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, 1997
                    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.  (   )

The Registrant's revenues for its most recent fiscal year (twelve months 
ending June 30, 1997) $17,566,977.

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 30, 1997, $3,564,589.

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 23, 1997: 18,151,918.

Transitional Small Business Disclosure Format:
                     Yes            No     X   





                         TABLE OF CONTENTS

                              PART I
                                                                       Page
ITEM 1.    Description of Business                                      4 

             General                                                    4  

             Acquisitions and Dispositions Not in the 
             Ordinary Course of Business                                5

ITEM 2.    Properties                                                  10

            Acquisitions and Dispositions Not in the Ordinary Course
                   Of  Business                                        10

             Real Estate Operations - Materially Important Properties  10

             Real Estate Operations - Other Properties                 10

             Financing and Lines of Credit                             13

             Policies with Respect to certain Activities               14

             Description of the Real Estate Development Business       15

             Government Regulation and Environmental Matters           17

             Warranty Bonds and Other Obligations                      17

             Competition                                               17

             Warranties and Other Obligations                          18

             Description of Markets                                    18

             Other Real Estate Investments                             20

             Employees                                                 20


ITEM 3.    Legal Proceedings                                           20
 
ITEM 4.    Submission of Matters to a Vote    
           Of Security Holders                                         21

                             PART II

ITEM 5.    Market for Registrant's Common Stock and
           Related Shareholder Matters                                 22

ITEM 6.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations               22

ITEM 7.    Financial Statements and Supplementary Data                 25

ITEM 8.    Changes in and Disagreements With Accountants
           On Accounting and Financial Disclosure                      47

                             PART III

ITEM 9.    Directors, Executive Officers, and Control
           Persons of the Registrant                                   47

ITEM 10.   Executive Compensation                                      48

ITEM 11.   Security Ownership of Certain Beneficial Owners
           and Management                                              49

ITEM 12.   Certain relationships and Related Transactions              50

ITEM 13.   Exhibits and Reports on Form 8-K                            50
<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.

    Pursuant to the Bankruptcy Plan confirmed on November 21, 1995 (see 
"Chapter 11 Bankruptcy" discussed below), the Company disposed of its interest
in Proactive Solutions by transferring the Company's shares of common stock of
Proactive Solutions to the persons from whom the Company acquired Proactive
Solutions in June 1994 in exchange for the 375,000  shares of the Company's 
common stock that had been issued to such persons in such acquisition.

    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").  As  a result, 
the Company's financial statements included herein, with respect to periods 
before February 12, 1996, reflect the results of operations of Capital First.

    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, and
anticipates it will receive its common stock for the remaining purchase
price and interest.  

     As a result of the dispositions of Keystone and Proactive Solutions and
the acquisitions described below, as of June 30, 1997, the Company was
a holding company conducting, through subsidiaries, the development 
of residential real estate.

    On September 1, 1995, the Company, along with its two subsidiaries at 
that date, Keystone and Proactive Solutions, filed a petition under Chapter
11 of the U.S. Bankruptcy Code for voluntary bankruptcy in the United
States Bankruptcy Court for the Northern District of Oklahoma (the
"Court").  Although the Court dismissed the separate petition of Keystone
Labs, the Company and Proactive Solutions were placed under the Court's
protection.  On November 21, 1995, the Court confirmed the Equity
Securities Holders' Plan of Reorganization (the "Plan").  Pursuant to the
Plan, most of the Company's creditors were paid in December 1995 by issuing
to them shares of the Company's common stock.  The Company's remaining
creditors were paid in January 1996.  Also pursuant to the Plan, certain 
classes of the Company's stockholders received warrants entitling them to 
purchase the Company's common stock at $2.00 per share (after a 4-for-1 
reverse stock split) in exchange for the release of their respective claims 
against the Company.  All unexercised warrants expired prior to June 30, 1997.
Pursuant to the Plan, as of June 30, 1997, approximately 2,105,000 warrants
were exercised and the Company received approximately $4,109,000 in 
cash and receivables. Also, as of June 30, 1997, the Company completed all
requirements of the bankruptcy court.

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 is 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 were not so registered, the 
Company would have been 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 (Flowers 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 will provide sales personnel, training and techniques, and other
management assistance to Killearn in order to increase Killearn's sales of
residential lots.  Since August 1, 1996, Killearn and PTE have been operating
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.

     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.

     In connection with the Company's acquisition of the stock of the Flowers
Entities,  the Company also agreed to issue additional shares of the
Company's common stock to the respective sellers if the average closing
price of the Company's common stock for the last ten trading days prior
to December 31, 1996, does not equal at least $3.50 per share.  Based
on the $3.50 per share price guarantee, the aggregate proposed purchase
price for the stock of all of the Flowers Entities was estimated to be 
$8,977,503.  The Company also agreed to appoint Flowers to its 
Board of Directors.  

     Subsequently, in February, 1997, the Company renegotiated said
previous agreement such that Highland was purchased for a total of
3,200,000 shares; Flowers Properties, Inc. was purchased for 800,000
total shares; and Barrier Dunes was purchased for a total of 500,000
shares.  The renegotiated price was approved by the Company's Board
on April 10, 1997.

     Highland 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.  Highland 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 Highland
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 Highland. In connection
with its acquisition of Highland's common stock, the Company agreed to
pay a selling commission of $1,000 per lot sold to two entities controlled
by the Sellers with respect to each lot on the 626 acres that Highland
develops and sells.

     Flowers Properties owns 286 acres of undeveloped land in 
Thomasville (Thomas County), Georgia.  When developed, this land
should yield approximately 450 single-family lots of approximately
 .50 acre each.  Flowers Properties expects to offer these lots for sale at
prices between $15,000 and $40,000.  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.

     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.  In connection with its
acquisition of Barrier Dune's common stock, the Company agreed to
indemnify Flowers with regard to any payments he might have to 
make as a guarantor with respect to a $2,145,653 promissory note from
Barrier Dunes to NationsBank, N.A., and to pay Flowers a guaranty fee.
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.

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


Specialty Construction Materials - Dispositions.

     QuinStone, Inc.

     QuinStone, Inc. is a Quincy, Florida, based manufacturer of simulated
stone and other synthetic building products.  On September 16, 1996, the
Company purchased 82% of the outstanding stock of QuinStone, Inc.
("QuinStone") from James H. Dahl and Rock Creek Partners, Ltd.
(collectively, the "Dahl Group") in exchange for 750,000 shares of the
Company's common stock ("Exchange Shares").  Based on the closing
bid price of the Company's common stock on September 16, 1996,
the aggregate purchase price paid by the Company in this acquisition
was approximately $2,250,000.  As part of the acquisition, the Company
and the Dahl Group entered into a Registration Rights Agreement.  Under
such agreement, members of the Dahl Group could have requested, after
September 16, 1997, and before the date at which they may sell the Exchange
Shares pursuant to Rule 144(k) under the 1933 Act, that the Company use
its best efforts to cause the registration of the Exchange Shares under the
1933 Act.  Nonperformance by the Company under the terms of the 
Registration Rights Agreement would entitle the Dahl Group to receive
an additional 225,000 shares of the Company's common stock.  On or about
November 16, 1996, the Company and the Dahl Group mutually rescinded
said agreement.  Following the rescission, the Company returned and signed
over all shares of QuinStone Industries it had received, and received back its
750,000 shares and retired them as treasury stock. Therefore, none of the
assets, liabilities or operations of QuinStone are included in the Company's 
financial statements.

     Decocrete Worldwide, Inc.

     Decocrete International, Inc. ("Decocrete International") was a St. 
Petersburg, Florida, based manufacturer of tiles and other alternatives to 
concrete.  As previously reported, on February 10, 1996, under the direction 
of Capital First, the Company's newly-incorporated subsidiary, Decocrete 
Worldwide, Inc. ("Decocrete Worldwide"), entered into an agreement to purchase
the net assets of Decocrete International in exchange for twenty percent
(20%) of the common stock of Decocrete Worldwide and $72,000 cash.
Under the terms of the original purchase agreement, 60% of Decocrete
Worldwide's net after-tax profits were to be allocated to the Company
and 40% were to be allocated  to Decocrete International (i.e., the seller).
Concurrent with the Closing, Decocrete International was dissolved and
the remaining assets (i.e., the cash and common stock in Decocrete Worldwide)
were distributed to the  two shareholders of  Decocrete International,
Garat Oates and Thomas Colmenares.  On July 12, 1996, the Company
purchased the stock in Decocrete Worldwide held by Garat Oates,
amounting to fifteen per cent (15%) of the issued and outstanding stock
of Worldwide for approximately $7,500.  As a result of this transaction,
the Company owns 95% of Decocrete Worldwide's common stock and is
entitled to 90% of Decocrete Worldwide's net after-tax profits.  The
Company accounted for the acquisition of Decocrete International
under the  purchase method of accounting.  The Company sold the Decocrete
Worldwide building in January, 1997 and ceased the manufacture and retail
sale of decorative concrete materials as of December 31, 1996 and is actively
seeking interested parties to sell the business. 

Real Estate Development-Proposed Acquisitions

     Piney-Z

     On December 31, 1995, Conner contributed to Capital First his 33 1/3%
limited partnership interest in Piney-Z Ltd. and Apalachee Partners, Ltd.
(the "Piney-Z Partnerships").  The Piney-Z Partnerships were formed in
October 1995, by Conner, Williams and Grace Dansby to develop
the "Piney-Z" development, an approximately 400 acre mixed-use
development north of Tallahassee.  On May 17, 1996, the Company
purchased Williams' 33 1/3% general partnership.  In the acquisition, 
the Company issued to Williams 200,000 shares of its common stock
(valued at $675,000) and repaid Williams a $25,000 advance he had made
to the Piney-Z Partnerships.  As a result of these acquisitions, as of June 
30, 1997, the Company and Capital First had a collective ownership interest
of 66 2/3% of the Piney-Z Partnerships.  Additionally, the Company caused
Piney-Z, Ltd. partnership to file a Petition with the City of Tallahassee, 
Florida to form a Community Development District ("CDD") under 
Florida Statutes Chapter 190. On June 11, 1997, the City Commission of
the City of Tallahassee (the "City") established the CDD by Ordinance
 97-O-0033AA, under provisions of Chapter 190 for the purposes
of financing and managing the acquisition, construction, maintenance and
operation of a portion of the infrastructure necessary for community
development.  The District is authorized to issue bonds for the purpose
of financing, funding, planning, establishing, operating and maintaining
water management, water supply, sewer and wastewater management,
district roads, street lights and other basic infrastructure projects within
or without the boundaries of the District. Additionally, through an 
Interlocal Agreement, dated  with the City of Tallahassee, the City
has agreed to pay 57% of the total costs of construction of Conner
Boulevard, the primary thoroughfare through Piney-Z. Because of the
ownership percentage in the partnership (and the fact that the Company 
became the sole general partner), the results of the Piney-Z Partnerships
have been consolidated in the Company's financial statements from July 1,
1995 to June 30, 1997.




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 Vero Beach,
Florida.  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,
1997, 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 was developing a condominium project in Vero Beach,
Florida.  As of June 30, 1997, Capital First's only materially important
properties were Summerbrooke (a golf course subdivision in 
Tallahassee),  Golden Eagle (another golf course community in Tallahassee),
Piney-Z Plantation (residential community consisting of single family
and multi-family homes), and Hibiscus Condominium Phase II (a
condominium project in Vero Beach, 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, 1997, there were 125 remaining developed lots for sale within 
Summerbrooke, as well as 96 remaining permitted and platted but undeveloped 
lots on approximately 51 acres of land.  Capital First expects to sell the 
remaining developed lots within 12 months and develop and sell the undeveloped
lots within the next eighteen 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, 1997, there 
were 137 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 two years and develop and sell the undeveloped lots within the next 
four years. 

     In connection with Capital First's November 1993 acquisition of Golden
Eagle (as well as Eagle's Ridge and Killearn Lakes), Capital First also 
acquired the Golden Eagle Golf and Country Club (the "GE Country Club") from 
Killearn.  Since November 1993, Capital First operated the GE Country Club to
 support the value of the surrounding property; i.e., the Golden Eagle 
subdivision. In the fall of 1995, the management of Capital First concluded 
that ownership of the GE Country Club was no longer in the best interest 
of Capital First. The GE Country Club was, accordingly, sold on September 
27, 1995, to C.C. Sellers for the aggregate sales price of approximately 
$3.1 million, at a net loss of approximately $180,000.  

      Piney-Z

     Piney-Z Plantation is a 400 acre project, which has been platted and 
planned pursuant to a Planned Unit Development approval process for 
approximately 800 single family homes; 80,000 square feet of commercial 
space; and 5,000 square feet of medical space.  The project, located in the 
City of  Tallahassee, Florida is the first Master Plan Community in the 
Southeast sector of the city.

     Vero Beach

     Hibiscus Condominium Phase II is a twelve-story condominium project 
which will consist of 58 units.  As of June 30, 1997, construction had not
yet begun.  This project is anticipated to be financed by means of an 
approximate $6.5 million construction loan from a local bank, which note
is anticipated to have a maturity date of two years from execution, and
will require a proposed equity position of approximately $1.3 million, some
of which the Company may look to finance through the addition or use
of a joint venturer on the project.  

Real Estate Operations-Other Properties

     Among Capital First's other properties, as of June 30, 1997, five
properties were relatively  significant:

          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, 1997, 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, swimming pool and tennis courts.  The average
house price is $160,000 and the average lot price is $27,500.
As of June 30, 1997, over 50% of the lots in this subdivision were
still available for sale.

     Killearn Commons

     Killearn Commons is a three-phase community targeted toward
the first-time home buyer or middle income families.  Most homes
will have three bedrooms, two baths and feature 1,400 square feet
of living space.  The average house price is $120,000 and the
average lot price is $19,500.  As of June 30, 1997, approximately
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, 1997, there 
were 42 developed lots and 75 permitted and platted, but 
undeveloped lots remaining to be sold.

     The Glen

     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 30,1997, there were ninety
(90) lots still available for sale in Phase I.

Interest Expense

     The interest expense on the mortgage debt for the year ending June 30, 
1997 was approximately $2,047,000, of which approximately $960,000 was
 capitalized as a cost of land development.  The interest expense for the 
twelve month period ending June 30, 1998, 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 $2,000,000 credit line with a local bank, of which approximately
$676,000 was still outstanding as of June 30, 1997.  The loan matures in 
January 1998, 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.   Likewise, the Company obtained a $575,000 line of credit for 
the development of the  Piney-Z property.  As of June 30, 1997, there remains 
available $203,928.  The loan matured on September 30, 1997.  The Company
 expects this loan to be paid off from an estimated $12,000,000 in proposed 
development bonds  obtained through the Community Development District.

     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, 1997,
a total of approximately $5,398,000 was outstanding on these loans.   The
largest loan with an original principal balance of $5,000,000 matures in July
1999, and carries an interest rate of 7.5%. The smaller loan, with an original
principal amount of $2,500,000 matures on December 31, 1997, and carries
an interest rate of 10%.  Development of this subdivision (as well as the 
Eagle's Ridge and Killearn Lakes subdivision) was also financed by means 
of a line of credit from a local bank, with respect to which approximately
$1,767,000 was  still outstanding as of June 30, 1996.  The loan matures in 
the current fiscal  year, carries an interest rate of 10.25%, with 
interest-only payments and without prepayment penalties.  At maturity,
 based on prior history, the Company expects that these loans would be 
renewed for at least one year.  


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, Barrier Dunes, and Killearn.  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 has no material outstanding loans owed to it by other entities
or persons, including officers and directors, except for the note receivable,
currently due December 31, 1997 from Apalachee East, Ltd. on the
commercial property sold near Piney-Z Plantation.  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 subsidiary, Capital First, 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.
Capital First 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, 1997, 
was $28,940.  At June 30, 1997, 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, 
Capital First considers the cost of the land, the desirability of the 
proposed project to targeted home buyers, population growth patterns,
competitive conditions, and available financing.  Capital First's land
purchase agreements are typically subject to numerous conditions, 
including, but not limited to Capital First obtaining the necessary 
zoning and other governmental approvals for a proposed subdivision.  
  
     During the investigation period, Capital First confirms the availability
of utilities, performs hazardous waste and other environmental analyses,
arranges financing and completes its marketing feasibility studies.
As a result, Capital First is generally able to begin its development 
activities immediately after it closes a land purchase.  Although Capital
First's policy is to maintain an approximately 4-5 year supply of raw land,
it develops its subdivisions in phases.  Therefore, Capital First 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), Capital First 
engages a general contractor to install  the "horizontal" infrastructure
of roads, water, sewer, drainage, gas and electricity.  Capital First  
typically contracts out its work on a lump-sum basis.  Capital First has
 used the same (unrelated) general contractor for the last 29 subdivisions
 it has developed.   Capital First does not maintain significant inventories 
of construction  materials, except for materials being used in current 
construction.  Generally, the construction materials used in Capital First's
 operations are readily available from numerous sources, but prices may 
fluctuate due to various factors, including increased demand or supply 
shortages.  Capital First does not have any long-term contractual commitments 
with suppliers of building materials. 



Marketing and Sales

     Capital First sells approximately 50% of its lots on a wholesale basis
directly to builders participating in Capital First's custom builder 
program.  Builders participating in this program are offered the opportunity
 to purchase land directly from Capital First.  By participating in the 
program, a builder agrees to satisfy certain quality, uniformity and other 
standards when constructing a house in a Capital First subdivision.  As of 
June 30,  1997, 76 builders were participating in this program.  Capital 
First sells  the remaining 50% of its lots on a retail basis directly to 
prospective homeowners desiring to build houses in one of the Capital 
First subdivisions.  Capital First sells these lots through commissioned 
sales personnel.  Such sales personnel may sell lots in any Capital 
First subdivision, but typically concentrate on selling lots in upper market 
and golf-course communities.  As of June 30, 1997, there were five such 
sales personnel.  The Company also sells its lots through independent real 
estate brokers.

     Capital First'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, Capital First 
provides incentives to real estate brokers to promote broker participation.

     Capital First 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 
Capital First'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.
Capital First does not typically provide financing with respect to its sales.
Occasionally, Capital First will take a house or other non-cash property
as consideration for land sales.  At June 30, 1997, Capital First had 
approximately $1.4 million 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, Capital First 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.

     Capital First 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, Capital First 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 Capital 
First to incur substantial compliance and other costs, or prohibit or 
severely restrict development by Capital First in environmentally 
sensitive regions or areas.

Competition

     The real estate development industry is extremely competitive and 
fragmented.  Many of Capital First's competitors are substantially larger
and much better capitalized.  Capital First 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. Capital First 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,
Capital First's management has been successful at acquiring large tracts of
land at favorable prices.  Capital First 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, Capital First believes it should remain competitive.

Warranties, Bonds and Other Obligations

     In developing subdivisions, Capital First 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 Capital First's
pending construction activities.  As of June 30, 1997, Capital First's had no
obligations under these bonds.  In the event any such obligations are drawn
upon because of Capital First's failure to build required infrastructure or 
satisfy other obligations, Capital First would be obligated to reimburse the
issuing surety company or bank.

     Capital First 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 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 develops residential properties primarily in the 
Tallahassee (Leon County), Florida area.  In 1995, the population of the 
Tallahassee  Metropolitan Statistical Area was approximately 260,000.  
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 believes that land regulation in Tallahassee is relatively 
complex, but that it is experienced in obtaining the appropriate approvals.

     Vero Beach (North Hutchinson Island), Florida

     Capital First has completed (and sold out) two high-rise condominium
buildings on North Hutchinson Island, Florida.  North Hutchinson Island 
is east of Fort Pierce, Florida and 4.5 miles south of Vero Beach, Florida.
Capital First anticipates beginning the construction of the Hibiscus 
Condominium Phase II, a twelve-story building in which all fifty-eight
units are on the oceanfront, during the next fiscal year.  The Hibiscus
projects units to be offered for sale at prices ranging from $150,000
to $250,000.  Its principal competition on North Hutchinson Island
is another condominium project with prices starting at $325,000. 
Capital First believes the Hibiscus project will appeal to three groups
of potential buyers: those who intend to live on North Hutchinson 
Island year-round (currently 30% of the island's population); those
who intend to reside on the island primarily in the winter (currently
35% of the island's population); and those who live within a two-hour
drive and who intend to use their units during the summer and rent the
units out during the winter (currently 35% of the island's population).

     Thomasville, Georgia

     Through its subsidiary, Flowers Properties, 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 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.  Flowers
Properties intends to develop approximately 450 single-family lots,
of approximately .50 acres each, in a phased development over four years.
Between August 15, 1996 and June 30, 1997, Flowers Properties sold
15 lots in Thomasville.  The Company believes Flowers Properties is
competitive in Thomasville and that it will 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, 1997, Barrier Dunes had sold 107 out of 
200 total lots.

     Albany, Georgia

     Through its  subsidiary, Highland, 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.  Highland 
intends to develop approximately 879 single-family lots, of
approximately .75 acres each, in a phased development.  Between 
August 15, 1996 and June 30, 1997, Highland had sold 57 lots in Albany.
Over the last several years, Highland has sold approximately 200 lots a
year in Albany.  The Company believes Highland is competitive in Albany and
that it will be able to acquire additional land in Albany as necessary for 
future development.

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, 1997, the number of persons employed by the Company and
     each subsidiary was as follows:

     Proactive Technologies, Inc.                               15
     Capital First Holdings, Inc.                                0
     Flowers Properties, Inc.                                    0
     Highland Properties Construction Co., Inc.                  0
     Barrier Dunes Development, Inc.                             0
     Piney-Z, Ltd. (67%)                                         0
     Countryside Partnership (50%)                               0
     Decocrete Worldwide, Inc.                                   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.

     As was previously reported on Form 8-K filed September 13, 1995, in 
connection with the filing of its bankruptcy petition, on September 1, 1995, 
the Company filed a Complaint in the United States Bankruptcy Court for 
the Northern District of Oklahoma alleging certain acts of wrongdoing
by Joel C. Holt, a director, Ira Rimer, a stockholder, G. David Gordon, 
Esq. and the law firm of Klenda, Gordon & Getchell, P.C., the Company's
former corporate counsel.  On September 5, 1995, the defendants, along
with several other parties, filed a suit in Tulsa County District Court 
against the Company, William E. Davis and Donald H. Mitchell, also alleging
several acts of wrongdoing.  On October 18, 1995, all parties involved in 
the two separate lawsuits agreed to a settlement whereby, among other things,
all litigation between the parties involved was dismissed with prejudice. 
Pursuant to this settlement, William Davis and Donald Mitchell agreed
to resign as directors and officers of the Company and Keystone Laboratories,
Inc. and exchange all their shares of  the Company's common stock and options
to purchase such common stock for the common stock of Proactive Solutions
held by the Company.

     In addition, under the terms 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, 1997, the Company has not received any 
payments with respect to the Note and does not expect to receive any 
payments under the Note. 

     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, 1997, 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      1 1/2  1/2     1 5/8   5/8
Ending      Second Quarter     1      1/4     1 5/8   1/2
June 30,    Third Quarter      2 3/4  2       3       2 1/2
1996        Fourth Quarter     3 3/4  2 3/8   4       2 3/4

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

     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 24, 1997, was 1,057.

     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.

     At this time, the Company already owns a three to four year supply of
land in Tallahassee.  The acquisition of the Flowers Entities will add a 
four to five year supply of land in Albany and Thomasville, Georgia. 
Additionally, through its investment in Killearn, the Company will share 
access to an eight-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, 1997 compared with unaudited 12 month results 1996

     Sales for the year ending June 30, 1997, decreased $9,616,124, or
approximately 36%, to $17,566,977 compared to $27,183,101 (unaudited)
for the year ending June 30, 1996.  This decrease is attributable primarily 
to a decrease in the availability of commercial property, which was available
and sold during the year ending June 30, 1996.   Gross profit for this
period remained somewhat stable, however, increasing only $27,336 from
$5,714,455 (unaudited) for the year ending June 30, 1996 to $5,741,791, for the 
year ending June 30, 1997.  Cost of sales decreased by $9,643,460 from
$21,468,646 (unaudited), for the year ending June 30, 1996 to
$11,825,186 for the year ending June 30, 1997.  Gross profit margin
increased 11.68% from 21.0% for the year ended June 30, 1996 to
32.69% for the year ended June 30, 1997.  This increase was due
primarily to a bulk sale in the current year of a large tract of 
commercial property for, which the company had a low basis in 
resulting in a 68% gross profit margin, which vastly affected the 
gross profit margin of the Company.  Normally, the Company would 
expect profit margins of 20% to 22% in the future,  based on the history of 
lot sales from inventory over the past several years. 
 
     Selling, general and administrative ("SG&A") expenses increased by
$247,887 from $1,703,615 (unaudited) for the year ending June 30, 1996, to
$1,951,502 for the year ending June 30, 1997.  This increase is due primarily 
to accounting and other professional fees associated with the Flowers entities
and accounting fees.  It is anticipated that professional fees will continue 
to be higher than normal in the current fiscal year because of added fees 
incurred  from the new Flowers entities.

Income tax expense increased only slightly from $836,124 (unaudited) for
the year ending June 30, 1996, to $859,887 for the year ended June 30, 1997.

Minority Interest of $656,756 arose in the year ended June 30, 1997, due to
the elimination of the income of that amount due the minority partner from
Apalachee Partners, Ltd.

     Net income increased by $280,758, from $922,315 for the year ending 
June 30, 1996, to $1,203,073 for the year ending June 30, 1997.  The increase
is primarily attributable to the fact that interest expense decreased 
$1,315,965 from $2,403,354 for the year ended June 30, 1996 (unaudited) to 
$1,087,389 for the year ended June 30, 1997. A significant amount of interest 
expense was capitalized due to the fact that the Company had five different 
subdivisions being developed during the fiscal year.

     Management believes that, on balance, revenues and income should increase
in the year ending June 30, 1998, 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 the marketing arrangement with Killearn.  SG&A 
expenses are expected to stabilize following the integration of the
acquisitions.

Inventory and Other Assets

     Houses, condominiums and buildings in inventory increased from 
$1,122,075 on June 30, 1996 to $2,769,952 on June 30, 1997.  This $1,647,877
increase is primarily due to the Flowers entities adding a total of 
about $1,300,000 in model homes and rental properties, including an historic 
country house surrounded by 10 acres with an approximate value of $300,000. 
(See ACQUISITIONS AND DISPOSITIONS NOT IN THE ORDINARY COURSE
OF BUSINESS at Page 5.)

     The inventory of developed lots increased by $9,346,826, from  $9,352,691
on June 30, 1996 to $18,699,517 on June 30, 1997, primarily as a direct result
of the inventory of lots in Albany and Thomasville, Georgia and Cape San Blas,
Florida from the Flowers acquisition.

     Land under development decreased by $1,184,931, to $6,195,789 on June 30,
1997 compared to $7,380,720 on June 30, 1996.  This decrease was due to the 
completion of Phases I of The Landings, and The Glen, and the completion of 
Summerbrooke Phase IX, which moved the land in those phases to developed
inventory.
     The Company's inventory of (raw) land increased substantially from
$4,636,910 on June 30, 1996 to $8,759,754 on June 30, 1997, an increase
of $4,122,844. The increase was primarily due to approximately 
$4,228,000 worth of (raw) land acquired from the Flowers
acquisitions. 

     The largest part of the increase in non-inventory assets resulted from 
the Company's financing of certain land sales.   Accounts receivable and notes
receivable increased approximately $3,613,591 due primarily to a $2.5
million note the Company received on the sale of commercial property by 
Apalachee Partners, Ltd., which note is due and payable on December 31, 
1997.  Additionally, there was approximately $800,000 obtained in mortgage
receivables from the Flowers acquisitions.

     Property and equipment decreased $300,681, from $1,337,958 on June
30, 1996 to $1,037,277 on June 30, 1997.  The decrease is primarily due
to the sale of the manufacturing facility for Decocrete Worldwide in
St. Petersburg, Florida for $425,000 and the sale of Killearn Sales 
Center for $200,000.

     Investments in and advances to real estate ventures decreased by $271,954
on June 30, 1997 to $22,000, down from $293,954, on June 30, 1996.  The
net decrease was the result of approximately $159,000 in distributions
received from the venture and a loss incurred by it during the year.  

     Deferred income taxes were increased significantly from an asset of 
$283,704 at June 30, 1996 to a liability of $1,232,452 at June 30, 1997
primarily due to a step-up in basis of real estate acquired with the Flowers'
entities.

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.  Together with revenues from other
sources, such sales 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 increased by $5,469,314, from $17,708,442 on June 30, 1996 to
$23,177,756 on June 30, 1997.  This increase was caused by:
approximately $5,033,548 in payables brought over to the Company's
balance sheet as a result of the Flowers acquisitions.  Additionally,
$2,321,072 in payables resulted from the Company obtaining loans for
Piney-Z for the purpose of preparing the property for development.  During
the year, the Company retired approximately $14,409,118 in existing notes
payable through its sales.  The Company also has a margin account balance
of approximately $88,000, which was used to finance the Company's June
24, 1997 purchase of 17,000 shares of Killearn Properties, Inc. common 
stock.  

     The related party note payable increased $1,589,380 to $1,839,380 for the
year ended June 30, 1997 from $250,000 for the year ended June 30, 1996. 
This increase is due to a note payable to a director arising out of the
Flowers acquisitions.

     Accounts payable and accrued expenses increased by $800,922 to $1,908,586
on June 30, 1997 from $1,107,664 on  June 30, 1996.  This increase was due to 
the additional expenses brought over from the Flowers acquisitions.

     Customer deposits decreased by $167,930, to $572,395 from $740,325
on June 30, 1996.  The decrease is primarily due to the closing of many of
the contracts pending as of June 30, 1996.  Primarily, the bulk of customer 
deposits the Company has at this time are from the Piney-Z project, the 
development of the first phase of which is expected to be well under way
during fiscal year 1998.  

     The deferred revenue liability decreased by $714,284, to $109,250 at June
30, 1997 from $823,534 at June 30, 1996, primarily due to the completion
(and delivery) of the remaining half of Golden Eagle Phase VII, a phase in
the higher-end Golden Eagle subdivision.

     Shareholder's equity increased by $9,444,142, from $6,368,618 on June 30,
1996, to $15,812,760 on June 30, 1997.  The increase in equity is attributable
(a) to proceeds from the sale of nearly 1,108,250 shares of common stock
pursuant to the exercise of warrants, (b) the acquisition of the Flowers 
entities through an exchange of stock which increased equity by $6,812,500 , 
(c)  the reclassification of a note receivable related to the exercise of 
warrants resulted in a decrease to equity of approximately $1,060,984, 
and (d) net income of $1,203,073.

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, 1997 and June 30, 1996
Consolidated Statements of Operations for the year ended June 30, 
1997,the six months ended June 30, 1996, and the year ended December 31, 1995

Consolidated Statements of Shareholders' Equity for the year ended June 
30, 1997, the six months ended June 30, 1996 and the year ended December 31, 
1995

Consolidated Statements of Cash Flows for the year ended June 30, 1997, 
the six months ended June 30, 1996, and the year ended December 31, 1995

     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 sheet of Proactive
Technologies, Inc. and Subsidiaries as of June 30, 1997 and the related 
consolidated statements of operations, changes in shareholders' equity and
cash flows for the year 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 audit.

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

In our opinion, the 1997 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, 1997 and 
the consolidated results of their operations and cash flows for the year then 
ended in conformity with generally accepted accounting principles.



                                              JONES AND KOLB


Atlanta, Georgia
September 30, 1997 
<PAGE>Report of Independent Accountants

     We have audited the accompanying consolidated balance sheets of Proactive
Technologies, Inc. and Subsidiaries ("PTE", formerly Capital First Holdings,
Inc.) as of June 30, 1996 and the related consolidated statements of 
operations, changes in shareholders' equity and cash flows for the six
months ended June 30, 1996 and the year ended December 31, 1995.
These financial statements are the responsibility of management. 
Our responsibility is to express an opinion on these 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, 1996 and the consolidated
results of their operations and their cash flows for the six months ended June
30, 1996 and the year ended December 31, 1995 in conformity with
generally accepted accounting principles.

As discussed in Note 1, on February 12, 1996, Proactive Technologies, Inc.
acquired the stock of Capital First Holdings Inc. ("Capital First") in a
reverse acquisition in which Capital First's sole shareholder acquired
voting control of PTE.  For financial reporting purposes, Capital First
is the accounting acquiror.  Accordingly, the historical financial position
and results of operations up to the date of the acquisition are those of
Capital First.  The consolidated statements of operations for the six months
ended June 30, 1996 includes the operations of Capital First for the six 
months and PTE for the period from February 12, 1996 through June 30, 1996. 
Capital First's stockholders' equity has been retroactively restated for the
effect of the recapitalization associated with the transaction.

                                         Coopers & Lybrand L.L.P.
                                         Atlanta, Georgia

September 6, 1996
<PAGE>
Proactive Technologies, Inc. and Subsidiaries (Note 1)
Consolidated Balance Sheets as of June 30, 1997 and June 30, 1996

                                          June 30,          June 30,
                                          1997              1996

ASSETS
Real estate Inventories:
     Houses, condominiums 
          and buildings                  $  2,769,952       $1,122,075
     Developed lots                        18,699,517        9,352,691
     Land under development                 6,195,789        7,380,720
     Land                                   8,759,754        4,636,910
                                        _____________     ____________
                                           36,425,012       22,492,396
Cash and cash equivalents,
    including restricted cash
    of approximately $155,243
    and $17,923, respectively                 182,485          153,674
Certificates of deposit                       109,503          116,265
Accounts and notes receivable               4,730,162        1,116,571
Investment in Killearn
     Properties, Inc.                       2,253,000        2,149,689    
Investments in equity securities              220,080          270,527     
Investments in and advances
     to real estate joint ventures             22,000          293,954
Property and equipment, net                 1,037,277        1,337,958
Deferred income taxes                               0          283,704
Other assets                                  249,521          250,991
                                       ______________     ____________
Total assets                             $ 45,229,040      $28,465,729
                                       ______________     ____________
                                       ______________     ____________

LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Notes payable                            $ 21,338,376      $17,458,442
Related party note payable                  1,839,380          250,000
Accounts payable and 
     accrued expenses                       1,908,586        1,107,664 
Customer deposits                             572,395          740,325
Income taxes payable                        1,716,671        1,099,401
Deferred income tax liability               1,232,452                0
Deferred revenue                              109,250          823,534
Deferred compensation payable                 386,714          558,273
                                         ____________     ____________
     Total liabilities                     29,103,824       22,037,639

Minority interest                             312,456           59,472
                                         ____________     ____________
Commitments and 
     contingent liabilities
Shareholders' equity:
Common stock, $.04 par value,
     60,000,000 shares authorized,
    18,151,918 and 12,402,168
   issued and outstanding,
  respectively (see Note 1)                   726,077          496,087
Additional paid-in capital                 14,266,837        5,317,139
Retained earnings                           3,200,830        1,997,757
Net unrealized gain on 
  investments in equity securities
 (net of  deferred taxes of 
  $34,729)                                          0           57,635
Note receivable that may be
   settled in Company stock                (1,320,000)      (1,500,000)
Note receivable collateralized
by Company stock                           (1,060,984)               0  
                                         _____________     ____________
    Total shareholders' equity             15,812,760        6,368,618
  Total liabilities                      _____________     ____________
   and shareholders' equity              $ 45,229,040      $28,465,729
                                         _____________     ____________
                                         _____________     ____________

The accompanying notes are an integral part of these consolidated financial
statements.<PAGE>Proactive Technologies, Inc. and Subsidiaries (Note 1)
Consolidated Statements of Operations for the year ended June 30, 1997, 
the six months ended June 30, 1996 and the year ended December 31, 1995

                                                Six Months
                                 Year Ended     Ended        Year Ended
                                 June 30,       June 30,     December 31,
                                 1997           1996         1995

Sales                            $17,566,977   $10,392,953   $29,970,961
Cost of sales                     11,825,186     8,311,754    23,701,542 
                                ____________   ___________   ___________
Gross profit                       5,741,791     2,081,199     6,269,419 
       
Selling, general and
 administrative exp.              (1,951,502)    ( 762,589)   (1,577,420)
Interest expense                  (1,087,389)    ( 705,118)   (2,435,605)
Equity in earnings of
 affiliated companies                    988       281,936             0
Minority Interest                (   656,756)            0             0
Other, net                           217,744       186,722       480,132 
                                _____________   ___________   ___________
Income before income taxes
 and discontinued 
  operations                       2,264,876     1,082,150     2,736,526

Income tax expense                 ( 859,887)     (501,352)     (980,501)
                                _____________   ___________   ___________
Net income before
discontinued 
operations                         1,404,989       580,798     1,756,025 

Discontinued operations:
     Loss from operations of Golden Eagle
     (less applicable  income tax benefit of 
     $186,996) 
                                                             (309,936)

     Loss on disposal of Golden Eagle (less 
    applicable income tax benefit of $67,862)                (112,477)

    Loss from operations of 
    Decocrete (less applicable 
    tax benefit of $121,822, 
    and $24,000, 
    respectively                    (201,916)     ( 40,934)
                                 ____________    __________  _________
Net income                       $ 1,203,073     $ 539,864  $1,333,612
                                 ____________    __________  _________
                                 ____________    __________  _________
Earnings per share before
 discontinued operations               $ .08         $0.05       $0.16 
Discontinued operations                ( .01)          .00        (.04)
                                 ____________    _________  ___________
Earnings per share                     $ .07         $ .05       $ .12 
                                 ____________    _________  ___________
                                 ____________    _________  ___________
Weighted average
 shares outstanding               16,732,516    11,870,415  10,739,405
                                 ____________   __________  __________
                                 ____________   __________  __________

The accompanying notes are an integral part of these consolidated
 financial statements.  Proactive Technologies, Inc. and Subsidiaries (Note 1)

<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Shareholders' Equity
For the year ended June 30, 1997, the six months ended June 30, 1996 and the 
year ended December 31, 1995

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

                                                                                              Net      
                                                                                         Unrealized Gain
                                                                Additional                On Investments   
                                            Common Stock         Paid-In       Retained    In Equity     Note
                                         Shares        Amount    Capital       Earnings    Securities   Receivable  Total
Balance at December 31, 1994, restated  10,739,405   $429,576   $171,634       $124,281                              $725,491
Net income December 31, 1995                                                  1,333,612                             1,333,612
                                        __________   _______     _______      _________   ____________   _________  _________
Balance at December 31, 1995, restated  10,739,405    429,576    171,634      1,457,893                             2,059,103 
Net income June 30, 1996                                                        539,864                               539,864 
Reverse acquisition                                            1,438,790                                            1,438,790
Purchase of common stock
   of Killearn Properties, Inc.            454,400     18,176  1,046,824                                            1,065,000
Acquisition of partnership interest        200,000      8,000    667,000                                              675,000 
Services provided for stock                 12,000        480     40,020                                               40,500
Sale of Keystone Laboratories, Inc.                                                                    (1,500,000) (1,500,000)
Exercise of common 
   stock warrants                          996,363     39,855  1,952,871                                            1,992,726
Net change in unrealized 
   gain on investments                                                                        57,635                   57,635
                                        __________   _______     _______      _________   ____________   _________  _________
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
Payment of expenses                         24,500       980      45,020                                               46,000
Issuance of Stock                          100,000     4,000     208,000                                              212,000
Exercise of common stock warrants        1,108,250    44,330   2,072,170                                            2,116,500
Net change in unrealized gain on investments                                                 (57,635)                 (57,635) 
Collection on Keystone Note Receivable                                                                     180,000    180,000
Note receivable from exercise of stock warrants                                                        (1,060,984) (1,060,984)
                                        __________   _______     _______      _________   ____________   _________  _________
Balance at June 30, 1997                18,151,918  $726,077 $14,266,837     $3,200,830           $0   (2,380,984)$15,812,760
<S>                                     <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 (Note 1)
Consolidated Statements of Cash Flows
for the year ended June 30, 1997, the six months ended June 30, 1996 and the
year ended December 31, 1995
                                           June 30     June 30,   December 31,
                                             1997        1996       1995
Cash flows from operating activities:
Net income                                 $1,203,073  $539,864   $1,333,612
Adjustments to reconcile net income to net cash 
    provided by operating activities:
     Depreciation and amortization            171,429    43,511      301,385
     Expenses settled through 
        the issuance  of stock                 46,000    40,500
     Loss on real estate ventures             113,169                200,534
     Loss on disposal of Golden Eagle                                180,339
     Loss on disposal of 
        property and equipment                112,120    24,435     
     (Gain) Loss on impairment 
        of real estate                        (50,000)   46,101      535,683
     Unrealized (gain) loss on 
        equity trading securities             (75,555)   38,873
     Equity in earnings of 
        real estate ventures                           (281,936)
     Minority interest in income 
        of  consolidated subsidiaries         656,756   (12,528)
     Changes in operating assets and liabilities:
          Real estate inventories             649,665 1,070,145    8,932,661
          Deferred income taxes              (206,229)  404,879      325,980
          Accounts and notes receivable    (2,806,490) (822,153)     163,487
          Other assets                        (66,068) (128,887)     166,868
          Accounts payable and 
             accrued expenses                 705,084    95,750     (731,531)
          Customer deposits                  (170,981)  584,103     (513,857)
          Deferred compensation payable      (171,559) (225,109)    (301,618)
          Deferred revenue                   (714,284) (754,530)   1,143,422
          Income taxes payable                617,270  (512,527)     176,524
                                           __________  _________  ___________
               Net cash provided 
                by operating activities        13,400   150,491   11,913,489
                                           __________  _________  ___________
Cash flows from investing activities:
     Proceeds from disposal of Golden Eagle                        3,116,003
     Acquisitions of businesses, 
        net of cash acquired                           (140,205)
     Distributions from real 
        estate joint ventures                 158,785    57,680      497,752
     Distributions to minority partner 
        in real estate joint venture         (350,000)          
     Investment in real estate ventures                             (162,562)
     Purchase of investments 
        in equity securities                  (93,830)(1,117,325)
     Proceeds from sale of 
        equity securities                      16,844          
     Purchase of property and equipment       (42,862) (514,664)    (245,482)
     Proceeds from disposal of 
        property, plant and equipment         582,470                 56,482
     Proceeds from maturity of 
        certificates of deposit                47,356    22,107
     Purchase of certificate of deposit       (40,594)              (138,372)
     Decrease in due to affiliates                                (2,526,889)
                                            _________  _________  __________
          Net cash from 
            investing activities              278,169(1,692,407)     596,932
                                            _________ __________  __________
Cash flows from financing activities:
     Repayment of amounts borrowed        (14,715,778)(5,281,072)(17,672,939)
     Proceeds from issuance 
       of notes payable                    13,005,504  4,829,373   4,927,451
     Proceeds from exercise of warrants     1,055,516  1,992,726            
     Proceeds from issuance of stock          212,000          
     Payments on notes receivable             180,000                    
                                           __________  _________  __________
          Net cash from 
            financing activities             (262,758) 1,541,027 (12,745,488)
                                           __________  _________  __________
Net increase (decrease) in cash 
   and cash equivalents                        28,811       (889)   (235,067)
Cash and cash equivalents 
   at beginning of period                     153,674    154,563     389,630
                                           __________  _________   _________
Cash and cash equivalents 
   at end of period                          $182,485   $153,674    $154,563
                                           __________  _________   _________
                                           __________  _________   _________

Supplemental disclosures of cash flow information:
     Cash paid during period for:
          Interest                         $1,705,541 $1,014,124  $2,302,657
                                           __________  _________   _________
                                           __________  _________   _________

          Taxes                              $365,000   $585,000    $549,119
                                           __________  _________   _________
                                           __________  _________   _________
The accompanying notes are an integral part of these consolidated financial 
statements.
Proactive Technologies, Inc. and Subsidiaries (Note 1)
Notes to the Consolidated Financial Statements

 1.     Basis of Presentation:

     On February 12, 1996, Proactive Technologies, Inc. ("PTE") acquired 100%
of the outstanding common stock of Capital First Holdings, Inc. ("Capital
First") in a reverse acquisition in which Capital First's sole shareholder
acquired voting control of PTE.  The acquisition was accomplished
through the issuance of approximately 8,559,000 shares of PTE common
stock which represented approximately 80% of the voting shares of PTE
immediately after the transaction.  For accounting purposes, the
acquisition has been treated as a recapitalization of Capital First with
Capital First as the acquiror.  The historical financial statements
prior to February 12, 1996 are those of Capital First and retroactively
reflect, as of December 31, 1994, the recapitalization resulting from
the shares issued in the transaction.  The tangible net assets of PTE have
been recorded at their existing cost basis, except for its only remaining
subsidiary, Keystone Laboratories, Inc. ("Keystone"), which is further
described below. Capital First is a residential real estate developer
with its principal operations in Tallahassee, Florida.

     Upon completion of the reverse acquisition, PTE determined
the operations of Keystone, a drug testing laboratory, were
inconsistent with its long-term business objectives and decided
to sell or otherwise dispose of the business.  As further discussed
in Note 3, on June 29, 1996, PTE reached an agreement to sell to
certain PTE shareholders the net assets and operations of Keystone
in return for 428,571 shares of PTE stock (subject to certain
adjustments) or, at the option of the buyer, cash of $1,500,000. 
Accordingly, the net assets of Keystone have been valued in the
combination with Capital First using this subsequent sales price.  

     As a result of the reverse acquisition, Capital First effectively
changed its accounting year end to June 30 from December 31. 
The consolidated balance sheet at June 30, 1996 reflects the
accounts of Capital First and PTE.  The consolidated statement
of operations for the six months ended June 30, 1996 include the
operations of Capital First for the six months and the results of
PTE for the period from February 12, 1996 through June 30, 1996.

     Since the only remaining operations of PTE at the time of 
acquisition were those of its discontinued subsidiary Keystone, 
pro forma financial information giving effect to the acquisition
has not been presented.

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 year ended June 30, 1997, the 
six months ended June 30, 1996 and the year ended December 31, 1995 
was approximately $960,000, $264,000 and $760,000, 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.

     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, six months
ended June 30, 1996 and the year ended December 31, 1995, rebate
income of approximately  $32,000, $9,000, and $506,000, respectively,
was recorded as a reduction of cost of sales.

     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 16,732,516 weighted average 
shares outstanding for the year ended June 30,1997, 11,870,415 for the six 
months ended June 30, 1996, and 10,739,405 for the year ended December 31, 1995.
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, 1997, there is a note receivable 
outstanding related to the exercise of the warrants with a balance of 
$1,060,984.  This note is secured by the stock issued from the exercise of the
warrants and will be treated in a manner similar to an optionuntil 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.

     Reclassifications

     Certain reclassifications have been made to the June 30, 1996 and 
December 31,1995 financial statements to conform to the June 30, 1997 
presentation.

3.     Business Acquisitions & Dispositions:

     As described in Note 1, 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 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 is payable in either stock, using
an assigned value of $3.50 per share or, at the option of the buyer, cash.
The purchase price is 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 anticipates that it will receive stock for the remaining purchase 
price and interest.  Accordingly, the Company has recorded the note 
receivable as a reduction to equity. 

 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
February 12, 1996 to June 30, 1996 amounted to approximately $124,000
(unaudited).   Net earnings for the period from July 1, 1996 to June 30, 
1997 were approximately $135,000 (unaudited).  Management of PTE
believes Keystone will honor its obligations under the note.

     Previously, Capital First acquired a golf and country club ("Golden
Eagle") in connection with its purchase of contiguous land which it planned 
to develop.  The Company operated the country club in order to ensure the
retention of value and maintenance of certain standards to support the value
in the surrounding property.  On September 27, 1995, the Company sold
the country club to an unrelated party for aggregate proceeds of approximately
$3.1 million.  The Company had previously provided a reserve against the
valuation of the property of $1.5 million and the net loss realized during
1995, after giving effect to the provision previously recorded, was 
approximately $180,000.  Revenues of Golden Eagle during 1995 amounted
 to approximately $2 million.

    The operating results of Golden Eagle have been presented as a 
discontinued operation for the period in 1995 up to the date sold and the 
resulting loss on disposal has been presented as the loss on disposal of 
discontinued operation in the accompanying financial statements.

     Effective February 10, 1996 Decocrete Worldwide, Inc. ("Decocrete"), a
newly-formed 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. Assets have been written down to 
the amount expected to be realized upon sale.  The operating results of 
Decocrete are included in the accompanying consolidated financial statements 
from the date of acquisition as a discontinued operation.

    4.     Property and Equipment: 

     Property and equipment consists of the following:
                                            June 30,         June 30,
                                            1997             1996

Land and land improvements                  $   216,988      $   253,267
Buildings and building improvements             617,850          793,796
Vehicles                                        118,765          156,420
Furniture, fixtures and equipment               325,897          320,889
                                             __________       __________
                                              1,279,500        1,524,372
Accumulated depreciation                       (242,223)        (186,414)
                                             __________       __________
                                            $ 1,037,277     $  1,337,958
                                             __________       __________
                                             __________       __________

5.     Investments in Equity Securities:

     Prior to its reverse acquisition in February 1996, PTE had invested
certain idle funds in equity securities.  The Company sold the majority
of these securities during the year ended June 30, 1997.

     In addition, 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, 1997, PTE holds a 15% ownership interest in this company.

     At June 30, 1997 and 1996, the Company had securities
classified as trading with a fair value of approximately $90,080 and
$145,527, respectively.  An unrealized net holding loss of
approximately $39,000 related to these securities was recognized
in the consolidated statement of operations for the six months ended 
June 30, 1996.  An additional loss of $130,000 was realized from the
sale of trading securities during the year ended June 30, 1997.

     No sales activity occurred during the period in available-for-sale 
securities.

6.     Investment in Killearn Properties, Inc.:

The Company has made investments in Killearn Properties, Inc.  Killearn 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 is recording
 its investment in Killearn using the equity method for the year ended 
June 30, 1997, compared to treating it as an available for sale investment at 
June 30, 1996.  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:

                                                 4/30/97            
                                                 Unaudited 

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
                                                  __________
                                                  __________
     The Company's investment in Killearn differs 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

Subsequent to June 30, 1997, the market value of Killearn's common stock
increased significantly to approximate the Company's recorded investment.  
The difference between the Company's recorded investment and its interest
in the underlying equity of net assets has been allocated to land inventories
and is being amortized over eight years.  The equity in earnings of Killearn
was computed as follows:

Net income for year 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

Since Killearn's income for the year is included in the Company's consolidated
results of operations for the year ended June 30, 1997, pro forma
operating results are the same as those reported.


7.     Investments In Real Estate Ventures:

     The Company has certain investments in real estate partnerships
formed to manage specific development projects.  The investment
balances at June 30, 1997 and June 30, 1996 consist of the following:
                                             June 30,      June 30,
                                             1997          1996 

 Countryside Partnership, 50% and 
   44% interest at June 30, 1997
   and 1996, respectively                    $ 22,000      $293,954
                                                  

     The Company is a general partner in Countryside Partnership and
has a significant but not controlling interest.  Day-to-day operations
are managed by the other partner with major transactions, such as the
acquisition, disposition or financing of property requiring joint approval.
As general partner, the Company is liable for the debt and obligations
of the partnership.  The Company earned commission revenue of
approximately $45,000 in 1997 and $78,000 in 1996 from 
Countryside Partnership.


     Summarized financial information for Countryside Partnership
as of and for year ended June 30, 1997, the six months ended June 30,
1996 and the year ended December 31, 1995 is as follows:

                         June 30,        June 30,     December 31,
                         1997            1996         1995
                        (Unaudited)

Real estate              $   15,601      $ 602,805    $ 1,549,740
Other assets                 33,607        154,988          4,339
                          _________       ________     __________
Total assets             $   49,208      $ 757,793    $ 1,554,079
                          _________       ________     __________
                          _________       ________     __________

Mortgage debt                                         $ 1,186,351
Other liabilities                        $  11,300        204,318
                          _________     __________     __________
                                            11,300      1,390,669
Partnership equity       $   49,208        746,493        163,410
                          _________       ________     __________
                         $   49,208      $ 757,793    $ 1,554,079
                          _________       ________     __________
                          _________       ________     __________

Sales                    $  979,000     $1,570,800
Cost of sales             1,218,255      1,049,012
                          _________      _________     __________
Gross profit               (239,255)       521,788
Other income and 
  expenses, net              98,930      $ 118,975    $    27,007
                          __________      ________     __________
Net income               $ (140,325)     $ 640,763    $    27,007
                          __________      ________     __________
                          __________      ________     __________

     PTE received partnership distributions of approximately $159,000
and $58,000 during 1997 and 1996; respectively.  The Company has
reported a loss of $113,169 on its income statement in "Equity in 
earnings of affiliated companies, which represents its share of the 
partnership loss, and a write down to net realizable value of its 
partnership interest.

     During 1995 Northampton Partners, a partnership in which the Company
held a 50% interest, completed the development and sale of its land, settled 
all remaining liabilities and distributed its equity to the Partners.  The 
Company received net proceeds of approximately $498,000 and recorded a loss of
approximately $201,000.  The loss is included in other, net on the statement
of operations. 

     In addition the Company owns a 67% interest in two partnerships, Piney-Z, 
Ltd. and Apalachee Partners, Ltd.  Based on the majority ownership and
control of these partnerships, they are included in the Company's
consolidated financial statements.  The 33% minority interest has been 
deducted from the operating results of the Company and is reflected on the
balance sheet net of a $350,000 distribution paid to the minority partner.

 8.    Mortgage Loans and Notes Payable: 

 Debt consisted of the following:
                                            June 30,        June 30,   
                                            1997            1996
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.                     $ 5,459,842     $ 6,675,143

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.                                    14,954,558       8,724,926

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 1997 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.                        679,643         809,882

Note payable to a director with
interest at the prime rate.  Principal and
interest payments are due annually, and
has a 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.                           1,839,380         250,000  

$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 KPI 
securities.                                                       
                                                 88,326         492,325
 
Other notes payable                             156,007         756,166
                                            ___________     ___________
                                            $23,177,756     $17,708,442
                                            ___________     ___________
                                            ___________     ___________

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 $880,000 available under existing 
loan arrangements for use in completing development of certain of its
properties.

    The notes payable to Killearn are collateralized by the stock of Capital
First.

     Maturities of the notes payable, some of which are dependent on the
sale of lots, are as follows at June 30, 1997:

Year                                       Amount

1998                                   $   18,242,429
1999                                        2,879,652
2000                                          454,170
2001                                          234,170
2002                                          234,170
2003 and thereafter                         1,133,165
                                        _____________
Total                                  $   23,177,756
                                        _____________
                                        _____________

     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.  Accordingly, such carrying amount also approximates
fair value.

9.     Income Taxes: 

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

                               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
                         ________       _________      ___________
                         ________       _________      ___________

                              Six Months Ended June 30, 1996
                         Federal        State          Total

Current                 $178,941        $ 31,617       $  210,558
Deferred                 248,258          42,536          290,794
                        ________        ________       __________
                        $427,199        $ 74,153       $  501,352
                        ________        ________       __________
                        ________        ________       __________

                              Year Ended December 31, 1995
                         Federal        State          Total

Current                 $558,856       $ 95,665        $  654,521
Deferred                 394,665        (68,685)          325,980
                        ________       _________       __________
                        $953,521       $ 26,980        $  980,501
                        ________       _________       __________
                        ________       _________       __________

     Income taxes payable at June 30, 1997 and 1996 includes taxes payable
from prior years which had not been paid.

     Capital First's 1994  and 1995 tax return is currently under examination
by the Internal Revenue Service, but no report has 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,
                                      1997             1996 

Difference in basis of
    Acquired Assets                   $ 1,424,609               0
Real estate inventories                  ( 59,123)     $  189,953
Deferred compensation                    (144,890)       (209,911)
Deferred revenue                                0        (309,649)
Investments in equity securities                0          34,729
Other                                      11,856          11,174  
                                       __________       __________
                                      $ 1,232,452      $ (283,704)
                                       __________       __________
                                       __________       __________

     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 was assumed by PTE,
and PTE entered into a note payable agreement with the seller for the
remaining $250,000.  The assumed note bears interest at a rate of
approximately 16% and its due date has been extended to December
31, 1997.  The seller financed portion represents a short-term, 
non-interest bearing note due December 31, 1997 and is classified
as a related party note payable on the balance sheet. In March 
1995, the sole stockholder of Capital First acquired from
Capital First's then other stockholder, the remaining 50% of the 
outstanding stock of  Capital First.

     The Company has a deferred compensation agreement with
the current Chief  Executive Officer which resulted in the 
Company agreeing to pay compensation to him the sum of
 $1.4 million for services rendered through 1994.  The $1.4 million
is payable in five equal, monthly payments of $10,000 made 
throughout 1995 and in $4,000 payments for each lot sale made in 
specified developments.  During the year ended June 30, 1997, and 
the six months ended June 30, 1996, a total of $216,000, and $423,000,
respectively, was paid under this compensation agreement.  Based on an
imputed interest rate of 10%, total interest incurred during the year ended
June 30, 1997, and the six months ended June 30, 1996 amounted to
approximately $45,000, and $58,000, respectively, and the remaining
principal balance at June 30, 1997, and June 30, 1996 equaled approximately
$387,000 and $516,000, respectively, and is included in deferred
compensation payable.  

     From time to time the Company makes advances and repayments of loans
to its President which are repaid either through cash payments or 
increases in compensation expense. On June 30, 1997, the President owed
$143,000 to the Company.

     During 1997, the Company sold one lot to the 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. (AMEX "KPI").  KPI 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 KPI whereby KPI would exchange certain assets (consisting of
the golf course and country club, a newly constructed inn and certain joint
venture interests) to KPI's then Chairman of the Board and Chief Executive
Officer, for this approximate 42% ownership interest in KPI, or 551,321 shares
of KPI voting common stock.  In connection with this proposed transaction, PTE
would be required to loan KPI $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 KPI stock, increasing its ownership
interest in KPI to approximately 22%.  On July 29, 1996, PTE proposed to KPI'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 KPI's board include two additional representatives
of PTE.  On July 31, 1996, KPI's Board of Directors approved the transaction 
and the PTE proposals, and an agreement was entered into on August 2, 1996
between KPI and KPI's chairman.  The split-off transaction was voted upon and
approved at KPI'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 1997, 
the Company received $150,000 in consulting fees from Killearn 
Properties, Inc.

     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 owes Killearn on June 30, 1996 and 1997,
respectively, $6,563,436 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.  
On June 30, 1997, the Company owed $19,305 to Killearn on these advances.
Additionally, the Company has made commitments to guarantee certain
loans of Killearn.

     During August 1996, the Company purchased a new subsidiary which
previously purchased a building for $550,000 from Killearn Properties, Inc.
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.

     During 1997, the Company sold 100,000 shares of Company stock to a
subsequent director for $212,000.  Also, the Company traded with two other
subsequent directors, a total of 472,200 shares of Company stock for 118,050
shares of Killearn Properties, Inc. stock during 1996 and 1997.

     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.  The purchased corporations 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.  As of June 30, 1997 the land in South Georgia
contains a mortgage in the approximate amount of $1.8 million which is
payable to a director of the Company.  The acquisition is accounted for
under the purchase method of accounting.  Summarized unaudited proforma
results of operations including the acquired  companies (Flowers 
Properties, Inc., Highland Properties Construction Company, Inc. and Barrier 
Dunes Development Corporation, Inc.) is presented below:

                                           6 Months             12 Months
                                           Ending               Ending
                                           6/30/96              12/31/95
                                           Unaudited            Unaudited

Real estate                               $25,563,118           $22,831,890
Other                                       9,116,316             5,642,404
                                           __________            __________
Total Assets                               34,679,434            28,474,294
                                           __________            __________
                                           __________            __________

Mortgage Debt                              21,876,504            19,488 978
Other                                       4,879,255             5,422,914
Equity                                      7,923,680             3,562,402
                                           __________            __________
Total Liabilities                          34,679,439            28,474,294
                                           __________            __________
                                           __________            __________

Sales                                      11,255,881            31,414,003
Cost of Sales                               8,967,579            24,798,254
                                           __________            __________
Gross Profit                                2,288,302             6,615,749
Other Income and expenses, net              1,530,076             5,036,812
                                           __________            __________
Net Income before discontinued operations                       
   operations                                 758,226             2,001,350

Discontinued operations                       (40,934)             (422,413)
                                           __________            __________
Net Income                                    717,292             1,578,937  
                                           __________            __________
                                           __________            __________
Earnings per share before
 discontinued operations                          .05                   .13

Discontinued operations                           .00                  (.03) 
                                           __________            __________
Earnings per share                                .05                   .10
                                           __________            __________
                                           __________            __________
Weighted average shares outstanding        15,239,405            16,370,415 



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

     During the year, the Company entered into several property exchanges,
whereby it traded property worth a total of approximately $1,044,150 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 1996 and 1997, the Company traded with two other subsequent 
directors, a total of 472,200 shares of Company stock for 118,050 shares of 
Killearn Properties, Inc. stock.

     During 1997 and 1996, respectively, 24,500 and 12,000 shares of common
stock were issued to two creditors as payment for services rendered.  A 
$46,000 and $40,500 expense was recorded, respectively, in connection with 
these transactions.

     In May 1996, Piney-Z. Ltd., and Apalachee Partners, Ltd. partnership
interests valued at $675,000 were purchased with the issuance of 200,000
shares of common stock. 

      During 1996, a fixed asset with a net book value of approximately 
$140,000 was traded to obtain the release of a $140,000 liability included in
deferred compensation payable in 1995.

     In April 1996, as previously discussed in Note 10, the Company purchased
land for $475,000 through the issuance of a note of $250,000 and the
assumption of $225,000 of existing debt.

12.     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.

13.     Subsequent Events

     Subsequent to year end, the Company entered into an agreement
to purchase a total of 145,646 additional shares of Killearn common 
stock for approximately $254,000 in cash, 293,730 shares of newly 
issued PTE stock, and $198,000 in promissory notes. 

14.     Statement of Operations for the Year Ended June 30, 1996
          (Unaudited):

     Summarized consolidated results of operations of the Company for the year 
ended June 30, 1996 were as follows:

                                                     Year
                                                     Ended      
                                                     June 30,
                                                     1996
                                                     (Unaudited)


     Sales                                            $   27,183,101
     Cost of sales                                        21,468,646
                                                        ____________
     Gross profit                                          5,714,455

     Selling, general and 
       administrative expenses                            (1,703,615)
     Equity in earnings of real estate ventures              281,936
     Interest expense                                    ( 2,403,354)
     Other, net                                              125,540
                                                        ____________
     Income before income taxes
        and discontinued operations                        2,014,962
     Income tax expense                                     (836,124)
                                                        ____________
     Net income before discontinued operations             1,178,838
     Discontinued operations:
     Loss from operations of Golden
      Eagle (less applicable income tax
       benefit of $ 62,432)                                 (103,112)  
     Loss on disposal of Golden Eagle (less
         applicable tax benefit of $67,862)                ( 112,477)

     Loss from operations of Decocrete (less
     Applicable income tax benefit of $24,000              (  40,934)
                                                         ___________
     Net income                                            $ 922,315   
                                                         ___________
                                                         ___________

     Earnings per share before discontinued operations     $     .08
     Discontinued Operations                                 (   .02)
                                                         ___________
     Earnings Per Share                                    $     .06
                                                         ___________
                                                         ___________
     Weighted Number of Shares Outstanding                11,870,415


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 difference 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.  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          31       Chairman, President           1996

James A. Preiss         57       Chief Executive Officer       1996

Ben S. Branch           53       Director,
                                 Audit Committee Chairman      1997

Marshall R. Cassedy, Jr. 43       Director,
                                 Audit Committee Member        1997

Langdon S. Flowers, Jr. 47       Director                      1997

Robert E. Maloney, Jr.  33       Director
                                 Vice President-Corporate 
                                 Counsel                       1996

William Daniels         36       Vice President-Chief
                                 Financial Officer             1997

     Mark A. Conner, age 31, 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 57, is the Chief Executive Officer of Proactive 
Technologies, Inc. since December 1, 1996.  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, an has lectured at Rutgers University 
College of Labor  and Industry.

     Langdon S. Flowers, Jr., 47, 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., F&W AgriServices, Inc.
and Killearn Properties, Inc. (AMEX).  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 recently merged into Proactive
Technologies, Inc. (AMEX)/

     Ben S. Branch, Ph.D., 53, 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).

     Marshall R. Cassedy, Jr., 43, is the Resident Manager of D.E. Frey and 
Associates (a Paine Webber Correspondent Firm).  Prior to working with
D.E. Frey, he was an Option Analyst and Financial Consultant with Merrill
Lynch for fifteen years.  Mr. Cassedy graduated from the University of the
South with a B.A. in Economics with Honors.  He then obtained his M.B.A.
in Finance and Management from Florida State University.  Mr. Cassedy
has been involved in the community over the years and his activities have 
included the following:  Served as President of Goodwill Industries for 1994;
served as Chairman for the Multiple Sclerosis Dinner of Champions for 1997.
He is currently the Treasurer for the Tallahassee Community College Foundation
and a Member of St. Johns Episcopal Church.  Mr. Cassedy has also served as
Rotary Member for 15 years and was a Board Member for the Southern
Scholarship Foundation (Florida State University Housing Charity) from 1986 
through 1994.

     William Daniels, age 36, joined the Company in April, 1997 as Controller
and was subsequently promoted to Chief Financial Officer in August, 1997.  
Prior to joining Capital First, Mr. Daniels was employed in the manufacturing
and distribution industry, most noteworthy with Toshiba America Consumer 
Products.  Mr. Daniels earned a Bachelor of Science in Accounting from Rutgers 
University in 1985.

     Robert E. Maloney, Jr., age 33, has been Corporate Counsel to the Company
since February 1996.  He earned a B.S. 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, Massachusetts, and 
Connecticut and is a member of the Florida Trial Attorneys and the 
American Bar Association.


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, 1997, 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, 1997)

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

Mark A. Conner (1)
Chairman of the Board, 
President               $61,200        --0--      --0--      $ 168,125 (2)

James A. Preiss (3)
Chief Executive Officer $103,844       --0--      --0--      $ 396,000 (4)

(1)   Before February 12, 1996, Conner was employed by Capital First,
where he was the sole shareholder.  As a result, information regarding
compensation for fiscal years prior to the fiscal year ending June 30,
1996, is not considered meaningful for purposes hereof.

(2)    Includes $75,990  in debt service payments made by Capital First
and the Company on behalf of Conner and $92,135 in other personal
expenses paid by Capital First and the Company on behalf of Conner.

(3)   Based on an annual salary of $180,000 per year.  Before 
December 1, 1996, Preiss was not employed by the Company or
any related entities, As a result, information regarding
compensation for fiscal years prior to the fiscal year ending June 30,
1996, is not considered meaningful for purposes hereof.


(4)   Includes approximately $216,000 paid by the Company as a
deferred compensation payable during the year ended June 30, 1997.  




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

The following table sets forth information, as of June 30, 1997, 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                  4,100,000                 22.59% (1)
7118 Beech Ridge Trail
Tallahassee, Florida  32312

James A. Preiss                 4,100,000                 22.59% (1)
7118 Beech Ridge Trail
Tallahassee, Florida 32312

Langdon S. Flowers, Jr.         3,055,200                  16.8% (1)
329 N. Broad
Thomasville, Georgia 31792

Ben S. Branch                     409,000                  2.25% (1)
University Of Massachusetts
Amherst, MA.

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

George McIntosh                 1,444,800                  7.96% (1)
601 N. Slappey Blvd.
Albany, Georgia 31702          __________                _________

All Directors and Officers
as a Group                     13,134,000                 72.36% (1)
                               __________                _________
                               __________                _________

 (1) Based on 18,151,918 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 33.67 % limited partnership interests in Piney-Z, Ltd. and 
Apalachee Partners, Ltd.  In April 1996, the Company purchased land in Vero 
Beach, Florida from an entity owned by Conner for a purchase price of $475,000.
(See Note 10 to the Consolidated Financial Statements).  During the twelve 
months ending June 30, 1997, the Company made $92,556 in debt service 
payments with respect to loans on which Conner was primarily liable.
Such amounts were included in Conner's compensation.
     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, and which stock was owned
either in whole, or in part, by Langdon S. Flowers, Jr., or members
of his family.



                    PART IV

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

(a)     Reports on Form 8-K - During the Quarter ended June 30, 1997,
the Company filed one 8-K, on May 6, 1997, which changed the year 
end of the Company to April 30.    However, subsequent to the end of the
quarter, on July 29, 1997, the Company filed another 8-K, indicating the
Board had changed the year end back to June 30.  Further, on September
16, 1997, the Company filed a Form 8-K regarding its change of certifying 
accountants.  Additionally, on September 30, 1997, the Company made
minor amendments to that filing on From 8-K/A.

(b)Exhibits.
  Page
SEC Exhibit No.Type of Exhibit Number


9    Voting Trust Agreement N/A

10   Material Contracts N/A

10.1 Stock Exchange Agreement between____
     Registrant and Clark Capital Corporation dated June 29, 1996, regarding 
     the sale of Registrant's common stock in Keystone Laboratories, Inc. and 
     Promissory Note.

10.2 Stock Exchange Agreement by and among____
     Registrant, Flowers Properties, Inc., Langdon S. Flowers, Sr., Langdon S. 
     Flowers, Jr., Margaret Flowers Rich, Elizabeth Flowers McKinney, John 
     Howard Flowers and Dorothy Flowers Swinson, dated August 12, 1996.

10.3 Stock Exchange Agreement by and among____
     Registrant, Highland Properties Construction Company, Inc., Langdon S. 
     Flowers, Jr. and George McIntosh, dated August 13, 1996.

10.4 Stock Exchange Agreement by and among____
     Registrant, Barrier Dunes Development Corporation, Langdon S. Flowers, Jr.
     and Langdon S. Flowers, Sr., dated August 12, 1996.

10.5 Stock Exchange Agreement by and among____
     Registrant, James H. Dahl and Rock Creek Partners, Ltd., regarding 
     Registrant's purchase of common stock of QuinStone Inc. dated 
     September 16, 1996.
10.6 Form 10-KSB of Killearn Properties, Inc. for the year ended April 30,1997.

11   Statement Regarding Computation of Per ShareN/A
     Earnings

13   Annual Report to Security HoldersN/A

16   Letter on Change in Certifying AccountantN/A
     is incorporated herein by reference to Form 8-K
     filed on September 30, 1996.

18   Letter on Change in Accounting PrinciplesN/A

19   Previously Unfiled DocumentsN/A

21   Subsidiaries of the Registrant____

22   Published Report Regarding Matters SubmittedN/A
     to Vote of Security Holders

23   Consents of Experts and CounselN/A

24   Power of AttorneyN/A

27   Financial Data Schedule____
 
99   Additional ExhibitsN/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 14, 1997   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 14, 1997   By: /s/ Mark A. Conner  
                           Mark A. Conner
                           Chairman of the Board and President

Date:   October 14, 1997   By: /s/ James A. Preiss         
                           James A. Preiss
                           Director and  Chief Executive Officer

Date:   October 14, 1997   By: /s/ Robert E. Maloney, Jr.   
                           Robert E. Maloney, Jr.
                           Director

Date:   October 14, 1997   By: /s/ William Daniels  
                           William Daniels
                           Vice-President
                           Chief Financial Officer

Date:   October 14, 1997   By: /s/ Ben S. Branch           
                           Ben S. Branch
                           Director
                           Chairman - Audit Committee

Date:   October 14, 1997   By: /s/ Marshall R. Cassedy, Jr. 
                           Marshall R. Cassedy, Jr.
                           Director
                           Member - Audit Committee

Date:   October 14, 1997   By: /s/ Langdon S. Flowers, Jr.
                           Langdon S. Flowers, Jr.
                           Director
                                    

  <PAGE>
                          INDEX TO EXHIBITS

Exhibit  Sequential
Number               Description                Page            Number