10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

☒   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 For the fiscal year ended December 31, 2019

☐   Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period from ____________ to ___________

Commission file number 0-25466

	CYCLO THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)

Florida	59-3029743
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

6714 NW 16th Street, Suite B, Gainesville, Florida	32653
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (386) 418-8060

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
N/A	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $0.0001

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No ☒ 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐   No ☒ 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒    No ☐ 

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	☒	Smaller reporting company	☒
		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 13(a) of the Exchange Act.                             ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐    No ☒ 

As of June 30, 2019, the aggregate market value of the registrant’s Common Stock held by non-affiliates was $25,510,459 based on the closing price on the over-the-counter market of such Common Stock on such date. 

As of March 15, 2020, there were 121,671,462 shares of registrant’s Common Stock outstanding.

CYCLO THERAPEUTICS, INC.

ANNUAL REPORT ON FORM 10-K

For the Year Ended December 31, 2019

Table of Contents

Item	Description	Page
	Part I
1.	Business	1
1A.	Risk Factors	6
1B.	Unresolved Staff Comments	10
2.	Properties	10
3.	Legal Proceedings	11
4.	Mine Safety Disclosures	11
	Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
6.	Selected Financial Data	12
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
7A.	Quantitative and Qualitative Disclosures About Market Risk	17
8.	Financial Statements and Supplementary Data	F-1
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
9A.	Controls and Procedures	18
9B.	Other Information	19
	Part III
10.	Directors, Executive Officers and Corporate Governance	20
11.	Executive Compensation	23
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	25
13.	Certain Relationships and Related Transactions and Director Independence	27
14.	Principal Accountant Fees and Services	28
	Part IV
15.	Exhibits, Financial Statement Schedules	30
Signatures		32

PART I

Item 1.  Business.

Overview

Cyclo Therapeutics, 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. to CTD Holdings, Inc. We changed our name to Cyclo Therapeutics, Inc. in September 2019 to better reflect our current business.

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. Enrollment in this study was completed in October 2019, with initial results expected in the second quarter of 2020.

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, and in February 2020, the Company announced completion of enrollment of 12 patients in this study.

Preliminary data from our clinical studies suggests that Trappsol^® Cyclo^TM crosses the blood-brain-barrier in individuals suffering from NPC. Following intravenous administration of Trappsol^® Cyclo^TM 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. 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. In October 2019 we entered into an agreement with Worldwide Clinical Trials, a Contract Research Organization, to conduct a clinical trial to evaluate the safety and efficacy of Trappsol® Cyclo™ for 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.

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.

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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.

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 85% and 15%, respectively, of our 2019 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, 2019, our revenues consisted of 10% biopharmaceuticals, 75% basic natural and chemically modified cyclodextrins, and 15% 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.

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The majority of our revenues are from five to ten customers who have historically been repeat purchasers. In 2019 and 2018, one customer (UNO Healthcare, Inc.) that has historically been a large customer, accounted for 14% and 15% of our total revenue, respectively.  In addition, another customer that was not previously a large customer accounted for 25% of our total revenue in 2019.  Sigma-Aldrich Fine Chemical, Inc. accounted for almost 100% and 95% of our 2019 and 2018 annual sales, respectively, 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.

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 $4,869,000 in 2019, from $2,711,000 in 2018.

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. Enrollment in this study was completed in October 2019, with initial results expected in the second quarter of 2020. 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, and in February 2020, the Company announced completion of enrollment of 12 patients in this study.

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 December 31, 2019, we employed eight 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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Item 1A.  Risk Factors.

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

We have incurred net losses of approximately $7.5 million and $4.3 million for the years ended December 31, 2019 and December 31, 2018, respectively. Our recent losses have predominantly resulted from research and development expenses for our Trappsol^® Cyclo™ product and other general operating expenses, including personnel costs. 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, 2019, 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. A “going concern” opinion could impair our ability to finance our operations through the sale of equity. 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 year ended December 31, 2019, our operations used approximately $6,589,000 in cash. This cash was provided primarily by cash on hand and net proceeds of $7,120,000 from equity issuances. 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 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. 

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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.

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

We rely on contract research organizations (“CROs”), 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™.

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We are subject to risks arising from the recent global outbreak of the COVID-19 coronavirus.

The recent outbreak of the COVID-19 coronavirus has spread across the globe and is impacting worldwide economic activity. A pandemic, including COVID-19 or other public health epidemic, poses the risk that we or our employees, CROs, suppliers, manufacturers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to the spread of the disease or shutdowns that may be requested or mandated by governmental authorities.  While it is not possible at this time to estimate the full impact that COVID-19 could have on our business, the continued spread of COVID-19 could disrupt our clinical trials, supply chain and the manufacture or shipment of our cyclodextrin products, and other related activities, which could have a material adverse effect on our business, financial condition and results of operations. COVID-19 has also had an adverse impact on global economic conditions which could impair our ability to raise capital when needed. While we have not yet experienced any disruptions in our business or other negative consequences relating to COVID-19, the extent to which the COVID-19 pandemic impacts our results will depend on future developments that are highly uncertain and cannot be predicted.

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 25% of our total sales in fiscal 2019. Our largest four customers collectively accounted for 70% of total sales in fiscal 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.

8

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

As of March 15, 2020, 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.

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 Sharon Hrynkow, Ph.D., 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 independent Board committees.

Our audit, compensation and governance committees are not comprised exclusively of independent directors. Although 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.

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, 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.

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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.

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.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2.  Properties.

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.

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Item 3.  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.

Item 4.  Mine Safety Disclosures.

Not applicable.

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PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our Common Stock currently trades on the OTCQB under the symbol CTDH. The following table sets forth high and low bid quotations for the quarters indicated as reported by the OTCQB.

		High		Low
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	$	0.84	$	0.33
	Third Quarter	$	0.40	$	0.16
	Fourth Quarter	$	0.44	$	0.17

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 March 15, 2020, 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 160.

Dividend Policy

The Company paid no dividends in 2019 and will not pay any cash dividends on its Common Stock in 2020 because it intends to retain its earnings to finance the expansion of its business. Any future declaration of dividends will be determined by the Board of Directors in light of conditions then existing, including without limitation the company’s financial condition, capital requirements and business condition.

Item 6.  Selected Financial Data

Not applicable.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

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. Enrollment in this study was completed in October 2019, with initial results expected in the second quarter of 2020.

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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, and in February 2020, the Company announced completion of enrollment of 12 patients in this study.

Preliminary data from our clinical studies suggests that Trappsol^® Cyclo^TM crosses the blood-brain-barrier in individuals suffering from NPC. Following intravenous administration of Trappsol^® Cyclo^TM 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. 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. In October 2019, we entered into an agreement with Worldwide Clinical Trials, a Contract Research Organization, to conduct a clinical trial to evaluate the safety and efficacy of Trappsol® Cyclo™ for 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.

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 $104,000 for 2019 from $167,000 for 2018. 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.

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Liquidity and Capital Resources

Our cash increased to $2,784,000 as of December 31, 2019, from $2,217,000 at December 31, 2018, primarily as the result of net proceeds of approximately $6,990,000 generated by the sale of our equity securities in the private placement we closed in May 2019. Our current assets less current liabilities was approximately $817,000 at December 31, 2019 compared to approximately $844,000 at December 31, 2018.  Cash used in operations for 2019 increased to $6,589,000 compared to $3,188,000 for 2018.   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 raise. 

We plan to use the proceeds of the sale of our securities primarily for the development of our Trappsol^® Cyclo™ orphan drug product, including in connection with our continuing International Clinical Program and U.S. clinical trials, and other general corporate purposes.  

The Company has continued to realize losses from operations. We will need to raise additional capital to support our ongoing operations and continue our clinical trials. While we presently lack sufficient cash to meet our anticipated operating costs and capital expenditure requirements through April 2021, 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. There can be no guarantee that the Company will be successful in its ability to raise capital to fund future operational and development initiatives. Our need for additional capital as described above raises 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.

Our consolidated financial statements for the years ended December 31, 2019 and 2018 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 six fiscal years. Our ability to continue as a going concern is dependent upon the availability of equity financing as noted above.

At December 31, 2019, we had approximately $18,335,000 in net state and federal operating loss carryforwards expiring from 2020 through 2037, including $9,692,000 that will not expire, that can be used to offset our current and future taxable net income and reduce our income tax liabilities. We have provided a 100% valuation allowance on our deferred tax asset based on our expected future expenses related to our clinical trials and other development initiatives.

We had no off-balance sheet arrangements as of December 31, 2019.

Results of Operations - 2019 compared to 2018

For 2019, we incurred a net loss of $7,532,500, compared to a net loss in 2018 of $4,255,000. Total revenues for 2019 were $1,007,000 compared to $1,011,000 for 2018.  

Our change in the mix of our product sales for 2019 and 2018 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 38% to $104,000 for 2019 from $167,000 for 2018. The population of patients who use the product on a compassionate basis is small.   

Trappsol^® HPB

Our sales of Trappsol® HPB decreased 1% to $481,000 for 2019 from $484,000 for 2018.

Trappsol^® other products

Our sales of other Trappsol® products increased 14% to $266,000 for 2019 from $234,000 for 2018.

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Aquaplex^®

Our sales of Aquaplex^® increased to $150,000 for 2019 compared to $117,000 for 2018, 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 $149,250 in 2019, $111,000 in 2018, $17, 000 in 2017, $134, 000 in 2016, and $75, 000 in 2015.

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 2019, our five largest customers (Charles River Laboratories, Inc., Ventana Medical Systems, Inc., Sigma-Aldrich Fine Chemicals, Inc., Uno Healthcare, and Thermofisher Scientific Diagnostics, Inc.) accounted for 78% of our revenues, and the largest accounted for 25% of our revenues. 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. 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 decreased to $75,500 for 2019 compared to $105,000 for 2018. Our cost of products sold as a percentage of product sales was 7.5% for 2019 and 10% for 2018.  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 and the related margin. We did not experience any significant increases in material costs during 2019 or 2018.

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.

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 63% to $1,906,000 for 2019, from $1,172,000 for 2018.  In June 2019 we hired a Chief Financial Officer on a part-time basis, and in September 2019 we hired a Global Head of Regulatory Affairs. Increased personnel expenses reflect compensation expense and stock awards. We expect to maintain our level of employees and related costs in the near term.

Research and development expenses increased 80% to $4,869,000 for 2019, from $2,711,000 for 2018. The increase in research and development expenses is due to increased activity in our International Clinical Program and U.S. clinical trials. We expect research and development costs to further increase in 2020 as we continue to seek regulatory approval for the use of Trappsol^® Cyclo™ in the treatment of NPC and Alzheimer’s disease.

Repairs and maintenance expenses increased 117% to $8,000 for 2019 from $4,000 for 2018. This increase is due to varying levels of maintenance required on equipment and rental facilities. We expect our repairs and maintenance expenses to remain consistent in 2020.

Professional fees decreased 29% to $572,000 for 2019 from $809,000 for 2018.  In 2019 there was reduced activity in our lawsuit against the NIH, which we have discontinued, 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 increased 139% to $845,000 for 2019 from $354,000 for 2018. Office and other expenses include costs for travel to, and participation in, industry conferences and similar events, which vary from period to period, and investor relations expenses.

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Board of Directors fees and costs increased to $109,000 for 2019 from $95,000 for 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.

Amortization and depreciation decreased to $6,000 for 2019 from $10,000 for 2018.  These expenses fluctuate slightly with equipment purchases and dispositions.

Freight and shipping expenses were $6,000 for 2019 and 2018. 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 and expired inventory of $154,000 and $12,150 for 2019 and 2018, respectively.

We increased our valuation allowance to allow for 100% of the 2019 increase in our deferred tax asset and did not recognize an income tax benefit or provision for 2019 and 2018.

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. 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.

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

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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, 2019, we fully reserved for our net deferred tax asset with a $8,881,000 valuation allowance. We increased our valuation allowance by $2,645,000 in 2019 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, 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.

Forward-looking Statements

This Annual Report on Form 10-K contains forward-looking statements that reflect our current expectations about our future results, performance, prospects and opportunities. These forward-looking statements are subject to significant risks, uncertainties, and other factors, including those identified in "Risk Factors" above, which may cause actual results to differ materially from those expressed in, or implied by, any forward-looking statements. The forward-looking statements within this Form 10-K may be identified by words such as "believes," "anticipates," "expects," "intends," "may," "would," "will" and other similar expressions. However, these words are not the exclusive means of identifying these statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances occurring subsequent to the filing of this Form 10-K with the SEC or for any other reason. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the SEC that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

17

Item 8.  Financial Statements and Supplementary Data.

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm – WithumSmith+Brown, PC	F-2
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2019 and 2018	F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2019 and 2018	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders,

Cyclo Therapeutics, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Cyclo Therapeutics, Inc., formerly known as CTD Holdings, Inc., and subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2019, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, 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 consolidated 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.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of ASU 2016-02, Leases (Topic 842). 

/s/ WithumSmith+Brown, PC

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

Orlando, Florida

March 30, 2020

F-2

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2019			2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,783,719		$	2,217,412
Accounts receivable		143,429			80,044
Inventory, net		242,630			416,531
Current portion of mortgage note receivable		39,061			37,439
Prepaid insurance and services		137,069			18,185
Prepaid clinical expenses		612,161			-
Total current assets		3,958,069			2,769,611
FURNITURE AND EQUIPMENT, NET		13,546			18,571
RIGHT-TO-USE LEASE ASSET, NET		51,017			-
MORTGAGE NOTE RECEIVABLE, LESS CURRENT PORTION		90,596			129,674
TOTAL ASSETS	$	4,113,228		$	2,917,856
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of lease liability	$	16,385		$	-
Accounts payable and accrued expenses		3,124,735			1,925,332
Total current liabilities		3,141,120			1,925,332
LONG-TERM LEASE LIABILITY		36,126			-
STOCKHOLDERS' EQUITY
Common stock, par value $.0001 per share, 500,000,000 shares authorized, 121,564,990 and 90,759,324 shares issued and outstanding at December 31, 2019 and 2018, respectively		12,155			9,075
Preferred stock, par value $.0001 per share, 5,000,000 shares authorized, 0 outstanding		-			-
Additional paid-in capital		26,044,060			18,701,211
Stock subscription receivable		-			(130,062	)
Accumulated deficit		(25,120,233	)		(17,587,700	)
Total stockholders' equity		935,982			992,524
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	4,113,228		$	2,917,856

See accompanying Notes to Consolidated Financial Statements.

F-3

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2019			2018
REVENUES
Product sales	$	1,007,198		$	1,011,477
EXPENSES
Personnel		1,906,438			1,171,941
Cost of products sold (exclusive of direct and indirect overhead and handling costs)		75,493			105,026
Research and development		4,869,160			2,711,275
Repairs and maintenance		8,295			3,821
Professional fees		571,937			808,770
Office and other		845,624			354,102
Board of Directors fees and costs		109,473			95,431
Depreciation		5,681			10,124
Freight and shipping		5,885			5,643
Inventory write down		153,772			12,150
Total operating expenses		8,551,758			5,278,283
LOSS FROM OPERATIONS		(7,544,560	)		(4,266,806	)
OTHER INCOME
Investment and other income		12,027			11,773
LOSS BEFORE INCOME TAXES		(7,532,533	)		(4,255,033	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(7,532,533	)	$	(4,255,033	)
BASIC AND FULLY DILUTED NET LOSS PER COMMON SHARE	$	(0.07	)	$	(0.05	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		108,191,753			81,756,839

See accompanying Notes to Consolidated Financial Statements.

F-4

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2019 AND 2018

	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
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
Collection of subscription receivable		-		-		-			-			-			130,062			-			130,062
Sale of common stock, net of issuance fees		29,770,000		2,977		-			-			6,986,623			-			-			6,989,600
Stock-based compensation		1,035,666		103		-			-			356,226			-			-			356,329
Net loss		-		-		-			-			-			-			(7,532,533	)		(7,532,533	)
Balance, December 31, 2019		121,564,990	$	12,155		-		$	-		$	26,044,060		$	-		$	(25,120,233	)	$	935,982

See accompanying Notes to Consolidated Financial Statements.  

F-5

 CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(7,532,533	)	$	(4,255,033	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		5,681			10,124
Accrued stock compensation to employees		19,340			19,400
Accrued stock compensation to nonemployees		61,030			64,020
Issuance of stock-based compensation		356,329			-
Inventory valuation allowance		13,265			12,150
Increase or decrease in:
Accounts receivable		(63,385	)		(23,184	)
Inventory		160,636			42,540
Prepaid clinical expenses		(612,161	)		-
Prepaid insurance and services		(118,884	)		42,661
Other		2,162			-
Accounts payable and accrued expenses		1,119,033			898,882
Total adjustments		943,046			1,066,593
NET CASH USED IN OPERATING ACTIVITIES		(6,589,487	)		(3,188,440	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment		(1,324	)		(2,959	)
Proceeds from mortgage note receivable		37,456			35,899
NET CASH PROVIDED BY INVESTING ACTIVITIES		36,132			32,940
CASH FLOWS FROM FINANCING ACTIVITIES
Collection of stock subscription receivable		130,062			-
Proceeds from sale of common stock, preferred stock and warrants, net of issuance costs		6,989,600			4,101,939
NET CASH PROVIDED BY FINANCING ACTIVITIES		7,119,662			4,101,939
NET INCREASE IN CASH AND CASH EQUIVALENTS		566,307			946,439
CASH AND CASH EQUIVALENTS, beginning of year		2,217,412			1,270,973
CASH AND CASH EQUIVALENTS, end of year	$	2,783,719		$	2,217,412
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
NONCASH INVESTING AND FINANCING ACTIVITIES
Capitalization of right-to-use asset and lease liability	$	68,022		$	-
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-6

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of Cyclo Therapeutics, Inc. (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, under the name Cyclodextrin Technologies Development, Inc. with operations beginning in July 1992. In conjunction with a restructuring in 2000, we changed our name to CTD Holdings, Inc. We changed our name to Cyclo Therapeutics, Inc. in September 2019 to better reflect our current business. 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. Enrollment in this study was completed in October 2019, with initial results expected in the second quarter of 2020. 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 this study in July 2017, and in February 2020, the Company announced completion of enrollment of 12 patients in this study. More recently, we began exploring the use of cyclodextrins in the treatment of Alzheimer's disease, and in October 2019 entered into an agreement with a Contract Research Organization to conduct a clinical trial to evaluate the safety and efficacy of Trappsol® Cyclo™ for the treatment of this disease.

We also 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 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, 2019 and 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 $52,900 and $39,700 at December 31, 2019 and 2018, respectively. The Company’s reserve for obsolete inventory is based on the Company’s best estimates of product sales and customer demands. It is reasonably possible that the estimates used by the Company to determine its provisions for inventory write-downs will be material different from actual write-downs. These differences could result in materially higher than expected inventory provisions and related costs, which could have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

F-7

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

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

(f) PREPAID CLINICAL EXPENSES––Prepaid clinical expenses consist of our pharmaceutical drug Trappsol® Cyclo™ expected to be used in our clinical trial program recorded at cost.

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

(h) 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. 

(i) 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.

F-8

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

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

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.

(j) 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.

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

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

(m) 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.

(n) 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 63,321,294 and 32,192,294 common shares were antidilutive for 2019 and 2018, respectively.

(o) 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.

(p) 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.

F-9

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

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

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, 2019 or 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 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, 2019 and 2018, the carrying value of the mortgage note receivable approximates fair value.

(q) LIQUIDITY AND GOING CONCERN––For the years ended December 31, 2019 and 2018, the Company incurred net losses of $7,533,000 and $4,255,000, respectively. The Company has an accumulated deficit of approximately $25,120,000 at December 31, 2019. Our recent losses have predominantly resulted from research and development expenses for our Trappsol^® Cyclo™ product and other general operating expenses, including personnel expenses and 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, 2019, our operations used approximately $6,589,000 in cash. This cash was provided primarily by cash on hand and net proceeds of $7,120,000 from equity issuances. At December 31, 2019, the Company had a cash balance of $2,784,000 and current assets less current liabilities of $817,000. 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 six 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 years ended December 31, 2019 and 2018 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.

F-10

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

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

(r) 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. The Company’s most significant estimate relates to inventory obsolescence. 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.

(s) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS––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 became effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period. The Company adopted Topic 842 as of January 1, 2019. See Note 7.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 simplify the accounting for income taxes by removing certain exceptions to the general principles and clarifying a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU 2019-12 are effective for years beginning after December 15, 2020. The Company does not expect this ASU to have a material impact on its consolidated financial statements.

(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(i) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Year Ended
	December 31,
	2019		2018
Trappsol® Cyclo™	$	103,596	$	166,596
Trappsol® HPB		481,379		484,101
Trappsol® Fine Chemical		265,947		233,910
Aquaplex®		149,878		116,806
Other		6,398		10,064
Total revenues	$	1,007,198	$	1,011,477

Substantially all of our sales of Trappsol^® Cyclo™ for the years ended December 31, 2019 and 2018 were to a single customer who exports the drug to South America. Substantially all of our Aquaplex^® sales are to one customer.

F-11

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

(3) MAJOR CUSTOMERS AND SUPPLIERS:

Our revenues are derived primarily from chemical supply and pharmaceutical companies located primarily in the United States. In 2019, four major customers accounted for 70% of total revenues. Accounts receivable balances for these major customers represent 95% of total accounts receivable at December 31, 2019. 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.

Substantially all inventory purchases were from three vendors in 2019 and 2018. 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, 2019, the product mix of our revenues consisted of 10% biopharmaceuticals, 75% basic natural and chemically modified cyclodextrins, and 15% cyclodextrin complexes. 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.

(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 remaining on this mortgage are as follows:

Year Ending
December 31,	Principal
2020	$	39,061
2021		40,754
2022		42,520
2023		7,322
	$	129,657

(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-12

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018

(6) FURNITURE AND EQUIPMENT:

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

	2019		2018
Machinery and equipment	$	16,524	$	16,089
Office furniture		49,490		52,820
		66,014		68,909
Less: accumulated depreciation		52,468		50,338
Furniture and equipment, net	$	13,546	$	18,571

(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.

F-13

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018

 (7) LEASES: (CONTINUED)

Operating lease assets are recorded net of accumulated amortization of $17,006 as of December 31, 2019. Lease expense for lease payments are recognized on a straight-line basis over the lease term.   Lease expense for the years ended December 31, 2019 and 2018 was $17,006 and $22,249, respectively.

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of December 31, 2019:

Year ending December 31,	Amounts
2020	$	19,170
2021		19,170
2022		19,170
2023		1,598
2024		-
Total	$	59,108

(8) EQUITY TRANSACTIONS:

The Company expensed $168,120 and $83,420 in employee and board member stock compensation in 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. Stock compensation expense for board members is included in “Board of Directors fees and costs” on our statement of operations, and stock compensation expense for officers and employees that are not board members is included in “Personnel” on our statement of operations.  In 2019, the Company issued 450,000 shares of Common Stock to employees as a bonus with a value of $87,750, and issued 241,666 shares as a bonus to advisory board members with a value of $109,908. In addition, the Company issued 344,000 shares of Common Stock in 2019 to board members and officers with a value of $158,670  at the time of issuance, with respect to which compensation expense had been accrued with respect to 172,000 of such shares in 2018 and 172,000 of such shares in 2017.  In 2018, the Company did not issue shares of Common Stock for compensation.

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, Joshua M. Fine, was employed by Scarsdale at the time of its initial engagement by us and active on our account until his appointment as our Chief Financial Officer in June 2019.

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 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. 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.

F-14

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

(8) EQUITY TRANSACTIONS: (CONTINUED)

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 of its securities to a group of accredited investors that included several directors of the Company and members of management. Investors in the 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 the Company of $7,442,500, before deducting placement agent fees and offering expenses of $452,900 resulting in cash proceeds of $6,989,600. The warrants are exercisable immediately upon issuance at an exercise price of $0.30 per share and expire on the 66^th month anniversary of the issuance date.  The Company paid a cash fee to its placement agent of $452,900 and issued warrants to the placement agent and its designees to purchase an aggregate of 1,359,000 shares of common stock with the same terms as the warrants issued to the investors.  The Company filed a registration statement with the Securities and Exchange Commission to register the resale of the outstanding common stock and the shares of common stock underlying the warrants and the warrants issued to the placement agent, which was declared effective on July 12, 2019. In addition, the Company’s directors and officers entered into Lock-Up Agreements at the closing under which they have 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 Company’s common stock on a national securities exchange.

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

Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294
Issued	31,129,000
Exercised	-
Expired	-
Warrants outstanding, December 31, 2019	63,321,294

The following table presents the number of Common Stock warrants outstanding, their exercise price, and expiration dates at December 31, 2019:

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
31,129,000	$	0.30	November 2024
8,040,000	$	0.25	April 2025
3,519,963	$	0.65	December 2025
63,321,294

In addition, there are seven-year warrants outstanding at December 31, 2019 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-15

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

(9) PREFERRED STOCK:

The Company’s Articles of Incorporation provide for 5,000,000 shares of “blank check” preferred stock. At December 31, 2019 and 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.

(10) 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 $8,881,000 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, 2019, 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, 2019, unused federal and state net operating loss carryforwards totaling approximately $18,335,000 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		9,692,000
Total	$	18,335,000

F-16

CYCLO THERAPEUTICS, INC.
FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018

(10) INCOME TAXES: (CONTINUED)

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, 2019, 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 $4,292,000 at December 31, 2019.

For 2019, we did not recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased $2,645,000 from 2018 to 2019, which is primarily the result of an additional net operating loss for 2019. We increased our valuation allowance to offset this increase in our deferred tax asset.

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.

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

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	4,496,000		$	3,017,000
Tax credits		4,292,000			3,085,000
Impairment allowances		13,000			10,000
Stock-based compensation		20,000			64,000
Other		62,000			62,000
Less valuation allowance		(8,881,000	)		(6,235,000	)
Deferred tax asset, net of valuation		2,000			3,000
Deferred tax liabilities:
Property and equipment		(2,000	)		(3,000	)
Deferred tax liabilities		(2,000	)		(3,000	)
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. Effective January 1, 2019, the Florida corporate state income tax rate was reduced from 5.5% to 4.458%. The impact of this rate reduction was a reduction in the Company’s deferred tax asset and the corresponding valuation allowance of approximately $102,000.

F-17

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018

(10) INCOME TAXES: (CONTINUED)

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, 2019 and 2018, is summarized as follows:

	2019			2018
Tax benefit (expense) at Federal statutory rate	$	1,582,000		$	894,000
Effect of State taxes		265,000			185,000
Effect of tax rate change		(102,000	)		-
Tax credits		1,217,000			676,000
Nondeductible expenses		(317,000	)		(180,000	)
Valuation allowance – deferred tax assets		(2,645,000	)		(1,575,000	)
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 2016.

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.

(11) 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 2019 and 2018, the Company elected to match the employee’s contribution, not to exceed 4% of compensation. The Company’s 401(k) contributions were $29,410 and $24,765 for 2019 and 2018, respectively.

(12) EQUITY INCENTIVE PLAN:

On August 29, 2019, the Company’s stockholders approved the Company’s  2019 Omnibus Equity Incentive Plan at a special meeting of stockholders (the “Incentive Plan”). The Incentive Plan provides for the issuance of up to 6,843,750 shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiaries. Options granted under the Incentive Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. As of December 31, 2019, we had awarded 450,000 shares of common stock as awards under the Incentive Plan, with 6,393,750 shares of common stock remaining available for future awards under the Incentive Plan.

(13) COMMITMENTS AND CONTINGENCIES:

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.

F-18

CYCLO THERAPEUTICS, INC.

FORMERLY KNOWN AS CTD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018

(14) 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, Joshua M. Fine, was employed by Scarsdale at the time of its initial engagement by us and active on our account until his appointment as our Chief Financial Officer in June 2019.

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.

In June 2019, we engaged Joshua M. Fine, the son of our Chief Executive Officer, to serve as our Chief Financial Officer. Mr. Fine receives an annual salary of $125,000. In addition, he was awarded a stock bonus of 50,000 shares in September 2019.

During 2017, Rebecca A. Fine, the daughter of our Chief Executive Officer, provided executive assistant services at the rate of $5,000 per month. From January through May 2019, she provided these services at the rate of $5,800 per month. In June 2019, Ms. Fine was employed by us as a full-time employee serving as an executive assistant with an annual salary of $69,600. Ms. Fine also received a stock bonus of 25,000 shares in September 2019.

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 $100,000 to $107,200 in October 2018.  In addition, he received cash bonuses of $10,000 and $12,500 in 2018 and 2019, respectively. Mr. Strattan also received a stock bonus of 50,000 shares in September 2019.

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. Her annual salary increased from $72,000 in 2018, to $78,000 in 2019. In addition, she received a cash bonus of $5,000 in 2018. Ms. Strattan also received a stock bonus of 25,000 shares in September 2019.

F-19

Item 9.  Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Disclosure controls and procedures are the Company’s controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the possible controls and procedures.

Our management has evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon this evaluation, our management, including our principal executive officer and principal financial officer, has concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Annual Report on Internal Control over Financial Reporting

Company management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019.  In making this assessment, management used the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.   Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2019.

18

Changes in Internal Control.

We made no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal controls that occurred during our last fiscal quarter that has materially affected, or which is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.  Other Information.

None.

19

PART III

Item 10.  Directors, Executive Officers, Promoters, Control Persons and Corporate Governance.

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 March 15, 2020:

Name	Age	Positions and Offices With Registrant	Year First Became Director
N. Scott Fine	63	Director, Chief Executive Officer	2014
Jeffrey L. Tate, Ph.D.	62	Director, Chief Operating Officer	2010
C.E. Rick Strattan	74	Director	1990
Markus W. Sieger	54	Director	2014
F. Patrick Ostronic	64	Director	2014
William S. Shanahan	79	Director	2016
Dr. Randall M. Toig	69	Director	2018
Joshua M. Fine	37	Chief Financial Officer	N/A
Sharon H. Hrynkow, Ph.D.	59	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.  

Jeffrey L. Tate, Ph.D., 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.

Sharon H. Hrynkow, Ph.D., 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.

Board Committee Structure

Our Board of Directors has Audit, Compensation and Governance Committees as standing committees. Currently, N. Scott Fine, F. Patrick Ostronic and Jeffrey L. Tate serve as the members of our Audit Committee; Markus W. Sieger, F. Patrick Ostronic and C.E. Rick Strattan serve as the members of our Compensation Committee; and Markus W. Sieger and N. Scott Fine serve as the members of our Governance Committee.  

Audit Committee Financial Expert

The Board of Directors has determined that F. Patrick Ostronic qualifies as an audit committee financial expert within the meaning of SEC regulations.

Code of Ethics

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our code of ethics will be provided to any person without charge, upon request. Requests should be addressed to Investor Relations Department, c/o Cyclo Therapeutics, Inc., P.O. Box 1180, Alachua, Florida 32616-1180.

Delinquent Section 16(a) Reports

We are required to identify each person who was an officer, director or beneficial owner of more than 10% of our registered equity securities during our most recent fiscal year and who failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934.

Based solely upon a review of Forms 3 and 4 and amendments thereto filed with the SEC during the year ended December 31, 2019, no person who, at any time during the year ended December 31, 2019 was a director, officer or beneficial owner of more than 10 percent of our Common Stock, failed to timely file the reports required by Section 16(a) of the Exchange Act during the year ended December 31, 2019, except for one transaction filed on a Form 4 one day late by our director Markus W. Sieger, and two transactions filed on a Form 4 two days late by our director F. Patrick Ostronic.

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Item 11.  Executive Compensation.

Executive Compensation

The following table contains information concerning the compensation paid during our fiscal years ended December 31, 2019 and 2018 to (i) the person who served as our Chief Executive Officer during 2019, and (ii) our executive officers as of December 31, 2019 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	2019		400,000		10,000		79,579		489,579
CEO	2018		400,000		4,294		62,347		466,641
Jeffrey L. Tate, Ph.D.	2019		220,974		29,500		31,959		282,433
COO	2018		186,667		4,294		27,233		218,194
Sharon H. Hrynkow, Ph.D.	2019		248,000		19,500		89,084		356,584
Chief Scientific Officer	2018		232,000		-		7,947		239,947

(1)

Reflects award of 20,000 shares to Mr. Fine and Dr. Tate as compensation for services as a member of the Company’s board of directors in 2019 and 2018, respectively.  Also reflects award of 100,000 shares in 2019 as compensation for services in the form of an employee bonus to each of  Drs. Tate and Hrynkow. 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 cash bonuses, matching contributions made under the Company’s 401(k) plan, and insurance premiums for health, dental, and vision.

Outstanding Equity Awards at Fiscal Year End

As of December 31, 2019, our Named Executive Officers had no outstanding unexercised options, unvested stock or other unvested equity incentive plan awards.

Employment Agreements

Currently, N. Scott Fine and Sharon H. Hrynkow, Ph.D., are our only Named Executive Officers 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.

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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.  In addition, we pay cash compensation of $15,000 per annum to Markus W. Sieger for acting as our Lead Director. We did not compensate our other directors for their services during 2019, but expect to award each of them 20,000 shares of Common Stock in consideration of their services to the Company during 2019.

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Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table shows the ownership of the Common Stock of the Company on March 15, 2020, 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 March 15, 2020 are deemed outstanding for computing the percentage ownership of the stockholder holding the options or warrants, but are not deemed outstanding for computing the percentage ownership of any other stockholder. Percentage of ownership is based on 121,671,462 shares of Common Stock outstanding as of March 15, 2020.

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)	16.9	%
Jeffrey L. Tate	1,190,972	(3)	1.0	%
N. Scott Fine	8,812,966	(4)	7.1	%
Markus Sieger	5,265,714	(5)	4.3	%
F. Patrick Ostronic	2,065,780	(6)	1.7	%
William S. Shanahan	4,707,220	(7)	3.8	%
Dr. Randall M. Toig	2,715,540	(8)	2.2	%
Sharon Hrynkow, Ph.D.	715,000	(9)	*
Joshua M. Fine	2,327,659	(10)	1.9	%
All Directors and  Executive Officers as a Group (9 Persons)	48,409,236	(11)	37.0	%
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	8,829,000	(13)	7.0	%
Armistice Capital Master Fund	12,050,000	(14)	9.9	%

(1)

Unless otherwise indicated, the business address of each officer and director of the Company is c/o Cyclo Therapeutics, 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.

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(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 currently exercisable warrants to purchase 280,000 shares of Common Stock.
(10)	Includes currently exercisable warrants to purchase 1,679,6590 shares of Common Stock.
(11)	Includes currently exercisable warrants to purchase 9,101,219 shares of Common Stock.
(12)	Based on a Schedule 13D/A filed by Novit, LP and its affiliates with the SEC on July 21, 2015. 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)	Includes 3,389,000 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)	Based on a Schedule 13G/A filed by Armistice Capital, LLC with the SEC on February 14, 2020. Does not include 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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Equity Compensation Plan Information

Plan Category	Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a) (#)		Weighted average exercise price of outstanding options, warrants and rights (b) ($)		Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) (#)
Equity compensation plans not approved by security holders (1)		2,345,647	$	0.32		0
Equity compensation plans approved by security holders	None		Not Applicable			6,393,750
Total:		2,345,647	$	0.32		6,393,750

(1)

Consists of (i) seven-year warrants to purchase 240,000 shares of Common Stock at an exercise price of $0.25 per share, issued to Scarsdale Equities and its affiliates for services provided in connection with our April 2014 private placement, (ii) seven-year warrants to purchase 103,500 shares of Common Stock at an exercise price of $1.00 per share, issued to Scarsdale Equities and its affiliates for services provided in connection with our July 2014 private placement, (iii) seven-year warrants to purchase 156,000 shares of Common Stock at an exercise price of $0.50 per share, issued to Scarsdale Equities and its affiliates for services provided in connection with our July 2015 private placement, (iv) seven-year warrants to purchase 78,000 shares of Common Stock at an exercise price of $0.50 per share, issued to Scarsdale Equities and its affiliates for services provided in connection with our August 2015 private placement, (v) seven-year warrants to purchase 480,000 Units at an exercise price of $0.25, each Unit consisting of one share of Common Stock and one warrant for one additional share of Common Stock at an exercise price of $0.25 per share, issued to Scarsdale Equities and its affiliates for services provided in connection with our June 2016 private placement, (vi) seven-year warrants to purchase 164,074 Units at an exercise price of $0.35, each 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, issued to Scarsdale Equities and its affiliates for services provided in connection with our February 2017 private placement, and (vii) seven-year warrants to purchase 600 Units at an exercise price of $100, each Unit consisting of one share of Series B Convertible Preferred Stock convertible into 400 shares of Common Stock and one warrant for one additional 400 shares of Common Stock at an exercise price of $0.25 per share, issued to Scarsdale Equities and its affiliates for services provided in connection with our October 2017 private placement.

(2)

The Company’s  2019 Omnibus Equity Incentive Plan  (the “Incentive Plan”) provides for the issuance of up to 6,843,750 shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiaries. As of December 31, 2019, we had awarded 450,000 shares of common stock as awards under the Incentive Plan, with 6,393,750 shares of common stock remaining available for future awards under the Incentive Plan

Item 13.  Certain Relationships and Related 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, Mr. Fine’s son, Joshua M. Fine, was employed by Scarsdale at the time of its initial engagement by us and active on our account until his appointment as our Chief Financial Officer in June 2019. During 2018, we paid Scarsdale Equities cash fees of approximately $66,000.

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.

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In June 2019, we engaged Joshua M. Fine, the son of our Chief Executive Officer, to serve as our Chief Financial Officer. Mr. Fine receives an annual salary of $125,000. In addition, he was awarded a stock bonus of 50,000 shares in September 2019.

During 2017, Rebecca A. Fine, the daughter of our Chief Executive Officer, provided executive assistant services at the rate of $5,000 per month. From January through May 2019, she provided these services at the rate of $5,800 per month. In June 2019, Ms. Fine was employed by us as a full-time employee serving as an executive assistant with an annual salary of $69,600. Ms. Fine also received a stock bonus of 25,000 shares in September 2019.

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 $100,000 to $107,200 in October 2018.  In addition, he received cash bonuses of $10,000 and $12,500 in 2018 and 2019, respectively. Mr. Strattan also received a stock bonus of 50,000 shares in September 2019.

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. Her annual salary increased from $72,000 in 2018, to $78,000 in 2019. In addition, she received a cash bonus of $5,000 in 2018. Ms. Strattan also received a stock bonus of 25,000 shares in September 2019.

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.  

Item 14.  Principal Accountant Fees and Services.

Audit Fees

The aggregate fees billed in 2019 and 2018 for professional services rendered by the principal accountant, WithumSmith+Brown, PC for the audit of the Company’s annual financial statements, the review of financial statements included in the Company’s Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $110,127 and $53,645, respectively.

Audit-Related Fees

No fees were billed during either of the last two fiscal years for any assurance and related services by WithumSmith+Brown, PC that are not reported under the caption “Audit Fees”.

Tax Fees

No fees were billed during either of the last two fiscal years for professional services rendered by WithumSmith+Brown, PC for tax compliance, tax advice, or tax planning.

All Other Fees

No other fees were billed during either of the last two fiscal years for professional services provided by WithumSmith+Brown, PC.

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Audit Committee Pre-Approval Policies

The Company’s Audit Committee has not adopted a policy for the pre-approval of services provided by its independent auditors. However, the Company’s independent auditors are generally engaged only to audit the Company’s annual financial statements and review the Company’s interim financial statements.

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PART IV

Item 15.  Exhibits, Financial Statement Schedules.

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	Articles of Amendment to the Articles of Incorporation filed September 18, 2019 (incorporated by reference to the Company’s Form 10-Q filed with the Securities and Exchange Commission on November 14, 2019).
3.3	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).
4.3	Description of Registrant’s Securities*
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).

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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 Sharon H. Hrynkow, Ph.D., 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 Sharon H. Hrynkow, Ph.D., 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).
10.15†	2019 Omnibus Equity Incentive Plan (incorporated by reference to Appendix B to the Company’s Proxy Statement on Schedule 14A filed July 19, 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).
31.1	Rule 13a-14(a)/15d-14a(a) Certification of Principal Executive Officer*
31.2	Rule 13a-14(a)/15d-14a(a) Certification of Principal Financial Officer*
32.1	Section 1350 Certification of Principal Executive Officer *
32.2	Section 1350 Certification of Principal Financial Officer *
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*

*	Filed herewith.
†	Management contract or compensatory plan or arrangement

31

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CYCLO THERAPEUTICS, INC.
By:	/s/ N. Scott Fine
	N. SCOTT FINE Chief Executive Officer (principal executive officer) Date: March 30, 2020

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ N. Scott Fine	By:	/s/ Joshua M. Fine
	N. SCOTT FINE Chief Executive Officer; Director (principal executive officer)		JOSHUA M. FINE Chief Financial Officer (principal financial and accounting officer)
Date: March 30, 2020			Date: March 30, 2020

By:	/s/ C.E. Rick Strattan	By:	/s/ William S. Shanahan
	C.E. RICK STRATTAN Director		WILLIAM S. SHANAHAN Director
Date: March 30, 2020		Date: March 30, 2020
By:	/s/ Jeffrey L. Tate	By:	/s/ F. Patrick Ostronic
	JEFFREY L. TATE Chief Operating Officer; Director		F. PATRICK OSTRONIC Director
Date: March 30, 2020		Date: March 30, 2020
By:	/s/ Markus W. Sieger	By:	/s/ Randall M. Toig
	MARKUS W. SIEGER Director		RANDALL M. TOIG Director
Date: March 30, 2020		Date: March 30, 2020

32

EX-4.3

EXHIBIT 4.3

CYCLO THERAPEUTICS, INC.

DESCRIPTION OF SECURITIES REGISTERED PURSUANT TO
SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

The following summary of the common stock of Cyclo Therapeutics, Inc. is qualified by our certificate of incorporation and bylaws and is subject to the applicable provisions of the Florida Business Corporation, as amended (the “Florida Act”).

Common Stock

We are authorized to issue 500,000,000 shares of Common Stock, $.0001 par value per share. 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. 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.

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;

• 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.

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, N. Scott Fine, certify that:

1. I have reviewed this Annual Report on Form 10-K of Cyclo Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2020	By:	/s/ N. Scott Fine
		N. Scott Fine
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a)

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Joshua M. Fine, certify that:

1. I have reviewed this Annual Report on Form 10-K of Cyclo Therapeutics, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 30, 2020	By:	/s/ Joshua M. Fine
		Joshua M. Fine
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of Cyclo Therapeutics, Inc. (the “Company”) for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, N. Scott Fine, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  March 30, 2020	/s/ N. Scott Fine
	N. Scott Fine
	Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Annual Report on Form 10-K of Cyclo Therapeutics, Inc. (the “Company”) for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joshua M. Fine, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  March 30, 2020	/s/ Joshua M. Fine
	Joshua M. Fine
	Chief Financial Officer

XML

Note 14 - Related Party Transactions (Details Textual) - USD ($)	1 Months Ended				2 Months Ended	12 Months Ended		27 Months Ended
	Jun. 30, 2019	Jan. 31, 2019	Oct. 30, 2018	Jan. 31, 2018	Dec. 31, 2017	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2018	Sep. 30, 2019
Common Stock, Shares, Issued, Total						121,564,990	90,759,324	90,759,324
C.E. Rick Strattan [Member]
Payments for Non-profit Organization, Monthly Fee								$ 5,000
Joshua M. Fine [Member]
Annual Salary for Chief Financial Officer	$ 125,000
Common Stock, Shares, Issued, Total									50,000
Rebecca A. Fine [Member]
Common Stock, Shares, Issued, Total									25,000
Independent Contractor, Service, Monthly Rate							$ 5,000
Independent Contractor, Monthly Rate							5,800
Annual Salary for Executive Assistant	$ 69,600
Kevin J. Strattan [Member]
Common Stock, Shares, Issued, Total									50,000
Annual Salary for Vice President, Finance			$ 107,200		$ 100,000
Bonus for Vice President, Finance						$ 12,500	10,000
Corey E. Strattan [Member]
Common Stock, Shares, Issued, Total									25,000
Annual Salary for Documentation Specialist and Logistics Coordinator		$ 78,000		$ 72,000
Bonus for Documentation Specialist and Logistics Coordinator							$ 5,000

XML

Note 9 - Preferred Stock (Details Textual) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	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	0
Series B Preferred Stock [Member]
Preferred Stock, Shares Authorized				50,000
Preferred Stock, Shares Issued, Total				35,600
Convertible Preferred Stock, Shares Issued upon Conversion			400
Preferred Stock, Liquidation Preference Per Share			$ 100

XML

Note 10 - Income Taxes - Summary of Differences Between the Effective Income Tax Rate Reflected in Benefit (Provision) for Income Taxes Amount (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Tax benefit (expense) at Federal statutory rate	$ 1,582,000	$ 894,000
Effect of State taxes	265,000	185,000
Effect of tax rate change	(102,000)
Tax credits	1,217,000	676,000
Nondeductible expenses	(317,000)	(180,000)
Valuation allowance – deferred tax assets	(2,645,000)	(1,575,000)
Total tax benefit (provision)	$ 0	$ 0

XML

Note 7 - Leases (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

Year ending December 31,	Amounts
2020	$	19,170
2021		19,170
2022		19,170
2023		1,598
2024		-
Total	$	59,108

XML

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Organization and Operations [Policy Text Block]

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

August 1990

as a Florida corporation, under the name Cyclodextrin Technologies Development, Inc. with operations beginning in

July 1992.

In conjunction with a restructuring in

2000,

we changed our name to CTD Holdings, Inc. We changed our name to Cyclo Therapeutics, Inc. in

September 2019

to better reflect our current business. 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.

Enrollment in this study was completed in

October 2019,

with initial results expected in the

second

quarter of

2020.

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 this study in

July 2017,

and in

February 2020,

the Company announced completion of enrollment of

12

patients in this study. More recently, we began exploring the use of cyclodextrins in the treatment of Alzheimer's disease, and in

October 2019

entered into an agreement with a Contract Research Organization to conduct a clinical trial to evaluate the safety and efficacy of Trappsol® Cyclo™ for the treatment of this disease.

We also 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 which had been primarily reselling basic cyclodextrin products. 

Basis of Accounting, Policy [Policy Text Block]

(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.

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. 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, 2019

and

2018.

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

$52,900

and

$39,700

at

December 31, 2019

and

2018,

respectively. The Company’s reserve for obsolete inventory is based on the Company’s best estimates of product sales and customer demands. It is reasonably possible that the estimates used by the Company to determine its provisions for inventory write-downs will be material different from actual write-downs. These differences could result in materially higher than expected inventory provisions and related costs, which could have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

Prepaid Expenses [Policy Text Block]

(f) PREPAID CLINICAL EXPENSES––Prepaid clinical expenses consist of our pharmaceutical drug Trappsol® Cyclo™ expected to be used in our clinical trial program recorded at cost.

Mortgage Banking Activity [Policy Text Block]

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

Property, Plant and Equipment, Policy [Policy Text Block]

(h) 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]

(i) 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.

Revenue from Contract with Customer, Shipping and Handling Fees, Policy [Policy Text Block]

(j) 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]

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

Research and Development Expense, Policy [Policy Text Block]

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

Income Tax, Policy [Policy Text Block]

(m) 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]

(n) 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

63,321,294

and

32,192,294

common shares were antidilutive for

2019

and

2018,

respectively.

Share-based Payment Arrangement [Policy Text Block]

(o) 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.

Fair Value Measurement, Policy [Policy Text Block]

(p) 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,

2019

or

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 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, 2019

and

2018,

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

Liquidity [Policy Text Block]

(q) LIQUIDITY AND GOING CONCERN––For the years ended

December 31, 2019

and

2018,

the Company incurred net losses of

$7,533,000

and

$4,255,000,

respectively. The Company has an accumulated deficit of approximately

$25,120,000

at

December 31, 2019.

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

®

Cyclo™ product and other general operating expenses, including personnel expenses and 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, 2019,

our operations used approximately

$6,589,000

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

$7,120,000

from equity issuances. At

December 31, 2019,

the Company had a cash balance of

$2,784,000

and current assets less current liabilities of

$817,000.

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

six

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 years ended

December 31, 2019

and

2018

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]

(r) 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. The Company’s most significant estimate relates to inventory obsolescence. 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.

New Accounting Pronouncements, Policy [Policy Text Block]

(s) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS––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 became effective for fiscal years beginning after

December 15, 2018,

including interim reporting periods within that reporting period. The Company adopted Topic

842

as of

January 1, 2019.

See Note

7.

In

December 2019,

the FASB issued ASU

2019

-

12,

Simplifying the Accounting for Income Taxes.

The amendments in ASU

2019

-

12

simplify the accounting for income taxes by removing certain exceptions to the general principles and clarifying a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU

2019

-

12

are effective for years beginning after

December 15, 2020.

The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

XML

Note 2 - Revenues (Details Textual)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Number of Operating Segments	1
Number of Major Customers	3	3
Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers	4	4
Aquaplex [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Number of Major Customers	1	1

XML

Note 11 - Employee Benefit Plan

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

(

1

1

) 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

2019

and

2018,

the Company elected to match the employee’s contribution,

not

to exceed

4%

of compensation. The Company’s

401

(k) contributions were

$29,410

and

$24,765

for

2019

and

2018,

respectively.

XML

Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	121,564,990	90,759,324
Common stock, shares outstanding (in shares)	121,564,990	90,759,324
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares outstanding (in shares)	0	0

XML

Note 1 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

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 Cyclo Therapeutics, Inc

.

(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, under the name Cyclodextrin Technologies Development, Inc. with operations beginning in

July 1992.

In conjunction with a restructuring in

2000,

we changed our name to CTD Holdings, Inc. We changed our name to Cyclo Therapeutics, Inc. in

September 2019

to better reflect our current business. 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.

Enrollment in this study was completed in

October 2019,

with initial results expected in the

second

quarter of

2020.

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 this study in

July 2017,

and in

February 2020,

the Company announced completion of enrollment of

12

patients in this study. More recently, we began exploring the use of cyclodextrins in the treatment of Alzheimer's disease, and in

October 2019

entered into an agreement with a Contract Research Organization to conduct a clinical trial to evaluate the safety and efficacy of Trappsol® Cyclo™ for the treatment of this disease.

We also 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 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, 2019

and

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

$52,900

and

$39,700

at

December 31, 2019

and

2018,

respectively. The Company’s reserve for obsolete inventory is based on the Company’s best estimates of product sales and customer demands. It is reasonably possible that the estimates used by the Company to determine its provisions for inventory write-downs will be material different from actual write-downs. These differences could result in materially higher than expected inventory provisions and related costs, which could have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

(f) PREPAID CLINICAL EXPENSES––Prepaid clinical expenses consist of our pharmaceutical drug Trappsol® Cyclo™ expected to be used in our clinical trial program recorded at cost.

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

(h) 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. 

(i) 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.

(j) 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.

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

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

(m) 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.

(n) 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

63,321,294

and

32,192,294

common shares were antidilutive for

2019

and

2018,

respectively.

(o) 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.

(p) 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,

2019

or

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 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, 2019

and

2018,

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

(q) LIQUIDITY AND GOING CONCERN––For the years ended

December 31, 2019

and

2018,

the Company incurred net losses of

$7,533,000

and

$4,255,000,

respectively. The Company has an accumulated deficit of approximately

$25,120,000

at

December 31, 2019.

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

®

Cyclo™ product and other general operating expenses, including personnel expenses and 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, 2019,

our operations used approximately

$6,589,000

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

$7,120,000

from equity issuances. At

December 31, 2019,

the Company had a cash balance of

$2,784,000

and current assets less current liabilities of

$817,000.

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

six

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 years ended

December 31, 2019

and

2018

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.

(r) 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. The Company’s most significant estimate relates to inventory obsolescence. 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.

(s) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS––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 became effective for fiscal years beginning after

December 15, 2018,

including interim reporting periods within that reporting period. The Company adopted Topic

842

as of

January 1, 2019.

See Note

7.

In

December 2019,

the FASB issued ASU

2019

-

12,

Simplifying the Accounting for Income Taxes.

The amendments in ASU

2019

-

12

simplify the accounting for income taxes by removing certain exceptions to the general principles and clarifying a handful of narrow issues within the broad topic of income tax accounting. The amendments in ASU

2019

-

12

are effective for years beginning after

December 15, 2020.

The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

XML

Note 7 - Leases

12 Months Ended

Dec. 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

$17,006

as of

December 31, 2019.

Lease expense for lease payments are recognized on a straight-line basis over the lease term.   Lease expense for the years ended

December 31, 2019

and

2018

was

$17,006

and

$22,249,

respectively.

The following is a maturity analysis of the annual undiscounted cash flows of the operating lease liabilities as of

December 31, 2019:

Year ending December 31,	Amounts
2020	$	19,170
2021		19,170
2022		19,170
2023		1,598
2024		-
Total	$	59,108

XML

Note 8 - Equity Transactions - Common Stock Warrants Outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Warrants outstanding (in shares)	32,192,294	20,632,331
Issued (in shares)	31,129,000	11,559,963
Exercised (in shares)
Expired (in shares)
Warrants outstanding (in shares)	63,321,294	32,192,294

XML

Note 2 - Revenues - Revenues by Product (Details) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Revenues	$ 1,007,198	$ 1,011,477
Product sales	1,007,198	1,011,477
Trappsol Cyclo [Member]
Revenues	103,596	166,596
Product sales	103,596	166,596
Trappsol HPB [Member]
Revenues	481,379	484,101
Product sales	481,379	484,101
Trappsol Fine Chemical [Member]
Revenues	265,947	233,910
Product sales	265,947	233,910
Aquaplex [Member]
Revenues	149,878	116,806
Product sales	149,878	116,806
Product and Service, Other [Member]
Revenues	6,398	10,064
Product sales	$ 6,398	$ 10,064

XML

Note 6 - Furniture and Equipment - Summary of Property and Equipment (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Property, plant and equipment, gross	$ 66,014	$ 68,909
Less: accumulated depreciation	52,468	50,338
Furniture and equipment, net	13,546	18,571
Machinery and Equipment [Member]
Property, plant and equipment, gross	16,524	16,089
Office Furniture [Member]
Property, plant and equipment, gross	$ 49,490	$ 52,820

XML

Note 10 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(

10

) 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

$8,881,000

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, 2019,

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, 2019,

unused federal and state net operating loss carryforwards totaling approximately

$18,335,000

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		9,692,000
Total	$	18,335,000

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, 2019,

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

$4,292,000

at

December 31, 2019.

For

2019,

we did

not

recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased

$2,645,000

from

2018

to

2019,

which is primarily the result of an additional net operating loss for

2019.

We increased our valuation allowance to offset this increase in our deferred tax asset.

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.

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

	201 9			201 8
Deferred tax assets:
Net operating loss carryforwards	$	4,496,000		$	3,017,000
Tax credits		4,292,000			3,085,000
Impairment allowances		13,000			10,000
Stock-based compensation		20,000			64,000
Other		62,000			62,000
Less valuation allowance		(8,881,000	)		(6,235,000	)
Deferred tax asset, net of valuation		2,000			3,000
Deferred tax liabilities:
Property and equipment		(2,000	)		(3,000	)
Deferred tax liabilities		(2,000	)		(3,000	)
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.

Effective

January 1, 2019,

the Florida corporate state income tax rate was reduced from

5.5%

to

4.458%.

The impact of this rate reduction was a reduction in the Company’s deferred tax asset and the corresponding valuation allowance of approximately

$

102,000

.

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, 2019

and

2018,

is summarized as follows:

	201 9			201 8
Tax benefit (expense) at Federal statutory rate	$	1,582,000		$	894,000
Effect of State taxes		265,000			185,000
Effect of tax rate change		(102,000	)		-
Tax credits		1,217,000			676,000
Nondeductible expenses		(317,000	)		(180,000	)
Valuation allowance – deferred tax assets		(2,645,000	)		(1,575,000	)
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

2016.

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

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 2,783,719	$ 2,217,412
Accounts receivable	143,429	80,044
Inventory, net	242,630	416,531
Current portion of mortgage note receivable	39,061	37,439
Prepaid insurance and services	137,069	18,185
Prepaid clinical expenses	612,161
Total current assets	3,958,069	2,769,611
FURNITURE AND EQUIPMENT, NET	13,546	18,571
RIGHT-TO-USE LEASE ASSET, NET	51,017
MORTGAGE NOTE RECEIVABLE, LESS CURRENT PORTION	90,596	129,674
TOTAL ASSETS	4,113,228	2,917,856
CURRENT LIABILITIES
Current portion of lease liability	16,385
Accounts payable and accrued expenses	3,124,735	1,925,332
Total current liabilities	3,141,120	1,925,332
LONG-TERM LEASE LIABILITY	36,126
STOCKHOLDERS' EQUITY
Common stock, par value $.0001 per share, 500,000,000 shares authorized, 121,564,990 and 90,759,324 shares issued and outstanding at December 31, 2019 and 2018, respectively	12,155	9,075
Preferred stock, par value $.0001 per share, 5,000,000 shares authorized, 0 outstanding
Additional paid-in capital	26,044,060	18,701,211
Stock subscription receivable		(130,062)
Accumulated deficit	(25,120,233)	(17,587,700)
Total stockholders' equity	935,982	992,524
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 4,113,228	$ 2,917,856

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (7,532,533)	$ (4,255,033)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	5,681	10,124
Accrued stock compensation to employees	19,340	19,400
Accrued stock compensation to nonemployees	61,030	64,020
Issuance of stock-based compensation	356,329
Inventory valuation allowance	13,265	12,150
Increase or decrease in:
Accounts receivable	(63,385)	(23,184)
Inventory	160,636	42,540
Prepaid clinical expenses	(612,161)
Prepaid insurance and services	(118,884)	42,661
Other	2,162
Accounts payable and accrued expenses	1,119,033	898,882
Total adjustments	943,046	1,066,593
NET CASH USED IN OPERATING ACTIVITIES	(6,589,487)	(3,188,440)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment	(1,324)	(2,959)
Proceeds from mortgage note receivable	37,456	35,899
NET CASH PROVIDED BY INVESTING ACTIVITIES	36,132	32,940
CASH FLOWS FROM FINANCING ACTIVITIES
Collection of stock subscription receivable	130,062
Proceeds from sale of common stock, preferred stock and warrants, net of issuance costs	6,989,600	4,101,939
NET CASH PROVIDED BY FINANCING ACTIVITIES	7,119,662	4,101,939
NET INCREASE IN CASH AND CASH EQUIVALENTS	566,307	946,439
CASH AND CASH EQUIVALENTS, beginning of year	2,217,412	1,270,973
CASH AND CASH EQUIVALENTS, end of year	2,783,719	2,217,412
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest
Cash paid for income taxes
NONCASH INVESTING AND FINANCING ACTIVITIES
Capitalization of right-to-use asset and lease liability	68,022
Common stock issued in exchange for a subscription receivable		130,062
Conversion of preferred stock into common stock		$ 1,424

XML

Note 6 - Furniture and Equipment

12 Months Ended

Dec. 31, 2019

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:

	201 9		201 8
Machinery and equipment	$	16,524	$	16,089
Office furniture		49,490		52,820
		66,014		68,909
Less: accumulated depreciation		52,468		50,338
Furniture and equipment, net	$	13,546	$	18,571

XML

Note 3 - Major Customers and Suppliers (Details Textual)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Number of Major Customers	3	3
Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Number of Major Customers	4	4
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Four Major Customer [Member]
Concentration Risk, Percentage	70.00%	57.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Four Major Customer [Member]
Concentration Risk, Percentage	95.00%	31.00%
Revenue, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | Biopharmaceuticals [Member]
Concentration Risk, Percentage	10.00%	17.00%
Revenue, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | Basic Natural and Chemically Modified Cyclodexterins [Member]
Concentration Risk, Percentage	75.00%	71.00%
Revenue, Product and Service Benchmark [Member] | Product Concentration Risk [Member] | Cyclodexterin Complexes [Member]
Concentration Risk, Percentage	15.00%	12.00%

XML

Note 7 - Leases (Details Textual)	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Operating Lease, Right-of-Use Asset, Amortization	$ 17,006
Operating Lease, Expense	$ 17,006	$ 22,249
Office Building [Member]
Number of Operating Leases	1

XML

Note 8 - Equity Transactions - Summary of Warrants Outstanding, Exercise Price, and Expiration Dates (Details) - $ / shares	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Warrants Issued (in shares)	63,321,294	32,192,294	20,632,331
Warrants Issued (in shares)	63,321,294	32,192,294	20,632,331
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 November 2024 [Member]
Warrants Issued (in shares)	31,129,000
Exercise Price (in dollars per share)	$ 0.30
Warrants Issued (in shares)	31,129,000
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

XML

Note 10 - Income Taxes (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Deferred Tax Asset Based Upon Expected Income Tax Rates	$ 8,881,000
Valuation Allowance Percentage	100.00%
Operating Loss Carryforwards, Total	$ 18,335,000
Income Tax Expense (Benefit), Total	0	$ 0
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	2,645,000	1,575,000
SEC Schedule, 12-09, Valuation Allowances and Reserves, Amount, Ending Balance		$ 768,000
State and Local Jurisdiction [Member] | Florida Department of Revenue [Member]
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount	$ (102,000)
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent	4.458%	5.50%
Orphan Drug Credit [Member]
Tax Credit Carryforward, Amount	$ 4,292,000

XML

Note 11 - Employee Benefit Plan (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay		4.00%
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 29,410	$ 24,765

XML

Note 1 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Inventory Valuation Reserves, Ending Balance		$ 52,900	$ 39,700
Net Income (Loss) Attributable to Parent, Total		(7,532,533)	(4,255,033)
Retained Earnings (Accumulated Deficit), Ending Balance		(25,120,233)	(17,587,700)
Net Cash Provided by (Used in) Operating Activities, Total		(6,589,487)	(3,188,440)
Proceeds from Issuance or Sale of Equity, Net of Issuance Costs		7,120,000
Cash and Cash Equivalents, at Carrying Value, Ending Balance		2,783,719	$ 2,217,412	$ 1,270,973
Working Capital		$ 817,000
Fair Value, Recurring [Member]
Financial and Nonfinancial Liabilities, Fair Value Disclosure	$ 0
Warrants To Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		63,321,294	32,192,294
Computers and Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life		3 years
Computers and Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life		5 years
Machinery and Furniture [Member] | Minimum [Member]
Property, Plant and Equipment, Useful Life		7 years
Machinery and Furniture [Member] | Maximum [Member]
Property, Plant and Equipment, Useful Life	10 years

XML

Note 6 - Furniture and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	201 9		201 8
Machinery and equipment	$	16,524	$	16,089
Office furniture		49,490		52,820
		66,014		68,909
Less: accumulated depreciation		52,468		50,338
Furniture and equipment, net	$	13,546	$	18,571

XML

Note 14 - Related Party Transactions

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

(

1

4

)

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, Joshua M. Fine, was employed by Scarsdale at the time of its initial engagement by us and active on our account until his appointment as our Chief Financial Officer in

June 2019.

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.

In

June 2019,

we engaged Joshua M. Fine, the son of our Chief Executive Officer, to serve as our Chief Financial Officer. Mr. Fine receives an annual salary of

$125,000.

In addition, he was awarded a stock bonus of

50,000

shares in

September 2019.

During

2017,

Rebecca A. Fine, the daughter of our Chief Executive Officer, provided executive assistant services at the rate of

$5,000

per month. From

January

through

May 2019,

she provided these services at the rate of

$5,800

per month. In

June 2019,

Ms. Fine was employed by us as a full-time employee serving as an executive assistant with an annual salary of

$69,600.

Ms. Fine also received a stock bonus of

25,000

shares in

September 2019.

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

$100,000

to

$107,200

in

October 2018. 

In addition, he received cash bonuses of

$10,000

and

$12,500

in

2018

and

2019,

respectively. Mr. Strattan also received a stock bonus of

50,000

shares in

September 2019.

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. Her annual salary increased from

$72,000

in

2018,

to

$78,000

in

2019.

In addition, she received a cash bonus of

$5,000

in

2018.

Ms. Strattan also received a stock bonus of

25,000

shares in

September 2019.

XML

Note 4 - Mortgage Note Receivable - Scheduled Debt Principal Collections on Mortgage Note Receivable (Details) - USD ($)	Dec. 31, 2019	Jan. 21, 2016
2020	$ 39,061
2021	40,754
2022	42,520
2023	7,322
	$ 129,657	$ 265,000

XML

Note 8 - Equity Transactions (Details Textual)			1 Months Ended			3 Months Ended	4 Months Ended	12 Months Ended
	May 31, 2019 USD ($) $ / shares shares	May 23, 2018 shares	Jan. 30, 2019 USD ($)	Apr. 30, 2018 USD ($) $ / shares shares	Apr. 30, 2014	Mar. 30, 2018 USD ($)	Apr. 30, 2018 $ / shares shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2018 USD ($) $ / shares shares	Dec. 31, 2017 shares	May 22, 2018 shares	Oct. 31, 2017 shares
Share-based Payment Arrangement, Expense | $								$ 168,120	$ 83,420
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture									0
Proceeds from Issuance of Private Placement | $						$ 74,983
Common Stock, Shares Authorized		500,000,000						500,000,000	500,000,000		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
Equity Units, Number of Common Shares in Each Unit									1
Proceeds from Issuance or Sale of Equity, Net of Issuance Costs | $								$ 7,120,000
Series B Preferred Stock [Member]
Convertible Preferred Stock, Shares Issued upon Conversion												400
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, Number of Securities Called by Warrants or Rights				400			400
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.30			$ 0.25			$ 0.25
Warrants To Purchase Common Stock [Member]
Term of Warrant									7 years
Warrants Issued to Placement Agent in Connection with Private Placement [Member]
Class of Warrant or Right, Number of Securities Called by Warrants or Rights	1,359,000
Warrants to Purchase Units Sold in May 2016 Private Placement [Member]
Term of Warrant									7 years
Class of Warrant or Right, Number of Securities Called by Warrants or Rights									480,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares									$ 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
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares									$ 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
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares									$ 100
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
Term of Warrant							7 years
Equity Units Issued During Period, Shares, New Issues	29,770,000			20,100					3,519,963
Share Price | $ / shares				$ 100			$ 100		$ 0.65
Proceeds from Issuance of Private Placement | $	$ 7,442,500		$ 130,063	$ 2,010,000					$ 2,342,034
Payment for Cash Fee | $									$ 50,000
Equity Units, Number of Common Shares in Each Unit	1
Shares Issued, Price Per Share | $ / shares	$ 0.25
Equity Units, Number of Warrants in Each Unit	1
Payments of Stock Issuance Costs | $	$ 452,900
Proceeds from Issuance or Sale of Equity, Net of Issuance Costs | $	$ 6,989,600
Private Placement [Member] | Series B Preferred Stock [Member]
Convertible Preferred Stock, Shares Issued upon Conversion				400			400
Employees [Member]
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture								450,000
Shares Issued, Value, Share-based Payment Arrangement, before Forfeiture | $								$ 87,750
Director [Member]
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture								241,666
Shares Issued, Value, Share-based Payment Arrangement, before Forfeiture | $								$ 109,908
Board Members and Officers [Member]
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture								344,000
Shares Issued, Value, Share-based Payment Arrangement, before Forfeiture | $								$ 158,670
Share Based Payment Arrangement By Share Based Compensation Arrangement, Deferred Compensation, Shares Acrrued									172,000	172,000

XML

Note 8 - Equity Transactions

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

(

8

)

EQUITY

TRANSACTIONS:

The Company expensed

$168,120

and

$83,420

in employee and board member stock compensation in

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. Stock compensation expense for board members is included in “Board of Directors fees and costs” on our statement of operations, and stock compensation expense for officers and employees that are

not

board members is included in “Personnel” on our statement of operations.  In

2019,

the Company issued

450,000

shares of Common Stock to employees as a bonus with a value of

$87,750,

and issued

241,666

shares as a bonus to advisory board members with a value of

$109,908.

In addition, the Company issued

344,000

shares of Common Stock in

2019

to board members and officers with a value of

$158,670

 at the time of issuance, with respect to which compensation expense had been accrued with respect to

172,000

of such shares in

2018

and 

172,000

of such shares in

2017.

  In

2018,

the Company did

not

issue shares of Common Stock for compensation.

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, Joshua M. Fine, was employed by Scarsdale at the time of its initial engagement by us and active on our account until his appointment as our Chief Financial Officer in

June 2019.

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 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. 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.

On

May 31, 2019,

the Company completed a private placement of its securities to a group of accredited investors that included several directors of the Company and members of management. Investors in the 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 the Company of

$7,442,500,

before deducting placement agent fees and offering expenses of

$452,900

resulting in cash proceeds of

$6,989,600.

The warrants are exercisable immediately upon issuance at an exercise price of

$0.30

per share and expire on the

66

th

 month anniversary of the issuance date.  The Company paid a cash fee to its placement agent of

$452,900

and issued warrants to the placement agent and its designees to purchase an aggregate of

1,359,000

shares of common stock with the same terms as the warrants issued to the investors.  The Company filed a registration statement with the Securities and Exchange Commission to register the resale of the outstanding common stock and the shares of common stock underlying the warrants and the warrants issued to the placement agent, which was declared effective on

July 12, 2019.

In addition, the Company’s directors and officers entered into Lock-Up Agreements at the closing under which they have 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 Company’s common stock on a national securities exchange.

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

Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294
Issued	31,129,000
Exercised	-
Expired	-
Warrants outstanding, December 31, 2019	63,321,294

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

December 31, 2019:

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
31,129,000	$	0.30	November 2024
8,040,000	$	0.25	April 2025
3,519,963	$	0.65	December 2025
63,321,294

In addition, there are

seven

-year warrants outstanding at

December 31, 2019

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

Consolidated Statements of Operations - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
REVENUES
Product sales	$ 1,007,198	$ 1,011,477
EXPENSES
Personnel	1,906,438	1,171,941
Cost of products sold (exclusive of direct and indirect overhead and handling costs)	75,493	105,026
Research and development	4,869,160	2,711,275
Repairs and maintenance	8,295	3,821
Professional fees	571,937	808,770
Office and other	845,624	354,102
Board of Directors fees and costs	109,473	95,431
Depreciation	5,681	10,124
Freight and shipping	5,885	5,643
Inventory valuation allowance	13,265	12,150
Total operating expenses	8,551,758	5,278,283
LOSS FROM OPERATIONS	(7,544,560)	(4,266,806)
OTHER INCOME
Investment and other income	12,027	11,773
LOSS BEFORE INCOME TAXES	(7,532,533)	(4,255,033)
PROVISION FOR INCOME TAXES	0	0
NET LOSS	$ (7,532,533)	$ (4,255,033)
BASIC AND FULLY DILUTED NET LOSS PER COMMON SHARE (in dollars per share)	$ (0.07)	$ (0.05)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (in shares)	108,191,753	81,756,839

XML

Note 4 - Mortgage Note Receivable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

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

(

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 remaining on this mortgage are as follows:

Year Ending
December 31,	Principal
2020	$	39,061
2021		40,754
2022		42,520
2023		7,322
	$	129,657

XML

Note 12 - Equity Incentive Plan

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Equity Incentive Plan Disclosure [Text Block]

(

12

)

EQUITY INCENTIVE PLAN:

On

August 29, 2019,

the Company’s stockholders approved the Company’s  

2019

Omnibus Equity Incentive Plan at a special meeting of stockholders (the “Incentive Plan”). The Incentive Plan provides for the issuance of up to

6,843,750

shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiaries. Options granted under the Incentive Plan

may

either be intended to qualify as incentive stock options under the Internal Revenue Code of

1986,

or

may

be non-qualified options, and are exercisable over periods

not

exceeding

ten

years from date of grant. As of

December 31, 2019,

we had awarded

450,000

shares of common stock as awards under the Incentive Plan, with

6,393,750

shares of common stock remaining available for future awards under the Incentive Plan.

XML

Note 2 - Revenues

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

(

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

(i) – Revenue Recognition for additional discussion.

Revenues by product are summarized as follows:

	Year Ended
	December 31 ,
	201 9		201 8
Trappsol ® Cyclo™	$	103,596	$	166,596
Trappsol ® HPB		481,379		484,101
Trappsol ® Fine Chemical		265,947		233,910
Aquaplex ®		149,878		116,806
Other		6,398		10,064
Total revenues	$	1,007,198	$	1,011,477

Substantially all of our sales of Trappsol

®

Cyclo™ for the years ended

December 31, 2019

and

2018

were to a

single

customer who exports the drug to South America. Substantially all of our Aquaplex

®

sales are to

one

customer.

XML

Note 10 - Income Taxes - Summary of Significant Components of Deferred Federal Income Taxes (Details) - USD ($)	Dec. 31, 2019	Dec. 31, 2018
Deferred tax assets:
Net operating loss carryforwards	$ 4,496,000	$ 3,017,000
Tax credits	4,292,000	3,085,000
Impairment allowances	13,000	10,000
Stock-based compensation	20,000	64,000
Other	62,000	62,000
Less valuation allowance	(8,881,000)	(6,235,000)
Deferred tax asset, net of valuation	2,000	3,000
Deferred tax liabilities:
Property and equipment	(2,000)	(3,000)
Deferred tax liabilities	(2,000)	(3,000)
Net tax assets

XML

Note 13 - 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

XML

Note 8 - Equity Transactions (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Share-based Compensation, Stock Warrants Activity [Table Text Block]

Warrants outstanding, December 31, 2017	20,632,331
Issued	11,559,963
Exercised	-
Expired	-
Warrants outstanding, December 31, 2018	32,192,294
Issued	31,129,000
Exercised	-
Expired	-
Warrants outstanding, December 31, 2019	63,321,294

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
31,129,000	$	0.30	November 2024
8,040,000	$	0.25	April 2025
3,519,963	$	0.65	December 2025
63,321,294

XML

Note 2 - Revenues (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Year Ended
	December 31 ,
	201 9		201 8
Trappsol ® Cyclo™	$	103,596	$	166,596
Trappsol ® HPB		481,379		484,101
Trappsol ® Fine Chemical		265,947		233,910
Aquaplex ®		149,878		116,806
Other		6,398		10,064
Total revenues	$	1,007,198	$	1,011,477

XML

Note 10 - Income Taxes - Summary of Net Operating Loss Carryforward Expirations (Details)	Dec. 31, 2019 USD ($)
Net operating loss carryforwards	$ 18,335,000
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	$ 9,692,000

XML

Note 12 - Equity Incentive Plan (Details Textual) - The 2019 Omnibus Incentive Plan [Member] - shares	4 Months Ended
	Dec. 31, 2019	Aug. 29, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		6,843,750
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	450,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	6,393,750
Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years

XML

Note 10 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

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		9,692,000
Total	$	18,335,000

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	201 9			201 8
Deferred tax assets:
Net operating loss carryforwards	$	4,496,000		$	3,017,000
Tax credits		4,292,000			3,085,000
Impairment allowances		13,000			10,000
Stock-based compensation		20,000			64,000
Other		62,000			62,000
Less valuation allowance		(8,881,000	)		(6,235,000	)
Deferred tax asset, net of valuation		2,000			3,000
Deferred tax liabilities:
Property and equipment		(2,000	)		(3,000	)
Deferred tax liabilities		(2,000	)		(3,000	)
Net tax assets	$	-		$	-

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	201 9			201 8
Tax benefit (expense) at Federal statutory rate	$	1,582,000		$	894,000
Effect of State taxes		265,000			185,000
Effect of tax rate change		(102,000	)		-
Tax credits		1,217,000			676,000
Nondeductible expenses		(317,000	)		(180,000	)
Valuation allowance – deferred tax assets		(2,645,000	)		(1,575,000	)
Total tax benefit (provision)	$	-		$	-

XML

Note 4 - Mortgage Note Receivable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Participating Mortgage Loans [Table Text Block]

Year Ending
December 31,	Principal
2020	$	39,061
2021		40,754
2022		42,520
2023		7,322
	$	129,657

XML

Note 4 - Mortgage Note Receivable (Details Textual) - USD ($)	Jan. 21, 2016	Dec. 31, 2019
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	$ 129,657
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%

XML

Note 7 - Leases - Operating Lease Maturity (Details)	Dec. 31, 2019 USD ($)
2020	$ 19,170
2021	19,170
2022	19,170
2023	1,598
2024
Total	$ 59,108

XML

Note 13 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

(

13

)

COMMITMENTS AND CONTINGENCIES:

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 3 - Major Customers and Suppliers

12 Months Ended

Dec. 31, 2019

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

2019,

four

major customers accounted for

70%

of total revenues. Accounts receivable balances for these major customers represent

95%

of total accounts receivable at

December 31, 2019.

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.

Substantially all inventory purchases were from

three

vendors in

2019

and

2018.

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, 2019,

the product mix of our revenues consisted of

10%

biopharmaceuticals,

75%

basic natural and chemically modified cyclodextrins, and

15%

cyclodextrin complexes. 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.

XML

Note 9 - Preferred Stock

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Preferred Stock [Text Block]

(

9

) PREFERRED STOCK:

The Company’s Articles of Incorporation provide for

5,000,000

shares of “blank check” preferred stock. At

December 

31,

2019

and

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

Document And Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2019	Mar. 15, 2020	Jun. 30, 2019
Document Information [Line Items]
Entity Registrant Name	Cyclo Therapeutics, Inc.
Entity Central Index Key	0000922247
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		121,671,462
Entity Public Float			$ 25,510,459
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Title of 12(g) Security	Common Stock, par value $0.0001

XML

Consolidated Statements of Stockholders' Equity - 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, 2017	72,999,361	15,500
Balance at Dec. 31, 2017	$ 7,299	$ 2	$ 14,470,984		$ (13,332,667)	$ 1,145,618
Sale of preferred stock units, net of issuance fees (in shares)		20,100				0
Sale of preferred stock units, net of issuance fees		$ 2	1,959,998			$ 1,960,000
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)
Sale of common stock, net of issuance fees (in shares)	3,519,963
Sale of common stock, net of issuance fees	$ 352		2,271,649	(130,062)		2,141,939
Net loss					(4,255,033)	$ (4,255,033)
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture		20,100				0
Stock-based compensation		$ 2	1,959,998			$ 1,960,000
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
Sale of preferred stock units, net of issuance fees (in shares)	1,035,666
Sale of preferred stock units, net of issuance fees	$ 103		356,226			356,329
Sale of common stock, net of issuance fees (in shares)	29,770,000
Sale of common stock, net of issuance fees	$ 2,977		6,986,623			6,989,600
Net loss					(7,532,533)	(7,532,533)
Collection of subscription receivable				130,062		130,062
Shares Issued, Shares, Share-based Payment Arrangement, before Forfeiture	1,035,666
Stock-based compensation	$ 103		356,226			356,329
Balance (in shares) at Dec. 31, 2019	121,564,990
Balance at Dec. 31, 2019	$ 12,155		$ 26,044,060		$ (25,120,233)	$ 935,982

XML

Note 5 - Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

(

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.