U. S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

     [X] Quarterly  report under Section 13 or 15(d) of the Securities  Exchange
Act of 1934

     For the quarterly period ended March 31, 1998

     [ ]  Transition report under Section 13 or 15(d) of the Exchange Act

     For the transition period from __________ to __________

                         Commission File Number 0-21279

                          THERMACELL TECHNOLOGIES, INC.
                          -----------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

               FLORIDA                                 59-3223708
               -------                                 ----------
     (State or Other Jurisdiction of                (I.R.S. Employer
       Incorporation or Organization)              Identification No.)

                       5419 Provost Dr., Holiday, FL 34690
                       -----------------------------------  
                    (Address of Principal Executive Offices)

                                 (813) 938-3269
                                 --------------  
                           (Issuer's Telephone Number)


     Check  whether  the issuer:  (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such a
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
    ---     --- 

     The number of shares  outstanding of the Issuer's Common Stock,  $.0001 Par
Value, as of March 31, 1998 was 3,375,578.

     Transitional Small Business Disclosure Format:

Yes     No  X
    ---    --- 


<PAGE>

                          THERMACELL TECHNOLOGIES, INC.


                                      Index



                                                                        Page
                                                                        ----  
Part I - Financial Information

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets -
           September 30, 1997 and March 31, 1998......................  1 - 2

         Consolidated Statements of Operations -
           Three months and six months ended March 31, 1997 and 1998..      3

         Consolidated Statements of Cash Flows -
           Six months ended March 31, 1997 and 1998...................      4

         Notes to Consolidated Financial Statements...................      5

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations........................  6 - 9

Part II - Other Information

Item 1. Legal Proceedings.............................................     10

Item 5. Other Information.............................................     10

Item 6. Exhibits and Reports on Form 8-K..............................     10


         Signatures...................................................     10

Exhibit 11............................................................     11

                                       i
<PAGE>

                                    THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                                             Consolidated Balance Sheets


                                                       Assets

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

                                                                                      March 31,         September 30,
                                                                                        1998                1997
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------
                                                                                     (unaudited)

Current assets
   Cash                                                                         $           880,565  $          580,522
   Accounts receivable, net                                                                 362,956             384,351
   Other                                                                                      4,569               1,676
   Inventories                                                                              520,410             410,972
   Prepaid expenses and other                                                                35,939               8,886
   Prepaid stockholder relations expenses                                                   222,917                   -
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

         Total current assets                                                             2,027,356           1,386,407
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

Property and equipment                                                                      852,340             697,671
   Less accumulated depreciation                                                            149,731              86,773
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------
                                                                                            702,609             610,898
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

Other assets
   Deposits                                                                                  16,389              14,795
   Deferred income tax benefit, net                                                         667,249             631,372
   Goodwill, net                                                                            849,286             819,199
   Other intangibles, net                                                                   105,512              80,004
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------
                                                                                          1,638,436           1,545,370
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------




         Total assets                                                           $         4,368,401  $        3,542,675
                                                                                  ==================  ==================
                                                                                  ==================  ==================

</TABLE>

See notes to consolidated financial statements.

                                       1
<PAGE>

                                    THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                                             Consolidated Balance Sheets


                                        Liabilities and Stockholders' Equity


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

                                                                                      March 31,         September 30,
                                                                                        1998                1997
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------
                                                                                     (unaudited)

Current liabilities
   Accounts payable                                                             $           450,954  $          551,572
   Accrued expenses                                                                         170,463             277,192
   Accrued payroll and payroll taxes                                                              -             187,321
   Current maturities of long-term debt
     Notes payable                                                                           11,912              18,434
     Capital leases                                                                          12,882              16,977
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

         Total current liabilities                                                          646,211           1,051,496
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

Long-term debt, net of current maturities
   Notes payable                                                                             38,300              41,856
   Capital lease obligations                                                                 26,599              21,233
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------
         Total long-term debt, net of current maturities                                     64,899              63,089
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

         Total Liabilities                                                                  711,110           1,114,585
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

Stockholders' equity
   Preferred stock, par value $.0001
     5,000,000 shares, authorized, issued
     and outstanding                                                                            500                 500

   Preferred  stock,  Series B  convertible,  $1,000 stated  value,  8% dividend
     Authorized 1,500 shares,
     1,250 outstanding March 31, 1998                                                     1,250,000                   -

   Common stock, par value $.0001
     Authorized 20,000,000 shares,
     3,375,578 And 3,021,139 issued and outstanding, respectively                               338                 301

   Additional paid-in capital                                                             5,595,809           5,564,319
   Deduct notes receivable associated with stockholder loan                                (442,629)           (550,460)
   Accumulated deficit                                                                   (2,746,727)         (2,586,570)
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------

         Total stockholders' equity                                                       3,657,291           2,428,090
                                                                                  ------------------  ------------------
                                                                                  ------------------  ------------------


         Total liabilities and stockholders' equity                             $         4,368,401  $        3,542,675
                                                                                  ==================  ==================
                                                                                  ==================  ==================

</TABLE>

See notes to consolidated financial statements.

                                       2
<PAGE>


                                    THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                                        Consolidated Statements of Operations
                                                      (Unaudited)


<TABLE>
<CAPTION>


                                                            For the Three Months Ended               For the Six Months Ended
                                                          --------------------------------        -------------------------------
<S>                                                    <C>                 <C>                <C>                 <C>

                                                            March 31,          March 31,           March 31,          March 31,
                                                              1998               1997                 1998               1997
                                                          --------------      ------------        -------------       -----------

Revenue
     Sales                                               $      712,347      $    210,156       $    1,470,631      $    403,543

Less cost of sales                                              474,147           105,263              966,856           236,811
                                                          --------------      ------------        -------------       -----------

     Gross profit                                               238,200           104,893              503,775           166,732

Selling, general and administrative
     expenses                                                   408,424           294,315              748,069           729,365
                                                          --------------      ------------        -------------       -----------

                 Loss from operations                          (170,224)         (189,422)            (244,294)         (562,633)
                                                          --------------      ------------        -------------       -----------

Other income (expense)
     Commissions                                                      -           (23,333)                   -           (34,883)
     Interest income                                             13,080             7,421               25,066             7,421
     Interest expense                                            (2,215)          (64,995)              (6,894)          (97,725)
     Other                                                       45,045                 -               46,740            (2,310)
                                                          --------------      ------------        -------------       -----------

                 Total other income (expense)                    55,910           (80,907)              64,912          (127,497)
                                                          --------------      ------------        -------------       -----------

                 Loss before income taxes                      (114,314)         (270,329)            (179,382)         (690,130)

Income taxes
     Deferred income tax benefit                                 22,863            49,561               35,877           106,636
                                                          --------------      ------------        -------------       -----------

                 Net loss                                $      (91,451)     $   (220,768)      $     (143,505)     $   (583,494)
                                                          ==============      ============        =============       ===========

Basic loss per common share                              $        (0.03)     $      (0.14)      $        (0.05)     $      (0.49)
                                                          ==============      ============        =============       ===========

</TABLE>

See notes to consolidated financial statements.

                                       3
<PAGE>


                                 THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                                     Consolidated Statements of Cash Flows
                                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                                  For the Six Months Ended
                                                                              ----------------------------------
                                                                                March 31,          March 31,
                                                                                   1998               1997
                                                                              ---------------    ---------------
<S>                                                                   <C>                    <C>

Cash flows from operating activities:
   Reconciliation of net loss to net cash
     used in operating activities
       Net loss                                                           $         (160,157) $        (583,493)
       Adjustments to reconcile net loss to net
         cash used in operating activities
         Depreciation                                                                 62,958             18,404
         Amortization                                                                 40,746             31,651
         Deferred income tax benefit                                                 (35,877)          (105,618)
         (Increase) decrease in accounts and notes receivable                         21,395            (10,642)
         (Increase) in inventories                                                  (109,438)           (64,172)
         (Increase) in prepaid and other assets                                     (254,457)           (23,801)
         Increase (decrease) in accounts payable                                    (100,618)           310,370
         Increase (decrease) in accrued expenses                                    (294,050)           410,107
                                                                              ---------------    ---------------
               Net cash used in operating activities                                (829,498)           (17,194)
                                                                              ---------------    ---------------

Cash flows from investing activities
   Capital expenditures                                                             (154,669)           (63,494)
   Capital expenditure acquisitions, goodwill                                        (66,340)                 -
   Expenditures for patent, net                                                      (30,000)           (51,172)
                                                                              ---------------    ---------------
               Net cash used in investing activities                                (251,009)          (114,666)
                                                                              ---------------    ---------------

Cash flows from financing activities
   Proceeds from issuance of common stock                                             81,526          5,023,803
   Proceeds from issuance of Series B preferred stock                              1,500,000                  -
   Proceeds from issuance of notes payable                                                 -            135,000
   Principal payments on notes payable                                                (8,807)        (1,210,477)
   Principal advances on stockholder loan                                                  -           (300,545)
   Proceeds from payments on stockholder loan                                        107,831                  -
   Costs associated with obtaining financing                                        (300,000)                 -
                                                                              ---------------    ---------------
               Net cash provided by financing activities                           1,380,550          3,647,781
                                                                              ---------------    ---------------
                                                                              ---------------    ---------------

               Net increase in cash                                                  300,043          3,515,921

Cash beginning                                                                       580,522             24,278
                                                                              ---------------    ---------------

Cash ending                                                               $          880,565  $       3,540,199
                                                                              ===============    ===============

</TABLE>

See notes to consolidated financial statements.

                                       4
<PAGE>

                  THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
                   Notes to Consolidated Financial Statements
                                   (Unaudited)

Note 1 - Basis of presentation

The accompanying  unaudited  consolidated  financial  statements,  which are for
interim  periods,  do  not  include  all  disclosures  provided  in  the  annual
consolidated  financial statements.  These unaudited financial statements should
be read in conjunction with the financial  statements and the footnotes  thereto
contained  in Form  10-KSB for the fiscal  period  ended  September  30, 1997 of
ThermaCell Technologies,  Inc. (the "Company"), as filed with the Securities and
Exchange Commission.

In the opinion of management,  the accompanying  unaudited financial  statements
contain all adjustments  (which are of a normal and recurring  nature) necessary
for a fair presentation of the financial  statements.  The results of operations
for the three  months and six months ended March 31, 1998 and March 31, 1997 are
not necessarily indicative of the results to be expected for the full year.

Note 2 - Basic loss per share calculations

<TABLE>
<CAPTION>


                                  For the Quarter Ending March 31, 1998       For the Quarter Ending March 31, 1997
                               ------------------------------------------  -------------------------------------------
                               ------------------------------------------  -------------------------------------------
<S>                            <C>           <C>            <C>            <C>           <C>             <C>

                                   Income        Shares      Per Share         Income        Shares       Per Share
                                (Numerator)   (Denominator)   Amount        (Numerator)   (Denominator)    Amount
                               ------------- -------------- -------------  ------------- --------------- -------------
                               ------------- -------------- -------------  ------------- -----------------------------
Net Loss                           $ (91,451)                                 $ (220,768)
Less: Preferred stock dividends       16,652
                               ------------- -------------- -------------  ------------- --------------- -------------
                               ------------- -------------- -------------  ------------- --------------- -------------
Income available to common  
 shareholders                       (108,103)    3,153,568                      (220,768)     1,533,166
Effect of exercise of Options                      466,667
                               ------------- -------------- -------------  ------------- --------------- -------------
                               ------------- -------------- -------------  ------------- --------------- -------------

Income available to common
 shareholders                     $ (108,103)    3,620,235       $ (0.03)     $ (220,768)     1,533,166       $ (0.14)
                               ============= ============== =============  ============= =============== =============
                               ============= ============== =============  ============= =============== =============
</TABLE>

<TABLE>
<CAPTION>

                                For the Six Months Ending March 31, 1998     For the Six Months Ending March 31, 1997
                               --------------------------------------------  -----------------------------------------
                               --------------------------------------------  -----------------------------------------
<S>                            <C>           <C>            <C>            <C>            <C>            <C>
 
                                  Income        Shares      Per Share         Income        Shares       Per Share
                                (Numerator)   (Denominator)   Amount        (Numerator)   (Denominator)    Amount
                               ------------- -------------- ---------------  ------------ -------------- -------------
                               ------------- -------------- ---------------  ------------ -------------- -------------
Net Loss                          $ (143,505)                                 $ (583,494)
Less: Preferred stock dividends       16,652                                           -
Income Available to common          (160,157)    3,145,415                      (583,494)     1,201,507
                               ------------- -------------- ---------------  ------------ -------------- -------------
                               ------------- -------------- ---------------  ------------ -------------- -------------
 shareholders
Effect of exercise of Options                      233,333
                               ------------- -------------- ---------------  ------------ -------------- -------------
                               ------------- -------------- ---------------  ------------ -------------- -------------
Income available to common
 shareholders                     $ (160,157)    3,378,748        $ (0.05)    $ (583,494)     1,201,507       $ (0.49)
                               ============= ============== ===============  ============ ============== =============
</TABLE>


Note 3 - Accounting Change

The Company adopted Statement of Accounting  Standards #128, Earnings per Share,
during the quarter  ended  December 31,  1997.  Since the Company has reported a
loss only the basic  earnings  (loss) per share is  required.  The  inclusion of
converted  preferred  shares in the  calculation of weighted average shares for
diluted  earnings  per share  purposes would be  anti-dilutive and per FASB 128,
cannot be included in the financial statements.

                                       5
<PAGE>

                          THERMACELL TECHNOLOGIES, INC.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-QSB contains forward looking  information and statements within the
meaning of Section  27A of the  Securities  Act of 1933 and  Section  21E of the
Securities  Exchange Act of 1934.  Actual results could differ  materially  from
those projected in the forward looking statements contained in this Form 10-QSB.

GENERAL

The  Company was  incorporated  in Florida in August,  1993,  for the purpose of
developing,  manufacturing and marketing insulating materials and coatings using
partially  evacuated glass  microspheres  ("shells").  The Company's  technology
utilizes the  insertion  of the shells in various  materials  and products  that
improve the thermal resistive characteristics of such products.

The Company's  business strategy is to (i) expand the marketing and distribution
of  ThermaCool(TM)  paints  and  coatings,  (ii)  develop  and  manufacture  the
Company's own shells and (iii) expand the shell  technology  to other  products,
such as drywall, gypsum board, home siding materials, and space foam insulation,
among others.

On November 30, 1995,  the Company  acquired the assets of C.F.  Darling Paint &
Chemicals,  Inc.,  a paint  manufacturing  company,  located in New Port Richey,
Florida.  The Company  acquired these assets so that it would have a facility to
produce and develop paints and coatings for its ThermaCool(TM) product line.

On March 19, 1998, the Company  completed a public offering for 1,375,000 Units,
each Unit  consisting  of one share of Common Stock,  $.0001 par value,  and one
Series A Redeemable Common Stock Purchase Warrant, at a price of $4.00 per Unit.
In addition,  the underwriter  exercised its over-allotment  purchase option and
purchased 206,250 additional Units at the initial per Unit public offering price
less the underwriting discounts and commission.

On July 28,  1998,  the  Company  acquired  all the  outstanding  common  stock,
representing 100% ownership of Atlas Chemical Company,  a paint manufacturer and
distributor,  located in Miami,  Florida. The Company acquired this firm so that
it would have a larger  manufacturing  facility  to both  expand  production  of
coatings  and to obtain an  established  marketing  distribution  channel  which
included  major accounts such as Builders  Square,  Ace Hardware,  Lowes,  among
others.

On  March  2,  1998,   the  Company   acquired  the  assets  of  Ladehoff  Paint
Manufacturing Co., Inc. of Mesa, Arizona for $115,000. This acquisition included
property and  equipment,  inventory and goodwill  along with its  tradename.  No
liabilities were acquired in this acquisition.

The Company has  sustained  significant  operating  losses since its  inception.
Management's strategy of expanding the ThermaCool(TM) product line, developing a
commercially  viable  manufacturing  process for shells and  expansion  into new
markets for its shell technology may result in the Company incurring  additional
losses due to the costs associated with these strategies. The Company expects to
incur losses until it is able to increase its sales, expand its product line and
increase its distribution  capabilities to a sufficient  revenue level to offset
ongoing  operating and expansion costs.  To-date,  the Company has realized some
operating benefits with this strategy.

                                       6
<PAGE>

RESULTS OF OPERATIONS

Three months ended March 31, 1998 compared to Three months ended March 31, 1997

Total  revenues for the three months ended March 31, 1998 was $712,347  compared
to  $210,156  for the same  period of 1997,  which  represents  an  increase  of
$502,191 or 239%.  The  increase  was a result of both  expanded  sales of paint
products and coatings produced by the Company's paint manufacturing facility and
the sales contribution for the period of the Atlas Chemical Co. operation.

Gross profit  margins were 33.4% and 49.9%,  respectively,  for the  three-month
period  ending March 31, 1998 as compared to the prior  period  ending March 31,
1997.  This  decrease  is the  result of a change  in mix of paint and  coatings
products sold by the Company and the  continuing  lower margin  contribution  of
Atlas  Chemical.  It is  expected  that  with the  higher  levels  of  materials
purchases,  economies of scale from the combined business will allow the Company
to benefit from higher gross profit margins in the future.

For  the  three  months  ended  March  31,  1998,  total  selling,  general  and
administrative  expenses  were  $408,424,  as compared to $294,315  for the same
period of the previous year, an increase of $114,109,  or 39%. This increase was
due to higher expenses incurred by the company in marketing,  staffing and other
expenses  associated with the Company's  operations together with the additional
costs for S,G & A of the Atlas Chemical  operation.  The Company has taken steps
to reduce  duplication of personnel and is in the process of  consolidating  its
staffing,  marketing,  and production for more efficient and effective  business
operations that will be completed within the third quarter of this fiscal year.

The Company  continued to experience a loss from  operations of $170,224 for the
period  ending  March 31, 1998 as  compared  to a loss of $189,422  for the same
prior year  period.  The higher  consolidated  gross  profit for this period was
offset,  in part,  by a higher  level of S, G & A expense  incurred  during this
three month period that  contributed  to the lower  operating  loss.  Management
anticipates  that  further  increasing  levels  of sales,  including  continuing
contributions  from Atlas  Chemical and its  recently  acquired  Ladehoff  Paint
Manufacturing  businesses,  will  result  in  improvement  in  future  operating
performance.

Other income for the recent period ended March 31, 1998 included interest income
of $13,080 from the Company's  cash balance at its bank that was 76% higher than
the  previous  year ago  period.  In  addition,  the  Company  benefited  from a
settlement of an  outstanding  account  payable that provided a one-time  income
benefit of $45,045 for this period.  The year ago period was adversely  effected
by a commission  expense  relating to bridge  financing  prior to the  Company's
successful public offering completed in March 1997. There was $2,215 of interest
expense  in the  present  period as  compared  to  $64,995  in the prior  year's
quarter.  The expense for the year ago period  reflected  the bridge  loans that
were  outstanding  during that time and the resultant  interest charges for that
debt.

Based upon management's  current estimates of future taxable income,  management
has determined that a valuation  allowance of fifty percent (50%) is appropriate
during the current  period  ending March 31, 1998 to  represent  that portion of
deferred taxes that may be realized in the future.

The net loss,  after  income  taxes  benefit but before  dividends  on preferred
stock,  and net loss per share was $91,451 for the three  months ended March 31,
1998 as compared to a net loss of $220,768  for the same period in 1997.  During
February 1998, the Company  completed a placement of preferred  stock bearing an
8% dividend. The dividend on this outstanding issue was $16,652 for the quarter.
There was no  preferred  stock  bearing a dividend  outstanding  in the year ago
period.  The basic earnings or net loss after dividends on preferred  stock, and
the basic per share  earnings  or net loss  attributable  to common  shares  was
$108,103  and $0.03 for the three  months  ended March 31, 1998 as compared to a
net loss of $220,768 and $0.14 on the same basis for the same period in 1997.

                                       7
<PAGE>

Six months ended March 31, 1998 compared to six months ended March 31, 1997

Total revenue for the six months ended March 31, 1998 was $1,470,631 compared to
$403,543  for  the  same  period  of  1997,  which  represents  an  increase  of
$1,067,088,  or 264%. The increase was primarily the result of the  contribution
of the Atlas  Chemical  that  expanded the sales of paint  products and coatings
produced by the Company.

Gross profit margins were 34% and 41%,  respectively,  for the present six month
period  ending March 31, 1998 as compared to the prior  period  ending March 31,
1997.  This  decrease  was the  result of a change in mix of paint and  coatings
products  sold  with the lower  margined  products,  principally  from the Atlas
product line, contributing more significantly during the period.

For  the  six  months  ended  March  31,  1998,   total  selling,   general  and
administrative  expenses  were  $748,069,  as compared to $729,365  for the same
period of the previous year, an increase of approximately  $18,704,  or 3%. This
slight  increase is the result of the Company's  efforts to control its overhead
expense  within the  consolidation  of its  existing  operations  with the Atlas
business.

The Company  continued to experience a loss from  operations of $244,294 for the
period six month ending March 31, 1998 as compared to a loss of $562,633 for the
same prior year  period.  The gross  profit  increase  over the prior period was
$337,043,  or 202%,  primarily  resulting from the profit contribution of higher
revenues as compared to the year ago period.  This higher  margin  contribution,
while  maintaining  S G & A  expense,  resulted  in a lower  reported  loss from
operations  for the period.  Management  anticipates  that further  increases in
sales  while  controlling  its  S  G & A  expense  levels,  will  result  in  an
improvement in its future operating performance.

Based upon management's  current estimates of future taxable income,  management
has determined that a valuation  allowance of fifty percent (50%) is appropriate
during the current  period  ending March 31, 1998 to  represent  that portion of
deferred taxes that may be realized in the future.

The net loss,  after  income  taxes  benefit but before  dividends  on preferred
stock,  and net loss per share was  $179,382  for the six months ended March 31,
1998 as  compared to a net loss of  $690,130  for the same period in 1997.  This
represented  a reduction  in the loss of $510,748 for this period as compared to
the year before six-month period ended March 31, 1997. During February 1998, the
Company  completed a placement of  preferred  stock  bearing a 8% dividend.  The
dividend  on this  outstanding  issue was  $16,652  for this  current  six-month
period.  There was no preferred stock bearing a dividend outstanding in the year
ago  period.  The  basic  earnings  or net loss  after  preferred  dividends  on
preferred  stock,  and the basic per share earnings or net loss  attributable to
common  shares was $160,157 and $0.05 for the six months ended March 31, 1998 as
compared  to a net loss of  $583,494  and  $0.49 on the same  basis for the same
period in 1997.

This current six-month period loss per share was lower, in part,  because of the
effect of more common shares  outstanding.  During these two comparable periods,
the weighted average shares  outstanding  increased from 1,201,507 to 3,378,748.
This increase is directly  attributed to the Company's  successful  underwriting
that was concluded in March 1998, the conversion of convertible  preferred stock
into common stock, and the dilutive effect of exercisable stock options.

LIQUIDITY AND CAPITAL RESOURCES

To  date,  the  Company  has  funded  its  operations  and  product  development
activities  with capital  provided by issuing  securities  and from  borrowings.
During the six months ending March 31, 1998,  the Company  raised  approximately
$1.3 million through the placement of convertible preferred stock, after related
expenses.

                                       8
<PAGE>

On February  19,  1998,  the Company  completed  an offering of 1,500  shares of
Series B Preferred Stock to Thomson Kernaghan & Co., Ltd. pursuant to Regulation
S. The principal placement agent for the offering was London Select Enterprises,
Ltd.  The  total   offering   price  for  the  Series  B  Preferred   Stock  was
$1,500,000.00.  This preferred issue has an 8% yield.  This placement allows the
holder to convert such  preferred  stock into the Company's  common stock at the
lower of the  common  stock bid price  five days  prior to  funding or five days
prior to exercise of the conversion election.  As of March 31, 1998, $250,000 of
preferred  stock was converted  into 195,369  shares of common stock,  including
dividends paid in common stock.

The Company  will  continue to focus its  marketing  efforts  within the Sunbelt
Region of the United States to increase  consumer  awareness  and  acceptance of
both its existing and new products.  In addition to this marketing  effort,  the
Company has expanded its  manufacturing  capabilities at its Miami location that
will enable it to produce higher production volumes.

For the six month period ended March 31, 1998,  the  Company's  net cash used in
operating  activities was $829,498 in the current  period  compared with $17,194
used in operating activities in the comparable period last year. In this period,
cash used in operating  activities  principally resulted from supporting its net
loss and the expansion of accounts receivables, inventory and other assets while
reducing accounts payable and accrued expenses.

Net cash used in investing  activities  for the six month period ended March 31,
1998 was  $251,009 as compared  to  $114,666  in the prior  year,  is  primarily
attributed  to higher  levels of capital  expenditures  and the  acquisition  of
Ladehoff Paint.

Net cash from financing activities for the six-month period ended March 31, 1998
was  $1,380,551  compared to $3,647,781 in the prior period.  The present period
included the preferred  stock equity  placement  while the prior period included
the successful underwriting in which the Company raised approximately $5 million
and the repayment of outstanding  debt.  During the present period,  $107,831 of
officer loan was repaid.

As of March 31,  1998,  the  Company had net working  capital of  $1,381,145  as
compared to a net working  capital  position of $334,911 at fiscal period ending
September 31, 1997. The Company's  working capital position  improved  primarily
because of its $1.5 million  preferred  stock  placement in February  1998.  The
Company's  ratio of current assets to current  liabilities  was 3.1 at March 31,
1998.

The preferred  stock placement  completed  during February 1998 has provided the
Company with  sufficient  capital to meet its present  working capital needs and
provides  funds for  expansion  of its  operations  for at least the next twelve
months. The primary motivation for this equity infusion was to allow the Company
to meet the new tangible net worth  requirements  for  continued  listing of its
securities on NASDAQ.

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<PAGE>

                         THERMACELL TECHNOLOGIES, INC.


PART II - OTHER INFORMATION

Item 1.           Legal Proceedings.

         On May 2, 1997, the Company was served with a summons regarding a civil
action filed in the United States District Court,  Eastern  District of Michigan
by IA, Inc., as plaintiff,  that alleges the Company,  and its  president,  John
Pidorenko,  and Monroe  Parker  Securities,  Inc.,  the  Company's  underwriter,
breached a  marketing  agreement  executed  by Mr.  Pidorenko  on March 26, 1992
relating to  technologies  developed  by IA,  Inc.  This  agreement  contained a
confidentiality and non-disclosure clause for technologies purportedly developed
by IA, Inc. The Company was not a party to that agreement.  The Company believes
that it has not infringed on any patents held by IA, Inc.,  non-withstanding the
validity of such patents  and/or their claims.  The petition  requested  various
court actions  including a jury trial, but no specific request for damages.  The
Company intends to vigorously defend itself in this action. The Company believes
it has meritorious  defenses in this matter which is in a preliminary  stage and
which will not be resolved until a considerable period of time has elapsed.  The
Company has previously agreed to indemnify the Monroe Parker  Securities,  Inc.,
its former underwriter, against any claims asserted by this party.

Item 5.           Other Information

     On January 15, 1998,  Mr.  Peter  Mahovlich  was  appointed to the board of
directors of the Company.

Item 6.           Exhibits and reports on Form 8K

     Form 8K, dated February 19, 1998, is incorporated herein by reference.


SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1934, the Registrant had
duly caused the report to be signed on its behalf by the  undersigned  thereunto
duly authorized.


                                                 ThermaCell Technologies, Inc.

Dated : 5/14/98                                  /s/ Gerald Couture
                                                 _______________________
                                                 Gerald Couture
                                                 Vice-President, Finance and CFO

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