U. S. SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549
          
                               FORM 10-KSB
           Annual Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934
              For the Fiscal Year Ended June 30, 1998
                    Commission File Number 1-8662

                     PROACTIVE TECHNOLOGIES, INC.
               formerly KEYSTONE MEDICAL CORPORATION)
     (Exact name of registrant as specified in its charter)

                 
Delaware                                 23-2265039
(State of Incorporation)           (IRS Employer Identification No.)

                         7118 Beech Ridge Trail
                     Tallahassee,  Florida   32312 
               (Address of Principal Executive Offices)

                           (850) 668-8500
     (Registrant's telephone number, including area code)

   Securities Registered Pursuant to Section 12(b) of the Securities
 Exchange Act of 1934:

Title of Class             Name of each Exchange on which registered:
Common Stock, par value $0.04             American Stock Exchange

 Securities Registered Pursuant to Section 12(g) of the Securities 
Exchange Act of 1934:   NONE

     Check whether the Registrant (1) has filed all reports required 
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding twelve 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 

Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-B is not contained herein, and will not 
be contained, to the best of Registrant's knowledge, in definitive 
proxy or information statements incorporated by reference in Part III
of the Form 10-KSB or any amendment to this Form 10-KSB.
       Yes        No  X

The Registrant's revenues for its most recent fiscal year (twelve 
months ending June 30, 1998) $15,133,889.

The aggregate market value of the voting stock held by non-affiliates 
computed by reference to the price at which the stock was sold, or the 
average bid and asked prices of such stock, as of a specified date 
within the past 60 days:  As of September 29, 1998, $3,522,188.10.

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

  The number of shares outstanding of the Registrant's Common Stock as 
of September 29, 1998: 16,499,253.

Transitional Small Business Disclosure Format:
                     Yes            No     X   





                         TABLE OF CONTENTS

                              PART I
                                                                   Page
ITEM 1.    Description of Business                                       

             General                                                      

             Acquisitions and Dispositions Not in the 
             Ordinary Course of Business                                

ITEM 2.    Properties                                                  

            
             Real Estate Operations - Materially Important Properties  

             Real Estate Operations - Other Properties                 

             Financing and Lines of Credit                             

             Policies with Respect to certain Activities               

             Description of the Real Estate Development Business       

             Government Regulation and Environmental Matters           

             Warranty Bonds and Other Obligations                      

             Competition                                               

             Warranties and Other Obligations                          

             Description of Markets                                    

             Other Real Estate Investments                             

             Employees                                                 


ITEM 3.    Legal Proceedings                                           
 
ITEM 4.    Submission of Matters to a Vote    
           Of Security Holders                                         

                             PART II

ITEM 5.    Market for Registrant's Common Stock and
           Related Shareholder Matters                                 

ITEM 6.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations               

ITEM 7.    Financial Statements and Supplementary Data                 

ITEM 8.    Changes in and Disagreements With Accountants
           On Accounting and Financial Disclosure                      

                             PART III

ITEM 9.    Directors, Executive Officers, and Control
           Persons of the Registrant                                   

ITEM 10.   Executive Compensation                                      

ITEM 11.   Security Ownership of Certain Beneficial Owners
           and Management                                              

ITEM 12.   Certain relationships and Related Transactions              

ITEM 13.   Exhibits and Reports on Form 8-K                            

<PAGE>

PART I

Item 1.     Description of Business.

General

     Proactive Technologies, Inc. ("PTE" or the "Company") was organized
as a Delaware corporation in 1982 and has been primarily a holding 
company.  Historically, the Company's  two subsidiaries were  Keystone
Laboratories, Inc.("Keystone") and Proactive Solutions, Inc. ("Proactive
Solutions"), respectively.  Keystone operated a drug screening and 
confirmatory drug testing lab.  Proactive Solutions was in the 
development stage of developing computer software for business 
management systems.  As of  June 30, 1996, the Company no longer owned
these subsidiaries.

    As described more fully below (see "ACQUISITIONS AND DISPOSITIONS 
NOT IN THE ORDINARY COURSE OF BUSINESS"), on February 12, 1996, PTE 
acquired 100% of the outstanding common stock of Capital First Holdings,
Inc. ("Capital First") through the issuance of 8,559,077 shares of PTE 
common stock, which represented approximately 80% of the voting shares 
of PTE immediately after the transaction.  For accounting purposes, the
acquisition of Capital First by PTE has been treated as a 
recapitalization of Capital First with Capital First as the acquiror 
(a "reverse acquisition").  

    After the reverse acquisition was completed, PTE determined that the
drug screening business of Keystone was inconsistent with the long-term
business objectives of Capital First.  As a result, PTE decided to sell 
or otherwise dispose of its interest in Keystone.  On June 29, 1996, the
Company entered into an agreement to sell all of its stock in Keystone 
to Clark Capital Corp., Richard T. Clark, Jr., Joel C. Holt, and G. 
David Gordon (the "Clark Group").  The Clark Group is composed of former
officers or shareholders of the Company.  The purchase price under the 
agreement was $1,500,000, such amount payable in shares of PTE common 
stock, using an assigned value of $3.50 per share, or, at the option of 
the Clark Group, cash.  

    Under the agreement, approximately $250,000 of the purchase price 
was due at closing with the remainder due on or before December 31, 
1997, extended from July 31, 1997, such remainder bearing interest at 
the rate of 8% per annum; such interest, also at the option of the 
Clark Group, may be payable in PTE stock.  On July 28, 1996, the 
Company received approximately 72,000 shares of PTE common stock towards
the purchase price.  During fiscal year end June 30, 1998, the Clark Group 
paid substantially all of its remaining obligation using common stock of 
the Company.


     As a result of the dispositions of Keystone and the acquisitions 
described below, as of June 30, 1998, the Company was a holding 
company conducting, through subsidiaries, the development of 
residential real estate.

     Certain statements contained in this report, including, without 
limitation, statements containing the words "believes", "anticipates",
"expects", and words of similar import, constitute forward-looking
statements, within the meaning of the Private Securities Litigation
Reform Act of 1995.  Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause the
actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following:  international,
national and local general economic and market conditions; demographic
changes; national interest rates; the ability of the Company to sustain,
manage or forecast its growth; the ability of the Company to
successfully make and integrate acquisitions; existing governmental
regulatiuons and changes in or the failure to comply with,
governmental regulations; adverse publicity, competition; changes
in business strategy or development plans; business disruptions, 
weather conditions; the ability to attract and retain qualified
personnel; and other factors referenced in this report.  Certain
of these factors are discussed in more detail elsewhere in this 
report.  Given these uncertainties, readers of this report and
investors are cautioned not to place undue reliance on such
forward-looking statements.  The Company disclaims any obligation
to update any such factors or to publicly announce the result
of any revisions to any of the forward-looking statements contained 
hereinto reflect future events or developments.

ACQUISITIONS AND DISPOSITIONS NOT IN THE ORDINARY COURSE OF BUSINESS

Real Estate Development-Completed Acquisitions

Capital First Holdings, Inc.

     Capital First Holdings, Inc. ("Capital First"), was organized as a 
Florida corporation in 1994, and is engaged primarily in the design, 
development and sales of single-family subdivisions in Tallahassee 
(Leon County), Florida.  In addition, Capital First has been the 
developer of condominium projects in Vero Beach, Florida.  On 
February 12, 1996, the Company acquired all of the issued and 
outstanding shares of common stock of Capital First from Mark A. Conner 
("Conner") in exchange for 8,559,077 of newly issued shares of the
Company's common stock.  For accounting purposes, the transaction has 
been treated as a reverse acquisition.  After the reverse acquisition 
by Capital First, Conner was appointed to the Company's Board of 
Directors and elected its President and Chief Executive Officer.  In 
connection with the acquisition, Conner entered into a five-year 
employment agreement.

     Killearn Properties, Inc.

    Killearn Properties, Inc.  ("Killearn") is a developer of single-
family subdivisions, now primarily operating in Stockbridge (Henry 
County), Georgia.   In November 1993, Capital First purchased 
substantially all of Killearn's real estate holdings in Florida.  In 
April 1996, the Company purchased 115,700 shares of  the common stock
of Killearn on the open market at an average price of $8.58 per share.
In May 1996, the Company proposed a transaction with Killearn whereby 
Killearn would "split-off" certain assets (consisting of a golf course
and country club, a newly constructed inn and certain joint venture 
interests) to an entity controlled by J.T. Williams ("Williams"), 
Killearn's Chairman of the Board, President and Chief Executive Officer,
in exchange for Williams' approximately 42% effective common stock 
interest in Killearn.

     By August 1996, the Company had acquired an additional 199,750
shares of Killearn common stock in three separate transactions with
Killearn shareholders.  In each such purchase, for each share of 
Killearn common stock acquired, the Company issued four shares of its
common stock to the respective seller.  The 798,200 shares of the 
Company's common stock issued in these transactions were valued, based
on the relevant closing bid prices of the common stock on the American
Stock Exchange, at approximately $1,824,000.  In connection with one 
such acquisition, whereby the Company issued 139,600 shares to James H.
Dahl, IRA, 80,000 shares to James H. Dahl and Georgia P. Dahl, JTWROS, 
and 107,200 shares to Rock Creek Partners, Ltd., the Company agreed to 
register the shares of its common stock issued to the sellers under the
Securities Act of 1933 (the "1933 Act") on or before July 31, 1997.  
In case such shares are not so registered, the Company was to be required
to issue to the sellers an additional 98,040 shares of its common stock.
As a result of these acquisitions, as of August 1996, the Company owned
approximately 21.9% of the total number of issued and outstanding shares
of Killearn's common stock. On November 16, 1996, the Company and James
H. Dahl rescinded their August agreement and the Company received back
326,800 shares of its stock in return for 81,700 shares of Killearn 
Properties, Inc. voting common stock.

    On July 31, 1996, Killearn's Board of Directors  approved the 
proposed split-off (the "Split-Off") and, on August 2, 1996, Killearn 
and Williams entered into an agreement regarding the Split-Off.  On 
September 30, 1996, Killearn's shareholders (other than Williams) 
approved the split-off and elected Conner to Killearn's Board of 
Directors.  Conner was also elected Chairman and Chief Executive 
Officer of Killearn, and two of the Company's nominees (Langdon S.
Flowers, Jr. and Robert E. Maloney, Jr.) were appointed to Killearn's
board.

    Taking into account that on November 12, 1996, the Dahl Group and 
the Company rescinded its stock exchange from August, 1996, PTE's 
interest in Killearn's outstanding common stock increased to 
approximately 28.26%.

    In addition, on July 29, 1996, PTE delivered a letter to Killearn's
Board of Directors  proposing that PTE and Killearn enter into an 
agreement under which PTE would provide sales personnel, training and 
techniques, and other management assistance to Killearn in order to 
increase Killearn's sales of residential lots.  From August 1996 until
March 1997, Killearn and PTE operated under an informal arrangement for
such assistance. On March 10, 1997, Killearn's Board of Directors made
a proposal to pay PTE $12,500.00 per month for the services of PTE's 
sales personnel, retroactive to July 1, 1996.

     The Company continued to make investments in Killearn Properties,
Inc., including acquisitions during the three months ended September 30,
1997, of an additional 155,426 shares of KPI, in exchange for 
approximately $323,000 in cash, $198,000 in promissory notes, and 
294,000 shares of Company voting stock, bringing its holdings in KPI to
approximately 45.77%.

     Subsequent to September 30, 1997, the Company learned that J.T.
Williams, Jr., whom the Company had entered into a prior agreement (see
Form 13/D filed October 11, 1997) had refused to tender his shares in
accordance with a stock exchange agreement between Mr. Williams and the 
Company.  The result was that in the event the non-performance by Mr.
Williams was valid, the Company's position was reduced to 315,430 
shares, or 35.5% of the 887,412 issued and outstanding shares of KPI.

     Additionally, as filed in Form 13/D with EDGAR on January 8, 1998,
the Company exercised its call rights with three other major KPI 
shareholders under certain Put and Call Agreements for a total of
132,000 additional KPI shares at a total price of $1,254,000, or $9.50
per share, giving the Company a total of 447,430 shares, representing 
50.4% of the total issued and outstanding shares of KPI.

     On January 27, 1998, the Company entered into an Agreement to sell
315,430 shares of KPI stock to the Wimberly Investment Fund, L.P. for a
total of $2,286,867.50, or $7.25 per share.  Consequently, as of
June 30, 1998, the Company currently owns of record, 132,000, or
14.87% of the total issued and outstanding shares of KPI.

     As part of the aforementioned January 27, 1998 agreement
the Company created a new Georgia corporation called Capital First 
Holdings, Inc. of Georgia, which entity received at cost from Killearn
Properties, Inc. title to three separate subdivisions -- The Summit, 
The Glen, and Simpson Mill Development, as well as Killearn's 50%
interest in Henry County Land Partners, a Georgia General Partnership,
and other contract assignments, the result of which brought
approximately 650 acres or 1,200 lots, in various stages of
development and land with an approximate cost basis of $9 million to the
Company.

     Flowers Entities

    In August 1996, the Company agreed to acquire the stock of three 
separate corporations (the "Flowers Entities") from groups controlled 
by Langdon S. Flowers, Jr. ("Flowers"):  Highland Properties 
Construction Co., Inc., a Georgia corporation ("Highland"), Flowers 
Properties, Inc., a Georgia corporation ("Flowers Properties"), and 
Barrier Dunes Development Corporation, a Florida corporation ("Barrier
Dunes") for 2,000,000, 350,000, and 200,000 shares of voting common 
stock of the Company, respectively.

     Highland, now known as Capital First Holdings of Albany, Inc. 
("CFH Albany"), owns 626 acres of undeveloped land in Albany, Georgia.
When developed, this land should yield approximately 661 single-family
lots of approximately .75 acres each.  CFH Albany expects to offer these
lots for sale at prices between $15,000 and $28,000.  On August 13, 
1996, the Company agreed to purchase all of the outstanding stock of 
CFH Albany from Flowers and George McIntosh (the "Sellers"), in exchange
for 1,050,378 shares of the Company's common stock issuable to Flowers
and 864,623 shares of the Company's common stock issuable to George 
McIntosh. Further, the Company agreed to issue additional stock in the
event that the average trading price of the stock for the ten trading 
days prior to December 31, 1996 to bring the purchase price equivalent
to  $3.50 per share. The average per share trading price for the ten 
days prior to December 31, 1996 was $1.44 per share.  On February 13, 
1997, the agreement was amended to pay a total of 3,200,000 shares 
for CFH Albany. During the year ended June 30, 1998, the Company
and the Sellers made a purchase price adjustment related to the
acquisition of the Flowers Entities to better reflect the market
value of the properties acquired by the Company as determined by more 
recent price and sales information.  This 1998 purchase price agreement 
and the return of 809,441 shares by Sellers to the Company lowered the 
net number of shares paid for CFH Albany to a total of 2,390,559.

     Flowers Properties, Inc. owned about 300 acres of undeveloped land in 
Thomasville (Thomas County), Georgia.  When developed, this land
should have yielded approximately 450 single-family lots of approximately
 .50 acre each.  At June 30, 1998 the Company no longer owned any real
estate.  On August 12, 1996, the Company agreed to purchase all of the 
outstanding stock of Flowers Properties from Flowers and Langdon S. 
Flowers, Sr. and certain other persons related to Flowers (the "Flowers
Group"), in exchange for 350,000 shares of the Company's common stock. 
Further, the Company agreed to issue additional stock in the event that
the average trading price of the stock for the ten trading days prior to 
December 31, 1996 to bring the purchase price equivalent to  $3.50 per 
share.  The average per share trading price for the ten days prior to 
December 31, 1996 was $1.44 per share.  On February 6, 1997, the agreement
was amended to pay a total of 800,000 shares for Flowers Properties.  
During year ended June 30, 1998 the Company and the Sellers made a 
purchase price adjustment related to the acqusition of the Flowers 
Entities to better reflect the market value of the properties acquired 
as determined by more recent price and sales information.  The 1998 
purchase price agreement and the return of 51,516 shares lowered the net 
number of shares paid for Flowers Properties to a total of 748,484.  

     Barrier Dunes owns a 30-acre parcel of partially developed land in
Cape San Blas, Florida.  On August 12, 1996, the Company agreed to
purchase all of the stock of Barrier Dunes from Flowers and Langdon S.
Flowers, Sr., in exchange for 150,660 shares of the Company's
common stock to Flowers and 149,340 shares of the Company's
common stock to Langdon S. Flowers, Sr.  Further, the Company agreed 
to issue additional stock in the event that the average trading price 
of the stock for the ten trading days prior to December 31, 1996 to 
bring the purchase price equivalent to  $3.50 per share.  The average 
per share trading price for the ten days prior to December 31, 1996 
was $1.44 per share.  On February 11, 1997, the agreement was amended 
to pay a total of 500,000 shares for Barrier Dunes.  During the year 
ended June 30, 1998, the Company and the Sellers made a purchase price 
adjustment related to the acquiition of the Flowers Entities to better 
reflect the market value of the properties acquired as determined by 
more recent price and sales information.  The 1998 purchase price agreement
and the return of 241,499 shares lowered the net number of shares paid 
for Barrier Dunes to a total of 258,501.  

    The Company accounted for the acquisition of the Flowers Entities
as a purchase.


ITEM 2.  Property


General

    The Company and Capital First maintain their offices in a  2,400 
square foot building owned by Capital First and located at 7118 Beech 
Ridge Trail, Tallahassee, Florida  32312.  Capital First also owned a 
2,000 square foot building on this site, which was sold on May 30, 
1997.  Capital First also has small sales offices in the Golden Eagle
subdivision and in Stockbridge, Georgia.  Management believes that all
property occupied by the Company and its subsidiaries is adequately 
covered by insurance. 


Real Estate Operations-Materially Important Properties

     As described in Item 1.  Description of Business above, as of 
June 30, 1998, The Company, through its subsidiary, Capital First,
was engaged in selling residential lots in eight Tallahassee 
residential communities, was engaged in the construction of 
horizontal infrastructure in three other Tallahassee residential
communities and three residential communities in Stockbridge, 
Georgia, as well as one golf course community in Freeport,  
Florida.  As of June 30, 1998, Capital First's only 
materially important properties were Summerbrooke (a golf course 
subdivision in Tallahassee),  Golden Eagle (another golf course 
community in Tallahassee), Hickory Grove in Albany, Georgia, The 
Glen at Eagle's Landing (a single family subdivision in Stockbridge,
Georgia), The Summit at Eagle's Landing (a single family subdivision 
in Stockbridge, Georgia), and Magnolia Bluff (a golf course community 
in Freeport, Florida).  Capital First holds a fee simple interest 
in all such materially important properties.

     All land owned by Capital First is properly zoned for its 
intended use.

     Summerbrooke

    Summerbrooke features a Dean Refram-designed 18 hole championship 
golf course, named "The Players Club at Summerbrooke," and has a 9,000
square foot country club, grill and bar, with meeting rooms and a pro 
shop, which an unrelated party opened in early 1994.  It also features
a chain of four lakes, with more than half of the lots located on the 
golf course or lakefront. Summerbrooke targets upper-middle class 
families seeking the benefits of the lakefront and golf course living.
Homes typically consist of four bedrooms and two and a half baths in 
2,600 square feet of living space.  The average house price is $220,000
and the average lot price is $44,000.  As of June 30, 1998, 
there were 185 remaining developed lots for sale within 
Summerbrooke.  Capital First expects to sell the remaining developed 
lots within 24 months. 

     Golden Eagle

     A gated and guarded community, Golden Eagle features a Tom Fazio
designed golf course rated in the top 20 courses in the Southeast by 
Golf Digest magazine.  It is located in the heart of Killearn Lakes 
Plantation and is surrounded by three large lakes.  The Golden Eagle 
community includes a 31,000 square foot club house, as well as a 
swimming pool, sauna, three dining rooms, banquet facilities, and 
tennis courts.  Golden Eagle targets upper-income individuals and 
retirees.  Homes are typically over 3,200 square feet, with four 
bedrooms and three baths, and with prices beginning at $250,000 and
reaching in excess of $1 million.  The average house price is $300,000
and the average lot price is $58,000.  As of June 30, 1998, there 
were 57 remaining developed lots for sale within Golden Eagle, as 
well as 234 remaining permitted and platted but undeveloped lots on 
239 acres of land.  The Company expects to sell the remaining 
developed lots within the next eighteen months and develop and sell 
the undeveloped lots within the next three years. 

     Hickory Grove - Albany, Georgia

     Hickory Grove subdivision in Albany, Georgia contains approximately
60 developed lots, and acreage sufficient for another approximate 410
lots, and is planned for a five year phased development.  During the year, 
the Company sold about 60 lots to groups of smaller builders, for an
average lot price of $23,500 per lot.  Future lots are anticipated to be
sold at comparable prices.  Average house prices for this area are estimated 
to be in the $160,000 to $190,000 price range.


     The Summit at Eagle's Landing

     The Summit at Eagle's Landing is a 289 lot multi-phase subdivision
in Henry County, Georgia, which is currently under contract to a
national builder on a phase take-down schedule over the next three
years.  Currently, the Company is developing the first phase of 72
lots, with the completion of this phase estimated during the second
quarter of fiscal 1999.  The lots are to be sold at an average lot price
of approximately $25,000.  The average house price for this area is 
estimated to be in the $110,000 to $135,000 price range.

     The Glen at Eagle's Landing

     The Glen at Eagle's Landing is a multi-phase subdivision project
located in Stockbridge, Georgia.  This entire project has been fully
contracted with another national builder.  The Company currently has 
22 developed lots in inventory, as well as land for an additional 92 
lots, on which the Company intends to begin construction during the 
second fiscal quarter.  The average lot price in this subdivision is
approximately $25,000, and the average home price for this area is 
estimated to be between $130,000 to $150,000.

     Magnolia Bluff

     Magnolia Bluff represents the Company's first efforts into the
Destin/Freeport, Florida market.  The Company has acquired a 749 acre 
site consisting of a minimum of 450 single family lots, which size 
ranges depending on the location.  The average lot is approximately 
one-half acre.  The average interior lot price is $20,000; the average
golf course lot price is $30,000.  The centerpiece of the subdivision
is the Diamond Players Club, which consists of an eighteen hole
championship golf course designed by Mike Young, with a clubhouse of 
almost 5,000 square feet.  The project is currently under construction
and carries an estimated completion date of Spring, 1999.  The
Company has successfully created a community development district 
for the funding of this project and anticipates closing on the 
approximate $5.8 million in bonds sometime in October of 1998.

Real Estate Operations-Other Properties

     Among Capital First's other properties, as of June 30, 1998, five
properties were relatively  significant:

          Henry County Land Partners

     As part of the January 27, 1998 Killearn stock sale to the Wimberly 
Investment Fund, L.P., the Company purchased a 50% interest in this 
partnership which owned a total of 14.4 acres of commercial property in 
Corporate Center, as well as 183 acres of property known as the Highlands, 
and approximately 80 acres known as Ward Lake, all of which are located 
in the Henry County, Georgia area.

          Killearn Lakes Plantation

     Killearn Lakes Plantation covers 4,000 acres of former plantation
property in Tallahassee.  Killearn Lakes Plantation targets young 
middle-income families with children.  The average house price is 
$135,000 and the average lot price is $26,000.  As of June 30, 1998,
less than 5% of the lots in this subdivision were still available 
for sale.

     Eagle's Ridge

     Eagle's Ridge is an upscale retirement community catering to 
retirees who desire low maintenance living, and is located on the 
golf course within the Golden Eagle development.  Eagle's Ridge 
has its own clubhouse and tennis courts.  The average house price is 
$160,000 and the average lot price is $27,500.  As of June 30, 1998, 
over 50% of the lots in this subdivision were still available for 
sale.

     The Landings at Golden Eagle

     The Landing at Golden Eagle is a two-phase multi-family
community also targeted toward first-time home buyers or middle
income families.  Most duplex units will have two bedrooms, two
baths one garage and feature approximately 1,500-1,700 square
feet of living space.  The average duplex unit price is $160,000
and the average lot price is $28,000.   At June 30, 1998, there 
were 38 developed lots and 75 permitted and platted, but 
undeveloped lots remaining to be sold.

     The Glen  -  Tallahassee, Florida

     The Glen is a two-phase multi-family community also targeted 
toward first-time home buyers or middle income families.  Most houses
will have 2 bedrooms, 2 baths, and a one car garage and feature 
approximately 1,400 square feet of living space.  The average house 
price is $140,000 to $160,000 and the average lot price is $20,000.
As of June 30,1998, all lots in Phase I have been sold, and 110 platted,
but undeveloped lots remain in Phase II.

Interest Expense

     The interest expense on the mortgage debt for the year ending 
June 30, 1998 was approximately $2,213,867 of which approximately
$943,950 was capitalized as a cost of land development.  The interest
expense for the twelve month period ending June 30, 1999, will depend
on development activities, lot sales, prevailing interest rates and 
other factors.  In general terms, the principal outstanding with 
respect to a mortgage loan is reduced by a certain agreed upon amount
as  each lot is sold.  The development loans are generally renewed on
an annual basis.

Financing and Lines of Credit

     Development of the Summerbrooke subdivision Phases IX and X was 
financed by means of a $1,892,230 credit line with a local bank, of 
which the Company had fully drawn upon as of June 30, 1998.
The loan matures in May 1999, carries an interest rate of prime 
plus 1.5%, with interest-only payments and without prepayment penalties.
At maturity, based on prior history, the Company expects that this loan
would be renewed for at least one year.   

     The Company financed its purchase of Golden Eagle (as well as the
Eagle's Ridge and Killearn Lakes subdivisions) in November 1993 through
purchase money mortgages from the seller, Killearn.  As of June 30, 
1998, a total of approximately $1,992,527 was outstanding on these 
loans.  After the fiscal year end, the Company refinanced its loan 
with its primary Tallahassee lender and paid off the Killearn 
Properties, Inc. loan in Tallahassee as of August 5, 1998.  

     In November 1997, the Company purchased a 749 acre parcel of 
property in Freeport, Florida, giving a $2,100,000 purchase money 
mortgage to the seller.  The note has an annual interest rate of 8.5%,
with interest payments due semi-annually, with a balloon payment due 
in November of 1999.  The Company expects this loan to be paid off 
from an estimated $5,800,000 in proposed development bonds obtained
through the Community Development District.

Policies with Respect to Certain Activities

     The following is a discussion of investment policies, financing 
policies and policies with respect to certain other activities of the 
Company. Although the Company has no formal written policies with 
respect to such activities, the following discussion outlines the 
Company's objectives and informal policies with respect to these 
activities, which have been determined by the Board of Directors of 
the Company and may be changed from time to time at the discretion 
of the Board of Directors without a vote of the shareholders of the 
Company.

          Investment Policies

     The Company's primary objective with regard to real estate is 
to acquire raw land in Florida and Georgia for the purpose of 
developing the land into residential subdivisions.  However, future 
development or investment activities may not be limited to these 
geographic areas.  The Company's policy is to develop or acquire raw
land in circumstances where management believes that opportunities 
exist for acceptable investment returns.  The Company may expand or
develop existing properties or sell such properties in whole or in 
part as determined by management.

     The Company may also participate with other entities in property 
ownership, through joint ventures or other types of co-ownership.
(See Note 7 to the Consolidated Financial Statements).  Equity 
investments may be subject to existing mortgage financing and other
indebtedness which would have priority over the equity interest of the
Company.  The Company may issue securities to persons in exchange
for properties.  The Company may also invest in securities of entities
engaged in real estate activities or securities of other issuers, 
including for the purpose of exercising control over such entities 
and/or enhancing the value of its investment in such entities, such 
as its investments in Flowers Properties, Highland, and Barrier Dunes.
The Company may acquire all or substantially all of the securities or
assets of other entities where such investments would be consistent 
with the Company's investment policies.

         Financing Policies

       The Company uses internally generated and borrowed funds to 
purchase real estate.  In reaching such financing decisions, 
management considers traditional mortgage debt-to-asset ratios.
Borrowings may be in the form of bank borrowings, publicly and 
privately placed debt instruments, or purchase money obligations to
the sellers of properties, any of which indebtedness may be unsecured
or may be secured by any or all of the assets of the Company.  The
Company has not established any limit on the number of mortgages
that may be placed on any single property or on its portfolio as a 
whole, but mortgage financing instruments usually limit additional 
indebtedness on such properties.  To the extent the Board of Directors
of the Company determines a need for additional capital, the Company
may raise such capital through equity offerings, debt financings or
other methods.

     Policies with Respect to Other Activities

     The Company has authority to offer and sell shares of its capital
stock or other securities and to repurchase or otherwise reacquire its
shares or any other securities and may engage in such activities in 
the future.    The Company may in the future make loans to joint ventures
in which it participates in order to satisfy such ventures' working 
capital needs.  The Company has not engaged, and does not intend to 
engage in the trading, underwriting or agency distribution or sale of 
securities of other issuers.  The Company intends to make investments in
such a way that it will not be treated as an investment company under the 
Investment Company Act of 1940.



DESCRIPTION OF THE REAL ESTATE DEVELOPMENT BUSINESS

General

     Through its main subsidiaries, Capital First Holdings, Inc., 
Capital First Holdings of Albany, Inc. and Capital First Holdings, Inc. 
of Georgia, the Company is engaged primarily in the design, development 
and sales of lots in single-family and multi-family subdivisions in 
Tallahassee (Leon County), Florida, Albany (Lee and Dougherty County),
and Stockbridge (Henry County), Georgia, respectively.  The Company offers 
moderately priced lots that are designed to appeal to a wide market, 
ranging from first-time home buyers to upper-income retirees.  Sales 
prices of most of Capital First's lots range from approximately 
$21,000 to approximately $95,000; the average sales price of lots 
delivered during the fiscal year ended June 30, 1998, was $32,501.  
At June 30, 1998, the Company had fourteen communities in various 
stages of planning and development, including eight communities in 
which the Company is currently offering lots for sale. 

Decision Making and Environmental Policies

     When determining whether to purchase a particular tract of land, 
the Company considers the cost of the land, the desirability of the 
proposed project to targeted home buyers, population growth patterns,
competitive conditions, and available financing.  The Company's land
purchase agreements are typically subject to numerous conditions, 
including, but not limited to, the Company obtaining the necessary 
zoning and other governmental approvals for a proposed subdivision.  
  
     During the investigation period, the Company confirms the 
availability of utilities, performs hazardous waste and other 
environmental analyses, arranges financing and completes its marketing
feasibility studies. As a result, the Company is generally able to 
begin its development activities immediately after it closes a land 
purchase.  Although the Company's policy is to maintain an 
approximately 4-5 year supply of raw land, it develops its subdivisions
in phases.  Therefore, the Company only begins developing a new phase
of a subdivision after it has sold substantially all of the lots in a 
particular subdivision's prior phase.

     In developing a new subdivision (or phase thereof), the Company 
engages a general contractor to install  the "horizontal" infrastructure
of roads, water, sewer, drainage, gas and electricity.  The Company  
typically contracts out its work on a lump-sum basis.  It has
used the same (unrelated) general contractor for the last 29 
subdivisions it has developed.   The Company does not maintain 
significant inventories of construction  materials, except for materials
being used in current construction.  Generally, the construction 
materials used in the Company's operations are readily available 
from numerous sources, but prices may fluctuate due to various factors,
including increased demand or supply shortages.  The Company does not
have any long-term contractual commitments with suppliers of building 
materials. 



Marketing and Sales

    The Company sells approximately 50% of its lots on a wholesale 
basis directly to builders participating in the Company's custom 
builder program.  Builders participating in this program are offered 
the opportunity to purchase land directly from the Company.  By 
participating in the program, a builder agrees to satisfy certain 
quality, uniformity and other standards when constructing a house in
the Company's subdivision.  As of June 30,  1998, 76 builders were 
participating in this program.  The Company sells  the remaining 50%
of its lots on a retail basis directly to prospective homeowners 
desiring to build houses in one of the Company's subdivisions.  
Capital First sells these lots through commissioned sales personnel.
Such sales personnel may sell lots in any Company subdivision, 
but typically concentrate on selling lots in upper market and 
golf-course communities.  As of June 30, 1998, there were five such 
sales personnel.  The Company also sells its lots through independent
real estate brokers.

     The Company's advertising program encompasses various media.  
Signage is a primary medium, which is used when construction begins on 
a new subdivision.  Upon the completion of the horizontal improvements 
in a subdivision, a full advertising campaign typically begins, using 
newspaper, radio, television and direct mail.  In addition, the Company 
provides incentives to real estate brokers to promote broker 
participation.

     The Company has experienced significant fluctuations in 
quarterly revenues as a result of, among other things, the timing of 
lot closings, the cyclical nature of the homebuilding industry, changes
in prevailing interest rates and other economic factors.  The volume 
and timing of the Company's revenues are also substantially affected
by the opening of new residential subdivisions.  Generally, a 
residential subdivision has its highest sales volume when it is new 
(due primarily to the wide choice of available lots), with sales 
activity decreasing as a subdivision matures.  The Company does not 
typically provide financing with respect to its sales.  Occasionally, 
the Company will take a house or other non-cash property as 
consideration for land sales.  At June 30, 1998, the Company had 
approximately $855,000 of such houses and buildings in its 
inventory that it is either renting or holding for sale, or both.



Government Regulation and Environmental Matters

     In developing a project, the Company must obtain the approval of 
numerous governmental authorities regulating relevant matters, such as 
permitted land uses and levels of density, the installation of utility 
services and the dedication of acreage for open space, parks and 
schools.  Several authorities in Florida have imposed impact fees as
a means of defraying the cost of providing certain governmental 
services to developing areas, and the amounts of these fees have 
increased significantly during recent years.  The State of Florida 
and various localities within the state have also, at times, declared
moratoriums on the issuance of building permits and imposed other 
restrictions in areas where the infrastructure (e.g.,  roads, 
schools, parks, water and sewage treatment facilities and other 
public facilities) does not reach minimum standards.  All of these 
factors could have a material adverse effect on Capital First's future 
development activities.

     The Company is subject to a variety of Federal, state and local 
regulations concerning protection of health and the environment.   
Prior to consummating the purchase of land, the Company engages 
independent environmental engineers to evaluate such land for the 
presence of hazardous or toxic materials, wastes or substances.  The 
Company is unaware of any environmental liability or compliance with
applicable environmental laws or regulations arising out of its 
properties that the Company believes would have a material adverse 
effect on its business, assets or results of operations.  
Nevertheless, in some instances, these environmental laws may result
in delays, cause the Company to incur substantial compliance and 
other costs, or prohibit or severely restrict development by it
in environmentally sensitive regions or areas.

Competition

     The real estate development industry is extremely competitive and 
fragmented.  Many of the Company's competitors are substantially 
larger and much better capitalized.  The Company competes on the 
basis of a number of interrelated factors, including location, 
reputation, design, quality and price, with numerous other entities,
including some entities with nationwide operations and greater 
financial, marketing, sales and other resources.  At times, 
competitors may offer lots at discounted prices for financial or 
other reasons. The Company also competes for residential sales 
with individual resales of existing lots and condominiums, including
sales of lots at deeply discounted prices by lenders and other 
similar institutions.  Nonetheless, the Company's management has
been successful at acquiring large tracts of land at favorable prices.
The Company endeavors to identify situations where it is able to 
purchase quality land at favorable prices by purchasing such land 
either from its original owner(s) or through foreclosure.  Because
of its experience at expeditiously obtaining the necessary governmental
approvals and then efficiently "manufacturing" raw land into attractive
residential communities, the Company believes it should remain 
competitive.

Warranties, Bonds and Other Obligations

     In developing subdivisions, Capital First Holdings, Inc. is sometimes 
required to obtain performance or maintenance bonds or letters of credit 
to supplement the amounts its general contractor is required to obtain.  
The amount of such obligations outstanding at any time varies in 
accordance with the Company's pending construction activities.  
As of June 30, 1998, the Company had no obligations under these
bonds.  In the event any such obligations are drawn upon because of
the Company's failure to build required infrastructure or satisfy
other obligations, the Company would be obligated to reimburse the 
issuing surety company or bank.

     Capital First Holdings, Inc. is also obligated under Florida law 
to subsidize homeowners' associations in certain of its residential 
developments up to a pro rata portion of expenses based on the number 
of lots which have not been closed in such developments. To date, 
Capital First Holdings, Inc. has not incurred any costs to subsidize 
homeowners' associations, as such associations' revenues have been 
adequate to cover their operating costs.

Description of Markets

     Tallahassee, Florida

     Capital First Holdings, Inc. develops residential properties 
primarily in the Tallahassee (Leon County), Florida area.  In 1998, 
the population of the Tallahassee  Metropolitan Statistical Area was 
approximately 240,000.  Tallahassee is the capital of Florida.  It is 
also the location of Florida State University ("FSU"), Florida A & M 
University ("FAMU"), Tallahassee Community College and Lively Technical 
Center.  These institutions have combined enrollment of nearly 60,000 
students.  Tallahassee also has significant  resources for research and high 
technology.  In this regard, Innovation Park/Tallahassee is a research
and development center created to encourage the collaboration and 
transfer of technology between two affiliated universities, FSU and 
FAMU, government laboratories and private industry.  In addition, 
Tallahassee is the location of the National High Magnetics Field 
Laboratory, one of the leading centers for research in magnet-related
technologies. Because of the growth of the Florida state government
and the local  colleges, the Tallahassee economy has been relatively 
stable.

     Capital First Holdings believes that land regulation in Tallahassee is 
relatively complex, but that it is experienced in obtaining the 
appropriate approvals.

     Stockbridge, Georgia

     Through its subsidiary, Capital First Holdings, Inc. of Georgia, 
and its partnership interest in Henry County Land Partners, the Company
owns approximately 280 acres of developed and undeveloped land in
Stockbridge, (South Metro Atlanta) Georgia.  Stockbridge, Georgia, in
Henry County, is located about 25 miles south of downtown Atlanta.
Henry County has an estimated population of 91,000.  Henry County was
the sixth fastest growing community nationally, with a population that
has more than doubled since 1980.  Capital First Holdings, Inc. of
Georgia has two residential communities currently under development
which will yield over 400 developed lots upon completion anticipated
to be completed over the next 24 to 36 months.  The Company believes
that its subsidiary is competitive in the Henry County area, and will
be able to acquire additional land in Stockbridge/Henry County as
necessary for future development.

     Thomasville, Georgia

     Through its subsidiary, Capital First Holdings, the Company owns 
286 acres of undeveloped land in Thomasville, Georgia. Thomasville
is located in Thomas County, Georgia, and is approximately 45 miles 
west of Valdosta, Georgia and 35 miles northeast of Tallahassee, 
Florida. Thomasville has approximately 20,000 residents, with 
Thomas County as a whole, having about 40,000 residents.  Thomas County 
is an agricultural and marketing center with a diversified economy,
including vegetable producing, meat packing, lumber, textiles, baking,
and plastics.  The Company intends to develop approximately 450 
single-family lots, of approximately .50 acres each, in a phased
development over four years.   The Company believes it to be competitive 
in Thomasville and that it may be able to acquire additional land in 
Thomasville as necessary for future development.

     Cape San Blas, Florida

     Through its subsidiary, Barrier Dunes, the Company will develop a
30-acre site in Cape San Blas, which is located approximately halfway
between Apalachicola and Panama City on the St. Joseph Peninsula
facing the Gulf of Mexico.  Cape San Blas is a convenient resort
destination for residents of Tallahassee and the rest of the Florida 
Panhandle. As of June 30, 1998, Barrier Dunes had sold 118 out of 
200 total lots.

     Albany, Georgia

     Through its  subsidiary, Capital First Holdings of Albany, Inc.
("CFH Albany")(f/k/a Highland Properties Construction Company, Inc.), 
the Company will develop a 626 acre site in Albany, Georgia.  Albany 
is in Lee County, Georgia and has an estimated population of 
approximately 120,000.  In Money magazine's 1995 survey of "Best Places"
to live, Albany was rated the most livable city in Georgia.  Albany 
has large employers such as Proctor & Gamble, Cooper Tire and Miller
Brewing Co.  CFH Albany originally had about 900 lots to develop, of
which 770 lots remain.  During fiscal year 1998, CFH Albany had sold 
77 lots in Albany.  The Company believes CFH Albany is competitive 
in Albany and that it will be able to acquire additional land as 
necessary for future development.

    	Destin / Freeport, Florida

	   The Company is undertaking its first development project in this
market.  The project is located in Walton County, which is a popular
vacation destination located on the Florida Panhandle.  The Company
acquired a 749 acre site and has begun development on it.  The 
subdivision, named Magnolia Bluff, will consist of a minimum of 450 
single family lots and the Diamond Players Club, which is an eighteen
hole championship golf course designed by Mike Young that includes a
clubhouse of almost 5,000 square feet.   

Other Real Estate Investments

     In addition to the operations described above, the Company has 
certain investments in real estate partnerships formed to carry out 
specific development projects.  (See Note 7 to the Consolidated 
Financial Statements.)

EMPLOYEES

     As of June 30, 1998, the number of persons employed by the Company
and each subsidiary was as follows:

     Proactive Technologies, Inc.                                6
     Capital First Holdings, Inc.                                0
     Capital First Holdings, Inc. of Georgia                     0
     Flowers Properties, Inc.                                    0
     Capital First Holdings of Albany, Inc.                      0
     Barrier Dunes Development Corporation                       0
     Henry County Land Partners (50%)                            0
     

     The Company (and its subsidiaries) have no collective bargaining 
agreements with any unions and believes that overall relations with 
its employees are excellent.


Item 3.      Legal Proceedings.


     Under the terms of the settlement agreement entered into
in 1995 with Proactive Solutions, Inc., a former subsidiary of the Company,
William Davis and Donald Mitchell, two former directors of the Company, 
who agreed to resign as part of the settlement agreement, Proactive 
Solutions will be responsible for the debts listed in its bankruptcy 
schedules and has executed a non-recourse, unsecured, $800,000 
promissory note payable to the Company (the "Note").  The Note is 
payable annually in an amount equal to one percent (1%) of the net 
sales made by Proactive Solutions each year until December 31, 1998.
Under the terms of the Note,  any balance remaining on December 31, 
1998, will be extinguished and the Company will not have any right of 
recourse against Proactive Solutions.  As of June 30, 1998, the Company
has not received any payments with respect to the Note and does not 
expect to receive any payments under the Note. 

     Additionally, one of the Company's subsidiaries was sued for a 
negligence claim in St. Lucie County, Florida allegedly arising from a 
1994 incident from a prospective purchaser who slipped in a completed 
but unsold condominium unit, who is seeking in excess of $15,000.  
The Company has retained outside counsel and is defending the action 
vigorously.  Management believes the claim to be defensible and 
anticipates a resolution during the next fiscal year.

     The Company and its subsidiaries are involved from time to time in 
various claims and legal actions in the ordinary course of business. In
the opinion of management, the Company and its subsidiaries are not 
party to any other legal proceedings, the adverse outcome of which, 
would have any material adverse effect on its business, its assets, 
or results of operations.

Item 4.     Submission of Matters to a Vote of Security Holders.
 
     During the fourth quarter of the fiscal year ended June 30, 1998, 
there were no matters submitted to a vote of the security holders of 
the Company.

                             PART II

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

Market Information 

     On July 15, 1996, the Company's stock was listed on the American 
Stock Exchange under the symbol "PTE".  The following table shows the 
high and low bid and ask prices of the stock during the last two 
fiscal years:

                                 Bid            Ask
COMMON STOCK                   H      L       H       L
Fiscal
Year        First Quarter      2 1/2  2       3 3/8   2 1/4
Ending      Second Quarter     1 5/8  1 1/4   3 1/16  2 3/4
June 30,    Third Quarter      1      1       1 5/8   1 1/2
1997        Fourth Quarter     11/16  1/2     1 1/16  1

Fiscal
Year        First Quarter      15/16  11/16   1       11/16
Ending      Second Quarter     3/4    3/8     3/4     7/16
June 30,    Third Quarter      9/16   1/4     9/16    3/8
1998        Fourth Quarter     1 5/16 3/8     2 3/8   3/8

     The bid prices reflect inter-dealer prices, without retail markup,
mark-down or commission and may not represent actual transactions.

     The number of record holders of the Company's common stock as
of September 18, 1998, was 1,043.

     The Company has never paid cash dividends on its common stock
and intends to utilize current earnings to expand its operations.  
Therefore, it is not contemplated that cash dividends will be paid 
on the Company's common stock in the foreseeable future.

Item 6.  Management's Discussion and Analysis or Plan of Operation.

Overview

     Since the reverse acquisition of the Company by Capital First 
and its dispositions of Keystone and Proactive Solutions, and 
the discontinuation of Decocrete Worldwide operations, management
has narrowed the focus of the Company to be a developer of 
residential properties (single family and multi-family).  In the 
next 12-18 months, with respect to the Company's development 
activities, it is management's intention to continue to maintain 
the Company's market share in the several geographic markets where
the Company currently develops and sells property and to increase
its market share through planned acquisitions.  Management intends
to do so by continuing to aggressively "manufacture" its residential
lots and sell them through its existing wholesale  (76 builders on
Builders Programs) and retail resale channels.  Management still
believes that searching for a diversified business, with which to
complement its real estate development, is something the Company
cannot lose sight of.

     At this time, the Company already owns a three to four year 
supply of land in Tallahassee.  The acquisition of the Flowers 
Entities added a three to four year supply of land in Albany and 
Thomasville, Georgia. Also, the Company has purchased a five year 
supply of land in the Freeport, Florida area, as it begins to 
develop a 450 lot golf course community in western Florida. 
Additionally, through its divestment in Killearn, the Company either
owns outright or shares a four-year supply of land in the Henry 
County submarket of the Atlanta market.  Moreover, because management
believes that sufficient demand for housing will continue in the 
markets where the Company operates, should the Company encounter 
opportunities to acquire undervalued well-positioned land parcels 
in these locations, management intends to take advantage of such 
opportunities.

Results of Operations

     Year Ended June 30, 1998 compared with Year End June 30, 1997

     Sales for the year ending June 30, 1998, decreased $2,433,088, 
or approximately 13.85%, to $15,133,889 compared to $17,566,977
for the year ending June 30, 1997.  This decrease is attributable 
primarily to slower market conditions in the southeastern United
States, as well as a decrease in the availability of new commercial
property.   Gross profit for this period decreased $2,496,155 from 
$5,741,971 for the year ending June 30, 1997 to $3,245,636 for the 
year ending June 30, 1998.  Cost of sales increased by $63,067 from 
$11,825,186 for the year ending June 30, 1997 to $11,888,253 for the
year ending June 30, 1998.  Gross profit margin decreased 11.25% 
from 32.7% for the year ended June 30, 1997 to 21.45% for the year 
ended June 30, 1998.  This decrease was due primarily to a bulk sale
in the previous year of a large tract of commercial property, for 
which the company had a low cost basis in, resulting in a 68% gross profit
margin, which significantly affected the gross profit margin of the Company 
last year.  Normally, the Company would expect profit margins of 20% 
to 22%, based on the history of lot sales from inventory over the past
several years.  The gross profit margin for the year ended June 30, 
1998 falls within this expected range. 
 
     Selling, general and administrative ("SG&A") expenses increased by
$835,768 from $1,951,502 for the year ending June 30, 1997, to 
$2,787,270 for the year ending June 30, 1998.  This increase is due 
primarily to accounting and other professional fees associated with  
acquisition activities, severance pay to former CEO James Preiss, write downs
of certain assets of the Company as well as additional accounting fees
paid to update the accounting department of the Company.  It is anticipated 
that professional fees may continue to be higher in the next fiscal year 
as the Company continues to search for diversified entities to help 
complement its residential and commercial development business.
 
     During fiscal year ended June 30, 1998, due to the decrease in sales 
and increased expenses, the Company incurred an income tax benefit from
continuing operations of $332,146 as compared to an income tax expense from
continuing operations of $859,887 for the year ending June 30, 1997.

     The minority interest expense of $656,756 incurred in the year ended 
June 30, 1997, did not recur in 1998 due to the sale of Piney-Z, Ltd.
partnership interest.

     Net income decreased by $2,083,450, from $1,203,073 for the year
ending June 30, 1997, to a loss of $880,377 for the year ending June 
30, 1998.  The decrease is primarily attributable to the decrease in 
sales, increase in selling, general and administrative expenses, as 
well as an increase in interest expense of $182,528 from $1,087,389 
for the year ended June 30, 1997 to $1,269,917 for the year ended 
June 30, 1998. A significant amount of interest expense was capitalized
due to the fact that the Company had seven different subdivisions being
developed during the current fiscal year.

     Management believes that, on balance, revenues and income should 
remain somewhat constant in the year ending June 30, 1999, due to 
management's renewed focus on real estate sales following its recent
acquisition activity.  In addition, based on its current development 
schedule, management expects an increase in sales of lots in the 
Company's subdivisions and an increase in brokerage commission income
generated through its newly implemented sales program, in an effort 
to counteract a slower economy.  

Inventory and Other Assets

     Houses, condominiums and buildings in inventory decreased from 
$2,769,952 on June 30, 1997 to $979,912 on June 30, 1998.  This 
$1,790,040 decrease is primarily due to disposal of a number of the model 
homes owned by the Company, including those that were acquired last 
year as part of the Flowers acquisition. (See ACQUISITIONS AND 
DISPOSITIONS NOT IN THE ORDINARY COURSE OF BUSINESS at Page 5.)

     The inventory of developed lots decreased by $5,577,856, from 
$18,699,517 on June 30, 1997 to $13,121,661 on June 30, 1998.  This 
decrease is due to both the sales of developed lots in Albany and 
Thomasville, Georgia and Cape San Blas, Florida that were acquired last
fiscal year as part of the Flowers transaction and the sales of lots in
subdivision phases that were completed just before the end of last year.

     Land under development increased by $5,968,437, to $12,164,226 on 
June 30, 1998 compared to $6,195,789 on June 30, 1997.  This increase 
was due to the construction that began and is still underway in seven 
different residential communities.  These communities include three in 
the Tallahassee, Florida market, three in the Stockbridge, Georgia 
market, and the golf course community being built in Freeport, Florida.

     The Company's inventory of (raw) land decreased about 23.58% from
$8,759,754 on June 30, 1997 to $6,694,257 on June 30, 1998, a decrease
of $2,065,497. This decrease was primarily due to the the development
that is under way on seven residential communities, including four new
subdivisions, The Glen and The Summit at Eagle's Landing, Golden Eagle 
Phase 8, and Magnolia Bluff, moving this land from raw land to land 
under development, as well as the sale of the Piney-Z partenrship interest.

     The largest part of the decrease in non-inventory assets resulted 
from the Company's financing of certain land sales last year, that have
subsequently been paid by the purchasers during this fiscal year.  
Accounts and notes receivable decreased approximately $1,363,726 due 
primarily to a $2.5 million note the Company received on the sale of 
commercial property by Apalachee Partners, Ltd. last fiscal
year, and which note was due and paid during this fiscal year.  
Additionally, there was approximately $300,000 which were paid off
through the transfer of property to the Company.

     Property and equipment decreased $627,612, from $1,037,277 on June
30, 1997 to $409,665 on June 30, 1998.  The decrease is primarily due
to the sale of the Barrier Dunes building in Stockbridge, Georgia, as
well as the disposal of all Company owned vehicles.  

     Deferred income taxes were decreased significantly from a 
liability of $1,232,452 at June 30, 1997 to a liability of $297,739 
at June 30, 1998 primarily due to the loss incurred by the Company, and
the Flowers Entities 1998 purchase price adjustment.

Liquidity and Capital Resources

     Generally, the Company expects to continue to sell lots in order 
to meet liquidity needs as it has done in the past.  While the Company
experienced a period with a minimal amount of operating cash, influxes
of cash from loans from the President and pending closings of multi-lot
sales contracts, and extended payment terms from vendors, should be 
sufficient, in the opinion of management, to provide sufficient operating 
cash for the Company.   Together with revenues from other sources, sales 
of lots would be expected to generate sufficient cash to meet liquidity 
requirements.

     Most of the Company's significant liabilities are reflected in its 
Notes Payable and arise primarily from debt encumbering the real estate
inventory of the Company.  (See Note 8 to the Consolidated Financial 
Statements).  Notes Payable decreased by $1,328,823, from $23,177,756 
on June 30, 1997 to $21,848,933 on June 30, 1998.  This decrease resulted
from the net reduction of real estate inventories was caused by the 
repayment of approximately $8,983,000 in existing notes payable through 
its sales.  

     The related party note payable decreased by its full amount to $0 
for the year ended June 30, 1998 from $1,839,380 for the year ended June
30, 1997. This decrease is due to the satisfaction of the note payable 
to a director that arose out of the Flowers acquisitions.

     Accounts payable and accrued expenses decreased by $300,368 to 
$1,608,218 on June 30, 1998 from $1,908,586 on June 30, 1997.  This 
decrease was due to the payment of accrued liabilities during the
fiscal year.

     Customer deposits decreased by $447,826, to $124,569 from $572,395
on June 30, 1997.  The decrease is primarily due to the closing of many
of the contracts pending as of June 30, 1997, and the sale of the 
Company's Piney-Z partnership interest.  Primarily, the bulk of 
customer deposits the Company has at this time are from the Golden 
Eagle 8 project, the development of the first phase of which is 
expected to be well under way during fiscal year 1999.  

     Shareholder's equity decreased by $2,578,782, from $15,812,760 on 
June 30, 1997, to $13,233,978 on June 30, 1998.  The decrease in equity
is attributable to the net loss for the Company during the fiscal year
as well as the Company stock returned under the Flowers Entities' purchase
price adjustment.

    The Company is presently reviewing the potential impact of Year 2000 
compliance issues with regard to its information and accounting systems
and business operations.  The preliminary determination made by
management is that any costs, problems, or uncertainties associated with
the potential consequences of Year 2000 issues are not expected to have
a material impact on its future operations or financial condition.

Item 7.     Financial Statements.

The following financial statements are contained in this Item 7:

              Report of Independent Accountants               

     Consolidated Balance Sheets as of June 30, 1998 and 1997.

     Consolidated Statements of Operations for the years ended June 30, 
1998 and 1997.

     Consolidated Statements of Changes in Shareholders' Equity for
the years ended June 30, 1998 and 1997.

     Consolidated Statements of Cash Flows for the years ended June 30, 
1998 and 1997.

     Notes to the Consolidated Financial Statements
<PAGE>

Report of Independent Certified Public Accountants
Board of Directors
Proactive Technologies, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Proactive
Technologies, Inc. and Subsidiaries as of June 30, 1998 and 1997 and the 
related consolidated statements of operations, changes in 
shareholders' equity and cash flows for the years then ended.  These 
financial statements are the responsibility of management.  Our 
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the financial statements 
are free of material misstatement.  An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the 
financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well 
as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of 
Proactive Technologies, Inc. and Subsidiaries as of June 30, 1998 and 
1997, and the consolidated results of their operations and cash flows 
for the years then ended in conformity with generally accepted
accounting principles.



                                              JONES AND KOLB


Atlanta, Georgia
September 30, 1998 


<PAGE>Proactive Technologies, Inc. and Subsidiaries 
Consolidated Balance Sheets as of June 30, 1998 and 1997

                                          June 30,          June 30,
                                          1998              1997

ASSETS
Real estate inventories:
     Houses, condominiums 
          and buildings                  $     979,912      $2,769,952
     Developed lots                         13,121,661      18,699,517
     Land under development                 12,164,226       6,195,789
     Land                                    6,694,257       8,759,754
                                        ---------------   ------------
                                            32,960,056      36,425,012
Cash and cash equivalents,
    including restricted cash
    of $155,243 in 1997                          7,240         182,485
Certificates of deposit                         92,524         109,503
Accounts and notes receivable                3,366,436       4,730,162
Investment in Killearn
     Properties, Inc.                        1,188,000       2,253,000    
Investments in equity securities               261,565         220,080     
Investments in and advances
     to real estate joint ventures                   0          22,000
Property and equipment, net                    409,665       1,037,277
Other assets                                   174,696         249,521
                                         -------------    ------------
Total assets                             $  38,460,182     $45,229,040

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable                            $  21,848,933     $21,338,376
Related party note payable                           0       1,839,380
Accounts payable and 
     accrued expenses                        1,608,218       1,908,586 
Customer deposits                              124,569         572,395
Income taxes payable                         1,237,495       1,716,671
Deferred income tax liability                  297,739       1,232,452
Deferred revenue                               109,250         109,250
Deferred compensation payable                        0         386,714
     Total liabilities                      25,226,204      29,103,824

Minority interest                                    0         312,456

Commitments and contingent liabilities

Shareholders' equity:
Common stock, $.04 par value,
     60,000,000 shares authorized,
    17,092,657 and 18,151,918
   issued and outstanding,
  respectively (see Note 1)                    683,706         726,077
Additional paid-in capital                  12,657,420      14,266,837
Retained earnings                            2,320,453       3,200,830
Note receivable that may be
   settled in Company stock                          0      (1,320,000)
Note receivable collateralized
   by Company stock                           (477,524)     (1,060,984)  
Treasury stock (682,192 shares)             (1,950,077)              0
    Total shareholders' equity              13,233,978      15,812,760

  Total liabilities 
   and shareholders' equity              $  38,460,182     $45,229,040

The accompanying notes are an integral part of these consolidated 
financial statements.<PAGE>

Proactive Technologies, Inc. and Subsidiaries 
Consolidated Statements of Operations for the years ended June 30, 
1998 and 1997

                                                
                                              Year Ended   Year Ended
                                               June 30,     June 30,
                                                1998         1997

Sales                                        $ 15,133,889  $17,566,977
Cost of sales                                  11,888,253   11,825,186 
                                              -----------   -----------
Gross profit                                    3,245,636    5,741,791 
       
Selling, general and
 administrative exp.                           (2,787,270)  (1,951,502)
Interest expense                               (1,269,917)  (1,087,389)
Equity in earnings of
 affiliated companies                              20,568          988
Minority Interest                                       0   (  656,756)
Loss on attempted acquisition of Killearn        (368,767)           0 
Other income, net                                 177,282      217,744 
                                              -----------   -----------
(Loss)income before income taxes
 and discontinued 
  operations                                     (982,468)   2,264,876

Income tax benefit (expense)                      332,146     (859,887)
                                              -----------   -----------
Net (loss)income before
discontinued 
operations                                       (650,322)   1,404,989 

Discontinued operations:
   Loss from investment in Decocrete 
   (less applicable tax benefit of
   $138,801 and 121,822, respectively            (230,055)    (201,916)
                                              ------------   ----------
Net (loss)income                            $    (880,377)  $1,203,073
(Loss) earnings per share before
  discontinued operations                         ($0.04)        $0.08 
Discontinued operations                           ( 0.01)       ( 0.01)
                                               ----------    ----------
(Loss) earnings per share                  $    ( 0.05)         $ .07 

Weighted average
 shares outstanding                           16,845,746     16,732,516

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

Proactive Technologies, Inc. and Subsidiaries 
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
For the Years ended June 30, 1998 and 1997

<S>                                      <C>           <C>            <C>  
         <C>         <C>           <C>       <C>         <C>

                                                                               
                 Net      
                                                                               
                 Unrealized Gain
                                                                      Additional
                On Investments   
                                             Common Stock             Paid-In  
     Retained    In Equity   Treasury    Note
                                         Shares        Amount         Capital  
     Earnings    Securities  Stock       Receivable    Total

Balance at June 30, 1996                12,402,168    $496,087       $5,317,139
    $1,997,757   $57,635               $(1,500,000)   $6,368,618

Net income June 30, 1997                                                       
     1,203,073                                         1,203,073
Purchase of common stock of 
  Killearn Properties, Inc.                343,800      13,752          744,874
                                                         758,626
Return of common stock of 
  Killearn Properties, Inc.               (326,800)    (13,072)       ( 752,866)
                                                       (765,938) 
Purchase of Flowers entities             4,500,000     180,000        
6,632,500                                                       6,812,500
Stock issued for services                   24,500         980           45,020
                                                          46,000
Issuance of stock                          100,000       4,000          208,000
                                                         212,000
Exercise of common stock warrants
  for cash and notes receivable          1,108,250      44,330        2,072,170
                                        (1,060,984)    1,055,516
Net change in unrealized gain on investments                                    
                (57,635)                                (57,635) 
Collection on Keystone Note Receivable                                          
                                          180,000       180,000

Balance at June 30, 1997                18,151,918    $726,077      $14,266,837 
   $3,200,830      $  0                (2,380,984)  $15,812,760

Net income June 30, 1998                                                        
     (880,377)                                         (880,377)    
Stock issued for services                  43,195    $  1,727      $    30,356
                                                          32,083 
Purchase price adjustment on Flowers
  acquisition                           (1,102,456)    (44,098)      (1,639,773)
                                                    ( 1,683,871)    
Collection on notes receivable                                                  
                           $(1,950,077) 1,903,460       (46,617)

Balance at June 30, 1998                17,092,657    $683,706     $ 12,657,420 
  $2,320,453      $   0    $(1,950,077) $(477,524)  $13,233,978
                                        ==========    ========     ============ 
  ==========      ======   ============ ==========  ===========           
<S>                                         <C>          <C>            <C>     
      <C>           <C>        <C>          <C>          <C>
</TABLE>

The accompanying notes are an integral part of these consolidated 
financial statements.
<PAGE>

Proactive Technologies, Inc. and Subsidiaries 
Consolidated Statements of Cash Flows
for the years ended June 30, 1998 and 1997

                                                  June 30,    June 30,
                                                   1998         1997
Cash flows from operating activities:
Net (loss) income                              ($880,377)    $1,203,073
Adjustments to reconcile net (loss) income 
    to net cash (used) provided by operating 
    activities:
     Depreciation and amortization                85,366        171,429
     Expenses settled through 
        the issuance of stock                     32,083         46,000
     Interest received through return of stock  ( 46,617)             0
     (Income) loss on real estate ventures      ( 20,568)       113,169
     (Gain) loss on disposal of 
        property and equipment                  (133,933)       112,120
     (Gain) on impairment 
        of real estate                                 0        (50,000)
     Loss on sale of equity securities           284,592              0
     Unrealized loss (gain) on 
        equity trading securities                 66,000        (75,555)
     Minority interest in income 
        of consolidated subsidiaries                   0        656,756
     Changes in operating assets and liabilities:
          Real estate inventories                253,659        649,665
          Deferred income taxes                 (934,713)      (206,229)
          Accounts and notes receivable         (158,861)    (2,806,490) 
          Other assets                           161,094        (66,068)
          Accounts payable and 
             accrued expenses                   (291,185)       705,084    
          Customer deposits                     (447,825)      (170,981)  
          Deferred compensation payable         (386,714)      (171,559) 
          Deferred revenue                             0       (714,284) 
          Income taxes payable                  (479,176)       617,270  
                                             ------------    -----------
               Net cash (used) provided 
                by operating activities       (2,897,175)        13,400   
Cash flows from investing activities:
     Distributions from real 
        estate joint ventures                     27,568        158,785
     Distributions to minority partner 
        in real estate joint venture                   0       (350,000)      
     Purchase of investments 
        in equity securities                    (318,460)      ( 93,830)
     Proceeds from sale of 
        equity securities                      2,286,868         16,844        
     Purchase of property and equipment         ( 10,758)     (  42,862)
     Proceeds from disposal of 
        property, plant and equipment                  0        582,470 
     Amounts loaned as notes receivable         (106,826)             0
     Payments on notes receivable              2,680,450        180,000
     Proceeds from maturity of 
        certificates of deposit                   16,979         47,356 
     Purchase of certificate of deposit                0       ( 40,594)  
                                               -----------   ----------- 
          Net cash from 
            investing activities               4,575,821        458,169
Cash flows from financing activities:
     Repayment of amounts borrowed           (16,324,702)   (14,715,778)
     Proceeds from issuance 
       of notes payable                       14,470,811     13,005,504 
     Proceeds from exercise of warrants                0      1,055,516        
     Proceeds from issuance of stock                   0        212,000         
                                            -------------   -----------
          Net cash from 
            financing activities             ( 1,853,891)     ( 442,758)
Net increase (decrease) in cash 
   and cash equivalents                         (175,245)        28,811 
Cash and cash equivalents 
   at beginning of period                        182,485        153,674 
                                           --------------   -----------
Cash and cash equivalents 
   at end of period                          $     7,240     $  182,485 
                                            =============   ============
Supplemental disclosures of cash flow information:
     Cash paid during period for:
          Interest                           $ 1,304,557    $ 1,705,541 
                                            ============    ============
          Taxes                              $   253,998    $   365,000 
                                            ============    ============

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

Proactive Technologies, Inc. and Subsidiaries 
Notes to the Consolidated Financial Statements

 1.     Basis of Presentation:

     These financial statements include the operations of Proactive
Technologies, Inc. ("PTE"), its principal subsidiary, Capital First
Holdings, Inc. ("Capital First"), and several other subsidiaries.  All
of the companies are real estate developers with operations in
Tallahassee, Florida; Stockbridge, Albany and Thomasville, Georgia; 
Cape San Blas, Florida; and Freeport, Florida.

2. Summary of Significant Accounting Policies:

   Principles of  Consolidation

     The accompanying consolidated financial statements include the
accounts of PTE (see Note 1) and its wholly owned and majority 
owned subsidiaries.  Investments in which the Company does not
own a majority interest but exerts significant but not controlling
influence are reported under the equity method.  All significant
intercompany balances and transactions have been eliminated.

     Cash and Cash Equivalents

     The Company classifies as cash equivalents any investments
which can be readily converted to cash and have an original
maturity of less than three months.  At times cash and cash
equivalent balances at a limited number of banks and financial
institutions may exceed insurable amounts.  The Company believes it 
mitigates its risks by depositing cash or investing in cash 
equivalents in major financial institutions.

     The Company is required under certain mortgages to maintain cash
deposits or certificates of deposit as collateral.  Such balances are 
reflected either as restricted cash or certificates of deposit on the 
accompanying balance sheet.

     Real Estate Inventories

     Real estate inventories are recorded at the lower of cost or 
estimated fair value.  Expenditures for land development are 
capitalized and allocated to development projects by the specific 
identification method.  Costs are allocated to specific lots based 
on the ratio of the lot sales price to the estimated total project 
sales price.  Interest costs and real estate taxes are capitalized 
while development is in progress.  Total interest capitalized during
the years ended June 30, 1998 and 1997 was approximately $943,950 and 
$960,000,respectively.

     Property, Plant and Equipment

     Property, plant and equipment are stated at cost, less accumulated
depreciation.  Depreciation is computed on the straight-line basis over
the assets' estimated useful lives.  Expenditures for maintenance and 
repairs are expensed as incurred and expenditures for improvements 
which extend the useful life or add value to the asset are capitalized.

     Sales and disposals of assets are recorded by removing the related
cost and accumulated depreciation amounts with any resulting gain or 
loss reflected in income.

     Revenue Recognition

     The Company records revenue on the sale of real estate properties
once the Company has fulfilled its obligation under the sales contract 
and is not obligated to perform significant activities after the sale 
to earn its profit.  Revenue is only recognized when the collectibility
of the sales price is reasonably assured.  When land is sold prior to 
the completion of development by the Company, the related revenue and 
profit is recognized under the percentage-of-completion method as the
development is completed.  Generally, the Company does not provide 
financing on its sales of property.

     Utility rebates due from the City of Tallahassee for water and 
sewer lines built by the Company are recognized in income in the year 
the rebates are fixed and determinable.  During the year ended June 30,
1997, rebate income of approximately $32,000 was recorded as a reduction 
of cost of sales.  No utility rebates were received for the year ended 
June 30, 1998.

     Equity Securities

     The Company accounts for equity securities as provided for under
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," which requires
classification of the securities as either held-to-maturity, trading 
securities or available-for-sale and requires fair value accounting for
trading and available-for- sale securities.

      Management classifies as trading securities those securities which
are bought and held principally for the purpose of selling them in the
near term.  Unrealized holding gains and losses for these securities are
included in earnings.  All other equity securities are classified as 
available-for-sale with the unrealized holding gains and losses reported
as a separate component of stockholders' equity.  If a decline in an 
available-for-sale security is judged to be other than temporary, the 
cost basis of the individual security is written down to fair value as
a new cost basis and the amount of the write-down is included in 
earnings.

     Securities traded on national security exchanges are valued based 
on the last sales price.  When market quotations are not readily 
available, securities are valued based on bid prices received from 
broker-dealers in the same or similar securities or are based on 
management's estimates.  Where the fair value of an equity security 
is not readily determinable, the security is reported at cost, less 
an estimated impairment reserve, if required.

     Gains or losses from sales of securities are recognized on the 
trade date.  The basis on which cost is determined in computing 
realized gains and losses is the specific identification method.

     Earnings Per Share

     Earnings per share are calculated based on the weighted average 
shares outstanding for the period.  PTE warrants outstanding, 
entitling each holder to acquire one share of common stock for an 
exercise price of $2.00 per share, are included in earnings per share
computations beginning on February 12, 1996, the date of the reverse
acquisition by Capital First, to the extent they are dilutive.  
While there are no warrants outstanding at June 30, 1998, there is
a note receivable outstanding related to the exercise of the warrants
with a balance of $477,524.  This note is secured by the stock 
issued from the exercise of the warrants and will be treated in a 
manner similar to an option until it is paid or satisfied.  

     Income Taxes

     The Company's income taxes are accounted for in accordance with
the liability method as provided under Statement of Financial 
Accounting Standards No. 109, "Accounting for Income Taxes."  
Accordingly, deferred income taxes are recognized for the tax 
consequences of differences between the financial statement 
carrying amounts and the tax bases of existing assets and liabilities.
The measurement of deferred tax assets is reduced, if necessary, by 
the amount of any benefits that, based on available evidence, are 
not expected to be realized.

      Use of Estimates

      The preparation of financial statements in conformity with 
generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at 
the date of the financial statements and the reported amounts of 
revenues and expenses during the reporting period. Actual results 
could differ from those estimates.

  

3.     Business Acquisitions & Dispositions:

     Capital First acquired voting control of PTE in a reverse acquisition 
on February 12, 1996.  At that time, the newly combined Company determined 
the operations of Keystone Laboratories, Inc. ("Keystone"), a former
subsidiary of PTE, were inconsistent with its long-term business 
objectives and reached a decision to sell or otherwise dispose of Keystone.
On June 29, 1996 the Company entered into an agreement to sell the stock 
of Keystone to certain members of Keystone management that were also 
shareholders of PTE.  The purchase price under the agreement was set at 
$1,500,000 which was payable in either stock, using an assigned value 
of $3.50 per share, or, at the option of the buyer, cash. The purchase 
price was payable as follows: a deposit of 72,000 shares of the Company's 
common stock due at closing and the remainder due on December 31, 1997 
bearing interest at the rate of 8% per annum.  Such interest may also be 
settled in PTE stock.  The initial payment was made in July 1996 in 
the form of approximately 72,000 shares of PTE stock, and the Company 
received all of the remaining shares during the current fiscal year for
the remaining price and interest.   

     	PTE acts as a guarantor for a note payable of Keystone with a
balance of approximately $125,000 as of June 30, 1996.  The note 
matures in June 2001.  Keystone's net earnings for the period from
July 1, 1996 to June 30, 1997 amounted to approximately $135,000
(unaudited).  Net earnings for the period from July 1, 1997 to June 30, 
1998 were approximately $175,000 (unaudited).  Management of 
PTE believes Keystone will honor its obligations under the note.

     Effective February 10, 1996, Decocrete Worldwide, Inc. 
("Decocrete"), a subsidiary of PTE, operating under the direction of 
Capital First, acquired the net assets of Decocrete International, 
Inc., a manufacturer of decorative concrete with a plant located in 
Tampa, Florida, for an aggregate purchase price of $72,000 in cash and
20% of the outstanding shares of Decocrete.  The acquisition has been
accounted for under the purchase method of accounting.  Identifiable 
assets acquired approximated the liabilities assumed; accordingly, 
the entire purchase price has been attributed to goodwill. During 
fiscal 1997 the Company decided to cease operating Decocrete. The 
Company has written off all existing amounts still outstanding from 
Decocrete in these financial statements.

	     In August, 1996, the Company acquired all of the stock of three
separate corporations (the "Flowers Entities") for 4,500,000 shares of
the Company's common stock which was valued at $6,812,500, based on
renegotiated terms.  The acquisition was accounted for as a purchase
and the results of operations of the Flowers Entities are included in
the consolidated financial statements from the date of acquisition.

	    During the year ended June 30, 1998, the Company renegotiated its
acquisition of the Flower Entities after a reevaluation of the assets
acquired.  The modified purchase price was re-valued at $5,128,629 after
the purchase price adjustment.  As a result, the purchaser returned to
the Company a total of 1,102,456 shares of PTE stock originally issued
for the acquisition.  Accordingly, real estate inventory and shareholders'
equity were reduced by $1,683,871 during 1998 as a result of this purchase
price adjustment.  The adjusted total shares issued for the Flowers
Entities totals 3,397,544 shares.

	    During the year ended June 30, 1998, the Company acquired certain
real estate from Killearn Properties, Inc. ("Killearn"), by assuming the 
outstanding debt.  The real estate is located in the Stockbridge (South 
Metro) area of Atlanta.  The real estate consists of two tracts of property 
encumbered by debt in the amount of $2,437,992.  In addition, PTE 
received 100% of the outstanding stock in Simpson Mill Development 
Corporation, which it later sold at a net gain of $369,552.  PTE also 
received a 50% interest in Henry County Land Partners, a Georgia 
general partnership owning three parcels of land.

	    At June 30, 1997, the Company owned a 67% interest in two separate 
partnerships, Piney-Z, Ltd. and Apalachee Partners, Ltd., which were
consolidated in the Company's 1997 consolidated financial statements,
net of the minority interest.  During the year ended June 30, 1998, 
Apalachee Partners collected its mortgage receivable and ceased 
operations. In October 1997, the Company sold its interest in the 
Piney Z partnership to an unrelated third party and realized a gain 
of $996,192 on such sale (Note 7).

4.     Property and Equipment: 

     Property and equipment consists of the following:
                                            June 30,            June 30,
                                              1998                1997

Land and land improvements               $   151,960         $   216,988      
Buildings and building improvements          249,361             617,850
Vehicles                                           0             118,765 
Furniture, fixtures and equipment            242,927             325,897       

                                             644,248           1,279,500        
Accumulated depreciation                    (234,583)           (242,223)  
                                         $   409,665         $ 1,037,277 

5.     Investments in Equity Securities:

     In the year ended June 30, 1997, the Company has made a $130,000 
investment in The Buckhead Brewery and Grill, Inc. ("Buckhead").   
Buckhead owns and operates a restaurant in Tallahassee, Florida.  As of
June 30, 1998, PTE holds a 5% ownership interest in this company.

     At June 30, 1998 and 1997, the Company had securities
classified as trading with a fair value of approximately $1,189,030
and $90,080, respectively.  An unrealized net holding loss of
approximately $66,000 related to these securities was reported
in the consolidated statement of operations for the year ended 
June 30, 1998.  An additional loss of $130,000 was recognized from the
sale of trading securities during the year ended June 30, 1997.

6.     Investment in Killearn Properties, Inc.:

	The Company has made investments in Killearn, which is the real estate 
development company from which Capital First acquired its Tallahassee 
development.  Killearn's primary operations include the development of 
residential property surrounding a golf course in Henry County, Georgia.  
At June 30, 1997, PTE's aggregate holdings in Killearn were approximately 
251,000 shares, representing approximately 28% ownership of Killearn, 
an increase from the 16% interest held at June 30, 1996.   As a result 
of the increase in ownership during 1997, the Company recorded its 
investment in Killearn using the equity method for the year ended June 
30, 1997.  The Company reported income of $114,157 from its
investment in Killearn, which is included in "Equity in earnings of 
affiliated companies" on the income statement. (See also Notes 8 and 10, 
Notes Payable, and Related Party Transactions).

     Summarized financial information for Killearn Properties, Inc. & 
Subsidiaries as of and for the year ended April 30, 1997 is as 
follows:

Real estate						                          $24,441,540
Other assets					                            8,369,977
                                            -----------
Total assets					                           32,811,517


Mortgage debt					                          19,948,364
Other liabilities					                       9,736,091
Equity						                                 3,127,062
                                           -----------
Total liabilities and equity 		             32,811,517

Sales							                                13,349,358
Cost of sales					                           9,129,206
                                           -----------
Gross profit					                            4,220,152
Other income and expenses, net		            (3,124,829)
                                           -----------
Net income						                           $ 1,095,323

     	At June 30, 1997, the Company's investment in Killearn differed 
from its market value and the Company's equity in its net assets as 
follows:

Recorded investment				                                  $ 2,253,000
Market value of investment at June 30, 1997              $ 1,191,000
Interest in underlying equity of net assets (book value) $   883,700

     The difference between the Company's recorded investment and its 
interest in the underlying equity of net assets was allocated to
land inventories and was being expensed as inventory was sold.  The 
equity in earnings of Killearn at June 30, 1997 was computed as follows:

Net income for fiscal 1997 as reported by Killearn       $ 1,095,323
Company's interest in earnings			                		           28.26%
Allocated income								                                     309,498
Less amortization of excess purchase price over book value	  195,341
Net equity in earnings as adjusted				                   $   114,157

	    In January 1998, the Company sold the majority of its shares in 
Killearn at a net loss of $284,592.  At June 30, 1998, the Company 
held 132,000 shares of Killearn, representing 14.88% of the outstanding
shares of Killearn.  As a result of the decreased ownership, PTE ceased
accounting for its investment in Killearn on the equity method.  The 
investment is currently accounted for as a trading security.

     The accumulated costs of the Company's attempted acquisition of
Killearn have been reported separately on the consolidated statement
of operations.  The total of $368,767 includes loss on the sale of
Killearn stock, losses from the Company's share of Killearn's earnings, the
unrealized net holding loss on stock held at June 30, 1998, and certain 
legal expenses relating to the attempted acquisition.


7.     Investments In Real Estate Ventures:

     As discussed in Note 3 of the financial statements, the Company 
acquired a 50% interest in Henry County Land Partners, a Georgia 
general partnership.  The Company is a general partner and has 
significant control over the partnership.  As a general partner, 
the Company is liable for the debt and obligations of the partnership.


     Summarized financial information for Henry County Land Partners
as of June 30, 1998, and for the period February 2, 1998 to June 30, 
1998 is as follows:

                                         June 30,    
                                         1998        
                        
Real estate                           $ 1,226,873                   
Cash                                       98,152           
Total assets                            1,325,025                

Mortgage debt				                     $ 1,044,625
Other liabilities					                     50,033
Total liabilities				                   1,094,658
Partnership equity                        230,367
                                      -----------
Total liabilities and equity		        $ 1,325,025             
                                                       

Sales                                 $ 2,925,881     
Cost of sales                           2,357,644       
Gross profit                              568,237               
Other income and (expenses), net          (55,869)           
                                     ------------
Net income                            $   512,368    

     PTE received partnership distributions of $205,000 and made an
additional capital contribution of $64,000 during 1998.

	    Due to its ownership interest and control, the Company's 50%
share of the assets, liabilities and operations are consolidated in
the Company's financial statements.

	    In addition the Company owned a 67% interest in two separate
partnerships, Piney-Z, Ltd. and Apalachee Partners, Ltd.  Based on
the majority ownership and control of these partnerships, they were
consolidated in the Company's 1997 financial statements.  The 33%
minority interest in the earnings of the partnerships has been 
deducted from the operating results of the Company for the year 
ended June 30, 1997 and is reflected on the balance sheet net of a 
$350,000 distribution paid to the minority partner during that fiscal
year.  During the year ended June 30, 1998, the Company sold its
interest in Piney-Z, Ltd. and Apalachee Partners, Ltd., distributed
its remaining assets, and ceased operations (Note 3).

 8.    Mortgage Loans and Notes Payable: 

 Debt consisted of the following:
                                            June 30,        June 30,   
                                            1998            1997
Notes payable to Killearn with
interest rates ranging from 7% to 10%.
Interest is paid either quarterly 
or semi-annually. These notes are 
collateralized by portions
of the developed lots, land
under development, houses and 
condominiums, and land.                   $ 1,992,527       $ 5,459,842 

Notes payable to financial institutions 
with interest rates ranging from 8.25% 
to 10.5% with several of the notes having 
variable interest rates at prime plus 1% 
or 1 1/2%.  Interest is due monthly and 
principal is due in balloon payments 
at varying dates through 1999. The notes 
are collateralized by portions of the 
developed lots, land under development 
and land.                                  16,172,163        14,954,558   

Notes payable to financial institutions 
with interest rates ranging from 8.25% 
to 9.75%.  Payment terms differ with 
some paying interest monthly with balloon 
payments in 1998 and others paying principal 
and interest monthly with maturity dates 
from 2013 to 2025. The notes are 
collateralized by portions of the 
houses and condominiums.                      715,255           679,643 

Note payable to a director with
interest at the prime rate.  Principal and
interest payments are due annually;
balloon payment due in 2003.
The note is collateralized with land,
land under development, and developed lots
in Thomasville, Georgia and Cape
San Blas, Florida.                                  0        1,839,380   

$500,000 margin loan with an investment 
banking firm.  Interest due monthly 
at rate of 8.375%.  Principal due on demand.  
Collateralized by portions of the Killearn 
securities.                                         0           88,326  
 
Other notes payable                         2,968,988          156,007     

Total                                     $21,848,933      $23,177,756     
 
All indebtedness which is collateralized by real property include 
contingent principal and interest payments due when lots of the 
related collateral are released for sale.   Substantially all of the
notes are guaranteed by a major stockholder.

     The Company has approximately $229,000 available under existing 
loan arrangements for use in completing development of certain of its
properties.

     Maturities of the notes payable, some of which are dependent on the
sale of lots, are as follows at June 30, 1998:

Year                                       Amount

1999                                   $   14,629,845
2000                                        3,342,376
2001                                        2,369,010
2002                                          262,256
2003                                          818,901
2004 and thereafter                           426,545
Total                                  $   21,848,933

     Based on the relatively short maturities of fixed rate debt, and 
the market rates of interest such debt bears, management believes the
aggregate carrying amount of its fixed rate debt approximates such
debt's fair value.  Interest rates on variable rate debt fluctuate with
market conditions.  The majority of notes receivable relate to notes
payable assumed by purchasers of certain real estate.  Accordingly, 
such carrying amounts also approximate fair value.

9.     Income Taxes: 

     The components of income tax (benefit) expense attributable to 
continuing operations are as follows:

                               Year Ended June 30, 1998
                         Federal        State          Total

Current               ($ 37,655)      ($ 7,570)      ($ 45,225) 
Deferred              ($244,985)      ($41,936)      ($286,921)
                      ($282,640)      ($49,506)      ($332,146)   

                               Year Ended June 30, 1997
                         Federal        State          Total

Current                $926,220       $167,535      $1,093,755
Deferred               (199,719)      ( 34,149)      ( 233,868)
                       $726,501       $133,386      $  859,887

     Income taxes payable at June 30, 1998 and 1997 include taxes 
payable from prior years which had not been paid.

     Capital First's 1994 and 1995 and Proactive Technologies, Inc.'s
1996 tax returns are currently under examination by the Internal 
Revenue Service, but no reports have yet been issued.

     Total income tax expense attributable to continuing operations 
differs from the amount computed by applying the U.S. federal 
statutory tax rate to pretax income from continuing operations 
primarily due to the effect of state taxes and penalties and interest
charged on delinquent balances.

     The components of the net deferred tax liability (asset) are 
as follows:

                                      June 30,         June 30,
                                      1998             1997 

Difference in basis of
    acquired assets                 $   377,989       $ 1,424,609 
Real estate inventories               (  59,123)         ( 59,123)
Deferred compensation                 (   5,029)         (144,890)
Investments in equity securities      (  16,098)                0 
Other                                         0            11,856    
                                    $   297,739       $ 1,232,452


     Prior to the reverse acquisition, PTE incurred significant net
 operating losses ("NOL's").  Due to the substantial limitations 
placed on the utilization of such NOL's following a change in 
control, no related deferred tax benefit has been recorded, however,  
the Company is seeking to maximize any available benefit.
 
10.       Related Party Transactions:

     In April 1996, the Company purchased land from an entity owned by
PTE's largest shareholder for a purchase price of $475,000 (which
approximates the shareholder's basis in the property).  In connection
with this purchase, a note payable of $225,000 with an unrelated third
party was assumed by PTE, and PTE entered into a note payable agreement 
with the seller for the remaining $250,000.  The assumed note bore interest 
at a rate of approximately 16% and was paid off during the year ended 
June 30, 1998.

     The Company had a deferred compensation agreement with the 
former Chief Executive Officer James A. Preiss, which resulted in the 
Company having a deferred payable of $387,000 at June 30, 1997.  During 
the year ended June 30, 1998, the Chief Executive Officer ceased employment 
with the Company and entered into a termination agreement whereby 
the deferred compensation payable would be paid in full and certain
other property transferred to him as payment for past services.  As
a result, the Company paid the remaining $387,000 due under the 
deferred compensation arrangement and transferred to him cash and 
additional property with a total book value of $183,055, which are 
classified as compensation expense.  

     From time to time the Company makes advances and repayments of 
loans to and from its President which are repaid either through cash
payments or increases in compensation expense. Prior to year end, the
Company borrowed approximately $172,000 from the President from funds 
acquired through the sale of his personal stock.  As of June 30, 1998, 
the President owed $109,111 to the Company.

     During 1997, the Company sold one lot to its former Chief 
Executive Officer and one house to a director amounting to total 
revenues of approximately $145,000.  

    During April, 1996, the Company acquired for investment purposes
approximately 8.1% of the issued and outstanding shares of Killearn
Properties, Inc. ("Killearn").  Killearn is in the business of real estate
development in the Stockbridge, Georgia area.  The Company filed its 
Schedule 13D regarding this event on April 25, 1996.  In May, 1996, 
PTE proposed a transaction with Killearn whereby Killearn would exchange 
certain assets (consisting of the golf course and country club, a newly 
constructed inn and certain joint venture interests) to Killearn's then 
Chairman of the Board and Chief Executive Officer, for this approximate
42% ownership interest in Killearn, or 551,321 shares of Killearn voting 
common stock.  In connection with this proposed transaction, PTE would be 
required to loan Killearn $2 million dollars, which would be used to 
facilitate the transfer of the assets.   During August 1996, PTE 
acquired approximately 85,950 additional shares of Killearn stock, increasing
its ownership interest in Killearn to approximately 22%.  On July 29, 1996, 
PTE proposed to Killearn's Board of Directors that PTE be retained to provide
sales personnel and sales training techniques in order to improve the 
sales of residential lots.  In addition, PTE proposed that Killearn's board
include two additional representatives of PTE.  On July 31, 1996, Killearn's 
Board of Directors approved the transaction and the PTE proposals, and 
an agreement was entered into on August 2, 1996 between Killearn and 
Killearn's chairman.  The split-off transaction was voted upon and approved 
at Killearn's shareholders' meeting held on September 30, 1996.  At the Board 
meeting following the shareholders' meeting, Mark A. Conner, President
of the Company, Robert E. Maloney, Jr., and Langdon S. Flowers, Jr., 
directors of the Company were named to the Board of Killearn.  
On November 1, 1996, Mr. Conner was named Chairman of Killearn.  
At June 30, 1997, the Company owned 250,750 shares, or 28.26% 
of Killearn stock. Since August 1, 1996, Killearn and PTE have been 
operating under an informal arrangement for the services of sales 
personnel. On March 10, 1997, Killearn's Board of Directors ratified 
a proposal to pay PTE $12,500 per month for the services of PTE's sales
personnel, retroactive to July 1, 1996.  During fiscal 1998 and 1997, the 
Company received $25,000 and $150,000, respectively, in consulting fees 
from Killearn.

     In a prior fiscal year, the Company agreed to purchase land and 
other assets from Killearn for approximately $25,000,000.  As a result
of that transaction, the Company owed Killearn on June 30, 1998 and 
1997, respectively, $1,992,527 and $5,459,842.  In addition, from time 
to time during fiscal year 1997, the Company made and received advances
and repayments of short term loans to Killearn which are repaid through
cash payments.  In January, 1998, the Company paid all advances owed
to Killearn and has incurred no additional advances to date.  

     During August 1996, the Company purchased a new subsidiary which
previously purchased a building for $550,000 from Killearn  whose 
Chairman and Chief Executive Officer is Mark A. Conner. The
purchaser signed a promissory note in the amount of $550,000 that is
included in notes payable in the accompanying balance sheet that bears
interest at 9% per annum.  The building was sold back to Killearn
in February 1998 in complete satisfaction of its note payable.

     During 1997, the Company sold 100,000 shares of Company stock to a
subsequent director for $212,000.  

     Effective August 12, 1996, the Company acquired from a subsequent 
director, all of the voting common stock of Flowers Properties, Inc., 
Highland Properties Construction Company, Inc., and Barrier Dunes 
Development Corporation, Inc., in exchange for Company stock.  Under the
agreement, the 2,565,000 shares originally issued were adjusted as a 
result of the average quoted market price of the shares for the ten 
trading days prior to December 31, 1996, if it was below $3.50 per 
share. The Company re-negotiated the transaction and issued an 
additional 1,935,000 additional shares for the above transactions.  
Then, in 1998, the Company and the directors completed their 
reevaluation of the assets acquired.  The renegotiated purchase price 
was valued at $5,128,629 after the purchase price adjustment.  As a 
result the director returned to the Company a total of 1,102,456 shares
of Company stock originally issued for the acquisition.  The purchased
companies' operations principally consist of developed land and raw 
land in Middle and South Georgia, and Cape San Blas, Florida.  The land 
owned by these corporations has been added to the land inventory of the
Company.  The acquisition is accounted for under the purchase method of 
accounting. 

     The Company entered into certain transactions with a corporation
of which an officer is the father of the Company's President.  During the 
year ended June 30, 1998, the Company had lot sales of $208,000 to such 
corporation.  In addition the corproation owed the Company $636,395
under a note receivable created upon the sale of an entire subdivision.
All sales to the corporation were made at prices equivalent to third
party transactions.


11.     Supplemental Cash Flow Information for Noncash Investing and 
          Financing Activities:

     During fiscal year 1998 and 1997, the Company entered into several 
property exchanges, whereby it traded property worth a total of 
approximately $304,000 and $2,303,000, respectively, for which it received
equivalent value in property.

     During fiscal 1997, the Company issued 4,500,000 shares of its 
voting common stock valued at approximately $6,812,500 for all of the 
voting stock of Highland Properties Construction Company, Inc., 
Flowers Properties, Inc., and Barrier Dunes Development Corporation, 
which companies own real estate in Albany, Georgia, Thomasville, 
Georgia and Cape San Blas, Florida, respectively.  During the year 
ended June 30, 1998, the Company renegotiated its acquisition of the 
Flower Entities after a reevaluation of the assets acquired.  The 
renegotiated purchase price was valued at $5,128,629 after the purchase 
price adjustment.  As a result, the purchaser returned to the Company a 
total of 1,102,456 shares of PTE stock originally issued for the 
acquisition.  The adjusted total shares issued for the Flowers Entities
totals 3,397,544 shares.

    During 1998, the Company satisfied its Company note payable to a
director in exchange for the transferrance of inventory and notes
receivable from its Capital First Holdings, Barrier Dunes, Flowers 
Properties and CFH Albany companies worth a total of $1,720,000.

     During 1998 and 1997, respectively, 43,195 and 24,500 shares of 
common stock were issued to two creditors as payment for services 
rendered.  A  $32,000 and $46,000 expense was recorded, respectively, 
in connection with these transactions.

     During 1998, the Company purchased 132,000 shares of Killearn stock
for $1,254,000, financed by notes payables to the Sellers.

     During 1998, the Company transferred a Stockbridge, Georgia building
to Killearn in complete satisfaction of its mortgage note payable.

     Certain properties worth approximately $429,770 were transferred to 
the former CEO under his termination agreement in satisfaction of
his deferred compensation liability.

12.     Contingencies

     During the normal course of business, the Company is subject to
various lawsuits which may or may not have merit.   Management intends
to defend such suits vigorously and believes that they will not result
in any material loss to the Company.
  
13.     Concentration of Risk:

     The Company currently utilizes one vendor in the development of 
all of its land inventories.  Although there are a limited number of 
development companies in the area, management believes that other 
suppliers could provide similar services on comparable terms.  A change
in vendors, however, could cause a delay in development and a possible
loss of sales, which would adversely affect operating results.

14.     Subsequent Events

     Subsequent to year end, the Company paid off its entire remaining
Killearn Properties, Inc. obligation of approximately $2,000,000
through refinancing with its first mortgagee in Tallahassee, Florida.
As a result, of this refinancing, the Company now has an approximate
$9,000,000 obligation with its primary lender and the obligation to 
Killearn secured by the Florida property has been removed.  The Company
now owes about $346,000 to Killearn, which amounts are due and payable
on or before June 30, 1999, and which amounts are secured by second 
mortgages on property located in Henry County, Georgia.

     Additionally, subsequent to year end, the Company borrowed an
additional $100,000 from the President and the Company's largest 
shareholder, which funds were utilized to increase working capital 
of the Company.

     Also subsequent to year end, the Company contracted to sell 100 
acres to a company to which a director is the majority shareholder for 
$610,000, which amount was greater than the largest offer the Company 
received from any other purchaser.  The Company's cost in the land 
approximates the agreed upon sales price.

     Additionally, in September 1998 Barrier Dunes borrowed approximately
$600,000 from a development line in order to begin construction of six
units in Cape San Blas, Florida.

             
                            

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

     As reported on Form 8-K filed on September 15, 1997, on September
5, 1997, the Company formally dismissed its former accountant, Coopers
& Lybrand. This dismissal was due to a dispute over fees for the upcoming 
audit.   The report of Coopers & Lybrand did not contain an adverse 
opinion or disclaimer of opinion and was not modified as set forth 
in Form 10-KSB/A filed on EDGAR on October 20, 1997.  On September 3,
1997, the Company had engaged Jones and Kolb as its new accountant.

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

    The following table sets forth the names, ages and current positions
with the Company held by Directors, Executive Officers and Significant 
Employees, together with the year such positions were assumed.  There is
no immediate family relationship between or among any of the Directors, 
Executive Officers or Significant Employees, and the Company is not 
aware of any arrangement or understanding between any Director or 
Executive Officer and any other person pursuant to which he was elected
to his current position.

Name                   Age          Position                  Since

Mark A. Conner          32       Chairman, President           1996

James A. Preiss         58       Director                      1996

Ben S. Branch           55       Director,
                                 Audit Committee Chairman      1997

Langdon S. Flowers, Jr. 48       Director                      1997

Robert E. Maloney, Jr.  34       Director
                                 Vice President-Corporate 
                                 Counsel                       1996

David W. Wahl           26       Vice President-Chief
                                 Financial Officer             1998

     Mark A. Conner, age 32, has been President of the Company since
February 1996, and President of Capital First since its incorporation
in 1994.  Mr. Conner earned a B.S. in Finance, with honors, from 
Florida State University in 1987.  Mr. Conner started his own real 
estate company in October 1987, Conner, White & Associates, Inc., 
which focused on the development of affordable housing for first time
and mid-priced home buyers.  This approach proved to be successful, 
resulting by 1992 in the development and marketing of 14 communities.

     James A. Preiss, age 58, is the former Chief Executive Officer of 
Proactive Technologies, Inc., who resigned in March of 1998 to pursue 
other interests.  He is a former partner of Proactive's President, Mark
A. Conner, and co-developed more than $50 million in residential real 
estate from 1992 to 1995.  He has substantial experience in the real 
estate industry and in the early 1970's, directed SunView, New Jersey's
real estate divisions for the Deltona Corporation communities of Marco 
Island, Spring Hill, Citrus Springs, Sunny Hills, Deltona, and Pine 
Ridge Estates.  In 1978, he founded Preiss & Preiss, Inc., a $60 million 
industrial real estate development corporation in Fairfield, New Jersey
and Morristown, New Jersey. He has also owned Indus-Council Consultants,
Inc., a New Jersey based consulting group, and has lectured at Rutgers
University College of Labor and Industry.

     Langdon S. Flowers, Jr., 48, was born and raised in Thomasville, 
Georgia, and still resides there.  He has also served as president of 
the W.R. Milton YMCA Board of Directors and is a past director of the 
Thomas County Habitat for Humanity.  He is currently a director of the
South Georgia Regional Board of NationsBank, M.L. Lynch, Co., and F&W 
AgriServices, Inc.  In 1971, he earned a B.S. degree in Management from 
Georgia Tech University.  From 1974 to 1984 Langdon worked in various 
positions with Flowers Industries, Inc. (NYSE) including serving as 
President of Flowers Baking Company (Thomasville, Georgia), President 
of Schott's Bakery (Houston, Texas), and Corporate Regional Vice 
President for the six Georgia and Alabama bakeries.  In 1984 Langdon 
left Flowers Industries to form his own management company, FPI, Inc. 
and three real estate development companies:  Barrier Dunes Development
Corporation, Flowers Properties, Inc. and Highland Properties Construction
Company.  All three of these development companies were merged into 
Proactive Technologies, Inc. (AMEX)

     Ben S. Branch, Ph.D., 55, Professor of Finance at the University of 
Massachusetts, has served as the Chapter 7 Bankruptcy Trustee for the 
Bank of New England Corporation since 1991.  Prior to that he chaired 
the Senior Unsecured Creditors Committee and later the Board of 
Directors for the First Republic Bank Corporation.  Professor Branch 
received his Ph.D. in Economics from the University of Michigan in 1970.
He taught Economics at Dartmouth College from 1970-1975 when he joined 
the Finance Department faculty at the University of Massachusetts.  He 
is the author of numerous articles on investing, appearing in such 
publications as the Wall Street Journal and Barrons as well as numerous 
academic journals.  He has also written several books on investing 
including Investments, Principal, and Practices (Longman, 1987).  He is
also the co-author (with noted bankruptcy lawyer Hugh Ray) of a book on
investing in the claims against the bankruptcy and financially 
distressed firms, Bankruptcy Investing, How to Profit from Distressed 
Companies (Dearborn Publishing, 1992).

     Robert E. Maloney, Jr., age 34, has been Corporate Counsel to the 
Company since February 1996.  He earned a B.A. with high honors 
(including Phi Beta Kappa) from Ohio Wesleyan University in 1986.  He 
graduated from Wake Forest University School of Law in 1989, and served
as the Executive Editor of Wake Forest Law Review in 1988-89.  Mr. 
Maloney was with the firm of Fee, Bryan & Koblegard, P.A. in Fort 
Pierce, Florida from 1989 to 1995, where he specialized in litigation
matters.  In 1993 and 1994, Mr. Maloney served as counsel on a number
of Capital First's real estate developments.  He is licensed to practice
law in the states of Florida, Georgia, Massachusetts, and Connecticut
and is a member of the Florida Trial Attorneys and the American Bar 
Association.

	     David W. Wahl, age 26, joined the Company in May 1998 as
Controller and was subsequently promoted to Chief Financial Officer.
Mr. Wahl earned a B.A. in Economics and Mathematics from Williams
College in 1993.  He also obtained his M.B.A. from Emory University 
in 1998, graduating with Honors.  Mr. Wahl has had experience as an
auditor with a Big 5 accounting firm and as an analyst in the Corporate
Finance division of a pharmaceuticals company.


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

     Section 16(a) of the Securities Exchange Act of 1934, as amended, 
and regulations of the SEC thereunder require the Company's executive 
officers and directors and persons who own more than 10% of the 
Company's common stock, as well as certain affiliates of such persons,
to file initial reports of ownership and reports of changes in 
ownership with the SEC.  Executive officers, directors and persons 
owning more than 10% of the Company's common stock are required to 
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it 
and written representations that no other reports were required for 
those persons, the Company believes that during the fiscal year ended
June 30, 1998, its executive officers, directors and owners of more 
than 10% of its common stock complied with all filing requirements.

Item 10.     Executive Compensation.

                                   SUMMARY COMPENSATION TABLE
                                        (Year ended June 30, 1998)

Name and                                       Long-term    Other Annual
Principal Position     Salary        Bonus     Compensation Compensation

Mark A. Conner 
Chairman of the Board, 
President             $61,200        --0--      --0--      $ 109,360 (1)

James A. Preiss (2)
CEO                  $131,539        --0--      --0--      $ 570,055 (3)


(1)    Includes other personal expenses paid by Capital First and the 
Company on behalf of Conner.

(2)   Based on an annual salary of $180,000 per year.  Mr. Preiss
resigned his position on March 9, 1998.

(3)   Includes $387,000 paid by the Company due under a deferred
compensation arrangement and property transferred to him with a 
book value of $183,055.  




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

The following table sets forth information, as of June 30, 1998, 
concerning shares of Common Stock of the Company beneficially owned by 
each beneficial owner of more than 5% of the Company's common stock and 
by each director and officer and by all directors and officers as a 
group.  Unless expressly indicated otherwise, each stockholder 
exercises sole voting and investment power with respect to the shares 
beneficially owned.

Name and Address               Number of Shares           Percent
of Beneficial Owner            Beneficially Owned         of Class

Mark A. Conner                  8,000,200                 46.80% (1)
7118 Beech Ridge Trail
Tallahassee, Florida  32312

Langdon S. Flowers, Jr.         2,397,544                 14.03%
P..O. Box 
Thomasville, Georgia

Robert E. Maloney, Jr.             25,000                    <1%
7118 Beech Ridge Trail
Tallahassee, FL 32312          

Ben S. Branch                     420,000                    2.46%
University of Mass.
Amherst, MA

George McIntosh                 1,000,000                  5.85%(1)
P.O. Box
Albany, Georgia

All Directors and Officers
as a Group                     11,842,744                 69.29% (1)

 (1) Based on 17,092,657 issued and outstanding shares used to calculate 
percentage.

Item 12    Certain Relationships and Related Transactions.

    In December 1995, the Company's President, Conner, contributed to 
Capital First, his 33.3% limited partnership interests in Piney-Z, Ltd. 
and Apalachee Partners, Ltd. (See Note 10 to the Consolidated Financial 
Statements).  During the twelve months ending June 30, 1998, the Company
made $92,556 in debt service payments with respect to loans on Conner's 
home on which Conner was primarily liable.  Such amounts were included in 
Conner's compensation.

     In April 1996, the Company purchased land from an entity owned by
PTE's largest shareholder for a purchase price of $475,000 (which
approximates the shareholder's basis in the property).  In connection
with this purchase, a note payable of $225,000 was assumed by PTE,
and PTE entered into a note payable agreement with the seller for the
remaining $250,000.  The assumed note bores interest at a rate of
approximately 16% and was paid off during the year ended June 30, 1998.

     The Company had a deferred compensation agreement with the 
former Chief Executive Officer which resulted in the Company having
a deferred payable of $387,000 at June 30, 1997.  During the year 
ended June 30, 1998, the Chief Executive Officer ceased employment 
with the Company and entered into a termination agreement whereby 
the deferred compensation payable would be paid in full and certain
other property transferred to him as payment for past services.  As
a result, the Company paid the remaining $387,000 due under the 
deferred compensation arrangement and transferred to him cash and 
additional property with a total book value of $183,055, which are 
classified as compensation expense.  

     From time to time the Company makes advances and repayments of 
loans to and from its President which are repaid either through cash
payments or increases in compensation expense. Prior to year end, the
Company borrowed approximately $172,000 from the President from funds 
acquired through the sale of his personal stock.  As of June 30, 1998, 
the President owed $109,111 to the Company.

     During 1997, the Company sold one lot to its former Chief 
Executive Officer and one house to a director amounting to total 
revenues of approximately $145,000.  

     During April, 1996, the Company acquired for investment purposes
approximately 8.1% of the issued and outstanding shares of Killearn
Properties, Inc. ("Killearn").  Killearn is in the business of real 
estate development in the Stockbridge, Georgia area.  The Company filed 
its Schedule 13D regarding this event on April 25, 1996.  In May, 1996, 
PTE proposed a transaction with Killearn whereby Killearn would exchange 
certain assets (consisting of the golf course and country club, a newly 
constructed inn and certain joint venture interests) to Killearn then 
Chairman of the Board and Chief Executive Officer, for this approximate
42% ownership interest in Killearn, or 551,321 shares of Killearn voting 
common stock.  In connection with this proposed transaction, PTE would be 
required to loan Killearn $2 million dollars, which would be used to 
facilitate the transfer of the assets.   During August 1996, PTE 
acquired approximately 85,950 additional shares of Killearn stock, 
increasing its ownership interest in Killearn to approximately 22%.  On 
July 29, 1996, PTE proposed to Killearn's Board of Directors that PTE 
be retained to provide sales personnel and sales training techniques in 
order to improve the sales of residential lots.  In addition, PTE 
proposed that Killearn's board include two additional representatives of PTE. 
On July 31, 1996, Killearn's  Board of Directors approved the transaction
and the PTE proposals, and an agreement was entered into on August 2, 
1996 between Killearn and Killearn's chairman.  The split-off transaction
was voted upon and approved at Killearn's shareholders' meeting held on 
September 30, 1996.  At the Board meeting following the shareholders' 
meeting, Mark A. Conner, President of the Company, Robert E. Maloney, Jr.,
and Langdon S. Flowers, Jr., directors of the Company were named to the 
Board of Killearn.  On November 1, 1996, Mr. Conner was named Chairman 
of Killearn.  At June 30, 1997, the Company owned 250,750 shares, or 28.26%
of Killearn stock. Since August 1, 1996, Killearn and PTE have been 
operating under an informal arrangement for the services of sales 
personnel. On March 10, 1997, Killearn's Board of Directors ratified 
a proposal to pay PTE $12,500 per month for the services of PTE's sales
personnel, retroactive to July 1, 1996.  During fiscal 1998 and 1997, the 
Company received $25,000 and $150,000 in consulting fees from Killearn.

     In a prior fiscal year, the Company agreed to purchase land and 
other assets from Killearn  for approximately $25,000,000.  As a result
of that transaction, the Company owed Killearn on June 30, 1998 and 
1997, respectively, $1,992,527 and $5,329,168.  In addition, from time 
to time during fiscal year 1997, the Company made and received advances
and repayments of short term loans to Killearn which are repaid through
cash payments.  In January, 1998, the Company repaid all advances to
Killearn and have not incurred any further advances to date.

     During August 1996, the Company purchased a new subsidiary which
previously purchased a building for $550,000 from Killearn. The
purchaser signed a promissory note in the amount of $550,000 that is
included in notes payable in the accompanying balance sheet that bears
interest at 9% per annum.  The building was sold back to Killearn
in February 1998.

     During 1997, the Company sold 100,000 shares of Company stock to a
subsequent director for $212,000.  

     Effective August 12, 1996, the Company acquired from a subsequent 
director, all of the voting common stock of Flowers Properties, Inc., 
Highland Properties Construction Company, Inc., and Barrier Dunes 
Development Corporation, Inc., in exchange for Company stock.  Under the
agreement, the 2,565,000 shares originally issued were adjusted as a 
result of the average quoted market price of the shares for the ten 
trading days prior to December 31, 1996, if it was below $3.50 per share.
The Company re-negotiated the transaction and issued an additional 
1,935,000 additional shares for the above transactions.  Then, in  
1998, the Company and the directors completed their reevaluation of the
assets acquired.  The renegotiated purchase price was valued at 
$5,128,629 after the purchase price adjustment.  As a result the 
director returned to the Company a total of 1,102,456 shares of Company
stock originally issued for the acquisition.  The purchased
companies' operations principally consist of developed land and raw 
land in Middle and South Georgia, and Cape San Blas, Florida.  The land 
owned by these corporations has been added to the land inventory of the
Company.  


     During 1998 and 1997, respectively, 43,195 and 24,500 shares of 
common stock were issued to two creditors as payment for services 
rendered.  A  $32,000 and $46,000 expense was recorded, respectively, 
in connection with these transactions.



                    PART IV

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

(a)     Reports on Form 8-K - NONE  

(b)Exhibits.
  Page

SEC Exhibit No.Type of Exhibit Number

27 Financial Data Schedule  44
 
99 Additional Exhibits N/A

<PAGE>                           SIGNATURES

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


                                PROACTIVE TECHNOLOGIES, INC.


Date:   October 13, 1998         By: /s/ Mark A. Conner           
                                Mark A. Conner
                                Chairman of the Board and  President


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

Date:   October 13, 1998      By: /s/ Mark A. Conner  
                             Mark A. Conner
                             Chairman of the Board and President

Date:   October 13, 1998      By: /s/ James A. Preiss         
                             James A. Preiss
                             Director 

Date:   October 13, 1998      By: /s/ Robert E. Maloney, Jr.   
                             Robert E. Maloney, Jr.
                             Director

Date:   October 13, 1998      By: /s/ David Wahl  
                             David Wahl
                             Vice-President
                             Chief Financial Officer

Date:   October 13, 1998      By: /s/ Ben S. Branch           
                             Ben S. Branch
                             Director
                             Chairman - Audit Committee

Date:   October 13, 1998      By: /s/ Langdon S. Flowers, Jr.
                             Langdon S. Flowers, Jr.
                             Director
                                    

  <PAGE>                  INDEX TO EXHIBITS

Exhibit  Sequential
Number               Description                Page            Number