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 March 31, 1998

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

           For the transition period from ____________ to ____________

                         Commission file number: 0-15224

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

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


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


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



Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports),  and (2) has been subject to such filing  requirements for the past 90
days.
                      YES  X                     NO
                         -----                      -----

As of May 1, 1998,  25,176,432 shares of Common Stock, $.001 par value per share
were outstanding.

           Transitional Small Business Disclosure Format (check one):

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

<PAGE>



                       ADVANCE DISPLAY TECHNOLOGIES, INC.


                                      INDEX


                                                                            Page
                                                                            ----

                          PART I. FINANCIAL INFORMATION


Item 1.  Consolidated Balance Sheets (unaudited) -
           March 31, 1998 and June 30,1997 ................................. 3

         Consolidated  Statements of Operations (unaudited) - 
           Three months and nine months ended March 31, 1998
           and March 31, 1997 and for the period from
           March 15, 1995, inception, to March 31, 1998 .....................4

         Consolidated  Statements of Cash Flows (unaudited) - 
           Three months and nine months ended March 31, 1998 
           and March 31, 1997 and for the period from
           March 15, 1995, inception, to March 31, 1998 ...................5-6

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

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


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings..................................................12

Item 2.  Changes in Securities..............................................12

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

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

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

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

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


                                        2

<PAGE>
<TABLE>
<CAPTION>



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

                             CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)

                                                            March 31,       June 30,
                                                               1998           1997
                                                           -----------    -----------
                                     ASSETS
                                     ------
CURRENT ASSETS:
<S>                                                        <C>            <C>        
   Cash                                                    $    96,960    $   235,731
   Inventory                                                   105,497         51,819
   Other current assets                                         22,607         10,191
                                                           -----------    -----------
      Total current assets                                     225,064        297,741

PROPERTY AND EQUIPMENT                                         142,934         77,674
   Less:  Accumulated depreciation                             (29,120)        (2,260)
                                                           -----------    -----------
      Net property and equipment                               113,814         75,414
                                                           -----------    -----------

INTANGIBLE ASSETS, net of accumulated
        amortization of $106,032 and
        $42,750, respectively                                  471,023        529,615
                                                           -----------    -----------

      TOTAL ASSETS                                         $   809,901    $   902,770
                                                           ===========    ===========


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

CURRENT LIABILITIES:
   Accounts payable                                        $   511,608    $   558,140
   Convertible notes payable to shareholders                      --          500,000
   Other accrued liabilities                                   122,180        111,494
                                                           -----------    -----------
      Total current liabilities                                633,788      1,169,634

CONVERTIBLE, REDEEMABLE PROMISSORY NOTES TO SHAREHOLDERS       873,725           --

SHAREHOLDERS' DEFICIT:
   Preferred stock, $.001 par value, 100,000,000
        shares authorized, 1,843,900 shares issued
        and outstanding (liquidation preference of
        $2,765,850)                                              1,844          1,844
   Common stock, $.001 par value, 100,000,000 shares
        authorized, 25,176,432 and 21,343,923 shares
        issued and outstanding, respectively                    25,176         21,344
   Additional paid-in capital                                2,999,670      2,453,503
   Deficit accumulated during the development
        stage                                               (3,724,302)    (2,743,555)
                                                           -----------    -----------
      Total shareholders' deficit                             (697,612)      (266,864)
                                                           -----------    -----------

      TOTAL LIABILITIES AND SHAREHOLDERS'DEFICIT           $   809,901    $   902,770
                                                           ===========    ===========

       (See accompanying notes to unaudited consolidated financial statements)

                                          3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>



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

                                          CONSOLIDATED STATEMENTS OF OPERATIONS
                                                       (Unaudited)

                                                                                                                March 15, 1995
                                                                                                                  (Inception)
                                               Three Months Ended                  Nine Months Ended                Through
                                                    March 31,                          March 31,                   March 31,
                                         ------------------------------      -----------------------------       ------------
                                             1998              1997              1998              1997              1998
                                         ------------      ------------      ------------      -----------       ------------
REVENUE:


<S>                                      <C>               <C>               <C>               <C>               <C>         
 Consulting                              $       --        $       --        $     30,000      $       --        $     30,000
 Interest Income - related party                 --              31,566              --              84,528           162,761
                                         ------------      ------------      ------------      ------------      ------------
     Total Revenue                               --              31,566            30,000            84,528           192,761
                                                                                                                  

COSTS AND EXPENSES:
 Cost of goods                                   --                --              11,427              --              11,427
 General and administrative                   218,035               314           741,015             2,240           880,370
 Research and development                      85,398              --             211,923              --           2,756,863
 Interest expense - related party              18,926            44,153            46,383           114,201           268,404
                                         ------------      ------------      ------------      ------------      ------------
     Total costs and expenses            $    322,359      $     44,467      $  1,010,748      $    116,441      $  3,917,064
                                         ------------      ------------      ------------      ------------      ------------

NET LOSS                                 $   (322,359)     $    (12,901)     $   (980,748)     $    (31,913)     $ (3,724,303)
                                         ============      ============      ============      ============      ============

BASIC AND DILUTED NET LOSS
   PER COMMON SHARE                      $       (.01)     $       (.02)     $       (.04)     $       (.04)
                                         ============      ============      ============      ============

WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                      25,176,432           784,236        23,781,938           784,236
                                         ============      ============      ============      ============






                   (See accompanying notes to unaudited consolidated financial statements)



                                                     4
</TABLE>

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

                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (Unaudited)
                                                                                                                  March 15, 1995
                                                                                                                    (Inception)
                                                     Three Months Ended                Nine Months Ended              Through
                                                         March 31,                         March 31,                 March 31,
                                               ----------------------------      ----------------------------      -----------
                                                  1998             1997             1998             1997              1998
                                               -----------      -----------      -----------      -----------      -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                            <C>              <C>              <C>              <C>              <C>         
  Net Loss                                     $  (322,359)     $   (12,901)     $  (980,748)     $   (31,913)     $(3,724,303)
Adjustments to reconcile net loss
  to net cash used in
  operating activities:
Acquired research and development
  expense                                             --               --               --               --          2,536,494
 Depreciation and amortization                      31,454             --             86,750             --            136,599
 (Increase)decrease in:
     Inventory                                         468             --            (53,678)            --            (99,449)
     Interest receivable                              --            (24,844)            --            (63,682)        (141,863)
     Other current assets                            6,044             --            (12,416)            --            (12,416)
 (Decrease) increase in:
   Accrued interest payable to
     shareholders                                   18,926           37,431           44,755           93,354          247,879
   Accounts payable                                 (9,834)            --            (46,532)            --             65,766
   Other accrued liabilities                       (58,401)            --            (10,344)            --            (41,009)
                                               -----------      -----------      -----------      -----------      -----------
Net cash used in operating                        (333,702)            (314)        (972,213)          (2,241)      (1,032,302)
  activities                                   -----------      -----------      -----------      -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Additions to property and equipment                  (408)            --            (75,260)            --            (90,359)
 Dispositions of property and
   equipment                                          --               --              8,702             --              8,702
 Advances to affiliates                               --               --               --            (54,473)        (932,925)
 Purchase of notes receivable and
   security interest                                  --               --               --               --           (225,000)
 Cash received in acquisition                         --               --               --               --            303,812
                                               -----------      -----------      -----------      -----------      -----------
   Net cash used in
       investing activities                           (408)            --            (66,558)         (54,473)        (935,770)
                                               -----------      -----------      -----------      -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Capital contributions                                --               --               --               --            103,127
 Proceeds from notes payable
   to shareholders                                    --               --            160,000             --            160,000
 Proceeds from convertible notes
   payable to shareholders                         300,000             --            740,000            5,000        1,502,400
 Proceeds from line-of-credit                         --               --               --               --            299,505
                                               -----------      -----------      -----------      -----------      -----------
   Net cash provided by
       financing activities                        300,000             --            900,000            5,000        2,065,032
                                               -----------      -----------      -----------      -----------      -----------
Increase (decrease) in cash and
  cash equivalents                                 (34,110)            (314)        (138,771)         (51,714)          96,960
Cash & cash equivalents at
  beginning of period                              131,070            2,955          235,731           54,355             --
                                               -----------      -----------      -----------      -----------      -----------
Cash and cash equivalents at end
  of period                                    $    96,960      $     2,641      $    96,960      $     2,641      $    96,960
                                               ===========      ===========      ===========      ===========      ===========




                                                             5


<PAGE>

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

                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (Unaudited)

                                                                                                                     March 15, 1995
                                                                                                                       (Inception)
                                                          Three Months Ended                Nine Months Ended            Through
                                                               March 31                         March 31,               March 31,
                                                    ------------------------------    -----------------------------    ----------
                                                        1998             1997             1998            1997            1998
                                                    -------------    -------------    ------------    -------------    ----------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
    Interest                                        $        --      $        --      $        746    $       7,122    $   26,070
                                                    =============    =============    ============    =============    ==========
    Taxes                                           $        --      $        --      $       --      $        --      $     --
                                                    =============    =============    ============    =============    ==========

NON-CASH INVESTING AND FINANCING ACTIVITIES:

Issuance of common Stock for acquisition
  of Display Group, LLC and Display
  Optics, Ltd. and conversion of
  Convertible debt                                  $        --      $        --      $       --      $        --      $2,199,026

                                                    =============    =============    ============    =============    ==========
Conversion of 10% Convertible,
  Redeemable Promissory Notes into
  shares of the Company's Common
  Stock at the rate of $0.1315 per
  share or 4,182,509 shares                         $        --      $        --      $    550,000    $        --      $  550,000
                                                    =============    =============    ============    =============    ==========

Conversion of short term notes and
  accrued interest into Convertible,
  Redeemable Promissory Notes                       $        --      $        --      $    183,575    $        --      $  183,575
                                                    =============    =============    ============    =============    ==========



                              (See accompanying notes to unaudited consolidated financial statements)




                                                                6
</TABLE>

<PAGE>

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

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

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


Note 2.

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



                                        7

<PAGE>



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

                Special Note Regarding Forward-Looking Statements

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


General

     In  December  1993,  Advance  Display  Technologies,  Inc.  ("ADTI" or "the
Company") and  individual  investors  organized a limited  partnership,  Display
Optics,  Ltd. (the  "Partnership"  or "DOL"),  to obtain capital and to continue
development of the fiber optic video technology and other related display screen
technology.  The  Company  acted as a general  partner and the  Partnership  was
managed by Display Group,  LLC. Display Group was formed by the limited partners
of the  Partnership  and other  individuals and entities to manage and partially
fund operations of the Partnership.  Display Group had no equity interest in DOL
as all interests of Display Group in DOL were in the form of convertible debt.

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

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

                                        8

<PAGE>




     The Exchange was accounted for using the purchase method of accounting.  As
the former members of Display Group acquired a majority of the Company's  Common
Stock, for financial statement reporting purposes, the Exchange was treated as a
reverse  acquisition  whereby Display Group was considered the acquiring entity.
Therefore,  the financial  statements for periods through May 31, 1997 have been
restated to reflect only the results of operations of Display Group.  Subsequent
to May 31, 1997, the financial statements reflect the combined operations of the
Company, DOL and Display Group. Effective December 31, 1997, DOL was liquidated.
Display Group is a wholly-owned subsidiary with no operating activity except for
the ongoing pursuit of a legal claim.


Results of Operations

     During the quarter ended March 31, 1998, the Company continued  development
efforts on a fiber optic large display screen system, the related  manufacturing
process and a  marketing  study and plan  overview.  The Company had no sales to
report for this period.  Future sales are contingent on the Company's ability to
improve and further develop the product and  manufacturing  process and complete
and successfully execute a detailed marketing plan.

     For the fiscal  quarter and nine months ended March 31,  1998,  the Company
reported net losses of ($322,359) and ($980,748),  respectively,  as compared to
($12,901)  and  ($31,913)  for the same periods of the prior  fiscal  year.  The
increases in fiscal 1998 from fiscal 1997 are primarily  due to the  restatement
of the financial  statements  reporting only Display Group activity  through May
31, 1997 and the inclusion of operational  activity of the combined entities for
the first nine months of the current fiscal year.

     The Company reported total revenue of $0 and $30,000 for the fiscal quarter
and nine months ended March 31,  1998.  Revenue from the nine months ended March
31, 1998,  consisted  entirely of consulting  fees pursuant to an agreement with
Toshiba Lighting and Technology  Corporation ("TLT") effective July 1, 1997. The
agreement  called for the Company to provide  market  research  information  for
consideration of $5,000 per month.  This agreement expired on December 31, 1997.
The Company reported total revenue of $31,566 and $84,528 for the fiscal quarter
and nine months ended March 31, 1997, respectively,  which consisted entirely of
interest income from loans made by Display Group to the Partnership. These loans
were  converted to equity of the Company  effective May 21, 1997 pursuant to the
Exchange described above. Therefore,  there was no related party interest income
reported for the fiscal quarter and nine months ended March 31, 1998. There were
no sales of the  Company's  products  to report  for the  quarter  or nine month
period ended March 31, 1998.

     The Company reported general and administrative ("G&A")expenses of $218,035
and $741,015, respectively for the quarter and nine months ended March 31, 1998,
respectively,  and $314 and $2,240 for the quarter  and nine months  ended March
31, 1997,  respectively.  The Company  also  reported  research and  development
("R&D")  expenses of $85,398 and  $211,923 for the quarter and nine months ended
March 31, 1998,  respectively.  There were no research and development  expenses
reported for the quarter and nine months ended March 31, 1997.  These  increases
in the current fiscal periods from amounts  reported for the same periods of the
prior  fiscal  year  were  primarily  due to the  restatement  of the  financial
statements  reporting only Display Group  activity  through May 31, 1997 and the
inclusion of  operational  activity of the combined  entities for the first nine
months of the current  fiscal year. G&A expenses for the fiscal quarter and nine
months  ended  March 31,  1998,  respectively,  included:  1)  depreciation  and


                                        9

<PAGE>


amortization  of  approximately  $30,000 and $83,000;  2) promotional and travel
expenses of  approximately  $5,000 and  $34,000;  3) general  office  expense of
approximately  $31,000  and  $94,000;  4)  employee  salaries  and  expenses  of
approximately  $72,000 and $270,000;  and 5) professional and consulting fees of
approximately  $80,000 and  $260,000  (primarily  due to legal fees  incurred in
connection with the Exchange transaction and ongoing litigation,  and accounting
fees in connection with the audit of the Company's financial  statements for the
fiscal year ended June 30, 1997 and the audit of financial statements of DOL and
Display Group in connection with the Exchange).

     Interest expense decreased from $44,153 and $114,201 for the fiscal quarter
and nine months ended March 31, 1997,  respectively,  to $18,926 and $46,383 for
the same periods of the current  fiscal year,  respectively.  This  decrease was
primarily due to a reduction in debt due to the  conversion of notes into equity
per the Exchange.


Liquidity and Capital Resources

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

     The Company and its subsidiaries  have been totally  dependent on financing
from outside  sources to fund  operations for more than four years. At March 31,
1998, the Company  reported  negative net worth of $697,612 and negative working
capital  of  $408,724.   The  Company  will  require   additional   capital  for
administrative expenses,  continued development of the product and manufacturing
process, marketing costs and other costs. Management believes that the Company's
continued  existence  is  dependent  upon its ability to: 1) improve and further
develop  the  product and the related  manufacturing  process;  2)  successfully
market the product; 3) obtain additional funding through outside sources; and 4)
achieve and maintain profitable operations. Although management is attempting to
achieve  these  objectives,  there can be no assurance  that the Company will be
able to obtain sufficient additional capital or manufacture or sell its products
on terms and conditions satisfactory to the Company.

     Cash flow from financing  activities for the fiscal quarter and nine months
ended  March  31,  1998  consisted  entirely  of loans to the  Company  from two
shareholders  totaling  $0  and  $160,000  respectively,  and  the  issuance  of
convertible,   redeemable  promissory  notes  totaling  $300,000  and  $740,000,
respectively.  Proceeds from financing  activities  during the nine months ended
March 31, 1998 were primarily  used for  manufacturing  a 7'x9' screen,  ongoing
product  and  manufacturing   process   development,   operating   expenses  and
investments in capital equipment.

     On February 4, 1998, the Company completed an additional  private placement
offered to qualified investors.  The private placement provided for the issuance
of a  minimum  of  $300,000  and a  maximum  of  $650,000  of  10%  Convertible,
Redeemable Promissory Notes (the "Notes") issuable in increments of $10,000. The
Notes  are due  October  15,  2000 and are  convertible,  at the  option  of the
noteholder, into shares of the Company's Common Stock at the rate of $0.1615 per


                                       10

<PAGE>


share.  The  Company  has the right to call these  Notes  after one year and the
noteholders  have 30 days in which to convert  if these  Notes are called by the
Company.  The Company may elect to pay interest on any of these Notes  converted
in cash or by issuance of additional  shares of the Company's  Common Stock.  On
February 4, 1998,  the Company sold  $300,000 of these  Convertible,  Redeemable
Promissory Notes to two existing shareholders.

     ADTI reported a working capital deficit position at March 31, 1998. Current
liabilities  exceeded  current  assets by $408,724.  At March 31, 1998,  current
liabilities consisted entirely of trade payables and accrued expenses which were
incurred due to litigation costs,  costs of the Exchange,  costs associated with
the various private offerings and operating costs.

     The Company's  working capital deficit position  improved at March 31, 1998
from June 30, 1997 by approximately $463,000 due to the conversion of short-term
convertible  debt on  October  14,  1997  and  the  subsequent  issuance  of new
convertible debt with terms in excess of one year as discussed above.

     The Company's efforts will continue to be focused on further development of
a fiber optic large display screen system and the related manufacturing process.
During the quarter ended March 31, 1998 the Company  completed a marketing study
and marketing plan overview.  The Company plans to complete a detailed marketing
plan as development of the product and related manufacturing process progresses.
In addition,  the Company will continue  efforts on raising  additional  capital
through private placements or other sources. There can be no assurances that the
Company will be able to acquire the capital needed or be successful in achieving
any of these objectives.


IMPACT OF THE YEAR 2000 ISSUE

     The Year 2000 Issue is the result of computer  programs being written using
two digits rather than four to define the applicable  year. Any of the Company's
computer programs that have  date-sensitive  software may recognize a date using
"00" as the year 1900 rather than the year 2000.  This could  result in a system
failure or miscalculations causing disruptions of operations,  including,  among
other things, a temporary inability to process  transactions,  send invoices, or
engage in similar normal business activities.

     As of the  date of this  report,  no  assessment  has  been  made as to the
effects of the Year 2000 Issue on the Company.  Therefore, the Company is unable
to determine  whether the Year 2000 Issue will  materially  affect the Company's
operating  ability,  future  financial  results,  or  cause  reported  financial
information  not to be  necessarily  indicative of future  operating  results or
future financial condition.

     The Company  intends to initiate an assessment  of the potential  impact of
the Year 2000 Issue on the Company's business in the future.


                                       11

<PAGE>



                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS.

None.


ITEM 2.  CHANGES IN SECURITIES.

     On February 4, 1998, the Company sold additional  securities  pursuant to a
private placement in transactions  exempt from the registration  requirements of
the 1933 Act. The Company sold 10% Convertible,  Redeemable  Promissory Notes in
the aggregate principal amount of $300,000,  to accredited investors pursuant to
the  provisions of Regulation D, Rule 506 of the 1933 Act. The Company  received
all cash from this offering.  The notes issued  pursuant to the offering will be
due October 15, 2000 and are convertible,  at the option of the noteholder, into
shares of the  Company's  Common  Stock at the rate of $0.1615  per  share.  The
Company has the right to call these notes after  approximately one year from the
date of issuance  and the  noteholders  will have 30 days in which to convert if
these notes are called by the Company.  The Company may elect to pay interest on
any of these notes converted in cash or by issuance of additional  shares of the
Company's Common Stock.


ITEM 3.  DEFAULTS ON SENIOR SECURITIES.

None.


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

None.


ITEM 5.  OTHER INFORMATION.

None.


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

None.




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<PAGE>


                                   SIGNATURES


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


                                             ADVANCE DISPLAY TECHNOLOGIES, INC.
                                                       (Registrant)



Date: May 7, 1998                                         /S/ Kenneth P. Warner
      -----------                                         ---------------------
                                                              Kenneth P. Warner
                                          President and Chief Executive Officer
                                        (Chief Executive and Financial Officer)



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