U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended March 31, 1999.

[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act
    of 1934 (No Fee Required)
For the transition period from _______________ to _______________.

                          COMMISSION FILE NO. 333-68167

                                  CARDIA, INC.
                 (Name of small business issuer in its charter)

              MINNESOTA                                41-1923885
  (State or other jurisdiction of          (I.R.S. Employer Identification No.)
   incorporation or organization)

                13770 FRONTIER COURT, BURNSVILLE, MINNESOTA 55337
               (Address of principal executive offices) (Zip Code)

                                 (612) 997-2100
                            Issuer's telephone number


         Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [ ]

         Indicate the number of shares outstanding of each of the Issuer's
classes of common stock, as of the latest practical date: 1,059,000 shares of
Common Stock (par value $0.01 per share) outstanding on May 24, 1999.

<PAGE>


                                TABLE OF CONTENTS


                                                                           Page
                                                                          Number

                         PART I - FINANCIAL INFORMATION


Item 1. Financial Statements

           Balance sheet as of March 31, 1999 (Unaudited) and
            December 31, 1998 ...............................................  1
           Statement of Operations for the three months ended
            March 31, 1999 (Unaudited) and March 31, 1998 (Unaudited) .......  3
           Statement of cash flows for the three months ended
            March 31, 1999 (Unaudited) and March 31, 1998 (Unaudited) .......  4
           Notes to financial statements (Unaudited) ........................  5

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operation ............................................  9




                           PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K .................................... 11

<PAGE>


                                     PART I

                             FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



                                  CARDIA, INC.

                                  BALANCE SHEET



                                                March 31,      December 31,
                                                  1999             1998
                                              -----------      ------------
                                              (Unaudited)

ASSETS

CURRENT ASSETS
     Cash and cash equivalents                  $164,156         $    500
     Accounts receivable                         113,105           92,917
     Inventories                                  52,000           50,888
     Prepaid expenses                              2,621           11,285
                                                --------         --------

         TOTAL CURRENT ASSETS                    331,882          155,590
                                                --------         --------

PROPERTY AND EQUIPMENT - NET                      46,210           27,371
INTANGIBLE ASSETS - NET                           79,165           83,332
                                                --------         --------

TOTAL ASSETS                                    $457,257         $266,293
                                                ========         ========






                       See notes to financial statements.



                                       1
<PAGE>




                                  CARDIA, INC.

                                  BALANCE SHEET




                                                     March 31,      December 31,
                                                       1999            1998
                                                   -----------      -----------
                                                   (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Trade accounts payable                        $    51,948      $    63,651
     Accrued expenses                                   18,560               --
                                                   -----------      -----------

         TOTAL CURRENT LIABILITIES                      70,508           63,651
                                                   -----------      -----------

STOCKHOLDERS' EQUITY
     Common stock (10,000,000 shares
       authorized; 500,078 outstanding)                  5,000               --
     Advances by Applied Biometrics, Inc.                   --        1,496,894
     Accumulated deficit                            (1,457,916)      (1,294,252)
     Additional paid in capital                      1,839,665               --
                                                   -----------      -----------

         TOTAL STOCKHOLDERS' EQUITY                    386,749          202,642
                                                   -----------      -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $   457,257      $   266,293
                                                   ===========      ===========






                       See notes to financial statements.






                                       2
<PAGE>



                                  CARDIA, INC.


                             STATEMENT OF OPERATIONS
                                   (Unaudited)




                                                       Three months ended
                                                             March 31,
                                                  -----------------------------
                                                     1999               1998
                                                  ---------           ---------


Net Sales                                         $ 203,727           $  20,490
Cost of Sales                                       106,113               4,096
                                                  ---------           ---------
Gross Profit                                         97,614              16,394

Operating expenses:
         Selling, general and administrative        243,216             110,449
         Research and development                    18,062              71,489
                                                  ---------           ---------

NET LOSS                                          $(163,664)          $(165,544)
                                                  =========           =========

Net loss per share
         Basic                                         (.37)               (.44)
                                                  =========           =========
         Fully diluted                                 (.37)               (.44)
                                                  =========           =========

Weighted average shares outstanding                 441,666             375,000
                                                  =========           =========







                       See notes to financial statements.




                                       3
<PAGE>




                                  CARDIA, INC.

                             STATEMENT OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                               Three months ended
                                                                    March 31,
                                                            ------------------------
                                                              1999           1998
                                                            ---------     ----------
<S>                                                         <C>           <C>
Cash flows from operating activities:

         Net loss                                           $(163,664)    $(165,544)
         Adjustments to reconcile net income to net cash
              provided by operating activities:

              Depreciation and amortization                     4,167         4,167
              (Increase) decrease in accounts receivable      (20,188)      (20,490)
              (Increase) decrease in prepaid expenses           8,664             0
              (Increase) decrease in inventories               (1,112)      (20,000)
              Increase (decrease) in accounts payable         (11,703)       18,073
              Increase (decrease) in accrued liabilities       18,560             0
                                                            ---------     ---------
         Net cash used by operating activities               (165,276)     (183,794)
                                                            ---------     ---------

Cash flows from investing activities:

         Cash payments for the purchase of property           (18,839)       (3,855)
                                                            ---------     ---------
         Net cash used by investing activities                (18,839)       (3,855)
                                                            ---------     ---------

Cash flows from financing activities:

         Proceeds from issuance of common stock               125,000             0
         Investment by Applied Biometrics, Inc.               222,771       187,649
                                                            ---------     ---------
         Net cash used by financing activities                347,771       187,649
                                                            ---------     ---------

Net increase  in cash and equivalents                         163,656             0

Cash and equivalents, beginning                                   500             0
                                                            ---------     ---------
Cash and equivalents, ending                                $ 164,156     $       0
                                                            =========     =========
</TABLE>


                       See notes to financial statements.



                                       4
<PAGE>


                                  CARDIA, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)



1. Organization and Operations

Cardia, Inc. (Cardia or the Company) was formed in October 1998 as a subsidiary
of Applied Biometrics, Inc. (ABI). Prior to that time, the entity was operated
as the Transcatheter Closure Business (the Business) of ABI. Cardia was formed
to develop, manufacture, and market Transcatheter Closure devices (TCD's) which
are based on intellectual property rights ABI acquired in November 1997.

TCD's are a new generation of implantable device technologies, which are
delivered through a catheter to permanently repair certain cardiac defects in
children and adults.

In December 1998, the Board of Directors of ABI approved a plan to distribute
ABI's interest in the Company as a dividend to the shareholders of ABI (the
Distribution). Under the plan, ABI shareholders received one share of Cardia for
every 11.563 shares of ABI common stock. The Distribution to shareholders
occurred on February 11, 1999 with a total Distribution for 375,000 shares.

2. Basis of Presentation

The accompanying financial statements include the specifically identifiable net
assets of the transcatheter closure operations of ABI and the results of
operations of that business from the point of ABI's acquisition of the
underlying technology.

Costs related to functions performed by ABI have been charged to the Business.
Such costs allocated by ABI include certain general and administrative costs
such as personnel costs, legal costs and costs of the finance function. These
allocations of costs were determined in a manner which management considers to
reflect the incremental costs of providing these services. The terms of these
transactions and allocations of costs were determined between related parties
and may therefore differ from terms which would have occurred between wholly
unrelated parties or had the Business operated as a completely autonomous entity
since inception.

Prior to the Distribution, the Business' financing requirements were funded by
Applied Biometrics, Inc. No interest expense has been allocated or charged to
the Business for financing provided by ABI.

The financial information included herein may not necessarily be indicative of
the financial position, results of operations or cash flows of the Business in
the future or what the financial position, results of operations or cash flows
would have been if the Business had been a separate, independent company during
the periods presented.

The accompanying financial statements are unaudited and reflect all adjustments,
consisting only of normal recurring adjustments which are in the opinion of
management, necessary for a fair presentation. Operating results for the
three-month period ended March 31, 1999 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1999.



                                       5
<PAGE>

These financial statements should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1998, previously
filed with the SEC as part of Cardia's Annual report on form 10-KSB.

3. Summary of Significant Accounting Policies

ORGANIZATION

The Company operates in one industry segment and is engaged in the development,
manufacturing and marketing of Transcatheter Closure Devices.

FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS

The Business' financial instruments consist of short-term trade receivables and
payables for which the current carrying amounts approximate fair market value.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and 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 these estimates.

CASH AND CASH EQUIVALENTS

Cash equivalents are highly liquid marketable securities with original
maturities of three months or less.

INVENTORY

Inventory is stated at the lower of cost (first-in-first-out basis) or market.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost with depreciation computed using the
straight-line method over the estimated useful lives of the assets. Expenditures
for additions and improvements are capitalized while repair and maintenance
costs are expensed as incurred.

INTANGIBLE ASSETS

The cost of acquired intangible assets is capitalized and amortized on a
straight-line basis over an estimated useful life of six years. The
recoverability of unamortized intangible assets is assessed on an ongoing basis
by comparing discounted future cash flows from the related product to net book
value.

REVENUE RECOGNITION

Revenue is recognized upon shipment of goods to customers.



                                       6
<PAGE>

CONCENTRATION OF CREDIT RISK

The Company does not believe it is subject to a concentration of credit risk.

RESEARCH AND DEVELOPMENT

The costs of research and development are expensed as incurred.

INCOME TAXES

Income taxes are accounted for using the liability method. The liability method
requires the recognition of deferred tax assets and liabilities for differences
between the financial reporting and income tax bases of the Company's assets and
liabilities.

NET LOSS PER SHARE

Earnings (loss) per share is computed by dividing net loss by the
weighted-average number of shares of common stock outstanding during the year.
For periods prior to the spin-off of Cardia from ABI, weighted-average shares
outstanding have been determined as if the distribution of shares in the
spin-off had occurred as of the inception of the Company. Common stock
equivalents, consisting of shares which might be issued upon exercise of stock
options are not included in weighted-average common shares for purposes of
determining diluted earnings per share in years where losses are reported since
their inclusion would be antidilutive. Pro forma loss per share is as follows:

                                                               March 31,
                                                          -------------------
                                                            1999       1998
Pro forma:

   Basic and diluted loss per share                       $   (.37)  $   (.44)

   Shares used in computing pro forma loss per share       441,666    375,000


RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities." This standard
establishes accounting and reporting standards for derivative instruments and
hedging activities. The Company must adopt this standard no later than fiscal
year 2000. Management believes the adoption of SFAS No. 133 will not have a
material effect on the Company's financial statements.

4. Stock Option Plan

On January 27, 1999, the Board of Directors and sole shareholder of the Company
adopted the Cardia, Inc. 1999 Omnibus Stock Incentive Plan to provide for the
granting of stock-based incentives to officers, key employees and directors of
the Company. The Company has reserved 200,000 shares of its common stock



                                       7
<PAGE>

for issue in connection with awards granted pursuant to the plan. Subsequent to
December 31, 1998, the Company issued options to purchase an aggregate of
132,500 shares of its common stock at exercise prices varying from $1.00 to
$1.10 per share.

5. Subsequent Events Capitalization and Financing

Subsequent to March 31, 1999, the Company completed a rights offering of its
common stock to sell an aggregate of 500,000 shares of common stock at a
subscription price of $1.00 per share, on the basis of one right for each share
of Cardia Stock held by a shareholder immediately after distribution.




                                       8
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

INTRODUCTION

         Cardia, Inc. was formed in October of 1998 as a subsidiary of Applied
Biometrics, Inc. ("ABI") to develop, manufacture and market transcatheter
closure device products for the repair of certain cardiac defects. These
products are based, in part, on certain intellectual property rights ABI
acquired from Bernhard Schneidt and Dr. Rainer Schrader in November of 1997.
Prior to October 1998, a division of ABI engaged in the development of
transcatheter closure devices. As of October of 1998, Cardia has assumed all
activity relating to the development and marketing of these products.

         On February 11, 1999, ABI distributed 375,000 shares of the Company's
common stock to ABI shareholders. Concurrent with the Distribution, the Company
sold 125,000 shares of Cardia common stock at a price of $1 per share to an
officer of the Company.

         Subsequent to the Distribution, the Company completed a rights offering
of its common stock to sell an aggregate of 500,000 shares of common stock at a
subscription price of $1 per share, on the basis of one right for each share of
Cardia stock held by a shareholder immediately after the Distribution.

         Cardia is currently developing two transcatheter closure device
products, one for the pediatric defect market and one for the adult defect
market. Cardia estimates that the market for adult closure devices is
significantly larger than the market for pediatric closure devices. Cardia,
therefore, intends to focus most of its resources during the next twelve months
on continuing to develop, test and pursue regulatory approval to market and sell
its adult line of closure devices in Europe and the United States.

RESULTS OF OPERATIONS

REVENUES

         Revenues for the quarter ended March 31, 1999 were $203,727 as compared
to revenues of $20,490 in the first quarter of 1998. To date, Cardia's modest
revenues have been generated by marketing its pediatric and adult closure
devices on an experimental basis in Germany and Switzerland. Cardia is currently
seeking the necessary regulatory approvals to market these devices on a broader
basis in additional European Union countries. However, Cardia has turned its
primary focus toward the development of its adult device and expects the
majority of future revenue to be generated from the sale of this product. Cardia
does not expect to realize significant revenues until product development is
complete and Cardia has obtained necessary regulatory approvals to market its
products in Europe and the United States.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Cardia expended $243,216 in the first quarter of 1999 on selling,
general and administrative expenses, up from $110,449 in the first quarter of
1998. The majority of these expenses are attributable to Cardia's sales and
marketing activities. These expenditures are not currently fixed costs and the
amount spent during the remainder of 1999 will depend largely on the performance
and growth of Cardia's business. Accordingly, Cardia will adjust these expenses
based on revenues and cash flows. Cardia does not expect



                                       9
<PAGE>

to make material capital investments in plant or equipment during 1999. However,
Cardia expects to add between four and six full-time employees during 1999.
Those additional personnel will not be added, however, unless business growth
justifies additional employees.

RESEARCH AND DEVELOPMENT

         Research and Development costs accounted for $18,062, or 7% of total
operating expenses, down from 40% in the first quarter of 1998. Cardia's
on-going plans for research and development for its pediatric and adult closure
devices include further improvements of the acquired technology and
investigation into modified devices for new applications. Cardia expects to
spend approximately $100,000 to $200,000 to complete development of its existing
closure devices during 1999.

NET LOSS

         Cardia recognized a loss of $163,664 in the first quarter of 1999 as
compared to a loss of $165,544 recognized in the first quarter of 1998.

LIQUIDITY AND CAPITAL RESOURCES

         Cardia's liquidity currently consists of approximately $625,000 in
cash, including the proceeds of the Company's rights offering, which are not
reflected on the Company's financial statements for the period reported on
herein. Assuming Cardia does not receive revenue from the sale of its closure
devices, Cardia believes that this liquidity will be sufficient to fund
operations for an estimated six months. At that time, Cardia intends to raise
additional capital through the issuance of equity or debt securities or through
bank debt, or a combination of these means.

FORWARD LOOKING STATEMENTS

         This form 10-QSB contains forward-looking statements that involve risks
and uncertainties. When used in this 10-QSB, the words or phrases "believes,"
"anticipates," "expects," "intends," "estimates" or similar expressions are
intended to identify forward-looking statements, but are not the exclusive means
of identifying such statements. These forward looking statements involve risks
and uncertainties that may cause our actual results to differ materially from
those expressed or implied by the forward looking statements. Important factors
that could cause our actual results to differ materially from projections
include, but are not limited to (1) Cardia's ability to comply with extensive
government regulations, (2) Cardia's ability to protect its proprietary
technology, (3) rapidly changing technologies and Cardia's ability to respond to
these changes, (4) Cardia's ability to obtain adequate insurance reimbursement
from government and private health care insurers, and (5) Cardia's ability to
retain qualified personnel. Readers are urged to carefully review and consider
the various disclosures made by Cardia in this report and in Cardia's other
reports filed with the Securities and Exchange Commission from time to time that
attempt to advise interested parties of the risks and factors that may affect
Cardia's business and results of operations. Cardia undertakes no obligation to
revise any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this report.




                                       10
<PAGE>


                                     PART II

                               OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              The following exhibit is included with this Quarterly Report on
              Form 10-QSB as required by item 601 of Regulation S-B:

              Exhibit 27.     Financial Data Schedule

         (b)  Reports on Form 8-K

              None.




                                       11
<PAGE>


                                   SIGNATURES

       Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on June 2, 1999.

                                           CARDIA, INC.

                                           By   /s/ Joseph A. Marino
                                              --------------------------------
                                                Chief Executive Officer



                                       12