMEA). Trappsol^® Cyclo™ has also been designated an orphan drug in Europe.

Our IND for Trappsol^® Cyclo™ as a treatment for NPC was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol^® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017. We have also filed Clinical Trial Applications for a Phase I/II clinical study with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The European Phase I/II study will evaluate the safety of Trappsol^® Cyclo™ along with a range of clinical outcomes, including neurologic, hepatic, and respiratory, in addition to measurements of cholesterol metabolism and markers of NPC. The European study is similar to the U.S. study, providing for the administration of Trappsol^® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial. The first patient was dosed in this study in July 2017.

There have been a number of federal and state legislative changes made over the last few years regarding the pricing of pharmaceutical products, government control and other changes to the healthcare system of the U.S. It is uncertain how such legislative changes will be adopted or what actions federal, state or private payers for medical goods and services may take in response to such legislation. We cannot predict the effect such healthcare changes will have on our business, and no assurance can be given that any such reforms will not have a material adverse effect.

Employees

As of June 25, 2019, we employed seven people on a full-time basis. None of our employees belong to a union.  We believe relations with our employees are good.

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DESCRIPTION OF PROPERTY

We do not currently own any real property. In December 2016, we sold our office and manufacturing facility located in Alachua, Florida for $800,000. On November 26, 2018, we exercised a two-year renewal option, commencing February 2019, with respect to our lease of approximately 2,500 square feet of office and warehouse space located in Gainesville, Florida for $1,600 per month. We believe that this leased property is currently sufficient for our operating requirements.

LEGAL PROCEEDINGS

From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and allocates additional monies for potential losses on such litigation if it is possible to estimate the amount of loss and if the amount of the loss is probable. Other than as set forth above, we are not currently involved in any litigation nor to our knowledge, is any litigation threatened against us, the outcome of which would, in our judgment based on information currently available to us, have a material adverse effect on our financial position or results of operations.

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this prospectus contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this prospectus are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section captioned “Risk Factors” on page 3 of this prospectus. The following should be read in conjunction with our audited financial statements included elsewhere herein.

Overview

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) in 2014 for our lead drug candidate, Trappsol^® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Type C disease (“NPC”). NPC is a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. In 2015, we launched an International Clinical Program for Trappsol^® Cyclo™ as a treatment for NPC. In 2016, we filed an Investigational New Drug application (“IND”) with the FDA, which describes our Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study will evaluate the safety of Trappsol^® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 14-week treatment period of intravenous administration of Trappsol^® Cyclo™ every two weeks to participants 18 years of age and older. The IND was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol^® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017.

We have also filed Clinical Trial Applications for a Phase I/II clinical study with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The European Phase I/II study will evaluate the safety of Trappsol^® Cyclo™ along with a range of clinical outcomes, including neurologic, hepatic, and respiratory, in addition to measurements of cholesterol metabolism and markers of NPC. The European study is similar to the U.S. study, providing for the administration of Trappsol^® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial. The first patient was dosed in this study in July 2017.

Preliminary data from our clinical studies suggests that Trappsol^® Cyclo™ crosses the blood-brain-barrier in individuals suffering from NPC. Following intravenous administration of Trappsol^® Cyclo™ to study subjects, it was detected in subjects' cerebrospinal fluid. The clinical significance of these findings will be determined as part of the final analysis of both clinical trials.

We are also exploring the use of cyclodextrins in the treatment of Alzheimer's disease under a collaborative arrangement with Kerwin Research Center, which is funding this project. In January 2018, the FDA authorized a single patient IND expanded access program using Trappsol^® Cyclo™ for the treatment of this disease, and in October 2018, we filed a patent application with respect to the use of hydroxypropyl beta cyclodextrins in the treatment of Alzheimer's disease.

We also continue to operate our legacy fine chemical business, consisting of the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business that had been primarily reselling basic cyclodextrin products.

Substantially all of our revenues are derived from our legacy fine chemical business, consisting of the sale of cyclodextrins, including cyclodextrin complexes, the resale of cyclodextrins manufactured by others for our clients to their specifications, and our own licensed cyclodextrin products. We have trademarked certain products under our Trappsol^®, Aquaplex^®, and AP™-Flavor product lines.  We currently sell our products directly to customers in the pharmaceutical, diagnostics, and industrial chemical industries, and to chemical supply distributors.  

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Trappsol^® Cyclo™

At the end of 2009, we provided Trappsol^® Cyclo™ (our first generation product) to a customer for compassionate use as an Investigational New Drug to treat a set of twins in the U.S. who were diagnosed NPC, also known as Childhood Alzheimer’s. NPC is a fatal disease caused by a genetic defect that prevents proper handling of cholesterol in the body’s cells. The patient’s treatment with our Trappsol^® Cyclo™ product proved to provide an ameliorative benefit. On May 17, 2010, the FDA granted orphan drug status for Trappsol^® Cyclo™ for the treatment of NPC. Trappsol^® Cyclo™ (first generation and second generation product) has been administered to more than 20 NPC patients in compassionate use programs around the world, including in the U.S., Brazil and Spain. Our annual sales of Trappsol^® Cyclo™ decreased to $167,000 for 2018 from $342,000 for 2017. In 2012, we began to offer 100ml vials of Trappsol^® Cyclo™ in a liquid form from a contract manufacturer (second generation product). In 2014, we completed validation of the proprietary Trappsol^® Cyclo™ manufacturing process and submitted a Type II Drug Master File to the FDA. In 2015, we established an International Clinical Program that includes a team of experienced drug development companies and individuals. Our third generation product of Trappsol^® Cyclo™ in liquid form is in clinical trials. We hold Orphan Drug Designation for Trappsol^® Cyclo™ in both the U.S. and Europe.

Resale of Cyclodextrin and Cyclodextrin Complexes

Our sales of cyclodextrins and cyclodextrin complexes are primarily to chemical supply houses around the world, to pharmaceutical companies, to food companies for research and development and to diagnostics companies. 

We acquire our products principally from outside the United States, including from Wacker Biosolutions, a division of Wacker Chemie AG (Germany), with a production facility located in Adrian, Michigan and Hangzhou Pharma and Chem Co. (China), Quian Hui (China), and Cyclodextrin Research & Development Laboratory (Hungary), and are gradually finding supply sources in the United States. While we enjoy lower supply prices from outside the United States, changes in shipping costs for our current order quantities and currency exchange rates are making domestic sources more competitively priced. We make patent information about cyclodextrins available to our customers. We also offer our customers our knowledge of the properties and potential new uses of cyclodextrins and complexes.

As most of our customers use our cyclodextrin products in their research and development activities, the timing, product mix, and volume of their orders from us are unpredictable. We also have four large customers (each of whom has historically purchased from us annually and, depending upon the year, may account for greater than 10% of our annual revenues) who have a significant effect on our revenues when they increase or decrease their research and development activities that use cyclodextrins. We keep in constant contact with these customers as to their cyclodextrin needs so we can maintain the proper inventory composition and quantity in anticipation of their needs. The sales to large customers and the product mix and volume of products sold has a significant effect on our revenues and product margins. These factors contribute to our revenue volatility from quarter to quarter and year to year.

Results of Operations

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018

We reported a net loss of $(1,904,000) for the three months ended March 31, 2019, compared to net loss of $(813,000) for the three months ended March 31, 2018.

Total revenues for the three month period ended March 31, 2019 increased 11% to $221,000 compared to $198,000 for the same period in 2018. Our change in the mix of our product sales for the three months ended March 31, 2019 and 2018 is as follows:

Trappsol® Cyclo

Our sales of Trappsol® Cyclo™ remained consistent at $30,000 for the three month periods ended March 31, 2019, and 2018.  Substantially all of our sales of Trappsol® Cyclo™ for the three months ended March 31, 2019 and 2018 were to a particular customer who exports the drug to South America. Our annual 2018 sales to this customer were $167,000 (100% of total 2018 sales of Trappsol® Cyclo™).  This product is designated as an orphan drug; the population of patients who use the product on a compassionate basis is small.  

Trappsol® HPB

Our sales of Trappsol® HPB decreased by 5% for the three month period ended March 31, 2019, to $71,000 from $75,000 for the three months ended March 31, 2018.

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Trappsol® other products

Our sales of other Trappsol® products increased for the three month period ended March 31, 2019, to $66,000 from $61,000 for the three months ended March 31, 2018.

Aquaplex®
Our sales of Aquaplex® were $53,000 for the three months ended March 31, 2019 compared to $29,000 for the three months ended March 31, 2018.

The largest customers for our legacy fine chemical business continue to follow historical product ordering trends by placing periodic large orders that represent a significant share of our annual sales volume. During the three months ended March 31, 2019, our four largest customers accounted for 76% of our sales; the largest accounted for 22% of sales. During the three months ended March 31, 2018, our four largest customers accounted for 76% of our sales; the largest accounted for 28% of sales. Historically, our usual smaller sales of HPB occur more frequently throughout the year compared to our large sales that we receive periodically. The timing of when we receive and are able to complete these two kinds of sales has a significant effect on our quarterly revenues and operating results and makes period to period comparisons difficult.

 Our cost of products sold (excluding any allocation of direct and indirect overhead and handling costs) for the three month period ended March 31, 2019 decreased 13% to $21,000 from $24,000 for the same period in 2018. Our cost of products sold (excluding any allocation of direct and indirect overhead and handling costs) as a percentage of sales was 9% and 12% for the three months ended March 31, 2019 and 2018, respectively. Historically, the timing and product mix of sales to our large customers has had a significant effect on our sales, cost of products sold (excluding any allocation of direct and indirect overhead and handling costs) and the related margin. We did not experience any significant increases in material costs during 2018, or the first quarter of 2019.

Our gross margins may not be comparable to those of other entities, since some entities include all the costs related to their distribution network in cost of goods sold. Our cost of goods sold includes only the cost of products sold and does not include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation expense. Our employees provide receiving, inspection, warehousing and shipping operations for us. The cost of our employees is included in personnel expense. Our other costs of warehousing and shipping functions are included in office and other expense.

As we buy inventory from foreign suppliers, the change in the value of the U.S. dollar in relation to the Euro, Yen and Yuan has an effect on our cost of inventory. Our main supplier of specialty cyclodextrins and complexes, Cyclodextrin Research & Development Laboratory, is located in Hungary and its prices are set in Euros. The cost of our bulk inventory often changes due to fluctuations in the U.S. dollar. The cost of shipping from outside the U.S. also has a significant effect on our inventory acquisition costs. When we experience short-term increases in currency fluctuation or supplier price increases, we are often not able to raise our prices sufficiently to maintain our historical margins. Therefore, our margins on these sales may decline.

Personnel expenses increased by 48%, to $410,000 for the three months ended March 31, 2019 from $278,000 for the three months ended March 31, 2018. The increase in personnel expense is due to bonuses paid in 2018. We expect to maintain our level of employees and related costs in the near term.

Research and development expenses increased 228% to $1,343,000 for the three months ended March 31, 2019, from $409,000 for the three months ended March 31, 2018. Research and development expenses as a percentage of our total operating expenses increased to 63% for the three months ended March 31, 2019 from 40% for the three months ended March 31, 2018. The increase in research and development expense is due to increased activity in our International Clinical Program and U.S. clinical trials. We expect future research and development costs to further increase as we continue to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC.

Professional fees decreased 8% to $215,000 for the three months ended March 31, 2019, compared to $234,000 for the three months ended March 31, 2018. Professional fees may increase in the future due to new initiatives in raising capital and the continuation of product development.

Office and other expenses increased 113% to $103,000 for the three months ended March 31, 2019, compared to $48,000 for the three months ended March 31, 2018. Office and other expenses include costs for travel to, and participation in, industry conferences and similar events, which vary from period to period.

Board of Directors fees and costs increased to $33,000 for the three months ended March 31, 2019, compared to $16,000 for the three months ended March 31, 2018. Board of Directors fees and costs include fees (generally in the form of stock compensation) paid to our non-employee directors and scientific advisory board members, reimbursement of expenses of our board members, and related expenses.

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We increased our valuation allowance to offset the increase in our deferred tax asset from our net operating loss and did not recognize an income benefit or provision for the three months ended March 31, 2019, and 2018, respectively.

Year Ended December 31, 2018 Compared to Ended December 31, 2017

For 2018, we incurred a net loss of $4,255,000, compared to a net loss in 2017 of $3,833,000. Total revenues for 2018 were $1,011,000 compared to $1,238,000 for 2017.  

Our change in the mix of our product sales for 2018 and 2017 is as follows: 

Trappsol^® Cyclo™ HPBCDs
First and second-generation formulations of Trappsol^® Cyclo™ HPBCD (in liquid and powder form) have been sold to a single customer who exports to Brazil for compassionate use in NPC patients.  Sales decreased 51% to $167,000 for 2018 from $342,000 for 2017.  Our 2017 sales to this customer were $287,000 (84% of total 2017 sales of Trappsol^® Cyclo™) with the remainder sold to individual institutions in approved compassionate use programs in Europe.   The population of patients who use the product on a compassionate basis is small.   

Trappsol^® HPB
Our sales of Trappsol® HPB decreased 32% to $484,000 for 2018 from $711,000 for 2017.

Trappsol^® other products
Our sales of other Trappsol® products increased 79% to $234,000 for 2018 from $131,000 for 2017.

Aquaplex^®
Our sales of Aquaplex^® increased to $117,000 for 2018 compared to $18,000 for 2017, and are primarily attributable to a single customer. The increase in sales is representative of the periodic purchasing pattern of our primary Aquaplex® customer.  Aquaplex^® sales to this customer for the last five years were $110,674 in 2018, $16,512 in 2017, $133,813 in 2016, $75,474 in 2015, and $34,027 in 2014.

The largest customers of our legacy fine chemical business continue to follow historical product ordering trends to place periodic large orders that represent a significant share of our annual revenue volume.  In 2018, our five largest customers (Ventana Medical Systems, Inc., Uno Healthcare, Siemens Medical Solutions USA, Inc., Sigma-Aldrich Fine Chemicals, Inc., and BAS Evansville, Inc.) accounted for 61% of our revenues, and the largest accounted for 18% of our revenues.  In 2017, our five largest customers (Charles River Laboratories, Inc., Uno Healthcare, Ventana Medical Systems, Inc., Thermofisher Scientific Diagnostics, Inc., and Siemens Medical Solutions USA, Inc.) accounted for 73% of our revenues, and the largest accounted for 25% of our revenues.   Historically, our usual smaller sales of HPB occur more frequently throughout the year compared to our large sales that we receive periodically.  The timing of when we receive and are able to complete these two kinds of sales has a significant effect on our quarterly revenues and operating results and makes period to period comparisons difficult.

Our cost of products sold (excluding any allocation of direct and indirect overhead and handling costs) decreased to $105,000 for 2018 compared to $133,000 for 2017. Our cost of products sold as a percentage of product sales was 10% for 2018 and 11% for 2017.  This percentage is a function of the sales make up by product mix as well as customer order size.  Historically, the timing and product mix of sales to our large customers has had a significant effect on our sales, cost of products sold (excluding any allocation of direct and indirect overhead and handling costs) and the related margin. We did not experience any significant increases in material costs during 2018 or 2017.

Our gross margins may not be comparable to those of other entities, since some entities include all the costs related to their distribution network in cost of goods sold. Our cost of goods sold includes only the direct cost of products sold and does not include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. Our employees provide management, receiving, inspection, warehousing and shipping operations for us. The cost of our employees is included in personnel expense. Our other costs of warehousing and shipping functions are included in office and other expense.

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As we buy inventory from foreign suppliers, the change in the value of the U.S. dollar in relation to the Euro, Yen and Yuan has an effect on our cost of inventory. Our main supplier of specialty cyclodextrins and complexes, Cyclodextrin Research & Development Laboratory, is located in Hungary and its prices are set in Euros. The cost of our bulk inventory often changes due to fluctuations in the U.S. dollar. The cost of shipping from outside the U.S. also has a significant effect on our inventory acquisition costs. When we experience short-term increases in currency fluctuation or supplier price increases, we are often not able to raise our prices sufficiently to maintain our historical margins.  Therefore, our margins on these sales may decline.

Personnel expenses decreased 1% to $1,172,000 for 2018, from $1,183,000 for 2017.  The decrease in personnel expense is due to a slight decrease in employee benefits. We expect to maintain our level of employees and related costs in the near term.

Research and development expenses increased 18% to $2,711,000 for 2018, from $2,293,000 for 2017. Our research and development expenses are due to our International Clinical Program. We expect research and development costs to increase in 2019 as we continue to seek regulatory approval for the use of Trappsol^® Cyclo™ in the treatment of NPC.

Repairs and maintenance expenses decreased 64% to $4,000 for 2018 from $11,000 for 2017. This decrease is due to low levels of maintenance required on equipment and rental facilities. We expect our repairs and maintenance expenses to remain consistent in 2019.

Professional fees decreased 10% to $809,000 for 2018 from $903,000 for 2017.  The decrease from 2017 was due to reduced activity in 2018 in our lawsuit against the NIH, and reduced intellectual property related expenses. Professional fees may increase in the future due to new initiatives in raising capital and the continuation of product development.

Office and other expenses decreased 16% to $354,000 for 2018 from $421,000 for 2017.

Board of Directors fees and costs decreased to $95,000 for 2018 from $118,000 for 2017. Board of Directors fees and costs include fees paid to our non-employee directors and scientific advisory board members, reimbursement of expenses of our board members, and related expenses.

Amortization and depreciation increased 11% to $10,000 for 2018 from $9,000 for 2017.  This increase is due to the purchase of new equipment in 2018.

Freight and shipping decreased 25% to $6,000 for 2018 from $8,000 for 2017. Freight and shipping is dependent on frequency of ordering products for inventory and frequency of shipping out products sold.

We recorded an impairment expense for slow moving inventory of $12,150 and $5,500 for 2018 and 2017, respectively.

We increased our valuation allowance to allow for 100% of the 2018 increase in our deferred tax asset and did not recognize an income tax benefit or provision for 2018 and 2017.

Liquidity and Capital Resources

Our cash increased to $2,217,000 as of December 31, 2018, from $1,271,000 at December 31, 2017. Our current assets less current liabilities was $844,000 at December 31, 2018 compared to $953,000 at December 31, 2017.  Cash used in operations for 2018 increased to $3,188,000 compared to $3,062,000 for 2017.  Our increase in cash and working capital is due to equity issuances. The increase in cash used in operations is due primarily to our net loss and increasing expenses for our drug development and expansion strategy, which we intend to continue funding with the capital we raised. 

During the year ended December 31, 2018, we generated net proceeds of approximately $4,102,000 from the sale of our equity securities in two private placements, and approximately $130,000 in addition in January 2019 following the initial closing of our December 2018 private placement.

Our cash decreased to approximately $1,115,000 as of March 31, 2019, compared to $2,217,000 as of December 31, 2018. Our current assets less current liabilities were $(949,000) as of March 31, 2019, compared to $844,000 at December 31, 2018. Cash used in operations was $1,225,000 for the three months ended March 31, 2019, compared to $738,000 for the same period in 2018.

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On May 31, 2019, we completed a private placement (the “May 2019 Private Placement”) of our securities to a group of accredited investors that included several directors of the Company and members of management. Investors in the May 2019 Private Placement purchased a total of 29,770,000 units at a price per unit of $0.25, each unit consisting of one share of Common Stock and one warrant to purchase a share of Common Stock, resulting in gross proceeds to us of $7,442,500, before deducting placement agent fees and offering expenses.

We believe that the proceeds of the May 2019 Private Placement have provided the Company with sufficient cash to meet its anticipated operating costs and capital expenditure requirements for the next twelve months. To date, the Company has been able to generate sufficient cash to fund its drug development activities from private offerings of its equity securities, together with cash generated from operations and asset sales. While we expect to continue to be successful in obtaining additional funds to meet our cash requirements, no assurance can be given that adequate additional funding will be available to us on acceptable terms, if at all. Additional capital will be required in the future to develop our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including the results of our clinical trials, our progress in obtaining regulatory approval for our drug candidates and market conditions. 

We expect to continue to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions.

We have no off-balance sheet arrangements at March 31, 2019.

Critical Accounting Policies and Estimates

The results of operations are based on the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. The preparation of consolidated financial statements requires management to select accounting policies for critical accounting areas as well as make estimates and assumptions that affect the amounts reported in the consolidated financial statements. The Company’s accounting policies are more fully described in Note 1 of Notes to Consolidated Financial Statements for its year ended December 31, 2018. Significant changes in assumptions and/or conditions in our critical accounting policies could materially impact the operating results. We have identified the following accounting policies and related judgments as critical to understanding the results of our operations.

Revenue Recognition

Revenues are recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product Revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other third-party distribution partners. These customers subsequently resell our products to health care providers and patients. 

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified one performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do not differ materially from our historical practices.

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Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

Valuation Allowance on Deferred Tax Assets

At December 31, 2018, we fully reserved for our net deferred tax asset with a $6,235,000 valuation allowance. We increased our valuation allowance by $1,575,000 in 2018 to reduce our recognized deferred tax asset to zero.

We have determined it is more likely than not that we will not realize our temporary deductible differences and net operating loss carryforwards, and we have provided a 100% valuation allowance at December 31, 2018 and March 31, 2019.

Current accounting standards require that deferred tax assets be evaluated for future realization and reduced by the extent to which we believe a portion will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets including our recent cumulative earnings (loss) experience, expectations of future expenses from research and development and product development, expectations of future taxable income, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.  The range of possible judgments relating to the valuation of our deferred tax asset is very wide.  Significant judgment is required in making this assessment, and it is very difficult to predict when, if ever, our assessment may conclude our deferred tax assets are realizable.

Research and Development

The Company’s research and development activities and expenses are related to our International Clinical Trial Program. We expense our research and development costs as incurred.

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MANAGEMENT

The following table contains information regarding the current members of the Board of Directors and executive officers. The ages of individuals are provided as of June 27, 2019:

Name	Age	Positions and Offices With Registrant	Year First Became Director
N. Scott Fine	62	Director, Chief Executive Officer	2014
Jeffrey L. Tate, Ph.D.	61	Director, Chief Operating Officer	2010
C.E. Rick Strattan	73	Director	1990
Markus W. Sieger	53	Lead Director	2014
F. Patrick Ostronic	63	Director	2014
William S. Shanahan	79	Director	2016
Dr. Randall M. Toig	68	Director	2018
Joshua M. Fine	37	Chief Financial Officer and Secretary	N/A
Dr. Sharon H. Hrynkow	58	Chief Scientific Officer and SVP for Medical Affairs	N/A

N. Scott Fine has been a Director of the Company since February 2014, and became our Chief Executive Officer on September 14, 2015.  From 2004 until 2014, he was a principal at Scarsdale Equities, an investment banking firm located in New York City. Mr. Fine has been involved in investment banking for over 35 years, working on a multitude of debt and equity financings, buy and sell side M&A, strategic advisory work and corporate restructurings. Much of his time has been focused on transactions in the healthcare and consumer products area. Mr. Fine has led global transactions in healthcare, including medical devices, generic pharmaceuticals, and genetics. He also worked with The Tempo Group of Jakarta, Indonesia when Mr. Fine and his family resided in Jakarta. Mr. Fine was Chairman of the Board of The Global Virus Network (GVN), and he also was the lead investment banker on the initial public offering of Green Mountain Coffee Roasters, Inc. and Central European Distribution Corporation (“CEDC”), a multi-billion-dollar alcohol company. Mr. Fine continued his involvement with CEDC serving as a director from 1996 until 2014, during which time he led the CEDC Board in its successful efforts in 2013 to restructure the company through a pre-packaged Chapter 11 process whereby CEDC was acquired by the Russian Standard alcohol group. Recently, Mr. Fine served as Vice Chairman and Chairman of the Restructuring Committee of Pacific Drilling from 2017 to 2018 where he successfully led the independent directors to a successful reorganization. He also served as sole director of Better Place Inc. from 2013 until 2015. In his role there, Mr. Fine successfully managed the global wind down of the company in a timely and efficient manner which was approved by both the Delaware and Israeli Courts.

Mr. Fine currently serves on the board of directors of Kenon Holdings Ltd. (NYSE: KEN).  Mr. Fine also devotes time to several non-profit organizations, including through his service on the Board of Trustees for the IWM American Air Museum in Britain. Mr. Fine has been a guest lecturer at Ohio State University’s Moritz School of Law.

Mr. Fine’s relationships within the financial community in New York and around the world, as well as his significant experience with equity and debt financing, make him a valuable contributor as a Director.  Mr. Fine was appointed to the Board of Directors in connection with a private placement of Common Stock by the Company in February 2014, and has the right to be nominated to our Board (or to have a representative nominated to our Board) for up to seven years from the date of that offering.  Mr. Fine is the father of Joshua M. Fine, our Chief Financial Officer.

Dr. Jeffrey L. Tate has served as a Director of the Company since August 2010 and since September 14, 2015 has served as our Chief Operating Officer. Prior to Mr. Fine’s appointment as Chief Executive Officer, Dr. Tate served as our President (from August 2010) and Chief Executive Officer (from July 2014).  From January 2007 to February 2010, he was president of J-Jireh Products, Incorporated, a company that develops and markets industrial, food, cosmetic and nutritional products manufactured using pulse drying technology.  From January 1995 to December 2006, Dr. Tate served as a principal of J. Benson Tate Consultants LLC, a management consulting company. From July 1999 to January 2005, Dr. Tate served as Vice President of Scientific and Regulatory Affairs of Natural Biologics, LLC, a pharmaceutical company.  Dr. Tate received his B.Sc. from the University of Minnesota Department of Botany and his M.Sc. and Ph.D. from the University of Minnesota Graduate School in Management of Technology and Plant Physiology, respectively. 

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Dr. Tate was selected to serve as a member of our Board of Directors because of his position with CTD Holdings, Inc. and his experience with biopharmaceutical development, manufacturing and regulatory compliance.

C.E. Rick Strattan has served as Director of the Company since 1990.  Mr. Strattan served as Chairman and CEO from 1990 to 2014, and as treasurer of the Company from August 1990 to May 1995.  From November 1987 through July 1989, Mr. Strattan was with Pharmatec, Inc., where he served as Director of Marketing and Business Development for cyclodextrins. Mr. Strattan was responsible for cyclodextrin sales and related business development efforts. From November, 1985 through May, 1987, Mr. Strattan served as Chief Technical Officer for Boots-Celltech Diagnostics, Inc. He also served as Product Sales Manager for American Bio-Science Laboratories, a Division of American Hospital Supply Corporation. Mr. Strattan is a graduate of the University of Florida receiving a B.S. degree in chemistry and mathematics, and has also received an MS degree in pharmacology, and an MBA degree in Marketing/Computer Information Sciences, from the same institution. Mr. Strattan has written and published numerous articles and a book chapter on the subject of cyclodextrins.

Mr. Strattan was selected to serve as a member of our Board of Directors because of his extensive experience with cyclodextrins, his years of executive level experience, and his advanced degrees in pharmacology. 

Markus W. Sieger has been a Director of the Company since February 2014 and serves as the Lead Director on the Company’s Board of Directors. Mr. Sieger holds a degree in Economics from the University of Applied Sciences for Business and Administration Zurich. He started his career in 1981 with Zurich Insurance Group where he specialized in information systems and organizational projects, which he managed in Switzerland and in the United States. In 1994, he joined fincoord where he built a track record of negotiating and closing complex merger and acquisition transactions and building up, strategically repositioning and reorganizing companies in both emerging and Western markets. Since 2013, Mr. Sieger has been an investor and principal at Sieger & Sieger Ltd. and Consiglio AG, focusing on strategic advisory mandates and investments. He is member of the boards of directors of various public and private companies in Western/Central and Eastern Europe. Since June 2016 Mr. Sieger has been the President and CEO of Polpharma Group, one of the leading pharmaceutical generics players in the CEE/CIS region, which is also active in the development and production of biosimilar products.

Mr. Sieger’s extensive experience in strategic, operational and investment roles make him a valuable member of our Board of Directors. Mr. Sieger was appointed to the Board of Directors in connection with a private placement of Common Stock by the Company in February 2014, and has the right to be nominated to our Board (or to have a representative nominated to our Board) for up to seven years from the date of that offering.

F. Patrick Ostronic has been a director since April 2014. Mr. Ostronic has been an officer of US Pharmacia International, Inc., a subsidiary of USP, since November 2006, and also serves as the Chief Financial Officer of The USP Group. Mr. Ostronic is also a director of Novit US, Inc., the general partner of Novit. 

Mr. Ostronic’s extensive experience in finance and the pharmaceutical industry make him a valuable member of the Board of Directors. Mr. Ostronic was appointed to the Board in connection with a private placement of Common Stock by the Company in April 2014.

William S. Shanahan has been a director since June 2016. Mr. Shanahan is currently retired and served as the President of Colgate-Palmolive Company from 1992 until to September 30, 2005. More recently he was employed as a Management Advisor to ValueAct Capital LLC of San Francisco and as a Consultant for Life Technologies Corporation.

Mr. Shanahan’s vast experience will greatly benefit the Company as it seeks to execute its global growth plan, and makes him a valuable member of the Board of Directors.

Dr. Randall M. Toig has been a director since March 2018. Dr. Toig has been a practicing physician for more than 35 years in obstetrics, gynecology and gynecological surgery, and practices at Gold Coast Gynecology in Chicago. He is also an associate professor of clinical obstetrics and gynecology at Northwestern University. He previously served at Northwestern Memorial Hospital practicing, teaching and serving on active staff. Dr. Toig is consistently listed in the Top Doctors of Chicago and Guide to America's Top Doctors in his fields.

Dr. Toig’s medical experience makes him a valuable member of the Board of Directors.

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Joshua M. Fine was appointed our Chief Financial Officer on June 11, 2019, and has been our Secretary since 2014. From 2011 until his appointment as our Chief Financial Officer, he served as the Vice President/Director, Healthcare Capital Markets, of Scarsdale Equities. Mr. Fine is also currently the Vice President of Finance and Operations for Icagen, Inc., a biotechnology company, a position he has held since 2017. From 2009 until 2011, Mr. Fine served as the Vice President, Capital Markets of Emerging Growth Equities, a boutique investment banking firm. Mr. Fine holds a Bachelor of Arts in Political Science from Hartwick College. Mr. Fine is the son of N. Scott Fine, our Chief Executive Officer.

Dr. Sharon H. Hrynkow has served as our Chief Scientific Officer since February 2019, and as our Senior Vice President for Medical Affairs since September 2015. Prior to that, she served as the President of Global Virus Network, a nonprofit organization working to combat pandemic viral disease. She previously served as a Senior Executive at the National Institutes of Health (NIH), where she was the Deputy Director and Acting Director of the Fogarty International Center, the focal point for international research and training and for diplomatic relations for the NIH. Dr. Hrynkow also served as Associate Director of the National Institute on Environmental Health Sciences and Senior Advisor to the NIH Deputy Director. Dr. Hrynkow serves on many advisory committees for national and international organizations, and has been recognized for her contributions to global health and global science by scientific and political leaders and organizations, including with the US President's Merit Award for Senior Executives, the Order of Merit from the King of Norway and election as Fellow of the American Association for the Advancement of Science. She is an elected member of the Council on Foreign Relations. Dr. Hrynkow received her PhD in Neuroscience from the University of Connecticut Health Center and her B.A. in Biology from Rhode Island College.

EXECUTIVE COMPENSATION

The following table contains information concerning the compensation paid during our fiscal years ended December 31, 2018 and 2017 to (i) the person who served as our Chief Executive Officer during 2018, and (ii) our executive officers as of December 31, 2018 whose compensation exceeded $100,000 (collectively, our “Named Executive Officers”).

SUMMARY COMPENSATION TABLE

Name & Principal Position	Year	Salary ($)		Stock Awards ($) (1)		All Other Compensation ($) (2)		Total ($)
N. Scott Fine	2018		400,000		4,294		62,347		466,641
CEO	2017		400,000		16,170		24,673		440,843
Jeffrey L. Tate	2018		186,667		4,294		27,233		218,194
COO	2017		155,000		16,170		17,371		188,541
Dr. Sharon H. Hrynkow	2018		232,000		-		7,947		239,947
Chief Scientific Officer (3)

(1)	Reflects award of 20,000 shares to each Named Executive Officer in 2018 and 2017 as compensation for services as a member of the Company’s Board of Directors in 2018 and 2017, respectively.  Also reflects award of 20,000 shares in 2017 as compensation for services in the form of an employee bonus. All of the shares were fully vested upon issuance. The stock award figure represents the value of the stock award at grant date as calculated under FASB ASC Topic 718.
(2)	Reflects matching contributions made under the Company’s 401(k) plan, and insurance premiums for health, dental, and vision.
(3)	Dr. Sharon H. Hrynkow was designated an executive officer of the Company by our Board of Directors on June 29, 2018.

Outstanding Equity Awards at Fiscal Year End

As of December 31, 2018, our Named Executive Officers had no outstanding unexercised options, unvested stock or other unvested equity incentive plan awards.

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Employment Agreements

Currently, N. Scott Fine and Dr. Sharon H. Hrynkow are our only Named Executive Officer who are parties to employment agreements with us.

We entered into an Employment Agreement with Mr. Fine dated as of September 14, 2015, and amended on November 7, 2017, pursuant to which Mr. Fine serves as our Chief Executive Officer. Under the Employment Agreement:

● Mr. Fine’s employment as Chief Executive Officer is for an initial term ending on September 14, 2020, subject to automatic one-year extensions unless either party notifies the other party prior to the expiration of the then term.

● Mr. Fine receives an initial base salary of $400,000 per annum.

● Mr. Fine is entitled to an annual bonus based on financial performance and personal performance targets to be established by the Board of Directors or a committee thereof.

● In the event of the termination of Mr. Fine’s employment by the Company without Cause (as defined in the Employment Agreement), Mr. Fine will be entitled to continued payment of his base salary for a period of one-year following termination, and the payment of any bonus previously earned by Mr. Fine but not yet paid.

We entered into an Employment Agreement with Dr. Hrynkow dated as of September 14, 2015, and amended on November 8, 2017. Under the Employment Agreement:

● Dr. Hrynkow employment with us is for an initial term ending on September 14, 2019, subject to automatic one-year extensions unless either party notifies the other party prior to the expiration of the then term.

● Dr. Hrynkow is entitled to a base salary of $200,000 per annum, which has been increased to $248,000.

● Dr. Hrynkow is entitled to an annual bonus based on financial performance and personal performance targets.

● In the event of the termination of Dr. Hrynkow’s employment by the Company without Cause (as defined in the Employment Agreement), Dr. Hrynkow will be entitled to continued payment of her base salary for a period of one-year following termination, and the payment of any bonus previously earned by Dr. Hrynkow but not yet paid.

Compensation of Directors

Directors of the Company are entitled to such compensation for their services as the Board may from time to time determine, and reimbursements for their reasonable expenses incurred in attending meetings of directors. We did not compensate our directors for their services during 2018, other than the issuance of 20,000 shares of common stock to each of our directors in February 2018 in consideration of their services to the Company during 2017, and cash compensation of $15,000 paid to Markus Sieger for serving as Lead Director.

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Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

The following table shows the ownership of the Common Stock of the Company on June 27, 2019, by (i) those persons known by the Company to be beneficial owners of more than 5% of the Company’s outstanding Common Stock; (ii) each current executive officer named in the Summary Compensation Table; (iii) each director; and (iv) all directors and executive officers as a group. Unless otherwise noted, shares are subject to the sole voting and investment power of the indicated person.  Beneficial ownership is determined in accordance with the rules of the SEC. Shares of Common Stock subject to options or warrants currently exercisable or exercisable within 60 days of June 27, 2019 are deemed outstanding for computing the percentage ownership of the shareholder holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other shareholder. Percentage of ownership is based on 91,264,463 shares of Common Stock outstanding as of June 27, 2019.

Names and Address of Individual or Identity of Group(1)	Number of Shares Beneficially Owned			Approximate Percent of Class
Officers and Directors
C.E. Rick Strattan		20,608,385	(2)		17.0	%
Jeffrey L. Tate		1,090,972	(3)		*
N. Scott Fine		8,752,966	(4)		7.1	%
Markus Sieger		5,165,714	(5)		4.2	%
F. Patrick Ostronic		1,614,780	(6)		1.3	%
William S. Shanahan		4,145,020	(7)		3.4	%
Dr. Randall M. Toig		2,615,540	(8)		2.1	%
Joshua M. Fine		2,277,659	(9)		1.9	%
Dr. Sharon Hrynkow		595,000	(10)		*
All Directors and Executive Officers as a Group (9 Persons)		46,866,036	(11)		36.0	%
5% Holders
Novit, L.P.		13,135,164	(12)		10.5	%
966 Hungerford Drive Rockville, Maryland 20850
Scarsdale Equities LLC 10 Rockefeller Plaza, Suite 720 New York, NY 10020		13,862,900	(13)		11.0	%
Armistice Capital Master Fund Ltd.		12,000,000	(14)		9.9	%

*     Less than one percent.

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(1)	Unless otherwise indicated, the business address of each officer and director of the Company is c/o CTD Holdings, Inc., 6714 NW 16th Street, Suite B, Gainesville, Florida 32653.
(2)	Based solely on a Schedule 13D/A filed by Mr. Strattan with the SEC on October 20, 2015, and Form 4s filed by Mr. Strattan on June 8, 2016, July 26, 2016, April 4, 2017 and February 5, 2018.  Includes currently exercisable warrants to purchase 40,000 shares of Common Stock and 630,738 shares of Common Stock owned by TFBU, Inc. (“TFBU”), a tax exempt organization under Section 501(c)(3) of the Internal Revenue Code.  Mr. Strattan has sole voting and dispositive power with respect to the shares of Common Stock issued in the name of TFBU.
(3)	Includes currently exercisable warrants to purchase 225,000 shares of Common Stock.
(4)	Includes currently exercisable warrants to purchase 2,076,483 shares of Common Stock.
(5)	Includes currently exercisable warrants to purchase 372,857 shares of Common Stock.
(6)	Includes currently exercisable warrants to purchase 709,890 shares of Common Stock.
(7)	Includes currently exercisable warrants to purchase 2,039,560 shares of Common Stock.
(8)	Includes currently exercisable warrants to purchase 1,307,770 shares of Common Stock.
(9)	Includes 1,679,659 shares that may be issued under currently exercisable warrants, including warrants to purchase Common Stock underlying warrants to purchase “Units” of the Company’s securities.
(10)	Includes currently exercisable warrants to purchase 280,000 shares of Common Stock.
(11)	Includes 9,731,219 shares that may be issued under currently exercisable warrants, including warrants to purchase Common Stock underlying warrants to purchase “Units” of the Company’s securities.
(12)	Novit U.S., Inc. is the general partner of Novit, L.P. and Katarzyna Kusmierz is the trustee of the NAP Trust, which owns all of the outstanding partnership interests in Novit, L.P. Each of Novit US, Inc. and Ms. Kusmierz share voting and dispositive power over the shares Common Stock owned by Novit, L.P. and may be deemed to own such shares of Common Stock. Includes currently exercisable warrants to purchase 3,617,582 shares of Common Stock.
(13)	Based on a Schedule 13G/A filed by Scarsdale Equities, LLC with the SEC on February 19, 2019 and information provided by Scarsdale to the Company. Includes 8,422,900 shares of Common Stock held in accounts managed by Scarsdale and 5,440,000 shares of Common Stock issuable upon the exercise of warrants held in such managed accounts.
(14)	Does not include a warrant to purchase 12,000,000 shares of Common Stock that may be issued on exercise of a warrant, as such warrant includes a provision precluding the exercise thereof if the warrant holder would beneficially own in excess of 4.99% of the Company’s outstanding shares of Common Stock. Armistice Capital, LLC, the investment manager of Armistice Capital Master Fund Ltd., or Armistice, and Steven Boyd, the managing member of Armistice Capital, LLC, hold shared voting and dispositive power over the shares held by Armistice. Each of Armistice Capital, LLC and Steven Boyd disclaims beneficial ownership of the securities listed except to the extent of their pecuniary interest therein. The principal business address of Armistice is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY, 10022

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Certain Relationships and Related party Transactions,
and Director Independence.

Related Party Transactions

N. Scott Fine was a principal at Scarsdale Equities and a director of ours when we initially retained Scarsdale Equities as our financial adviser and exclusive placement agent in April 2014. Mr. Fine ceased to be affiliated with Scarsdale Equities on October 6, 2014. In addition, Joshua M. Fine, our Chief Financing Officer, was employed by Scarsdale Equities and active on our account from the time we engaged Scarsdale in 2014 until his employment with us in June 2019. During 2018, we paid Scarsdale Equities cash fees of approximately $66,000. In connection with private placements of our securities, during 2017 we paid Scarsdale Equities cash fees of approximately $213,000 and issued it and its designees warrants to purchase (A) 164,074 Units at an exercise price of $0.35, each such Unit consisting of one share of Common Stock and one warrant for one additional share of Common Stock at an exercise price of $0.35 per share, including warrants to purchase 109,929 Units issued to Joshua M. Fine; and (B) 600 Units at an exercise price of $100, each such Unit consisting of one share of Series B Preferred Stock and one warrant to purchase 400 shares of Common Stock at an exercise price of $0.25 per share, including warrants to purchase 432 Units issued to Joshua M. Fine.

Since October 2016, we have paid a monthly fee of $5,000 to a non-profit organization of which C.E. Rick Strattan is the Executive Director, in consideration of consulting services provided to us by Mr. Strattan. Mr. Strattan is our founder, former Chief Executive Officer and one of our directors.

During 2017, Rebecca A. Fine, the daughter of our Chief Executive Officer and brother of our Chief Financial Officer, was employed by us as an Executive Assistant and was paid an annual salary of $60,000. During 2018, she was engaged by us as a contractor to provide those services at the rate of $5,000 per month and received a bonus of $5,000. She is currently engaged by us as a contractor at the rate of $5,800 per month.

Kevin J. Strattan, the son of C.E. Rick Strattan, has been employed by us since 2008, and since 2014 has been our Vice President, Finance – Compensation. His annual salary increased from $90,000 to $100,000 in November 2017 and to his current salary of $107,200 in October 2018. In addition, he received a bonus of $10,000 in 2018.

Corey E. Strattan, the daughter-in-law of C.E. Rick Strattan, has been employed by us since 2011 as a documentation specialist and logistics coordinator.  During 2017 she was paid an annual salary of $48,000.  In January 2018, her annual salary increased to $72,000. In January 2019 her annual salary increased to $78,000, her current salary. In addition, she received a bonus of $5,000 in 2018.

Director Independence

Our Board of Directors is comprised of seven individuals, two of whom are or were in the last three years employed by the Company. We have determined that of our other directors, Mr. Sieger, Mr. Ostronic, Mr. Shanahan and Dr. Toig, are “independent” using the definition set forth in the NYSE MKT Company Guide, which we have chosen to use for purposes of evaluating board independence as if we were listed on such exchange.  We also do not have an independent audit committee, compensation committee or governance committee, since members of the Board who do not qualify as “independent” under the standards of the NYSE MKT Company Guide serve on each of those committees.

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DESCRIPTION OF SECURITIES

The following summary of our capital stock, our certificate of incorporation and bylaws and is subject to the applicable provisions of the Florida Business Corporation, as amended (the “Florida Act”), and is intended as a summary only and is subject to and qualified in its entirety by reference to our certificate of incorporation and bylaws, and the applicable provisions of the Florida Act.

Common Stock

We are authorized to issue 500,000,000 shares of Common Stock, $.0001 par value per share, of which 121,034,463 shares were outstanding on the date of this prospectus. Holders of shares of our Common Stock are entitled to one vote per share on all matters submitted to a vote of the shareholders and are not entitled to cumulative voting rights. Our shares of our Common Stock do not carry any preemptive, conversion or subscription rights, and there are no sinking fund or redemption provisions applicable to the shares of our Common Stock. Holders of our Common Stock are entitled to receive dividends and other distributions in cash, stock or property as may be declared by our Board of Directors from time to time out of our assets or funds legally available for dividends or other distributions, subject to dividend or distribution preferences that may be applicable to any then outstanding shares of preferred stock. In the event of our voluntary or involuntary liquidation, dissolution or winding up, holders of shares of our Common Stock are entitled to share ratably in the assets legally available for distribution to shareholders after payment of all debts and other liabilities and satisfaction of the liquidation preference, if any, granted to the holders of any preferred stock then outstanding. All outstanding shares of our Common Stock are fully paid and nonassessable.

Preferred Stock

We are authorized to issue 5,000,000 shares of preferred stock, $.0001 par value per share, of which no shares are outstanding on the date of this prospectus. Our certificate of incorporation authorizes our Board of Directors to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law, the authorized shares of preferred stock will be available for issuance without further action by you. Our Board of Directors is able to determine, with respect to any series of preferred stock, the powers (including voting powers), preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, including, without limitation:

● the designation of the series;

● the number of shares of the series, which our Board of Directors may, except where otherwise provided in the preferred stock designation, increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding);

● whether dividends, if any, will be cumulative or non-cumulative and the dividend rate of the series;

● the dates at which dividends, if any, will be payable;

● the redemption rights and price or prices, if any, for shares of the series;

● the terms and amounts of any sinking fund provided for the purchase or redemption of shares of the series;

● the amounts payable on shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs;

● whether the shares of the series will be convertible into shares of any other class or series, or any other security, of the Company or any other corporation, and, if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion may be made;

● restrictions on the issuance of shares of the same series or of any other class or series; and

● the voting rights, if any, of the holders of the series.

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We could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our Common Stock might believe to be in their best interests or in which the holders of our Common Stock might receive a premium for your Common Stock over the market price of the Common Stock. Additionally, the issuance of preferred stock may adversely affect the holders of our Common Stock by restricting dividends on the Common Stock, diluting the voting power of the Common Stock or subordinating the liquidation rights of the Common Stock. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our Common Stock.

Anti-Takeover Effects of Certain Provisions of Our Certificate of Incorporation, Our Bylaws and the Florida Act

The following provisions of our certificate of incorporation, our bylaws and the Florida Act may discourage takeover attempts of us that may be considered by some shareholders to be in their best interest. The effect of such provisions could delay or frustrate a merger, tender offer or proxy contest, the removal of incumbent directors, or the assumption of control by shareholders, even if such proposed actions would be beneficial to our shareholders. Such effect could cause the market price of our Common Stock to decrease or could cause temporary fluctuations in the market price of our Common Stock that otherwise would not have resulted from actual or rumored takeover attempts.

Authorized but Unissued Capital Stock

Florida law does not require shareholder approval for any issuance of authorized shares. Additional shares that may be used in the future may be used for a variety of corporate purposes, including future public offerings, to raise additional capital, to facilitate acquisitions and employee benefit plans.

Our Board of Directors may generally issue preferred shares on terms calculated to discourage, delay or prevent a change of control or the removal of our management. Moreover, our authorized but unissued shares of preferred stock will be available for future issuances without shareholder approval and could be utilized for a variety of corporate purposes.

One of the effects of the existence of unissued and unreserved Common Stock or preferred stock may be to enable our Board of Directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive our shareholders of opportunities to sell their shares of Common Stock at prices higher than prevailing market prices.

 Director Vacancies

Our Bylaws provides that any vacancies in our Board of Directors, however occurring, will be filled by a majority of the remaining members of the Board of Directors, even if less than a quorum. This provision may discourage a third party from making a tender offer or otherwise attempting to obtain control of us because the provision effectively limits shareholder election of Directors to annual and special meetings of the shareholders.

No Cumulative Voting

There is no cumulative voting in the election of directors. Therefore, shareholders holding a majority in voting power of the shares of our stock entitled to vote generally in the election of directors will be able to elect all our directors.

Anti-takeover provisions of Florida Law

We are subject to certain anti-takeover provisions that apply to public corporations under Florida law. Pursuant to Section 607.0901 of the Florida Business Corporation Act, a publicly held Florida corporation may not engage in a broad range of business combinations or other extraordinary corporate transactions with an “interested shareholder” without the approval of the holders of two-thirds of the voting shares of such corporation (excluding shares held by the interested shareholder) unless:

• the transaction is approved by a majority of disinterested directors before the shareholder becomes an interested shareholder;

• the interested shareholder has owned at least 80% of the corporation’s outstanding voting shares for at least five years preceding the announcement date of any such business combination;

31

• the interested shareholder is the beneficial owner of at least 90% of the outstanding voting shares of the corporation, exclusive of shares acquired directly from the corporation in a transaction not approved by a majority of the disinterested directors; or

• the consideration paid to the holders of the corporation’s voting stock is at least equal to certain fair price criteria.

An “interested shareholder” is defined as a person who together with affiliates and associates beneficially owns more than 10% of a corporation’s outstanding voting shares.

In addition, we are subject to Section 607.0902 of the Florida Act which prohibits the voting of shares in a publicly held Florida corporation that are acquired in a “control share acquisition” unless the holders of a majority of the corporation’s voting shares, exclusive of shares owned by officers of the corporation, employee directors or the acquiring party, approve the granting of voting rights as to the shares acquired in the “control share acquisition.” A control share acquisition is defined as an acquisition that immediately thereafter entitles the acquiring party to 20% or more of the total voting power in an election of directors.

These statutory provisions may prevent takeover attempts that might result in a premium over the market price for our common shares.

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MAY 2019 PRIVATE PLACEMENT

On May 31, 2019, we completed a private placement (the “May 2019 Private Placement”) of our securities to a group of accredited investors that included several directors and members of management, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), dated as of May 30, 2019. Investors in the May 2019 Private Placement purchased a total of 29,770,000 units at a price per unit of $0.25, each unit consisting of one share of Common Stock (the “Shares”) and one warrant to purchase a share of Common Stock (the “Investor Warrants”), resulting in gross proceeds to us of $7,442,500, before deducting placement agent fees and offering expenses. The Shares and Investor Warrants comprising the units were issued separately.  The Investor Warrants are exercisable immediately upon issuance at an exercise price of $0.30 per share and expire on the 66-month anniversary of the issuance date.

ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”), acted as sole placement agent for the offering pursuant to a Placement Agency Agreement dated as of May 30, 2019. Pursuant to terms of the Placement Agency Agreement, we paid a cash fee to ThinkEquity in the amount of $453,000 and issued warrants (the “Placement Agent Warrants”) to ThinkEquity and its designees to purchase an aggregate of 1,359,000 shares of Common Stock, with the same terms as the Investor Warrants issued to the investors.

Pursuant to the Purchase Agreement, we entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the investors in the May 2019 Private Placement, pursuant to which we have agreed to file the registration statement which includes this prospectus (the “Registration Statement”) with the Securities and Exchange Commission to register the resale of the Shares and shares of Common Stock underlying the Investor Warrants and the Placement Agent Warrants.  In addition, our directors and officers entered into Lock-Up Agreements at the closing of the May 2019 Private Placement under which they agreed not to sell any of their securities of the Company until the earliest of (i) 270 days after the effective date of the Registration Statement, (ii) 365 days after the closing, and (iii) 120 days after the listing of our Common Stock on a national securities exchange. 

The May 2019 Private Placement was effected pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506(b) promulgated thereunder.

33

SELLING SHAREHOLDERS

The shares of Common Stock being offered by the selling shareholders are those previously issued to the selling shareholders in the May 2019 Private Placement, and those shares issuable upon exercise of Investor Warrants and Placement Agent Warrants. For additional information regarding the issuances of those shares of Common Stock and the Warrants, see “May 2019 Private Placement” above. We are registering the shares of Common Stock in order to permit the selling shareholders to offer the shares for resale from time to time. Except as set forth in the table below and for the ownership of the shares of Common Stock and the shares of Common Stock underlying the Investor Warrants and the Placement Agent Warrants, or prior investments in the Company, the selling shareholders have not had any material relationship with us within the past three years.

The table below lists the selling shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling shareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling shareholder, based on its ownership of Common Stock, Investor Warrants and Placement Agent Warrants, as of June 27, 2019, assuming the exercise of all of the Investor Warrants and Placement Agent Warrants held by the selling shareholders on that date, without regard to any limitations on exercises under the terms of those warrants.

The third column lists the shares of Common Stock being offered by this prospectus by the selling shareholders.

In accordance with the terms of a registration rights agreement with the selling shareholders, this prospectus generally covers the resale of the sum of (i) the number of shares of Common Stock issued to the selling shareholders in the May 2019 Private Placement, and (ii) the maximum number of shares of Common Stock issuable upon exercise of the related Investor Warrants, determined as if the outstanding Investor Warrants were exercised in full as of the trading day immediately preceding the date this registration statement was initially filed with the SEC  without regard to any limitations on the exercise of the Warrants.  The fourth column assumes the sale of all of the shares offered by the selling shareholders pursuant to this prospectus.

Under the terms of the Investor Warrants and Placement Agent Warrants, a selling shareholder may not exercise such Warrants, to the extent such exercise would cause such selling shareholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed either 4.99% or 9.99% of our then outstanding shares of Common Stock following such exercise. The number of shares in the table below do not reflect this limitation. The selling shareholders may sell all, some or none of their shares in this offering. See “Plan of Distribution,” following the table below.

Name of Selling Stockholder	Number of Shares of Common Stock Owned Prior to Offering			Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus			Number of Shares of Common Stock Owned After Offering			Percentage of Common Stock Owned After the Offering
William Moore (1)		840,000	(2)		840,000	(2)		-			-
William McGough (3)		600,000	(4)		400,000	(5)		200,000	(6)		*
Francis Mlynarczyk (7)		1,050,000	(8)		200,000	(6)		850,000	(9)			%
Anthony B. Low-Beer (10)		5,700,000	(11)		1,200,000	(12)		4,500,000	(13)		2.9	%
John R. Low-Beer (14)		750,000	(15)		400,000	(5)		350,000	(16)		*
Sheila Low-Beer (17)		575,000	(18)		400,000	(5)		175,000	(19)		*
Fredrick Morris (20)		354,000	(21)		200,000	(6)		154,000	(22)		*
ALB Private Investments (23)		4,900,000	(24)		400,000	(5)		4,500,000	(13)		2.9	%
Ong Geok Chin (25)		587,692	(26)		280,000	(27)		307,692	(28)		*
Markus Sieger (29)		5,165,714	(30)		800,000	(31)		4,365,714	(32)		2.9	%
Ivan C. Frederickson Jr.(33)		600,000	(4)		600,000	(4)		-			-

34

Michael & Ashley Jorgensen (34)	400,000	(5)	400,000	(5)	-		-
Sharon Hrynkow (’35)	595,000	(36)	80,000	(37)	515,000	(38)	*
Scott & Kathleen Simpson (39)	800,000	(31)	800,000	(31)	-		-
Randall Toig (40)	2,615,540	(41)	400,000	(5)	2,215,540	(42)	1.4	%
Jeffrey S Bornstein (43)	405,000	(44)	400,000	(5)	5,000	(45)	*
Lorenzo Corte (46)	320,000	(47)	320,000	(47)	-		-
Scott & Cathy Fine (’48)	8,752,966	(49)	800,000	(31)	6,025,714	(50)	5.2	%
Joshua Weinshank (51)	95,506	(52)	80,000	(37)	15,506	(53)	*
Robert Koch (54)	400,000	(5)	400,000	(5)	-		-
William S. Shanahan (55)	4,145,020	(56)	1,600,000	(57)	2,545,020	(58)	1.7	%
Phylis M. Esposito (59)	1,855,000	(60)	200,000	(6)	1,655,000	(61)	1.1	%
Maida Chicon (62)	300,000	(63)	80,000	(37)	220,000	(64)	*
Kevin McCormack (65)	365,000	(66)	200,000	(6)	165,000	(67)	*
Ryan McCormack (68)	275,000	(69)	200,000	(6)	75,000	(70)	*
Alan H. Abramson Trust U/A 7/22/13 (71)	160,000	(72)	160,000	(72)	-		-
Dennis B Poster (73)	200,000	(6)	200,000	(6)	-		-
Sinthia Martins Silva (74)	200,000	(6)	200,000	(6)	-		-
Francis Patrick Ostronic (75)	1,614,780	(76)	400,000	(5)	1,214,780	(77)	*
Novit LP (78)	13,135,164	(79)	1,600,000	(57)	11,535,164	(80)	7.4	%
National Bank Financial, Inc. (81)	1,200,000	(12)	1,200,000	(12)	-		-
Dyke Rogers (82)	400,000	(16)	400,000	(16)	-		-
Northlea Partners (83)	140,000	(84)	140,000	(84)	-		-
Bigger Capital Fund, LP (85)	2,000,000	(86)	2,000,000	(86)	-		-
District 2 Capital Fund LP (87)	2,000,000	(85)	2,000,000	(85)	-		-
Efrat Investments LLC (88)	1,200,000	(12)	1,200,000	(12)	-		-
Warberg WF VII LP (89)	480,000	(90)	480,000	(90)	-		-
Warberg WF VI LP (91)	480,000	(90)	480,000	(90)	-		-
Clay Struve (92)	400,000	(5)	400,000	(5)	-		-
Verition Multi Strategy Master Fund Ltd.(93)	1,600,000	(57)	1,600,000	(57)	-		-
A.K.S. Family Partners LP (94)	400,000	(5)	400,000	(5)	-		-
Empery Asset Master, LTD (95)	2,061,860	(96)	2,061,860	(96)	-		-
Empery Tax Efficient, LP (97)	359,556	(98)	359,556	(98)	-		-
Empery Tax Efficient II, LP (99)	1,578,584	(100)	1,578,584	(100)	-		-
Sabby Volatility Warrant Master Fund, Ltd. (101)	4,000,000	(102)	4,000,000	(102)	-		-
Armistice Capital Master Fund Ltd. ( 103)	24,000,000	(104)	24,000,000	(104)	-		-
Alta Partners, LLC (105)	400,000	(5)	400,000	(5)	-		-
Orca Capital GMBH (106)	600,000	(4)	600,000	(4)	-		-
RedDiamond Partners LLC (107)	800,000	(31)	800,000	(31)	-		-
Ramnarian Jaigobind+	1,426,948	(108)	1,426,948	(108)	-		-
Fordham Financial Management, Inc. (109)	271,800	(110)	271,800	(110)	-		-
Chirag Choudhary+	43,590	(111)	43,590	(111)	-		-
Eric Lord+	85,345	(112)	85,345	(112)	-		-
Kevin Mangan+	72,648	(113)	72,648	(113)	-		-
Priyanka Mahajan+	62,863	(114)	62,863	(114)	-		-
Nelson Baquet+	4,077	(115)	4,077	(115)	-		-
Maria Robles+	2,040	(116)	2,040	(116)	-		-
Craig Skop+	30,752	(117)	30,752	(117)	-		-
Christopher Gormally+	5,824	(118)	5,824	(118)	-		-
Philippe Allain+	5,436	(119)	5,436	(119)	-		-
Jeffrey Singer+	4,077	(120)	4,077	(120)	-		-
Andrew Scott+	543,600	(121)	543,600	(121)	-		-

* Denotes less than 1%.

+ Referenced selling stockholder is affiliated with ThinkEquity, a division of Fordham Financial Management, Inc., a registered broker dealer, and the placement agent for the May 2019 Private Placement. The address of such selling stockholder is c/o ThinkEquity, 17 State Street, 22nd Floor, New York, NY 10004.

(1) The address for William Moore is 106 Santa Rosa Blvd, Fort Walton Beach, FL 32548.

(2) Represents (i) 420,000 shares of Common Stock and (ii) 420,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(3) The address for William McGough is 4706 Holly Drive, Palm Beach Gardens, FL 33418.

(4) Represents (i) 300,000 shares of Common Stock and (ii) 300,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(5) Represents (i) 200,000 shares of Common Stock and (ii) 200,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(6) Represents (i) 100,000 shares of Common Stock and (ii) 100,000 shares of Common Stock issuable upon exercise of Warrants.

(7) The address of Francis Mlynarczyk is 852 President Street, Brooklyn, NY 11215.

(8) Represents (i) 550,000 shares of Common Stock and (ii) 500,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(9) Represents (i) 450,000 shares of Common Stock and (ii) 400,000 shares of Common Stock issuable upon exercise of Warrants.

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(10) The address for Anthony Low-Beer is 85398 S Willamette St, Eugene, OR 97405.

(11) Represents (i) 3,600,000 shares of Common Stock and (ii) 2,100,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(12) Represents (i) 600,000 shares of Common Stock and (ii) 600,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(13) Represents (i) 3,000,000 shares of Common Stock and (ii) 1,500,000 shares of Common Stock issuable upon exercise of Warrants.

(14) The address for John Low-Beer is 415 8th Street, Brooklyn, NY 11215.

(15) Represents (i) 400,000 shares of Common Stock and (ii) 350,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(16) Represents (i) 200,000 shares of Common Stock and (ii) 150,000 shares of Common Stock issuable upon exercise of Warrants.

(17) The address for Sheila Low-Beer is 330 Concord Street, #5A, Charleston, SC 29401.

(18) Represents (i) 325,000 shares of Common Stock and (ii) 250,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(19) Represents (i) 120,000 shares of Common Stock and (ii) 50,000 shares of Common Stock issuable upon exercise of Warrants.

(20) The address for Fredrick Morris is 145 Fellows Road, London, UK NW3 3JJ.

(21) Represents (i) 177,000 shares of Common Stock and (ii) 177,000 shares of Common Stock issuable upon exercise of Warrants, including 100,000 Investor Warrants.

(22) Represents (i) 77,000 shares of Common Stock and (ii) 77,000 shares of Common Stock issuable upon exercise of Warrants.

(23) Francis Mlynarczyk, as manager of ALB Private Investments, LLC, has voting and dispositive power over securities of the Company held by ALB Private Investments, LLC. The address for ALB Private Investments, LLC is 10 Rockefeller Plaza, Suite 720, New York, NY 10020.

(24) Represents (i) 3,200,000 shares of Common Stock and (ii) 1,700,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(25) The address for Ong Geok Chin is 39A Lorong Marzuki, Singapore 415807.

(26) Represents (i) 293,846 shares of Common Stock and (ii) 293,846 shares of Common Stock issuable upon exercise of Investor Warrants.

(27) Represents (i) 140,000 shares of Common Stock and (ii) 140,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(28) Represents (i) 153,846 shares of Common Stock and (ii) 153,846 shares of Common Stock issuable upon exercise of Warrants.

(29) The address for Markus Sieger is Binderstrasse 53, 8702, Zollikon, Switzerland.  Mr. Sieger is a director of the Company.

(30)  Represents (i) 4,422,857 shares of Common Stock and (ii) 742,857 shares of Common Stock issuable upon exercise of warrants, including 400,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(31) Represents (i) 400,000 shares of Common Stock and (ii) 400,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(32) Represents (i) 4,022,857 shares of Common Stock and (ii) 342,857 shares of Common Stock issuable upon exercise of Warrants.

(33) The address for Ivan Frederickson, Jr. is 11601 Kew Gardens Ave Suite 101, Palm Beach Gardens, FL 33410.

(34) The address for Michael and Ashley Jorgensen is 121 Poinciana Dr. Jupiter, FL 33458.

(35) The address for Sharon Hrynkow is 4816 King Solomon Dr. Annandale, VA 22003.  Dr. Hrynkow is the Company’s Chief Scientific Officer.

(36) Represents (i) 315,000 shares of Common Stock and (ii) 280,000 shares of Common Stock issuable upon exercise of warrants, including 40,000 Investor Warrants.

(37) Represents (i) 40,000 shares of Common Stock and (ii) 40,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(38) Represents (i) 275,000 shares of Common Stock and (ii) 240,000 shares of Common Stock issuable upon exercise of Warrants.

(39) The address for Scott and Kathleen Simpson is 10 Sumner Place Kensington, London SW7 3EE.

(40) The address for Randall Toig is 705 Redwood Lane, Glencoe, IL 60022.  Mr. Toig is a director of the Company.

(41) Represents (i) 1,307,770 shares of Common Stock and (ii) 1,307,770 shares of Common Stock issuable upon exercise of warrants, including 200,000 Investor Warrants.

36

(42) Represents (i) 1,107,770 shares of Common Stock and (ii) 1,107,770 shares of Common Stock issuable upon exercise of Warrants.

(43) The address for Jeffrey S Bornstein, 500 Main St. Unit 5, Ridgefield, CT 06877.

(44) Represents (i) 205,000 shares of Common Stock and (ii) 200,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(45) Represents 5,000 shares of Common Stock.

(46) The address for Lorenzo Corte is 110 Ridgway, Wimbledon, London SW19 4RD.

(47) Represents (i) 160,000 shares of Common Stock and (ii) 160,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(48) The address for Scott and Kathy Fine is 3322 Greenway Drive, Jupiter, FL 33458.  Mr. Fine is the Company’s Chief Executive Officer and Chairman of the Board.

(49) Represents (i) 6,676,483 shares of Common Stock and (ii) 2,076,483 shares of Common Stock issuable upon exercise of warrants, including 400,000 Investor Warrants.

(50) Represents (i) 6,276,483 shares of Common Stock and (ii) 1,676,483 shares of Common Stock issuable upon exercise of Warrants.

(51) The address for Joshua Weinshank is 155 Limestone Rd, Ridgefield, CT 06877.

(52) Represents 95,506 shares of Common Stock.

(53) Represents 15,506 shares of Common Stock.

(54) The address for Robert Koch is 8015 Greentree Road, Bethesda, MD 20817.

(55) The address for William Shanahan is 58 Sunswyck Roadm Darien, CT 06820. Mr. Shanahan is a director of the Company.

(56) Represents (i) 2,105,460 shares of Common Stock and (ii) 2,039,560 shares of Common Stock issuable upon exercise of warrants, including 800,000 Investor Warrants.

(57) Represents (i) 800,000 shares of Common Stock and (ii) 800,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(58) Represents (i) 1,305,460 shares of Common Stock and (ii) 1,239,560 shares of Common Stock issuable upon exercise of Warrants.

(59) The address for Phylis Esposito is 434 East 52nd Street, PH E, New York, NY 10023.

(60) Represents (i) 1,305,000 shares of Common Stock and (ii) 550,000 shares of Common Stock issuable upon exercise of warrants, including 100,000 Investor Warrants.

(61) Represents (i) 1,205,000 shares of Common Stock and (ii) 450,000 shares of Common Stock issuable upon exercise of Warrants.

(62) The address for Maida Chicon is 12 Beekman Pl, APT 7B, New York, NY 10022.

(63) Represents (i) 210,000 shares of Common Stock and (ii) 90,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(64) Represents (i) 170,000 shares of Common Stock and (ii) 50,000 shares of Common Stock issuable upon exercise of Warrants.

(65) The address for Kevin McCormack is 333 Pearl Street, New York, NY 10038.

(66) Represents (i) 215,000 shares of Common Stock and (ii) 150,000 shares of Common Stock issuable upon exercise of warrants, including 50,000 Investor Warrants.

(67) Represents (i) 115,000 shares of Common Stock and (ii) 50,000 shares of Common Stock issuable upon exercise of Warrants.

(68) The address for Ryan McCormack is 333 Pearl Street, New York, NY 10038.

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(69) Represents (i) 145,000 shares of Common Stock and (ii) 130,000 shares of Common Stock issuable upon exercise of warrants, including 30,000 Investor Warrants.

(70) Represents (i) 45,000 shares of Common Stock and (ii) 30,000 shares of Common Stock issuable upon exercise of Warrants.

(71) Alan Abramson, as the Trustee of Alan Abramson Trust, has voting and dispositive power over securities of the Company held by Alan Abramson Trust. The address for Alan Abramson Trust is 1235 Courier Ct, Deerfield, IL 60015.

(72) Represents (i) 80,000 shares of Common Stock and (ii) 80,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(73) The address for Dennis Poster is 15 Westfair Drive, Westport, CT 06880.

(74) The address for Sinthia Marins Silva is 4 Peacock Place N1 1YG, London, UK.

(75) The address for Francis Patrick Ostronic is 966 Hungerford Drive, Ste 3B, Rockville, MD 20850.  Mr. Ostronic is a director of the Company.

(76) Represents (i) 904,890 shares of Common Stock and (ii) 709,890 shares of Common Stock issuable upon exercise of warrants, including 200,000 Investor Warrants.

(77) Represents (i) 704,890 shares of Common Stock and (ii) 509,890 shares of Common Stock issuable upon exercise of Warrants.

(78) Francis Patrick Ostronic (a director of the Company), as the Director of Novit, LP, has voting and dispositive power over securities of the Company held by Novit, LP. The address for Novit, LP is 966 Hungerford Drive, Ste 3B, Rockville, MD 20850.

(79) Represents (i) 9,517,582 shares of Common Stock and (ii) 3,617,582 shares of Common Stock issuable upon exercise of warrants, including 800,000 Investor Warrants.

(80) Represents (i) 8,717,582 shares of Common Stock and (ii) 2,817,582 shares of Common Stock issuable upon exercise of warrants.

(81) Ashley Kennedy, as the Portfolio Manager of National Bank Financial, Inc., has voting and dispositive power over securities of the Company held by National Bank Financial, Inc. The address for National Bank Financial, Inc. is M100-1010 de la Gauchetiere Street W, Montreal, Quebec H3B 5J2.

(82) The address for Dyke Rogers is 1205 Olive Ave, Dalhart, TX 79022.

(83) John Abeles, as the managing member of the general partner of Northlea Partners, has voting and dispositive power over securities of the Company held by Northlea Partners. The address for Northlea Partners is 365 NW 41st St, Boca Raton, FL 33431.

(84) Represents (i) 70,000 shares of Common Stock and (ii) 70,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(85) Michael Bigger, as the managing member of the general partner of Bigger Capital Fund, LP, has voting and dispositive power over securities of the Company held by Bigger Capital Fund, LP. The address for Bigger Capital Fund, LP is 159 Jennings Road, Cold Spring Harbor, NY 11724.

(86) Represents (i) 1,000,000 shares of Common Stock and (ii) 1,000,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(87) Michael Bigger, as the managing member of the general partner of District 2 Capital Fund LP, has voting and dispositive power over securities of the Company held by District 2 Capital Fund LP. The address for District 2 Capital Fund LP is 175 W. Carver St. Huntington, NY.

(88) Rina Rollhaus, as the managing partner of Efrat Investments LLC, has voting and dispositive power over securities of the Company held by Efrat Investments LLC. The address for Efrat Investments LLC is 54 Lenox Ave, Clifton NJ 07012.

(89) Daniel Warsh, as the manager of Warberg WF VII LP, has voting and dispositive power over securities of the Company held by Warberg WF VII LP. The address for Warberg WF VII LP is 716 Oak St, Winnetka, IL 60093.

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(90) Represents (i) 240,000 shares of Common Stock and (ii) 240,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(91) Daniel Warsh, as the manager of Warberg WF VI LP, has voting and dispositive power over securities of the Company held by Warberg WF VI LP. The address for Warberg WF VI LP is 716 Oak St, Winnetka, IL 60093

(92) The address for Clayton Struve is 175 W. Jackson Blvd. Suite 440, Chicago IL 60604.

(93) William Anderson, as the Chief Financial Officer of Verition Multi Strategy Master Fund Ltd., has voting and dispositive power over securities of the Company held by Verition Multi Strategy Master Fund Ltd. The address for Verition Multi Strategy Master Fund Ltd. is One American Lane, Greenwich, CT 06831.

(94) Adam Stern, as the General Partner of A.K.S. Family Partners LP., has voting and dispositive power over securities of the Company held by A.K.S. Family Partners LP. The address for A.K.S. Family Partners LP. is 888 C 8th Ave #530, New York, NY 10019.

(95) Empery Asset Management LP, the authorized agent of Empery Asset Master Ltd (“EAM”), has discretionary authority to vote and dispose of the shares held by EAM and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by EAM. EAM, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares. The business address for each of EAM, Empery Asset Management LP and Messrs. Hoe and Lane is c/o Empery Asset Management, LP, 1 Rockefeller Plaza, Suite 1205, New York, NY 10020.

(96) Represents (i) 1,030,930 shares of Common Stock and (ii) 1,030,930 shares of Common Stock issuable upon exercise of Investor Warrants.

(97) Empery Asset Management LP, the authorized agent of Empery Tax Efficient, LP (“ETE”), has discretionary authority to vote and dispose of the shares held by ETE and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by ETE. ETE, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares. The business address for each of ETE, Empery Asset Management LP and Messrs. Hoe and Lane is c/o Empery Asset Management, LP, 1 Rockefeller Plaza, Suite 1205, New York, NY 10020.

(98) Represents (i) 179,778 shares of Common Stock and (ii) 179,778 shares of Common Stock issuable upon exercise of Investor Warrants.

(99) Empery Asset Management LP, the authorized agent of Empery Tax Efficient II, LP (“ETE II”), has discretionary authority to vote and dispose of the shares held by ETE II and may be deemed to be the beneficial owner of these shares. Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery Asset Management LP, may also be deemed to have investment discretion and voting power over the shares held by ETE II. ETE II, Mr. Hoe and Mr. Lane each disclaim any beneficial ownership of these shares. The business address for each of ETE II, Empery Asset Management LP and Messrs. Hoe and Lane is c/o Empery Asset Management, LP, 1 Rockefeller Plaza, Suite 1205, New York, NY 10020.

(100) Represents (i) 789,292 shares of Common Stock and (ii) 789,292 shares of Common Stock issuable upon exercise of Investor Warrants.

(101) Sabby Management, LLC is the investment manager of Sabby Volatility Warrant Master Fund, Ltd., or Sabby VWMF, and shares voting and investment power with respect to these shares in this capacity. As manager of Sabby Management, LLC, Hal Mintz also shares voting and investment power on behalf of Sabby VWMF. Each of Sabby Management, LLC and Hal Mintz disclaims beneficial ownership over the securities listed except to the extent of their pecuniary interest therein. The address of principal business office of S Sabby VWMF is 10 Mountainview Road, Suite 205, Upper Saddle River, New Jersey 07458.

(102) Represents (i) 2,000,000 shares of Common Stock and (ii) 2,000,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(103) Armistice Capital, LLC, the investment manager of Armistice Capital Master Fund Ltd., or Armistice, and Steven Boyd, the managing member of Armistice Capital, LLC, hold shared voting and dispositive power over the shares held by Armistice.  Each of Armistice Capital, LLC and Steven Boyd disclaims beneficial ownership of the securities listed except to the extent of their pecuniary interest therein.  The principal business address of Armistice is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY, 10022.

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(104) Represents (i) 12,000,000 shares of Common Stock and (ii) 12,000,000 shares of Common Stock issuable upon exercise of Investor Warrants.

(105) Steven Cohen, as a managing member of Alta Partners, LLC, has voting and dispositive power over securities of the Company held by Alta Partners, LLC. The address for Alta Partners, LLC is 29 Valentines Lane, Old Brookville, NY 11545.

(106) Thomas Kipfer, as the Operation Manager of Orca Capital GMBH, has voting and dispositive power over securities of the Company held by Orca Capital GMBH. The address for Orca Capital GMBH is Sperl-Ring 2, Pfaffenhofen 85276, Germany.

(107) John DeNobile, as a managing member of RedDiamond Partners, LLC, has voting and dispositive power over securities of the Company held by RedDiamond Partners, LLC. The address for RedDiamond Partners, LLC is 156 West Saddle River Road, Saddle River, NJ 07458.

(108) Represents (i) 600,000 shares of Common Stock, (ii) 600,000 shares of Common Stock issuable upon exercise of Investor Warrants and (iii) 226,948 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(109) William Baquet, as the President of Fordham Financial Management, Inc., has voting and dispositive power over securities of the Company held by Fordham Financial Management, Inc. The address of Fordham Financial Management, Inc. is 17 Battery Place, Suite 643, New York, NY 10004. ThinkEquity, a division of Fordham Financial Management, Inc., was the placement agent in the May 2019 Private Placement.

(110) Represents 271,800 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(111) Represents 43,590 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(112) Represents 85,345 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(113) Represents 72,648 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(114) Represents 62,863 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(115) Represents 4,077 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(116) Represents 2,040 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(117) Represents 30,752 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(118) Represents 5,824 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(119) Represents 5,436 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(120) Represents 4,077 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

(121) Represents 543,600 shares of Common Stock issuable upon exercise of Placement Agent Warrants.

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PLAN OF DISTRIBUTION

Each Selling Shareholder (the “Selling Shareholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the principal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Shareholder may use any one or more of the following methods when selling securities:

• ordinary brokerage transactions and transactions in which the broker dealer solicits purchasers;

• block trades in which the broker dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker dealer as principal and resale by the broker dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• settlement of short sales;

• in transactions through broker dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security;

• through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

• a combination of any such methods of sale; or

• any other method permitted pursuant to applicable law.

The Selling Shareholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

Broker dealers engaged by the Selling Shareholders may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

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The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the Common Stock by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

42

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby has been passed upon for us by Fox Rothschild LLP, 101 Park Avenue, New York, NY 10178.

EXPERTS

The audited consolidated balance sheets at December 31, 2018 and 2017 and the audited consolidated statements of operations, shareholders’ (deficit) equity and cash flows for the years ended December 31, 2018 and 2017 have been audited by WithumSmith+Brown, PC, our independent registered public accounting firm. We have included these financial statements in this registration statement in reliance upon the reports of such firm given their authority as experts in accounting and auditing.

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement that we filed with the SEC. You should rely only on the information provided in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of Common Stock. Applicable SEC rules may require us to update this prospectus in the future.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any report, statement or other information that we file with the SEC at the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain further information on the operation of the Public Reference room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov, as well as our website at www.ctd-holdings.com. Information contained on our website does not constitute a part of this prospectus.

 This prospectus is part of a registration statement that we filed with the SEC. This prospectus and any accompanying prospectus supplement do not contain all of the information included in the registration statement, and certain statements contained in this prospectus and any accompanying prospectus supplement about the provisions or contents of any contract, agreement or any other document referred to herein are not necessarily complete. For each of these contracts, agreements or documents filed as an exhibit to the registration statement, we refer you to the actual exhibit for a more complete description of the matters involved. In addition, we have omitted certain parts of the registration statement in accordance with the rules and regulations of the SEC. To obtain all of the information that we filed with the SEC in connection herewith, we refer you to the registration statement, including its exhibits and schedules. You should assume that the information contained in this prospectus and any accompanying prospectus supplement is accurate only as of the date appearing on the front of the prospectus or prospectus supplement, as applicable.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

	Page
Consolidated Balance Sheets as of March 31, 2019 (Unaudited) and December 31, 2018.	F-2
Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2019 and 2018.	F-3
Consolidated Statement of Stockholders’ Equity (Unaudited) for the Three Months Ended March 31, 2018	F-4
Consolidated Statement of Stockholders’ Equity (Deficit) (Unaudited) for the Three Months Ended March 31, 2019	F-5
Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2019 and 2018	F-6
Notes to Unaudited Consolidated Financial Statements	F-7
Report of Independent Registered Public Accounting Firm – WithumSmith+Brown, PC	F-13
Consolidated Balance Sheets as of December 31, 2018 and 2017	F-14
Consolidated Statements of Operations for the Years Ended December 31, 2018 and 2017	F-15
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2018 and 2017	F-16
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018 and 2017	F-17
Notes to Consolidated Financial Statements	F-18

F-1

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31, 2019			December 31, 2018
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,115,133		$	2,217,412
Accounts receivable		74,796			80,044
Inventory, net		413,253			416,531
Current portion of mortgage note receivable		37,439			37,439
Other		46,901			18,185
Total current assets		1,687,522			2,769,611
FURNITURE AND EQUIPMENT, NET		18,411			18,571
RIGHT-TO-USE LEASE ASSET, NET		63,771			-
MORTGAGE NOTE RECEIVABLE, LESS CURRENT PORTION		120,458			129,674
OTHER		15,000			-
TOTAL ASSETS	$	1,905,162		$	2,917,856
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Current portion of lease liability	$	14,182		$	-
Accounts payable and accrued expenses		2,622,511			1,925,332
Total current liabilities		2,636,693			1,925,332
LONG-TERM LEASE LIABILITY		50,049			-
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.0001 per share, 500,000,000 shares authorized, 90,759,324 shares issued and outstanding, at March 31, 2019 and December 31, 2018		9,075			9,075
Preferred stock, par value $.0001 per share, 5,000,000 shares authorized		-			-
Additional paid-in capital		18,701,211			18,701,211
Stock subscription receivable		-			(130,062	)
Accumulated deficit		(19,491,866	)		(17,587,700	)
Total stockholders' equity (deficit)		(781,580	)		992,524
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	1,905,162		$	2,917,856

 See accompanying Notes to Consolidated Financial Statements.

F-2

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended
	March 31,
	2019			2018
REVENUES
Product sales	$	220,826		$	198,069
EXPENSES
Personnel		409,999			277,567
Cost of products sold (exclusive of depreciation, shown separately below)		20,550			23,672
Research and development		1,342,763			409,198
Repairs and maintenance		1,684			-
Professional fees		214,975			233,976
Office and other		102,642			47,867
Board of Director fees and costs		33,085			15,783
Depreciation		1,484			2,500
Freight and shipping		1,434			1,882
Total operating expenses		2,128,616			1,012,445
LOSS FROM OPERATIONS		(1,907,790	)		(814,376	)
OTHER INCOME
Investment and other		3,624			1,432
LOSS BEFORE INCOME TAXES		(1,904,166	)		(812,944	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(1,904,166	)	$	(812,944	)
BASIC AND FULLY DILUTED NET LOSS PER COMMON SHARE	$	(.02	)	$	(.01	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		90,759,324			72,999,361

See Accompanying Notes to Consolidated Financial Statements.

F-3

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2018

(unaudited)

	Common Stock				Preferred Stock Series B				Additional							Total
	Shares		Par Value		Units		Par Value		Paid-In Capital		Subscription Receivable		Accumulated Deficit			Stockholders’ Equity
Balance, December 31, 2017		72,999,361	$	7,299		15,500	$	2	$	14,470,984	$	-	$	(13,332,667	)	$	1,145,618
Net loss		-		-		-		-		-		-		(812,944	)		(812,944	)
Balance, March 31, 2018	$	72,999,361	$	7,299	$	15,500	$	2	$	14,470,984	$	-	$	(14,145,611	)	$	332,674

See Accompanying Notes to Consolidated Financial Statements.

F-4

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2019

(unaudited)

	Common Stock				Preferred Stock Series B				Additional								Total
	Shares		Par Value		Units		Par Value		Paid-In Capital		Subscription Receivable			Accumulated Deficit			Stockholders’ Equity (Deficit)
Balance, December 31, 2018		90,759,324	$	9,075		-	$	-	$	18,701,211	$	(130,062	)	$	(17,587,700	)	$	992,524
Collection of subscription receivable		-		-		-		-		-		130,062			-			130,062
Net loss		-		-		-		-		-		-			(1,904,166	)		(1,904,166	)
Balance, March 31, 2019		90,759,324	$	9,075		-	$	-	$	18,701,211	$	-		$	(19,491,866	)	$	(781,580	)

See Accompanying Notes to Consolidated Financial Statements.

F-5

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months Ended
	March 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,904,166	)	$	(812,944	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,484			2,500
Accrued stock compensation to employees		7,300			3,300
Accrued stock compensation to non-employees		24,090			10,890
Increase or decrease in:
Accounts receivable		5,248			9,178
Inventory		3,278			17,778
Other current assets		(28,716	)		(4,258	)
Other		460			-
Accounts payable and accrued expenses		665,789			35,859
Total adjustments		678,933			75,247
NET CASH USED IN OPERATING ACTIVITIES		(1,225,233	)		(737,697	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		(1,324	)		(1,634	)
Proceeds from mortgage note receivable		9,216			2,934
NET CASH PROVIDED BY INVESTING ACTIVITIES		7,892			1,300
CASH FLOWS FROM FINANCING ACTIVITIES
Collection of subscription receivable		130,062			-
Advance – private placement		-			74,983
Other		(15,000	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES		115,062			74,983
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,102,279	)		(661,414	)
CASH AND CASH EQUIVALENTS, beginning of period		2,217,412			1,270,973
CASH AND CASH EQUIVALENTS, end of period	$	1,115,133		$	609,559
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Capitalization of right-to-use asset and lease liability	$	64,231			-

See Accompanying Notes to Consolidated Financial Statements.

F-6

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

The information presented herein as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 is unaudited.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD Holdings, Inc. and subsidiaries (the “Company,” “we,” “our” or “us”) that affect the accompanying consolidated financial statements.

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in August 1990, as a Florida corporation with operations beginning in July 1992. We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol® Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol® Cyclo™ and in January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017. We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The first patient was dosed in our European study in July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(b) BASIS OF PRESENTATION––The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation 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 recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the three month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 15, 2019.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of three months or less.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Based on our assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for uncollectible accounts was not deemed necessary at March 31, 2019 and December 31, 2018.

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol® Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (first-in, first-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does not include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete.  The reserve for obsolete inventory was $39,700 at March 31, 2019 and December 31, 2018. 

F-7

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(f) EQUIPMENT––Equipment is recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally three to five years for computers, and seven to ten years for equipment and office furniture).

(g) REVENUE RECOGNITION––Effective January 1, 2018, the Company adopted the provisions of ASC 606 using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018, did not change our revenue recognition as the majority of our revenues continue to be recognized when the customer takes control of our product. As we did not identify any accounting changes that impacted the amount of reported revenues with respect to our product revenues and no adjustment to retained earnings was required upon adoption.

Under the new revenue standards, we recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other third-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified one performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do not differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note 6, Revenues, to these condensed consolidated financial statements.

F-8

 CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(h) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(i) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

(j) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented.  Outstanding warrants to purchase 32,192,294 common shares and 28,500,478 common shares, for the three months ended March 31, 2019 and 2018, respectively, and 1,768,147 common shares that may be issued under warrants to purchase units sold in the Company’s private placements, were antidilutive for the three months ended March 31, 2018 and March 31, 2019, and have been excluded from the calculation of loss per common share.

(k) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants. An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(l) LIQUIDITY AND GOING CONCERN––For the three months ended March 31, 2019 and 2018, the Company incurred net losses of $1,904,166 and $812,944. At March 31, 2019, the Company had a cash balance of $1,115,133 and its current assets less current liabilities were $(949,171). The Company has an accumulated deficit of $19,491,866 at March 31, 2019. Our recent losses have predominantly resulted from research and development expenses for our Trappsol® Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC.

For year ended December 31, 2018, our operations used approximately $3,188,000 in cash. This cash was provided primarily by cash on hand and net proceeds of $4,102,000 from equity issuances. At December 31, 2018, the Company had a cash balance of $2,217,000 and current assets less current liabilities of $844,000. We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we may be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

We have incurred losses from operations in each of our last five fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. There can be no assurance that the Company will be successful with these fundraising endeavors.   These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

F-9

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2019

(m) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, including contingencies. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(n) FAIR VALUE MEASUREMENTS AND DISCLOSURES––The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have no assets or liabilities that are required to have their fair value measured on a recurring basis at March 31, 2019 or December 31, 2018.  Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment. 

For short-term classes of our financial instruments which are not reported at fair value, the carrying amounts approximate fair value due to their short-term nature, which include cash, accounts receivable, and accounts payable.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At March 31, 2019 and December 31, 2018, the carrying value of the mortgage note receivable approximates fair value. 

(o) Accounting Standards Adopted––

● Leases - In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” (“ASU 2016-02”), which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and financing leases with lease terms greater than twelve months.  The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment for prepaid and deferred rent and tenant incentives.  For income statement purposes, leases will continue to be classified as operating or financing with lease expense in both cases calculated substantially the same as under the prior leasing guidance. 

The Company adopted Topic 842 as of January 1, 2019 (the first day of fiscal 2019).  See Note 7

(p) Accounting Standards to be Adopted in Future Periods––There are no outstanding accounting standards to be adopted that will have a material effect on the Company’s financial position and operations.

(2) MORTGAGE NOTE RECEIVABLE

On January 21, 2016, we sold our real property located in High Springs, Florida to an unrelated party. Pursuant to the terms of the sale, at the closing, the buyer paid $10,000 in cash, less selling costs and settlement charges, and delivered to us a promissory note in the principal amount of $265,000, and a mortgage in our favor securing the buyer’s obligations under the promissory note. The promissory note provides for monthly payments of $3,653, including principal and interest at 4.25%, over a seven-year period that commenced March 1, 2016, with the unpaid balance due in February 2023.

F-10

CTD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2019

(3) EQUITY TRANSACTIONS:

The Company expensed $31,390 and $14,190 in employee and board member stock compensation for the three months ended March 31, 2019 and 2018, respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members.

In April, 2018, the Company completed a private placement resulting in gross proceeds to the Company of $2,010,000. Prior to March 31, 2018, the Company received $74,983 in advance from these investors, which has been recorded as an advance -- private placement in the accompanying statement of cash flows.

As of March 31, 2019, the Company had warrants outstanding to purchase 32,192,294 shares of common stock at exercise prices of $0.25 - $1.00 per share that expire at various dates through 2025. An additional 1,768,147 shares of common stock may be issued under warrants outstanding to purchase 480,000 Units sold in the Company’s May 2016 private placement at an exercise price of $0.25 per Unit, 164,074 Units sold in the Company’s February 2017 private placement at an exercise price of $0.35 per Unit, and 600 Units sold in the Company’s October 2017 private placement at an exercise price of $100 per Unit.

(4) INCOME TAXES:

The Company reported a net loss for the three months ended March 31, 2019 and 2018, respectively. The Company increased its deferred tax asset valuation allowance rather than recognize an income tax benefit.

(5) SALES CONCENTRATIONS:

Sales to four major customers accounted for 76% of total sales for the three months ended March 31, 2019 and 2018, respectively. A loss of one of these customers could have a significant adverse effect on the Company’s financial condition, results of operations and cash flows.

(6) REVENUES:

The Company operates in one business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life threatening rare diseases and medical conditions. The Company considers there to be revenue concentration risks for regions where net product revenues exceed 10% of consolidated net product revenues. The concentration of the Company’s net product revenues within the regions below may have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. See Note 1(g) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Three Months Ended
	March 31,
	2019		2018
Trappsol Cyclo	$	30,096	$	30,096
Trappsol HPB		70,867		74,762
Trappsol research		65,852		61,025
Aquaplex		52,560		29,455
Other		1,451		2,731
Total revenues	$	220,826	$	198,069

Substantially all of our sales of Trappsol® Cyclo™ for the three months ended March 31, 2019 and March 31, 2018 were to a particular customer who exports the drug to South America. Substantially all of our Aquaplex sales are to one customer.

F-11

CTD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2019

(7) LEASES:

The Company adopted ASU 2016-02 “Leases (Topic 842)” along with related clarifications and improvements effective at the beginning of fiscal 2019, using the modified retrospective transition method.  There was no cumulative-effect adjustment to the Company's Consolidated Balance Sheet as of December 31, 2018. Comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods, as the Company has elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward our prior lease classifications under ASC 840, “Leases.”

Under the new guidance, right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease terms at the commencement dates.  The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The incremental borrowing rate for all existing leases as of the opening balance sheet date was based upon the remaining terms of the leases; the incremental borrowing rate for all new or amended leases is based upon the lease terms.  The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by a Company options to extend the leases that the Company is reasonably certain to exercise.

The Company has elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward our prior lease classifications under ASC 840, “Leases.”

Adoption of Topic 842 did not have a material impact on our annual operating results or cash flows. Operating lease expense is recognized on a straight-line basis over the lease term and is included in operating costs or General and administrative expense.  Variable lease payments are expensed as incurred.

The effects of the changes made to the Company’s Consolidated Balance Sheet as of December 31, 2018 for the adoption of Topic 842 is as follows:

The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date.  Leases with an initial term of 12 months or less but greater than one month are not recorded on the balance sheet for select asset classes.  The lease liability is measured at the present value of future lease payments as of the lease commencement date, or the opening balance sheet date for leases existing at adoption of Topic 842.  The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. 

Certain leases provide that the lease payments may be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index.  Future base rent escalations that are not contractually quantifiable as of the lease commencement date are not included in our lease liability. 

The Company has one office lease, which is as an operating lease and included in the right-of-use asset, current portion of lease liability, and long-term lease liability captions on the Company’s consolidated balance sheet.

Operating lease assets are recorded net of accumulated amortization of $4,251 as of March 31, 2019.

Lease expense for lease payments are recognized on a straight-line basis over the lease term.   Lease expense for the first quarter of 2019 was $3,331.

F-12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

CTD Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CTD Holdings, Inc. and subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt Regarding Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion.

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.  We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ WithumSmith+Brown, PC

We have served as the Company’s auditor since 2011.
Orlando, Florida

March 15, 2019

F-13

 CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2018			2017
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,217,412		$	1,270,973
Accounts receivable		80,044			56,860
Inventory, net		416,531			471,221
Current portion of mortgage note receivable		37,439			35,884
Other		18,185			60,846
Total current assets		2,769,611			1,895,784
FURNITURE AND EQUIPMENT, NET		18,571			25,736
MORTGAGE NOTE RECEIVABLE, LESS CURRENT PORTION		129,674			167,128
TOTAL ASSETS	$	2,917,856		$	2,088,648
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	1,925,332		$	943,030
STOCKHOLDERS' EQUITY
Common stock, par value $.0001 per share, 500,000,000 and 100,000,000 shares authorized at December 31, 2018 and 2017, respectively, 90,759,324 and 72,999,361 shares issued and outstanding at December 31, 2018 and 2017, respectively		9,075			7,299
Preferred stock, par value $.0001 per share, 0 and 5,000,000 shares authorized at December 31, 2018 and 2017, respectively, Series B – 50,000 shares designated, convertible 0 and 15,500 shares issued and outstanding at December 31, 2018 and 2017, liquidation preference $0 and $1,550,000 December 31, 2018 and 2017, respectively		-			2
Additional paid-in capital		18,701,211			14,470,984
Stock subscription receivable		(130,062	)		-
Accumulated deficit		(17,587,700	)		(13,332,667	)
Total stockholders' equity		992,524			1,145,618
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,917,856		$	2,088,648

See accompanying Notes to Consolidated Financial Statements.

F-14

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2018			2017
REVENUES
Product sales	$	1,011,477		$	1,237,756
EXPENSES
Personnel		1,171,941			1,183,441
Cost of products sold (exclusive of depreciation and amortization, shown separately below)		105,026			132,918
Research and development		2,711,275			2,292,892
Repairs and maintenance		3,821			10,500
Professional fees		808,770			902,714
Office and other		354,102			421,256
Board of Directors fees and costs		95,431			117,555
Depreciation		10,124			9,271
Freight and shipping		5,643			7,847
Loss (gain) on disposal of equipment		-			(2,817	)
Inventory write down		12,150			5,500
Total expenses		5,278,283			5,081,077
LOSS FROM OPERATIONS		(4,266,806	)		(3,843,321	)
OTHER INCOME
Investment and other income		11,773			10,261
Total other income		11,773			10,261
LOSS BEFORE INCOME TAXES		(4,255,033	)		(3,833,060	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(4,255,033	)	$	(3,833,060	)
BASIC AND FULLY DILUTED NET LOSS PER COMMON SHARE	$	(0.05	)	$	(0.05	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		81,756,839			72,037,167

See accompanying Notes to Consolidated Financial Statements.

F-15

CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2018 AND 2017

	Common Stock				Preferred Stock Series B						Additional									Total
	Shares		Par Value		Units			Par Value			Paid-In Capital			Subscription Receivable			Accumulated Deficit			Stockholders’ Equity
Balance, December 31, 2016		66,952,529	$	6,695		-		$	-		$	11,018,915		$	-		$	(9,499,607	)	$	1,526,003
									-
Sale of common stock, net of issuance fees		5,754,832		575		-			-			1,850,480			-			-			1,851,055
Sale of preferred stock units, net of issuance fees		-		-		15,500			2			1,489,998			-			-			1,490,000
Stock compensation		292,000		29		-			-			111,591			-			-			111,620
Net loss		-		-		-			-			-			-			(3,833,060	)		(3,833,060	)
Balance, December 31, 2017		72,999,361		7,299		15,500			2			14,470,984			-			(13,332,667	)		1,145,618
Sale of preferred stock units, net of issuance fees		-		-		20,100			2			1,959,998			-			-			1,960,000
Conversion of preferred stock units to common stock		14,240,000		1,424		(35,600	)		(4	)		(1,420	)		-			-			-
Sale of common stock, net of issuance fees		3,519,963		352		-			-			2,271,649			(130,062	)		-			2,141,939
Net loss		-		-		-			-			-						(4,255,033	)		(4,255,033	)
Balance, December 31, 2018		90,759,324	$	9,075		-		$	-		$	18,701,211		$	(130,062	)	$	(17,587,700	)	$	992,524

See accompanying Notes to Consolidated Financial Statements.  

F-16

 CTD HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(4,255,033	)	$	(3,833,060	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		10,124			9,271
Gain on disposal of equipment		-			(2,817	)
Stock compensation to employees		19,400			65,205
Stock compensation to nonemployees		64,020			53,475
Inventory valuation allowance		12,150			5,500
Increase or decrease in:
Accounts receivable		(23,184	)		32,807
Inventory		42,540			20,676
Other current assets		42,661			(6,967	)
Accounts payable and accrued expenses		898,882			593,428
Total adjustments		1,066,593			770,578
NET CASH USED IN OPERATING ACTIVITIES		(3,188,440	)		(3,062,482	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment		(2,959	)		(6,856	)
Proceeds from mortgage note receivable		35,899			34,409
Proceeds from sale of property and equipment, net of closing costs		-			4,650
NET CASH PROVIDED BY INVESTING ACTIVITIES		32,940			32,203
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, preferred stock and warrants, net of issuance costs		4,101,939			3,341,055
NET CASH PROVIDED BY FINANCING ACTIVITIES		4,101,939			3,341,055
NET INCREASE IN CASH AND CASH EQUIVALENTS		946,439			310,776
CASH AND CASH EQUIVALENTS, beginning of year		1,270,973			960,197
CASH AND CASH EQUIVALENTS, end of year	$	2,217,412		$	1,270,973
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Common stock issued in exchange for a subscription receivable	$	130,062		$	-
Conversion of preferred stock into common stock	$	1,424		$	-

See accompanying Notes to Consolidated Financial Statements

F-17

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD Holdings, Inc. and subsidiaries (the “Company,” “we,” “our” or “us”) that affect the accompanying consolidated financial statements:

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in August 1990 as a Florida corporation, with operations beginning in July 1992. We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol^® Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol^® Cyclo™ and in January 2017 the FDA granted Fast Track designation to Trappsol^® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017. We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The first patient was dosed in our European study in July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(b) BASIS OF PRESENTATION––The consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of three months or less.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Customer account balances with invoices dated over 90 days old are considered past due. The Company does not accrue interest on past due accounts. Customer payments are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, applied to the oldest unpaid invoices.

The carrying amount of accounts receivable are reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will not be collected. The Company reviews each customer balance where all or a portion of the balance exceeds 90 days from the invoice date. Based on the Company’s assessment of the customer's current creditworthiness, the Company estimates the portion, if any, of the balance that will not be collected, and writes off receivables as a charge to the allowance for credit losses when, in management’s estimation, it is probable that the receivable is worthless. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for doubtful accounts was not deemed necessary at December 31, 2018 and 2017.

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol^® Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (first-in, first-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does not include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete. The reserve for obsolete inventory was $39,700 and $27,500 at December 31, 2018 and 2017, respectively.

(f) MORTGAGE NOTE RECEIVABLE––The mortgage note receivable is stated at amortized value, which is the amount we expect to collect. 

F-18

 CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:  (CONTINUED)

(g) FURNITURE AND EQUIPMENT––Furniture and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally three to five years for computers and vehicles and seven to ten years for machinery, equipment and office furniture). We periodically review our long-lived assets to determine if the carrying value of assets may not be recoverable. If an impairment is identified, we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. 

(h) REVENUE RECOGNITION–– Effective January 1, 2018, the Company adopted the provisions of ASC 606 using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption.

Under the new revenue standards, revenues are recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other third-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified one performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do not differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

F-19

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:  (CONTINUED)

For additional information on our revenues, please read Note 2, Revenues, to these consolidated financial statements.

(i) SHIPPING AND HANDLING FEES––Shipping and handling fees, if billed to customers, are included in product sales. Shipping and handling costs associated with inbound and outbound freight are expensed as incurred and included in freight and shipping expense.

(j) ADVERTISING––Advertising costs are charged to operations when incurred. We incur minimal advertising expenses.

(k) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(l) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

The Tax Cut and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act contains several key provisions including, among other things, reducing the U.S. federal corporate tax rate from 35% to 21%. Changes in tax law are accounted for in the period of enactment. In addition, federal net operating losses (“NOLs”) generated during future periods will be carried forward indefinitely, but will be subject to an 80% utilization against taxable income. The carryback provision has been revoked for NOLs after January 1, 2018.

(m) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented, as convertible preferred stock and outstanding warrants to purchase 32,192,294 and 28,500,478 common shares were antidilutive for 2018 and 2017, respectively.

(n) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants.  An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(o) FAIR VALUE MEASUREMENTS AND DISCLOSURES–The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

F-20

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:  (CONTINUED)

We have no assets or liabilities that are required to have their fair value measured on a recurring basis at December 31, 2018 or 2017.  Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment.

For short-term classes of our financial instruments, which include cash, accounts receivable and accounts payable, and which are not reported at fair value, the carrying amounts approximate fair value due to their short-term nature.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At December 31, 2018 and 2017, the carrying value of the mortgage note receivable approximates fair value.

(p) LIQUIDITY AND GOING CONCERN–– For the year ended December 31, 2018 and 2017, the Company incurred net losses of $4,255,000 and $3,833,000, respectively. The Company has an accumulated deficit of approximately $17,588,000 at December 31, 2018. Our recent losses have predominantly resulted from research and development expenses for our Trappsol^® Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol^® Cyclo™ in the treatment of NPC.

For year ended December 31, 2018, our operations used approximately $3,188,000 in cash. This cash was provided primarily by cash on hand and net proceeds of $4,102,000 from equity issuances. At December 31, 2018, the Company had a cash balance of $2,217,000 and current assets less current liabilities of $844,000. We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

The Company has incurred losses from operations in each of the last five years. We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we may be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

Our consolidated financial statements for the year ended December 31, 2018 and 2017 were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. We have incurred losses from operations in each of our last five fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

(q) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(r) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS–– In August 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-15, “Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendments in this ASU relate to eight specific types of cash receipts and cash payments which current U.S. generally accepted accounting principles (“U.S. GAAP”) either is unclear or does not include specific guidance on the cash flow classification issues. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this ASU effective January 1, 2018 and there was no significant impact on its consolidated financial statements and disclosures. 

F-21

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:  (CONTINUED)

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires that lessees recognize assets and liabilities for leases with lease terms greater than 12 months in the statement of financial position. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period. The Company will adopt this ASU effective January 1, 2019 and does not expect a significant impact on its consolidated financial statements and disclosures. 

Between May 2014 and December 2016, the FASB issued several ASUs on Revenue from Contracts with Customers (Topic 606). These updates will supersede nearly all existing revenue recognition guidance under current U.S. GAAP. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A five-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). Effective January 1, 2018, the Company adopted the provisions of ASC 606 using the modified retrospective method. The adoption of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption.

(2) REVENUES:

The Company operates in one business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life threatening rare diseases and medical conditions. The Company considers there to be revenue concentration risks for regions where net product revenues exceed 10% of consolidated net product revenues. The concentration of the Company’s net product revenues within the regions below may have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. The Company adopted the requirements of ASC 606 on January 1, 2018 using the modified retrospective method. See Note 1(h) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Year Ended
	December 31,
	2018		2017
Trappsol® Cyclo™	$	166,596	$	342,231
Trappsol® HPB		484,101		710,939
Trappsol® Fine Chemical		233,910		130,982
Aquaplex®		116,806		17,760
Other		10,064		35,844
Total revenues	$	1,011,477	$	1,237,756

All of our sales of Trappsol^® Cyclo™ for the year ended December 31, 2018 and 84% of our sales of Trappsol^® Cyclo™ for the year ended December 31, 2017 were to a single customer who exports the drug to South America. Substantially all of our Aquaplex^® sales are to one customer.

F-22

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(3) MAJOR CUSTOMERS AND SUPPLIERS:

Our revenues are derived primarily from chemical supply and pharmaceutical companies located primarily in the United States. In 2018, four major customers accounted for 57% of total revenues. Accounts receivable balances for these major customers represent 31% of total accounts receivable at December 31, 2018. In 2017, three major customers accounted for 59% of total revenues. Accounts receivable balances for these major customers represent 27% of total accounts receivable at December 31, 2017. 

Substantially all inventory purchases were from three vendors in 2018 and 2017. These vendors are located primarily outside the United States.

We have three sources for our Aquaplex® products. There are multiple sources for our Trappsol^® products.

For the year ended December 31, 2018, the product mix of our revenues consisted of 17% biopharmaceuticals, 71% basic natural and chemically modified cyclodextrins, and 12% cyclodextrin complexes. For the year ended December 31, 2017, the product mix of our revenues consisted of 28% biopharmaceuticals, 71% basic natural and chemically modified cyclodextrins, and 1% cyclodextrin complexes.

(4) MORTGAGE NOTE RECEIVABLE:

On January 21, 2016, the Company sold its real property located in High Springs, Florida to an unrelated party. Pursuant to the terms of the sale, at the closing, the buyer paid $10,000 in cash, less selling costs and settlement charges, and delivered to the Company a promissory note in the principal amount of $265,000, and a mortgage in our favor securing the buyer’s obligations under the promissory note. The promissory note provides for monthly payments of $3,653, including principal and interest at 4.25%, over a seven-year period that commenced March 1, 2016, with the unpaid balance due in February 2023. Scheduled debt principal collections on this mortgage for the next five years and thereafter are as follows:

Year Ending
December 31,	Principal
2019	$	37,439
2020		39,061
2021		40,754
2022		42,520
2023		7,339
Thereafter		-
	$	167,113

(5) CONCENTRATIONS OF CREDIT RISK:

Significant concentrations of credit risk for all financial instruments owned by the Company are as follows:

DEMAND DEPOSITS––We maintain bank accounts in Federal credit unions and other financial institutions, which are insured up to the Federal Deposit Insurance Corporation limits. The bank accounts may exceed federally insured levels; however, we have not experienced any losses in such accounts.

F-23

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017

(6) FURNITURE AND EQUIPMENT:

Furniture and equipment consists of the following as of December 31:

	2018		2017
Machinery and equipment	$	16,089	$	14,764
Office furniture		52,820		51,186
		68,909		65,950
Less: accumulated depreciation		50,338		40,214
Furniture and equipment, net	$	18,571	$	25,736

(7) EQUITY TRANSACTIONS:

The Company expensed $83,420 and $118,680 in employee and board member stock compensation in 2018 and 2017, respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members. In 2018, the Company did not issue shares of Common Stock as a bonus.  In 2017, the Company issued 292,000 shares of Common Stock to eight board members, the Company’s secretary, and to employees as a bonus. 

In April 2014, we entered into a one-year agreement with Scarsdale Equities, LLC (“Scarsdale”), which was subsequently extended, to act as our financial advisor and exclusive placement agent. Under the agreement, Scarsdale is entitled to a fee with respect to each private placement of debt or equity securities of the Company in an amount equal to 6% of the proceeds of such financing raised by Scarsdale, and a seven-year warrant to purchase 6% of the securities issued as a part of such financing raised by Scarsdale, with an exercise price equal to 100% of the offering price of the securities sold during the term of the agreement. The foregoing compensation terms were modified for private placements effected in 2017, resulting in the compensation described in more detail below. The agreement also provides for payment of the above fees for any financing within one year of the expiration of the term, with investors identified by Scarsdale during the term. N. Scott Fine, the Company’s Chief Executive Officer and Chairman of the Board, was a principal of Scarsdale at the time we initially retained Scarsdale as our financial adviser, and his son is currently employed by Scarsdale, is active on our account and serves as our Secretary.

On February 23, 2017, the Company issued 5,754,832 “Units” at a purchase price of $0.35 per Unit in a private placement, each Unit consisting of one share of Common Stock, and a seven-year warrant to purchase an additional share of Common Stock at an exercise price of $0.35, for aggregate gross proceeds to the Company of approximately $2 million. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of approximately $153,000, and it and its designees were issued seven-year warrants to purchase 164,074 Units at an exercise price of $0.35 per Unit. A $10,000 cash fee was also paid to another party with respect to this private placement.

In October 2017, the Company completed a private placement of 15,500 preferred stock “Units” at a purchase price of $100 per Unit, each Unit consisting of one share of Series B Convertible Preferred Stock (“Series B Preferred Stock”) convertible into 400 shares of Common Stock, and seven-year warrants to purchase 400 shares of Common Stock at an exercise price of $0.25 per share. The Series B Preferred Stock was automatically converted into Common Stock on May 23, 2018, when the Company increased its authorized shares of Common Stock, which resulted in the Company having a sufficient number of authorized and unissued shares of Common Stock to permit the conversion or exercise, as applicable, of all outstanding shares of preferred stock, warrants and other convertible securities. The Series B Preferred Stock had a liquidation preference of $100 per share, was not redeemable, and did not entitle the holder to special dividends. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of $60,000, and it and its designees were issued seven-year warrants to purchase 600 Units at an exercise price of $100 per Unit.

F-24

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(7) EQUITY TRANSACTIONS: (CONTINUED)

In  April 2018, the Company completed a private placement of 20,100 “Units”, at a price of $100 per Unit, resulting in gross proceeds to the Company of $2,010,000. Each Unit consisted of one share of Series B Preferred Stock convertible into 400 shares of Common Stock, and seven-year warrants to purchase 400 shares of Common Stock at an exercise price of $0.25 per share. Prior to March 31, 2018, the Company received $74,983 in advance from these investors. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of $50,000.

On May 23, 2018, at a special meeting of shareholders, the Company’s shareholders approved amendments to the Company’s Articles of Incorporation increasing the number of authorized shares of Common Stock from 100,000,000 shares to 500,000,000 shares, and deleting references to the Series A Preferred Stock, which was no longer outstanding. Following the meeting, the Company filed Articles of Amendment to its Article of Incorporation which resulted in the automatic conversion of each outstanding share of Series B Preferred Stock into 400 shares of Common Stock, increasing the number of outstanding shares of Common Stock by 14,240,000.

In December 2018, the Company completed a private placement of 3,519,963 common stock “Units” at a price of $0.65 per Unit, resulting in gross proceeds to the Company of $2,342,034, of which $130,063 was received in January 2019 and is reflected in the accompanying balance sheet as a stock subscription receivable. Each Unit consisted of one share of common stock and a seven-year warrant to purchase one share of common stock at an exercise price of $0.65 per share.

The following table presents the number of Common Stock warrants outstanding:

Warrants outstanding, December 31, 2016	8,677,500
Issued	11,954,831
Exercised	-
Expired	-
Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294

The following table presents the number of Common Stock warrants outstanding, their exercise price, and expiration dates at December 31, 2018:

Warrants Issued	Exercise Price		Expiration Date
240,000	$	0.25	April 2021
103,500	$	1.00	July 2021
156,000	$	0.50	July 2022
78,000	$	0.50	August 2022
8,100,000	$	0.25	June 2023
5,754,831	$	0.35	February 2024
6,200,000	$	0.25	October 2024
8,040,000	$	0.25	April 23, 2025
3,519,963	$	0.65	December 2025
32,192,294

In addition, there are seven-year warrants outstanding at December 31, 2018 to purchase 480,000 Units sold in our May 2016 private placement at an exercise price of $0.25 per Unit, 164,074 Units sold in our February 2017 private placement at an exercise price of $0.35 per Unit, and 600 Units sold in our October 2017 private placement at an exercise price of $100 per Unit.

F-25

CTD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017

(8) PREFERRED STOCK:

The Company’s Articles of Incorporation provide for 5,000,000 shares of “blank check” preferred stock. At December 31, 2018, no shares of preferred stock were outstanding or designated.

In October 2017, the Company designated 50,000 shares of preferred stock as Series B Convertible Preferred Stock and issued an aggregate of 35,600 of such shares in connection with the private placements described in Note 7 above. Each share of Series B Preferred Stock was convertible into 400 shares of Common Stock, had a liquidation preference of $100 per share, and did not entitle the holder to special dividends. The Series B Preferred Stock automatically converted into common stock in 2018. Please read Note 7, Equity Transactions, to these consolidated financial statements.

(9) INCOME TAXES:

If all of our net operating loss carryforwards and temporary deductible differences were used, we would realize a net deferred tax asset of approximately $6,235,000 based upon expected income tax rates. Under ASC 740, deferred tax assets must be reduced by a valuation allowance if it is likely that all or a portion of it will not be realized.  At December 31, 2018, we have determined it is more likely than not that we will not realize our temporary deductible differences and net operating loss carryforwards, and have provided a 100% valuation allowance on our net deferred tax asset.

Positive evidence we evaluated in the order of significance and weighting in our evaluation includes the amount of net operating loss carryforward utilized against current income tax liabilities in four of the prior ten years, and the length of time the net operating loss carryforwards are available before they expire.  Negative evidence we considered in the order of significance and weighting in our evaluation include our recent net losses, our plans for continued clinical trial and product development expenses, the timing of expiration of the net operating loss carryforwards prior to being utilized, unpredictability of future sales and profitability, competition from others, and new government regulations.  We determined greatest weight should be given to our plans for continued clinical trial and product development expenses, trend of increasing expenses, and recent net operating losses in our evaluation. We re-measure our valuation allowance each quarter based on changes in our current and expected future sales and margins, and changes in the other factors of both positive and negative evidence.

We have available at December 31, 2018, unused federal and state net operating loss carryforwards totaling approximately $11,903,000 that may be applied against future taxable income.  

F-26

CTD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017

(9) INCOME TAXES: (CONTINUED)

If not used, the net operating loss carryforwards will expire as follows:

Year Ending December 31,	Amount
2020	$	174,000
2021		71,000
2024		66,000
2028		7,000
2030		160,000
2031		73,000
2032		48,000
2034		727,000
2035		1,969,000
2036		2,867,000
2037		2,481,000
Indefinite		3,260,000
Total	$	11,903,000

A change in ownership pursuant to Section 382 of the Internal Revenue Code occurred during 2014. As a result, net operating losses in existence as of the date of the ownership change are subject to an annual Section 382 limitation. At December 31, 2018, the amount of net operating losses subject to an annual Section 382 limitation has not been determined.

The Company has expenses that qualify for the Orphan Drug Credit. The Orphan Drug Credit may be used to offset any current tax liabilities. Unused credits may be carried forward for 20 years. If the credit has not been used by the end of the 20 year carryforward period, it can be deducted as an expense for federal income tax purposes. The cumulative unused credit carryforward was $3,085,000 at December 31, 2018.

For 2018, we did not recognize a benefit or provision for income taxes.  The net deferred tax asset before the valuation allowance increased $1,575,000 from 2017 to 2018, which is primarily the result of an additional net operating loss for 2018. We increased our valuation allowance to offset this increase in our deferred tax asset.

For 2017, we did not recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased $1,044,000 from 2016 to 2017, which is primarily the result of an additional net operating loss for 2017. We increased our valuation allowance to offset this increase in our deferred tax asset.

Significant components of our deferred Federal income taxes were as follows:

	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	3,017,000		$	2,206,000
Tax credits		3,085,000			2,397,000
Impairment allowances		10,000			7,000
Stock compensation		64,000			20,000
Other		62,000			35,000
Less valuation allowance		(6,235,000	)		(4,660,000	)
Deferred tax asset, net of valuation		3,000			5,000
Deferred tax liabilities:
Property and equipment		(3,000	)		(5,000	)
Deferred tax liabilities		(3,000	)		(5,000	)
Net tax assets	$	-		$	-

F-27

CTD HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2018 AND 2017

(9) INCOME TAXES: (CONTINUED)

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (H.R. 1) (the “Act”). The Act includes a number of changes in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from 34% to 21%, effective January 1, 2018.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company’s net tax asset as of December 31, 2018 was determined based on the current enacted federal tax rate of 34% prior to the passage of the Act. As a result of the reduction in the corporate income tax rate to 21% from 34% under the Act, the Company revalued its net deferred tax assets and liabilities as of January 1, 2018. The impact of the reduction of the income tax rate was a reduction of deferred tax asset and the corresponding valuation allowance of approximately $768,000.

The differences between the effective income tax rate reflected in the benefit (provision) for income taxes and the amounts, which would be determined by applying federal statutory income tax rate of 21% at December 31, 2018 and 34% at December 31, 2017, is summarized as follows:

	2018			2017
Tax benefit (expense) at Federal statutory rate	$	894,000		$	1,303,000
Effect of State taxes		185,000			139,000
Tax credits		676,000			1,135,000
Nondeductible expenses		(180,000	)		(435,000	)
Tax Cuts and Jobs Act rate decrease		-			(1,098,000	)
Valuation allowance – deferred tax assets		(1,575,000	)		(1,044,000	)
Total tax benefit (provision)	$	-		$	-

The Company files income tax returns in the U.S. Federal jurisdiction, and in the State of Florida. The Company is no longer subject to U.S. Federal or state income tax examinations by tax authorities for years before 2015.

The Company has reviewed and evaluated the relevant technical merits of each of its tax positions in accordance with accounting principles generally accepted in the United States of America for accounting for uncertainty in income taxes, and determined that there are no uncertain tax positions that would have a material impact on the financial statements of the Company. When applicable, interest and penalties will be reflected as a component of income tax expense.

(10) EMPLOYEE BENEFIT PLAN:

The Company maintains a 401(k) plan available to all employees who have satisfied certain eligibility requirements. Employee contributions are discretionary. The Company may match employee contributions and may also make discretionary contributions for all eligible employees based upon their total compensation. For 2018 and 2017, the Company elected to match the employee’s contribution, not to exceed 4% of compensation. The Company’s 401(k) contributions were $24,765 and $14,235 for 2018 and 2017, respectively.

(11) COMMITMENTS AND CONTINGENCIES:

During 2017, the Company filed a Complaint against the National Institutes of Health (the “NIH”) in the United States District Court for the Northern District of Florida, Gainesville Division. Pursuant to the Complaint, the Company is seeking an order requiring the NIH to provide the Company with records responsive to a request originally made by the Company to the NIH under the Freedom of Information Act on October 19, 2016. Subsequent to the filing of the Complaint, the Company received documents from the NIH with substantial redactions. Legal counsel is currently reviewing those documents and our options in connection with this proceeding.

F-28

CTD HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

(11) COMMITMENTS AND CONTINGENCIES: (CONTINUED)

From time to time, the Company is a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and records an expense for potential losses on such litigation if it is possible to estimate the amount of loss and if the amount of the loss is probable.

On November 26, 2018, we entered a new two-year lease for approximately 2,500 square feet of office and distribution warehouse space located in Gainesville, Florida for $1,600 per month, with a two-year renewal option.

(12) RELATED PARTY TRANSACTIONS:

As discussed in Note 7 above, N. Scott Fine, our Chief Executive Officer and Chairman of the Board, was a principal of Scarsdale at the time we initially retained Scarsdale as our financial adviser, and his son is currently employed by Scarsdale, is active on our account and serves as our Corporate Secretary.

Since October 2016, we have paid a monthly fee of $5,000 to a non-profit organization of which C.E. Rick Strattan is the Executive Director, in consideration of consulting services provided to us by Mr. Strattan. Mr. Strattan is our founder, former Chief Executive Officer and one of our directors.

During 2017, Rebecca A. Fine, Mr. Fine’s daughter, was employed by us as an Executive Assistant and was paid an annual salary of $60,000. During 2018, she was engaged by us as a contractor to provide those services at the rate of $5,000 per month and received a bonus of $5,000. She is currently engaged by us as a contractor at the rate of $5,800 per month.

Kevin J. Strattan, the son of C.E. Rick Strattan, has been employed by us since 2008, and since 2014 has been our Vice President, Finance – Compensation. His annual salary increased from $90,000 to $100,000 in November 2017 and to his current salary of $107,200 in October 2018. In addition, he received a bonus of $10,000 in 2018.

Corey E. Strattan, the daughter-in-law of C.E. Rick Strattan, has been employed by us since 2011 as a documentation specialist and logistics coordinator. During 2017 she was paid an annual salary of $48,000. In January 2018, her annual salary increased to $72,000. In January 2019 her annual salary increased to $78,000 her current salary. In addition, she received a bonus of $5,000 in 2018.

F-29

Common Stock

60,899,000 Shares

P R O S P E C T U S

June 27, 2019

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.     OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses Incurred by us in connection with the sale of the Common Stock being registered by this registration statement. All amounts shown are estimates, except for the Securities and Exchange Commission (“SEC”) registration fee.

SEC registration fee	$	3,173.81
Accounting fees and expenses	$	2,500.00
Legal fees and expenses	$	30,000.00
Miscellaneous expenses	$	2,500.00
Total	$	38,173.81

ITEM 14.     INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article IX of our articles of incorporation provides that our directors and officers shall be indemnified against liabilities they may incur while serving in such capacities to the fullest extent permitted by law.

The Florida Act provides that, in general, a business corporation may indemnify any person who is or was a party to any proceeding (other than an action by, or in the right of, the corporation) by reason of the fact that he is or was a director or officer of the corporation, against liability incurred in connection with such proceeding, including any appeal thereof, provided certain standards are met, including that such officer or director acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and provided further that, with respect to any criminal action or proceeding, the officer or director had no reasonable cause to believe his conduct was unlawful. In the case of proceedings by or in the right of the corporation, the Florida Act provides that, in general, a corporation may indemnify any person who was or is a party to any such proceeding by reason of the fact that he is or was a director or officer of the corporation against expenses and amounts paid in settlement actually and reasonably incurred in connection with the defense or settlement of such proceedings, including any appeal thereof, provided that such person acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim as to which such person is adjudged liable unless a court of competent jurisdiction determines upon application that such person is fairly and reasonably entitled to indemnity. To the extent that any officers or directors are successful on the merits or otherwise in the defense of any of the proceedings described above, the Florida Act provides that the corporation is required to indemnify such officers or directors against expenses actually and reasonably incurred in connection therewith. However, the Florida Act further provides that, in general, indemnification or advancement of expenses shall not be made to or on behalf of any officer or director if a judgment or other final adjudication establishes that his actions, or omissions to act, were material to the cause of the action so adjudicated and constitute: (1) a violation of the criminal law, unless the director or officer had reasonable cause to believe his conduct was lawful or had no reasonable cause to believe it was unlawful; (2) a transaction from which the director or officer derived an improper personal benefit; (3) in the case of a director, a circumstance under which the director has voted for or assented to a distribution made in violation of the Florida Act or the corporation’s articles of incorporation; or (4) willful misconduct or a conscious disregard for the best interests of the corporation in a proceeding by or in the right of the corporation to procure a judgment in its favor or in a proceeding by or in the right of a shareholder.

ITEM 15.     RECENT SALES OF UNREGISTERED SECURITIES

Over the past three years, we have issued and sold the following securities without registration under the Securities Act:

On July 22, 2016, the Company issued 264,000 shares of Common Stock due to an employee, seven board members, and the Company’s secretary, for services to the Company.

On February 23, 2017, the Company issued 5,754,832 “Units” at a purchase price of $0.35 per Unit in a private placement, each Unit consisting of one share of Common Stock, and a seven-year warrant to purchase an additional share of Common Stock at an exercise price of $0.35, for aggregate gross proceeds to the Company of approximately $2 million. Scarsdale Equities (“Scarsdale”) acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of approximately $153,000, and it and its designees were issued seven-year warrants to purchase 164,074 Units at an exercise price of $0.35 per Unit. A $10,000 cash fee was also paid to another party with respect to this private placement.

II-1

In October 2017, the Company completed a private placement of 15,500 preferred stock “Units” at a purchase price of $100 per Unit, each Unit consisting of one share of Series B Convertible Preferred Stock (“Series B Preferred Stock”) convertible into 400 shares of Common Stock, and seven-year warrants to purchase 400 shares of Common Stock at an exercise price of $0.25 per share. The Series B Preferred Stock was automatically converted into Common Stock on May 23, 2018, when the Company increased its authorized shares of Common Stock, which resulted in the Company having a sufficient number of authorized and unissued shares of Common Stock to permit the conversion or exercise, as applicable, of all outstanding shares of preferred stock, warrants and other convertible securities. The Series B Preferred Stock had a liquidation preference of $100 per share, was not redeemable, and did not entitle the holder to special dividends. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of $60,000, and it and its designees were issued seven-year warrants to purchase 600 Units at an exercise price of $100 per Unit.

In 2017, the Company issued 292,000 shares of Common Stock to eight board members, the Company’s secretary, and to employees as a bonus, for services to the Company. 

In April 2018, the Company completed a private placement of 20,100 “Units”, at a price of $100 per Unit, resulting in gross proceeds to the Company of $2,010,000. Each Unit consisted of one share of Series B Preferred Stock convertible into 400 shares of Common Stock, and seven-year warrants to purchase 400 shares of Common Stock at an exercise price of $0.25 per share. Prior to March 31, 2018, the Company received $74,983 in advance from these investors. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of $50,000.

In December 2018, the Company completed a private placement of 3,519,963 Common Stock “Units” at a price of $0.65 per Unit, resulting in gross proceeds to the Company of $2,342,034, of which $130,063 was received in January 2019 and is reflected in the accompanying balance sheet as a stock subscription receivable. Each Unit consisted of one share of Common Stock and a seven-year warrant to purchase one share of Common Stock at an exercise price of $0.65 per share.

On May 31, 2019, the Company completed a private placement (the “May 2019 Private Placement”) of “Units” to a group of accredited investors that included several directors and members of management, pursuant to a Securities Purchase Agreement (the “Purchase Agreement”), dated as of May 30, 2019. Investors in the May 2019 Private Placement purchased a total of 29,770,000 Units at a price per unit of $0.25, each unit consisting of one share of Common Stock (the “Shares”) and one warrant to purchase a share of Common Stock (the “Investor Warrants”), resulting in gross proceeds to us of $7,442,500, before deducting placement agent fees and offering expenses. The Investor Warrants are exercisable immediately upon issuance at an exercise price of $0.30 per share and expire on the 66-month anniversary of the issuance date. The May 2019 Private Placement was effected pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506(b) promulgated thereunder.  ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”), acted as sole placement agent for the offering pursuant to a Placement Agency Agreement dated as of May 30, 2019. Pursuant to terms of the Placement Agency Agreement, the Company paid a cash fee to ThinkEquity in the amount of $453,000 and issued warrants (the “Placement Agent Warrants”) to ThinkEquity and its designees to purchase an aggregate of 1,359,000 shares of Common Stock, with the same terms as the Investor Warrants issued to the Investors.  Pursuant to the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with the investors in the May 2019 Private Placement, pursuant to which we has agreed to file the registration statement which includes this prospectus (the "Registration Statement”) with the Securities and Exchange Commission to register the resale of the Shares and shares of Common Stock underlying the Investor Warrants and the Placement Agent Warrants. 

All of the foregoing securities were issued in private placement transactions exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act directly by us without engaging in any advertising or general solicitation of any kind.

II-2

ITEM 16.     EXHIBITS

The following exhibits are filed as part of this registration statement:

Exhibits
3.1	Amended and Restated Articles of Incorporation filed June 29, 2018 (incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission on August 14, 2018).
3.2	By-Laws (incorporated by reference to the Company’s Form 10-SB filed with the Securities and Exchange Commission on February 1, 1994).
4.1	Form of Warrant issued to investors in private placements conducted in 2016, 2017 and 2018 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 8, 2016).
4.2	Form of Warrant, dated May 31, 2019, issued by CTD Holdings, Inc. to investors and ThinkEquity, a division of Fordham Financial Management, Inc., and its designees (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed June 4, 2019).
5.1	Opinion of Fox Rothschild LLP
10.1	Conversion Agreement dated as of February 19, 2014 between CTD Holdings, Inc. and C.E. Rick Strattan (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed February 20, 2014).
10.2	Voting Commitment Letter dated as of February 19, 2014 between CTD Holdings, Inc. and C.E. Rick Strattan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed February 20, 2014).
10.3	Securities Purchase and Collaboration Agreement dated as of April 9, 2014 between CTD Holdings, Inc. and Novit, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 15, 2014).
10.4†	Employment Agreement between the Company and N. Scott Fine, dated as of September 14, 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 16, 2015).
10.5†	Amendment to Employment Agreement between the Company and N. Scott Fine, dated as of November 7, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 8, 2017).
10.6	Promissory Note in the original principal amount of $265,000, dated January 21, 2016, by Crit, Inc. DBA Commercial Gates & Electric, in favor of CTD Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 27, 2016).
10.7	Mortgage, dated January 21, 2016, by Crit, Inc. DBA Commercial Gates & Electric, in favor of CTD Holdings, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 27, 2016).
10.8	Commercial Contract between Alchem Laboratories Corporation and Nanosonic Products Inc., entered into September 6, 2016 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 20, 2016).
10.9	Form of Securities Purchase Agreement between CTD Holdings, Inc. and investors in the October 2017 private placement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 20, 2017).
10.10†	Employment Agreement between the Company and Dr. Sharon H. Hrynkow, dated as of September 14, 2015 (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed March 15, 2019).
10.11†	Amendment to Employment Agreement between the Company and Dr. Sharon H. Hrynkow, dated as of November 8, 2017 (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed March 15, 2019).
10.12	Securities Purchase Agreement, dated as of May 30, 2019, between CTD Holdings, Inc. and purchasers party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed June 4, 2019)
10.13	Placement Agency Agreement, dated as of May 30, 2019, between CTD Holdings, Inc. and ThinkEquity, a division of Fordham Financial Management, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed June 4, 2019).
10.14	Registration Rights Agreement, dated as of May 30, 2019, between CTD Holdings, Inc. and purchasers party thereto (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed June 4, 2019).
21.1	Subsidiaries (incorporated by reference to Exhibit 21.1 to the Company’s Annual Report on Form 10-K filed April 16, 2018).
23.1	Consent of WithumSmith+Brown, PC.
23.2	Consent of Fox Rothschild LLP (included in Exhibit 5.1)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

II-3

ITEM 17.     UNDERTAKINGS

(a)           The undersigned registrant hereby undertakes:

(1)           to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)           to include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii)         to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)        to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2)           that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)           to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)           that, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(b)          Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on June 27, 2019.

CTD HOLDINGS, INC.
By:	/s/ N. Scott Fine
	N. Scott Fine
	Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Michael W. DePasquale, with full authority to act without the others, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/ N. Scott Fine	Chief Executive Officer, Director	June 27, 2019
N Scott Fine
/s/ Joshua M. Fine	Chief Financial Officer	June 27, 2019
Joshua M. Fine
/s/ C.E. Rick Strattan	Director	June 27, 2019
C.E. Rick Strattan
/s/ Jeffrey L. Tate	Chief Operating Officer, Director	June 27, 2019
Jeffrey L. Tate
/s/ Randall M. Toig	Director	June 27, 2019
Randall M. Toig
/s/ William S. Shanahan	Director	June 27, 2019
William S. Shanahan
/s/ F. Patrick Ostronic	Director	June 27, 2019
F. Patrick Ostronic
/s/ Markus W. Sieger	Director	June 27, 2019
Markus W. Sieger

II-5

EX-5.1

Exhibit 5.1

101 Park Avenue
Suite 1700
New York, NY 10178

Tel (212) 878-7900

Fax (212) 692-0940

www.foxrothschild.com

June 27, 2019

CTD Holdings, Inc.
6714 NW 16th Street, Suite B
Gainesville, Florida 32563

Re: Common Stock of CTD Holdings, Inc. Registered on Form S-1

Ladies and Gentlemen:

We have acted as counsel to CTD Holdings, Inc., a Florida corporation (the “Company”), in connection with the Company’s registration of 60,899,000 shares (the “Shares”) of common stock of the Company, par value $0.0001 per share (the “Common Stock”), to be sold by the selling shareholders listed in the registration statement under “Selling Shareholders.” The Shares are included in a registration statement on Form S-1 (the “Registration Statement”) under the Securities Act of 1933, as amended (the “Securities Act”), filed by the Company with the Securities and Exchange Commission (the “SEC”) on the date hereof.

In connection with this opinion, we have examined and relied upon the originals, or copies certified or otherwise identified to our satisfaction, of such records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the opinions expressed below. As to certain factual matters, we have relied upon certificates of the officers of the Company and have not sought to independently verify such matters.

Our opinion herein is expressed solely with respect to the laws of the State of Florida and is based on these laws as in effect on the date hereof. We express no opinion as to whether the laws of any jurisdiction are applicable to the subject matter hereof. We are not rendering any opinion as to compliance with any federal or other state law, rule or regulation relating to securities, or to the sale or issuance thereof.

On the basis of the foregoing, we are of the opinion that the Shares have been duly authorized, and upon exercise of the warrants to purchase the 31,129,000 shares of Common Stock included in the Shares, the Shares will be duly and validly issued and fully paid and nonassessable.

This opinion is rendered only to you and is solely for your benefit in connection with the Registration Statement and may be relied upon by and persons entitled to rely upon it pursuant to the applicable provisions of the Securities Act. This opinion letter has been prepared for your use in connection with the registration of the Shares pursuant to the Registration Statement, speaks as of the date the Registration Statement becomes effective, and we assume no obligation to advise you of any changes in the foregoing subsequent to that date.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving such consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the SEC thereunder. This opinion is expressed as of the date hereof, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable law.

Very truly yours,

/s/ Fox Rothschild LLP

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-1 of our report dated March 15, 2019 relating to the December 31, 2018 and 2017 consolidated financial statements which appear in CTD Holdings Inc.’s Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K for the year ended December 31, 2018.

We also consent to the reference to us under the caption “Experts” in this Registration Statement.

/s/ WithumSmith+Brown, PC

Orlando, FL

June 27, 2019

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2019
Document Information [Line Items]
Entity Registrant Name	CTD HOLDINGS INC
Entity Central Index Key	0000922247
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Document Type	S-1
Document Period End Date	Mar. 31, 2019
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 1,115,133	$ 2,217,412
Accounts receivable	74,796	80,044
Inventory, net	413,253	416,531
Current portion of mortgage note receivable	37,439	37,439
Other	46,901	18,185
Total current assets	1,687,522	2,769,611
FURNITURE AND EQUIPMENT, NET	18,411	18,571
RIGHT-TO-USE LEASE ASSET, NET	63,771
MORTGAGE NOTE RECEIVABLE, LESS CURRENT PORTION	120,458	129,674
OTHER	15,000
TOTAL ASSETS	1,905,162	2,917,856
CURRENT LIABILITIES
Current portion of lease liability	14,182
Accounts payable and accrued expenses	2,622,511	1,925,332
Total current liabilities	2,636,693	1,925,332
LONG-TERM LEASE LIABILITY	50,049
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.0001 per share, 500,000,000 shares authorized, 90,759,324 shares issued and outstanding, at March 31, 2019 and December 31, 2018	9,075	9,075
Preferred stock, par value $.0001 per share, 5,000,000 shares authorized
Additional paid-in capital	18,701,211	18,701,211
Stock subscription receivable		(130,062)
Accumulated deficit	(19,491,866)	(17,587,700)
Total stockholders' equity (deficit)	(781,580)	992,524
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$ 1,905,162	$ 2,917,856

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2019	Dec. 31, 2018	May 23, 2018	May 22, 2018	Dec. 31, 2017	Dec. 31, 2004
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001			$ 0.0001
Common stock, shares authorized (in shares)	500,000,000	500,000,000	500,000,000	100,000,000	100,000,000
Common stock, shares issued (in shares)	90,759,324	90,759,324			72,999,361
Common stock, shares outstanding (in shares)	90,759,324	90,759,324			72,999,361
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001			$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000				5,000,000

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
REVENUES
Product sales	$ 220,826	$ 198,069	$ 1,011,477	$ 1,237,756
EXPENSES
Personnel	409,999	277,567	1,171,941	1,183,441
Cost of products sold (exclusive of depreciation and amortization, shown separately below)	20,550	23,672	105,026	132,918
Research and development	1,342,763	409,198	2,711,275	2,292,892
Repairs and maintenance	1,684		3,821	10,500
Professional fees	214,975	233,976	808,770	902,714
Office and other	102,642	47,867	354,102	421,256
Board of Directors fees and costs	33,085	15,783	95,431	117,555
Depreciation	1,484	2,500	10,124	9,271
Freight and shipping	1,434	1,882	5,643	7,847
Total operating expenses	2,128,616	1,012,445	5,278,283	5,081,077
LOSS FROM OPERATIONS	(1,907,790)	(814,376)	(4,266,806)	(3,843,321)
OTHER INCOME
Investment and other income	3,624	1,432	11,773	10,261
LOSS BEFORE INCOME TAXES	(1,904,166)	(812,944)	(4,255,033)	(3,833,060)
PROVISION FOR INCOME TAXES			0	0
NET LOSS	$ (1,904,166)	$ (812,944)	$ (4,255,033)	$ (3,833,060)
BASIC AND FULLY DILUTED NET LOSS PER COMMON SHARE (in dollars per share)	$ (0.02)	$ (0.01)	$ (0.05)	$ (0.05)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in shares)	90,759,324	72,999,361	81,756,839	72,037,167

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Receivables from Stockholder [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2016	66,952,529
Balance at Dec. 31, 2016	$ 6,695		$ 11,018,915		$ (9,499,607)	$ 1,526,003
Net loss					(3,833,060)	(3,833,060)
Balance (in shares) at Dec. 31, 2017	72,999,361	15,500
Balance at Dec. 31, 2017	$ 7,299	$ 2	14,470,984		(13,332,667)	1,145,618
Net loss					(812,944)	(812,944)
Balance (in shares) at Mar. 31, 2018	72,999,361	15,500
Balance at Mar. 31, 2018	$ 7,299	$ 2	14,470,984		(14,145,611)	332,674
Balance (in shares) at Dec. 31, 2017	72,999,361	15,500
Balance at Dec. 31, 2017	$ 7,299	$ 2	14,470,984		(13,332,667)	1,145,618
Net loss					(4,255,033)	(4,255,033)
Balance (in shares) at Dec. 31, 2018	90,759,324
Balance at Dec. 31, 2018	$ 9,075		18,701,211	(130,062)	(17,587,700)	992,524
Net loss					(1,904,166)	(1,904,166)
Collection of subscription receivable				130,062		130,062
Balance (in shares) at Mar. 31, 2019	90,759,324
Balance at Mar. 31, 2019	$ 9,075		$ 18,701,211		$ (19,491,866)	$ (781,580)

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,904,166)	$ (812,944)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,484	2,500
Stock compensation to employees	7,300	3,300
Stock compensation to nonemployees	24,090	10,890
Increase or decrease in:
Accounts receivable	5,248	9,178
Inventory	3,278	17,778
Other current assets	(28,716)	(4,258)
Other	460
Accounts payable and accrued expenses	665,789	35,859
Total adjustments	678,933	75,247
NET CASH USED IN OPERATING ACTIVITIES	(1,225,233)	(737,697)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment	(1,324)	(1,634)
Proceeds from mortgage note receivable	9,216	2,934
NET CASH PROVIDED BY INVESTING ACTIVITIES	7,892	1,300
CASH FLOWS FROM FINANCING ACTIVITIES
Collection of subscription receivable	130,062
Advance – private placement		74,983
Other	(15,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES	115,062	74,983
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,102,279)	(661,414)
CASH AND CASH EQUIVALENTS, beginning of year	2,217,412	1,270,973
CASH AND CASH EQUIVALENTS, end of year	1,115,133	609,559
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest
Cash paid for income taxes
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Capitalization of right-to-use asset and lease liability	$ 64,231

XML

Consolidated Balance Sheets - USD ($)	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CURRENT ASSETS
Cash and cash equivalents	$ 1,115,133	$ 2,217,412	$ 609,559	$ 1,270,973	$ 960,197
Accounts receivable	74,796	80,044		56,860
Inventory, net	413,253	416,531		471,221
Current portion of mortgage note receivable	37,439	37,439		35,884
Other	46,901	18,185		60,846
Total current assets	1,687,522	2,769,611		1,895,784
FURNITURE AND EQUIPMENT, NET	18,411	18,571		25,736
MORTGAGE NOTE RECEIVABLE, LESS CURRENT PORTION	120,458	129,674		167,128
TOTAL ASSETS	1,905,162	2,917,856		2,088,648
CURRENT LIABILITIES
Accounts payable and accrued expenses	2,622,511	1,925,332		943,030
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.0001 per share, 500,000,000 and 100,000,000 shares authorized at December 31, 2018 and 2017, respectively, 90,759,324 and 72,999,361 shares issued and outstanding at December 31, 2018 and 2017, respectively	9,075	9,075		7,299
Preferred stock, par value $.0001 per share, 5,000,000 shares authorized				2
Additional paid-in capital	18,701,211	18,701,211		14,470,984
Stock subscription receivable		(130,062)
Accumulated deficit	(19,491,866)	(17,587,700)		(13,332,667)
Total stockholders' equity	(781,580)	992,524	$ 332,674	1,145,618	$ 1,526,003
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,905,162	$ 2,917,856		$ 2,088,648

XML

Consolidated Balance Sheets (Parentheticals) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	500,000,000	100,000,000
Common stock, shares issued (in shares)	90,759,324	72,999,361
Common stock, shares outstanding (in shares)	90,759,324	72,999,361
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000
Preferred stock, shares outstanding (in shares)	0
Series B Preferred Stock [Member]
Preferred stock, shares authorized (in shares)	0	5,000,000
Preferred stock, shares issued (in shares)	0	15,500
Preferred stock, shares outstanding (in shares)	0	15,500
Preferred stock, liquidation preference	$ 0	$ 1,550,000
Preferred stock, shares designated (in shares)	50,000	50,000

XML

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
REVENUES
Product sales	$ 1,011,477	$ 1,237,756
EXPENSES
Personnel	1,171,941	1,183,441
Cost of products sold (exclusive of depreciation and amortization, shown separately below)	105,026	132,918
Research and development	2,711,275	2,292,892
Repairs and maintenance	3,821	10,500
Professional fees	808,770	902,714
Office and other	354,102	421,256
Board of Directors fees and costs	95,431	117,555
Depreciation	10,124	9,271
Freight and shipping	5,643	7,847
Gain on disposal of equipment		(2,817)
Inventory valuation allowance	12,150	5,500
Total expenses	5,278,283	5,081,077
LOSS FROM OPERATIONS	(4,266,806)	(3,843,321)
OTHER INCOME
Investment and other income	11,773	10,261
Total other income	11,773	10,261
LOSS BEFORE INCOME TAXES	(4,255,033)	(3,833,060)
PROVISION FOR INCOME TAXES	0	0
Net Income (Loss) Attributable to Parent, Total	$ (4,255,033)	$ (3,833,060)
BASIC AND FULLY DILUTED NET LOSS PER COMMON SHARE (in dollars per share)	$ (0.05)	$ (0.05)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in shares)	81,756,839	72,037,167

XML

Consolidated Statements of Stockholders' Equity - USD ($)	Sale of Preferred Stock Units [Member] Preferred Stock [Member] Series B Preferred Stock [Member]	Sale of Preferred Stock Units [Member] Additional Paid-in Capital [Member]	Sale of Preferred Stock Units [Member]	Common Stock [Member]	Preferred Stock [Member] Series B Preferred Stock [Member]	Preferred Stock [Member]	Additional Paid-in Capital [Member]	Subscription Receivable [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Dec. 31, 2016				66,952,529
Balance at Dec. 31, 2016				$ 6,695			$ 11,018,915		$ (9,499,607)	$ 1,526,003
Sale of stock, net of issuance fees (in shares)				5,754,832
Sale of stock, net of issuance fees				$ 575			1,850,480			1,851,055
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture	15,500			292,000
Sale of stock, net of issuance fees	$ 2	$ 1,489,998	$ 1,490,000	$ 29			111,591			111,620
Stock compensation	$ 2	1,489,998	1,490,000	$ 29			111,591			111,620
Net loss									(3,833,060)	(3,833,060)
Balance (in shares) at Dec. 31, 2017				72,999,361	15,500	15,500
Balance at Dec. 31, 2017				$ 7,299	$ 2	$ 2	14,470,984		(13,332,667)	1,145,618
Net loss									(812,944)	(812,944)
Balance (in shares) at Mar. 31, 2018				72,999,361		15,500
Balance at Mar. 31, 2018				$ 7,299		$ 2	14,470,984		(14,145,611)	332,674
Balance (in shares) at Dec. 31, 2017				72,999,361	15,500	15,500
Balance at Dec. 31, 2017				$ 7,299	$ 2	$ 2	14,470,984		(13,332,667)	1,145,618
Sale of stock, net of issuance fees (in shares)				3,519,963
Sale of stock, net of issuance fees				$ 352			2,271,649	$ (130,062)		2,141,939
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture	20,100
Sale of stock, net of issuance fees	$ 2	1,959,998	1,960,000
Stock compensation	$ 2	$ 1,959,998	$ 1,960,000
Net loss									(4,255,033)	(4,255,033)
Conversion of preferred stock units to common stock (in shares)				14,240,000	(35,600)
Conversion of preferred stock units to common stock				$ 1,424	$ (4)		(1,420)
Balance (in shares) at Dec. 31, 2018				90,759,324
Balance at Dec. 31, 2018				$ 9,075			18,701,211	$ (130,062)	(17,587,700)	992,524
Net loss									(1,904,166)	(1,904,166)
Balance (in shares) at Mar. 31, 2019				90,759,324
Balance at Mar. 31, 2019				$ 9,075			$ 18,701,211		$ (19,491,866)	$ (781,580)

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (4,255,033)	$ (3,833,060)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	10,124	9,271
Gain on disposal of equipment		(2,817)
Stock compensation to employees	19,400	65,205
Stock compensation to nonemployees	64,020	53,475
Inventory valuation allowance	12,150	5,500
Increase or decrease in:
Accounts receivable	(23,184)	32,807
Inventory	42,540	20,676
Other current assets	42,661	(6,967)
Accounts payable and accrued expenses	898,882	593,428
Total adjustments	1,066,593	770,578
Net Cash Provided by (Used in) Operating Activities, Total	(3,188,440)	(3,062,482)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment	(2,959)	(6,856)
Proceeds from mortgage note receivable	35,899	34,409
Proceeds from sale of property and equipment, net of closing costs		4,650
NET CASH PROVIDED BY INVESTING ACTIVITIES	32,940	32,203
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, preferred stock and warrants, net of issuance costs	4,101,939	3,341,055
NET CASH PROVIDED BY FINANCING ACTIVITIES	4,101,939	3,341,055
NET INCREASE IN CASH AND CASH EQUIVALENTS	946,439	310,776
CASH AND CASH EQUIVALENTS, beginning of year	1,270,973	960,197
CASH AND CASH EQUIVALENTS, end of year	2,217,412	1,270,973
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest
Cash paid for income taxes
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Common stock issued in exchange for a subscription receivable	130,062
Conversion of preferred stock into common stock	$ 1,424

XML

Note 1 - Summary of Significant Accounting Policies

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

(

1

) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD Holdings, Inc. and subsidiaries (the “Company,” “we,” “our” or “us”) that affect the accompanying consolidated financial statements.

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in

August 1990,

as a Florida corporation with operations beginning in

July 1992.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol® Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol® Cyclo™ and in

January 2017

the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in

September 2017.

We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The

first

patient was dosed in our European study in

July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(b) BASIS OF PRESENTATION––The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form

10

-Q and Rule

10

-

01

of Regulation 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 recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the

three

month period ended

March 

31,

2019

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2019.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form

10

-K for the year ended

December 31, 2018,

as filed with the Securities and Exchange Commission on

March 15, 2019.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of

three

months or less.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Based on our assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for uncollectible accounts was

not

deemed necessary at

March 31, 2019

and

December 31, 2018.

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol® Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (

first

-in,

first

-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does

not

include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete.  The reserve for obsolete inventory was

$39,700

at

March 31, 2019

and

December 31, 2018. 

(f) EQUIPMENT––Equipment is recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally

three

to

five

years for computers, and

seven

to

ten

years for equipment and office furniture).

(g) REVENUE RECOGNITION––Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018,

did

not

change our revenue recognition as the majority of our revenues continue to be recognized when the customer takes control of our product. As we did

not

identify any accounting changes that impacted the amount of reported revenues with respect to our product revenues and

no

adjustment to retained earnings was required upon adoption.

Under the new revenue standards, we recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the

five

step model prescribed under ASU

No.

2014

-

09:

(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other

third

-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is

one

year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified

one

performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do

not

differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,

may

be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will

not

occur in a future period. Actual amounts

may

ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note

6,

Revenues, to these condensed consolidated financial statements.

(h) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(i) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than

not

the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

(j) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented.  Outstanding warrants to purchase

32,192,294

common shares and

28,500,478

common shares, for the

three

months ended

March 31, 2019

and

2018,

respectively, and

1,768,147

common shares that

may

be issued under warrants to purchase units sold in the Company’s private placements, were antidilutive for the

three

months ended

March 31, 2018

and

March 31, 2019,

and have been excluded from the calculation of loss per common share.

(k) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants. An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(l) LIQUIDITY AND GOING CONCERN––For the

three

months ended

March 31, 2019

and

2018,

the Company incurred net losses of

$1,904,166

and

$812,944.

At

March 31, 2019,

the Company had a cash balance of

$1,115,133

and its current assets less current liabilities were $(

949,171

). The Company has an accumulated deficit of

$19,491,866

at

March 31, 2019.

Our recent losses have predominantly resulted from research and development expenses for our Trappsol® Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC.

For year ended

December 31, 2018,

our operations used approximately

$3,188,000

in cash. This cash was provided primarily by cash on hand and net proceeds of

$4,102,000

from equity issuances. At

December 31, 2018,

the Company had a cash balance of

$2,217,000

and current assets less current liabilities of

$844,000.

We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we

may

be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

We have incurred losses from operations in each of our last

five

fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. There can be

no

assurance that the Company will be successful with these fundraising endeavors.   These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

(m) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, including contingencies. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(n) FAIR VALUE MEASUREMENTS AND DISCLOSURES––The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement,

not

an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have

no

assets or liabilities that are required to have their fair value measured on a recurring basis at

March 31, 2019

or

December 31, 2018. 

Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment. 

For short-term classes of our financial instruments which are

not

reported at fair value, the carrying amounts approximate fair value due to their short-term nature, which include cash, accounts receivable, and accounts payable.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At

March 31, 2019

and

December 31, 2018,

the carrying value of the mortgage note receivable approximates fair value. 

(o) Accounting Standards Adopted––

● Leases - In February 2016, the FASB issued ASU 2016 - 02, “Leases (Topic 842 ),” (“ASU 2016 - 02” ), which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and financing leases with lease terms greater than twelve months.  The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment for prepaid and deferred rent and tenant incentives.  For income statement purposes, leases will continue to be classified as operating or financing with lease expense in both cases calculated substantially the same as under the prior leasing guidance. 

The Company adopted Topic

842

as of

January 1, 2019 (

the

first

day of fiscal

2019

).  See Note

7

(p)

Accounting Standards to be Adopted in Future Periods

––There are

no

outstanding accounting standards to be adopted that will have a material effect on the Company’s financial position and operations.

(

1

) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD Holdings, Inc. and subsidiaries (the “Company,” “we,” “our” or “us”) that affect the accompanying consolidated financial statements:

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in

August 1990

as a Florida corporation, with operations beginning in

July 1992.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol

®

Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol

®

Cyclo™ and in

January 2017

the FDA granted Fast Track designation to Trappsol

®

Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in

September 2017.

We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The

first

patient was dosed in our European study in

July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(b) BASIS OF PRESENTATION––The consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of

three

months or less.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Customer account balances with invoices dated over

90

days old are considered past due. The Company does

not

accrue interest on past due accounts. Customer payments are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, applied to the oldest unpaid invoices.

The carrying amount of accounts receivable are reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will

not

be collected. The Company reviews each customer balance where all or a portion of the balance exceeds

90

days from the invoice date. Based on the Company’s assessment of the customer's current creditworthiness, the Company estimates the portion, if any, of the balance that will

not

be collected, and writes off receivables as a charge to the allowance for credit losses when, in management’s estimation, it is probable that the receivable is worthless. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for doubtful accounts was

not

deemed necessary at

December 31, 2018

and

2017.

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol

®

Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (

first

-in,

first

-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does

not

include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete. The reserve for obsolete inventory was

$39,700

and

$27,500

at

December 31, 2018

and

2017,

respectively.

(f) MORTGAGE NOTE RECEIVABLE––The mortgage note receivable is stated at amortized value, which is the amount we expect to collect. 

(g) FURNITURE AND EQUIPMENT––Furniture and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally

three

to

five

years for computers and vehicles and

seven

to

ten

years for machinery, equipment and office furniture). We periodically review our long-lived assets to determine if the carrying value of assets

may

not

be recoverable. If an impairment is identified, we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. 

(h) REVENUE RECOGNITION–– Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018

did

not

change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did

not

identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues,

no

adjustment to retained earnings was required upon adoption.

Under the new revenue standards, revenues are recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the

five

step model prescribed under ASU

No.

2014

-

09:

(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other

third

-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is

one

year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified

one

performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do

not

differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,

may

be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will

not

occur in a future period. Actual amounts

may

ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note

2,

Revenues, to these consolidated financial statements.

(i) SHIPPING AND HANDLING FEES––Shipping and handling fees, if billed to customers, are included in product sales. Shipping and handling costs associated with inbound and outbound freight are expensed as incurred and included in freight and shipping expense.

(j) ADVERTISING––Advertising costs are charged to operations when incurred. We incur minimal advertising expenses.

(k) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(l) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than

not

the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

The Tax Cut and Jobs Act (the “Tax Act”) was enacted on

December 22, 2017.

The Tax Act contains several key provisions including, among other things, reducing the U.S. federal corporate tax rate from

35%

to

21%.

Changes in tax law are accounted for in the period of enactment. In addition, federal net operating losses (“NOLs”) generated during future periods will be carried forward indefinitely, but will be subject to an

80%

utilization against taxable income. The carryback provision has been revoked for NOLs after

January 1, 2018.

(m) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented, as convertible preferred stock and outstanding warrants to purchase

32,192,294

and

28,500,478

common shares were antidilutive for

2018

and

2017,

respectively.

(n) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants.  An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(o) FAIR VALUE MEASUREMENTS AND DISCLOSURES–The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement,

not

an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have

no

assets or liabilities that are required to have their fair value measured on a recurring basis at

December 

31,

2018

or

2017.

  Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment.

For short-term classes of our financial instruments, which include cash, accounts receivable and accounts payable, and which are

not

reported at fair value, the carrying amounts approximate fair value due to their short-term nature.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At

December 31, 2018

and

2017,

the carrying value of the mortgage note receivable approximates fair value.

(p) LIQUIDITY AND GOING CONCERN–– For the year ended

December 31, 2018

and

2017,

the Company incurred net losses of

$4,255,000

and

$3,833,000,

respectively. The Company has an accumulated deficit of approximately

$17,588,000

at

December 31, 2018.

Our recent losses have predominantly resulted from research and development expenses for our Trappsol

®

Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol

®

Cyclo™ in the treatment of NPC.

For year ended

December 31, 2018,

our operations used approximately

$3,188,000

in cash. This cash was provided primarily by cash on hand and net proceeds of

$4,102,000

from equity issuances. At

December 31, 2018,

the Company had a cash balance of

$2,217,000

and current assets less current liabilities of

$844,000.

We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

The Company has incurred losses from operations in each of the last

five

years. We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we

may

be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

Our consolidated financial statements for the year ended

December 31, 2018

and

2017

were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. We have incurred losses from operations in each of our last

five

fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

(q) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(r) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS–– In

August 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016

-

15,

“Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendments in this ASU relate to

eight

specific types of cash receipts and cash payments which current U.S. generally accepted accounting principles (“U.S. GAAP”) either is unclear or does

not

include specific guidance on the cash flow classification issues. The amendments in this ASU are effective for public business entities for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. The Company adopted this ASU effective

January 1, 2018

and there was

no

significant impact on its consolidated financial statements and disclosures. 

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

), which requires that lessees recognize assets and liabilities for leases with lease terms greater than

12

months in the statement of financial position. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after

December 15, 2018,

including interim reporting periods within that reporting period. The Company will adopt this ASU effective

January 1, 2019

and does

not

expect a significant impact on its consolidated financial statements and disclosures. 

Between

May 2014

and

December 2016,

the FASB issued several ASUs on Revenue from Contracts with Customers (Topic

606

). These updates will supersede nearly all existing revenue recognition guidance under current U.S. GAAP. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A

five

-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after

December 15, 2017,

and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018

did

not

change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did

not

identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues,

no

adjustment to retained earnings was required upon adoption.

XML

Note 2 - Mortgage Note Receivable

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

(

2

) MORTGAGE NOTE RECEIVABLE

On

January 21, 2016,

we sold our real property located in High Springs, Florida to an unrelated party. Pursuant to the terms of the sale, at the closing, the buyer paid

$10,000

in cash, less selling costs and settlement charges, and delivered to us a promissory note in the principal amount of

$265,000,

and a mortgage in our favor securing the buyer’s obligations under the promissory note. The promissory note provides for monthly payments of

$3,653,

including principal and interest at

4.25%,

over a

seven

-year period that commenced

March 1, 2016,

with the unpaid balance due in

February 2023.

(

4

) MORTGAGE NOTE RECEIVABLE

:

On

January 21, 2016,

the Company sold its real property located in High Springs, Florida to an unrelated party. Pursuant to the terms of the sale, at the closing, the buyer paid

$10,000

in cash, less selling costs and settlement charges, and delivered to the Company a promissory note in the principal amount of

$265,000,

and a mortgage in our favor securing the buyer’s obligations under the promissory note. The promissory note provides for monthly payments of

$3,653,

including principal and interest at

4.25%,

over a

seven

-year period that commenced

March 1, 2016,

with the unpaid balance due in

February 2023.

Scheduled debt principal collections on this mortgage for the next

five

years and thereafter are as follows:

Year Ending
December 31,	Principal
2019	$	37,439
2020		39,061
2021		40,754
2022		42,520
2023		7,339
Thereafter		-
	$	167,113

XML

Note 3 - Equity Transactions

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

(

3

) EQUITY TRANSACTIONS:

The Company expensed

$31,390

and

$14,190

in employee and board member stock compensation for the

three

months ended

March 31, 2019

and

2018,

respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members.

In

April, 2018,

the Company completed a private placement resulting in gross proceeds to the Company of

$2,010,000.

Prior to

March 31, 2018,

the Company received

$74,983

in advance from these investors, which has been recorded as an advance -- private placement in the accompanying statement of cash flows.

As of

March 31, 2019,

the Company had warrants outstanding to purchase

32,192,294

shares of common stock at exercise prices of

$0.25

-

$1.00

per share that expire at various dates through

2025.

 An additional

1,768,147

shares of common stock

may

be issued under warrants outstanding to purchase

480,000

Units sold in the Company’s

May 2016

private placement at an exercise price of

$0.25

per Unit,

164,074

Units sold in the Company’s

February 2017

private placement at an exercise price of

$0.35

per Unit, and

600

Units sold in the Company’s

October 2017

private placement at an exercise price of

$100

per Unit.

(

7

)

EQUITY

TRANSACTIONS:

The Company expensed

$83,420

and

$118,680

in employee and board member stock compensation in

2018

and

2017,

respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members. In

2018,

the Company did

not

issue shares of Common Stock as a bonus.  In

2017,

the Company issued

292,000

shares of Common Stock to

eight

board members, the Company’s secretary, and to employees as a bonus. 

In

April 2014,

we entered into a

one

-year agreement with Scarsdale Equities, LLC (“Scarsdale”), which was subsequently extended, to act as our financial advisor and exclusive placement agent. Under the agreement, Scarsdale is entitled to a fee with respect to each private placement of debt or equity securities of the Company in an amount equal to

6%

of the proceeds of such financing raised by Scarsdale, and a

seven

-year warrant to purchase

6%

of the securities issued as a part of such financing raised by Scarsdale, with an exercise price equal to

100%

of the offering price of the securities sold during the term of the agreement. The foregoing compensation terms were modified for private placements effected in

2017,

resulting in the compensation described in more detail below. The agreement also provides for payment of the above fees for any financing within

one

year of the expiration of the term, with investors identified by Scarsdale during the term. N. Scott Fine, the Company’s Chief Executive Officer and Chairman of the Board, was a principal of Scarsdale at the time we initially retained Scarsdale as our financial adviser, and his son is currently employed by Scarsdale, is active on our account and serves as our Secretary.

On

February 23, 2017,

the Company issued

5,754,832

“Units” at a purchase price of

$0.35

per Unit in a private placement, each Unit consisting of

one

share of Common Stock, and a

seven

-year warrant to purchase an additional share of Common Stock at an exercise price of

$0.35,

for aggregate gross proceeds to the Company of approximately

$2

million. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of approximately

$153,000,

and it and its designees were issued

seven

-year warrants to purchase

164,074

Units at an exercise price of

$0.35

per Unit. A

$10,000

cash fee was also paid to another party with respect to this private placement.

In

October 2017,

the Company completed a private placement of

15,500

preferred stock “Units” at a purchase price of

$100

per Unit, each Unit consisting of

one

share of Series B Convertible Preferred Stock (“Series B Preferred Stock”) convertible into

400

shares of Common Stock, and

seven

-year warrants to purchase

400

shares of Common Stock at an exercise price of

$0.25

per share. The Series B Preferred Stock was automatically converted into Common Stock on

May 23, 2018,

when the Company increased its authorized shares of Common Stock, which resulted in the Company having a sufficient number of authorized and unissued shares of Common Stock to permit the conversion or exercise, as applicable, of all outstanding shares of preferred stock, warrants and other convertible securities. The Series B Preferred Stock had a liquidation preference of

$100

per share, was

not

redeemable, and did

not

entitle the holder to special dividends. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of

$60,000,

and it and its designees were issued

seven

-year warrants to purchase

600

Units at an exercise price of

$100

per Unit.

In 

April 2018,

the Company completed a private placement of

20,100

“Units”, at a price of

$100

per Unit, resulting in gross proceeds to the Company of

$2,010,000.

Each Unit consisted of

one

share of Series B Preferred Stock convertible into

400

shares of Common Stock, and

seven

-year warrants to purchase

400

shares of Common Stock at an exercise price of

$0.25

per share. Prior to

March 31, 2018,

the Company received

$74,983

in advance from these investors. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of

$50,000.

On

May 23, 2018,

at a special meeting of shareholders, the Company’s shareholders approved amendments to the Company’s Articles of Incorporation increasing the number of authorized shares of Common Stock from

100,000,000

shares to

500,000,000

shares, and deleting references to the Series A Preferred Stock, which was

no

longer outstanding. Following the meeting, the Company filed Articles of Amendment to its Article of Incorporation which resulted in the automatic conversion of each outstanding share of Series B Preferred Stock into

400

shares of Common Stock, increasing the number of outstanding shares of Common Stock by

14,240,000.

In

December 2018,

the Company completed a private placement of

3,519,963

common stock “Units” at a price of

$0.65

per Unit, resulting in gross proceeds to the Company of

$2,342,034,

of which

$130,063

was received in

January 2019

and is reflected in the accompanying balance sheet as a stock subscription receivable. Each Unit consisted of

one

share of common stock and a

seven

-year warrant to purchase

one

share of common stock at an exercise price of

$0.65

per share.

The following table presents the number of Common Stock warrants outstanding:

Warrants outstanding, December 31, 2016	8,677,500
Issued	11,954,831
Exercised	-
Expired	-
Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294

The following table presents the number of Common Stock warrants outstanding, their exercise price, and expiration dates at

December 31, 2018:

Warrants Issued	Exercise Price		Expiration Date
240,000	$	0.25	April 2021
103,500	$	1.00	July 2021
156,000	$	0.50	July 2022
78,000	$	0.50	August 2022
8,100,000	$	0.25	June 2023
5,754,831	$	0.35	February 2024
6,200,000	$	0.25	October 2024
8,040,000	$	0.25	April 23, 2025
3,519,963	$	0.65	December 2025
32,192,294

In addition, there are

seven

-year warrants outstanding at

December 31, 2018

to purchase

480,000

Units sold in our

May 2016

private placement at an exercise price of

$0.25

per Unit,

164,074

Units sold in our

February 2017

private placement at an exercise price of

$0.35

per Unit, and

600

Units sold in our

October 2017

private placement at an exercise price of

$100

per Unit.

XML

Note 4 - Income Taxes

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(

4

) INCOME TAXES:

The Company reported a net loss for the

three

months ended

March 

31,

2019

and

2018,

respectively. The Company increased its deferred tax asset valuation allowance rather than recognize an income tax benefit.

(

9

) INCOME TAXES:

If all of our net operating loss carryforwards and temporary deductible differences were used, we would realize a net deferred tax asset of approximately

$6,235,000

based upon expected income tax rates. Under ASC

740,

deferred tax assets must be reduced by a valuation allowance if it is likely that all or a portion of it will

not

be realized.  At

December 31, 2018,

we have determined it is more likely than

not

that we will

not

realize our temporary deductible differences and net operating loss carryforwards, and have provided a

100%

valuation allowance on our net deferred tax asset.

Positive evidence we evaluated in the order of significance and weighting in our evaluation includes the amount of net operating loss carryforward utilized against current income tax liabilities in

four

of the prior

ten

years, and the length of time the net operating loss carryforwards are available before they expire.  Negative evidence we considered in the order of significance and weighting in our evaluation include our recent net losses, our plans for continued clinical trial and product development expenses, the timing of expiration of the net operating loss carryforwards prior to being utilized, unpredictability of future sales and profitability, competition from others, and new government regulations.  We determined greatest weight should be given to our plans for continued clinical trial and product development expenses, trend of increasing expenses, and recent net operating losses in our evaluation. We re-measure our valuation allowance each quarter based on changes in our current and expected future sales and margins, and changes in the other factors of both positive and negative evidence.

We have available at

December 31, 2018,

unused federal and state net operating loss carryforwards totaling approximately

$11,903,000

that

may

be applied against future taxable income.  

If

not

used, the net operating loss carryforwards will expire as follows:

Year Ending December 31,	Amount
2020	$	174,000
2021		71,000
2024		66,000
2028		7,000
2030		160,000
2031		73,000
2032		48,000
2034		727,000
2035		1,969,000
2036		2,867,000
2037		2,481,000
Indefinite		3,260,000
Total	$	11,903,000

A change in ownership pursuant to Section

382

of the Internal Revenue Code occurred during

2014.

As a result, net operating losses in existence as of the date of the ownership change are subject to an annual Section

382

limitation. At

December 31, 2018,

the amount of net operating losses subject to an annual Section

382

limitation has

not

been determined.

The Company has expenses that qualify for the Orphan Drug Credit. The Orphan Drug Credit

may

be used to offset any current tax liabilities. Unused credits

may

be carried forward for

20

years. If the credit has

not

been used by the end of the

20

year carryforward period, it can be deducted as an expense for federal income tax purposes. The cumulative unused credit carryforward was

$3,085,000

at

December 31, 2018.

For

2018,

we did

not

recognize a benefit or provision for income taxes.  The net deferred tax asset before the valuation allowance increased

$1,575,000

from

2017

to

2018,

which is primarily the result of an additional net operating loss for

2018.

We increased our valuation allowance to offset this increase in our deferred tax asset.

For

2017,

we did

not

recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased

$1,044,000

from

2016

to

2017,

which is primarily the result of an additional net operating loss for

2017.

We increased our valuation allowance to offset this increase in our deferred tax asset.

Significant components of our deferred Federal income taxes were as follows:

	2018			201 7
Deferred tax assets:
Net operating loss carryforwards	$	3,017,000		$	2,206,000
Tax credits		3,085,000			2,397,000
Impairment allowances		10,000			7,000
Stock compensation		64,000			20,000
Other		62,000			35,000
Less valuation allowance		(6,235,000	)		(4,660,000	)
Deferred tax asset, net of valuation		3,000			5,000
Deferred tax liabilities:
Property and equipment		(3,000	)		(5,000	)
Deferred tax liabilities		(3,000	)		(5,000	)
Net tax assets	$	-		$	-

On

December 22, 2017,

the President of the United States signed into law the Tax Cuts and Jobs Act (H.R.

1

) (the “Act”). The Act includes a number of changes in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from

34%

to

21%,

effective

January 1, 2018.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company’s net tax asset as of

December 31, 2018

was determined based on the current enacted federal tax rate of

34%

prior to the passage of the Act. As a result of the reduction in the corporate income tax rate to

21%

from

34%

under the Act, the Company revalued its net deferred tax assets and liabilities as of

January 

1,

2018.

 The impact of the reduction of the income tax rate was a reduction of deferred tax asset and the corresponding valuation allowance of approximately

$768,000.

The differences between the effective income tax rate reflected in the benefit (provision) for income taxes and the amounts, which would be determined by applying federal statutory income tax rate of

21%

at

December 31, 2018

and

34%

at

December 31, 2017,

is summarized as follows:

	2018			2017
Tax benefit (expense) at Federal statutory rate	$	894,000		$	1,303,000
Effect of State taxes		185,000			139,000
Tax credits		676,000			1,135,000
Nondeductible expenses		(180,000	)		(435,000	)
Tax Cuts and Jobs Act rate decrease		-			(1,098,000	)
Valuation allowance – deferred tax assets		(1,575,000	)		(1,044,000	)
Total tax benefit (provision)	$	-		$	-

The Company files income tax returns in the U.S. Federal jurisdiction, and in the State of Florida. The Company is

no

longer subject to U.S. Federal or state income tax examinations by tax authorities for years before

2015.

The Company has reviewed and evaluated the relevant technical merits of each of its tax positions in accordance with accounting principles generally accepted in the United States of America for accounting for uncertainty in income taxes, and determined that there are

no

uncertain tax positions that would have a material impact on the financial statements of the Company. When applicable, interest and penalties will be reflected as a component of income tax expense.

XML

Note 5 - Sales Concentrations

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

(

5

) SALES CONCENTRATIONS:

Sales to

four

major customers accounted for

76%

of total sales for the

three

months ended

March 

31,

2019

and

2018,

respectively. A loss of

one

of these customers could have a significant adverse effect on the Company’s financial condition, results of operations and cash flows.

(

5

) CONCENTRATIONS OF CREDIT RISK:

Significant concentrations of credit risk for all financial instruments owned by the Company are as follows:

DEMAND DEPOSITS––We maintain bank accounts in Federal credit unions and other financial institutions, which are insured up to the Federal Deposit Insurance Corporation limits. The bank accounts

may

exceed federally insured levels; however, we have

not

experienced any losses in such accounts.

XML

Note 6 - Revenues

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(

6

) REVENUES:

The Company operates in

one

business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life threatening rare diseases and medical conditions. The Company considers there to be revenue concentration risks for regions where net product revenues exceed

10%

of consolidated net product revenues. The concentration of the Company’s net product revenues within the regions below

may

have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. See Note

1

(g) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Three Months Ended
	March 31 ,
	2019		2018
Trappsol Cyclo	$	30,096	$	30,096
Trappsol HPB		70,867		74,762
Trappsol research		65,852		61,025
Aquaplex		52,560		29,455
Other		1,451		2,731
Total revenues	$	220,826	$	198,069

Substantially all of our sales of Trappsol® Cyclo™ for the

three

months ended

March 31, 2019

and

March 31, 2018

were to a particular customer who exports the drug to South America. Substantially all of our Aquaplex sales are to

one

customer.

(

2

) REVENUES:

The Company operates in

one

business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life threatening rare diseases and medical conditions. The Company considers there to be revenue concentration risks for regions where net product revenues exceed

10%

of consolidated net product revenues. The concentration of the Company’s net product revenues within the regions below

may

have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. The Company adopted the requirements of ASC

606

on

January 1, 2018

using the modified retrospective method. See Note

1

(h) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Year Ended
	December 31 ,
	2018		2017
Trappsol ® Cyclo™	$	166,596	$	342,231
Trappsol ® HPB		484,101		710,939
Trappsol ® Fine Chemical		233,910		130,982
Aquaplex ®		116,806		17,760
Other		10,064		35,844
Total revenues	$	1,011,477	$	1,237,756

All of our sales of Trappsol

®

Cyclo™ for the year ended

December 31, 2018

and

84%

of our sales of Trappsol

®

Cyclo™ for the year ended

December 31, 2017

were to a single customer who exports the drug to South America. Substantially all of our Aquaplex

®

sales are to

one

customer.

XML

Note 7 - Leases

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

(

7

) LEASES:

The Company adopted ASU

2016

-

02

“

Leases

(Topic

842

)” along with related clarifications and improvements effective at the beginning of fiscal

2019,

using the modified retrospective transition method.  There was

no

cumulative-effect adjustment to the Company's Consolidated Balance Sheet as of

December 31, 2018.

Comparative information has

not

been restated and continues to be reported under the accounting standards in effect for those periods, as the Company has elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward our prior lease classifications under ASC

840,

“Leases.”

Under the new guidance, right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease terms at the commencement dates.  The Company uses its incremental borrowing rates as the discount rate for its leases, which is equal to the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. The incremental borrowing rate for all existing leases as of the opening balance sheet date was based upon the remaining terms of the leases; the incremental borrowing rate for all new or amended leases is based upon the lease terms.  The lease terms for all the Company’s leases include the contractually obligated period of the leases, plus any additional periods covered by a Company options to extend the leases that the Company is reasonably certain to exercise.

The Company has elected the package of practical expedients permitted under the transition guidance, which among other things, allows us to carryforward our prior lease classifications under ASC

840,

“Leases.”

Adoption of Topic

842

did

not

have a material impact on our annual operating results or cash flows. Operating lease expense is recognized on a straight-line basis over the lease term and is included in operating costs or General and administrative expense.  Variable lease payments are expensed as incurred.

The effects of the changes made to the Company’s Consolidated Balance Sheet as of

December 31, 2018

for the adoption of Topic

842

is as follows:

The Company determines if an arrangement is or contains a lease at contract inception and recognizes a right-of-use asset and a lease liability at the lease commencement date.  Leases with an initial term of

12

months or less but greater than

one

month are

not

recorded on the balance sheet for select asset classes.  The lease liability is measured at the present value of future lease payments as of the lease commencement date, or the opening balance sheet date for leases existing at adoption of Topic

842.

  The right-of-use asset recognized is based on the lease liability adjusted for prepaid and deferred rent and unamortized lease incentives. 

Certain leases provide that the lease payments

may

be increased annually based on the fixed rate terms or adjustable terms such as the Consumer Price Index.  Future base rent escalations that are

not

contractually quantifiable as of the lease commencement date are

not

included in our lease liability. 

The Company has

one

office lease, which is as an operating lease and included in the right-of-use asset, current portion of lease liability, and long-term lease liability captions on the Company’s consolidated balance sheet.

Operating lease assets are recorded net of accumulated amortization of

$4,251

as of

March 31, 2019.

Lease expense for lease payments are recognized on a straight-line basis over the lease term.   Lease expense for the

first

quarter of

2019

was

$3,331.

XML

Note 1 - Summary of Significant Accounting Policies

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Significant Accounting Policies [Text Block]

(

1

) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD Holdings, Inc. and subsidiaries (the “Company,” “we,” “our” or “us”) that affect the accompanying consolidated financial statements.

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in

August 1990,

as a Florida corporation with operations beginning in

July 1992.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol® Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol® Cyclo™ and in

January 2017

the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in

September 2017.

We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The

first

patient was dosed in our European study in

July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(b) BASIS OF PRESENTATION––The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form

10

-Q and Rule

10

-

01

of Regulation 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 recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the

three

month period ended

March 

31,

2019

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2019.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form

10

-K for the year ended

December 31, 2018,

as filed with the Securities and Exchange Commission on

March 15, 2019.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of

three

months or less.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Based on our assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for uncollectible accounts was

not

deemed necessary at

March 31, 2019

and

December 31, 2018.

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol® Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (

first

-in,

first

-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does

not

include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete.  The reserve for obsolete inventory was

$39,700

at

March 31, 2019

and

December 31, 2018. 

(f) EQUIPMENT––Equipment is recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally

three

to

five

years for computers, and

seven

to

ten

years for equipment and office furniture).

(g) REVENUE RECOGNITION––Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018,

did

not

change our revenue recognition as the majority of our revenues continue to be recognized when the customer takes control of our product. As we did

not

identify any accounting changes that impacted the amount of reported revenues with respect to our product revenues and

no

adjustment to retained earnings was required upon adoption.

Under the new revenue standards, we recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the

five

step model prescribed under ASU

No.

2014

-

09:

(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other

third

-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is

one

year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified

one

performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do

not

differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,

may

be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will

not

occur in a future period. Actual amounts

may

ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note

6,

Revenues, to these condensed consolidated financial statements.

(h) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(i) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than

not

the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

(j) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented.  Outstanding warrants to purchase

32,192,294

common shares and

28,500,478

common shares, for the

three

months ended

March 31, 2019

and

2018,

respectively, and

1,768,147

common shares that

may

be issued under warrants to purchase units sold in the Company’s private placements, were antidilutive for the

three

months ended

March 31, 2018

and

March 31, 2019,

and have been excluded from the calculation of loss per common share.

(k) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants. An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(l) LIQUIDITY AND GOING CONCERN––For the

three

months ended

March 31, 2019

and

2018,

the Company incurred net losses of

$1,904,166

and

$812,944.

At

March 31, 2019,

the Company had a cash balance of

$1,115,133

and its current assets less current liabilities were $(

949,171

). The Company has an accumulated deficit of

$19,491,866

at

March 31, 2019.

Our recent losses have predominantly resulted from research and development expenses for our Trappsol® Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC.

For year ended

December 31, 2018,

our operations used approximately

$3,188,000

in cash. This cash was provided primarily by cash on hand and net proceeds of

$4,102,000

from equity issuances. At

December 31, 2018,

the Company had a cash balance of

$2,217,000

and current assets less current liabilities of

$844,000.

We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we

may

be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

We have incurred losses from operations in each of our last

five

fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. There can be

no

assurance that the Company will be successful with these fundraising endeavors.   These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

(m) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, including contingencies. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(n) FAIR VALUE MEASUREMENTS AND DISCLOSURES––The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement,

not

an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have

no

assets or liabilities that are required to have their fair value measured on a recurring basis at

March 31, 2019

or

December 31, 2018. 

Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment. 

For short-term classes of our financial instruments which are

not

reported at fair value, the carrying amounts approximate fair value due to their short-term nature, which include cash, accounts receivable, and accounts payable.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At

March 31, 2019

and

December 31, 2018,

the carrying value of the mortgage note receivable approximates fair value. 

(o) Accounting Standards Adopted––

● Leases - In February 2016, the FASB issued ASU 2016 - 02, “Leases (Topic 842 ),” (“ASU 2016 - 02” ), which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and financing leases with lease terms greater than twelve months.  The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment for prepaid and deferred rent and tenant incentives.  For income statement purposes, leases will continue to be classified as operating or financing with lease expense in both cases calculated substantially the same as under the prior leasing guidance. 

The Company adopted Topic

842

as of

January 1, 2019 (

the

first

day of fiscal

2019

).  See Note

7

(p)

Accounting Standards to be Adopted in Future Periods

––There are

no

outstanding accounting standards to be adopted that will have a material effect on the Company’s financial position and operations.

(

1

) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of CTD Holdings, Inc. and subsidiaries (the “Company,” “we,” “our” or “us”) that affect the accompanying consolidated financial statements:

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in

August 1990

as a Florida corporation, with operations beginning in

July 1992.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol

®

Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol

®

Cyclo™ and in

January 2017

the FDA granted Fast Track designation to Trappsol

®

Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in

September 2017.

We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The

first

patient was dosed in our European study in

July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(b) BASIS OF PRESENTATION––The consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of

three

months or less.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Customer account balances with invoices dated over

90

days old are considered past due. The Company does

not

accrue interest on past due accounts. Customer payments are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, applied to the oldest unpaid invoices.

The carrying amount of accounts receivable are reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will

not

be collected. The Company reviews each customer balance where all or a portion of the balance exceeds

90

days from the invoice date. Based on the Company’s assessment of the customer's current creditworthiness, the Company estimates the portion, if any, of the balance that will

not

be collected, and writes off receivables as a charge to the allowance for credit losses when, in management’s estimation, it is probable that the receivable is worthless. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for doubtful accounts was

not

deemed necessary at

December 31, 2018

and

2017.

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol

®

Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (

first

-in,

first

-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does

not

include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete. The reserve for obsolete inventory was

$39,700

and

$27,500

at

December 31, 2018

and

2017,

respectively.

(f) MORTGAGE NOTE RECEIVABLE––The mortgage note receivable is stated at amortized value, which is the amount we expect to collect. 

(g) FURNITURE AND EQUIPMENT––Furniture and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally

three

to

five

years for computers and vehicles and

seven

to

ten

years for machinery, equipment and office furniture). We periodically review our long-lived assets to determine if the carrying value of assets

may

not

be recoverable. If an impairment is identified, we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. 

(h) REVENUE RECOGNITION–– Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018

did

not

change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did

not

identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues,

no

adjustment to retained earnings was required upon adoption.

Under the new revenue standards, revenues are recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the

five

step model prescribed under ASU

No.

2014

-

09:

(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other

third

-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is

one

year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified

one

performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do

not

differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,

may

be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will

not

occur in a future period. Actual amounts

may

ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note

2,

Revenues, to these consolidated financial statements.

(i) SHIPPING AND HANDLING FEES––Shipping and handling fees, if billed to customers, are included in product sales. Shipping and handling costs associated with inbound and outbound freight are expensed as incurred and included in freight and shipping expense.

(j) ADVERTISING––Advertising costs are charged to operations when incurred. We incur minimal advertising expenses.

(k) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(l) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than

not

the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

The Tax Cut and Jobs Act (the “Tax Act”) was enacted on

December 22, 2017.

The Tax Act contains several key provisions including, among other things, reducing the U.S. federal corporate tax rate from

35%

to

21%.

Changes in tax law are accounted for in the period of enactment. In addition, federal net operating losses (“NOLs”) generated during future periods will be carried forward indefinitely, but will be subject to an

80%

utilization against taxable income. The carryback provision has been revoked for NOLs after

January 1, 2018.

(m) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented, as convertible preferred stock and outstanding warrants to purchase

32,192,294

and

28,500,478

common shares were antidilutive for

2018

and

2017,

respectively.

(n) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants.  An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(o) FAIR VALUE MEASUREMENTS AND DISCLOSURES–The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement,

not

an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have

no

assets or liabilities that are required to have their fair value measured on a recurring basis at

December 

31,

2018

or

2017.

  Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment.

For short-term classes of our financial instruments, which include cash, accounts receivable and accounts payable, and which are

not

reported at fair value, the carrying amounts approximate fair value due to their short-term nature.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At

December 31, 2018

and

2017,

the carrying value of the mortgage note receivable approximates fair value.

(p) LIQUIDITY AND GOING CONCERN–– For the year ended

December 31, 2018

and

2017,

the Company incurred net losses of

$4,255,000

and

$3,833,000,

respectively. The Company has an accumulated deficit of approximately

$17,588,000

at

December 31, 2018.

Our recent losses have predominantly resulted from research and development expenses for our Trappsol

®

Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol

®

Cyclo™ in the treatment of NPC.

For year ended

December 31, 2018,

our operations used approximately

$3,188,000

in cash. This cash was provided primarily by cash on hand and net proceeds of

$4,102,000

from equity issuances. At

December 31, 2018,

the Company had a cash balance of

$2,217,000

and current assets less current liabilities of

$844,000.

We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

The Company has incurred losses from operations in each of the last

five

years. We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we

may

be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

Our consolidated financial statements for the year ended

December 31, 2018

and

2017

were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. We have incurred losses from operations in each of our last

five

fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

(q) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(r) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS–– In

August 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016

-

15,

“Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendments in this ASU relate to

eight

specific types of cash receipts and cash payments which current U.S. generally accepted accounting principles (“U.S. GAAP”) either is unclear or does

not

include specific guidance on the cash flow classification issues. The amendments in this ASU are effective for public business entities for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. The Company adopted this ASU effective

January 1, 2018

and there was

no

significant impact on its consolidated financial statements and disclosures. 

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

), which requires that lessees recognize assets and liabilities for leases with lease terms greater than

12

months in the statement of financial position. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after

December 15, 2018,

including interim reporting periods within that reporting period. The Company will adopt this ASU effective

January 1, 2019

and does

not

expect a significant impact on its consolidated financial statements and disclosures. 

Between

May 2014

and

December 2016,

the FASB issued several ASUs on Revenue from Contracts with Customers (Topic

606

). These updates will supersede nearly all existing revenue recognition guidance under current U.S. GAAP. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A

five

-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after

December 15, 2017,

and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018

did

not

change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did

not

identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues,

no

adjustment to retained earnings was required upon adoption.

XML

Note 2 - Revenues

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(

6

) REVENUES:

The Company operates in

one

business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life threatening rare diseases and medical conditions. The Company considers there to be revenue concentration risks for regions where net product revenues exceed

10%

of consolidated net product revenues. The concentration of the Company’s net product revenues within the regions below

may

have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. See Note

1

(g) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Three Months Ended
	March 31 ,
	2019		2018
Trappsol Cyclo	$	30,096	$	30,096
Trappsol HPB		70,867		74,762
Trappsol research		65,852		61,025
Aquaplex		52,560		29,455
Other		1,451		2,731
Total revenues	$	220,826	$	198,069

Substantially all of our sales of Trappsol® Cyclo™ for the

three

months ended

March 31, 2019

and

March 31, 2018

were to a particular customer who exports the drug to South America. Substantially all of our Aquaplex sales are to

one

customer.

(

2

) REVENUES:

The Company operates in

one

business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life threatening rare diseases and medical conditions. The Company considers there to be revenue concentration risks for regions where net product revenues exceed

10%

of consolidated net product revenues. The concentration of the Company’s net product revenues within the regions below

may

have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. The Company adopted the requirements of ASC

606

on

January 1, 2018

using the modified retrospective method. See Note

1

(h) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Year Ended
	December 31 ,
	2018		2017
Trappsol ® Cyclo™	$	166,596	$	342,231
Trappsol ® HPB		484,101		710,939
Trappsol ® Fine Chemical		233,910		130,982
Aquaplex ®		116,806		17,760
Other		10,064		35,844
Total revenues	$	1,011,477	$	1,237,756

All of our sales of Trappsol

®

Cyclo™ for the year ended

December 31, 2018

and

84%

of our sales of Trappsol

®

Cyclo™ for the year ended

December 31, 2017

were to a single customer who exports the drug to South America. Substantially all of our Aquaplex

®

sales are to

one

customer.

XML

Note 3 - Major Customers and Suppliers

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Major Customers and Suppliers Disclosure [Text Block]

(

3

) MAJOR CUSTOMERS AND SUPPLIERS:

Our revenues are derived primarily from chemical supply and pharmaceutical companies located primarily in the United States. In

2018,

four

major customers accounted for

57%

of total revenues. Accounts receivable balances for these major customers represent

31%

of total accounts receivable at

December 31, 2018.

In

2017,

three

major customers accounted for

59%

of total revenues. Accounts receivable balances for these major customers represent

27%

of total accounts receivable at

December 31, 2017. 

Substantially all inventory purchases were from

three

vendors in

2018

and

2017.

These vendors are located primarily outside the United States.

We have

three

sources for our Aquaplex® products. There are multiple sources for our Trappsol

®

products.

For the year ended

December 31, 2018,

the product mix of our revenues consisted of

17%

biopharmaceuticals,

71%

basic natural and chemically modified cyclodextrins, and

12%

cyclodextrin complexes. For the year ended

December 31, 2017,

the product mix of our revenues consisted of

28%

biopharmaceuticals,

71%

basic natural and chemically modified cyclodextrins, and

1%

cyclodextrin complexes.

XML

Note 4 - Mortgage Note Receivable

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

(

2

) MORTGAGE NOTE RECEIVABLE

On

January 21, 2016,

we sold our real property located in High Springs, Florida to an unrelated party. Pursuant to the terms of the sale, at the closing, the buyer paid

$10,000

in cash, less selling costs and settlement charges, and delivered to us a promissory note in the principal amount of

$265,000,

and a mortgage in our favor securing the buyer’s obligations under the promissory note. The promissory note provides for monthly payments of

$3,653,

including principal and interest at

4.25%,

over a

seven

-year period that commenced

March 1, 2016,

with the unpaid balance due in

February 2023.

(

4

) MORTGAGE NOTE RECEIVABLE

:

On

January 21, 2016,

the Company sold its real property located in High Springs, Florida to an unrelated party. Pursuant to the terms of the sale, at the closing, the buyer paid

$10,000

in cash, less selling costs and settlement charges, and delivered to the Company a promissory note in the principal amount of

$265,000,

and a mortgage in our favor securing the buyer’s obligations under the promissory note. The promissory note provides for monthly payments of

$3,653,

including principal and interest at

4.25%,

over a

seven

-year period that commenced

March 1, 2016,

with the unpaid balance due in

February 2023.

Scheduled debt principal collections on this mortgage for the next

five

years and thereafter are as follows:

Year Ending
December 31,	Principal
2019	$	37,439
2020		39,061
2021		40,754
2022		42,520
2023		7,339
Thereafter		-
	$	167,113

XML

Note 5 - Concentrations of Credit Risk

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

(

5

) SALES CONCENTRATIONS:

Sales to

four

major customers accounted for

76%

of total sales for the

three

months ended

March 

31,

2019

and

2018,

respectively. A loss of

one

of these customers could have a significant adverse effect on the Company’s financial condition, results of operations and cash flows.

(

5

) CONCENTRATIONS OF CREDIT RISK:

Significant concentrations of credit risk for all financial instruments owned by the Company are as follows:

DEMAND DEPOSITS––We maintain bank accounts in Federal credit unions and other financial institutions, which are insured up to the Federal Deposit Insurance Corporation limits. The bank accounts

may

exceed federally insured levels; however, we have

not

experienced any losses in such accounts.

XML

Note 6 - Furniture and Equipment

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

(

6

)

FURNITURE AND

EQUIPMENT:

Furniture and equipment consists of the following as of

December 31:

	2018		2017
Machinery and equipment	$	16,089	$	14,764
Office furniture		52,820		51,186
		68,909		65,950
Less: accumulated depreciation		50,338		40,214
Furniture and equipment, net	$	18,571	$	25,736

XML

Note 7 - Equity Transactions

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

(

3

) EQUITY TRANSACTIONS:

The Company expensed

$31,390

and

$14,190

in employee and board member stock compensation for the

three

months ended

March 31, 2019

and

2018,

respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members.

In

April, 2018,

the Company completed a private placement resulting in gross proceeds to the Company of

$2,010,000.

Prior to

March 31, 2018,

the Company received

$74,983

in advance from these investors, which has been recorded as an advance -- private placement in the accompanying statement of cash flows.

As of

March 31, 2019,

the Company had warrants outstanding to purchase

32,192,294

shares of common stock at exercise prices of

$0.25

-

$1.00

per share that expire at various dates through

2025.

 An additional

1,768,147

shares of common stock

may

be issued under warrants outstanding to purchase

480,000

Units sold in the Company’s

May 2016

private placement at an exercise price of

$0.25

per Unit,

164,074

Units sold in the Company’s

February 2017

private placement at an exercise price of

$0.35

per Unit, and

600

Units sold in the Company’s

October 2017

private placement at an exercise price of

$100

per Unit.

(

7

)

EQUITY

TRANSACTIONS:

The Company expensed

$83,420

and

$118,680

in employee and board member stock compensation in

2018

and

2017,

respectively. These shares were valued using quoted market values. The Company accrues stock compensation expense over the period earned for employees and board members. In

2018,

the Company did

not

issue shares of Common Stock as a bonus.  In

2017,

the Company issued

292,000

shares of Common Stock to

eight

board members, the Company’s secretary, and to employees as a bonus. 

In

April 2014,

we entered into a

one

-year agreement with Scarsdale Equities, LLC (“Scarsdale”), which was subsequently extended, to act as our financial advisor and exclusive placement agent. Under the agreement, Scarsdale is entitled to a fee with respect to each private placement of debt or equity securities of the Company in an amount equal to

6%

of the proceeds of such financing raised by Scarsdale, and a

seven

-year warrant to purchase

6%

of the securities issued as a part of such financing raised by Scarsdale, with an exercise price equal to

100%

of the offering price of the securities sold during the term of the agreement. The foregoing compensation terms were modified for private placements effected in

2017,

resulting in the compensation described in more detail below. The agreement also provides for payment of the above fees for any financing within

one

year of the expiration of the term, with investors identified by Scarsdale during the term. N. Scott Fine, the Company’s Chief Executive Officer and Chairman of the Board, was a principal of Scarsdale at the time we initially retained Scarsdale as our financial adviser, and his son is currently employed by Scarsdale, is active on our account and serves as our Secretary.

On

February 23, 2017,

the Company issued

5,754,832

“Units” at a purchase price of

$0.35

per Unit in a private placement, each Unit consisting of

one

share of Common Stock, and a

seven

-year warrant to purchase an additional share of Common Stock at an exercise price of

$0.35,

for aggregate gross proceeds to the Company of approximately

$2

million. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of approximately

$153,000,

and it and its designees were issued

seven

-year warrants to purchase

164,074

Units at an exercise price of

$0.35

per Unit. A

$10,000

cash fee was also paid to another party with respect to this private placement.

In

October 2017,

the Company completed a private placement of

15,500

preferred stock “Units” at a purchase price of

$100

per Unit, each Unit consisting of

one

share of Series B Convertible Preferred Stock (“Series B Preferred Stock”) convertible into

400

shares of Common Stock, and

seven

-year warrants to purchase

400

shares of Common Stock at an exercise price of

$0.25

per share. The Series B Preferred Stock was automatically converted into Common Stock on

May 23, 2018,

when the Company increased its authorized shares of Common Stock, which resulted in the Company having a sufficient number of authorized and unissued shares of Common Stock to permit the conversion or exercise, as applicable, of all outstanding shares of preferred stock, warrants and other convertible securities. The Series B Preferred Stock had a liquidation preference of

$100

per share, was

not

redeemable, and did

not

entitle the holder to special dividends. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of

$60,000,

and it and its designees were issued

seven

-year warrants to purchase

600

Units at an exercise price of

$100

per Unit.

In 

April 2018,

the Company completed a private placement of

20,100

“Units”, at a price of

$100

per Unit, resulting in gross proceeds to the Company of

$2,010,000.

Each Unit consisted of

one

share of Series B Preferred Stock convertible into

400

shares of Common Stock, and

seven

-year warrants to purchase

400

shares of Common Stock at an exercise price of

$0.25

per share. Prior to

March 31, 2018,

the Company received

$74,983

in advance from these investors. Scarsdale acted as financial advisor to the Company in connection with the private placement and was paid a cash fee of

$50,000.

On

May 23, 2018,

at a special meeting of shareholders, the Company’s shareholders approved amendments to the Company’s Articles of Incorporation increasing the number of authorized shares of Common Stock from

100,000,000

shares to

500,000,000

shares, and deleting references to the Series A Preferred Stock, which was

no

longer outstanding. Following the meeting, the Company filed Articles of Amendment to its Article of Incorporation which resulted in the automatic conversion of each outstanding share of Series B Preferred Stock into

400

shares of Common Stock, increasing the number of outstanding shares of Common Stock by

14,240,000.

In

December 2018,

the Company completed a private placement of

3,519,963

common stock “Units” at a price of

$0.65

per Unit, resulting in gross proceeds to the Company of

$2,342,034,

of which

$130,063

was received in

January 2019

and is reflected in the accompanying balance sheet as a stock subscription receivable. Each Unit consisted of

one

share of common stock and a

seven

-year warrant to purchase

one

share of common stock at an exercise price of

$0.65

per share.

The following table presents the number of Common Stock warrants outstanding:

Warrants outstanding, December 31, 2016	8,677,500
Issued	11,954,831
Exercised	-
Expired	-
Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294

The following table presents the number of Common Stock warrants outstanding, their exercise price, and expiration dates at

December 31, 2018:

Warrants Issued	Exercise Price		Expiration Date
240,000	$	0.25	April 2021
103,500	$	1.00	July 2021
156,000	$	0.50	July 2022
78,000	$	0.50	August 2022
8,100,000	$	0.25	June 2023
5,754,831	$	0.35	February 2024
6,200,000	$	0.25	October 2024
8,040,000	$	0.25	April 23, 2025
3,519,963	$	0.65	December 2025
32,192,294

In addition, there are

seven

-year warrants outstanding at

December 31, 2018

to purchase

480,000

Units sold in our

May 2016

private placement at an exercise price of

$0.25

per Unit,

164,074

Units sold in our

February 2017

private placement at an exercise price of

$0.35

per Unit, and

600

Units sold in our

October 2017

private placement at an exercise price of

$100

per Unit.

XML

Note 8 - Preferred Stock

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Preferred Stock [Text Block]

(

8

) PREFERRED STOCK:

The Company’s Articles of Incorporation provide for

5,000,000

shares of “blank check” preferred stock. At

December 31, 2018,

no

shares of preferred stock were outstanding or designated.

In

October 2017,

the Company designated

50,000

shares of preferred stock as Series B Convertible Preferred Stock and issued an aggregate of

35,600

of such shares in connection with the private placements described in Note

7

above. Each share of Series B Preferred Stock was convertible into

400

shares of Common Stock, had a liquidation preference of

$100

per share, and did

not

entitle the holder to special dividends. The Series B Preferred Stock automatically converted into common stock in

2018.

Please read Note

7,

Equity Transactions, to these consolidated financial statements.

XML

Note 9 - Income Taxes

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(

4

) INCOME TAXES:

The Company reported a net loss for the

three

months ended

March 

31,

2019

and

2018,

respectively. The Company increased its deferred tax asset valuation allowance rather than recognize an income tax benefit.

(

9

) INCOME TAXES:

If all of our net operating loss carryforwards and temporary deductible differences were used, we would realize a net deferred tax asset of approximately

$6,235,000

based upon expected income tax rates. Under ASC

740,

deferred tax assets must be reduced by a valuation allowance if it is likely that all or a portion of it will

not

be realized.  At

December 31, 2018,

we have determined it is more likely than

not

that we will

not

realize our temporary deductible differences and net operating loss carryforwards, and have provided a

100%

valuation allowance on our net deferred tax asset.

Positive evidence we evaluated in the order of significance and weighting in our evaluation includes the amount of net operating loss carryforward utilized against current income tax liabilities in

four

of the prior

ten

years, and the length of time the net operating loss carryforwards are available before they expire.  Negative evidence we considered in the order of significance and weighting in our evaluation include our recent net losses, our plans for continued clinical trial and product development expenses, the timing of expiration of the net operating loss carryforwards prior to being utilized, unpredictability of future sales and profitability, competition from others, and new government regulations.  We determined greatest weight should be given to our plans for continued clinical trial and product development expenses, trend of increasing expenses, and recent net operating losses in our evaluation. We re-measure our valuation allowance each quarter based on changes in our current and expected future sales and margins, and changes in the other factors of both positive and negative evidence.

We have available at

December 31, 2018,

unused federal and state net operating loss carryforwards totaling approximately

$11,903,000

that

may

be applied against future taxable income.  

If

not

used, the net operating loss carryforwards will expire as follows:

Year Ending December 31,	Amount
2020	$	174,000
2021		71,000
2024		66,000
2028		7,000
2030		160,000
2031		73,000
2032		48,000
2034		727,000
2035		1,969,000
2036		2,867,000
2037		2,481,000
Indefinite		3,260,000
Total	$	11,903,000

A change in ownership pursuant to Section

382

of the Internal Revenue Code occurred during

2014.

As a result, net operating losses in existence as of the date of the ownership change are subject to an annual Section

382

limitation. At

December 31, 2018,

the amount of net operating losses subject to an annual Section

382

limitation has

not

been determined.

The Company has expenses that qualify for the Orphan Drug Credit. The Orphan Drug Credit

may

be used to offset any current tax liabilities. Unused credits

may

be carried forward for

20

years. If the credit has

not

been used by the end of the

20

year carryforward period, it can be deducted as an expense for federal income tax purposes. The cumulative unused credit carryforward was

$3,085,000

at

December 31, 2018.

For

2018,

we did

not

recognize a benefit or provision for income taxes.  The net deferred tax asset before the valuation allowance increased

$1,575,000

from

2017

to

2018,

which is primarily the result of an additional net operating loss for

2018.

We increased our valuation allowance to offset this increase in our deferred tax asset.

For

2017,

we did

not

recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased

$1,044,000

from

2016

to

2017,

which is primarily the result of an additional net operating loss for

2017.

We increased our valuation allowance to offset this increase in our deferred tax asset.

Significant components of our deferred Federal income taxes were as follows:

	2018			201 7
Deferred tax assets:
Net operating loss carryforwards	$	3,017,000		$	2,206,000
Tax credits		3,085,000			2,397,000
Impairment allowances		10,000			7,000
Stock compensation		64,000			20,000
Other		62,000			35,000
Less valuation allowance		(6,235,000	)		(4,660,000	)
Deferred tax asset, net of valuation		3,000			5,000
Deferred tax liabilities:
Property and equipment		(3,000	)		(5,000	)
Deferred tax liabilities		(3,000	)		(5,000	)
Net tax assets	$	-		$	-

On

December 22, 2017,

the President of the United States signed into law the Tax Cuts and Jobs Act (H.R.

1

) (the “Act”). The Act includes a number of changes in existing tax law impacting businesses including, among other things, a permanent reduction in the corporate income tax rate from

34%

to

21%,

effective

January 1, 2018.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company’s net tax asset as of

December 31, 2018

was determined based on the current enacted federal tax rate of

34%

prior to the passage of the Act. As a result of the reduction in the corporate income tax rate to

21%

from

34%

under the Act, the Company revalued its net deferred tax assets and liabilities as of

January 

1,

2018.

 The impact of the reduction of the income tax rate was a reduction of deferred tax asset and the corresponding valuation allowance of approximately

$768,000.

The differences between the effective income tax rate reflected in the benefit (provision) for income taxes and the amounts, which would be determined by applying federal statutory income tax rate of

21%

at

December 31, 2018

and

34%

at

December 31, 2017,

is summarized as follows:

	2018			2017
Tax benefit (expense) at Federal statutory rate	$	894,000		$	1,303,000
Effect of State taxes		185,000			139,000
Tax credits		676,000			1,135,000
Nondeductible expenses		(180,000	)		(435,000	)
Tax Cuts and Jobs Act rate decrease		-			(1,098,000	)
Valuation allowance – deferred tax assets		(1,575,000	)		(1,044,000	)
Total tax benefit (provision)	$	-		$	-

The Company files income tax returns in the U.S. Federal jurisdiction, and in the State of Florida. The Company is

no

longer subject to U.S. Federal or state income tax examinations by tax authorities for years before

2015.

The Company has reviewed and evaluated the relevant technical merits of each of its tax positions in accordance with accounting principles generally accepted in the United States of America for accounting for uncertainty in income taxes, and determined that there are

no

uncertain tax positions that would have a material impact on the financial statements of the Company. When applicable, interest and penalties will be reflected as a component of income tax expense.

XML

Note10 - Employee Benefit Plan

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

(

10

) EMPLOYEE BENEFIT PLAN:

The Company maintains a

401

(k) plan available to all employees who have satisfied certain eligibility requirements. Employee contributions are discretionary. The Company

may

match employee contributions and

may

also make discretionary contributions for all eligible employees based upon their total compensation. For

2018

and

2017,

the Company elected to match the employee’s contribution,

not

to exceed

4%

of compensation. The Company’s

401

(k) contributions were

$24,765

and

$14,235

for

2018

and

2017,

respectively.

XML

Note 11 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

(

1

1

)

COMMITMENTS AND CONTINGENCIES:

During

2017,

the Company filed a Complaint against the National Institutes of Health (the “NIH”) in the United States District Court for the Northern District of Florida, Gainesville Division. Pursuant to the Complaint, the Company is seeking an order requiring the NIH to provide the Company with records responsive to a request originally made by the Company to the NIH under the Freedom of Information Act on

October 19, 2016.

Subsequent to the filing of the Complaint, the Company received documents from the NIH with substantial redactions. Legal counsel is currently reviewing those documents and our options in connection with this proceeding.

From time to time, the Company is a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and records an expense for potential losses on such litigation if it is possible to estimate the amount of loss and if the amount of the loss is probable.

On

November 26, 2018,

we entered a new

two

-year lease for approximately

2,500

square feet of office and distribution warehouse space located in Gainesville, Florida for

$1,600

per month, with a

two

-year renewal option.

XML

Note 12 - Related Party Transactions

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

(

1

2

)

RELATED PARTY

TRANSACTIONS:

As discussed in Note

7

above, N. Scott Fine, our Chief Executive Officer and Chairman of the Board, was a principal of Scarsdale at the time we initially retained Scarsdale as our financial adviser, and his son is currently employed by Scarsdale, is active on our account and serves as our Corporate Secretary.

Since

October 2016,

we have paid a monthly fee of

$5,000

to a non-profit organization of which C.E. Rick Strattan is the Executive Director, in consideration of consulting services provided to us by Mr. Strattan. Mr. Strattan is our founder, former Chief Executive Officer and

one

of our directors.

During

2017,

Rebecca A. Fine, Mr. Fine’s daughter, was employed by us as an Executive Assistant and was paid an annual salary of

$60,000.

During

2018,

she was engaged by us as a contractor to provide those services at the rate of

$5,000

per month and received a bonus of

$5,000.

She is currently engaged by us as a contractor at the rate of

$5,800

per month.

Kevin J. Strattan, the son of C.E. Rick Strattan, has been employed by us since

2008,

and since

2014

has been our Vice President, Finance – Compensation. His annual salary increased from

$90,000

to

$100,000

in

November 2017

and to his current salary of

$107,200

in

October 2018.

In addition, he received a bonus of

$10,000

in

2018.

Corey E. Strattan, the daughter-in-law of C.E. Rick Strattan, has been employed by us since

2011

as a documentation specialist and logistics coordinator. During

2017

she was paid an annual salary of

$48,000.

In

January 2018,

her annual salary increased to

$72,000.

In

January 2019

her annual salary increased to

$78,000

her current salary. In addition, she received a bonus of

$5,000

in

2018.

XML

Significant Accounting Policies (Policies)

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Accounting Policies [Abstract]

Organization and Operations [Policy Text Block]

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in

August 1990,

as a Florida corporation with operations beginning in

July 1992.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol® Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol® Cyclo™ and in

January 2017

the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in

September 2017.

We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The

first

patient was dosed in our European study in

July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

(a) ORGANIZATION AND OPERATIONS––The Company was incorporated in

August 1990

as a Florida corporation, with operations beginning in

July 1992.

We are a biotechnology company that develops cyclodextrin-based products for the treatment of disease. We have filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) for our lead drug candidate, Trappsol

®

Cyclo™ as a treatment for Niemann-Pick Type C disease (“NPC”), a rare and fatal cholesterol metabolism disease that impacts the brain, lungs, liver, spleen, and other organs. The FDA approved our Investigational New Drug application (IND) which describes our Phase I clinical plans in the U.S. for Trappsol

®

Cyclo™ and in

January 2017

the FDA granted Fast Track designation to Trappsol

®

Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in

September 2017.

We have also filed Clinical Trial Applications with several European regulatory bodies, including those in the United Kingdom, Sweden and Italy, and in Israel, all of which have approved our applications. The

first

patient was dosed in our European study in

July 2017.

We also sell cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs with continuing growth in research and new product development. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business which had been primarily reselling basic cyclodextrin products. 

Basis of Accounting, Policy [Policy Text Block]

(b) BASIS OF PRESENTATION––The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form

10

-Q and Rule

10

-

01

of Regulation 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 recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the

three

month period ended

March 

31,

2019

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2019.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form

10

-K for the year ended

December 31, 2018,

as filed with the Securities and Exchange Commission on

March 15, 2019.

(b) BASIS OF PRESENTATION––The consolidated financial statements include the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents, Policy [Policy Text Block]

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of

three

months or less.

(c) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of

three

months or less.

Receivable [Policy Text Block]

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Based on our assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for uncollectible accounts was

not

deemed necessary at

March 31, 2019

and

December 31, 2018.

(d) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Customer account balances with invoices dated over

90

days old are considered past due. The Company does

not

accrue interest on past due accounts. Customer payments are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, applied to the oldest unpaid invoices.

The carrying amount of accounts receivable are reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will

not

be collected. The Company reviews each customer balance where all or a portion of the balance exceeds

90

days from the invoice date. Based on the Company’s assessment of the customer's current creditworthiness, the Company estimates the portion, if any, of the balance that will

not

be collected, and writes off receivables as a charge to the allowance for credit losses when, in management’s estimation, it is probable that the receivable is worthless. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, an allowance for doubtful accounts was

not

deemed necessary at

December 31, 2018

and

2017.

Inventory, Cash Flow Policy [Policy Text Block]

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol® Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (

first

-in,

first

-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does

not

include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete.  The reserve for obsolete inventory was

$39,700

at

March 31, 2019

and

December 31, 2018. 

(e) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of our pharmaceutical drug Trappsol

®

Cyclo™, cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (

first

-in,

first

-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does

not

include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete. The reserve for obsolete inventory was

$39,700

and

$27,500

at

December 31, 2018

and

2017,

respectively.

Property, Plant and Equipment, Policy [Policy Text Block]

(f) EQUIPMENT––Equipment is recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally

three

to

five

years for computers, and

seven

to

ten

years for equipment and office furniture).

(g) FURNITURE AND EQUIPMENT––Furniture and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally

three

to

five

years for computers and vehicles and

seven

to

ten

years for machinery, equipment and office furniture). We periodically review our long-lived assets to determine if the carrying value of assets

may

not

be recoverable. If an impairment is identified, we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset. 

Revenue [Policy Text Block]

(g) REVENUE RECOGNITION––Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018,

did

not

change our revenue recognition as the majority of our revenues continue to be recognized when the customer takes control of our product. As we did

not

identify any accounting changes that impacted the amount of reported revenues with respect to our product revenues and

no

adjustment to retained earnings was required upon adoption.

Under the new revenue standards, we recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the

five

step model prescribed under ASU

No.

2014

-

09:

(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other

third

-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is

one

year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified

one

performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do

not

differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,

may

be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will

not

occur in a future period. Actual amounts

may

ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note

6,

Revenues, to these condensed consolidated financial statements.

(h) REVENUE RECOGNITION–– Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018

did

not

change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did

not

identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues,

no

adjustment to retained earnings was required upon adoption.

Under the new revenue standards, revenues are recognized when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the

five

step model prescribed under ASU

No.

2014

-

09:

(i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

In the U.S. we sell our products to the end user or wholesale distributors. In other countries, we sell our products primarily to wholesale distributors and other

third

-party distribution partners. These customers subsequently resell our products to health care providers and patients.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is

one

year or less or the amount is immaterial.  We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified

one

performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

Reserves for Discounts and Allowances

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do

not

differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration typically utilize the most likely method and reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances,

may

be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will

not

occur in a future period. Actual amounts

may

ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

For additional information on our revenues, please read Note

2,

Revenues, to these consolidated financial statements.

Research and Development Expense, Policy [Policy Text Block]

(h) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

(k) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred.

Income Tax, Policy [Policy Text Block]

(i) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than

not

the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

(l) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than

not

the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

The Tax Cut and Jobs Act (the “Tax Act”) was enacted on

December 22, 2017.

The Tax Act contains several key provisions including, among other things, reducing the U.S. federal corporate tax rate from

35%

to

21%.

Changes in tax law are accounted for in the period of enactment. In addition, federal net operating losses (“NOLs”) generated during future periods will be carried forward indefinitely, but will be subject to an

80%

utilization against taxable income. The carryback provision has been revoked for NOLs after

January 1, 2018.

Earnings Per Share, Policy [Policy Text Block]

(j) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented.  Outstanding warrants to purchase

32,192,294

common shares and

28,500,478

common shares, for the

three

months ended

March 31, 2019

and

2018,

respectively, and

1,768,147

common shares that

may

be issued under warrants to purchase units sold in the Company’s private placements, were antidilutive for the

three

months ended

March 31, 2018

and

March 31, 2019,

and have been excluded from the calculation of loss per common share.

(m) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented, as convertible preferred stock and outstanding warrants to purchase

32,192,294

and

28,500,478

common shares were antidilutive for

2018

and

2017,

respectively.

Share-based Payment Arrangement [Policy Text Block]

(k) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants. An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

(n) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants.  An expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date.

Liquidity [Policy Text Block]

(l) LIQUIDITY AND GOING CONCERN––For the

three

months ended

March 31, 2019

and

2018,

the Company incurred net losses of

$1,904,166

and

$812,944.

At

March 31, 2019,

the Company had a cash balance of

$1,115,133

and its current assets less current liabilities were $(

949,171

). The Company has an accumulated deficit of

$19,491,866

at

March 31, 2019.

Our recent losses have predominantly resulted from research and development expenses for our Trappsol® Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC.

For year ended

December 31, 2018,

our operations used approximately

$3,188,000

in cash. This cash was provided primarily by cash on hand and net proceeds of

$4,102,000

from equity issuances. At

December 31, 2018,

the Company had a cash balance of

$2,217,000

and current assets less current liabilities of

$844,000.

We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we

may

be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

We have incurred losses from operations in each of our last

five

fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. There can be

no

assurance that the Company will be successful with these fundraising endeavors.   These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

(p) LIQUIDITY AND GOING CONCERN–– For the year ended

December 31, 2018

and

2017,

the Company incurred net losses of

$4,255,000

and

$3,833,000,

respectively. The Company has an accumulated deficit of approximately

$17,588,000

at

December 31, 2018.

Our recent losses have predominantly resulted from research and development expenses for our Trappsol

®

Cyclo™ product and other general operating expenses, including board advisory fees. We believe our expenses will continue to increase as we conduct clinical trials and continue to seek regulatory approval for the use of Trappsol

®

Cyclo™ in the treatment of NPC.

For year ended

December 31, 2018,

our operations used approximately

$3,188,000

in cash. This cash was provided primarily by cash on hand and net proceeds of

$4,102,000

from equity issuances. At

December 31, 2018,

the Company had a cash balance of

$2,217,000

and current assets less current liabilities of

$844,000.

We will need additional capital to maintain our operations, continue our research and development programs, conduct clinical trials, seek regulatory approvals and manufacture and market our products.

The Company has incurred losses from operations in each of the last

five

years. We will need to raise additional capital through the sale of our securities from time to time for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing and commercialization. Our ability to obtain such additional capital will likely be subject to various factors, including our overall business performance and market conditions. If we cannot raise the additional funds required for our anticipated operations, we

may

be required to reduce the scope of or eliminate our research and development programs, delay our clinical trials and the ability to seek regulatory approvals, downsize our general and administrative infrastructure, or seek alternative measures to avoid insolvency. If we raise additional funds through future offerings of shares of our Common Stock or other securities, such offerings would cause dilution of current stockholders’ percentage ownership in the Company, which could be substantial. Future offerings also could have a material and adverse effect on the price of our Common Stock.

Our consolidated financial statements for the year ended

December 31, 2018

and

2017

were prepared on the basis of a going concern which contemplates that we will be able to realize assets and discharge liabilities in the normal course of business. We have incurred losses from operations in each of our last

five

fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. These factors raise substantial doubt about our ability to continue as a going concern. The financial statements do

not

include any adjustments that might result from the outcome of these uncertainties.

Use of Estimates, Policy [Policy Text Block]

(m) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes, including contingencies. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(q) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

Fair Value Measurement, Policy [Policy Text Block]

(n) FAIR VALUE MEASUREMENTS AND DISCLOSURES––The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement,

not

an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have

no

assets or liabilities that are required to have their fair value measured on a recurring basis at

March 31, 2019

or

December 31, 2018. 

Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment. 

For short-term classes of our financial instruments which are

not

reported at fair value, the carrying amounts approximate fair value due to their short-term nature, which include cash, accounts receivable, and accounts payable.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At

March 31, 2019

and

December 31, 2018,

the carrying value of the mortgage note receivable approximates fair value. 

(o) FAIR VALUE MEASUREMENTS AND DISCLOSURES–The Fair Value Measurements and Disclosures topic of the Accounting Standards Codification (“ASC”) requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. The Fair Value Measurements and Disclosures topic emphasizes that fair value is a market-based measurement,

not

an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in

one

of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.

● Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

● Level 3: Unobservable inputs that are not corroborated by market data.

We have

no

assets or liabilities that are required to have their fair value measured on a recurring basis at

December 

31,

2018

or

2017.

  Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment.

For short-term classes of our financial instruments, which include cash, accounts receivable and accounts payable, and which are

not

reported at fair value, the carrying amounts approximate fair value due to their short-term nature.  The fair value of the mortgage note receivable is estimated based on the present value of the underlying cash flows discounted at current rates. At

December 31, 2018

and

2017,

the carrying value of the mortgage note receivable approximates fair value.

New Accounting Pronouncements, Policy [Policy Text Block]

(o) Accounting Standards Adopted––

● Leases - In February 2016, the FASB issued ASU 2016 - 02, “Leases (Topic 842 ),” (“ASU 2016 - 02” ), which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and financing leases with lease terms greater than twelve months.  The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment for prepaid and deferred rent and tenant incentives.  For income statement purposes, leases will continue to be classified as operating or financing with lease expense in both cases calculated substantially the same as under the prior leasing guidance. 

The Company adopted Topic

842

as of

January 1, 2019 (

the

first

day of fiscal

2019

).  See Note

7

(p)

Accounting Standards to be Adopted in Future Periods

––There are

no

outstanding accounting standards to be adopted that will have a material effect on the Company’s financial position and operations.

(r) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS–– In

August 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2016

-

15,

“Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).” The amendments in this ASU relate to

eight

specific types of cash receipts and cash payments which current U.S. generally accepted accounting principles (“U.S. GAAP”) either is unclear or does

not

include specific guidance on the cash flow classification issues. The amendments in this ASU are effective for public business entities for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. The Company adopted this ASU effective

January 1, 2018

and there was

no

significant impact on its consolidated financial statements and disclosures. 

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

), which requires that lessees recognize assets and liabilities for leases with lease terms greater than

12

months in the statement of financial position. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This update also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after

December 15, 2018,

including interim reporting periods within that reporting period. The Company will adopt this ASU effective

January 1, 2019

and does

not

expect a significant impact on its consolidated financial statements and disclosures. 

Between

May 2014

and

December 2016,

the FASB issued several ASUs on Revenue from Contracts with Customers (Topic

606

). These updates will supersede nearly all existing revenue recognition guidance under current U.S. GAAP. The core principle is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. A

five

-step process has been defined to achieve this core principle, and, in doing so, more judgment and estimates

may

be required within the revenue recognition process than are required under existing U.S. GAAP. The standards are effective for annual periods beginning after

December 15, 2017,

and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standards in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standards recognized at the date of adoption (which includes additional footnote disclosures). Effective

January 1, 2018,

the Company adopted the provisions of ASC

606

using the modified retrospective method. The adoption of the new revenue standards as of

January 1, 2018

did

not

change the Company’s revenue recognition as the majority of its revenues continues to be recognized when the customer takes control of the product. As the Company did

not

identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues,

no

adjustment to retained earnings was required upon adoption.

Mortgage Banking Activity [Policy Text Block]

(f) MORTGAGE NOTE RECEIVABLE––The mortgage note receivable is stated at amortized value, which is the amount we expect to collect. 

Revenue from Contract with Customer, Shipping and Handling Fees, Policy [Policy Text Block]

(i) SHIPPING AND HANDLING FEES––Shipping and handling fees, if billed to customers, are included in product sales. Shipping and handling costs associated with inbound and outbound freight are expensed as incurred and included in freight and shipping expense.

Advertising Cost [Policy Text Block]

(j) ADVERTISING––Advertising costs are charged to operations when incurred. We incur minimal advertising expenses.

XML

Note 6 - Revenues (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended
	March 31 ,
	2019		2018
Trappsol Cyclo	$	30,096	$	30,096
Trappsol HPB		70,867		74,762
Trappsol research		65,852		61,025
Aquaplex		52,560		29,455
Other		1,451		2,731
Total revenues	$	220,826	$	198,069

	Year Ended
	December 31 ,
	2018		2017
Trappsol ® Cyclo™	$	166,596	$	342,231
Trappsol ® HPB		484,101		710,939
Trappsol ® Fine Chemical		233,910		130,982
Aquaplex ®		116,806		17,760
Other		10,064		35,844
Total revenues	$	1,011,477	$	1,237,756

XML

Note 2 - Revenues (Tables)

3 Months Ended

12 Months Ended

Mar. 31, 2019

Dec. 31, 2018

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended
	March 31 ,
	2019		2018
Trappsol Cyclo	$	30,096	$	30,096
Trappsol HPB		70,867		74,762
Trappsol research		65,852		61,025
Aquaplex		52,560		29,455
Other		1,451		2,731
Total revenues	$	220,826	$	198,069

	Year Ended
	December 31 ,
	2018		2017
Trappsol ® Cyclo™	$	166,596	$	342,231
Trappsol ® HPB		484,101		710,939
Trappsol ® Fine Chemical		233,910		130,982
Aquaplex ®		116,806		17,760
Other		10,064		35,844
Total revenues	$	1,011,477	$	1,237,756

XML

Note 4 - Mortgage Note Receivable (Tables)

12 Months Ended

Dec. 31, 2018

Notes Tables

Schedule of Participating Mortgage Loans [Table Text Block]

Year Ending
December 31,	Principal
2019	$	37,439
2020		39,061
2021		40,754
2022		42,520
2023		7,339
Thereafter		-
	$	167,113

XML

Note 6 - Furniture and Equipment (Tables)

12 Months Ended

Dec. 31, 2018

Notes Tables

Property, Plant and Equipment [Table Text Block]

	2018		2017
Machinery and equipment	$	16,089	$	14,764
Office furniture		52,820		51,186
		68,909		65,950
Less: accumulated depreciation		50,338		40,214
Furniture and equipment, net	$	18,571	$	25,736

XML

Note 7 - Equity Transactions (Tables)

12 Months Ended

Dec. 31, 2018

Notes Tables

Schedule of Share-based Compensation, Stock Warrants Activity [Table Text Block]

Warrants outstanding, December 31, 2016	8,677,500
Issued	11,954,831
Exercised	-
Expired	-
Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

Warrants Issued	Exercise Price		Expiration Date
240,000	$	0.25	April 2021
103,500	$	1.00	July 2021
156,000	$	0.50	July 2022
78,000	$	0.50	August 2022
8,100,000	$	0.25	June 2023
5,754,831	$	0.35	February 2024
6,200,000	$	0.25	October 2024
8,040,000	$	0.25	April 23, 2025
3,519,963	$	0.65	December 2025
32,192,294

XML

Note 9 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Notes Tables

Summary of Operating Loss Carryforwards [Table Text Block]

Year Ending December 31,	Amount
2020	$	174,000
2021		71,000
2024		66,000
2028		7,000
2030		160,000
2031		73,000
2032		48,000
2034		727,000
2035		1,969,000
2036		2,867,000
2037		2,481,000
Indefinite		3,260,000
Total	$	11,903,000

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	2018			201 7
Deferred tax assets:
Net operating loss carryforwards	$	3,017,000		$	2,206,000
Tax credits		3,085,000			2,397,000
Impairment allowances		10,000			7,000
Stock compensation		64,000			20,000
Other		62,000			35,000
Less valuation allowance		(6,235,000	)		(4,660,000	)
Deferred tax asset, net of valuation		3,000			5,000
Deferred tax liabilities:
Property and equipment		(3,000	)		(5,000	)
Deferred tax liabilities		(3,000	)		(5,000	)
Net tax assets	$	-		$	-

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	2018			2017
Tax benefit (expense) at Federal statutory rate	$	894,000		$	1,303,000
Effect of State taxes		185,000			139,000
Tax credits		676,000			1,135,000
Nondeductible expenses		(180,000	)		(435,000	)
Tax Cuts and Jobs Act rate decrease		-			(1,098,000	)
Valuation allowance – deferred tax assets		(1,575,000	)		(1,044,000	)
Total tax benefit (provision)	$	-		$	-

XML

Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Inventory Valuation Reserves, Ending Balance	$ 39,700		$ 39,700	$ 27,500
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	32,192,294		32,192,294	28,500,478
Net Income (Loss) Attributable to Parent, Total	$ (1,904,166)	$ (812,944)	$ (4,255,033)	$ (3,833,060)
Cash and Cash Equivalents, at Carrying Value, Ending Balance	1,115,133	609,559	2,217,412	1,270,973	$ 960,197
Working Capital	(949,171)		844,000
Retained Earnings (Accumulated Deficit), Ending Balance	(19,491,866)		(17,587,700)	(13,332,667)
Net Cash Provided by (Used in) Operating Activities, Total	(1,225,233)	$ (737,697)	(3,188,440)	(3,062,482)
Proceeds from Issuance or Sale of Equity, Net of Issuance Costs			4,102,000
Fair Value, Recurring [Member]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	0		0	0
Assets, Fair Value Disclosure	$ 0		$ 0	$ 0
Warrants To Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	32,192,294	28,500,478
Warrants To Purchase Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,768,147	1,768,147
Computers and Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years		3 years
Computers and Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	5 years		5 years
Machinery and Furniture [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	7 years		7 years
Machinery and Furniture [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years		10 years

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Note 2 - Mortgage Note Receivable (Details Textual) - USD ($)	Jan. 21, 2016	Dec. 31, 2018
Proceeds from Sale of Property Held-for-sale	$ 10,000
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Face Amount of Mortgages	265,000	$ 167,113
Mortgage Loans on Real Estate, Monthly Payment	$ 3,653
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Interest Rate	4.25%

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Note 3 - Equity Transactions (Details Textual) - USD ($)		1 Months Ended	3 Months Ended			12 Months Ended
	Feb. 23, 2017	Apr. 30, 2018	Mar. 31, 2019	Mar. 31, 2018	Mar. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Share-based Payment Arrangement, Expense			$ 31,390	$ 14,190		$ 83,420	$ 118,680
Proceeds from Issuance of Private Placement				$ 74,983	$ 74,983
Warrants To Purchase Common Stock [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			32,192,294
Warrants To Purchase Common Stock [Member] | Minimum [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.25
Warrants To Purchase Common Stock [Member] | Maximum [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights			1
Warrants To Purchase Units [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 1,768,147
Warrants to Purchase Units Sold in May 2016 Private Placement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			480,000			480,000
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.25			$ 0.25
Warrants to Purchase Units Sold in February 2017 Private Placement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			164,074			164,074
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.35			$ 0.35
Warrants to Purchase Units Sold in October 2017 Private Placement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			600			600
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 100			$ 100
Private Placement [Member]
Proceeds from Issuance of Private Placement	$ 2,000,000	$ 2,010,000				$ 2,342,034

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Note 5 - Sales Concentrations (Details Textual) - Customer Concentration Risk [Member]	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Revenue Benchmark [Member]
Number of Major Customers	4	4	4	3
Revenue Benchmark [Member] | Four Major Customer [Member]
Concentration Risk, Percentage	76.00%	76.00%	57.00%
Accounts Receivable [Member]
Number of Major Customers	1		4
Accounts Receivable [Member] | Four Major Customer [Member]
Concentration Risk, Percentage			31.00%

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Note 6 - Revenues (Details Textual)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Number of Operating Segments	1		1
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers	4	4	4	3
Aquaplex [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers	1	1	1

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Note 6 - Revenues - Revenues by Product (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Revenues	$ 220,826	$ 198,069	$ 1,011,477	$ 1,237,756
Trappsol Cyclo [Member]
Revenues	30,096	30,096	166,596	342,231
Trappsol HPB [Member]
Revenues	70,867	74,762	484,101	710,939
Trappsol Research [Member]
Revenues	65,852	61,025
Aquaplex [Member]
Revenues	52,560	29,455	116,806	17,760
Product and Service, Other [Member]
Revenues	$ 1,451	$ 2,731	$ 10,064	$ 35,844

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Note 7 - Leases (Details Textual)	3 Months Ended
	Mar. 31, 2019 USD ($)
Operating Lease, Right-of-Use Asset, Amortization	$ 4,251
Operating Lease, Expense	$ 3,331
Office Building [Member]
Number of Operating Leases	1

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Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Inventory Valuation Reserves, Ending Balance	$ 39,700		$ 39,700	$ 27,500
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	32,192,294		32,192,294	28,500,478
Net Income (Loss) Attributable to Parent, Total	$ (1,904,166)	$ (812,944)	$ (4,255,033)	$ (3,833,060)
Retained Earnings (Accumulated Deficit), Ending Balance	(19,491,866)		(17,587,700)	(13,332,667)
Net Cash Provided by (Used in) Operating Activities, Total	(1,225,233)	(737,697)	(3,188,440)	(3,062,482)
Proceeds from Issuance or Sale of Equity, Net of Issuance Costs			4,102,000
Cash and Cash Equivalents, at Carrying Value, Ending Balance	1,115,133	$ 609,559	2,217,412	1,270,973	$ 960,197
Working Capital	(949,171)		844,000
Fair Value, Recurring [Member]
Assets, Fair Value Disclosure	0		0	0
Financial and Nonfinancial Liabilities, Fair Value Disclosure	$ 0		$ 0	$ 0
Computers and Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	3 years		3 years
Computers and Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	5 years		5 years
Machinery and Furniture [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life	7 years		7 years
Machinery and Furniture [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years		10 years

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Note 2 - Revenues (Details Textual)		3 Months Ended		12 Months Ended
	Jan. 01, 2017	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Number of Operating Segments		1		1
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers		4	4	4	3
Trappsol Cyclo [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member] | One Major Customer [Member]
Concentration Risk, Percentage	84.00%
Aquaplex [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers		1	1	1

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Note 2 - Revenues - Revenues by Product (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Revenues	$ 220,826	$ 198,069	$ 1,011,477	$ 1,237,756
Trappsol Cyclo [Member]
Revenues	30,096	30,096	166,596	342,231
Trappsol HPB [Member]
Revenues	70,867	74,762	484,101	710,939
Trappsol Fine Chemical [Member]
Revenues			233,910	130,982
Aquaplex [Member]
Revenues	52,560	29,455	116,806	17,760
Product and Service, Other [Member]
Revenues	$ 1,451	$ 2,731	$ 10,064	$ 35,844

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Note 3 - Major Customers and Suppliers (Details Textual)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Number of Vendors			3	3
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of Major Customers	4	4	4	3
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Four Major Customer [Member]
Concentration Risk, Percentage	76.00%	76.00%	57.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Three Major Customers [Member]
Concentration Risk, Percentage				59.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Number of Major Customers	1		4
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Major Customer [Member]
Concentration Risk, Percentage			31.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Three Major Customers [Member]
Concentration Risk, Percentage				27.00%
Revenue, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | Biopharmaceuticals [Member]
Concentration Risk, Percentage			17.00%	28.00%
Revenue, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | Basic Natural and Chemically Modified Cyclodexterins [Member]
Concentration Risk, Percentage			71.00%	71.00%
Revenue, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | Cyclodexterin Complexes [Member]
Concentration Risk, Percentage			12.00%	1.00%

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Note 4 - Mortgage Note Receivable (Details Textual) - USD ($)	Jan. 21, 2016	Dec. 31, 2018
Proceeds from Sale of Property Held-for-sale	$ 10,000
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Face Amount of Mortgages	265,000	$ 167,113
Mortgage Loans on Real Estate, Monthly Payment	$ 3,653
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate, Interest Rate	4.25%

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Note 4 - Mortgage Note Receivable - Scheduled Debt Principal Collections on Mortgage Note Receivable (Details) - USD ($)	Dec. 31, 2018	Jan. 21, 2016
2019	$ 37,439
2020	39,061
2021	40,754
2022	42,520
2023	7,339
Thereafter
	$ 167,113	$ 265,000

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Note 6 - Furniture and Equipment - Summary of Property and Equipment (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Property, plant and equipment, gross		$ 68,909	$ 65,950
Less: accumulated depreciation		50,338	40,214
Furniture and equipment, net	$ 18,411	18,571	25,736
Machinery and Equipment [Member]
Property, plant and equipment, gross		16,089	14,764
Office Furniture [Member]
Property, plant and equipment, gross		$ 52,820	$ 51,186

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Note 7 - Equity Transactions (Details Textual) - USD ($)				1 Months Ended				3 Months Ended			4 Months Ended	12 Months Ended
	May 23, 2018	Feb. 23, 2017	Jun. 06, 2016	Jan. 30, 2019	Apr. 30, 2018	Oct. 31, 2017	Apr. 30, 2014	Mar. 31, 2019	Mar. 31, 2018	Mar. 30, 2018	Apr. 30, 2018	Dec. 31, 2018	Dec. 31, 2017	May 22, 2018
Share-based Payment Arrangement, Expense								$ 31,390	$ 14,190			$ 83,420	$ 118,680
Equity Units, Number of Common Shares in Each Unit												1
Proceeds from Issuance of Private Placement									$ 74,983	$ 74,983
Common Stock, Shares Authorized	500,000,000							500,000,000				500,000,000	100,000,000	100,000,000
Conversion of Preferred Stock to Common Stock, Number of Shares Issued Per Share Converted	400
Increase (Decrease) in Number of Common Shares Outstanding	14,240,000
Series B Preferred Stock [Member]
Convertible Preferred Stock, Shares Issued upon Conversion						400
Preferred Stock, Liquidation Preference Per Share						$ 100
Scarsdale Agreement Warrants [Member]
Term of Warrant											7 years
Class of Warrant or Right, Percentage of Securities Issued Called by Warrants or Rights							6.00%
Class of Warrant or Right, Exercise Price, Percentage of Offering Price							100.00%
Warrants Issued with Units [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.35			$ 0.25						$ 0.25
Class of Warrant or Right, Number of Securities Called by Warrants or Rights					400						400
Warrants Issued to Scarsdale in Connection with Private Placement [Member]
Term of Warrant		7 years	7 years
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 0.35				$ 100
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		164,074				600
Warrant [Member]
Term of Warrant						7 years
Class of Warrant or Right, Exercise Price of Warrants or Rights						$ 0.25
Class of Warrant or Right, Number of Securities Called by Warrants or Rights						400
Warrants To Purchase Common Stock [Member]
Term of Warrant												7 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								32,192,294
Warrants to Purchase Units Sold in May 2016 Private Placement [Member]
Term of Warrant												7 years
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.25				$ 0.25
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								480,000				480,000
Warrants to Purchase Units Sold in February 2017 Private Placement [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 0.35				$ 0.35
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								164,074				164,074
Warrants to Purchase Units Sold in October 2017 Private Placement [Member]
Class of Warrant or Right, Exercise Price of Warrants or Rights								$ 100				$ 100
Class of Warrant or Right, Number of Securities Called by Warrants or Rights								600				600
Financial Advisory and Exclusive Placement Agent Agreement [Member] | Scarsdale [Member]
Private Placement Fee, Percentage of Proceeds							6.00%
Private Placement [Member]
Equity Units, Number of Series B Convertible Preferred Stock in Each Unit			1		1						1
Term of Warrant											7 years
Equity Units Issued During Period, Shares, New Issues		5,754,832			20,100							3,519,963
Shares Issued, Price Per Share		$ 0.35
Equity Units, Number of Common Shares in Each Unit		1
Equity Units, Warrant Component, Warrant Term		7 years
Proceeds from Issuance of Private Placement		$ 2,000,000			$ 2,010,000							$ 2,342,034
Stock Issued During Period, Shares, New Issues						15,500
Share Price					$ 100	$ 100					$ 100	$ 0.65
Payment for Cash Fee						$ 60,000						$ 50,000
Private Placement [Member] | Subsequent Event [Member]
Proceeds from Issuance of Private Placement				$ 130,063
Private Placement [Member] | Series B Preferred Stock [Member]
Convertible Preferred Stock, Shares Issued upon Conversion					400						400
Private Placement [Member] | Scarsdale [Member]
Payments of Stock Issuance Costs		153,000
Private Placement [Member] | Another Party with Respect to Private Placement [Member]
Payments of Stock Issuance Costs		$ 10,000
Employee, Board Members, and the Company Secretary [Member]
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture													292,000

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Note 7 - Equity Transactions - Common Stock Warrants Outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Warrants outstanding (in shares)	20,632,331	8,677,500
Issued (in shares)	11,559,963	11,954,831
Exercised (in shares)
Expired (in shares)
Warrants outstanding (in shares)	32,192,294	20,632,331

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Note 7 - Equity Transactions - Summary of Warrants Outstanding, Exercise Price, and Expiration Dates (Details) - $ / shares	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Warrants Issued (in shares)	32,192,294	20,632,331	8,677,500
Warrants Issued (in shares)	32,192,294	20,632,331	8,677,500
Warrants Expiring in April 2021 [Member]
Warrants Issued (in shares)	240,000
Exercise Price (in dollars per share)	$ 0.25
Warrants Issued (in shares)	240,000
Warrants Expiring in July 2021 [Member]
Warrants Issued (in shares)	103,500
Exercise Price (in dollars per share)	$ 1
Warrants Issued (in shares)	103,500
Warrants Expiring in July 2022 [Member]
Warrants Issued (in shares)	156,000
Exercise Price (in dollars per share)	$ 0.50
Warrants Issued (in shares)	156,000
Warrants Expiring in August 2022 [Member]
Warrants Issued (in shares)	78,000
Exercise Price (in dollars per share)	$ 0.50
Warrants Issued (in shares)	78,000
Warrants Expiring in June 2023 [Member]
Warrants Issued (in shares)	8,100,000
Exercise Price (in dollars per share)	$ 0.25
Warrants Issued (in shares)	8,100,000
Warrants Expiring in February 2024 [Member]
Warrants Issued (in shares)	5,754,831
Exercise Price (in dollars per share)	$ 0.35
Warrants Issued (in shares)	5,754,831
Warrants Expiring in October 2024 [Member]
Warrants Issued (in shares)	6,200,000
Exercise Price (in dollars per share)	$ 0.25
Warrants Issued (in shares)	6,200,000
Warrants Expiring in April 23, 2025 [Member]
Warrants Issued (in shares)	8,040,000
Exercise Price (in dollars per share)	$ 0.25
Warrants Issued (in shares)	8,040,000
Warrants Expiring in December, 2025 [Member]
Warrants Issued (in shares)	3,519,963
Exercise Price (in dollars per share)	$ 0.65
Warrants Issued (in shares)	3,519,963

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Note 8 - Preferred Stock (Details Textual) - $ / shares	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Oct. 31, 2017	Oct. 17, 2017	Dec. 31, 2004
Preferred Stock, Shares Authorized	5,000,000	5,000,000				5,000,000
Preferred Stock, Shares Outstanding, Ending Balance		0
Series B Preferred Stock [Member]
Preferred Stock, Shares Authorized		0	5,000,000		50,000
Preferred Stock, Shares Outstanding, Ending Balance		0	15,500
Preferred Stock, Shares Issued, Total		0	15,500		35,600
Convertible Preferred Stock, Shares Issued upon Conversion				400
Preferred Stock, Liquidation Preference Per Share				$ 100

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Note 9 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Deferred Tax Asset Based Upon Expected Income Tax Rates			$ 6,235,000
Valuation Allowance Percentage			100.00%
Operating Loss Carryforwards, Total			$ 11,903,000
Income Tax Expense (Benefit), Total			0	$ 0
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount			1,575,000	$ 1,044,000
SEC Schedule, 12-09, Valuation Allowances and Reserves, Amount, Ending Balance			768,000
Orphan Drug Credit [Member]
Tax Credit Carryforward, Amount			$ 3,085,000

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Note 9 - Income Taxes - Summary of Net Operating Loss Carryforward Expirations (Details)	Dec. 31, 2018 USD ($)
Net operating loss carryforwards	$ 11,903,000
Expiring in Tax Year 2020 [Member]
Net operating loss carryforwards	174,000
Expiring in Tax Year 2021 [Member]
Net operating loss carryforwards	71,000
Expiring in Tax Year 2024 [Member]
Net operating loss carryforwards	66,000
Expiring in Tax Year 2028 [Member]
Net operating loss carryforwards	7,000
Expiring in Tax Year 2030 [Member]
Net operating loss carryforwards	160,000
Expiring in Tax Year 2031 [Member]
Net operating loss carryforwards	73,000
Expiring in Tax Year 2032 [Member]
Net operating loss carryforwards	48,000
Expiring in Tax Year 2034 [Member]
Net operating loss carryforwards	727,000
Expiring in Tax Year 2035 [Member]
Net operating loss carryforwards	1,969,000
Expiring in Tax Year 2036 [Member]
Net operating loss carryforwards	2,867,000
Expiring in Tax Year 2037 [Member]
Net operating loss carryforwards	2,481,000
Expiring in Tax Year indefinite [Member]
Net operating loss carryforwards	$ 3,260,000

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Note 9 - Income Taxes - Summary of Significant Components of Deferred Federal Income Taxes (Details) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Net operating loss carryforwards	$ 3,017,000	$ 2,206,000
Tax credits	3,085,000	2,397,000
Impairment allowances	10,000	7,000
Stock compensation	64,000	20,000
Other	62,000	35,000
Less valuation allowance	(6,235,000)	(4,660,000)
Deferred tax asset, net of valuation	3,000	5,000
Deferred tax liabilities:
Property and equipment	(3,000)	(5,000)
Deferred tax liabilities	(3,000)	(5,000)
Net tax assets

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Note 9 - Income Taxes - Summary of Differences Between the Effective Income Tax Rate Reflected in Benefit (Provision) for Income Taxes Amount (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Tax benefit (expense) at Federal statutory rate			$ 894,000	$ 1,303,000
Effect of State taxes			185,000	139,000
Tax credits			676,000	1,135,000
Nondeductible expenses			(180,000)	(435,000)
Tax Cuts and Jobs Act rate decrease				(1,098,000)
Valuation allowance – deferred tax assets			(1,575,000)	(1,044,000)
Total tax benefit (provision)			$ 0	$ 0

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Note10 - Employee Benefit Plan (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	4.00%	4.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 24,765	$ 14,235

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Note 11 - Commitments and Contingencies (Details Textual) - Office and Distribution Warehouse Space [Member]	Nov. 26, 2018 USD ($) ft²
Lessee, Operating Lease, Term of Contract	2 years
Area of Leasing Property | ft²	2,500
Operating Lease, Monthly Payment | $	$ 1,600
Lessee, Operating Lease, Renewal Term	2 years

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Note 12 - Related Party Transactions (Details Textual) - USD ($)	1 Months Ended			2 Months Ended	12 Months Ended		22 Months Ended	27 Months Ended
	Jan. 31, 2019	Oct. 30, 2018	Jan. 31, 2018	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Oct. 31, 2017	Dec. 31, 2018
C.E. Rick Strattan [Member]
Payments for Non-profit Organization, Monthly Fee								$ 5,000
Rebecca A. Fine [Member]
Annual Salary for Executive Assistant						$ 60,000
Independent Contractor, Service, Monthly Rate					$ 5,000
Independent Contractor, Bonus					5,000
Independent Contractor, Monthly Rate					5,800
Kevin J. Stratton [Member]
Annual Salary for Vice President, Finance		$ 107,200		$ 100,000			$ 90,000
Bonus for Vice President, Finance					10,000
Corey E. Strattan [Member]
Annual Salary for Documentation Specialist and Logistics Coordinator	$ 78,000		$ 72,000			$ 48,000
Bonus for Documentation Specialist and Logistics Coordinator					$ 5,000