SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

           [X] Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                  For the Quarterly Period Ended March 31, 1998

                                       or

     [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                          Exchange Act of 1934 for the
                           Transition Period from to .

                         Commission File Number: 0-22737


                      Advanced Communication Systems, Inc.
             (Exact name of registrant as specified in its charter)


           Delaware                                 54-1421222
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)

                   10089  Lee  Highway,  Fairfax,  Virginia  22030  (Address  of
              principal executive office and zip code)


                                 (703) 934-8130
               Registrant'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 ] No [ ]

As of the close of business on April 15, 1998, the  registrant  had  outstanding
6,554,000 shares of Common Stock, par value $.01 per share.

<PAGE>


                      ADVANCED COMMUNICATION SYSTEMS, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                                      INDEX


                                                                      PAGE

PART I.         FINANCIAL INFORMATION

Item 1.         Financial Statements:

                Condensed Consolidated Balance Sheets as of
                March 31, 1998 and September 30, 1997                   3
                                                                               

                Condensed Consolidated Statements of Operations
                for the Three Months and Six Months Ended March
                31, 1998 and 1997                                       4

                Condensed Consolidated Statements of Cash Flows 
                for the Six Months Ended March 31, 1998 and 1997        5

                Notes to Condensed Consolidated Financial Statements    6

Item 2.         Management's Discussion and Analysis of Financial 
                Condition and Results of Operations                     9

PART II.        OTHER INFORMATION

Item 4.         Submission of Matters to a Vote of Security Holders    13
Item 6.         Exhibits and Reports on Form 8-K                       13

<PAGE>



                      ADVANCED COMMUNICATION SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)
                                   (Unaudited)

                                                     March 31,     September 30,
                                                       1998            1997
                                                   ------------    ------------
                                        ASSETS
Current assets:
Cash and cash equivalents.........................      $802          $2,744
Contract receivables..............................    27,440          17,643
Other receivables.................................       621             154
Income taxes receivable...........................         -             529
Prepaid expenses..................................       805             296
Inventories.......................................       677             544
                                                   ------------   ------------
   Total current assets...........................    30,345          21,910
                                                   ------------   ------------
Property and equipment, net.......................     5,157           1,261
                                                                              
Other assets:
Other related party receivables...................       152              86
Software development costs, net...................     1,568             950
Intangibles, net..................................    19,333           1,706
Long-term deferred tax asset......................         -             147
Other non-current assets..........................       233             152
                                                   ------------    ------------
   Total other assets.............................    21,286           3,041
                                                   ------------    ------------
      Total assets................................   $56,788         $26,212
                                                   ============    ============

                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.................       $84            $  -
Accounts payable..................................     2,325           3,321
Accrued expenses and other current liabilities....     9,224           8,838
Billings in excess of revenue.....................       245             225
Income taxes payable..............................       331               -
                                                   ------------    ------------
   Total current liabilities......................    12,209          12,384
Long-term debt....................................    24,846               -
Deferred income tax liability.....................       778               -
                                                   ------------    ------------
   Total liabilities..............................    37,833          12,384
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares 
  authorized, no shares issued and outstanding....         -               -
                                                                               
Common stock,  $.01 par value,  40,000,000 shares  
  authorized, 9,450,000 shares issued at March  
  31, 1998 and 8,975,000 shares issued at 
  September 30,1997...............................        95              90
Paid-in-capital...................................    17,692          14,409
Retained earnings (deficit).......................     1,205            (382)
                                                                              
Less - Treasury stock, 2,901,625 shares at March 
  31, 1998 and 2,945,000 shares at 
  September 30, 1997..............................       (37)           (289)
                                                   ------------    ------------
   Total stockholders' equity.....................    18,955          13,828
                                                   ------------    ------------
      Total liabilities and stockholders' equity...  $56,788         $26,212
                                                   ============    ============

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.
<PAGE>
<TABLE>

                      ADVANCED COMMUNICATION SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (Unaudited)
<CAPTION>
                                                                  Three Months Ended        Six Months Ended
                                                                       March 31                 March 31
                                                                  1998          1997       1998         1997    
                                                               ----------    --------    ---------   ----------
     <S>                                                         <C>          <C>          <C>           <C>    
     Revenues................................................    $18,380      $12,064      $32,550       $21,130

     Direct costs............................................     11,859        8,708       20,990        14,746
                                                                    
     Indirect, general and administrative expenses...........      4,888        2,583        8,821         5,025
                                                               ----------    --------    ---------   ----------
     Income from operations..................................      1,633          773        2,739         1,359
                                                                     
     Interest expense........................................       (289)         (71)        (378)         (134)
                                                                     
     Other income, net.......................................          4           29           15            44
                                                               ----------    ---------    --------   -----------
     Income before taxes.....................................      1,348          731        2,376         1,269

     Provision for income taxes..............................        505            -          879             -
                                                               ----------    ---------    --------    ----------
     Net income..............................................       $843         $731       $1,497        $1,269
                                                               ==========    =========    ========    ==========

     Net income per share-basic..............................      $0.13                     $0.23
                                                               ==========                 ========
     Net income per share-diluted............................      $0.13                     $0.23
                                                               ==========                 ========

     Weighted average shares outstanding-basic...............      6,524                     6,438
                                                               ==========                 ========
     Weighted average shares outstanding-diluted.............      6,636                     6,558
                                                               ==========                 ========

     Pro forma statements of operations data

     Income before taxes as reported.........................                    $731                     $1,269
     Pro forma income tax provision..........................                     285                        495
                                                                             ----------                ---------
     Pro forma net income....................................                    $446                       $774
                                                                             ==========                =========

     Pro forma net income per share-basic....................                   $0.11                      $0.18
                                                                             ==========                =========
     Pro forma net income per share-diluted..................                   $0.10                      $0.18
                                                                             ==========                =========

     Pro forma weighted average shares outstanding-basic.....                   4,246                      4,246
                                                                             ==========                ===========
     Pro forma weighted average shares outstanding-diluted...                   4,346                      4,346
                                                                             ==========                ===========

         The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>

                                   ADVANCED COMMUNICATION SYSTEMS, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (in thousands)
                                            (Unaudited)
<CAPTION>

                                                                              Six Months Ended
                                                                                  March 31
                                                                         --------------------------
                                                                            1998           1997
                                                                         -----------    -----------
       <S>                                                                 <C>            <C>         
       Cash flow from operating activities:
       Net income......................................................    $1,497         $1,269
       Adjustments to reconcile net income to net 
           cash provided by (used in) operating activities-
           Depreciation and amortization...............................       549            201
           Changes in assets and liabilities:
                Contract receivables...................................    (2,249)        (1,557)
                Other receivables......................................      (406)          (128)
                Prepaid expenses.......................................       (94)          (307)
                Inventories............................................      (133)             -
                Other related party receivables........................       (66)          (123)
                Long-term deferred tax asset...........................       147              -
                Other assets...........................................       (27)           (54)
                Accounts payable.......................................    (2,083)         2,278
                Accrued expenses and other current liabilities.........    (1,010)         1,574
                Billings in excess of revenue..........................        20             83
                Income taxes payable...................................       942              -
                Deferred income taxes..................................      (363)             -
                                                                         -----------    -----------
                  Net cash (used in) provided by operating activities..    (3,276)         3,236
                                                                         -----------    -----------

       Cash flows from investing activities:
       Acquisitions, net of cash acquired..............................   (19,748)             -
       Purchases of property and equipment.............................      (765)          (350)
       Capitalized software development costs..........................      (686)             -
       Deferred financing costs........................................      (101)             -
                                                                         -----------    -----------
                  Net cash used in investing activities................   (21,300)          (350)
                                                                         -----------    -----------

       Cash flows  from  financing  activities:  
       Net costs incurred in sale of common stock......................       (13)             -
       Net repayments from borrowings..................................      (866)             -
       Net borrowings (repayments) under line of credit................    23,261         (2,688)
       Sale of treasury stock..........................................       252             38
                                                                         -----------    -----------  
                    Net cash provided by financing activities..........    22,634         (2,650)
                                                                         -----------    -----------

     
       Net(decrease)increase in cash...................................    (1,942)            236
       Cash and cash equivalents, beginning of period..................     2,744           1,177
                                                                         -----------    -----------

       Cash and cash equivalents, end of period........................      $802          $1,413
                                                                         ===========    ===========

       Income taxes paid...............................................      $155              $0
                                                                         ===========    ===========
       Interest paid...................................................      $352            $134
                                                                         ===========    ===========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
                                               
<PAGE>
                                               
                                               

                      ADVANCED COMMUNICATION SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1998
                                   (Unaudited)

1.   Basis of Presentation

The accompanying  condensed  consolidated balance sheet as of March 31, 1998 and
the statements of operations and cash flows for all periods  presented have been
prepared by Advanced Communication  Systems, Inc. ("the Company"),  and have not
been audited. These financial statements, in the opinion of management,  include
all  adjustments,  consisting of normal recurring  adjustments,  necessary for a
fair  presentation  of the financial  position,  results of operations  and cash
flows  for  all  periods  presented.   These  condensed  consolidated  financial
statements should be read in conjunction with the financial statements and notes
thereto for the fiscal year ended  September  30, 1997 included in the Company's
Annual  Report  on Form  10-K and in the  Registration  Statement  on Form  S-1.
Interim  operating  results are not necessarily  indicative of operating results
for the full year.

2.   Management's Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

3.   Provision for Income Taxes

Prior to June 25, 1997,  the Company  elected to be treated as an S  corporation
and was not subject to federal and certain state income taxes.  As a result,  no
provision for federal or state income taxes has been included in the  historical
statements of operations prior to June 25, 1997. On June 25, 1997, in connection
with the  initial  public  offering  the S  corporation  status was  terminated,
thereby  subjecting  future  income of the Company to federal  and state  income
taxes at the  corporate  level.  Subsequent  to June 25,  1997,  the Company has
provided  for federal and state  income taxes in the  statements  of  operations
based on the effective tax rate.

4.   Pro Forma Net Income Per Share

Pro forma net income is based on the assumption that the Company's S corporation
status was  terminated  at the  beginning of the year.  Pro forma net income per
share has been  computed  by  dividing  pro  forma  net  income by the pro forma
weighted average number of common shares outstanding during the period.


5.  Net Income Per Share

Effective  December  31,  1997,  the Company  adopted the  Financial  Accounting
Standards Board Statement of Financial  Accounting  Standards  ("SFAS") No. 128,
"Earnings Per Share".  This statement  replaces the previously  reported primary
and fully  diluted  net income per share with basic and  diluted  net income per
share.  Unlike primary net income per share, basic net income per share excludes
any  dilutive  effects of stock  options.  Diluted  net income per share is very
similar to the previously  reported fully diluted net income per share.  All net
income per share  amounts  have been  restated  to conform to SFAS No.  128.  No
reconciling  items existed between the net income used for basic and diluted net
income per share.  The only  reconciling  item between the shares used for basic
and diluted net income per share related to outstanding stock options.

6. Acquisitions

Integrated Systems Control, Inc.

In November 1997, the Company acquired all the outstanding  shares of Integrated
Systems  Control,  Inc.  ("ISC") in exchange for 475,000 shares of the Company's
common  stock.  The  acquisition  has  been  accounted  for  as a  purchase  and
accordingly  the total purchase price has been allocated to acquired  assets and
liabilities  assumed at their estimated fair values.  The excess of the purchase
price over the net assets  acquired is being carried as goodwill,  in the amount
of approximately $1.3 million, which will be amortized over its estimated useful
life of thirty years.

Advanced Management, Inc.

In February 1998, the Company  acquired all the  outstanding  shares of Advanced
Management,  Inc.  ("AMI") for $19.5 million in cash and  additional  contingent
payments for each of two consecutive  twelve month periods following the closing
date of the  acquisition  up to a maximum of $5.25 million for each period.  The
acquisition has been accounted for as a purchase, and accordingly,  the purchase
price has been allocated to the acquired assets and liabilities assumed at their
estimated  fair  values.  The excess of the  purchase  price over the net assets
acquired is being carried as intangible assets,  including goodwill and customer
lists,  in  the  amounts  of  approximately  $12.2  million  and  $4.1  million,
respectively,  which will be amortized over their estimated useful lives ranging
from 16 to 40 years.

The  following  unaudited  pro  forma  summary  presents  information  as if the
acquisitions  had occurred at the  beginning of each period  presented.  The pro
forma  information  does not  necessarily  reflect the actual results that would
have occurred nor is it  necessarily  indicative of future results of operations
of the combined companies.





                                                      (Unaudited)
                                           Six Months Ended    Year Ended
                                               March 31,      September 30,
                                                 1998            1997
                                           ---------------  ---------------
       (in thousands, except per share data)
       Revenues.............................   $40,635           $88,620
       Net income...........................    $1,520            $3,066
       Net income per share - basic.........     $0.24             $0.59
       Net income per share - diluted.......     $0.23             $0.58



7. Long-Term Debt

Notes payable and line of credit consist of the following:
<TABLE>
<CAPTION>
                                                          March 31,       September 30,
                                                            1998             1997
                                                         ------------     ------------
                                                                 (Unaudited)
   <S>                                                     <C>                 <C>
   Line of credit:
       $35,000,000 line of credit with a
       commercial bank expiring February 28, 2000.....     $23,261             $ -


   Notes payable:
       Note payable to bank, interest at 9.9%,
       due February 2005, secured by a First
       Deed of Trust on an office building............         971               -

       Note  payable to Urban  Business  Development  
       Corporation,  interest  at 8.575%, due January 
       2015, guaranteed by the Small Business 
       Administration and secured by a Second Deed                  
       of Trust on an office building.................         698               -
                                                         ------------     ------------
                                                            24,930               -
       Less current maturities........................          84               -
                                                         ------------     ------------
                                                           $24,846             $ -
                                                         ============     ============
</TABLE>



Line of Credit

In February 1998, the Company entered into a line of credit  arrangement  with a
commercial bank, refinancing the Company's  then-existing line of credit and the
outstanding  commercial  bank debt of ISC.  This line of credit  consists of two
separate facilities,  permitting the Company to borrow up to an aggregate of $35
million.  The first  facility,  in an amount up to $15  million,  may be used to
finance acquisitions,  working capital, and other corporate purposes,  and bears
interest at either the bank's prime rate or at a London  interbank  offered rate
("LIBOR") for one, two or three month periods, plus a percentage,  not more than
2.2%,  which  depends  on  the  Company's  historical  performance.  The  second
facility,  in an amount up to $20 million, may be used to finance  acquisitions,
and bears  interest  at either the  bank's  prime rate or at a LIBOR rate plus a
percentage,  not more than  2.45%,  which  depends on the  Company's  historical
financial  performance.  Each facility  expires on February 28, 2000. The credit
agreement contains various covenants requiring the Company and its subsidiaries,
on a consolidated basis, to maintain certain financial ratios, including debt to
net income,  minimum net income and minimum net worth. The credit agreement also
prohibits the payment of dividends. As of March 31, 1998 the outstanding balance
on its line of credit was $23.3 million and the weighted  average  interest rate
for the six months ended March 31, 1998, was  approximately  8.2%. The Company's
subsidiary,  ISC, had three notes  payable  totaling  $1,671,000  at the date of
acquisition,  secured by accounts receivable,  equipment and other assets, which
were repaid using the above mentioned facility in February 1998.

The Company had a line of credit  arrangement with a commercial bank under which
it could borrow up to a maximum of $5 million.  The  borrowings  were limited to
80%  of  eligible  receivables,  as  defined,  and  90% of  eligible  government
receivables,  as defined,  and were secured by all assets  including  inventory,
contract  receivables and intangibles.  Interest was paid monthly, at the bank's
prime rate plus a  percentage,  not more than  0.25%.  The  agreement  contained
various  covenants  requiring the Company to maintain certain  financial ratios,
each as defined,  including  tangible  net worth,  liabilities  to tangible  net
worth,  funded debt to operating cash flow and debt service.  The agreement also
restricted the payment of dividends.  The line of credit arrangement  expired on
February 28, 1998.

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

The following  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations contains forward-looking  statements based on management's
current  expectations,  estimates and projections about the Company's  industry,
management's   beliefs  and  certain  assumptions  made  by  management.   These
forward-looking  statements involve risks and uncertainties,  and actual results
may differ  materially from those  anticipated or expressed in such  statements.
Potential risks and uncertainties  include,  among others, those set forth under
the "Risk  Factors"  section of the Company's  final  prospectus  dated June 27,
1997, as filed with the Securities and Exchange  Commission.  Except as required
by law,  the Company  undertakes  no  obligation  to update any  forward-looking
statement, whether as a result of new information, future events or otherwise.

Results of Operations

The  following  table sets  forth  certain  statement  of  operations  data as a
percentage of revenues for the periods indicated:





                                    Three Months              Six Months
                                   Ended March 31,          Ended March 31,
                             -----------------------   -------------------------
                                1998        1997          1998          1997
                             ----------  ----------   ------------  ------------
Revenues.....................  100.0 %     100.0 %       100.0 %       100.0 %

Direct costs.................   64.5        72.2          64.5          69.8

Indirect, general and
 administrative..............   26.6        21.4          27.1          23.8
                             ----------  ----------   ------------  ------------
Income from operations.......    8.9         6.4           8.4           6.4

Other income (expense), net..   (1.6)       (0.3)         (1.1)         (0.4)
                             ----------  ----------   ------------  ------------

Income before taxes..........    7.3         6.1           7.3           6.0

Pro forma income taxes (1)...    2.7         2.4           2.7           2.4
                             ----------  ----------   ----------    ------------
 Pro forma net income........    4.6 %       3.7 %         4.6 %         3.6 %
                             ==========  ==========   ===========   ============

____________________________________


(1) Prior to June 25, 1997,the Company elected to be treated as an S corporation
and was not subject to federal and certain  state  income  taxes.  The pro forma
income taxes data reflects federal and state income taxes based on estimated tax
rates,  as if the  Company  had  elected C  corporation  status for the  periods
indicated.  Amounts  for the three month and six month  periods  ended March 31,
1998, are based on actual results.

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

Revenues increased 52.4%, or $6.4 million, to $18.4 million for the three months
ended  March 31,  1998,  from $12.0  million  for the same  period in 1997.  The
increase  was  principally  due to an increase in  revenues  from  communication
systems,  primarily  under  contracts  with the U.S.  Navy,  resulting  from the
Company's  acquisitions  of RFM and ISC, and  information  technology  services,
resulting from the acquisition of AMI.

Direct costs include labor costs,  related fringe benefits,  subcontract  costs,
material  costs and other  non-overhead  costs  directly  related to a contract.
Direct  costs  increased  to $11.9  million for the three months ended March 31,
1998 from $8.7  million for the same period in 1997 due  primarily  to increased
revenues  from  the  Company's  acquisitions.   Direct  costs,  expressed  as  a
percentage of revenues,  decreased to 64.5% for the three months ended March 31,
1998 from 72.2% for the same period in 1997,  primarily due to a decrease in the
proportion of revenues coming from systems integration services.  These services
have higher direct costs than the other  services the Company  provides  because
the contracts  generally require the Company to purchase hardware  components as
part of the services.

Indirect, general and administrative expenses include fringe benefits, overhead,
selling  and  administrative  costs,  depreciation  and  amortization,  bid  and
proposal costs and research and development expenses. Indirect expense increased
to $4.9 million for the three months ended March 31, 1998, from $2.6 million for
the same period in 1997.  The increase was due  primarily to the higher level of
revenues  discussed  above.  Indirect  expenses,  expressed as a  percentage  of
revenues,  increased  to 26.6% from 21.4% for the three  months  ended March 31,
1998, due to both the higher proportion of communication systems revenues, which
typically have higher associated  indirect expenses,  and to the amortization of
intangible assets,  principally goodwill,  from the acquisition of RFM, ISC and
AMI.

Income from operations  increased  111.3%,  to $1.6 million for the three months
ended March 31, 1998,  from $773,000 for the same period in 1997,  primarily due
to increased  communication systems revenues and information technology services
revenues from the  acquisition of AMI, RFM and ISC. As a percentage of revenues,
income from  operations  increased  to 8.9% for the three months ended March 31,
1998,  from  6.4% for the  comparable  period  in the  prior  year,  principally
attributable  to  increased  revenues  from  fixed  price and  time-and-material
contracts of AMI which typically carry higher margins.

Other income (expense),  net,  consists of interest  expense,  offset in part by
interest income from short-term  deposits of cash. Interest expense was $289,000
and  $71,000  for the  three-month  periods  ended  March  31,  1998  and  1997,
respectively.  Interest income was $4,000 and $29,000 for the three months ended
March 31, 1998 and 1997, respectively.

The Company's  effective tax rate was 37.0% for the three months ended March 31,
1998. The Company's pro forma  effective tax rate was 39.0% for the three months
ended March 31, 1997. This decrease is primarily due to lower state taxes.

Six Months Ended March 31, 1998 Compared to Six Months Ended March 31, 1997

Revenues increased 54.0%, or $11.4 million,  to $32.6 million for the six months
ended  March 31,  1998,  from $21.1  million  for the same  period in 1997.  The
increase  was  principally  due to an increase in  revenues  from  communication
systems,  primarily  under  contracts  with the U.S.  Navy,  resulting  from the
Company's  acquisitions  of RFM and ISC, and  information  technology  services,
resulting from the acquisition of AMI.

Direct costs increased to $21.0 million for the six months ended March 31, 1998,
from  $14.7  million  for the same  period in 1997 due  primarily  to  increased
revenues  from  the  Company's  acquisitions.   Direct  costs,  expressed  as  a
percentage  of  revenues,  decreased to 64.5% for the six months ended March 31,
1998, from 69.8% for the same period in 1997, primarily due to a decrease in the
proportion of revenues coming from systems integration services.  These services
have higher direct costs than other  services the Company  provides  because the
contracts  generally require the Company to purchase hardware components as part
of the services.

Indirect  expenses  increased to $8.8 million for the six months ended March 31,
1998  from  $5.0  million  for the same  period in 1997.  The  increase  was due
primarily to the higher level of revenues  discussed above.  Indirect  expenses,
expressed  as a percentage  of  revenues,  increased to 27.1% for the six months
ended March 31, 1998, from 23.8% for the comparable period last year, due to the
amortization  of  intangible  assets,  primarily  goodwill,  resulting  from the
acquisition of RFM, ISC and AMI.

Income from  operations  increased  101.5%,  to $2.7  million for the six months
ended March 31, 1998,  from $1.4 million for the same period in 1997,  primarily
due to  increased  communication  systems  and IT  Services  revenues  from  the
acquisition  of RFM,  ISC and AMI.  As a  percentage  of  revenues,  income form
operations  increased to 8.4% for the six months ended March 31, 1998, from 6.4%
for the  comparable  period  in the  prior  year,  principally  attributable  to
increased  revenues from  fixed-price  and  time-and-materials  contracts  which
typically carry higher margins.

Other income (expense),  net,  consists of interest  expense,  offset in part by
interest income from short-term  deposits of cash. Interest expense was $378,000
and  $134,000  for  the  six-month  periods  ended  March  31,  1998  and  1997,
respectively. The increase in interest expense resulted primarily from the $19.5
million  borrowed to fund the AMI  acquisition.  Interest income was $15,000 and
$44,000 for the six months ended March 31, 1998 and 1997, respectively.

The  Company's  effective  tax rate was 37% for the six months  ended  March 31,
1998.  The  Company's  pro forma  effective  tax rate was 39% for the six months
ended March 31, 1997. This decrease is primarily due to lower state taxes.

Liquidity and Capital Resources

The Company  used cash from  operating  activities  of $3.3  million for the six
months ended March 31, 1998,  resulting primarily from net income, for increases
in contract  receivables and decreases in accrued expenses and accounts payable.
The increase in contract  receivables was due to increases in revenue recognized
on  contracts  for  which  billings  had not  been  presented  to the  customer,
particularly  on a contract with the  Australian  Navy. For the six months ended
March 31, 1997, the Company  generated  cash from  operating  activities of $3.2
million resulting  primarily from net income,  increases in accounts payable and
accrued expenses and partially offset by increases in contract receivables.

The principal use of cash for investing activities has been for the purchases of
computers and equipment and the  acquisition  of AMI. The purchases of computers
and equipment totaled $765,000 and $350,000 for the six-month period ended March
31,  1998 and 1997,  respectively.  Further  the  Company  invested  $686,000 in
software development costs for its communications products, including the latest
Microsoft  Exchange-based  product,  INFORMATION  2000,  in the six months ended
March 31, 1998. In February 1998, the Company  acquired AMI for $19.5 million in
cash  and  additional  contingent  payments  based  on  achievement  of  certain
financial goals.

In February 1998, the Company entered into a line of credit  arrangement  with a
commercial bank, refinancing the Company's  then-existing line of credit and the
outstanding  commercial  bank debt of ISC.  This line of credit  consists of two
separate facilities,  permitting the Company to borrow up to an aggregate of $35
million.  The first  facility,  in an amount up to $15  million,  may be used to
finance acquisitions,  working capital, and other corporate purposes,  and bears
interest at either the bank's prime rate or at a London  interbank  offered rate
("LIBOR") for one, two or three month periods, plus a percentage,  not more than
2.2%,  which  depends  on  the  Company's  historical  performance.  The  second
facility,  in an amount up to $20 million, may be used to finance  acquisitions,
and bears  interest  at either the  bank's  prime rate or at a LIBOR rate plus a
percentage,  not more than  2.45%,  which  depends on the  Company's  historical
financial  performance.  Each facility  expires on February 28, 2000. The credit
agreement contains various covenants requiring the Company and its subsidiaries,
on a consolidated basis, to maintain certain financial ratios, including debt to
net income,  minimum net income and minimum net worth. The credit agreement also
prohibits the payment of dividends. As of March 31, 1998 the outstanding balance
on its line of credit was $23.3 million.

The Company  currently  anticipates  that its  current  cash  balances,  amounts
available  under  its  credit  facility  and  net  cash  provided  by  operating
activities   will  be  sufficient  to  meet  its  working  capital  and  capital
expenditure requirements for at least the next twelve months.
<PAGE>

PART II - OTHER INFORMATION

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

(a) The Company held its Annual Meeting of Stockholders on February 25, 1998.

(b)   The  matters  voted upon at the  meeting  and the votes cast with  respect
      thereto were as follows:
         (1)       Election of Directors
                                                   Votes              Votes
                   Nominee for Director          Cast For           Withheld
                   ------------------------  -----------------  ----------------

                   Charles R. Collins.....       6,216,825             19,800

                   Thomas A. Costello.....       6,215,525             21,100

                   Charles G. Martinache..       6,215,525             21,100

                   George A. Robinson.....       6,215,525             21,100

                   Wayne Shelton..........       6,216,825             19,800


         (2)      The  ratification of the appointment of Arthur Andersen LLP as
                  the Company's  independent  accountants for the current fiscal
                  year ending  September  30, 1998 was ratified  with 6,220,331
                  votes in favor, 4,140 votes against and 12,154 abstentions.

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibit 11.1        Statement Regarding Computation of Per Share
                                   Earnings

               Exhibit 11.2        Statement Regarding Computation of Pro Forma
                                   Per Share Earnings

               Exhibit 27.1        Financial Data Schedule


         (b)     (i) On February 4, 1998,  the Company filed a current report on
                 Form 8-K/A,  containing the financial  statements and pro forma
                 information  required by Item 7 of Form 8-K with respect to the
                 November 26, 1997, acquisition of all the outstanding shares of
                 Integrated Systems Control, Inc.

                 (ii) On February 19, 1998,  the Company filed a current  report
                 on Form 8-K, Item 5,  containing a press release dated February
                 18,  1998,  reporting  that the  Company  signed  a  definitive
                 agreement  to acquire  all the  outstanding  shares of Advanced
                 Management,  Incorporated ("AMI") in exchange for $19.5 million
                 in cash and additional  earn-out  payments upon the achievement
                 of certain financial goals in the next twenty-four months.

                 (iii) On March 13, 1998,  the Company filed a current report on
                 Form 8-K,  Item 2,  reporting  that on February  26,  1998,  it
                 completed the  acquisition  of AMI pursuant to a Stock Purchase
                 Agreement  dated  January 31, 1998.  Additionally,  the Company
                 replaced its $6.5 million credit  facilities with a $35 million
                 revolving credit facility to finance the acquisition of AMI and
                 provide for its other working capital needs.
<PAGE>


                                   SIGNATURES


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




Date:  May 15, 1998              ADVANCED COMMUNICATION SYSTEMS, INC.



                                     /S/ George A. Robinson
                           -----------------------------------------------
                                       George A. Robinson
                                       Chairman, President
                                    and Chief Executive Officer


                                         /S/ Dev Ganesan
                           -----------------------------------------------
                                           Dev Ganesan
                                   Executive Vice President, Chief
                                   Financial Officer and Treasurer
{"company-data": {"conformed-name": "ADVANCED COMMUNICATION SYSTEMS INC", "cik": "0001035104", "assigned-sic": "7373", "irs-number": "541421222", "state-of-incorporation": "DE", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-14652", "film-number": "98623488"}, "business-address": {"street1": "10089 LEE HIGHWAY", "city": "FAIRFAX", "state": "VA", "zip": "22030", "phone": "7039378130"}, "mail-address": {"street1": "10089 LEE HIGHWAY", "city": "FAIRFAX", "state": "VA", "zip": "22030"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

           [X] Quarterly Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                  For the Quarterly Period Ended March 31, 1998

                                       or

     [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
                          Exchange Act of 1934 for the
                           Transition Period from to .

                         Commission File Number: 0-22737

                      Advanced Communication Systems, Inc.
             (Exact name of registrant as specified in its charter)

           Delaware                                 54-1421222
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)

                   10089  Lee  Highway,  Fairfax,  Virginia  22030  (Address  of
              principal executive office and zip code)

                                 (703) 934-8130
               Registrant'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 ] No [ ]

As of the close of business on April 15, 1998, the  registrant  had  outstanding
6,554,000 shares of Common Stock, par value $.01 per share.
ADVANCED COMMUNICATION SYSTEMS, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                                      INDEX

                                                                      PAGE

PART I.         FINANCIAL INFORMATION

Item 1.         Financial Statements:

                Condensed Consolidated Balance Sheets as of
                March 31, 1998 and September 30, 1997                   3
                                                                               

                Condensed Consolidated Statements of Operations
                for the Three Months and Six Months Ended March
                31, 1998 and 1997                                       4

                Condensed Consolidated Statements of Cash Flows 
                for the Six Months Ended March 31, 1998 and 1997        5

                Notes to Condensed Consolidated Financial Statements    6

Item 2.         Management's Discussion and Analysis of Financial 
                Condition and Results of Operations                     9

PART II.        OTHER INFORMATION

Item 4.         Submission of Matters to a Vote of Security Holders    13
Item 6.         Exhibits and Reports on Form 8-K                       13
ADVANCED COMMUNICATION SYSTEMS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)
                                   (Unaudited)

                                                     March 31,     September 30,
                                                       1998            1997
                                                   ------------    ------------
                                        ASSETS
Current assets:
Cash and cash equivalents.........................      $802          $2,744
Contract receivables..............................    27,440          17,643
Other receivables.................................       621             154
Income taxes receivable...........................         -             529
Prepaid expenses..................................       805             296
Inventories.......................................       677             544
                                                   ------------   ------------
   Total current assets...........................    30,345          21,910
                                                   ------------   ------------
Property and equipment, net.......................     5,157           1,261
                                                                              
Other assets:
Other related party receivables...................       152              86
Software development costs, net...................     1,568             950
Intangibles, net..................................    19,333           1,706
Long-term deferred tax asset......................         -             147
Other non-current assets..........................       233             152
                                                   ------------    ------------
   Total other assets.............................    21,286           3,041
                                                   ------------    ------------
      Total assets................................   $56,788         $26,212
                                                   ============    ============

                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.................       $84            $  -
Accounts payable..................................     2,325           3,321
Accrued expenses and other current liabilities....     9,224           8,838
Billings in excess of revenue.....................       245             225
Income taxes payable..............................       331               -
                                                   ------------    ------------
   Total current liabilities......................    12,209          12,384
Long-term debt....................................    24,846               -
Deferred income tax liability.....................       778               -
                                                   ------------    ------------
   Total liabilities..............................    37,833          12,384
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares 
  authorized, no shares issued and outstanding....         -               -
                                                                               
Common stock,  $.01 par value,  40,000,000 shares  
  authorized, 9,450,000 shares issued at March  
  31, 1998 and 8,975,000 shares issued at 
  September 30,1997...............................        95              90
Paid-in-capital...................................    17,692          14,409
Retained earnings (deficit).......................     1,205            (382)
                                                                              
Less - Treasury stock, 2,901,625 shares at March 
  31, 1998 and 2,945,000 shares at 
  September 30, 1997..............................       (37)           (289)
                                                   ------------    ------------
   Total stockholders' equity.....................    18,955          13,828
                                                   ------------    ------------
      Total liabilities and stockholders' equity...  $56,788         $26,212
                                                   ============    ============

         The accompanying notes are an integral part of these condensed
                       consolidated financial statements.
ADVANCED COMMUNICATION SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                   (Unaudited)
Three Months Ended        Six Months Ended
                                                                       March 31                 March 31
                                                                  1998          1997       1998         1997    
                                                               ----------    --------    ---------   ----------
Revenues................................................    $18,380      $12,064      $32,550       $21,130

     Direct costs............................................     11,859        8,708       20,990        14,746
                                                                    
     Indirect, general and administrative expenses...........      4,888        2,583        8,821         5,025
                                                               ----------    --------    ---------   ----------
     Income from operations..................................      1,633          773        2,739         1,359
                                                                     
     Interest expense........................................       (289)         (71)        (378)         (134)
                                                                     
     Other income, net.......................................          4           29           15            44
                                                               ----------    ---------    --------   -----------
     Income before taxes.....................................      1,348          731        2,376         1,269

     Provision for income taxes..............................        505            -          879             -
                                                               ----------    ---------    --------    ----------
     Net income..............................................       $843         $731       $1,497        $1,269
                                                               ==========    =========    ========    ==========

     Net income per share-basic..............................      $0.13                     $0.23
                                                               ==========                 ========
     Net income per share-diluted............................      $0.13                     $0.23
                                                               ==========                 ========

     Weighted average shares outstanding-basic...............      6,524                     6,438
                                                               ==========                 ========
     Weighted average shares outstanding-diluted.............      6,636                     6,558
                                                               ==========                 ========

     Pro forma statements of operations data

     Income before taxes as reported.........................                    $731                     $1,269
     Pro forma income tax provision..........................                     285                        495
                                                                             ----------                ---------
     Pro forma net income....................................                    $446                       $774
                                                                             ==========                =========

     Pro forma net income per share-basic....................                   $0.11                      $0.18
                                                                             ==========                =========
     Pro forma net income per share-diluted..................                   $0.10                      $0.18
                                                                             ==========                =========

     Pro forma weighted average shares outstanding-basic.....                   4,246                      4,246
                                                                             ==========                ===========
     Pro forma weighted average shares outstanding-diluted...                   4,346                      4,346
                                                                             ==========                ===========

         The accompanying notes are an integral part of these condensed consolidated financial statements.
ADVANCED COMMUNICATION SYSTEMS, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                          (in thousands)
                                            (Unaudited)
Six Months Ended
                                                                                  March 31
                                                                         --------------------------
                                                                            1998           1997
                                                                         -----------    -----------
Cash flow from operating activities:
       Net income......................................................    $1,497         $1,269
       Adjustments to reconcile net income to net 
           cash provided by (used in) operating activities-
           Depreciation and amortization...............................       549            201
           Changes in assets and liabilities:
                Contract receivables...................................    (2,249)        (1,557)
                Other receivables......................................      (406)          (128)
                Prepaid expenses.......................................       (94)          (307)
                Inventories............................................      (133)             -
                Other related party receivables........................       (66)          (123)
                Long-term deferred tax asset...........................       147              -
                Other assets...........................................       (27)           (54)
                Accounts payable.......................................    (2,083)         2,278
                Accrued expenses and other current liabilities.........    (1,010)         1,574
                Billings in excess of revenue..........................        20             83
                Income taxes payable...................................       942              -
                Deferred income taxes..................................      (363)             -
                                                                         -----------    -----------
                  Net cash (used in) provided by operating activities..    (3,276)         3,236
                                                                         -----------    -----------

       Cash flows from investing activities:
       Acquisitions, net of cash acquired..............................   (19,748)             -
       Purchases of property and equipment.............................      (765)          (350)
       Capitalized software development costs..........................      (686)             -
       Deferred financing costs........................................      (101)             -
                                                                         -----------    -----------
                  Net cash used in investing activities................   (21,300)          (350)
                                                                         -----------    -----------

       Cash flows  from  financing  activities:  
       Net costs incurred in sale of common stock......................       (13)             -
       Net repayments from borrowings..................................      (866)             -
       Net borrowings (repayments) under line of credit................    23,261         (2,688)
       Sale of treasury stock..........................................       252             38
                                                                         -----------    -----------  
                    Net cash provided by financing activities..........    22,634         (2,650)
                                                                         -----------    -----------

     
       Net(decrease)increase in cash...................................    (1,942)            236
       Cash and cash equivalents, beginning of period..................     2,744           1,177
                                                                         -----------    -----------

       Cash and cash equivalents, end of period........................      $802          $1,413
                                                                         ===========    ===========

       Income taxes paid...............................................      $155              $0
                                                                         ===========    ===========
       Interest paid...................................................      $352            $134
                                                                         ===========    ===========
The accompanying notes are an integral part of these condensed consolidated financial statements.
ADVANCED COMMUNICATION SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1998
                                   (Unaudited)

1.   Basis of Presentation

The accompanying  condensed  consolidated balance sheet as of March 31, 1998 and
the statements of operations and cash flows for all periods  presented have been
prepared by Advanced Communication  Systems, Inc. ("the Company"),  and have not
been audited. These financial statements, in the opinion of management,  include
all  adjustments,  consisting of normal recurring  adjustments,  necessary for a
fair  presentation  of the financial  position,  results of operations  and cash
flows  for  all  periods  presented.   These  condensed  consolidated  financial
statements should be read in conjunction with the financial statements and notes
thereto for the fiscal year ended  September  30, 1997 included in the Company's
Annual  Report  on Form  10-K and in the  Registration  Statement  on Form  S-1.
Interim  operating  results are not necessarily  indicative of operating results
for the full year.

2.   Management's Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
reported  amounts of revenues and expenses during the reporting  period.  Actual
results could differ from those estimates.

3.   Provision for Income Taxes

Prior to June 25, 1997,  the Company  elected to be treated as an S  corporation
and was not subject to federal and certain state income taxes.  As a result,  no
provision for federal or state income taxes has been included in the  historical
statements of operations prior to June 25, 1997. On June 25, 1997, in connection
with the  initial  public  offering  the S  corporation  status was  terminated,
thereby  subjecting  future  income of the Company to federal  and state  income
taxes at the  corporate  level.  Subsequent  to June 25,  1997,  the Company has
provided  for federal and state  income taxes in the  statements  of  operations
based on the effective tax rate.

4.   Pro Forma Net Income Per Share

Pro forma net income is based on the assumption that the Company's S corporation
status was  terminated  at the  beginning of the year.  Pro forma net income per
share has been  computed  by  dividing  pro  forma  net  income by the pro forma
weighted average number of common shares outstanding during the period.

5.  Net Income Per Share

Effective  December  31,  1997,  the Company  adopted the  Financial  Accounting
Standards Board Statement of Financial  Accounting  Standards  ("SFAS") No. 128,
"Earnings Per Share".  This statement  replaces the previously  reported primary
and fully  diluted  net income per share with basic and  diluted  net income per
share.  Unlike primary net income per share, basic net income per share excludes
any  dilutive  effects of stock  options.  Diluted  net income per share is very
similar to the previously  reported fully diluted net income per share.  All net
income per share  amounts  have been  restated  to conform to SFAS No.  128.  No
reconciling  items existed between the net income used for basic and diluted net
income per share.  The only  reconciling  item between the shares used for basic
and diluted net income per share related to outstanding stock options.

6. Acquisitions

Integrated Systems Control, Inc.

In November 1997, the Company acquired all the outstanding  shares of Integrated
Systems  Control,  Inc.  ("ISC") in exchange for 475,000 shares of the Company's
common  stock.  The  acquisition  has  been  accounted  for  as a  purchase  and
accordingly  the total purchase price has been allocated to acquired  assets and
liabilities  assumed at their estimated fair values.  The excess of the purchase
price over the net assets  acquired is being carried as goodwill,  in the amount
of approximately $1.3 million, which will be amortized over its estimated useful
life of thirty years.

Advanced Management, Inc.

In February 1998, the Company  acquired all the  outstanding  shares of Advanced
Management,  Inc.  ("AMI") for $19.5 million in cash and  additional  contingent
payments for each of two consecutive  twelve month periods following the closing
date of the  acquisition  up to a maximum of $5.25 million for each period.  The
acquisition has been accounted for as a purchase, and accordingly,  the purchase
price has been allocated to the acquired assets and liabilities assumed at their
estimated  fair  values.  The excess of the  purchase  price over the net assets
acquired is being carried as intangible assets,  including goodwill and customer
lists,  in  the  amounts  of  approximately  $12.2  million  and  $4.1  million,
respectively,  which will be amortized over their estimated useful lives ranging
from 16 to 40 years.

The  following  unaudited  pro  forma  summary  presents  information  as if the
acquisitions  had occurred at the  beginning of each period  presented.  The pro
forma  information  does not  necessarily  reflect the actual results that would
have occurred nor is it  necessarily  indicative of future results of operations
of the combined companies.

                                                      (Unaudited)
                                           Six Months Ended    Year Ended
                                               March 31,      September 30,
                                                 1998            1997
                                           ---------------  ---------------
       (in thousands, except per share data)
       Revenues.............................   $40,635           $88,620
       Net income...........................    $1,520            $3,066
       Net income per share - basic.........     $0.24             $0.59
       Net income per share - diluted.......     $0.23             $0.58

7. Long-Term Debt

Notes payable and line of credit consist of the following:
March 31,       September 30,
                                                            1998             1997
                                                         ------------     ------------
                                                                 (Unaudited)
Line of credit:
       $35,000,000 line of credit with a
       commercial bank expiring February 28, 2000.....     $23,261             $ -

   Notes payable:
       Note payable to bank, interest at 9.9%,
       due February 2005, secured by a First
       Deed of Trust on an office building............         971               -

       Note  payable to Urban  Business  Development  
       Corporation,  interest  at 8.575%, due January 
       2015, guaranteed by the Small Business 
       Administration and secured by a Second Deed                  
       of Trust on an office building.................         698               -
                                                         ------------     ------------
                                                            24,930               -
       Less current maturities........................          84               -
                                                         ------------     ------------
                                                           $24,846             $ -
                                                         ============     ============
Line of Credit

In February 1998, the Company entered into a line of credit  arrangement  with a
commercial bank, refinancing the Company's  then-existing line of credit and the
outstanding  commercial  bank debt of ISC.  This line of credit  consists of two
separate facilities,  permitting the Company to borrow up to an aggregate of $35
million.  The first  facility,  in an amount up to $15  million,  may be used to
finance acquisitions,  working capital, and other corporate purposes,  and bears
interest at either the bank's prime rate or at a London  interbank  offered rate
("LIBOR") for one, two or three month periods, plus a percentage,  not more than
2.2%,  which  depends  on  the  Company's  historical  performance.  The  second
facility,  in an amount up to $20 million, may be used to finance  acquisitions,
and bears  interest  at either the  bank's  prime rate or at a LIBOR rate plus a
percentage,  not more than  2.45%,  which  depends on the  Company's  historical
financial  performance.  Each facility  expires on February 28, 2000. The credit
agreement contains various covenants requiring the Company and its subsidiaries,
on a consolidated basis, to maintain certain financial ratios, including debt to
net income,  minimum net income and minimum net worth. The credit agreement also
prohibits the payment of dividends. As of March 31, 1998 the outstanding balance
on its line of credit was $23.3 million and the weighted  average  interest rate
for the six months ended March 31, 1998, was  approximately  8.2%. The Company's
subsidiary,  ISC, had three notes  payable  totaling  $1,671,000  at the date of
acquisition,  secured by accounts receivable,  equipment and other assets, which
were repaid using the above mentioned facility in February 1998.

The Company had a line of credit  arrangement with a commercial bank under which
it could borrow up to a maximum of $5 million.  The  borrowings  were limited to
80%  of  eligible  receivables,  as  defined,  and  90% of  eligible  government
receivables,  as defined,  and were secured by all assets  including  inventory,
contract  receivables and intangibles.  Interest was paid monthly, at the bank's
prime rate plus a  percentage,  not more than  0.25%.  The  agreement  contained
various  covenants  requiring the Company to maintain certain  financial ratios,
each as defined,  including  tangible  net worth,  liabilities  to tangible  net
worth,  funded debt to operating cash flow and debt service.  The agreement also
restricted the payment of dividends.  The line of credit arrangement  expired on
February 28, 1998.

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

The following  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations contains forward-looking  statements based on management's
current  expectations,  estimates and projections about the Company's  industry,
management's   beliefs  and  certain  assumptions  made  by  management.   These
forward-looking  statements involve risks and uncertainties,  and actual results
may differ  materially from those  anticipated or expressed in such  statements.
Potential risks and uncertainties  include,  among others, those set forth under
the "Risk  Factors"  section of the Company's  final  prospectus  dated June 27,
1997, as filed with the Securities and Exchange  Commission.  Except as required
by law,  the Company  undertakes  no  obligation  to update any  forward-looking
statement, whether as a result of new information, future events or otherwise.

Results of Operations

The  following  table sets  forth  certain  statement  of  operations  data as a
percentage of revenues for the periods indicated:

                                    Three Months              Six Months
                                   Ended March 31,          Ended March 31,
                             -----------------------   -------------------------
                                1998        1997          1998          1997
                             ----------  ----------   ------------  ------------
Revenues.....................  100.0 %     100.0 %       100.0 %       100.0 %

Direct costs.................   64.5        72.2          64.5          69.8

Indirect, general and
 administrative..............   26.6        21.4          27.1          23.8
                             ----------  ----------   ------------  ------------
Income from operations.......    8.9         6.4           8.4           6.4

Other income (expense), net..   (1.6)       (0.3)         (1.1)         (0.4)
                             ----------  ----------   ------------  ------------

Income before taxes..........    7.3         6.1           7.3           6.0

Pro forma income taxes (1)...    2.7         2.4           2.7           2.4
                             ----------  ----------   ----------    ------------
 Pro forma net income........    4.6 %       3.7 %         4.6 %         3.6 %
                             ==========  ==========   ===========   ============

____________________________________

(1) Prior to June 25, 1997,the Company elected to be treated as an S corporation
and was not subject to federal and certain  state  income  taxes.  The pro forma
income taxes data reflects federal and state income taxes based on estimated tax
rates,  as if the  Company  had  elected C  corporation  status for the  periods
indicated.  Amounts  for the three month and six month  periods  ended March 31,
1998, are based on actual results.

Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997

Revenues increased 52.4%, or $6.4 million, to $18.4 million for the three months
ended  March 31,  1998,  from $12.0  million  for the same  period in 1997.  The
increase  was  principally  due to an increase in  revenues  from  communication
systems,  primarily  under  contracts  with the U.S.  Navy,  resulting  from the
Company's  acquisitions  of RFM and ISC, and  information  technology  services,
resulting from the acquisition of AMI.

Direct costs include labor costs,  related fringe benefits,  subcontract  costs,
material  costs and other  non-overhead  costs  directly  related to a contract.
Direct  costs  increased  to $11.9  million for the three months ended March 31,
1998 from $8.7  million for the same period in 1997 due  primarily  to increased
revenues  from  the  Company's  acquisitions.   Direct  costs,  expressed  as  a
percentage of revenues,  decreased to 64.5% for the three months ended March 31,
1998 from 72.2% for the same period in 1997,  primarily due to a decrease in the
proportion of revenues coming from systems integration services.  These services
have higher direct costs than the other  services the Company  provides  because
the contracts  generally require the Company to purchase hardware  components as
part of the services.

Indirect, general and administrative expenses include fringe benefits, overhead,
selling  and  administrative  costs,  depreciation  and  amortization,  bid  and
proposal costs and research and development expenses. Indirect expense increased
to $4.9 million for the three months ended March 31, 1998, from $2.6 million for
the same period in 1997.  The increase was due  primarily to the higher level of
revenues  discussed  above.  Indirect  expenses,  expressed as a  percentage  of
revenues,  increased  to 26.6% from 21.4% for the three  months  ended March 31,
1998, due to both the higher proportion of communication systems revenues, which
typically have higher associated  indirect expenses,  and to the amortization of
intangible assets,  principally goodwill,  from the acquisition of RFM, ISC and
AMI.

Income from operations  increased  111.3%,  to $1.6 million for the three months
ended March 31, 1998,  from $773,000 for the same period in 1997,  primarily due
to increased  communication systems revenues and information technology services
revenues from the  acquisition of AMI, RFM and ISC. As a percentage of revenues,
income from  operations  increased  to 8.9% for the three months ended March 31,
1998,  from  6.4% for the  comparable  period  in the  prior  year,  principally
attributable  to  increased  revenues  from  fixed  price and  time-and-material
contracts of AMI which typically carry higher margins.

Other income (expense),  net,  consists of interest  expense,  offset in part by
interest income from short-term  deposits of cash. Interest expense was $289,000
and  $71,000  for the  three-month  periods  ended  March  31,  1998  and  1997,
respectively.  Interest income was $4,000 and $29,000 for the three months ended
March 31, 1998 and 1997, respectively.

The Company's  effective tax rate was 37.0% for the three months ended March 31,
1998. The Company's pro forma  effective tax rate was 39.0% for the three months
ended March 31, 1997. This decrease is primarily due to lower state taxes.

Six Months Ended March 31, 1998 Compared to Six Months Ended March 31, 1997

Revenues increased 54.0%, or $11.4 million,  to $32.6 million for the six months
ended  March 31,  1998,  from $21.1  million  for the same  period in 1997.  The
increase  was  principally  due to an increase in  revenues  from  communication
systems,  primarily  under  contracts  with the U.S.  Navy,  resulting  from the
Company's  acquisitions  of RFM and ISC, and  information  technology  services,
resulting from the acquisition of AMI.

Direct costs increased to $21.0 million for the six months ended March 31, 1998,
from  $14.7  million  for the same  period in 1997 due  primarily  to  increased
revenues  from  the  Company's  acquisitions.   Direct  costs,  expressed  as  a
percentage  of  revenues,  decreased to 64.5% for the six months ended March 31,
1998, from 69.8% for the same period in 1997, primarily due to a decrease in the
proportion of revenues coming from systems integration services.  These services
have higher direct costs than other  services the Company  provides  because the
contracts  generally require the Company to purchase hardware components as part
of the services.

Indirect  expenses  increased to $8.8 million for the six months ended March 31,
1998  from  $5.0  million  for the same  period in 1997.  The  increase  was due
primarily to the higher level of revenues  discussed above.  Indirect  expenses,
expressed  as a percentage  of  revenues,  increased to 27.1% for the six months
ended March 31, 1998, from 23.8% for the comparable period last year, due to the
amortization  of  intangible  assets,  primarily  goodwill,  resulting  from the
acquisition of RFM, ISC and AMI.

Income from  operations  increased  101.5%,  to $2.7  million for the six months
ended March 31, 1998,  from $1.4 million for the same period in 1997,  primarily
due to  increased  communication  systems  and IT  Services  revenues  from  the
acquisition  of RFM,  ISC and AMI.  As a  percentage  of  revenues,  income form
operations  increased to 8.4% for the six months ended March 31, 1998, from 6.4%
for the  comparable  period  in the  prior  year,  principally  attributable  to
increased  revenues from  fixed-price  and  time-and-materials  contracts  which
typically carry higher margins.

Other income (expense),  net,  consists of interest  expense,  offset in part by
interest income from short-term  deposits of cash. Interest expense was $378,000
and  $134,000  for  the  six-month  periods  ended  March  31,  1998  and  1997,
respectively. The increase in interest expense resulted primarily from the $19.5
million  borrowed to fund the AMI  acquisition.  Interest income was $15,000 and
$44,000 for the six months ended March 31, 1998 and 1997, respectively.

The  Company's  effective  tax rate was 37% for the six months  ended  March 31,
1998.  The  Company's  pro forma  effective  tax rate was 39% for the six months
ended March 31, 1997. This decrease is primarily due to lower state taxes.

Liquidity and Capital Resources

The Company  used cash from  operating  activities  of $3.3  million for the six
months ended March 31, 1998,  resulting primarily from net income, for increases
in contract  receivables and decreases in accrued expenses and accounts payable.
The increase in contract  receivables was due to increases in revenue recognized
on  contracts  for  which  billings  had not  been  presented  to the  customer,
particularly  on a contract with the  Australian  Navy. For the six months ended
March 31, 1997, the Company  generated  cash from  operating  activities of $3.2
million resulting  primarily from net income,  increases in accounts payable and
accrued expenses and partially offset by increases in contract receivables.

The principal use of cash for investing activities has been for the purchases of
computers and equipment and the  acquisition  of AMI. The purchases of computers
and equipment totaled $765,000 and $350,000 for the six-month period ended March
31,  1998 and 1997,  respectively.  Further  the  Company  invested  $686,000 in
software development costs for its communications products, including the latest
Microsoft  Exchange-based  product,  INFORMATION  2000,  in the six months ended
March 31, 1998. In February 1998, the Company  acquired AMI for $19.5 million in
cash  and  additional  contingent  payments  based  on  achievement  of  certain
financial goals.

In February 1998, the Company entered into a line of credit  arrangement  with a
commercial bank, refinancing the Company's  then-existing line of credit and the
outstanding  commercial  bank debt of ISC.  This line of credit  consists of two
separate facilities,  permitting the Company to borrow up to an aggregate of $35
million.  The first  facility,  in an amount up to $15  million,  may be used to
finance acquisitions,  working capital, and other corporate purposes,  and bears
interest at either the bank's prime rate or at a London  interbank  offered rate
("LIBOR") for one, two or three month periods, plus a percentage,  not more than
2.2%,  which  depends  on  the  Company's  historical  performance.  The  second
facility,  in an amount up to $20 million, may be used to finance  acquisitions,
and bears  interest  at either the  bank's  prime rate or at a LIBOR rate plus a
percentage,  not more than  2.45%,  which  depends on the  Company's  historical
financial  performance.  Each facility  expires on February 28, 2000. The credit
agreement contains various covenants requiring the Company and its subsidiaries,
on a consolidated basis, to maintain certain financial ratios, including debt to
net income,  minimum net income and minimum net worth. The credit agreement also
prohibits the payment of dividends. As of March 31, 1998 the outstanding balance
on its line of credit was $23.3 million.

The Company  currently  anticipates  that its  current  cash  balances,  amounts
available  under  its  credit  facility  and  net  cash  provided  by  operating
activities   will  be  sufficient  to  meet  its  working  capital  and  capital
expenditure requirements for at least the next twelve months.
PART II - OTHER INFORMATION

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

(a) The Company held its Annual Meeting of Stockholders on February 25, 1998.

(b)   The  matters  voted upon at the  meeting  and the votes cast with  respect
      thereto were as follows:
         (1)       Election of Directors
                                                   Votes              Votes
                   Nominee for Director          Cast For           Withheld
                   ------------------------  -----------------  ----------------

                   Charles R. Collins.....       6,216,825             19,800

                   Thomas A. Costello.....       6,215,525             21,100

                   Charles G. Martinache..       6,215,525             21,100

                   George A. Robinson.....       6,215,525             21,100

                   Wayne Shelton..........       6,216,825             19,800

         (2)      The  ratification of the appointment of Arthur Andersen LLP as
                  the Company's  independent  accountants for the current fiscal
                  year ending  September  30, 1998 was ratified  with 6,220,331
                  votes in favor, 4,140 votes against and 12,154 abstentions.

Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibit 11.1        Statement Regarding Computation of Per Share
                                   Earnings

               Exhibit 11.2        Statement Regarding Computation of Pro Forma
                                   Per Share Earnings

               Exhibit 27.1        Financial Data Schedule

         (b)     (i) On February 4, 1998,  the Company filed a current report on
                 Form 8-K/A,  containing the financial  statements and pro forma
                 information  required by Item 7 of Form 8-K with respect to the
                 November 26, 1997, acquisition of all the outstanding shares of
                 Integrated Systems Control, Inc.

                 (ii) On February 19, 1998,  the Company filed a current  report
                 on Form 8-K, Item 5,  containing a press release dated February
                 18,  1998,  reporting  that the  Company  signed  a  definitive
                 agreement  to acquire  all the  outstanding  shares of Advanced
                 Management,  Incorporated ("AMI") in exchange for $19.5 million
                 in cash and additional  earn-out  payments upon the achievement
                 of certain financial goals in the next twenty-four months.

                 (iii) On March 13, 1998,  the Company filed a current report on
                 Form 8-K,  Item 2,  reporting  that on February  26,  1998,  it
                 completed the  acquisition  of AMI pursuant to a Stock Purchase
                 Agreement  dated  January 31, 1998.  Additionally,  the Company
                 replaced its $6.5 million credit  facilities with a $35 million
                 revolving credit facility to finance the acquisition of AMI and
                 provide for its other working capital needs.
SIGNATURES

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

Date:  May 15, 1998              ADVANCED COMMUNICATION SYSTEMS, INC.

                                     /S/ George A. Robinson
                           -----------------------------------------------
                                       George A. Robinson
                                       Chairman, President
                                    and Chief Executive Officer

                                         /S/ Dev Ganesan
                           -----------------------------------------------
                                           Dev Ganesan
                                   Executive Vice President, Chief
                                   Financial Officer and Treasurer