<PAGE>
                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB/A

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

       For the fiscal year ended December 31, 1998
                                        OR
[   ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

Commission file number 0-28088

                                 MODACAD, INC.
       -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

            California                                  95-4145930
 -------------------------------          ------------------------------------
 (State or other jurisdiction of          (IRS Employer Identification Number)
 incorporation or organization)

    3861 Sepulveda Blvd., Culver City                       90230
----------------------------------------                 ----------
(Address of principal executive offices)                 (Zip Code)

                                  (310) 751-2100
                           ---------------------------
                           (Issuer's telephone number)

      Securities registered under Section 12(b) of the Exchange Act: None

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

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

Check whether the registrant (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. [X]

The registrant's revenues for its most recent fiscal year were $6,681,280.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  was  $48,277,215  based on the average bid and asked prices of $9.06
per share as quoted on the Nasdaq National Market on May 26, 1999.

The number of outstanding shares of the registrant's common stock, as of May 26,
1999, was 7,401,515.


Transitional Small Business Disclosure Format: Yes    No  X
                                                  ---    ---
<PAGE>

                                    PART III

Item 10. Executive Compensation

Summary Compensation Table

The following table summarizes the  compensation  paid during each of 1998, 1997
and 1996 to the Company's chief executive  officer and other executive  officers
whose compensation exceeded $100,000 in 1998:
<TABLE>
<CAPTION>

                                                               Long-Term
                                               Other      Compensation Awards
                                               Annual  -------------------------
                                               Compen-   Restricted   Securities
Name and             Fiscal                    sation   Stock Awards  Underlying
Principal Position    Year    Salary    Bonus    (1)         (2)       Options
--------------------------------------------------------------------------------
<S>                  <C>    <C>       <C>        <C>       <C>       <C>
Joyce Freedman       1998   $200,000  $100,000   $7,200    $ 0        200,000
Chairman of the      1997   $150,000   $20,999   $4,800    $ 0         37,227
Board and Chief      1996   $150,000   $36,619   $4,800    $ 0             0
Executive Officer

Maurizio Vecchione   1998   $200,000  $100,000   $7,200    $ 0        200,000
President & Chief    1997   $150,000   $20,999   $4,800    $ 0         37,227
Operating Officer    1996   $150,000   $36,619   $4,800    $ 0             0

Lee Freedman         1998   $125,000   $   0     $4,800    $ 0         50,000
Vice President,      1997   $125,000   $   0     $4,800    $ 0             0
Finance & Chief      1996   $125,000   $   0     $4,800    $ 0             0
Financial Officer

Linda Freedman       1998   $125,000   $   0     $4,800    $ 0         85,000(3)
Vice President,      1997   $100,000   $32,261   $4,800    $ 0         55,000
Marketing            1996   $106,029   $24,710   $4,800    $25,965         0

Steven Gentry        1998   $120,000   $   0     $ 0       $39,687(4)  25,000
Vice President,      1997   $100,000   $   0     $ 0       $ 0             0
Engineering          1996    $90,833   $   0     $ 0       $19,470    180,000

</TABLE>
____________________

(1) Other Annual Compensation consists of automobile allowances.

(2) As of December 31, 1998, Linda Freedman held 2,596 restricted  shares valued
at $44,132,  and Steven Gentry held 6,490 restricted  shares valued at $110,330,
which  values are based on the market  value of the  Company's  Common  Stock of
$17.00 per share at December 31, 1998.  The Company  currently pays no dividends
on Common Stock.

(3)  Consists  of options to  purchase  25,000  shares  granted  during 1998 and
options to purchase  60,000 shares granted in previous years which were repriced
during 1998.

(4) Consists of 2,597 shares of restricted Common Stock granted to Steven Gentry
during  1998,  all of which  shares  were vested as of December  31,  1998.  The
Company currently pays no dividends on Common Stock.

                                       1
<PAGE>

Option Grants in Last Fiscal Year

The  following  table sets forth  information  concerning  option  grants during
fiscal  year  1998  to each  of the  executive  officers  named  in the  Summary
Compensation Table who received stock option grants in 1998. The Company has not
granted any stock appreciation rights (SARs).  Unless otherwise indicated in the
footnotes, all options had vested and were exercisable as of December 31, 1998.

<TABLE>
<CAPTION>

                                Individual Grants
--------------------------------------------------------------------------------
                     Number of       Percent of Total   Exercise or
                Shares Underlying   Options Granted      Base Price   Expiration
    Name         Options Granted     to Employees in       ($/Sh)       Date
                                      Fiscal Year (1)
--------------------------------------------------------------------------------
<S>                  <C>                <C>              <C>            <C>
Joyce Freedman      200,000(2)          23.8%            $15.88           4/7/08
Maurizio Vecchione  200,000(2)          23.8%            $15.88           4/7/08
Lee Freedman         25,000              3.0%            $15.88           4/7/08
Lee Freedman         25,000              3.0%            $16.13          4/15/08
Linda Freedman       25,000              3.0%             $9.50          4/15/08
Linda Freedman       10,000(3)(4)        1.5%(5)          $9.50          8/27/07
Linda Freedman       50,000(3)           7.7%(5)          $9.50         10/26/07
Steven Gentry        25,000              3.0%             $9.50          4/15/08
</TABLE>
____________________

(1) The Company  granted  options to purchase an aggregate of 840,000  shares to
employees in 1998.

(2) As of December 31, 1998, no options had vested or become exercisable.

(3) Represent options granted during 1998 in connection with option  repricings,
which  repricings were effected  through the  cancellation of options granted in
previous fiscal years and the grant of repriced options.

(4) As of December 31, 1998, 4,000 options had vested and were exercisable,  and
the balance will vest and become  exercisable in three 2,000 share  installments
on October 24 of 1999, 2000 and 2001.

(5) The Company  repriced  options to purchase an aggregate of 649,000 shares in
1998.

                                       2
<PAGE>

Option Exercises and Year End Value Table

The following table sets forth  information  concerning  option exercises during
the last fiscal year by the executive officers named in the Summary Compensation
Table and the value of options held by such officers as of December 31, 1998:

<TABLE>
<CAPTION>
                                    Number of Securities   Value of Unexercised
                                     Underlying Options    In-the-Money Options
                                    at December 31, 1998   at December 31, 1998
                                                                           (1)
                                    --------------------   ---------------------
                  Shares       Value
                  Acquired    Realized
   Name          on Exercise    ($)           Unexercisable        Unexercisable
                     (#)             Exercisable          Exercisable
--------------------------------------------------------------------------------
<S>                <C>      <C>         <C>       <C>     <C>           <C>
Joyce Freedman          0          0     37,227   200,000           0   $224,000
Maurizio Vecchione      0          0     37,227   200,000           0   $224,000
Lee Freedman            0          0     50,000         0     $50,000          0
Linda Freedman          0          0     82,000     6,000    $625,890    $45,000
Steven Gentry      35,000   $406,875    160,000         0  $1,807,500          0
</TABLE>
____________________

(1) Dollar value is based on the market value of the  Company's  Common Stock of
$17.00 per share at December 31, 1998 minus the per share exercise price.


Compensation of Directors

Three  non-employee  members of the Board of Directors,  Leslie  Saleson,  Peter
Frank and Andrea  Vecchione,  received  compensation  in the form of warrants to
purchase  shares of Common  Stock from the Company in 1998 for their  service on
the Board. In October 1998, the Company  granted to each of Peter Frank,  Leslie
Saleson and Andrea  Vecchione  ten-year  warrants to  purchase  6,000  shares of
Common  Stock at an  exercise  price of $9.50 per share,  2,000  shares of which
vested immediately and the balance of which vest in two 2,000 share installments
on October 9 of 1999 and 2000. In October 1998, the Company  repriced  five-year
warrants  which had been  granted to F.  Stephen  Wyle during 1997 to purchase a
total of 8,000  shares of Common  Stock,  changing  the  exercise  price on such
warrants   from  $16.375  per  share  to  $9.50  per  share,   which  price  was
approximately  equal to the average closing price of the Company's  Common Stock
on the NASDAQ  National  Market for the five trading days ended October 9, 1998.
Also in October  1998,  the Company  repriced  ten-year  warrants  that had been
granted during 1997 to each of Leslie  Saleson and Andrea  Vecchione to purchase
2,000 shares of Common Stock at an exercise price of $17.25 per share,  changing
such exercise price to $9.50 per share,  which price was approximately  equal to
the average  closing price of the Company's  Common Stock on the NASDAQ National
Market for the five trading days ended October 9, 1998.

Employment Contracts

Effective  January 1, 1998, the Company entered into employment  agreements with
Joyce  Freedman,  as  Chairman  of the Board and Chief  Executive  Officer,  and
Maurizio Vecchione,  as President and Chief Operating Officer,  which have terms
expiring December 31, 2005. The employment agreements each provide for an annual
salary  of  $200,000,  a signing  bonus of  $100,000  and a  monthly  automobile
allowance of $600.  Each  employment  agreement  further  provides for an annual
performance  bonus  payable  for  each  calendar  year  during  the  term of the
agreement,  in an amount to be determined by the  Compensation  Committee of the
Board. In addition,  in connection with the employment  agreements,  the Company
granted to each of Ms. Freedman and Mr. Vecchione a five-year option to purchase
200,000  shares of Common  Stock.  Such options vest and become  exercisable  as
follows: if the closing sale price of the Company's Common Stock is greater than
$10 per share for a period of 20  consecutive  trading  days in any fiscal  year
during the term of the  employment  agreement,  options to purchase 50 shares of
Common  Stock for each  $1,000 of net income  (before  deductions  for taxes and
executive  bonuses)  of the  Company  in such  calendar  year  vest  and  become
exercisable  at an  exercise  price  equal to the market  value per share on the
grant date.  No options  granted  under these  employment  agreements  vested or
became exercisable for either Ms. Freedman or Mr. Vecchione during 1998.

Compensation Committee Interlocks and Insider Participation

The  Compensation  Committee  of the  Company's  Board  of  Directors  currently
consists of F.  Stephen  Wyle,  Leslie  Saleson and Peter  Frank.  None of these
individuals  was an officer or  employee  of the  Company at any time during the
1998  Fiscal  Year or at any other  time.  No current  executive  officer of the
Company has ever served as a member of the board of  directors  or  compensation
committee of any other entity that has or has had one or more executive officers
serving  as a  member  of the  Company's  Board  of  Directors  or  Compensation
Committee.

                                       3
<PAGE>

                                   SIGNATURE

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

                                             ModaCAD, Inc.


Date:  May 28, 1999                  By:   /s/  JOYCE FREEDMAN
                                             -------------------------
                                             Joyce Freedman
                                             Chairman of the Board and
                                             Co-Chief Executive Officer

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


 /s/  JOYCE FREEDMAN             Chairman of the Board and         May 28, 1999
------------------------         Co-Chief Executive Officer       --------------
      Joyce Freedman                                                   Date


/s/  MAURIZIO VECCHIONE          President,                        May 28, 1999
------------------------         Co-Chief Executive Officer       --------------
     Maurizio Vecchione          and Director                          Date



/s/  LEE FREEDMAN                Vice President, Finance,          May 28, 1999
------------------------         Chief Financial Officer and     ---------------
     Lee Freedman                Director                              Date


/s/  ANDREA VECCHIONE            Secretary and Director            May 28, 1999
------------------------                                          --------------
     Andrea Vecchione                                                  Date


/s/  STEPHEN WYLE                Director                          May 28, 1999
------------------------                                          --------------
     Stephen Wyle                                                      Date


/s/  PETER FRANK                 Director                          May 28, 1999
------------------------                                          --------------
     Peter Frank                                                       Date


/s/  LESLIE SALESON              Director                          May 28, 1999
------------------------                                          --------------
     Leslie Saleson                                                    Date

                                       4