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 December 31, 1997

                                       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 December 31, 1997, the registrant had outstanding
6,514,000 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 December 31, 1997
         and September 30, 1997                                             3

         Condensed Consolidated Statements of Operations for the Three
         Months Ended December 31, 1997 and 1996                            4

         Condensed Consolidated Statements of Cash Flows for the Three
         Months Ended December 31, 1997 and 1996                            5

         Notes to Condensed Consolidated Financial Statements               6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                          8

PART II. OTHER INFORMATION                                                 

Item 6.  Exhibits and Reports on Form 8-K                                  11

<PAGE>


                      ADVANCED COMMUNICATION SYSTEMS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)

                                               December 31,       September 30,
                                                   1997               1997
                                               -------------      ------------
                                     ASSETS              (Unaudited)
Current assets:
Cash and cash equivalents.....................        $251            $2,744
Contract receivables..........................      22,713            17,643
Other receivables.............................         151               154
Income taxes receivable.......................         309               529
Prepaid expenses..............................         349               296
Inventories...................................         614               544
                                               -------------      ------------
  Total current assets........................      24,387            21,910
                                               -------------      ------------
Property and equipment, net...................       4,792             1,261
Other assets:
Other related party receivables...............         118                86
Goodwill, net.................................       2,839             1,706
Software development costs, net...............       1,155               950   
Deferred tax asset............................         147               147  
Other assets..................................         201               152
                                               -------------      ------------ 
  Total other non-current assets..............       4,460             3,041
                                               -------------      ------------
   Total assets...............................     $33,639           $26,212
                                               =============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.............      $1,964           $     -
Accounts payable..............................       2,137             3,321
Accrued expenses and other liabilities........       7,827             8,838
Billings in excess of revenue.................         243               225
                                               -------------      ------------
Total current liabilities.....................      12,171            12,384
Long-term debt................................       2,512                 -
Deferred income taxes.........................       1,141                 -
                                               -------------      ------------ 
  Total liabilities...........................      15,824            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 December 31,1997 and  8,975,000  
  shares issued at September 30,1997..........          95                90
Paid-in-capital...............................      17,693            14,409
Retained earnings.............................         276              (382)
Less - Treasury stock, 2,936,000 shares at 
  December 31, 1997 and 2,945,000 shares at 
  September 30, 1997..........................        (249)             (289)
                                               -------------      ------------ 
  Total stockholders' equity..................      17,815            13,828
                                               -------------      ------------
   Total liabilities and stockholders'equity..     $33,639           $26,212
                                               =============      ============

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

<PAGE>


                      ADVANCED COMMUNICATION SYSTEMS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

                                                     Three months ended
                                                        December 31,
                                                  -------------------------
                                                      1997         1996
                                                  ------------ ------------
                                                        (Unaudited)

  Revenues.....................................      $14,170      $9,066
            
  Direct costs.................................        9,131       6,038
           
  Indirect, general & administrative...........        3,933       2,442
                                                  ------------ ------------
           
  Income from operations.......................        1,106         586
            
  Other expense................................          (78)        (48)
                                                  ------------ ------------
  Income before taxes..........................        1,028         538
           
  Income tax expense...........................          374           -
                                                  ------------ ------------
  Net income...................................         $654        $538
                                                  ============ ============

  Net income per share - basic.................        $0.10 
                                                  ============
  Net income per share - diluted...............        $0.10 
                                                  ============

             
  Weighted average shares outstanding - basic...       6,352 
                                                  ============
  Weighted average shares outstanding - diluted.       6,480
                                                  ============

  Pro forma statement of operations data:
    Net income as reported......................                    $538
    Pro forma income tax provision (Note 1).....                     210
                                                                ------------
    Pro forma net income........................                    $328
                                                                ============

    Pro forma net income per share - basic......                   $0.08
                                                                ============
    Pro forma net income per share - diluted....                   $0.08
                                                                ============  

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

Note 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 statement of operations data reflects taxes based on applicable  rates
as if the Company has not elected S corporation status for the period presented.

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

<PAGE>

                      ADVANCED COMMUNICATION SYSTEMS, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)


                                                     Three months ended
                                                        December 31,
                                                 ---------------------------
                                                     1997           1996
                                                 ------------   ------------
                                                          (Unaudited)
  Cash flow from operating activities:
  Net income.....................................     $654           $538
  Adjustments to reconcile net income to net  
     cash provided by operating activities-
     Depreciation and amortization...............      187             99
     Changes in assets and liabilities:              
        Contract receivables.....................   (1,661)          (532)
        Other receivables........................        3            (68)
        Income taxes receivable..................      220              -
        Prepaid expenses.........................     (133)            31
        Inventories..............................      (70)             -
        Other related party receivables..........      (32)             6
        Other assets.............................      (10)          (193)
        Accounts payable.........................   (1,142)        (1,580)
        Accrued expenses.........................   (2,023)         1,328
        Billings in excess of revenue............       18             35
                                                 ------------   ------------
        Net cash used in operating activities...    (3,989)          (336)
                                                 ------------   ------------

      Cash flows from investing activities:   
      Purchases of property and equipment........     (235)          (187)     
      Capitalized software development costs.....     (239)             -
                                                 ------------   ------------
        Net cash used in investing activities....     (474)          (187)
                                                 ------------   ------------

      Cash flows from financing activities:       
      Net costs incurred in sale of common stock.      (11)             - 
      Net repayments from borrowings.............      (20)             - 
      Net proceeds under lines of credit.........    1,961            229
      Sale of treasury stock.....................       40             19
                                                 ------------   ------------
        Net cash provided by financing activities    1,970            248
                                                 ------------   ------------
      Net decrease in cash.......................   (2,493)          (275)
      Cash and cash equivalents, beginning of
           period................................    2,744          1,177
                                                 ------------   ------------
      Cash and cash equivalents, end of period...     $251           $902
                                                 ============   ============
      Income taxes paid..........................     $119             $0
                                                 ============   ============
      Interest paid..............................      $78            $62
                                                  ===========   ============

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


<PAGE>



                      ADVANCED COMMUNICATION SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997
                                   (Unaudited)

1.   Basis of Presentation

The accompanying  condensed  consolidated  balance sheet as of December 31, 1997
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.  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.  Recently Issued Financial Accounting Standards

The Company  adopted the  Financial  Accounting  Standards  Board  Statement  of
Financial Accounting Standards (SFAS) No. 128, Earnings per Share, for the three
months ended  December  31,  1997.  SFAS No. 128 requires the Company to present
basic and  diluted  net income  per share on the face of the  income  statement.
Basic  net  income  per  share  is  computed  by  dividing  net  income  by  the
weighted-average number of common shares outstanding for the period. Diluted net
income  per  share  is  computed  by  dividing  net  income  by  the  sum of the
weighted-average number of common shares outstanding for the period end plus the
assumed exercise of all dilutive securities,  such as stock options. Diluted net
income per share for the periods  presented is not materially  different for net
income per share reported under Accounting Principles Board Opinion No. 15.

6. Acquisition

Effective  October 31, 1997, the Company acquired all of the outstanding  shares
of common stock 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
among the  acquired  assets in  accordance  with the  provisions  of  Accounting
Principles  Board Opinion No. 16. The excess of the purchase price over the fair
market value of the assets  acquired is being  classified as intangible  assets,
principally goodwill, and will be amortized over its estimated useful life of 30
years.

The  following  unaudited  pro  forma  summary  presents  information  as if the
acquisition  had occurred at the  beginning  of each fiscal year.  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)
                                                       September 30,
                                                   1997              1996
                                             ---------------    --------------
     (in thousands, except per share data)

  Revenues................................       $64,374            $42,352
  Net income..............................        $1,168             $1,433
  Net income per share - basic............         $0.23              $0.31
  Net income per share - diluted..........         $0.22              $0.30
                  



7. Notes Payable and Long-Term Debt

Notes  payable and  long-term  debt  consisted of the  following at December 31,
1997:

                                                             Balance at
                                                            December 31,
                                                                1997
                                                          ----------------
 Lines of credit:                                          (in thousands)
   Lines of credit with commercial banks, interest 
   ranges from prime to prime plus  one-half  
   percent,  maximum  borrowing of $6.5  million,
   secured by all assets, expiring in February                            
   1998 and January 1999..............................         $2,595

 Long-term debt:
   Note payable to bank, interest at 9.9%, due 
   February 2005, secured by a First Deed of 
   Trust on an office building........................            974

   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...........................................            701

   Note payable to bank, interest at 9.25%, due April 
   2000, secured by accounts receivable, equipment 
   and other assets....................................           158

   Note payable to bank, interest at 8.75%, due April 
   1999, secured by accounts receivable, equipment 
   and other assets....................................            48
                                                           ----------------
                                                                4,476
       Less current maturities.........................        (1,964)
                                                           ----------------
                                                               $2,512
                                                           ================


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
                                                  Ended December 31,
                                          ---------------------------------
                                              1997             1996
                                          ------------     ------------
                           
   Revenues.............................     100.0  %         100.0  %
   Direct costs.........................      64.4             66.6
   Indirect, general and administrative.      27.8             26.9
                                          ------------     ------------
   Income from operations...............      7.8              6.5
   Other expense, net...................     (0.6)            (0.6)
                                          ------------     ------------
   Income before taxes..................      7.2              5.9
   Provision for income taxes...........      2.6                -
                                          ------------     ------------
   Net income...........................      4.6  %           5.9  %
                                          ============     ============

   Pro forma tax provision..............                       2.3
                                                            
   Pro forma net income.................                       3.6  % 
                                                           ============


Three Months Ended December 31, 1997 Compared to Three Months Ended 
December 31, 1996 

Revenues increased 56.3%, or $5.1 million, to $14.2 million for the three months
ended  December  31, 1997,  from $9.1  million for the same period in 1996.  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 RF Microsystems, Inc. and ISC.

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 $9.1 million for the three months ended  December 31,
1997 from $6.0  million for the same period in 1996 due  primarily  to increased
revenues  from  the  Company's  acquisitions.   Direct  costs,  expressed  as  a
percentage of revenues,  decreased to 64.4% for the three months ended  December
31, 1997 from 66.6% for the same period in 1996,  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 $3.9 million for the three  months ended  December 31, 1997 from $2.4 million
for the same period in 1996.  The increase was due primarily to the higher level
of revenues  discussed above.  Indirect  expenses,  expressed as a percentage of
revenues,  increased to 27.8% from 26.9% for the three months ended December 31,
1997, due to the higher  proportion of  communication  systems  revenues,  which
typically have higher associated indirect expenses.

Income from  operations  increased  88.7%,  to $1.1 million for the three months
ended  December 31, 1997,  from $586,000 for the same period in 1996,  primarily
due to increased  communication systems revenues from U.S. Navy contracts.  As a
percentage of revenues,  income from operations  increased to 7.8% for the three
months ended December 31, 1997, from 6.5% for the comparable period in the prior
year,  principally  attributable  to  increased  revenues  from fixed  price and
time-and-materials type contracts which typically carry higher margins.

Other expense,  net,  consists of interest  expense,  offset in part by interest
income  from  short-term  deposits  of cash.  Interest  expense  was $89,000 and
$64,000  for  the  three  month  periods  ended  December  31,  1997  and  1996,
respectively. Interest income was $11,000 and $16,000 for the three months ended
December 31, 1997 and 1996, respectively.

The Company's  effective tax rate was 36.4% for the three months ended  December
31, 1997.  The  Company's  pro forma  effective tax rate was 39.0% for the three
months ended December 31, 1996.

Liquidity and Capital Resources

The Company used cash from  operating  activities  of $4.0 million for the three
months ended December 31, 1997,  resulting primarily from net income,  increases
in contract  receivables and decreases in accrued expenses and accounts payable.
The increase in contract  receivables was due to increased revenues from the two
large U.S. Navy  contracts  awarded to the Company  during fiscal 1997.  For the
three months  ended  December  31,  1996,  the Company used cash from  operating
activities  which  amounted to $336,000,  resulting  primarily  from net income,
increases in contract  receivables,  decreases in accounts payable and partially
offset by increases in accrued expenses.

The  principal  use of cash for  investing  activities  was for the  purchase of
computers and equipment.  These purchases  totaled $235,000 and $187,000 for the
three  months  ended  December  31, 1997 and 1996,  respectively.  Further,  the
Company invested $239,000 in software development costs for its latest Microsoft
Exchange-based  product,  ISALTS 2000,  in the three  months ended  December 31,
1997.

The Company currently has a lines of credit with commercial banks under which it
can  borrow up to a maximum of $6.5  million.  As of  December  31,  1997,  $2.6
million was outstanding  under these  facilities.  One of the Company's lines of
credit for $5.0 million is due to expire in February 1998. The Company is in the
process of replacing this facility.

<PAGE>


PART II - OTHER INFORMATION


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 November 17, 1997, the Company filed a current report
                    on Form  8-K,  Item 2,  containing  a  press  release  dated
                    November  6,  1997,  reporting  that  the  Company  signed a
                    definitive  agreement to acquire all the outstanding  shares
                    of Integrated Systems Control,  Inc. in exchange for 475,000
                    shared of its common stock.

                    (ii) On  November  25,  1997,  the  Company  filed a current
                    report on Form 8-K/A,  containing  the financial  statements
                    and pro forma  financial  information  required by Item 7 of
                    Form 8-K with respect to the September 12, 1997  acquisition
                    of all the outstanding shares of RF Microsystems,  Inc. from
                    REMEC, Inc.

                    (iii) On  December  5,  1997,  the  Company  filed a current
                    report on Form 8-K, Item 5,  reporting  that on November 29,
                    1997, it completed  the  acquisition  of Integrated  Systems
                    Control,  Inc. pursuant to a Stock Purchase  Agreement dated
                    October 31, 1997.


<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:  February 17, 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
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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 December 31, 1997

                                       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 December 31, 1997, the registrant had outstanding
6,514,000 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 December 31, 1997
         and September 30, 1997                                             3

         Condensed Consolidated Statements of Operations for the Three
         Months Ended December 31, 1997 and 1996                            4

         Condensed Consolidated Statements of Cash Flows for the Three
         Months Ended December 31, 1997 and 1996                            5

         Notes to Condensed Consolidated Financial Statements               6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                          8

PART II. OTHER INFORMATION                                                 

Item 6.  Exhibits and Reports on Form 8-K                                  11
ADVANCED COMMUNICATION SYSTEMS, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)

                                               December 31,       September 30,
                                                   1997               1997
                                               -------------      ------------
                                     ASSETS              (Unaudited)
Current assets:
Cash and cash equivalents.....................        $251            $2,744
Contract receivables..........................      22,713            17,643
Other receivables.............................         151               154
Income taxes receivable.......................         309               529
Prepaid expenses..............................         349               296
Inventories...................................         614               544
                                               -------------      ------------
  Total current assets........................      24,387            21,910
                                               -------------      ------------
Property and equipment, net...................       4,792             1,261
Other assets:
Other related party receivables...............         118                86
Goodwill, net.................................       2,839             1,706
Software development costs, net...............       1,155               950   
Deferred tax asset............................         147               147  
Other assets..................................         201               152
                                               -------------      ------------ 
  Total other non-current assets..............       4,460             3,041
                                               -------------      ------------
   Total assets...............................     $33,639           $26,212
                                               =============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt.............      $1,964           $     -
Accounts payable..............................       2,137             3,321
Accrued expenses and other liabilities........       7,827             8,838
Billings in excess of revenue.................         243               225
                                               -------------      ------------
Total current liabilities.....................      12,171            12,384
Long-term debt................................       2,512                 -
Deferred income taxes.........................       1,141                 -
                                               -------------      ------------ 
  Total liabilities...........................      15,824            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 December 31,1997 and  8,975,000  
  shares issued at September 30,1997..........          95                90
Paid-in-capital...............................      17,693            14,409
Retained earnings.............................         276              (382)
Less - Treasury stock, 2,936,000 shares at 
  December 31, 1997 and 2,945,000 shares at 
  September 30, 1997..........................        (249)             (289)
                                               -------------      ------------ 
  Total stockholders' equity..................      17,815            13,828
                                               -------------      ------------
   Total liabilities and stockholders'equity..     $33,639           $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)

                                                     Three months ended
                                                        December 31,
                                                  -------------------------
                                                      1997         1996
                                                  ------------ ------------
                                                        (Unaudited)

  Revenues.....................................      $14,170      $9,066
            
  Direct costs.................................        9,131       6,038
           
  Indirect, general & administrative...........        3,933       2,442
                                                  ------------ ------------
           
  Income from operations.......................        1,106         586
            
  Other expense................................          (78)        (48)
                                                  ------------ ------------
  Income before taxes..........................        1,028         538
           
  Income tax expense...........................          374           -
                                                  ------------ ------------
  Net income...................................         $654        $538
                                                  ============ ============

  Net income per share - basic.................        $0.10 
                                                  ============
  Net income per share - diluted...............        $0.10 
                                                  ============

             
  Weighted average shares outstanding - basic...       6,352 
                                                  ============
  Weighted average shares outstanding - diluted.       6,480
                                                  ============

  Pro forma statement of operations data:
    Net income as reported......................                    $538
    Pro forma income tax provision (Note 1).....                     210
                                                                ------------
    Pro forma net income........................                    $328
                                                                ============

    Pro forma net income per share - basic......                   $0.08
                                                                ============
    Pro forma net income per share - diluted....                   $0.08
                                                                ============  

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

Note 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 statement of operations data reflects taxes based on applicable  rates
as if the Company has not elected S corporation status for the period presented.

              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)

                                                     Three months ended
                                                        December 31,
                                                 ---------------------------
                                                     1997           1996
                                                 ------------   ------------
                                                          (Unaudited)
  Cash flow from operating activities:
  Net income.....................................     $654           $538
  Adjustments to reconcile net income to net  
     cash provided by operating activities-
     Depreciation and amortization...............      187             99
     Changes in assets and liabilities:              
        Contract receivables.....................   (1,661)          (532)
        Other receivables........................        3            (68)
        Income taxes receivable..................      220              -
        Prepaid expenses.........................     (133)            31
        Inventories..............................      (70)             -
        Other related party receivables..........      (32)             6
        Other assets.............................      (10)          (193)
        Accounts payable.........................   (1,142)        (1,580)
        Accrued expenses.........................   (2,023)         1,328
        Billings in excess of revenue............       18             35
                                                 ------------   ------------
        Net cash used in operating activities...    (3,989)          (336)
                                                 ------------   ------------

      Cash flows from investing activities:   
      Purchases of property and equipment........     (235)          (187)     
      Capitalized software development costs.....     (239)             -
                                                 ------------   ------------
        Net cash used in investing activities....     (474)          (187)
                                                 ------------   ------------

      Cash flows from financing activities:       
      Net costs incurred in sale of common stock.      (11)             - 
      Net repayments from borrowings.............      (20)             - 
      Net proceeds under lines of credit.........    1,961            229
      Sale of treasury stock.....................       40             19
                                                 ------------   ------------
        Net cash provided by financing activities    1,970            248
                                                 ------------   ------------
      Net decrease in cash.......................   (2,493)          (275)
      Cash and cash equivalents, beginning of
           period................................    2,744          1,177
                                                 ------------   ------------
      Cash and cash equivalents, end of period...     $251           $902
                                                 ============   ============
      Income taxes paid..........................     $119             $0
                                                 ============   ============
      Interest paid..............................      $78            $62
                                                  ===========   ============

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.
ADVANCED COMMUNICATION SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                December 31, 1997
                                   (Unaudited)

1.   Basis of Presentation

The accompanying  condensed  consolidated  balance sheet as of December 31, 1997
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.  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.  Recently Issued Financial Accounting Standards

The Company  adopted the  Financial  Accounting  Standards  Board  Statement  of
Financial Accounting Standards (SFAS) No. 128, Earnings per Share, for the three
months ended  December  31,  1997.  SFAS No. 128 requires the Company to present
basic and  diluted  net income  per share on the face of the  income  statement.
Basic  net  income  per  share  is  computed  by  dividing  net  income  by  the
weighted-average number of common shares outstanding for the period. Diluted net
income  per  share  is  computed  by  dividing  net  income  by  the  sum of the
weighted-average number of common shares outstanding for the period end plus the
assumed exercise of all dilutive securities,  such as stock options. Diluted net
income per share for the periods  presented is not materially  different for net
income per share reported under Accounting Principles Board Opinion No. 15.

6. Acquisition

Effective  October 31, 1997, the Company acquired all of the outstanding  shares
of common stock 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
among the  acquired  assets in  accordance  with the  provisions  of  Accounting
Principles  Board Opinion No. 16. The excess of the purchase price over the fair
market value of the assets  acquired is being  classified as intangible  assets,
principally goodwill, and will be amortized over its estimated useful life of 30
years.

The  following  unaudited  pro  forma  summary  presents  information  as if the
acquisition  had occurred at the  beginning  of each fiscal year.  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)
                                                       September 30,
                                                   1997              1996
                                             ---------------    --------------
     (in thousands, except per share data)

  Revenues................................       $64,374            $42,352
  Net income..............................        $1,168             $1,433
  Net income per share - basic............         $0.23              $0.31
  Net income per share - diluted..........         $0.22              $0.30
                  

7. Notes Payable and Long-Term Debt

Notes  payable and  long-term  debt  consisted of the  following at December 31,
1997:

                                                             Balance at
                                                            December 31,
                                                                1997
                                                          ----------------
 Lines of credit:                                          (in thousands)
   Lines of credit with commercial banks, interest 
   ranges from prime to prime plus  one-half  
   percent,  maximum  borrowing of $6.5  million,
   secured by all assets, expiring in February                            
   1998 and January 1999..............................         $2,595

 Long-term debt:
   Note payable to bank, interest at 9.9%, due 
   February 2005, secured by a First Deed of 
   Trust on an office building........................            974

   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...........................................            701

   Note payable to bank, interest at 9.25%, due April 
   2000, secured by accounts receivable, equipment 
   and other assets....................................           158

   Note payable to bank, interest at 8.75%, due April 
   1999, secured by accounts receivable, equipment 
   and other assets....................................            48
                                                           ----------------
                                                                4,476
       Less current maturities.........................        (1,964)
                                                           ----------------
                                                               $2,512
                                                           ================

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
                                                  Ended December 31,
                                          ---------------------------------
                                              1997             1996
                                          ------------     ------------
                           
   Revenues.............................     100.0  %         100.0  %
   Direct costs.........................      64.4             66.6
   Indirect, general and administrative.      27.8             26.9
                                          ------------     ------------
   Income from operations...............      7.8              6.5
   Other expense, net...................     (0.6)            (0.6)
                                          ------------     ------------
   Income before taxes..................      7.2              5.9
   Provision for income taxes...........      2.6                -
                                          ------------     ------------
   Net income...........................      4.6  %           5.9  %
                                          ============     ============

   Pro forma tax provision..............                       2.3
                                                            
   Pro forma net income.................                       3.6  % 
                                                           ============

Three Months Ended December 31, 1997 Compared to Three Months Ended 
December 31, 1996 

Revenues increased 56.3%, or $5.1 million, to $14.2 million for the three months
ended  December  31, 1997,  from $9.1  million for the same period in 1996.  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 RF Microsystems, Inc. and ISC.

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 $9.1 million for the three months ended  December 31,
1997 from $6.0  million for the same period in 1996 due  primarily  to increased
revenues  from  the  Company's  acquisitions.   Direct  costs,  expressed  as  a
percentage of revenues,  decreased to 64.4% for the three months ended  December
31, 1997 from 66.6% for the same period in 1996,  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 $3.9 million for the three  months ended  December 31, 1997 from $2.4 million
for the same period in 1996.  The increase was due primarily to the higher level
of revenues  discussed above.  Indirect  expenses,  expressed as a percentage of
revenues,  increased to 27.8% from 26.9% for the three months ended December 31,
1997, due to the higher  proportion of  communication  systems  revenues,  which
typically have higher associated indirect expenses.

Income from  operations  increased  88.7%,  to $1.1 million for the three months
ended  December 31, 1997,  from $586,000 for the same period in 1996,  primarily
due to increased  communication systems revenues from U.S. Navy contracts.  As a
percentage of revenues,  income from operations  increased to 7.8% for the three
months ended December 31, 1997, from 6.5% for the comparable period in the prior
year,  principally  attributable  to  increased  revenues  from fixed  price and
time-and-materials type contracts which typically carry higher margins.

Other expense,  net,  consists of interest  expense,  offset in part by interest
income  from  short-term  deposits  of cash.  Interest  expense  was $89,000 and
$64,000  for  the  three  month  periods  ended  December  31,  1997  and  1996,
respectively. Interest income was $11,000 and $16,000 for the three months ended
December 31, 1997 and 1996, respectively.

The Company's  effective tax rate was 36.4% for the three months ended  December
31, 1997.  The  Company's  pro forma  effective tax rate was 39.0% for the three
months ended December 31, 1996.

Liquidity and Capital Resources

The Company used cash from  operating  activities  of $4.0 million for the three
months ended December 31, 1997,  resulting primarily from net income,  increases
in contract  receivables and decreases in accrued expenses and accounts payable.
The increase in contract  receivables was due to increased revenues from the two
large U.S. Navy  contracts  awarded to the Company  during fiscal 1997.  For the
three months  ended  December  31,  1996,  the Company used cash from  operating
activities  which  amounted to $336,000,  resulting  primarily  from net income,
increases in contract  receivables,  decreases in accounts payable and partially
offset by increases in accrued expenses.

The  principal  use of cash for  investing  activities  was for the  purchase of
computers and equipment.  These purchases  totaled $235,000 and $187,000 for the
three  months  ended  December  31, 1997 and 1996,  respectively.  Further,  the
Company invested $239,000 in software development costs for its latest Microsoft
Exchange-based  product,  ISALTS 2000,  in the three  months ended  December 31,
1997.

The Company currently has a lines of credit with commercial banks under which it
can  borrow up to a maximum of $6.5  million.  As of  December  31,  1997,  $2.6
million was outstanding  under these  facilities.  One of the Company's lines of
credit for $5.0 million is due to expire in February 1998. The Company is in the
process of replacing this facility.
PART II - OTHER INFORMATION

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 November 17, 1997, the Company filed a current report
                    on Form  8-K,  Item 2,  containing  a  press  release  dated
                    November  6,  1997,  reporting  that  the  Company  signed a
                    definitive  agreement to acquire all the outstanding  shares
                    of Integrated Systems Control,  Inc. in exchange for 475,000
                    shared of its common stock.

                    (ii) On  November  25,  1997,  the  Company  filed a current
                    report on Form 8-K/A,  containing  the financial  statements
                    and pro forma  financial  information  required by Item 7 of
                    Form 8-K with respect to the September 12, 1997  acquisition
                    of all the outstanding shares of RF Microsystems,  Inc. from
                    REMEC, Inc.

                    (iii) On  December  5,  1997,  the  Company  filed a current
                    report on Form 8-K, Item 5,  reporting  that on November 29,
                    1997, it completed  the  acquisition  of Integrated  Systems
                    Control,  Inc. pursuant to a Stock Purchase  Agreement dated
                    October 31, 1997.
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:  February 17, 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