<PAGE>

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

                                  FORM 10-QSB

(Mark One)

 [X]              QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended January 31, 1997

 [  ]             TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE
                  EXCHANGE ACT

                  For the transition period from      to 

                         Commission file number 0-12646

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

                     Delaware                               31-1065350
         (State or other jurisdiction of                  (IRS Employer
         incorporation or organization)                   Identification No.)

               1895 Airport Exchange Boulevard, Erlanger, KY 41018
                    (Address of principal executive offices)

                                 (606) 282-0020
                           (Issuer's telephone number)

------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

As of February 28, 1997, there were 22,893,178 shares of Common Stock
outstanding.

TOTAL PAGES IN THIS REPORT:   11 (excluding cover but including signature page)

<PAGE>

                                      INDEX

PART I.   Financial Information                              Page No.
                                                             --------

          Item 1.  Financial Statements

                   Balance Sheets                              2-3

                   Statements of Operations                      4

                   Statements of Cash Flows                      5

                   Notes to Financial Statements               6-7

          Item 2.  Management's Discussion and Analysis
                   of Financial Condition and Results of
                   Operations                                  8-9

PART II.  Other Information

          Item 6.  Exhibits                                     10

SIGNATURES                                                      11

<PAGE>

                           Angstrom Technologies, Inc.
                                  Balance Sheet

<TABLE>
<CAPTION>
                                                         Jan. 31,         Oct. 31, 
                                                           1997             1996
                                                        (Unaudited)         (Note)
<S>                                                     <C>               <C>
Assets
Current assets:
  Cash and cash equivalents                             $   127,697       $   24,175
  Short-term investments                                    696,348          816,517
  Accounts receivable                                       132,981          110,940
  Interest receivable                                         4,794            6,093
  Inventories:
    Finished goods                                           31,054           30,168
    Work in process                                          11,963           12,906
    Raw materials and parts                                 521,811          522,931
                                                      -----------------------------------
                                                           564,828           566,005
  Prepaid expenses                                           3,151             1,181
                                                      -----------------------------------
Total current assets                                     1,529,799         1,524,911

Furniture and equipment, at cost                           151,208           141,789
  Less accumulated depreciation                             51,343            46,609
                                                      -----------------------------------
Net furniture and equipment                                 99,865            95,180

Patents, less accumulated amortization of $6,027            96,367            97,877
                                                      -----------------------------------
Total assets                                            $1,726,031        $1,717,968
                                                      ===================================
</TABLE>

NOTE: The balance sheet at October 31, 1996 has been derived from the audited
financial statements at that date, but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. See accompanying notes.

                                      -2-

<PAGE>

                          Angstrom Technologies, Inc.
                           Balance Sheet (continued)

<TABLE>
<CAPTION>

                                                                            Jan. 31,       Oct. 31, 
                                                                             1997            1996
                                                                         (Unaudited)        (Note)
<S>                                                                   <C>                 <C>
            Liabilities and capital
            Current liabilities:
               Accounts payable                                        $   114,323      $   190,938
               Accrued liabilities                                          66,037           55,520
               Long-term debt due within one year                           26,858           26,068
                                                                       -----------       ----------
            Total current liabilities                                      207,218          272,526

            Long-term debt                                                  61,367           68,386

            Capital:
               Preferred stock, $.01 par value; 5,000,000 shares 
                 authorized, 1,449,595 issued and outstanding 
                 (liquidation preference of $2.00 per share)             2,385,132        2,439,483
               Common stock, $.01 par value; 45,000,000 shares 
                 authorized, 22,600,698 shares issued and outstanding      226,007          224,690
               Additional paid in capital                                4,779,120        4,726,086
               Accumulated deficit                                      (5,932,813)      (6,013,203)
                                                                       ----------------------------
            Net capital                                                  1,457,446        1,377,056
                                                                       ----------------------------

            Total liabilites and capital                                $1,726,031       $1,717,968
                                                                       ============================
</TABLE>

NOTE: The balance sheet at October 31, 1996 has been derived from the audited
financial statements at that date, but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. See accompanying notes.

                                      -3-

<PAGE>

                           Angstrom Technologies, Inc.
                            Statements of Operations

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended Jan. 31
                                                        1997             1996   
                                                     ---------------------------
<S>                                                  <C>            <C>
Net sales                                            $ 422,796      $   198,499

Cost of Sales                                          119,450          140,157
                                                     ---------------------------
Gross profit                                           303,346           58,342

Selling, general and administrative expenses           227,365          179,859
Interest expense                                         2,772           (3,472)
Interest income                                         (7,181)          17,510
Gain on security sale                                        -            4,028
                                                     ---------------------------
                                                       222,956          197,925

Net income (loss)                                       80,390         (103,451)
Less dividend requirement on preferred stock           (45,984)         (44,045)
                                                     ===========================
Net loss applicable to common stock                  $  34,406      $  (147,496)
                                                     ---------------------------

Net loss per common share                            $       -      $     (0.01)
                                                     ===========================

Weight Average Number of Shares Outstanding          22,486,623       21,760,958
                                                     ===========================
</TABLE>

See accompanying notes.

                                       -4-

<PAGE>

                           Angstrom Technologies, Inc.
                            Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                            Three Months ended Jan. 31,
                                                                1997             1996
                                                         -----------------------------------
<S>                                                      <C>                <C>
Operating activities
Net income (loss)                                          $   80,390       $ (103,451)
Adjustments to reconcile net loss to net cash 
  used by operating activities:
   Depreciation and amortization                               6,243            3,672
   Changes in operating assets and liabilities:
     Accounts receivable                                     (22,041)          60,008
     Interest receivable                                       1,299                -
     Inventories                                               1,177          (49,295)
     Prepaid expenses                                         (1,970)          51,287
     Accounts payable                                        (76,615)         (12,980)
     Accrued liabilities                                      11,308          (26,426)
                                                         -----------------------------------
Net cash used by operating activities                           (209)         (77,185)
Investing activities
Purchases of furniture and equipment                          (9,419)         (24,214)
Proceeds from sale of investments                            120,169           66,267
Capitalization of patents                                          -          (15,730)
                                                         -----------------------------------
Net cash provided by investing activities                    110,750           26,323
Financing activities
Payment of preferred stock dividend                               -                -
Principal repayments of long-term debt                        (7,019)          (5,537)
                                                         -----------------------------------
Net cash used by financing activities                         (7,019)          (5,537)
                                                         -----------------------------------
Net increase (decrease) in cash                              103,522          (56,399)
Cash and cash equivalents at beginning of year                24,175          129,308
                                                         -----------------------------------
Cash and cash equivalents at end of year                  $  127,697        $  72,909
                                                         ===================================
Supplemental cash flow disclosures
Cash paid for interest                                    $   2,772        $   3,473
</TABLE>

See accompanying notes.

                                      -5-

<PAGE>

                           ANGSTROM TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS

                                   (UNAUDITED)

Note 1   The accompanying financial statements have been prepared in accordance
         with generally accepted accounting principles for interim financial
         information. Accordingly, they do not include all of the information
         and footnotes required by generally accepted accounting principles for
         complete financial statements. In the opinion of management, all
         adjustments (consisting of normal recurring accruals) considered
         necessary for a fair presentation have been included. Operating results
         for the three month period ended January 31, 1997 is not necessarily
         indicative of the results that may be expected for the year ended
         October 31, 1997. For further information, refer to the financial
         statements and footnotes thereto included in the Company's annual
         report on Form 10-K for the year ended October 31, 1996.

Note 2   Earnings per common share are calculated based upon a weighted
         average of shares outstanding after giving effect to the preferred
         dividend requirements.

Note 3   The preferred stock issued December 22, 1993 provided for an annual
         cumulative dividend to be paid on November 1, 1995. Management has
         determined that available funds would be more prudently utilized in its
         ongoing research and development efforts and as a result no accrual or
         payment of dividend will be made until such time as sufficient cash
         flows are generated from operations. Management intends to hold the
         dividend payable as of November 1, 1996, in arrears. No dividend was
         accrued for the year ended October 31, 1996. The amount that would have
         been accrued at October 31, 1996, if a dividend had been recorded,
         would have been $237,206 ($.16 per preferred stock share outstanding at
         November 1, 1996). No dividend has been accrued for the three month
         period ended January 31, 1997. The amount that would have been accrued
         at January 31, 1997, if a dividend had been recorded, would have been
         approximately $45,984.

Note 4   On December 3, 1993, the shareholders of the Company approved an
         amendment to the Company's certificate of incorporation increasing the
         authorized number of shares of common stock to 45,000,000 from
         25,000,000, increasing the authorized number of preferred stock to
         5,000,000 from 2,000,000 and reducing the par value of the preferred
         stock to $.01 per share from $10.00 per share.

         On December 22, 1993, the Company completed the issuance of 1,725,000
         units of its securities through a public offering, resulting in net
         proceeds of $2,838,454 after offering expenses. Each unit consists of
         one share of the redeemable convertible preferred stock and one Class A
         redeemable common stock purchase warrant. Each share of preferred stock
         is convertible into four shares of the Company's common stock and each
         Class A warrant entitles the holder to purchase one share of the

         Company's common stock for $1.00 and to receive one Class B redeemable
         common stock purchase warrant which entitles the holder to purchase one
         share of the Company's common stock for $1.50.

         For the three months ended January 31, 1997, preferred stock
         conversions were as follows:

                  Conversion         Preferred Stock       Common Stock
                     Date               Converted            Received
                  ----------           ------------        ------------  
                  12/24/96                 2,000             8,000
                  12/26/96                 4,780            19,120
                  01/03/97                 2,500            10,000
                  01/20/97                17,000            68,000
                  01/30/97                 6,660            26,640
                                         -------           -------
                                          32,940           131,760
                                          ======           =======

                                      -6-
<PAGE>

         The preferred stock has a liquidation preference of $2.00 per share, an
aggregate of $2,899,190.

Note 5   Effective November 1, 1993, the Company adopted Statement of
         Financial Accounting Standards No. 109 "Accounting for Income Taxes."
         The standard requires the use of the liability method to recognize
         deferred income tax assets and liabilities, using expected future tax
         rates.

         The cumulative effect of adopting the standard and the effect of
         applying the standard on the operating statement for the period ended
         January 31, 1994 was zero. The tax effects of the net operating loss
         carryforwards and temporary differences that give rise to deferred
         income tax assets and a corresponding valuation allowance at January
         31, 1997 and October 31, 1996 are presented below:

                                              January 31,           October 31,
                                                  1997                  1996
                                             ------------           -----------
         Deferred tax assets:

              Net operating loss               $1,466,000            $1,498,000
              Other, net                            6,200                 5,000
                                             ------------           -----------

              Total deferred tax assets         1,472,200             1,503,800
              Less:  valuation allowance       (1,472,200)           (1,503,800)
                                               ----------            ----------

                   Net Deferred Tax Asset   $         -0-        $           -0-
                                            ===============      ===============


         The company entered fiscal 1997 with cumulative net operating loss
         carryforwards of approximately $3,800,000 for federal income tax
         purposes which expire in the years 2000 to 2010. As a result of a
         capital stock transaction in May 1989, a change in ownership, as
         defined by Section 382 of the Internal Revenue Code, occurred. The
         effect of the change in ownership is to severely limit the future
         utilization of the net operating loss carryforward existing at that
         date.

                                      -7-

<PAGE>

Item 2.       Management's Discussion and Analysis of

              Financial Condition and Results of Operations

Fiscal 1997 First Quarter Compared to Fiscal 1996

        Net sales for the first quarter of Fiscal 1997 were approximately
$422,800, an increase of approximately 113% from the approximately $198,500 in
net sales in the corresponding quarter of fiscal 1996. This increase in sales
was a result of significantly higher sales of chemicals made to the
subcontractor for the U.S. Postal Service on a new order relating to the
Company's prior work on certified mail labels, as well as increased sales of
scanners and chemicals to other clients. Cost of sales decreased materially from
70.6% to 28.3% due to the higher margins associated with the high volume
of first quarter chemical sales, as well as reflecting increased efficiencies 
in production methods put in place.

        Selling, general and administrative expenses increased from
approximately $179,900 in the prior year's first quarter to approximately
$227,400 in the first quarter of fiscal 1997. These increases were primarily due
to the increase in sales commissions, which were directly tied into the increase
in sales.

        The Company generated net income of $80,390 before dividend requirements
in the first quarter of Fiscal 1997 as compared with a net loss of $103,451
before dividend requirements in the prior year's comparable period. Continuing
its policy of conserving cash to meet operating requirements, the Company has
declined to accrue a preferred stock dividend for the periods in reference.

        Research and development expenses totaled approximately $93,600 during
the recent quarter, as compared to approximately $90,000 in the prior year's
comparative period, as the Company continued to focus its efforts on sweeping
various electronic functions into a single microprocessor chip of special
design, while continuing its development of additional chemical compounds and
refinements to its existing line of scanners and readers.

 Liquidity and Capital Resources

        The Company's primary need for cash is to support its programs and its
ongoing operating activities. The Company's primary sources of liquidity have
historically been cash provided by financing activities. The Company has never

generated significant cash flows from its operations and has depended upon
financing from outside sources to maintain itself.

        The Company had cash and cash equivalents, and investments of $824,045
as at the end of the first quarter Fiscal 1997 as compared with $840,692 as at
the end of Fiscal 1996, reflecting in a decrease in these categories of $16,647.
It experienced a slight increase in trade accounts receivable of $22,041, while
inventory remained at relatively constant levels. As indicated in Note 3 to
these financial statements, no preferred dividend has been accrued for the first
quarter of Fiscal 1997 since management has determined to conserve available
funds and maintain the Company's liquidity in light of its needs to continue
developmental and marketing expenditures referred to hereinabove. The Company
anticipates that existing funds will enable

                                       8

<PAGE>

it to fund its operating and capital needs through at least October 31, 1997,
the end of its current fiscal year, and for some time thereafter. The Company
may require additional financing after such time depending on the status of its
sales efforts and whether sufficient revenues and contractual commitments have
been received from its customers to enable it to function with sufficient
liquidity. The Company is not able at this time to predict the amount or
potential source of such additional funds and has no commitment to obtain such
funds.

 Federal Income Taxes

        Effective November 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes". The standard
requires the use of the liability method to recognize deferred income tax assets
and liabilities, using expected future tax rates.

        The tax effects of the net operating loss carryforwards and temporary 
differences that give rise to deferred income tax assets and a corresponding 
valuation allowance and deferred tax liabilities at January 31, 1997 and 
October 31, 1996 is presented below.

Deferred tax assets:                        January 31, 1997    October 31, 1996
                                            ----------------    ----------------
        Net Operating Loss                     $1,466,000         $ 1,498,000
        Other Net                                   6,200               5,800
                                               ----------         -----------
Total deferred tax assets                      $1,472,200           1,503,800
        Less:  Valuation allowance             (1,472,200)         (1,503,800)
                                               ----------         -----------
Net deferred tax asset                         $   -0-            $    -0-
                                               ==========         =========== 
                                                

                                                                        
        The Company has cumulative net operating loss carryforwards of
approximately $3,800,000 for federal income tax purposes which expire between
the years 2000 to 2010. As a result of a capital stock transaction in May 1989,
a change in ownership, as defined by Section 382 of the Internal Revenue Code,
occurred. The effect of the change in ownership is to severely limit the future
utilization of the net operating loss carryforward existing at that date.

Other

        In the opinion of management, inflation has not had a material effect on
the operations of the Company.

                                        9

<PAGE>

                                     Part II

Other Information

Item 6.  Exhibits

              (a)    Exhibits

                     No exhibits are being filed with this Quarterly Report on
                     Form 10-QSB.

                                       10


<PAGE>

                                   SIGNATURES

        In accordance with the requirements of the Exchange Act, the registrant
has caused this report on Form 10-QSB to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                           ANGSTROM TECHNOLOGIES, INC.

        DATE:  March 14, 1997              By: s/Daniel A. Marinello
                                               ---------------------
                                               Daniel A. Marinello
                                               Chief Executive Officer
                                               and Chief Financial Officer


                                       11