SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter ended June 30, 1997 Commission file number 2-31876 ---------------- ------- ACADEMIC COMPUTER SYSTEMS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) New Jersey 22-1848316 - ---------------------------------------- -------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) c/o Unity Venture Capital Associates Ltd. 245 Fifth Avenue New York, New York 10016 - ---------------------------------------- -------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 696-4282 ---------------------------- 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 he 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 No ----- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at August 4, 1997 - --------------------------------------- ----------------------------- Common stock, par value $.05 per share 907,700 PART I - FINANCIAL INFORMATION ------------------------------ Item 1. FINANCIAL STATEMENTS: The following are the required financial statements, including an index thereof: ACADEMIC COMPUTER SYSTEMS, INC. ------------------------------- INDEX ----- PAGE NO. Balance Sheet - June 30, 1997 - September 30, 1996 1 Statement of Income - Three Months Ended June 30, 1997 and 1996 Nine Months Ended June 30, 1997 and 1996 2 Statement of Retained Earnings - Nine Months Ended June 30, 1997 and 1996 3 Statement of Cash Flows - Nine Months Ended June 30, 1997 and 1996 4 Notes to Financial Statements 5 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: During the nine months ended June 30, 1997, the Company sold all of its debt and equity investments at then prevailing market prices; its present assets consist exclusively of cash and cash equivalents. The Company, under new management since May 21, 1997, will seek to effect a merger, exchange of capital stock, asset acquisition or other similar business combination with an operating business which the Company's Board of Directors believes has significant growth potential. Management believes that all material adjustments have been included herein. PART II - OTHER INFORMATION --------------------------- Not applicable. ACADEMIC COMPUTER SYSTEMS, INC. ------------------------------- BALANCE SHEET ------------- ASSETS ------ JUNE SEPTEMBER 30, 30, 1997 1996 -------- --------- Current assets: Cash and cash equivalents $632,156 $167,657 Interest receivable - 2,770 Prepaid federal income tax - 418 -------- -------- Total current assets 632,156 170,845 Long-term assets: Marketable securities (Note 2) - 408,191 -------- -------- $632,156 $579,036 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Taxes payable $ 54,587 $ 1,795 Accounts payable and accrued expenses 1,763 1,250 -------- -------- Total current liabilities 56,350 3,045 -------- -------- Commitments and contingencies (Note 3) - - Deferred taxes payable (Note 4) - 38,437 Stockholders' equity: Common stock, par value of $.05 per share; authorized 1,250,000 shares, issued and outstanding 910,000 shares at June 30, 1997 and September 30, 1996 45,500 45,500 Additional paid-in capital 312,571 312,571 Unrealized gain on securities reported at fair value - 88,578 Retained earnings 219,891 93,061 -------- -------- 577,962 578,147 Less treasury stock - at cost (2,300 shares) ( 2,156) ( 2,156) -------- -------- 575,806 575,991 -------- -------- $632,156 $579,036 -------- -------- -------- -------- See Notes to Financial Statements. -1- ACADEMIC COMPUTER SYSTEMS, INC. ------------------------------- STATEMENT OF INCOME ------------------- Three Months Ended Nine Months Ended June 30, June 30, ------------------- ------------------- 1997 1996 1997 1996 -------- -------- -------- -------- Income: Dividend income $ 192 $ 4,649 $ 6,466 $ 17,310 Interest income 1,907 2,883 6,704 5,217 Other income - - 1,690 - Realized gain on sale of securities (Note 2) - - 173,336 - -------- -------- -------- -------- 2,099 7,532 188,196 22,527 -------- -------- -------- -------- Costs and expenses: Operating costs, selling, general and administrative expense 1,984 941 5,079 3,121 -------- -------- -------- -------- Income before provision for taxes 115 6,591 183,117 19,406 -------- -------- -------- -------- Provision for income taxes: Federal 44 672 52,203 1,630 State and local 2 117 4,084 232 -------- -------- -------- -------- 46 789 56,287 1,862 -------- -------- -------- -------- Net income $ 69 $ 5,802 $126,830 $ 17,544 -------- -------- -------- -------- -------- -------- -------- -------- Per share: Net income $ 00 $ 01 $ 14 $ 02 -------- -------- -------- -------- -------- -------- -------- -------- Shares outstanding 907,700 907,700 907,700 907,700 -------- -------- -------- -------- -------- -------- -------- -------- See Notes to Financial Statements. -2- ACADEMIC COMPUTER SYSTEMS, INC.8 STATEMENT OF RETAINED EARNINGS Nine Months Ended JUNE 30, -------------------- 1997 1996 --------- -------- Balance - at beginning of period $ 93,061 $ 68,438 Net income 126,830 17,544 -------- -------- Balance - at end of period $219,891 $ 85,982 -------- -------- -------- -------- See Notes to Financial Statements. -3- ACADEMIC COMPUTER SYSTEMS, INC. STATEMENT OF CASH FLOWS Nine Months Ended June 30, --------------------- 1997 1996 --------- ---------- Cash flows derived from operating activities: Interest and dividends received $ 15,940 $ 22,324 Other income received 1,690 - Cash paid to suppliers ( 4,566) 17,630 Income taxes paid ( 3,077) ( 4,724) ---------- --------- Net cash provided by operating activities 9,987 14,479 ---------- --------- Cash flows derived from investing activities: Sale of securities 1,054,601 - Purchase of securities ( 600,089) - ---------- --------- Net cash provided by investing activities 454,512 - ---------- --------- Net increase in cash and cash equivalents 464,499 14,479 Cash and cash equivalents, beginning of period 167,657 149,375 ---------- --------- Cash and cash equivalents, end of period $ 632,156 $163,854 ---------- --------- ---------- --------- Reconciliation of net income to net cash provided by operating activities: Net income $ 126,830 $ 17,544 Adjustments to reconcile net income to net cash provided by operating activities: (Realized gain) on sale of securities ( 173,336) - (Increase) decrease in other current assets 3,188 ( 1,633) Increase in accounts payable 513 - Increase (decrease) in taxes payable 52,792 ( 1,432) ---------- --------- Net cash provided by operating activities $ 9,987 $ 14,479 ---------- --------- ---------- --------- See Notes to Financial Statements. -4- ACADEMIC COMPUTER SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 AND 1996 1. Statement of Significant Accounting Policies: The Company records its investment income on the accrual basis. In the opinion of management, the accompanying financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of June 30, 1997, and the results of operations and cash flows for the nine months ended June 30, 1997 and June 30, 1996. Such financial statements do not include all disclosures required by generally accepted accounting principles. These financial statements should be read in conjunction with the Company's audited financial statements for the years ended September 30, 1996 and 1995 included in the Company's annual report filed on Form 10K. 2. MARKETABLE SECURITIES: The Company has adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Under SFAS No. 115, debt and equity securities are classified into three categories: trading, available-for-sale, and held-to-maturity. Management determines the appropriate classification of its investments at the time of purchase, and reevaluates such determination at each balance sheet date. The Company had categorized its marketable securities as available-for-sale. SFAS No. 115 requires available-for-sale securities to be carried at fair value with unrealized gains and unrealized losses reported as a separate component of shareholders' equity. Realized gains and losses are determined on a specific identification basis. A decline in market value of any available-for-sale security below cost that is deemed other than temporary is charged to earnings, resulting in the establishment of a new cost basis for the security. During the nine months ended June 30, 1997, the Company liquidated all of its investments in debt and equity securities. 3. COMMITMENTS AND CONTINGENCIES: The Company's income tax returns have not been audited by the Internal Revenue Service. The Company is not involved in any litigation. 4. DEFERRED TAXES: Temporary differences arise from unrealized gains on securities that are reported as an adjustment to stockholders' equity for financial reporting but are not recorded in the tax return until the securities are sold. The Company uses the liability method for calculating the deferred tax provision and charges the tax effect directly to stockholders' equity. The deferred taxes relate solely to the available-for-sale securities, and, as such, have no effect on the components of net income. As of June 30, 1997, the Company had no unrealized gains on securities, having liquidated its entire portfolio prior to that date (see Note 2). -5- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized. ACADEMIC COMPUTER SYSTEMS, INC. By /s/ Lawrence Burstein ---------------------------- President By /s/ Steven Millner ----------------------------- Treasurer Dated: August 13, 1997