U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   Form 10-KSB

(Mark One)

(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (Fee Required)

                   For the fiscal year ended December 31, 1999

( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (No Fee Required)

              For the transition period from _________ to _________

                         Commission file number 0-24930

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                 (Name of small business issuer in its charter)

            FLORIDA                                   59-3029743
     State or other jurisdiction of               (I.R.S. Employer
     incorporation or organization)              Identification No.)

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

                     Issuer's telephone number: 352-375-6822

Securities registered under Section 12(b) of the Exchange Act:

         Title of each class          Name of each exchange on which registered

                                      None

Securities registered under Section 12(g) of the Exchange Act:

                               Class A Common Stock
                                (Title of class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 X No
----.

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB ( )

     State issuer's revenues for its most recent fiscal year:  $557,495.

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference at the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days: $1,099,363.13 based on the average high and low price as of March 29, 1999
of $1.3125 per share.

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: 1,687,610 shares of Common Stock
as of March 29, 2000.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                      None

Transitional Small Business Disclosure Format (Check One): Yes No X



<PAGE>


PART I

Item 1.  Description of Business

     Cyclodextrin Technologies Development, Inc. ("the Company") was organized
as a Florida corporation on August 9, 1990, with operations beginning in July
1992. The Company sells cyclodextrins ("Cyclodextrins" or "CDs") and related
products to the food, pharmaceutical and other industries. The Company has
recently began growing and selling mushrooms. The Company also provides
consulting services.

CDs

     Cyclodextrins are molecules that bring together oil and water and have
potential applications anywhere oil and water must be used together. Successful
applications have been made in the areas of agriculture, analytical chemistry,
biotechnology, cosmetics, diagnostics, electronics, foodstuffs, pharmaceuticals
and toxic waste treatment. Stabilization of food flavors and fragrances is the
largest current worldwide market for CD applications. The Company and others are
already developing CD-based applications in stabilization of flavors for food
products; elimination of undesirable tastes and odors; preparation of antifungal
complexes for foods and toiletries; stabilization of fragrances and dyes;
reduction of foaming in foods; cosmetics and toiletries; and the improvement of
quality, stability and storability of foods.

     CDs 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 too unstable or too insoluble 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. These side effects can be ameliorated by CDs. CDs also
have many potential uses in drug delivery for topical  applications  to the eyes
and skin.

     The Company believes that the application of CDs in both OTC and ethical
ophthalmic products provides the greatest opportunity for the successful and
timely introduction of CD containing preparations for topical drug use.

     The Company provides consulting services for the commercial development of
new products containing CDs. The Company's revenues are derived from consulting,
the distribution of CDs, the  manufacturing of selected CD complexes,  and sales
of its own manufactured and licensed products containing CDs.

Mushrooms

     On May 7, 1999, the Company created Natural Spirit Mushroom Enterprise,
Inc., a Florida corporation, for the purpose of growing, developing and
marketing mushroom-based products, some of which would be combined with
cyclodextrin to be used in herbal, cosmetic and alternative medicines. Natural
Spirit acquired the rights to certain proprietary methods of exotic mushroom
cultivation from a defunct mushroom producing company. CTD issued 26,500 shares
of its common stock to investors and promoters of the defunct company for their
rights to certain processes expected to be used by Natural Spirit. 98% of the
outstanding shares of Natural Spirit are owned by the Company with 1% being
owned by C.E. Rick Strattan and 1% being owned by the Chief Operating Officer of
Natural Spirit, John Lindsay.

     CTD believes that the addition of Natural Spirit to the CTD structure has
dual benefits for CTD. The direct benefit comes from the expectation that
Natural Spirit will become fully operational by year end, and will provide a
less volatile source of income from its sales of exotic mushrooms. The indirect
benefit lies complimentary nature of the respective products of CTD and Natural
Spirit. The exotic mushrooms and the expertise of Natural Spirit provide an
excellent opportunity for CTD to expand its own product line into dietary
supplements utilizing the active ingredients from the mushrooms and the
cyclodextrins of CTD. In 1999, the revenues obtained from the sale of mushrooms
by the Company were $1,582. The Company expects the sales of mushrooms by
Natural Spirit to increase to exceed $100,000 in 2000.

     Natural Spirit's operations have been financed by CTD. CTD made an initial
direct investment of approximately $80,000 to acquire approximately 40 acres of
land, building and equipment formerly used as a Mushroom Farm. The funds came
from profits from operations and $50,000 in new CTD stock sold between March and
June of 1999. The offering, if completely sold, will result in the issuance of
650,000 shares of new CTD stock and the receipt by the Company of $1,287,500.

<PAGE>

       CD Product Background

     CDs are donut shaped circles of glucose (sugar) molecules. CDs are formed
naturally by the action of bacterial enzymes on starch.  They were first noticed
and  isolated in 1891 by a French  scientist,  Villiers,  as he studied  rotting
potatoes.  The bacterial  enzyme  naturally  creates a mixture of at least three
different  CDs depending on how many glucose units are included in the molecular
circle; six glucose units yield Alpha CD ("ACD");  seven units, beta CD ("BCD");
eight units, gamma CD ("GCD").  The more glucose units in the circle, the bigger
the circle,  or donut. The inside of this "donut" provides an excellent  resting
place for  "oily"  molecules  while the  outside  of the donut is  significantly
compatible with water enabling clear stable solutions of CDs to exist in aqueous
environments  even when an "oily" molecule is carried within the donut hole. 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 water as the
primary vehicle.

     CDs are manufactured in large quantities by mixing appropriate enzymes with
starch solutions, thereby reproducing the natural process. ACD, BCD and GCD can
be manufactured by an entirely natural process and therefore are considered to
be natural products. Additional processing is required to isolate and separate
the CDs. The purified ACD, BCD, and GCD are referred to collectively as natural
CDs (NCD's).

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

     The Company's strategy is to introduce products with little or no
regulatory burden in order to minimize product expenses and create profitable
revenue.

     The Company currently sells its products for use in the pharmaceutical,
food and industrial chemical industries.
<PAGE>

       CD Market

     The food additive industry has been experimenting with CDs for many years.
Now that commercial supply of these materials can be assured and regulatory
approval is imminent, the Company believes that the food additive industry will
significantly increase its use of CDs.

     CDs have been used in a variety of food products in Japan for over 25
years.  The  market  for the use of CDs in food  products  in 1997 in Japan  was
estimated at $150 million.  Within the last five years, more European  countries
have  approved  the use of CDs in food  products.  In the United  States,  major
starch  companies are renewing their earlier  interest in CDs as food additives.
Oral  arguments  for  regulatory  approval  by the United  States  Food and Drug
Administration  ("FDA") have been accepted. As of November 3, 1997, BCD use as a
food additive in 10 categories of food products was confirmed to be GRAS.

     Applications of CDs in personal products and for industrial uses have
appeared in many patents and patent applications. Proctor & Gamble uses CDs in
Bounce(R), a popular fabric softener. Avon uses CDs in its dermal preparations
using its Age Protective System APS(R). These uses will grow as the price of the
manufactured CDs decrease or are perceived as acceptable in view of the value
added to the products.

     In Japan at least twelve pharmaceutical preparations are now marketed which
contain CDs. The CDs 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, the
dollar value of the worldwide market for products containing CDs and for
complexes of CDs can be 2 to 3 to 4 times that of the CD itself.



<PAGE>

        CD Products

     The Company's CD products include its Trappsol(R), Aquaplex(R), and
AP(TM)-Flavor product lines. The Trappsol product line consists of approximately
15 different varieties of CDs and the Aquaplex product line includes more than
three dozen different complexes of active ingredients with various CDs. In
addition to these product lines, the Company introduced Garlessence( R) in the
fourth quarter of 1995. Garlessence is the first ingestible product containing
CDs to be marketed in the U.S. The Company believes that by marketing
Garlessence it has demonstrated industry leadership. The Company also provides
consulting services, research coordination, and the use of CD Infobase(TM), a
comprehensive database of CD related information. The Company has protected its
service and trade marks by registering them with the U.S. Patent and Trademark
office. The following trademarks have been approved: Trappsol(R),
Garlessence(R), and Aquaplex (R). These properties add to the intangible asset
value of the Company.

     CTD purchases CD's from commercial manufacturers around the world
including: Wacker Chemie - Munich, Germany; Ensuiko Sugar Refining Co., Ltd. -
Yokohama, Japan; Nihon Shokuhin Kako - Tokyo, Japan; Roquette Freres - Le Strem,
France; American-Maize Products - Hammond IN, USA. CTD purchases specialty CD's
on occasion from Cyclolab R&D Company in Budapest, Hungary. The Company does not
manufacture cyclodextrins.

     The Company has also introduced new products into its basic line of CDs and
CD complexes--liquid preparations of CDs; relatively unprocessed, less expensive
mixtures of the natural CDs; naturally modified CDs (glucosyl and maltosyl); and
finally, excess production of custom complexes when those items are not
proprietary or restricted by the customer.
<PAGE>

         Business Strategy

     The Company's strategy has been and will continue to be to generate
profitable revenue through sales of CD related goods, natural medicines (using
the ingredients found in mushrooms, herbs and other medicinal natural sources)
and services. The long term success of this strategy depends on the smooth and
continuous transition into CD-related products with increasing value-added
attributes and the development of its natural medicinal offerings based on
natural sources, especially mushrooms.

     From inception through the current year, sales of CDs and CD derivatives
have been sufficient to provide the necessary operational profitability to
sustain the Company. Since these materials were simply purchased and resold,
they had the least value-added attributes.

     Presently, sales of CD complexes represent 31% of the Company's product
sales revenues. Transition to the more value-added complexes continues and is
desirable for increased profitability since higher margins can be maintained for
these products. However, it appears that the distribution oriented business of
CD sales has eroded. Combined with price reductions dictated by the market, the
revenues from the sales of distributed products have decreased as much as the
revenue from CD complexes has increased. The Company continues to be dependent
on just a few major customers for the majority of its revenue. In response to
this situation the Company has expanded its original business strategy of
parlaying its leadership position in the presently quite small CD industry as a
supplier of CDs, CD derivatives, CD complexes to include:

(1)  Marketing and launching a dozen OTC and naturaceutical products (e.g.,
     dietary supplements) utilizing CD delivery benefits. For example, by
     extracting specific ingredients from the garlic clove and complexing these
     ingredients with Trappsol(R) B (beta cyclodextrin) Garlessence(R) was
     created. Similar products can be created with any of the other herbal
     ingredients such as ginseng, echinacea, ginkgo, cat's claw, and melatonin.

(2)  Licensing the use of the Trappsol(R)symbol for use by others wishing to use
     CD delivery technology. This strategy is reflected in the Garlessence
     package which, in addition to the Garlessence trademark, carries a
     Trapposol trademark. This symbol will be promoted as an indication that a
     Trappsol(R)cyclodextrin is used with the product within and thereby assures
     the user of the quality of the aqueous delivery system. This symbol will be
     licensed in the same way as the MLB (Major League Baseball) symbol is for
     baseball related products and the Nutrasweet(R)symbol is for artificially
     sweetened products containing Nutrasweet(R).

(3)  Growing mushrooms and other natural medicinal sources to create revenue
     from direct sales and to create a source of raw materials for its
     development of enhanced natural medicinals using CD's.

<PAGE>


     The Company intends to increase its business development efforts in the
food additive and personal products industries while continuing to build on its
successes in the pharmaceutical industry.

     Business development on behalf of the Company's clients will include the
following: (i) negotiation of rights and/or licenses to CD-related inventions;
(ii) consultation with manufacturers to establish customized manufacturing
specifications; (iii) patentability assessments and strategic planning of patent
activities; (iv) trade secret strategies; (v) regulatory interface; and (vi)
strategic marketing planning.

     The Company believes its competitive advantage lies in its experience and
know how in the use and application of CDs, areas in which it believes it has a
significant lead.

     In addition to its licensing efforts, the Company intends to coordinate
research studies in which it will retain a portion of the rights created as a
result of the research work supported.

     Assuming the availability of funds, the Company will negotiate licensing
rights to its own selected inventions. Because of its comprehensive technical
and patent database for CD-related inventions, the Company believes it is
uniquely positioned to take advantage of constantly evolving licensing
situations.


<PAGE>


     Marketing Plan

     The Company believes that the failure of businesses to exchange information
about CD molecules has hindered a more rapid commercialization of CDs as safe
excipients. The Company believes that its philosophy of partnering and sharing
will act as a catalyst to create momentum overcoming the inertia created by the
previous conservatism and secrecy.

     The Company's sales have always been direct, volatile and driven by the
acceptance of CD's as beneficial excipeints. Arrangements with large laboratory
supply companies and several diagnostic companies have provided a strong sales
base, but at the price of dependency on a few customers.

     The Company has taken advantage of the propensity of researchers to use the
Internet to gather information about new products by establishing a WEB Page and
"site" on the world-wide web and obtaining a unique and descriptive domain name:
"cyclodex.com".
<PAGE>

     Rather than trying to push companies to introduce CD products, the Company
intends to pull them into the market by launching approximately seven new CD
containing products of its own into the U.S. market over the next five years.
These products will address needs in the relatively unregulated areas of natural
medicine, topical OTC (over the counter) preparations, veterinary products, and
home gardening.

     The  Company  intends  to work with  clients  in  countries  whose  current
regulatory  views include CDs as natural products acting as excipients to
introduce  beneficial  pharmaceuticals  improved by CDs.

     Along  with  the  new  products  themselves,  the  Company  has  created  a
licensable mark that may be used by other manufacturers  wishing to
take advantage of the improved aqueous  delivery  afforded by Trappsol CDs. This
protected mark has the capability of generating  revenues in a manner similar to
the  Nutrasweet(R)  (artificial  sweetener)  and MLB(R) (major league  baseball)
logos.

     The Company intends to generate additional revenue through obtaining rights
to certain patents that it will sublicense to appropriate  organizations or that
it will use to  develop  its own  proprietary  products.  Revenue  would then be
expected to result from  sub-licensing  royalties,  sales of CD  complexes to be
used in the newly developed  pharmaceuticals,  and finally from the sales of the
products to end users.

     Assuming an ongoing successful process of development, approval and
adoption of CDs and CMCDs for pharmaceutical applications, the Company's
objective is to initiate dialogue and be well prepared for partnerships with
major food companies. Price is a primary concern in this market, but unlike
pharmaceuticals where FDA permission for clinical testing may be obtained before
actual FDA product approval, food companies cannot feed experimental
formulations to test panels of consumers until the ingredients, i.e., the CDs,
receive approval for human consumption. Therefore, the Company will work with
the food companies and key university food research groups to initially evaluate
non-taste applications. These questions will initially be explored using NCDs
since commercial adoption will depend heavily upon the price of the CD selected
and NCDs will always be the least expensive. The benefits derived from the use
of CDs with expensive ingredients (e.g., flavors, fragrances)have already become
accepted commercial uses for CMCDs (chemically modified CSk's) and (naturally
modified CD's) NMCDs.
<PAGE>

         Competition

     The  Company is  currently a leading  consultant  in  determining  what the
manufacturing  standards  and costs for CDs and CMCDs are.  However,  there will
always  exist  the  potential  for  competition  in this  area  since no  patent
protection can be comprehensive and forever exclusive.  Nevertheless, there is a
perceived  barrier to entry into the CD industry  because of the lack of general
experience with CD complexation procedures. The Company has established a strong
business  relationship  with one of the  experts  in this field --  Cyclolab  in
Hungary -- and has utilized the services and expertise of this  laboratory.  The
Company believes this relationship  provides a significant  marketing lead time,
and combined with a strong  marketing  presence,  will give the Company a two to
three year lead time advantage over its competitors.

     The  Company  intends  to form a more  formal  business  relationship  with
Cyclolab in Hungary by creating a Cyclolab-USA  laboratory  facility and thereby
strengthen  its  competitive  advantage.  Discussions  between the principals of
Cyclolab  and  CTD  have  been   ongoing  for  more  than  5  years.   Potential
relationships which have been discussed include joint venture arrangements,  the
Company's  outright  acquisition  of  Cyclolab  and the  employment  of Cyclolab
personnel to create Cyclolab-USA. There is no assurance that the Company will be
able to reach a formal business relationship with Cyclolab.


<PAGE>

         Government Regulation

     Under the Federal  Food,  Drug and Cosmetic Act ("Food and Drug Act"),  the
Food  and  Drug  Administration  ("FDA")  is given  comprehensive  authority  to
regulate the development,  production,  distribution,  labeling and promotion of
food and drugs. The FDA's authority  includes the regulation of the labeling and
purity of the Company's  food and drug  products.  In the event the FDA believes
that 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.

     The FDA and comparable  agencies in foreign  countries  impose  substantial
requirements  upon the introduction of therapeutic drug products through lengthy
and detailed laboratory and clinical testing procedures, sampling activities and
other costly and time consuming  procedures.  The extent of potentially  adverse
government   regulations   which  might  arise  from   future   legislation   or
administrative action cannot be predicted.

     Under present FDA regulations,  FDA defines drugs as "articles intended for
use in the diagnosis,  cure,  mitigation,  treatment or prevention of disease in
man."  The  Company's  product  development  strategy  is at first to  introduce
products  that  will not be  regulated  by the FDA as drugs  because  all of its
ingredients are natural products or are generally regarded as safe (GRAS) by the
FDA.  The  Company  is  continually  updated  by  counsel  as to  changes in FDA
regulations that might affect the use of and claims for these products. There is
no assurance that the FDA will not take the position that the Company's food and

nutritional  supplement  products are subject to  requirements  relating to drug
development  and sale.  The  effect of such  determination  could be to limit or
prohibit distribution of such products.

         Employees

     In 1999 the Company  employed 9 persons on a full time  basis.  None of the
Company's  employees belong to a union. The Company believes  relations with its
employees are good.
<PAGE>
Item 2.  Description of Properties.

     The Company occupies a 3,000 sq. ft. building at 3713 S.W. 42nd Ave., Suite
3, Gainesville, Florida 32608, pursuant to a 5-year lease beginning November 1,
1994. In 1999, this lease was extended for an additional two-year period until
November 1999, at an annual rent of $21,888. The Company also has an option
to lease an additional 3,000 sq. ft. of space. The Company houses its
administrative offices in approximately 1,100 sq. ft. of this space; an
additional 550 sq. ft. is dedicated to laboratory/manufacturing functions. The
remaining 1,350 sq. ft. has been prepared for additional laboratory and pilot
plant manufacturing use.

     The current marketing and sales activities are implemented from that site.
The entire 6,000 sq. ft. could support a total of 12 - 15 people and therefore
is expected to be adequate for the foreseeable future. Current total office and
laboratory operating expenses excluding salaries haveincreased to about $20,000
per month with the creation of NSME.

     On June 4, 1999, the Company bought approximately 40 acres in Alachua
County, Florida, for a purchase price of $210,000 which was paid for in part by
a new first mortgage of $150,000. The property had been developed in part as a
mushroom growing facility. Since the purchase of the property, the Company has
continued to develop the property and use the property to grow various types of
mushrooms. The property contains two grow-houses which the Company believes
are adequate to grow approximately 24,000 pounds of mushrooms per year. Two
additional grow-houses are under construction. There is a residential
building which is being used to house the operations of the Company's
mushroom-growing subsidiary.

Item 3.  Legal Proceedings.
         None

Item 4.  Submission of Matters to a Vote of Security Holders.
         None


<PAGE>

Part II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

     In October 1994, the Company's securities began trading on the OTC Bulletin
Board and in the  over-the-counter  market "pink  sheets" under the symbol CTDI.
Since the commencement of trading of the Company's securities, there has been an
extremely limited market for its securities.  During the fourth quarter of 1995,
one of the Company's  market makers ceased  business.  The following  table sets
forth high and low bid quotations for the quarters  indicated as reported by the
OTC Bulletin Board.

<TABLE>
<S>           <C>                  <C>               <C>
                                    High               Low
1995          First Quarter        $ 7.50            $ 3.00
              Second Quarter       $ 8.50            $ 4.25
              Third Quarter        $ 9.00            $ 4.00
              Fourth Quarter       $ 8.00            $  .50
1996          First Quarter        $ 2.25            $  .50
              Second Quarter       $ 1.0625          $  .75
              Third Quarter        $ 2.25            $  .25
              Fourth Quarter       $ 1.00            $  .625
1997          First Quarter        $ 3.00            $  .75
              Second Quarter       $ 1.50            $  .562
              Third Quarter        $  .562           $  .437
              Fourth Quarter       $ 1.062           $  .531
1998          First Quarter        $ 0.875           $ 0.375
              Second Quarter       $ 0.625           $ 0.375
              Third Quarter        $ 0.500           $ 0.281
              Fourth Quarter       $ 0.260           $ 0.170
1999          First Quarter        $ 0.406           $ 0.115
              Second Quarter       $ 0.437           $ 0.156
              Third Quarter        $ 0.25            $ 0.187
              Fourth Quarter       $ 0.468           $ 0.156

</TABLE>

     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  December  31,  1999, 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 56.

         Dividend Policy

     The Company  does not  anticipate  paying any cash  dividends on its common
stock in the  foreseeable  future  because it intends to retain its  earnings to
finance the expansion of its business. Thereafter, 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.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     When used in this report, the words "believes," expects," "anticipates" and
similar  expressions  are  intended  to  identify  forward-looking   statements.
Statements herein regarding sales and research performance,  expected financing,
and expected  regulatory  approval of the Company's  products further constitute
forward-looking  statements  under federal  securities laws. Such statements are
subject  to  certain  risks  and  uncertainties  that  could  cause  the  actual
realization  to  be  delayed  or to  not  occur.  Management  has  made  certain
assumptions  regarding each of the statements  which may or may not be accurate.
Actual research and development  results may vary significantly from the current
plans.  Actual  Company  financing  activities may vary  significantly  from the
current plans and may result in the Company changing its plan of the use of such
proceeds.

Liquidity and Capital Resources

     As of December 31, 1999, the Company's net working capital was $120,186,
and $90,093 at the end of 1998; the Company's net working capital steadily grew
over the year to this level.

     Total product sales for 1999 more than doubled ($557,495 vs. $276,325) from
the year before. This substantial increase resulted from the anticipated
emergence of new users of cyclodextrins (CD) resulting from the greater
regulatory acceptance of CD's for use in commercial products. More specifically
to the Company, the increase resulted from first time customers in addition to
its major customers buying more CD's more frequently during the year. The
Company's consulting revenues increased as well over the year before ($9,466 vs.
$350), and should continue to increase.


     Inventory more than doubled from year-end 1998 to 1999 ($85,249 vs.
$32,786). These levels were increased in anticipation of the continued strong
sales expected for the first quarter of 2000.

     In 1999, the company obtained $35,000 in a private placement of 70,000
shares of 144 restricted common shares of the company. An additional $15,000 was
raised by the sales of 20,000 shares as part of a 505D offering. The Company
used these funds and approximately $300,000 of debt equity to purchase 40 acres
of land, buildings, and equipment to be used by the Company's new subsidiary,
Natural Spirit Mushroom Enterprises, Inc. (Natural Spirit). If the offering is
sold out, an additional $1,272,500 from sales of an additional 630,000 shares of
the Company's stock is expected to be used in the development and expansion of
the Natural Medicinal Project underway at Natural Spirit.

     The Company currently has a $25,000 credit line with approximately $ 3,000
outstanding balance as of December 31, 1999. The Company also has available
approximately $ 50,000 in combined credit card lines with less than $ 8,000
outstanding.

     The Company's previous 5-year lease for its 3000 square feet of office and
laboratory space has been extended two years until November 2001. The company
expects to move its offices to its own facility during the year 2000 and will
sublet its current space for 2001. The two year lease extension provides the
Company considerable flexibility in the timing and expense of its move to new
offices.

     The Company's web site (cyclodex.com) has contributed to the Company's
increase in CD product sales by providing companies and universities in the US
and the rest of the world a way to easily locate a source of CD supplies and
technology. The Company has received limited response to its subscription
service for its patent database. As the Company's financial resources grow,
management will allocate additional human resources to the management,
maintenance, and upgrading of its web site. As part of its commitment to its
presence on the Internet, the Company intends to allocate in 2000 financial
resources for a significant upgrade and expansion of its Web Site.

     The Company's total assets more than doubled ($766,745 vs. $325,447) from
year end 1998 to year end 1999 as a result of its strong sales performance and
the acquisition of approximately $330,000 of property and equipment in 1999.

     In the second quarter of 1999, the Company took its first step into the
direct production of a dietary supplement class of products by obtaining the
rights to certain trade secret technology, which dramatically improves the
production capabilities for mushroom cultivation, and purchased a site to
utilize this technology for the production of exotic mushrooms and other
medicinal plants. The acquisition marks the beginning of the Company's expansion
into a basic manufacturing role for all types of alternative medicines. The
immediate strategy is for the Company to grow selected exotic mushrooms in bulk
for the edible market, for research, and for its own development of alternative
medicines based on the natural ingredients in selected mushrooms. By the end of
December 1999 Natural Spirit had produced for sale approximately 1000 lbs. of
Shiitake mushrooms and had generated revenue of approximately $1000.

Results of Operations

     Sales for the year ended December 31, 1999 ($557,495) were more than double
the sales for the same period in 1998 ($276,352). Sales of CD's and related
manufactured complexes have historically been highly volatile. This large
increase in 1999 was the result of first time customers and increased sales to
existing customers. The average size of the Company's sales increased in 1999
from 1998. These new customers significantly reduced the Company's dependence of
the past on just one or two major purchasers. In 1998 one company accounted for
48% of the Company's sales; in 1999 that same company, while buying more, only
accounted for 28% of the Company's total product sales in 1999. Management's
goal is to continue to diversify its sales base. Sales to three customers
represented 58% of 1999 sales while two customers accounted for 59% of 1998
sales.

     The Company's gross profit margin on product sales increased from 80%
(1998) to 86% in 1999. This increase was primarily due to the advancement of
projects the Company has been nurturing for several years to stages where a
greater volume of CD's is required. The Company sold more of its higher gross
margin products in 1999 compared to 1998.

     Selling, general and administrative (SG & A) expenses for 1999 ($392,492)
increased 124% over those of 1998 ($175,427), which doesn't include $127,876 of
one-time expenses that were reported in the total expenses of 1998. The Company
believes that the increase was due in large part to its acquisition and start up
of its subsidiary, Natural Spirit. While a 100% increase in expenses is not
unheard of to double sales, the Company's management is examining all aspects of
Natural Spirit operations to see that the expenses associated with Natural
Spirit are significantly reduced in 2000. One of management's goals is to keep
total SG & A expenses below $250,000 for the year 2000.

     Consulting services were $9,466 in 1999 compared to $350 in 1998.
Management expects these revenues to grow slightly in 2000.

     The Company has unused operating loss carryforwards and deductible
temporary differences totaling approximately $1,366,000 at December 31, 1999. If
not used, the carryforwards expire in years beginning in 2009. If all the
operating loss carryforwards and deductible temporary differences were used, the
Company would realize a deferred tax asset of approximately $314,000 based upon
expected income tax rates. The Company has previously recognized the benefit of
these deferred tax assets. Realization depends on generating sufficient taxable
income before the expiration of the loss carryforwards. Although realization is
not assured, Management believes that approximately 60% of the deferred tax
asset will be realized based upon anticipated profitability in the future. The
amount of the deferred tax asset considered realizable, however, could be
reduced in the near term if estimates of future taxable income during the
carryforward period are reduced.

     The Company recorded income tax expense of $20,000 and $35,000 in 1999 and
1998, respectively, although the Company was not required to pay income taxes in
these years. The income tax expense in 1999 was a result of reporting net income
for the year and a change in the deferred tax asset valuation allowance. The
income tax expense in 1998 was a result of a change in the deferred tax asset
valuation allowance.

     The Company absorbed $150,512 of Natural Spirit start-up expenses (38% of
its total SG & A expenses) using operational revenue and still reported a
consolidated net income of $69,407 in 1999 compared to a loss of $109,583 in
1998.

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

Item 7.  Financial Statements



                        [LETTERHEAD OF JAMES MOORE & CO.]

                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Stockholders of
Cyclodextrin Technologies Development, Inc.:



We have audited the  accompanying  consolidated  balance  sheet of  Cyclodextrin
Technologies  Development,  Inc.  as of  December  31,  1999,  and  the  related
consolidated  statements  of  operations,  comprehensive  income,  stockholders'
equity and cash flows for the years  ended  December  31,  1999 and 1998.  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 conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  Cyclodextrin
Technologies  Development,  Inc. as of December 31, 1999, and the results of its
operations and its cash flows for the years ended December 31, 1999 and 1998, in
conformity with generally accepted accounting principles.

/s/James Moore & Company
January 28, 2000
Gainesville, Florida

                                     F - 1



<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999
<TABLE>
<CAPTION>
                                     ASSETS

<S>                                                     <C>
CURRENT ASSETS
 Cash and cash equivalents                               $     73,425
 Accounts receivable                                           21,264
 Inventory                                                     85,249
 Current portion of note receivable                            25,157
 Deferred tax asset                                            15,000
 Other current assets                                           6,021
                                                        -------------
     Total current assets                                     226,116
                                                        -------------
PROPERTY AND EQUIPMENT                                        331,825


                                                         -------------
OTHER ASSETS
 Notes receivable, less current portion                        10,832
 Deferred tax asset                                           180,000
 Intangibles                                                   17,972
                                                         -------------
         Total other assets                                   208,804
                                                         -------------
TOTAL ASSETS                                             $    766,745
                                                        =============
</TABLE>

The  accompanying  notes to financial  statements  are an integral  part of this
statement.

                                     F-2



<PAGE>
                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999
                                   (Continued)
<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                    <C>
CURRENT LIABILITIES
 Accounts payable and accrued expenses                   $      58,766
 Current portion of long term debt                              23,920
 Line of credit                                                  3,294
 Due to shareholder                                             19,950
                                                         -------------
     Total current liabilities                                105,930
                                                         -------------
 Long Term debt, less current portion                          186,475
                                                          -------------

Common stock payable                                             7,800
                                                           ------------

STOCKHOLDERS' EQUITY
 Class A common stock, par value $.0001 per share,                 158
  9,900,000 shares authorized, 1,587,610 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
 Additional paid-in capital                                 1,765,943
 Accumulated deficit                                       (1,299,561)
                                                         -------------
     Total stockholders' equity                               466,540
                                                         -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $   766,745
                                                         =============
</TABLE>

The accompanying notes to financial statements are an integral part of this
statement.

                                     F-3


<PAGE>
                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
 <TABLE>
<CAPTION>                                                     1999            1998
                                                           -------------   -------------
<S>                                                        <C>             <C>
PRODUCT SALES                                              $  557,495      $    276,325

COST OF PRODUCTS SOLD                                          74,832            55,856
                                                           -------------   -------------
GROSS PROFIT                                                  482,663           220,469

CONSULTING SERVICES AND OTHER OPERATING REVENUE                 9,466               350
                                                           -------------   -------------
TOTAL OPERATING REVENUE                                       492,129            220,819
                                                           -------------   -------------
OPERATING EXPENSES
 Selling, general and administrative                          392,492            175,427
 Public offering expenses                                         -               70,689
 Write down of inventory to net realizable
 value                                                            -               57,187
                                                           -------------   -------------
     Total operating expenses                                 392,492            303,303
                                                           -------------   -------------
INCOME (LOSS) FROM OPERATIONS                                  99,637           (82,484)
                                                           -------------   -------------
OTHER INCOME (EXPENSE)
 Investment and other income                                     (792)           10,633
 Gain due to change in redemption price
  on common stock subject to repurchase                         1,660               420
Interest expense                                              (11,098)           (3,152)
                                                           -------------   -------------
     Total other income (expense)                             (10,230)            7,901
                                                           -------------   -------------
INCOME (LOSS) BEFORE INCOME TAXES                              89,407           (74,583)

INCOME TAX EXPENSE, net                                       (20,000)          (35,000)
                                                            -------------   -------------
NET INCOME (LOSS)                                         $    69,407       $  (109,583)
                                                            =============   =============
NET INCOME(LOSS)PER COMMON SHARE                          $       .05       $      (.08)
                                                            ===========   =============
WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                                       1,539,377         1,290,434
                                                           =============    =============
</TABLE>
The  accompanying  notes to financial  statements  are an integral part of these
statements.
                                     F-4


<PAGE>
                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                     1999              1998
<S>                                             <C>                <C>
                                                  -------------    -------------
NET INCOME (LOSS)                                $     69,407      $   (109,583)
                                                 -------------     -------------
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
  Unrealized holding losses arising during
   the period                                          -                 (4,164)
  Less:  Reclassification adjustment for previous
    unrealized losses included in net income (loss)    4,164              3,755
                                                   -------------   -------------
OTHER COMPREHENSIVE INCOME (LOSS)                      4,164               (409)
                                                   -------------   -------------
COMPREHENSIVE INCOME (LOSS)                      $    73,571        $  (109,992)
                                                   =============   =============
</TABLE>

The  accompanying  notes to financial  statements  are an integral part of these
statements.

                                     F-5
<PAGE>
<TABLE>
<CAPTION>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

                                       COMMON STOCK             ADDITIONAL   ACCUM. OTHER                      TOTAL
                                                                 PAID-IN     COMPREHENSIVE    ACCUMULATED   STOCKHOLDERS'
                                    SHARES        AMOUNT         CAPITAL     INCOME (LOSS)      DEFICIT        EQUITY
                                  -----------   -----------   ------------  -------------   ------------   ------------
<S>                             <C>            <C>            <C>           <C>           <C>             <C>
Balance, December 31, 1997         1,220,110    $   120        $ 1,670,744   $   (3,755)    $(1,259,385)   $  407,724

Shares issued for services           106,474         11             24,989           -              -          25,000

Shares repurchased and retired       (10,000)        (1)            (4,999)          -              -          (5,000)

Other comprehensive income(loss)         -            -                -           (409)            -            (409)

Net loss                                 -            -                -             -        (109,583)      (109,583)
                                  -----------    -----------    -----------    -----------   -----------   ------------
Balance, December 31, 1998         1,316,584        130          1,690,734       (4,164)    (1,368,968)       317,732

Shares issued for services           253,000         26             23,630           -              -          23,656

Shares repurchased and
 retired                            (106,474)        (9)            (6,380)          -              -          (6,389)

Shares issued to acquire
 rights                               26,500          2             13,248           -              -          13,250

Shares sold                           90,000          9             44,711           -              -          44,720

Expiration of repurchase
  obligation                           8,000          -                -             -              -             -

Other comprehensive income               -            -                -          4,164             -           4,164

Net income                               -            -                -             -          69,407         69,407
                                 ------------   ------------   ------------   ------------   ------------  -----------
Balance, December 31, 1999         1,587,610        158          1,765,943           -      (1,299,561)       466,540

                                 ============   ============   =============  ============   ============  =============
</TABLE>
The  accompanying  notes to financial  statements  are an integral part of these
statements.
                                                                  F-6


<PAGE>
                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           DECEMBER 31, 1999 AND 1998
                Increase (decrease) in Cash and Cash Equivalents

                                                           1999          1998
                                                        -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)                                    $  69,407     $  (109,583)
                                                        -----------  -----------
 Adjustments to reconcile net income (loss) to net
      cash provided by operating activities:
   Depreciation and amortization                         18,684          14,282
   Loss on sale of investments                            3,122           2,019
   Write down of inventory to net realizable value           -           57,187
   Gain based on redemption price of common
     stock subject to repurchase                         (1,660)           (420)
   Stock issued for services                             23,656          25,674
   Decrease (increase) in accounts receivable            (9,569)         29,841
   Increase in inventory                                (52,463)         (2,977)
   Decrease (increase)in other current assets            (2,956)            363
   Decrease in deferred income taxes                     20,000          35,000
   Decrease in deferred offering costs                       -           35,000
   Increase (decrease) in accounts payable and
     accrued expenses                                    52,710         (23,240)
   Increase in common stock payable                       7,800               -
                                                       -----------   -----------
        Total adjustments                                59,324         172,729
                                                       -----------   -----------
    Net cash provided by operating activities           128,731          63,146
                                                       -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
 Purchase of property and equipment                     127,710)         (3,733)
 Loans to employees                                     (41,603)             -
 Repayment of employees loan                              5,614           2,467
 Purchase of intangible assets                           (5,722)             -
 Proceeds from sale of investments                       10,261          19,331
 Purchases of investments                                    -          (13,382)
                                                      ------------   -----------
Net cash provided by (used in) investing activities    (159,160)          4,683
                                                      ------------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
 Net proceeds (payments) on line-of-credit                3,294         (23,877)
 Net proceeds (payments) on investment margin account        -          (10,400)
 Proceeds from loan payable to stockholder               21,589          16,771
 Payment to stockholder on loan                          (1,639)        (16,771)
 Proceeds from sale of stock                             50,000              -
 Offering costs of sale of stock                         (5,279)             -
 Repurchase of stock                                     (6,389)         (5,000)
 Proceeds from long term debt                            36,472              -
 Payment on long term debt                              (31,077)             -
                                                     -----------     -----------
Net cash provided by (used for) financing activities     66,971         (39,277)
                                                     ------------    -----------

The accompanying notes to financial statements are an integral part of these
statements.


                                       F-7

<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           DECEMBER 31, 1999 AND 1998
                Increase (decrease) in Cash and Cash Equivalents
                                   (Continued)

                                                         1999         1998
                                                     ------------  ------------

Net increase in cash and cash equivalents               36,542        28,552

CASH AND CASH EQUIVALENTS, beginning of year            36,883         8,331
                                                     ------------  ------------
CASH AND CASH EQUIVALENTS, end of year               $  73,425     $  36,883
                                                     ============  ============


                                                         1999         1998
                                                     ------------  ------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest               $  11,098        3,152
                                                     ============  ============
Cash paid for income taxes                                  -            -
                                                     ============  ============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
 FINANCING ACTIVITY
  Common stock issued for services                   $  23,656     $ 25,674
                                                     ============  ============
  Common stock issued to acquire rights              $  13,250     $     -
                                                     ============  ============
  Acquisition of property and equipment with debt    $ 205,000     $     -
                                                     ============  ============

The  accompanying  notes to financial  statements  are an integral part of these
statements.

                                       F-8


<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of
Cyclodextrin Technologies Development, Inc. and Subsidiary (the Company) which
affect the accompanying consolidated financial statements:

     (a) ORGANIZATION AND OPERATIONS - The Company was incorporated in August
1990, as a Florida corporation with operations beginning in July 1992. The
Company is engaged in the marketing and sale of cyclodextrins and related
products to food, pharmaceutical and other industries. The Company also provides
consulting services related to cyclodextrin technology. In 1999, the Company
formed Nature Spirit Mushroom Enterprises, Inc. (NSME), a 98% owned subsidiary,
to grow mushrooms and to develop and market a line of mushroom based products.
The Company's current market is primarily within the United States.

     (b) BASIS OF PRESENTATION - The consolidated financial statements include
the Company and its 98% owned subsidiary. All intercompany accounts and
transactions have been eliminated.

     (c) CASH AND CASH EQUIVALENTS - For the purposes of reporting cash flows,
the Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

     (d)PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost.
Depreciation on property and equipment is computed using primarily the
straight-line method over the estimated useful lives of the assets, which range
from five to forty years. Depreciation on leasehold improvements is computed on
the straight-line method over the lesser of the term of the related lease or the
estimated useful lives of the assets.

     (e) INVENTORY - Inventory consists of cyclodextrin products purchased for
resale and chemical complexes manufactured in-house and raw mushrooms in
process. Inventory is recorded at the lower of cost (first-in, first-out) or
market.

     (f) INTANGIBLES - Intangible assets consist of loan costs and goodwill
recorded at cost. Intangible assets are amortized using the straight-line method
over their respective estimated useful lives.

     (g) REVENUE RECOGNITION - Revenues are recognized when products are
shipped.

     (h) ADVERTISING - Advertising costs are charged to operations when
incurred.

     (i) START-UP COSTS - The initial costs incurred to organize the Company's
subsidiary were expensed as incurred.

     (j) RECLASSIFICATIONS - Certain reclassifications have been made to the
1998 financial information to conform to the 1999 presentation.

     (k) NET INCOME (LOSS) PER COMMON SHARE - Net income (loss) per common share
is computed in accordance with the requirements of Statement of Financial
Accounting Standards No. 128 (SFAS 128). SFAS 128 requires net income (loss) per
share information to be computed using a simple weighted average of common
shares outstanding during the periods presented.

                                     F-9


<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998


     (l) USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.


     (2) COMMITMENTS:

The Company's noncancelable operating lease for office space expires October 31,
2001. The Company has a purchase option in which ten percent of the lease
payments may be applied to the purchase price. The future minimum lease payments
under all operating leases for the next five years are as follows:


                    YEAR ENDING
                    DECEMBER 31,                     AMOUNT
                    ------------                   -----------

                       2000                          28,996
                       2001                          25,348
                       2002                           7,108
                       2003                           3,947
                       2004                              -
                                                   -----------
                   Total                           $ 65,399
                                                   ===========

Rent expense under the foregoing lease and all other operating leases was
$27,315 and $23,391 for 1999 and 1998, respectively.

1994 Employee Stock Option Plan

The Company adopted a nonqualified employee stock issuance plan to provide
incentives to employees. The Company has reserved 100,000 shares of voting
common stock under this Plan. 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. 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. The Company recorded a gain of $1,660 in 1999 from the expiration
of the repurchase obligation of 8,000 shares issued in 1994. There are no shares
subject to repurchase at December 31, 1999.



                                     F-10


<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

(2) COMMITMENTS:  (Continued)

1999 Incentive Stock Option Plan

The Company adopted a nonqualified employee stock option plan to provide
incentives to directors, employees and consultants. Up to 79,000 shares may be
issued under this plan. Options and condition of exercise are at the discretion
of the Board of Directors. The option price can be no less than fair market
value of the underlying stock on the date of award. On June 1, 1999, the Company
awarded an option to an employee for 20,000 shares under the plan. The
employee's vesting in the option is contingent on the Company fully completing
its current private placement of 650,000 shares of common stock (see Note 10).
The option will vest over three years; 6,000 after one year; an additional 6,000
after two years; and the remaining 8,000 after three years. The option price is
$.50 per share and the option expires the earlier of the employee leaving the
employ of the Company or five years. The option price is equal to private stock
sales of unregistered shares during 1999 which is deemed to be fair value.
Therefore, no compensation expense was recorded at issuance.

NSME Stock Bonus Plan

NSME adopted a stock bonus plan whereby an officer of NSME can receive NSME
common stock owned by the Company if certain financial targets are met. The
stock bonus plan terminates June 1, 2001 unless extended by both the officer and
NSME. The stock bonus is contingent on the Company fully completing its current
private placement offering as described in Note 10 and the officer being in the
employ of the Company for a minimum of two years and at the end of each calendar
year for which a stock bonus is due. The officer will be awarded 100 shares of
NSME stock owned by the Company for each $12,500 of net income earned by NSME,
in excess of net income required to repay intercompany loans due to the Company.
Up to 2,000 shares (20% of NSME outstanding stock) can be awarded per year and
the award is made annually for the prior year. There were no shares earned or
due under this plan at December 31, 1999.

The Company awarded 100,000 shares of common stock to its President in 1999.
These shares were not issued at December 31, 1999. The Company valued these
shares at $7,800, approximately 50% less than the bid price on the award date.
The Company has recorded an expense and a liability to issue common stock of
$7,800, at December 31, 1999.

(3) PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 1999, consists of:

         Land                                       $      80,000
         Buildings and improvements                       180,006
         Machinery and equipment                          112,794
         Office furniture and equipment                    42,372
                                                       ------------
                                                          415,172
         Less: accumulated depreciation                    83,347
                                                       ------------
         Property and equipment, net                 $    331,825
                                                       =============
                                             F-11


<PAGE>
                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

 (4) CONCENTRATIONS OF CREDIT RISK:

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

     (a) DEMAND  DEPOSITS - The Company has demand  deposits in two local branch
banks which are  insured by the  Federal  Deposit  Insurance  Corporation  up to
$100,000. At December 31, 1999, the bank balance was $72,140. The Company has no
policy of requiring collateral or other security to support its deposits.

     (b) ACCOUNTS  RECEIVABLE - The  Company's  accounts  receivable  consist of
amounts due primarily from food and  pharmaceutical  companies located primarily
in the United States.  The Company has no policy  requiring  collateral or other
security to support its accounts receivable.

(5) MAJOR CUSTOMERS:

Sales to three customers in 1999 represented approximately 58% of total sales.
Of this, sales to the largest major customer was 28% of sales. Sales to two
customers in 1998 represented approximately 59% of total sales. Of this, sales
to the largest major customer was approximately 48% of sales.

(6) NOTES PAYABLE:

Long-term debt consists of the following:

         Mortgage note payable to bank, payments of $1,782
          due monthly including principal and interest
          at 7.95%, collateralized by land and buildings
          with a cost of $210,000                                  $   183,598

         Loan payable to individual, payments of $1,591 due
          monthly including principal and interest at 8.5%,
          collateralized by equipment with a cost of $35,000            26,797
                                                                    -----------
                                                                       210,395
              Less current portion                                      23,920
                                                                    -----------
              Long - term debt, less current portion                $   186,475
                                                                    ===========


Maturities on long-term debt as of December 31, 1999 over the next five years
are as follows:

         Year ending
         December 31,                                   Amount

            2000                                        $23,920
            2001                                         16,888
            2002                                          8,199
            2003                                          8,876
            2004                                          9,607
                                                        =======

                                      F-12

<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

The Company has a $25,000 unsecured line-of-credit with a local bank. The
monthly minimum payment is calculated based on the outstanding balance. The
interest rate is variable (11.50 % at December 31, 1999). The credit line can be
canceled and payment of the outstanding amount due can be required on demand by
the bank at any time.

(7) RELATED PARTY TRANSACTIONS:

The Company has the following notes receivables due from employees at December
31, 1999:

         Mortgage receivable, payments of $1,263 due monthly
            including principal and interest at 8%,
            collateralized by a personal residence                   $  24,512

         Loan receivable, payments of $95 due weekly including
            principal and interest at 8.5%, unsecured                   6,691

         Short-term loans, unsecured                                    4,786
                                                                      ---------
                                                                       35,989
                  Less current portion                                 25,157
                                                                      ---------
                  Notes receivable, less current portion             $ 10,832
                                                                      =========

The majority shareholder advanced the Company $21,589 as a short term loan. The
balance is $19,950 at December 31, 1999. The Company is making payments of
$1,887 monthly including principal and interest at 8%. The advance is unsecured.

(8) FAIR VALUE OF FINANCIAL INSTRUMENTS:

Statement of Financial Accounting Standards No. 107 requires disclosure of fair
value to the extent practicable for financial instruments which are recognized
or unrecognized in the balance sheet. The fair value of the financial
instruments disclosed herein is not necessarily representative of the amount
that could be realized or settled, nor does the fair value amount consider the
tax consequences of realization or settlement. The following table summarizes
financial instruments by individual balance sheet account as of December 31,
1999:


                                                CARRYING            FAIR
                                                 AMOUNT             VALUE
                                               ----------         ---------
FINANCIAL ASSETS
  Cash and cash equivalents                   $  73,425         $  73,425
  Accounts receivable                            21,264            21,264
  Notes Receivable                               35,989            35,989
                                               ----------         ---------
         Total financial assets               $ 130,678         $ 130,678
                                               ==========         =========
FINANCIAL LIABILITIES
  Accounts payable and accrued expenses          58,766            58,766
  Line of credit payable                          3,294             3,294
  Long-term debt                                210,395           210,395
  Due to shareholder                             19,950            19,950
                                               ----------         ---------
         Total financial liabilities          $ 292,405         $ 292,405
                                               ==========         =========

                                      F-13


<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

The fair value of all financial instruments classified as current assets or
liabilities approximates carrying value due to the short-term maturity of the
instruments.

(9) INCOME TAXES:

The Company has available at December 31, 1999, unused operating loss
carryforwards totaling approximately $ 1,366,000 that may be applied against
future taxable income. If not used, the carryforwards will expire as follows:

           Year Ending
           December 31,                               Amount
        -----------------                       -----------------

             2009                              $         965,000
             2010                                        195,000
             2012                                        206,000
                                                -----------------
             Total                              $      1,366,000
                                                =================

The Company also has deductible temporary difference resulting from the
difference between financial and tax bases of inventory and stock issued for
services totaling approximately $75,000 at December 31, 1999.

If all of the operating loss carryforwards and temporary deductible differences
were used, the Company would realize a deferred tax asset of approximately $
314,000 based upon expected income tax rates. Under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, the deferred tax
asset should be reduced by a valuation allowance if it is likely that all or a
portion of it will not be realized. Realization depends on generating sufficient
taxable income before the expiration of the loss carryforwards. Although
realization is not assured, management believes that approximately sixty percent
of the deferred tax asset will be realized based upon anticipated future
profitability. Therefore, the Company has established a valuation allowance of $
119,000 at December 31, 1999. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if estimates of future
taxable income during the carryforward period are reduced. The Company recorded
income tax expense of $35,000 as a result of an increase in the valuation
allowance on the deferred tax asset less the tax benefit of temporary
differences at December 31, 1998. The Company recorded income tax expense of
$20,000 on its taxable income for 1999. The Company has previously recognized
the benefits of its net operating loss carryforward.

                                                  1999          1998
                                             -----------   ------------
Current income tax expense                   $   31,000     $     -

Tax benefit of temporary differences                 -        (21,500)

Effect of increase (decrease) in valuation
   allowance                                    (11,000)       56,500

                                             -----------   ------------
Total net tax expense                        $   20,000     $  35,000
                                             ===========   ============


                                      F-14


<PAGE>

                   CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

(10) PRIVATE PLACEMENT OF STOCK :

Beginning in 1999, the Company began offering a total of 650,000 shares of
common stock under a private placement memorandum to expire April 30, 2000. In
1999, 20,000 shares were sold for $15,000, less direct offering costs of $5,279.

In 1999, the Company also sold 70,000 of common stock for $35,000.

The Company expensed $71,347 of costs related to an unsuccessful private
placement memorandum in 1998. Included in these costs was $40,000 paid to a
financial consultant and $25,000, the value of 106,474 shares of common stock
issued to a financial consultant.

(11) WRITE DOWN OF INVENTORY TO NET REALIZABLE VALUE:

During 1998 the Company determined that its quantity of Garlessence inventory
was in excess of current requirements based on lower than expected product
sales. Accordingly, the Garlessence inventory was written down to its estimated
net realizable value, and $57,187 was charged to expense in 1998.

(12) STOCK REPURCHASE:

In April 1999, the Company repurchased 106,474 shares of its outstanding common
stock for $6,389. These shares will be canceled. The Company has no plans to
repurchase additional shares.

(13) SEGMENTS:

During 1999, the Company began farming mushrooms. The Company now operates two
business segments; Cyclodextrin products and mushroom products. Information on
these two segments follows:


                                           Cyclodextrin       Mushroom
         Assets                             $ 91,177          $ 323,995

         Revenues                           $565,379          $   1,582

         Income (loss) from operations      $245,781          $(146,144)

Income (loss) from operations by segment include intercompany allocations of
administrative expenses.



<PAGE>


     Item 8. Changes in and  Disagreements  With  Accountants  on Accounting and
Financial Disclosure.

     None.





PART III.

     Item 9.  Directors,  Executive  Officers,  Promoters  and Control  Persons;
Compliance with Section 16(a) of the Exchange Act.

<TABLE>
<S>                      <C>    <C>                       <C>
Name                     Age    Position                  Since
C.E. Rick Strattan       54     President/CEO, Director   August, 1990
</TABLE>



     C.E. Rick Strattan,  has been President and a Director of the Company since
its formation.  He served as treasurer of the Company from August,  1990 to May,
1995.  From November 1987 through July 1992,  Mr.  Strattan was with  Pharmatec,
Inc. where he became its Director of Marketing and Business Development for CDs.
He was responsible for CD sales and related business development  efforts.  From
November,  1985  through  May,  1987 he 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.  He is a graduate of the  University of Florida with a BS 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's  professional  and
technical experience are deemed highly important to the Company. See "Business -
General."

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers,  directors and persons who beneficially own more than 10% of
the Company's  Common Stock to file initial  reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission  ("SEC").  Such
persons are  required by SEC  regulations  to furnish the Company with copies of
all Section 16(a) forms filed by such persons.

     Based solely on the Company's review of such forms furnished to the Company
and written  representation from certain reporting persons, the Company believes
that during the fiscal year ended  December  31, 1999,  all filing  requirements
applicable  to the  Company's  executive  officers,  directors and more than 10%
shareholders were complied with.



<PAGE>


Item 10. Executive Compensation

     Executive  compensation  is  determined  by the  Board  of  Directors.  All
compensation  paid by the Company for services  rendered during the three fiscal
years ended December 31, 1997,  1998 and 1999 for each executive  officer is set
forth in the following table:
<TABLE>
<CAPTION>

                        SUMMARY COMPENSATION TABLE (three
              fiscal years ended December 31, 1997, 1998 and 1999)

                                                                  Annual                     Long Term
                                                               Compensation                Compensation
                                                  ---------------------------------------------------------


                                                                             Other              All
                                                                             Annual            Other
Name and Principal Position                Year    Salary      Bonus      Compensation      Compensation
<S>                                        <C>     <C>        <C>             <C>           <C>

C.E. Rick Strattan                         1999    $42,000      -0-           -0-              -0-
Chief Executive Officer, President         1998    $15,500    $10,000         -0-              -0-
                                           1997    $34,750      -0-           -0-              -0-

Lisa Stephens(1)                           1999       -0-       -0-           -0-              -0-
Chief Financial Officer                    1998    $25,000     $  500         -0-              -0-

David L. Southworth(2)                     1999      -0-        -0-           -0-              -0-
Treasurer/Chief Financial Officer          1998      -0-        -0-           -0-              -0-
                                           1997    $15,686      -0-           -0-              -0-
</TABLE>
     (1) Ms. Stephens resigned in 1999.

     (2) On June 30, 1997, Mr. Southworth resigned from the Company as
Treasurer/Chief Financial Officer.

     On November 15, 1995, the Company  adopted a  non-qualified  employee stock
purchase plan pursuant to which employees may purchase  restricted shares of the
Company's  common stock at a price of 50% of the current bid price of the shares
in  amounts  not to exceed  the  employee's  gross  pay.  Pursuant  to the plan,
employees have elected to purchase  33,400  shares,  of which 15,800 shares have
been purchased by Mr. Strattan.

     Natural Spirit adopted a stock bonus plan whereby an officer of Natural
Spirit can receive Natural Spirit common stock owned by the Company if certain
financial targets are met. The stock bonus plan terminates June 1, 2001 unless
extended by both the officer and Natural Spirit. The stock bonus is contingent
on the Company fully completing its current private placement of 650,000 shares
of common stock and the officer being in the employ of the Company for a minimum
of two years and at the end of each calendar year for which a stock bonus is
due. The officer will be awarded 100 shares of Natural Spirit stock owned by the
Company for each $12,500 of net income earned by Natural Spirit, in excess of
net income required to repay intercompany loans due to the Company. Up to 2,000
shares (20% of Natural Spirit: outstanding stock) can be awarded per year and
the award is made annually for the prior year. There were no shares earned or
due at December 31, 1999.

Performance-Based Stock Compensation

     On January 28, 1999, the Board of Directors authorized a bonus of $10,000
and 250,000 common shares to Mr. Strattan and 1,500 shares to Lisa Stephens for
their work in 1998. The Company believes Ms. Stephens shares were issued in
error.

     On April 5, 1999, the Board of Directors approved the repurchase of 106,474
common shares from Burckhardt and Company for a total consideration of
$6,388.44.

     On November 3, 1999, the Board of Directors authorized a bonus of 100,000
common shares to C.E. Rick Strattan in consideration of his work in 1999. These
shares were issued in 2000.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The following  table shows the ownership of the Common Stock of the Company
on March 29, 1999, by each person who, to the knowledge of the Company, owned
beneficially  more than five (5%) of such stock, the ownership of each director,
and the  ownership of all directors  and officers as a group.  Unless  otherwise
noted,  shares  are  subject  to the sole  voting  and  investment  power of the
indicated person.



Names and Address of Individual or .........Amount and Nature of   Approximate %
Identity of Group ..........................Beneficial Ownership     of Class

C.E. Rick Strattan(1).......................      850,000            50.37%
4123 N.W. 46th Avenue
Gainesville, FL 32606

All Officers and Directors as a group ......      850,000            50.37%



     (1) Held by Strattan Associates, Ltd., of which Mr. Strattan is the general
partner.  Strattan Associates,  Ltd. is a limited partnership established by Mr.
Strattan  for estate tax  purposes  and is not  otherwise  engaged in  business.
Strattan  Associates,  Ltd. is the owner of the 500,000 shares of CTD stock. Mr.
Strattan is the President/CEO and Director of the Company.

Item 12.  Certain Relationships and Related Transactions.

     On March 10, 1998, the Company adopted a resolution whereby 10,000 shares
of the Company's common stock, issued in the name of Gregory V. DeLong, be
returned to the Company's treasury stock as authorized but unissued shares,
pursuant to a Stock Power retained by the Company.

     On August 10, 1998,  the Company  purchased  10,000  shares of common stock
from Atlanta  Syndication  Network,  Inc. for $5,000. The shares were originally
issued in April 1997. The shares were canceled after the Company bought them.

     On November 24, 1998,  the Company  issued 106,474 shares to Burckhardt and
Co. for its services performed in 1998.

     On January 28, 1999, the Board of Directors authorized a bonus of $10,000
and 250,000 common shares to Mr. Strattan and 1,500 shares to Lisa Stephens for
their work in 1998.

     On April 5, 1999, the Board of Directors approved the repurchase of 106,474
common shares from Burckhardt and Company for a total consideration of
$6,388.44.

     On November 3, 1999, the Board of Directors authorized a bonus of 100,000
common shares to C.E. Rick Strattan in consideration of his work in 1999. These
shares were issued in 2000.

     On June 1, 1999, Natural Spirit entered into an employment agreement with
John Lindsay. Under the terms of the agreement, Mr. Lindsay will be able to
purchase 79% of the shares of Natural Spirit if a certain net annual profit is
obtained each year while he is still employed as President ( 1% of the shares of
Natural Spirit for every $12,500 in net profit). According to the schedule upon
which Mr. Lindsay's share rights may vest, CTD may lose control of Natural
Spirit within four years of its creation. Mr. Lindsay will also receive a salary
of $1,000 per month. On October 1, 1999, Mr. Lindsay's salary increased to
$2,000 per month. His salary will be $3,000 per month through the year 2,000 and
then increase to $4,000 the following year. Mr. Lindsay and Mr. Strattan are the
sole directors of Natural Spirit. CTD has certain buy-out rights with regard to
a possible spin-off of Natural Spirit. Neither John Lindsay nor Mr. Strattan
will receive compensation for their positions as directors of Natural Spirit.


     On March 13, 2000, CTD entered into an agreement with Randy "Lazarus"
McAtee d/b/a "Small Potatoes" to provide financial public relatiosn serices for
CTD for one year.  CTD has compensated Mr. McAtee by the transfer of 100,000
restricted shares.

<PAGE>


PART IV.

Item 13.  Exhibits and Reports on Form 8-K.

(a) Exhibits                                                                Page

    (1) Reports of Independent Certified Accountants                        F-1

    (2) Financial Statements                                                F-2

    Exhibits required by Item 601, Regulation S-B:

    (3) Articles of incorporation and by-laws

       (a) Articles of Incorporation filed August 9, 1990 *                 None

       (b) By-Laws. *                                                       None

       (c)    Certificates of Amendment to the Articles of
              Incorporation  filed November 18, 1993 and
              September 24, 1993. *                                         None

         (4)  Instruments  defining  the rights of security
              holders,  including indentures

              (a) Specimen Share Certificate for Common Stock. *            None

    (9)  Voting Trust Agreement                                             None

    (10)  Material Contracts

        (10.1)  Agreement of Shareholders dated November 11, 1993
                by and among C.E. Rick Strattan, Garrison Enterprises,
                Inc. and the Company. *                                     None

        (10.2)  Lease Agreement dated July 7, 1994**.                       None

        (10.3)  Consulting Agreement dated July 29, 1994 between
                the Company and Yellen Associates. *                        None

        (10.4)  License Agreement dated December 20, 1994 between
                the Company and Herbe Wirkstoffe GmbH. *                    None

        (10.5)  Joint Venture Agreement between the Company and
                Ocumed, Inc. dated May 1, 1995, incorporated by
                reference to the Company's Form 10-QSB for the
                quarter ended June 30, 1995.**                              None

        (10.6)  Extension of Agreement between the Company and Herbe
                         Wirkstoffe GmbH.***                                None
        (10.7)  Lease Extension
        (10.8)  Loan Agreement with John Lindsay
        (10.9)  Small Potatoes Contract

    (11)  Statement re: Computation of Per Share Earnings             Note 1 to
                                                                      Financial
                                                                      Statements

    (16)  Letter on changes in certifying accountant***                     None

    (18)  Letter on change in accounting principles                         None

    (22)  Subsidiaries of Registrant                                        None

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

    (24)  Consents of Experts and Counsel                                   None

    (25)  Power of Attorney                                                 None

    (27)  Financial Data Schedule

    (28)  Additional Exhibits                                               None

    (29)  Information from reports furnished to state insurance
          regulatory authorities                                            None

(b) Reports on Form 8-K:

         No Form 8-K was filed for the quarter ended December 31, 1999.

     *  Incorporated  by  reference to the  Company's  Form 10-SB filed with the
  Securities and Exchange Commission on February 1, 1994.
     **  Incorporated  by reference to the Company's  Form 10-KSB filed with the
  Securities and Exchange Commission on March 29, 1997.
    ***  Incorporated  by reference to the Company's  Form 10-KSB filed with the
  Securities and Exchange Commission on March 28, 1998.

                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


(Registrant)                       CYCLODEXTRIN TECHNOLOGIES DEVELOPMENT, INC.


                                    /S/ C.E. Rick Strattan
By (Signature and Title)            _______________________________________
                                    C.E. RICK STRATTAN, President,
                                    Chief Executive Officer, Chief
                                    Operating Officer and
                                    Director

Date: March 30, 1999