UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(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, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number: 0-13347
ARINCO COMPUTER SYSTEMS INC.
______________________________________
(Exact of small business issuer in its charter)
New Mexico 085-0272154
---------- -----------
(State or other jurisdiction of (I.R.S.Employer
Incorporation or organization) identification no.)
1650 University Blvd., N.E., Suite 5-100, Albuquerque, New Mexico 87102
-----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 505-242-4561
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 contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, indefinitive 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: -0-
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: On March 25, 1999, based on the
price quoted by NASDAQ OTC Bulletin Board was $319,500.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of March 25, 1999 was 4,541,000.
PART I
Item 1. Description of 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, NASDAQ Bulletin Board traded company
organized principally to serve its subsidiary operations.
On March 1, 1983, it 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 judgment 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 an interim distribution of $284,000
from the bankrupt estate of the guarantor. During 1996, a creditor
whose claim had been disallowed was successful in having the order
disallowing its claim set aside. The claim after a court proceeding was
subsequently disallowed. The creditor subsequently petitioned the court
to again review the previous Judge's ruling; however, to date, no
action has been taken. Management believes the Company will prevail and
a ruling requiring recall of the distribution is unlikely; nevertheless,
it is reasonably possible that such an event could occur, and if such
an event did occur, the amount of the recall cannot currently be
estimated.
At the end of the fiscal year ended December 31, 1998 the
Registrant was without any business, had assets consisting of $173,000
in cash, trading securities of $49,000, a receivable from a related
party of $16,000 and had liabilities of $2,000. At the end of the Fiscal
Year ending December 31, 1997 it had assets consisting of $270,000 in
cash and liabilities of $647,000. The decrease of liabilities was a
result of a review of old liabilities that after legal advice, were
determined to no longer be enforceable as claims against the Registrant.
As a result of the extinguishment of these obligations, an extraordinary
income item of $666,000 was recognized in the fourth quarter. The
decrease in assets was due primarily to a mark down to market of
securities held for sale, in addition, to an increase of $8,000 of
operating expense as compared to last year.
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
Registrant's 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 the
Registrant's sole officer and director is minimal. No compensation or
reimbursments have been paid.
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. The Registrant had 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 or the Eastern District of New York, a prior supplier
of material 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, however,
as described in Item 1 above, these judgments and all accrued interest
thereon, were extinquished, after legal advice that these liabilities
were no longer enforceable as claims against the Company.
2. See Item 1 above, regarding the current status of a legal
challenge by a creditor to recover a prior interim distribution to the
Registrant, of $284,000 from a bankrupt estate.
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 fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Registrant's common stock has been listed in the NASDAQ Bulletin
Board under the symbol "ARCU". The high and low bid prices during each
quarter of 1998 and 1997 represent inter dealer prices without
adjustment for retail markups, markdowns or commissions, and may not
reflect actual transactions.
Bid Prices Bid Prices
High Low High Low
----- ----- ----- -----
March 31, 1998 $0.10 $0.01 March 31, 1997 $0.02 $0.01
June 30, 1998 $0.10 $0.01 June 30, 1997 $0.02 $0.01
Sept. 30, 1998 $0.10 $0.01 Sept. 30, 1997 $0.02 $0.01
Dec. 31, 1998 $0.10 $0.01 Dec. 31, 1997 $0.02 $0.01
There were approximately 400 holders of the Registrant's common stock on
March 16, 1999.
The Registrant has never paid dividends on its common stock.
Item 6. Management's Discussion and Analysis or Plan of Operations.
(a) Plan of operation.
Liquidity and Capital Resources.
The Registrant currently has approximately $238,000, consisting of cash
and other liquid assets.
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 activities, for the year
ending December 31, 1999, while it seeks to acquire or establish a
new business. There is no assurance that given the Registrant's limited
financial resources, it will succeed in atracting acquisition or merger
prospects.
Financial Condition and Changes in Financial Condition:
As stated above, the Registrant's present financial condition is
sufficient to maintain its present level of operation into the
foreseeable future. The Registrant does not at this time anticipate
any cash expense that could not be met by the it's current cash
resources.
Year 2000 Issues:
Because of the limited operations of the Registrant, year 2000 issues
are minimal. The Registrant's banks and professional service vendors
have notified that they are year 2000 compliant. The personal computer
and software, which the Registrant utilizes, is deemed year 2000
compliant.
Item 7. Financial Statements.
Report of Independent Certified Public Accountants
--------------------------------------------------
Shareholders and Board of Directors
Arinco Computer Systems, Inc.
We have audited the accompanying consolidated balance sheet of Arinco
Computer Systems, Inc. and Subsidiary, as of December 31, 1998, and the
related consolidated statements of operations, shareholders' equity
(deficit), and cash flows for each of the two years in the period ended
December 31, 1998. 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,
1998, and the consolidated results of their operations and their
consolidated cash flows for each of the two years in the period ended
December 31, 1998 in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
Oklahoma City, Oklahoma
March 6, 1999
Arinco Computer Sytems, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEET
December 31, 1998
ASSETS (note H)
CURRENT ASSETS
Cash $ 173,000
Note receivable - related party (note C) 16,000
Trading securities (note J) 49,000
----------
$ 238,000
==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdrafts $ 2,000
COMMITMENTS AND CONTINGENCIES (notes G and H) -
SHAREHOLDERS' EQUITY
Preferred stock, $.06 per share 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 (note F) 40,000
Common stock - $.01 par value; authorized,
45,000,000 shares; issued and outstanding,
4,541,000 shares (note F) 45,000
Additional paid-in capital
Preferred stock 1,250,000
Common stock 1,272,000
Accumulated deficit (2,371,000)
-----------
236,000
-----------
$ 238,000
===========
The accompanying notes are an integral part of this statement.
Arinco Computer Systems, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
1998 1997
---- ----
Operating expenses - general
and administrative $ 11,000 $ 3,000
--------- ---------
Operating loss (11,000) (3,000)
Other (income) expense
Interest income (7,000) (9,000)
Interest expense 19,000 38,000
Unrealized loss on trading securities 30,000 -
--------- ---------
42,000 29,000
--------- ---------
Loss before extraordinary item (53,000) (32,000)
Extraordinary item - extinguishment of
liabilities (note D) 666,000 -
--------- ---------
NET EARNINGS (LOSS) 613,000 (32,000)
Preferred stock dividend requirement 24,000 24,000
--------- ---------
NET EARNINGS (LOSS) APPLICABLE TO
COMMON SHARES $ 589,000 $ (56,000)
========= =========
Earnings (loss) per common share
Loss before extraordinary item $ (.02) $ (.01)
Extraordinary item .15 -
--------- ---------
BASIC AND DILUTED NET EARNINGS
(LOSS) $ .13 $ (.01)
========= =========
Weighted average of common
shares outstanding, basic and diluted 4,541,000 4,541,000
========== ==========
The accompanying notes are an integral part of these statements.
Arinco Computer Systems, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 1998 and 1997
Preferred stock Common stock
----------------- -------------------
Shares Amount Shares Amount
------ ------ ------ ------
Balances at Jan. 1, 1997 396,000 $ 40,000 4,541,000 $ 45,000
Net loss - - - -
------- ------- --------- --------
Balances at Dec. 31, 1997 396,000 40,000 4,541,000 45,000
Net earnings - - - -
------- ------- --------- --------
Balances at Dec. 31, 1998 396,000 $ 40,000 4,541,000 $ 45,000
======= ======== ========= ========
The accompanying notes are an integral part of this statement.
Additional
paid-in capital
----------------------
Preferred Common Accumulated
stock stock deficit Total
--------- ---------- ----------- ---------
Balances at Jan. 1, 1997 $1,250,000 $1,272,000 $(2,952,000) $(345,000)
Net loss - - (32,000) (32,000)
--------- --------- ----------- ---------
Balances at Dec. 31, 1997 1,250,000 1,272,000 (2,984,000) (377,000)
Net earnings - - 613,000 613,000
--------- ---------- ----------- ---------
Balance at Dec. 31, 1998 $1,250,000 $1,272,000 $(2,371,000) $ 236,000
========== ========== ============ =========
The accompanying notes are an integral part of this statement.
Arinco Computer Systems, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
1998 1997
---- ----
Increase (Decrease) in Cash and Cash
Equivalents
Cash flows from operating activities
Net earnings (loss) $ 613,000 $(32,000)
Adjustments to reconcile net earnings
(loss) to net cash provided by
(used in) operating activities
Gain on extinguishment of
liabilities (666,000) -
Increase in trading securities
(including unrealized
depreciation of $30,000) (49,000) -
Changes in operating assets and
liabilities
Accrued expenses 19,000 37,000
--------- ---------
Net cash provided by
(used in) operating
activities (83,000) 5,000
Cash flows from investing activities
Loan to related party (16,000) -
Cash flows from financing activities
Bank overdraft 2,000 -
--------- ---------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (97,000) 5,000
Cash and cash equivalents at beginning
of year 270,000 265,000
--------- ---------
Cash and cash equivalents at end of year $ 173,000 $ 270,000
========== ==========
The accompanying notes are an integral part of these statements.
Arinco Computer Systems, Inc. and Subsidiary
NOTES TO CONSILIDATED FINANCIAL STATEMENTS
December 31, 1998 and 1997
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 that has had no
business operations since 1988. Intercompany transactions and
balances with the Company's subsidiary, New Start, Inc., are
eliminated in consolidation. Prior to the settlement of certain
liabilities of the Company in 1998 (Note D), the Company reported
on the liquidation basis of accounting; however, this change in
reporting had no effect on the 1998 or 1997 financial statements or
their presentation.
The Company's activities consist primarily of paying general and
administrative costs. At present, the Company has no employees and
is wholly dependent on the personal efforts of its officers and
directors, who are engaged full-time in other activities, endeavors,
and professions.
NOTE B - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the accompanying consolidated financial statements
follows.
1. Earnings (Loss) Per Common Share
--------------------------------
Earnings (loss) per common share has been computed using the
weighted average number of common shares outstanding during each
period after deduction of preferred stock dividends. Basic and
diluted loss per share are the same because the effect of warrants
and convertible preferred stock would be antidilutive.
2. Cash Accounts
-------------
The Company maintains its cash in bank deposit accounts which may
exceed federally insured limits. The Company has not
experienced any losses on such accounts and believes it is not
exposed to any significant credit risk on cash.
3. 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 financial statements and accompanying notes; accordingly,
actual results could differ from those estimates.
4. Securities
----------
Trading securities (cost of $79,000) are bought with the intention of
selling them in the near term and are carried at fair value with any
unrealized gains or losses included in earnings. Cost is determined
by specific identification and $30,000 of unrealized loss on the
securities was included in earnings for the year ended December 31,
1998.
Arinco Computer Systems, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE C - NOTE RECEIVABLE - RELATED PARTY
The Company has a note receivable from a related party of $16,000,
due on demand with interest payable at 8.5%.
NOTE D - EXTINGUISHMENT OF LIABILITIES
The Company incurred certain liabilities which could not be paid as a
result of unprofitable operations before 1988. During 1998, the
Company reviewed these old liabilities and, as a result of that
review and upon advice from legal counsel, determined that
liabilities totaling approximately $666,000 were no longer
enforceable as claims against the Company. As a result of the
extinguishment of these obligations, an extraordinary income item of
$666,000 was recognized in the fourth quarter.
NOTE E - 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,
-----------------------
1998 1997
---- ----
Tax expense (benefit) at statutory
rate $ 209,000 $ (11,000)
State income taxes 25,000 (1,000)
Change in valuation allowance (246,000) 16,000
Other 12,000 (4,000)
--------- ---------
$ - $ -
========== ==========
As of December 31, 1998, the Company has net operating loss carry
forwards for income tax purposes as follows:
Expiration date
2001 $ 68,000
2003 3,000
2004 28,000
2005 15,000
2006 39,000
2007 75,000
2008 73,000
2009 73,000
2011 36,000
2012 23,000
---------
$ 433,000
=========
Arinco computer Systems, Inc. and subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1998 and 1997
NOTE E - INCOME TAXES - CONTINUED
The Company's deferred tax assets and liabilities consist of the
following at December 31, 1998:
Net operating loss carryforwards $ 173,000
Valuation allowance (173,000)
----------
$ -
===========
The valuation allowance for deferred tax assets increased $94,000
and $16,000, respectively, for the years ended December 31, 1998 and
1997. The increase for 1998 was a result of an increase in prior
years operating losses of $340,000 and usage of prior year operating
loss carryforwards of $246,000.
NOTE F - CAPITAL STOCK
1. Warrants
--------
Warrants to purchase 503,000 shares of common stock at $1 per
share were outstanding at December 31, 1998 and 1997.
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 $332,000 at
December 31, 1998. Preferred stockholders 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 G - 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 H - SETTLEMENT OF LITIGATION
On March 31, 1986, the Company filed a lawsuit against Pathfinder
Computer Centers Corporation and its organizers (defendants) seeking
the balance due of $450,000 on a note plus accrued interest
(guaranteed 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. Subsequent to receipt of
settlement proceeds, a creditor whose claim had been disallowed in
the defendants bankruptcy proceedings was successful in having the
order disallowing its claim set aside. If the claim is subsequently
allowed, the creditor could petition the court to have the bankruptcy
trustee recall the settlement proceeds; however, to date, no action
has been taken. Management believes court action requiring recall
of the settlement proceeds is unlikely; nevertheless, it is
reasonably possible that such an event will occur, although the
amount of the recall cannot currently be estimated.
Arinco Computer Systems, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
December 31, 1998 and 1997
NOTE I - FINANCIAL INSTRUMENTS
The following table includes various estimated fair value
information as of December 31, 1998 as required by Statement of
Financial Accounting Standards ("SFAS") No. 107, Disclosures About
Fair Value of Financial Instruments. Such information, which pertains
to the Company's financial instruments, is based on the requirements
set forth in SFAS No. 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.
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.
The carrying amounts and estimated fair values of the Company's
financial instruments are as follows:
Carrying Estimated
amount fair value
-------- ----------
Financial assets
Cash $173,000 $173,000
Note receivable - related party
for which it is not practicable
to estimate fair value 16,000 -
Trading securities 49,000 49,000
NOTE J - RELATED PARTY TRANSACTIONS
During 1998, the Company purchased equity securities of an entity
under common control. These securities are classified as trading.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with Accountants
of the kind described by the Item 304 of Regulation S-B at any
time during the Registrant's two (2) most recent fiscal years.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
See PART II, "Employees"
ITEM 10. EXECUTIVE COMPENSATION
See PART II, "Employees"
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICAIAL OWNERS AND MANGEMENT
The following table sets forth, as of March 25, 1999, 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 voting
shares of all persons. Each person has sole voting and investment
power as to all shares unless otherwise indicated.
Directors.
__________
(2) (3)
(1) Name and address Amount and nature (4)
Title of of of Percent
Class Beneficial owner Beneficial ownership of class
- ---------------------------------------------------------------- --------
$0.01 par James A. Arias 530,000 11.7
value common 1650 University Blvd., Direct/Indirect*
Albuquerque, NM 87102
These shares are voted by the Registrant's sole officer and director,
James A. Arias
$0.01 par Realco, Inc. 285,000 6.3
value common 1650 University Blvd., Direct
Albuquerque, NM 87102
$0.01 par Financial Services Group, Inc. 100,000 2.2
value common 1650 University Blvd., Direct
Albuquerque, NM 87102
$0.01 par James A. Arias 145,000 3.2
value common 1650 University Blvd., Direct
Albuquerque, NM 87102
$0.001 par Steven P. Kadner 252,500 5.5
value common 8401 Washington Pl, N.E Indirect**
Albuquerque, NM 87113
$0.001 par Jerone F. Beckes 279,000 6.1
value common 8401 Washington Pl, N.E Indirect**
Albuquerque, NM 87113
convertible Storecos, a NV corp. 381,700 96.4
preferred 8106 Menaul Blvd., N.E. Direct
Albuquerque, NM 87113
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 September 11, 1998, the Registrant loaned $16,000 to a related
person of a company controlled by Mr. Arias. The loan is evidenced
by a demand note paying interest at the rate of 8.5% per annum.
The purpose of this loan was 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. On March 31, 1999 the
Registrant had no loans outstanding to any parties.
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) Documents filed as a part of this report:
-----------------------------------------
(1) Financial Statements.
Independent Auditors' report
Balance Sheet at December 31, 1998.
Statements of Operations for the years ended
December 31, 1998 and 1997.
Statements of Stockholders' Equity for the years ended
December 31, 1998 and 1997.
Statements of Cash Flows for the years ended
December 31, 1998 and 1997.
Notes to Financial Statements at
December 31, 1998 and 1997.
(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.
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.
s/James A. Arias
__________________________________________ Date: March 30, 1999
James A. Arias*, President and Chief
<F3> 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.
s/James A. Arias
____________________________________ Date: March 30, 1999
James A. Arias*., Director
<F3> *Only Mr. Arias is an officer or a director of the Registrant.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 173,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 238,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 238,000
<CURRENT-LIABILITIES> 2,000
<BONDS> 0
0
40,000
<COMMON> 45,000
<OTHER-SE> (152,000)
<TOTAL-LIABILITY-AND-EQUITY> 173,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 34,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,000
<INCOME-PRETAX> (53,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 666,000
<CHANGES> 0
<NET-INCOME> (589,000)
<EPS-PRIMARY> .13
<EPS-DILUTED> .13
