SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-QSB

     QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE ACT
     OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 1998

Commission file number 0-21151


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

DELAWARE                                                     91-1418002
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)


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 past 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
                                                               -----   -----

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

     There were 4,262,600 shares of common stock issued and outstanding on April
21, 1998.

Transitional Small Business Disclosure Format
(Check one):

Yes        No   X
   -----      -----


<PAGE>



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

GENERAL

     The Company is in the business of developing and commercializing  processes
for the  nondestructive,  non-invasive  testing of both above  ground and buried
pipeline to evaluate the condition  and  integrity of the pipeline.  The Company
believes that the development of its pulse propagation  analyzer process and the
further refinement of the technology  associated therewith has progressed to the
point where it believes  commercial  utilization is now likely.  The Company has
not, as of yet, obtained significant revenues from its planned primary source of
revenues  and has only one  commercial  agreement  for the use of its process or
technology.  The goal of the Company has been the establishment of technological
feasibility  associated with its services to electronically measure corrosion in
piping of all kinds. The Company's process identifies 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.  During fiscal 1996, the
Company began to see rapid progress in the development of its technology and its
ability to meet the  expectations  of  potential  customers.  By that time,  the
Company had begun to accelerate its efforts and expend more resources to develop
its technology faster.  This acceleration  continues into the fiscal year ending
June 30, 1998.  Thus,  expenses have been generally  increasing at a faster pace
than in prior  periods.  The  Company  expects  these  trends to continue as its
technological  development  continues  at this  accelerated  pace.  The  Company
believes  that it attained  technological  feasibility  of its process  with the
completion of its research and development activity in a controlled  environment
in July of 1996. In March of 1998, the Company entered into its first commercial
agreement to provide its services to ASCG Inspection, Inc. on the North Slope of
Alaska,  commencing in July,  1998.  The  agreement  provides for the testing of
approximately  one hundred road and caribou  crossings and is expected to result
in gross revenues to the Company of approximately one hundred thousand dollars.

     In order for the Company to obtain significant revenues from the use of its
technology,  the Company must establish a sales and marketing  organization that
is effective  and obtains  customers  for its pulse  propagation  analyzer.  The
Company must also be able to supply and train work crews in  sufficient  numbers
to satisfy the requirements of its customers.  From inception  through March 31,
1998,  the Company  incurred  losses of  $2,931,782  and losses are  expected to
continue at least  through the fourth  quarter of the year ending June 30, 1998;
no assurances can be given that losses will not continue thereafter.

RESULTS OF OPERATIONS

Quarter Ended March 31, 1998 Compared to the Quarter Ended March 31, 1997
-------------------------------------------------------------------------

     The  Company had  revenues of $15,000 for the quarter  ended March 31, 1998
compared to no  revenues  for the quarter  ended March 31,  1997.  The loss from
operations for the quarter ended March 31, 1998 was $241,035  compared to a loss
from  operations  of $164,423  for the quarter  ended March 31,  1997.  Interest


                                        2

<PAGE>


income for the  quarter  ended  March 31,  1998  totaled  $58,872,  representing
interest  earned from proceeds of the Company's  public stock offering which was
completed in February of 1997.  The net loss was $182,163 for the quarter  ended
March 31, 1998  compared to a net loss of $136,078  for the quarter  ended March
31, 1997. Research and development expenses increased to $80,303 for the quarter
ended March 31, 1998  compared to $55,943 for the quarter  ended March 31, 1997.
This  increase  was  attributable  to  additional  consulting  fees  paid  to  a
consultant in connection  with the Company's  ongoing  research and  development
activities.  General and  administrative  expenses increased to $175,732 for the
quarter ended March 31, 1998 from $108,480 for the quarter ended March 31, 1997,
primarily  because of increased salary and consulting  expenses  attributable to
additional  personnel as well as increased  payments to existing  personnel that
the  Company  was not in the  position  to fund prior to its public  offering of
stock in February, 1997.

Nine Months Ended March 31, 1998 Compared to Nine Months Ended March 31, 1997.
------------------------------------------------------------------------------

     Revenues  increased slightly to $45,000 for the nine months ended March 31,
1998  compared to $30,000 in the nine months ended March 31,  1997.  Revenues in
both nine month periods were derived from research and development  contracts or
demonstration contracts with two large multi-national oil companies. Total costs
and expenses for the nine months ended March 31, 1998 were $734,411  compared to
total costs and  expenses of $902,684  for the nine months ended March 31, 1997.
However,  of the total costs and  expenses  for the nine months  ended March 31,
1997,  $559,154,  or 61.9% were for noncash charges associated with the issuance
or extension of common stock purchase warrants. Excluding this non-cash expense,
operating losses for the nine months ended March 31, 1998 were actually $390,881
or 114%  greater  than for the nine months  ended March 31,  1997.  Research and
development  expenses  increased to $234,978 for the nine months ended March 31,
1998 from  $174,109  for the nine months  ended March 31,  1997,  an increase of
$60,869 or 35%. This increase was  primarily due to additional  consulting  fees
paid to a consultant  in connection  with an increase in the  Company's  ongoing
research  and  development  activities.   General  and  administrative  expenses
increased  for the nine months  ended March 31,  1998 to  $499,433,  compared to
$169,421 for the nine months  ended March 31,  1997,  primarily as the result of
additional  personnel  expenses  associated  with new  employees  and  increased
payments to existing personnel.

     Management  believes  that both  revenues  and  expenses of the Company are
likely to increase  during the fiscal year ending June 30, 1998  compared to the
fiscal  year ended June 30,  1997 if it is able to secure  additional  contracts
with  customers,  of which there is no  assurance.  The  revenues  earned by the
Company to date principally  relate to research and development  activities that
have been sponsored by large  multi-national  oil companies and large utilities.
These  activities  included  field research and  development at such  companies'
facilities.  These activities are likely to continue during the year ending June
30, 1998 and for the  foreseeable  future.  Management  is also working  towards
obtaining fee for service  contracts,  which are hoped to be the major source of
the Company's revenues.  One such contract has been obtained and is scheduled to
be performed in July, 1998. Management expects 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,  administrative  support
activities will increase together with related expenses.


                                        3

<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

     Revenues  for the period from July 1, 1988  (inception)  through  March 31,
1998,  were $527,189  while expenses were  $3,758,000,  resulting in a loss from
operations,  since inception, of $3,230,811.  Cash and cash equivalents at March
31, 1998 were $4,349,658.  Net cash used in operating  activities from inception
through March 31, 1998 was $1,871,440. Of this amount, $202,790 was spent in the
three month period ended March 31, 1998.  Thus,  while the revenues derived from
research and development  activities funded by multi-national  oil companies and
major  utilities  have been  indicative  of financial  support for the Company's
efforts  to  develop  its  technology,  they have not been  sufficient  to cover
expenses. Noncash expenses relating to the issuance of new common stock warrants
or the  extension of previously  issued  warrants in the amount of $559,154 were
incurred in the quarter  ended  December 31,  1996.  These  transactions  had no
effect on aggregate  stockholders'  equity.  At March 31, 1998,  the Company had
working capital of $4,299,416 and no material long term  commitments or material
commitments for capital expenditures.

     In February of 1997, the Company  completed an initial  public  offering of
its common stock,  selling  1,000,000  shares at a price of $6.00 per share,  as
well as an Underwriter's  overallotment option of 50,000 shares, also at a price
of $6.00 per share.  Net  offering  proceeds of  approximately  $5,171,000  were
realized  by the  Company  from  this  public  offering.  The  Company,  pending
utilization  of the net proceeds in  operations,  has invested  such proceeds in
short-term, high grade,  interest-bearing instruments. The Company believes that
its current  capital  resources and liquidity are adequate for at least the next
twelve months.  Other than equipment purchases for field crews if the Company is
successful  in  obtaining  commercial  contracts,  the Company does not have any
plans for  significant  capital  expenditures.  To date,  the  Company  has only
obtained  one  commercial  contract,  which it is  scheduled to perform in July,
1998.

RESOURCES

     As of March 31, 1998 the Company did not have any material  commitments for
capital expenditures. However, in order to fulfill current and potential fee for
service  contracts,  the Company  will need to attract,  hire,  train and outfit
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 the
operations may require alternate sources of financing such equipment. The timing
of these  events is  dependent  upon the  Company's  ability  to obtain  fee for
service contracts,  which is dependent upon the Company's  continuing ability to
demonstrate the  effectiveness of its technology.  The Company believes that its
cash position is  sufficient to satisfy its operating  needs for the next twelve
months.  Management believes it is well on the way to reaching these milestones,
but there can be no assurance that the Company's process will be accepted within
any  particular  time  frame,  or at all.  The  Company  will  incur  additional
personnel  expenses as it hires and trains  field  crews and  support  personnel
related to the successful receipt of commercial contracts.


                                        4

<PAGE>


                                     PART II

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.

     None.

Item 5. Other Information.

     None.

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

     (a) Exhibits.
         None

     (b) Reports on Form 8-K.
         None



                                        5

<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: April 21, 1998                      /s/ G.L. Scott
                                          --------------------------------------
                                          G.L. SCOTT
                                          Chief Executive Officer



                                          /s/Henry Gemino
                                          --------------------------------------
                                          HENRY GEMINO
                                          Chief Financial Officer


                                        6




<PAGE>
<TABLE>
<CAPTION>

Item 1. Financial Statements

                               PROFILE TECHNOLOGIES, INC.
                            (A Development Stage Enterprise)

                                Condensed Balance Sheets

========================================================================================
                                                               March 31,       June 30,
                                                                 1998            1997
========================================================================================

                                                             
                                    Assets
                                    ------

Current assets:
<S>                                                           <C>              <C>      
       Cash and cash equivalents                              $ 4,349,658      4,936,600
       Contract work-in-progress                                     --           20,000
       Prepaid expenses                                            66,605         52,798
                                                              ===========    ===========

                 Total current assets                           4,416,263      5,009,398

Property and equipment, net                                        79,643         34,941
Patents                                                           204,037        189,037
Other assets                                                        3,530          3,350
                                                              -----------    -----------

                 Total assets                                 $ 4,703,473      5,236,726
                                                              ===========    ===========

                          Liabilities and Stockholders Equity
                          -----------------------------------

Current liabilities:
       Accounts payable - stockholder                               4,290          2,500
       Other accounts payable                                       8,929          5,919
       Accrued wages                                                 --           20,614
       Other accrued liabilities                                  103,628        122,142
                                                              -----------    -----------

                 Total current liabilities                        116,847        151,175
                                                              -----------    -----------

Stockholders equity:
       Common stock, $0.001 par value. 
              Authorized 10,000,000 shares; issued
              and outstanding 4,262,600 shares at
              March 31, 1998 and June 30,1997                       4,263          4,263
       Additional paid-in capital                               7,514,145      7,514,145
       Deficit accumulated during the development stage        (2,931,782)    (2,432,857)
                                                              -----------    -----------

                 Total stockholders equity                      4,586,626      5,085,551
                                                             
========================================================================================

                 Total liabilities and stockholders' equity   $ 4,703,473      5,236,726
========================================================================================



                See accompanying notes to condensed financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                                                    PROFILE TECHNOLOGIES, INC.
                                                (A Development Stage Enterprise)

                                               Condensed Statements of Operations
                                                          

===================================================================================================================================
                                                           Period from
                                                           July 1, 1988
                                                        (inception) through   Three months ended            Nine months ended
                                                             March 31,             March 31,                     March 31,
                                                            -----------    --------------------------    --------------------------

                                                               1998           1998          1997           1998            1997
===================================================================================================================================

Revenues - testing services and research and
<S>                                                         <C>            <C>            <C>            <C>            <C>   
development fees                                            $   527,189         15,000           --           45,000         30,000
                                                            -----------    -----------    -----------    -----------    -----------

Costs and expenses:
    Research and development                                  1,592,668         80,303         55,943        234,978        174,109
    General and administrative                                1,306,178        175,732        108,480        499,433        169,421
    Excess of fair market value over exercise
                price of extended and assigned
                existing common stock purchase
                warrants                                        350,000           --             --             --           50,000

Fair value of common stock purchase
                warrants granted to consultants                 509,154           --             --             --          509,154
                                                            -----------    -----------    -----------    -----------    -----------

                         Total costs and expenses             3,758,000        256,035        164,423        734,411        902,684
                                                            -----------    -----------    -----------    -----------    -----------

                         Loss from operations                (3,230,811)      (241,035)      (164,423)      (689,411)      (872,684)
                                                            -----------    -----------    -----------    -----------    -----------

Interest income                                                 298,929         58,872         28,345        190,486         29,687
Other income                                                        100           --             --             --             --   
                                                            -----------    -----------    -----------    -----------    -----------

                         Net loss                           $(2,931,782)      (182,163)      (136,078)      (498,925)      (842,997)
                                                            -----------    -----------    -----------    -----------    -----------

Basic and diluted loss per share                                           $     (0.04)         (0.04)         (0.12)         (0.25)

Weighted average basic and diluted common
     and common share equivalents outstanding                                4,262,600      3,694,267      4,262,600      3,373,156
===================================================================================================================================




                                    See accompanying notes to condensed financial statements


</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                             PROFILE TECHNOLOGIES, INC.
                                          (A Development Stage Enterprise)

                                         Condensed Statements of Cash Flows
                                                 

==========================================================================================================================
                                                                          Period from
                                                                          July 1, 1988
                                                                      (inception) through         Nine months ended
                                                                            March 31,                  March 31,
                                                                                            ------------------------------
                                                                              1998              1998              1997
==========================================================================================================================

Cash flows from operating activities:                                                      
<S>                                                                       <C>                  <C>               <C>      
     Net loss                                                             $(2,931,782)         (498,925)         (842,997)
    Adjustments to reconcile net loss to net
        cash used in operating activities:
           Depreciation and amortization                                      144,476            27,134            15,272
           Services received in exchange for common stock                      10,000              --                --
           Excess of fair value over exercise price of
              extended and assigned existing common stock
              purchase warrants                                               350,000              --              50,000
           Fair value of common stock purchase warrants
              granted to consultants                                          509,154              --             509,154
           Changes in assets and liabilities:
              Contract work-in-progress                                          --              20,000              --   
              Accounts receivable/payable - stockholder                         4,290             1,790           (12,154)
              Prepaid expenses                                                (66,605)          (13,807)          (77,634)
              Other assets                                                     (3,530)             (180)           (1,950)
              Other accounts payable                                            8,929             3,010            (3,134)
              Accrued wages                                                      --             (20,614)             --   
              Other accrued liabilities                                       103,628           (18,514)           11,670
                                                                          -----------       -----------       -----------

                       Net cash used in operating activities               (1,871,440)         (500,106)         (351,773)
                                                                          -----------       -----------       -----------

Cash flows from investing activities:
        Patents                                                              (184,037)          (15,000)          (10,452)
        Purchase of property and equipment                                   (220,018)          (71,836)           (2,841)
                                                                          -----------       -----------       -----------

                       Net cash used in investing activities                 (404,055)          (86,836)          (13,293)
                                                                          -----------       -----------       -----------
Cash flows from financing activities:
        Proceeds from issuance of common stock,
           net of issuance costs                                            6,643,254              --           5,306,151
        Repurchase of common stock                                            (14,000)             --                --   
        Deferred IPO costs                                                       --                --             (31,635)
        Organizational costs                                                   (4,101)             --                --
                                                                          -----------       -----------       -----------

                       Net cash provided by financing activities            6,625,153              --           5,274,516
                                                                          -----------       -----------       -----------


                       Increase (decrease) in cash and cash equivalents     4,349,658          (586,942)        4,909,450

Cash and cash equivalents at beginning of period                                 --           4,936,600           212,689
                                                                          -----------       -----------       -----------


Cash and cash equivalents at end of period                                  4,349,658         4,349,658         5,122,139
                                                                          -----------       -----------       -----------

Supplemental disclosure of noncash financing and investing activities -
     Patent costs in exchange for common stock                            $    20,000              --                --   
=========================================================================================================================





                                  See accompanying notes to condensed financial statements

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                    PROFILE TECHNOLOGIES, INC.
                                                 (A Development Stage Enterprise)

                                                Statements of Stockholders' Equity
                                                          

===================================================================================================================================
                                                                                                             Deficit
                                                                                                           accumulated      Total
                                                                                               Additional  during the       stock-
                                                                       Common stock             paid-in    development      holders'
                                                                    Shares       Amount         capital       stage         equity
===================================================================================================================================

<S>                                                              <C>          <C>            <C>          <C>            <C>        
Sale at inception (July 1, 1988), $.0005 per share                1,000,000    $      500          --            --             500
Sale of common stock in July, $.0005 per share                      600,000           300          --            --             300
Sale of common stock in September, $.25 per share                   400,000         1,200        98,800          --         100,000
Net loss                                                               --            --            --         (85,749)      (85,749)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1989                                         2,000,000         2,000        98,800       (85,749)       15,051

Sale of common stock in September, $.25 per share                    80,000            80        19,920          --          20,000
Net loss                                                               --            --            --         (13,683)      (13,683)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1990                                         2,080,000         2,080       118,720       (99,432)       21,368

Sale of common stock in October, $.25 per share                     114,000           114        28,386          --          28,500
Issuance of common stock for services in November,
    $.25 per share                                                   40,000            40         9,960          --          10,000
Net loss                                                               --            --            --         (30,593)      (30,593)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1991                                         2,234,000         2,234       157,066      (130,025)       29,275

Sale of common stock in September, $.625 per share                  296,000           296       184,704          --         185,000
Sale of common stock in May, $1.50 per share                        141,268           141       211,761          --         211,902
Net loss                                                               --            --            --        (267,186)     (267,186)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1992                                         2,671,268         2,671       553,531      (397,211)      158,991

Sale of common stock in January, $1.50 per share                     51,000            51        76,449          --          76,500
Net loss                                                               --            --            --        (132,905)     (132,905)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1993                                         2,722,268         2,722       629,980      (530,116)      102,586

Net loss                                                               --            --            --         (13,503)      (13,503)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1994                                         2,722,268         2,722       629,980      (543,619)       89,083

Repurchases of common stock in October                              (16,000)          (16)      (13,984)         --         (14,000)
Sale of common stock in December, $1.75 per share,
      net of issuance costs of $22,115                              268,332           269       447,196          --         447,465
Excess of fair value over exercise price of existing common
      stock purchase warrants extended in December                     --            --         210,000          --         210,000
Net loss                                                               --            --            --        (453,382)     (453,382)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1995                                         2,974,600         2,975     1,273,192      (997,001)      279,166






                               

<PAGE>


                                                    PROFILE TECHNOLOGIES, INC.
                                                 (A Development Stage Enterprise)

                                                Statements of Stockholders' Equity
                                                         

                                                            Continued

===================================================================================================================================
                                                                                                             Deficit
                                                                                                           accumulated      Total
                                                                                               Additional  during the       stock-
                                                                       Common stock             paid-in    development      holders'
                                                                    Shares       Amount         capital       stage         equity
===================================================================================================================================

Issuance of common stock for services in October,
     $1.00 per share                                                 20,000            20        19,980          --          20,000
Sale of common stock in December - March, $2.00 per share,
     net of issuance costs of $34,600                               218,000           218       401,182          --         401,400
Excess of fair value over exercise price of existing common
      stock purchase warrants extended in March                        --            --          90,000          --          90,000
Net loss                                                               --            --            --        (400,853)     (400,853)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1996                                         3,212,600         3,213     1,784,354    (1,397,854)      389,713

Fair value of common stock purchase warrants granted to
      consultants                                                      --            --         509,154          --         509,154
Excess of fair market value over exercise price of existing
      common stock purchase warrants assigned by principal
      stockholder to others                                            --            --          50,000          --          50,000
Sale of common stock in February - March, $6.00 per share,
     net of issuance costs of $1,128,313                          1,050,000         1,050     5,170,637          --       5,171,687
Net loss                                                               --            --            --      (1,035,003)   (1,035,003)
                                                                 ----------    ----------    ----------    ----------    ----------

Balances at June 30, 1997                                         4,262,600    $    4,263     7,514,145    (2,432,857)    5,085,551

Net loss                                                               --            --            --        (498,925)     (498,925)
                                                                
===================================================================================================================================

Balances at March 31, 1998                                        4,262,600         4,263     7,514,145    (2,931,782)    4,586,626
===================================================================================================================================



                                    See accompanying notes to condensed financial statements



</TABLE>
<PAGE>


                           PROFILE TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)

                    Notes to Condensed Financial Statements

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


Basis of Presentation

The  unaudited  interim  condensed  financial  statements  and related  notes of
Profile  Technologies,  Inc.  (Company)  have  been  prepared  pursuant  to  the
instructions  to Form  10QSB.  Accordingly,  certain  information  and  footnote
disclosures normally included in the financial statements prepared in accordance
with generally accepted accounting principles have been omitted pursuant to such
instructions.  The accompanying condensed financial statements and related notes
should be read in conjunction  with the audited  financial  statements and notes
thereto  included  in the annual  report  FORM 10KSB for the year ended June 30,
1997.

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.



New Accounting Pronouncement and Net Loss Per Share

The Financial  Accounting  Standards  Board (FASB) recently issued SFAS No. 128,
Earnings  Per Share,  the  provisions  of which the Company  adopted  during the
quarter ended December 31, 1997. SFAS No. 128 requires  restatement of all prior
EPS figures  replacing them with a presentation of basic earnings per share, and
for companies with complex capital structures, diluted earnings per share. Basic
earnings  per share is  computed  using the  weighted  average  number of common
shares  outstanding  during the period.  Diluted  earnings per share is computed
using the  weighted  average  number of common and  dilutive  common  equivalent
shares outstanding during the period.

For all prior periods,  when the Company  presented their results of operations,
the  Company  had  computed  basic  and  diluted  net loss per  share  using the
provisions of Staff  Accounting  Bulletin  (SAB) No. 83 which  requires that all
common and common equivalent shares issued during the twelve months  immediately
preceding the initial filing of a  registration  statement for the Company's IPO
be  included  in  the  calculation  of  common  and  common   equivalent  shares
outstanding as if they were  outstanding  for all periods  presented,  including
loss years where the impact is antidilutive.  In February,  1998, the SEC issued
SAB No. 98 which  superseded  SAB No. 83.  Had the  company  computed  basic and
diluted  net loss per share  using the  provisions  of SAB No. 98,  antidiultive
common  equivalent  shares  previously  pursuant  to SAB No. 83 would  have been
omitted.


<PAGE>
<TABLE>
<CAPTION>


                           PROFILE TECHNOLOGIES, INC.
                        (A Development Stage Enterprise)

                     Notes to Condensed Financial Statements

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





Restatement  of EPS amounts  reported for the three months ended  September  30,
1997 and the three months and six months ended  December 31, 1997 resulted in no
change to the  previously  reported  amounts.  Previously  reported and restated
historical  basic and diluted net loss per share in accordance  with SFAS No.128
and using the  provisions  of SAB No. 98 for the years  ended June 30,  1996 and
1997  are as  follows  (as the  Company  had a net  loss in each of the  periods
presented, basic and diluted net loss per share is the same):


                                                                    Years ended             Three Months      Nine months
                                                                      June 30,             ended March 31,  ended March 31, 
                                                               1996             1997             1997             1997
                                                          ------------------------------    -------------    -------------

<S>                                                       <C>              <C>              <C>              <C>              
Net loss per share as previously reported ..........      $       (0.11)   $       (0.26)   $       (0.03)   $       (0.20)
                                                          =============    =============    =============    =============
Shares used in computing net loss per share
    as previously reported .........................          3,664,794        3,933,148        4,214,239        2,214,239

Restated historical basic and diluted
    net loss per share .............................      $       (0.12)   $       (0.29)   $       (0.04)   $       (0.25)
                                                          =============    =============    =============    =============
Restated shares used in computing historical
    basic and diluted net loss per share ...........          3,212,600        3,587,532        3,694,267        3,373,156



Excluded from the computation of historical  diluted  earnings per share for the
year ended June 30, 1996 are warrants to acquire  675,000 shares of common stock
with a  weighted-average  exercise  price of  $2.30,  and  warrants  to  acquire
1,120,000 shares of common stock with a weighted-average exercise price of $3.41
for the year ended June 30, 1997,  the three months ended March 31, 1997 and the
nine-months ended March 31, 1997 are excluded from the computation because their
effects would be anti-dilutive.

</TABLE>