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, 1996

  [   ]    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, 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 December 31, 1996, 3,834,055 common shares, $.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 -
              December 31, 1996 and June 30,1996....................      3

             Consolidated  Statements of Operations -
              Three months and six months
              ended  December  31, 1996 and December 31, 1995
              and for the period from October 7, 1983,
              inception, to December 31, 1996.......................      4

             Consolidated  Statements  of Cash Flows
              Three months and six months ended December 31, 1996
              and December 31, 1995 and for the period from
              October 7, 1983, inception, to December 31, 1996......    5-6

             Notes to Consolidated Financial Statements.............      7

Item 2.  Managements' Discussion and Analysis of
          Results of Operations and Financial Condition.............   8-10


                           PART II. OTHER INFORMATION

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

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

Item 3.  Defaults on Senior Securities..............................     11

Item 4.  Submission of Matters to a Vote of
           Security Holders.........................................     11

Item 5.  Other Information..........................................     11

Item 6.  Exhibits and Reports on Form 8-K...........................     11

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


                                        2

<PAGE>



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

                           CONSOLIDATED BALANCE SHEETS


                                           December 31,      June 30,
                                               1996            1996
                                           ------------    ------------

                                     ASSETS


Property, and Equipment                    $    124,203    $    124,203
   Less:  Accumulated depreciation             (124,203)       (124,203)
                                           ------------    ------------
      Net Property and Equipment                   --              --
                                           ------------    ------------

Investment in DOL                               375,494         403,619
                                           ------------    ------------

      Total Assets                         $    375,494    $    403,619
                                           ============    ============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
   Accrued expenses                        $     92,748    $     92,748
   Due to affiliated parties                     32,324          32,324
                                           ------------    ------------
      Total Current Liabilities                 125,072         125,072

Research and Development Liability            1,853,811       1,311,914

      Total Liabilities                       1,978,883       1,436,986

Shareholders' Equity:
   Preferred stock, $.001 par value               2,991           2,991
   Common stock, $.001 par value                  3,834           3,834
   Additional paid-in capital                11,450,062      11,450,062
   Accumulated deficit                      (13,060,276)    (12,490,254)
                                           ------------    ------------
      Total Shareholders' Equity             (1,603,389)     (1,033,367)

      Total Liabilities and
       Shareholders' Equity                $    375,494    $    403,619
                                           ============    ============

                (See accompanying notes to financial statements)

                                        3

<PAGE>
<TABLE>
<CAPTION>
                                                   ADVANCE DISPLAY TECHNOLOGIES, INC.
                                                    (A Development Stage Company)

                                                CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                 October 7, 1983
                                     Three Months Ended               Six Months Ended       (Inception) through
                                        December 31,                     December 31,             December 31,
                                    1996            1995            1996            1995              1996
                                ------------    ------------    ------------    ------------    ----------------
Revenue:
<S>                             <C>             <C>             <C>             <C>             <C>          
 Licensing and exclusivity fees $        ---    $        ---    $        ---    $        ---    $   2,500,000
 Royalty fees                            ---             ---             ---             ---          320,047
 Product and equipment sales             ---             ---             ---             ---        1,243,935
 Consulting                              ---             ---             ---             ---           60,000
 Other                                   ---             ---             ---             ---        1,037,971
                                ------------    ------------    ------------    ------------    -------------
      Total Revenue                      ---             ---             ---             ---        5,161,953

Expenses:
   Cost of Goods                      45,434             ---          45,434             ---        1,050,048
   Marketing                             ---             ---             ---             ---          741,463
   Research and development           14,485          89,320          76,576         147,609        3,834,421
   General and administrative        196,177         137,905         453,244         260,895       11,889,423
                                ------------    ------------    ------------    ------------    -------------
        Total Expenses               256,096         227,225         575,254         408,504       17,515,355
                                ------------    ------------    ------------    ------------    -------------
Operating (Loss)                    (256,096)       (227,225)       (575,254)       (408,504)     (12,353,402)

Other Income (Expenses):
   Other income                          ---             ---             ---             ---          696,799
   Interest income                     2,553           3,415           5,232           7,158          298,699
   Loss on assets disposed               ---             ---             ---             ---       (1,002,838)
   Interest expense                      ---             ---             ---             ---         (699,534)
                                ------------    ------------    ------------    ------------    -------------
  Total Other Income (Expense)         2,553           3,415           5,232           7,158         (706,874)
                                ------------    ------------    ------------    ------------    -------------

   Net Loss                     $   (253,543)   $   (223,810)   $   (570,022)   $   (401,346)   $ (13,060,276)
                                ============    ============    ============    ============    =============


Net Loss per Common Share            $ ( .07)        $ ( .06)        $   .15)        $ ( .10)
                                     =======         =======         =======         =======

Weighted Average Number of Common
   Shares Outstanding              3,834,055       3,834,055       3,834,055       3,834,055
                                   =========       =========       =========       =========


                                          (See accompanying notes to financial statements)

                                                                 4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                   ADVANCE DISPLAY TECHNOLOGIES, INC.
                                                      (A Development Stage Company)

                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                   October 7, 1983
                                         Three Months Ended              Six Months Ended        (Inception) through
                                             December 31,                   December 31,             December 31,
                                         1996           1995            1996           1995             1996
                                     ------------   ------------    ------------   ------------    -----------------

Cash Flows from Operating Activities:
<S>                                  <C>            <C>             <C>            <C>             <C>            
   Net loss                          $  (253,543)   $  (223,810)    $   (570,022)  $   (401,346)   $  (13,060,276)
   Adjustments to reconcile net loss
    to net cash (used in)
    operating activities:
     Depreciation and amortization        14,064         14,064           28,127         28,127         3,280,281
     Deferred revenue                        ---            ---              ---            ---          (315,004)
     Stock issued for services               ---            ---              ---            ---         2,133,727
     Loss on disposal of assets              ---            ---              ---            ---         1,002,838
     (Increase) decrease in:
       Due from affiliates and other       9,156         20,259            9,992         39,172          (215,026)
     Increase (decrease) in:
       Accounts payable                      ---            ---              ---            ---           349,811
       Accrued expenses                      ---            ---              ---            ---           568,360
       Due to officers, stockholders
        and affiliated parties               ---            ---              ---            ---            (7,639)
                                     -----------    -----------     ------------   ------------     -------------
      Net cash used in
        operating activities            (230,323)      (189,487)        (531,903)      (334,047)       (6,262,928)
                                     -----------    -----------     ------------   ------------     -------------

Cash Flows from Investing Activities:
   Additions to property and equipment       ---            ---              ---            ---        (3,692,226)
   Other assets                              ---            ---              ---            ---          (677,675)
   Acquisition of subsidiary                 ---            ---              ---            ---           (85,524)
   Cash from disposal of assets              ---            ---              ---            ---           273,417
                                     -----------    -----------     ------------   ------------     -------------
     Net Cash used in
         investing activities                ---            ---              ---            ---        (4,182,008)
                                     -----------    -----------     ------------   ------------     -------------

 Cash Flows from Financing Activities:
   Proceeds from affiliates                  ---            ---              ---            ---            39,960
   Issuance of common stock                  ---            ---              ---            ---         6,774,027
   Increase in treasury stock                ---            ---              ---            ---           (22,280)
   Increase in notes payable                 ---            ---              ---            ---         2,862,760
   Sale leaseback proceeds,
       net of certificate
      of deposit ($550,000),
      loan fees ($30,000)                    ---            ---              ---            ---           180,000
   Payments of principal on
      notes payable and capital
      lease obligations                      ---            ---              ---            ---        (1,882,780)
   Deferred loan costs                       ---            ---              ---            ---           (55,556)
   Royalty fees received in advance          ---            ---              ---            ---           315,000
   Settlement of capital lease               ---            ---              ---            ---          (163,199)
   Issuance of preferred stock               ---            ---              ---            ---           349,999
   Research and development liability    230,323        189,487          531,903        334,047         2,047,005
                                     -----------    -----------     ------------   ------------     -------------
    Net Cash provided by
      financing activities               230,323        189,487          531,903        334,047        10,444,936
                                     -----------    -----------     ------------   ------------     -------------


                                            (See accompanying notes to financial statements)
                                                               (Continued)


                                                                    5
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                                   ADVANCE DISPLAY TECHNOLOGIES, INC.
                                                      (A Development Stage Company)

                                                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               (Continued)
                                                                                                     October 7, 1983
                                          Three Months Ended               Six Months Ended       (Inception) through
                                             December 31,                    December 31,             December 31,
                                         1996            1995            1996            1995             1996
                                     ------------    ------------    ------------    ------------    ----------------


<S>                                   <C>             <C>             <C>             <C>            <C>    
Increase (decrease) in cash                   ---             ---            ---              ---               ---
Cash and cash equivalents
   at beginning of period                     ---             ---            ---              ---               ---
                                     ------------    ------------    -----------     ------------    --------------
Cash and cash equivalents at end
   of period                         $        ---    $        ---    $       ---     $        ---    $          ---
                                     ============    ============    ===========     ============    ==============



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


Cash paid for:
   Interest                          $        ---    $        ---    $       ---     $        ---    $      718,515
                                     ============    ============    ===========     ============    ==============

   Taxes                             $        ---    $        ---    $       ---     $        ---    $          ---
                                     ============    ============    ===========     ============    ==============
Property and equipment through
   capital leases                    $        ---    $        ---    $       ---     $        ---    $    1,332,376
                                     ============    ============    ===========     ============    ==============

Assets acquired for liabilities assumed in
   purchase of Video View, Inc.      $       ---     $        ---    $       ---     $        ---    $      297,130
                                     ============    ============    ===========     ============    ==============

Acquisition of certain assets (including
   patents) for common stock and
   assumption of liabilities         $        ---    $        ---    $       ---     $        ---    $      200,000
                                     ============    ============    ===========     ============    ==============

Settlement of trade payables and accrued
   salaries through issuance of common
   stock                             $        ---    $        ---    $       ---     $        ---    $      599,803
                                     ============    ============    ===========     ============    ==============


                                            (See accompanying notes to financial statements)

</TABLE>
                                                                    6

<PAGE>



                       ADVANCE DISPLAY TECHNOLOGIES, INC.
                   NOTES TO 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 the Company's Form 10-KSB for the year
ended June 30, 1996, as the notes to these  interim  financial  statements  omit
certain information required for complete financial statements.

Note 2.

     The consolidated  financial  statements include the accounts of Video View,
Inc., a subsidiary which the Company owns 100 percent of the voting stock. Video
View, Inc. has been inactive since 1991.

Note 3.

     In December  1993,  the Company  organized a limited  partnership,  Display
Optics,  Ltd.  (the  "Partnership"  or "DOL"),  to obtain  capital  to  continue
development of the fiber optic video technology and other related display screen
technology. The Company acts as a general partner and the Partnership is managed
by Display Group,  LLC. The Company conducts  substantially  all of its business
through the Partnership. The Company accounts for its relationship with DOL as a
research  and  development  partnership  which  requires  the  Company to record
certain  expenses  incurred by DOL as expenses of the Company and a liability to
the investors.



                                        7

<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           RESULTS OF OPERATIONS AND FINANCIAL CONDITION
           ---------------------------------------------

General
-------

     During December 1993, Advance Display Technologies, Inc. ("ADTI") and other
individual investors organized a limited partnership,  Display Optics, Ltd. (the
"Partnership"), to obtain capital and to continue development of the fiber optic
and other  related  video  technology.  ADTI acts as a general  partner  and the
Partnership is managed by Display Group, LLC (the "Managing  General  Partner").
ADTI  conducts  substantially  all  of its  business  through  the  Partnership.
Accordingly,  all references to "the Company" and its operations  since December
1993  in  this  report  refer  to the  Partnership  unless  specifically  stated
otherwise.

     Following  the  organization  of the  Partnership,  the Company was able to
increase  its  research  and  development  efforts  on the  product  as  well as
administrative activities,  including raising additional capital, developing and
demonstrating  the technology and taking steps necessary to preserve and protect
the technology.  Based on an analysis of the Partnership Agreement and generally
accepted accounting principles,  the transaction is being recorded as a research
and development  arrangement which requires ADTI to record the expenses incurred
by the Partnership as a liability.


Results of Operations
---------------------

     For the fiscal quarter and six months ended December 31, 1996, ADTI and the
Partnership  reported net loss of ($253,543)  and  ($570,022),  respectively  as
compared to  ($223,810)  and  ($401,346)  for the same  fiscal  periods of 1995,
respectively.  There were no sales of the  Company's  products  reported  during
either  period.  Management  believes  the lack of sales  of  products  has been
attributable to the inadequacies or cost  inefficiencies of projection  systems.
In  addition,  the  Company's  abilities  to  adequately  develop and market its
products has been  severely  limited over the past several years due to the lack
of adequate operating capital. The Company seeks to raise additional capital for
continued development and marketing of its products.

     During 1996, projection technology took a major leap in terms of brightness
and resolution  capabilities.  At the same time,  prices of projectors have gone
down and  continue  to  decline.  This  enabled  the Company to sell one screen,
subsequent to the end of the fiscal quarter. The Company manufactured the screen
internally,  primarily during November and December, 1996 and installed the 9' x
12' fiber optic screen at the National Western Event Center in Denver,  Colorado
in January 1997.  This  installation  represents the first sale of the Company's
product since the late 1980's.  The Company plans to use this  installation  for
continued marketing of its products.

     Due to the  promotional  nature of this  installation,  the Company  deeply
discounted the sale price of the 9' x 12' screen discussed above.  This discount
together with excess costs incurred in meeting a tight installation deadline due
to scheduled events at the center, resulted in a write down of work in process

                                        8

<PAGE>



inventory of $45,434 to the expected  revenues from the sale for the quarter and
six months ended  December 31, 1996. The Company did not incur any similar costs
during the same fiscal periods of the prior year.

     ADTI reported general and administrative  expenses of $196,177 and $453,244
for the  quarter  and six months  ended  December  31,  1996,  respectively  and
$137,905 and  $260,895,  respectively  for the same fiscal  periods of the prior
year.  The  increase  in 1996 from  amounts  reported  in 1995 for the six month
period and the quarter was due to several factors: 1) increased interest expense
on outstanding debt of approximately  $43,600 and $25,100,  respectively,  2) an
increase in salaries and related expenses of approximately  $47,900 and $33,800,
respectively, and 3) an increase in legal and professional fees of approximately
$103,800  and  $14,300,  respectively,  due  to  administrative  issues  of  the
Partnership, ongoing litigation and auditing fees.

     ADTI reported research and development  expenses of $76,576 and $14,485 for
the six months and quarter  ended  December  31, 1996  compared to $147,609  and
$89,320 for the same fiscal  periods of the prior  year.  The Company  continued
development on projection  technologies during the first quarter of fiscal 1997.
Research and development costs declined  substantially  during the quarter ended
December 31, 1996 as efforts were focused  primarily on  manufacturing  the 9' x
12' screen for installation in January, 1997.

     Interest income decreased from $7,158 for the six months ended December 31,
1995 to $5,232 for the six months ended  December 31, 1996 due to the  reduction
of the  amount  due ADTI  from the  Partnership.  Amounts  receivable  for funds
previously  advanced from ADTI to the  Partnership  are reduced as debts of ADTI
are accrued and ultimately  paid by the  Partnership.  At December 31, 1996, the
balance  due  ADTI by the  Partnership  was  approximately  $193,194,  including
interest.


Liquidity and Capital Resources
-------------------------------

     ADTI has been totally dependent on the ability of the Partnership to obtain
capital to fund  operations for more than three years and expects to continue to
be dependent, in total or in part, for the foreseeable future. During the fiscal
quarter and six months ended December 31, 1996, the Company was funded  entirely
by  the  issuance  of  convertible  debt.  Borrowings  of  the  Company  totaled
$1,670,046 at March 31, 1997.

     At December 31, 1996,  ADTI reported  negative net worth of $1,603,389  and
negative  working  capital of  $125,072.  The Company  will  require  additional
capital for  administrative  expenses,  continued  development  of the  product,
manufacturing  start up costs and  marketing  the product.  The Company hopes to
obtain additional  funding to support working capital  requirements.  Management
anticipates  continuing to  manufacture  the product for sale,  initially to the
large display screen markets,  in 1997.  Management  believes that the Company's
continued existence is dependent upon its ability to: 1) successfully market the
product; 2) obtain additional  sources of funding through outside financing or

                                        9

<PAGE>



equity investments; and 3) achieve and maintain profitable operations.  Although
Management believes it will be able to achieve these objectives, there can be no
assurance that the Company will be able to obtain additional capital or sell its
products on terms and conditions satisfactory to the Company.

     Due to significant  costs  associated with development and marketing of the
Company's  technology,  ADTI and the Company have  experienced a continuing need
for  working  capital  since  inception.  This need  became  particularly  acute
beginning  in  1989,   following   protracted   litigation  over  the  Company's
technology.  To alleviate this situation,  ADTI formed the Partnership in fiscal
1994 to obtain capital to continue development of its technology.  (See General,
above)

     ADTI reported a working capital  deficit  position at December 31, 1996 and
December 31, 1995.  ADTI's sole asset at December 31, 1996 and December 31, 1995
was its investment in the  Partnership.  Therefor,  the working  capital deficit
position  at  December  31,  1996 and  December  31,  1995 was the amount of the
current liabilities reported of $125,072 for both periods.

     Cash flows from financing  activities for the six months ended December 31,
1996 and 1995 consisted entirely of the increase in the research and development
liability  of  $531.903  and  $334,047,  respectively.  Total  cash  flows  from
financing  activities for both 1996 and 1995 were used  completely for operating
activities.

     The Company's efforts will continue to be focused on further development of
the projection system and screen, and on raising additional capital through debt
or equity  investments.  There can be no  assurances  that the  Company  will be
successful obtaining additional capital needed to sustain operations.

                                       10

<PAGE>

                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.
---------------------------

None.

ITEM 2.  CHANGES IN SECURITIES.
-------------------------------

None.

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.
------------------------------------------

ADTI filed a Form 8-K dated  October  15, 1996 to report its  inability  to file
timely its Annual Report on Form 10-KSB for the fiscal year ended June 30, 1996.
Due to a  continuing  need for  working  capital,  ADTI  was  unable  to  retain
qualified advisors,  including attorneys and independent accountants,  to assist
in the  preparation  of the Report and audit of ADTI's  financial  statements in
time to file in a timely manner.

                                       11

<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: May 19, 1996                                           /S/ Darrell D. Avey
      ------------                            ----------------------------------
                                                                 Darrell D. Avey
                                                           Chairman of the Board
                                                             Corporate Secretary
                                                  Acting Chief Financial Officer






                                       12