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]

the fiscal year ended December 31, 1996

[   ]
             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                              085-0272154
        _____________                            ____________
 (State or otherjurisdiction of                (I.R.S. Employer
 incorporation or organization)               identification no.)


  1650 University Blvd., N, S.E., Suite 100,
          Albuquerque, New Mexico                            897102
______________________________________________               ______
 (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 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.  ($16,000)
                                                              _________

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).  $117,795
                                      ________

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: 4,396,000.
     __________


                             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, acquired a telephone inter-connect company which
had engaged inselling  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.  If the
claim  is  subsequently allowed, the  creditor could petition the court
to have the bankruptcy  trustee  recall the  distribution; however,  to
date, no  action  has  been  taken.  Management  believes court  action
requiring  recall  of  the  distribution  is unlikely; nevertheless, it
is  reasonably  possible  that  such  an event will occur, although the
amount of the recall cannot currently be estimated.

      At  the  end  of  the  fiscal  year  ended  December 31, 1995 the
Registrant  was without any business, had assets  consisting of $39,000
in cash and a receivable  from  a related  party  of $215,000  and  had
liabilities of $572,000. At the end of the Fiscal  Year ending December
31, 1996 it had assets consisting of $265,000 in cash  and  liabilities
of $610,000.  The increase  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 Registrant's accumulation of
interest  income  earned  from  time  deposits, while the  increase  of
liabilities  resulted  from accrued interest  expense  associated  with
"Other Debt"  (see  Item  7.  Financial   Statements,  Note  D- Debt to
Nonrelated Parties).

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 Registrants 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. 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 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.

2.    In  1995, the  Registrant received  an  interim  distribution  of
approximately  $284,000  in  connection with a bankruptcy case in which
the  Registrant  is  a creditor.  The  bankruptcy case has not yet been
closed, however, no additional distributions  are contemplated  because
the  remaining  amounts  are committed  for administrative expenses and
recent settlement entered into by the Trustee.

      A large creditor filed a motion  to  set aside  a  previous order
disallowing itsclaim based upon a lack of notice.  The court set  aside
the default order disallowing  its  claim, but parties  in interest may
still object to  the claim.  The  creditor threatened to take action in
early February,  but no  action  has  been  taken  to date.  Management
believes court action requiring recall of the distribution is unlikely;
nevertheless,  it is reasonably possible that such an event will occur,
although  the amount of the recall cannot currently be estimated.

      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  no t 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 1995 and 1996 are as follows


<TABLE>
                        Bid Prices                         Bid Prices
                      High      Low                      High      Low
                      ____      ___                      ____      ___
<S>                  <C>       <C>    <S>                <C>      <C>

March 31, 1996       $0.02     $0.01  March 31, 1995     $0.02    $0.01
June  30, 1996       $0.02     $0.01  June  30, 1995     $0.02    $0.01
September 30,1996    $0.02     $0.01  September 30,1995  $0.02    $0.01
December 31, 1996    $0.02     $0.01  December 31, 1995  $0.02    $0.01
</TABLE>

       There were approximately 350  holders of the Registrant's common
stock on March 25, 1997.

     The Registrant has never paid dividends on its common stock.


Item  6. Management's' Discussion  and Analysis or Plan  of  Operations


Liquidity and Capital Resources.
________________________________

      The  Registrant's cash position improved  during  the past fiscal
year as a result of its earnings of interest on its  time deposits. The
Registrant currently has approximately $265,000.

      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, for the year
ending December 31, 1997, while it  seeks to acquire or establish a new
business.


Financial Condition and Changes in Financial Condition
_______________________________________________________

      As  stated  above, the  Registrant's  cash position improved as a
result  of  interest  income  and  liabilities increased as a result of
accrued  interest  expense  during the fiscal year ended  December  31,
1996.   At December 31, 1995, the  Registrant  had  assets  of $254,000
consisting  of  $39,000  in  cash  and  $215,000  in  notes   and   had
liabilities  of $572,000.  Assets  increased by $254,000 as a result of
the recovery of cash on a judgment 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. (Item 7 begins on the nest page.)



       REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
       __________________________________________________


The 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, 1996, and the related
consolidated  statements of operations, shareholders' deficit, and cash
flows for each of the two years in the period ended December  31, 1996.
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,
1996,  and  the  consolidated results of  their  operations  and  their
consolidated  cash  flows for each of the two years in the period ended
December 31, 1996  in  conformity  with  generally  accepted accounting
principles.

As  disclosed  in Note  J 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
February 7, 1997






                  Arinco Computer Systems, Inc.
                   CONSOLIDATED BALANCE SHEET
                       December 31, 1996


                ASSETS (note J)

CURRENT ASSETS
 Cash                                                 $    265,000
                                                      ============

     LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES (note C)
 Other debt - nonrelated parties                      $    252,000
 Accrued expenses                                          358,000
                                                       ___________

         Total current liabilities                         610,000

COMMITMENTS AND CONTINGENCIES (notes F and G)                 -

SHAREHOLDERS' DEFICIT
 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,
   4,500,000 shares; issued and outstanding,
   4,396,000 shares (note F)                               44,000
 Additional paid-in capital
   Preferred stock                                      1,250,000
   Common stock                                         1,273,000
 Accumulated deficit                                   (2,952,000)
                                                       ___________
                                                         (345,000)
                                                       ___________

                                                      $   265,000
                                                       ===========

The accompanying notes are an integral part of this statement.




                   Arinco Computer Systems, Inc.
              CONSOLIDATED STATEMENTS OF OPERATIONS
                      Year ended December 31,

                                                         1996        1995
                                                       ________     _______

Revenue - settlement of litigation                   $      -    $  284,000

Operating expenses - general and administrative          5,000        4,000
                                                       ________     _______

         Operating profit (loss)                        (5,000)     280,000

Other (income) expense
 Interest income                                       (16,000)      (8,000)
 Interest expense                                       38,000       72,000
                                                       ________      ______
                                                        22,000       64,000
                                                       ________      ______

         Earnings (loss) before extraordinary item     (27,000)     216,000

Extraordinary item - extinguishment of
  liabilities (note C)                                     -        704,000
                                                       ________     _______

         NET EARNINGS (LOSS)                           (27,000)     920,000

Preferred stock dividend requirement                    24,000       45,000
                                                       ________     _______

         NET EARNINGS (LOSS) APPLICABLE
              TO COMMON SHARES                     $   (51,000)   $ 875,000
                                                    ===========   =========

Earnings (loss) per common share (note B1)

 Primary
   Earnings (loss) before extraordinary item       $     (.01)    $    .05
   Extraordinary item                                     -            .17
                                                    __________    ________

         NET EARNINGS (LOSS)                       $     (.01)    $    .22
                                                    __________    ________

 Fully diluted
   Earnings (loss) before extraordinary item       $     (.01)    $    .04
   Extraordinary item                                     -            .15
                                                    __________    ________

         NET EARNINGS (LOSS)                       $     (.01)    $    .19
                                                    ==========    ========

Weighted average of common shares outstanding

   Primary                                           4,097,672   4,035,000
                                                    ==========   =========
   Fully diluted                                     4,097,672   4,791,700
                                                    ==========   =========


       The accompanying notes are an integral part of these statements.



                                         Arinco Computer Systems, Inc.
                               CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT
                                    Years ended December 31, 1996 and 1995

<TABLE>
<CAPTION>
                                                     Additional
                                                  paid-in capital
                                                 __________________

             Preferred stock    Common stock     Preferred   Common     Accumulated  Treasury stock
             ________________ _________________                                      ______________
             Shares  Amount  Shares     Amount    stock      stock       deficit     Share   Amount   Total
             _____   ______  ______     ______    _____      _____       _________   _____   ______   _____
<S>          <C>     <C>      <C>       <C>      <C>        <C>        <C>         <C>      <C>       <C>
Balances
at 1\1\95    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 1\1\95   807,000    81,000 4,085,000   41,000  1,282,000  1,278,000 (2,925,000) 100,000   (75,000)    (318,000)

Net loss         -         -          -        -          -          -    (27,000)       -         -      (27,000)

Preferred
stock
exchanged
for common
stock      (361,000)  (36,000) 361,000     3,000          -     33,000          -         -        -             -

Retirement
of treasury
stock       (50,000)   (5,000) (50,000)        -     (32,000)  (38,000)         -  (100,000)   75,000            -
            _______    _______  ______   _______   __________  ________   _______  _________   ______       ________

Balances
at 12\31\96 396,000   $40,000   4,396,000 $44,000 $1,250,000 $1,273,000 $(2,952,000)      -    $   -      $(345,000)
            =======   =======   ========= ======= ========== ========== ============ =======   ======   ============

</TABLE>

             The accompanying notes are an integral part of these statements.




                     Arinco Computer systems, Inc.
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                       Year ended December 31,


                                                          1996       1995
                                                         ______     ______
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities
 Net earnings (loss)                                   $ (27,000)$ 920,000
 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)
       Accrued expenses                                   38,000    72,000
         Net cash provided by operating activities        11,000   254,000
                                                         _______   _______
Cash flows from investing activities
 Repayments (borrowings) by related party                215,000  (215,000)
                                                         _______   _______

         NET INCREASE IN CASH AND
              CASH EQUIVALENTS                           226,000    39,000

Cash and cash equivalents at beginning of year            39,000         -
                                                        ________  ________
Cash and cash equivalents at end of year                $265,000 $  39,000
                                                        ========  ========


      The accompanying notes are an integral part of this statement.



               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      December 31, 1996 and 1995


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 transaction  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.

 1.  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.

2.  Cash Accounts
     _____________

The   Company   maintains  its  cash in  bank  deposit  accounts  which
may exceed federally insured limits.

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.

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
resul o 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    the
Company's   former subsidiary  bears interest  at  15%.   The   Company
has  defaulted on payment;   accordingly,   the   amount  is  currently
due and payable.


NOTE E - INCOME TAXES

The  following is  a reconciliation between the Company's tax provision
to the tax computed at the statutory federal rate:
<TABLE>
                                             Year ended December 31,
                                             _______________________
                                                1996         1995
                                             ________     __________
   <S>                                       <C>          <C>

   Tax expense (benefit) at statutory rate   $ (9,000)    $ 313,000
   State income taxes                          (1,000)       37,000
   Change in valuation allowance               10,000      (350,000)
                                             _________     _________

                                              $     -     $      -
                                             =========    ==========

</TABLE>
As  of December 31, 1996,  the   Company   has   net   operating   loss
carryforwards  for  financial  reporting  and  income  tax  purposes as
follows:
<TABLE>
           <S>                             <C>

           Expiration date
             2008                          $  65,000
             2009                             73,000
             2011                             27,000
                                            ________

                                           $ 165,000
                                            ========
</TABLE>
The  Company's deferred  tax  assets and  liabilities  consist  of  the
following at December 31, 1996:
<TABLE>
   <S>                                     <C>

   Net operating loss carryforward         $  63,000
   Valuation allowance                       (63,000)
                                           __________

             Deferred tax liability        $     -
                                           ==========
</TABLE>
The  valuation   allowance  for   deferred   tax    assets    decreased
$105,000  and $350,000, respectively, for the years  ended December 31,
1996 and 1995.


NOTE F - 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, 1996.

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 annualy each May 31 beginning May 31, 1985.
Dividends in arrears amount to $285,000 at December 31, 1996. 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.

3.  Exchange and Retirement of Stock
     ________________________________
In   July,  1996, 361,082  shares  of  outstanding preferred stock were
exchanged   for   361,082   shares   of   the   Company's   $.01    par
value common stock under   the   share-for-share   conversion    rights
of  the  preferred  stock.  During 1996, the  Company   retired  50,000
shares    of   preferred    stock   and   50,000   shares   of   common
stock which was previously held as treasury 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 ("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.  Subsequent  to  distribution,   a  creditor
whose claim had been disallowed 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  distribution;  however, to date, no action has been taken.
Management believes court action requiring recall of the   distribution
is  unlikely; nevertheless, it  is  reasonably   possible  that such an
event   will occur, although the amount of the recall cannot  currently
be estimated.


NOTE I - FINANCIAL INSTRUMENTS

The  following  table includes various estimated fair value information
as  of  December  31,  1996  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.

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.  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:
<TABLE>
                                            Carrying          Estimated
                                             amount          fair value
                                            ________         __________
   <S>                                     <C>                 <C>

   Financial assets
     Cash                                  $ 265,000           $265,000
   Financial liabilities
     Notes payable for which it
       is not practicable to
         estimate fair value                (252,000)              -
</TABLE>


NOTE J - 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     59      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.

<TABLE>
<CAPTION>
                          Number
Capacities in           of persons   Salaries and    Insurance   Other forms of
Which Served             in group   Directors fees    Benefits    Remuneration
_____________           __________  ______________   __________  ______________
<S>                         <C>          <C>              <C>           <C>

Directors                   1            -0-              -0-           -0-
Executive Officers(2)       1            -0-              -0-           -0-

All Officers and
Directors as a group        1            -0-              -0-           -0-
</TABLE>

        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  25,  1997,   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>

                    (2)                        (3)
 (1)          Name and address           Amount and nature        (4)
Title of             of                         of              Percent
Class         Beneficial owner          Beneficial ownership   of class
________      ________________         _____________________   ________
<S>            <C>                             <C>                 <C>

$0.01 par      James A. Arias                  385,000             8.76
value common   1650 University Blvd., #100     Indirect*
stock          Albuquerque, NM 87102                   <F1>

$0.01 par      Realco, Inc.                    385,000             8.76
value common   1650 University Blvd., #100     Direct
stock          Albuquerque, NM 87102

$0.01 par      Financial Services Group, Inc.  385,000             8.76
value common   1650 University Blvd., #100     Direct
stock          Albuquerque, NM 87102

$0.01 par      James A. Arias                  385,000             8.76
value common   1650 University Blvd., #100     Indirect*
stock          Albuquerque, NM 87102                   <F1>

$.001 par      Steven P. Kadner                518,500            11.79
value common   8401 Washington Pl, N.E.        Direct and
stock          Albuquerque, NM 87113           Indirect**
                                                       <F2>

$0.001 par     Jerome F. Beckes                545,000            12.40
value common   8401 Washington Pl, N.E.        Direct and
stock          Albuquerque, NM 87113           Indirect**
                                                       <F2>

$.001 par      Richard Elkins                  223,000             5.07
value common   P.O.B. 25000                    Direct
stock          Albuquerque, NM 87125

convertible    Storecos, a NV corp.            381,700             96.4
preferred      8106 Menual Blvd., N.E.         Direct
               Albuquerque, NM 87113
</TABLE>
[FN]

<F1> *These  shares  are owned  by  Realco, Inc. and Financial Services
      Group,  Inc., both  of  which  are  controlled  by  Mr. Arias.

<F2>** 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.

     None


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.

       (11)   Statement   re: computation of  per  share earnings.  See
Note B (1) 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..



__________________________________________       Date: April 12, 1996
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.



____________________________________              Date: April 12, 1996
James A. Arias*., Director

<F3> *Only Mr. Arias is an officer or a director of the Registrant.