SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-Q

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

                      For Three Months Ended March 31, 1998
                          Commission File Number 0-3296

                               ETHIKA 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 May 8, 1998
    Common Stock, $1.00 par value                           20,360,346
<PAGE>






                               ETHIKA CORPORATION

                                      INDEX

                                                                                

PART I:  FINANCIAL INFORMATION

            Item 1.        Financial Statements

                           Consolidated balance sheets - March 31, 1998 and
                           December 31, 1997 ...................................

                           Consolidated statements of operations for the three
                           months ended March 31, 1998 and 1997 ................

                           Consolidated statements of cash flows for the three
                           months ended March 31, 1998 and 1997 ................

                           Notes to consolidated financial statements ..........

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

PART II. OTHER INFORMATION

                         None

SIGNATURES .....................................................................


<PAGE>
<TABLE>
<CAPTION>
Ethika Corporation and Subsidiaries
Consolidated Balance Sheet  March 31, 1998 and December 31,  1997
(Unaudited)  
                                                                   March 31,        December 31,
                                                                      1998                1997
                                                                  ------------      ------------
<S>                                                               <C>               <C>  
ASSETS
Current Assets:
  Cash and cash equivalents                                       $    123,619      $    535,651
  Accounts receivable, net of allowance for doubtful accounts             --                --   
  Leases receivable                                                    112,762           112,763
  Investment securities- Trading                                       440,000           549,281
  Note Receivable                                                      450,000                 0
  Net assets held for sale                                             562,723           739,545
                                                                  ------------      ------------

Total Current Assets                                                 1,689,104         1,937,240

Property and equipment , net of accumulated depreciation                43,895            45,097

Leases  receivable                                                     138,114           166,746
                                                                  ------------      ------------

Total Assets                                                      $  1,871,113      $  2,149,083
                                                                  ============      ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable and accrued expenses                           $    267,898      $    367,992
  Accrued loss on discontinued operations                                6,743            80,000
                                                                  ------------      ------------
Total Current Liabilities
                                                                       274,641           447,992
                                                                  ------------      ------------     

Total Liabilities                                                      274,641           447,992
Stockholders' Equity
Common Stock, $1 par value authorized 50,000,000 shares;
issued 20,387,658 shares and 14,975,018;  outstanding
20,360,346 shares and 14,947,706 shares;                            20,360,346        20,360,346
Discount on Common Stock                                            (8,123,528)       (8,123,528)         
Accumulated Deficit                                                (10,640,346)      (10,535,727)
                                                                  ------------      ------------
Total Stockholders' Equity                                           1,596,472         1,701,091
                                                                  ------------      ------------
Contingencies
Total Liabilities and Stockholders' Equity                        $  1,871,113      $  2,149,083
                                                                  ============      ============
</TABLE>
The Accompanying notes are an integral part of these Consolidated Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
Ethika Corporation and Subsidiaries
Consolidated Statement of Operations
For the three  months  ended  March 31,
1998 and 1997
(Unaudited)

                                                  March 31, 1998   March 31, 1997
<S>                                                  <C>              <C>
  General and  administrative expenses               $ 129,991        $ 134,263

  Interest income                                       17,715           36,488
  Gain (loss) on disposal of fixed Assets                2,402

  Gain (loss) from investment securities                 5,255

  Interest expense                                        --             (7,765)
                                                     ---------        ---------
Income tax benefit                                        --               --
                                                     ---------        ---------

Loss from continuing operations                       (104,619)        (105,540)

Discontinued operations:
Loss from operations                                       -0-         (433,714)
Loss on disposals                                         --               --
                                                     ---------        ---------

Net loss                                             ($104,619)       ($539,254)
                                                     =========        =========

Basic and diluted earnings per share:
Loss from continuing operations                      $   (.005)       $   (.008)
                                                     =========        =========

Loss from discontinued operations                    $   (.000)       $   (.035)
                                                     =========        =========

Basic and diluted net loss per share                 $   (.005)       $   (.045)
                                                     =========        =========
</TABLE>
The Accompanying notes are an integral part of these Consolidated Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
Ethika Corporation and Subsidiaries
Consolidated Statement of Cash Flows
For the three  months ended March 31, 1998 and 1997
                       
                                                  March 31, 1998   March 31, 1997
                                                   -----------      -----------
<S>                                                <C>               <C>  
Cash Flows from Operating Activities:
Net loss                                           ($  104,619)     ($  539,254)
Adjustments to reconcile net (loss)
to net cash provided by operating activities
Depreciation and Amortization                            1,202          128,836
Realized and unrealized (gain)loss on
investment securities                                   (4,059)
Changes in balance sheet accounts:
(Increase) decrease in  accounts receivable                              83,276
(Increase) decrease in  inventory                                        (1,718)
Decrease in Assets held for sale                       176,822
Increase ( decrease) in accounts payable              (173,351)        (286,397)
and other liabilities                                                    62,475
Increase ( decrease) in deferred revenue
Sales of investment securities - trading               113,340                0
                                                   -----------      -----------
Net cash provided by (used from)
Operating activities                                     9,335         (552,782)
                                                   -----------      -----------

Cash flows from investing activities:
Purchases of equipment                                                   (1,102)
Payments received from leases                           28,632           25,158
Note Receivable                                       (450,000)               0
                                                   -----------      -----------
Net cash (used from) provided by                      (421,368)          24,056
                                                   -----------      -----------
Investing activities

Cash flows from financing activities:
Net cash used from financing activities                   NONE             NONE
                                                   -----------      -----------

Net increase (decrease) in cash and cash
Equivalents                                           (412,033)        (528,726)
Cash and cash equivalents - beginning of
Period                                                 535,651        1,906,085
                                                   -----------      -----------
 
Cash and cash equivalents - end of period          $   123,618      $ 1,377,359 
                                                   ===========      =========== 
Supplemental Cash Flow Information:  
Cash payments for interest                                   0      $     7,765
                                                   ===========      =========== 

Supplemental Schedule of Non-Cash  
Investing and Financing  Activities:                      NONE             NONE 
                                                   ===========      =========== 
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ETHIKA CORPORATION (Unaudited)
MARCH 31, 1998

NOTE 1 - BUSINESS COMBINATION

On January 26, 1998,  the  Corporation  entered  into an  Agreement  and Plan of
Reorganization  (the  "Reorganization  Agreement")  with North American  Digicom
Corporation  ("NADC"),  a privately  owned  company  headquartered  in Lakewood,
Colorado,  to  acquire  100%  of the  outstanding  common  stock  of  NADC.  The
Reorganization Agreement requires that the Corporation's common stock be reverse
split on the basis of one (1) new share for every twenty-two and one half (22.5)
shares presently  outstanding with all fractional shares being rounded up to the
next highest  multiple of fifty (50) shares.  Then the shareholders of NADC will
exchange  their  common  stock for Ethika  common stock at the rate of three (3)
shares  of Ethika  common  stock for four (4)  shares  of NADC  stock.  The NADC
shareholders  will  receive  approximately  19.6  million  post-split  shares of
Ethika,  which will represent  approximately 95% of the then outstanding shares.
The  Reorganization  Agreement also requires that the Corporation's  Articles of
Incorporation be amended to eliminate the par value of the Corporation's  common
stock,  authorize a class of preferred stock whose rights and preferences can be
set by the Board of Directors and authorize a name change of the  Corporation to
North American Digicom Corporation.  The Reorganization Agreement also calls for
the  Corporation's  shareholders  to approve a re-domicile of the Corporation to
Colorado. This transaction is a reverse acquisition,  where NADC will become the
historical  reporting  company  and is treated as the  acquirer  for  accounting
purposes.

Closing of the  Reorganization  Agreement is  conditioned  upon surrender of the
NADC common stock in exchange for the Corporation's common stock and approval of
the Reorganization by Shareholders at the Annual  Shareholders  meeting together
with  approval  by  shareholders  of the reverse  split and the above  described
amendments  to the  Corporation's  Article of  Incorporation.  Closing  was also
conditioned  upon the  execution  of a Voting Trust  Agreement by a  stockholder
group which holds  fifty-one  percent (51%) of the  Corporation's  common stock.
This  Voting  Trust  Agreement  was  executed  on or about  March  16,  1998 and
irrevocably gives the Trustee (Frank Grey, who is a member of Ethika's Board and
President of NADC) voting  authority  over the subject common stock and requires
the  Trustee  to vote in  favor  of the  items  included  in the  Reorganization
Agreement.  The NADC  shareholders must also provide their approval of the terms
and conditions of this transaction.

NADC is a mass  communications  company  which  integrates  retail and wholesale
long-distance  services including  nationwide  internet services,  prepaid phone
cards  through  its  wholly-owned  subsidiary,   United  Online,   violence-free
television   programming   distributed   nationwide   through  its  wholly-owned
subsidiary,  kidZtime TV TM, Inc., and other  telecommunications  services under
one umbrella  utilizing the most current technology in providing services to its
customers.

Subsequent  to the  approval  of the  Reorganization  Agreement  by the Board of
Directors  of Ethika and NADC,  Ethika  extended a line of credit to NADC not to
exceed $500,000 to be secured by NADC's equipment and accounts receivable. As of
March 31, 1998, $450,000 with interest at 6% has been advanced against this line
of credit.
<PAGE>
Additionally,  the Board of Directors and  management has determined it to be in
the  best  interest  of the  Corporation  to  divest  itself  of its  electronic
publishing   business   units   and   focus  its   attentions   on  the   NADC's
Tele-communications business.

On February 17,  1998,  the  Corporation  completed  the sale of Text  Retrieval
Systems,  Inc. to TRS Acquisition  Corporation,  a closely held  corporation for
$150,000 cash and future  royalties not to exceed  $1,500,000  over the next ten
years.  Moreover on April 2, 1998 the Corporation  completed a transaction  with
Ben Ezra  Weinstein and Company,  Inc., a publicly  held New Mexico  corporation
("BNEZ") engaged in the electronic  publishing of financial software to sell CDS
and its 8% equity interest in InfoDynamics,  Inc., including the note receivable
from  InfoDynamics,  Inc. The selling price of $850,000 was paid in  convertible
preferred  stock of BNEZ which has not  resulted  in any  impairment  of the net
assets. In March 1998, the Corporation initiated  negotiations with BNEZ to sell
Legislative  Information  Systems,  Inc.  (LIS).  The  selling  price  for  this
transaction is also expected to be paid in securities of BNEZ.

NOTE 2--BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations:  Ethika  Corporation  (the  "Corporation")  operates as an
applied technology company through its wholly-owned subsidiaries, Text Retrieval
Systems,  Inc.  ("TRS"),  Compass Data  Systems,  Inc.  ("CDS") and  Legislative
Information  Systems,  Inc. ("LIS").  TRS, CDS and LIS are engaged in publishing
electronic  libraries  that link related data sources for  convenient  access by
personal  computers.  Certain  products of TRS, CDS and LIS are sold nationally,
while others are specific to states such as Florida, Missouri, and Kansas.

Basis of Presentation:  During the first quarter of 1998, the Board of Directors
and management  began to implement a plan of disposition  for the  Corporation's
operating units; TRS, CDS and LIS.  Accordingly,  the operations of this segment
have been presented as  discontinued  operations in the  accompanying  financial
statements.

Principles of Consolidation:  The consolidated  financial statements include the
financial  statements of the Corporation and its wholly owned subsidiaries.  All
significant inter-company accounts and transactions have been eliminated.

Cash and Cash Equivalents:  Cash and cash equivalents  include cash in banks and
money-market investments,  which carry no withdrawal restrictions, and that have
original maturity of ninety days or less.

Investments: At March 31, 1998 and December 31, 1997, marketable securities were
classified  as trading,  which,  under the  provisions of Statement of Financial
Accounting  Standards No. 115 - Accounting  for Certain  Investments in Debt and
Equity Securities, were reported at market value with unrealized market gains or
losses being reflected in the statement of operations.

Revenue  Recognition:  The  Corporation  recognizes  revenue for software  sales
ratably over the period of each product's  subscription  life. The Corporation's
various  products are updated  annually,  quarterly and monthly based on content
availability and/or specific customer agreements.  Revenue associated with sales
of TRS' primary  product are not  recognized  until cash is collected due to the
customers'  right of return and  limited  history of  returns  for the  product.
Revenue  associated  with customer  programming is recorded,  when completed and
billed.
<PAGE>
Property  and  Equipment:  Property  and  equipment  are  stated  at  cost  less
accumulated  depreciation.  Depreciation  is  computed  using the  straight-line
method over the  estimated  useful  lives of these assets which are thirty years
for the building;  three years for computer  hardware and software;  and five to
seven years for furniture and fixtures.

Inventory:   Inventory  consists  primarily  of  software  product  manuals  and
promotional materials. Inventory is valued based on an average cost method.

Intangible  Assets:  Intangible  assets  consist  primarily  of assets  acquired
through the acquisitions of TRS and CDS. Acquired goodwill and software products
are amortized  over three years.  Non-compete  agreements are amortized over the
life of the related agreement (2-3 years). The Corporation regularly reviews its
ability to realize future economic  benefit from software  products and goodwill
based upon the expected future cash flows of the related subsidiary or product.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
the  disclosure  of  contingent   liabilities  at  the  date  of  the  financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Actual results could differ from those estimates.

Income Taxes: Deferred taxes are provided on a liability method whereby deferred
tax assets are  recognized for deductible  temporary  differences  and operating
loss and tax credit  carry-forwards  and deferred tax liabilities are recognized
for taxable  temporary  differences.  Temporary  differences are the differences
between the  reported  amounts of assets and  liabilities  and their  income tax
bases.  Deferred tax assets are reduced by a valuation  allowance  when,  in the
opinion of  management,  it is more likely than not that some  portion or all of
the  deferred  tax  assets  will  not  be  realized.  Deferred  tax  assets  and
liabilities  are  adjusted  for  changes  in tax laws  and  rates on the date of
enactment.

Financial instruments that potentially subject the Corporation to concentrations
of credit risk consist principally of trade accounts receivable. The Corporation
extends  credit  to its  customers  based  on an  evaluation  of the  customer's
financial condition, generally without requiring collateral.  Exposure to losses
on accounts  receivables  is primarily  dependent on each  customer's  financial
condition. The Corporation monitors its exposure for credit losses and maintains
allowances for such losses.

Earnings Per Share: The Corporation  adopted  Statement of Financial  Accounting
Standards No. 128,  "Earnings Per Share" ("SFAS No. 128") during 1997.  SFAS No.
128 provides for new  accounting  principles  to be used in the  calculation  of
earnings per share and was effective for financial  statements  for both interim
and annual periods ended after December 15, 1997. The  Corporation  has restated
its net loss per share for all periods  presented to give effect to SFAS No. 128
and to reflect the acquisition of LIS. Basic and diluted  earnings per share are
based on the weighted average number of common shares  outstanding of 20,360,346
at March 31, 1998 and 12,567,706, for the three months ended March 31, 1997.

Restatement and Reclassifications:  Certain 1997 amounts have been retroactively
restated  to reflect  the merger  with LIS,  which has been  accounted  for as a
pooling-of-interests.  Certain amounts in the prior years'  statements have been
reclassified to conform with the current year financial statements.
<PAGE>
NOTE 3 - DISCONTINUED OPERATIONS

In February 1998, the Corporation's  Board of Directors and management adopted a
formal plan to divest itself of its electronic  publishing business,  consisting
of TRS, CDS and LIS (collectively the "Segment"),  based upon an analysis of the
electronic  publishing market and the amount of capital that management  expects
will be required to compete effectively in that market, together with the recent
poor performance  that the Corporation has experienced  since its entry into the
industry.  The Segment represents  virtually all of the Corporation's assets and
operations.  The Segment has been accounted for as a  discontinued  operation in
accordance  with APB 30,  which  among  other  provisions  requires  the plan of
disposal  to  be  carried  out  within  one  year.  Accordingly,  the  financial
statements have been restated for this  transaction.  A provision of $80,000 was
recorded in the December 31, 1997  financial  statements  related to anticipated
losses from the operations of the Segment  through the actual  disposal dates. A
$10,132 change was recorded  against this accrual at March 31, 1998 to recognize
the effect of the sale of TRS.  Further,  net  assets  consisting  primarily  of
accounts  receivable,  notes  receivable,  property and equipment,  intangibles,
accounts payable and deferred revenue of this segment have been  reclassified to
net assets held for sale.

As a part of the plan of disposal,  the Corporation completed the sale of TRS to
TRS Acquisition  Corporation,  a closely held corporation,  for $150,000 in cash
and future royalties not to exceed $1,500,000 over the next ten years.

Additionally, on April 2, 1998, the Corporation completed a transaction with Ben
Ezra  Weinstein  and  Company,   Inc.  ("BNEZ"),  a  publicly  held  New  Mexico
corporation engaged in the electronic  publishing of financial software, to sell
CDS and its 8% equity  interest in  InfoDynamics,  including the note receivable
from  InfoDynamics.  The  selling  price of  $850,000  was  paid in  convertible
preferred  stock of BNEZ which has not  resulted  in any  impairment  of the net
assets. In March 1998, the Corporation also initiated  negotiations with BNEZ to
sell LIS. The selling price for this  transaction is expected to also be paid in
convertible  preferred  stock of BNEZ.  No  provision  for loss on sale of these
subsidiaries  has been provided as the management  expects that the value of the
securities received will exceed the net book value of the Segment.  However, the
preferred  stock  will not be  convertible  to common  stock for a period of one
year.

NOTE 4 - CONTINGENCIES

The Corporation was notified by Standard Management Corporation on June 26, 1997
that its subsidiary, Standard Life Insurance of Indiana, had received a Citation
and Original  Petition  captioned  "Rilla Lindley versus Standard Life Insurance
Company of Indiana, Dixie National Life Insurance Company, Randy Owens" filed in
2nd Judicial District Court, Parish of Brenville, State of Louisiana. Standard's
notification  constituted a claim notice  pursuant to Section 10.3 of the Second
Restated  Stock Purchase  Agreement  dated August 30, 1995 by and among Standard
Life and  Dixie  National  Life  and  Dixie  National  Corporation  (now  Ethika
Corporation)  in  which  Ethika  agreed  to  indemnify  Standard  under  certain
conditions against qualified third-party claims originating prior to the sale of
Dixie National Life to Standard. The scope of Ethika's indemnity obligation,  if
any, under the Agreement is limited to claims  predicated upon occurrences prior
to closing  based on actions  or  inactions  of Dixie  National  Life  Insurance
Company.
<PAGE>
The third-party  claim  involves,  among other things,  allegations  regarding a
vanishing  premium life insurance policy issued by Dixie National Life which was
purchased by the plaintiff in August 1989 from defendant Owens, an employee of a
general  insurance  agency in  Louisiana.  The claim appears to be styled in the
form of a class action. An investigation into the Citation's  allegations by the
defendants,   including  legal  representation  of  the  Corporation,  has  been
initiated.  Potential  liabilities,  if any, of the various  defendants have not
been determined.

Pursuant to agreements  with Plaintiff  counsel no answer would be filed pending
settlement  discussions and the filing of an amended complaint properly pleading
as a class action suit. In January 1998,  the  Corporation  informed SMC that it
could  not  defend  the  action.  To the  Corporation's  knowledge,  no  further
settlement discussions have been held and no amended complaint has been filed.

NOTE 5 - GOING CONCERN

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. For the three month period ended March
31, 1998, the Company incurred a loss of $104,619 and had an accumulated deficit
of $10,640,346 that raise  substantial  doubt about its ability to continue as a
going concern.  Additionally,  Ethika and NADC, the entity that the  Corporation
has proposed  acquiring,  received going concern  opinions from their respective
independent   accountants  with  regard  to  the  December  31,  1997  financial
statements.

The  Corporation  anticipates  that  through  its reverse  acquisition  of North
American  Digicom  Corporation,  the  combined  company  will be able to  obtain
additional debt or equity capital.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Liquidity and Capital Resources

Heavy cash drains were placed upon the Corporation as a result of the litigation
activities,  failed  acquisition  attempts  and  continued  negative  cash flows
experienced by the TRS and LIS divisions  during the last six months of 1997 and
the first two months of 1998. As a result of these developments, management does
not  believe  that  its  current  working  capital  and  anticipated  levels  of
internally generated funds will be sufficient to fund its operating requirements
for 1998 and management has sought to cut the Corporation's operational expenses
through divestiture of its unprofitable  subsidiaries so that it may concentrate
its capital  resources on the  Tele-communications  business.  In February 1998,
Text  Retrieval  Systems was sold and on April 2, 1998,  Compass Data Systems of
Salt Lake City, Utah was sold. Additionally,  a letter of intent has been signed
for the sale of Legislative Information Systems, Inc., pending completion of due
diligence by the buyer.


Results of Operations

Three Months Ended March 31, 1998 Compared to Restated  Three Months Ended March
31, 1997

The three  months  ended March 31,  1998,  generated a net loss from  continuing
operations of $104,619  ($.005 per share)  compared to a loss of $105,540 ($.008
per share) for the comparable  period of 1997. This decrease  results  primarily
from  reduction  in  staffing  at  the  Corporate  headquarters.   A  loss  from
discontinued  operations of $63,506 ($.003 per share) was offset against amounts
accrued at December 31, 1997 compared to $433,714 ($.035 per share) for the same
period  in  1997.  This  reduction  results  primarily  from the sale of the TRS
division in February and positive  earnings  reported by the  Company's  Compass
Data Systems division for the three month period.

Part II Other Information

NONE

Item 6 - Exhibits and Reports on 8K

         (a)       Exhibits
                  (27) Financial Data Schedule


         (b)      NONE

<PAGE>



                                   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)             
                                                                               
Date:    May 8, 1998                            /s/Dennis Brovarone            
                                                -------------------            
                                                President                      
                                                                               
Date:    May 8, 1998                            /s/David E. Williams           
                                                --------------------           
                                                Vice President Finance         
                                                And Chief Financial Officer