As filed with the Securities and Exchange Commission on October 14, 1998.

===============================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC. 20549

                                   FORM 10-QSB

(Mark One)
[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

                       For the Quarter Ended August 31, 1998

                        Commission file number 000-28506

                      AMERICAN DIGITAL COMMUNICATIONS, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


                 WYOMING                               13-3411167
        (State of Incorporation)                 (IRS. EMPLOYER ID NO.)

            745 FIFTH AVENUE
         SUITE 900, NEW YORK, NY                         10151
(Address of Principal Executive Offices)               (Zip Code)

                                 (212) 486-7424
                  (Registrant's Telephone No. incl. area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

           YES [X]                                         NO [ ]


The number of shares  outstanding  of each of the  Registrant's  class of common
equity, as of October 2, 1998 are as follows:

        CLASS OF SECURITIES                      SHARES OUTSTANDING
        -------------------                      ------------------
  Common Stock, $.0001 par value                     25,127,886

================================================================================

<PAGE>

                      AMERICAN DIGITAL COMMUNICATIONS, INC.

                                      INDEX

PART I          FINANCIAL INFORMATION

      Item 1.   Financial Statements Sheet................................... 3
                Statements of Operations and Comprehensive Income............ 5
                Statements of Cash Flows..................................... 6
                Notes to Financial Statements................................ 7
                
      Item 2.   Management's Discussion and Analysis or Plan of Operations... 8

PART II.        OTHER INFORMATION
    Items 1-5   .............................................................11

      Item 6.   Exhibits and Reports on Form 8-K
                    A)  Exhibit 27 Financial Data Schedule...................12
                    B)  Form 8-K  -  None

                Signatures...................................................13


<PAGE>

                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                                  BALANCE SHEET
                                   (UNAUDITED)

<TABLE>
<CAPTION>


ASSETS                                                                   AUGUST 31,    February 28,
                                                                              1998             1998
                                                                              ----             ----
<S>                                                                     <C>              <C>   
Current Assets:
     Cash                                                                   25,548           19,558
     Notes receivable                                                        8,548            8,548
     Due from related parties                                                    -                -
     Marketable securities                                                 629,937        1,209,844
----------------------------------------------------------------------------------------------------

                  Total current assets                                     664,333        1,237,950
----------------------------------------------------------------------------------------------------

Property and equipment:
      Office equipment                                                     129,439          125,052
      Furniture and fixtures                                                26,082           26,082

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

                                                                           155,521          151,134
          Less:    Accumulated depreciation                                147,280          146,370
----------------------------------------------------------------------------------------------------
              Net property and equipment                                     8,241            4,764

Other assets:
      Distribution rights, net of amortization                             160,878          201,672
      TrackPower trademarks and other intellectual property rights         398,412          398,412
----------------------------------------------------------------------------------------------------
             Total other assets                                            559,290          600,084

            TOTAL ASSETS                                                 1,231,864        1,842,798
----------------------------------------------------------------------------------------------------

</TABLE>


                 See accompanying notes to financial statements.

<PAGE>


                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                                  BALANCE SHEET
                                   (UNAUDITED)
<TABLE>
<CAPTION>


LIABILITIES AND SHAREHOLDERS' EQUITY                                                  AUGUST 31,    February 28,
                                                                                            1998            1998
                                                                                            ----            ----
<S>                                                                                 <C>             <C>      
Current Liabilities:
      Accounts payable                                                                   231,528         243,716
      Accounts payable - related parties                                                  13,588          36,289
      Accrued expenses                                                                       596          59,193
      Accrued interest - related parties                                                  66,027          40,294
      Notes payable                                                                      850,000               -
      Notes payable - related parties                                                     30,370          30,370
      Current portion of capital lease obligations                                         5,951           5,075
      Current portion of long term note                                                        -               -
-----------------------------------------------------------------------------------------------------------------

                  Total current liabilities                                            1,198,060         414,937

Long term debt:
      Capital lease obligations                                                                -             876
      Long term note payable - related party                                             157,461         157,461
-----------------------------------------------------------------------------------------------------------------

           Total long term debt                                                          157,461         158,337


Shareholders' equity:
       Convertible   preferred   stock,  no  par  value,   unlimited  shares           1,000,000       1,000,000
authorized, (liquidation value $1,000,000)
     Common stock,  $.0001 par value;  Unlimited shares  authorized,  issued               2,518           2,412
and outstanding  25,127,886  shares,  issued and  outstanding  24,113,624 on
February 28, 1998.
       Additional paid in capital                                                      7,172,299       6,986,409
      Common stock subscribed (214,262 - 1998)                                                 -          41,995
       Accumulated deficit                                                           (7,920,966)     (6,905,424)
       Accumulated other comprehensive income                                          (377,508)         144,132
-----------------------------------------------------------------------------------------------------------------

                  Total shareholder's equity                                           (123,657)       1,269,524
-----------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                             1,231,864       1,842,798
-----------------------------------------------------------------------------------------------------------------

</TABLE>



                 See accompanying notes to financial statements.

<PAGE>



                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                                     Three Months Ended            Six Months Ended
                                                                         August 31,                   August 31,

                                                                      1998          1997            1998          1997
                                                                      ----          ----            ----          ----
<S>                                                            <C>              <C>           <C>             <C>      
  Revenue
        Two way radio sales                                              -            254               -       113,275
        220 mHz tower equipment sales                                    -        240,000               -       355,000
       Royalties from distribution rights                            3,118              -           7,747             -
  ----------------------------------------------------------------------------------------------------------------------
            Total revenue                                            3,118        240,254           7,747       468,275

  Costs and expenses:
        General and administrative                                 370,758         45,112         671,159       215,240
        Cost of equipment sales                                          -            254               -        81,667
        Cost of 220 MHz equip./Distribution rights                       -        599,333               -       694,940
        Financing costs                                            102,966              -         261,648             -
        Non-recurring Denver office costs                                -              -          48,778             -
        Depreciation and amortization                               20,850         18,563          41,704        35,818
  ----------------------------------------------------------------------------------------------------------------------

         Total costs and expenses                                  494,574        663,262       1,023,289     1,027,665
  ----------------------------------------------------------------------------------------------------------------------
  Net loss                                                       (491,456)      (423,008)     (1,015,542)     (599,390)
  Other comprehensive income:
  Unrealized holding loss on marketable securities               (910,735)              -       (521,640)             -
  ----------------------------------------------------------------------------------------------------------------------
  Comprehensive loss                                           (1,402,191)      (423,008)     (1,537,182)     (559,390)
  ----------------------------------------------------------------------------------------------------------------------

  Net loss per share of common stock                                (0.06)         (0.02)          (0.06)        (0.02)
  ----------------------------------------------------------------------------------------------------------------------

  Weighted average number of common shares outstanding          25,011,219     23,907,756      24,782,053    23,627,431
  ----------------------------------------------------------------------------------------------------------------------


</TABLE>


                 See accompanying notes to financial statements.

<PAGE>


                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                                  Three Months Ended           Six Months Ended
                                                                      August 31,                  August 31,

    INCREASE (DECREASE) IN CASH
                                                                       1998         1997          1998           1997
                                                                       ----         ----          ----           ----
    ------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>          <C>         <C>              <C>      
    NET CASH USED IN OPERATIONS
        Net loss                                                  (511,790)    (423,008)   (1,035,876)      (559,390)
          Adjustments to reconcile net loss
            to net cash used in operating activities:
            Depreciation and amortization                            20,850       18,563        41,704         35,818
              Loss on sale of fixed assets                                -      376,875             -        376,875
              Issuance of stock for bridge financing                 49,000            -       144,000              -
         Changes in:
                 Accounts receivable                                      -        2,952             -         21,110
                 Due from related parties                            34,044            -             -              -
                 Inventory                                                -          254             -        268,272
                 Other current assets                                 (300)    (165,338)         (300)      (134,026)
                 Accounts payable                                    49,120        (195)      (21,554)       (62,600)
                 Accrued expenses                                       200            -      (58,597)        (4,933)
                 Other accrued liabilities                           25,500     (54,504)        32,733        (2,571)
    ------------------------------------------------------------------------------------------------------------------
    Net cash used in operating activities                         (333,376)    (244,401)     (897,890)       (61,445)
    ------------------------------------------------------------------------------------------------------------------
    CASH FLOWS FROM INVESTING ACTIVITIES:
              Proceeds from sale of marketable securities                 -            -        58,267              -
                  Sale/(purchase) of fixed assets                         -      240,000       (4,387)        240,000
    ------------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) investing activities                   -      240,000        53,880        240,000
    ------------------------------------------------------------------------------------------------------------------
    CASH FLOWS FROM FINANCING ACTIVITIES:
              Proceeds from sale of common stock, net                     -         (16)             -           (16)
                  Payments of capital lease obligations                   -      (1,275)             -        (2,550)
                  Proceeds on issuance of notes payable             350,000            -       850,000      (196,429)
    ------------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) financing activities:            350,000      (1,291)       850,000      (198,995)
    ------------------------------------------------------------------------------------------------------------------

    ------------------------------------------------------------------------------------------------------------------
    INCREASE (DECREASE) IN CASH                                      16,624      (5,692)         5,990       (20,440)
    ------------------------------------------------------------------------------------------------------------------
    ------------------------------------------------------------------------------------------------------------------
    CASH,  beginning of period                                        8,924       16,953        19,558         31,701
    ------------------------------------------------------------------------------------------------------------------
    ------------------------------------------------------------------------------------------------------------------
    CASH,  end of period                                             25,548       11,261        25,548         11,261
    ------------------------------------------------------------------------------------------------------------------

</TABLE>


                 See accompanying notes to financial statements.


<PAGE>



                      AMERICAN DIGITAL COMMUNICATIONS, INC.

                          Notes to Financial Statements
                                 August 31, 1998


         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION:

         The accompanying financial statements have been prepared by the Company
without  audit.  In  the  opinion  of  management,  the  accompanying  unaudited
financial  statements  contain  all  adjustments   (consisting  of  only  normal
recurring  accruals) necessary for a fair presentation of the financial position
as of August 31, 1998 and February 28, 1998,  and the results of operations  and
cash flows for the periods ended August 31, 1998 and 1997.

         NATURE OF BUSINESS:

         The Company was organized June 30, 1993 under the laws of Wyoming,  The
Company was in the  wireless  telecommunications  business  and had  intended to
provide  two-way  communications  in the 220 mHz. band. The Company held various
distribution  rights for certain Midland brand commercial land mobile radios and
radio parts. The distribution rights were acquired in separate transactions over
the last several years.  During fiscal year 1998 the Company sold,  sub-licensed
or wrote-off all remaining distribution rights. On January 15, 1998, the Company
acquired the TrackPower trade name and other  intellectual  property rights. The
technology  was in use in a small pilot  project of  approximately  100 homes in
southern Ontario,  Canada.  The service provided live horse racing on television
via Multi Point Microwave  Distribution System (MMDS) and the subscribers placed
wagers using Telephone Account Betting (TAB). The pilot project was shut down on
September 30, 1998,  after proving the  technology to be both  commercially  and
technically  viable.  The  Company  plans to  change  the  delivery  system to a
satellite based system and to ultimately provide interactive  wagering through a
set top box and telephone  line  throughout  North  America.  The pilot provided
invaluable  knowledge  that will be used in the  development  of the new system.
Management is in discussions with key business partners and continues to believe
the Company will launch the new service late in calendar  1998. No revenues were
generated by the TrackPower business during the second quarter.

         Certain  matters  discussed  in this  Quarterly  Report may  constitute
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform Act of 1995 (the  "Reform  Act") and as such may involve risk
and  uncertainties.  These  forward  looking  statements  relate to, among other
things,  expectations of the business environment in which the Company operates,
projections of future  performance,  perceived  opportunities  in the market and
statements   regarding  the  Company's  goals.  The  Company's  actual  results,
performance,  or  achievements  expressed  or  implied  in such  forward-looking
statements  may differ.  For  discussion  of the factors that might cause such a
difference,  see  Item  2  Management's  Discussion  and  Analysis  or  Plan  of
Operations.

         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.

<PAGE>


         MARKETABLE SECURITIES:

         The  Company's   marketable   securities   consist  of  restricted  and
unrestricted  common stock of publicly  traded  companies.  The  securities  are
considered  held for sale and  therefore  are  recorded  at market  value at the
balance sheet date.

         DEPRECIATION:

         Office  equipment,  furniture  and  fixtures,  including  assets  under
capital leases, are stated at cost.  Depreciation is computed over the estimated
useful life of three years using the straight-line method.

         AMORTIZATION OF DISTRIBUTION RIGHTS:

         The  cost  of  the  remaining  distribution  rights,  which  have  been
sub-licensed to a third party, is being amortized over the term of the agreement
(4 years).

         It is reasonably possible that revenues generated from the distribution
of products  pursuant to the  agreement  will not be sufficient to recover these
capitalized costs.

         MEASUREMENT OF INTANGIBLES IMPAIRMENT:

         The  Company  annually  reviews the amount of the  recorded  intangible
assets for  impairment.  If the sum of expected  cash flows from these assets is
less than the carrying  amount of these  assets,  the Company will  recognize an
impairment loss in such period.

         NET LOSS PER SHARE:

         Basic loss per common share is based on the weighted  average number of
shares outstanding  during each period presented.  Options to purchase stock are
included as common stock equivalents when dilutive.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.


         OVERVIEW

         The  business  focus  for  the  Company  has  changed  from a  wireless
telecommunications  distribution business to a development stage enterprise. The
focus of management is negotiating future business contracts and agreements. See
"Notes to Financial  Statements - Summary of Significant  Accounting  Policies -
Nature of Business".

         The  operating  losses  thus far during  fiscal 1998 are  generally  as
expected.  The Company has been incurring the necessary  costs to develop future
business  relationships.  The Company has  financed the  operating  losses using
bridge  financing  supported by its marketable  securities.  Management hopes to
complete  certain key business  contracts and  agreements  shortly,  in order to
provide the necessary substance to attract permanent financing.



         RESULTS OF OPERATIONS

         The revenues of $3,118,  during the three month period ended August 31,
1998 and $7,747,  during the six month period  ended August 31, 1998,  were from
Midland distribution rights royalties. The

<PAGE>


remaining  Midland  distribution  rights  attracting  a royalty  stream are from
certain territories in Western Canada under a sub-license agreement with a third
party.  Revenues in the prior year were from the direct sale of Midland  two-way
radios and the sale of 220 mHz tower equipment.

         The Company does not expect any revenues from the  TrackPower  business
until the new service is launched.

         General and administrative  expenses,  increased from $313,097 in first
quarter to $370,758 in the second quarter.  The increase is a result of the cost
of legal advice and a catch up on a key consulting contract.

         Financing costs totaled $102,966 during the second quarter. These costs
include  $84,000  for a second  bridge  financing  concluded  during  the second
quarter.  This  financing  included the issuance of common  shares of ADC - at a
total cost of $49,000.  This cost has been  expensed  during the  period.  Other
costs for the bridge financing included placement fees and legal costs.

         Depreciation  and  amortization  represents  the  amortization  of  the
remaining  Midland   distribution  rights  and  normal  depreciation  on  office
equipment.

         The closing trading value of the Company's  investment in common shares
of Intek  decreased  from $4.00 at May 31, 1998 to $1.56 at August 31, 1998. The
market value of the Ventel  shares was generally  unchanged  during the quarter.
Accordingly  the  Company  recorded an  unrealized  holding  loss on  marketable
securities of $910,735.

         FINANCIAL CONDITION

         Total  assets  decreased  from  $1,842,798  to  $1,231,864  during  the
quarter.  The decline is  primarily as a result of a fall in the market value of
the Company's marketable securities.

         The Company's marketable securities consist of 418,381 Intek shares and
499,998 Ventel shares, which are pledged as security for the bridge financing.

         The TrackPower  trademarks and other  intellectual  property rights are
not being amortized until revenues begin to occur from the new business.

         The Company  borrowed an additional  $350,000 by way of notes  payable,
using the marketable securities as security, during the quarter.

         The Company's working capital ratio declined from 2.0:1 at May 31, 1998
to  approximately  0.6:1 at August 31, 1998. The change is due to the additional
$350,000 bridge financing and the decline in value of the marketable securities.

         Net equity of the Company also declined from $1,229,535 to a deficit of
$123,657 during the quarter.  It is anticipated  that the operating losses prior
to the commencement of its operating business will continue to accrue.



         LIQUIDITY AND CAPITAL RESOURCES

         The  decline  in the value of the  marketable  securities  has placed a
strain on the Company's  liquidity and capital resources.  The drop in the value
of the Intek shares was approximately $1 million.

<PAGE>


         The Company has been funding the development of the TrackPower business
through new debt.  Thus far in 1998 the Company has closed  bridge  financing of
135  Units,  representing  a  package  of  securities  including  total  debt of
$850,000.  The Board of Directors  authorized  the  extension of this debt to $1
million.  However,  due to the significant decline in the value of the Company's
securities, it is unlikely that additional amounts will be borrowed based solely
on the  marketable  securities.  The debt is on demand  basis and it is expected
that, depending upon market conditions,  the Company may begin to dispose of the
marketable securities in order to repay the debt.

         The  Company is planning  more  permanent  financing  and is hopeful to
complete it once certain key business agreements have been concluded.



<PAGE>




PART II. Other Information

ITEM 1.           LITIGATION

         No  material  legal  proceedings  to which the Company is a party or to
which the  property of the  Company is subject is pending  and no such  material
proceeding is known by management of the Company to be contemplated. No material
legal  proceedings  to which any director,  officer of affiliate of the Company,
any owner of record or  beneficially  of more than five  percent of any class of
the voting  securities of the Company,  or security holder is a party adverse to
the Company or has a material interest adverse to the Company is pending.

ITEM 2.           CHANGE IN SECURITIES

         Not applicable.

ITEM 3.           DEFAULTS  UPON SENIOR SECURITIES

         Not applicable.

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

         Not applicable.

ITEM 5.           OTHER INFORMATION

         Not applicable.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

Exhibits.         None.

EX-27                      Financial Data Schedule

Form 8-K          None.



<PAGE>



                                   SIGNATURES

Pursuant to the  registration  requirements  of the  Securities  Exchange Act of
1934,  the  registrant has duly caused this report to be signed on its behalf by
the undersigned, thereto duly authorized.



DATE:   OCTOBER  14, 1998           BY:

                                               /S/ JOHN G. SIMMONDS
                                           ---------------------------
                                                 JOHN G. SIMMONDS
                                            PRESIDENT / CEO / DIRECTOR
                                           (PRINCIPAL EXECUTIVE OFFICER)


DATE:   OCTOBER 14, 1998            BY:

                                               /S/ GARY N. HOKKANEN
                                           ----------------------------
                                                 GARY N. HOKKANEN
                                             CHIEF FINANCIAL OFFICER,
                                           (PRINCIPAL FINANCIAL OFFICER)