As filed with the Securities and Exchange Commission on July 15, 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 May 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 June 2, 1998 are as follows:

            CLASS OF SECURITIES                        SHARES OUTSTANDING
      Common Stock, $.0001 par value                       24,777,886

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


<PAGE>

                      AMERICAN DIGITAL COMMUNICATIONS, INC.


                                      INDEX


  PART I          FINANCIAL INFORMATION

        Item 1.   Financial Statements
                  Balance 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
                          B)   Form 8-K  -  None

                      Signatures..............................................12


                                       2

<PAGE>

                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                                  BALANCE SHEET
                                   (UNAUDITED)


<TABLE>
<CAPTION>
ASSETS                                                                      MAY 31,      February 28,
                                                                               1998             1998
<S>                                                                       <C>              <C>      
Current Assets:
    Cash                                                                      8,924           19,558
     Notes receivable                                                         8,548            8,548
     Due from related parties                                                34,044                -
     Marketable securities                                                1.540,672        1,209,844
-----------------------------------------------------------------------------------------------------

                  Total current assets                                    1,592,188        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                                 146,827          146,370
-----------------------------------------------------------------------------------------------------
              Net property and equipment                                      8,694            4,764

Other assets:
      Distribution rights, net of amortization                              181,275          201,672
      TrackPower trademarks and other intellectual property rights          398,412          398,412
-----------------------------------------------------------------------------------------------------
             Total other assets                                             579,687          600,084

            TOTAL ASSETS                                                  2,180,569        1,842,798
-----------------------------------------------------------------------------------------------------
</TABLE>


                See accompanying notes to financial statements.


                                       3

<PAGE>


                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                                  BALANCE SHEET
                                   (UNAUDITED)


<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY                                                     MAY 31,     February 28,
                                                                                            1998            1998
<S>                                                                                  <C>             <C>        
Current Liabilities:
      Accounts payable                                                                   139,010         243,716
      Accounts payable - related parties                                                  70,319          36,289
      Accrued expenses                                                                       396          59,193
      Accrued interest - related parties                                                  47,527          40,294
      Notes payable                                                                      500,000               -
      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                                              793,573         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               2,483           2,412
and outstanding  24,777,886  shares,  issued and  outstanding  24,113,624 on
February 28, 1998.
       Additional paid in capital                                                      7,123,334       6,986,409
      Common stock subscribed (214,262 - 1998)                                                 -          41,995
       Accumulated deficit                                                           (7,429,509)     (6,905,424)
       Accumulated other comprehensive income                                            533,227         144,132
-----------------------------------------------------------------------------------------------------------------

                  Total shareholder's equity                                           1,229,535       1,269,524
-----------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                             2,180,569       1,842,798
-----------------------------------------------------------------------------------------------------------------
</TABLE>

                See accompanying notes to financial statements.


                                       4

<PAGE>



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


<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           May 31,

                                                                     1998          1997
                                                                     ----          ----
<S>                                                            <C>            <C>       
  Revenue
        Two way radio sales                                             -        113,021
        220 mHz tower equipment sales                                   -        115,000
       Royalties from distribution rights                           4,629              -
  ---------------------------------------------------------------------------------------
            Total revenue                                           4,629        228,021

  Costs and expenses:
        General and administrative                                313,097        170,128
        Cost of equipment sales                                         -         81,413
        Cost of 220 MHz equip./Distribution rights                      -         95,607
        Financing costs                                           145,985              -
        Non-recurring Denver office costs                          48,778              -
        Depreciation and amortization                              20,854         17,255
  ---------------------------------------------------------------------------------------

         Total costs and expenses                                 528,714        364,403
  ---------------------------------------------------------------------------------------
  Net loss                                                      (524,085)      (136,382)
  Other comprehensive income:
  Unrealized holding gain on marketable securities                389,095
  ---------------------------------------------------------------------------------------
  Comprehensive loss                                            (134,990)      (136,382)
  ---------------------------------------------------------------------------------------

  Net loss per share of common stock                               (0.02)         (0.01)
  ---------------------------------------------------------------------------------------

  Weighted average number of common shares outstanding         24,552,886     23,627,431
  ---------------------------------------------------------------------------------------
</TABLE>


                See accompanying notes to financial statements.


                                       5

<PAGE>


                      AMERICAN DIGITAL COMMUNICATIONS, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                    Three Months Ended
                                                                                                               May 31,

    INCREASE (DECREASE) IN CASH
                                                                                                 1998             1997
                                                                                                 ----             ----
    -------------------------------------------------------------------------------------------------------------------
<S>                                                                                         <C>              <C>      
    NET CASH USED IN OPERATIONS
        Net loss                                                                            (524,085)        (136,382)
          Adjustments to reconcile net loss to net cash used in operating activities:

            Depreciation and amortization                                                      20,854           17,255
              Gain on sale of fixed assets                                                          -           19,393
              Issuance of stock for bridge financing                                           95,000                -
         Changes in:
                 Accounts receivable                                                                -           18,158
                 Due from related parties                                                    (34,044)                -
                 Inventory                                                                          -           81,293
                 Other current assets                                                               -           31,312
                 Accounts payable                                                            (70,675)         (62,435)
                 Accrued expenses                                                            (58,797)          (4,933)
                 Other accrued liabilities                                                      7,233         (82,134)
    -------------------------------------------------------------------------------------------------------------------
    Net cash used in operating activities                                                   (564,514)        (118,473)
    -------------------------------------------------------------------------------------------------------------------
    CASH FLOWS FROM INVESTING ACTIVITIES:
              Proceeds from sale of marketable securities                                      58,267                -
              License expenditures                                                                  -         (10,000)
                  Sale/(purchase) of fixed assets                                             (4,387)          115,000
    -------------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) investing activities                                        53,880          105,000
    -------------------------------------------------------------------------------------------------------------------
    CASH FLOWS FROM FINANCING ACTIVITIES:
              Proceeds from sale of common stock, net                                               -                -
                  Payments of capital lease obligations                                             -          (1,275)
                  Proceeds on issuance of notes payable                                       500,000                -
    -------------------------------------------------------------------------------------------------------------------
    Net cash provided by (used in) financing activities:                                      500,000          (1,275)
    -------------------------------------------------------------------------------------------------------------------

    -------------------------------------------------------------------------------------------------------------------
    INCREASE (DECREASE) IN CASH                                                              (10,634)         (14,748)
    -------------------------------------------------------------------------------------------------------------------
    CASH,  beginning of period                                                                 19,558           31,701
    -------------------------------------------------------------------------------------------------------------------
    CASH,  end of period                                                                        8,924           16,953
    -------------------------------------------------------------------------------------------------------------------
</TABLE>


                See accompanying notes to financial statements.


                                       6

<PAGE>


                      AMERICAN DIGITAL COMMUNICATIONS, INC.

                          Notes to Financial Statements
                                  May 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 May 31, 1998 and February 28, 1998, and the results of operations and cash
flows for the periods ended May 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 is in use in southern  Ontario,  Canada to market a service whereby a
subscriber  views live horse  racing on  television  via Multi  Point  Microwave
Distribution  System (MMDS) and places wagers using  Telephone  Account  Betting
(TAB).  The Company  plans to expand 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.  It is anticipated that the new service
will be  launched  late in calendar  1998.  No revenues  were  generated  by the
TrackPower business during the first 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.


                                       7

<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 Company has financed the  operating  losses using bridge  financing
supported by its marketable securities and expects to be able to manage on those
resources until it enters into permanent financing arrangements.

         RESULTS OF OPERATIONS

         The  revenues of $4,629,  during the three month  period  ended May 31,
1998, were from Midland  distribution  rights  royalties.  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 later on during the year.


                                       8

<PAGE>

         General and administrative expenses, during the quarter, increased from
$170,128 in 1997 to $313,097 in 1998. The increase is a result of;

               1) key consulting and management services agreements required for
               the development of the TrackPower business,

               2) the costs of operating the existing MMDS TrackPower business.

         Costs  incurred thus far associated  with closing the bridge  financing
and negotiating permanent financing total $145,985. These costs include $120,978
for the bridge  financing  concluded  during the first  quarter.  This financing
included the issuance of common shares of ADC - at a total cost of $95,000. This
cost has been expensed during the period.  Other costs for the bridge  financing
included  placement  fees and  legal  costs.  The  costs  incurred  thus far for
negotiating  permanent financing total $25,007.  These costs are primarily legal
and travel related.

         The Denver  office was closed  effective  May 15, 1998.  Closing  costs
including travel,  moving, rent and legal fees totaled $48,778.  These costs are
non-recurring.

         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  increased  from $2 31/32 at February  28, 1998 to $4 at May 31,  1998.
Accordingly  the  Company  recorded an  unrealized  holding  gain on  marketable
securities of $389,095. The value of the Ventel shares remain unchanged.

         FINANCIAL CONDITION

         Total  assets  increased  from  $1,842,798  to  $2,180,569  during  the
quarter.

         The Company disposed of 844,446 common shares of Ventel, at book value,
during the  quarter in order to generate  approximately  $58,000 of cash for the
development of the new business. At May 31, 1998 the Company held 499,998 Ventel
Shares valued at approximately $34,500.

         The Company  still holds  418,381  Intek  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  $500,000  by way of notes  payable,  using  the
marketable securities as security, during the quarter.

         The Company's working capital ratio declined from 3.0:1 at February 28,
1998 to approximately  2.0:1 at May 31, 1998. The change is primarily due to the
increased notes payable.

         Net equity of the Company also declined  from  $1,269,524 to $1,229,535
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 Company has been funding the development of the TrackPower business
through new debt. On April 17, 1998 the Company closed a bridge financing of 100
Units, representing a package of 


                                       9

<PAGE>

securities including total debt of $500,000. In June 1998 the Board of Directors
authorized the extension of this debt to $1 million in total.  It is anticipated
that based on the current market value of the Company's  marketable  securities,
an additional  $300,000 of this newly  authorized debt will be placed during the
second quarter, together with certain equity securities.

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


                                       10

<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.  
               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:   JULY  15, 1998        BY:

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


DATE:   JULY 15, 1998         BY:

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