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 December 31, 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 Street, Suite 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
January 27, 1998 is 5,827,485.
ASTROSYSTEMS, INC. AND SUBSIDIARIES
INDEX
Page No.
________
Part I - FINANCIAL INFORMATION
Item 1. Consolidated Statement of Net Assets in Liquidation 4
December 31, 1997
Consolidated Statement of Changes in Net Assets 5
in Liquidation
Six Months Ended December 31, 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 6. Exhibits and Reports on Form 8-K 12
Page 2
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 3
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF NET ASSETS IN LIQUIDATION
(Amounts in thousands, except per share amounts)
(Unaudited)
December 31,
1997
____________
Assets
______
Cash and cash equivalents $12,317
U.S. government securities 2,979
Other assets 2,250
_______
17,546
Liabilities
___________
Deferred income taxes 5,041
Accrued expenses/contingency reserve 4,186
_______
Net assets in liquidation $8,319
======
Number of common and common equivalent shares outstanding 5,828
=====
Net assets in liquidation per share $1.43
=====
The accompanying notes are an integral part of this statement.
Page 4
ASTROSYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
(In thousands)
(Unaudited)
Six months Six months
ended ended
December 31, December 31,
1997 1996
___________ ____________
Net assets in liquidation - beginning of period $5,497 $34,469
Increase in estimated liquidation values of
net assets over liabilities 2,822 831
______ _______
Net assets in liquidation - end of period $8,319 $35,300
====== =======
The accompanying notes are an integral part of these statements.
Page 5
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Month Periods ended December 31, 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 December 31, 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
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Month Periods ended December 31, 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:
December 31, December 31,
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 425 $960
Change in the estimate of shut-down costs (356) -
Other adjustments 59 (129)
______ ____
Increase in estimated liquidation values
of net assets over liabilities $2,822 $831
====== ====
NOTE C - ACCRUED EXPENSE/CONTINGENCY RESERVE
____________________________________________
Accrued expenses at December 31, 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 December 31, 1997 consist of (amounts in
thousands):
Accounts payable, accrued expenses and
miscellaneous $1,476
Minimum payments on nonrecourse
obligation 88
Shutdown costs and estimated operating
costs (including compensation) to
administer the Plan through dissolution 2,529
Estimated interest income (557)
Estimated tax benefit of losses through
dissolution (700)
Reserve for other contingencies 1,350
______
$4,186
======
Page 7
Astrosystems, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Month Periods ended December 31, 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.
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. On December 18, 1997, AstroPower, Inc. filed a registration statement
for an initial public offering of 3,015,000 shares of common stock at a
maximum offering price of $10.00 per share. If the offering is successful,
the Company will own 1,193,750 shares (this number gives effect to a three-
for-four reverse stock split prior to the issue). There can be no
assurances regarding the success or price per share of this offering. In
addition, the Company, along with the other major shareholders of
AstroPower, Inc., has agreed not to sell any shares held for a six month
period after the offering date.
Page 8
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 CompleteLiquidation 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 openmarket 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.
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,
Page 9
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 December 31, 1997 there was an increase in Net
Assets in Liquidation of $2,822,000. 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
AstroPower, Inc.
________________
The Company currently owns 32.3% of the common stock of AstroPower,
Inc. ("AstroPower"), a company engaged in photovoltaic research and
production. Assuming certain convertible preferred stock is converted into
common stock by stockholders of AstroPower other than the Company, the
Company's interest in AstroPower would be reduced to 22.3%. The Company
has a zero basis in its AstroPower common stock.
On December 18, 1997, AstroPower filed a registration statement for an
initial public offering of 3,015,000 shares of common stock at a maximum
offering price of $10.00 per share. If the offering is successful, the
Company will own 1,193,750 shares (this number gives effect to a three-for-
four reverse stock split prior to the issue). There can be no assurances
regarding the success or price per share of this offering. In addition, the
Company, along with the other major shareholders of AstroPower, Inc., has
agreed not to sell any shares held for a six month period after the
offering date.
Year 2000 Issue
_______________
The Year 2000 issue will not have a material effect on the Company's
financial results.
Page 11
PART II - OTHER INFORMATION
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 12
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.
February 4, 1997 BY: /S/
______________________________ ___________________________________
Date Gilbert H. Steinberg,
Vice President
February 4, 1997 /S/
______________________________ ___________________________________
Date Gilbert H. Steinberg, Treasurer and
Chief Financial Officer
Page 13
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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