UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended ~~December~~March 31, ~~2009~~2010

o 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 registrant 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 principal executive offices) (Zip Code)

(303) 267-0111

(Issuer’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES x T NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “larger accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company xT

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO x T

As of ~~February~~ 16May 21, 2010, there were 32,014,723 shares of the registrant’s common stock outstanding.

ADVANCE DISPLAY TECHNOLOGIES, INC.
INDEX
PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements
	Consolidated Balance Sheets - December 31, 2009 (unaudited) and June 30, 2009	1
	Consolidated Statements of Operations (unaudited) Three and six months ended December 31, 2009 and 2008 and for the period from March 15, 1995, inception, to December 31, 2009	2
	Consolidated Statements of Cash Flows (unaudited) Six months ended December 31, 2009 and 2008 and for the period from March 15, 1995, inception, to December 31, 2009	3
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 5.	Other Information	19
Item 6.	Exhibits	19
	Signatures

ADVANCE DISPLAY TECHNOLOGIES, INC.

INDEX

PART I. FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements

	Consolidated Balance Sheets -
	March 31, 2010 (unaudited) and June 30, 2009	1

	Consolidated Statements of Operations (unaudited)
	Three and nine months ended March 31, 2010 and 2009 and for the period from March 15, 1995, inception, to March 31, 2010	2

	Consolidated Statements of Cash Flows (unaudited)
	Nine months ended March 31, 2010 and 2009 and for the period from March 15, 1995, inception, to March 31, 2010	3

	Notes to Consolidated Financial Statements (unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	18

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	19

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Submission of Matters to a Vote of Security Holders	20

Item 5.	Other Information	20

Item 6.	Exhibits	20

	Signatures

Index

Item 1.

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	December 31, 2009			June 30, 2009
	March 31, 2010			June 30, 2009
	(Unaudited)
ASSETS
ASSETS (SUBSTANTIALLY PLEDGED)
Current Assets:
Cash	$	~~305~~494,~~566~~107		$	1,320,358
Component inventory, net of reserve for obsolescence		~~492~~475,~~762~~846			429,350
Work in progress inventory		1,935,452			1,624,001
Work in progress and completed assembly inventory		2,059,188			1,624,001
Finished Goods inventory		619,342			531,685
Vendor deposits		6454,~~173~~346			29,775
Other current assets		6350,~~406~~992			54,893
Total current assets		3,~~480~~753,~~701~~821			3,990,062
Property and Equipment, Net		1993,~~037,284~~264			1,381,888
Deferred Manufacturing Costs, Net		~~256~~212,~~270~~338			344,134
Deposits		31,353			31,353
Total Assets	$	4,~~805~~990,~~608~~776		$	5,747,437
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable
Trade	$	~~388~~457,~~938~~669		$	551,732
Related party		8547,~~095~~381			62,979
Senior secured revolving convertible note, net of debt discount, to related parties		1113,~~525~~349,~~293~~688			7,135,357
Demand notes to related parties		100,000			100,000
Accrued interest payable to related parties		~~598~~920,~~727~~457			381,715
Other accrued liabilities		4172,~~544~~208			95,913
Total current liabilities		1214,~~739~~947,~~597~~403			8,327,696
Long-term obligations, less current maturities		31,~~533~~711			32,281
Total liabilities		1214,~~771~~979,~~130~~114			8,359,977
COMMITMENTS AND CONTINGENCIES
Stockholders’ Equity (Deficit):
Preferred Series D stock, $.001 par value, 500,000,000 shares authorized, 177,002,763 shares issued and outstanding.		177,003			177,003
Common stock, $.001 par value,1,000,000,000 shares authorized, 32,014,723 issued and outstanding		32,015			32,015
Additional paid-in capital		23,~~813~~856,~~716~~904			23,201,490
Deficit accumulated during the development stage		(3134,~~988~~054,~~256~~260	)		(26,023,048	)
Total stockholders’ equity (deficit)		(79,~~965~~988,~~522~~338	)		(2,612,540	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	4,~~805~~990,~~608~~776		$	5,747,437

(See accompanying notes to consolidated, unaudited financial statements)

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended December 31,						Six Months Ended December 31,						Cumulative From Inception (March 15, 1995) Through December 31,
	Three Months Ended March 31,						Nine Months Ended March 31,						Cumulative From Inception (March 15, 1995) Through March 31,
	2009			2008			2009			2008			2009
	2010			2009			2010			2009			2010
Consulting Revenue	$	---		$	---		$	---		$	---		$	91,014
Other Income:
Related party interest income		---			---			---			---			162,761
Other interest income		~~498~~457			~~289~~347			~~905~~1,362			~~719~~1,066			31,~~398~~855
Settlement income		---			---			---			---			463,179
Other		---			---			---			---			550
Total revenue and other income		~~498~~457			~~289~~347			~~905~~1,362			~~719~~1,066			~~748~~749,~~902~~359
Costs and Expenses:
Cost of consulting revenue		---			---			---			---			93,648
Manufacturing operations		~~525~~546,~~830~~305			~~382~~692,~~247~~617			1,~~080~~626,~~083~~388			1,~~136~~829,~~753~~370			34,~~972~~519,~~814~~119
General and administrative		~~485~~501,~~234~~382			~~493~~406,~~468~~429			~~973~~1,~~567~~474,949			~~969~~1,~~877~~376,306			910,~~874~~375,~~430~~812
Marketing		~~364~~310,~~472~~817			~~148~~122,~~675~~551			~~724~~1,~~562~~035,379			~~437~~560,~~934~~485			2,~~389~~700,~~485~~302
Research and development		~~299~~276,~~896~~832			97200,~~418~~249			~~588~~865,~~651~~483			~~167~~367,~~695~~944			9,~~317~~594,~~497~~329
Impairment of intangible asset		---			---			---			---			451,492
Interest expense – related parties		~~290~~321,~~417~~730			97128,~~792~~009			~~533~~855,~~464~~194			~~147~~275,~~203~~212			45,~~998~~319,~~058~~788
Total costs and expenses		1,~~965~~957,~~849~~066			1,~~219~~549,~~600~~855			35,~~900~~857,~~327~~393			24,~~859~~409,~~462~~317			3133,~~097~~054,~~424~~490
Operating Loss	$	(1,~~965~~956,~~351~~609	)	$	(1,~~219~~549,~~311~~508	)	$	(35,~~899~~856,~~422~~031	)	$	(24,~~858~~408,~~743~~251	)	$	(3032,~~348~~305,~~522~~131	)
Other Income and Expenses:
Change in derivative conversion feature		---			3832,~~148,638~~433			---			3,~~148~~981,~~638~~071			4,917,976
Interest expense - derivative conversion feature		---			~~(1,516,736~~---	)		---			(1,516,736	)		(1,516,736	)
Amortization of debt discount		(~~668~~109,~~521~~395	)		(~~508~~1,~~383~~093,662	)		(2,~~065~~175,~~786~~181	)		(~~508~~1,~~383~~602,045	)		(5,~~017~~126,~~587~~982	)
Total other income and expenses		(~~668~~109,~~521~~395	)		1(261,~~123,519~~229	)		(2,~~065~~175,~~786~~181	)		1862,~~123,519~~290			(1,~~616~~725,~~347~~742	)
Loss Before Discontinued Operations and Extraordinary Gain	$	(2,~~633~~066,~~872~~004	)	$	(951,~~792~~810,737	)	$	(58,~~965~~031,~~208~~212	)	$	(13,~~735~~545,~~224~~961	)	$	(3134,~~964~~030,~~869~~873	)
Loss from discontinued operations		---			---			---			---			(202,278	)
Gain on disposal of discontinued operations		---			---			---			---			108,652
Loss Before Extraordinary Gain	$	(2,~~633~~066,~~872~~004	)	$	(951,~~792~~810,737	)	$	(58,~~965~~031,~~208~~212	)	$	(13,~~735~~545,~~224~~961	)	$	(3234,~~058~~124,~~495~~499	)
Extraordinary Gain Due to Extinguishment of Debt		---			---			---			---			328,785
Net Loss	$	(2,~~633~~066,~~872~~004	)	$	(951,~~792~~810,737	)	$	(58,~~965~~031,~~208~~212	)	$	(13,~~735~~545,~~224~~961	)	$	(3133,~~729~~795,~~710~~714	)
accrued preferred series e dividend		---			(122,~~612~~102	)		---			(2527,~~224~~326	)		(258,546	)
Net loss applicable to common shareholders	$	(2,~~633~~066,~~872~~004	)	$	(~~108~~1,~~404~~812,839	)	$	(58,~~965~~031,~~208~~212	)	$	(13,~~760~~573,~~448~~287	)	$	(3134,~~988~~054,~~256~~260	)
net loss per common share (basic and dilutive):	$	(.0806	)	$	(.0007	)	$	(.1925	)	$	(.0714	)
weighted average number of common shares outstanding		32,014,723			26,198,177			32,014,723			26,198,177

(See accompanying notes to consolidated, unaudited financial statements)

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended December 31,						Cumulative From Inception (March 15, 1995) Through December 31,
	Nine Months Ended March 31,						Cumulative From Inception (March 15, 1995) Through March 31,
	2009			2008			2009
	2010			2009			2010
cash flows from (to) operating activities:
Net (Loss)	$	(58,~~965~~031,~~208~~212	)	$	(13,~~735~~545,~~224~~961	)	$	(3133,~~729~~795,~~710~~714	)
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
Reserve for inventory obsolescence		31(11,~~211~~032	)		~~---~~133,846			~~254~~212,~~287~~044
Impairment of intangible asset		---			---			451,492
Impairment of assets		~~196~~246,~~840~~828			---			~~952~~1,~~170~~002,158
Depreciation and amortization		~~343~~516,~~587~~147			~~322~~490,~~679~~999			1,~~414~~587,~~754~~314
Amortization of deferred merger costs		---			---			75,000
Stock and stock option compensation expense		86129,~~375~~563			94137,~~628~~816			~~716~~759,~~521~~709
Interest expense related to debt discount		2,~~065~~175,~~786~~182			~~508~~1,~~383~~602,045			67,~~911~~020,~~160~~555
Interest expense related to derivative conversion feature on debt		---			1,516,736			1,516,736
Change in derivative conversion feature		---			(3,~~148~~981,~~638~~071	)		(4,917,976	)
Loss on disposal of property and equipment		---			---			8,765
(Increase) decrease in:
Inventory		(~~493~~558,~~731~~308	)		(1,~~003~~701,~~217~~077	)		(34,~~996~~060,~~144~~721	)
Vendor deposits		(3424,~~398~~571	)		1433,~~229~~400			(6454,~~173~~346	)
Other current assets		(83,~~513~~901	)		~~230~~(58,484	)		(~~118~~105,~~133~~719	)
(Decrease) increase in:
Accounts payable		(~~140~~109,~~677~~661	)		(~~207~~120,~~052~~074	)		~~436~~467,~~334~~351
Interest payable to shareholders		~~217~~538,~~012~~742			~~147~~275,~~201~~211			23,~~715~~036,~~081~~811
Other accrued liabilities		(5219,~~110~~716	)		~~(16,534~~236	)		(~~126~~94,~~569~~175	)
Net cash used in operating activities		(35,~~753~~144,~~826~~137	)		(35,~~506~~216,~~579~~378	)		(2324,~~367~~757,~~062~~373	)
cash flows from (to) investing activities:
Purchases of property and equipment		(~~107~~242,~~959~~555	)		(~~378~~541,~~329~~770	)		(2,~~229~~364,~~581~~177	)
Proceeds from sale of property and equipment		---			---			17,030
Long-term deposits		---			---			(33,111	)
Deferred manufacturing costs		---			(112,630	)		(525,598	)
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		(~~107~~242,~~959~~555	)		(~~490~~654,~~959~~400	)		(3,~~625~~759,~~373~~969	)
cash flows from (to) financing activities:
Proceeds from stock sales		---			---			9,505,877
Proceeds from exercise of options		---			---			14,400
Proceeds from notes payable to shareholders		24,~~850~~565,000			34,~~100~~885,000			1719,~~496~~211,754
Proceeds from line of credit		---			---			299,505
Principal payments on leased equipment		(34,~~007~~559	)		(24,~~682~~110	)		(1820,~~535~~087	)
Net cash provided by financing activities		24,~~846~~560,~~993~~441			34,~~097~~880,~~318~~890			2729,~~298~~011,~~001~~449
Increase (decrease) in cash		(1826,~~014,792~~251	)		(~~900~~989,~~220~~888	)		~~305~~494,~~566~~107
Cash & cash equivalent at beginning of period		1,320,358			1,271,364			---
Cash & cash equivalent at end of period	$	~~305~~494,~~566~~107		$	~~371~~281,~~144~~476		$	~~305~~494,~~566~~107

(See accompanying notes to consolidated, unaudited financial statements)

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Continued)

	Six Months Ended December 31,						March 15, 1995 (Inception) Through December 31,
	Nine Months Ended March 31,						March 15, 1995 (Inception) Through March 31,
	2009			2008			2009
	2010			2009			2010
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest	$	316,452		$	---		$	343,022
Non-cash transactions:
Issuance of common stock for acquisition of Display Group, LLC and Display Optics, Ltd. and conversion of convertible debt	$	---		$	---		$	2,199,026
Conversion of notes payable 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 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	)
Conversion of convertible, redeemable promissory notes to Preferred Series D Stock	$	---		$	~~---~~660,139		$	740,000
Conversion of interest on convertible, redeemable promissory notes to Preferred Series D Stock	$	---		$	---		$	273,330
Conversion of demand notes and accrued interest to Preferred Series E stock	$	---		$	---		$	1,008,985
Conversion of convertible, redeemable Promissory notes, demand notes and accrued interest to Preferred Series F stock	$	---		$	---		$	4,549,015
Acquisition of 15,000,000 shares of Preferred Series D stock	$	---		$	---		$	75,000
Conversion of demand notes and accrued interest to senior secured revolving convertible note to related parties	$	---		$	2,694,362		$	2,694,362
Conversion feature on senior secured revolving convertible note to related parties	$	---		$	56,~~198~~137,~~873~~189		$	6,417,068
Discount on senior secured revolving convertible note to related parties	$	(525,850	)	$	(34,~~682~~620,~~137~~453	)	$	(5,460,162	)
Equipment acquired under capital lease	$	---		$	8,395		$	42,606
Issuance of Common Stock for debt	$	---		$	---		$	5,000
Issuance of shares of Preferred Series D stock for deferred compensation	$	---		$	---		$	304,500
Cancellation of unearned Preferred Series D stock	$	---		$	---		$	(297,491	)

(See accompanying notes to consolidated, unaudited financial statements)

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. – Interim Financial Statements

These unaudited consolidated interim financial statements have been prepared by Advance Display Technologies, Inc. (the “Company”) in accordance with the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) that are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and footnotes for the Company for its year ended June 30, 2009 included in the Company’s Annual Report on Form 10-K for that year. The results for the three and ~~six~~nine-month interim periods ended ~~December~~ March 31, ~~2009~~2010 are not necessarily indicative of the results to be expected for the full year ending June 30, 2010.

Going Concern

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company is in the development stage, has not yet realized significant revenues from operations and is dependent on the continuation of outside funding, which is not certain. Since inception, the Company devoted most of its efforts on raising capital and research and development efforts. More recently, the Company has begun manufacturing operations and related marketing and sales efforts. The Company has incurred losses since inception and has a working capital deficit of $911,~~258~~193,~~896~~582 and negative stockholders’ equity of $79,~~965~~988,~~522~~338 as of ~~December~~March 31, ~~2009~~2010. These issues raise substantial doubt about the Company’s ability to continue as a going concern.

The Company’s current sales and marketing plan calls for a concentrated effort to generate sales of its proprietary SkyNet™ video display screens. The Company’s SkyNet™ LED Screen is a large, flexible, high resolution, video display screen that can be assembled in varying sizes and specifications according to a customer’s individual needs. Accordingly, the Company’s manufacturing process consists of assembling portions of the screens that can, in turn, be assembled into larger, custom sized screens. During the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010, the Company continued to build screen sub-assemblies and finished product inventory in order to be able to promptly respond to orders from prospective buyers. The Company is actively pursuing sales from specific domestic and international customers. The Company has not yet sold any of its SkyNet™ LED Screens and there can be no assurance that the Company will be able to do so in the future.

On November 6, 2008, the Company entered into a Senior Secured Revolving Credit Facility (the “Credit Facility”) with DeGeorge Holdings Three LLC, a Delaware limited liability company (“Lender”), which is an affiliate of the Company’s majority shareholder and a member of its Board of Directors. On June 15, 2009, the Company and the Lender entered into the Amendment to the Credit Facility (the “Amendment”) that modified certain terms of the Credit Facility. See Note 3, Notes Payable – Related Parties.

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Because (a) the amounts that can be borrowed under the Credit Facility are nearly exhausted, (b) the Lender is not obligated to make further advances under the Credit Facility and may elect not to do so at any time, (c) even if all remaining amounts were advanced, the Company is unlikely to generate sufficient revenue from sales in time to sustain its operations after all the advances have been expended and (d) the Company has been unable to identify any alternative sources of capital, the Lender has or will have multiple grounds upon which to declare the Company in default under the Credit Facility. The Company therefore believes that there is a substantial risk that the Lender will elect to foreclose on the Credit Facility ~~will~~in the near future. Even in the absence of such a foreclosure, the Company believes that the Credit Facility may not provide sufficient ~~financial~~cash ~~resources~~ to support its operations ~~until~~after ~~June~~the end of its fiscal year on June 30, 2010. Management believes that the Company’s ~~continued~~continuing ~~existence~~viability ~~after~~as ~~such~~an ~~funding~~enterprise isin ~~discontinued~~fiscal 2011 is dependent upon its ability to: (1) ~~successfully~~secure ~~raise~~interim ~~new~~funding ~~permanent~~from ~~capital~~the Lender or from outside sources, which is highly doubtful; (2) ~~secure~~ ~~interim~~successfully ~~funding~~raise ~~from~~new ~~outside~~permanent ~~sources;~~capital and (3) achieve and maintain positive cash flow and profitable operations. ~~There~~While ~~can~~the beCompany ~~no assurance~~has recently reduced its personnel and other costs and continues to aggressively pursue sales of its products and to seek investment capital, it appears unlikely that the Company will be able to doachieve soall of these essential objectives unless the Lender extends a substantial amount of new credit to the Company, which is unlikely.

At the end of fiscal 2009, the Company completed a series of transactions (the “Recapitalization”) that restructured its debt and senior debt securities. As part of the Recapitalization, the Company converted $740,000 in principal and $193,330 in interest outstanding on its Convertible Redeemable Promissory Notes into 55,888,021 shares of Series D Preferred Stock. The Company also exchanged all of the outstanding shares of its Series E Preferred Stock and Series F Preferred Stock for 1,267,531 and 4,549,015 shares of our Common Stock, respectively. In addition, the Company converted all of its outstanding shares of Series G Preferred Stock into 90,544,000 shares of Series D Preferred Stock. As a result of the foregoing transactions, the Company eliminated the Series E, F and G Preferred Stock, leaving the Company with only two classes of stock, Common Stock and Series D Preferred Stock. The Recapitalization lowered the Company’s total debt, reduced its interest expense and eliminated accrued dividend costs.

Principles of Consolidation

On July 23, 2007, the Company formed a subsidiary called ADTI Media Inc. (the “Subsidiary”), purchased 100 shares of the Subsidiary’s common stock for $100 and is the sole shareholder of the Subsidiary. The consolidated financial statements include the accounts of the Company and the Subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Significant Accounting Policies

For a description of the Company’s significant accounting policies, refer to the footnotes to the audited financial statements for the Company for its year ended June 30, 2009, included in the Company’s Annual Report on Form 10-K for that year.

Use of Estimates

The preparation of the Company’s financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

Component Inventory

Component Inventory consists of parts and materials stated at the lower of cost or market on a first-in, first-out basis. Parts that may be used in research and development activities are expensed as used.

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

~~Work-in-Progress Inventory~~Use of Estimates

~~Work-~~The preparation of the Company’s financial statements in~~-progress~~ ~~inventory~~conformity ~~consists~~with ~~of raw~~generally ~~materials,~~accepted ~~labor~~accounting ~~and~~principles ~~overhead~~requires ~~used~~the Company’s management to ~~build~~make ~~subassemblies~~estimates and ~~finished product~~assumptions ~~assemblies~~that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates.

Component Inventory

Work-in-Progress and Completed Assemblies Inventory

Work-in-progress inventory consists of raw materials, labor and overhead used to build subassemblies and finished product assemblies. Completed assemblies inventory consists of subassemblies including materials, labor and overhead that are ready to be used to build finished screen systems.

Finished Goods Inventory

Finished goods inventory consists of completed screen systems for sale.

Deferred Manufacturing Costs

Costs associated with production engineering, process development and facility preparation have been capitalized as deferred manufacturing costs and are being amortized over the estimated life of this generation of the LED Screens, currently estimated to be three years, of which approximately 1815 months remain. The Company reported deferred manufacturing costs of $~~256~~212,~~270~~ 338 at ~~December~~March 31, ~~2009~~2010, reflecting total capitalized costs of $525,598 less accumulated amortization of $~~269~~313,~~328~~260. Amortization expense for the ~~three~~ three-month periods ended ~~December~~March 31, ~~2009~~2010 and ~~2008~~2009 was $43,932. Amortization expense for the ~~six~~nine-month periods ended ~~December~~March 31, ~~2009~~2010 and ~~2008~~ 2009 was $87131,~~864~~796 for each period.

Impact of Recently Issued Accounting Pronouncements

~~On December~~The ~~15,~~Company ~~2009,~~has ~~the~~adopted ~~FASB~~all recently issued ~~Accounting~~accounting ~~Standards Update (“ASU”) No~~pronouncements. ~~2010-06 Fair Value Measurements and Disclosures Topic 820 “Improving Disclosures about Fair Value Measurements”.~~ ~~This~~The ~~ASU requires~~adoption ~~some~~of ~~new~~the ~~disclosures~~accounting ~~and~~pronouncements, ~~clarifies~~including ~~some~~those ~~existing~~not ~~disclosure requirements~~yet ~~about~~effective, ~~fair~~is ~~value~~not ~~measurement~~anticipated ~~as set forth in Codification Subtopic 820-10. The FASB’s objective is~~ to ~~improve~~have ~~these~~a ~~disclosures~~material ~~and,~~effect ~~thus,~~on ~~increase~~ the ~~transparency in~~ financial ~~reporting. The~~position ~~adoption~~or results of ~~this~~operations ~~ASU will~~of ~~not have a material impact on~~ the Company~~’s consolidated financial statements~~.

In October 2009, the FASB issued an ASU regarding accounting for own-share lending arrangements in contemplation of convertible debt issuance or other financing. This ASU requires that at the date of issuance of the shares in a share-lending arrangement entered into in contemplation of a convertible debt offering or other financing, the shares issued shall be measured at fair value and be recognized as an issuance cost, with an offset to additional paid-in capital. Further, loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs, at which time the loaned shares would be included in the basic and diluted earnings-per-share calculation. This ASU is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years for arrangements outstanding as of the beginning of those fiscal years. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”) codified as FASB ASC Topic 860. SFAS 166 improves the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement, if any, in transferred financial assets. SFAS 166 is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The Company is evaluating the impact the adoption of SFAS 166 will have on its financial statements.

On September 15, 2009, the Company adopted Accounting Standards Update (“ASU”) No. 2009-01, “Topic 105 - Generally Accepted Accounting Principles - amendments based on Statement of Financial Accounting Standards No. 168 , “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles” (“ASU No. 2009-01”). ASU No. 2009-01 re-defines authoritative US GAAP for nongovernmental entities to be only comprised of the FASB Accounting Standards Codification™ (“Codification”) and, for SEC registrants, guidance issued by the SEC. The Codification is a reorganization and compilation of all then-existing authoritative US GAAP for nongovernmental entities, except for guidance issued by the SEC. The Codification is amended to effect non-SEC changes to authoritative US GAAP. Adoption of ASU No. 2009-01 only changed the referencing convention of US GAAP in Notes to the Consolidated Financial Statements.

Note 2. Impairment of Assets

During fiscal 2009 the Company installed its first completed screen in Denver near the Colorado Convention Center on August 11, 2008 for marketing purposes. Due to nonconforming and defective parts provided by one of the Company’s key suppliers, the Company removed the screen and returned it to the manufacturing facility for analysis and repair. Because of the extent of the defective components, it was considered uneconomical to repair the screen for sale for outdoor use. Following reconditioning of the screen, management determined that the screen could be used for marketing demonstrations and for product integration testing. Accordingly, the Company reported a net impairment to inventory totaling $568,349 and marketing equipment of $277,888. The sign was being depreciated over its estimated useful life of three years. Because the repaired screen continued to experience some outages due to the non-conforming parts that could not be replaced, the Company estimated that, as of September 2009, the market value of the screen had decreased to approximately $75,000. Accumulated amortization on the sign totaled $115,787 at that time and, accordingly, the Company recorded an additional impairment to the screen of $87,101. The remaining value of the screen is being amortized over the screen’s remaining expected useful life at $3,571 per month, unless sold sooner. The impairments to inventory and the depreciation recorded by the Company do not reflect the consequential damages and other losses suffered by the Company due to the nonconforming and defective parts provided by the supplier.

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

In March 2010, the Company completed additional rework on this screen, including increasing its width by approximately five feet. The Company capitalized an additional $74,488 in costs for the expansion and enhancements made to the screen. The Company then entered into an agreement with The Music Box LLC to install this screen inside the newly renovated Music Box Theatre on Hollywood Boulevard, in Los Angeles, California. The Music Box is using the screen to enhance performances at the theatre using video content or background lighting. While the Company received no payment for the theatre’s use of the screen or its installation, the Company has the right to demonstrate this screen to potential new customers in a working customer installation environment. In the future, the Company will share in revenue generated through advertising on this screen, if any.

Note 3. – Notes Payable to Related Parties

During fiscal 2009, the Company entered into a Senior Secured Revolving Credit Facility (the “Credit Agreement”) with DeGeorge Holdings Three LLC, a Delaware limited liability company (“Lender”), an affiliate of its majority shareholder and a member of its Board of Directors, Lawrence F. DeGeorge. The November 6, 2008, Credit Agreement, as amended June 15, 2009 (the “Amendment”), established a revolving line of credit (the “Credit Facility”) not to exceed an aggregate amount of $15,000,000 that was secured by all of the Company’s assets. The Company issued a Convertible Revolving Promissory Note to the Lender dated June 15, 2009 (the “Convertible Note”) for any amounts drawn on the revolving line of credit, which provides for interest at ten percent per annum, and is due and payable December 31, 2010. The principal amount of the Convertible Note is convertible into shares of the Company’s Series D Preferred stock from $0.084 to $0.11 per share. The Company also issued a warrant to the Lender for the purchase of 810,564 shares of Series D Convertible Preferred Stock at $0.084 per share which expires on June 15, 2013. The Company borrowed an additional $24,~~850~~565,000 under the Credit Facility during the ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010. As of ~~December~~ March 31, ~~2009~~2010, the Company had borrowed a total of $1113,~~967~~682,869 under the Credit Facility. Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 470-20 “Conversion of Debt with Conversion and Other Options” (“ASC-470-20”), if the value of the underlying shares based on the share price of the Company’s common stock on the date of borrowing is greater than the value of the underlying shares based on the conversion rate, a debt discount is recorded for the difference up to the amount borrowed. From November 6, 2008 to ~~December~~March 31, ~~2009~~2010, the Company reported total debt discount of $5,460,162 less amortization of $5,~~017~~126,~~587~~981. The Company reported amortization expense on debt discount of $~~668~~109,~~521~~395 and $2,~~065~~175,~~786~~181 for the three and ~~six~~nine months ended ~~December~~ March 31, ~~2009~~2010 and net debt discount of $~~442~~333,~~575~~181 at ~~December~~March 31, ~~2009~~2010.

Note 4. – Loss Per Share

Loss per share is presented in accordance with the provisions of SFAS No. 128, Earnings Per Share (“EPS”) and Accounting Standards Codification Subtopic 260-10-55-2, Earnings Per Share-Computing a Weighted-Average. SFAS No. 128 and ASC 260-10-55-2 provide for the calculation of basic and diluted earnings or loss per share. Basic EPS is calculated by dividing the income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Such amounts include shares potentially issuable pursuant to the Revolving, Convertible, Redeemable Promissory Notes and related interest, borrowings under the Credit Facility, stock options, warrants and the convertible preferred stock. Basic and diluted EPS were the same for the quarters and six months ended December 31, 2009 and 2008 because the Company had losses from operations and, therefore, the effect of all potential common stock representing shares underlying convertible notes including interest, the outstanding balance under the Credit Facility, preferred stock, options and warrants in 2009 and 2008 was anti-dilutive. Diluted EPS does not include the following because they would have been anti-dilutive.

Index

ADVANCE DISPLAY TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Quarter Ended December 31,	Preferred Series D stock		Preferred Series G stock (1)		Convertible, redeemable promissory notes		Interest on convertible redeemable promissory notes		Outstanding balance under the Credit Facility		Warrants		Vested Stock Options
2009		177,002,763		-0-		-0-		-0-		123,074,913		810,564		4,059,375
2008		30,570,742		90,544,000		44,311,377		11,392,014		-0-		-0-		2,717,209

Note 4. – Loss per Share

Loss per share is presented in accordance with the provisions of Accounting Standards Codification Subtopic 260-10-55-2, Earnings Per Share-Computing a Weighted-Average. ASC 260-10-55-2 provides for the calculation of basic and diluted earnings or loss per share. Basic EPS is calculated by dividing the income or loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Such amounts include shares potentially issuable pursuant to the Revolving, Convertible, Redeemable Promissory Notes and related interest, borrowings under the Credit Facility, stock options, warrants and the convertible preferred stock. Basic and diluted EPS were the same for the quarters and nine months ended March 31, 2010 and 2009 because the Company had losses from operations and, therefore, the effect of all potential common stock representing shares underlying convertible notes including interest, the outstanding balance under the Credit Facility, preferred stock, options and warrants in 2010 and 2009 was anti-dilutive. Diluted EPS does not include the following because they would have been anti-dilutive.

Quarter Ended March 31,	Preferred Series D stock	Preferred Series G stock (1)	Convertible, redeemable promissory notes	Interest on convertible redeemable promissory notes	Outstanding balance under the Credit Facility	Warrants	Vested Stock Options

2010	177,002,763	-0-	-0-	-0-	143,491,580	810,564	4,478,125

2009	70,100,000	90,544,000	4,782,119	11,576,644	52,539,656	-0-	2,803,125

(1)

36,364,000 shares of the Preferred Series G stock outstanding were not convertible until the shareholders approved an increase in the Company’s authorized common stock.

Had all such shares in the table above been included in the calculation of diluted EPS, they would have resulted in weighted-average common shares of ~~327~~331,~~275~~166,~~393~~999 and ~~315~~ 320,~~540~~673,~~957~~598 for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010 and ~~224~~ 251,~~012~~587,~~487~~605 and ~~213~~226,~~723~~160,~~289~~473 for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2008~~ 2009, respectively. Not including the 36,364,000 shares of Preferred Series G stock listed in (1) in the calculation of diluted EPS would result in weighted-average common shares of ~~187~~215,~~648~~223,~~487~~605 and ~~177~~189,~~359~~796,~~289~~473 for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2008~~2009, respectively.

Note 5. – Subsequent Events

~~The Company~~On ~~has~~April ~~evaluated events and transactions that occurred between January 1~~30, ~~2010~~ ~~and February 16,~~ 2010, ~~which is~~ the ~~date the financial statements were issued for possible disclosure or recognition in the financial statements. The~~ Company ~~has~~made ~~determined~~an ~~that~~additional ~~the~~draw ~~following~~on ~~events and transactions required disclosure in~~ the ~~footnotes~~Credit toFacility ~~the~~of ~~financial statements~~$300,000.

On January 15, 2010 the Company made an additional draw on the Credit Facility of $950,000.

Index

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Going Concern

The Report of the Company’s Independent Registered Public Accounting firm on the Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009, includes a qualification regarding the Company’s ability to continue as a going concern because the Company is in the development stage, has not yet commenced significant operations from its business, has not yet realized significant revenues from operations and is dependent on the continuation of outside funding which is not certain. ~~Since inception~~Moreover, the Company ~~devoted~~ ~~most~~believes ofthat ~~its efforts~~there ~~toward~~is ~~raising~~a ~~capital~~substantial ~~and~~risk that its ~~research~~principal ~~and~~lender, ~~development~~which ~~efforts~~holds ~~although~~ a security interest in ~~recent~~all ~~years~~of its assets, itwill ~~has~~elect ~~focused~~to foreclose on ~~developing,~~those ~~manufacturing~~assets ~~and~~in ~~marketing~~the ~~its proprietary~~near ~~SkyNet™~~future. See ~~video~~“Credit ~~display~~Facility” ~~screens~~below.

Credit Facility

~~Recapitalization~~Because (a) the amounts that can be borrowed under the Credit Facility are nearly exhausted, (b) the Lender is not obligated to make further advances under the Credit Facility and may elect not to do so at any time, (c) even if all remaining amounts were advanced, the Company is unlikely to generate sufficient revenue from sales in time to sustain its operations after all the advances have been expended and (d) the Company has been unable to identify any alternative sources of capital, the Lender has or will have multiple grounds upon which to declare the Company in default under the Credit Facility. The Company therefore believes that there is a substantial risk that the Lender will elect to foreclose on the Credit Facility in the near future. Even in the absence of such a foreclosure, the Company believes that the Credit Facility may not provide sufficient cash to support its operations after the end of its fiscal year on June 30, 2010. Management believes that the Company’s continuing viability as an enterprise in fiscal 2011 is dependent upon its ability to: (1) secure interim funding from the Lender or from outside sources, which is highly doubtful; (2) successfully raise new permanent capital and (3) achieve and maintain positive cash flow and profitable operations. While the Company has recently reduced its personnel and other costs and continues to aggressively pursue sales of its products and to seek investment capital, it appears unlikely that the Company will be able to achieve all of these essential objectives unless the Lender extends a substantial amount of new credit to the Company, which is unlikely.

At the end of fiscal 2009, the Company completed a series of transactions (the “Recapitalization”) that restructured its debt and senior debt securities. As part of the Recapitalization, the Company converted $740,000 in principal and $193,330 in interest outstanding on its Convertible Redeemable Promissory Notes into 55,888,021 shares of Series D Preferred Stock. The Company also exchanged all of the outstanding shares of its Series E Preferred Stock and Series F Preferred Stock for 1,267,531 and 4,549,015 shares of our Common Stock, respectively. In addition, the Company converted all of its outstanding shares of Series G Preferred Stock into 90,544,000 shares of Series D Preferred Stock. As a result of the foregoing transactions, the Company eliminated the Series E, F and G Preferred Stock, leaving only two classes of stock, Common Stock and Series D Preferred Stock. The Recapitalization also lowered the Company’s total debt, reduced its interest expense and eliminated accrued dividend costs.

Index

Accordingly, the Company believes that the Lender may seek to foreclose upon the Credit Facility in the near future and take title to all or substantially all of the Company’s assets. In such an event, management intends to take all reasonable steps to maximize the value retained by the Company and its shareholders notwithstanding any such foreclosure, such as negotiating for a royalty or other interest in the ongoing business or revenues generated by any new entity that uses some or all of the foreclosed assets. There is no guarantee, however, that management’s efforts to preserve value for the Company’s shareholders will be successful. Moreover, in light of the substantial amount of preferred stock outstanding and the liquidation preference of that class of stock, it is in any event unlikely that holders of the Company’s common stock will ever realize a return on their investment.

Recapitalization

At the end of fiscal 2009, the Company completed a series of transactions (the “Recapitalization”) that restructured its debt and senior debt securities. As part of the Recapitalization, the Company converted $740,000 in principal and $193,330 in interest outstanding on its Convertible Redeemable Promissory Notes into 55,888,021 shares of Series D Preferred Stock. The Company also exchanged all of the outstanding shares of its Series E Preferred Stock and Series F Preferred Stock for 1,267,531 and 4,549,015 shares of our Common Stock, respectively. In addition, the Company converted all of its outstanding shares of Series G Preferred Stock into 90,544,000 shares of Series D Preferred Stock. As a result of the foregoing transactions, the Company eliminated the Series E, F and G Preferred Stock, leaving only two classes of stock, Common Stock and Series D Preferred Stock. The Recapitalization also lowered the Company’s total debt, reduced its interest expense and eliminated accrued dividend costs.

Denver SkyNet™ Video Screen Installation

The Company installed a SkyNet™ screen at the Colorado Convention Center in Denver on August 11, 2008. While installed, the screen suffered a series of performance failures resulting from noncompliant and defective parts provided by one of the Company’s key suppliers. It was subsequently determined that, due to the extent of the defective components, the screen could not be repaired in a manner that would permit it to be offered for sale for outdoor use. The Company determined that the sign would be used for marketing demonstrations and for ongoing product integration testing purposes and ultimately may be sold for an indoor application at a significantly reduced price due to the impairment.

The Company continues to be engaged in negotiations with the supplier and its insurance company concerning the losses suffered by the Company because of the supplier’s defective and nonconforming parts. The Company is uncertain whether a mutually satisfactory resolution of the dispute with the supplier can be achieved without litigation. The problem caused by the supplier’s defective and noncompliant parts temporarily suspended production at the Temecula facility but screen production was resumed in December of 2008.

~~Activities~~In ~~This Period~~March 2010, the Company completed additional rework on this screen, including increasing its width by approximately five feet. The Company then entered into an agreement with The Music Box LLC to install this screen inside the newly renovated Music Box Theatre on Hollywood Boulevard, in Los Angeles, California. The Music Box is using the screen to enhance performances at the theatre using video content or background lighting. While the Company received no payment for the theatre’s use of the screen or its installation, the Company has the right to demonstrate this screen to potential new customers in a working customer installation environment. In the future, the Company will share in revenue generated through advertising on this screen, if any.

During the quarter and six months ended December 31, 2009, the Company’s business activities were principally focused on (1) building subassemblies and finished product to position the company to respond to anticipated fulfillment timelines for current customer prospects; (2) improvement of its manufacturing and quality management operations for SkyNet™ LED screens; (3) expanding and training its production, engineering, sales, marketing and administrative workforce; (4) performing sales and marketing analysis and sales operations to support and bring to market SkyNet™ LED Screens, and (5) continuing its proprietary product development activities.

On August 21, 2009, the Company’s engineering and production facility in Temecula, California was successfully certified for ISO 9001 compliance. As a result of achieving ISO 9001 certification, the Company expects to be permitted to affix a “CE Mark” to all of its SkyNet™ products in early 2010, thus declaring quality and conformity to the necessary standards and directives. The CE mark is internationally recognized and accepted as the standard of a quality manufactured product. CE marking is also widely considered to be a prerequisite to selling manufactured products in the European Union.

On December 1, 2009, Robert Ridgeway, was appointed Vice President of Global Business Development and Planning of the Company. From July 2008 until his appointment, Mr. Ridgeway had been principally engaged as an independent contractor to the Company, providing consulting services in the areas of finance, corporate development and administration.

During the quarter ended December 31, 2009, the Company continued its international sales and marketing efforts by exhibiting its SkyNet™ LED screen products at Trade Expos in Abu Dhabi, UAE and in Buenos Aires, Argentina. While no immediate sales were realized at either of these expositions, successful demonstration of the SkyNet™ product to interested commercial parties in and around these markets was accomplished.

The Company’s inability to date to make any sales of its LED screens suggests that it may not be successful in generating enough revenue from such sales to cover its operating expenses so that it will need to raise capital in the near future to fund its operating losses. Even if the Company successfully generates a substantial amount of new sales orders for Screens, it will still face challenges in developing, internally or through outside vendors, sufficient manufacturing capacity and capital resources to fill those orders. If the Company is not successful in these endeavors, the Lender may foreclose on the Collateral, which would leave the Company without any assets or operations. While the Lender may elect to utilize the Collateral to continue some or all of the former operations of the Company after foreclosure, it is extremely unlikely that there would be any funds or property left in the Company that would be available for distribution to its shareholders upon a liquidation of the Company.

Index

~~During the~~Activities ~~same~~This periods a year ago, the Company’s business activities were principally focused on (1) raising additional capital in support of manufacturing operations of its SkyNet™ screens; (2) completing the second half of its first production model SkyNet™ screen; (3) after that screen failed because of the supplier’s defective parts, reconditioning the damaged screen for indoor marketing demonstrations and product integration testing purposes; (4) extensive analysis of the noncompliant and defective components provided by the supplier; (5) continued sales and marketing efforts; (6) resumed production of subassemblies for its SkyNet™ Screens; (7) evaluating other potential business opportunities; and (8) continuing its proprietary product development efforts.Period

~~Results~~During the quarter and nine months ended March 31, 2010, the Company’s business activities were principally focused on (1) building subassemblies and finished product to position the company to respond to anticipated fulfillment timelines for current customer prospects; (2) improvement of ~~Operations~~ its manufacturing and quality management operations for SkyNet™ LED screens; (3) expanding and training its production, engineering, sales, marketing and administrative workforce; (4) performing sales and marketing analysis and sales operations to support and bring to market SkyNet™ LED Screens, and (5) continuing its proprietary product development activities.

~~For~~On ~~the quarter~~August ~~and six months ended December 31~~21, 2009, the Company’s ~~reported~~engineering ~~a net loss of ($2,633,872)~~ and ~~($5,965,208),~~production orfacility ~~($.08)~~in ~~and ($.19) per share~~Temecula, ~~respectively, compared~~California towas ~~($95,792)~~successfully ~~and~~certified ~~($1,735,224), or ($.00) and ($.07) per share, respectively,~~ for ~~the~~ISO ~~quarter~~9001 ~~and six months ended December 31, 2008~~compliance. ~~The~~As ~~increase~~a inresult ~~net~~of ~~loss~~achieving ~~for~~ISO ~~the~~9001 ~~quarter and six months ended December 31~~certification, ~~2009~~the ~~from~~Company ~~2008~~expects isto ~~primarily~~be ~~due~~permitted to: ~~(1)~~affix ana ~~increase~~“CE inMark” ~~marketing costs of approximately $216,000 and $287,000, respectively, due~~ to ~~the~~all ~~Company’s efforts to generate sales~~ of its SkyNet™ ~~Screens;~~products ~~(2) an increase~~ in ~~research and~~early ~~development~~2010, ~~costs~~thus ofdeclaring ~~approximately~~quality ~~$202,000~~ and ~~$421,000,~~conformity ~~respectively, due~~ to ~~continued~~the ~~product~~necessary ~~development~~standards ~~efforts;~~and ~~(3)~~directives. The anCE ~~increase~~mark inis ~~interest~~internationally ~~expense~~recognized ~~of approximately $193,000~~ and ~~$386,000,~~accepted ~~respectively,~~as ~~due to~~ the ~~increased~~standard ~~debt outstanding; and (4) an increase in amortization~~ of ~~debt~~a ~~discount~~quality ~~of approximately~~manufactured ~~$160,000~~product. CE ~~and~~marking ~~$1,557,000,~~is ~~respectively,~~also ~~partially~~widely ~~offset~~considered byto be a ~~positive~~ ~~net~~prerequisite ~~change~~to inselling ~~derivative~~manufactured ~~conversion~~products ~~feature totaling approximately $1,632,000 for the 2008 period~~ in ~~connection with~~ the ~~Senior~~European ~~Secured Revolving Credit Facility~~Union.

~~The Company~~On ~~had~~December no1, ~~sales~~2009, ~~during~~Robert ~~the~~Ridgeway, ~~quarter~~was orappointed ~~six~~Vice ~~months~~President ~~ended~~of ~~December~~Global ~~31,~~Business ~~2009~~Development ~~or 2008. As~~and ofPlanning ~~the date~~ of ~~this report,~~ the Company. From ~~remains~~July in2008 ~~a development~~until ~~stage~~his appointment, ~~since~~Mr. itRidgeway ~~has~~had ~~not~~been ~~received~~principally ~~significant~~engaged ~~revenues~~as ~~from continuing~~an ~~operations. The~~independent ~~Company~~contractor ~~reported~~to ~~interest~~the ~~income~~Company, ofproviding ~~$498 and~~consulting ~~$905~~services ~~for~~in the ~~quarter~~areas ~~and~~of ~~six months ended December 31~~finance, ~~2009~~corporate ~~compared to $289~~ and ~~$719~~business ~~for~~development ~~the~~and ~~same periods in 2008~~administration.

~~Manufacturing Operations~~During ~~- The Company reported manufacturing costs of approximately $526,000 and $1,080,000 for~~ the quarter ~~and six months~~ ended ~~December~~March 31, ~~2009 compared to approximately $382~~2010,~~000~~ ~~and $1,137,000 for 2008. During~~ the ~~December 2009 quarter, the~~ Company continued toits ~~build~~domestic ~~subassemblies~~ and ~~complete~~ ~~rework~~international ~~enhancements~~sales onand ~~existing~~marketing ~~inventory~~efforts. ~~For~~International ~~the~~marketing ~~six months~~efforts ~~ended~~included ~~December~~attendance ~~31,~~at ~~2009,~~ the ~~Company~~Façade ~~completed~~Design ~~additional~~and ~~components~~Engineering ~~for one~~show ~~screen~~in ~~system~~Dubai, ~~for~~U.A.E., ~~sale~~where ~~and~~management ~~increased~~made ~~its~~presentations ~~work-in-progress for varying subassemblies~~ to ~~position~~architects concerning the ~~Company~~potential toenhancements ~~respond~~and toadvantages ~~anticipated~~of ~~fulfillment timelines~~adding ~~for~~LED ~~current~~lighting ~~customer~~and ~~prospects. Manufacturing~~signage ~~costs were allocated~~ to ~~work~~the infaçade ~~progress~~of ~~and~~large ~~finished~~building ~~goods~~structures, ~~inventory~~focusing ~~based~~ on ~~expected normal~~the ~~capacity~~capabilities ~~rates. Cost in excess~~ of the ~~allocations~~Company’s ~~to work-in-progress~~SkyNet™ Screen and ~~finished~~installation, ~~goods~~cost, ~~inventories~~power ~~are~~consumption ~~included~~and inother ~~manufacturing expense~~characteristics. In addition, ~~including~~site avisits ~~reserve~~to ~~for~~potential ~~obsolete~~customer ~~inventory~~installations ofwere ~~approximately~~conducted ~~$31,000~~in ~~for the~~both ~~2009~~Dubai ~~six-month~~and ~~period~~Abu Dhabi. InManagement ~~addition~~also toattended ~~these manufacturing activities,~~ the ~~Company~~Digital ~~also~~Signage ~~engaged~~Exposition in ~~preparations~~Las toVegas ~~install~~and ~~one~~conducted ofsite ~~its SkyNet™~~visits ~~Screens~~to ~~for~~potential ~~demonstration~~customer ~~purposes~~installation inlocations ~~Dubai, United Arab Emirates~~there.

The Company’s inability to date to make any sales of its LED screens suggests that it will not be successful in generating enough revenue from such sales to cover its operating expenses whenever further advances are no longer available under the Credit Facility. As a result, the Company needs to raise capital in the near future to fund its operating losses even if it successfully generates a substantial amount of new sales orders for Screens. In addition, the Company will still face challenges in developing, internally or through outside vendors, sufficient manufacturing capacity and capital resources to fill those orders. In light of the Company’s lack of success in these endeavors to date, the Lender may foreclose on the Collateral, which would leave the Company without any assets or operations. While the Lender may elect to utilize the Collateral to continue some or all of the former operations of the Company after foreclosure, it is extremely unlikely that there would be any funds or property left in the Company that would be available for distribution to its holders of its common stock upon a liquidation of the Company.

Index

During the ~~2008~~same periods, ~~the~~a ~~Company~~year ~~completed~~ago, the ~~second~~Company’s ~~half~~business ofactivities ~~its~~were ~~first~~principally ~~123~~focused ~~square foot~~on ~~production~~(1) ~~level~~raising ~~SkyNet™~~additional ~~Screen~~capital, ~~and~~via ~~installed~~ the ~~completed~~Credit ~~screen~~Facility, in ~~Denver~~ atsupport ~~the~~of ~~Colorado~~manufacturing ~~Convention~~and ~~Center~~marketing onoperations ~~August~~of ~~11,~~its ~~2008~~SkyNet™ ~~for~~screens; ~~marketing purposes. Due~~(2) toextensive ~~nonconforming~~testing and ~~defective~~implementation ~~parts supplied by one~~ of ~~the~~ ~~Company’s~~additional ~~key~~quality ~~suppliers,~~assurance ~~the~~procedures ~~Company~~with ~~removed~~respect ~~the screen and returned it~~ to the ~~Company’s~~components ~~manufacturing~~provided ~~facility~~by ~~in Temecula, California for analysis and repair. Because of~~ the ~~extent~~supplier of the defective components,; it(3) ~~was determined~~production ~~that~~of itassemblies ~~would~~and bea ~~uneconomical~~75 tosquare ~~repair~~meter ~~the~~complete screen system for sale; ~~for outdoor~~(4) ~~use. Following~~continued ~~reconditioning~~sales ~~of the screen, management determined that the screen could be used for marketing demonstrations~~ and ~~for product integration testing. Accordingly, the Company capitalized a total of $277,888 to~~ marketing ~~equipment. The~~efforts ~~Company recorded a net impairment to inventory~~ of ~~approximately~~its ~~$375,000~~SkyNet™ ~~for~~screen ~~the~~products; ~~six~~(5) ~~months~~evaluating ~~ended December 31, 2008, which is included in manufacturing costs. The impairment to inventory recorded by the Company to date does not reflect the consequential damages and~~ other ~~losses~~potential ~~suffered~~business byopportunities; ~~the Company as a result of the nonconforming~~ and ~~defective~~(6) ~~parts~~continuing ~~provided~~its byproprietary ~~the~~product ~~supplier~~development efforts.

~~Impaired and~~Results ~~obsolete inventory and tooling expense decreased by approximately $326,000 for the six-month period in 2009 from 2008 primarily on account~~ of the impairment to the SkyNet™ Screen recorded in the 2008 period, partially offset by inventory and tooling determined to be obsolete due to a change in product design during the 2009 period. These same costs increased slightly by approximately $2,000 for the 2009 quarter over 2008. During the quarter ended December 31, 2009, the Company continued manufacturing activities to complete partial subassemblies from the prior quarter. The relatively light inventory activities for the quarter resulted in a decrease in manufacturing and maintenance supplies in the 2009 periods from 2008. However, due to a higher allocation of overhead costs to inventory in the 2008 periods, these other manufacturing and inventory related costs increased by approximately $55,000 and $72,000 for the three and six-month periods of 2009, respectively, over 2008.Operations

~~Contract labor~~For ~~decreased~~the byquarter ~~approximately~~and nine months ended March 31, 2010, the Company reported a net loss of ($232,~~000~~066,004) and ($758,~~000~~031,212), or ($.06) and ($.25) per share, respectively, compared to ($1,810,737) and ($3,545,961), or ($.07) and ($.14) per share, respectively, for the quarter and ~~six month~~nine ~~periods~~months inended March 31, 2009. The increase in net loss for the quarter and nine months ended March 31, 2010 from ~~2008~~2009 is primarily due to: (1) an increase in general and administrative costs of approximately $95,000 and $99,000, respectively, due to ~~hiring~~additional ~~most~~support ofstaff and increased efforts for the ~~contract~~ ~~assemblers~~software asconversion ~~employees~~project; ~~during~~(2) ~~the~~an ~~2009~~increase ~~period. Salaries~~in ~~and benefits~~marketing ~~increased~~costs byof approximately $73188,000 and $~~171~~475,000, ~~for~~respectively, due to the ~~three~~Company’s ~~and six-month~~efforts ~~periods~~to generate sales of its SkyNet™ Screens; (3) an increase in ~~2009~~research ~~from~~and ~~2008~~development costs of approximately $77,000 and $498,000, respectively, due to ~~hiring~~continued ~~the~~product ~~former~~development ~~contract~~efforts; ~~assemblers as~~(4) ~~employees~~an ~~and~~increase ~~the~~in ~~hiring~~interest expense of ~~additional~~approximately ~~personnel~~$194,000 ~~for~~and ~~quality~~$580,000, ~~assurance~~respectively, ~~engineering~~ due to the increased debt outstanding; and ~~production~~(5) ~~activities. Professional~~an ~~consulting~~increase ~~fees increased~~in byamortization of debt discount of approximately $19573,000 ~~and~~for the nine-month period. These increases were partially offset by a decrease in amortization of debt discount of approximately $86984,000 for the three ~~and six~~-month periods inand ~~2009~~positive ~~from~~net ~~2008~~change ~~primarily~~in ~~due~~derivative toconversion ~~ongoing~~feature ~~product~~totaling ~~enhancement~~approximately ~~efforts~~ $832,000 and ~~review~~$2,464,000 ~~and~~for ~~design~~the of2009 ~~installation~~periods ~~specifications~~in ~~for~~connection with the ~~Dubai project~~Senior Secured Revolving Credit Facility.

~~Travel expenses~~The ~~for~~Company ~~manufacturing~~had ~~decreased~~no bysales ~~approximately~~during ~~$4,000~~the ~~and~~quarter ~~$25,000~~or ~~from the~~nine ~~2008~~months ~~periods~~ended toMarch ~~2009~~31, on2010 ~~account~~or 2009. As of ~~international~~the ~~travel~~date inof this report, the ~~2008~~Company ~~quarter to~~remains ~~meet~~in ~~with~~a ~~suppliers~~development stage, ~~including~~since ~~the~~it ~~supplier~~has ofnot ~~faulty~~received ~~components,~~significant ~~that~~revenues ~~did not~~from ~~recur~~continuing ~~in 2009~~operations. ~~Depreciation~~The ~~expense~~Company ~~increased~~reported byinterest ~~approximately~~ income of $~~4,000~~457 and $111,~~000~~362 for the ~~2009~~quarter ~~three~~ and ~~six-month~~nine ~~periods,~~months ~~respectively~~ended ~~due~~March ~~to additional~~31, ~~equipment~~2010 ~~and~~compared ~~tooling~~to ~~purchases since the year ago period. Other manufacturing expenses increased approximately~~ $~~18,000~~ 347 and $291,~~000~~066 ~~due~~for to the ~~expanded~~same ~~staff~~periods ~~and~~in ~~increased level of manufacturing overhead~~2009.

Manufacturing Operations - The Company reported manufacturing costs of approximately $546,000 and $1,626,000 for the quarter and nine months ended March 31, 2010 compared to approximately $693,000 and $1,829,000 for 2009. During the March 2010 quarter, the Company continued to complete rework enhancements on existing inventory and expand the demonstration Screen for installation at the Music Box Theatre in Los Angeles. For the nine months ended March 31, 2010, the Company completed additional components for one screen system for sale and increased its work-in-progress for varying subassemblies to position the Company to respond to anticipated fulfillment timelines for current customer prospects. Manufacturing costs were allocated to work-in-progress, completed assemblies and finished goods inventory based on expected normal capacity rates. Cost in excess of the allocations to work-in-progress, completed assemblies and finished goods inventories are included in manufacturing expense. In addition to these manufacturing activities, the Company also engaged in preparations to install one of its SkyNet™ Screens for demonstration purposes in Dubai, United Arab Emirates.

Index

~~General~~During ~~and~~the ~~Administrative Costs~~2009 -periods, ~~The~~the Company ~~reported~~completed ~~general~~the ~~and~~second ~~administrative~~half ~~(“G&A”) expenses~~ of ~~approximately~~its ~~$485,000~~first ~~and~~123 ~~$974,000~~square ~~for~~meter ~~the~~production ~~quarter~~level ~~and~~SkyNet™ ~~six~~Screen ~~months ended~~and ~~December~~installed ~~31,~~the ~~2009,~~completed ~~respectively,~~screen ~~compared~~in toDenver ~~approximately~~at ~~$493,000~~the ~~and $970,000~~Colorado ~~for~~Convention ~~the~~Center ~~corresponding~~on ~~periods~~August in11, 2008~~. Salaries~~ ~~and~~for ~~related expenses~~marketing ~~increased~~purposes. Due ~~approximately~~to ~~$64,000~~nonconforming and ~~$124,000 for~~defective ~~the~~parts ~~three~~supplied ~~and six-month~~by ~~periods ended~~one ~~December~~of ~~31,~~the ~~2009~~Company’s ~~from~~key ~~2008~~suppliers, ~~primarily~~the ~~resulting from~~Company removed the ~~appointment~~screen ofand ~~Mr.~~returned ~~Ridgeway~~it asto the Company’s ~~Vice~~manufacturing ~~President~~facility ofin ~~Business Development~~Temecula, ~~and~~California ~~Planning,~~for ~~additional~~analysis ~~accounting~~and ~~staff,~~repair. Because ~~including~~of the ~~conversion~~ extent of athe ~~contract~~defective ~~accounting~~components, ~~assistant~~it towas andetermined ~~employee,~~that ~~and~~it awould ~~reduced~~be ~~allocation~~uneconomical of to repair the ~~president’s~~screen ~~time~~for tosale ~~research~~for ~~and~~outdoor ~~development~~use. ~~Professional~~Following ~~fees decreased~~reconditioning byof ~~approximately~~the ~~$72~~screen,~~000~~ ~~and~~management ~~$124,000~~determined ~~for~~that the ~~three~~screen could be used for marketing demonstrations and ~~six-month periods ended~~for ~~December~~product 31integration testing. Accordingly, ~~2009~~ ~~from~~the ~~2008~~Company ~~primarily~~capitalized ~~due~~a total of $277,888 to: ~~(1)~~marketing equipment. The Company recorded a ~~decrease~~ innet ~~legal~~impairment ~~fees~~to ~~associated~~inventory ~~with~~of approximately $375,000 for the ~~Company’s~~nine ~~patent~~months ~~applications~~ended ~~and other~~March ~~activities~~31, ~~related~~2009, which is included in manufacturing costs. The impairment to ~~protection~~inventory ofrecorded by the Company’s ~~proprietary~~to ~~products~~date ~~and processes~~does ~~conducted~~not ~~during~~reflect the ~~2008~~consequential ~~periods;~~damages and ~~(2)~~other alosses ~~decrease~~suffered inby ~~legal~~the ~~fees related~~Company toas ~~the~~a ~~completion~~result of the ~~Credit~~nonconforming ~~Agreement~~and ~~during~~defective parts provided by the ~~2008 periods~~supplier.

~~The Company~~Certain iscomponents ~~continuing~~held ~~its~~in ~~efforts~~inventory towere ~~convert~~replaced ~~its~~with ~~existing~~alternate ~~enterprise~~parts ~~software system~~in 2009 and were not expected to be used in the future manufacture of Screens. Accordingly, the Company recorded a ~~more~~reserve ~~robust~~for ~~and~~the ~~comprehensive~~full ~~system~~value ~~with~~of ~~enhanced~~that ~~accounting, reporting,~~obsolete ~~customer~~inventory ~~relationship~~in ~~management~~the 2009 periods. During the quarter ended March 31, 2010 some of the fully reserved inventory ~~tracking~~was used for rework and ~~manufacturing~~ ~~resource~~expansion ~~planning~~of ~~capabilities~~the demonstration screen resulting in a lower reserve balance. ~~This~~In ~~effort~~addition, ~~required~~inventory ~~an increase~~and tooling determined to be obsolete due to a change in ~~G&A~~product ~~software~~design ~~license~~during ~~fees~~the 2010 periods was written down to its estimated fair market value of $0. These changes resulted in a net decrease in impaired and obsolete inventory and tooling expense of approximately $8126,000 and $23452,000 for the quarter and ~~six~~nine months ended ~~December~~March 31, ~~2009~~2010 from the ~~corresponding 2008~~same periods in the prior year. The ~~Company~~relatively ~~also~~light ~~enhanced~~inventory ~~its~~activities ~~website~~for ~~during~~ the current quarter and ~~six~~nine-month ~~months~~periods ~~ended~~resulted ~~December~~in ~~31,~~a ~~2008,~~decrease ~~resulting~~in manufacturing and maintenance supplies in the 2010 periods from 2009. However, due to a ~~decrease~~higher inallocation ~~these~~ of overhead costs ~~for~~to inventory in the ~~same~~2009 periods, inthese ~~2009~~other ofmanufacturing and inventory related costs decreased by approximately $2153,000 ~~and~~for the 2010 three-month period over 2009 but increased by approximately $2319,000~~, respectively~~ for the nine-month period of 2010 over 2009.

~~Other~~Contract ~~net G&A~~labor ~~expenses~~decreased ~~fluctuated~~by ~~slightly~~approximately $37,000 ~~resulting~~and $112,000 for the quarter and nine month periods in an2010 ~~increase~~from 2009, respectively, due to hiring most of the contract assemblers as employees during the 2010 period. Salaries and benefits increased by approximately $1384,000 and $4255,000 for the three and nine-month periods in 2010 from 2009 due to hiring the former contract assemblers as employees and the hiring of additional personnel for quality assurance, engineering and production activities. Professional consulting fees increased by approximately $8,000 and $93,000 for the three and ~~six~~nine-month periods in 2010 from ~~2008, respectively~~2009 primarily due to ongoing product enhancement efforts and review and design of installation specifications for the Dubai project.

~~Marketing~~Travel ~~Costs~~expenses ~~- Sales~~for ~~and~~manufacturing ~~marketing~~decreased ~~expenses increased~~ by approximately $~~216~~8,000 and $~~287~~34,000 ~~to approximately~~from ~~$364,000 and $725,000 for~~ the ~~quarter and six months ended December 31,~~ 2009 ~~from approximately $149,000 and $438,000 for the same~~ periods in ~~2008. During the 2008 periods, the Company employed three people~~ to ~~conduct~~2010 ~~business~~on ~~development~~account ~~activities related to sales, market analysis and project management~~ of ~~anticipated~~international ~~installations~~travel ~~from~~in the ~~sales~~2009 ofquarter SkyNet™ Screens. After the removal of the first production screen from the Colorado Convention Center installation and the resulting shutdown of the Company’s production line, the business development and project management positions were eliminated to ~~conserve~~meet ~~costs. During~~with ~~the quarter and six months ended December 31~~suppliers, ~~2009,~~including the ~~Company~~supplier ~~employed a Director~~ of ~~Middle East~~faulty ~~Operations to develop the market and pursue potential sales and a Director of Field Operations to manage installations. Combined~~components, ~~these~~that ~~changes~~did ~~resulted~~not ~~in an~~recur ~~increase~~ in ~~marketing salaries and related benefits of approximately $49,000 and $23,000 for three and six-month periods of 2009 from 2008, respectively~~2010. ~~Consulting~~Depreciation ~~fees~~expense ~~for~~increased ~~sales~~by ~~and marketing increased~~ approximately $472,000 and $8513,000 for the 2010 three and ~~six~~nine-month periods ~~of 2009 over the 2008 periods~~, ~~primarily~~respectively ~~from~~due ~~expanded~~to ~~marketing~~additional ~~efforts~~equipment and ~~installation~~ ~~design~~tooling ~~for~~purchases ~~inclusion~~since inthe ~~marketing proposals~~year ago period. ~~Marketing~~ Other ~~travel~~manufacturing expenses ~~increased~~decreased by approximately ~~$104,000~~ ~~and~~ $9615,000 for the ~~three~~2010 ~~and~~quarter ~~six-month~~from ~~periods ended December 31,~~ 2009 ~~over~~ ~~the~~and ~~same~~increased ~~periods~~approximately ~~in 2008~~$15,000 ~~respectively, due~~for ~~to increased international travel in~~ the ~~December~~2010 ~~31,~~nine-month ~~2009~~period ~~quarter~~over ~~to promote potential sales opportunities, primarily in South America and Dubai, UAE~~2009.

Product demonstration costs decreased approximately $77,000 for the six months ended December 31, 2009, from the year ago period, primarily due to costs incurred in connection with the Colorado Convention Center installation in August 2008. With respect to the video screen originally installed at that location and subsequently relocated to the Company’s Temecula facility for marketing purposes, the repaired screen continued to experience some outages due to non-conforming parts that cannot be replaced. As a result, management estimated that the market value of the screen has decreased to approximately $75,000 and, accordingly, in September 2009, recorded an additional impairment to the screen of approximately $87,000 affecting the six-month period ended December 31, 2009. Depreciation expense decreased approximately $11,000 and $10,000 for the 2009 three and six-month periods from 2008 primarily resulting from the impairment to the screen.

Index

~~Trade show~~General and ~~other~~Administrative ~~marketing~~Costs ~~event~~- ~~fees~~The ~~increased~~Company byreported general and administrative (“G&A”) expenses of approximately $10501,000 and $231,475,000 for the ~~December~~quarter and nine months ended March 31, 2010, respectively, compared to approximately $406,000 and $1,376,000 for the corresponding periods in 2009. Salaries and related expenses increased approximately $81,000 and $205,000 for the three and ~~six~~nine-month periods ~~from~~ended ~~the corresponding~~March ~~periods~~31, in2010 ~~2008~~from 2009, primarily ~~due~~resulting tofrom the appointment of Mr. Ridgeway as the Company’s ~~exhibition~~Vice atPresident of Business Development and Planning, additional accounting staff, including the conversion of a ~~Boston~~ ~~trade~~contract ~~show~~accounting inassistant ~~July~~to ~~2009~~an employee, and a ~~trade~~reduced ~~show~~allocation inof ~~Abu~~the ~~Dhabi,~~president’s ~~UAE~~time into ~~October 2009~~research and development. InProfessional ~~connection~~fees ~~with~~increased by approximately $3,000 for the ~~Abu~~2010 ~~Dhabi~~quarter ~~trade~~over ~~show~~2009 and decreased approximately $121,000 for the ~~shipment~~nine-month of period ended March 31, 2010 from 2009. The decrease for the ~~SkyNet™~~nine-month ~~Screen~~period is primarily due to: ~~Dubai~~(1) ~~for~~a andecrease ~~upcoming~~in ~~demonstration~~legal ~~installation,~~fees associated with the Company’s ~~reported~~patent anapplications ~~increase~~and inother ~~freight~~activities ~~and~~related ~~duty~~to ~~taxes~~protection of ~~approximately~~the ~~$11,000~~ Company’s proprietary products and ~~$54,000~~processes ~~for~~conducted during the 2009 ~~three~~periods; and ~~six-month~~(2) ~~periods~~a ~~over~~decrease ~~2008, respectively~~in legal fees related to the completion of the Credit Agreement and shareholder meeting preparations during the 2009 periods.

~~Other sales~~G&A ~~and~~travel ~~marketing~~ expenses ~~increased~~decreased ~~slightly~~approximately by$14,000 ~~approximately~~and $613,000 for the ~~2009~~ ~~three~~quarter and ~~six-month~~nine months ended March 31, 2010 from the same periods ~~over~~in ~~2008~~2009 primarily due to additional international travel in the 2009 periods.

~~Research~~The ~~and~~Company ~~Development Costs~~is -continuing ~~Research~~its ~~and~~efforts ~~development~~to ~~(“R&D”)~~convert ~~fees~~its ~~increased~~existing ~~by approximately~~enterprise ~~$202,000~~software ~~and~~system ~~$421,000~~to ~~for~~a ~~the~~more ~~2009~~robust ~~three~~ and ~~six-month~~comprehensive ~~periods over~~system ~~the~~with ~~same~~enhanced ~~periods~~accounting, inreporting, ~~2008~~customer asrelationship ~~the~~management, ~~Company~~inventory ~~continued~~tracking ~~development~~and ~~for~~manufacturing ~~new generations~~resource ofplanning ~~the SkyNet™ Screen~~capabilities. ~~Due~~This toeffort ~~changes~~required inan ~~design~~increase ~~with~~in ~~some of~~G&A ~~these~~software ~~efforts,~~license ~~the~~and ~~Company~~service ~~recorded~~fees ~~an impairment~~ of approximately $3010,000 and $9233,000 ~~with~~for ~~respect~~the toquarter ~~certain~~and ~~tooling~~nine ~~that~~months ~~had~~ended ~~been~~March ~~purchased~~31, ~~for~~2010 ~~prior iterations~~from ~~for~~ the ~~three~~corresponding ~~and~~2009 ~~six-month~~ periods. The ~~ended~~Company ~~December~~also ~~31, 2009. Depreciation~~enhanced ~~expense~~its ~~increased~~website byduring ~~approximately~~the ~~$9,000~~quarter and ~~$17,000~~ ~~for~~nine ~~the~~months ended March 31, 2009, ~~three~~resulting ~~and~~in ~~six-month~~a ~~periods~~decrease ~~over~~in these costs for the ~~2008~~same periods ~~due~~in ~~to purchases~~2010 of ~~R&D~~approximately ~~equipment~~$7,000 and $30,000, respectively.

~~Salaries and~~Other ~~related~~net ~~benefits~~G&A ~~increased~~expenses byfluctuations ~~approximately~~resulted ~~$108,000~~in ~~and~~an ~~$200,000~~increase ~~during the three and six-month periods compared to the same periods a year ago, primarily due to the addition~~ of the Company’s new Vice President of Research and Development and Chief Technology Officer in July 2009, along with more internal engineering efforts being directed toward research and development. Likewise, R&D consulting fees increased by approximately $6021,000 and $7124,000 for the ~~2009~~ 2010 three and ~~six~~nine-month periods over ~~2008~~2009, respectively~~, due to an increase in ongoing proprietary product development efforts~~. Travel expenses for research and development also increased approximately $2,000 and $24,000 for the 2009 periods over 2008 primarily due to international travel to LED and other suppliers for future development.

~~Other research~~Marketing Costs - Sales and ~~development~~marketing ~~costs~~expenses increased by approximately $188,000 and $475,000 to approximately $311,000 and $1,035,000 for the ~~2009~~ quarter ~~decreased~~and ~~from~~nine ~~2008~~months by ended March 31, 2010 from approximately $7123,000 and $560,000 for the same periods in 2009. OnDuring the ~~other~~2009 ~~hand~~periods, ~~these~~the Company employed three people to conduct business development activities related to sales, market analysis and project management of anticipated installations from the sales of SkyNet™ Screens. After the removal of the first production screen from the Colorado Convention Center installation and the resulting shutdown of the Company’s production line, the business development and project management positions were eliminated to conserve costs. During the quarter and nine months ended March 31, 2010, the Company employed a Director of Middle East Operations to develop the market and pursue potential sales and a Director of Field Operations to manage installations. Combined, these changes resulted in an increase in marketing salaries and related benefits of approximately $70,000 and $92,000 for three and nine-month periods of 2010 from 2009, respectively. Consulting fees for sales and marketing increased approximately $82,000 and $167,000 for the ~~six~~three and nine-month ~~period~~periods of 2010 over the 2009 periods, primarily from expanded marketing efforts and installation design for inclusion in marketing proposals. Marketing travel expenses increased by approximately $1740,000 ~~versus~~and a$136,000 ~~year~~for ~~ago~~the ~~on account~~three ofand nine-month periods ended March 31, 2010 over the ~~purchase~~same ofperiods ~~materials~~in 2009, ~~prototype~~respectively, due ~~development~~to increased international travel in the 2010 periods to promote potential sales opportunities, primarily in South America and ~~testing~~ Dubai, UAE.

Other Expense - Interest expense increased by approximately $193,000 and $386,000 for the quarter and six months ended December 31, 2009 over 2008, respectively, due to higher debt levels . During fiscal 2009, the Company entered into a Senior Secured Revolving Credit Agreement (the “Credit Agreement”) with DeGeorge Holdings Three LLC, a Delaware limited liability company (“Lender”), an affiliate of its majority shareholder and a member of its Board of Directors, Lawrence F. DeGeorge. The November 6, 2008, Credit Agreement, as amended June 15, 2009 (the “Amendment”), established a revolving line of credit (the “Credit Facility”) not to exceed an aggregate amount of Fifteen Million Dollars, $15,000,000 secured by all of the Company’s assets. Under ASC-470-20, if the value of the underlying shares based on the share price of the Company’s common stock on the date of borrowing is greater than the value of the underlying shares based on the conversion rate, a debt discount is recorded for the difference up to the amount borrowed. The Company has recorded total debt discount under the Convertible Note of approximately $5,460,000 through December 31, 2009. As of June 30, 2009, the Company had recorded amortization of the debt discount totaling approximately $2,951,000. The Company reported approximately $669,000 and $2,066,000 in additional amortization of debt discount for the quarter and six months ended December 31, 2009. The Company reported approximately $508,000 in amortization of debt discount for the three and six month periods ended December 31, 2008.

Index

~~Liquidity~~Product demonstration costs decreased approximately $3,000 and ~~Capital Resources~~$74,000 for the quarter and nine months ended March 31, 2010, from the year ago period, primarily due to costs incurred in connection with the Colorado Convention Center installation in August 2008. With respect to the video screen originally installed at that location and subsequently relocated to the Company’s Temecula facility for marketing purposes, the repaired screen continued to experience some outages due to non-conforming parts that cannot be replaced. As a result, management estimated that the market value of the screen had decreased to approximately $75,000 and, accordingly, in September 2009, recorded an additional impairment to the screen of approximately $87,000 affecting the nine-month period ended March 31, 2010. Depreciation expense decreased approximately $8,000 and $18,000 for the 2010 three and nine-month periods from 2009 primarily resulting from the impairment to the screen.

~~Since inception,~~Trade ~~the~~show ~~Company has been totally dependent on financing from outside sources to fund operations. At December 31, 2009, the Company reported negative net worth of $7,965,522~~ and ~~negative~~other ~~working~~marketing ~~capital~~event ~~of $9,258,896,~~fees ~~compared~~increased toby ~~negative~~approximately ~~net worth of~~ $23,~~612,540~~000 and ~~negative working capital of~~ $426,~~337,634~~000 atfor ~~June 30, 2009. The Company continues to require~~ the ~~infusion~~March ~~of outside capital to cover its administrative expenses~~31, ~~product~~ ~~development,~~2010 ~~manufacturing~~three ~~costs~~ and ~~business~~nine-month ~~development efforts. Under~~periods ~~the~~from ~~Credit Agreement,~~ the ~~Lender~~corresponding ~~has~~periods ~~the right~~in ~~to accelerate payment of principal~~2009, ~~interest~~primarily ~~and~~due ~~other~~to ~~amounts, if any, that are outstanding as of July 1, 2010, if~~ the Company’s ~~has~~exhibition ~~not~~at ~~sold,~~a ~~delivered or~~Boston ~~executed~~trade ~~any~~show ~~binding~~in ~~sales~~July ~~agreements~~2009 ~~for~~and ~~SkyNet™ screens by that time. If the Company does not pay the amounts due under the Credit Agreement when due, or if there is~~ a ~~continuing~~trade ~~Event~~show ofin ~~Default~~Abu ~~under the Credit Agreement~~Dhabi, ~~the~~UAE ~~Lender may elect to sell or seize all or any portion of the Collateral or,~~ in ~~its~~October ~~discretion, refinance any amounts outstanding~~2009. ~~Management~~In ~~believes~~connection ~~that~~with the ~~Credit~~Abu ~~Facility~~Dhabi ~~will provide~~trade ~~sufficient~~show ~~financial~~and ~~resources~~the toshipment ~~support its operations until June~~ of ~~2010. Management~~ ~~also believes that~~ the ~~Company’s~~SkyNet™ ~~continued~~Screen ~~existence after this source of funding is no longer available will depend upon its ability~~ to: ~~(1)~~Dubai ~~successfully~~for ~~raise~~an ~~new~~upcoming ~~permanent~~demonstration ~~capital;~~installation, ~~(2) secure interim funding from outside sources; and (3) achieve and maintain positive cash flow and profitable operations. There can be no assurance that~~ the Company ~~will~~ bereported ~~able~~an toincrease ~~successfully~~in ~~raise~~freight ~~the necessary capital, secure interim funding from outside sources or achieve or maintain profitable operations. If the Company fails to do so, it will be forced to discontinue operations~~ and ~~liquidate~~ ~~its~~duty ~~assets. Irrespective~~taxes of ~~whether~~approximately ~~the Lender elects to assume or continue some or all of the Company’s former operations after such a foreclosure~~$54,000 ,for ~~it would not affect~~ the ~~Company’s~~2010 ~~liquidation~~nine-month ~~and~~period itover ~~is extremely unlikely that any funds or property would be distributed to shareholders in any such liquidation~~2009.

~~Cash flows~~Other ~~from~~sales ~~financing~~and ~~activities~~marketing ~~for~~expenses ~~the~~fluctuated ~~six~~slightly ~~months~~resulting ~~ended~~in ~~December~~a ~~31,~~decrease ~~2009 consisted~~ of ~~borrowings~~approximately ~~under the Credit Facility totaling~~ $21,~~850,~~000, ~~partially offset by nominal lease payments. These cash flows were used~~ for: ~~(1) operating~~the ~~expenses;~~2010 ~~(2)~~quarter ~~sales~~from 2009 and ~~marketing~~an ~~efforts;~~increase ~~(3)~~of ~~manufacturing operations;~~approximately ($4),000 ~~ongoing~~for ~~research~~the ~~and~~2010 ~~product~~nine-month ~~development;~~period ~~(5)~~over ~~continued manufacturing process development and tooling design and fabrication; (6) purchases of materials inventory; and (7) equipment purchases~~2009.

~~Cash flows~~Research ~~from~~and ~~financing~~Development ~~activities~~Costs ~~for~~- ~~the~~Research ~~six~~and ~~months~~development ~~ended~~(“R&D”) ~~December~~fees 31increased by approximately $77,000 ~~2008~~and $498, ~~consisted~~000 for the 2010 three and nine-month periods over the same periods in 2009 as the Company continued development for new generations of ~~borrowings~~the ~~under~~SkyNet™ Screen and other proprietary technologies. Due to changes in design with some of these efforts, the ~~Credit~~Company ~~Facility~~recorded ~~totaling~~an impairment of approximately $392,~~100,~~000 ~~partially offset~~with byrespect ~~nominal~~to ~~lease~~certain ~~payments. These~~tooling ~~cash~~that ~~flows~~had ~~primarily~~been ~~were used~~purchased for: ~~(1)~~prior ~~operating~~iterations ~~expenses;~~for ~~(2)~~the ~~business~~nine-month ~~development;~~period ~~(3)~~ended ~~manufacturing operations;~~March ~~(4)~~31, ~~materials~~2010. Depreciation ~~inventory;~~expense increased by approximately $9,000 and ~~(5)~~$26,000 ~~equipment~~for the 2010 three and nine-month periods over the 2009 periods due to purchases of R&D equipment.

~~At December~~Salaries 31and related benefits increased by approximately $65,000 ~~2009~~and $265,000 during the three and nine-month periods compared to the same periods a year ago, primarily due to the addition of the Company’s ~~reported~~new ~~current~~Vice ~~assets~~President of ~~$3,480,701~~Research and ~~a working~~Development ~~capital~~and ~~deficit~~Chief Technology Officer in July 2009, along with more internal engineering efforts being directed toward research and development. ~~Current~~Likewise, ~~liabilities~~R&D ~~exceeded~~consulting ~~current~~fees ~~assets~~increased by approximately $917,~~258,896. At~~000 ~~December~~for ~~31,~~the ~~2009~~2010 ~~current~~nine-month ~~liabilities~~period ~~consisted~~over ~~of: (1)~~2009, ~~notes~~due to ~~shareholders~~an ~~with~~increase ~~accrued~~in ~~interest,~~ongoing ~~net~~proprietary ofproduct ~~debt~~development ~~discount~~efforts. However, of R&D consulting fees decreased by approximately $1254,~~224,020~~000 ~~and~~for ~~(2)~~the ~~trade~~2010 ~~payables~~three-month period from 2009 as certain projects were nearing completion. R&D supplies and ~~accrued~~related expenses ~~totaling~~increased by approximately $~~515~~52,~~577~~000 and $71,000 ~~which were~~due ~~incurred~~to ~~primarily~~the increased proprietary product development efforts. Travel expenses for ~~business~~research and development, ~~operating~~also ~~costs,~~increased ~~inventory purchases~~approximately $5,000 ~~equipment~~and ~~purchases~~$29,000 ~~manufacturing~~for ~~operations,~~the ~~continued~~2010 ~~proprietary product~~periods ~~development~~over 2009 primarily due to international travel to LED and ~~marketing~~other ~~efforts~~suppliers for future development.

Index

Other research and development costs fluctuated slightly resulting in no significant change for the 2010 quarter from 2009 and a decrease for the 2010 nine-month period by approximately $3,000 versus a year ago.

Other Income and Expense - Interest expense increased by approximately $194,000 and $580,000 for the quarter and nine months ended March 31, 2010 over 2009, respectively, due to higher debt levels. During fiscal 2009, the Company entered into a Senior Secured Revolving Credit Agreement (the “Credit Agreement”) with DeGeorge Holdings Three LLC, a Delaware limited liability company (“Lender”), an affiliate of its majority shareholder and a member of its Board of Directors, Lawrence F. DeGeorge. The November 6, 2008, Credit Agreement, as amended June 15, 2009 (the “Amendment”), established a revolving line of credit (the “Credit Facility”) not to exceed an aggregate amount of Fifteen Million Dollars, $15,000,000 secured by all of the Company’s assets. Under ASC-470-20, if the value of the underlying shares based on the share price of the Company’s common stock on the date of borrowing is greater than the value of the underlying shares based on the conversion rate, a debt discount is recorded for the difference up to the amount borrowed. The Company has recorded total debt discount under the Convertible Note of approximately $5,460,000 through March 31, 2010. As of June 30, 2009, the Company had recorded amortization of the debt discount totaling approximately $2,951,000. The Company reported approximately $109,000 and $2,175,000 in additional amortization of debt discount for the quarter and nine months ended March 31, 2010. The Company reported approximately $1,094,000 and $1,602,000 in amortization of debt discount for the three and nine month periods ended March 31, 2009, respectively. Also, the Company reported a positive net change in derivative conversion feature of approximately $832,000 and $2,464,000 for the quarter and nine months ended March 31, 2009, respectively, compared to $0 for the 2010 periods in connection with the Senior Secured Revolving Credit Facility.

Liquidity and Capital Resources

Since inception, the Company has been totally dependent on financing from outside sources to fund operations. At March 31, 2010, the Company reported negative net worth of $9,988,338 and negative working capital of $11,193,582, compared to negative net worth of $2,612,540 and negative working capital of $4,337,634 at June 30, 2009. The Company continues to require the infusion of outside capital to cover its administrative expenses, product development, manufacturing costs and business development efforts. Under the Credit Agreement, the Lender has the right to accelerate payment of principal, interest and other amounts, if any, that are outstanding as of July 1, 2010, if the Company has not sold, delivered or executed any binding sales agreements for SkyNet™ screens by that time. If the Company does not pay the amounts due under the Credit Agreement when due, or if there is a continuing Event of Default under the Credit Agreement, the Lender may elect to sell or seize all or any portion of the Collateral or, in its discretion, refinance any amounts outstanding. Management believes that the Credit Facility will provide sufficient financial resources to support its operations until June of 2010. Management also believes that the Company’s continued existence after this source of funding is no longer available will depend upon its ability to: (1) secure interim funding from the lender or from outside sources, which is highly doubtful; (2) successfully raise new permanent capital; and (3) achieve and maintain positive cash flow and profitable operations. There can be no assurance that the Company will be able to successfully raise the necessary capital, secure interim funding from outside sources or achieve or maintain profitable operations. If the Company fails to do so, it will be forced to discontinue operations and liquidate its assets. Irrespective of whether the Lender elects to assume or continue some or all of the Company’s former operations after such a foreclosure, it would not affect the Company’s liquidation and it is extremely unlikely that any funds or property would be distributed to shareholders in any such liquidation.

Index

Cash flows from financing activities for the nine months ended March 31, 2010 consisted of borrowings under the Credit Facility totaling $4,565,000, partially offset by nominal lease payments. These cash flows were used for: (1) operating expenses; (2) sales and marketing efforts; (3) manufacturing operations; (4) ongoing research and product development; (5) continued manufacturing process development and tooling design and fabrication; (6) purchases of materials inventory; and (7) equipment purchases.

Cash flows from financing activities for the nine months ended March 31, 2009, consisted of borrowings under the Credit Facility totaling $4,885,000 partially offset by nominal lease payments. These cash flows primarily were used for: (1) operating expenses; (2) business development; (3) manufacturing operations; (4) materials inventory; and (5) equipment purchases.

At March 31, 2010, the Company reported current assets of $3,753,821 and a working capital deficit. Current liabilities exceeded current assets by $11,193,582. At March 31, 2010 current liabilities consisted of: (1) notes to shareholders with accrued interest, net of debt discount, of $14,370,145 and (2) trade payables and accrued expenses totaling $577,258, which were incurred primarily for business development, operating costs, inventory purchases, equipment purchases, manufacturing operations, continued proprietary product development and marketing efforts.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Our management, including our Principal Executive and Financial Officer, has evaluated the design, operation, and effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this quarterly report on Form 10-Q. Based upon this evaluation, the Company’s Principal Executive and Financial Officer, concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports filed or submitted pursuant to the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including its Principal Executive Officer and Principal Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding disclosures.

Changes in Internal Control ~~Over~~ over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended ~~December~~March 31, ~~2009~~2010 that have materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting except for the risks ordinarily associated with the increased level of business activity at the Company since that date, as the Company continues to develop its manufacturing operations for its proprietary LED Screens, including but not limited to the purchase, shipment and tracking of parts, tooling and equipment and the implementation of new systems and software, including an enterprise resource management system and related software.

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Inherent Limitations on Effectiveness of Controls

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Additionally, projections of an evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Risk of Foreclosure on Assets. ~~Management~~The Company has pledged all of its assets as collateral to secure a revolving line of credit agreement (the “Credit Agreement”) with its principal investor group (the “Lender”). By that agreement, the Lender has indicated a willingness to continue to fund the Company’s operations through the fourth quarter of fiscal 2010 and, if the Company has sold, delivered or executed any binding agreements with unaffiliated third-parties for the sale of SkyNet™ display systems by that time, to continue such funding until December 2010. Management believes that the Company’s continued existence beyond that time is dependent upon its ability to: (1) ~~successfully~~secure ~~raise~~interim ~~new~~funding ~~permanent~~from ~~capital~~the lender or from outside sources, which is highly doubtful; (2) ~~secure~~successfully ~~interim~~raise ~~funding~~new ~~from outside~~permanent ~~sources~~capital; and (3) achieve and maintain positive cash flow and profitable operations. ~~There~~At ~~can~~this betime, noit ~~assurance~~appears unlikely that the Company will be able to doachieve soall of these objectives in time to avoid a foreclosure. There can be no assurance that the Company will be successful in raising any more capital or producing revenue from operations. Accordingly, if the Company fails to meet the goals set by the Credit Agreement or otherwise fails to raise enough new capital to repay the amounts owed under the Credit Agreement and otherwise needed to sustain its operations, the Lender can be expected to seize all of the Company’s assets upon a default, and the Company will be forced to immediately discontinue operations and liquidate its assets. In such an event, it is extremely unlikely that there would be any funds or property available for distribution to ~~shareholders~~holders of the Company’s common stock in any such liquidation.

Please see the additional Risk Factors relating to the Company in Item 1A of the Company’s Annual Report on Form 10-K for the year ended June 30, 2009, which Risk Factors are incorporated herein by reference.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

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ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.	Description

31.1	Certificate of Principal Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

31.2	Certificate of Principal Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

32.1	Certificate of Principal Executive and Principal Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

1920

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.

	ADVANCE DISPLAY TECHNOLOGIES, INC.
Date: February 16, 2010	/s/ Matthew W. Shankle
Date: May 24, 2010	/s/ James P. Martindale
	Matthew W. Shankle President, Chief Executive and Financial Officer
	James P. Martindale Executive Vice President of Manufacturing, Chief Operations Officer Acting Principal Executive and Financial Officer
Date: February 16, 2010	/s/ Rebecca L. McCall
Date: May 24, 2010	/s/ Rebecca L. McCall
	Rebecca L. McCall VP of Accounting, Principal Accounting Officer

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INDEX OF EXHIBITS

Exhibit No.	Description

31.1	Certificate of Principal Executive Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

31.2	Certificate of Principal Financial Officer pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

32.1	Certificate of Principal Executive and Principal Financial Officer pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

Filing Compare · ADVANCE DISPLAY TECHNOLOGIES INC