SECURITIES AND EXCHANGE COMMISSION

                        Washington, D. C.   20549

                                  FORM 10-QSB

__X__ Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act
of 1934 for the Quarterly Period Ended: September 30, 1998.

____ Transition Report Under Section 13 or 15(d) of the Securities  Exchange Act
of 1934 for the Transition Period From ____ to ____


Commission  file  number: 0-24930

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
             (Exact name of registrant as specified in its charter)


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


   3713 S.W. 42nd Avenue, Suite 3, Gainesville, Florida, 32608-6581
 (Address of principal executive offices)              (Zip Code)


          Issuer's telephone number, including area code: 352-375-6822


   Former name, former address and former fiscal year, if changed since last
   report: N/A.

Check  whether  the issuer  (1) has filed all  reports  required to be filed by
Section 13 or 15(d) of the Exchange Act during the  preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes

Applicable  only to  issuers  involved  in  bankruptcy  proceedings  during the
preceding five years

Check whether the  registrant  filed all  documents  and reports  required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the  distribution of
securities under a plan confirmed by a court. No.

Applicable only to corporate issuers

As of September 30, 1998, the Company had  outstanding  1,225,110  shares of its
common stock.

Transitional Small Business Disclosure Format
(Check One):
 No.
<PAGE>


PART I:  Financial Information

CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                                 BALANCE SHEET
                                  (Unaudited)
<TABLE>
<CAPTION>
                                    ASSETS
                                                             September 30, 1998
                                                             ------------------
<S>                                                          <C>
CURRENT ASSETS
 Cash and cash equivalents                                   $           3,621
 Investments                                                             9,129
 Accounts receivable                                                    24,998
 Inventory                                                              34,315
 Deferred tax asset                                                     12,000
 Other current assets                                                    2,051
                                                             ------------------
     Total current assets                                               86,114
                                                             ------------------
PROPERTY AND EQUIPMENT
 Furniture and equipment                                                61,915
 Leasehold improvements                                                 24,800
                                                             ------------------
                                                                        86,715
 Less: Accumulated depreciation                                         66,345
                                                             ------------------
     Total property and equipment                                       20,370
                                                             ------------------
OTHER ASSETS
 Deferred tax asset                                                    238,000
                                                             ------------------
TOTAL ASSETS                                                 $         344,484
                                                             ==================
</TABLE>
                                  (Continued)

                                      F-1
<PAGE>

                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                                 BALANCE SHEET
                                  (Unaudited)
                                  (Concluded)
<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
                                                             September 30, 1998
                                                             ------------------
<S>                                                          <C>
CURRENT LIABILITIES
 Accounts payable and accrued expenses                       $          45,971
 Payable to officer                                                      9,467
                                                             ------------------
     Total current liabilities                                          55,438
                                                             ------------------
COMMON STOCK SUBJECT TO REPURCHASE,  
 par value $.0001 per share,  
 100,000 shares authorized, 8,000 
 shares issued and outstanding                                           1,827
                                                             ------------------

STOCKHOLDERS' EQUITY
 Class A common stock, par value 
  $.0001 per share,  9,900,000 shares
  authorized, 1,210,110 shares issued
  and outstanding;  Class B non-voting 
  common stock, par value $.0001 per 
  share, 10,000,000 shares authorized, 
  0 shares issued and outstanding                                          119
 Additional paid-in capital                                          1,665,745
 Accumulated other comprehensive income                                 (4,098)
 Accumulated deficit                                                (1,374,547)
                                                             ------------------
     Total stockholders' equity                                        287,219
                                                             ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $         344,484
                                                             ==================
</TABLE>

                See Accompanying Notes to Financial Statements

                                      F-2
<PAGE>

                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                           STATEMENTS OF OPERATIONS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                  Three Months Ending      Nine Months Ending
                                     September 30,            September 30,
                                 ----------------------  ----------------------
                                    1998        1997        1998        1997
                                 ----------  ----------  ----------  ----------
<S>                              <C>         <C>         <C>         <C>
PRODUCT SALES                    $  47,363   $  51,375   $ 184,770   $ 191,229

COST OF PRODUCTS SOLD                4,371       7,567      46,471      44,807
                                 ----------  ----------  ----------  ----------
GROSS PROFIT                        42,992      43,808     138,299     146,422

CONSULTING SERVICES                    300      43,331         300      43,331
                                 ----------  ----------  ----------  ----------
TOTAL OPERATING REVENUE             43,292      87,139     138,599     189,753
                                 ----------  ----------  ----------  ----------

OPERATING EXPENSES
  Selling, general and
   administrative                   35,374     100,447     133,111     263,273
  Public offering costs             71,347      (1,155)     71,347     129,967
  Inventory allowance               57,187           0      57,187           0
                                 ----------  ----------  ----------  ----------
   Total operating expenses        163,908      99,292     261,645     393,240
                                 ----------  ----------  ----------  ----------
LOSS FROM OPERATIONS              (120,616)    (12,153)   (123,046)   (203,487)
                                 ----------  ----------  ----------  ----------

OTHER INCOME (EXPENSE)
 Investment and other income        (2,345)      1,124      10,360       2,745
 Gain due to change in redemption
  price on common stock subject
  to repurchase                        254         775         254       1,563
 Equity in loss from
  unconsolidated joint venture           0        (123)          0        (367)
 Interest expense                     (736)       (643)     (2,730)     (1,883)
                                 ----------  ----------  ----------  ----------
   Total other income (expense)     (2,827)      1,133       7,884       2,058
                                 ----------  ----------  ----------  ----------
LOSS BEFORE INCOME TAX            (123,443)    (11,020)   (115,162)   (201,429)

INCOME TAX BENEFIT (EXPENSE)         1,600           0           0     (24,350)
                                 ----------  ----------  ----------  ----------
NET LOSS                         $(121,843)  $ (11,020)  $(115,162)  $(225,779)
                                 ==========  ==========  ==========  ==========
NET LOSS PER COMMON SHARE
 - BASIC AND DILUTIVE            $   (0.09)  $   (0.01)  $   (0.09)  $   (0.18)
                                 ==========  ==========  ==========  ==========
WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING
 - BASIC AND DILUTIVE             1,325,089   1,235,110   1,278,927   1,229,615
                                 ==========  ==========  ==========  ==========
</TABLE>

                See Accompanying Notes to Financial Statements

                                     F-3
<PAGE>

                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                           STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                         Nine Months Ending
                                                            September 30,
                                                     --------------------------
                                                        1998           1997
                                                     ------------  ------------
<S>                                                  <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss                                            $  (115,162)  $  (225,779)
                                                     ------------  ------------
 Adjustments to reconcile net loss 
  to net cash provided by operating 
  activities:
   Depreciation and amortization                          10,711        25,575
   Inventory allowance                                    57,187             0
   Public offering costs                                  71,347       129,967
   (Gain) loss on sale of investments                      2,019        (2,066)
   Deferred compensation earned                                0        18,500
   Equity in loss of unconsolidated joint venture              0           367
   Gain based on redemption price of common
     stock subject to repurchase                            (254)       (1,563)
   Stock issued for services                                 675             0
   Decrease in accounts receivable                        16,538        82,082
   Increase in inventory                                  (4,506)       (9,634)
   Increase (decrease) in other current assets             1,377        (2,347)
   Decrease in deferred income tax                             0        24,350
   Increase in deferred offering costs                   (36,347)       (2,436)
   Increase in accounts payable and
    accrued expenses                                      16,678        31,265
   Increase in unearned income                                 0         8,202
                                                     ------------  ------------
        Total adjustments                                135,425       302,262
                                                     ------------  ------------
    NET CASH PROVIDED BY OPERATING ACTIVITIES             20,263        76,483
                                                     ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of equipment and leasehold improvements         (3,732)       (8,758)
 Loan to employee                                              0        (2,579)
 Repayment of employee loan                                2,467         9,054
 Repurchase of stock                                      (5,000)
 Proceeds from sale of investments                        19,331        30,090
 Purchases of investments                                (13,227)      (36,745)
                                                     ------------  ------------
    NET CASH USED BY INVESTING ACTIVITIES                   (161)       (8,938)
                                                     ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Net proceeds from issuance of common stock                    0         5,620
 Net payments on line-of-credit                          (23,879)      (38,199)
 Net payments on investment margin account               (10,400)            0
 Net proceeds from loan payable to officer                 9,467         9,045
                                                     ------------  ------------
    NET CASH USED FOR FINANCING ACTIVITIES               (24,812)      (23,534)
                                                     ------------  ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS      (4,710)       44,011

CASH AND CASH EQUIVALENTS, beginning of period             8,331         7,767
                                                     ------------  ------------
CASH AND CASH EQUIVALENTS, end of period             $     3,621   $    51,778
                                                     ============  ============
</TABLE>

                                  (Continued)
                                      F-4
<PAGE>

                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                           STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                                  (Unaudited)
                                  (Concluded)
<TABLE>
<CAPTION>
                                                         Nine Months Ending
                                                           September 30,
                                                     --------------------------
                                                        1998           1997
                                                     ------------  ------------
<S>                                                  <C>           <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for interest           $     2,730   $     1,883
                                                     ============  ============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
 FINANCING ACTIVITY
  Equity in loss of unconsolidated joint venture     $         0   $       367
                                                     ============  ============

  Common stock issued for services                   $       675   $     5,620
                                                     ============  ============
</TABLE>

                See Accompanying Notes to Financial Statements

                                     F-5
<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)

The information presented herein as of September 30, 1998, and for the three and
nine months ended September 30, 1998 and 1997, is unaudited.

(1) BASIS OF PRESENTATION:

The  accompanying  financial  statements  have been prepared in accordance  with
generally accepted accounting  principles for interim financial  information and
with the  instructions  to Form  10-QSB  and  Rule  10-01  of  Regulations  S-X.
Accordingly,  they do not include all of the information and footnotes  required
by generally accepted accounting  principles for complete financial  statements.
In the opinion of management,  all  adjustments  (consisting of normal  required
adjustments) considered necessary for a fair presentation have been included.

Operating  results for the nine month period ended  September 30, 1998,  are not
necessarily  indicative  of the results that may be expected for the year ending
December 31, 1998. For further  information,  refer to the financial  statements
and footnotes thereto included in the Company's annual report of Form 10-KSB for
the year ended December 31, 1997.

(2) COMMITMENTS:

On July 7, 1994, the Company  entered into a five year  noncancelable  operating
lease for office space,  commencing  November 1994. The Company has an option to
rent  additional  space and a purchase  option in which ten percent of the lease
payments may be applied to the purchase price.

Rent  expense  under the  foregoing  lease and all other  operating  leases  was
$17,577  and  $16,830 for the nine  months  ended  September  30, 1998 and 1997,
respectively.

Effective  January 1, 1995, the Company  obtained an exclusive right to market a
dietary  supplement in the United States for three years.  The Company agreed to
pay  approximately  $60,000 for this right.  The agreement allows the Company to
recover this fee through  discounts on inventory  purchased through December 31,
1997. The license fee was amortized on a straight-line basis over the three year
period  of  the  contract  and  was  fully   amortized  at  December  31,  1997.
Amortization  expense in 1997 was $20,000.  In January 1998,  this agreement was
extended  until  December  31,  1998,  including  the right of first  refusal to
reobtain its  exclusive  marketing  rights  during this period.  The Company was
required to order  additional  inventory of  approximately  $15,000 by March 31,
1998, under the terms of this agreement  extension.  This agreement deadline was
further  extended  on  March  23,  1998  to  June  1,  1998.  The  Company  paid
approximately $5,500 in January 1998 toward this obligation. As of June 1, 1998,
the Company had not  purchased the  additional  inventory and the right of first
refusal  expired.  As of  September  30,  1998 the  $5,500  prepayment  has been
expensed and the Company is under no further obligation to purchase inventory.

See also Note 10.
                                     F-6
<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)

(2) COMMITMENTS (Continued):

The Company  entered into an agreement with Cyclops h. f.  (Cyclops),  a company
located in Reykjavik,  Iceland,  in May 1996 to secure  limited  exclusivity  to
certain  inventions  embodied  in patents  owned by Cyclops  for the  purpose of
creating  an  organization  that  would   commercialize   products  using  those
inventions.  In consideration,  the Company agreed to share equally with Cyclops
the  net  profits  derived  from  products  commercialized  by  the  Company  or
affiliates of the Company that use the inventions. This agreement expired in May
1997.

In April 1997, the Company  entered into an agreement with Atlantic  Syndication
Network,  Inc.  (ASNI) for the  production of a half hour premier cable program.
The Company  paid $2,500 in 1997 to reserve  production  time and also issued to
ASNI 10,000  shares of the  Company's  voting  common  stock.  The Company  also
granted ASNI an option to purchase up to 25,000 shares of its non-voting  common
stock at a purchase price of $1 per share.  This option expired June 1, 1998. On
August 10, 1998 the Company repurchased the 10,000 shares for $5,000 and retired
these shares previously issued to ASNI.

The Company has other commitments as discussed in Notes 6 and 7.

(3) COMMON STOCK SUBJECT TO REPURCHASE:

During 1994, the Company adopted a nonqualified  employee stock issuance plan to
provide  incentives  to  employees.  Stock  issued  under  this  plan  is at the
discretion  of the Board of  Directors  of the Company  and bears a  restrictive
legend.  All shares  issued  pursuant to this Plan must be held for a minimum of
two years and become fully vested after five years. During the three year period
beginning  on the first day of the third year  after  issuance  and ending  five
years after  issuance,  the Company shall purchase all or any part of the shares
from the employee upon the employee's written request; the purchase price of the
shares shall be 50% of the then current market value of the shares.

The Company reflects its obligation to repurchase the stock as a liability under
the caption  Common Stock Subject to Repurchase  in the  accompanying  financial
statements. Any change in the valuation of this account is recorded as a gain or
loss in the  accompanying  statement of  operations.  The  Company's  repurchase
obligation for current  employees is valued at 50% of the bid price of the stock
on the balance sheet date. The Company's repurchase obligation for stock held by
former employees is valued at 50% of the bid price on the date of the employee's
termination.

                                     F-7
<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)

(3) COMMON STOCK SUBJECT TO REPURCHASE:  (Continued)

The Company has reserved  100,000 of its  10,000,000  voting common stock shares
authorized to be used under this Plan.

1994 Shares
The Company  valued the shares  issued  under the plan in 1994 at 50% of the bid
price on award  date.  The quoted  market  price was not used to value the stock
since the stock does not trade  freely in an  established  market,  and thus,  a
market  price  could not be  accurately  established.  The  amount  recorded  is
classified as a reduction to stockholders' equity in the accompanying  financial
statements.  The Company  amortizes  this amount over the vesting  period on the
straight-line basis, the estimated benefit of future services.

In December  1994,  the Company  issued  25,000  shares to employees  for future
services under this plan. The Company valued the 25,000 shares at $37,500, which
was  approximately  50% less than the bid price at the award  date.  On June 30,
1997,  all of the  remaining  employees  holding  stock issued in 1994 under the
employee  stock  issuance  plan  noted  above,  terminated  employment  with the
Company. At that time, the remaining  unamortized amount of the stock issued for
future services was charged to expense.  The Company's  obligation to repurchase
the remaining 5,000 1994 shares expires in 1999.

1998 Shares
The Company valued the shares issued under the plan in 1998 at an average of the
stock price  during the 30 days prior and the 30 days after the award date.  The
quoted  market  price was not used to value the stock  since the stock  does not
trade  freely in an  established  market,  and thus, a market price could not be
accurately  established.  The amount  recorded is  classified  as a reduction to
stockholders'  equity in the  accompanying  financial  statements.  The  Company
amortizes this amount over the vesting period on the  straight-line  basis,  the
estimated benefit of future services.

In April 1998, the Company issued 1,500 shares to employees for future  services
under  this  plan.  The  Company  valued  the 1,500  shares  at $675,  which was
approximately 50% less than the bid price on the effective award date.

The Company  expensed  $675 and $18,500 under the plan for the nine months ended
September  30, 1998 and 1997.  The Company  also  recognized  a gain of $254 and
$1,563 for the same periods,  due to a change in the redemption  price on common
stock subject to repurchase.  No shares have been repurchased under this plan in
1998.

(4)     MAJOR CUSTOMERS AND SUPPLIERS:

Sales to the three largest  customers  were  approximately  72% and 69% of total
sales for the nine months ended September 30, 1998 and 1997, respectively.

(5) NOTES PAYABLE:

The Company has a $25,000  line-of-credit with a local bank. The monthly minimum
payment is calculated based on the outstanding balance. The interest rate varies
monthly at prime plus 3%  (currently  11.5%).  The  Company  has no  outstanding
balance as of September 30, 1998. The credit line can be canceled and payment of
the outstanding amount due can be required on demand by the bank at anytime.

                                     F-8
<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)

(6) JOINT VENTURES:

Effective May 1, 1995, the Company entered into a joint venture  agreement under
the name of Ocudex,  Inc. (Ocudex).  The Company and Ocumed,  Inc., an unrelated
company,  each own 50% of Ocudex.  The Company has advanced Ocudex $51,000 as of
December 31, 1997.  The Company  accounts for its investment in the Ocudex joint
venture using the equity method of accounting  whereby its investment is carried
at cost,  including  advances,  adjusted for the Company's share of earnings and
losses.  The Company  reduced  its  investment  in the joint  venture to zero at
December 31, 1997, due to uncertainty as to recovery of these amounts.

In March 1997, the Company entered into a joint venture agreement with Jurox PTY
Limited  (Jurox),  an  unrelated  company,  in order to  develop a new  product.
According to the agreement, each party shall be separately responsible for their
own costs for the development of the product.  The Company has agreed to provide
the developed product to Jurox at the cost to manufacture plus 10%. Jurox agrees
to pay the Company royalties on net sales of the product as follows:
          5% of net sales for the first  year of sales,  4% of net sales for the
          second year of sales, and 3% of net sales for a further 8 years.
No transactions have taken place as of September 30, 1998.

(7) DEFERRED OFFERING COSTS:

On October 14, 1997,  the Company  entered into a financial  services  agreement
with an unrelated company for financial  consulting  services related to raising
additional  capital.  Under this  agreement,  the  Company  issued an option for
600,000 shares of the Company's  common stock with an exercise price of $.25 per
share,  which is  approximately  50% of the market price on the date the parties
agreed to the terms of the  agreement.  The quoted  market price was not used to
value the stock since the stock does not trade freely in an  established  market
and, thus, a market price could not accurately be established.  The Company also
agreed to pay the consultant $85,000 in installments of $20,000 in October 1997,
and $5,000 each month  thereafter  until November 1998.  Beginning in March 1998
the  agreement  was  amended to provide  payment of the  remaining  installments
through  the future  issuance of the  Company's  common  stock.  The Company has
accrued  all earned but unpaid  amounts at  September  30,  1998.  The number of
shares to be issued  is  determined  monthly  by  dividing  $5,000 by 50% of the
average market price of the stock during the month the  compensation  is earned.
As of  September  30,  1998 the  Company  has paid  $40,000 in cash and  accrued
$25,000, the value of 106,474 shares of common stock, to be issued.

On April 30, 1998 the Company gave sixty days notice to terminate  the financial
services  agreement  and cancel the option for 600,000  shares of the  Company's
common  stock in favor of a new  agreement.  The Company  agreed to continue the
$5,000  monthly  payments for service in stock  through  July 31, 1998.  The new
agreement  specified  that if at least $2.5  million in new  capital  was raised
before July 31, 1998,  the  consultant  would be issued  50,000 shares of common
stock,  plus an amount of stock equal to $25,000  divided by the lowest  monthly
average  stock value during the months of March  through July 1998 and a monthly
retainer of $2,500 through  December 31, 1998. No new capital was raised by July
31, 1998 and the new agreement terminated.

                                     F-9
<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                  (Unaudited)

(7) DEFERRED OFFERING COSTS (Continued):

As the Company was preparing for a private placement to raise additional capital
in 1998,  the costs under this  agreement  and the direct  costs of  preparing a
business plan were classified as deferred charges.  These deferred costs were to
be offset  against the net  proceeds of the  offering.  Since no new capital was
raised under this agreement and the agreement was
terminated  effective  July 31, 1998,  deferred  offering costs in the amount of
$71,347 were expensed.

(8) EARNINGS PER COMMON SHARE:

Net income  (loss) per  common  share is  computed  in  accordance  with the new
requirements  of Statement of Financial  Accounting  Standards No. 128. SFAS 128
requires  earnings per share  information to be computed using a simple weighted
average of common  shares  outstanding  during the periods  presented.  SFAS 128
eliminated the previous  requirement  that earnings per share include the effect
of any dilutive common stock equivalents in the calculation. There was no effect
on the 1998 or  previously  reported  1997 per share amounts as a result of this
change in accounting method.

The stated  earnings  per share  amounts do not include any  potential  dilutive
effect if certain options issued in 1997 to purchase an additional 10,000 shares
of the  Company's  common  stock  were  exercised  because  the  exercise  price
currently  exceeds  market value and the effect would be  anti-dilutive  for all
periods presented.

(9)  COMPREHENSIVE INCOME

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 130,
"Reporting  Comprehensive  Income."  This  statement  established  standards for
reporting and display of comprehensive income and its components.  Comprehensive
income is net income,  plus certain  other items that are  recorded  directly to
shareholders'  equity,  bypassing  net  income.  The only  such  item  currently
applicable to the Company was the unrealized loss on investments.

The Company's comprehensive income was as follows:

<TABLE>
<CAPTION>
                                         Three Months Ended   Nine Months Ended
                                         September 30, 1998  September 30, 1998
                                         ------------------  ------------------
<S>                                      <C>                 <C>
Net loss                                 $        (121,843)  $        (115,162)
Other comprehensive income
  Unrealized gain (loss) on investments                 51                (343)
                                         ------------------  ------------------
Total comprehensive income (loss)        $        (121,792)  $        (115,505)
                                         ==================  ==================
</TABLE>

There  was no other  comprehensive  income  for the three or nine  months  ended
September 30, 1997.

(10)  INVENTORY ALLOWANCE

During the third  quarter  1998 the  Company  determined  that its  quantity  of
Garlessence  inventory  was in excess of current  requirements  and  provided an
allowance in the amount of $57,187.

See also Note 2.

                                     F-10
<PAGE>
Item 2. Management Discussion and Analysis or Plan of Operation

CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      MANAGEMENT DISCUSSION AND ANALYSIS
                          AS OF SEPTEMBER 30, 1998

Except for the historical  information  contained herein, this document contains
forward-looking  statements,  subject to uncertainties and risks,  including the
demand for the Company's  products and  services,  the ability of the Company to
successfully attract and retain personnel, competition,  uncertainties regarding
its  dealing  with  key  customers,  regulatory  uncertainties,  as  well as the
Company's ability to begin operations in additional markets and raise capital to
meet its operational requirements and expansion plans.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 1998, the Company's  working capital was $30,676 compared to
$89,144 at June 30, 1998. The most significant  change in working capital is due
to an  allowance  of $57,187  provided  for  Garlessence  inventory in excess of
current requirements.

Total  product sales  decreased  during the third quarter of 1998 by $4,012 (8%)
compared to the third  quarter of 1997.  This decrease in sales is due primarily
to general sales volatility as historically  experienced by the Company. Year to
date  sales  remained  stable,  only 3% lower than the year  before.  Management
expects  consulting  fee  revenues  to be much  less than  last  year's,  but to
increase in the fourth quarter over previous quarters in 1998. Selling,  General
and  Administrative  expenses  (SG&A)  decreased by 65% during the third quarter
1998  compared  to the  same  period  in  1997  due to a  reduction  in  outside
consulting, advertising and personnel costs.

Inventory decreased by 61% compared to the second quarter 1998. The reduction in
inventory is due primarily to an allowance provided in the third quarter of 1998
for  Garlessence  inventory in excess of current  requirements.  Management  has
continued to maintain appropriate  cyclodextrin  inventory levels in response to
normal customer sales.

The three year  period of time  (starting  January 1, 1995) in which the Company
could recover its original  licensing  fee for  Garlessence  of $60,000  through
discounted purchases of raw materials expired at the end of 1997 and the license
fee has been fully  amortized.  The Company has recovered  $9,137 of its license
fee  through  purchase  discounts.  The  Company  did  not  purchase  additional
inventory in the second quarter necessary to maintain the right-of-first-refusal
extension  through 1998; this status expired June 1, 1998. There is no assurance
that  the  license  fee or  product  investment  will be  recovered,  or that an
exclusive license can be obtained.

While the Company  continues to enjoy  non-exclusive  selling  rights,  combined
sales of Garlessence in 1997 and 1998 were less than $1,000.  Due to the reduced
sales levels,  the Company has provided an allowance for the inventory in excess
of current requirements in the amount of $57,187.  However,  Management believes
that  Garlessence  is a viable  product and  continues to seek out  distribution
arrangements  that will allow it to recover  its  licensing  fees and  inventory
costs.  The Company may be able to recover at least the  inventory  value of the
Garlessence  by selling it to companies  that  purchase  excess  inventory.  The
Garlessence product has a greater than five year shelf life.

<PAGE>
                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      MANAGEMENT DISCUSSION AND ANALYSIS
                          AS OF SEPTEMBER 30, 1998
                                (Continued)

In order to alleviate a potential  short term cash shortage  resulting  from the
reduced  sales  levels  in  December  1997 and  early in  1998,  Rick  Strattan,
President,  made a shareholder's  loan to the Company in March of  approximately
$16,800.  The loan is being amortized over a 12 month period at 8% interest with
payments due the first of each month.  As of September 30, 1998 the  outstanding
balance is approximately  $9,467.  Management does not expect further funding to
be required to meet the Company's cash needs.

In 1997,  the Company  entered  into a financial  consulting  agreement to raise
equity capital for new drug applications. As of July 31, 1998 no new capital was
raised, the agreement was terminated,  and the previously  capitalized  deferred
offering costs ($71,347) were expensed.  While some of these costs were paid out
of operations,  almost 40% were paid by the issuance of stock. The Company still
expects to benefit from the  continued  efforts of these  financial  consultants
through ongoing negotiations and growing interest by other companies.

To meet the  financial  needs of expected  future  growth,  the Company  filed a
registration  statement with the SEC to make a public  offering in 1996 and 1997
of 250,000 shares of common stock and 125,000 warrants of the Company. No shares
of stock were sold in this offering.  The offering closed April 30, 1997 and the
Company expensed the previously  capitalized  deferred offering costs ($127,467)
in the second quarter of 1997. While most of these offering costs were non-cash,
the net result was a loss in the financial  results  reported for the year ended
December 31, 1997.

The Company  currently has a $25,000 credit line with no outstanding  balance as
of  September  30,  1998.  The Company  reduced its  interest  expense by taking
advantage of its $91,000  combined  credit card borrowing  limits and paying off
its $14,700 credit line balance with lower interest credit card transfers.

The Company is in the fourth year of a five-year  lease for 3,000 square feet of
space for an office, laboratory, and manufacturing plant. The Company moved into
the building during October 1994. Rent payments are $18,000 in year one, $18,900
in year two,  $19,484 in year three,  $20,844 in year four,  and $21,888 in year
five. The Company also has a purchase  option on this space in which ten percent
of the lease  payments  may be applied to the  purchase  price.  The Company may
exercise an option to lease an additional  3,000 square feet of adjoining space.
The Company houses its  administrative  offices,  laboratory,  and manufacturing
facility in this complex,  utilizing an aggregate of approximately  1,650 square
feet.  This  facility has been built,  and can be  expanded,  according to "GMP"
(good manufacturing practices)  specifications in anticipation of the commercial
needs of the markets the Company  serves.  The  remaining  1,350  square feet of
space is for pilot plant  manufacturing and an analytical  laboratory.  However,
this  expansion will require  additional  funding and there is no assurance that
any additional funding will be available.  Management has no immediate plans for
this expansion.

The Company's  right-of-first-refusal  (ROFR) with Cyclops h.f. (CyC) to certain
inventions  embodied in patents  owned by Cyclops  expired in September of 1997.
Licenses to specific  ophthalmic drugs benefiting from CyC's inventions will now
have to be negotiated with the German company that

<PAGE>
                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      MANAGEMENT DISCUSSION AND ANALYSIS
                          AS OF SEPTEMBER 30, 1998
                                (Continued)

purchased  these  rights.  The  Company  feels  confident  that  rights to these
inventions can be obtained at least for sales in the United States.  There is no
assurance  that  the  Company  will  be  able  to  obtain  licenses  to the  CyC
inventions.

On May 1, 1995 the Company  entered  into a joint  venture  operating as Ocudex,
Inc. The Company and Ocumed,  Inc., (Ocumed) an unrelated company,  each own 50%
of Ocudex.  The Company had agreed to provide  funds on a best efforts  basis of
not more than $10,000 per month for up to 12 months. As of December 31, 1997 the
Company had advanced a total of $51,000 and realized  losses of $11,094 to date.
Since  there was no  activity  at Ocudex  during  all of 1997 and the  Company's
efforts  to  acquire  the assets of Ocumed,  did not  materialize,  the  Company
provided an allowance in the fourth quarter of 1997 for the remaining investment
in the amount of $40,406.  The Ocudex  corporate shell will remain available for
future use as the Company will continue to work with Ocumed to bring  ophthalmic
drugs using cyclodextrins to the market.

In May of 1996 the Company entered into a contractual agreement with Diversified
Corporate Consulting Group, LLC (DCCG), whereby the Company
transferred  110,010  shares of CTD's voting  common stock to DCCG in return for
future  financial  services  related to business and financial  public relations
improvement as defined in its agreement.  While this agreement expired in May of
1997, the Company continues to utilize DCCG's services on a best efforts basis.

During  the  eight  years  of its  existence  the  Company  has  created  a most
comprehensive database on patents involving cyclodextrins. Currently, management
is in the process of adding this  database to the  Company's  existing web site.
Customers will have access to the patent database through a subscription service
with a monthly  fee. The cost of the database is expected to be less than $5,000
and is being paid out of operations. However, the subscriptions fee revenue will
provide  continuing income at little or no cost to the company with the original
$5,000 expense  recovered within the first year of operation.  The Company plans
to add additional subscription databases in the future at minimal cost.

Management has evaluated the Company's  computer systems to determine the impact
of the Year 2000 (Y2K) on the Company's operations. Management has completed its
evaluation  and  determined  that both the  hardware  and  software  used by the
Company  are Y2K  capable  and no  additional  cost or impact on  operations  is
expected.

RESULTS OF OPERATIONS

Sales of  cyclodextrins  and related  manufactured  complexes  are  historically
highly volatile. In efforts to offset this volatility,  the Company continues to
expand its  revenue  producing  activities  to include  providing  research  and
development services for unrelated companies,  creating proprietary databases on
its web  site  that  will  generate  subscription  revenues  and  expanding  its
inventory line to include more  routinely  purchased  products.  While sales are
still volatile,  Management  feels that these efforts will reduce the volatility
and that  product and service  sales will be augmented  by  profitable  web-site
subscription services. 
<PAGE>
                  CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      MANAGEMENT DISCUSSION AND ANALYSIS
                          AS OF SEPTEMBER 30, 1998
                                (Continued)

Total  product  sales for the quarter  ended  September  30,  1998 were  $47,363
compared to $51,375 for the same period in 1997. Sales for the nine months ended
September 30, 1998 and 1997 remained constant.  Management expects  cyclodextrin
sales to continue at historical levels in the near term.

Product  sales are  primarily to large  pharmaceutical  and food  companies  for
research and development purposes. Sales of both products and services have been
concentrated  among a few large  customers.  For  1998,  one  customer  has been
responsible  for 55% of total sales and over the past three  years has  averaged
40% of total sales.

The Company's gross profit margin on product sales increased from 85% to 91% for
the third quarter of 1997 and 1998, respectively.  This increase in gross profit
margin is due to sales in the third quarter 1998 of inventory  items obtained at
no cost to the Company.  Occasionally,  the Company is able to obtain quantities
of  product  free or at a  reduced  cost  from  the  manufacturer  for  sampling
purposes.  The  Company is often able to sell  portions  of this  product to its
customers  resulting in unusually high gross margins due to the low  acquisition
costs. Future sales of these low cost products, while not assured, will continue
to positively  affect the Company's future gross profit and net income when they
occur.

Selling,  general and administrative  (SG&A) expenses for the third quarter 1998
decreased 65% from the third quarter 1997 ($35,374 vs. $100,447).  However, SG&A
expenses  for the third  quarter  1997  included  $26,920 of outside  consulting
services  related to the research and  development  project ongoing in the third
quarter  1997.  These  expenses  are  unusual  and are not  expected  to  recur.
Excluding  this amount,  normal SG&A expenses  decreased by $38,153  (35,374 vs.
$73,527).  This  decrease is the result of a reduction in personnel  and related
costs  made  in 1997 as well as a  decrease  in  advertising,  amortization  and
professional  fees.  Management  continues to manage SG&A expenses in efforts to
keep expenses in line with revenues thereby assuring operational profitability.

Consulting  services in the third  quarter 1998 were $300 compared to $43,331 in
the same period  1997.  Consulting  sales in 1997  resulted  from a research and
development project conducted in the third and fourth quarters.

The Company  experienced  two large  expenses in the third quarter of 1998:  the
Garlessence  inventory  allowance and the public  offering  expenses.  Combined,
these two items total $128,524. The effect of expensing these items is to create
a swing of $0.10 (from $0.01 to ($0.09)) in the EPS  reported by the company for
the three and nine months ended September 30, 1998. However, these items did not
result from normal operations of the Company.

The Company's loss from  operations for the nine months ended September 30, 1998
was $(123,046).  However,  the Company's net income from operations for the nine
months ended September 30, 1998 was $7,918 before the expenses for the inventory
allowance and the public offering costs.

The Company's net loss from  operations for the nine months ended  September 30,
1997 was ($73,520) before the public offering expenses. Comparing the results of
operations before the inventory allowance and public offering
<PAGE>
                 CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      MANAGEMENT DISCUSSION AND ANALYSIS
                          AS OF SEPTEMBER 30, 1998
                                (Continued)

costs for the nine months ended September 30, 1998 and 1997,  there is a $81,438
improvement  in operating  results from 1997 to 1998.  Operationally,  the above
expenses removed, the Company was profitable for the nine months ended September
30, 1998. This improvement in operating  results is due primarily to the reduced
SG&A expenses.

The Company  continues to develop new  products,  and  implement its strategy of
creating  operational  affiliates  that  will  use  CD's  in  herbal  medicines,
wastewater remediation, and pharmaceuticals.

<PAGE>
PART II: Other Information

Item 6.   Exhibits and Reports on Form 8-K

None.

(a)  Exhibits

Exhibit     Description                                                 Page

   (2)      Plan of Acquisition, Reorganization, Arrangement,
            Liquidation or Succession                                   None

   (4)      Instruments defining the Rights of Security Holders         None

  (10)      Material Contracts                                          None

  (11)      Statement re: Computation of Per Share Earnings             Note 8,
                                                                       Financial
                                                                      Statements

  (15)      Letter re: Unaudited Interim Financial Information          None

  (18)      Letter re: Change in Accounting Principles                  None

  (19)      Report Furnished to Security Holders                        None

  (22)      Published Report re: Matters Submitted to Vote of
            Security Holders                                            None

  (23)      Consents of Experts and Counsel                             None

  (24)      Power of Attorney                                           None

  (27)      Financial Data Schedule

  (99)      Additional Exhibits                                         None

(b) Reports on Form 8-K                                                 None

None.
<PAGE>
In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.


Dated:  November 13, 1998

                                          /s/ C. E. RICK STRATTAN
                                          C. E. RICK STRATTAN
                                          President, Chief Executive Officer,
                                          Chief Financial Officer