<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB

(Mark One)
[ x ]           QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended December 31, 2000
                                                 ----------------------

[   ]           TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                EXCHANGE ACT
                  For the transition period from _____________ to ______________

                                        0-21151
              Commission file number _________________________

                           PROFILE TECHNOLOGIES, INC.
        _______________________________________________________________
       (Exact name of small business issuer as specified in its charter)

              DELAWARE                                    91-1418002
________________________________________       ________________________________
(State or other jurisdiction of incorporation  (IRS Employer Identification No.)
or organization)

    1077 Northern Blvd., Roslyn, NY                          11576
________________________________________              ___________________
(Address of principal executive offices)                   (Zip Code)

                                    516-365-1909
                                  ________________
                            (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 part 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  X  No
                                                              ---    ---

Applicable only to corporate issuers

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: On February 13, 2001, there were
4,285,092 shares of common stock outstanding.

Transitional Small Business Disclosure Format (Check one): Yes [__] No [ X ]
<PAGE>

      PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.

                                PROFILE TECHNOLOGIES, INC.

                                 Condensed Balance Sheets
                                        (unaudited)

<TABLE>
<CAPTION>
                                                                                         December 31,                June 30,
                                                                                             2000                      2000
<S>                                                                                     <C>                      <C>
                                                      Assets
Current assets:

        Cash and cash equivalents                                                         $ 1,118,158               $ 1,744,032
        Accounts receivable                                                                   144,300                    14,300
        Contract work-in-progress                                                                  --                    69,779
        Prepaid expenses and other current assets                                               9,086                    46,272
                                                                                          -----------               -----------
              Total current assets                                                          1,271,544                 1,874,383

Equipment, net                                                                                220,194                   238,999
Patents, net                                                                                  257,788                   294,084
Other assets                                                                                    9,993                     9,993
                                                                                          -----------               -----------
              Total assets                                                                $ 1,759,519               $ 2,417,459
                                                                                          ===========               ===========

                           Liabilities and Stockholders' Equity


Current liabilities:
        Accounts payable--stockholder                                                     $        --                   $ 1,178
        Other accounts payable                                                                 25,925                    73,660
        Accrued liabilities                                                                   146,149                   165,697
                                                                                          -----------               -----------
              Total current liabilities                                                       172,074                   240,535

Stockholders' equity:
        Common stock, $0.001 par value.  Authorized 10,000,000 shares; issue
              and outstanding 4,285,092 shares at December 31, 2000
              and June 30, 2000                                                                 4,285                     4,285
        Additional paid-in-capital                                                          7,579,414                 7,572,998
        Accumulated deficit                                                                (5,996,254)               (5,400,359)
                                                                                          -----------               -----------
              Total stockholders' equity                                                    1,587,445                 2,176,924

              Total liabilities and stockholders' equity                                  $ 1,759,519               $ 2,417,459
                                                                                          ===========               ===========

</TABLE>



           See accompanying notes to condensed financial statements.
<PAGE>

                          PROFILE TECHNOLOGIES, INC.

                      Condensed Statements of Operations
                                  (unaudited)

<TABLE>
<CAPTION>
                                                         For the Three months ended               For the Six months ended
                                                                December 31,                            December 31,
                                                       ------------------------------          ------------------------------
                                                          2000                1999                2000                1999
                                                       ----------          ----------          ----------          ----------
<S>                                                    <C>                 <C>               <C>                 <C>
Revenue                                                $   31,329          $    1,903          $  277,750          $  142,250
                                                       ----------          ----------          ----------          ----------
Cost of revenue                                           102,989               1,244             253,539              70,861
                                                       ----------          ----------          ----------          ----------
        Gross profit (loss)                               (71,660)                659              24,211              71,389
                                                       ----------          ----------          ----------          ----------
Research and development                                   93,741              91,516             126,221             150,152
Selling, general and administrative                       283,469             330,033             533,714             582,169
                                                       ----------          ----------          ----------          ----------
        Total operating expenses                          377,210             421,549             659,935             732,321
                                                       ----------          ----------          ----------          ----------
        Loss from operations                             (448,870)           (420,890)           (635,724)           (660,932)
                                                       ----------          ----------          ----------          ----------
Interest income                                            17,665              32,842              39,829              68,562
                                                       ----------          ----------          ----------          ----------
        Net loss                                       $ (431,205)         $ (388,048)         $ (595,895)         $ (592,370)
                                                       ----------          ----------          ----------          ----------
Basic and diluted net loss per share                        (0.10)              (0.09)              (0.14)              (0.14)

Shares used to calculate basic and
        diluted net loss per share                      4,285,092           4,282,592           4,285,092           4,280,925
                                                       ==========          ==========          ==========          ==========
</TABLE>


           See accompanying notes to condensed financial statements.
<PAGE>
                          PROFILE TECHNOLOGIES, INC.

                      Condensed Statements of Cash Flows
                                 (unaudited)


<TABLE>
<CAPTION>
                                                                                        For the Six Months ended
                                                                                               December 31,

                                                                                         2000                1999
<S>                                                                                  <C>                 <C>
Cash flows from operating activities:
        Net loss                                                                      $ (595,895)         $ (592,370)
        Adjustments to reconcile net loss to net cash used in
            operating activities:
               Depreciation and amortization                                              71,631              66,873
               Stock compensation expense                                                  6,416                  --
               Changes in assets and liabilities:
                   Accounts receivable                                                  (130,000)              5,806
                   Contract work-in-progress                                              69,779              87,750
                   Accounts receivable/payable-stockholder                                (1,178)             (6,245)
                   Prepaid expenses and other current assets                              37,186               4,128
                   Other accounts payable                                                (47,735)             (1,563)
                   Accrued liabilities                                                   (19,548)             10,645
                                                                                     -----------         -----------

                       Net cash used in operating activities                            (609,344)           (424,976)
                                                                                     -----------         -----------

Cash flows from investing activities:
        Patents                                                                               --              (4,717)
        Purchase of equipment                                                            (16,530)            (54,843)
                                                                                     -----------         -----------

                       Net cash used in investing activities                             (16,530)            (59,560)
                                                                                     -----------         -----------
Net cash flows provided by financing activities--Proceeds
        from exercise of common stock purchase warrants                                       --              11,250
                                                                                     -----------         -----------

                       Decrease in cash and cash equivalents                            (625,874)           (473,286)

Cash and cash equivalents at beginning of the period                                   1,744,032           3,140,647
                                                                                     -----------         -----------
Cash and cash equivalents at end of the period                                       $ 1,118,158         $ 2,667,361
                                                                                     ===========         ===========
</TABLE>


           See accompanying notes to condensed financial statements.

<PAGE>

PROFILE TECHNOLOGIES, INC.

                                   12/31/00
                    Notes to Condensed Financial Statements


1.       Description of Business

Profile Technologies, Inc. (the "Company") is in the business of developing and
commercializing potential processes for the nondestructive, noninvasive testing
of both above ground and buried pipelines for the effectiveness of pipeline
cathodic protecting systems and coating integrity. The Company's future revenues
are currently dependent upon the market's acceptance of its sole developed
process.

2.       Basis of Presentation

The unaudited interim condensed financial statements and related notes of the
Company have been prepared pursuant to the instructions to Form 10-QSB.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles in the United States of America have been omitted pursuant to such
instructions. The condensed financial statements and related notes should be
read in conjunction with the audited financial statements and notes thereto
included in the annual report on form 10-KSB for the year ended June 30, 2000
(filed September 28, 2000). The information furnished reflects, in the opinion
of management, all adjustments, consisting of only normal recurring items,
necessary for fair presentation of the results of the interim periods presented.
Interim results are not necessarily indicative of results for a full year.

3.       Net Loss Per Share

Basic loss per share is computed by dividing the net loss by the weighted
average number of common shares outstanding during the period. Diluted loss per
share is computed by dividing the net loss by the weighted average number of
common and dilutive common equivalent shares outstanding during the period. As
the Company had a net loss attributable to common shareholders in each of the
periods presented, basic and diluted net loss per share are the same.

Excluded from the computation of diluted loss per share for the three and six
months ended December 31, 2000 are options and warrants to acquire 1,381,000
shares of common stock with a weighted-average exercise price of $4.19 because
their effect would be antidilutive. Excluded from the computation of diluted
loss per share for the three and six months ended December 31, 1999 are options
and warrants to acquire 1,246,000 shares of common stock with a weighted-average
exercise price of $4.10 because their effect would be antidilutive.


4.       New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative instruments embedded in other contracts, and for
hedging activities. The Statement requires that entities recognize all these
derivatives at fair value. SFAS 133 also specifies a new method of accounting
for hedging transactions, prescribes the type of items and transactions that may
be hedged, and specifies detailed criteria to be met to qualify for hedge
accounting. The Company adopted SFAS 133 on July 1, 2000. The adoption of this
statement did not have a material impact on the financial statements.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB
101") SAB 101 provides guidance on revenue recognition issues. The Company
adopted SAB 101 on July 1, 2000. The adoption of SAB 101 did not have a material
impact on the Company's financial statements.

<PAGE>

In March 2000, the FASB issued Interpretation No. 44 "Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of APB Opinion No.
25" ("FIN 44"). This interpretation provides guidance for applying APB Opinion
No. 25 "Accounting for Stock Issued to Employees." The Company adopted FIN 44 on
July 1, 2000. The adoption of FIN 44 did not have a material impact on the
Company's financial statements.

<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

GENERAL

     The Company is in the business of developing and commercializing potential
processes for the non-destructive, non-invasive testing of both above ground and
buried pipeline to evaluate the condition and integrity of the pipeline. The
development of its pulse propagation analyzer process and the further refinement
of the technology associated therewith have progressed to the point where it is
now being utilized commercially. The Company has begun to obtain revenues from
its commercial activities but has not yet reached profitability. There can be no
assurance that the Company will obtain commercial contracts in the future that
would produce operating revenues sufficient to attain profitability. The
Company's process identifies electromagnetic anomalies that may be indicative of
areas of corrosion, areas that lack cathodic protection and areas that may have
defective coating on both below ground and above ground pipes. The pulse
propagation analyzer consists of a computer, software to enhance collection and
processing of data, a precision multi-channel pulse generator and a signal
analyzer.

     In order for the Company to realize significant growth in its revenues
which, in turn, may lead to profitable operations, the Company must continue to
expand its customer base. In that regard, the Company has recently stepped up
its efforts to market its services to natural gas pipelines and distributors.
The Company must also be able to supply and train additional work crews in
sufficient numbers to satisfy the requirements of its customers. Finally, as new
contracts are obtained, the Company must be able to expand its capacity to
interpret data, either through software improvements or by hiring additional
data interpretation personnel.

     In the opinion of management, significant progress has been made to date in
developing its technologies, gaining credibility with its markets and building
its board of directors without spending inordinate sums to achieve these
goals. Gaining acceptance in the corrosion risk management program of
refiners, chemical manufacturers and natural gas utilities and pipelines has
proven to be a complex and time-consuming process. Accordingly, the Company's
losses have extended from the time it became a public company in 1997 until
the present. Neverthless, acceptance of the Company's technology continues to
grow, and, although there can be no assurance, the Company believes that it is
possible to achieve widespread acceptance of its technology, particularly in
the present day environment of increasing governmental regulation of pipeline
safety.

RESULTS OF OPERATIONS

Quarter Ended December 31, 2000 Compared to the Quarter Ended December 31,1999.

     The Company had revenues of $31,329 for the quarter ended December 31, 2000
compared to revenues of $1,903 for the quarter ended December 31, 1999. The cost
of revenue increased to $102,989 for the quarter ended December 31, 2000
compared to just $1,244 for the quarter ended December 31, 1999.  This increase
resulted from the hiring of additional personnel in anticipation of increased
work on the North Slope in Alaska. The loss from operations for the quarter
ended September 30, 2000 was $448,870 compared to a loss from operations of
$420,890 for the quarter ended December 31, 1999. The loss from operations in
the quarter ended December 31, 2000 increased by $27,980 from the comparable
quarter ended December 31, 1999 primarily because the Company increased the
amount of field and operations personnel. The operating loss for the quarter
ended December 31, 2000 was offset somewhat by interest income in the amount of
$17,665 representing interest earned from proceeds of the Company's public stock
offering which was completed in February of 1997. This resulted in a net loss of
$431,205 for the quarter ended December 31, 2000 compared to a net loss of
$388,048 for the quarter ended December 31, 1999. Research and development
expenses increased to $93,741 for the quarter ended December 31, 2000 from
$91,516 for the quarter ended December 31, 1999. General and administrative
expenses decreased to $283,469 for the quarter ended December 31, 2000 from
$330,033 for the quarter ended December 31, 1999. Expenses decreased in 2000 as
a result of the Company incurring more recruiting and training expenses in 1999.

Six Months Ended December 31, 2000 Compared to Six Months Ended December 31,
1999.

      Revenues increased to $277,750 for the six months ended December 31, 2000
compared to $142,250 for the six months ended December 31, 1999 as a result of
expanded work in the North Slope of Alaska.  Revenues in the six months ended
December 31, 2000 were derived predominantly from work performed on the North
Slope. During the period work was also performed for a refiner and a natural gas
utility.  Cost of revenue increased to $253,539 for the six months ended
December 31, 2000 compared to $70,861 for the six months ended December 31,
1999. Research and development expenses for the six months ended December 31,
2000 decreased to $126,221 from

<PAGE>

$150,152 for the six months ended December 31, 1999, a decrease of $23,931.
Selling, general and administrative expenses decreased to $533,714 for the six
months ended December 31, 2000 from $582,169 for the six months ended December
31, 1999, primarily as a result of certain of the Company's employees working on
more revenue generating projects. Loss from operations decreased to $635,724 for
the six months ended December 31, 2000 compared to $660,932 for the six months
ended December 31, 1999. Interest income decreased to $39,829 for the six months
ended December 31, 2000 down from $68,562 for the six months ended December 31,
1999. This resulted in a net loss of $595,895 for the six months ended December
31, 2000 compared to a net loss of $592,370 for the six months ended December
31, 1999.

     Management believes that both revenues and expenses of the Company are
likely to increase during the remainder of the fiscal year ending June 30, 2001
compared to the fiscal year ended June 30, 2000 if it is able to secure
additional contracts with customers, of which there is no assurance. The
revenues earned by the Company to date have often included research and
development activities that have been sponsored by large multi-national oil
companies and large utilities. These activities included field demonstrations at
such companies' facilities and are likely to continue during the year ending
June 30, 2001 and for the foreseeable future. Management is also working towards
obtaining additional fee for service contracts that are expected to be the major
source of the Company's revenues. If such contracts are obtained, management
expects that its expenditures associated with personnel and testing equipment
will begin to rise. In addition, as the Company begins to actually provide fee
for service work on a larger scale, additional administrative support activities
will increase together with related expenses.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash used in operating activities totaled $609,344 in the six months
ended December 31, 2000 compared to $424,976 for the six months ended December
31, 1999. The Company expects that additional operating activities will result
in cash outflows in the near term while the Company pursues additional
commercial contracts, marketing activities, and research and development. Cash
outflows from operations are expected to continue at least through the third
quarter of the year ending June 30, 2001. No assurances can be given that
operational activities will generate positive cash flows thereafter.

     The Company's cash and cash equivalents as of December 31, 2000 were
$1,118,158.  At December 31, 2000, the Company had working capital of $1,099,470
and no material long-term commitments or material commitments for capital
expenditures.

     Management is currently directing the Company's activities towards
obtaining additional fee for service contracts, which will necessitate the
Company attracting, hiring, training and outfitting qualified technicians. The
Company's intention is to purchase such equipment for its field crews for the
foreseeable future, until such time as the scope of operations may require
alternate sources of financing such equipment. There can be no assurance that
the Company's process will gain widespread commercial acceptance within any
particular time frame, or at all. The Company will incur additional expenses as
it hires and trains field crews and support personnel related to the successful
receipt of commercial contracts. At the present time the Company anticipates
that it might need one additional crew to service future contracts, but it
cannot be certain until contract negotiations are complete. That contracting
process should occur in late February or early March 2001, but there can be no
assurance that such negotiations will be successfully completed.

      The Company anticipates that capital will be expended to develop
infrastructure to support anticipated future growth. As a result, it is expected
that cash will be used in operations and to meet capital expenditure
requirements. The Company expects that accounts receivable and contract work-in-
progress will continue to increase to the extent revenues rise. Any such
increase that occurs at the same time or a greater rate than increases in
revenue can be expected to reduce cash and cash equivalents. The Company
believes that its current cash and cash equivalents will be sufficient to meet
working capital and capital expenditure requirements through fiscal 2001.
However, additional financing, if needed, may not be available on acceptable
terms, if at all. The ability to raise additional capital could be affected by
the fact that the Company does not meet one of the NASDAQ SmallCap Market's
continued listing requirements i.e., the $2 million in net tangible asset
requirement. By increasing its contract revenues and/or raising additional
capital, the Company will attempt to return to compliance with this standard.
However, there is no assurance that it will be able to do so. The Company's
ability to grow, implement

<PAGE>

business strategies and continue operations may be limited if additional
financing on acceptable terms or increased revenues are not obtained.

FORWARD-LOOKING STATEMENTS

      The provisions of the Private Securities Litigation Reform Act of 1995
(the "Act") provide companies with a "safe harbor" when making forward-looking
statements.  This "safe harbor" encourages companies to provide prospective
information about their companies without the fear of litigation.  Statements
that are not historical facts, including statements about management's
expectations, beliefs, plans and objectives for fiscal year 2001 and beyond are
forward looking statements (as such term is defined in the Act) and involve
various risks and uncertainties, including the risks associated with starting
new businesses.  Factors that could cause the Company's actual results to differ
materially from management's projections, forecasts, estimates and expectations
include, but are not limited to the following:

 .  lack of availability/access to capital;
 .  inability of the Company to retain certain key employees;
 .  inability of the Company to increase its customer base;
 .  inability to hire and train additional work crews if customer demand requires
     it;
 .  certain competitive factors including if the Company's technology becomes
     obsolete; and
 .  inability to develop infrastructure to support future growth.

<PAGE>

     PART II -- OTHER INFORMATION

Item 1. Legal Proceedings.

     The Company is not a party to any pending or threatened legal proceedings.

Item 2. Changes in Securities.

     None.

Item 3. Defaults Upon Senior Securities

     None.

Item 4. Submission of Matters to a Vote of Security Holders.

  (a) The annual meeting of the Company's shareholders was held on November 17,
      2000.

  (b) At such annual meeting, the stockholders of the Company elected G. L.
      Scott, Henry Gemino, Murphy Evans, John Tsungfen Kuo, Allen G. Reeves,
      Charles Christenson and William A, Krivsky as directors for one-year
      terms. The elections were approved by the following votes:

<TABLE>
<CAPTION>
Directors                              For                    Withheld
----------------------------------------------------------------------
<S>                                   <C>                     <C>
G. L. Scott                            3,671,885               181,630
----------------------------------------------------------------------
Henry Gemino                           3,624,239               229,276
----------------------------------------------------------------------
Murphy Evans                           3,677,185               176,330
----------------------------------------------------------------------
John Tsungfen Kuo                      3,715,135               138,380
----------------------------------------------------------------------
Allen G. Reeves                        3,673,785               179,730
----------------------------------------------------------------------
Charles Christenson                    3,792,335                61,180
----------------------------------------------------------------------
William A. Krivsky                     3,792,335                61,180
----------------------------------------------------------------------
</TABLE>


Item 5. Other Information.

     None.

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

     (a)   Exhibits.

           27.1 Financial Data Schedule

     (b)  Reports on Form 8-K

          None

<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                              PROFILE TECHNOLOGIES, INC.
                                              ---------------------------------
                                              (Registrant)

Date: February 14, 2001                       /s/  Henry Gemino
                                              ---------------------------------
                                              Henry Gemino
                                              Chief Executive Officer;
                                              Chief Financial Officer