FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1996
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: 0-13347
ARINCO COMPUTER SYSTEMS INC.
(Exact name 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.E. SUITE 100
ALBUQUERQUE, NEW MEXICO 87102
(Address of principal executive offices) (Zip Code)
505-242-4561
Issuer's telephone number, including area code
Not Applicable
(Former names, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer (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 issuer
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes[X] No[ ]
The number of shares outstanding of the Issuer's common stock, par value $
0.001 par value common stock, its only class of equity securities, as of
November 11, 1996 was 4,396,082 shares.
Transitional Small Business Disclosure Format (Check one): Yes[ ] No[X]
PART I
Item 1. FINANCIAL STATEMENTS
ARINCO COMPUTER SYSTEMS INC.
BALANCE SHEET
UNAUDITED
September 30,
1996
ASSETS
CURRENT ASSETS
Cash and Interest Bearing Deposits .................... $ 263,000
-----------
Total Assets ......................................... $ 263,000
===========
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Other Debt
Non-related parties .................................... $ 252,000
Accrued expenses ....................................... 348,000
-----------
Total current liabilities ............................ 600,000
SHAREHOLDERS' DEFICIT:
Preferred stock, .06 cumulative,
convertible share for share into
common stock, $.10 par value,
$446,000 liquidation preference,
5,000,000 shares authorized,
807,000 shares issued and
outstanding of which 50,000 shares
are treasury stock ..................................... 45,000
Common stock, $.01 par value,
4,500,00 shares authorized 4,446,000
shares issued and outstanding of
which 50,000 shares are treasury stock ................. 45,000
Additional paid-in-capital
Preferred stock ...................................... 1,282,000
Common stock ......................................... 1,310,000
Accumulated deficit .................................... (2,944,000)
Treasury stock, at cost ................................ (75,000)
-----------
Total shareholders' deficit ...................... (337,000)
-----------
Total liabilities and
shareholders' deficit ........................... $ 263,000
===========
See accompanying notes to consolidated financial statements
ARINCO COMPUTER SYSTEMS, INC.
CONDENSED STATEMENT OF OPERATIONS
UNAUDITED
Nine Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1995
OPERATING EXPENSES
General and administrative ................. 5,000 800
----------- -----------
Total operating expenses .......... 5,000 800
----------- -----------
OPERATING LOSS ............................... (5,000) (800)
INTEREST EXPENSE ............................. (28,000) (53,200)
----------- -----------
OTHER INCOME ................................. 14,000 289,000
----------- -----------
LOSS FROM OPERATIONS ......................... (19,000) 235,000
DEFICIT AT BEGINNING OF PERIOD ............... (2,925,000) (3,845,000)
----------- -----------
DEFICIT AT END OF PERIOD ..................... $(2,944,000) $(3,610,000)
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE .......... $ (.004) $ .57
=========== ===========
WEIGHTED AVERAGE OF SHARES OUTSTANDING ....... 4,114,000 4,035,000
=========== ===========
See accompanying notes to consolidated financial statements
ARINCO COMPUTER SYSTEMS, INC.
CONDENSED STATEMENT OF OPERATIONS
UNAUDITED
Three Months Three Months
Ended Ended
Sept. 30, 1996 Sept 30, 1995
OPERATING EXPENSES
General and administrative ................. 2,000 200
----------- -----------
Total operating expenses .......... 2,000 200
----------- -----------
OPERATING LOSS ............................... (2,000) (200)
INTEREST EXPENSE ............................. (9,000) (16,800)
----------- -----------
OTHER INCOME ................................. 3,000 3,000
----------- -----------
LOSS FROM OPERATIONS ......................... (8,000) (14,000)
DEFICIT AT BEGINNING OF PERIOD ............... (2,936,000) (3,596,000)
----------- -----------
DEFICIT AT END OF PERIOD ..................... $(2,944,000) $(3,610,000)
=========== ===========
NET INCOME (LOSS) PER COMMON SHARE .......... $ (.002) $ (.003)
=========== ===========
WEIGHTED AVERAGE OF SHARES OUTSTANDING ....... 4,272,000 4,035,000
=========== ===========
See accompanying notes to consolidated financial statements
ARINCO COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED September 30, 1996 & 1995
1996 1995
Operating Activities:
Net loss/income ................................... $(19,000) $235,000
Adjustments to reconcile net
loss to cash provided (used)
by operating activities:
Changes in operating assets and liabilities: ......... 243,000 20,000
-------- --------
Net cash provided by operating activities: ........... 224,000 255,000
Cash and cash equivalents at beginning of period ..... 39,000 -0-
-------- --------
Cash and cash equivalents at end of period ........... $263,000 $255,000
======== ========
See accompanying notes to consolidated financial statements
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ------------------------------------------
The consolidated balance sheet as of September 30, 1996 and the
consolidated statements of operations for the three and six months period and
cash flows for the nine month periods ended September 30, 1996 and 1995 have
been prepared by the Company without audit.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the consolidated financial
position at September 30, 1996 and 1995 and the consolidated results of
operations and consolidated cash flows for the nine month periods ended
September 30, 1996 and 1995 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Its suggested that these consolidated financial
statements be read in conjunction with the consolidated financial filing of the
Company's Securities & Exchange Commission Form 10-KSB. The results of
operations for the periods ended September 30, 1996 and 1995 are not necessarily
indicative of the operating results for the full year.
EARNINGS (LOSS) PER SHARE
- -------------------------
Earnings (loss) per share are computed using the weighted number of common
shares outstanding of 4,114,000 for the nine month periods ended September 30,
1996 respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following is Management's discussions and analysis of the financial
condition and results of operations of the Company during the quarter ended
September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity, as discussed herein, refers to the Company's ability to generate
adequate amounts of cash to meet its needs.
At September 30, 1996 the Company had cash of $263,000, and liabilities
of $600,000.
The Company is presently without significant income. To acquire or develop
any further new business interests, the Company must obtain moneys, by borrowing
or the sale of equities. There is no assurance that the Company, however, will
be successful in raising new capital or securing any new business.
RESULTS OF OPERATIONS
- ---------------------
During the quarter ended September 30,1996, the Company's net loss of
$19,500 for the nine month period and ended represents the excess of expense
over revenue.
Operations for the nine month period ended September 30, 1996 generated
other income of $14,000 and expenses of $33,000. Compared with other income of
$289,000 and expenses of $54,000 for the six month period ended September 30,
1995.
Operations for the three month period ended September 30,1996 generated
other income of $3,000. and expenses of $11,000. Compared with other income of
$3,000 and expenses of $17,000 for the nine month period ended September 30,
1995
The Company incurred an operating loss of $9,500 during the three month and
$19,500 during the nine month period ended September 30, 1996.
As the Company has incurred operating losses, no provision for income taxes
was required for the quarter ended September 30, 1996.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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) On April 8, 1988 pursuant to a stipulation the US District Court for
the Eastern District of New York, a prior supplier of materials to a formally
owned subsidiary, obtained Judgment 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 2. CHANGES IN SECURITIES
(b) During the month of September of this reporting period 36,000 shares of
6% cumulative Preferred Stock were tendered to the registrant for conversion
into 361,000 common shares of the registrant's common stock, pursuant to the
conversion right of the tendered preferred shares.
ITEM 3. DEFAULTS IN SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Arinco Computer Systems Inc.
November 11, 1996 James A. Arias
-------------------------------
James A. Arias
Interim Chief Executive Officer
and Chief Financial Officer
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