<PAGE>


                       U.S. SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549
                                     FORM 10-QSB


          X        Quarterly Report pursuant to Section 13 or 15(d)of the
         ---       Securities Exchange Act of 1934

                   For the quarterly period ended September 30, 1996

                   Transition Report Under Section 13 or 15(d) of the
         ---       Securities Exchange Act of 1934

                   For the transition period from ____to____.


                           Commission File Number: 0-17119

                              ATHENA Medical Corporation
           ----------------------------------------------------------------
           (Each name of small business issuer as specified in its charter)

                Nevada                                          33-0202574
  ------------------------------------                      -----------------
    (State or other jurisdiction of                         (IRS Employer
      incorporation or organization)                        Identification No.)


                            10180 SW Nimbus Ave., Suite J5
                                  Portland, OR 97223
                    ----------------------------------------------
                       (Address of principal executive offices)

                                    (503) 968-8800
                              --------------------------
                             (Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes  X   No
                                                              ----    ----
As of September 30, 1996, the issuer had outstanding  9,458,597 shares of its
$.01 par value Common Stock.

Transitional Small Business Disclosure Format: (Check one) Yes      No   X
                                                              -----    -----


                                        Page 1

<PAGE>


                           PART I - FINANCIAL INFORMATION

The information included herein is unaudited.  However, such information
reflects all adjustments (consisting solely of normal, recurring adjustments)
which are, in the opinion of the Company's management, necessary for a fair
presentation of the results of operations for the interim periods.  The interim
financial information and notes thereto should be read in conjunction with the
Company's latest annual report on Form 10-KSB.  The results of operations for
the nine months ended September 30, 1996, are not necessarily indicative of
results to be expected for the entire year.


                                        Page 2

<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

                              ATHENA MEDICAL CORPORATION
                                    BALANCE SHEETS
                                  as of September 30
                                     (unaudited)

                                                     1996          1995
                                                -----------    -----------
ASSETS
CURRENT ASSETS:
    Cash and Cash Equivalents                      $329,599     $3,425,588
    Accounts Receivable, trade                       36,740         28,046
    Inventory                                       356,531         91,700
    Prepaids and Other                              181,188         69,666
                                                -----------    -----------
         Total Current Assets                       904,058      3,615,000

EQUIPMENT, FURNITURE and LEASEHOLDS, at cost        788,253        472,576
    Less: Accumulated Depreciation                 (207,581)       (68,748)
                                                -----------    -----------
                                                    580,672        403,828

PATENTS and LICENSES, net                            45,764         19,529

LOANS RECEIVABLE - Officers , Directors
 and Distributors                                   171,948        115,031
                                                -----------    -----------
         Total Assets                            $1,702,442     $4,153,388
                                                -----------    -----------
                                                -----------    -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Accounts Payable                               $186,209       $126,822
     Current Portion of Notes Payable               130,767              -
     Accrued Expenses                                21,150              -
     Accrued Salaries and Related Liabilities         6,144             60
                                                -----------    -----------
         Total Current Liabilities                  344,270        126,882

     Long-Term Notes Payable                        129,098              -
                                                -----------    -----------
          Total Liabilities                         473,368        126,882

STOCKHOLDERS' EQUITY
    Common Stock, $0.01 par value, authorized 33,000,000
     shares; issued  9,458,597
     and 8,928,243 shares                            94,586         89,282
    Additional Paid-in Capital                    9,337,254      8,233,538
    Accumulated Deficit                          (8,202,766)    (4,296,314)
                                                -----------    -----------
         Total Stockholders' Equity               1,229,074      4,026,506
                                                -----------    -----------
         Total Liabilities and
          Stockholders' Equity                   $1,702,442     $4,153,388
                                                -----------    -----------
                                                -----------    -----------


The accompanying notes are an integral part of these balance sheets.


                                        Page 3

<PAGE>

                              ATHENA MEDICAL CORPORATION
                               STATEMENTS OF OPERATIONS
                                     (unaudited)

<TABLE>
<CAPTION>

                                             For the three months ended         For the nine months ended
                                                    September 30                      September 30
                                        ------------------------------------------------------------------
                                              1996               1995           1996                1995
                                        -------------       -----------   ------------        -----------
<S>                                     <C>                 <C>           <C>                 <C>
Sales, net                                  $33,645                $467      $189,446             $48,467
Cost of Sales                                16,754               8,356        71,449              63,174
                                        -----------         -----------   -----------         -----------
Gross Margin                                 16,891              (7,889)      117,997             (14,707)

Gain on Sale of Equity
 Securities                                     -                   -             -                22,717

Operating Expenses:
     General and Administrative (A)         734,613             988,977     2,918,363           3,098,033
                                        -----------         -----------   -----------         -----------
          Net Loss                         $717,722            $996,866    $2,800,366          $3,090,023
                                        -----------         -----------   -----------         -----------
                                        -----------         -----------   -----------         -----------

Net Loss Per Share                            $0.08               $0.11         $0.31               $0.40
                                        -----------         -----------   -----------         -----------
                                        -----------         -----------   -----------         -----------

Weighted Average Shares Outstanding       9,198,742           8,928,243     9,035,089           7,698,509
                                        -----------         -----------   -----------         -----------
                                        -----------         -----------   -----------         -----------


</TABLE>


The accompanying notes are an integral part of these statements.


(A) Includes $642,633 for the nine months ended September 30, 1995 of non-cash
    expenses incurred in exchange for options and warrants.


                                        Page 4

<PAGE>


                              ATHENA MEDICAL CORPORATION
                               STATEMENTS OF CASH FLOWS
                             Increase (Decrease) in Cash
                                     (unaudited)

<TABLE>
<CAPTION>

                                            For the three months ended         For the nine months ended
                                                   September 30                      September 30
                                        ------------------------------------------------------------------
                                             1996               1995           1996                1995
                                         --------------     -------------  --------------     -------------
<S>                                      <C>                <C>            <C>                <C>
Cash Flows From Operating Activities:
Net Loss                                  $(717,722)       $(996,866)      $(2,800,366)       $(3,090,023)

Adjustments to reconcile net loss to
 net cash provided by (used  in)
 operating activities:
   Depreciation and amortization             41,560           25,551           118,620             61,666
   Amortization of deferred
    financing fee                                 -                -                 -            200,000
   Services received for options and
    warrants issued                               -          249,300                 -            642,633
   Loss on valuation of equity
    securities                                    -                -                 -             50,280
   Gain on sale of equity securities              -                -                 -            (22,717)
   Changes in working capital:
      Accounts receivable                   (28,289)             (46)          (34,675)           (28,046)
      Prepaid expenses and other            101,167          (18,274)           77,302            (44,253)
      Inventory                              31,785          (29,990)         (196,911)           (47,611)
      Accounts payable                       45,975           67,986           (10,338)           (57,623)
      Accrued salaries and related
       liabilities                          (11,641)          (1,079)           (9,576)           (45,998)
      Accrued expenses                        4,950                -           (48,850)                 -
                                          ---------      -----------        ----------        -----------
         Net cash used in
          operating activities             (532,215)        (703,418)       (2,904,794)        (2,381,692)

Cash Flows From Investing Activities:
   Purchases of equipment, furniture
    and leaseholds                             (615)        (243,692)         (243,974)          (299,517)
   Acquisition of licensing rights                -                -           (33,000)                 -
   Proceeds from sales of equity securities       -                -                               62,917
                                          ---------      -----------        ----------        -----------
      Net cash used in
       investing activities                    (615)        (243,692)         (276,974)          (236,600)

Cash Flows From Financing Activities:
   Additions to notes receivable,
    net of repayments                       (51,729)          (5,784)          (55,188)             4,969
   Net proceeds from sale of Common
    Stock, exercise of options and
    warrants and receipt of payment on
    subscription receivable                 827,750                -           842,650            123,625
   Proceeds from convertible
    debentures and notes payable                  -                -                 -          1,996,700
   Net proceeds from long-term
    debt, net of repayments                 (47,687)               -           259,864                  -
                                          ---------      -----------        ----------        -----------
      Net cash provided by (used
       in) financing activities             728,334           (5,784)        1,047,326          2,125,294
                                          ---------      -----------        ----------        -----------

Net Increase (Decrease) in Cash
 and Cash Equivalents                       195,504         (952,894)       (2,134,442)          (492,998)

Cash and Cash Equivalents, beginning
 of period                                  134,095        4,378,482         2,464,041          3,918,586
                                          ---------      -----------        ----------        -----------

Cash and Cash Equivalents, end of period   $329,599       $3,425,588          $329,599         $3,425,588
                                          ---------      -----------        ----------        -----------
                                          ---------      -----------        ----------        -----------

Supplemental Schedule of Non-Cash
 Financing Activities:
Issuance of Common Stock in
 exchange for convertible debentures              -                -                 -         $4,000,000


</TABLE>


The accompanying notes are an integral part of these statements.


                                        Page 5

<PAGE>


                              ATHENA MEDICAL CORPORATION
                            NOTES TO FINANCIAL STATEMENTS
                                  September 30, 1996


1.  ORGANIZATION OF THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION OF THE COMPANY
ATHENA Medical Corporation (the "Company") manufactures and distributes 
feminine health care products and diagnostics, including the Fresh 'n 
Fit-Registered Trademark- Padette (the "Padette"), a feminine protection 
product.  The Company entered into the United States retail distribution 
market during the first quarter of 1996.  Management has utilized a direct 
marketing approach in its initial roll-out of the Padette in the Southeast 
region of the United States. The Company sold a bulk shipment of 3.2 million 
Padettes during the first quarter, for distribution into the Chinese market.

The Company has experienced significant operating losses, and has not 
established a history of  revenues from product sales, nor is there any 
assurance of future revenues.  The Company contemplates that significant 
ongoing expenditures will be necessary to successfully implement its business 
plan, including developing, manufacturing and marketing its proprietary 
products. Execution of the Company's plans and its ability to continue as a 
going concern depend upon its ability to acquire substantial additional 
financing. Management's plans include efforts to obtain additional capital 
and to evaluate potential partnering opportunities.  The Company has 
demonstrated the ability to raise operating funds in the past by securing 
investments in its Common Stock of approximately $8.1 million through 
September 30, 1996; however, there can be no assurance that the Company's 
efforts to raise additional funding or enter into a business alliance will be 
successful. During the second quarter, the Company obtained a commitment for 
interim equity bridge financing of $1.225 million to cover operating 
expenses, costs associated with the roll-out of the Padette and to hire an 
international marketing and sales director, while the Company finalizes 
raising additional capital financing.  As of September 30, 1996, the Company 
received $725,000 of this commitment.  Currently, the Company is seeking to 
raise $5.5 million in a private equity placement.  If the Company is unable 
to obtain adequate additional financing, enter into a successful business 
alliance or generate sufficient profitable sales revenues, management may be 
required to curtail the Company's product development, marketing activities 
and other operations.

BASIS OF PRESENTATION
The interim financial data is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods.  The financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission.  Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make information presented not misleading.  It should be noted
that operating results for the periods presented are not necessarily indicative
of the results to be expected for the year ended December 31, 1996.  For further
information, refer to the financial statements and notes to financial statements
included in the Company's annual report on Form 10-KSB for the year ended
December 31, 1995.

PER SHARE DATA
The net loss per share was computed by dividing net loss by the weighted average
number of shares of the Company outstanding during the periods. Warrants and
options outstanding are not included as the effect would be anti-dilutive.

                                        Page 6

<PAGE>


INVENTORY
Inventory consists of materials and is valued at the lower of cost or market.
Cost is on a first-in, first-out basis.

EQUIPMENT, FURNITURE AND LEASEHOLD IMPROVEMENTS
Equipment, furniture and leasehold improvements are recorded at cost, except for
assets acquired in the 1994 acquisition of Xtramedics, Inc., which were recorded
at fair market value. For financial reporting purposes, depreciation, including
amortization of capitalized leases, is calculated using the straight-line method
over estimated useful lives ranging from three to ten years. Maintenance and
repair costs are expensed as incurred.

PATENTS, TRADEMARK AND LICENSES
Patents, trademark and licenses are recorded at cost, except for patents and
licenses acquired in the acquisition noted above, which were recorded at
estimated fair market value, net of amortization. Costs are amortized over the
remaining useful lives ranging from one to seventeen years.

INCOME TAXES
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). Under
SFAS 109, deferred tax assets and liabilities are recorded based on the tax
effected differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, using enacted marginal income
tax rates. There are no deferred tax balances at September 30, 1996 and 1995,
due to the Company's cumulative net operating losses.

STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers all
instruments with a maturity of three months or less, when purchased, to be cash
equivalents.

RECLASSIFICATION
Certain reclassifications have been made to prior period account balances to
conform to the current period presentation.

2.  INVENTORY

    Inventory consists of the following at September 30:

                                                   1996                1995
                                                --------             -------
    Raw Materials                                $77,821             $42,786
    Work In Process                              118,192               4,862
    Finished Goods                               160,518              44,052
                                                --------             -------
                                                $356,531             $91,700
                                                --------             -------
                                                --------             -------

3.  INDEBTEDNESS

    Long-term debt consists of the following at September 30, 1996:


    Unsecured note at 8.00%, due 1996             $6,528
    Secured lease at 14.79%, due 1998             77,449
    Secured lease at 9.75%, due 1999              10,028
    Secured lease at 14.45%, due 1999            119,196
    Secured lease at 14.73%, due 1999             46,664
                                                --------
    Less current maturities                      130,767
                                                --------
    Total long-term debt                        $129,098
                                                --------
                                                --------


                                        Page 7

<PAGE>


The Company has entered into a financing arrangement (reflected by the unsecured
note listed above), for the purpose of securing directors and officers insurance
for fiscal year 1996.  Certain collateralized equipment is leased by the
Company, which obligations are reflected by the secured leases as noted above.
These leases are used for the research and development of new products and for
the manufacturing and production of the Fresh 'n Fit-Registered Trademark-
Padette.

4.  ROYALTIES

Under terms of a licensing agreement, the Company assumed an obligation to pay
royalties to an investor (who is a noncontrolling stockholder) based on varying
percentages of up to five percent of net sales of the Padette through February
1998.

5.  COMMON STOCK OPTIONS AND WARRANTS

Under the provisions of its 1994 Incentive and Non-Qualified Stock Option Plan
(the "Plan"), the Company has reserved 3,300,000 shares of its common stock for
issuance under qualified options, non-qualified options, stock appreciation
rights, and other awards as set forth in the Plan. The Plan provides for
administration by a committee comprised of not less than two members of the
Company's Board of Directors. Such committee (or the Board of Directors in its
absence) determines the number of shares, option price, duration and other terms
of the options granted under the Plan. Qualified options are available for award
to employees of the Company. Non-qualified options are available for issuance to
consultants, advisors and others having a relationship with the Company, on
terms determined by the committee.

As of September 30, 1996, options for a total of 2,266,530 shares have been
awarded, 53,500 have been exercised, and 2,213,030 are outstanding. Of the
number awarded and outstanding, 2,050,280 are qualified stock options, and
162,750 are non-qualified stock options. There were no options granted, no
options exercised and 2,500 options surrendered during the quarter ended
September 30, 1996.

The following summarizes outstanding options for shares of the Company's Common
Stock as of the quarter ended September 30, 1996:

                             QUALIFIED STOCK OPTIONS
<TABLE>
<CAPTION>

Titles of Securities                                                          Weighted Average
Issuable: Common Stock                           Shares Under Option      Exercise Price Per Share
-------------------------------------------  --------------------------  ----------------------------
<S>                                          <C>                         <C>
Number exercisable at September 30, 1996             1,637,030                     $0.98

Number exercisable thereafter                         413,250                      $3.68


                           NON-QUALIFIED STOCK OPTIONS

Titles of Securities                                                          Weighted Average
Issuable: Common Stock                           Shares Under Option      Exercise Price Per Share
-------------------------------------------  --------------------------  ----------------------------
Number exercisable at September 30, 1996              62,750                       $3.07

Number exercisable thereafter                        100,000                       $3.13


</TABLE>

As of September 30, 1996, warrants for an aggregate 3,500,150 shares have been
awarded. There were no warrants granted, 102,750 warrants exercised and no
warrants surrendered during the quarter ended September 30, 1996.

The following table summarizes warrants outstanding for the purchase of shares
of the Company's Common Stock as of the quarter ended September 30, 1996:


                                        Page 8

<PAGE>

                                       WARRANTS

<TABLE>
<CAPTION>

Titles of Securities                             Shares Subject               Weighted Average
Issuable: Common Stock                           to Warrants              Exercise Price Per Share
-------------------------------------------  --------------------------  ----------------------------
<S>                                         <C>                           <C>
Number exercisable at September 30, 1996             3,381,814                     $1.91

Number exercisable thereafter                          118,336                     $2.45


</TABLE>

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

During 1996, the Company commercialized and launched its initial product, the
Fresh 'n Fit-Registered Trademark- interlabial pad (the "Padette"), into the
Southeast region of the United States and into the Shanghai region of China.

In preparation for the Company's introduction into the domestic retail market,
the Company has increased inventory levels to meet expected demand from mass
merchandise customers.

The Company's domestic manufacturing facility is complete and capable of
supplying anticipated demand through the fiscal year ending 1996.  The Company
has scheduled the delivery of two state-of-the-art manufacturing lines and two
end-line cartoners during fourth quarter 1996 to meet expected 1997 demand.
Payment for this equipment will occur through a secured financing arrangement.

In September 1996, the Company received FDA clearance for its "Affirm" 
One-Step Home Pregnancy Test, and is currently involved in discussions with 
strategic partners to market the product domestically and internationally.  
The Affirm test provides accurate and sensitive results, in as soon as 
one to two minutes, at a competitive price compared to other home 
pregnancy tests. In spite of FDA clearance, the Company's ability to 
commercialize this product successfully is subject to the risks inherent in 
new products. These risks include uncertainties whether the product, once 
developed, can be successfully manufactured and marketed or will be 
commercially successful. Morever, the costs of developing and introducing new 
products cannot be reliably forecast and may substantially exceed the 
Company's expectations and financial resources. Delays in development of the 
Affirm product may result in a later than anticipated introduction, which 
could have a material adverse effect on the Company. Initial sales are 
expected by the end of fourth quarter 1996.

During September 1996, the Company also announced the introduction of Fresh 
'n Fit-Registered Trademark- Natural Padettes, a 100 percent biodegradable 
feminine protection product.  Samples of this product have been supplied to 
potential strategic partners for marketing evaluation.  A U.S. patent 
covering this new product was issued in September 1996.

RESULTS OF OPERATIONS

Net sales for the nine months ended September 30, 1996 were $189,446, compared
to $48,467 for the same period in 1995.  The increase was primarily due to a
single sale of $144,000 by the Company of its Fresh 'n Fit-Registered Trademark-
Padettes to a customer in the People's Republic of China, and domestic retail
sales by the Company in the Southeast region of the United States to mass
merchandise customers totaling  $38,942.

The Company sells its Padette to consumers through its direct marketing efforts
consisting of newspaper and magazine advertisements, presentations at trade
shows and toll-free telephone numbers.  The Company's direct marketing efforts
are intended to develop awareness of the Padette rather than provide a
significant source of revenue.


                                        Page 9

<PAGE>

If the Company is successful in raising additional funds, the Company intends 
to increase its marketing efforts of the Padette through newspaper 
advertising, light mailings of the product to potential users, restocking 
physician offices and attendance at women's fairs. The extent of such efforts 
will be dependent on the Company's ability to obtain additional working 
capital. There can be no assurance that additional funds can be obtained on 
acceptable terms, or at all. Also, there can be no assurance that the Company 
will develop effective marketing or advertising programs which will support 
Padette sales.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 1996, the Company had cash and cash equivalents of $329,599 and
working capital of $559,788.

The Company is in the process of pursuing capital through a private placement 
of approximately $5.5 million in equity. There can be no assurance that 
additional funds can be obtained on acceptable terms, or at all. If the 
Company is unable to raise additional funds, the Company will be materially 
adversely effected and may not be able to continue operations. Pursuant to a 
separate equity bridge financing agreement during the second quarter, the 
Company received a commitment for $1.225 million in cash (of which $725,000 
was received by September 30, 1996) in exchange for 638,021 shares of the 
Company's common stock.

Certain statements in this Form 10-QSB contain "forward-looking" information (as
defined in Section 27A of the Securities Act of 1933, as amended) that involve
risks and uncertainties, including, but not limited to, the effect of economic
conditions, lack of revenues from products, product development, operating
losses, results of financing efforts, availability and cost of raw materials and
labor, potential need for additional capital equipment, market acceptance risks,
risks of international business and the impact of competitive products and
pricing.


                                       Page 10

<PAGE>

                             PART II - OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

In September 1996, John Perry resigned as Chairman of the Board of Directors 
and Chief Executive Officer of the Company. He remains with the Company as 
General Manager of the Florida office. James Reinmuth, a director and 
shareholder of the Company, was appointed Chairman of the Board of Directors 
and Chief Executive Officer.

The Company previously announced that it received purchase orders from a 
distributor in China for the Padette, totally $1.6 million. The Company ships 
against such orders upon receipt of a letter of credit. The Company has 
shipped one order to China totalling $144,000. The other orders were 
scheduled to be shipped in the third and forth quarters of 1996. The Company 
has not received letters of credit for these shipments. The Company has 
confirmed that the Padette has been placed on the shelves of more than 200 
retail stores in the Shangai-Pudong region. Although sales of the product 
have occured, the Company has not received any specific sales data or request 
for additional product. The Company has no reason to believe that additional 
product will be ordered by the distributor. The Company is currently 
negotiating with alternative distributors.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

  a)  Exhibits

      3.1    Articles of incorporation*

      3.2    By laws*

      11.1   Statement Re: computation of per share earnings

      27.1   Financial Data Schedule

  b)  Reports on Form 8-K

      NONE.
      -------------------------

   *  Incorporated by reference to the Company's Statement on Form 10-KSB for
      the year ended December 31, 1994.


                                       Page 11

<PAGE>

                                      SIGNATURES



In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.




ATHENA Medical Corporation

                                            /s/ WILLIAM H. FLEMING
                                            -----------------------------------
Date:    November 13, 1996                  William H. Fleming
                                            President & Chief Operating
                                            Officer
                                            (principal executive officer)



                                            /s/ KIMBERLY L. MICK
                                            -----------------------------------
Date:    November 13, 1996                  Kimberly L. Mick
                                            Acting Chief Financial Officer




                                       Page 12