SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20001
                                    FORM 10-K

                      ANNUAL REPORT PURSUANT TO SECTION 13
                 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended                            Commission File No. 0-11-50
      August 31, 1998

                              MAMMATECH CORPORATION
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

           FLORIDA                                            59-2181303
-------------------------------                          ----------------------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification Number)


         930 N.W. 8th Avenue, Gainesville, Florida 32601 (352) 375-0607
         --------------------------------------------------------------
               (Address including zip code, and telephone number,
        including area code, of registrant's principal executive offices)

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

Title of Each Class                             Exchange on Which Registered
-------------------                             -----------------------------
      None                                                  None

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

                                  Common Stock
                                  ------------
                                (Title of Class)

Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 of 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days. Yes    x     No
                           -----       -----

The aggregate market value of the Company's common stock held by  non-affiliates
as of November 30 was $357,274  based on the average bid and asked price.  As of
November  30,  there  were  100,352,500  shares of the  Company's  common  stock
outstanding. Of this sum, 6,208,500 shares are treasury shares.


Total Number of Pages: 37                           Exhibit Index is on Page: 36


                                             
<PAGE>

                                     PART I
                                     ------

ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------
INTRODUCTION
------------

     The Company owns all rights to, subject to certain minor royalties,  and is
engaged in the sale of a patented  breast tumor  detection  training system (the
"MammaCare  System").  Using  lifelike  models  of a human  female  breast,  the
MammaCare  System is designed to train  individuals to perform  effective manual
breast examination. The breast models contain simulated tumors of varying sizes,
ranging from under 5mm. to over 10mm. They also contain material which simulates
the normal nodularity, or "lumpiness", that characterizes most breast tissue.

     Although the examiner can never  determine by feel alone  whether a lump is
benign or  malignant,  detection  of tumors in the size range  simulated  by the
models is  important  to early  diagnosis  of  malignancies.  Thus,  the Company
believes  that by  training  women to palpate  the  breast  model (and their own
breasts)  properly,  the MammaCare System will lead to early detection of breast
cancer and thus reduce morbidity and mortality due to this disease.

     The  MammaCare  System is sold in several  forms,  all of which  contain at
least one of the Company's  patented  breast  models.  Originally,  a client was
given  private  training  after which she was provided  with a take-home  breast
model and other materials.  Now, the customer may view a video tape developed by
the Company  which  teaches her the proper use of the  model(s) and an extremely
thorough examination technique. The practice model is designed to permit a woman
to reinforce her lump detection skills  periodically and serves as a comparative
standard as she palpates her own breast.

     The sale of  take-home  models,  together  with  training in the  Company's
method of B.S.E.,  was originally  accomplished  primarily through franchise and
license arrangements  (collectively referred to as "Franchises") with healthcare
providers.  In addition,  the Company owns and operates one MammaCare  Center in
Gainesville,  Florida.  Franchisees sell materials and provide training directly
to women, as does the Company at its own Center. To date, these franchisees have
been medical schools, hospitals, breast centers, and radiology clinics.

     In recent years,  development and marketing through new Franchises has been
de-emphasized   because  this  marketing   approach  proved  overly  costly  and
cumbersome for the returns it generated.  The Company has therefore  developed a
different  marketing strategy which involves the sale of an integrated  training
system known as the MammaCare Learning System (the "Learning System").

                                        2

<PAGE>


The Learning  System is  available in two  versions,  the  Professional  and the
Personal, and is comprised of one (Personal) or two (Professional) breast models
and a  videotaped  B.S.E.  training  program  designed  to be viewed by women in
either their homes Personal) or in a clinical  setting  (Professional).  In both
cases, the skill learned is subject to ultimate  evaluation by a physician.  See
Item 1, "New Marketing Approach".

THE PURPOSE OF MANUAL BREAST EXAMINATION
----------------------------------------

     Manual  palpation  has been and  remains  the most  widely  used method for
detection of breast cancer in all stages of development.  The breast is an ideal
organ for physical  examination  because of the external location,  coupled with
the softness of the tissue and its hard  backing.  The earlier  breast cancer is
detected,  diagnosed and treated,  the greater the chances are for arrest of the
condition.  Published  studies  of breast  pathology  have shown that 94% of all
cancerous   tumors  of  the  breast  are  potentially   discoverable  by  manual
examination conducted by a properly trained person. Even though women themselves
remain the primary  discoverers  of breast  cancer,  several  reports  show that
B.S.E. is not widely practiced.  Consequently, most breast cancers are initially
detected at a relatively advanced stage with metastasis having already occurred.
The average size tumor that women  present to their  physicians is about 3.5 cm.
(over one inch) in diameter.  Treatment often requires a radical  mastectomy (an
extensive  surgical  procedure which includes removal of the breast,  underlying
muscle and  axillary  lymph nodes)  followed by a course of radiation  treatment
and/or  chemotherapy.  On the other hand,  if the disease is initially  detected
while the primary  tumor is small (less 1.0 cm) and no lymph nodes are involved,
treatment  often  involves only removal of the tumor and a margin of surrounding
healthy tissue.  Thereafter, a course of radiation treatment is often prescribed
as a precautionary measure.

     In research  conducted at the  University of Florida under the direction of
the two principle shareholders of the Company, together with a third individual,
more than 445 women were taught to detect  tumors in the model ranging from 2 to
10 mm.  As a result  of this  training,  33 of  these  women  (7.4%)  discovered
suspicious masses and were referred to physicians. This percentage is comparable
to that expected from screening  procedures  involving  mammography and clinical
examination.

     The  research  was  conducted  at the  University's  Center for  Ambulatory
Studies.  Except for a National  Cancer  Institute  grant made  directly  to the
University in 1977 and one small direct  University  grant, the research was not
directly  sponsored  by  the  University;  instead,  it  was  concluded  at  the
University's  facilities  under the  supervision  of the Company's two principle


                                        3

<PAGE>

shareholders  (and a third  person)  as part of their  normal  faculty  research
duties. The University released its rights to this research.

     Based upon its commercial  experience with  approximately  10,000 women who
have had the benefit of MammaCare  training,  the Company has demonstrated  that
the MammaCare System can train women to detect masses as small as 0.3 cm. It has
been well  documented  that  detection of such small  masses  often  enables the
surgeon to provide treatment in the form of lumpectomy (see above) or some other
less extensive  procedure not requiring total removal of the affected breast and
surrounding tissue.

BASIC TRAINING MODEL AND TRAINING
---------------------------------

     The Company's  basic training model is a life-like  model of a human female
breast. Its covering is a thin silicone membrane which simulates human skin. The
interior of the model, also made of silicone, closely simulates that of a mature
female  breast with  respect to  granular,  glandular,  adipose  and  connective
tissue.  Implanted within the model are simulated tumors  consisting of extruded
polymers  whose  firmness   matches  that  of  excised  tumors.   The  model  is
manufactured  in different  degrees of firmness and nodularity in order to offer
the trainee a model which closely resembles her own breast.

     A special  series of training  exercises is used to instruct women in basic
palpation techniques required for manual self- examination for breast anomalies.
The basic  approach  is to: (1) teach the  distinction  between  the feel of all
varieties of normal breast tissue and that of typical breast tumors, (2) teach a
method of palpation  that insures  contact with all depths of the  trainee's own
breast tissue,  and (3) teach a pattern of examination that insures palpation of
all breast tissue.

COMPANY CENTER
--------------

     The Company's Center is located in Gainesville, Florida. This Center serves
three important  functions.  It is the national  training center  established to
provide training for all licensees,  physicians,  nurses,  and Company personnel
who are engaged in offering  MammaCare to the public.  Another  function of this
Center is to package and ship MammaCare Products.  Finally, this facility serves
as a research center  permitting the Company to undertake  marketing and product
development research.

     As part of the Company's  commitment to maintain the quality of its service
to both the  medical  profession  and women who need  B.S.E.,  the  Company  has
developed  two  training  programs  at the  Gainesville  Center.  The first is a
comprehensive, one-week training program leading to certification as a MammaCare

                                        4

<PAGE>

Specialist. Specialist certification is dependent upon a demonstrated mastery of
pertinent  selected  biological and medical  literature as well as the MammaCare
Method of performing and teaching manual breast examination.

     The second  training  program  leads to an Associate  certificate.  It is a
three-day  training  session for  physicians  and nurses  which  enables them to
instruct  women  in the  use of the  MammaCare  technique.  These  certification
procedures are used by the Company to control the quality of its training. It is
a matter of  resolute  Company  policy that a woman's  mastery of the  MammaCare
System will only be evaluated by a physician or MammaCare Specialist.  MammaCare
Specialists are empowered to train and certify MammaCare Associates at their own
sites.

MARKETING OF THE COMPANY'S SYSTEM AND MODELS
--------------------------------------------

     MammaCare Systems are each sold as a complete learning  program.The Company
permits models to be sold separately to customers who have appropriate training,
either  through the actual  training  sessions  required in connection  with the
MammaCare System, through the video training contained in either of the Learning
Systems, or through training provided by the Arkansas, California,  Florida, and
Maine  Divisions of the American Cancer Society in accordance with the Company's
standards.

     During the last  several  fiscal  years,  the Company has  intensified  its
efforts to offer  MammaCare  overseas.(See  Management  Discussion  below).  The
Company has  developed  an  extensive  customer  base in Canada and  anticipates
increased  activity  in  that  country  as the  trade  barriers  continue  to be
dismantled  as a result of NAFTA.  The Company has trained a number of MammaCare
Specialists who live and work in Canada and maintains close professional ties to
these individuals.

MARKETING HISTORY
-----------------

     During the Spring of 1986,  the Company  concluded  that  Centers  were not
providing enough sales volume and not recruiting enough new users of the System.
After the end of 1986 fiscal  year,  the  Company  implemented  a new  marketing
strategy designed to encourage sales through  physicians.  Shortcomings with the
prior  marketing  approach  included the price of MammaCare (up to $125),  which
generally   was  not  covered  by  most  health   insurance   carriers  and  the
inconvenience women found with the training at the Centers.

            
                                        5

<PAGE>


     Under this new  marketing  approach,  health care  providers  purchase  the
MammaCare  Professional Learning System directly from the Company for $225 each.
The Company does not generate any revenues  from the use of the Learning  System
by women; its sole revenues under the new marketing  approach come from sales of
System and any accompanying training.

     The MammaCare  Professional Learning System consists of a teaching model, a
45-minute  video  cassette,  and practice kit. The teaching  model is a patented
breast  model,  designed  to teach the  difference  between  the feel of normal,
nodular breast tissue and the feel of small lesions.  The video cassette  guides
the learner through a series step-by-step  exercises,  first on the models, then
on her own breast tissue.  This is intended to lead to mastery level proficiency
in palpation,  search technique and lump detection.  The practice kit contains a
"take-home"  breast model, a written review  manual,  a reminder  calendar and a
record booklet.

        It is  suggested  that  providers  make the System  available  to their
patients to use at a set fee. A patient may purchase the practice kit portion of
the System for continued monthly reinforcement of her skills.  Patients may view
the videotape  either in their homes or in the  provider's  facility.  In either
case, a patient should have her proficiency reviewed by a physician or certified
MammaCare Specialist.

        By obtaining the MammaCare  Learning  System from their own  providers,
patients  are assured of receiving  the full  quality of  MammaCare  without the
inconvenience and expense of a lengthy clinic visit.  Further, it is anticipated
that the cost of  MammaCare to the public will be lower than  historical  prices
charged for this service. However, while the Company has made providers aware of
the need to keep the price of MammaCare  reasonable,  the  providers are free to
charge whatever fee they deem appropriate for the use of the System. In light of
the fact that most health insurance  policies do not reimburse  patients for any
portion  of  their  MammaCare  expenses,  no  assurance  can be  given  that the
physicians will set prices low enough to attract patients.

        Providers  who are  Franchisees  or licensees are permitted to purchase
Kits at a substantial  discount.  The Company's intent is for these providers to
act as  distributors  to other  physicians  and health care  providers  in their
respective geographic regions. Patients would then seek a proficiency evaluation
from  either  their  physician  or  the  Franchisee/provider.   Conceivably,  if
additional  treatment  were needed,  the patient  would choose the  physician or
health care provider to furnish such treatment since a health care  relationship
had already been established.


                                        6

<PAGE>


     A  direct-to-physicians  marketing  approach was also developed  during the
Summer of 1986 and  implemented  in late  September  of the same year.  To date,
there are over 1000 physicians,  hospitals and diagnostic centers throughout the
United States  providing the Learning System to women.  Although it is too early
to judge whether it will be more successful than the Company's earlier marketing
strategies,  the  Company  believes  that this  marketing  approach  is superior
insofar as it eliminates certain prior deficiencies.  No assurances can be given
that this new  marketing  approach  will be  successful.  In any event,  for the
Company  to  maintain  profitability,  MammaCare  must  be  provided  to an ever
increasing number of women.

     Early in 1989,  the  Company  introduced  a  companion  product  called the
MammaCare Personal Learning System. It contains a single breast model, a 45-min.
video tape which  teaches the same skills as the  videotape in the  Professional
System but with reference to the single model, and assorted printed matter. This
System is being marketed  directly to women and was described in the August 1989
issue of Redbook and the  July-August  1991 issue of the East West Journal.  The
Company is presently evaluating consumer response to this product and expects to
develop additional marketing strategies for it in the coming year. The MammaCare
Personal Learning System is sold for $69.50, making it affordable and convenient
for working  women and others who are unable to schedule  and keep  appointments
with health care providers.It is also discounted to readers of Family Circle and
other  publications in the lay press that feature MammaCare  periodically in the
editorial content of their health sections.

     In 1993, the Company  introduced a third version of MammaCare  known as the
MammaCare Clinical Learning System.  This system is used to train physicians and
other health care providers to conduct  clinical breast  examinations  using the
MammaCare  Method. It is being adopted by medical schools,  teaching  hospitals,
and a small  number  of HMO's  who are  attempting  to  control  costs by taking
advantage  of the benefits of competent  manual  examination  of the breast as a
means of early cancer detection.  It is being used extensively by the Breast and
Cervical Cancer  Screening  Programs in the various states and will be the focus
of an expanded training effort by the Company in the near future.

OTHER MARKETING APPROACHES
--------------------------

     It is part of the Company's overall  marketing  strategy to arrange for the
availability of MammaCare wherever women routinely seek health service.  To this
end, the Company has sought to penetrate  the  institutional  market and medical
departments of large corporations.  Limited resources have prevented the Company
from  pursuing  this  strategy   vigorously;   however,   the  General  Electric


                                        7

<PAGE>


Corporation  ("GE") has introduced  the  Professional  Learning  System into its
Fairfield,  Connecticut  headquarters  facility  where  it was  reportedly  well
received.  GE has purchased three Learning Systems for use in other  facilities.
Additionally,  Pacific Bell has  purchased a small number of MammaCare  Personal
Learning Systems for a trial program aimed at their female employees. Results of
that trial were  reported  in 1991 and were  judged  favorable  by Pacific  Bell
representatives.

     The Company has intermittent  negotiations ongoing with several other large
corporations to make MammaCare  available in their health care  facilities.  The
Company believes that the addition of the MammaCare Personal Learning System may
offer a more  attractive  mechanism  for providing  MammaCare in the  workplace.
There can be no  assurance,  however,  that  either  these  negotiations,  trial
programs,  or related marketing  efforts will result in significant  revenue for
the Company.

     Prior to 1988,the Company retained a Southern California nurse practitioner
as a marketing  consultant for MammaCare.She  appeared on the first ABC-TV "Home
Show" in February,  1988 where she described the MammaCare  Learning System to a
nationwide audience. This individual was employed by a large health care concern
in Beverly Hills, California until 1996 and is a nationally recognized expert on
BSE. That  organization  now uses MammaCare in all of its breast centers under a
special agreement negotiated during 1992.

     Largely  as a result of the  efforts  of this  individual,  the  California
Division of the American Cancer Society  adopted  several  features of MammaCare
for  enhancement of their  national  Special Touch  program.  Specifically,  the
Company provides its patented training models to Special Touch  Facilitators who
have undergone  training  approved by the Company.  These  individuals  may also
purchase the Company's Home Practice Model for use by participants in California
A.C.S.  BSE training  programs.  In November of 1989,  the  California  Division
received an Honors  Citation  for its Special  Touch  Program  from the National
Office of the American  Cancer  Society.  To date,  the Company has shipped over
$100,000  worth  of  products  to  California  A.C.S.   chapters  or  affiliated
individuals under this arrangement.

     Similar arrangements have been concluded with the Alaska, Alabama,  Alaska,
Arkansas,  Connecticut,  Delaware,  Florida, Georgia, Indiana, Kansas, Kentucky,
Maine,  Minnesota,  New York,  Pennsylvania,  South  Carolina,  South Dakota and
Wisconsin  Divisions of the American Cancer Society.  These  organizations are a
major  component  of the  Company's  customer  base and are a stable  source  of
revenue.

RESEARCH
--------

     The University of North Carolina at Chapel Hill was the first major medical

                                        8

<PAGE>



institution to conduct  research using  MammaCare.  The results of that research
have been widely disseminated and are available from the Company by request.

     Other  institutions and  organizations who have conducted or are conducting
research  involving  MammaCare  include  Johns  Hopkins  University,   the  Fred
Hutchinson  Cancer  Center,  the  University  of  California  at San Diego,  the
University of Oregon, the University of Arkansas, the University of Vermont, the
State University of New York at Stony Brook, the Harvard  Community Health Plan,
the  University of Cincinnati,  the University of Indiana,  the Fox Chase Cancer
Center,   Northwestern  University,   the  University  of  West  Virginia,  U.S.
Healthcare, and the Mayo Clinic.

PATENTS, TRADEMARKS AND COPYRIGHTS
----------------------------------

     The MammaCare System was invented by seven people,  including the Company's
two  principle  shareholders,  as part of research  activities  conducted at the
University of Florida. Subject to royalties payable to four of the co-inventors,
the Company owns all rights to and is entitled to receive all revenues  from the
System.  The  Company's  ownership  interest in the  patents and foreign  patent
applications is as follows:




Total Sale Volume of the System         Company's Percentage
-------------------------------         --------------------

$          1 to $ 5,000,000                    97.14%
$  5,000,001 to $ 7,500,000                    97.71%
$  7,500,001 to $10,000,000                    98.29%
$ 10,000,001 and over                          98.86%

--------------------------------

     The Company's  position is that based upon  reasonable  expectations of the
parties, the above figures are for the life of the patent.

PATENTS
-------

     The  Company  is  the  assignee  of  the   following   patents  and  patent
applications directed to the Model and/or the System as indicated:

                                        9

<PAGE>



            Patent No.    Issue date
            or Appli-      or Filing     Expiration   Subject
Country     cation No.    Date           Date         Matter
-------     ----------    ----------     ----------   --------



United      4,134,218     1/16/79       1/16/96      Model and
States                                               Methods and
                                                     Apparatus re-
                                                     lating to the
                                                     System

United        308,914     Filed                      New model re-
States                    2/9/89                     lating to the
                                                     system.

Canada      1,109,252     9/22/81       9/22/98      Model

Canada      1,147,951     Filed         6/14/2000    Methods and
                          6/14/83                    Apparatus re-
                                                     lating to the
                                                     System

United      2005894       5/26/82       10/2/98      Model
Kingdom

United      2077017       10/13/82      10/2/98      Methods and
Kingdom                                              Apparatus re-
                                                     lating to the
                                                     System

Germany     P 2844373.4   11/11/81      10/12/98     Model, as well
                                                     as certain appa-
                                                     ratus relating
                                                     to the System

Germany(1)  Pending       Filed            -         Division appli-
            Application   2/25/80                    cation of the
            P 2857496.14                             application
                                                     which issued as
                                                     German Patent
                                                     No. P 2844373.4
                                                     and is directed
                                                     to methods and
                                                     apparatus rela-
                                                     ting to the system

Japan       1304322       6/15/85       10/11/98     Methods and
                                                     Apparatus rela-
                                                     ting to the System.

Japan(2)    Pending       10/26/84         -         Model allowed
            224,279/84                               and published
                                                     for opposition.
                                                     Opposition pro-
                                                     ceeding pending.
                                       10
<PAGE>



(1) The German  Patent  Office  has issued a notice of a decision  to grant this
application.  After the  application  is granted,  it will be published  for the
purpose of  opposition,  an  interested  person may oppose the  granting  of the
application within three months of the publication date.

(2) This application was allowed by the Japanese Patent Office and published for
opposition in September,  1985. In November, 1985, a Statement of Opposition was
filed on the ground that protection sought fro this model was overbroad and that
the Company's  model is not  sufficiently  novel or inventive  compared to other
models to  support a patent.  In  November,  1986,  the  Company  filed a repose
setting forth their position that the patent application  defines the model in a
manner that is  patentable  over all of the prior  models  known.  To date,  the
Japanese Patent Office has not acted on this matter.

     All of the foreign patents and patent applications have claimed the benefit
of the filing date of the application which issued as U.S. Patent No. 4,134,218,
namely,  October 11, 1977, under the Paris Convention of 1883 for the Protection
of Industrial  Property.  There is no assurance  that any of the pending  patent
applications will be issued as patents.




                                       11

<PAGE>


TRADEMARKS
----------

     The following  chart depicts the  trademarks  and  copyrights  owned by the
Company:

                                    Regis-
                                    tration
Type of Mark     Mark               Number          Status
------------     ----               ------          ------

U.S. Trademark   The MammaCare      1,288,296       Issued
                 Method & Design                    7/31/84

U.S. trademark   The Mammatech      1,305,388       Issued
                 Corporation                        11/13/84

U.S. Trademark   MammaKit           1,317,844       Issued
                                                    2/5/85

U.S. Trademark   MammaTrainer       1,310,897       Issued
                 & Design                           12/25/84

U.S. Trademark   MammaTest          1,303,689       Issued
                 & Design                           11/6/84

U.S. Trademark   M & Design         1,310,918       Issued
                                                    12/25/84

U.S. Trademark   Hand Design        1,357,256       Issued
                                                    8/27/85
U.S. Trademark   MammaCare          1,445,641       Issued
                                                    6/30/87

---------------------------------------------------

COPYRIGHTS
----------
                                   Regis-
                                   tration
Type                Name           Number        Effective for:
----                ----           ------        --------------

Advertising         What Am I      TX1-199-545   75 years from
Brochure            Supposed to                  9/29/83
                    Feel?

Test Form           MammaTest      TX1-234-492   75 years from
                                                 12/14/83

Instructional       The MammaCare  TX1-259-524   75 years from
Manual              Method                       12/29/83

                                       12

<PAGE>

ITEM 2. PROPERTIES
------------------

     The Company's  facilities house its executive offices and MammaCare Center.
Located at 930 N.W. 8th Avenue, Gainesville,  Florida, the Company's offices are
approximately  2,700  square feet.  Rent is $1295.25  per month plus  utilities.
These facilities are adequate for the Company's current business operations. The
Company  does  not  anticipate   difficulties  in  obtaining  additional  office
facilities  in  Gainesville  at  comparable  rates  should   operations   expand
sufficiently.  The Company rents these  facilities  from an unrelated party on a
month-to-month basis.

     The Company owns a completely  equipped modular factory unit that is housed
within a  building  owned by RTS  Laboratories,  Inc.  (RTS),  a  non-affiliated
organization   located  in  Alachua,   Florida.   RTS  supplies   personnel  and
manufactures  the Company's models under contract,  using the Company's  modular
facility, materials, and equipment.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

     There is no current or pending litigation involving the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-----------------------------------------------------------

     Not Applicable.



                                       13

<PAGE>

                                     PART II
                                     -------

ITEM 5.  MARKET FOR THE COMPANY'S COMMON STOCK EQUITY AND RELATED
         SHAREHOLDER MATTERS
-----------------------------------------------------------------

     A.  Market  Information.  The  Company's  common  stock  is  traded  in the
over-the-counter  market.  From February 1983,  through December 1985, there had
been an  established  trading  market on NASDAQ for the Company's  common stock.
However,  in  mid-December  1985,  the  Company's  common stock was de-listed by
NASDAQ. The Company's common stock is currently listed in the National Quotation
Bureau "pink  sheets".  Throughout  1998, the bid value of the stock ranged from
$0.001 to $0.04.

     The following information concerning the National Quotation Bureau price of
the  Company's  common  stock has been  received  from  NASDAQ and the  National
Quotation Bureau.


     Quarterly Period          High Bid (1)            Low Bid (1)
     ----------------          ------------            -----------

     November 30, 1988          $   0.005              $   0.005
     February 28, 1989          $   0.01               $   0.0025
     May 31, 1989               $   0.01               $   0.01
     August 31, 1989            $   0.01               $   0.004
     November 30, 1989          $   0.01               $   0.0075
     February 28, 1990          $   0.01               $   0.005
     May 31, 1990               $   0.01               $   0.005
     August 31, 1990            $   0.01               $   0.001
     November 30, 1990          $   0.01               $   0.001
     February 29, 1991          $   0.01               $   0.001
     May 31, 1991               $   0.01               $   0.001
     August 31, 1991            $   0.01               $   0.001
     November 30, 1991          $   0.01               $   0.001
     February 29, 1992          $   0.01               $   0.001
     May 31, 1992               $   0.01               $   0.001
     August 31, 1992            $   0.01               $   0.001
     August 31, 1996            $   0.01               $   0.005
     August 31, 1997            $   0.01               $   0.001
     August 31, 1998            $   0.24               $   0.001

(1) Such over-the-counter market quotations reflect inter-dealer prices, without
retail  mark-up,  mark-down or  commission,  and may not  necessarily  represent
actual transactions.

     B. Holders of Common Stock. As of August 31, 1998, there were approximately
3,460  record  holders of the  Company's  common stock with  100,352,500  shares
outstanding, of which 6,208,500 shares are treasury stock.



                                       14

<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA
--------------------------------

Summary of Consolidated Statements of Operations
<TABLE>
<CAPTION>


YEAR ENDED            Aug.31,         Aug.31,          Aug.31,          Aug.31,          Aug.31,
                      1998            1997             1996             1995             1994
--------------------------------------------------------------------------------------------------

<S>                   <C>             <C>              <C>              <C>              <C>    
Revenues from         541,911         438,755          331,688          301,524          269,208
Operations
Net Income            150,545         143,578           67,715           44,548           44,802
(Loss)
Income (Loss)               0               0                0                0                0
per Common
Share


Summary of Consolidated Balance Sheet
-------------------------------------

YEAR ENDED            Aug.31,         Aug.31,           Aug.31,           Aug.31,           Aug.31,
                       1998             1997              1996             1995              1994
---------------------------------------------------------------------------------------------------
Total Assets          769,143         530,184           365,925           281,691           228,889
Total                 225,927         112,825            98,396            81,877            73,623
Liabilities
Shareholder's         543,216         417,359           267,529           199,814           155,266
Equity
</TABLE>


During these periods, no cash dividends were declared or paid.
--------------------------------------------------------------


                                       15

<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
         AND RESULT OF OPERATIONS
----------------------------------------------------------------------

     Results of Operations.
     ----------------------

                               [GRAPHIC OMITTED]

              Figure 1. Sales Revenues for Mammatech Corporation:
                                    1987-1998

     The sales data for 1998 set another  record for the Company and extends the
trend  established  over the past several  years.  Figure 1 shows this  progress
since 1987, the first year the Company sold its products directly to the medical
profession rather than through its licensed centers.

     The 1998 sales total of $541,911  represents  an increase of 23.5% over the
previous year and a 63.3% increase over 1996. Export sales accounted for 4.6% of
the total, down from 7.4% in 1996..

     The Company's operating expense increased by 145% in comparison to 1997 and
increased  by 58% over the 1996  figure.This  resulted in an  operating  loss of
$32,145.  The elevated 1998 figure was due to the hiring of increased  personnel
assigned to an SBIR Phase II grant awarded to the Company during the year.  This
expense was reimbursed in the amount of #165,136 leaving net income for the year
of $150,545, up 4.8% from 1997.

     During the year,  the  Company  again  increased  its  customer  base while
continuing  to  serve  its   established   customers.   As  was  the  case  last
year,additional State Health Departments purchased product and training from the
Company in connection with Breast and Cervical Cancer Program (BCCP) grants from
the Center for Disease Control  (CDC).This  continues to be a significant source
of revenue for the Company,  although  there can be no assurance  that this will
continue.

     During the year, the Company also continued to provide specialized training
and products to medical personnel from military facilities along the East coast.
There is a continuing  commitment on the part of all three US. Military  Service
branches to upgrade their breast cancer  screening  practices for the benefit of


                                       16

<PAGE>

both female military personnel and dependents. In addition,  MammaCare is now in
use in military  installations in Europe and the Company anticipates  continuing
sales to this market. Of course,  there can be no assurance that such sales will
continue.

     The Company earlier  negotiated a sales and  distribution  agreement with a
German  health  care  products  company.   This  agreement   provides  exclusive
distribution  rights  for the  Company's  products  throughout  Germany  and the
German-speaking  portions of Austria,  Switzerland,  and Belgium. In return, the
distributor  has  undertaken at its own expense to provide  translations  of the
Company's  Personal  Learning  System  video  tape and  printed  materials.  The
distributor  has also  launched an  extensive  promotional  campaign in both the
electronic and print media.  During the year, the Company trained at its expense
three  medical  professionals  (two  nurses  and  one  physician)  from  Germany
(www.mammacare.com/whatsnew).  The  distributor  is now actively  marketing  and
modest sales have begun to occur.

     The Company has also negotiated a sales and  distribution  agreement with a
medical company in Brazil and has provided extensive training to a senior member
of management.  That  organization has established an excellent  presence on the
internet (www.pontofinal.com/mammacare), but sales have not yet commenced due to
the economic crisis in that country.

     Finally,  the Company  conducted a substantial  research program during the
year under a Phase II grant in the amount of  $592,000  from the Small  Business
Innovative Research (SBIR) Program of the National Institutes of Health.  During
the year,  Adaptive  MammaCare(R)  systems  have been sent to over 200  visually
impaired  women and  preliminary  data  indicate that they are able to use these
products in their homes with proficiency  similar to that of sighted women. Work
is now beginning on validation of a companion  product for the hearing  impaired
and will near completion in the coming year.

     Liquidity
     ---------

     At the close of the 1997 fiscal year, the Company's  current assets totaled
$769,143  compared  to  $530,184  at the  close of 1997.  Results  for the first
quarter of 1998, although not completely determined at the time of this writing,
portend no immediate decrease in this figure.

     The  Company  continues  to support its  operations  solely on the basis of
operating  revenues  and is  debt  free  but  for  its  note  for  $6,736  to an
unaffiliated  supplier for its manufacturing  facility.  The Company's principal
goal continues to be to make MammaCare available to all women at risk for breast
cancer  through  affiliations  with  capable  organizations  in the health  care
industry.



                                       17

<PAGE>


     Capital Resources.
     ------------------

     The Company has no material  commitment for capital  expenditures and there
are no known trends in its capital resources.


ITEM 8.  FINANCIAL STATEMENTS - (SEE FOLLOWING PAGES)
-----------------------------


                                       18

<PAGE>
<TABLE>
<CAPTION>
                                           Mammatech Corporation
                                              Balance Sheets
                                         August 31, 1998 and 1997

                                                 ASSETS
                                                 ------
                                                                     1998                   1997
                                                                     ----                   ----
Current assets:
<S>                                                                 <C>                    <C>     
  Cash                                                              $342,740               $169,088
  Available for sale securities                                       94,377                 82,752
  Accounts receivable - trade, net of allowance for
    doubtful accounts of $6,350 and $9,350                            74,983                 62,745
  Accounts receivable - other                                          3,190                  3,236
  Inventory                                                          201,574                162,019
                                                                    --------               --------
      Total current assets                                           716,864                479,840

Property and equipment, at cost, net of
  accumulated depreciation of $170,288 and $147,390                   43,622                 49,082

Patents, trademarks and other intangibles, net of
  accumulated amortization of $66,955 and $64,675                      8,657                  1,262
                                                                    --------               --------
                                                                    $769,143               $530,184
                                                                    ========               ========

                                                      19


                                                                                                                                  

<PAGE>

                                    Mammatech Corporation
                                  Balance Sheets (Continued)
                                   August 31, 1998 and 1997



                              LIABILITIES AND STOCKHOLDERS' EQUITY
                              ------------------------------------

                                                                    1998                       1997
                                                                    ----                       ----
Current liabilities:
  Current portion of long-term debt                                4,796                      3,578
  Accounts payable - trade                                        48,595                     38,722
  Accounts payable - officers                                      6,630                      6,630



  Accrued expenses                                               163,966                     58,368
                                                             -----------                -----------
      Total current liabilities                                  223,987                    107,298

Long-term debt                                                     1,940                      5,527

Stockholders' equity:
 Common stock, $.0001 par value,
  200,000,000 shares authorized,
  100,352,500 shares issued and outstanding                       10,035                     10,035
 Additional paid-in capital                                    2,809,594                  2,809,594
 Accumulated deficit                                          (2,109,926)                (2,260,471)
                                                             -----------                -----------
                                                                 709,703                    559,158
 Valuation allowance for marketable securities                   (18,436)                     6,252
 Treasury stock, at cost, 6,208,500 shares                      (148,051)                  (148,051)
                                                             -----------                -----------
                                                                 543,216                    417,359
                                                             -----------                -----------
                                                             $   769,143                $   530,184
                                                             ===========                ===========



                          See accompanying notes to financial statements.





                                                20
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                              Mammatech Corporation
                                             Statements of Operations
                                    Years Ended August 31, 1998, 1997 and 1996

                                                              1998                   1997                   1996
                                                              ----                   ----                   ----

<S>                                                      <C>                    <C>                    <C>          
Sales, net                                               $     541,911          $     438,755          $     331,688
Cost of sales                                                  159,604                135,316                103,819
                                                         -------------          -------------          -------------
Gross profit                                                   382,307                303,439                227,869

Selling, general and administrative expenses                   414,452                169,458                262,686
                                                         -------------          -------------          -------------
Income (loss) from operations                                  (32,145)               133,981                (34,817)
Other income and (expense):
  Interest expense                                                (829)                  (896)                     0
  Other income                                                 165,136                      0                 97,846
  Interest and dividend income                                  18,383                 10,493                  4,686
                                                         -------------          -------------          -------------
                                                               182,690                  9,597                102,532

Income (loss) before income taxes                              150,545                143,578                 67,715
Provision for income taxes                                           0                      0                      0
                                                         -------------          -------------          -------------

Net income (loss)                                        $     150,545          $     143,578          $      67,715
                                                         =============          =============          =============

Basic earnings (loss) per share:
 Net income (loss)                                       $        0.00          $        0.00          $        0.00
                                                         =============          =============          =============

 Weighted average shares outstanding                       100,352,500            100,352,500            100,352,500
                                                         =============          =============          =============


                                 See accompanying notes to financial statements.




                                                            21
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                       Mammatech Corporation
                                                 Statement of Stockholders' Equity
                                             Years Ended August 31, 1998, 1997 and 1996

                                                               Additional                  Securities
                                    Common                      Paid-in       Treasury     Valuation     Accumulated
                                    Shares        Amount        Capital        Stock        Reserve        Deficit         Total
                                    ------        ------        -------        -----        -------        -------         -----

<S>                              <C>            <C>           <C>            <C>           <C>          <C>             <C>       
Balance at August 31, 1995       100,352,500    $   10,035    $  2,809,594   $  148,051    $       0    $ (2,471,764)   $  199,814
Net income for the year                    0             0               0            0            0          67,715        67,715
                                ------------    ----------    ------------   ----------    ---------    ------------    ----------
Balance, August 31, 1996         100,352,500        10,035       2,809,594     (148,051)           0      (2,404,049)      267,529
Increase in market value
of securities                          6,252         6,252
Net income for the year                    0             0               0            0            0         143,578       143,578
                                ------------    ----------    ------------   ----------    ---------    ------------    ----------

Balance, August 31, 1997         100,352,500        10,035       2,809,594     (148,051)       6,252      (2,260,471)      417,359

(Decrease) in market value of
securities                           (24,688)      (24,688)
Net income for the year                    0             0               0            0            0         150,545       150,545
                                ------------    ----------    ------------   ----------    ---------    ------------    ----------
Balance, August 31, 1998         100,352,500    $   10,035    $  2,809,594   $ (148,051)   $ (18,436)   $ (2,109,926)   $  543,216
                                ============    ==========    ============   ==========    =========    ============    ==========






                                        See accompanying notes to financial statements.


                                                            22
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                   Mammatech Corporation
                                                  Statements of Cash Flows
                                         Years Ended August 31, 1998, 1997 and 1996

                                                                  1998                1997                1996
                                                                  ----                ----                ----
<S>                                                            <C>                 <C>                 <C>      
Net income (loss)                                               $ 150,545           $ 143,578           $  67,715
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
   Depreciation and amortization                                   25,177               7,574              17,910
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable                    (12,192)            (28,448)             37,086
    (Increase) decrease in inventory                              (39,555)            (67,116)            (61,762)
    (Increase) decrease in other assets                            (9,675)                  0                   0
    Increase (decrease) in accounts payable                         9,873              17,128              (3,595)
    Increase (decrease) in accrued expenses                       105,598               2,744               7,566
                                                                ---------           ---------           ---------
       Total adjustments                                           79,226             (68,118)             (2,795)
                                                                ---------           ---------           ---------
  Net cash provided by
   operating activities                                           229,771              75,460              64,920
                                                                ---------           ---------           ---------

Cash flows from investing activities:
   Investment in securities                                       (36,313)            (76,500)                  0
   Acquisition of property and equipment                          (17,437)             (4,080)            (17,414)
   Acquisition of patents                                               0                   0              (1,500)
                                                                ---------           ---------           ---------
Net cash (used in) investing activities                           (53,750)            (80,580)            (18,914)
                                                                ---------           ---------           ---------

Cash flows from financing activities:
   Repayment of officer loans                                           0              (2,000)
   Repayment of note                                               (2,369)             (3,443)             (3,057)
                                                                ---------           ---------           ---------
  Net cash (used in)
   financing activities                                            (2,369)             (5,443)             (3,057)
                                                                ---------           ---------           ---------

   Depreciation and amortization                                   25,177               7,574              17,910
Changes in assets and liabilities:
    (Increase) decrease in accounts receivable                    (12,192)            (28,448)             37,086
    (Increase) decrease in inventory                              (39,555)            (67,116)            (61,762)
    (Increase) decrease in other assets                            (9,675)                  0                   0
Increase (decrease) in cash                                       173,652             (10,563)             42,949
Cash and cash equivalents,
 beginning of period                                              169,088             179,651             136,702
                                                                ---------           ---------           ---------
Cash and cash equivalents,
 end of period                                                  $ 342,740           $ 169,088           $ 179,651
                                                                =========           =========           =========

                               See accompanying notes to financial statements.

                                                      23
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                   Mammatech Corporation
                                                  Statements of Cash Flows
                                         Years Ended August 31, 1998, 1997 and 1996


                                                             1998               1997               1996
                                                             ----               ----               ----

Supplemental cash flow information:
<S>                                                        <C>                 <C>                <C>     
   Cash paid for interest                                  $    829            $    896           $  1,104
   Cash paid for income taxes                              $   0.00            $   0.00           $   0.00


Non-cash investing and financing activities:

Increase (decrease) in investment valuation reserve        $(24,688)           $  6,252           $ 15,605







                                      See accompanying notes to financial statements.



                                                            24
</TABLE>

<PAGE>



                   REPORT OF INDEPENDENT AUDITORS


Board of Directors and Shareholders
Mammatech Corporation

We have audited the accompanying  balance sheets of Mammatech  Corporation as of
August 31, 1998 and 1997, and the related  statements of operations,  changes in
stockholders'  equity,  and cash flows for each of the three  years then  ended.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audit.

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  by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Mammatech  Corporation as of
August 31, 1998 and 1997, and the results of its operations,  and its cash flows
for each of the three years then ended,  in conformity  with generally  accepted
accounting principles.





                                          James E. Scheifley & Associates, P.C.
                                          Certified Public Accountants

Englewood, Colorado
September 23, 1998


                                       25

<PAGE>





                              Mammatech Corporation
                          Notes to Financial Statements
                                 August 31, 1998


Note 1. Summary of Significant Accounting Policies

     A. Organization and Operations:  Mammatech  Corporation was incorporated in
     the State of Florida on November  23, 1981,  and holds  patents on a breast
     tumor detection  training  system.  The system,  which consists of a breast
     model and a method of breast  self-examination,  is marketed by the Company
     to individuals and healthcare professionals.

Inventories:
Inventories,  which consist  principally  of finished  goods,  are stated at the
lower of cost or market using the first-in, first-out method.

Property and Equipment:
Property and equipment are carried at cost.  Depreciation  and  amortization are
computed using the  straight-line  method over the estimated useful lives of the
assets ranging from 3 to 8 years. When assets are retired or otherwise  disposed
of, the cost and the  related  accumulated  depreciation  are  removed  from the
accounts,  and any resulting  gain or loss is  recognized in operations  for the
period. The cost of repairs and maintenance is charged to operations as incurred
and significant renewals or betterments are capitalized.

Patents, Trademarks, and Copyrights:
Patents, trademarks, and copyrights are amortized using the straight-line method
over their estimated useful economic lives of 10 years.  They are stated at cost
less accumulated amortization.

Revenue recognition:
The  Company  recognizes  revenue  on the sales of its  products  at the time of
shipment.

Earnings per share:
In February 1997, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 128,  "Earnings  Per Share."  SFAS No. 128  supersedes  and  simplifies  the
existing  computational  guidelines  under  Accounting  Principles Board ("APB")
Opinion No. 15, "Earnings Per Share."

The statement is effective for financial  statements  issued for periods  ending
after  December 15,  1997.  Among other  changes,  SFAS No. 128  eliminates  the
presentation  of primary  earnings per share and replaces it with basic earnings
per  share  for  which  common  stock  equivalents  are  not  considered  in the
computation. It also revises the computation of diluted earnings per share.


                                       26

<PAGE>



The  Company has  adopted  SFAS No. 128 and there is no  material  impact to the
Company's earnings per share, financial condition, or results of operations. The
Company's  earnings per share have been restated for all periods presented to be
consistent with SFAS No. 128.

The basic  earnings  per share is computed by dividing net income for the period
by the weighted average number of common shares outstanding for the period.
Basic income per share is unchanged on a diluted basis.

Cash and cash equivalents:
Cash and cash  equivalents,  consist  of cash and term  deposits  with  original
maturities of less than 90 days.

Estimates:
The preparation of the Company's financial statements requires management to use
estimates and assumptions.  These estimates and assumptions  affect the reported
amounts in the financial statements and accompanying notes. Actual results could
differ from these estimates.

Fair value of financial instruments:
The  Company's  short-term  financial  instruments  consist  of  cash  and  cash
equivalents,  marketable securities, accounts and loans receivable, and payables
and accruals.  The carrying amounts of these financial instruments  approximates
fair value because of their short-term  maturities.  Financial  instruments that
potentially  subject  the  Company to a  concentration  of credit  risk  consist
principally  of cash,  marketable  securities  and accounts  receivable,  trade.
During the year the Company  maintained cash deposits at financial  institutions
in excess  of the  $100,000  limit  covered  by the  Federal  Deposit  Insurance
Corporation.

Stock-based Compensation
The Company  adopted  Statement  of Financial  Accounting  Standard No. 123 (FAS
123), Accounting for Stock-Based Compensation beginning with the Company's first
quarter of 1996.  Upon  adoption  of FAS 123 when  circumstances  requiring  its
application arise, the Company will continue to measure compensation expense for
its  stock-based  employee  compensation  plans using the intrinsic value method
prescribed by APB No. 25, Accounting for Stock Issued to Employees.


Advertising
Advertising expenses are charged to expense upon first showing.  Amounts charged
to expense were $335,  $2,252 and $574 for the years ended August 31, 1998, 1997
and 1996, respectively.

New Accounting Pronouncements
SFAS No. 130, 'Reporting  Comprehensive Income',  establishes guidelines for all
items that are to be  recognized  under  accounting  standards as  components of
comprehensive income to be reported in the financial statements.


                                       27

<PAGE>



The statement is effective for all periods beginning after December 15, 1997 and
reclassification  of financial  statements of financial  statements  for earlier
periods will be required for comparative  purposes. To date, the Company has not
engaged in transactions which would result in any significant difference between
its reported net loss and comprehensive net loss as defined in the statement.


Note 2. Related Party Transactions

The Company  occupies office and clinic space pursuant to a month to month lease
entered  into with a  shareholder  at a cost of $1,295  per month  plus  certain
common costs,  which  approximates  fair market value. Rent expense was $12,791,
$15,755,  and $14,780  for the years  ended  August 31,  1998,  1997,  and 1996,
respectively.

During  prior  years two  officers  of the  Company  made  advances  aggregating
$11,830.  During the year ended August 31, 1997,  $2,000 of these  advances were
repaid. The balance of the advances was $6,630 at August 31, 1998.

During February,  1989, an officer of the Company filed a patent application for
a product  representing a variation of the Company's  patented  models.  The new
product is an important part of the Company's product line.

The Company has entered into an agreement with this officer  whereby the Company
would enjoy exclusive and unrestricted use of the new product for the payment of
the patent  application  fees. The agreement was for a period of one year and is
automatically renewable for additional one year periods provided,  however, that
either party may cancel the  agreement  upon one months notice after the initial
year.


Note 3. Available for Sale Securities

During the year ended August 31, 1997, the Company  invested $76,500 (cost basis
using specific  identification  method) in government  securities  backed mutual
funds. The market value of the funds amounted to $82,752 at August 31, 1997. The
accumulated   amount  of  net  unrealized  holding  gains  applicable  to  these
securities, has been included as a separate component of stockholders' equity in
the accompanying  balance sheet This amount,  $6,252, also represents the change
in net unrealized holding gains for the year ended August 31, 1997.

During the year ended August 31, 1998 the Company invested an additional $36,313
in a high income mutual fund.  The aggregate  market value of the funds amounted
to $94,377 at August 31, 1998.

The accumulated  amount of net unrealized  holding (losses)  applicable to these
securities, has been included as a separate component of stockholders' equity in
the accompanying  balance sheet This amount was ($18,436) at August 31, 1998 and
the change in net unrealized holding (losses) for the year ended August 31, 1998
amounted to ($24,688).

                                       28

<PAGE>


Note 4. Property and Equipment

Property and equipment consists of the following, at cost, at August 31:

                                               1998      1997 
                                             --------  --------
      Furniture and equipment                $197,775  $180,618
      Leasehold improvements                   16,135    15,854
                                             --------  --------
                                              213,910   196,472
      Less: accumulated depreciation          170,288   147,390
                                             --------  --------
                                             $ 43,622  $ 49,082
                                             ========  ========

Depreciation  charged to operations was $22,897,  $7,274, and $12,680 during the
years ended August 31, 1998, 1997, and 1996, respectively.


Note 5. Note Payable

At August 31, 1997 the Company had an unsecured  note payable due to a vendor in
the  principal  amount of $9,105  with  interest  at 8% per annum and payable in
installments of $350 per month until paid.  Maturity of this note is as follows:
1999: $4,796; 2000: $1,940.


Note 6. Commitments and Contingencies

In connection with the acquisition of the patent rights for the Company's system
of breast  self-examination,  the Company has paid $11,787 to the  University of
Florida for its release of all patent rights. In addition, 7 inventors also held
certain patent rights to the Company's process. Three of these individuals,  who
are  principal  shareholders  of the  Company,  contributed  their rights to the
Company.

The remaining four inventors have assigned their rights in certain models to the
Company in exchange for royalty  payments to be made based on sales. The related
sales were $540,808,  $297,947, and $78,198 for the years ended August 31, 1998,
1997, and 1996,  respectively.  The related royalty expense was $15,575, $8,581,
and $2,252 for the years ended August 31, 1998, 1997, and 1996, respectively.

The aggregate royalties payable to the inventors is as follows:

                               Sales               Royalty
                     --------------------------    -------
                     $        1  -  $ 5,000,000     2.86%
                     $5,000,001  -  $ 7,500,000     2.29%
                     $7,500,001  -  $10,000,000     1.71%
                     Over           $10,000,000     1.14%


                                       29

<PAGE>



The Company does not maintain product liability insurance related to its product
line.  It is unable to estimate  the risks and  possible  economic  consequences
related to its decision not to carry this type of insurance.

Note 7. Concentration of Credit Risk/Major Customers

During the years ended  August 31,  1998 and 1997 the Company  made sales to the
American Medical Women's  Association  aggregating  $95,950 (18% of total sales)
and $70,957  (16% of total  sales),  respectively.  This  customer had a prepaid
balance of $365 at August 31, 1998.  Additionally  during 1998, the Company made
sales to Irving  Burton & Associates  aggregating  $107,841 (20% of total sales)
and had an amount receivable from this customer of $36,475 at August 31, 1998.

At August 31, 1998 the Company has $295,336 on deposit in uninsured money market
accounts.

The Company currently  utilizes a single  manufacturer for its products.  Should
this manufacturer be unable to meet the Company's demands it feels that it would
be able to locate another suitable manufacturer or manufacturers.

The Company made sales to customers  located in foreign  countries  amounting to
$25,099,  32,476 and $15,580  during the years ended August 31,  1998,  1997 and
1996, respectively.


Note 8. Other Income

During  1996 the  Company  received a federal  grant in the amount of $97,846 to
develop  and adapt the  Company's  products  for use by women  with  vision  and
hearing impairments.

During  September 1997, the Company received final approval for a research grant
aggregating  $592,000 to offset the costs  associated  with a program to promote
breast  self-examination for disabled women. The grant was issued to the Company
by the US Department of Health and Human Services and has a two year term ending
September 29, 1999. Funds received for services provided under the grant for the
year ended August 31, 1998 amounted to $165,136.


Note 9. Income Taxes

Deferred income taxes may arise from temporary differences resulting from income
and  expense  items  reported  for  financial  accounting  and tax  purposes  in
different  periods.  Deferred  taxes are  classified as current or  non-current,
depending on the  classifications  of the assets and  liabilities  to which they
relate.  Deferred taxes arising from temporary  differences that are not related
to an asset or liability are classified as current or  non-current  depending on


                                       30

<PAGE>


the periods in which the  temporary  differences  are  expected to reverse.  The
Company has not recorded the deferred tax asset  related to the  operating  loss
carryforward  (approximately $692,000) because it cannot reasonably estimate its
ability to utilize the loss carryforward. The deferred tax asset and the related
reserve decreased by approximately $51,000 for the year ended August 31, 1998.

At August 31, 1998, the Company had net operating loss carry forward aggregating
approximately $2,036,000 which expire beginning as follows:

              1999:   $ 626,000          2000:   $ 233,000
              2001:   $ 279,000          2002:   $ 280,000
              2003:   $ 228,000          2004:   $ 131,000
              2005:   $ 115,000          2006:   $  74,000
              2007:   $  54,000          2008:   $  16,000

The amounts shown for income taxes in the  statements of operations  differ from
the  amounts   computed  at  federal   statutory   rates.  The  following  is  a
reconciliation of those differences.

Year Ended August 31,
---------------------
                                     1998     1997    1996
                                     ----     ----    ----
   Tax at federal statutory rates     34%      34%     34%
   Surtax exemption                  ( 6)     ( 7)    (16)
   Operating loss carryforward       (28)     (27)    (18)
                                     ---      ---     ---
                                      - %      - %     - %
                                     ===      ===     ===


Item 9. Disagreements on Accounting and Financial Disclosure
------------------------------------------------------------

None



                                       31

<PAGE>





PART III
--------

Item 10. Directors and Executive Officers of the Company
--------------------------------------------------------

   The  following  persons  are the  executive  officers  and  directors  of the
Company.

Name                           Age   Position with the Company
----                           ---   -------------------------

Mark Kane Goldstein, Ph.D.      60   Chairman of the Board, Vice-
                                     President and Secretary

H. S. Pennypacker, Ph.D.        61   President and Director

Mary Bailey Sellers             50   Treasurer


     All directors serve until the next annual meeting of shareholders. There is
currently one vacancy on the Board of Directors.

Mark Kane Goldstein
-------------------

     Mark Kane Goldstein,  Ph.D.,  is Chairman of the Board,  Vice President and
Secretary  of the  Company.  Dr.  Goldstein  directs  and advises the Company on
fiscal and policy matters and directs research on product development. From 1971
until  July,   1982,   Dr.   Goldstein   was  employed  by  the  U.S.   Veterans
Administration,  Gainesville, Florida, as a research scientist. During this same
period, Dr. Goldstein also was an Associate  Professor/Research Scientist at the
University of Florida, Gainesville, Florida, and continues as Co-Director of its
Center for Ambulatory Studies.

     From  1978  through  May,  1984,  Dr.  Goldstein  was a member  of the City
Commission of Gainesville,  Florida  including 1980-81 when he served a one-year
term as Mayor.

     Dr. Goldstein received a B.A. in 1961 from Muhlenberg  College,  an M.A. in
1962 from Columbia University and a Ph.D. in 1971 from Cornell  University.  All
Degrees were in Psychology.


Henry Sutton Pennypacker, Ph.D.
-------------------------------

     Henry Sutton  Pennypacker,  Jr.,  Ph.D., is President and a director of the
Company.  He is currently  employed as President of the Company and as Professor
Emeritus of Psychology at the University of Florida.  He was the acting Chairman
of the Department of Psychology  from June 1969 to 1970 and prior thereto was an
Associate  Professor  and  Assistant  Professor.  In May 1998,  Dr.  Pennypacker
retired from the University but continues to teach on a part-time basis.

                                       32

<PAGE>



     Dr.  Pennypacker  is the author or  co-author  of four books and over fifty
articles and book chapters  dealing with various aspects of behavioral  research
and behavioral medicine. He is a past President of the International Association
for Behavior Analysis, the Society for Advancement of Behavior Analysis, and the
Florida  Association for Behavior Analysis.  On August 10, 1990, Dr. Pennypacker
received an award from the California Division of the American Cancer Society in
recognition  of his  "...pioneering  contribution  to breast  self-  examination
education."

     Dr. Pennypacker  received a B.A. and an M.A. from the University of Montana
in 1958 and 1960,  respectively,  and a Ph.D.  from Duke University in 1962. All
degrees were in Psychology.

Mary Bailey Sellers
-------------------

     Mary Bailey  Sellers has been  employed as  Controller by the Company since
September  1985.  She was  appointed  Treasurer in August 1986.  From April 1978
through November 1984, she was employed by Barnett Bank of Alachua County, N.A.,
and a predecessor bank as Vice President--commercial loans. Mrs. Sellers devoted
her time to her family from December 1984 through August 1985.

     Mrs.  Sellers  received a B.A.  in English  and  History in 1970 from Barry
College.


Item 11. Executive Compensation
-------------------------------

     The following table sets forth the cash remuneration paid or accrued by the
Company during the fiscal year ended August 31, 1998, to each executive  officer
whose total cash compensation  exceeded $60,000 and to all executive officers of
the Company as a group.

                             Cash Compensation Table
                             -----------------------

          A                           B                    C
-------------------------------------------------------------------------------
Name of individual              Capacities in             Cash
or number of persons            which served           Compensation
in a group
All executive officers          All capacities         $78,226.52
as a group
(three persons) (1)
                                       33

<PAGE>


(1)  No  executive  officer of the  Company  received  more than  $38,443.48  in
     compensation during the fiscal year ended August 31,1998.

     Dr.  H. S.  Pennypacker,  Jr.,  President  of the  Company,  and  Dr.  Mark
Goldstein received partial compensation  associated with their activities on the
research grant during the 1998 fiscal year.In addition,$50,633.48 was accrued in
salary for Dr.  Pennypacker and $33,583.48 was accrued for Dr.  Goldstein.  Mary
Sellers receives a salary of $38,443.48 per year.

     During  September,  1992 the  Company  authorized  the  issuance of to H.S.
Pennypacker and M.K. Goldstein a total of 20,000,000 shares of common stock. The
Company valued these shares at $20,000. In addition, the Company accrued $20,000
in salary due to Dr. Goldstein.Dr.  Goldstein subsequently relinquished claim to
these funds.

     During August,  1994, the Company agreed to issue 20,000,000  shares of its
$0.0001 par value common stock to two of its officers for services.  The Company
recorded a $20,000  charge to its  operations  during the year ended  August 31,
1994, related to this issuance.

   During April,  1994,  the Company  issued 500,000 shares of treasury stock to
certain  employees for services.  The value  attributed to the services was $500
and was based upon the bid price of the  Company's  common  stock at the time it
was issued ($0.001 per share).  The difference  between the cost of the treasury
stock ($12,000) and the charge to operations was charged to paid-in capital.

     All directors receive  reimbursement of expenses but no fees for serving as
directors.




Item 12. Security Ownership of Certain Beneficial Owners and Management
-----------------------------------------------------------------------

     The following  table sets forth,  as of Nov. 30, 1998, the number of shares
of common stock owned both of record and  beneficially by (I) all persons owning
five percent or more of the  outstanding  common stock of the Company;  (ii) all
directors, and (iii) all officers and directors as a group:

                                     Shares of          Percentage of
                                    Stock Owned       Outstanding Shares
                                    -----------       ------------------

Mark Kane Goldstein, Ph.D. (2)       26,516,000              26.4%
930 N.W. 8th Avenue
Gainesville, Florida 32601

H. S. Pennypacker, Ph.D.             25,800,000              25.7%
930 N.W. 8th Avenue (1)(2)
Gainesville, Florida 32601
  
Mary Bailey Sellers                    400,000               4.0%
930 N.W. 8th Avenue
Gainesville, Florida 32601

All Officers and Directors
as a group (1)(2)


                                       34

<PAGE>

------------------------------

(1) All shares owned by Dr.  Pennypacker are owned by himself and his wife as to
which Dr. Pennypacker has shared investment and voting power.


Item 13. Certain Relationships and Related Transactions
-------------------------------------------------------

     On February 9, 1989,  Mark Kane  Goldstein,  an Officer and Director of the
Company,  filed Patent  Application  Serial No. 308,914 seeking protection for a
new breast  model that  represents  a  significant  variation  on the  Company's
patented  models.  The new breast model is an integral part of the Company's new
MammaCare  Personal  Learning  System.  The Company has entered into a licensing
agreement  with  Dr.   Goldstein   whereby  the  Company  enjoys  exclusive  and
unrestricted  use of the  invention in exchange for payment of costs  associated
with  preparation  and filing of the patent  documents  together  with  whatever
foreign patent protection the Company,  in consultation with Dr. Goldstein,  may
seek.



                                     PART V
                                     ------

Item 14.  Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
-----------------------------------------------------------------------------

(a) The following documents are filed as part of this Report on Form 10-K.

Financial Statements                             Pages 19 to 25


(b)  Reports on Form 8-K:  No  reports  on Form 8-K were  filed  during the last
quarter of the fiscal year ended August 31, 1998.

                                       35

<PAGE>


(c)  Exhibit Index: None


3        Articles of Incorporation*

3.1      Articles of Amendment to Articles of Incorporation*

3.2      By-Laws*

3.3      Amendments to By-Laws*

4        Warrants*

10.1     Patent Assignment Agreements*

10.2     H. S. Pennypacker Assignment*

10.3     Mark Kane Goldstein Assignment*

                    ----------------------------------------


*Contained in the Company's registration statement of Form S-18 filed in October
27, 1982.

**Contained in Amendment No. 1 to the Company's registration statement on Form
S-18 filed on November 13, 1982.

***Contained in Amendment No. 3 to the Company's registration statement on Form
S-18 filed on November 9, 1982.







                                   SIGNATURES
                                   ----------

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

                                           MAMMATECH CORPORATION

                                           By:  /s/  H.S. Pennypacker, Jr.
                                                --------------------------------
                                               H. S. Pennypacker, Jr., President

Date:  November 19, 1998

                                       36

<PAGE>


Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the  following  persons on behalf of the Company and in
the Capacities and on the dates indicated.


Signature                    Position or Office                  Date
---------                    ------------------                  ----


/s/  Mark Kane Goldstein      Chairman of the Board           November 25, 1998
-------------------------
Mark Kane Goldstein



/s/  H.S. Pennypacker, Jr.    President and Director          November 25 1998
--------------------------
H. S. Pennypacker, Jr.


/s/  Mary Bailey Sellers      Treasurer                       November 25, 1998
--------------------------
Mary Bailey Sellers


                                       37