SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-QSB
(Mark One)

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

                     For the Quarter Ended December 31, 1997

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

           For the transition period from ____________ to ____________

                         Commission file number: 0-15224

                       ADVANCE DISPLAY TECHNOLOGIES, INC.
                      -------------------------------------
                     (Exact name of small business issuer as
                            specified in its charter)

        COLORADO                                                84-0969445
 ----------------------                                  ----------------------
(State of incorporation)                                (IRS Employer ID number)


             1251 South Huron Street, Unit C, Denver, Colorado 80223
             -------------------------------------------------------
               (Address of principle executive offices) (Zip Code)


                                 (303) 733-5339
                 ----------------------------------------------
                (Issuer's telephone number, including area code)



Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
section 13 or 15(d) of the  Securities  Exchange  Act of 1934 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
                          -----                     -----

As of February 10, 1998,  25,176,432 shares of Common Stock, $.001 par value per
share were outstanding.

           Transitional Small Business Disclosure Format (check one):

                       YES                        NO  X
                          -----                     -----

<PAGE>



                       ADVANCE DISPLAY TECHNOLOGIES, INC.


                                      INDEX


                                                                           Page
                                                                           ----

                          PART I. FINANCIAL INFORMATION


Item 1.  Consolidated Balance Sheets (unaudited) -
          December 31,1997 and June 30,1997..................................3

         Consolidated  Statements of Operations (unaudited) 
          Three months and six months ended  December  31, 
          1997 and December  31,1996 and for the period from
          March 15, 1995, inception, to December 31, 1997....................4

         Consolidated  Statements of Cash Flows (unaudited) 
          Three months and six months  ended  December 31,
          1997 and December 31, 1996 and for the period from
          March 15, 1995, inception, to December 31, 1997..................5-6

         Notes to Consolidated Financial Statements (unaudited)..............7

Item 2.  Management's Discussion and Analysis of
                  Results of Operations and Financial Condition...........8-11


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings..................................................11

Item 2.  Changes in Securities..............................................11

Item 3.  Defaults on Senior Securities......................................12

Item 4.  Submission of Matters to a Vote of
                  Security Holders..........................................12

Item 5.  Other Information..................................................12

Item 6.  Exhibits and Reports on Form 8-K...................................12

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


                                        2

<PAGE>
<TABLE>
<CAPTION>



                            ADVANCE DISPLAY TECHNOLOGIES, INC.
                               (A Development Stage Company)

                                CONSOLIDATED BALANCE SHEETS
                                        (Unaudited)
                  
                                                              December 31,       June 30,
                                                                 1997             1997
                                                             -------------    -------------

                                          ASSETS
                                          ------

CURRENT ASSETS:
<S>                                                          <C>              <C>          
   Cash                                                      $     131,070    $     235,731
   Inventory                                                       105,965           51,819
   Other current assets                                             28,651           10,191
                                                             -------------    -------------
      Total current assets                                         265,686          297,741

PROPERTY AND EQUIPMENT                                             142,526           77,674
   Less:  Accumulated depreciation                                 (17,196)          (2,260)
                                                             -------------    -------------
      Net Property and Equipment                                   125,330           75,414
                                                             -------------    -------------

INTANGIBLE ASSETS, net of accumulated
        amortization of $81,812 and
        $42,750, respectively                                      490,553          529,615
                                                             -------------    -------------

      TOTAL ASSETS                                           $     881,569    $     902,770
                                                             =============    =============


                          LIABILITIES AND SHAREHOLDERS' DEFICIT
                          -------------------------------------

CURRENT LIABILITIES:
   Accounts payable                                          $     521,442    $     558,140
   Convertible notes payable to shareholders                          --            500,000
   Other accrued liabilities                                       161,656          111,494
                                                             -------------    -------------
      Total current liabilities                                    683,098        1,169,634

CONVERTIBLE, REDEEMABLE PROMISSORY NOTES TO SHAREHOLDERS           573,725             --

SHAREHOLDERS' DEFICIT:
   Preferred stock, $.001 par value, 100,000,000
        shares authorized,  1,843,900 shares issued
        and outstanding (liquidation preference of
        $2,765,850)                                                  1,844            1,844
   Common stock, $.001 par value, 100,000,000 shares
        authorized, 25,176,432 and 21,343,923 shares
        issued and outstanding, respectively                        25,176           21,344
   Additional paid-in capital                                    2,999,670        2,453,503
   Deficit accumulated during the development
        stage                                                   (3,401,944)      (2,743,555)
                                                             -------------    -------------
      Total shareholders' deficit                                 (375,254)        (266,864)
                                                             -------------    -------------

      TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT            $     881,569    $     902,770
                                                             =============    =============

           (See accompanying notes to unaudited consolidated financial statement)

                                             3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                            ADVANCE DISPLAY TECHNOLOGIES, INC.
                                              (A Development Stage Company)

                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                                       (Unaudited)

                                                                                                              March 15, 1995
                                                                                                               (Inception)
                                             Three Months Ended                   Six Months Ended               Through
                                                December 31,                        December 31,               December 31,
                                       ------------------------------      ------------------------------      ------------
                                           1997              1996              1997              1996              1997
                                       ------------      ------------      ------------      ------------      ------------

REVENUE:

<S>                                    <C>               <C>               <C>               <C>               <C>         
 Consulting                            $     15,000      $       --        $     30,000      $       --        $     30,000

 Interest Income - related party               --              26,803              --              52,962           162,761
                                       ------------      ------------      ------------      ------------      ------------
     Total Revenue                           15,000            26,803            30,000            52,962           192,761


COSTS AND EXPENSES:

 Cost of goods                                 --                --              11,427              --              11,427

 General and administrative                 263,693               900           522,980             1,926           662,335

 Research and development                    92,284              --             126,525              --           2,671,465

 Interest expense - related party            12,288            35,485            27,457            70,048           249,478
                                       ------------      ------------      ------------      ------------      ------------

     Total costs and expenses          $    368,265      $     36,385      $    688,389      $     71,974      $  3,594,705
                                       ============      ============      ============      ============      ============

NET LOSS                               $   (353,265)     $     (9,582)     $   (658,389)     $    (19,012)     $ (3,401,944)
                                       ============      ============      ============      ============      ============

NET LOSS PER COMMON SHARE              $       (.01)     $       (.01)     $       (.03)     $       (.02)
                                       ============      ============      ============      ============

WEIGHTED AVERAGE NUMBER OF COMMON

   SHARES OUTSTANDING                    24,829,347           784,236        23,086,635           784,236
                                       =============     ============      ============      ============






                          (See accompanying notes to unaudited consolidated financial statements)





                                                             4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                               ADVANCE DISPLAY TECHNOLOGIES, INC.
                                                 (A Development Stage Company)

                                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (Unaudited)
                                                                                                                      March 15, 1995
                                                                                                                        (Inception)
                                                         Three Months Ended                 Six Months Ended              Through
                                                            December 31,                       December 31,             December 31,
                                                    ----------------------------      ----------------------------    --------------
                                                       1997              1996             1997             1996             1997
                                                    -----------      -----------      -----------      -----------      -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                 <C>              <C>              <C>              <C>              <C>         
  Net Loss                                          $  (353,265)     $    (9,582)     $  (658,389)     $   (19,012)     $(3,401,944)
Adjustments to reconcile net loss
  to net cash used in
  operating activities:
Acquired research and development
  expense                                                  --               --               --               --          2,536,494
 Depreciation and amortization                           30,260             --             55,296             --            105,145
 (Increase)decrease in:
     Inventory                                            3,846             --            (54,146)            --            (99,917)
     Interest receivable                                   --            (19,800)            --            (38,838)        (141,863)
     Other current assets                                 2,406             --            (18,460)            --            (18,460)
 (Decrease) increase in:
   Accrued interest payable to
      shareholders                                       11,183           28,482           25,829           55,923          228,953
   Accounts payable                                      (7,212)            --            (36,698)            --             75,600
   Other accrued liabilities                             (9,616)            --             48,057             --             17,392
                                                    -----------      -----------      -----------      -----------      -----------
Net cash used in operating activities                  (322,398)            (900)        (638,511)          (1,927)        (698,600)
                                                    -----------      -----------      -----------      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Additions to property and equipment                    (68,316)            --            (74,852)            --            (89,951)
 Dispositions of property and
   equipment                                              8,702             --              8,702             --              8,702
 Advances to affiliates                                    --               --               --            (54,473)        (932,925)
 Purchase of notes receivable and
   security interest                                       --               --               --               --           (225,000)
 Cash received in acquisition                              --               --               --               --            303,812
                                                    -----------      -----------      -----------      -----------      -----------
   Net Cash used in
       investing activities                             (59,614)            --            (66,150)         (54,473)        (935,362)
                                                    -----------      -----------      -----------      -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Capital contributions                                     --               --               --               --            103,127
 Proceeds from notes payable
   to shareholders                                       95,000             --            160,000             --            160,000
 Proceeds from convertible notes
   payable to shareholders                              390,000             --            440,000            5,000        1,202,400
 Proceeds from line-of-credit                              --               --               --               --            299,505
                                                    -----------      -----------      -----------      -----------      -----------
   Net Cash provided by
       financing activities                             485,000             --            600,000            5,000        1,765,032
                                                    -----------      -----------      -----------      -----------      -----------
Increase (decrease) in cash                             102,988             (900)        (104,661)         (51,400)         131,070
Cash & cash equivalents at
  beginning of period                                    28,082            3,855          235,731           54,355             --
                                                    -----------      -----------      -----------      -----------      -----------
Cash and cash equivalents at end
  of period                                         $   131,070      $     2,955      $   131,070      $     2,955      $   131,070
                                                    ===========      ===========      ===========      ===========      ===========





                             (See accompanying notes to unaudited consolidated financial statements)

                                                                5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



                                       ADVANCE DISPLAY TECHNOLOGIES, INC.
                                          (A Development Stage Company)

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (Unaudited)

                                                                                                       March 15, 1995
                                                                                                         (Inception)
                                                Three Months Ended              Six Months Ended           Through
                                                    December 31,                   December 31,          December 31,
                                           -----------------------------   ----------------------------  ------------
                                                1997            1996           1997           1996           1997
                                           -------------   -------------   ------------   -------------   ----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

<S>                                        <C>             <C>             <C>            <C>             <C>       
    Interest                               $         746   $        --     $        746   $       7,122   $   26,070
                                           =============   =============   ============   =============   ==========
    Taxes                                  $        --     $        --     $       --     $        --     $     --
                                           =============   =============   ============   =============   ==========

Issuance of common Stock for acquisition

  of Display Group, LLC and Display

  Optics, Ltd. and conversion of

  Convertible debt                         $        --     $        --     $       --     $        --     $2,199,026
                                           =============   =============   ============   =============   ==========


         Non-cash financing activities:

                  Effective  October  14,  1997,  $550,000  of 10%  Convertible,
                  Redeemable  Promissory Notes were converted into shares of the
                  Company's  Common  Stock at the rate of  $0.1315  per share or
                  4,182,509 shares.

                  On November 5, 1997,  $160,000 of short term notes and $23,575
                  of  accrued   interest  were   converted   into   Convertible,
                  Redeemable Promissory Notes.

     (See accompanying notes to unaudited consolidated financial statements)




                                        6
</TABLE>

<PAGE>



                       ADVANCE DISPLAY TECHNOLOGIES, INC.
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

     The accompanying  unaudited interim consolidated  financial statements have
been  prepared in  accordance  with the  instructions  to Form 10-QSB and do not
include  all the  information  and  footnotes  required  by  generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  The results of operations
for any interim period are not necessarily  indicative of results for the entire
fiscal year. These  statements  should be read in conjunction with the financial
statements  and  related  notes  included  in Form  10-KSB for  Advance  Display
Technologies, Inc. ("ADTI" or "the Company")for the year ended June 30, 1997, as
the  notes  to these  interim  financial  statements  omit  certain  information
required for complete financial statements.


Note 2.

     Financial  statements  for the  periods  through  May 31,  1997  have  been
restated - See Management's Discussion and Analysis of Results of Operations and
Financial Condition.


Note 3.

Subsequent Events

     On  February  4,  1998,  the  Company  sold  $300,000  of 10%  Convertible,
Redeemable  Promissory Notes pursuant to an additional private placement offered
to accredited investors. The notes are due October 15, 2000 and are convertible,
at the option of the  noteholder,  into shares of the Company's  Common Stock at
the rate of $0.1615  per share.  The  Company  has the right to call these notes
after one year and the  noteholders  have 30 days in which to  convert  if these
notes are called by the Company. The Company may elect to pay interest on any of
these  notes  converted  in cash or by  issuance  of  additional  shares  of the
Company's Common Stock.




                                        7

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

                Special Note Regarding Forward Looking Statements

     Certain statements contained herein constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward looking statements include, without limitation, statements regarding the
Company's anticipated marketing and production, need for working capital, future
revenues and results of  operations.  Factors that could cause actual results to
differ materially  include,  among others, the ability of the Company to: obtain
sufficient  capital,  further develop and improve the manufacturing  process for
its product,  manufacture  its product at a cost that would result in profitable
sales,  sell a sufficient  number of screens at a sufficient  price to result in
positive operating margins, complete a marketing study and implement a marketing
plan, attract and retain qualified management and other personnel, and generally
to  successfully  execute a  business  plan that  will take the  Company  from a
development  stage  entity  to a  profitable  operating  company.  Many of these
factors are outside the control of the Company.  Investors  are cautioned not to
put undue  reliance on forward  looking  statements.  The Company  disclaims any
intent or  obligation  to update  publicly  these  forward  looking  statements,
whether as a result of new information, future events or otherwise.


General

     In  December  1993,  Advance  Display  Technologies,  Inc.  ("ADTI" or "the
Company") and  individual  investors  organized a limited  partnership,  Display
Optics,  Ltd. (the  "Partnership"  or "DOL"),  to obtain capital and to continue
development of the fiber optic video technology and other related display screen
technology.  The  Company  acted as a general  partner and the  Partnership  was
managed by Display Group,  LLC. Display Group was formed by the limited partners
of the  Partnership  and other  individuals and entities to manage and partially
fund operations of the Partnership.

     The  Company  conducted  substantially  all of  its  business  through  the
Partnership  until the  completion  of the exchange  effective  May 21,1997 (see
below). Based on an analysis of the Partnership Agreement and generally accepted
accounting  principles,  a research and development  arrangement existed between
the  Partnership  and the Company  which  required  ADTI to record the  expenses
incurred by the Partnership as a liability.

     Effective May 21, 1997, the Company entered into an exchange agreement (the
"Exchange") with Display Group, DOL and the owners of Display Group and DOL (the
"Investors").   Under  the  terms  of  the  Exchange  and  previously   existing
agreements, all member interests in Display Group, partnership interests in DOL,
convertible notes totaling $1,799,026,  and Series B Preferred Common Stock held
by the Investors were  exchanged for 17,509,868  shares of ADTI Common Stock and
1,843,900  shares of Series C  Preferred  Stock  issued  to the  Investors.  The
Exchange resulted in Display Group and DOL becoming wholly-owned subsidiaries of
ADTI whereby the  operations  of Display  Group and DOL were  consolidated  with
those of the Company.  The Exchange  resulted in the Investors  acquiring in the
aggregate a direct  interest in Common Stock equal to  approximately  eighty two
percent (82%) of the Company's issued and outstanding Common Stock.

     The Exchange was accounted for using the purchase method of accounting.  As
the former members of Display Group acquired a majority of the Company's  Common
Stock, for financial statement reporting purposes, the Exchange was treated as a


                                        8

<PAGE>


reverse  acquisition  whereby Display Group was considered the acquiring entity.
Therefore,  the financial  statements for periods through May 31, 1997 have been
restated to reflect only the results of operations of Display Group.  Subsequent
to May 31, 1997, the financial statements reflect the combined operations of the
Company, DOL and Display Group.


Results of Operations

     For the fiscal  quarter and six months ended December 31, 1997, the Company
reported net losses of ($353,265) and ($658,389),  respectively,  as compared to
($9,582)  and  ($19,012)  for the same  periods of the prior  fiscal  year.  The
increases  in  1997  from  1996  are  primarily  due to the  restatement  of the
financial  statements reporting only Display Group activity through May 31, 1997
and the inclusion of operational activity of the combined entities for the first
six months of the current fiscal year.

     The Company  reported  total  revenue of $15,000 and $30,000 for the fiscal
quarter and six months ended December 31, 1997,  respectively,  which  consisted
entirely of consulting  fees pursuant to an agreement with Toshiba  Lighting and
Technology  Corporation ("TLT") effective July 1, 1997. The agreement called for
the Company to provide market research  information for  consideration of $5,000
per month.  This agreement  expired on December 31, 1997.  The Company  reported
total revenue of $26,803 and $52,962 for the fiscal quarter and six months ended
December 31, 1996,  respectively,  which  consisted  entirely of interest income
from loans made by Display Group to the Partnership.  These loans were converted
to equity  of the  Company  effective  May 21,  1997  pursuant  to the  Exchange
described above. Therefore, there was no interest income reported for the fiscal
quarter  and six months  ended  December  31,  1997.  There were no sales of the
Company's  products to report for the six month periods ended  December 31, 1996
and 1997.

     During  the  six  month  period  ended   December  31,  1997,  the  Company
manufactured  one 7' x 9' fiber optic  screen  which it now holds in  inventory.
Actual costs incurred to build the screen  exceeded  projections  due to various
difficulties  experienced  during the manufacturing  process which also affected
the overall  quality of the screen.  Therefore,  the cost of the screen exceeded
the anticipated  proceeds from the sale of the screen and the inventory value of
this screen was reduced by  approximately  $11,400 which was reported as cost of
goods.

     The Company reported general and administrative ("G&A")expenses of $263,693
and  $522,980,  respectively  for the quarter and six months ended  December 31,
1997,  respectively,  and $900 and $1,926 for the quarter  and six months  ended
December  31,  1996,  respectively.  The  Company  also  reported  research  and
development  ("R&D")  expenses of $92,284 and  $126,525  for the quarter and six
months  ended  December  31,  1997,  respectively.  There were no  research  and
development  expenses reported for the quarter and six months ended December 31,
1996.  These  increases in the current fiscal periods from amounts  reported for
the same periods of the prior fiscal year were primarily due to the  restatement
of the financial  statements  reporting only Display Group activity  through May
31, 1997 and the inclusion of operational  activity of the combined entities for
the first six months of the current  fiscal  year.  G&A  expenses for the fiscal
quarter and six months  ended  December  31, 1997,  respectively,  included:  1)
depreciation  and  amortization  of  approximately   $29,000  and  $53,000;   2)
promotional and travel expenses of approximately $18,000 and $29,000; 3) general
office expense of approximately  $38,000 and $64,000;  4) employee  salaries and
expenses  of  approximately  $125,000  and  $198,000;  and 6)  professional  and
consulting fees of  approximately  $54,000 and $179,000  (primarily due to legal
fees  incurred  in  connection   with  the  Exchange   transaction  and  ongoing
litigation,  and accounting  fees in connection  with the audit of the Company's
financial  statements  for the fiscal  year ended June 30, 1997 and the audit of
financial statements of DOL and Display Group in connection with the Exchange).

                                        9

<PAGE>




     Interest expense  decreased from $35,485 and $70,048 for the fiscal quarter
and six months ended December 31, 1996, respectively, to $12,288 and $27,457 for
the same  periods of the  current  fiscal  year,  respectively.  This change was
primarily due to the  elimination  of funds  advanced from outside  investors to
Display  Group as a result of the  Exchange  which was  partially  offset by the
interest expense on loans received by ADTI after the Exchange.


Liquidity and Capital Resources

     Due to significant  costs  associated with development and marketing of the
Company's  products  and the lack of  material  sales to date,  the  Company has
experienced a continuing need for financing  since the 1980's.  This need became
particularly acute beginning in 1989, following  protracted  litigation over the
Company's  technology.  The Company's  operations were essentially  dormant from
approximately  1990 to 1993.  In fiscal  1994,  ADTI formed the  Partnership  to
obtain capital to continue development of its technology. (See General, above)

     The Company and its subsidiaries  have been totally  dependent on financing
from outside  sources to fund  operations for more than four years.  At December
31,  1997,  the Company  reported  negative  net worth of $375,254  and negative
working  capital of $417,412.  The Company will require  additional  capital for
administrative   expenses,   continued  development  of  the  product,   further
automation  of the  manufacturing  process,  marketing  costs and  other  costs.
Management believes that the Company's continued existence is dependent upon its
ability  to: 1) improve and  further  automate  the  manufacturing  process;  2)
successfully market the product; 3) obtain additional sources of funding through
outside sources;  and 4) achieve and maintain  profitable  operations.  Although
management is attempting to achieve these objectives,  there can be no assurance
that  the  Company  will be able to  obtain  sufficient  additional  capital  or
manufacture  or sell its products on terms and  conditions  satisfactory  to the
Company.

     Cash flows from financing  activities for the fiscal quarter and six months
ended  December  31, 1997  consisted  entirely of loans to the Company  from two
shareholders totaling $95,000 and $160,000 respectively,  and cash received from
the issuance of convertible,  redeemable  promissory notes totaling $390,000 and
$440,000,  respectively.  The  original  loans  from  the two  shareholders,  of
$160,000,  were converted into new Convertible,  Redeemable  Promissory Notes on
November 5, 1997,  pursuant to an  additional  private  placement  as  described
below.

     Proceeds from  financing  activities  received  during the six months ended
December 31, 1997 were primarily used for manufacturing a 7'x9' screen,  ongoing
product  development,  operating  expenses and investments in capital  equipment
(net of dispositions) of approximately $66,150.

     Effective  October 14, 1997,  $550,000 of 10% convertible  promissory notes
were converted into shares of the Company's  Common Stock at the rate of $0.1315
per share or  4,182,509  shares.  The interest due on these notes of $23,695 was
converted into a  Convertible,  Redeemable  Promissory  Note on November 5, 1997
pursuant to an additional private placement as described below.


                                       10

<PAGE>


     On October 10, 1997, the Company initiated an additional  private placement
offered to qualified investors.  The private placement provided for the issuance
of a minimum of $550,000 and a maximum of $1,000,000 of 10% due October 15, 2000
and are  convertible,  at the  option  of the  noteholder,  into  shares  of the
Company's  Common  Stock at the rate of $0.1615  per share.  The Company has the
right to call these  Notes  after one year and the  noteholders  have 30 days in
which to convert if these Notes are called by the Company. The Company may elect
to pay  interest  on any of these  Notes  converted  in cash or by  issuance  of
additional  shares of the  Company's  Common  Stock.  On November  5, 1997,  the
Company  closed the  offering  with the sale of $573,695 of the Notes.  Proceeds
included the conversion of $160,000 of demand loans  previously  outstanding (as
discussed  above),  cash received of $390,000 and conversion of interest payable
of $23,695 (as discussed above).

     On February 4, 1998, the Company  completed an additional  offering whereby
it sold $300,000 of 10% convertible,  redeemable promissory notes under the same
terms as the offering initiated on October 10, 1997 (see above).

     ADTI  reported a working  capital  deficit  position at December  31, 1997.
Current  liabilities  exceeded current assets by $417,412.  At December 31,1997,
current  liabilities  consisted  entirely of trade payables and accrued expenses
which were  incurred  due to  litigation  costs,  costs of the  Exchange,  costs
associated with the various private offerings and operating costs.

     The Company's  working capital position  improved at December 31, 1997 from
June 30, 1997 by  approximately  $454,000 due to the  conversion  of  short-term
convertible  debt on  October  14,  1997  and  the  subsequent  issuance  of new
convertible debt with terms in excess of one year as discussed above.

     The Company's efforts will continue to be focused on further development of
the FiberVision  Screen and on the design and development of a further automated
manufacturing system. The Company is also currently completing a marketing study
and planning to create a detailed marketing plan. In addition,  the Company will
continue  efforts on raising  additional  capital through private  placements or
other  sources.  There can be no  assurances  that the  Company  will be able to
acquire the capital needed or be successful in achieving these objectives.


                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

None.


ITEM 2.  CHANGES IN SECURITIES.

     On November 5, 1997 and February 4, 1998, the Company completed  additional
private placements of its securities in a series of transactions exempt from the
registration  requirements  of the 1933 Act. The Company  sold 10%  Convertible,
Redeemable  Promissory  Notes in the aggregate  principal amount of $573,695 and
$300,000,  respectively,  to accredited  investors pursuant to the provisions of
Regulation  D,  Rule 506 of the 1933 Act.  Proceeds  from the  November  5, 1997
offering  included the conversion of $160,000 of loans  previously  outstanding,
cash of $390,000 and  conversion of interest of $23,695 due to an investor.  The
Company  received all cash from the February 4, 1998 offering.  The notes issued
from both offerings will be due October 15, 2000 and will be convertible, at the
option of the noteholder,  into shares of the Company's Common Stock at the rate
of $0.1615 per share.  The Company will have the right to call these notes after
approximately  one year from the date of issuance and the noteholders  will have
30 days in which to  convert  if these  notes  are  called by the  Company.  The
Company may elect to pay interest on any of these notes  converted in cash or by
issuance of additional shares of the Company's Common Stock.

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<PAGE>



ITEM 3.  DEFAULTS ON SENIOR SECURITIES.

None.


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

None.


ITEM 5.  OTHER INFORMATION.

None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

None.




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<PAGE>


                                   SIGNATURES


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


                                         ADVANCE DISPLAY TECHNOLOGIES, INC.
                                         (Registrant)



Date: February 13, 1998                  /S/ Kenneth P. Warner
      -----------------                  ---------------------------------------
                                         Kenneth P. Warner
                                         President and Chief Executive Officer
                                         (Chief Executive and Financial Officer)





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