SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               AMENDMENT NO. 1 TO
                                  FORM 10-KSB/A

[X] Annual Report pursuant to Section 13 or 15(d) of the 
    Securities Act of 1934

    For the fiscal year ended December 31, 1998, 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 No. 0-12575


                         ARIZONA INSTRUMENT CORPORATION
           -----------------------------------------------------------
           (Name of small business issuer as specified in its charter)


           Delaware                                              86-0410138
-------------------------------                                -------------
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

4114 East Wood Street, Phoenix, AZ                                  85040
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number, including area code: (602) 470-1414

Securities registered pursuant to Section 12(b) of the Act: None

Securities  registered  pursuant to Section 12(g) of the Act: Common Stock, $.01
par value

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.

                            [X] Yes           [ ]  No

As of April 23,  1999,  the  aggregate  market value of the voting stock held by
non-affiliates of the registrant was  $3,002,665.38.  The aggregate market value
is  computed  with  reference  to the  average  bid and asked price of $2.125 as
reported  on the Nasdaq  SmallCap  Market for April 23,  1999.  Shares of Common
Stock held by each  officer and director and by each person who owns 10% or more
of the  outstanding  Common Stock have been excluded in that such persons may be
deemed to be affiliates.

This determination of affiliate status is not necessarily conclusive.

[  ] Check if  disclosure  of  delinquent  filers in  response  to Item 405 of
     Regulation S-B is not contained herein,  and will not 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.
<PAGE>
         As of April 23, 1999, 1,459,989 shares of Common Stock ($.01 par value)
were  outstanding.  All share  amounts are  adjusted to reflect the 5 to 1 stock
split made effective February 16, 1999.

         Arizona Instrument Corporation (the "Company") hereby amends its Report
on Form 10-KSB for the year ended  December 31, 1998 by adding  thereto Items 9,
10, 11, and 12, as set forth below.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

         The  names of the  directors  and  certain  executive  officers  of the
Company, and certain information about them, are set forth below.

NAME                  AGE  PRINCIPAL OCCUPATION AND DIRECTORSHIPS
----                  ---  --------------------------------------

S. Thomas Emerson     58   President and CEO of Arizona Technology Incubator,  a
                           partnership  that mentors  promising young technology
                           companies.   Dr.   Emerson  was  chairman  of  Xantel
                           Corporation,  a private  company  engaged in computer
                           communications,  from August 1992 to January 1998 and
                           Chief Executive Officer of Syntellect Incorporated, a
                           manufacturer of voice response systems,  from 1984 to
                           April 1992. Prior to founding Syntellect in 1984, Dr.
                           Emerson was a founder of  Periphonics  Corporation of
                           Bohemia,  New York  where he  served  for 14 years in
                           various executive capacities.

Steven G. Zylstra     44   Director   of   Business   Development   for   Simula
                           Technologies,  Inc., (as new  subsidiary,  formerly a
                           division  of  Simula  Government  Products,  Inc.) of
                           Phoenix, Arizona, since 1995. The company specializes
                           in  the   development  and  production  of  high-tech
                           transportation seating and safety systems,  composite
                           technologies,  and ballistic armor systems. From 1984
                           to 1995,  Mr.  Zylstra  served as General  Manager of
                           General  Pneumatics  Corporation,   Western  Research
                           Center, of Scottsdale,  Arizona.  He is a Co- Founder
                           and  Member of the  Governor's  Arizona  Science  and
                           Technology  Council,  Co-Founder  and Director of the
                           Arizona   Innovation  Network  and  Director  of  the
                           Arizona  Technology  Incubator,  among other  outside
                           activities.

George G. Hays        43   Chairman of the Board,  President and Chief Executive
                           Officer of the  Company.  Mr. Hays joined the Company
                           in March 1997 as Vice  President  of  Finance,  Chief
                           Financial Officer and Vice President of Manufacturing
                           of the  Company.  In  November  1997,  Mr.  Hays  was
                           elected  President and Chief Executive Officer of the
                           Company.  In  January  1998,  Mr.  Hays  was  elected
                           Chairman of the Board of Directors.  Prior to joining
                           the Company,  Mr. Hays was  President  and founder of
                           Hays  Financial  Group,  Inc., an investment  banking
                           firm, since 1986. Mr. Hays is still President of Hays
                           Financial Group, Inc.

Harold D. Schwartz    73   President  of  Chez  &  Schwartz,   Incorporated,   a
                           marketing and sales  consulting firm, since 1973. Mr.
                           Schwartz  currently  serves on the Board of Directors
                           of Cobra Electronics Corporation, a public company.

                                      -2-
<PAGE>
Linda Shepherd        46   Controller  and  Chief  Accounting   Officer  of  the
                           Company.  Ms. Shepherd was named Controller and Chief
                           Accounting Officer in mid-1997. Ms. Shepherd has been
                           an accountant  for the Company  since 1984.  Prior to
                           her  position  with the  Company,  she  served  as an
                           accountant for a local trucking firm for nine years.

COMPLIANCE WITH SECTION 16(a) REPORTING REQUIREMENTS

         Under  the  securities  laws  of  the  United  States,   the  Company's
directors,  its executive officers, and any persons holding more than 10% of the
Company's  Common Stock are required to report  their  initial  ownership of the
Company's Common Stock and any subsequent  changes in that ownership to the SEC.
Specific due dates for these  reports have been  established  and the Company is
required to disclose  any failure to file by these  dates.  All of these  filing
requirements were satisfied during the year ended December 31, 1998, except that
Harold  Schwartz,  a  director  of the  Company,  reported  an April  and a July
purchase  of shares by his wife on a Form 5 dated  February  10,  1999 and Linda
Shepherd,  the Controller and Chief Accounting Officer of the Company,  reported
an August purchase of shares on a Form 5 dated February 8, 1999. In making these
disclosures,  the Company  has relied  solely on written  representation  of its
directors and executive  officers and copies of the reports that they have filed
with the Commission.

ITEM 10. EXECUTIVE COMPENSATION

                         SUMMARY COMPENSATION TABLE (1)

The  following  table sets forth,  with respect to the years ended  December 31,
1996,  1997  and  1998,  compensation  awarded  to,  earned  by or  paid  to all
individuals  serving as the Company's Chief Executive Officer during fiscal 1998
and each of the  Company's  other  executive  officers  who were  serving  as an
executive  officer at December 31, 1998 and whose salary and bonus aggregated at
least $100,000 for services rendered to the Company during fiscal 1998.

<TABLE>
<CAPTION>
                                           ANNUAL COMPENSATION          LONG-TERM COMPENSATION
                                     ----------------------------    ----------------------------
                                                                                             PAY-
                                                                              AWARDS         OUTS
                                                                     ---------------------   ----
                                                          OTHER        RE-      SECURITIES
                                                          ANNUAL     STRICTED   UNDERLYING   LTIP
                                                          COMPEN-     STOCK      OPTIONS/    PAY-   ALL OTHER
                                                          SATION      AWARDS       SARS      OUTS   COMPEN-
NAME AND PRINCIPAL POSITION   YEAR   SALARY($)    BONUS     ($)        (#)        (#)(3)     ($)    SATION($)
---------------------------   ----   ---------    -----   -------    --------   ----------   ----   ---------
<S>                           <C>     <C>         <C>     <C>             <C>     <C>           <C> <C>
George G. Hays,               1998    171,300         0   5,400(2)     0          45,000       0    1,338(4)
President and Chief           1997    113,749     6,300   4,050(2)     0          15,000       0    1,228(4)
Executive Officer(6)                                                                               
                                                                                                   
Walfred R. Raisanen,          1998    195,984         0       0        0               0       0    5,736(4)
Vice President of             1997    166,740    29,250       0        0               0       0    4,981(4)
Engineering(5)                1996    153,622    42,000       0        0               0       0    4,309(4)
</TABLE>
----------
(1)  All share  amounts are  adjusted to reflect the 5 to 1 reverse  stock split
     effective February 16, 1999.

(2)  Automobile allowance.

                                       -3-
<PAGE>
(3)  Consists entirely of stock options.

(4)  Life insurance premium payments.

(5)  Mr.  Raisanen left his employment with the Company on February 26, 1999. He
     resigned from the Board of Directors on March 15, 1999.

(6)  Mr. Hays  commenced  his  employment  with the  Company on March 10,  1997.
     Therefore no information for 1996 is available.

                  OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)(2)

         The following  table sets forth  information  about stock option grants
during the last  fiscal  year to the  executive  officers  named in the  Summary
Compensation Table.

                                         INDIVIDUAL GRANTS
                     -----------------------------------------------------------
                       NUMBER OF     % OF TOTAL
                      SECURITIES     OPTION/SARS
                      UNDERLYING       GRANTED
                     OPTIONS/SARS  TO EMPLOYEES IN  EXERCISE OR BASE  EXPIRATION
     NAME             GRANTED (#)    FISCAL YEAR      PRICING ($/SH)     DATE
     ----             -----------    -----------      --------------     ----
George G. Hays          45,000(4)        65%                 $4.60     1/13/2008

Walfred R. Raisanen (3)      0           --                     --        --
----------
(1)  All share  amounts are  adjusted to reflect the 5 to 1 reverse  stock split
     effective February 16, 1999.

(2)  Consists entirely of stock options.

(3)  Mr.  Raisanen left his employment with the Company on February 26, 1999. He
     resigned from the Board of Directors on March 15, 1999.

(4)  Vest in three equal annual  installments with the first installment vesting
     on January 13, 1998.

                                       -4-
<PAGE>
               AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                 AND FISCAL YEAR-END OPTION/SAR VALUE TABLE (1)

         The  following  table  sets  forth  information  with  respect  to  the
executive  officers named in the Summary  Compensation  Table concerning  option
exercises  during  the last  fiscal  year and the  number  and value of  options
outstanding at the end of the last fiscal year.

<TABLE>
<CAPTION>
                                              
                                             NUMBER OF UNEXERCISED          VALUE OF UNEXERCISED 
                      SHARES                 OPTIONS/SARS AT FISCAL       IN-THE-MONEY OPTIONS/SARS 
                     ACQUIRED      VALUE          YEAR-END (#)(1)         AT FISCAL YEAR END ($)(3)
                        ON       REALIZED  ---------------------------   ---------------------------
 NAME               EXERCISE(#)   ($)(2)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
 ----               -----------   ------   -----------   -------------   -----------   -------------
<S>                      <C>         <C>     <C>              <C>            <C>            <C>
George G. Hays           0           0       20,000           0              (4)(5)         (4)(5)

Walfred R. Raisanen      0           0       12,000           0              (4)(5)         (4)(5)
</TABLE>
----------
(1)  All share  amounts are  adjusted to reflect the 5 to 1 reverse  stock split
     effective February 16, 1999.

(2)  No SARs are outstanding.

(3)  Calculated  based on the closing  price as reported on the Nasdaq  SmallCap
     Market for the date of exercise minus the exercise price, multiplied by the
     number of shares acquired on exercise.

(4)  Value as of December 31, 1998 is based upon the average bid and asked price
     of $3.75 as reported on the Nasdaq  SmallCap  Market for December 31, 1998,
     minus the exercise price, multiplied by the number of shares underlying the
     options.

(5)  None of these options were in-the-money on December 31, 1998.

EMPLOYMENT/CHANGE OF CONTROL ARRANGEMENTS

     Effective January 1, 1998, the Company entered into an employment agreement
with George G. Hays  pursuant to which Mr. Hays agreed to serve as President and
Chief  Executive  Officer.  The  agreement  provides for a base annual salary of
$165,000, subject to merit increases, plus an annual incentive bonus of at least
30% of annual salary based on an incentive bonus plan  administered by the Board
of  Directors.  Mr.  Hays  is  also  entitled  to  participate  in  any  benefit
arrangements available to executive officers of the Company. Upon termination of
the  employment  agreement  without  cause,  Mr.  Hays is entitled to receive an
amount  equal to the  compensation  due him over the  balance of the term of the
employment agreement,  and to participate in applicable benefit programs for the
balance of the term of the  employment  agreement.  The agreement  terminates on
March 31, 2000, and will automatically renew for additional one-year terms until
notice of non-renewal by the Company. This agreement replaces Mr. Hays' previous
employment  agreement with the Company dated April 1, 1997, pursuant to which he
was employed as Vice President and Chief Financial Officer.  The Company amended
and renewed Mr. Hays'  employment  agreement  and extended it through  March 31,
2001.

         Effective  November  5, 1992,  the  Company  entered  into a  five-year
employment  agreement  with Walfred R. Raisanen  pursuant to which Mr.  Raisanen
agreed to serve as Vice President of Research and

                                       -5-
<PAGE>
Development  for a base  annual  salary  of  $120,000,  which is to be  adjusted
annually for cost-of-living  increases.  Mr. Raisanen's employment agreement has
been renewed according to its terms effective November 5, 1997. In January 1998,
Mr. Raisanen's title was changed to Vice President of Engineering.  Mr. Raisanen
is also  entitled  to  participate  in any  benefit  arrangements  available  to
executive officers of the Company.  Upon termination of the employment agreement
by the Company without cause, Mr. Raisanen is entitled to receive a cash payment
equal to the compensation due him over the balance of the term of the employment
agreement,  and to participate in applicable benefit programs for the balance of
the term of the employment agreement.  In 1999, the Company decided not to renew
Mr. Raisanen's employment agreement. Mr. Raisanen terminated his employment with
the Company on February  26,  1999.  He resigned  from the Board of Directors on
March 15, 1999.

         The Company's  1991 Option Plan  provides  that options  granted to any
executive officer or director of the Company will become immediately exercisable
and vested in full upon the occurrence,  before the expiration or termination of
such option,  of (a) delivery of written  notice of a  stockholders'  meeting at
which the stockholders will consider a proposed merger,  sale of assets or other
reorganization  of the Company,  (b) the acquisition by any person of securities
representing  25% or more of the total  number of votes  entitled to be case for
the election of directors of the Company, (c) commencement of a tender offer for
the stock of the Company,  or (d) failure,  at any annual or special  meeting of
stockholders  following an election contest,  of any of the persons nominated by
the Company to win election seats on the board of directors.

         The  Company's  1991 Option Plan further  provides  that subject to the
above  provisions,  in the event a merger  or  similar  reorganization  that the
Company does not survive,  a sale of all or  substantially  all of the assets of
the Company,  or the  dissolution  and  liquidation of the Company,  shall cause
every option outstanding under the 1991 Option Plan to terminate,  to the extent
not then  exercised,  except to the extent that any  surviving  entity agrees to
assume the 1991 Option Plan and/or the obligations under any such option.

COMPENSATION OF DIRECTORS

         Outside  directors are currently paid $1,000 plus expenses per Board or
committee meeting attended. Pursuant to the 1991 Stock Option Plan, non-employee
directors are  automatically  granted options  exercisable for 500 shares at the
market  price on the date of grant upon  joining the Board and on each January 1
thereafter. The options become exercisable six months after grant and expire two
years after  termination of Board service.  In addition,  the Company decided to
grant each outside  shareholder  an additional 500 shares at the market price on
January 1, 1999.  Directors who are  employees are only paid their  expenses (if
any) for attendance at meetings.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following  table sets forth  information  regarding the  beneficial
ownership  of the  Company's  Common Stock at April 23, 1999 with respect to (i)
each director and director nominee of the Company,  (ii) each executive  officer
named in the Summary Compensation Table set forth herein, (iii) all directors

                                       -6-
<PAGE>
and executive  officers as a group, and (iv) each person known by the Company to
be the  beneficial  owner  of more  than  5% of the  outstanding  shares  of the
Company's Common Stock:

                 SHARES OF COMMON STOCK BENEFICIALLY OWNED(1)(2)

                                             NUMBER                PERCENT
NAME AND ADDRESS (3)                        OF SHARES              OF TOTAL
--------------------                        ---------              --------
George G. Hays (4)                           40,400                  2.7%
S. Thomas Emerson (4)                        10,500                   (5)
Harold D. Schwartz (4)                       45,370                  3.1%
Steven G. Zylstra (4)                         4,120                   (5)
All directors and executive                 101,614                   7%
officers as a group (4) (6)
(5 persons)

----------
(1)  All share  amounts are  adjusted to reflect the 5 to 1 revenue  stock split
     effective February 16, 1999.

(2)  Beneficial  ownership is  determined  in  accordance  with the rules of the
     Securities and Exchange Commission ("SEC") and generally includes voting or
     investment power with respect to securities.  In accordance with SEC rules,
     shares  which may be  acquired  upon  exercise  of stock  option  which are
     currently  exercisable  or which become  exercisable  within 60 days of the
     date of the table are deemed beneficially owned by the optionee.  Except as
     indicated  by  footnote,  and  subject  to  community  property  laws where
     applicable,  the  persons or  entities  named in the table  above have sole
     voting  and  investment  power with  respect to all shares of Common  Stock
     shown as beneficially owned by them.

(3)  Unless  otherwise  indicated,  the beneficial  owner's  address is: c/o the
     Company, 4114 East Wood Street, Phoenix, Arizona 85040.

(4)  Includes  shares  issuable  upon  exercise of options  which are  currently
     exercisable  or become  exercisable  within  60 days of April  23,  1999 as
     applicable for each of the following individuals:

                   Hays                  40,000 shares
                   Emerson                6,500 shares
                   Schwartz               3,000 shares
                   Zylstra                4,000 shares

(5)  Less than one percent.

(6)  Includes 1,144 shares issuable upon exercise of options and 80 shares owned
     by  officers  (in  addition  to shares  issuable  upon  exercise of options
     indicated in note (4).

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         MERGER  AGREEMENT.  On September  30,  1992,  Horizon  Engineering  and
Testing,  Inc. was merged (the "Merger")  into a wholly-owned  subsidiary of the
Company   pursuant  to  an  Agreement   of  Merger  (the  "Merger   Agreement").
Shareholders of Horizon  received cash  consideration  of $190,000 and shares of
the Company's  Common Stock.  Quinn Johnson,  a former  director of the Company,
held 90% of the  outstanding  stock of  Horizon  at the time of the  Merger  and
received  529,328  shares of Common  Stock in  connection  with the Merger.  The
Company agreed to register the shares of the Company's Common Stock

                                       -7-
<PAGE>
issued  pursuant  to the Merger  Agreement  under  applicable  federal and state
securities  laws at any time after  April 1, 1993 upon the request of holders of
25% of such shares and to keep such registration effective through September 30,
1995.  Mr.  Johnson has agreed to  indemnify  Horizon  and the  Company  against
certain liabilities in connection with the Company's acquisition of Horizon, and
has placed 49,030  shares of the Company's  Common Stock in escrow in connection
therewith.

         NON-COMPETITION  AGREEMENT.  Pursuant  to a  Non-Competition  Agreement
dated  September 30, 1993, and in  consideration  of a cash payment of $350,000,
Mr.  Johnson  agreed to refrain from  competing  with Horizon until the later of
September 30, 1998 or two years after leaving the employment of Horizon, subject
to earlier termination under certain circumstances.

         EMPLOYMENT  AGREEMENT.  Mr.  Johnson  served as  President  of  Horizon
pursuant to an  Employment  Agreement  dated  September  30, 1992.  Mr.  Johnson
resigned  from his  position  as  President  of  Horizon in  September  1996 and
resigned  from his  position as director  of the  Company in January  1998.  The
Employment  Agreement  provided for a base salary of $125,000 over its four-year
term, with annual adjustments tied to increases in the Consumer Price Index. The
Employment  Agreement  also  provided  for an annual  bonus  equal to (i) 15% of
Horizon's pretax profit (as defined) with respect to pretax profit  representing
up to 15% of Horizon's gross revenues;  and (ii) 20% of Horizon's  pretax profit
on that portion of the pretax profit in excess of 15% of gross revenues,  with a
maximum bonus over the term of the four-year agreement equal to $700,000. In the
event of termination of the Employment  Agreement by the Company  without cause,
Mr.  Johnson was  entitled to receive (i) the  difference  between  $700,000 and
bonus  payments  prior  to  termination;  plus  (ii)  an  amount  equal  to  the
then-applicable annual base salary.

                                       -8-
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

                                       ARIZONA INSTRUMENT CORPORATION

Date:  April 29, 1999                  By: /s/ George G. Hays
                                           -------------------------------------
                                           George G. Hays
                                           President and Chief Executive Officer

                                       By: /s/ Linda Shepherd
                                           -------------------------------------
                                           Linda Shepherd
                                           (Principal Accounting Officer)


                                       -9-