U. S. SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10-QSB


               QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934


                 For the quarterly period ended: March 31, 2000


                           Commission file No.0-24511


                        ADVANCED OPTICS ELECTRONICS, INC.
           (Name of small business issuer as specified in its charter)

       Nevada                                             88-0365136
(State of incorporation)                       (IRS Employer Identification No.)

           8301 Washington NE, Suite 4, Albuquerque, New Mexico 87113
           (Address of principal executive offices including zip code)

Issuer's telephone number:                                        (505) 797-7878

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 [_]

The number of issuer's  shares of Common Stock  outstanding as of March 31, 2000
was 48,635,411

Transitional Small Business Disclosure Format (check one): Yes [_]  No [X]


<PAGE>


ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)


ADVANCED OPTICS ELECTRONICS, INC.
                                                   (A DEVELOPMENT STAGE COMPANY)

                                                                FINANCIAL REPORT

                                                                  MARCH 31, 2000


<PAGE>


                        ADVANCED OPTICS ELECTRONICS, INC.
                          (A DEVELOPMENT STAGE COMPANY)


                                    CONTENTS

                                                                           Page

INDEPENDENT ACCOUNTANTS' REPORT                                              1

FINANCIAL STATEMENTS

               Balance Sheet                                                 2

               Statements of Operations                                      4

               Statements of Changes in Stockholders' Equity                 5

               Statements of Cash Flows                                      7

               Notes to Financial Statements                                 9


<PAGE>


NEFF & RICCI LLP
----------------
CERTIFIED PUBLIC ACCOUNTANTS
7001 PROSPECT PLACE NE
ALBUQUERQUE, NM  87110


                         Independent Accountants' Report


Board of Directors
Advanced Optics Electronics, Inc.


We have reviewed the  accompanying  condensed  balance sheet of Advanced  Optics
Electronics,  Inc. (a  development  stage company) as of March 31, 2000, and the
related  condensed   statements  of  operations,   cash  flows  and  changes  in
stockholders'  equity for the three month  period ended March 31, 2000 and 1999,
and for the  2000,  1999,  and 1998  portion  of the  period  from May 22,  1996
(inception)  through March 31, 2000.  The 1996 and 1997 portion of the condensed
financial  statements for the period from May 22, 1996 (inception) through March
31, 2000,  were audited by other  auditors  whose report dated February 5, 1998,
expressed an unqualified opinion.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and making  inquiries of persons  responsible  for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion  regarding the financial  statements  taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to the accompanying condensed financial statements referred to above for
them to be in conformity with generally accepted accounting principles.

/s/ Neff & Ricci LLP

Albuquerque, New Mexico
April 20, 2000


<PAGE>


ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
March 31, 2000



ASSETS

Current Assets
    Cash and cash equivalents                                         $  719,377
    Certificate of deposit                                               156,237
    Marketable equity securities                                          73,143
    Costs and estimated earnings
        in excess of billings on
        uncompleted contract                                             594,584
    Raw materials                                                         29,293
    Due from officer and shareholder                                      67,494
                                                                      ----------

           Total current assets                                        1,640,128
                                                                      ----------

Property and Equipment, net                                              320,486
                                                                      ----------

Other Assets
    Investment in Bio Moda, Inc.                                         191,112
    Intangible assets, net                                               211,438
    Other assets                                                          30,000
                                                                      ----------

           Total other assets                                            432,550
                                                                      ----------


           Total assets                                               $2,393,164
                                                                      ==========


See Notes to Financial Statements.


<PAGE>


<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                                                                <C>
Current Liabilities
    Accounts payable                                                               $    12,173
    Accrued liabilities                                                                 17,456
    Current portion of long-term debt
        and capital lease obligation                                                    45,917
    Allowance for loss on contract                                                      89,584
                                                                                   -----------
           Total current liabilities                                                   165,130
                                                                                   -----------

Long-term portion of long-term debt
    and capital lease obligation                                                       467,298
                                                                                   ===========

Commitments

Shareholders' Equity
    Capital stock:
        Preferred Series A, 7.5% cumulative,  convertible into common stock at a
           rate  determined  by dividing  the  purchase  price of the  preferred
           shares by the conversion price of the common stock;  $.001 par value;
           authorized 10,000,000 shares, issued 550 shares
           in first quarter of 2000                                                          1
        Common, authorized 75,000,000 shares, $.001 par value
           48,714,706 shares issued and 48,589,206 shares outstanding                   48,715
    Additional paid-in capital                                                       6,929,273
    Deficit accumulated during the development stage                                (5,183,426)
    Treasury stock                                                                     (33,827)
                                                                                   -----------

           Total shareholders' equity                                                1,760,736
                                                                                   -----------

           Total liabilities and shareholders' equity                              $ 2,393,164
                                                                                   ===========
</TABLE>



<PAGE>


ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS
Quarters Ended March 31, 2000 and 1999
and the Period from May 22, 1996 (Inception)
Through March 31, 2000

<TABLE>
<CAPTION>
                                                                                      5/22/96
                                                                                   (Inception)
                                                                                      Through
                                                      2000               1999        03/31/00
<S>                                                <C>                 <C>           <C>
Revenues
    Contract revenue                               $     34,039          66,375         594,584
                                                   --------------------------------------------

Costs and Expenses
    General and administrative                        1,206,669         106,570       3,779,404
    Contract costs                                      111,886          85,941         853,247
    Research and development                            133,967          48,273         562,114
                                                   --------------------------------------------

           Total expenses                             1,452,522         240,784       5,194,765
                                                   --------------------------------------------

    Operating loss                                   (1,418,483)       (174,409)     (4,600,181)
                                                   --------------------------------------------

Other Income and (Expenses)
    Interest income                                       2,293           1,964          14,010
    Unrealized gain (loss) on marketable
        equity securities                                 7,655          (9,968)        (25,904)
    Loss on Bio Moda, Inc.                              (16,222)        (24,571)       (192,733)
    Interest expense                                    (76,581)         (3,299)       (273,017)
                                                   --------------------------------------------

           Total other expenses                         (82,855)        (35,874)       (477,644)
                                                   --------------------------------------------

           Net loss before cumulative effect
               of change in accounting principle     (1,501,338)       (210,283)     (5,077,825)
                                                   --------------------------------------------

Cumulative Effect of Change
    in Accounting Principle                                --           (63,020)        (63,020)
                                                   --------------------------------------------

           Net loss                                  (1,501,338)       (273,303)     (5,140,845)
                                                   --------------------------------------------

Net loss per share before cumulative effect
    of change in accounting principle                      (.03)           (.01)           (.23)

Cumulative effect of change in
    accounting principle                                   --              (.00)           (.00)
                                                   --------------------------------------------

Net loss per share                                 $       (.03)           (.01)           (.23)
                                                   ============================================
Weighted average shares outstanding                  48,153,762      25,252,592      22,111,342
                                                   ============================================
</TABLE>

See Notes to Financial Statements.


<PAGE>


ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from May 22, 1996 (Inception) Through
March 31, 2000

<TABLE>
<CAPTION>
                                                           Common Stock                 Preferred Stock
                                                     -------------------------      -----------------------
                                                                      Par                          Par
                                                       Shares         Value           Shares       Value

<S>                                                  <C>           <C>                  <C>              <C>
Balance, May 22, 1996                                        --    $        --             --   $        --
Stock issued to incorporators for cash                  500,000            500             --            --
Stock issued for the net assets of PLZ Tech, Inc.     4,500,000          4,500             --            --
Net loss                                                     --             --             --            --
                                                     ------------------------------------------------------

Balance, December 31, 1996                            5,000,000          5,000             --            --
Stock issued in public offering                       2,281,212          2,281             --            --
Net loss                                                     --             --             --            --
                                                     ------------------------------------------------------

Balance, December 31, 1997                            7,281,212          7,281             --            --
Stock issued for cash                                10,979,275         10,979             --            --
Stock issued for services                             2,751,000          2,751             --            --
Stock issued in exchange for note receivable            315,000            315             --            --
Purchase and retirement of treasury stock              (472,200)          (472)            --            --
Net loss                                                     --             --             --            --
                                                     ------------------------------------------------------


Balance, December 31, 1998                           20,854,287         20,854             --            --
Stock issued for cash                                 8,681,624          8,682             --            --
Stock issued for services                            17,094,313         17,094             --            --
Intrinsic value of beneficial conversion
    feature of notes payable                                 --             --             --            --
Fair value of warrants related to notes payable              --             --             --            --
Purchase and retirement of treasury stock              (489,251)          (489)            --            --
Purchase of treasury stock                                   --             --             --            --
Sale of treasury stock                                       --             --             --            --
Net loss                                                     --             --             --            --
                                                     ------------------------------------------------------

Balance, December 31, 1999                           46,140,973         46,141             --            --
Stock issued for cash                                   782,000            782            550             1
Stock issued for services                             1,791,733          1,792             --            --
Purchase of treasury stock                                   --             --             --            --
Sale of treasury stock                                       --             --             --            --
Constructive dividends (amortization of
    discount on convertible preferred stock)                 --             --             --            --
Net loss                                                     --             --             --            --
                                                     ------------------------------------------------------

Balance, March 31, 2000                              48,714,706    $    48,715          550     $         1
                                                     ======================================================
</TABLE>


The Notes to Financial Statements are an integral part of these statements.
<PAGE>


<TABLE>
<CAPTION>
                                                        Equity
                                                       (Deficit)
                                                      Accumulated
               Treasury Stock           Additional     During the       Total
                                         Paid-In      Development   Shareholders'
            Shares         Cost          Capital         Stage         Equity
           --------     ----------      ---------     -----------    -----------
           <S>          <C>             <C>           <C>            <C>
                 --             --         24,500             --         25,000
                 --             --        281,096             --        285,596
                 --             --             --        (76,902)       (76,902)
           ---------------------------------------------------------------------

                 --             --        305,596        (76,902)       233,694
                 --             --        362,720             --        365,001
                 --             --             --        (84,690)       (84,690)
           ---------------------------------------------------------------------

                 --             --        668,316       (161,592)       514,005
                 --             --      1,281,728             --      1,292,707
                 --             --        293,719             --        296,470
                 --             --         28,685             --         29,000
                 --             --        (39,913)            --        (40,385)
                 --             --             --       (752,111)      (752,111)
           ---------------------------------------------------------------------

                 --             --      2,232,535       (913,703)     1,339,686
                 --             --        855,101             --        863,783
                 --             --      1,469,320             --      1,486,414
                 --             --        174,610             --        174,610

                 --             --        125,000             --        125,000
                 --             --        (10,643)            --        (11,132)
           (229,000)       (41,760)            --             --        (41,760)
             85,000         11,130         24,334             --         35,464
                 --             --             --     (2,725,804)    (2,725,804)
           ---------------------------------------------------------------------

           (144,000)       (30,630)     4,870,257     (3,639,507)     1,246,261
                 --             --        852,710             --        853,493
                 --             --      1,118,441             --      1,120,233
             (6,500)        (7,683)            --             --         (7,683)
             25,000          4,486         32,080             --         49,770

                 --         42,581        (42,581)            --
                 --             --             --     (1,501,338)    (1,501,338)
           ---------------------------------------------------------------------

           (125,500)    $  (33,827)     6,929,273     (5,183,426)     1,760,736
           =====================================================================
</TABLE>


<PAGE>


ADVANCED OPTICS ELECTRONICS, INC.
 (A DEVELOPMENT STAGE COMPANY)
ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Quarters Ended March 31, 2000 and 1999
and the Period from May 22, 1996 (Inception) Through
March 31, 2000

<TABLE>
<CAPTION>
                                                                                             5/22/96
                                                                                           (Inception)
                                                                                             Through
                                                                2000              1999       03/31/00

<S>                                                          <C>               <C>          <C>
Cash Flows From Operating Activities
    Net (loss)                                               $(1,501,338)      (273,303)    (5,140,845)
    Adjustments to reconcile net loss to net cash
        provided by operating activities:
           Amortization and depreciation expense                  27,630         23,529        222,156
           Write off of organization costs                            --         63,020         63,020
           Amortization of discounts on convertible notes         70,691             --        206,223
           Unrealized (gain) loss on marketable securities        (7,655)         9,968         25,904
           Loss on Bio Moda, Inc.                                 16,222         24,571        192,732
           Issuance of common stock for services               1,120,233         27,687      2,903,117
           Issuance of notes for services                             --             --         50,000
           Contract receivable                                   (34,039)       (66,375)      (594,584)
           Marketable equity securities                             (131)            --           (131)
           Allowance for loss on contract                         18,039             --         89,584
           Other receivables                                      31,030         (5,954)       (48,844)
           Inventory                                               6,000        (41,324)       (29,293)
           Accrued liabilities and accounts payable              (50,751)         1,116         29,629
                                                             -----------------------------------------
               Net cash used by operating
                  activities                                    (304,069)      (237,065)    (2,031,332)
                                                             -----------------------------------------

Cash Flows From Investing Activities
    Purchase of equipment                                        (31,886)       (27,605)      (344,226)
    Investment in Bio Moda, Inc.                                      --             --       (383,845)
    Purchase of marketable securities                            (28,883)            --        (98,917)
    Purchase of certificate of deposit                           (51,655)            --       (156,237)
    Purchase of other assets                                          --        (10,000)       (96,427)
    Proceeds from sale of Wizard Technologies, Inc.               65,000             --             --
                                                             -----------------------------------------
               Net cash used by investing
                  activities                                     (47,424)       (37,605)    (1,079,652)
                                                             -----------------------------------------
</TABLE>


See Notes to Financial Statements.


<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Quarters Ended March 31, 2000 and 1999
and the Period from May 22, 1996 (Inception) Through
March 31, 2000

<TABLE>
<CAPTION>

                                                                              5/22/96
                                                                            (Inception)
                                                                              Through
                                                   2000           1999       03/31/00
<S>                                             <C>              <C>         <C>
Cash Flows From Financing Activities
    Additions to notes payable                          --            --       572,776
    Payments on notes payable and capital
        lease obligation                           (15,097)       (6,764)     (136,673)
    Issuance of common stock                       853,493       154,620     3,399,984
    Sale of treasury stock                          49,770            --        85,234
    Purchase of treasury stock                      (7,683)      (11,132)      (90,960)
                                                --------------------------------------
               Net cash provided by financing
                  activities                       880,483       136,724     3,830,361
                                                --------------------------------------

Net increase (decrease) in cash                    528,990      (137,946)      719,377

Cash, beginning of period                          190,387       204,612            --
                                                --------------------------------------

Cash, end of period                             $  719,377        66,666       719,377
                                                ======================================
</TABLE>


See Notes to Financial Statements.


<PAGE>


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of  Presentation.  The interim  financial  information  included herein is
unaudited. Certain information and footnote disclosures normally included in the
financial  statements  have been condensed or omitted  pursuant to the rules and
regulations  of the  Securities  and  Exchange  Commission  (SEC),  although the
Company  believes that the disclosures made are adequate to make the information
presented  not  misleading.   These  financial  statements  should  be  read  in
conjunction  with the financial  statements  and related notes  contained in the
Company's  annual report on Form 10-KSB for the period ended  December 31, 1999.
Other than as indicated herein,  there have been no significant changes from the
financial  data  published in that report.  In the opinion of  management,  such
unaudited  information  reflects  all  adjustments,  consisting  only of  normal
recurring  accruals and other  adjustments  necessary for a fair presentation of
the unaudited information.

Description of Business.  Advanced Optics  Electronics,  Inc. (the Company) is a
developmental   stage  technology  company  with  its  principal  focus  on  the
development and production of large-scale  flat panel  displays.  The Company is
currently  continuing  its  research  and  development  of  this  product.  Upon
substantial  completion of the research and  development of the large flat panel
display,  the Company plans to make the transition  from a  developmental  stage
company to selling and producing  this product.  The market for the  large-scale
flat panel will include,  but not be limited to,  cockpit  displays,  flat panel
computer monitors, and advertising billboards. Advanced Optics Electronics, Inc.
plans to focus on producing and selling the large-scale  flat panel displays for
outdoor advertising billboards.

The  Company  has  obtained  a  contract  to  produce  two  outdoor  advertising
billboards using its flat panel display technology. This is the first commercial
application of the Company's technology.  The success of the Company will depend
on its ability to  commercialize  its technology and complete this contract.  In
addition,  the Company may be required to obtain additional  capital in order to
fund the completion of the contract.

Liquidity. Through March 31, 2000, the Company has maintained adequate liquidity
and has sufficient cash to pay its liabilities.  Yet, completion of the contract
for the first  billboard is behind  schedule and the first milestone for billing
was not met by March 31, 2000.  Accordingly,  to fund Company  operations and to
complete  the first  billboard,  additional  cash from  stock  issuances  and/or
borrowings may become necessary in the future.

Marketable  Equity  Securities.  The Company  classifies  all of its  marketable
equity  securities  as  available  for  sale  securities.   Available  for  sale
securities  are  carried  at fair  value  with the  unrealized  gains and losses
reported in Other  Comprehensive  Income. As of March 31, 2000, gross unrealized
gains  for the  quarter  were  $7,655  and  not  considered  significant  to the
financial statements taken as a whole. Therefore, they have been reported in the
income statement.


                                                                               9
<PAGE>


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (CONTINUED)

Inventories.  Inventory consists of raw materials and is carried at the lower of
cost (specific identification) or market.

Equity  Investment.  The investment in Bio Moda, Inc. is accounted for using the
equity method. Under this method, income and losses reported by the investee are
recorded  by the  Company  in its  proportionate  interest  at the time they are
recognized by the investee.  The original cost of the Bio Moda, Inc.  investment
exceeded the  Company's  proportionate  interest in Bio Moda's book value.  This
difference is being amortized over a 15 year period.

Loss Per Share.  Loss per share is computed on the basis of the weighted average
number of common  shares  outstanding  during the year and did not  include  the
effect of potential  common stock as their  effect  would be  antidilutive.  The
numerator  for the  computation  is the net  loss  and  the  denominator  is the
weighted  average  shares of  common  stock  outstanding.  Certain  options  and
warrants  outstanding  were not  included in the  computation  of loss per share
because their effect would be antidilutive.  Convertible  preferred stock issued
during the quarter  also was not included in the  computation  of loss per share
because their effect would be antidilutive.

Use of Estimates.  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  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  those  estimates.  The
principal  areas  requiring  estimation  are  revenue  recognition  based on the
percentage of completion  method,  loss  allowances  and the valuation of common
stock issued for services.

Revenue and Cost Recognition.  The Company recognized revenue on its contract in
process using the percentage-of-completion  method of accounting, which is based
on the proportion of the contract cost incurred to the estimated  total contract
cost. Costs incurred and estimated  earnings in excess of billings represent the
revenue recognized that has not yet been billed.

Contract  costs include all direct  material and labor costs and those  indirect
costs  related  to  contract  performance,  such as  indirect  labor,  supplies,
overhead, and equipment depreciation.


                                                                              10
<PAGE>


NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (CONTINUED)


The contract to produce two outdoor advertising  billboards totals $1.7 million,
with  $885,000  allocated  to  the  first  unit.  An  estimated  total  loss  of
approximately  $273,000  in the first unit has been  recognized  as of March 31,
2000. The Company's estimated cost to complete as of March 31, 2000 is $380,000,
which it expects to fund with cash,  billings  on the  contract  and  additional
capital.

In accordance with the contract, the Company will bill the customer when certain
milestones have been met. There have been no billings through March 31, 2000.

Adjustments to the original estimates of total contract revenue,  total contract
cost,  and extent of  progress  toward  completion  are often  required  as work
progresses under the contract and as experience is gained, even though the scope
of the work required under the contract may not change. The nature of accounting
for  contracts  is  such  that   refinements  of  the  estimating   process  for
continuously  changing  conditions and new developments are a characteristic  of
the process.  Accordingly,  provisions  for losses on contracts  are made in the
period in which they become evident under the percentage-of-completion method.


<PAGE>


NOTE 2.   RELATED PARTY RECEIVABLES

Related party receivables at March 31, 2000, consist of the following:

Due from officer                                                      $   52,494
Note receivable from former shareholder bearing
    interest at 8% and due in June, 2000                                  15,000
                                                                      ----------

                                                                      $   67,494
                                                                      ==========
NOTE 3.   INVESTMENTS

During 1999 Bio Moda,  Inc.  sold  additional  shares,  therefore  the Company's
investment in Bio Moda, Inc. decreased from 22 to 20 percent.  Bio Moda, Inc. is
a development stage company involved  primarily in the development of technology
for the early  detection of lung cancer.  As a development  stage  company,  Bio
Moda,  Inc.  has not had any  revenues  and,  as of March 31,  2000,  was in the
process of conducting clinical trials.

There is currently no active  market for the common stock of Bio Moda,  Inc. The
ultimate value of the Company's  investment in Bio Moda, Inc. will depend on its
ability  to  complete  its  research  and  either   commercialize  or  sell  its
proprietary technology.

A summary of the  unaudited  financial  data  relative  to Bio Moda,  Inc. as of
December 31, 1999 is as follows:

Assets:
    Current assets                                                    $  30,730
    Other assets                                                         24,465
                                                                      ---------
                                                                         55,195
                                                                      =========

    Fixed assets                                                          2,515
                                                                      ---------

Total assets                                                          $  57,710
                                                                      =========

Liabilities and equity
    Notes payable to stockholders                                     $  92,711
    Common stock                                                        760,037
    Deficit accumulated during the development stage                   (795,038)
                                                                      ---------

Total liabilities and equity                                          $  57,710
                                                                      =========


                                                                              12
<PAGE>


NOTE 3.   INVESTMENTS (CONTINUED)

The  investment in Bio Moda,  Inc. is accounted for using the equity  method.  A
summary of the investment is as follows:

Original cost, all of which exceeded book value                       $ 358,845
Additional purchase in 1999                                              25,000
Share of net loss                                                      (143,836)
Amortization of excess of cost
    over book value                                                     (48,897)
                                                                      ---------

Net investment                                                        $ 191,112
                                                                      =========

In August 1999,  the Company issued 200,000 shares of its common stock to Wizard
Technologies,  Inc.  for  $88,580.  The  Company  then  purchased  a 10  percent
ownership in Wizard for $65,000  with the  proceeds.  During the quarter  ending
March 31, 2000, the Company sold back all of its shares of Wizard's common stock
to Wizard for its original investment of $65,000.

NOTE 4.   LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION

Convertible  Notes.  On June 3, 1999, the Company issued $500,000 in convertible
notes which bear  interest at an annual rate of 8 percent and mature  (principal
and  interest)  on May 31,  2001.  Effective  August  1,  1999,  the  notes  are
convertible  into shares of common stock at a 25 percent discount to the closing
bid price of a share of common  stock at the time of  conversion  or the time of
exercise.  The notes were issued in exchange  for  $430,000 in cash,  $50,000 in
legal services and $20,000 in commissions. The commissions have been capitalized
as debt  origination  costs and are being  amortized over the life of the notes.
The notes are unsecured.

The  intrinsic  value of the  conversion  feature of the  principal  and accrued
interest was estimated to be $174,610.  This has been recorded as an increase in
paid-in  capital and a discount to the convertible  notes payable,  with related
amortization being charged to interest expense.  The discount is being amortized
over a one year  period,  which is  management's  estimate  of time  before  any
conversion  will be exercised.  The  convertible  notes also include  detachable
warrants for the purchase of  12,500,000  shares of common stock at the lower of
75 percent of the  closing  bid price of a share of common  stock at the time of
exercise or September 1, 1999. The warrants  expire on June 3, 2002.  Management
estimates  that  approximately  half the  warrants  will be  exercised  prior to
expiration.

Management  estimated  the fair market  value of these  warrants at $125,000 and
recorded  this amount as an  increase  in paid-in  capital and a discount to the
convertible  notes  payable.  The discount is being  amortized over the two year
life of the notes.


                                                                              13
<PAGE>


NOTE 4.   LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION
          (CONTINUED)

A significant  contingency  required by the aforementioned  convertible note and
warrant  agreements  is the  registration  of the  underlying  shares  with  the
Securities  and Exchange  Commission.  The company is to use its best efforts to
register  these  shares and is in the  process  of  preparing  the  registration
statement.


NOTE 5.   EQUITY TRANSACTIONS

The Company was initially capitalized through the issuance of 500,000 shares for
$25,000 in cash.  In November  1996,  the  Company  issued  4,500,000  shares in
exchange  for the  outstanding  shares of PLZ Tech,  Inc.  The  transaction  was
accounted for as a purchase and net assets of $285,596,  consisting primarily of
patents and equipment  were  recorded.  In previous  financial  statements,  the
Company  did not present  unclaimed  shares  resulting  from the merger with PLZ
Tech, Inc. as outstanding  shares.  In the accompanying 1997 and prior financial
statements the number of shares  outstanding  has been restated to include these
shares.

During 1997, the Company issued  2,281,212 shares of stock in a public offering,
primarily for cash.

During  1998,  the  Company  repurchased  472,200  of its  outstanding  stock in
exchange  for  $10,000  in  notes  receivable  and  $30,385  in cash in  various
transactions. This stock was subsequently retired.

The  Company  also  issued  9,274,811  shares of common  stock in  exchange  for
$1,292,707 in cash, net of sales commissions and other direct costs.  Certain of
these sales included price maintenance  agreements  resulting in the issuance of
an additional 1,704,464 shares of stock in 1998.

In 1998,  the Company  issued  2,751,000  shares of common stock in exchange for
services from contractors,  officers and others. These shares were valued at the
estimated  fair market  value for  similar  issuances  of stock and  amounted to
$296,470. The Company also issued 315,000 shares to an officer in exchange for a
note  receivable  of $29,000.  The notes bear  interest at the rate of 7 percent
with interest due semiannually and the principal due July, 2001.

In 1999, the Company  repurchased  489,251 shares of its  outstanding  stock for
$11,132 in cash. These shares were retired. The Company also repurchased 229,000
shares for $41,760 and resold 85,000 of these shares for $35,464.  The remaining
144,000 treasury shares have been recorded at cost.


                                                                              14
<PAGE>


NOTE 5.   EQUITY TRANSACTIONS (CONTINUED)

The  Company  also sold  8,681,624  shares  for  $863,782  in cash,  and  issued
17,094,313 shares for services from contractors, officers and others, which were
valued at $1,486,414.

During the quarter ending March 31, 2000, the Company sold 782,000 shares of its
common stock for  $368,495 in cash,  and issued  1,791,733  shares of its common
stock for services from contractors,  officers and others,  which were valued at
$1,120,233.  The value of the  services is included in the costs and expenses on
the Statement of Operations.

Also during this quarter,  the Company sold 25,000 shares of its treasury  stock
for $49,770 and repurchased 6,500 shares for $7,683. The repurchased shares have
been recorded at cost.

On March 14,  2000,  the Company  issued 550 shares of its Series A  convertible
preferred  stock for  $550,000.  Related  finders  fees and  attorney  fees were
$65,000,  and were netted  against the  proceeds  for a net increase in cash and
equity of $485,000.  Effective  June 14, 2000, the shares are  convertible  into
shares of common  stock at the lesser of 110 percent of the closing bid price of
a share of common  stock on March 13, 2000 or 77.5 percent of the average of the
five lowest  closing bid prices for the common stock for the twenty trading days
immediately preceding the conversion date.

Management  estimated  the  intrinsic  value  of the  conversion  feature  to be
$159,677.  This has been  recorded  as an  increase  in  paid-in  capital  and a
discount to the convertible  preferred stock,  with related  amortization  being
charged to retained earnings via constructive  dividends.  The discount is being
amortized over a 90 day period, which is the period from the date of issuance to
the point at which the preferred  shares can be converted to common shares.  The
convertible  preferred stock also includes  detachable warrants for the purchase
of 55,000  shares of common  stock at a  purchase  price per share  equal to 110
percent of the closing bid price for the common stock on the closing date (March
8, 2000). The warrants expire on March 8, 2005. The detachable warrants have not
been valued in the accompanying  financial  statements,  as management estimates
their fair market value to be immaterial.


                                                                              15
<PAGE>


NOTE 6.   STOCK PLANS

During the quarter  ending March 31,  2000,  the Company  granted an  additional
1,375,000  stock options to certain key  employees.  This results in total stock
options  granted and  unexercised  of 8,125,000 as of March 31, 2000. The shares
issued upon  exercise of the options may be  authorized  and unissued  shares or
shares held by the Company in its treasury. The exercise date of options granted
is based upon the related agreement as approved by the Board of Directors.  Also
during this  quarter,  one key  employee  exercised  his  options and  purchased
150,000 shares of common stock for $13,500.

NOTE 7.   SUBSEQUENT EVENT

At the Directors' meeting held during April 2000, the Company's  Directors voted
to increase the authorized shares of common stock to 150,000,000.


                                                                              16
<PAGE>


                        ADVANCED OPTICS ELECTRONICS, INC.


                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  FINANCIAL CONDITION AND RESULTS OF OPERATION
                                       .

Forward - Looking Statements

This Quarterly  Report contains  forward-looking  statements about the business,
financial  condition and prospects of the Company that reflect  assumptions made
by management and management's beliefs based on information  currently available
to it. The Company can give no assurance that the expectations indicated by such
forward-looking  statements will be realized. If any of management's assumptions
should prove incorrect, or if any of the risks and uncertainties underlying such
expectations  should  materialize,  the  Company's  actual  results  may  differ
materially from those indicated by the forward-looking statements.

The key factors  that are not within the  Company's  control and that may have a
direct  bearing  on  operating  results  include,  but are not  limited  to, the
acceptance by customers of the  Company's  products,  the  Company's  ability to
develop  new  products  cost-effectively,  the  ability of the  Company to raise
capital in the future, the development by competitors of products using improved
or alternative  technology,  the retention of key employees and general economic
conditions.

There may be other risks and circumstances that management is unable to predict.
When  used in this  Quarterly  Report,  words  such as,  "believes,"  "expects,"
"intends,"  "plans,"  "anticipates"  "estimates"  and  similar  expressions  are
intended to identify forward-looking  statements,  although there may be certain
forward-looking   statements   not   accompanied   by  such   expressions.   All
forward-looking statements are intended to be covered by the safe harbor created
by Section 21E of the Securities Exchange Act of 1934.

                                    OVERVIEW

Advanced Optics Electronics, Inc. is a technology company whose primary focus is
the development, production and sales of its electronic flat panel displays. The
primary  initial  product  will be  marketed  to  users of  outdoor  advertising
billboards.  We believe  that our product  line will create a new segment of the
outdoor  advertising  industry  where multiple ads can be displayed and changed.
This will create new and enhanced sources of revenue for billboard companies.

Our goal is to create a product line based on  technology  that is scalable both
in terms of size and resolution to meet a wide range of requirements  related to
site,  economics and use from our potential  customers.  The major advantages of
our flat panel displays are viewing quality,


                                                                              17
<PAGE>


affordability, customer system integrity, and remote change in seconds to reduce
advertising site maintenance and increase revenues. We also plan the development
of a leasing program and an Owned & Operated group.

The Company was organized as a Nevada  corporation  on May 22, 1996. On November
7, 1996,  the Company  acquired the  business and patents of PLZTech,  a company
involved in the  development of flat panel  displays.  Our operating  activities
have related  primarily to the initial  planning and  development of our product
and building our operating infrastructure.

We have recognized  limited revenue to date. We expect that our principal source
of revenue will be derived from sales of our electronic display product.  We are
anticipating having a prototype within the next 90 days.

Our operating expenses have increased significantly since our inception, and the
rate of increase has risen since last year. This is due to increased engineering
and  management  staff and  investments in operating  infrastructure.  Since our
inception we have incurred  significant losses and, as of March 31, 2000, had an
accumulated deficit of $5.2 million.


RESULTS OF CONTINUING OPERATIONS

Due  to  our  limited  operating  history,  we  believe  that   period-to-period
comparisons of our results of operations are not fully meaningful and should not
be relied upon as an indication of future performance.

Comparison of the Three-Month Periods Ended March 31, 2000 and 1999

Revenue. Since our inception, we have been in the development stage and have had
only limited revenue. Revenues decreased to $34,039 in the first quarter of 2000
from $66,375 in the first quarter of 1999.

Product Development. Product development expenses consist primarily of personnel
expenses,  consulting fees and depreciation of the equipment associated with the
development and enhancement of our flat panel displays. Research development and
technical  costs increased to $133,967 in the first quarter of 2000 from $48,273
in the first  quarter of 1999. We believe that  continued  investment in product
development is critical to attaining our strategic  objectives and, as a result,
expect product development expenses to increase significantly in future periods.
We expense product development costs as they are incurred.

General and  Administrative.  General  and  administrative  expenses  consist of
expenses for executive and administrative  personnel,  facilities,  professional
services,  travel and other general corporate  activities,  and the depreciation
and  amortization of office  furniture and leasehold  improvements.  General and
administrative  costs  increased to $1,206,669 in the first quarter of 2000 from
$106,570  in the first  quarter  of 1999.  The  increase  was  primarily  due to
increased personnel, professional


                                                                              18
<PAGE>


service fees and facility  expenses  necessary to support our growth. We expect
general and administrative  costs to increase as we continue to expand our staff
and incur  additional  costs to support the growth of our business and the costs
of being a public  company.  We further  expect our general  and  administrative
expenses to increase as we grow through strategic acquisitions.

Other Income  (Expense).  Other income (expense)  consists of interest and other
income and expense.  Interest income increased to $2,293 in the first quarter of
2000 from $1,964 in the first quarter of 1999..  The increase in interest income
was due to an increase in our average net cash and cash equivalents balance.

Depreciation  increased to $27,630 in the first  quarter of 2000 from $23,529 in
the first quarter of 1999. due primarily to  depreciation  expense for equipment
acquired under capital leases.


     LIQUIDITY AND CAPITAL RESOURCES

We have funded our  operations  since  inception  primarily  through the private
placement  of equity  securities,  through  which we have raised net proceeds of
$3,830,361  through March 31, 2000. We have also financed our operations through
an equipment loan and capital lease financing.

In August 1998 Advanced Optics Electronics,  Inc. entered into a lease agreement
for the  financing of equipment  for the  development  of its flat panel display
systems. The Company is required to repay the $101,000 in equal monthly payments
of the lease.  Monthly payments on the lease are approximately  $2,850. The term
of the lease is 3 years and is backed by the credit of the Company.

The Company's holding in BioModa, Inc will provide additional liquidity. BioModa
is a biomedical  development  company. The Company's ownership of BioModa, as of
March 31, 2000, was 20%. No immediate family members of officers or directors of
Advanced Optics Electronics, Inc. are securities holders of BioModa.

During the quarter  ended March 31, 2000  $31,886 was spent for the  purchase of
equipment.  Product  development  expenditures  were $133,967 in 1999. Funds for
operations,  product development and capital expenditures were provided from the
sale of securities and cash reserves. As of March 31, 2000, we had approximately
$875,614 of cash and cash equivalents.

Management believes that sales of securities, cash reserves and contract revenue
will provide  adequate  liquidity and capital  resources to meet the anticipated
development  stage  requirements  through the end of the third  quarter 2000. At
that time it is  anticipated  that sales of flat panel  displays  will begin and
contribute  to  operating  revenues.  It is  anticipated  that these  sales will
provide the  additional  capital  resources to fund the  proportionately  higher
working capital  requirements of production and sales  initiatives.  The Company
currently has no other significant commitments for capital expenditures in 2000.


                                                                              19
<PAGE>


                           PART II. OTHER INFORMATION

Item 1. Legal proceedings

The  Company is not a party to any  significant  legal  proceeding,  the adverse
outcome of which, in management's opinion,  would have a material adverse effect
on the Company's  operating results.  The Company is a plaintiff in a proceeding
to remedy Internet  related  defamation.  The damages sought are not significant
relative to the current assets of the Company

Item 2. Changes in securities

During the first  quarter of fiscal year 2000 there was a 2,373,733  increase in
shares of common stock.

Item 3. Defaults upon senior securities - Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

The Company held its Annual  Meeting on April 12, 2000.  Proxies were  solicited
for the meeting  pursuant to Regulation  14A under the Exchange Act. On the date
of record March 6, 2000, there were 48,433,745 shares outstanding. Two proposals
were voted on:

The proposal to approve the action of the Board of Directors in appointing  Neff
& Ricci CPA LLP to  continue  as  independent  auditors  for 2000  received  the
following votes:

--------------------------------------------------------------------------------
For:                               41,718,809                            86.14%
--------------------------------------------------------------------------------
Against:                              130,750                             0.27%
--------------------------------------------------------------------------------
Abstain:                              278,330                             0.57%
--------------------------------------------------------------------------------
Broker Non-votes:                          NA                                NA
--------------------------------------------------------------------------------

The foregoing proposal was approved and accordingly ratified.

The proposal to approve an amendment to the Company's  Articles of Incorporation
and By-Laws to increase the authorized shares of common stock from 75,000,000 to
150,000,000 received the following votes:

--------------------------------------------------------------------------------
For:                               39,834,584                            82.25%
--------------------------------------------------------------------------------
Against:                            2,158,890                             4.46%
--------------------------------------------------------------------------------
Abstain:                              134,415                             0.28%
--------------------------------------------------------------------------------
Broker Non-votes:                          NA                                NA
--------------------------------------------------------------------------------


The foregoing proposal was approved and accordingly ratified.

                                                                              20
<PAGE>


                                   SIGNATURES


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


                              Dated: May 11, 2000

                             ADVANCED OPTICS ELECTRONICS, INC.



                             BY:/s/John J. Cousins
                                   ---------------
                             John J. Cousins
                             Vice President of Finance
                             (Principal Accounting Officer)



                             BY:/s/Leslie S. Robins
                                   ----------------
                             Leslie S. Robins
                             Executive Vice President
                             (Principal Executive Officer)


                                                                              21
<PAGE>

Item 5.  Other Information - Not applicable

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits
27.1 Financial Data Schedule

(b) Reports on Form 8-K
No reports on Form 8-K were filed by the company during the  three-month  period
ending March 31, 2000


                                                                              22