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 March 31, 1997
 
   [ ]            TRANSITION REPORT UNDER SECTION 13 OF 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
                          For the transition period
                            from ____ to _____
 
                        Commission file Number 000-21749
 

                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
             (Exact name of small business issuer as specified in its charter)
 


          Delaware                                         95-4257380
(State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification No.)
 
 
                           3501 Lakewood Boulevard
                        Long Beach, California 90808 
                  (Address of principal executive offices)



                                (562) 938-8618
                          (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  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 [  ]
 
     As of May 12, 1997, the issuer had outstanding  6,900,000 shares of Class A
Common  Stock,  2,000,000  shares of Class B Common Stock,  4,000,000  shares of
Class E-1 Common Stock and 4,000,000 shares of Class E-2 Common Stock.

<PAGE>

                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)


                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements


                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)

                                  Balance Sheet
                                  (unaudited)
<TABLE>

                                                                March 31, 1997
                                                                ---------------
<S>                                                             <C>
Assets
Current Assets:
   Cash and cash equivalents                                       $24,048,000
   Marketable securities                                               501,000
   Certificate of deposit                                            1,012,000
   Prepaid expenses and other current assets                           160,000
                                                                 ---------------
         Total current assets                                       25,721,000
Property and equipment, net                                          1,867,000
                                                                 ---------------
         Total assets                                              $27,588,000
                                                                 ---------------
</TABLE>






                 See accompanying notes to financial statements.

                                     1
<PAGE>
                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)


                                  Balance Sheet
                                  (unaudited)

<TABLE>
                                                             March 31, 1997
                                                             --------------
<S>                                                          <C>
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                               $76,000
   Accrued liabilities                                            223,000
                                                             ---------------
         Total current liabilities                                299,000

   Advance deposit                                                 10,000
                                                             ---------------
         Total liabilities                                        309,000
                                                             ---------------

Commitments and contingencies
Stockholders' equity:
   Preferred stock, par value $.0001 per share;
      5,000,000 shares authorized; no shares
      issued and outstanding
   Class A Common Stock, par value $.0001 per share;
      60,000,000 shares authorized; 6,900,000 shares
      issued and outstanding                                        1,000
   Class B Common Stock, par value $.0001 per share;
      10,000,000 shares authorized; 2,000,000 shares
      issued and outstanding
   Class E-1 Common Stock, par value $.0001 per share;
      4,000,000 shares authorized; 4,000,000 shares
      issued and outstanding
   Class E-2 Common Stock, par value $.0001 per share;
      4,000,000 shares authorized, 4,000,000 shares
      issued and outstanding

   Warrants to purchase common stock:    
      Public Warrants                                             473,000
      Class A Warrants                                         11,290,000
      Class B Warrants                                          4,632,000
   Additional paid-in capital                                  35,730,000
   Deficit accumulated during the development stage           (24,847,000)
                                                              -------------

         Total stockholders' equity                            27,279,000
                                                              -------------

         Total liabilities and stockholders' equity           $27,588,000
                                                              -------------
</TABLE>





                See accompanying notes to financial statements.

                                     2
<PAGE>
                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)


                             Statement of Operations
                                  (unaudited)

                                                                             
<TABLE>

                                                                              Period from
                                                     Three Months Ended    January 26, 1990
                                                          March 31,         (inception) to
                                                     -------------------        March 31,
                                                      1996         1997           1997
                                                     -------------------   -----------------
<S>                                                  <C>        <C>         <C>     
Other income                                         $          $  1,000        $711,000
Interest income                                                  289,000         459,000
                                                     -------------------   -----------------

                                                                 290,000       1,170,000

Costs and expenses:
   Research and development costs                                326,000      13,962,000
   Preoperating costs                                                            282,000
   General and administrative expenses               268,000     481,000       7,871,000
   Loss on disposal of assets                                      2,000         359,000
   Interest expense                                   73,000                   1,840,000
   In-process research and development acquired                                  761,000
                                                     -------------------   -----------------

                                                     341,000     809,000      25,075,000
                                                     -------------------   -----------------

Loss before extraordinary item                      (341,000)   (519,000)    (23,905,000)
Extraordinary loss on retirement of Bridge Notes                                (942,000)
                                                     -------------------   -----------------

         Net loss                                  ($341,000)   $519,000)   ($24,847,000)
                                                     -------------------   -----------------

Net loss per share                                     ($.10)      ($.06)
                                                     -------------------   

Weighted average number of shares outstanding      3,400,000   8,900,000
                                                     -------------------   
</TABLE>







                     See accompanying notes to financial statements.

                                     3

<PAGE>
                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)


                             Statement of Cash Flows
                                  (unaudited)


<TABLE>
                                                                                       Period from
                                                                                       January 26,
                                                             Three Months Ended      1990 (inception)
                                                                   March 31,           to March 31,
                                                             1996           1997           1997
                                                          ------------------------   ----------------
<S>                                                       <C>           <C>            <C>  
Cash flows from operating activities:
   Net loss                                               $(341,000)    $(519,000)     $(24,847,000)
   Adjustments to reconcile net loss to net cash
   used in operating activities:
      Depreciation and amortization                          82,000        79,000         1,893,000
      Extraordinary loss on retirement of Bridge Notes                                      942,000
      Noncash stock compensation expense                                                  1,207,000
      Noncash interest expense                                                              336,000
      Loss on disposal of assets                                            2,000           359,000
      Cost of in-process research and development
         acquired                                                                           761,000
      Imputed interest on advances from stockholder           5,000                         810,000
      Changes in assets and liabilities:
          Increase in prepaid expenses and other current
              assets                                                       (5,000)         (160,000)
          Increase (decrease) in accounts payable            12,000       (69,000)           76,000
          Increase in accrued liabilities                    91,000        65,000           123,000
          Increase in interest payable                       29,000
          Increase in advance deposit                                      10,000            10,000
                                                         ---------------------------   ---------------

         Net cash used in operating activities             (122,000)     (437,000)      (18,490,000)
                                                         ---------------------------   ---------------

Cash flows from investing activities:
   Capital expenditures                                                  (265,000)      (4,112,000)
   Proceeds from disposal of assets                                         3,000            3,000
   Proceeds from insurance claims upon loss of aircraft                                     30,000
   Proceeds from sale of marketable securities                          1,525,000        1,525,000
   Purchase of marketable securities                                                    (2,026,000)
   Purchase of certificate of deposit                                  (1,000,000)      (1,012,000)
                                                         -------------------------   ---------------
         Net cash proceeds provided by (used in)
         investing activities                                             263,000       (5,592,000)
                                                         -------------------------   ---------------
Cash flows from financing activities:
   Advances from stockholder                                                            10,728,000
   Proceeds from issuance of common stock prior to
      initial public offering                                                            7,500,000
   Net proceeds from initial public offering and exercise
      of over-allotment option                                                          30,411,000
   Net proceeds from bridge financing                                                    6,195,000
   Repayment of bridge financing                                                        (7,000,000)
   Repayment of obligation under capital leases               (3,000)                      (40,000)
   Net proceeds from loans from officer                      125,000                       336,000
                                                         -------------------------   ---------------
         Net cash provided by financing activities           122,000                    48,130,000
                                                         -------------------------   ---------------
</TABLE>

                  See accompanying notes to financial statements.

                                     4

<PAGE>
                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)

<TABLE>

                                                                                       Period from
                                                                                        January 26,
                                                             Three Months Ended      1990 (inception)
                                                                   March 31,           to March 31,
                                                             1996           1997           1997
                                                          ------------------------   ----------------
<S>                                                       <C>         <C>            <C>
Net (decrease) increase in cash and cash equivalents              --     (174,000)      24,048,000
Cash and cash equivalents at beginning of period                  --   24,222,000               --
                                                         -------------------------   --------------- 
Cash and cash equivalents at end of period                 $      --  $24,048,000      $24,048,000
                                                         -------------------------   --------------- 
Supplemental cash flow information:
   Cash paid for interest                                                                 $694,000
                                                                                      --------------

Supplemental disclosure of noncash investing and
 financing activities:
   Stockholder advances converted to common stock                                      $10,728,000
                                                                                      --------------

   Loans from officers converted to common stock                                          $336,000
                                                                                      --------------

   Common stock issued for noncash consideration
       and compensation                                                                 $1,507,000
                                                                                      --------------

   Liabilities assumed from ASI                                                           $400,000
                                                                                      --------------

   Common stock issued for in-process research and
       development acquired                                                               $361,000
                                                                                      --------------

   Equipment acquired under capital leases                                                 $40,000
                                                                                      ---------------

   Deposit surrendered as payment for rents due                                            $80,000
                                                                                      ---------------
</TABLE>



                     See accompanying notes to financial statements.

                                     5
<PAGE>
                    ADVANCED AERODYNAMICS & STRUCTURES, INC.
                        (A Development Stage Enterprise)


                          Notes to Financial Statements


1.   General

     In the opinion of the  Company's  management,  the  accompanying  unaudited
     financial  statements  include all  adjustments  (which include only normal
     recurring  adjustments)  necessary for a fair presentation of the financial
     position of the Company at March 31, 1997 and the results of operations and
     cash flows for the three months ended March 31, 1997 and 1996. Although the
     Company  believes that the  disclosures in these  financial  statements are
     adequate  to  make  the  information  presented  not  misleading,   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 the  rules and
     regulations  of  the  Securities  and  Exchange   Commission.   Results  of
     operations for interim periods are not necessarily indicative of results of
     operations to be expected for any other interim period or the full year.

     The  financial  information  in this  quarterly  report  should  be read in
     conjunction  with the audited  December 31, 1996  financial  statements and
     notes thereto included in the Company's annual report filed on Form 10-KSB.

     The Company is a development  stage  enterprise.  On December 3, 1996,  the
     Company  successfully  completed an initial public  offering to finance the
     continued development,  manufacture and marketing of its product to achieve
     commercial  viability.  The net proceeds of the  offering  were and will be
     used to amend its Federal Aviation  Administration ("FAA") Type Certificate
     for  technical  revisions  to  its  product,  to  obtain  a FAA  Production
     Certificate for its product,  to repay  borrowings  under a bridge loan, to
     expand the  Company's  sales and  marketing  efforts,  to  establish  a new
     manufacturing  facility, and to acquire production materials and additional
     tooling and equipment.

2.   Net Loss Per Share

     The Company's net loss per share was computed based on the weighted average
     number of shares of common stock outstanding  during the three months ended
     March 31, 1996 and 1997 and  excludes all  outstanding  shares of Class E-1
     and  Class  E-2  Common  Stock  because  the  conditions  for the  lapse of
     restrictions on such shares have not been satisfied.

     Pursuant to Securities and Exchange  Commission Staff  Accounting  Bulletin
     No. 83,  certain common stock  equivalents  issued by the Company have been
     included as outstanding in net loss per share  computations for the quarter
     ended March 31, 1996. Common stock equivalents were not included in the net
     loss per share  computation  for the quarter  ended March 31, 1997 as their
     effect on net loss per share is antidilutive.

     In  February  1997,  the  Financial  Accounting  Standards  Board  issued 
     Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
     Share." SFAS No. 128  establishes  standards for  computing and  presenting
     earnings per share ("EPS") and supersedes APB Opinion No. 15, "Earnings per
     Share." It replaces the  presentation of primary EPS with a presentation of
     basic EPS. It also requires dual  presentation  of basic and diluted EPS on
     the face of the income  statement  for all entities  with  complex  capital
     structures and requires a  reconciliation  of the numerator and denominator
     of the  basic EPS  computation  to the  numerator  and  denominator  of the
     diluted EPS computation. SFAS No. 128 will become effective for the Company
     for the year ending  December 31, 1997.  The impact of the adoption of SFAS
     No.  128 on the  Company's  financial  statements  is  not  expected  to be
     material.

3.   Stock Option Plan

     On March 4, 1997,  options  to  purchase  210,000  shares of Class A Common
     Stock were granted at an exercise  price of $5 per share,  by the Company's
     Board of Directors to certain employees,  officers,  consultants and agents
     of the Company.

                                     6
<PAGE>

Item 2.   Plan of Operations


     Certain  statements   contained  in  this  report,   including   statements
concerning the Company's future cash and financing  requirements,  the Company's
ability to obtain market  acceptance of its aircraft,  the Company's  ability to
obtain  regulatory  approval for its aircraft,  and the  competitive  market for
sales of small business aircraft and other statements contained herein regarding
matters that are not historical  facts, are forward looking  statements;  actual
results  may  differ  materially  from  those set forth in the  forward  looking
statements, which statements involve risks and uncertainties,  including without
limitation those risks and uncertainties set forth in the Company's Registration
Statement on Form SB-2 (No. 333-12273) under the heading "Risk Factors."

     Prior to commencing commercial sales of the JETCRUZER 500, the Company will
need to, among other things,  complete the  development of the aircraft,  obtain
the  requisite  regulatory  approvals,  establish an  appropriate  manufacturing
facility, hire additional engineering and manufacturing personnel and expand its
sales and marketing  efforts.  The Company  estimates  that the cost to complete
development  of the  JETCRUZER  500 and  obtain  an  amendment  of its FAA  Type
Certificate will be approximately  $8,000,000.  This amount includes the cost of
equipment and tooling (estimated at approximately $1,500,000), static and flight
testing  of  the  aircraft  (estimated  at  approximately  $2,500,000)  and  the
employment of the necessary  personnel to build and test the aircraft (estimated
at  approximately   $4,000,000).   The  Company   estimates  that  the  cost  of
establishing  an  appropriate   manufacturing  facility  will  be  approximately
$7,000,000.  The Company  intends to use  $1,100,000  of the  proceeds  from its
recent  initial  public  offering  ("IPO")  for this  purpose and to finance the
remaining  portion through  Industrial  Development  Bonds,  mortgage  financing
and/or  other  similar  means.  The Company  also  intends to use  approximately
$900,000 of the proceeds of the IPO for sale and marketing of the aircraft.

     The Company expects to receive progress payments during the construction of
aircraft and final payments upon the delivery of aircraft.  However, the Company
believes it will continue to  experience  losses until such time as it commences
the sale of aircraft on a commercial scale.

     During the next 12 to 18 months,  the Company  intends to focus its efforts
in the following areas:

     *    To complete the  development  of the JETCRUZER 500,  including,  among
          other things,  adding a larger engine,  pressurization,  environmental
          systems, de-icing capability and autopilot certification.

     *    To  obtain  an  amendment  to its  Type  Certificate  to  include  the
          JETCRUZER 500,  including the  manufacture of FAA conformed  models of
          the JETCRUZER 500 and static and flight testing.

     *    To  establish  an  appropriate   manufacturing   facility  capable  of
          producing  the  JETCRUZER  500 on a commercial  scale,  including  the
          establishment   of  a  production   line  in  such  facility  and  the
          acquisition of production inventory and additional items of equipment,
          tooling and computer hardware and software systems.

     *    To  obtain  a  production   certificate  from  the  FAA  and  commence
          commercial production of the JETCRUZER 500.

     *    To expand its sales and  marketing  staff and increase  its  marketing
          efforts with respect to the JETCRUZER 500.

     *    To increase its engineering, manufacturing and administrative staff in
          anticipation of increased development and production activities.

     The  Company  believes  that the net  proceeds  from its recent IPO will be
sufficient  to finance its plan of  operations  for at least the 12 to 18 months
following the date of this report, based upon the current status of its business
operations,  its current plans and current economic and industry conditions.  If
the Company's estimates prove to be incorrect,  however, then during such period
the Company may have to seek additional  sources of financing,  reduce operating
costs and/or curtail growth plans.

                                     7
<PAGE>

                           PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports of Form 8-K

     (a)  Exhibits:

          Exhibit No.  Description                                      Page No.
          -----------  -----------------------------------------------  --------

            *3.1       Certificate of Incorporation...................
           **3.2       Bylaws.........................................
            *3.3       Amendment to Certificate of Incorporation......
            *4.1       Specimen Certificate of Class A Common Stock...
            *4.2       Warrant Agreement (including form of Class A 
                         and Class B Warrant Certificates.............
            *4.3       Form of Underwriter's Unit Purchase Option.....
           *10.1       Form of Indemnification Agreement..............
          **10.2       Amended 1996 Stock Option Plan.................
           *10.3       Employment Agreement dated as of May 1, 1996 
                         between the Company and Dr. Carl L. Chen.....
           *10.4       Agreement of Merger dated July 16, 1996 between
                         Advanced Aerodynamics and Structures, Inc., 
                         California corporation, and Advanced 
                         Aerodynamics & Structures, Inc., a
                         Delaware corporation.........................
          **10.5       Lease dated December 19, 1996 between Olen 
                         Properties Corp., a Florida corporation, 
                         and the Company...............................
            11.1       Statement re: Computation of Per Share Earnings.
              27       Financial Data Schedule.........................

     * Incorporated by reference to the Company's Registration Statement on Form
SB-2 (333-12273) declared effective by the Securities and Exchange Commission on
December 3, 1996.

     ** Incorporated  by reference to the Company's  Report on Form 10-KSB filed
with the Securities and Exchange Commission on March 31, 1997.

     Reports on Form 8-K:

     During the  quarter  ended  March 31,  1997,  the  Company did not file any
reports on Form 8-K.


                                       8
<PAGE>


                                   SIGNATURES

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

Dated:  May 14, 1997                    ADVANCED AERODYNAMICS &
                                        STRUCTURES, INC.

                                        /s/ Carl L. Chen 
                                        ---------------------------------------
                                            Carl L. Chen, President


                                        /s/ Dave Turner
                                        ----------------------------------------
                                            Dave Turner, Chief Financial Officer
















                                       9