FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED
For the transition period from _______________ to ____________
Commission File Number: 0-13347
ARINCO COMPUTER SYSTEMS INC.
(Exact of small business issuer in its charter)
New Mexico 85-0272154
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) identification no.)
1650 University Blvd., N, S.E., Suite 100, Albuquerque, New Mexico 87102
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 505-243-4949
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
$0.001 Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No____.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year. $284,000
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act). $58,045
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: $0.001 par value common stock, its
only class of equity securities, as of March 15, 1996, was: 4,034,755.
PART I
Item 1. Business.
Arinco Computer Systems, Inc. (Arinco, Company or Registrant) was
incorporated under the laws of the State of New Mexico on March 31, 1978. Arinco
is a publicly held, over-the-counter traded company organized principally to
serve its subsidiary operations.
On March 1, 1983, the Registrant acquired a telephone inter-connect company
which had engaged in selling and installing telecommunications equipment in
commercial and governmental facilities. In July of 1987, operations ceased when
two creditors of the telephone inter-connect subsidiary received the assets of
the company. A negotiated settlement was agreed upon because of continued
default by the company in payment of its secured obligations.
In July of 1985, the Registrant sold its interest in a computer retail
chain to a public company involved in a similar business. Upon the default of
the purchaser to meet its cash and securities payment obligations to the
Registrant, the Registrant instituted suit and secured a judgement against the
purchaser and guarantor for the balance owing on notes, interest thereon, and
attorneys fees. In 1986, the purchaser filed bankruptcy and in 1987, the
guarantor filed bankruptcy. In 1995, the Registrant received $284,000 from the
bankruptcy estate of the guarantor.
At the end of the fiscal year ended December 31, 1989 the Registrant was
without any business or any meaningful assets of any kind and had liabilities of
$1,087,000. At the end of the Fiscal Year ending December 31, 1995 it had
liabilities of $572,000 while its assets consisted of $39,000 in cash and a
receivable from a related party of $215,000 (see Item 7. Financial Statements
and Item 12. Certain Relationships and Related Transactions). The reduction of
liabilities and increase in assets from the last fiscal period were due to the
following actions and events: The increase in cash assets was due to the receipt
by the Registrant of the payment from the bankrupt estate of a guarantor, while
the reduction of liabilities resulted from a time-bar prohibiting the
enforcement of certain claims and judgments.
Employees.
The Registrant currently has no employees who are compensated for their
efforts on behalf of the Registrant. The sole officer of the Registrant is
employed without compensation, but is to be reimbursed all out of pocket
expenses incurred by him on the Registrant's business. The Registrants' sole
director is not paid for being a director or for attending directors meetings,
but is to be reimbursed all out of pocket expenses incurred in attending such
meetings. The time incurred by Mr. Arias is minimal.
Item 2. Description of Properties.
The Registrant utilizes office space of a company managed by its President
and sole director, Mr. James A. Arias, at 1650 University Blvd., N.E., Suite
5-100, Albuquerque, New Mexico 87102. The Registrant is not presently paying
rent for the use of this office space, however, the space used is negligible.
Item 3. Legal Proceedings.
1. On March 31, 1986, the Registrant filed a law suit in the District Court for
Bernalillo County, New Mexico, (Action CV-86-02473) naming a purchaser and a
guarantor of a prior sale of a company formally owned by the Registrant, as
defendants. The Registrant sought to recover money owed, accrued interest due,
damages and costs of litigation, all arising from the failure of purchaser and
its guarantor's to pay, when due, certain promissory notes issued in
consideration for the acquisition of shares of a subsidiary formally owned and
sold to the defendant. On September 17, 1986, the Court entered a Judgment in
favor of the Registrant for $490,399.32 plus 11.5% interest per annum from July
16, 1986 until satisfied, plus $40,000 attorney's fees and plus the cost of the
litigation. In 1995, the Registrant collected $284,000 from the bankruptcy
estate of the guarantor. The legal proceeding related to this transaction has
now terminated and no further action is contemplated.
2. The Registrant has been subjected to the following judgments:
a) On July 21, 1988, a Judgment was entered in the First Judicial District,
County of Santa Fe, New Mexico for legal fees in the amount of $5,869.97.
b) During fiscal 1987 pursuant to a Stipulation in the US District Court for
the Eastern District of New York, a prior supplier of materials to a
formally owned subsidiary , obtained Judgement against the Registrant in
the amount of $245,738, plus interest.
These two judgments remain unpaid at the date of this Report.
Insofar as is known to the Company's management, there are no other
proceedings now pending, threatened, or contemplated, or unsatisfied judgments
outstanding which have not been provided for in any court or agency to which the
Company or any of its officers or directors, in such capacity, are or may be a
party, except as discussed above.
Item 4. Submission of Matters to a Vote of Securities Holders.
No matters were submitted to a vote of shareholders during the fourth
quarter of the company's fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Registrant's common stock has been listed in by the National Daily
Quotation Bureau, Inc. in its Pink Sheets and the OTC Bulletin Board under the
symbol "ARCS". The high and low bid prices during each quarter of 1994 and 1995
are as follows
Bid Prices Bid Prices
High Low High Low
March 31, 1995 $0.02 $0.01 March 31, 1994 $0.02 $0.01
June 30, 1995 $0.02 $0.01 June 30, 1994 $0.02 $0.01
September 30, 1995 $0.02 $0.01 September 30, 1994 $0.02 $0.01
December 31, 1995 $0.02 $0.01 December 31, 1994 $0.02 $0.01
There were approximately 350 holders of the Registrant's common stock on
March 15, 1996.
The Registrant has never paid dividends on its common stock.
Item 6. Managements' Discussion and Analysis or Plan of Operations.
Liquidity and Capital Resources.
The Registrant's cash position improved substantially during the past
fiscal year as a result of its receiving the a cash payment on a judgment that
was issued in 1986. The Registrant currently has approximately $39,000 in cash
and has loaned $215,000 to a corporation affiliated with Mr. Arias. The loan is
evidenced by a Real Estate Mortgage Note bearing interest at the rate of 9% per
annum.
The Registrant's sole officer and director is currently devoting his
services, as needed, to the Registrant without compensation. Other costs and
expenses, including legal and accounting costs are being paid from the cash held
by the Registrant.. The Registrant may continue to operate in a limited manner
utilizing the funds it currently has. It is believed that the Registrant has
sufficient funds to maintain its current activities, which are to acquire or
establish a new business.
Financial Condition and Changes in Financial Condition
As stated above, the Registrant's cash and liability positions improved
dramatically during the fiscal year ended December 31, 1995. At December 31,
1994, the Registrant had no assets and had liabilities of $1,238,000. Assets
increased by $254,000 as a result of the recovery of cash on a judgement entered
for the Registrant in 1986. Also, during fiscal 1995, certain debts and
judgments became barred from collection through application of the statute of
limitation, which was the primary reason for reducing the liabilities by
approximately $666,000 to $572,000. Management believes that additional debts
and expenses may also be time barred and has retained the services to an
attorney to review the status of those debts and expenses and furnish the
Registrant an opinion relating to that matter.
Item 7. Financial Statements.
Report of Independent Certified Public Accountants
Shareholders and Board of Directors
Arinco Computer Systems Inc.
We have audited the consolidated balance sheet of Arinco Computer Systems Inc.
and Subsidiary, as of December 31, 1995, and the related consolidated statements
of operations, shareholders' deficit, and cash flows for each of the two years
in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Arinco Computer
Systems, Inc. and Subsidiary, as of December 31, 1995, and the consolidated
results of their operations and their consolidated cash flows for each of the
two years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles.
As disclosed in Note K to the consolidated financial statements, the Company
ceased operations upon the disposal of its subsidiary on October 7, 1987.
Although no formal plan of liquidation has been adopted, no material business
activity has occurred since October 7, 1987. As a result, the Company uses the
liquidation basis of accounting.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
April 4, 1996
Arinco Computer Systems Inc.
CONSOLIDATED BALANCE SHEET
December 31 1995
<TABLE>
<CAPTION>
ASSETS (note K)
<S> <C>
CURRENT ASSET
Cash .............................................................. $ 39,000
NOTE RECEIVABLE - RELATED PARTY (note E) ............................... 215,000
-----------
$ 254,000
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES (note C)
Other debt - nonrelated parties ................................... $ 252,000
Accrued expenses .................................................. 320,000
-----------
Total current liabilities ...................... 572,000
COMMITMENTS AND CONTINGENCIES (notes G and H) .......................... --
SHAREHOLDERS' DEFICIT
Preferred stock, $.06 per share cumulative, convertible
share-for-share into common stock - $.10 par value,
$807,000 liquidation preference; authorized, 5,000,000
shares; issued and outstanding, 807,000 shares, of which
50,000 shares are treasury stock (note G) .............. 81,000
Common stock - $0.01 par value; authorized, 4,500,000
shares; issued and outstanding, 4,085,000 shares, of
which 50,000 shares are treasury stock (note G) ........ 41,000
Additional paid-in capital
Preferred stock ........................................ 1,282,000
Common stock ........................................... 1,278,000
Accumulated deficit ............................................ (2,925,000)
Treasury stock - at cost ....................................... (75,000)
-----------
(318,000)
-----------
$ 254,000
===========
</TABLE>
The accompanying notes are an integral part of this statement
Arinco Computer Systems Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Revenue - settlement of litigation ........................ $ 284,000 $ --
Operating expenses - general and administrative ........... 4,000 2,000
----------- -----------
Operating profit (loss) ................. 280,000 (2,000)
Other (income) expense
Interest income ...................................... (8,000) --
Interest expense ..................................... 72,000 72,000
----------- -----------
64,000 72,000
----------- -----------
Earnings (loss) before extraordinary item 216,000 (74,000)
Extraordinary item - extinguishment of liabilities (note C) 704,000 --
----------- -----------
NET EARNINGS (LOSS) .............................. 920,000 (74,000)
Preferred stock dividend requirement ...................... 45,000 45,000
----------- -----------
NET EARNINGS (LOSS) APPLICABLE
TO COMMON SHARES ..................... $ 875,000 $ (119,000)
=========== ===========
Earnings (loss) per common share (note B)
Primary
Earnings (loss) before extraordinary item ...... $ .05 $ (.03)
Extraordinary item ............................. .17 --
----------- -----------
NET EARNINGS (LOSS) ..................... $ .22 $ (.03)
=========== ===========
Fully diluted
Earnings (loss) before extraordinary item ..... $ .04 $ (.03)
Extraordinary item ............................ .15 --
----------- -----------
NET EARNINGS (LOSS) ..................... $ .19 $ (.03)
=========== ===========
Weighted average of common shares outstanding
Primary ................................................. 4,035,000 4,035,000
=========== ===========
Fully diluted ........................................... 4,791,700 4,035,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements
Arinco Computer Systems, Inc.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Additional
Paid-in capital
---------------
Preferred Stock Common Stock Preferred Common Accumulated Treasury stock
--------------- ------------ --------- ------ ----------- --------------
Shares Amount Shares Amount Stock Stock deficit Shares Amount Total
------- -------- --------- -------- ----------- ----------- ----------- ------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at
January 1, 1994 . 807,000 $ 81,000 4,085,000 $ 41,000 $ 1,282,000 $ 1,278,000 $(3,771,000) 100,000 $ (75,000) $(1,164,000)
Net loss ........ -- -- -- -- -- -- (74,000) -- -- (74,000)
------- -------- --------- -------- ----------- ----------- ----------- ------- --------- -----------
Balances at
December 31, 1994 807,000 81,000 4,085,000 41,000 1,282,000 1,278,000 (3,845,000) 100,000 (75,000) (1,238,000)
Net earnings .... -- -- -- -- -- -- 920,000 -- -- 920,000
------- -------- --------- -------- ----------- ----------- ----------- ------- --------- -----------
Balances at
December 31, 1995 807,000 $ 81,000 4,085,000 $ 41,000 $ 1,282,000 $ 1,278,000 $(2,925,000) 100,000 $ (75,000) $ (318,000)
======= ======== ========= ======== =========== =========== =========== ======= ========= ===========
</TABLE>
The accompanying notes are an integral part of this statement
Arinco Computer Systems Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) ............................................ $ 920,000 $ (74,000)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Gain on extinguishment of liabilities ................... (704,000) --
Changes in operating assets and liabilities
Accounts payable ................................ (34,000) 2,000
Accrued expenses ................................ 72,000 72,000
--------- ---------
Net cash provided by operating activities 254,000 --
Cash flows from investing activities
Loan to related party ......................................... (215,000) --
--------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS ...................... 39,000 --
Cash and cash equivalents at beginning of year .................. -- --
--------- ---------
Cash and cash equivalents at end of year ........................ $ 39,000 $ --
========= =========
</TABLE>
The accompanying notes are an integral part of these statements
Arinco Computer Systems Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE A - ORGANIZATION
Arinco Computer Systems, Inc. (the "Company") was incorporated under the laws of
the State of New Mexico on March 31, 1978. The Company is a publicly-held,
over-the-counter traded company. The Company has had no significant business
operations since the disposal of its operating subsidiary in 1987. The Company's
subsidiary, New Start, Inc., has no business operations and intercompany
transactions and balances are eliminated in consolidation.
NOTE B - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the
accompanying consolidated financial statements follows.
Earnings (Loss) Per Common Share
- --------------------------------
Earnings (loss) per common share is determined by dividing the earnings (loss)
by the weighted average number of common shares outstanding during the periods.
Warrants are not included in the computation of earnings (loss) per share
because the effect of inclusion would be antidilutive. Fully diluted earnings
(loss) per share is based on the weighted average number of common shares
outstanding during the periods as if the preferred shares were converted into
common shares at the beginning of the periods.
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 amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ fr those estimates.
NOTE C - EXTINGUISHMENT OF LIABILITIES
The Company incurred certain liabilities which could not be paid as a result of
unprofitable operations before 1988. During 1995, the Company reviewed these old
liabilities and, as a result of that review and upon advice from legal counsel,
determined that approximately $704,000 of these liabilities were no longer
enforceable as claims against the Company. As a result of the extinguishment of
these obligations, an extraordinary income item of $704,000 has been reflected
in the consolidated statement of operations and recognized in the fourth
quarter.
NOTE D - DEBT TO NONRELATED PARTIES
The debt to nonrelated parties which was previously collateralized by
substantially all of the assets of its former subsidiary bears interest at 15%.
The Company has defaulted on payment; accordingly, the amount is currently due
and payable.
NOTE E - NOTE RECEIVABLE - RELATED PARTY
The Company has a demand note receivable from a related party of $215,000 with
interest payable monthly at 9%. The note is collateralized by real estate in
Albuquerque, New Mexico.
NOTE F - INCOME TAXES
The following is a reconciliation between the Company's tax provision to the tax
computed at the statutory federal rate:
Year ended December 31,
-----------------------
1995 1994
--------- ---------
Tax expense (benefit) at statutory rate $ 313,000 $ (25,000)
State income taxes 37,000 (3,000)
Change in valuation allowance (350,000) 28,000
--------- ---------
$ - $ -
========= =========
As of December 31, 1995, the Company has net operating loss carryforwards for
financial reporting and income tax purposes as follows:
Expiration date
1999 $ 56,000
2001 118,000
2003 3,000
2004 28,000
2005 15,000
2007 75,000
2008 74,000
2009 74,000
---------
$ 443,000
=========
The Company's deferred tax assets and liabilities consist of the following at
December 31, 1995:
Noncurrent deferred tax assets $ -
Net operating loss carryforward 168,000
Valuation allowance (168,000)
----------
Deferred tax liability $ -
==========
NOTE G - CAPITAL STOCK
1. Warrants
In connection with a public offering of the Company's stock, warrants to
purchase 503,000 shares of its common stock at $1 per share remain outstanding
at December 31, 1995.
2. Preferred Stock
The Company's preferred stock has full voting rights, accumulates $.06 per share
cumulative dividends annually, and is convertible on a share-for-share basis to
the Company's common stock. Dividends on outstanding preferred stock are payable
annually each May 31 beginning May 31, 1985. Dividends in arrears amount to
$500,000 at December 31, 1995. Preferred shareholders are not entitled to
payment of any accrued but unpaid dividends existing at the time of a voluntary
conversion of such stock to common stock.
NOTE H - COMMITMENTS AND CONTINGENCIES
Management believes that certain liabilities formerly reported by the Company
are now time barred from collection and are no longer reported as liabilities of
the Company.
NOTE I - SETTLEMENT OF LITIGATION
On March 31, 1986, the Company filed a lawsuit against Pathfinder Computer
Centers Corporation ("Pathfinder") and its organizers seeking the balance due of
$450,000 on a note plus accrued interest (guarantied by Aaron D. and Jerilyn H.
Silver). On February 14, 1990, the Company settled the litigation and received
settlement proceeds in 1995 of approximately $284,000.
NOTE J - FINANCIAL INSTRUMENTS
The following table includes various estimated fair value information as of
December 31, 1995 as required by Statement of Financial Accounting Standards No.
107, "Disclosures About Fair Value of Financial Instruments" ("SFAS 107"). Such
information, which pertains to the Company's financial instruments, is based on
the requirements set forth in SFAS 107 and does not purport to represent the
aggregate net fair value of the Company. The carrying amounts in the table below
are the amounts at which the financial instruments are reported in the
consolidated financial statements.
All of the Company's financial instruments are held for purposes other than
trading.
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
1. Cash
----
The carrying amount approximates fair value because of the short maturity and
highly liquid nature of those instruments.
2. Note Receivable - Related Party
-------------------------------
This note has no specific maturity date and it is not practicable to estimate
fair value.
3. Debt to Unrelated Parties
-------------------------
These amounts, which accrue interest at 15%, are past due the maturity date and
it is not practicable to estimate fair value.
The carrying amounts and estimated fair values of the Company's financial
instruments are as follows:
Carrying
Estimated
amount fair value
--------- ---------
Financial assets
Cash $ 39,000 $ 39,000
Note receivable - related party for which it is not
practicable to estimate fair value 215,000 -
Financial liabilities
Notes payable for which it is not practicable to
estimate fair value (252,000) -
NOTE K - CESSATION OF OPERATIONS
Since inception, the Company has operated on minimal amounts of invested
capital. Continuing losses have severely impaired the Company's cash flow. The
Company relinquished the assets of its subsidiary on October 7, 1987 in
settlement of two notes payable. The Company has essentially ceased its
operations and reduced its existence to a shell corporation. Management will
continue its efforts to improve the Company's capital but does not anticipate
developing a formal plan of liquidation.
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
No principal independent accountant resigned (or declined to stand for
re-election) or was dismissed during the Registrant's two most recent fiscal
years or any later interim period.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.
The following individuals are the Company's directors and executive officers:
Name age Positions held with Company
---- --- ---------------------------
James A. Arias 58 Acting President, Chief Financial Officer and Director
Background information about the sole director and sole executive officer is as
follows:
JAMES A. ARIAS has served as the President, Chief Executive Officer and a
Director of Realco, Inc., a publicly traded corporation, since its formation in
September 1983. From 1975 to September of 1983, he was a partner of James
Bentley & Associates, a financial consulting and real estate syndication firm in
Albuquerque, New Mexico, which was merged into and became a division of
Financial Services Group, Inc., a New Mexico corporation, of which Mr. Arias is
President and a controlling shareholder. Since 1984, he has served as Manager of
S&H Brokerage Inc., N.M., an insurance broker in Albuquerque, New Mexico. From
1987 to July 1993, he served as President and a Director of Valiant
International, Inc., an aircraft acquisition and servicing company. Since June
1995, he has served as interim sole Director and as acting Director of the
Registrant. Mr. Arias devotes substantially all of his time to the business of
Realco, Inc.
No director, officer or beneficial owner of more than 10% of the Company's
common stock, its only equity securities, or any other person subject to Section
16 of the Exchange Act failed to file reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year or prior fiscal years.
Item 10. Executive Compensation.
No officer or director received compensation during the last fiscal year. The
following table sets forth certain information concerning the remuneration paid
by the Company for the fiscal year ended December 31, 1995.
number
Capacities in of persons Salaries and Insurance other forms of
Which Served in group Directors fees Benefits Remuneration
- ------------ -------- -------------- -------- ------------
Directors 1 -0- -0- -0-
Executive Officers(2) 1 -0- -0- -0-
All Officers and
Directors as a group 1 -0- -0- -0-
The Registrant has no long term compensation arrangements and neither it nor its
subsidiaries have adopted any plan pursuant to which cash or non-cash
compensation will be paid to any officer or director of the Registrant or its
subsidiaries. The Registrant has not adopted any pension or other form of
defined benefit or actuarial plan.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 31, 1995, the beneficial ownership
of Common Stock by each person who is known by the Company to own beneficially
more than 5% of the issued and outstanding Common Stock and the shares of Common
Stock owned by each nominee and all officers and Directors as a group. Each
person has sole voting and investment power as to all shares unless otherwise
indicated.
Directors
- ---------
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Name and address Amount and nature
Title of of of Percent
CLass Beneficial owner Beneficial ownership of class
----- ---------------- -------------------- --------
<S> <C> <C> <C>
$0.01 par James A. Arias 385,000 9.5
value common 1650 University Blvd., #100 Indirect*
Albuquerque, NM 87102
$0.01 par Realco, Inc. 385,000 9.5
value common 1650 University Blvd., #100 Direct
Albuquerque, NM 87102
$0.01 par Financial Services Group, Inc. 385,000 9.5
value common 1650 University Blvd., #100 Direct
Albuquerque, NM 87102
$0.001 par value Steven P. Kadner 518,500 12.85
common stock 8401 Washington Pl, N.E. Direct and
Albuquerque, NM 87113 Indirect
$0.001 par value Jerome F. Beckes 545,000** 13.5
common stock 8401 Washington Pl, N.E. Direct and
Albuquerque, NM 87113 Indirect
convertible Storecos, a NV corp. 381,700 54.4
preferred 8106 Menual Blvd., N.E. Direct
Albuquerque, NM 87113
convertible Richard Elkins 223,000 31.8
preferred 1515 Plaza Encantada, N.W. Direct
Albuquerque, NM 87107
convertible Frank Thompson 127,000 18.1
preferred 143 West Cedarwood Circle Direct
Albuquerque, NM 87125
</TABLE>
*These shares are owned by Realco, Inc. and Financial Services Group, Inc., both
of which are affiliates of Mr. Arias
** 266,000 of these shares are owned by Aquila Technologies Group, Inc., a
corporation which is controlled by Messrs. Kadner and Beckes.
There are no arrangements known to the registrant, including any pledge by any
person of securities of the registrant or any of its parents, the operation of
which may at a subsequent date result in a change in control of the registrant.
Item 12. Certain Relationships and Related Transactions.
On November 17, 1995, the Registrant loaned $215,000 to Charter Building and
Development Corp., a subsidiary of Realco, Inc., a publicly traded corporation
of which Mr. Arias is an officer and a director. The loan is evidenced by a Real
Estate Mortgage Note, payable on demand, with interest at the rate of 9% per
annum. The purpose of this loan was to secure the highest rate of return during
the anticipated short time that the Registrant will have no specific requirement
for the funds or any part of them.
Item 13. Exhibits and Reports on Form 8-K.
(a) Documents filed as a part of this report:
None
(b) Reports on Form 8-K:
The Registrant filed no reports on Form 8-K during the last quarter of the
period covered by this Report:
(c) Exhibits:
The following documents are incorporated by reference to the Registrant's
Form 10 Registration Statement under the Securities Exchange Act of 1934: a.
Articles of Incorporation; b. Bylaws; c. Instruments defining rights of security
holders, including indentures; d. Material contracts; e. Subsidiaries of
Registrant and f. Additional Exhibits.
(10) Real Estate Mortgage Note dated November 17, 1995.
(11) Statement re computation of per share earnings. See Note 2 to the
financial statements.
There are no other exhibits specified in Item 601 of Regulation S-B to be
included with this filing.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ARINCO COMPUTER SYSTEMS INC.
James A. Arias Date: April 12, 1996
____________________________________
James A. Arias*, President and Chief
Executive Officer and
Chief Financial Officer
In accordance with the Exchange Act,, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
James A. Arias Date: April 12, 1996
____________________________________
James A. Arias*, Director
*Only Mr. Arias is an officer or a director of the Registrant.
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