**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-QSB**

**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) |

| **7334                South Alton Way, Suite F, Centennial, CO 80112**            |
|-----------------------------------------------------------------------------------|
| (Address                of principle executive offices) (Zip                Code) |

| **(303)                267-0111**                                                    |
|--------------------------------------------------------------------------------------|
| (Issuer’s                telephone number, including area                code) |

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

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

----

**ADVANCE      DISPLAY TECHNOLOGIES, INC.**

**INDEX**

**Page**

|                                               |
|----------------------------------------------------|
|  PART                I. FINANCIAL INFORMATION |
|                                               |   |   |
| Item                1.                             | Balance                Sheets |   |
|                                               |   | December                31, 2006 (unaudited) and June 30, 2006 | 1 |
|                                               |   |   |   |
|                                               | Statements                of Operations (unaudited) |   |
|                                               |   | Three                and six months ended December 31, 2006 and 2005 and for the |   |
|                                               |   | period                from March 15, 1995, inception, to December 31, 2006 | 2 |
|                                               |   |   |   |
|                                               | Statements                of Cash Flows (unaudited) |   |
|                                               |   | Six                months ended December 31, 2006 and 2005 and for the |   |
|                                               |   | period                from March 15, 1995, inception, to December 31, 2006 | 3-4 |
|                                               |   |   |   |
|                                               | Notes                to Financial Statements (unaudited) | 5-7 |
|                                               |   |   |   |
| Item                2.                             | Management’s                Discussion and Analysis or Plan of Operations | 8-12 |
|                                               |   |   |   |
|                                               |   | General | 8-9 |
|                                               |   | Results                of Operations | 9-10 |
|                                               |   | Liquidity                and Resources | 10-11 |
|                                               |   | Forward                Looking Statements | 12 |
|                                               |   |   |   |
| Item                3.                             | Controls                and Procedures | 12 |
|                                               |   |   |   |
|                                               |   |   |   |
|                                               |   |   |   |
| PART                II. OTHER INFORMATION          |
|                                               |   |   |   |
| Item                2.                             | Unregistered                Sale of Equity Securities and Use of Proceeds | 13 |
|                                               |   |   |   |
| Item                6.                             | Exhibits | 13 |
|                                               |   |   |   |
|                                               | Signatures | 14 |

----

**PART      1. FINANCIAL INFORMATION**

**Item      1.**

**ADVANCE      DISPLAY TECHNOLOGIES, INC.**

**(A      Development Stage Company)**

**BALANCE      SHEETS**

|                                                                                                                                                                                                                                                              |   | **December                    31,****2006** |        | **June                    30,****2006** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|-------------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                              |   | (Unaudited)                                 |        |                                    |   |
| ASSETS                                                                                                                                                                                                                                                            |   |                                        |        |                                    |   |
| CURRENT                    ASSETS:                                                                                                                                                                                                                                |   |                                        |        |                                    |   |   |   |
| Cash                                                                                                                                                                                                                                                              |   | $                                           | 80,112      |                                    | $      | 130,248 |   |
| Preferred                    stock subscriptions receivable                                                                                                                                                                                                       |   |                                        | 240,000     |                                    |   | -- |   |
| Inventory                                                                                                                                                                                                                                                         |   |                                        | 86,500      |                                    |   | -- |   |
| Vendor                    deposits                                                                                                                                                                                                                                |   |                                        | 29,575      |                                    |   | -- |   |
| Other                    current assets                                                                                                                                                                                                                           |   |                                        | 44,611      |                                    |   | 11,719 |   |
| Total                    current assets                                                                                                                                                                                                                           |   |                                        | 480,798     |                                    |   | 141,967 |   |
|                                                                                                                                                                                                                                                              |   |                                        |        |                                    |   |   |   |
| PROPERTY                    AND EQUIPMENT, NET                                                                                                                                                                                                                    |   |                                        | 105,765     |                                    |   | 48,749 |   |
|                                                                                                                                                                                                                                                              |   |                                        |        |                                    |   |   |   |
| TOTAL                    ASSETS                                                                                                                                                                                                                                   |   | $                                           | 586,563     |                                    | $      | 190,716 |   |
|                                                                                                                                                                                                                                                              |   |                                        |        |                                    |   |   |   |
| LIABILITIES                    AND SHAREHOLDERS’ (DEFICIT)                                                                                                                                                                                                  |   |                                        |        |                                    |   |   |   |
| CURRENT                    LIABILITIES:                                                                                                                                                                                                                           |   |                                        |        |                                    |   |   |   |
| Accounts                    payable                                                                                                                                                                                                                               |   |                                        |        |                                    |   |   |   |
| Trade                                                                                                                                                                                                                                                             |   | $                                           | 141,330     |                                    | $      | 72,530 |   |
| Related                    party                                                                                                                                                                                                                                  |   |                                        | 31,852      |                                    |   | 19,324 |   |
| Revolving,                    convertible, redeemable promissory notes payable to related                    parties                                                                                                                                              |   |                                        | 740,000     |                                    |   | 740,000 |   |
| Demand                    notes payable to related parties                                                                                                                                                                                                        |   |                                        | 800,000     |                                    |   | 500,000 |   |
| Accrued                    interest payable to related parties                                                                                                                                                                                                    |   |                                        | 166,180     |                                    |   | 91,691 |   |
| Other                    accrued liabilities                                                                                                                                                                                                                      |   |                                        | 31,042      |                                    |   | 29,142 |   |
| Total                    current liabilities                                                                                                                                                                                                                      |   |                                        | 1,910,404   |                                    |   | 1,452,687 |   |
|                                                                                                                                                                                                                                                              |   |                                        |        |                                    |   |   |   |
| LONG-TERM                    CAPITAL LEASE OBLIGATIONS, LESS CURRENT MATURITIES:                                                                                                                                                                                  |   |                                        | 5,340       |                                    |   | 5,980 |   |
| Total                    liabilities                                                                                                                                                                                                                              |   |                                        | 1,915,744   |                                    |   | 1,458,667 |   |
|                                                                                                                                                                                                                                                              |   |                                        |        |                                    |   |   |   |
| SHAREHOLDERS’                    (DEFICIT):                                                                                                                                                                                                                 |   |                                        |        |                                    |   |   |   |
| Preferred                    Series D stock, $.001 par value, 60,000,000 shares authorized,                    25,780,322                    issued and outstanding, (liquidation preference of                    $430,531).                                     |   |                                        | 25,780      |                                    |   | 25,780 |   |
| Preferred                    Series E stock, $.001 par value, cumulative 5% dividend,1,008,985                    shares                    authorized, 1,008,985 shares issued and outstanding (liquidation                    preference of $1,164,533)         |   |                                        | 1,009       |                                    |   | 1,009 |   |
| Preferred                    Series F stock, $.001 par value, 4,549,015 shares authorized,                    4,549,015                    shares issued and outstanding (liquidation preference of                    $4,549,015)                                |   |                                        | 4,549       |                                    |   | 4,549 |   |
| Preferred                    Series G stock, $.001 par value, 50,000 shares authorized, 10,714                    and 0                    shares issued and outstanding, respectively (liquidation preference                    of                    $750,000) |   |                                        | 11          |                                    |   | -- |   |
| Preferred                    stock subscriptions receivable                                                                                                                                                                                                       |   |                                        | (85,000     | )                                       |   | -- |   |
| Common                    stock, $.001 par value, 100,000,000 shares authorized, 26,198,177                    issued                    and outstanding                                                                                                          |   |                                        | 26,199      |                                    |   | 26,199 |   |
| Additional                    paid-in capital                                                                                                                                                                                                                     |   |                                        | 12,113,607  |                                    |   | 11,355,802 |   |
| (Deficit)                    accumulated during the development stage                                                                                                                                                                                             |   |                                        | (13,415,336 | )                                       |   | (12,681,290 | ) |
| Total                    Shareholders’ (Deficit)                                                                                                                                                                                                            |   |                                        | (1,329,181  | )                                       |   | (1,267,951 | ) |
|                                                                                                                                                                                                                                                              |   |                                        |        |                                    |   |   |   |
| TOTAL                    LIABILITIES AND SHAREHOLDERS’ (DEFICIT)                                                                                                                                                                                            |   | $                                           | 586,563     |                                    | $      | 190,716 |   |

----

**ADVANCE      DISPLAY TECHNOLOGIES, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF OPERATIONS**

**(Unaudited**
**)**

|                                                                                                 |   | Three                      Months EndedDecember                      31, |       | Six                      Months EndedDecember                      31, |   | Cumulative                      From Inception (March                      15, 1995) Through                      December 31, |   |
|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------|------------|------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                 |   | 2006                                                                     |       | 2005                                                                   |   | 2006                                                                                                                           |   | 2005 |   | 2006 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |
| CONSULTING                      REVENUE                                                              |   | $                                                                        | ---        |                                                                   | $      | 5,472                                                                                                                          |   | $ | --- |   | $ | 34,045 |   | $ | 91,014 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| OTHER                      INCOME:                                                                   |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Related                      party interest income                                                   |   |                                                                     | ---        |                                                                   |   | ---                                                                                                                            |   |   | --- |   |   | --- |   |   | 162,761 |   |
| Other                      interest income                                                           |   |                                                                     | 57         |                                                                   |   | 108                                                                                                                            |   |   | 158 |   |   | 166 |   |   | 9,231 |   |
| Settlement                      income                                                               |   |                                                                     | ---        |                                                                   |   | 86,117                                                                                                                         |   |   | --- |   |   | 86,117 |   |   | 463,179 |   |
| Other                                                                                                |   |                                                                     | ---        |                                                                   |   | ---                                                                                                                            |   |   | --- |   |   | --- |   |   | 550 |   |
| Total                      revenue and other income                                                  |   |                                                                     | 57         |                                                                   |   | 91,697                                                                                                                         |   |   | 158 |   |   | 120,328 |   |   | 726,735 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| COSTS                      AND EXPENSES:                                                             |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Cost                      of consulting revenue                                                      |   |                                                                     | ---        |                                                                   |   | 19,639                                                                                                                         |   |   | --- |   |   | 39,036 |   |   | 93,648 |   |
| General                      and administrative                                                      |   |                                                                     | 215,803    |                                                                   |   | 187,358                                                                                                                        |   |   | 390,856 |   |   | 272,614 |   |   | 5,618,867 |   |
| Research                      and development                                                        |   |                                                                     | 210,521    |                                                                   |   | 29,313                                                                                                                         |   |   | 268,859 |   |   | 89,973 |   |   | 4,438,363 |   |
| Impairment                      of intangible asset                                                  |   |                                                                     | ---        |                                                                   |   | ---                                                                                                                            |   |   | --- |   |   | --- |   |   | 451,492 |   |
| Interest                      expense - related parties                                              |   |                                                                     | 38,522     |                                                                   |   | 217,167                                                                                                                        |   |   | 74,489 |   |   | 329,528 |   |   | 3,774,860 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Total                      costs and expenses                                                        |   |                                                                     | 464,846    |                                                                   |   | 453,477                                                                                                                        |   |   | 734,204 |   |   | 731,151 |   |   | 14,377,230 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| LOSS                      BEFORE DISCONTINUED OPERATIONS                      AND EXTRAORDINARY GAIN |   | $                                                                        | (464,789   | )                                                                      | $      | (361,780                                                                                                                       | )      | $ | (734,046 | ) | $ | (610,823 | ) | $ | (13,650,495 | ) |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Loss                      from discontinued operations                                               |   |                                                                     | ---        |                                                                   |   | ---                                                                                                                            |   |   | --- |   |   | --- |   |   | (202,278 | ) |
| Gain                      on disposal of discontinued operations                                     |   |                                                                     | ---        |                                                                   |   | ---                                                                                                                            |   |   | --- |   |   | --- |   |   | 108,652 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| LOSS                      BEFORE EXTRAORDINARY GAIN                                                  |   | $                                                                        | (464,789   | )                                                                      | $      | (361,780                                                                                                                       | )      | $ | (734,046 | ) | $ | (610,823 | ) | $ | (13,744,121 | ) |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| EXTRAORDINARY                      GAIN DUE TO                                                       |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| EXTINGUISHMENT                      OF DEBT                                                          |   |                                                                     | ---        |                                                                   |   | ---                                                                                                                            |   |   | --- |   |   | --- |   |   | 328,785 |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| NET                      LOSS                                                                        |   | $                                                                        | (464,789   | )                                                                      | $      | (361,780                                                                                                                       | )      | $ | (734,046 | ) | $ | (610,823 | ) | $ | (13,415,336 | ) |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| ACCRUED                      PERFERRED SERIES E DIVIDEND                                             |   |                                                                     | (12,612    | )                                                                      |   | (12,612                                                                                                                        | )      |   | (25,224 | ) |   | (25,224 | ) |   | (155,548 | ) |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| NET                      LOSS APPLICABLE TO COMMON SHAREHOLDERS                                      |   | $                                                                        | (477,401   | )                                                                      | $      | (374,392                                                                                                                       | )      | $ | (759,270 | ) | $ | (636,047 | ) | $ | (13,570,884 | ) |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| NET                      LOSS PER COMMON SHARE (BASIC AND DILUTIVE):                                 |   | $                                                                        | (.02       | )                                                                      | $      | (.01                                                                                                                           | )      | $ | (.03 | ) | $ | (.02 | ) |   |   |   |
|                                                                                                 |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED                      AVERAGE NUMBER OF COMMON                                               |   |                                                                     |       |                                                                   |   |                                                                                                                           |   |   |   |   |   |   |   |   |   |   |
|  SHARES                      OUTSTANDING                                                        |   |                                                                     | 26,198,177 |                                                                   |   | 25,675,786                                                                                                                     |   |   | 26,198,177 |   |   | 25,646,981 |   |   |   |   |

----

**ADVANCE      DISPLAY TECHNOLOGIES, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF CASH FLOWS**

**(Unaudited)**

|                                                                  |   |                                                               |     |                                                                                                                     |   |     |   |
|-----------------------------------------------------------------------|--------|--------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
|                                                                  |   | Six                    Months EndedDecember                    31, |     | Cumulative                    From Inception (March                    15, 1995) Through                    December 31, |   |
|                                                                  |   | 2006                                                               |     | 2005                                                                                                                     |   | 2006     |   |
| CASH                      FLOWS FROM (TO) OPERATING ACTIVITIES:       |   |                                                               |     |                                                                                                                     |   |     |   |
| Net                    (Loss)                                         |   | $                                                                  | (734,046 | )                                                                                                                        | $      | (610,823 | )      | $ | (13,415,336 | ) |
| Adjustments                    to reconcile net loss to net           |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Cash                    used in operating activities:                 |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Loss                    from discontinued operations                  |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 202,278 |   |
| (Gain)                    on disposition of discontinued operations   |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | (108,652 | ) |
| (Gain)                    on debt forgiven                            |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | (496,777 | ) |
| Acquired                    research and development expense          |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 2,536,494 |   |
| Impairment                    of intangible asset                     |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 451,492 |   |
| Depreciation                    and amortization                      |   |                                                               | 11,119   |                                                                                                                     |   | 7,052    |   |   | 317,018 |   |
| Amortization                    of deferred merger costs              |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 75,000 |   |
| Stock                    and stock option compensation expense        |   |                                                               | 7,816    |                                                                                                                     |   | 15,981   |   |   | 248,491 |   |
| Interest                    expense related to debt discount          |   |                                                               | ---      |                                                                                                                     |   | 300,000  |   |   | 1,893,573 |   |
| Loss                    on disposal of property and equipment         |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 5,445 |   |
| (Increase)                    decrease in:                            |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Trade                    accounts receivable                          |   |                                                               | ---      |                                                                                                                     |   | (14,527  | )      |   | --- |   |
| Inventory                                                             |   |                                                               | (86,500  | )                                                                                                                        |   | ---      |   |   | (80,452 | ) |
| Vendor                    deposits                                    |   |                                                               | (29,575  | )                                                                                                                        |   | 66,062   |   |   | (29,575 | ) |
| Other                    current assets                               |   |                                                               | (32,892  | )                                                                                                                        |   | (11,309  | )      |   | (101,096 | ) |
| (Decrease)                    increase in:                            |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Accounts                    payable                                   |   |                                                               | 81,328   |                                                                                                                     |   | (20,429  | )      |   | 135,483 |   |
| Interest                    payable to shareholders                   |   |                                                               | 74,489   |                                                                                                                     |   | 29,528   |   |   | 1,808,335 |   |
| Customer                    deposits                                  |   |                                                               | ---      |                                                                                                                     |   | (24,196  | )      |   | --- |   |
| Other                    accrued liabilities                          |   |                                                               | 3,675    |                                                                                                                     |   | 5,505    |   |   | (146,089 | ) |
| Net                    cash used in operating activities              |   |                                                               | (704,586 | )                                                                                                                        |   | (257,156 | )      |   | (6,704,368 | ) |
|                                                                  |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| CASH                      FLOWS FROM (TO) INVESTING ACTIVITIES:       |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Purchases                    of property and equipment                |   |                                                               | (68,135  | )                                                                                                                        |   | (76,691  | )      |   | (242,516 | ) |
| Proceeds                    from sale of property and equipment       |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 17,030 |   |
| Advances                    to affiliates                             |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | (932,925 | ) |
| Purchase                    of notes receivable and security interest |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | (225,000 | ) |
| Cash                    received in acquisition                       |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 303,812 |   |
| Net                    cash used in investing activities              |   |                                                               | (68,135  | )                                                                                                                        |   | (76,691  | )      |   | (1,079,599 | ) |
|                                                                  |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| CASH                      FLOWS FROM (TO) FINANCING ACTIVITIES:       |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Proceeds                    from stock sales                          |   |                                                               | 425,000  |                                                                                                                     |   | ---      |   |   | 1,128,127 |   |
|  Proceeds                    from exercise of options            |   |                                                               | ---      |                                                                                                                     |   | 10,800   |   |   | 14,400 |   |
| Proceeds                    from notes payable to shareholders        |   |                                                               | 300,000  |                                                                                                                     |   | 300,000  |   |   | 6,429,754 |   |
| Proceeds                    from line of credit                       |   |                                                               | ---      |                                                                                                                     |   | ---      |   |   | 299,505 |   |
| Principal                    payments on leased equipment             |   |                                                               | (2,415   | )                                                                                                                        |   | (1,876   | )      |   | (7,707 | ) |
| Net                    cash provided by financing activities          |   |                                                               | 722,585  |                                                                                                                     |   | 308,924  |   |   | 7,864,079 |   |
|                                                                  |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |
| Increase                    (decrease) in cash                        |   |                                                               | (50,136  | )                                                                                                                        |   | (24,923  | )      |   | 80,112 |   |
| Cash                    & cash equivalent at beginning of period  |   |                                                               | 130,248  |                                                                                                                     |   | 41,602   |   |   | --- |   |
| Cash                    & cash equivalent at end of period        |   | $                                                                  | 80,112   |                                                                                                                     | $      | 16,679   |   | $ | 80,112 |   |
|                                                                  |   |                                                               |     |                                                                                                                     |   |     |   |   |   |   |

----

**ADVANCE      DISPLAY TECHNOLOGIES, INC.**

**(A      Development Stage Company)**

**STATEMENTS      OF CASH FLOWS **

**(Unaudited)**

|                                                                                                                                                        |   | Six                  Months EndedDecember                  31, |    | Cumulative                  From Inception (March                  15, 1995) Through                  December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|---------|--------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                        |   | 2006                                                           |    | 2005                                                                                                               |   | 2006 |   |
|                                                                                                                                                        |   |                                                           |    |                                                                                                               |   |   |   |
| SUPPLEMENTAL                  DISCLOSURE OF CASH FLOW INFORMATION                                                                                           |   |                                                           |    |                                                                                                               |   |   |   |   |   |   |
| Cash                  paid for:                                                                                                                             |   |                                                           |    |                                                                                                               |   |   |   |   |   |   |
| Interest                                                                                                                                                    |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 26,570 |   |
| Non-cash                  transactions:                                                                                                                     |   |                                                           |    |                                                                                                               |   |   |   |   |   |   |
| Issuance                  of common stock for acquisition of Display Group, LLCand                  Display Optics, Ltd. and conversion of convertible debt |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 2,199,026 |   |
| Conversion                  of notes payable to stockholders to Common stock                                                                                |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 550,000 |   |
| Conversion                  of interest payable on notes to notes payable                                                                                   |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 12,354 |   |
| Retirement                  of shares in settlement                                                                                                         |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 1,402 |   |
| Extinguishment                  of debt and trade payables                                                                                                  |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 496,777 |   |
| Acquired                  membership interest in Regent Theaters, LLC and Regent                  Releasing, LLC                                            |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 50,000 |   |
| Conversion                  of Preferred Series C stock to common stock                                                                                     |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 1,844 |   |
| Subscriptions                  for Preferred Series D stock                                                                                                 |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 400,000 |   |
| Cancellation                  of Subscriptions for Preferred Series D Stock                                                                                 |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | (325,000 | ) |
| Subscriptions                  for Preferred Series G Stock                                                                                                 |   | $                                                              | 325,000 |                                                                                                               | $      | --- |   | $ | 325,000 |   |
| Conversion                  of demand notes and accrued Interest to Preferred Series                  E stock                                               |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 1,008,985 |   |
| Conversion                  of convertible, redeemable Promissory notes, demandnotes                  and accrued Interest to Preferred Series F stock      |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 4,549,015 |   |
| Acquisition                  of 15,000,000 shares of Preferred Series D stock                                                                               |   | $                                                              | ---     |                                                                                                               | $      | --- |   | $ | 75,000 |   |
| Equipment                  acquired under capital lease                                                                                                     |   | $                                                              | ---     |                                                                                                               | $      | 7,900 |   | $ | 14,603 |   |
| Issuance                  of shares of Common Stock for debt                                                                                                |   | $                                                              | ---     |                                                                                                               | $      | 5,000 |   | $ | 5,000 |   |
| Issuance                  of shares of Preferred Series D stock for Deferred                  compensation                                                  |   | $                                                              | ---     |                                                                                                               | $      | 69,500 |   | $ | 304,500 |   |
| Cancellation                  of unearned Preferred Series D stock                                                                                          |   | $                                                              | ---     |                                                                                                               | $      | (297,491 | ) | $ | (297,491 | ) |

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**ADVANCE      DISPLAY TECHNOLOGIES, INC.**

**NOTES      TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**Note      1. - Interim Financial Statements**

**Recently      Issued Accounting Pronouncements**

*Fair      Value Measurements*

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*Employers'      Accounting for Defined Benefit Pension and Other Postretirement Plans−An      amendment of FASB Statements No. 87, 88, 106, and 132(R)*

**Note      2. -Demand Notes - Related Parties**

**Note      3. -Commitments and Contingencies**

**Note      4 - Shareholders’ Equity**

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**Note      5. - Subsequent Events**

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**Item      2. **
**MANAGEMENT’S      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS**

**General**

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**Results      of Operations**

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**Liquidity      and Capital Resources**

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**Forward      Looking Statements**

**Item      3. **
**CONTROLS      AND PROCEDURES**

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**PART      II. OTHER INFORMATION**

**Item      2. **
**UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

**Item      6. **
**EXHIBITS**

|   | (a) | Exhibits |
|--------|-----|----------|

|   | Exhibit                No. | Description                                                                                                                                                 |   |
|--------|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                       |                                                                                                                                                        |   |
|   | 31                         | Certificate                of Chief Executive and Financial Officer pursuant to Section 302                of The                Sarbanes Oxley Act of 2002 |
|   |                       |                                                                                                                                                        |   |
|   | 32                         | Certificate                of Chief Executive and Financial Officer pursuant to Section 906                of The                Sarbanes-Oxley Act of 2002 |

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**SIGNATURES**

|                                   | ADVANCE                DISPLAY TECHNOLOGIES, INC.(Registrant)                                    |
|----------------------------------------|-----------------------------------------------------------------------------------------------------------------|
| Date:                February 20, 2007 | /s/                Matthew W. Shankle                                                                           |
|                                   | Matthew                W. ShanklePresident,                Chief Executive and Financial                Officer |

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