SECURITIES EXCHANGE COMMISSION

                             Washington, DC 20549

                                   FORM 10-Q

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

For Nine Months Ended September 30, 1996         Commission File Number 0-3296

                              ETHIKA CORPORATION
                     (Formerly Dixie National Corporation)
            (Exact name of registrant as specified in its charter)

             MISSISSIPPI                             64-0440887
    (State of other jurisdiction of                (IRS Employer
     incorporation or organization)              Identification No.)

                           107 THE EXECUTIVE CENTER
                   HILTON HEAD ISLAND, SOUTH CAROLINA 29928
                    (Address of Principal Executive Office)

       Registrant's telephone number including area code: (803) 785-7850

                                     NONE
Former name, former address, and former fiscal year, if changed since last
report.

INDICATE  BY CHECK  MARK  WHETHER  THE  REGISTRANT  (1) HAS FILED ALL  REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES  EXCHANGE ACT OF
1934  DURING THE  PRECEDING  12 MONTHS (OR FOR SUCH  SHORTER  PERIOD  THAT THE
REGISTRANT  WAS  REQUIRED TO FILE SUCH  REPORTS),  AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.    YES [X] NO [ ]

INDICATE THE NUMBER OF SHARES  OUTSTANDING OF EACH OF THE ISSUER'S  CLASSES OF
COMMON STOCK AS OF THE LATEST PRACTICABLE DATE.

            CLASS                             OUTSTANDING AT NOVEMBER 15, 1996
 COMMON STOCK, $1.00 PAR VALUE                            13,824,273

<PAGE>

                              ETHIKA CORPORATION

                                     INDEX

                                                                          PAGE

PART I:     FINANCIAL INFORMATION

       Item 1.     Financial Statements

                   Consolidated Balance Sheets - September 30, 1996 and
                   December 31, 1995.........................................3

                   Consolidated Income Statement for the Three
                   and Nine Months ended September 30, 1996 and 1995.........4

                   Consolidated Statements of Cash Flows for the Nine
                   Months ended September 30, 1996 and 1995..................5

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

       Item 2.     Management's Discussion and Analysis of Financial
                   Condition and Results of Operations.......................8

PART II:    OTHER INFORMATION

       Item 1.     Legal Proceedings.........................................9

       Item 4.     Submission of Matters to a Vote of Security Holders.......9

       Item 6.     Exhibits and Reports on Form 8-K..........................9

SIGNATURES..................................................................10

                                       2

<PAGE>

ETHIKA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS  (Unaudited)
<TABLE>
<CAPTION>
                                                       September 30,   December 31,
                                                           1996            1995
                                                          ------          ------
<S>                                                    <C>             <C>

ASSETS
Current Assets
Cash and cash equivalents                              $2,375,393      $1,377,869
Accounts receivable - miscellaneous                       118,988          14,027
Federal income tax receivable                             302,000         302,000
Leases receivable - current portion                       102,342          98,097
Investment in marketable securities                             0       2,227,904
Inventory                                                  20,969               0
                                                       -----------     -----------

Total Current Assets                                    2,919,692       4,019,897

Plant, Property, and Equipment
Plant, property, and equipment (at cost)                1,445,386       1,225,445
Accumulated depreciation                                 (884,987)       (814,510)
                                                       -----------     -----------

Total Plant, Property, and Equipment (net)                560,399         410,935

Non-Current Assets
Leases receivable - non-current portion (note 5)          305,152         373,175
Investment in TRS (note 3)                                      0         137,946
Goodwill Net - (note 3 & 4)                             2,901,046          61,970
Option - TRS (note 3)                                           0         100,000
                                                       -----------     -----------

Total Non-current Assets                                3,206,198         673,091
                                                       -----------     -----------

Total Assets                                           $6,686,289      $5,103,923
                                                       ===========     ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses                    $454,905         $42,578
Notes payable                                                 893          41,667
Mortgage note payable - current portion                   113,345         107,862
                                                       -----------     -----------

Total Current Liabilities                                 569,143         192,107

Non-current Liabilities
Mortgage note payable - non-current portion               234,689         320,973
Deferred taxes                                            131,483         127,483
                                                       -----------     -----------

Total Non-Current Liabilities                             366,172         448,456
                                                       -----------     -----------

Total Liabilities                                         935,315         640,563
                                                       -----------     -----------

Stockholders' Equity
Common stock                                           13,825,385      10,598,773
Discount on common stock                               (1,831,584)       (996,222)
Treasury stock                                             (1,604)         (1,112)
Retained earnings (deficit)                            (6,241,223)     (5,138,079)
                                                       -----------     -----------

Total Stockholders' Equity                              5,750,974       4,463,360
                                                       -----------     -----------

Total Liabilities and Stockholders' Equity             $6,686,289      $5,103,923
                                                       ===========     ===========

See Accompanying Notes to Consolidated Financial Statements
</TABLE>

                                       3


<PAGE>

ETHIKA CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT AND CHANGES IN RETAINED EARNINGS (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,1996 AND 1995 (Unaudited)
<TABLE>
<CAPTION>
                                                 Three Months Ended                          Nine Months Ended
                                                    September 30,                              September 30,
<S>                                         <C>              <C>                        <C>              <C>
                                                 1996            1995                       1996             1995
                                            ------------     ------------               ------------     ------------
                                                               (NOTE 2)                                    (NOTE 2)
                                                             ------------                                ------------
REVENUES
Rental income                                $   45,000                                  $  138,775
Software sales                                  164,364                                     202,816
                                            ------------                                ------------
Total Revenue                                   209,364                                     341,591

EXPENSES
Wages, benefits, and related costs              274,687                                     601,134
Materials                                        64,665                                      81,990
Depreciation                                     10,735                                      29,035
Amortization of intangibles                     149,308                                     288,448
Interest expense                                  9,143       $   97,752                     28,564       $  391,212
General and administrative expenses             398,712          306,671                    942,244          658,039
                                            ------------     ------------               ------------     ------------

Total Operating Expenses                        907,250          404,423                  1,971,415        1,049,251
                                            ------------     ------------               ------------     ------------
OPERATING INCOME (LOSS)                        (697,886)        (404,423)                (1,629,824)      (1,049,251)

NON-OPERATING INCOME (LOSS)
Interest income - investments                    16,414           10,930                     72,170           74,487
Lease income - Fry Guy, Inc. (note 5)            13,757           54,000                     47,368           54,000
TRS loss (note 3)                                     0                                    (265,643)
Gain on disposal of marketable securities         1,625                0                    672,785                0
                                            ------------     ------------               ------------     ------------
Total Non-operating Income (loss)                31,796           64,930                    526,680          128,487
                                            ------------     ------------               ------------     ------------

Income (loss) from continuing operations       (666,090)        (339,493)                (1,103,144)        (920,764)
before income taxes
Income taxes

Income (loss) from continuing operations       (666,090)        (339,493)                (1,103,144)        (920,764)
Income (loss) from operation of discontinued                    (211,151)                                 (1,047,874)
subsidiary (note 2)
Estimated (loss) on disposal of Dixie Life)
(note 2)                                              0         (355,296)                         0       (4,032,296)
                                            ------------     ------------               ------------     ------------

Net income (loss)                              (666,090)        (905,940)                (1,103,144)      (6,000,934)

Retained earnings (deficit) at beginning
of period                                    (5,575,133)      (3,383,501)                (5,138,079)       1,711,493
                                            ------------     ------------               ------------     ------------

Retained earnings (deficit) at end of
period                                      ($6,241,223)     ($4,289,441)               ($6,241,223)     ($4,289,441)
                                            ============     ============               ============     ============
Earnings per share:
Income (loss) from continuing operations         ($.048)          ($.032)                    ($.088)          ($.088)
                                            ============     ============               ============     ============
Income (loss) from discontinued operations            0           ($.054)                         0           ($.484)
                                            ============     ============               ============     ============
Net income (loss)                                ($.048)          ($.086)                    ($.088)          ($.572)
                                            ============     ============               ============     ============
See Accompanying Notes to Consolidated
Financial Statements
</TABLE>

                                       4

<PAGE>

ETHIKA  CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
                                                                           Nine Months Ended
                                                                             September 30,
                                                                       1996                  1995
                                                                      ------                ------
<S>                                                                <C>                    <C>
Cash Flows from Operating Activities
Net income (loss) from continuing operations                       ($1,103,144)            ($920,764)
Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
Depreciation                                                            29,035                78,694
Amortization                                                           288,448
Increase (decrease) in accounts payable                                (35,326)               37,092
(Increase) decrease in lease and accounts receivable                   (64,385)
(Increase) decrease in inventory                                           119                     0
                                                                   ------------          ------------

Total adjustments to net income (loss)                                 217,891               115,786
                                                                   ------------          ------------

Net cash provided by operating activities                             (885,253)             (804,978)

Cash flows from investing activities:
Proceeds from sale of marketable securities                          2,227,904
Decrease in equity investments                                        (253,507)
Increase in Fry Guy, Inc. leases                                        64,500              (531,567)
Increase in accounts receivable loan to TRS
(Increase) decrease in fixed assets                                    (34,545)              (49,645)
                                                                   ------------          ------------
Net cash provided (used) by investing activities                     2,004,352              (581,212)

Cash flows from financing activities:
Payments on debts                                                      (80,801)              (74,793)
Decrease in notes payable                                              (40,774)               50,000
                                                                   ------------          ------------
Net cash provided (used)  by investing activities                     (121,575)              (24,793)
                                                                   ------------          ------------
Net cash provided (used) by discontinued operations                          0               920,291
                                                                   ------------          ------------

Net increase (decrease) in cash and cash equivalents                   997,524              (490,692)
Cash and cash equivalents - beginning of period                      1,377,869             5,319,456
                                                                   ------------          ------------
Cash and cash equivalents - end of period                           $2,375,393            $4,828,764
                                                                   ============          ============
</TABLE>

                                       5

<PAGE>

ETHIKA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996

NOTE 1 - BASIS OF PRESENTATION

The  accompanying   unaudited  consolidated  financial  statements  of  Ethika
Corporation  ("Corporation")  have been prepared in accordance  with generally
accepted  accounting  principles for interim  financial  information  and with
instructions to Form 10-Q and Article 10 of Regulations S-X. Accordingly, they
do not  include  all of the  detail  and  disclosures  required  by  generally
accepted accounting  principles for complete financial  statements.  Operating
results  for the nine months  ended  September  30,  1996 are not  necessarily
indicative  of the results that may be expected  for the year ending  December
31, 1996. More detailed  information is contained in the Notes to Consolidated
Financial Statements included in the Corporation's Form 10-K Annual Report for
the year ended December 31, 1995.

All  adjustments,  which in the opinion of Management are necessary for a fair
presentation  of such financial  statements,  are included and consist only of
normal recurring adjustments.

NOTE 2 - DISCONTINUED OPERATIONS - DIXIE NATIONAL LIFE INSURANCE COMPANY

On October 2, 1995 the  Corporation  completed the sale of Dixie National Life
Insurance Company ("Dixie Life"),  which was 99.3% owned by the Corporation to
Standard Life Insurance Company of Indiana.  Dixie Life represented  virtually
all of the Corporation's  assets and operations.  Accounting  Principles Board
Opinion No. 30 (APB 30) required  reporting  the  operations  of  discontinued
operations as a single net amount in the statement of operations. Beginning on
January 1, 1996, the Corporation started reporting its insurance operations as
discontinued  operations and  accordingly  has restated its September 30, 1995
and December 31, 1995 financial statements as herein presented to reflect this
change.

NOTE 3 - ACQUISITION OF TEXT RETRIEVAL SYSTEMS, INC. ("TRS")

On April 2, 1996 the  Corporation  exercised its option and completed the 100%
acquisition of TRS, a privately-held  corporation  based in Ponte Vedra Beach,
Florida.  In October  1995 the  Corporation  acquired  the  option  with a 35%
initial ownership  interest in TRS. Under the terms of the TRS agreement,  the
Corporation  issued 100,000 shares of its common stock to the prior owners and
granted  TRS a  $750,000  line of credit  for  working  capital  purposes.  To
complete the acquisition of TRS, the Corporation  issued 2,500,000  additional
shares of its common  stock.  The  2,500,000  additional  shares of its common
stock  having a $1 per share par value had a market  value of $.7965 per share
at  the  date  of  acquisition  resulting  in  recording  a  discount  on  the
Corporation's  common stock of $508,750.  The final  purchase price to be paid
for TRS and  numbers  of shares to

                                       6

<PAGE>

be issued will be  determined  based upon certain  performance  criteria to be
measured for the twelve months ending June 30, 1997.

TRS publishes  electronic  reference  libraries that link related data sources
for convenient access by personal computers.  The electronic libraries,  often
containing  thousands of pages,  are  connected  by hypertext  cross-reference
links.   This  permits  users  to  access  massive  documents  while  avoiding
time-consuming  manual  research.  One  of  the  latest  TRS  products  is  an
employer's compliance library,  HR/Comply,  which links all federal employment
laws  and  related   regulations   to  a  compendium  of  state  statutes  and
regulations. Other TRS libraries include comprehensive compliance data for the
retail and public housing markets.

Since its  incorporation in 1994, TRS has been involved in the development and
packaging of software used in its electronic  libraries,  and in the marketing
of its  products.  TRS has 28  employees  including 3 software  writers and 12
marketers.

The Corporation  accounted for its initial  investment in TRS under the equity
method of  accounting.  The  Corporation  recorded a loss of $265,643  for the
three months ended March 31, 1996 (revised  loss from the  previously-reported
loss of $143,333).  At the date of the initial acquisition,  the Corporation's
investment exceeded its share of the underlying equity in the assets of TRS by
$61,970.  The total  amount of  goodwill  recognized  by  completing  the 100%
acquisition  of TRS is  $3,050,824.  For  financial  statement  purposes,  the
goodwill  will  be  amortized  over a  sixty-month  period.  The  consolidated
statements  of  operations  for nine months ended  September  30, 1996 include
$278,280 of  amortization.  See Item 2  Management's  Decision and Analysis of
Financial  Condition  and Results of  Operations  for the  discussion  of TRS'
performance since acquisition.

NOTE 4 - ACQUISITION OF COMPASS DATA SYSTEMS, INC.

On August 17, 1996 the Corporation  acquired 100% of the outstanding shares of
Compass Data Systems,  Inc.  ("CDS"),  a  privately-held  corporation.  CDS is
located in Salt Lake City, Utah and publishes electronic information providing
turnkey reference  services to a wide variety of industries and organizations.
Among its principal  product  offerings are state tax law reference  libraries
which keep subscribers current on tax law changes.

CDS began operations in May 1991 and currently employs 8 full-time  employees.
At April  30,  1996,  the most  current  fiscal  year end,  CDS had  assets of
$157,246 with no significant liabilities.  Revenues for the year were $450,477
generating pre-tax income of $7,790.

The  transaction was completed  through an exchange of stock.  The Corporation
issued 726,612  shares of its common stock to Eric R. and Sherry  Fredrickson,
the sole  shareholders  of CDS. In addition,  Mr.  Fredrickson  entered into a
two-year  employment

                                       7

<PAGE>

contract.  He also entered into a two-year  non-compete  contract for which he
received $50,000 at closing and will receive another $50,000 in 1997.

NOTE 5 - LEASING ACTIVITIES

During 1995, the Corporation  entered into leasing activities which consist of
the leasing of fry cook units to be placed in various  locations  and operated
by the  lessee.  All of the  Corporation's  leases  are  classified  as direct
financing leases.  Under the direct financing method of accounting for leases,
the total net rentals  receivable  under the lease contracts are recorded as a
net investment in direct  financing  leases,  and the unearned  income on each
lease is  recognized  each month at a constant  periodic rate of return on the
unrecovered investment.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

The  Corporation has a strong liquid position with current assets at September
30, 1996 in excess of $2,900,000 with the only  significant  liability being a
mortgage  on the former  headquarters  of the  Corporation  for  approximately
$348,000 of which $113,345 is current.

RESULTS OF OPERATIONS

As  described in Note 2 of Notes to  Consolidated  Financial  Statements,  the
Corporation completed the sale of Dixie Life on October 2, 1995. The September
30, 1995 Consolidated Income Statement has been restated to reflect Dixie Life
as a discontinued operation.

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED
TO RESTATED NINE MONTHS ENDED SEPTEMBER 30, 1995

For the nine months ended  September 30, 1996, the  Corporation had a net loss
from continuing  operations of $1,103,144  ($.088 per share) compared to a net
loss  from  continuing  operations  of  $920,764  ($.088  per  share)  for the
comparable period of 1995. The loss results from  expenditures  related to the
start-up nature of Text Retrieval Systems,  Inc. ("TRS") which was acquired in
April 1996.  Losses on TRS since  acquisition  total  $634,892.  Since TRS and
Compass  Data  Systems,  Inc.  ("CDS")  (acquired  August 17, 1996) assets are
largely intangible,  the Corporation has recorded approximately  $3,200,000 in
goodwill associated with these acquisitions.  This goodwill is being amortized
over  a  60-month  period  and  to  date  has  contributed   $288,448  to  the
Corporation's  losses.  Rental income represents income from the obligation of
Standard  Life  Insurance  Company to pay $15,000 per month rent to  Vanguard,
Inc., a wholly-owned subsidiary of the Corporation, through December 31, 1996,
the  expiration  date of

                                       8

<PAGE>

an  existing  lease  on  the  office  building   previously  occupied  by  the
Corporation and Dixie Life. The obligation terminates upon earlier sale of the
building.

THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED
TO RESTATED THREE MONTHS ENDED SEPTEMBER 30, 1995

For the three months ended  September 30, 1996, the Corporation had a net loss
from  continuing  operations of $666,090  ($.048 per share)  compared to a net
loss of $339,493  ($.032 per share) for the  comparable  period in 1995.  This
increase in loss from  continued  operations  results from the  completion  of
developmental  expenses  associated  with the launch of the TRS human resource
(HR/Comply)  product.  These  expenses are  somewhat  offset by a reduction in
interest expense of $88,000 resulting from the liquidation of notes payable at
the time of the sale of Dixie Life.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

As  previously  reported in the  Corporations  Form 8-K current  report  dated
August 17, 1996,  on September  16, 1996 a lawsuit was filed in United  States
District Court for the Southern District of Mississippi,  Jackson Division, by
certain plaintiffs  against the Corporation;  its Chairman and Chief Executive
Officer,  S.L. Reed; and E.R.  Ellenbecker,  an individual not affiliated with
the Corporation.  On October 30, 1996 Ethika filed its Answer to this lawsuit.
A counter claim was made, and additional  parties were added to the lawsuit by
Ethika.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Shareholders of the Corporation held on September 26,
1996, the shareholders approved the amendment to Article III, Section 6 of the
Corporation's  Bylaws  reducing the minimum and maximum number of Directors of
the  Corporation  to not less than five nor more than fifteen by the following
vote: For = 9,907,411; Against = 34, 716; and Withheld = 6,384.

ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits
        (27) Financial Data Schedule

(b)     Reports on Form 8-K

                                       9

<PAGE>

The Corporation  filed the following Form 8-K Current Reports during the third
quarter of 1996:

    DATE OF REPORT              ITEM REPORTED                 SUBJECT

   August 17, 1996        Item 2. Acquisition or        Additional information
                          Disposition of Assets         relating to the acqui-
                          (Previously reported in       sition of CDS
                          Form 10-Q for quarter
                          ended June 30, 1996)

                          Item 5. Other Events          Disclosure of lawsuit
                                                        filed against Ethika
                                                        Corporation and others.
SIGNATURES

Pursuant to the  requirements  of the Securities and Exchange Act of 1934, the
registrant  has duly  caused  this  report to be  signed on its  behalf by the
undersigned thereunto duly authorized.

                                              Ethika  Corporation
                                              --------------------------------
                                              (Registrant)

                                              /s/G. Thomas Reed
                                              --------------------------------
Date:  November 18, 1996                      G. Thomas Reed
                                              President and
                                              Chief Operating Officer

                                              /s/David E. Williams
                                              --------------------------------
Date:  November 18, 1996                      David E. Williams
                                              Senior Vice President Finance
                                              and Chief Financial Officer

                                      10