SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC. 20549

                                  FORM 10-K

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

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
      EXCHANGE ACT OF 1934
      (FEE REQUIRED)

      FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
      EXCHANGE ACT OF 1934 
      (NO FEE REQUIRED)

     FOR THE TRANSITION PERIOD FROM                 TO                 

                         Commission File No.  0-9646

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

            Massachusetts                            04-2461059
   -------------------------------       ----------------------------------
   (State or other jurisdiction of       (IRS. Employer identification No.)
   incorporation of organization)

        555 Woburn Street, Tewksbury, Massachusetts            01876
        -------------------------------------------         ----------
        (Address of principal executive offices)            (Zip Code)

     Registrant's telephone number, including area code:  (978) 937-9600

      Securities registered pursuant to section 12(b) of the Act:  NONE

      Securities registered pursuant to section 12(g) of the Act:  NONE

                        Common Stock, Par Value .0143
                        -----------------------------


Indicate by check mark 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 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  Yes   XX    No       
                                                    ------     ------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 
405 of Regulation S-K is not contained herein, and will not be contained, 
to the best of the registrant's knowledge, in definitive proxy or 
information statements incorporated by reference in Part III of this Form 
10-K or any amendment to this Form 10-K. [  ]

The aggregate market value of the registrant's Common Stock held by non-
affiliates of the registrant based upon the closing sale price of the 
Common Stock on March 12, 1999 was approximately $208,440 based on the 
average of the closing bid and asked quotations of the Common Stock in the 
over the counter market.  The number of shares held by nonaffiliates was 
1,158,000.  Shares of Common Stock held by each officer and director and by 
each person who owns 5% or more of the outstanding Common Stock have been 
excluded in that such persons may be deemed to be affiliates.  This 
determination of affiliate status is not necessarily a conclusive 
determination for other purposes.

The number of shares of par value $ .0143 common stock outstanding as of 
March 12, 1999 was 3,792,308.

Portions of the registrant's definitive Proxy Statement for its Annual 
Meeting of the stockholders to be held on May 10, 1999 (the "Proxy 
Statement") are incorporated by reference into Part III.


                                   PART I


Item 1 - Description of Business
--------------------------------

(a)   General Development of Business
      -------------------------------

      Megatech Corporation  (Megatech or the Company) was established in 
1970 and is engaged in the production and sale of educational training 
programs and equipment in the energy  power and transportation areas sold 
domestically and internationally to educational institutions and government 
agencies.

      Megatech manufactures educational training equipment which consist of 
modular technology workstations which are designed to provide students with 
hands-on experience working with various technologies such as: automotive, 
environmental, fiber-optic, microwave, laser, alternate energies, 
electronic, personal computer kits and multi-media. In conjunction with the 
educational equipment, Megatech produces over 200 video training programs 
and student manuals which enable students to follow a self-paced self-
guided program to learn the technologies described above.

      The Company competes with a number of major suppliers of school 
training equipment and several small single product line companies through 
the uniqueness of its products, and the quality of its training programs.  
Most of the sales to states, cities, towns and school districts are the 
results of having submitted sealed bids and having been awarded the sale 
based on being the lowest bidder, directly or through independent sales rep 
organizations.

      There was one customer which accounted for 28% and 20% of total sales 
for the year ended December 31, 1998 and 1997.  Two customers accounted for 
26% of sales for the year ended December 31, 1996.  No other customers 
accounted for more than 10% of sales in each of the years ended December 
31, 1998, 1997 and 1996.

      Approximately 46%, 33% and 22% of sales during the years ended 
December 31, 1998, 1997 and 1996, respectively, were from international 
sales.

      The Company's backlog as of December 31, 1998 and 1997 was $459,929 
and $588,247, respectively.

      As of December 31, 1998, the Company had 12 full-time and 8 part-time 
employees, in addition to it's independent domestic and international sales 
rep organizations.


(b)   Financial Information About Industry Segments
      ---------------------------------------------

      N/A


(c)   Narrative Description of Business
      ---------------------------------

      See (a) above.


(d)   Financial Information About Foreign and Domestic Operations and 
      ---------------------------------------------------------------
       Exports Sales
       -------------

      The Company presently has no operations in foreign countries.  


      Export sales of the Company were as follows:
      --------------------------------------------

<TABLE>
<CAPTION>

                            Percent of
      Year      Amount      Total Sales
      ----      ------      -----------

      <S>      <C>              <C>
      1998     $847,077         46%

      1997     $693,481         33%

      1996     $493,491         22%

</TABLE>

      Most of these sales are made upon receipt of Irrevocable Letters of 
Credit or prepayments.


Item 2 - Properties
-------------------

      The Company's administrative, sales and marketing, research and  
development, and manufacturing facility is located in Tewksbury, 
Massachusetts and consists of approximately 20,000 square feet under a 
lease with a related party, that will expire in November 1999, and 
renewable for an additional five years. The current facility will 
accommodate twice the current production levels.  There is ample expansion 
capability beyond the current capacity for additional square footage for 
manufacturing.


Item 3 - Legal Proceedings
--------------------------

      None


Item 4 - Submission of Matters to a Vote of Security Holders:
-------------------------------------------------------------

      During the fourth quarter of 1998, no matters were submitted to a 
vote of the security holders through the solicitation of proxies or 
otherwise.


                                   PART II


Item 5 - Market for the Registrant's Common Equity and Related Stockholders 
---------------------------------------------------------------------------
          Matters
          -------

      The Company's Common Stock is traded in the over-the-counter market, 
National Association of Security Dealers through the NASD  electronic 
bulletin board under the symbol MGTC. The following table sets forth the 
periods indicated, the closing high and low Bid Quotations of the Common 
Stock in the over-the-counter market.  These Quotations represent prices 
between dealers, do not include retail markup, markdowns or commissions and 
do not necessarily represent actual transactions.

<TABLE>
<CAPTION>

                               High     Low
                               ----     ---
      <S>      <C>             <C>      <C>
      1998     1st Quarter      .25      .05
               2nd Quarter      .25      .05
               3rd Quarter      .25      .03
               4th Quarter      .25      .04

      1997     1st Quarter      .25      .02
               2nd Quarter      .25      .02
               3rd Quarter      .25      .02
               4th Quarter      .25      .02

      1996     1st Quarter     3.25     2.25
               2nd Quarter     2.75     1.00
               3rd Quarter     1.00      .25
               4th Quarter      .25      .02

</TABLE>

      As of March 12, 1999, there were approximately 821 Shareholders based 
upon the number of record holders as of that date.  The Company has paid no 
cash dividends since it's inception in 1970. At the present time, the 
Company intends to retain all potential earnings for future growth of the 
business.


Item 6 - Selected Financial Data
--------------------------------

      The following table summarizes certain financial data which are 
qualified by more detailed financial statements included herein.

<TABLE>
<CAPTION>

                                     1998           1997           1996           1995           1994
                                     ----           ----           ----           ----           ----

<S>                               <C>            <C>            <C>            <C>            <C>
Sales                             $1,844,782     $2,097,454     $2,216,978     $2,824,912     $4,050,844
Income (Loss) from operations        (99,081)      (130,842)       (94,578)       (48,310)       241,076
Net Income (Loss)                    (99,535)      (129,606)       (95,633)       (57,504)       203,009
Net Income (Loss)
 per Common share                     (0.026)        (0.034)        (0.025)        (0.015)         0.053
Weighted average shares
 outstanding                       3,792,308      3,790,122      3,784,566      3,731,425      3,830,875
Total Assets                         788,374        936,784      1,052,450      1,049,046      1,222,490
Long Term Obligations                    -0-            -0-            -0-          1,230          8,728
Stockholders' equity                 410,287        545,733        660,255        731,517        777,826
Cash Dividends Per Share                 -0-            -0-            -0-            -0-            -0-

</TABLE>

Item 7 - Management's Discussion and Analysis of Financial Condition
--------------------------------------------------------------------
          and Results of Operation
          ------------------------

      1998 Compared with 1997
      -----------------------

      Sales for 1998 decreased from the corresponding period of 1997 by $ 
0.25 million or 12%, to $1.8 million.  This decrease was primarily due to a 
decrease in overall sales volume.  Domestic sales in 1998 were $ 1 million 
or 54% of total sales, compared to $ 1.4 million or 67% of total sales in 
1997.  International sales in 1998 were $0.8 million or 46% of total sales, 
compared to $ 0.7 million or 33% of total sales in 1997.  The Company 
believes that the decrease in overall sales is due to declining domestic 
sales.

      Gross profit for 1998 decreased from the corresponding period of 1997 
by $0.15 million, or 17%, to $0.7 million.  As a percentage of total sales, 
gross profit was 39% and 41% for 1998 and 1997, respectively.  Currently, 
there are no known future increases in costs of materials, labor or other 
price increases which could have an effect on sales other than normal 
inflation increases.

      Selling and marketing expenses for 1998 decreased from the 
corresponding period of 1997 by approximately $ 0.2 million or 22% to $ 0.6 
million.  As a percentage of total sales, selling and marketing expenses 
decreased to 34% for 1998 compared to 38% for 1997.  The decrease is 
primarily due to changes in marketing staff.

      General and administrative expenses for 1998 decreased from the 
corresponding period of 1997 by $.01 million, or 7% to $0.17 million.  The 
decrease in G & A expenses is the result of changes in office staff.  As a 
percentage of total sales, G & A expenses increased to 9.1% in 1998 
compared to 8.7% in 1997.

      Research and development expenses for 1998 remained relatively steady 
in comparison to 1997 at $ .02 million.  As a percentage of total sales, R 
& D expenses also remained steady at 1.0% of sales in 1998 and 1997.

      Loss from operations for 1998 as compared to the same period of 1997 
decreased by $ .03 million. As a percentage of total sales, operating 
losses decreased to 5.4% for 1998 compared to 6.2% for 1997. The operating 
losses are a result of the factors indicated above. 


      1997 Compared with 1996
      -----------------------

      Sales for 1997 decreased from the corresponding period of 1996 by $ 
0.1 million or 5%, to $2.1 million.  This decrease was primarily due to a 
decrease in overall sales volume.  Domestic sales in 1997 were $ 1.4 
million or 67% of total sales, compared to $ 1.7 million or 78% of total 
sales in 1996.  International sales in 1997 were $0.7 million or 33% of 
total sales, compared to $ 0.5 million or 22% of total sales in 1996.  The 
Company believes that the decrease in overall sales is due to declining 
domestic sales.

      Gross profit for 1997 decreased from the corresponding period of 1996 
by $0.05 million, or 5%, to $0.9 million.  As a percentage of total sales, 
gross profit remained steady at 41% for 1997 and 1996.  Currently, there 
are no known future increases in costs of materials, labor or other price 
increases which could have an effect on sales other than normal inflation 
increases.

      Selling and marketing expenses for 1997 increased from the 
corresponding period of 1996 by approximately $ 0.01 million or 1% to $ 0.8 
million.  As a percentage of total sales, selling and marketing expenses 
increased to 38% for 1997 compared to 36% for 1996.  The increase is 
primarily due to changes in marketing staff.

      General and administrative expenses for 1997 decreased from the 
corresponding period of 1996 by $.01 million, or 6% to $0.18 million.  As a 
percentage of total sales, G & A expenses remained steady at 8.7% for 1997 
and 1996.  The decrease of G & A expenses are a result of changes in office 
staff.

      Research and development expenses for 1997 decreased from the 
corresponding period of 1996 by $.011 million, or 36% to $.02 million.  As 
a percentage of total sales, R & D expenses decreased to .95% for 1997 
compared to 1.4% for 1996.  The decrease of R & D expenses are a result of 
a decrease in product development costs.

      Loss from operations for 1997 as compared to the same period of 1996 
increased by $ .03 million.  As a percentage of total sales, operating 
losses increased to 6.2% for 1997 compared to 4.3% for 1996.  The operating 
losses are a result of the factors indicated above. 


      Liquidity and capital resources
      -------------------------------

      Working capital at December 31, 1998 was $330,476 as compared to 
$452,364 in working capital at December 31, 1997.  The decrease was 
attributable to the net loss for the year ended December 31, 1998.

      The Company maintains a $ 100,000 line-of-credit agreement with a 
bank.  The line is collateralized by a security interest in substantially 
all assets of the Company.  Interest is payable monthly at the bank's prime 
rate plus 1.5%.  There were no borrowings outstanding  on this line at 
December 31, 1998.

      There is no long term debt or other notes payable outstanding at 
December 31, 1998.

      Capital expenditures totaled approximately $7,000 in 1998 and $13,000 
in 1997.  No material purchase or capital commitments exist at December 31, 
1998.  

      The Company believes that cash generated from operations, together 
with the existing sources of debt financing, will be sufficient to meet 
foreseeable cash requirements through 1999.

      The Company is taking steps in 1999 to address Year 2000 readiness 
regarding manufacturing operations and internal systems.  Outside computer 
consultants will be utilized to upgrade hardware and software required to 
become Year 2000 compliant.  The estimated cost of such upgrades is 
approximately $15,000.  In addition to internal systems upgrades, key 
suppliers of raw materials for manufacturing operations will be contacted 
to determine their readiness for Year 2000.  In the event that a key 
supplier experiences  Year 2000 problems, the Company believes that it has 
sufficient alternative suppliers to satisfy raw material needs.


Item 7a - Quantitative and Qualitative Disclosures about Market Risk
--------------------------------------------------------------------

      Not appicable.

Item 8 - Financial Statements and Supplementary Data
----------------------------------------------------

      Financial statements and schedules together with the auditors' 
reports thereon are referred to Part IV and are attached hereto.


Item 9 - Changes in and Disagreements with Accountants on Accounting and 
------------------------------------------------------------------------
          Financial Disclosures
          ---------------------

      1.    Disagreements with Accountants on Accounting and Financial 
            Disclosure: 

            None


      2.    Changes in Registrant's Certifying Accountants 

            None


                                  PART III


Item 10 - Directors, Executive Officers of the Registrant
---------------------------------------------------------

      The information required with respect to the Directors and the 
Executive Officers of the Company is incorporated herein by reference to 
"Executive Officers" in the Proxy Statement and is incorporated herein by 
reference.


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

      The information required with respect to executive compensation of 
the Company is incorporated herein by reference to "Executive Officer 
Compensation" in the Proxy Statement and is incorporated herein by 
reference.


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

      The information required by this item with respect to security 
ownership and management and certain beneficial owners of the Company is 
incorporated by reference to the caption "Stock Ownership of Directors, 
Executive Officers and Principal Stockholders" contained in the Proxy 
Statement and is incorporated herein by reference.

      The Company knows of no arrangements, including any pledge by any 
person of securities of the Company, the operation of which may at a 
subsequent date result in a change in control of the Company.  The Company 
also knows of no agreements among its shareholders which relate to voting 
or investment power of its shares of Common Stock.


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

      The Company has signed an agreement with Cramer Production Company, 
Inc. (Cramer) of Norwood, Massachusetts, to produce a series of 
instructional video tapes supporting modular technology programs offered by 
the Company.  An officer/shareholder of Cramer is director of the Company.  
Cramer is responsible under the agreement for all video production and 
video cassette reproduction.  The videotapes are exclusively marketed by 
Company.  The Company provides scripts for the modules, technical 
representatives, program materials and is also responsible for packaging, 
design and promotion.  Purchases from Cramer under this agreement were 
approximately $21,300 , $ 30,200 and $28,900 for the years ended December 
31, 1998, 1997 and 1996, respectively.

      During the year ended December 31, 1997 and 1996, sales to a related 
entity were approximately $500 and $63,200.  There were no such 
transactions for the year ended December 31, 1998.  Commissions paid to the 
same entity for the years ended December 31, 1998, 1997, and 1996 were 
approximately $27,000, $26,000 and $15,900, respectively.

      The Company has entered into a lease agreement for its Tewksbury, 
Massachusetts facility with Lorig Corporation, which is owned by members of 
the family of an officer and majority stockholder of the Company.  The 
Company believes the lease agreement  is either favorable or comparable to 
others based on a market value of the facility.


                                   PART IV

<TABLE>
<CAPTION>

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

      <S>                                                                        <C>
      a)    The following documents are filed as a part of this Report:

            1.    Financial Statement:

                  Report of Independent Certified Public Accountants             10

                  Balance sheet at December 31, 1998 and 1997                    11

                  Statement of operations for the years
                  ended December 31, 1998, 1997 and 1996                         12

                  Statement of Stockholders' equity for the years
                  ended December 31, 1998, 1997 and 1996                         13

                  Statement of cash flows for the years
                  ended December 31, 1998, 1997 and 1996                        14

                  Notes to Financial Statements                                 15


            2.    Schedules for the years ended December 31, 1998, 1997 
                  and 1996

                  Schedule II - Valuation and Qualifying Accounts              20

                  All other schedules called for under Regulation S-X 
                  are not submitted because they are not applicable or 
                  not required, or because the required information is 
                  included in the Consolidated financial statements and 
                  notes thereto.


            3.    Exhibits:

                  The following exhibits are filed herewith:

                  27.1 Financial data schedule                                 22


      b)    Reports on Form 8-K:

            The Company filed no Reports on Form 8-K with the 
            Securities and Exchange Commissions during the quarter 
            ended December 31, 1998.

</TABLE>

             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
             --------------------------------------------------

To the Board of Directors and Stockholders of
  Megatech Corporation

      We have audited the accompanying balance sheet of Megatech 
Corporation as of December 31, 1998 and 1997, and the related statements of 
operations, stockholders' equity and cash flows for the years ended 
December 31, 1998, 1997 and 1996.  These financial statements are the 
responsibility of the Company's management.  Our responsibility is to 
express an opinion on these financial statements based on our 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 our audits 
provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of Megatech 
Corporation as of December 31, 1998 and 1997, and the results of its 
operations and its cash flows for the years ended December 31, 1998, 1997 
and 1996 in conformity with generally accepted accounting principles.

      Our audits, referred to above, also include the financial schedules 
listed in the Index at Item 14(a)(2).  In our opinion, based on our audit, 
such financial schedules present fairly the information required to be set 
forth therein.


                                       SULLIVAN BILLE, P.C.



Tewksbury, Massachusetts
February 12, 1999


                            MEGATECH CORPORATION
                            ====================

                  BALANCE SHEET, DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>

                                                    1998            1997
----------------------------------------------------------------------------

<S>                                              <C>             <C>
                A S S E T S
                ===========

CURRENT ASSETS:
  Cash and cash equivalents                      $   187,580     $    55,026
  Accounts receivable:
    Trade (less allowance for doubtful
     accounts:  1998, $10,166; 1997,
     $11,070)                                        101,502         335,891
    Other                                             14,149          20,790
  Inventories                                        399,868         409,551
  Prepaid expenses                                     5,464          22,157
                                                 ---------------------------
      Total current assets                           708,563         843,415

PROPERTY AND EQUIPMENT - Net                          72,145          85,703

OTHER ASSETS                                           7,666           7,666
                                                 ---------------------------

      TOTAL                                      $   788,374     $   936,784
                                                 ===========================

       L I A B I L I T I E S   A N D
   S T O C K H O L D E R S'   E Q U I T Y

CURRENT LIABILITIES:
  Note payable - bank                                            $    25,000
  Accounts payable:
    Trade                                        $   163,729         258,179
    Affiliate                                                         15,204
  Accrued liabilities:
    Customer advanced payments                       142,609          13,081
    Accrued commissions                                7,334          46,558
    Other                                             64,415          33,029
                                                 ---------------------------

      Total current liabilities                      378,087         391,051
                                                 ---------------------------

STOCKHOLDERS' EQUITY:
  Common stock, authorized, 5,000,000 shares
   of $.0143 par value; issued and
   outstanding, 3,792,308 shares                      54,230          54,230
  Additional paid-in capital                       4,013,947       4,049,858
  Deficit                                         (3,657,890)     (3,558,355)
                                                 ---------------------------

      Stockholders' equity - net                     410,287         545,733
                                                 ---------------------------

      TOTAL                                      $   788,374     $   936,784
                                                 ===========================
</TABLE>

                            See notes to financial statements.


                            MEGATECH CORPORATION
                            ====================

                           STATEMENT OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>

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

<S>                                <C>            <C>            <C>
SALES                              $1,844,782     $2,097,454     $2,216,978
COST OF SALES                       1,123,575      1,227,910      1,299,326
                                   ----------------------------------------
GROSS PROFIT                          721,207        869,544        917,652
                                   ----------------------------------------

OPERATING EXPENSES:
  Selling and marketing               626,836        798,965        788,010
  General and administrative          168,048        181,428        192,746
  Research and development             25,404         19,993         31,474
                                   ----------------------------------------

      Total operating
       Expenses                       820,288      1,000,386      1,012,230
                                   ----------------------------------------
LOSS FROM OPERATIONS                  (99,081)      (130,842)       (94,578)
OTHER INCOME (EXPENSE) - Net             (454)         1,236         (1,055)
                                   ----------------------------------------
NET LOSS                           $  (99,535)    $ (129,606)    $  (95,633)
                                   ========================================
NET LOSS PER SHARE - Basic and
 diluted                           $    (.026)    $    (.034)    $    (.025)
                                   ========================================
</TABLE>

                     See notes to financial statements.


                            MEGATECH CORPORATION
                            ====================

                      STATEMENT OF STOCKHOLDERS' EQUITY
            FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>

                                    COMMON STOCK        ADDITIONAL
                                --------------------      PAID-IN                     STOCKHOLDERS'
                                 SHARES      AMOUNT       CAPITAL       DEFICIT        EQUITY - NET
---------------------------------------------------------------------------------------------------

<S>                             <C>          <C>        <C>           <C>                <C>
BALANCE AT DECEMBER 31, 1995    3,762,058    $53,797    $4,010,836    $(3,333,116)       $731,517
ISSUANCE OF COMMON STOCK            5,250         75         5,990                          6,065
STOCK OPTIONS EXERCISED            22,000        315         2,985                          3,300
COMPENSATION                                                15,363                         15,363
STOCK OPTIONS TERMINATED                                      (357)                          (357)
NET LOSS FOR THE YEAR                                                     (95,633)        (95,633)
                                -----------------------------------------------------------------

BALANCE AT DECEMBER 31, 1996    3,789,308     54,187     4,034,817     (3,428,749)        660,255
ISSUANCE OF COMMON STOCK            3,000         43           406                            449
COMPENSATION                                                14,875                         14,875
STOCK OPTIONS TERMINATED                                      (240)                          (240)
NET LOSS FOR THE YEAR                                                    (129,606)       (129,606)
                                -----------------------------------------------------------------

BALANCE AT DECEMBER 31, 1997    3,792,308     54,230     4,049,858     (3,558,355)        545,733
COMPENSATION                                                 8,714                          8,714
STOCK OPTIONS TERMINATED                                   (44,625)                       (44,625)
NET LOSS FOR THE YEAR                                                     (99,535)        (99,535)
                                -----------------------------------------------------------------

BALANCE AT DECEMBER 31, 1998    3,792,308    $54,230    $4,013,947    $(3,657,890)       $410,287
                                =================================================================
</TABLE>

                     See notes to financial statements.


                            MEGATECH CORPORATION
                            ====================

                           STATEMENT OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>

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

<S>                                                 <C>          <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                          $(99,535)    $(129,606)    $(95,633)
  Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
    Non-cash charges (credit) to net loss:
      Depreciation and amortization                   20,509        23,851       27,586
      Compensation funded by stock options - net     (35,911)       14,635       15,006
      Common stock awarded as compensation                             449        6,065
    Decrease (increase) in current assets:
      Accounts receivable                            241,030       103,457       74,258
      Inventories                                      9,683       (29,172)     (53,043)
      Prepaid expenses                                16,693        (5,030)     (11,588)
    Increase (decrease) in current
     liabilities:
      Accounts payable                              (109,654)      (44,880)      78,674
      Accrued liabilities                            121,690        19,988       35,946
                                                    -----------------------------------
        Net cash provided by (used in)
         operating activities                        164,505       (46,308)      77,271
                                                    -----------------------------------
CASH FLOWS USED IN INVESTING ACTIVITIES -
  Additions to property and equipment                 (6,951)      (13,184)      (5,425)
                                                    -----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from (payments on) line of credit - net   (25,000)       25,000
  Payments on capital lease obligation                              (1,252)      (2,954)
  Principal payments on notes payable                                           (37,000)
  Proceeds from issuance of common stock                                          3,300
                                                    -----------------------------------
        Net cash provided by (used in)
         financing activities                        (25,000)       23,748      (36,654)
                                                    -----------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                         132,554       (35,744)      35,192

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR        55,026        90,770       55,578
                                                    -----------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR            $187,580     $  55,026     $ 90,770
                                                    ===================================

SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                                     $    892     $     756     $  1,189
  Taxes paid                                             715         1,393          187

</TABLE>

                     See notes to financial statements.


                            MEGATECH CORPORATION
                            ====================

                        NOTES TO FINANCIAL STATEMENTS
                      DECEMBER 31, 1998, 1997 AND 1996

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

1.    OPERATIONS

      Megatech Corporation is engaged in the production and sale of 
        educational training programs in the energy, power and 
        transportation areas which are sold domestically and internationally 
        to educational institutions and government agencies.  Inherent in 
        the line of business in which the Company is engaged, is the risk 
        of product line obsolescence due to technological advances.  There 
        also exists the risk that certain customers, such as governmental 
        agencies, which are funded by tax revenues, may be subject to 
        budget reductions.  The Company grants credit to its customers.  
        Approximately 46%, 33% and 22% of sales during the years ended 
        December 31, 1998, 1997 and 1996, respectively, were from 
        international sales.

      There were two customers which accounted for 26% of sales for the 
        year ended December 31, 1996.  One customer accounted for 28% and 
        20% of sales for the years ended December 31, 1998 and 1997, 
        respectively.  No other customers accounted for more than 10% of 
        sales in each of the years ended December 31, 1998, 1997 and 1996.

2.    SIGNIFICANT ACCOUNTING POLICIES

      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 and disclosures 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.

      Revenue Recognition
      -------------------

      Revenue from product sales are recognized upon shipment.  Revenue for 
        maintenance and service and other revenues are recognized as the 
        services are performed.

      Cash and Cash Equivalents
      -------------------------

      For purposes of reporting cash flows, cash and cash equivalents 
        include cash and all highly liquid investments with original 
        maturities of three months or less.

      Inventories
      -----------

      Inventories are valued at the lower of cost (first-in-first-out 
        method) or market.

      Property and Equipment
      ----------------------

      Property and equipment are recorded at cost.  Depreciation and 
        amortization are computed principally on the straight-line method 
        for financial accounting purposes, and accelerated methods for tax 
        purposes, over the estimated useful lives of the assets.

      Leasehold improvements are amortized on the straight-line method over 
        their respective lives or the lease terms, whichever is shorter.

      Costs of maintenance and repairs are charged to expense while costs 
        of significant renewals and betterments are capitalized.

      Income Taxes
      ------------

      Income taxes are accounted for under the asset and liability method.  
        Deferred tax assets and liabilities are recognized for the future 
        tax consequences attributable to differences between the financial 
        statement carrying amounts of existing assets and liabilities and 
        their respective tax bases and operating loss and tax credit 
        carryforwards.  Deferred tax assets and liabilities are measured 
        using enacted tax rates expected to apply to taxable income in the 
        years in which those temporary differences are expected to be 
        recovered or settled.  The effect on deferred tax assets and 
        liabilities of a change in tax rates is recognized in income in the 
        period that includes the enactment date.  A valuation allowance is 
        used to reduce deferred tax assets when it is "more likely than 
        not" that some portion or all of the deferred tax assets will not 
        be realized.

3.    INVENTORIES

      Inventories consisted of the following:

<TABLE>
<CAPTION>

                                December 31,
                            ---------------------
                              1998         1997
                              ----         ----

        <S>                 <C>          <C>
        Raw material        $186,176     $199,841
        Work in Process       37,477
        Finished goods       176,215      209,710
                            ---------------------
              Total         $399,868     $409,551
                            =====================

</TABLE>

4.    NOTE PAYABLE - BANK

      The Company has a $100,000 ($200,000 at 1997) line-of-credit 
        agreement with a bank. The line is collateralized by a security 
        interest in substantially all assets of the Company.  Interest is 
        payable monthly at the bank's prime rate plus 1.5%, 9.25% at 
        December 31, 1998.  There were no borrowings outstanding on this 
        line at December 31, 1998.  Borrowings outstanding on this line 
        were $25,000 at December 31, 1997.

5.    PROPERTY AND EQUIPMENT

      Property and equipment consisted of the following:

<TABLE>
<CAPTION>

                                                  December 31,
                                              ---------------------
                                                1998         1997
                                                ----         ----

        <S>                                   <C>          <C>
        Machinery and equipment               $237,081     $237,081
        Office equipment                       124,270      117,319
        Leasehold improvements                  69,776       69,776
        Automobile                              32,632       32,632
                                              ---------------------
              Total                            463,759      456,808
        Less accumulated depreciation and
         amortization                          391,614      371,105
                                              ---------------------
        Property and equipment - net          $ 72,145     $ 85,703
                                              =====================

</TABLE>

      The useful lives employed for computing depreciation and amortization 
        on principal classes of property and equipment are as follows:

<TABLE>
<CAPTION>

           Class Description        Years
           -----------------        -----

        <S>                         <C>
        Machinery and equipment     5 - 7
        Office equipment            5 - 7
        Leasehold improvements       10
        Automobile                    5

</TABLE>

6.    LEASE AGREEMENTS

      The Company leases its office, research and production facility in 
        Tewksbury, Massachusetts from a related party, under a five- year 
        operating lease which expires in November 1999.  Under the terms of 
        the lease, as amended, the Company is responsible for all operating 
        expenses and maintenance costs.  Rent expense under this lease was 
        approximately $86,000, $85,000 and $95,700 for the years ended 
        December 31, 1998, 1997 and 1996, respectively.  The future minimum 
        lease payments due under the lease, as amended, are $78,000 for the 
        year ending December 31, 1999.

7.    INCOME TAXES

      The Company has available federal net operating loss carryforwards of 
        approximately $2,790,600 expiring through December 2018 and state 
        operating loss carryforwards of approximately $306,800 expiring 
        through December 2003.

      Significant components of the Company's deferred tax assets and 
        liabilities are as follows:

<TABLE>
<CAPTION>

                                                       December 31,
                                                 -------------------------
                                                    1998           1997
                                                    ----           ----

        <S>                                      <C>            <C>
        Deferred income tax assets:
          Federal and state net operating 
           loss carryforwards                    $  977,900     $1,073,500
          Allowance for doubtful accounts,
           reserves and accruals                     42,400         57,100
                                                 -------------------------
              Total deferred income tax
               assets                             1,020,300      1,130,600

        Deferred income tax liabilities - tax
         over book depreciation                      (7,600)        (6,500)
        Valuation allowance for deferred tax
         assets                                  (1,012,700)    (1,124,100)
                                                 -------------------------
        Net recognized deferred income tax
         benefit                                 $   -0-        $   -0-
                                                 =========================

</TABLE>

8.    RELATED PARTY TRANSACTIONS

      The Company has an agreement with Cramer Production Company, Inc. 
        (Cramer) of Norwood, Massachusetts to produce a series of 
        instructional video tapes supporting modular technology programs 
        offered by the Company.  An officer/shareholder of Cramer is a 
        director of the Company.  Cramer is responsible under the agreement 
        for all video production and video cassette reproduction.  The 
        videotapes are exclusively marketed by the Company.  The Company 
        provides scripts for the modules, technical representatives, 
        program materials and is also responsible for packaging, design and 
        promotion.  Purchases from Cramer under this agreement, included in 
        cost of sales, were approximately $21,300, $30,200 and $28,900 for 
        the years ended December 31, 1998, 1997 and 1996, respectively.

      During the years ended December 31, 1997 and 1996, sales to a related 
        entity were approximately $500 and $63,200. There were no such 
        transactions during the year ended December 31, 1998. Commissions 
        paid to the same entity were approximately $27,000, $26,000 and 
        $15,900 during 1998, 1997 and 1996, respectively. 

9.    EMPLOYEE BENEFIT PLAN

      During the year ended December 31, 1997, the Company adopted a SIMPLE 
        IRA Plan (the Plan), which covers all employees who meet certain 
        requirements.  Under the terms of the Plan, the Board of Directors 
        determines annually the amount of the matching contribution.  The 
        matching contribution for the years ended December 31, 1998 and 
        1997 were approximately $6,300 and $2,400, respectively.

10.   NET LOSS PER SHARE

      Basic net loss per share has been computed using the weighted average 
        number of common shares outstanding.

      Diluted net loss per share gives effect to all dilutive potential 
        common shares that were outstanding during the period.  The Company 
        had a net loss for the years ended December 31, 1998, 1997 and 
        1996; therefore, none of the options outstanding at period end were 
        included in the diluted net loss per share calculation for the 
        years ended December 31, 1998, 1997 and 1996, since they were anti-
        dilutive.

      The weighted average number of shares outstanding is as follows:

<TABLE>
<CAPTION>

                   Year Ended      Number of
                  December 31,      Shares
                  ------------     ---------

                      <S>          <C>
                      1998         3,792,308
                      1997         3,790,122
                      1996         3,784,566

</TABLE>

11.   STOCK OPTIONS PLANS

      The Company has issued stock options to various directors, officers, 
        employees and others under various stock option plans.  Under the 
        terms of the plans, one third of the options become exercisable one 
        year from the date of grant, two thirds two years from the date of 
        grant and all options expire three years from the date of grant.

      The following table summarizes stock option activity:

<TABLE>
<CAPTION>

                                              Stock          Price
                                             Options       Per Share
                                             -------       ---------

        <S>                                  <C>         <C>
        Outstanding at December 31, 1995      81,000     $ .15 - $2.75
        Granted                               27,000              1.00
        Expired or cancelled                 (10,000)              .15
        Exercised                            (22,000)              .15

        Outstanding at December 31, 1996      76,000       .15 - $2.75
        Expired or cancelled                 (34,000)      .15 -  1.00

        Outstanding at December 31, 1997      42,000      1.00 -  2.75
        Expired                              (42,000)     1.00 -  2.75

        Outstanding at December 31, 1998         -0-             $ -0-

</TABLE>

12.   RECLASSIFICATION OF AMOUNTS

      Certain amounts in the financial statements for the years ended 
        December 31, 1997 and 1996 have been reclassified to conform to 
        current year presentation.

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

                                                                    SCHEDULE II


                            MEGATECH CORPORATION
                            ====================

<TABLE>
<CAPTION>

                                        VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------------------------------------------------------
          COLUMN A                COLUMN B             COLUMN C            COLUMN D    COLUMN E
-----------------------------------------------------------------------------------------------
                                                      ADDITIONS
                                               ------------------------
                                 BALANCE AT    CHARGED TO    CHARGED TO                 BALANCE
                                  BEGINNING     COSTS AND      OTHER                     AT END
         DESCRIPTION               OF YEAR      EXPENSES      ACCOUNTS    DEDUCTIONS    OF YEAR
-----------------------------------------------------------------------------------------------
<S>                              <C>              <C>           <C>          <C>        <C>
Year Ended December 31, 1996:
-----------------------------
  Reserve for obsolescence       $10,000          $-0-          $-0-         $-0-       $10,000
  Allowance for doubtful
   Accounts                      $11,580          $-0-          $-0-         $-0-       $11,580

Year Ended December 31, 1997:
-----------------------------
  Reserve for obsolescence       $10,000          $-0-          $-0-         $-0-       $10,000
  Allowance for doubtful
   Accounts                      $11,580          $-0-          $-0-         $510       $11,070

Year Ended December 31, 1998:
-----------------------------
  Reserve for obsolescence       $10,000          $-0-          $-0-         $-0-       $10,000
  Allowance for doubtful
   Accounts                      $11,070          $-0-          $-0-         $904       $10,166
-----------------------------------------------------------------------------------------------

</TABLE>


                                 SIGNATURES

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


      MEGATECH CORPORATION
      (Registrant)


By:   /s/ Vahan V. Basmajian
      ----------------------
      Vahan V. Basmajian, President, Treasurer and Director


Date:_______________________________


      Pursuant to the requirements of the Securities Exchange Act of 1934, 
this report has been signed by the following persons on behalf of the 
registrant and in the capacities and on the date indicated.


By:   /s/ Vahan V. Basmajian
      ----------------------
      Vahan V. Basmajian, President, Treasurer and Director


By:   /s/ Ralph E. Hawes
      ------------------
      Ralph E. Hawes, Director


By:   /s/ Dennis A. Humphrey
      ----------------------
      Dennis A. Humphrey, Director & Clerk


By:   /s/ Thomas J. Martin
      --------------------
      Thomas J. Martin, Director


Date:_____________________________