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, 2003


                           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 5, 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, 2003
was 936,802,960

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

<PAGE>

PART I:  FINANCIAL INFORMATION
ITEM 1:  Financial Statements




                        ADVANCED OPTICS ELECTRONICS, INC.
                          (A Development Stage Company)
                             CONDENSED BALANCE SHEET
                                 March 31, 2003
--------------------------------------------------------------------------------
                                 ASSETS
Current Assets
    Cash                                                   $   138,203
                                                           ------------
    Costs and estimated earnings in excess
      of billings on uncompleted contract                    1,990,852
    Allowance for loss on contract                          (1,255,000)
                                                           ------------
                                                               735,852
    Other current assets                                        36,833
                                                           ------------

       Total current assets                                    910,888

Property and Equipment, net                                    107,582

Other Assets
    Intangible assets, net                                      11,242
    Investment in Biomoda, Inc.                                 63,531
    Notes receivable from related parties                       49,890
                                                           ------------
                                                               124,663

                                                           $ 1,143,133
                                                           ============

                 LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
    Accounts payable                                       $   132,817
    Accrued expenses                                           277,547
    Notes payable                                               10,152
    Convertible debentures                                   1,192,676
                                                           ------------

       Total current liabilities                             1,613,192
                                                           ------------

Commitments and Contingencies

Stockholders' Deficit
    Preferred stock, $0.001 par value,
      10,000,000 shares authorized;
      no shares issued and outstanding                               -
    Common stock, $0.001 par value,
      1,500,000,000 shares authorized;
      936,802,960 shares issued and outstanding                936,803
    Treasury stock, at cost                                     (6,634)
    Notes receivable officer                                  (313,022)
    Additional paid in capital                              10,188,086
    Deficit accumulated during the development stage       (11,275,292)
                                                           ------------

       Total stockholders' deficit                            (470,059)
                                                           ------------

                                                           $ 1,143,133
                                                           ============

--------------------------------------------------------------------------------
Page 2   See accompanying notes to these condensed financial statements.

<PAGE>
<TABLE>
<CAPTION>
                        ADVANCED OPTICS ELECTRONICS, INC.
                          (A Development Stage Company)
                       CONDENSED STATEMENTS OF OPERATIONS
  For the Three Month Periods Ended March 31, 2003 and 2002 and For The Period
              From May 22, 1996 (Inception) Through March 31, 2003
--------------------------------------------------------------------------------------------------------------------

                                                                                             May 22, 1996
                                                                                              (Inception)
                                                                                               Through
                                                                                               March 31,
                                                             2003               2002             2003
                                                         -------------     -------------     -------------
<S>                                                    <C>                <C>               <C>

CONTRACT REVENUES                                        $          -      $          -      $          -

OPERATING EXPENSES
    General and administrative                               (335,919)         (365,114)       (7,148,013)
    Research and development                                  (13,549)          (23,601)       (1,345,622)
    Asset impairment                                                -                 -          (227,570)
                                                         -------------     -------------     -------------
                                                             (349,468)          (388,715)       (8,721,205)

ESTIMATED LOSS ON CONTRACT                                    (50,000)                 -        (1,255,000)
                                                         -------------     -------------     -------------

OPERATING LOSS                                               (399,468)         (388,715)       (9,976,205)
                                                         -------------     -------------     -------------

OTHER (EXPENSE) INCOME
    Interest income                                             4,120             4,704            75,502
    Gain (loss) on marketable equity securities                     -                 -           (29,368)
    Other investment gains                                          -                 -            59,784
    Loss from investment in Biomoda, Inc.                      (1,634)                -          (291,384)
    Gain (loss) on disposal of assets                               -            10,000            (4,306)
    Interest expense                                           (2,226)          (34,050)       (1,046,295)
                                                         -------------     -------------     -------------
                                                                  260           (19,346)       (1,236,067)
                                                         -------------     -------------     -------------

NET LOSS BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE                               (399,208)         (408,061)      (11,212,272)

CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE                                                -                 -           (63,020)
                                                         -------------     -------------     -------------

NET LOSS                                                 $   (399,208)     $   (408,061)     $(11,275,292)
                                                         =============     =============     =============

Basic and diluted net loss before cumulative effect
of change in accounting principle available to
common shareholder per common share                      $     (0.001)     $     (0.004)     $      (0.04)

Cumulative effect of change in accounting principle                 -                 -                 -
                                                         -------------     -------------     -------------

Basic and diluted net loss available to common
shareholder per common share                             $     (0.001)     $     (0.004)     $      (0.04)
                                                         =============     =============     =============
Basic and diluted weighted average common shares
  outstanding                                             788,678,586       103,737,280       297,914,265
                                                         =============     =============     =============

----------------------------------------------------------------------------------------------------------
Page 3   See accompanying notes to these condensed financial statements.

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                        ADVANCED OPTICS ELECTRONICS, INC.
                          (A Development Stage Company)
                       CONDENSED STATEMENTS OF CASH FLOWS
  For The Three Month Periods Ended March 31, 2003 and 2002 and For the Period
              From May 22, 1996 (Inception) Through March 31, 2003

--------------------------------------------------------------------------------------------------------------------

                                                                                             May 22, 1996
                                                                                              (Inception)
                                                                                                Through
                                                                                               March 31,
                                                              2003              2002             2003
                                                         -------------     -------------     -------------
<S>                                                    <C>                <C>               <C>
Cash flows from operating activities:
   Net loss                                              $   (399,208)     $   (408,061)     $(11,275,292)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
      Intrinsic value of conversion features                        -                 -           610,603
      Write off of organization costs                               -                 -            63,020
      Amortization of discount on convertible
       notes and preferred stock                                    -                 -           295,209
      Loss on marketable securities                                 -                 -            29,368
      Loss (gain) on disposal of assets                             -           (10,000)            4,306
      Loss on investment in Biomoda, Inc.                       1,634                 -           291,384
      Issuance of common stock for services                   211,371           263,650         4,738,702
      Issuance of notes payable for services                        -                 -            50,000
      Increase in excess of costs and earnings
       over billings on uncompleted contract                 (110,503)          (85,811)       (1,990,852)
      Increase in allowance for loss on contract               50,000                 -         1,255,000
      Interest accrued on convertible debentures                    -            30,167           228,446
      Interest earned on note receivable from
       stockholder and related parties                         (4,120)                -           (19,546)
      Depreciation and amortization                            21,835            23,446           559,795
      Bad debt expense                                              -                 -            15,000
      Asset impairment                                              -                 -           227,570
      Other non-cash expenses                                       -                 -            33,447
      Accrued interest                                              -                 -            30,667
   Changes in operating assets and liabilities:
      Increase in other current assets                              -            (4,702)          (36,833)
      Increase in accounts payable and accrued expenses      (102,478)           50,747           410,364
                                                         -------------     -------------     -------------

   Net cash used in operating activities                     (331,469)         (140,564)       (4,479,642)
                                                         -------------     -------------     -------------

Cash flows from investing activities:
   Purchases of property and equipment                              -                 -          (389,832)
   Proceeds from sale of property and equipment                     -            10,000            23,800
   Investment in Biomoda, Inc.                                      -                 -          (383,845)
   Proceeds from sale of Biomoda, Inc. stock                        -            11,250            28,930
   Advances to Biomoda, Inc.                                  (11,458)                -           (49,890)
   Sale of marketable securities                                    -                 -            40,665
   Purchases of marketable securities                               -                 -           (70,034)
   Decrease in certificates of deposit                              -                 -                 -
   Purchase of other assets                                         -                 -          (245,579)
                                                         -------------     -------------     -------------

   Net cash used in investing activities                      (11,458)           21,250        (1,045,785)
                                                         -------------     -------------     -------------

--------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 4   See accompanying notes to these condensed financial statements.

<PAGE>
<TABLE>
<CAPTION>
                       ADVANCED OPTICS ELECTRONICS, INC.
                          (A Development Stage Company)
                  CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
  For The Three Month Periods Ended March 31, 2003 and 2002 and For the Period
              From May 22, 1996 (Inception) Through March 31, 2003

--------------------------------------------------------------------------------------------------------------------

                                                                                             May 22, 1996
                                                                                              (Inception)
                                                                                                Through
                                                                                               March 31,
                                                              2003              2002             2003
                                                         -------------     -------------     -------------
<S>                                                     <C>               <C>               <C>
Cash flows from financing activities:
   Principal repayments on notes payable
     and capital leases                                       (27,958)           (1,889)         (259,835)
   Proceeds from notes payable                                      -                             622,776
   Issuance of common stock for cash                          468,230            48,041         4,642,102
   Increase in note receivable stockholder                          -                             (49,890)
   Proceeds from sale of treasury stock                             -             6,679           120,606
   Purchase of treasury stock                                       -              (170)         (154,710)
   Proceeds from issuance of convertible debt                       -                           1,060,000
   Principal repayments on convertible debt                    (9,000)                -           (22,451)
                                                         -------------     -------------     -------------

     Net cash provided by financing activities                431,272           52,661         5,958,598
                                                         -------------     -------------     -------------

Net increase (decrease) in cash                                88,345           (66,653)          433,171

Cash at beginning of period                                    49,858            90,863                 -
                                                         -------------     -------------     -------------

Cash at end of period                                    $    138,203      $     24,210      $    433,171
                                                         =============     =============     =============

See  accompanying  notes to the condensed  financial  statements  for additional information  relating to non-cash
investing and financing  activities during the three months ended March 31, 2003 and 2002.

--------------------------------------------------------------------------------------------------------------------
Page 5   See accompanying notes to these condensed financial statements.
</TABLE>
<PAGE>

MANAGEMENTS REPRESENTATION:

The management of Advanced  Optics  Electronics,  Inc. (the  "Company")  without
audit has prepared the  condensed  financial  statements  included  herein.  The
accompanying  unaudited  condensed  financial  statements  have been prepared in
accordance with accounting principles generally accepted in the United States of
America  for  interim  financial  information.   Certain  information  and  note
disclosures  normally included in the condensed financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been omitted. In the opinion of the management of the Company,  all
adjustments   considered  necessary  for  fair  presentation  of  the  condensed
financial  statements have been included and were of a normal recurring  nature,
and the accompanying condensed financial statements present fairly the financial
position  as of March 31,  2003,  and the  results of  operations  for the three
months  ended March 31, 2003 and 2002 and cash flows for the three  months ended
March 31, 2003 and 2002.

It is suggested that these financial  statements be read in conjunction with the
audited  financial  statements  and notes for the year ended  December 31, 2002,
included in the  Company's  Form 10-KSB filed with the  Securities  and Exchange
Commission on March 31, 2003. The interim results are not necessarily indicative
of the results for a full year.


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Operations
-------------------------------------

Advanced  Optics  Electronics,  Inc.  (the  "Company")  is a  development  stage
technology company with its principal focus on the development and production of
large-scale  flat panel  displays and trades on the OTC Bulletin Board under the
symbol "ADOT" The market for the  large-scale  flat panel  displays will include
advertising  billboards,  flat panel computer monitors and cockpit displays. The
Company  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,  complete  this  contract and
obtain additional  contracts.  As of March 31, 2003, completion of this contract
was behind schedule.

While management  believes the contract will ultimately be completed,  there can
be no certainty  that this will be  accomplished  because the technology has not
yet been used in a  commercial  application.  In  addition,  the  Company may be
required to obtain  additional  capital in order to fund the  completion  of the
contract.

--------------------------------------------------------------------------------
Page 6

<PAGE>


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Organization and Nature of Operations (continued)
-------------------------------------------------

Since  inception,  the Company has  primarily  been  engaged in the research and
development of its product.  Once the research and development is complete,  the
Company will begin to manufacture  and obtain new  contracts.  The Company is in
the development stage and has not generated revenues from any product sales. The
Company believes that its planned products will produce  sufficient  revenues in
the future. There are no assurances,  however,  that the Company will be able to
produce such products, or if produced,  that they will be accepted in the market
place.

Development Stage and Going Concern
-----------------------------------

The Company has been in the  development  stage since its  inception  on May 22,
1996,  and has not  generated  any  revenues  from  operations  and  there is no
assurance of any future revenues.

The Company will require substantial  additional funding for continuing research
and  development,   obtaining  acceptance  in  the  market  place  and  for  the
commercialization  of its product.  There can be no  assurance  that the Company
will be able to obtain  sufficient  additional  funds when needed,  or that such
funds, if available, will be obtainable on terms satisfactory to the Company.

Management has taken action to address these matters. They include:

     o   Retention of experienced management personnel with particular skills in
         the development and commercialization of such product.
     o   The Company is aggressively seeking new contracts.
     o   The Company has an equity method  investment  in a start-up  company
         (Biomoda),  which  management  hopes will be profitable.  Biomoda, Inc.
         has filed an SB2 registration statement with the SEC, which is not yet
         effective.
     o   The Company is seeking investment capital through the public markets.

Management  plans  to  obtain  revenues  from  product  sales,  but  there is no
commitment by any persons for purchases of any of the proposed products.  In the
absence  of  significant  sales  and  profits,  the  Company  may  seek to raise
additional  funds  to  match  its  working  capital   requirements  through  the
additional sales of debt and equity  securities,  there is no assurance that the
Company will be able to obtain sufficient additional funds when needed, although
such funds,  if  available,  will be  obtainable  on terms  satisfactory  to the
Company.  The successful  outcome of future  activities  cannot be determined at
this time and there is no  assurance  that if  achieved,  the Company  will have
sufficient  funds to execute its  intended  business  plan or generate  positive
operating results.

--------------------------------------------------------------------------------
Page 7

<PAGE>


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Development Stage and Going Concern (continued)
-----------------------------------------------

As a result, the accompanying  financial  statements have been prepared assuming
the Company will continue as a going concern,  which  contemplates,  among other
things,  the realization of assets and satisfaction of liabilities in the normal
course of  business.  As of March 31,  2003,  the Company has  negative  working
capital  of  $702,304,  an  accumulated  deficit  of  $11,275,292,  losses  from
operations and lack of  operational  history,  among other matters,  which raise
substantial doubt about its ability to continue as a going concern.

The condensed  financial  statements do not include any  adjustments  related to
recoverability  and  classification of assets carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.

Earnings Per Share
------------------

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 128
("SFAS 128"),  "Earnings Per Share." Under SFAS 128, basic earnings per share is
computed by dividing  income  available to common  stockholders  by the weighted
average  number  of  shares  assumed  to be  outstanding  during  the  period of
computation.  Diluted  earnings per share is computed  similar to basic earnings
per share  except that the  denominator  is  increased  to include the number of
additional  common  shares  that would have been  outstanding  if the  potential
common shares had been issued and if the additional  common shares were dilutive
(no shares as of March 31, 2003 and 2002).  Because  the Company has  incurred a
net loss in the three month  periods  ended  March 31, 2003 and 2002,  basic and
diluted loss per share are the same as additional  potential common shares would
be anti-dilutive.

Stock Based Compensation
------------------------

At March 31, 2003, the Company has one stock-based  employee  compensation  plan
(the  "Plan").  The  Company  accounts  for the Plan under the  recognition  and
measurement  principles of APB 25, and related  interpretation.  No  stock-based
compensation  cost is  recognized in net loss.  Stock options  granted under the
Plan have  exercise  prices equal to the market value of the  underlying  common
stock on the dates of grant.  The following table  illustrates the effect on net
income and loss per share if the Company had applied the fair value  recognition
provisions of SFAS 123 to stock-based employee compensation.

--------------------------------------------------------------------------------
Page 8

<PAGE>


1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock Based Compensation (continued)
------------------------------------

                                                  2003             2002
                                            --------------   --------------

Net loss:
  As reported                               $    (399,208)   $    (408,061)
  Deduct: Total stock-based employee
     compensation expense determined
     under fair value based method
     for all awards                                     -          (30,000)
                                            --------------   --------------
  Pro forma                                 $    (401,691)   $    (438,061)
                                            ==============   ==============

Basic and diluted net loss per share:
  As reported                               $      (0.001)   $      (0.004)
                                            ==============   ==============
  Pro forma                                 $      (0.001)   $      (0.004)
                                            ==============   ==============

The  above  pro  forma  effects  of  applying  SFAS  123  are  not   necessarily
representative of the impact on reported net loss for future years.

Recent Accounting Standards
---------------------------

Recent accounting pronouncements discussed in the notes to the December 31, 2002
audited financial statements,  filed previously with the Securities and Exchange
Commission  in form  10-KSB,  that were  required to be adopted  during the year
ending  December  31, 2003 did not have a  significant  impact on the  Company's
financial statements.


2. STOCKHOLDERS' EQUITY

Common Stock
------------

On March 17, 2003, the Company's Board of Directors authorized the change in the
total number of common  shares which the Company is authorized to issue from the
current authorized of 800,000,000 to 1,500,000,000 common shares.

During the period ended March 31, 2003, the Company sold  213,030,000  shares of
common stock for $468,230 in cash; all shares were sold for less than $0.01.

--------------------------------------------------------------------------------
Page 9

<PAGE>

2. STOCKHOLDERS' EQUITY (continued)

Common Stock (continued)
------------------------

During the period ended March 31, 2003, the Company issued  70,649,994 shares of
common stock for services,  which were valued at $211,371  (based on the closing
market  price on the date of  grant,  which was less than  $0.01).  The  Company
recorded such amounts in the accompanying statement of operations.

During the period  ended  March 31,  2003,  in  accordance  with the  applicable
convertible  note payable  agreement,  the Company issued  60,877,063  shares of
common  stock at  conversion  prices of less than $0.01 in  connection  with the
conversion of notes payable of approximately  $42,841, plus approximately $5,463
of accrued interest.

--------------------------------------------------------------------------------
Page 10

<PAGE>



                 ITEM 2: 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 has the  potential to create a new
segment of the outdoor advertising industry. Our systems software and electronic
displays represent an innovative approach to advertising that takes advantage of
the recent  technological  convergence of broadcast and billboard  media and the
World Wide Web.

--------------------------------------------------------------------------------
Page 11

<PAGE>

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.  We are also planning to
develop a leasing program and an Owned & Operated group.

The major advantages and features of the Display are:
   o   Brightest display ever available (35,000 nits)
   o   Widest viewing angle available
   o   Smallest dot pitch available for outdoor large-scale displays (8 mm dot
       pitch)
   o   High definition picture quality
   o   Modular assembly (1 meter increments) for scaleable and shapeable
       architectures
   o   True Color (24 bit)
   o   Full motion video (up to 120 frames per second)
   o   Transportable for mobile operations
   o   Weather resistant for outdoor applications
   o   Modest power requirements
   o   Minimum 5 year continual use lifetime
   o   Real-time live video feeds
   o   Broadcast/simulcast applications
   o   Supports streaming video
   o   Uses industry standard DVI protocol for high speed data linking and
       digital video interfacing
   o   Satellite linkable

Proprietary Billboard software capabilities are:
   o   Manage and update display content remotely
   o   Works with all image file formats and digital video editors
   o   Secure  Internet or WAN communications o WEB-based status monitoring
   o   Provides time, temperature and other dynamic content inserts

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  completed,  tested,  and
measured  the   performance   of,  our   prototype  and  are  currently  in  the
manufacturing process of our production model.

--------------------------------------------------------------------------------
Page 12

<PAGE>

We expect  our  principal  source of  revenue  to be  derived  from sales of our
electronic display product.  To date we have recognized limited revenue,  but we
have  developed a functioning  prototype  and we  anticipate  sales by the third
quarter  2003.  The  company  has set the price for its  units at  $395,000  and
$1,490,000 respectively for its 2 meter x 3 meter and its 3 meter x 8 meter flat
panel displays.

The  company  has  completed a  marketing  film that is being  distributed  on a
national  and  international  basis.  The  recipients  who receive this film are
institutional  investors  and  qualified  potential  buyers  of the  flat  panel
displays.

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, 2003, had a
deficit accumulated during the development stage of $11,275,292.


RESULTS OF OPERATIONS OF THE COMPANY

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, 2003 and 2002
-------------------------------------------------------------------

REVENUE.  During the quarter  ended  March 31,  2001,  the  Company  changed the
accounting for our contract to the completed contract method.  According to this
way of accounting for contracts,  we are booking no revenue until the completion
of the  contract.  Please  note that the  revenue  for the period  "May 22, 1996
(Inception)  Through March 31, 2003" has been  restated and is now $0.  Billings
and collections through March 31, 2003 have totaled $89,873.

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  decreased to $13,549 in the first quarter of 2003 from $23,601
in the first  quarter of 2002.  These  costs  have been  reduced in an effort to
conserve  cash and meet the  challenges of being a  development  stage  company.
However, 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.

--------------------------------------------------------------------------------
Page 13

<PAGE>

GENERAL AND  ADMINISTRATIVE.  General  and  administrative  expenses  consist of
expenses for executive and administrative  personnel,  facilities,  professional
services,  travel,  general  corporate  activities,  and  the  depreciation  and
amortization  of  office  furniture  and  leasehold  improvements.  General  and
administrative  costs  decreased  to $335,919 in the first  quarter of 2003 from
$365,114 in the first  quarter of 2002.  We expect  general  and  administrative
costs to increase in the future as our  business  prospects  develop and we will
require more staff.  The costs  associated  with being a publicly traded company
and  future  strategic  acquisitions  will  also  be a  contributing  factor  to
increases in this expense.

OTHER INCOME  (EXPENSE).  Other income (expense)  consists of interest and other
income and  expense.  Other  income  (expense)  increased to ($260) in the first
quarter of 2003 from  ($19,346)  in the first  quarter of 2002 due  primarily to
less interest expensed related to convertible debentures.

Depreciation  remained  relatively  constant at $17,668 in the first  quarter of
2003 and $23,446 in the first quarter of 2002.


LIQUIDITY AND CAPITAL RESOURCES

Since  inception,  we have funded our operations  primarily  through the private
placement of equity securities and the issuance of convertible debentures. As of
March 31, 2003 we have raised net proceeds of approximately $5,500,000.

The  cash  balance  at the end the end of the  quarter  of  $138,203  represents
approximately two months of cash operating expenses.

We have also utilized  equipment loans and capital lease financing.  As of March
31, 2003 we have a balance of approximately $10,000 on the equipment loans.

The Company's holding in Biomoda, Inc may provide additional liquidity.  Biomoda
is a biomedical  development  company. The Company's ownership of Biomoda, as of
March 31, 2003 was approximately 18.6%.

The  Company's  relationship  to its  investment in Biomoda  changed  during the
second quarter of 2002. There is now an active  leadership role in Biomoda being
provided by John Cousins and Leslie Robins.  Biomoda is currently in the process
of registering  securities  under an SB2 that has been filed with the Securities
and Exchange Commission but has not yet been declared effective. The Company has
gone to the equity  method of reporting  its  investment  in Biomoda  because of
these recent changes in the management relationship between the two companies.

Product  development  expenditures  were $13,549 for the quarter ended March 31,
2003. Funds for operations,  product  development and capital  expenditures were
provided from the sale of securities and cash reserves.

--------------------------------------------------------------------------------
Page 14

<PAGE>

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 fourth quarter 2003. 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 2003.

Going Concern
-------------

The Company's  independent  certified  public  accountants  have stated in their
report included in the Company's 2002 Form 10-KSB, that the Company has incurred
operating  losses in the last two years,  has a working  capital  deficit  and a
significant  stockholders'  deficit.  These conditions raise  substantial  doubt
about the Company's ability to continue as a going concern.

Inflation
---------

Management  believes  that  inflation  has  not  had a  material  effect  on the
Company's results of operations.

Critical Accounting Policies
----------------------------

In December  2001, the SEC requested  that all  registrants  list their three to
five most "critical  accounting  policies" in the MD&A. The SEC indicated that a
"critical  accounting policy" is one which is both important to the portrayal of
the Company's  financial condition and results,  and requires  management's most
difficult,  subjective  or complex  judgments,  often as a result of the need to
make  estimates  about the effect of matters that are inherently  uncertain.  We
believe that our following accounting policies fit this definition:

REVENUE RECOGNITION - In accordance with Statement of Position 81-1, "Accounting
for Performance of Construction-Type and Certain Production-Type Contracts," the
Company  accounts  for revenue and costs  related to its  long-term  contract in
process by the completed-contract method, whereas during the period from May 22,
1996 (inception) to December 31, 1999,  revenue and costs were determined by the
percentage-of-completion method. The completed-contract method of accounting was
adopted  in  2000  due to the  Company's  uncertainty  regarding  contract  cost
estimates.  The financial statements of the period from May 22, 1996 (inception)
to December 31,  1999,  were  restated to apply the  completed  contract  method
retroactively.  The effect of the accounting change had no effect on net loss or
loss per share previously  reported for 1999 or for the period from May 22, 1996
(inception) to December 31, 1999.

Under the completed  contract method of accounting,  contract revenues and costs
are recognized when the contract is completed,  with estimated losses recognized
when it becomes  evident  that  contract  costs will exceed  contract  revenues.
Contract  costs include all direct  material and labor costs and those  indirect
costs  related  to  contract  performance,  such as  indirect  labor,  supplies,
overhead, equipment depreciation and interest.

--------------------------------------------------------------------------------
Page 15

<PAGE>

Costs in excess of amounts  billed are  classified as current assets under costs
and estimated earnings in excess of billings on uncompleted contract.

ESTIMATES - Critical  estimates made by management are, among others,  estimates
for  current  and  deferred   taxes,   recoverability   of  intangible   assets,
collectibility  of  contract  receivable,  estimation  of  costs  for  long-term
contracts,  allowance  for loss on  contracts,  recoverability  of investment in
Biomoda, Inc. and the valuation of other assets. Actual results could materially
differ from those estimates.

ITEM 3.  CONTROLS AND PROCEDURES

Within 90 days prior to this report, Management carried out an evaluation of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures,  pursuant to Exchange Act Rule 13a-14 and 15d-14.  Based on the
foregoing,  the  Principal  Executive  Officer and Principal  Financial  Officer
concluded that the Company's disclosure controls and procedures are effective to
timely alert them to any material  information relating to the Company that must
be included in the Company's periodic SEC filings. In addition,  there have been
no significant  changes in the Company's  internal  controls or in other factors
that could significantly  affect internal controls subsequent to the date of the
most recent evaluation.


                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The company may on occasion be a party to litigation involving claims made by or
against the Company arising in the ordinary course of business. The officers and
directors know of no legal  proceedings  pending or  contemplated by any person,
entity or governmental  authority which would have a material  adverse effect on
the Company.

ITEM 2.  CHANGES IN SECURITIES

Common Stock
------------

As of March  31,  2003,  the  status of the  common  stock of the  Company  was:
1,500,000,000 shares authorized and 936,802,960 shares issued and outstanding.

During the period ended March 31, 2003, the Company sold  213,030,000  shares of
common stock for $468,230 in cash; all shares were sold for less than $0.01.

--------------------------------------------------------------------------------
Page 16

<PAGE>

During the period ended March 31, 2003, the Company issued  70,649,994 shares of
common stock for services,  which were valued at $211,371  (based on the closing
market  price on the date of  grant,  which was less than  $0.01).  The  Company
recorded such amounts in the accompanying statement of operations.

During the period  ended  March 31,  2003,  in  accordance  with the  applicable
convertible  note payable  agreement,  the Company issued  60,877,063  shares of
common  stock at  conversion  prices of less than $0.01 in  connection  with the
conversion of notes payable of approximately  $42,841, plus approximately $5,463
of accrued interest.

These transactions were exempt under Section 4(2) of the Securities Act of 1933,
as amended.  The purchasers were well known to an executive  officer of Advanced
Optics Electronics,  Inc. and each had a net worth or income level to qualify as
accredited investors, were experienced in financial and business matters, and no
general solicitation was involved in the transaction.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES - Not applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters  submitted  to a vote of the  Company's  security  holders
during the first quarter of fiscal year 2003.

ITEM 5.  OTHER INFORMATION - Not applicable

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits

   99.1   Certification  of Leslie S.  Robins,  Chief  Executive  Officer
          pursuant to 18 U.S.C.  section  1350,  as adopted pursuant to section
          906 of the Sarbanes-Oxley act of 2002.

   99.2   Certification of John J. Cousins,  Chief Financial Officer  (Principal
          Accounting  Officer) pursuant to 18 U.S.C. section 1350, as adopted
          pursuant to section 906 of the Sarbanes-Oxley act of 2002.

(a) Reports on Form 8-K

No reports on Form 8-K was filed during the first quarter of 2003.

--------------------------------------------------------------------------------
Page 17

<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 14, 2003

                               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)

--------------------------------------------------------------------------------
Page 18

<PAGE>

                                 CERTIFICATIONS


I, Leslie S. Robins, certify that:

1. I have  reviewed this report on Form 10-QSB of Advanced  Optics  Electronics,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the  registrant  and have: a) designed
such  disclosure  controls and  procedures to ensure that  material  information
relating to the registrant,  including its  consolidated  subsidiaries,  is made
known to us by others within those entities,  particularly  during the period in
which this quarterly report is being prepared; b) evaluated the effectiveness of
the registrant's  disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation  Date");  and
c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):  a) all  significant  deficiencies  in the  design or  operation  of
internal  controls  which could  adversely  affect the  registrant's  ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors any material weaknesses in internal controls;  and b) any
fraud, whether or not material,  that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: May 14, 2003

/s/ Leslie S. Robins
--------------------
Leslie S. Robins
Chief Executive Officer
(Principal Executive Officer)

--------------------------------------------------------------------------------
Page 19

<PAGE>

I, John J. Cousins, certify that:

1. I have  reviewed this report on Form 10-QSB of Advanced  Optics  Electronics,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the  registrant  and have: a) designed
such  disclosure  controls and  procedures to ensure that  material  information
relating to the registrant,  including its  consolidated  subsidiaries,  is made
known to us by others within those entities,  particularly  during the period in
which this quarterly report is being prepared; b) evaluated the effectiveness of
the registrant's  disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation  Date");  and
c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):  a) all  significant  deficiencies  in the  design or  operation  of
internal  controls  which could  adversely  affect the  registrant's  ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors any material weaknesses in internal controls;  and b) any
fraud, whether or not material,  that involves management or other employees who
have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly report whether there were significant  changes in internal controls or
in other factors that could significantly affect internal controls subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date: May 14, 2003

/s/ John J. Cousins
-------------------
John J. Cousins
Chief Financial Officer
(Principal Accounting Officer)

--------------------------------------------------------------------------------
Page 20

<PAGE>
                                                                    EXHIBIT 99.1

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Advanced Optics  Electronics,  Inc.  Quarterly  Report on
Form  10-QSB for the quarter  ended March 31, 2003 as filed with the  Securities
and Exchange Commission on the date hereof (the "Report"),  I, Leslie S. Robins,
Chairman and Chief  Executive  Officer of the Company,  certify,  pursuant to 18
U.S.C.  Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley
Act of 2002, that, to the best of my knowledge:

   (1)  Fully complies with the requirements of Section 13(a) or 15(d) of the
        Securities Exchange Act of 1934, as amended, and

   (2)  The information  contained in such Quarterly Report on Form 10-QSB
        fairly presents in all material  respects the financial  condition and
        results of operations of the Company.

A signed  original of this  written  statement  required by Section 906 has been
provided to Advanced Optics  Electronics,  Inc. and will be retained by Advanced
Optics Electronics, Inc. and furnished to the Securities and Exchange Commission
or its staff upon request.


/s/ Leslie S. Robins
--------------------
Leslie S. Robins
Chief Executive Officer
(Principal Executive Officer)

May 14, 2003

<PAGE>
                                                                    EXHIBIT 99.2

                CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Advanced Optics  Electronics,  Inc.  Quarterly  Report on
Form  10-QSB for the quarter  ended March 31, 2003 as filed with the  Securities
and Exchange  Commission on the date hereof (the "Report"),  I, John J. Cousins,
Chief Financial Officer of the Company,  certify,  pursuant to 18 U.S.C. Section
1350,  as adopted  pursuant  to Section 906 of the  Sarbanes-Oxley  Act of 2002,
that, to the best of my knowledge:

   (1)  Fully complies with the requirements of Section 13(a) or 15(d) of the
        Securities Exchange Act of 1934, as amended, and

   (2)  The information  contained in such Quarterly Report on Form 10-QSB
        fairly presents in all material  respects the financial  condition and
        results of operations of the Company.

A signed  original of this  written  statement  required by Section 906 has been
provided to Advanced Optics  Electronics,  Inc. and will be retained by Advanced
Optics Electronics, Inc. and furnished to the Securities and Exchange Commission
or its staff upon request.


/s/ John J. Cousins
-------------------
John J. Cousins
Chief Financial Officer
(Principal Accounting Officer)

May 14, 2003