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 March 31, 1999
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 $ .01
par value common stock, its only class of equity securities, as of May 17, 1999
was 4,541,000 shares.
<PAGE>
PART I
Item 1. FINANCIAL STATEMENTS
ARINCO COMPUTER SYSTEMS, INC.
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and Cash equivalents $ 178,000
Trading securities 104,000
---------
$ 282,000
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 2,000
SHAREHOLDERS' EQUITY:
Preferred stock, $.06 cumulative, convertible share-for-share into common
stock - $.10 par value, $396,000 liquidation preference; authorized,
5,000,000 shares; issued and outstanding, 396,000 shares 40,000
Common stock - $.01 par value; authorized,
45,000,000 shares; issued and outstanding,
4,541,000 shares 45,000
Additional paid-in capital
Preferred stock 1,250,000
Common stock 1,272,000
(2,327,000)
-----------
Accumulated deficit 280,000
-----------
$ 282,000
===========
See accompanying notes.
ARINCO COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
1999 1998
---- ----
Operating expenses - general
and administrative $ 3,000 $ -
-------- ---------
Operating loss 3,000 -
Other (income) expense
Interest income (2,000) (2,000)
Interest expense - 10,000
Unrealized gain on trading securities (45,000) -
---------- -----------
(47,000) 8,000
---------- -----------
NET EARNINGS (LOSS) 44,000 (8,000)
Preferred stock dividend requirement 6,000 6,000
---------- -----------
NET EARNINGS (LOSS) APPLICABLE
TO COMMON SHARES $ 38,000 $ (14,000)
========== ===========
BASIC AND DILUTED EARNINGS (LOSS) PER
COMMON SHARE $ 0.01 $ (0.00)
========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,541,000 4,541,000
========== ===========
See accompaning notes.
ARINCO COMPUTER SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31,
(UNAUDITED)
1999 1998
---- ----
Cash flows form operating activities
Net earnings (loss) $ 44,000 $ (8,000)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities
Increase in trading securities,including
unrealized appreciation of $45,000 in 1999 (55,000) -
Changes in operating assets and liabilities
Accounts payable 2,000 10,000
----------- ----------
Net cash provided by (used in)
operating activities (9,000) 2,000
Cash flows form investing activities
Advances on related party note receivable (20,000) -
Receipts on related party note receivable 36,000 -
----------- ---------
Net cash provided by investing
activities 16,000 -
Cash flow from financing activities
Payment of bank overdraft (2,000) -
----------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,000 2,000
Cash and cash equivalents at beginning of period 173,000 270,000
----------- ---------
Cash and cash equivalents at end of period $ 178,000 $ 272,000
=========== =========
See accompanying notes.
ARINCO COMPUTER SYSTEMS, INC.
NOTES TO CONSOLIDTED FINANCIAL STATEMENTS
MARCH 31, 1999
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet as of March 31, 1999, and the consolidated
statements of operations and cash flows for the three month periods ended March
31, 1999 and 1998 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 financial position, results of
operations and cash flows as of and for the three months ended March 31, 1999
and 1998.
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
Securities & Exchange Commission Form 10-KSB. The results of operations for the
periods ended March 31, 1999 and 1998 are not necessarily indicative of the
operating results for the full year.
EARNINGS (LOSS) PER SHARE
Earnings (loss) per share is computed using the weighted number of common
shares outstanding of 4,541,000 for the three month periods ended March 31, 1999
and 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS::
The following is Management's discussions and analysis of the financial
condition and results of operations of the Company during the quarter ended
March 31, 1999.
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 March 31, 1999 the Company had cash and trading securities totaling
$282,000.
The Registrant's sole officer and director is currently devoting his
services, as needed to the Registrant without compensation. No increase of
employees is anticipated during the foreseeable future of the Registrant. 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 activites for the year ending
December 31, 1999, while it seeks to establish a new business. There is no
assurance that given the Registrant's limited financial resoures, it will
succeed in attracting acquisitiions or merger prospects.
RESULTS OF OPERATIONS
The Company's net earnings of $38,000 for the quarter ended March 31, 1999
consist primarily of unrealized gains on trading securities of $45,000.00 as
reduced by operating expenses. Operations for the quarter ended March 31, 1998
generated a loss of $14,000 as a result of interest expense and preferred stock
divdend requirements exceeding interest income. The primary change between the
two quarters is the result of the Company holding trading securities in 1999.
As the Company has incurred operating losses, no provision for income taxes
was required for the quarter ended March 31, 1999.
YEAR 2000 ISSUE
Because of limited operations of the Registrant, Year 2000 issues are
minimal. The Registrant's financial institutions and professional service
providers have provided notification that they are Year 2000 compliant. The
personal computer and software which the Registrant utilizes is deemed Year 2000
compliant.
ITEM 3. QUANTITIATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Registrant has no material market risk associated with interest
rates, foreign currency exchange rates or commodity prices.
PART II. OTHER INFORMATION:
ITEM 1. LEGAL PROCEEDINGS:
NONE
ITEM 2. CHANGES IN SECURITIES:
NONE
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.
s/James A. Arias
-------------------------------
James A. Arias
Interim Chief Executive Officer
DATE: MAY 14, 1998
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 178,000
<SECURITIES> 104,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 282,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 282,000
<CURRENT-LIABILITIES> 2,000
<BONDS> 0
0
40,000
<COMMON> 45,000
<OTHER-SE> 195,000
<TOTAL-LIABILITY-AND-EQUITY> 282,000
<SALES> 0
<TOTAL-REVENUES> 47,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,000
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
