U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
_______________________________________
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended to
Commission File Number: 0-3344
__________
ASTROSYSTEMS, INC.
____________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 13-5691210
______________________________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1220 Market St., Ste 603, Wilmington, Delaware 19801
______________________________________________ ___________________
(Address of principal executive offices) (Zip Code)
(302) 652-3115
____________________________________________________________________
Registrant's telephone number, including area code)
N/A
____________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the issuer has filed all documents and reports
required to be filed by Sections 12, 13 or 15 (d) of the Exchange Act
after the distribution of securities under a plan confirmed by a
court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the issuer's common stock as
of November 7, 1997 is 5,827,603.
<PAGE>
ASTROSYSTEMS, INC. AND SUBSIDIARIES
INDEX
Page No.
________
Part I - FINANCIAL INFORMATION
Item 1. Consolidated Statement of Net Assets in Liquidation 4
September 30, 1997
Consolidated Statement of Changes in Net Assets
in Liquidation 5
Three Months Ended September 30, 1997 and 1996
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or
Plan of Operation 9
Part II - OTHER INFORMATION
Item 2. Changes in Securities 11
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
PART I - FINANCIAL INFORMATION
ASTROSYSTEMS, INC. AND SUBSIDIARIES
The financial information herein is unaudited. However, in the
opinion of management, such information reflects all adjustments
(consisting of normal recurring accruals and revisions to estimations)
necessary to a fair presentation for the period being reported.
On February 2, 1996, the Stockholders of the Company approved a Plan
of Complete Liquidation and Dissolution (the "Plan"). Therefore, the
financial statements are presented in accordance with the liquidation basis
of accounting. Under the liquidation basis of accounting, assets are
stated at their estimated net realizable values and liabilities are stated
at their anticipated settlement amounts. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with the liquidation basis of accounting have been condensed or
omitted. Accordingly, these condensed financial statements should be read
in conjunction with the Registrant's financial statements included in the
Company's Form 10-KSB for the year ended June 30, 1997.
<PAGE>
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
(Amounts in thousands, except per share amounts)
(Unaudited)
September 30,
1997
_____________
Assets
______
Cash and cash equivalents $12,903
U.S. government securities 3,978
Other assets 909
_______
17,790
Liabilities
___________
Deferred income taxes 5,175
Accrued expenses/contingency reserve 4,311
_______
Net assets in liquidation $8,304
======
Number of common and common equivalent
shares outstanding 5,828
=====
Net assets in liquidation per share $1.42
=====
The accompanying notes are an integral part of this statement.
PAGE 4
<PAGE>
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(In thousands)
(Unaudited)
Three months Three months
ended ended
September 30 September 30,
1997 1996
____________ _____________
Net assets in liquidation -
beginning of period $5,497 $34,469
Increase in estimated liquidation values of
net assets over liabilities 2,807 504
______ _______
Net assets in liquidation - end of period $8,304 $34,973
====== =======
The accompanying notes are an integral part of these statements.
PAGE 5
<PAGE>
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Month Periods ended September 30, 1997 and 1996
NOTE A - BASIS OF PRESENTATION
______________________________
A Plan of Complete Liquidation and Dissolution (the "Plan") was adopted
by the Company's Board of Directors (the "Board") on October 26, 1995
and approved by the holders of a majority of the Company's outstanding
shares of common stock on February 2, 1996. The Plan provides for: (1)
the payment of or provision for all of the Company's liabilities and
obligations, (2) the distribution to the Company's shareholders in kind
or of the proceeds from sale or other disposition of all of the
Company's assets, (3) the transfer of any remaining assets to a
liquidating trust by February 2, 2000, if applicable, and (4) the
dissolution of the Company.
The Company has adopted the liquidation basis of accounting for all
periods subsequent to February 2, 1996. Under the liquidation basis of
accounting, assets are stated at their estimated net realizable values
and liabilities are stated at their anticipated settlement amounts.
Therefore, historical financial information is not comparable to the
liquidation period financial information.
The Company has set aside, as Accrued expenses/contingency reserve, an
amount believed to be adequate for payment of all expenses and other
known liabilities, as well as likely and quantifiable contingent
obligations, including potential tax obligations. A portion of the
Accrued expenses/contingency reserve is a reserve for other
contingencies, aggregating $1,350,000 at September 30, 1997, which could
be made available for distribution to stockholders if and when the
Company determines it is no longer required. In the event that the
reserve for other contingencies is not adequate for payment of the
Company's expenses and liabilities, each stockholder could be held
liable for pro rata payments to creditors in an amount not to exceed the
stockholder's prior distributions from the Company.
The valuation of assets and liabilities necessarily requires many
estimates and assumptions, and there are substantial uncertainties in
carrying out the provisions of the Plan. The actual value of any
liquidating distributions will depend upon a variety of factors
including, among others, the actual market prices of any securities
distributed in kind, the proceeds from the sale of any of the Company's
assets and the actual timing of distributions. The valuations presented
in the accompanying statement of net assets in liquidation represent
forecasts, based on present facts and circumstances, of the estimated
realizable values of assets, net of liabilities and estimated costs
associated with carrying out the provisions of the Plan. The actual
values and costs could be higher or lower than the amounts recorded.
On June 30, 1997, the Company declared an initial liquidating
distribution of $5.00 per share in cash to stockholders of record as of
August 15, 1997. The distribution was paid on September 8, 1997. The
Board of Directors is currently unable to predict the precise amount or
timing of any future distributions pursuant to the Plan. The actual
amount and timing of, and record date for, all distributions will be
determined by the Board of Directors, in its sole discretion, and will
depend in part upon the Board's determination as to whether particular
assets are to be distributed in kind or otherwise disposed of, and the
amounts deemed necessary by the Board to pay or provide for all the
Company's liabilities and obligations.
PAGE 6
<PAGE>
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Month Periods ended September 30, 1997 and 1996
NOTE B - CHANGES IN NET ASSETS IN LIQUIDATION
_____________________________________________
The changes in the estimated liquidation values of net assets over
liabilities are as follows:
September 30, September 30,
1997 1996
(in thousands) (in thousands)
______________ ______________
Proceeds from exercise of stock options $2,070 --
Adjustment to Accounts Payable 946 --
Estimated taxes on above adjustment (322) --
Additional interest earned and estimated
on cash and cash equivalents 299 $414
Change in the estimate of shut-down costs (256) --
Other adjustments 70 90
______ _____
Increase in estimated liquidation values
of net assets over liabilities $2,807 $504
NOTE C - ACCRUED EXPENSE/CONTINGENCY RESERVE
____________________________________________
Accrued expenses at September 30, 1997 include estimates of costs
to be incurred in carrying out the Plan. The actual costs could
vary significantly from the related provisions due to uncertainty
related to the length of time required to complete the Plan and
complexities and contingencies which may arise.
Existing liabilities at September 30, 1997 consist of (amounts
in thousands):
1997
______
Accounts payable, accrued expenses and
miscellaneous $1,325
Minimum payments on nonrecourse
obligation 88
Shutdown costs and estimated operating
costs (including compensation) to
administer the Plan through dissolution 2,958
Estimated interest income (567)
Estimated tax benefit of losses through
dissolution (843)
Reserve for other contingencies 1,350
______
$4,311
=====
PAGE 7
<PAGE>
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Month Periods ended September 30, 1997 and 1996
NOTE C (continued)
______
Accounts payable, accrued expenses and miscellaneous consist of deferred
compensation payable to the officers of the Company, commissions
payable, accrued professional fees and other accrued liabilities.
The Company has set aside, as reserve for other contingencies, an amount
believed to be adequate for payment of likely and quantifiable
contingent obligations, including potential tax obligations. Any
portion of the reserve for other contingencies which the Company
determines is no longer required will be made available for distribution
to its stockholders. In the event that the reserve for other
contingencies account is not adequate for payment of the Company's
expenses and liabilities, each stockholder could be held liable for pro
rata payments to creditors in an amount not to exceed the stockholder's
prior distributions from the Company.
NOTE D - SALE OF OPERATING ASSETS
_________________________________
As of February 7, 1996, all of the Company's operating assets were sold
to two purchasers. The purchase prices are subject to adjustment based
upon a final valuation of the transferred inventory and equipment.
Pursuant to one of the purchase agreements, $1,000,000 of the purchase
price of $3,706,700 was being held in escrow to provide for
indemnification claims that may be asserted against the Company. At
June 30, 1997, the amount held in escrow was reduced to approximately
$773,000. On August 21, 1997, approximately $276,000 was released to
the Company.
At September 30, 1997, the Company has recorded a receivable aggregating
approximately $594,000 based upon the Company's valuation of inventory
sold. The value of certain inventory items is currently being disputed;
however, the Company does not believe that the final valuation will have
a material effect on the value of the net assets in liquidation.
NOTE E - OTHER ASSETS
_____________________
Assumes no material value for the Company's holdings in AstroPower, Inc.
There is currently no public market for the AstroPower, Inc. common
stock and there are certain restrictions on the transferability of such
shares. AstroPower, Inc. recently received $5,000,000 in convertible
note financing from a major corporation to assist in the funding of a
new manufacturing facility and is currently exploring other financing
options, including an initial public offering. However, there can be no
assurances that AstroPower, Inc. will be successful in obtaining future
financing.
PAGE 8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity, Capital Resources and Impact of Inflation
____________________________________________________
The Board of Directors adopted, and the stockholders approved on
February 2, 1996, a Plan of Complete Liquidation and Dissolution (the
"Plan") of the Company. See "Plan of Complete Liquidation and Dissolution"
below.
The Company announced on March 26, 1996 a Board of Directors
authorization for the repurchase of up to 500,000 shares of Common Stock to
be made from time to time through open market and privately negotiated
transactions (in addition to the 500,000 shares previously authorized on
October 23, 1992). To date, 676,404 shares have been repurchased.
On June 30, 1997, the Company declared an initial liquidating
distribution of $5.00 per share in cash to stockholders of record as of
August 15, 1997. The distribution was paid on September 8, 1997. Although
the Company has not established a firm timetable for additional liquidating
distributions to stockholders, the Company will, subject to exigencies
inherent in winding up the Company's business, make such distributions
consistent with maximizing stockholder value. The actual amount and timing
of, and record date for, all additional distributions will be determined by
the Board of Directors, in its sole discretion, and will depend in part
upon the Board's determination as to whether particular assets are to be
distributed in kind or otherwise disposed of, and the amounts deemed
necessary by the Board to pay or provide for all the Company's liabilities
and obligations.
Statement of Net Assets in Liquidation
______________________________________
Pursuant to the Plan, the Company consummated the sales of the assets
of its three operating units (Military Division, Behlman Electronics
subsidiary and Industrial Automation Division) as of February 7, 1996. The
exact amount of the proceeds to the Company of such sales is dependent upon
a final fixed asset and inventory valuation. The value of certain
inventory items is being disputed; however, the Company does not believe
that the final result will have a material effect on the value of the Net
Assets in Liquidation. In connection with the sale of the Military and
Behlman operations, approximately $500,000 of the purchase price currently
is being held in escrow to provide for certain indemnification claims that
the buyer may assert against the Company under the sale agreement.
PAGE 9
The Company has set aside, as Accrued expenses/contingency reserve, an
amount believed to be adequate for payment of all expenses and other known
liabilities as well as likely and quantifiable contingent obligations,
including potential tax obligations. Any portion of the contingency
reserve which the Company determines is no longer required will be made
available for distribution to its stockholders. In the event that the
Accrued expenses/contingency reserve account is not adequate for payment of
the Company's expenses and liabilities, each stockholder could be held
liable for pro rata payments to creditors in an amount not to exceed the
stockholder's prior distributions from the Company. The Company has
therefore adopted a conservative policy in retaining sufficient assets to
insure against any unforeseen and non-quantifiable contingencies.
Statement of Changes in Net Assets in Liquidation
_________________________________________________
From July 1, 1997 to September 30, 1997 there was an increase in Net
Assets in Liquidation of $2,807,000. This increase was primarily due to
the exercise of stock options and adjustment to accounts payable.
Plan of Complete Liquidation and Dissolution
____________________________________________
On February 2, 1996, the stockholders of the Company approved a Plan
of Complete Liquidation and Dissolution for the Company. Pursuant to the
Plan, the Company has sold its three operating units and intends to sell
such of its remaining assets as are not to be distributed in kind to its
stockholders. The Company intends to provide for payment of all expenses,
liabilities and obligations of the Company and liquidate via distributions
to stockholders.
On June 30, 1997, the Company declared an initial liquidating
distribution of $5.00 per share in cash to stockholders of record as of
August 15, 1997. The distribution was paid on September 8, 1997. The
Board is currently unable to predict the precise amount of any additional
distributions pursuant to the Plan. The actual amount and timing of, and
record date for, all such distributions will be determined by the Board of
Directors, in its sole discretion, and will depend in part upon the Board's
determination as to whether particular assets are to be distributed in kind
or otherwise disposed of, and the amounts deemed necessary by the Board to
pay or provide for all the Company's liabilities and obligations.
PAGE 10
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
_____________________
(c) In July 1997, 672,765 shares of common stock of the Company
were issued upon the exercise of stock options at an exercise price of
$2.875 per share and 4,000 shares of common stock were issued upon the
exercise of stock options at an exercise price of $3.50 per share. The
foregoing transactions were private transactions not involving a public
offering and were exempt from the registration provisions of the Securities
Act of 1933 pursuant to Section 4(2) thereof. Each of the optionees is an
accredited investor.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
________
2. Plan of Complete Liquidation and Dissolution
incorporated by reference to Exhibit A to Proxy Statement
of the Company dated January 12, 1996 with respect to
Annual Meeting of Stockholders held February 2, 1996 (File
No. 0-3344).
3. (a) Certificate of Incorporation - incorporated by
reference to Exhibit 3(a) to the Company's Annual Report on
Form 10-KSB for the fiscal year ended June 30, 1993 (File
No. 0-3344).
(b) By-Laws - incorporated by reference to Exhibit
3(b) to the Company's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1993 (File No. 0-3344).
10. Asset Purchase Agreement dated as of January 11,
1996 by and among Astrosystems, Inc., Behlman Electronics,
Inc., Orbit International Corp. and Cabot Court, Inc. -
incorporated by reference to Exhibit B to Proxy Statement
of the Company dated January 12, 1996 with respect to
Annual Meeting of Stockholders held February 2, 1996 (File
No. 0-3344).
27. Financial Data Schedule
(b) Reports on Form 8-K.
____________________
None.
No other reportable items
PAGE 11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ASTROSYSTEMS, INC.
November 18, 1997 BY: /S/
_____________________________ _________________________
Date Gilbert H. Steinberg,
Vice President
November 18, 1997 /S/
_____________________________ ________________________
Date Gilbert H. Steinberg,
Treasurer and
Chief Financial Officer
PAGE 12
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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