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

         [   ]  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 January 1, 1998 was 3,067,709.

         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 December 31, 1997.....................  1 - 2

         Consolidated Statements of Operations -
           Three months ended December 31, 1996 and 1997................    3

         Consolidated Statements of Changes in Stockholders' Equity -
           Three months ended December 31, 1997.........................    4

         Consolidated Statements of Cash Flows -
           Three months ended December 31, 1996 and 1997................    5

         Notes to Consolidated Financial Statements.....................    6

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations.......................... 7 - 10

Part II - Other Information

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

Item 2. Changes in Securities...........................................   10

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

Item 6. Exhibits and Reports on Form 8-K................................   11


         Signatures.....................................................   11

Exhibit 11..............................................................   12

                                       i
<PAGE>


                  THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                           Consolidated Balance Sheets

                                     Assets

<TABLE>
<CAPTION>


                                                                                    December 31,        September 30,
                                                                                        1997                 1997
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------
                                                                                     (unaudited)
<S>                                                                             <C>                  <C>    
Current assets
   Cash                                                                           $         287,575    $        580,522
   Accounts receivable, net                                                                 411,861             384,351
   Other                                                                                      5,455               1,676
   Inventories                                                                              446,714             410,972
   Prepaid expenses and other                                                                 7,389               8,886
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

         Total current assets                                                             1,158,994           1,386,407
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

Property and equipment                                                                      745,207             697,671
   Less accumulated depreciation                                                            117,038              86,773
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------
                                                                                            628,169             610,898
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

Other assets
   Deposits                                                                                  14,795              14,795
   Deferred income tax benefit, net                                                         644,386             631,372
   Goodwill, net                                                                            805,174             819,199
   Other intangibles, net                                                                    77,758              80,004
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------
                                                                                          1,542,113           1,545,370
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------




         Total assets                                                             $       3,329,276    $      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>
<CAPTION>

                                                                                    December 31,         September 30,
                                                                                        1997                 1997
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------
                                                                                     (unaudited)
<S>                                                                             <C>                 <C>      
Current liabilities
   Accounts payable                                                                         492,566             551,572
   Accrued expenses                                                                         182,866             277,192
   Accrued payroll and payroll taxes                                                        187,019             187,321
   Current maturities of long-term debt
     Notes payable                                                                           13,452              18,434
     Capital leases                                                                          12,883              16,977
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

         Total current liabilities                                                          888,786           1,051,496
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

Long-term debt, net of current maturities
   Notes payable                                                                             41,856              41,856
   Capital lease obligations                                                                 21,233              21,233
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------
         Total long-term debt, net of current maturities                                     63,089              63,089
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

         Total Liabilities                                                                  951,875           1,114,585
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

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

   Common stock, par value $.0001
     Authorized 20,000,000 shares,
     3,067,709 and 3,021,139 issued and outstanding, respectively                               306                 301

   Additional paid-in capital                                                             5,587,599           5,564,319
   Deduct notes receivable associated with stockholder loan                                (572,380)           (550,460)
   Accumulated deficit                                                                   (2,638,624)         (2,586,570)
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------

         Total stockholders' equity                                                       2,377,401           2,428,090
                                                                                  ------------------   -----------------
                                                                                  ------------------   -----------------


         Total liabilities and stockholders' equity                               $       3,329,276    $      3,542,675
                                                                                  ==================   =================
                                                                                  ==================   =================
</TABLE>






See notes to consolidated financial statements.


                                       2
<PAGE>


                          THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                              Consolidated Statements of Operations


<TABLE>
<CAPTION>

                                                                   For the Three Months Ended
                                                               ---------------------------------
                                                                 December 31,       December 31,
                                                                    1997               1996
                                                               --------------     --------------
                                                                (unaudited)        (unaudited)
<S>                                                         <C>                 <C>  

Revenue
     Sales                                                     $      758,284        $    193,387

Less cost of sales                                                    492,709             131,547
                                                               ---------------       -------------

     Gross profit                                                     265,575              61,840

Selling, general and administrative
     expenses                                                         339,645             435,050
                                                               ---------------       -------------

                  Loss from operations                                (74,070)           (373,210)
                                                               ---------------       -------------

Other income (expense)
     Commissions                                                            -             (11,550)
     Interest income                                                   11,986                   -
     Interest expense                                                  (4,679)            (32,730)
     Other                                                              1,695              (2,310)
                                                               ---------------       -------------

                  Total other income (expense)                          9,002             (46,590)
                                                               ---------------       -------------

                  Loss before income taxes                            (65,068)           (419,800)

Income taxes
     Deferred income tax benefit                                       13,014              57,075
                                                               ---------------       -------------

                  Net loss                                     $      (52,054)       $   (362,725)
                                                               ===============       =============

Loss per common share                                          $        (0.02)       $      (0.47)
                                                               ===============       =============

Weighted average number of
     common shares outstanding                                      3,024,761             779,382
                                                               ===============       =============
</TABLE>









See notes to consolidated financial statements.

                                       3
<PAGE>


                  THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

           Consolidated Statements of Changes in Stockholders' Equity
                                   (unaudited)

<TABLE>
<CAPTION>

                                   Common Stock           Preferred Stock          
                               ---------------------   ----------------------   Additional
                                 Number of               Number of               Paid-in      Accumulated
                                   Shares    Amount       Shares      Amount     Capital        Deficit        Total
                               ----------- ---------   ------------ ---------  ------------  -------------  -------------
<S>                           <C>         <C>         <C>          <C>        <C>           <C>            <C>
Balance September 30, 1997       3,021,139  $    301      5,000,000  $    500   $ 5,013,859   $(2,586,570)   $  2,428,090

Issuance of stock for
 payment of services                46,570         5              -         -        23,280             -          23,285

Note receivable associated
 with stockholder loan                   -         -              -         -       (21,920)            -         (21,920)

Net loss for the Three Months
   Ended December 31, 1997               -         -              -         -             -       (52,054)        (52,054)

                               ----------- ---------   ------------ ---------  -------------  -------------  -------------
Balance December 31, 1997        3,067,709  $    306      5,000,000  $    500   $ 5,015,219   $(2,638,624)   $  2,377,401
                               =========== =========   ============ =========  =============  =============  =============

</TABLE>






See notes to consolidated financial statements.

                                       4
<PAGE>


                                 THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY

                                     Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>


                                                                                 For the Three Months Ended
                                                                              ----------------------------------
                                                                                 December 31,     December 31,
                                                                                   1997               1996
                                                                              ---------------    ---------------
                                                                                (unaudited)       (unaudited)
<S>                                                                        <C>                 <C>
Cash flows from operating activities:
   Reconciliation of net loss to net cash
     used in operating activities
       Net loss                                                                 $    (52,054)       $  (362,725)
       Adjustments to reconcile net loss to net
         cash used in operating activities
         Depreciation                                                                 30,265              6,533
         Amortization                                                                 16,271                  -
         Deferred income tax benefit                                                 (13,014)           (57,075)
         (Increase) in accounts and notes receivable                                 (27,510)           (76,323)
         (Increase) in inventories                                                   (35,742)           (24,479)
         (Increase) in prepaid and other assets                                       (2,282)           (22,695)
         Increase (decrease) in accounts payable                                     (59,006)           280,855
         Increase (decrease) in accrued expenses                                     (94,628)           240,762
                                                                              ---------------    ---------------
               Net cash used in operating activities                                (237,700)           (15,147)
                                                                              ---------------    ---------------

Cash flows from investing activities
   Capital expenditures                                                              (47,536)           (64,298)
   Expenditures for patent, net                                                            -            (26,784)
                                                                              ---------------    ---------------
               Net cash used in investing activities                                 (47,536)           (91,082)
                                                                              ---------------    ---------------

Cash flows from financing activities
   Proceeds from issuance of common stock                                             23,285                  -
   Proceeds from issuance of notes payable                                                 -            202,995
   Principal payments on notes payable                                                (9,076)                 -
   Loans to officer/stockholder                                                      (21,920)                 -
   Costs associated with obtaining financing                                               -            (91,652)
                                                                              ---------------    ---------------
               Net cash provided by financing activities                              (7,711)           111,343
                                                                              ---------------    ---------------
                                                                              ---------------    ---------------

               Net increase (decrease) in cash                                      (292,947)             5,114

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

Cash ending                                                                     $    287,575        $    29,392
                                                                              ===============    ===============
</TABLE>




See notes to consolidated financial statements.

                                       5
<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  ended  December  31, 1997 and  December  31, 1996 are not
necessarily indicative of the results to be expected for the full year.

Note 2 - Per share calculations

The  computation of net earnings (loss) per common share has been based upon the
weighted  average  number of shares of outstanding  common stock,  which for the
three month periods ended December 31, 1997 and December 31, 1996 were 3,024,761
and 779,382, respectively.

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 reported as the  reporting of
diluted earnings per share would be anti-dilutive.

                                       6
<PAGE>


                  THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY


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

The  statements  contained  in this Report on Form  10-QSB,  that are not purely
historical, are 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.  These  include  statements   regarding  the  Company's
expectations,   intentions,   or  strategies   regarding  future  matters.   All
forward-looking  statements  included in this document are based on  information
available  to the Company on the date  hereof.  It is important to note that the
Company's  actual results could differ  materially  from those projected in such
forward-looking  statements  contained in this Form 10-QSB. The  forward-looking
statements  contained  here-in are based on current  expectations  that  involve
numerous risks and uncertainties.  Assumptions relating to the foregoing involve
judgments  regarding,  among  other  things,  the  Company's  ability  to secure
financing  or  investment  for  capital   expenditures,   future   economic  and
competitive market conditions,  and future business decisions. All these matters
are  difficult  or  impossible  to predict  accurately  and many of which may be
beyond the  control of the  Company.  Although  the  Company  believes  that the
assumptions underlying its forward-looking statements are reasonable, any of the
assumptions could be inaccurate and,  therefore,  there can be no assurance that
the  forward-looking  statements  included  in this form 10-QSB will prove to be
accurate.


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. The
operation was subsequently relocated to its present Holiday, Florida location.

On March 19, 1997, 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,  1997,  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
paints and coatings and to obtain an established marketing  distribution channel
which  included  major  accounts such as Builders  Square,  Ace Hardware,  among
others.

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

                                       7
<PAGE>

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. The Atlas Chemical acquisition,  that was
completed  on July 28,  1997,  should  further  the  Company's  plan to  achieve
profitable operations.


RESULTS OF OPERATIONS

Three months ended December 31, 1997 compared to three months ended December 31,
1996

Total  consolidated  revenue for the three  months  ended  December 31, 1997 was
$758,284  compared to $193,387 for the same period of 1996,  which represents an
increase of $564,897, or 292%. This increase was a result of both expanded sales
of paint products and coatings  produced by the Company with an entire quarter's
sales contribution of Atlas Chemical.

Gross profit margins were 35% and 32%, respectively,  for the three month period
ended  December  31, 1997,  as compared to the prior  period ended  December 31,
1996.  This  increase is the result of a change in the mix of paint and coatings
products sold by the Company,  and in part, by higher  contribution  margin from
Atlas  Chemical  because of product  line  changes and  improved  raw  materials
purchasing for the Atlas product line.

For the three  months  ended  December  31,  1997,  total  selling,  general and
administrative  expenses  were  $339,645,  as compared to $435,050  for the same
period of the previous year, a decrease of approximately  $95,405,  or 22%. This
decrease is the result of  reductions  in the level of  marketing,  staffing and
other expenses associated with both the Company's Holiday,  Florida facility and
the Atlas Chemical operations. 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.  With the
expansion of distribution  channels provided by the Atlas Chemical  acquisition,
the Company anticipates substantial benefit from the sales of its new technology
products to national customers.

The Company  continued to experience  losses from  operations of $74,070 for the
period  ended  December  31, 1997 as compared to a loss of $373,210 for the same
prior year period.  This  reduction in the  operating  loss over the loss of the
preceding year period reflects the margin  contribution  of Atlas Chemical.  The
higher  consolidated  gross profit for this period together with the lower level
of S. G. & A. expense  incurred  during this three month period  contributed  to
this  improvement  in the loss  from  operations.  Management  anticipates  that
increasing levels of sales, including the contribution of the Atlas acquisition,
will result in  improvement  in future  operating  performances  and  eventually
profitable operations.

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 ended  December 31, 1997 to represent that portion of
deferred taxes that may be realized in future periods.

The  interest  expense  for the period  ended  December  31,  1997 was $4,679 as
compared to the prior year's  quarter of $32,730.  The interest  expense for the
current  period was incurred  primarily for financing of company  vehicles while
the prior year period included interest expense for bridge loan financing.

The net loss, after income tax benefit,  and net loss per share were $52,054 and
$.02 per share  respectively,  for the three months  ended  December 31, 1997 as
compared to a net loss and net loss per share of $362,725 and $.47 respectively,
for the same period in 1996.  This loss represents an 86% reduction over the net
loss experienced in the year ago quarter.  The loss per share for the period was
also an 86% improvement over the previous year ago period.  The weighted average
shares  outstanding  for the quarter  ended  December 31, 1997 was  3,024,761 as
compared to 779,382 for the preceding  year quarter ended December 31, 1996. The
greater  number  of  shares  outstanding  for the  period  is the  result of the
Company's successful underwriting completed in March 1997.

                                       8
<PAGE>

The Company has focused,  in the recent  quarter  ended  December  31, 1997,  on
restructuring its operations to provide for efficient  operations within its two
manufacturing  facilities.  This  effort  will be  concluded  during the quarter
ending March 1998.  Thereafter,  the company will aggressively  market its paint
and  coatings  products,  with the  added  opportunity  presented  by the  Atlas
acquisition  to sell its combined  product line to both its  customers and those
acquired from the Atlas Chemical acquisition. A focus of its strategy will be to
continue to expand within the Sunbelt Region of the United  States.  In addition
to the Company's marketing efforts,  the Atlas acquisition has more than doubled
the  Company's  production  capabilities.  Management  is  optimistic  about the
benefits of its near-term marketing programs.

The  Company  anticipates  further   improvements  in  raw  material  purchasing
economies  that  will  result  in cost  savings  in such  purchases  within  its
manufacturing  operation.  This benefit will  continue in this fiscal year.  The
Company also anticipates  additional  improvement in gross profit margins during
fiscal year resulting from these improved purchasing economies.


LIQUIDITY AND CAPITAL RESOURCES

To date, the Company has largely  funded its operations and product  development
activities with funds provided by issuing securities and from borrowings. During
the  three  months  ended  December  31,  1997,  the  Company  did not raise any
additional capital for its operations.

Net cash used in operating  activities  for the three months ended  December 31,
1997 was  $237,700  compared  to net cash used of $15,147  for the three  months
ended December 31, 1996.  This increase in cash used by operating  activities is
due to the net loss and increases in accounts and notes receivables, inventories
and prepaid  expenses and other assets coupled with a reduction in the levels of
accounts payable and accrued  expenses.  In the prior year period,  increases in
both  accounts  payables  and  accrued  expenses  were a  significant  offset to
increased levels of current assets and the period's higher net loss.

Cash used in investing  activities  for the three months ended December 31, 1997
and 1996 was $47,536 and $91,082,  respectively.  Capital  expenditures  for the
recent  period were reduced over the prior year period and the company  incurred
no expense relating to expenditures for patents.

Cash used in financing  activities  for the three months ended December 31, 1997
was $7,711 as compared to cash provided by financing  activities of $111,343 for
the three months ended December 31, 1996. During the recent quarter, the Company
issued common stock for services,  advanced  funds on a  shareholder  loan,  and
further reduced the company's outstanding debt. In the prior three months period
ended December 31, 1996, the Company  obtained funding through bridge loans that
provided capital for funding the company's operations.

As of December  31,  1997,  the  Company had net working  capital of $270,208 as
compared to $334,911 at the period ended September 30, 1997. The decrease in net
working  capital of $64,703 is  primarily  the result of a decrease in payables,
higher accounts  receivable and inventory  levels combined with accounts payable
and accrued expenses decrease.  The Company's ratio of current assets to current
liabilities  was 1.3 at December 31, 1997,  and the same as at fiscal period end
September 30, 1997.

The Company is not  presently  profitable  and continues to fund itself from the
proceeds of its March 1997 public  offering.  For the quarter ended December 31,
1997,  the  Company's  loss before  depreciation  and  amortization  expense was
$5,518, its best operating  performance since the Company was founded.  Once the
Company  achieves  profitability,  it will be in a position to fund itself on an
operating basis.

Management  believes that additional  capital will be needed to fund its present
plan to build within nine months a manufacturing  facility to produce shells for
its paint and coating technology  products.  The Company is optimistic that such
funds will be available from investment or financing sources to provide for this

                                       9
<PAGE>

expansion plan.  Should funds not be readily  available,  management  intends to
defer the building of such a manufacturing facility to a later time when funding
can be arranged.

The Company  continues 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
positioned  itself  to  expand  the  near  term  production  of its  proprietary
products.


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  agreed to  indemnify  the  Monroe  Parker  Securities,  Inc.,  its
underwriter, against any claims asserted by this party.

On or about  February 11, 1998,  Mr. Kevin  Horrell  filed an amended  complaint
against the Company and Mr. Pidorenko. The previous complaint has been dismissed
in the Circuit Court of the 12th Judicial  Circuit,  in and for Sarasota County,
Florida,  Case No.  97-4867CA-01.  Mr.  Horrell  alleges  that he is due certain
unrestricted  securities  of the  Company in  connection  with  prior  financing
activities. Mr. Horrell alleges breach of contract, fraud in the inducement of a
contract and violations of Rule 10b-5.  The Company  believes it has meritorious
defenses in this matter which is in a preliminary stage.

Item 2.           Changes in Securities

To facilitate the Regulation S offering of Series B Convertible  Preferred Stock
described  in Item 5 below,  the terms of the Series A  Preferred  Stock held by
John Pidorenko,  the Company's  founder,  were amended to decrease the number of
outstanding   Series  A  Preferred  Shares  from  5,000,000  to  2,500,000  with
corresponding  adjustments  to voting  and  conversion  rights  of the  Series A
Preferred Shares.

Item 5.           Other Information

On December 19, 1997, Mr. Stephen  Drescher,  a member of the board of directors
and  the  designee  of  Monroe  Parker   Securities,   the  Company's   previous
underwriter, resigned effective that date.

On February 5, 1998,  the Company was notified by NASDAQ that its listing on the
NASDAQ Small  Markets was in  violation of the tangible net assets  requirements
for continued  listing.  This present  requirement was implemented on August 27,
1997 and required the Company to maintain tangible net assets of $2 million.  At
September  31,  1997,  the Company did not meet this  current  requirement.  The
Company's deficiency at that time was approximately $391,000.

In  anticipation of the new NASDAQ listing  requirements,  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 placement agent
for the offering was London Select Enterprises,  Ltd.
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<PAGE>

The  total   offering   price  for  the  Series  B   Preferred   Stock  was
$1,500,000.00.  This preferred  issue has an 8% yield.  Commissions of $180,000,
totaling  12% of the  offering  price,  were paid to the  placement  agent.  The
Company  claims  exemption from  registration  for this  transaction  based upon
Regulation S because:

        a.  The  Company  is a  Reporting  Issuer  as  defined  by  Rule  902 of
Regulation S. The Company is in full compliance, to the extent applicable,  with
all reporting  obligations  under either  Section 13(a) or 15(d) of the Security
Exchange Act of 1934, as amended.

        b. The  Company  has not  offered  the Series B  Preferred  Stock to any
person in the  United  States or any U.S.  Person  as that  term is  defined  in
Regulation S.

        c. At the time the buy order was received, the Company and/or its agents
reasonably  believed that the purchasers in the offering were outside the United
States and were not U.S. Persons; and

        d. The Company  reasonably  believes  that the  purchase of the Series B
Preferred  Stock  pursuant  to the  offering  has not  been  prearranged  with a
purchaser in the United States.

        e. The  Company  nor any of its  agents  has  engaged  in any  "Directed
Selling  Efforts" (as that term is defined in  Regulation S) nor has the Company
or any of its agents conducted general solicitation  relating to the offering to
persons residing within the United States or U.S. Persons.

The  Series B  Preferred  Shares  are  valued at  $1,000.00  per  share,  and if
converted,  the Series B Preferred Shares shall be converted into such number of
common shares of the Company as is obtained by dividing the  aggregate  value of
the shares of Series B Preferred Shares being so converted by the "Average Stock
Price" per share of the conversion  shares.  The "Average Stock Price" means the
lower of: (i) 70% of the  average  closing  bid prices of common  shares for the
period  of five  consecutive  trading  days  immediately  preceding  the date of
conversion  of the Series B Preferred  Shares;  or (ii) 70% of the average daily
closing bid prices of common shares for the period of five  consecutive  trading
days immediately preceding the date of subscription by the holder. Any holder of
Series B Preferred  Shares may at any time commencing 45 days after the issuance
of any Series B Preferred  Shares converted to 25%, and after 60 days convert up
to an  additional  25%, and after 75 days convert up to an  additional  25%, and
after 90 days convert 100% of his holdings of Series B Preferred Shares.

The funds will be used for  construction of a shell  manufacturing  facility and
general  corporate  purposes.  This capital  infusion will permit the Company to
comply with the new NASDAQ Small Markets listing requirements.

Item 6.  Exhibits and reports on Form 8K

          There were no Form 8K's filed for the period.

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: 2/19/98                               /s/ Gerald Couture
                                             ----------------------
                                             Gerald Couture
                                             Vice-President, Finance and CFO

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