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: June 30, 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 June 30, 2000
was 60,162,676

    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

                                                                 JUNE 30, 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                           6

    Statements of Cash Flows                                               10

    Notes to Financial Statements                                          13

<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 June 30, 2000, and the
related condensed statements of operations, cash flows and changes in
stockholders' equity for the quarter and the six month period ended June 30,
2000 and 1999, and for the 2000, 1999, and 1998 portion of the period from May
22, 1996 (inception) through June 30, 2000. The 1996 and 1997 portion of the
condensed financial statements for the period from May 22, 1996 (inception)
through June 30, 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
July 17, 2000


                                       1
<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
June 30, 2000
See Accountants' Report.


ASSETS

Current Assets
    Cash and cash equivalents                                         $  393,127
    Certificates of deposit                                              103,180
    Marketable equity securities                                          33,671
    Costs and estimated earnings
        in excess of billings on
        uncompleted contract                                             596,172
    Raw materials                                                         29,293
    Due from officer and shareholder                                     187,494
                                                                      ----------

           Total current assets                                        1,342,937
                                                                      ----------

Property and Equipment, net                                              313,258
                                                                      ----------

Other Assets
    Investment in Bio Moda, Inc.                                         174,890
    Intangible assets, net                                               196,186
    Other assets                                                          30,000
                                                                      ----------

           Total other assets                                            401,076
                                                                      ----------

           Total assets                                               $2,057,271
                                                                      ==========

See Notes to Financial Statements.


                                       2
<PAGE>

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
    Accounts payable                                                $    15,634
    Accrued liabilities                                                  17,347
    Current portion of long-term debt
        and capital lease obligation                                     44,567
    Allowance for loss on contract                                      128,257
                                                                    -----------
           Total current liabilities                                    205,805
                                                                    -----------

Long-term portion of long-term debt
    and capital lease obligation                                         27,364
                                                                    -----------

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 150,000,000 shares,
         $.001 par value 60,162,176 shares issued
         and 59,993,176 shares outstanding                               60,163
    Additional paid-in capital                                        8,083,228
    Deficit accumulated during the development stage                 (6,251,646)
     Treasury stock                                                     (67,644)
                                                                    -----------

           Total shareholders' equity                                 1,824,102
                                                                    -----------

           Total liabilities and
            shareholders' equity                                    $ 2,057,271
                                                                    ===========


                                       3
<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Quarters Ended June 30, 2000 and 1999
See Accountants' Report.

                                                      2000              1999

Revenues

    Contract revenue                              $      1,588           70,000
                                                  -----------------------------

Costs and Expenses
    General and administrative                         565,882          305,972
    Contract costs                                     121,588           78,178
    Research and development                           134,660           38,167
                                                  -----------------------------

           Total expenses                              822,130          422,317
                                                  -----------------------------

    Operating loss                                    (820,542)        (352,317)
                                                  -----------------------------

Other Income and (Expenses)
    Interest income                                      3,407            5,105
    Unrealized gain (loss) on marketable
        equity securities                               (5,813)         (12,961)
    Loss on Bio Moda, Inc.                             (16,222)         (13,957)
    Interest expense                                  (111,954)          (5,687)
                                                  -----------------------------

           Total other expenses                       (130,582)         (27,500)
                                                  -----------------------------

           Net loss                                   (951,124)        (379,817)
                                                  -----------------------------

Net loss per share                                $       (.02)            (.01)
                                                  =============================

Weighted average shares outstanding                 52,259,092       32,343,166
                                                  =============================


See Notes to Financial Statements.



                                       4
<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 2000 and 1999
and the Period from May 22, 1996 (Inception)
Through June 30, 2000
See Accountants' Report.

<TABLE>
<CAPTION>
                                                                                     5/22/96
                                                                                   (Inception)
                                                                                     Through
                                                       2000              1999        06/30/00
<S>                                                  <C>             <C>             <C>
Revenues
    Contract revenue                               $     35,627         136,375         614,596
                                                   --------------------------------------------

Costs and Expenses
    General and administrative                        1,772,551         412,542       4,354,016
    Contract costs                                      233,474         164,119         998,259
    Research and development                            268,627          86,440         657,967
                                                   --------------------------------------------

           Total expenses                             2,274,652         663,101       6,010,242
                                                   --------------------------------------------

    Operating loss                                   (2,239,025)       (526,726)     (5,395,646)
                                                   --------------------------------------------

Other Income and (Expenses)
    Interest income                                       5,700           7,069          17,417
    Unrealized gain (loss) on marketable
        equity securities                                 1,842         (22,929)        (31,717)
    Loss on Bio Moda, Inc.                              (32,444)        (38,528)       (208,955)
    Interest expense                                   (188,535)         (8,986)       (384,971)
                                                   --------------------------------------------

           Total other expenses                        (213,437)        (63,374)       (608,226)
                                                   --------------------------------------------

           Net loss before cumulative effect
               of change in accounting principle             --        (590,100)     (6,003,872)
                                                   --------------------------------------------

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

           Net loss                                  (2,452,462)       (653,120)     (6,066,892)
                                                   --------------------------------------------

Net loss per share before cumulative effect
    of change in accounting principle                      (.05)           (.02)           (.25)

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

Net loss per share                                 $       (.05)           (.02)          (.025)
                                                   ============================================

Weighted average shares outstanding                  50,500,857      28,797,880      23,982,040
                                                   ============================================
</TABLE>

See Notes to Financial Statements.


                                       5
<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from May 22, 1996 (Inception)
Through June 30, 2000
See Accountants' Report.

<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>

See Notes to Financial Statements


                                       6
<PAGE>

                                         Equity
                                        (Deficit)
                                       Accumulated
               Treasury Stock          Additional     During the       Total
           -----------------------       Paid-In      Development  Shareholders'
            Shares         Cost          Capital          Stage        Equity

                 --     $       --             --             --             --
                 --             --         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


                                       7
<PAGE>


ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
For the Period from May 22, 1996 (Inception)
Through June 30, 2000
See Accountants' Report.

<TABLE>
<CAPTION>
                                                    Common Stock                Preferred Stock
                                               -----------------------        ------------------
                                                               Par                        Par
                                                 Shares       Value           Shares     Value
<S>                                             <C>         <C>                <C>    <C>
Stock issued for note receivable                1,000,000   $    1,000           --   $       --
Stock issued for services                       1,247,970        1,248           --           --
Stock issued upon conversion of
    outstanding convertible notes               9,200,000        9,200           --           --
Purchase of treasury stock                             --           --           --           --
Constructive dividends (amortization of
    discount on convertible preferred stock)           --           --           --           --
Net loss                                               --           --           --           --
                                               -------------------------------------------------

Balance, June 30, 2000                         60,162,676   $   60,163          550   $        1
                                               -------------------------------------------------
</TABLE>


See Notes to Financial Statements.



                                       8
<PAGE>


                                         Equity
                                        (Deficit)
                                       Accumulated
               Treasury Stock          Additional     During the       Total
           -----------------------       Paid-In     Development   Shareholders'
             Shares         Cost         Capital        Stage          Equity

                  --     $       --        119,000            --        120,000
                  --             --        384,181            --        385,429

                  --             --        533,678            --        542,878
             (44,000)       (33,817)            --            --        (33,817)

                  --             --        117,096      (117,096)            --
                  --             --             --      (951,124)      (951,124)
           --------------------------------------------------------------------

            (169,500)    $  (67,644)     8,083,228    (6,251,646)     1,824,102
           --------------------------------------------------------------------



                                       9
<PAGE>



ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the Quarters Ended June 30, 2000 and 1999
See Accountants' Report.

<TABLE>
<CAPTION>
                                                                2000         1999
<S>                                                          <C>           <C>
Cash Flows From Operating Activities
    Net loss                                                 $(951,124)    (379,817)
    Adjustments to reconcile net loss to net cash
        provided by operating activities:
           Amortization and depreciation expense                37,556       27,371
           Amortization of discounts on convertible notes      112,976           --
           Unrealized (gain) loss on marketable securities       5,813       12,961
           Loss on Bio Moda, Inc.                               16,222       13,957
           Issuance of common stock for services               385,429      191,084
           Issuance of notes for services                           --       50,000
           Contract receivable                                  (1,588)     (70,000)
           Marketable equity securities                           (158)          --
           Allowance for loss on contract                       38,673           --
           Other receivables                                        --       (2,507)
           Accrued liabilities and accounts payable              3,352       (3,005)
                                                             ----------------------
               Net cash used by operating
                  activities                                  (352,849)    (159,956)
                                                             ----------------------

Cash Flows From Investing Activities
    Purchase of equipment                                      (15,076)     (33,057)
    Purchase of marketable securities                               --      (11,000)
    Purchase of certificate of deposit                            (249)     (54,800)
    Redemption of certificate of deposit                        53,306           --
    Sale of marketable securities                               33,817           --
                                                             ----------------------
               Net cash provided (used) by investing
                  activities                                    71,798      (98,857)
                                                             ----------------------

Cash Flows From Financing Activities
    Additions to notes payable                                      --      443,000
    Payments on notes payable and capital
        lease obligation                                       (11,382)      (3,173)
    Issuance of common stock                                        --      112,984
    Purchase of treasury stock                                 (33,817)          --
                                                             ----------------------
               Net cash (used) provided by financing
                  activities                                   (45,199)     552,811
                                                             ----------------------

Net (decrease) increase in cash                               (326,250)     293,998

Cash, beginning of period                                      719,377       66,666
                                                             ----------------------

Cash, end of period                                          $ 393,127      360,664
                                                             ======================
</TABLE>

See Notes to Financial Statements.


                                       10
<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
For the Six Months Ended June 30, 2000 and 1999
and the Period from May 22, 1996 (Inception) Through
June 30, 2000
See Accountants' Report.

<TABLE>
<CAPTION>
                                                                                                          5/22/96
                                                                                                       (Inception)
                                                                                                         Through
                                                                  2000                 1999              06/30/00
<S>                                                           <C>                    <C>               <C>
Cash Flows From Operating Activities
    Net loss                                                  $(2,452,462)           (653,120)         (6,091,969)
    Adjustments to reconcile net loss to net cash
        provided by operating activities:
           Amortization and depreciation expense                   65,186              50,900             259,712
           Write off of organization costs                             --              63,020              63,020
           Amortization of discounts on convertible notes         183,667                  --             319,199
           Unrealized (gain) loss on marketable securities         (1,842)             22,929              31,717
           Loss on Bio Moda, Inc.                                  32,444              38,528             208,954
           Issuance of common stock for services                1,505,662             218,771           3,288,546
           Issuance of notes for services                              --              50,000              50,000
           Contract receivable                                    (35,627)           (136,375)           (596,172)
           Marketable equity securities                              (289)                 --                (289)
           Allowance for loss on contract                          56,712                  --             128,257
           Other receivables                                       31,030              (8,461)            (48,844)
           Inventory                                                6,000             (41,324)            (29,293)
           Accrued liabilities and accounts payable               (47,399)             (1,889)             32,981
                                                              ---------------------------------------------------
               Net cash used by operating
                  activities                                     (656,918)           (397,021)         (2,384,181)
                                                              ---------------------------------------------------

Cash Flows From Investing Activities
    Purchase of equipment                                         (46,962)            (60,662)           (359,302)
    Investment in Bio Moda, Inc.                                       --                  --            (383,845)
    Sale of marketable securities                                  33,817                  --              33,817
    Purchase of marketable securities                             (28,883)            (11,000)            (98,917)
    Purchase of certificate of deposit                            (51,904)            (54,800)           (156,486)
    Redemption of certificate of deposit                           53,306                  --              53,306
    Purchase of other assets                                           --             (10,000)            (96,427)
    Proceeds from sale of Wizard Technologies, Inc.                65,000                  --                  --
                                                              ---------------------------------------------------
               Net cash used by investing
                  activities                                       24,374            (136,462)         (1,007,854)
                                                              ---------------------------------------------------
</TABLE>


See Notes to Financial Statements.


                                       11
<PAGE>

ADVANCED OPTICS ELECTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (CONTINUED)
For the Six Months Ended June 30, 2000 and 1999
and the Period from May 22, 1996 (Inception) Through
June 30, 2000
See Accountants' Report.


<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                     $       --               443,000               572,776
    Payments on notes payable and capital
        lease obligation                              (26,479)               (9,937)             (148,055)
    Issuance of common stock                          853,493               267,604             3,399,984
    Sale of treasury stock                             49,770                    --                85,234
    Purchase of treasury stock                        (41,500)              (11,132)             (124,777)

               Net cash provided by financing
                  activities                          835,284               689,535             3,785,162


Net increase in cash                                  202,740               156,052               393,127

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


Cash, end of period                                $  393,127               360,664               393,127
</TABLE>


See Notes to Financial Statements.


                                       12
<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. As of
June 30, 2000,  completion  of this  contract was behind  schedule and the first
milestones  for  billing had not yet been met.  While  management  believes  the
contract will  ultimately be completed,  because the technology has not yet been
used in a commercial  application,  there can be no certainty  that this will be
accomplished.  In  addition,  the Company  may be required to obtain  additional
capital in order to fund the completion of the contract.

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 June 30, 2000, gross unrealized
losses  for the  quarter  were  $5,813  and not  considered  significant  to the
financial statements taken as a whole. Therefore, they have been reported in the
income statement.


                                       13
<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 recognizes 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.


                                       14
<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  $398,000  in the first  unit has been  recognized  as of June 30,
2000. The Company's  estimated cost to complete as of June 30, 2000 is $417,000,
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 June 30, 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.


NOTE 2. RELATED PARTY RECEIVABLES

Related party receivables at June 30, 2000, consist of the following:

  Due from officer                                                      $ 52,494
  Note receivable from former shareholder bearing
      interest at 8% and due in November, 2000                            15,000
  Note receivable from officer, interest at 10% due
      Quarterly (first quarter prepaid) and principal
      due in June, 2003                                                  120,000
                                                                        --------

                                                                        $187,494


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.  As of June 30,
2000, the Company owned 931,253 shares of Bio Moda's total outstanding shares of
4,650,985,  and had an option to purchase an additional  187,000  shares at .485
cents  per  share.  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 June 30, 2000, was in the process of conducting clinical trials.


                                       15
<PAGE>

NOTE 3. INVESTMENTS (CONTINUED)

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
                                                                      =========

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                                                    (153,660)
  Amortization of excess of cost
      over book value                                                   (55,295)
                                                                      ---------

  Net investment                                                      $ 174,890
                                                                      =========

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.


                                       16
<PAGE>

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.

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.

On June 12,  2000,  the Company  entered  into an  agreement  that  modified the
convertible  notes  agreement  entered  into on June 3, 1999.  The result of the
modified  agreement was the issuance of 9,200,000 shares of the Company's common
stock upon conversion of the  convertible  notes plus accrued  interest  through
June 12, 2000, which totaled $542,878. This transaction constituted a conversion
of the  outstanding  convertible  notes,  and as such,  $40,058  of  unamortized
intrinsic value of the conversion feature was charged to interest expense during
the quarter.  In addition,  the modified agreement voided the related 12,500,000
detachable warrants,  and as a result the unamortized discount of $72,917 on the
estimated fair market value of $125,000 for the warrants was charged to interest
expense during the quarter.


                                       17
<PAGE>

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.

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.


                                       18
<PAGE>

NOTE 5. EQUITY TRANSACTIONS (CONTINUED)

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.

During the quarter ended June 30, 2000, the Company issued  1,247,970  shares of
its common stock for services from contractors,  officers and others, which were
valued at  $385,429.  The value of the  services  is  included  in the costs and
expenses on the Statement of  Operations.  The Company also  repurchased  44,000
shares  of its  outstanding  common  stock for  $33,817  in cash.  These  shares
remained in treasury at June 30, 2000, and have been recorded at cost.

Also during this quarter,  an officer of the Company  exercised  1,000,000 stock
options at a price of .12 cents per share.  The Company issued a note receivable
to the officer in the amount of $120,000 for the shares.  Interest for the first
quarter was prepaid.

NOTE 6. STOCK PLANS

During the quarter  ending June 30,  2000,  the  Company  granted an  additional
1,250,000  stock options to certain key  employees.  This results in total stock
options  granted and  unexercised  of 8,525,000 as of June 30, 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,  an officer  exercised his options and purchased  1,000,000
shares of common stock for $120,000 (see Notes 2 and 5).


                                       19
<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,


                                       20
<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 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 working prototype,  which was completed during the quarter, and
we anticipate sales by year-end.

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 June 30, 2000, had an
accumulated deficit of $6.3 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 June 30, 2000 and 1999

Revenue. Since our inception, we have been in the development stage and have had
only limited revenue. Revenues decreased to $1,588 in the second quarter of 2000
from $70,000 in the second 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 $134,660 in the second quarter of 2000 from $38,167
in the second 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  Aministrative.  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  increased to $565,882 in the second  quarter of 2000 from
$305,972  in the second  quarter of 1999.  The  increase  was  primarily  due to
increased personnel, professional


                                       21
<PAGE>

service  fees and  facility  expenses.  Due to the  growth of our  business  and
continuing expansion of our staff, we expect general and administrative costs to
increase.  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. Interest income decreased to $3,407 in the second quarter of
2000 from $5,105 in the second 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 $37,556 in the second quarter of 2000 from $27,371 in
the second quarter of 1999 due primarily to  depreciation  expense for equipment
acquired under capital leases.


                         LIQUIDITY AND CAPITAL RESOURCES

Since  inception,  we have funded our operations  primarily  through the private
placement of equity securities.  As of June 30, 2000 we have raised net proceeds
of  $3,399,984.  We have also  utilized  an  equipment  loan and  capital  lease
financing.  As of June 30,  2000 we have a balance of  $19,799 on the  equipment
loan and $42,023 on the capital lease.

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
June 30, 2000, was 20%.

During the  quarter  ended June 30, 2000  $46,962 was spent for the  purchase of
equipment.  Product  development  expenditures  were $134,660 in 2000. Funds for
operations,  product development and capital expenditures were provided from the
sale of securities and cash reserves.  As of June 30, 2000, we had approximately
$496,307 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.


                                       22
<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 second  quarter of fiscal year 2000 there was an 11,447,970  increase
in shares of  common  stock;  9,200,000  shares of which  were  issued to retire
convertible debt.

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 second quarter of fiscal year 2000.

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 June 30, 2000



                                       23
<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: August 8, 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)




                                       24