UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

           [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                For the transition period from _______ to _______
                        Commission file number: 333-58351

                             AREMISSOFT CORPORATION
                        ---------------------------------
             (Exact name of Registrant as specified in its charter)

           DELAWARE                        7372                 68-0413929
------------------------------- ---------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL  (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)    CLASSIFICATION CODE)      IDENTIFICATION NO.)

                             AREMISSOFT CORPORATION
                          200 CENTRAL PARK SOUTH, #23-A
                               NEW YORK, NY 10019
                                  212-765-7383
          (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
             AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
                           DR. LYCOURGOS K. KYPRIANOU
                      CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                             AREMISSOFT CORPORATION
                          200 CENTRAL PARK SOUTH, #23-A
                               NEW YORK, NY 10019
                                  212-765-7383
            (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                              INCLUDING AREA CODE)
                            ------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes   [ X ]        No [      ]


The number of shares  outstanding of the  Registrant's  Common Stock on July 24,
1999 was 13,530,051 shares.

<PAGE>2

                             AREMISSOFT CORPORATION

                                      INDEX

<TABLE>
<S>                                                                                       <C>

PART I - FINANCIAL INFORMATION                                                               PAGE

Item 1.   Financial Statements:

          Consolidated Balance Sheets as at
          June 30, 1999 and December 31, 1998                                                    3

          Consolidated Statements of Operations
          for the three months and six months ended  June 30, 1999
          and June 30, 1998                                                                      4

          Consolidated Statements of Cash Flows                                                  5
          for the six months ended June 30, 1999 and June 30,1998

          Notes to Interim Consolidated Financial Statements                                     6


Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                                    9


Item 3:     Quantitative and Qualitative disclosures about market risk                          15


PART  II - OTHER INFORMATION

Item 1--Legal Proceedings                                                                       16

Item 2--Changes in Securities and Use of Proceeds                                               16

Item 3--Defaults upon Senior Securities                                                         16

Item 4--Submission of Matters to a Vote of Security Holders                                     17

tem 5--Other Information                                                                        17

Item 6--Exhibits and Reports on Form 8-K                                                        17

SIGNATURES                                                                                      18
</TABLE>


<PAGE>3



                                          PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
                                              AREMISSOFT CORPORATION
                                            CONSOLIDATED BALANCE SHEETS
                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<S>                                                                                 <C>                    <C>
                                                                                     AS AT JUNE 30         AS AT DEC. 31
                                                                                          1999                  1998
                                                                                                              (Note 1)
                                                                                    ---------------        -------------
ASSETS

Current Assets
Cash and cash equivalents                                                                  4,844                149
Accounts receivable, less allowances for doubtful accounts
  of $639 at Dec 31,1998 and June 30,1999                                                 16,195             16,166
Other receivables                                                                            953                903
Inventory                                                                                  1,090                787
Deposit paid on service and maintenance contracts                                            975              3,531
Prepaid expenses and other assets                                                          1,862              1,135

Total Current Assets                                                                      25,919             22,671
Loan receivable -related party                                                             1,898              1,886
Property and equipment, net                                                                2,155              1,774
Purchased and developed software, net of accumulated
Amortization of $6,075 and $5,951 at Dec. 31, 1998 and
June 30, 1999 respectively.                                                                1,160              1,284
Intangible assets, net of accumulated amortization of $13,036
and $12,860 at Dec. 31, 1998 and June 30, 1999 respectively                                  161                337

Total  assets                                                                             31,293             27,952

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable                                                                           2,756              3,669
Accrued payroll taxes                                                                        526                586
Accrued value added taxes                                                                    300              1,649
Accrued income taxes                                                                       3,702              2,059
Current portion of capital lease obligations                                                  45                 55
Other accrued expenses                                                                     1,575              2,946
Bank loans and short term demand facility                                                      -             15,530
Deferred revenue                                                                           5,347              6,693

Total Current Liabilities                                                                 14,251             33,187
Long-term debt                                                                             7,908                  -
Loan and accrued interest payable -related party                                               -              1,781
Capital lease obligations, less current portion                                               87                 93

Total liabilities                                                                         22,246             35,061
Stockholders' equity (deficit)
Series-A convertible preferred stock, par value $0.001; authorized 2,100
  shares; no shares issued and outstanding, liquidating preference at par                      -                  -
value
Series-B convertible preferred stock, par value $0.001; authorized 3,500
  shares; no shares issued and outstanding, liquidating preference at par                      -                  -
value
Common stock, par value $0.001; authorized 75,000 shares; 10,000 shares
  and 13,530 issued and outstanding at Dec. 31, 1998 and June 30, 1999                        14                 10
Additional paid-in-capital                                                                39,971             27,107
Accumulated deficit                                                                      (28,865)           (32,201)
Accumulated other comprehensive income (loss)                                             (2,073)            (2,025)
Total stockholders' equity (deficit)                                                       9,047             (7,109)

Total liabilities and stockholders'  equity (deficit)                                     31,293             27,952
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>


                             AREMISSOFT CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<S>                                                             <C>             <C>             <C>           <C>
                                                               For three months ended         For six months ended
                                                                      June 30                        June 30
                                                               -----------------------        ---------------------
                                                                  1999           1998            1999          1998
                                                                 ------        -------          -------     --------
Revenues
Software licenses                                                 8,890          6,535           14,250      10,643
Maintenance and services                                          6,590          4,876           12,864       9,439
Hardware and other                                                1,262            895            2,740       2,320

Total revenues                                                   16,742         12,306           29,854      22,402


Cost of revenues
Software licenses                                                 1,061            640            1,777       1,120
Maintenance and services                                          2,059          1,140            4,046       2,397
Hardware and other                                                  884            596            1,921       1,735
Amortization of purchased software and
Capitalized software development costs                               62             17              124          34

Total cost of revenues                                            4,066          2,393            7,868       5,286

Gross Profit                                                     12,676          9,913           21,986      17,116
Operating Expenses
Sales and marketing                                               5,774          4,549           10,639       8,450
Research and development                                          1,197                           2,661       2,646
General and administrative                                        1,496          1,069            2,684       2,138
Amortization of intangible assets                                    88             24              176          48

Total operating expenses                                          8,555          6,792           16,160      13,282

Profit from operations                                            4,121          3,121            5,826       3,834
Other income (expense) :
Interest expense, net                                               341            475              848         932

Income before income taxes                                        3,780          2,646            4,978       2,902
Income tax expense                                                1,247          1,031            1,642       1,131

Net income                                                        $2,533         $1,615           $3,336      $1,771

Basic net income per share                                         $0.20          $0.16            $0.28       $0.18
Diluted net income per share                                       $0.20          $0.16            $0.28       $0.18

Basic weighted average shares outstanding                         12,589         10,000           11,849       9,641
Diluted weighted average shares outstanding                       12,604         10,015           11,864       9,656
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>5


                             AREMISSOFT CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<S>                                                                         <C>                  <C>
                                                                            For six months ended June 30
                                                                           ------------------------------
                                                                              1999                 1998
                                                                           ---------            ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    3,336                 1,771
Adjustments to reconcile net income to net cash
provided (used) in operating activities:
Depreciation                                                                    615                   402
Amortization and write-off of capitalized software and                            -                     -
Intangible assets                                                               300                    82

Changes in assets and liabilities:
Accounts receivable                                                             (29)               (4,547)
Other receivables                                                               (50)               (2,559)
Inventory                                                                      (303)                   12
Deposits paid on service and maintenance contract                             2,556                     -
Prepaid expenses and other assets                                              (727)                  178
Accounts Payable                                                               (913)                1,673
Deferred revenue                                                             (1,346)                3,320
Accrued taxes payable                                                           234                (1,925)
Other accrued expenses                                                       (1,371)               (2,178)
Net cash provided (used) in operating activities                              2,302                (3,767)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                                            (996)                 (594)
Capitalized software development costs                                            -                   (38)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock                                          12,868                 9,302
Principal repayments of short-term borrowings                                (7,622)                  137
Loan from related party                                                      (1,793)                    -
Principal payments of capital lease obligations                                 (16)                 (111)
Short-term demand facility                                                        -                (1,507)
Net cash provided by financing activities                                     3,437                 7,821

Net increase in cash & cash equivalents                                       4,743                 3,422
Effect of foreign currency exchange rates on cash and
cash equivalents                                                                (48)                 (202)
Cash and cash equivalents, at beginning of period                               149                   239
Cash and cash equivalents, at end of period                                  $4,844                $3,459

Supplemental disclosure:
Interest paid                                                                  $848                  $932

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>6

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



1.       BASIS OF PRESENTATION

The accompanying  unaudited  consolidated financial statements and notes thereto
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information and pursuant to the rules and regulations of
the Securities and Exchange  Commission.  Interim  results of operations for the
three-month  and  six-month  period  ended  June 30,  1999  are not  necessarily
indicative of operating results for the full fiscal year.

In the opinion of management,  all  adjustments  consisting of normal  recurring
entries  necessary  for the  fair  presentation  of the  consolidated  financial
position,  results of  operations,  and  changes  in cash flows for the  periods
presented  have been  included.  The  preparation  of  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

The  balance  sheet at  December  31,  1998 has been  derived  from the  audited
financial  statements  at that date but does not include all of the  information
and footnotes required by generally accepted accounting  principles for complete
financial statements.

For further  information,  refer to the  consolidated  financial  statements and
footnotes thereto included in the Company's  Registration Statement on Form S-1,
SEC File No. 333-58351, declared effective on April 22, 1999.


2.       FOREIGN CURRENCY TRANSLATION

The functional  currency of the Company and its United Kingdom  subsidiaries  is
the British pound. The functional currencies of the other subsidiaries are their
local currencies.

For reporting purposes,  the financial statements are presented in United States
dollars and in accordance  with Statement of Financial  Accounting  Standard No.
52,  "Foreign  Currency  Translation".   The  consolidated  balance  sheets  are
translated  into United States dollars at the exchange  rates  prevailing at the
balance  sheet  dates and the  statements  of  operations  and cash flows at the
average  rates  for the  relevant  periods.  Gains  and  losses  resulting  from
translation  are  included as a component  of  accumulated  other  comprehensive
income (loss).

Net gains and losses resulting from foreign  exchange  transactions are included
in the consolidated statements of operations




<PAGE>7


3.       NET INCOME PER SHARE


The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share data):

<TABLE>
<S>                                                                                  <C>           <C>
                                                                                     For Six Months Ended
                                                                                            June 30
                                                                                      1999          1998

Numerator used for both basic and diluted earnings (loss) per share                 $3,336        $1,771

Denominator for basic earnings per share;
  Weighted average shares outstanding                                               11,849         9,641
Denominator for diluted earnings per share:
  Denominator for basic earnings per share                                          11,849         9,641
  Effect of dilutive securities:
     Warrants                                                                           15            15
     Preferred stock                                                                     -             -
                                                                                    11,864         9,656

Basic net income per share                                                           $0.28         $0.18
Diluted net income per share                                                         $0.28         $0.18
</TABLE>


4.  COMPREHENSIVE INCOME

During June 1997, the Financial  Accounting Standards Board issued SFAS No. 130,
"Reporting  Comprehensive  Income"  ("SFAS No. 130").  SFAS No. 130  establishes
standards  for  the  reporting  and  display  of  comprehensive  income  and its
components in a full set of general-purpose  financial  statements.  The Company
adopted  SFAS  No.  130  during  1998.   Included   within   accumulated   other
comprehensive income are the cumulative amounts for foreign currency translation
adjustments

Comprehensive  income  for the six months  ended  June 30,  1999 and 1998 are as
follows (in thousands)
<TABLE>
<S>                                                                                  <C>             <C>
                                                                                       1999            1998
                                                                                       ----            ----

Net income                                                                          $ 3,336         $ 1,771
Foreign currency translation adjustments                                               (48)           (202)
                                                                                     ------          ------
Comprehensive income                                                                 $3,288          $1,569
</TABLE>


5.       SEGMENT REPORTING INFORMATION

The Company has adopted SFAS 131 "Disclosure about Segments of an Enterprise and
Related  Information"  during 1998,  which  changes the way the Company  reports
certain information about its operating segments.

<PAGE>8

The  Company  develops,   markets,   implements  and  supports   enterprise-wide
applications  software  targeted  at  mid-sized   organizations  mainly  in  the
manufacturing,  healthcare, hospitality, and construction industries. Management
considers  each  industry  to  be  a  reportable  segment,  with  each  industry
representing a strategic  business that offers  products and services to various
customers.  These  industries  are  managed  separately  because  each  requires
different product and marketing strategies.

Within each  industry,  the Company has  adopted  tailored  sales and  marketing
strategy.  This strategy includes  advertisements in leading trade publications,
participation  in trade shows and sponsorship of user groups.  In addition,  the
Company has developed corporate sales and marketing materials as well as general
financial and technical  materials that are distributed to each of the Company's
subsidiaries  for  inclusion  in their  sales  materials,  thereby  promoting  a
consistent  portrayal of the Company's  image and products.  The Company markets
its products  primarily  through a direct sales force in each of the industries.
In the manufacturing and hospitality  industries,  the Company also relies, to a
limited extent, on distributors to sell the Company's products.

The accounting policies adopted by each industry are the same as those described
in  the  summary  of  significant  accounting  policies.   Management  evaluates
performance  based on profit/(loss)  from operations  before interest and income
taxes.

                 Summarized financial information concerning the
                    Company's reportable segments is shown in
                              the following table:

<TABLE>
<S>                                      <C>             <C>          <C>            <C>              <C>
                                         MANUFACTURING    HEALTHCARE   HOSPITALITY    CONSTRUCTION     OTHER      TOTAL
                                        ---------------  -----------  ------------   -------------    -------   ---------
Segmental analysis for the six
 months ended June 30, 1999

Revenues from external  customers            $9,823        $8,716        $7,761        $2,431        $1,123       $29,854
Depreciation and amortization                   177           185           180            38           335           915
Profit (loss) from operations                 3,261         1,101         1,587           323         (446)         5,826
Total segment assets                         13,886         7,284         7,539         1,342         1,242        31,293


Segmental analysis for the six
 months ended June 30, 1998

Revenues from external  customers             6,317         7,460         5,869         2,128           628        22,402
Depreciation and amortization                    89           106            91            21           177           484
Profit (loss) from operations                 2,113           880           873           204         (236)         3,834
Total segment assets                         13,880         7,457         6,710         1,403           697        30,147

</TABLE>


The following table  represents  revenue by country based on country of customer
domicile and long-lived assets by country on the location of the assets.
<TABLE>
               <S>                            <C>           <C>            <C>            <C>

                                                          Revenues             Long-Lived Assets
                                                         ----------            -------------------
                                               June 30,1999   June 30, 1998 June 30,1999 June 30,1998
                                               ------------   ------------- ------------ ------------

               United Kingdom                    17,342         16,802        2,383         2,047
               Rest of Europe                     7,355          2,654          449           404
               United States                      1,178          1,006          120           108
               Asia                               1,035            717          514           809
               Rest of World                      2,944          1,223           10             0

                                                 29,854         22,402        3,476         3,368
</TABLE>
<PAGE>9

Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS.


Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995. The following Management's  Discussion
and Analysis of Financial  Condition and Results of Operations should be read in
conjunction with the Notes to the Condensed  Consolidated  Financial  Statements
included  in  Part  I,  Item  1, of this  report.  All  statements,  other  than
historical facts,  included in the following  discussion regarding the Company's
financial  position,  business  strategy,  and plans of  management  for  future
operations  are  "forward-looking  statements."  These  statements  are based on
management's beliefs and assumptions,  and on information currently available to
management.  Forward  looking  statements  include,  but  are  not  limited  to,
statements  in which words such as  "expect", "anticipate", "intend", "plan",
"believe", "estimate", "consider", or similar  expressions  are used.  Forward
looking statements are not guarantees of future performance. They involve risks,
uncertainties,  and  assumptions,  including  the risks  discussed  under  "Risk
Factors" in the Company's  prospectus included in its registration  statement on
Form  S-1,  SEC File No.  333-58351,  all of which  are  incorporated  herein by
reference.  The  Company's  actual  results  and  stockholder  values may differ
materially  from  those  anticipated  or  expressed  in  these  forward  looking
statements. Many of the factors that will determine these results and values are
beyond the Company's  ability to control or predict.  Readers of this report are
cautioned  not to put undue  reliance  on any  forward  looking  statement.  The
Company  undertakes  no  obligation  to publicly  update these  forward  looking
statements, whether as a result of new information, future events or otherwise.


OVERVIEW

AremisSoft   develops,   markets,   implements   and  supports   enterprise-wide
applications software targeted at mid-sized  organizations in the manufacturing,
healthcare,  hospitality and construction  industries (the "Targeted  Markets").
The Company's  software  products help streamline and enhance an  organization's
ability to manage and execute  mission-critical  functions  such as  accounting,
purchasing,  manufacturing,  customer service, and sales and marketing. In 1986,
the Company  established  a software  development  and  support  facility in New
Delhi,  India, which currently has 116 employees.  The Company believes that its
India  facility  provides  significant  organizational   efficiencies  and  cost
advantages in software development and support process.  AremisSoft products are
designed to be the primary business software that  organizations in the Targeted
Markets use to generate and  disseminate  information  across the  enterprise in
order to respond rapidly to changing market environments and customer needs. The
Company has licensed its software products to more than 5,000 customers.

The Company  strategically  focuses on customers  in the  Targeted  Markets with
annual  revenues of less than $200  million.  Through its  concentrated  product
focus,  AremisSoft believes that it has developed substantial industry expertise
in the Targeted Markets. In addition,  the Company has developed a three-tiered,
object-oriented   software  architecture  (the  "Aremis  Architecture"),   which
achieves  economies of scale and cost  reductions  in the  software  development
process by  capitalizing  on the common  functional  requirements  of  customers
across  a  variety  of  industries.   The  Company   believes  that  the  Aremis
Architecture  enables  it  to  produce  high  quality,  scalable  products  with
substantially  reduced  software  development,  implementation  and  maintenance
costs.

<PAGE>10

In the  past  five  years,  the  Company  has  experienced  rapid  growth,  both
internally and through acquisitions,  with revenues increasing from $6.4 million
in 1994 to $52.6 million in 1998. During this period,  the Company  successfully
acquired  and  integrated  the  operations  of  eleven  businesses,  which  were
principally  operating in the United Kingdom.  In each acquisition,  the Company
sought to reduce  expenses,  rejuvenate  the  existing  products of the acquired
business  and  transition  the  customers  to products  that  utilize the Aremis
Architecture.  The Company's software  development and support facility in India
provides the Company  accesses to highly  skilled  technical  personnel  who are
responsible for rejuvenating  the acquired  products and developing new products
in a cost-effective manner.

The Company markets its software products  primarily through its own sales force
and provides product support worldwide through 14 offices in seven countries. To
date, the majority of the Company's  revenues have been generated from customers
located in the United Kingdom.  Such customers  comprised  approximately  60% of
total  revenues.   Customers  using  the  Company's  software  products  include
Southampton Multifund (healthcare),  Birmingham Multifund (healthcare),  Telefon
AB LM  Ericsson  (manufacturing),  Nabisco  Biscuit Co.  (manufacturing),  Forte
Limited (hospitality) and London Electricity plc (construction).

The  Company's  objective  is  to  be  a  leading  provider  of  enterprise-wide
applications  software in the  Targeted  Markets.  The  Company's  strategy  for
achieving  this  objective  includes  (i)  targeting  mid-sized   organizations,
including  divisions and business  units of larger  companies,  (ii) focusing on
strategic  markets,   (iii)  leveraging  the  Company's   cost-efficient   India
operations,  (iv)  capitalizing  on  the  Company's  investment  in  the  Aremis
Architecture,  (v) expanding the Company's marketing, sales, support and service
capabilities  and  (vi)  acquiring  related  software  businesses,  products  or
technologies.


RESULTS OF OPERATIONS

Revenues

Total  revenues  increased  36.05% to $16.74  million for the three months ended
June 30, 1999 from $12.31  million for the three months ended June 30, 1998. For
the six-months ended June 30, 1999, the total revenue increased 33.26% to $29.85
million from $ 22.40 million during the comparable period in 1998. This increase
was due primarily to higher software license revenues as a result of an increase
in the sale of  higher  margin  licenses,  associated  maintenance  and  service
contract revenues and hardware and other revenue.

Software license revenues increased 36.04% to $8.89 million for the three months
ended June 30, 1999 from $6.54 million for the three months ended June 30, 1998.
For the six-months ended June 30, 1999, the software  license revenue  increased
33.89% to $14.25 million from $10.64  million  during the  comparable  period in
1998.  This  increase is primarily  due to the growth in the number of installed
customers,  increased  sales of licenses for the Company's  Aremis 4.0 products,
and  price  increases.  As a  percentage  of total  revenues,  license  revenues
remained at 53.10% for the three  months  ended June 30, 1999 and June 30, 1998.
For the  six-months  ended June 30,  1999,  as a  percentage  of total  revenue,
license revenue  increased to 47.73% from 47.51% during the comparable period in
1998.

Maintenance and service contract revenues  increased 35.15% to $6.59 million for
the three  months  ended June 30, 1999 from $4.88  million for the three  months
ended June 30, 1998. For the six-months ended June 30, 1999, the maintenance and
service revenue increased 36.29% to $12.86 million from $9.44 million during the
comparable  period  in 1998.  This is result of the  increase  in the  number of

<PAGE>11


installed customers and the growth in software license revenues. As a percentage
of total revenues, maintenance and service contract revenues decreased to 39.36%
for three  months ended June 30, 1999 from 39.62% for 1998.  For the  six-months
ended June 30, 1999, as a percentage of total revenue,  maintenance  and service
contract revenue increased to 43.09% from 42.13% during the comparable period in
1998.

Hardware  and other  revenues  increased  41.01% to $1.26  million for the three
months  ended June 30, 1999 from $0.90  million for the three  months ended June
30, 1998. For the six-months ended June 30, 1999, the hardware and other revenue
increased  18.10% to $2.74  million  from $2.32  million  during the  comparable
period in 1998. As a percentage of total  revenues,  hardware and other revenues
increased  to 7.54% for the three  months ended June 30, 1999 from 7.27% for the
three months ended June 30, 1998. For the  six-months  ended June 30, 1999, as a
percentage of total revenue, hardware and other revenues decreased to 9.18% from
10.36% during the comparable period in 1998 reflecting the Company's strategy to
reduce the sale and installation of lower margin third-party hardware.

Cost of Revenues

Cost of revenues  increased  69.91% to $4.07  million for the three months ended
June 30, 1999 from $2.39  million for the three months ended June 30, 1998.  For
the six-months  ended June 30, 1999, the total cost of revenue  increased 48.85%
to $7.87 million from $ 5.29 million during the comparable  period in 1998. As a
percentage of total revenues, cost of revenues increased to 24.29% for the three
months ended June 30, 1999 from 19.45% for the three months ended June 30, 1998.
For the six-months  ended June 30, 1999, as a percentage of total revenue,  cost
of revenue increased to 26.35% from 23.60% during the comparable period in 1998.

Software  license cost  increased  65.78% to $1.06  million for the three months
ended June 30, 1999 from $0.64 million for the three months ended June 30, 1999.
For the  six-months  ended June 30, 1999,  the software  license cost  increased
58.66% to $1.78 million from $1.12 million during the comparable period in 1998.
This  increase  is  primarily  due to the  growth  in the  number  of  installed
customers, increased sales of licenses for the Company's Aremis 4.0 products. As
a percentage of total  revenues,  license cost  increased to 6.33% for the three
months ended June 30, 1999 from 5.20% for the period  ended June 30,  1998.  For
the six-months  ended June 30, 1999, as a percentage of total  revenue,  license
cost increased to 5.95% from 5.00% during the comparable period in 1998.

Maintenance and service  contract cost increased 80.61% to $2.06 million for the
three months  ended June 30, 1999 from $1.14  million for the three months ended
June 30,  1998.  For the six months  ended June 30, 1999,  the  maintenance  and
service  contract  cost  increased  68.79% to $4.05  million from $2.40  million
during the comparable  period in 1998. as a result of the increase in the number
of  installed  customers  and the  growth in  software  license  revenues.  As a
percentage of total revenues, maintenance and service contract cost increased to
12.30% for the three months ended June 30, 1999 from 9.26% for 1998. For the six
months ended June 30, 1999, as a percentage of total  revenue,  maintenance  and
service  contract  cost  increased to 13.55% from 10.70%  during the  comparable
period in 1998.

 Hardware and other cost increased  48.32% to $0.88 million for the three months
ended June 30, 1999 from $0.60 million for the three months ended June 30, 1998.
For the six months  ended June 30, 1999,  the hardware and other cost  increased
10.72% to $1.92 million from $1.74 million during the comparable period in 1998.
As a percentage of total  revenues,  hardware and other cost  increased to 5.28%
for the three  months  ended June 30, 1999 from 4.84% for the three months ended
June 30, 1998.  For the six months ended June 30, 1999, as a percentage of total
revenue,  hardware  and other cost  decreased  to 6.43%  from  7.74%  during the

<PAGE>12


comparable period in 1998,  reflecting the Company's strategy to reduce the sale
and installation of lower margin third-party hardware.

Sales and Marketing

Sales and Marketing  expense consist  primarily of expenses related to sales and
marketing,  personnel,  advertising,  promotion,  trade shows  participation and
public relations.

The Company's sales and marketing expenses increased 26.93% to $5.77 million for
the three  months  ended June 30, 1999 from $4.55  million for the three  months
ended June 30,  1998.  For the  six-months  ended June 30,  1999,  the sales and
marketing cost increased  25.91% to $10.64 million from $8.45 million during the
comparable  period in 1998.  This is primarily due to the expansion of sales and
marketing  activities  principally  in  the  United  States  and  Europe.  As  a
percentage of total revenues,  sales and marketing  expenses decreased to 34.49%
for three  months  ended June 30,  1999,  from 36.97% for the three months ended
June 30, 1998.  For the six months ended June 30, 1999, as a percentage of total
revenue,  sales and  marketing  cost  decreased to 35.64% from 37.72% during the
comparable  period  in 1998,  primarily  due to  increased  efficiencies  in the
Company's sales and marketing operations.

Research and Development

Research and  development  expenses  increased to 4.09% to $1.20 million for the
three months  ended June 30, 1999 from $1.15  million for the three months ended
June 30,  1998.  For the six  months  ended  June 30,  1999,  the  research  and
development  expense  increased  to 0.57% to $2.66  million  from $2.65  million
during  the  comparable  period  in 1998.  As a  percentage  of total  revenues,
research and development  expenses decreased to 7.15% for the three months ended
June 30, 1999 from 9.35% for the three months  ended June 30, 1998.  For the six
months  ended June 30,  1999,  as a percentage  of total  revenue,  research and
development expenses decreased to 8.91% from 11.81% during the comparable period
in 1998.

General and Administrative

General and  administrative  expenses  increased 39.94% to $1.50 million for the
three months  ended June 30, 1999 from $1.07  million for the three months ended
June 30,  1998.  . For the six  months  ended June 30,  1999,  the  general  and
administrative  cost increased 25.54% to $2.68 million from $2.14 million during
the comparable  period in 1998. As a percentage of total  revenues,  general and
administrative  expenses  increased to 8.94% for the three months ended June 30,
1999 from 8.69% for the three  months  ended June 30,  1998.  For the six months
ended  June  30,  1999,   as  a  percentage  of  total   revenue,   general  and
administrative  expenses  decreased  to 8.99% from 9.54%  during the  comparable
period in 1998, This decrease reflects the effect of the Company's  cost-cutting
and cost control measures.

Net Interest Expense

Net interest expense reflects  interest on the Company's credit  facilities,  as
reduced by interest  income on cash  balances.  Net interest  expense  decreased
28.21% to $0.34  million  for the three  months  ended June 30,  1999 from $0.48
million for the three months ended June 30, 1998 . For the six months ended June
30, 1999, the net interest  expense  decreased 9.01% to $0.85 million from $0.93
million during the comparable  period in 1998.  This was due to the repayment of
part of the company's debt facility.

<PAGE>13


Income Tax Provision

There is a provision  for income taxes for the six months ended June 30, 1999 of
$1.64 million.  There was a provision for income taxes for $1.13 million for the
six months ended June 30, 1998.  The increase in income taxes  resulted from the
increase in the Company's  profitability  in 1999.  The company's  effective tax
rate was assumed at 33%.

Recoverability of the deferred tax asset has been reviewed at June 30, 1999, and
although certain subsidiaries generated taxable income in the period ending June
30, 1999,  no assurances  can be given that the level of taxable  income will be
sustained  at an  adequate  level  in  the  appropriate  subsidiaries.  It  must
therefore be considered  more likely than not that the deferred tax benefit will
not be recognized at this stage.

LIQUIDITY AND CAPITAL RESOURCES

The  Company  has  funded  its  operations  since  inception  primarily  through
borrowings under bank credit facilities, private placements of equity securities
and equity  contributions  by its  principal  stockholder.  In April  1999,  the
company offered 3.30 million shares of its common stock for public  subscription
and in June  1999  another  0.23  million  shares  were  offered  from  the over
allotment  option.  The net  proceeds  received by the company  from the sale of
shares of common stock were approximately $12.87 million, net of expenses. As of
June 30, 1999, the Company had $ 4.84 million of cash and cash  equivalents  and
$7.91 million in long-term borrowings..

The  Company  believes  that the  existing  cash and cash  equivalents,  will be
sufficient  to  meet  the  Company's   working  capital  and  currently  planned
expenditure  requirements  for the next 6 months.  The Company may, from time to
time,   consider   acquisitions  of   complementary   businesses,   products  or
technologies,  which may require additional  financing.  In addition,  continued
growth in the  Company's  business may,  from time to time,  require  additional
capital. No assurances can be given that additional capital will be available to
the  Company  at such  time or times as such  capital  may be  required  or,  if
available,  that it will be on commercially acceptable terms or would not result
in additional dilution to the Company's stockholders.

The  Company had an  operating  cash flow  surplus of $2.30  million for the six
months  ended June 30,  1999.  This  surplus  was  primarily  due to decrease in
deposits and increased  sales.  The Company had operating  cash flow deficits of
$3.77  million for the six months  ended June 30, 1998.  Operating  cash flow is
affected by seasonality, among other factors.

Accounts  receivable  increased  to $16.20  million at June 30, 1999 from $14.00
million at June 30, 1998.  Accounts  receivable at December 31, 1998 was $ 16.17
million. The average days sales outstanding was 98 days compared to 113 days for
the period June 30, 1998 and 112 for  December 31,  1998.  The  reduction in the
collection  days is the result of higher  collection of  receivables  during the
year.

Accrued taxes  increased  from $2.96  million at June 30, 1998 to  approximately
$4.53 million at June 30, 1999.

The Company  utilized cash for  investing  activities of $1.00 million and $0.63
million for the six-months ended June 30, 1999 and June 30, 1998 respectively.

Cash provided by financing  activities was approximately $3.44 million and $7.82
million for the six months ended June 30, 1999 and June 30, 1998,  respectively.
Financing activities for the six months of 1998 primarily consisted of a private
placement in February 1998 of  approximately  1,294,500  shares of Common Stock,

<PAGE>14


the net proceeds of which were $9.3 million.  Financing  activities  for the six
months ended June 30, 1999 primarily  consisted of proceeds from public issue of
$12.87  million,  net of expenses,  repayment of  short-term  borrowing of $7.62
million and repayment of $1.79 million loan to related party.


IMPACT OF THE YEAR 2000

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four to define the  applicable  year. Any of the Company's or
its  suppliers'  and  customers'  computer  programs  that  have  date-sensitive
software  may  recognize a date using "00" as the year 1900 rather than the year
2000.  The issue has grown in importance as the use of computers and  microchips
has become more  pervasive  and  interdependence  between  computer  systems has
increased.  The  Company  could be  materially  and  adversely  affected  either
directly or  indirectly  by the Year 2000 issue.  This could occur if any of its
critical computer systems or equipment  containing  embedded logic fails, if the
local infrastructure  (electric power, phone systems, or water system) fails, or
if its  significant  suppliers or customers are adversely  impacted.  This could
result in system failures or miscalculations  causing  disruptions of operations
including,  among other things, a temporary  inability to process  transactions,
send invoices or engage in similar normal business activities.

 Failure of the  Company to  complete  testing and  renovation  of its  critical
systems on a timely basis could have a material  adverse effect on the Company's
financial  condition  and  operating  results,  as could  Year  2000  compliance
problems  experienced by others with whom the Company does business.  Because of
the range of possible issues and the large number of variables  involved,  it is
impossible  to quantify  the  potential  cost of problems  should the  Company's
remediation  efforts or the efforts of those with whom it does  business  not be
successful.

The Company's internal information system is a client/server environment and the
Company  believes its internal  information  system is Year 2000 compliant.  The
Company  initiated a program and  established  a committee  comprised  of senior
executive  representatives from its subsidiaries in each of the Targeted Markets
to assess the Year 2000 readiness of its products and  operations  including its
non-information technology systems. All of the products currently being marketed
by the Company  have been  assessed and the Company  believes  they are all Year
2000 compliant.  The Company has also developed  upgrades for its  non-compliant
rejuvenated  and legacy  products,  which are no longer marketed by the Company.
The upgrades  developed for such  products are being sold to existing  customers
that use those  products.  The Company's IGS Hotel  (Version 2) and Hotel Master
products  are not,  and  will not be Year  2000  compliant.  The  users of these
products have been  informed  that the products will not be Year 2000  compliant
and the  Company  does not expect that such  noncompliance  will have a material
adverse effect on its business or results of operations.

The  Company  has  assessed  all of its  internal  systems  including  hardware,
software,  operating  systems,  development  tools and  languages as well as its
facilities and equipment including, among other things, its security devices and
telephone switchboards for Year 2000 compliance.  The Company has not identified
any material  Year 2000  compliance  problems,  but will continue to monitor its
information  systems.  However,  no  assurances  can be  given  that  Year  2000
compliance  problems  will not  eventually  occur with respect to the  Company's
information  systems  which,  depending  on the nature and scope of the problem,
could have a material  adverse  effect on its  business,  operating  results and
financial condition.

<PAGE>15


The Company has also begun  formal  communications  with  critical  suppliers to
determine  the  extent to which  their  failure  to  remedy  their own Year 2000
compliance   problems   would   materially   affect   the   Company.   Based  on
representations  received  from the  Company's  critical  suppliers  and testing
results as of June 30, 1999, the Company  believes that its business will not be
materially  adversely  affected by any Year 2000  noncompliance  of its critical
suppliers.  The  Company  has also  developed  contingency  arrangements,  which
include  identifying  possible  third  party  suppliers  in the event any of its
suppliers,  including  critical  suppliers,  are unable to provide the necessary
products or services to the Company as a result of Year 2000 compliance problems
not detected or corrected prior to their occurrence.  No assurances can be given
that  alternative  third-party  suppliers  will be  successful  in  meeting  the
Company's  requirements or, if met, that the terms of the arrangement will be as
favorable as those of the Company's current suppliers,  which could increase the
Company's expenses and have a material adverse effect on the Company's business,
operating results or financial condition.

The  aggregate  costs  incurred by the Company as of June 30, 1999 in connection
with Year 2000 compliance were approximately  $772,000,  of which  approximately
$123,000,  $186,000,  $126,000 and $40,000 were incurred in 1996, 1997, 1998 and
for the six months ended June 30, 1999,  respectively.  Year 2000 related  costs
have been funded from the  continuing  operations  of the  Company.  The Company
estimates that it will incur an additional $40,000 in costs to complete its Year
2000 compliance efforts.


EURO CONVERSION

In  January  1999,  the Euro  was  introduced  as the  currency  of a number  of
participating  nations in the European Union. Although the United Kingdom is not
currently a participating nation, the introduction of the Euro raises conversion
issues for business  transacted  with  entities in  participating  nations.  The
Company's  products either include or have been upgraded to include the Euro and
the Company  does not believe  that the Euro  conversion  has had or will have a
material adverse effect on its business. Because the Company's critical internal
systems have been modified to  accommodate a conversion to the Euro, the Company
believes it is adequately  prepared in the event the United Kingdom  converts to
the Euro in the future.



Item 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
         RISK


Foreign Currency Exchange Rates

A significant portion of the Company's business is conducted in currencies other
than the United States dollar.  As a result,  the Company is subject to exposure
from  movements  in  foreign  currency  exchange  rates.  The  Company  does not
currently engage in hedging transactions designed to manage currency fluctuation
risks.

Interest Rate Sensitivity

The  Company's  exposure  related  to adverse  movements  in  interest  rates is
primarily  derived from the variable  rate on the Company's  credit  facilities.
Interest rates on the Company's  credit  facilities  range from either  Sterling
LIBOR plus 3% to Sterling LIBOR plus 4% or the lending bank's base rate plus the
applicable  margin.  Increases  in Sterling  LIBOR  result in  increases  in the

<PAGE>16


Company's  interest  expense.  However,  at June 30, 1999, an increase of 10% in
Sterling  LIBOR would not have a material  adverse  effect on the  Company.  The
Company does not  currently  engage in hedging  transactions  designed to manage
interest rate fluctuation risks.


PART II - OTHER INFORMATION


Item 1:  LEGAL PROCEEDINGS

None

Item 2:  CHANGES IN SECURITIES AND USE OF PROCEEDS.

On April 22, 1999, the Securities and Exchange Commission declared effective the
Company's   registration   statement  on  Form  s-1,  SEC  File  No.  333-58351,
registering  3,300,000  shares of the  Company's  Common Stock and an additional
330,000  shares  of the  Company's  Common  Stock  to  cover  the  underwriter's
over-allotment  option  (the  "Shares").  The  public  offering  of  the  Shares
commenced on April on April 22, 1999,  and the closing of the offering  occurred
on April 27, 1999.  The Company issued  3,300,000  shares of its Common Stock in
connection  with the  initial  public  offering.  The  Company  then  issued  an
additional  230,000 shares in connection with the exercise of the  underwriter's
over-allotment  option on June 9, 1999.  Consequently,  in  connection  with the
Company's  public  offering,  the Company  offered and sold a total of 3,530,000
shares of its Common Stock for an aggregate  offering  price of $17.65  million.
The offering  terminated with the exercise of the  underwriter's  over-allotment
option on June 9, 1999.

The Company's public offering was underwritten by Cruttenden Roth  Incorporated.
Underwriting   discounts  and  commissions  were  approximately  $1.77  million.
Expenses for multiple road shows were  approximately  $350,000.  Other  expenses
which included,  but are not limited to,  accounting fees, legal fees,  printing
costs,  and  direct  expenses  related  to  the  offering  of  the  Shares  were
approximately   $2.66   million  for  a  total   expenses  of  the  offering  of
approximately  $4.78  million.  Net  proceeds  from the public  offering,  after
deducting the expenses of the offering, were $12.87 million.

The  Company  has used the net  proceeds  of the public  offering to repay $7.62
million of the Company's  borrowing  under the Company's bank credit  facilities
and to repay $1.79  million of the  Company's  indebtedness  to a an officer and
director  of the  Company.  The  Company  repaid  indebtedness  to  improve  the
Company's  balance  sheet  and  reduce  interest  expense  associated  with  the
Company's debt. The remaining  proceeds from the Company's  public offering will
be used for working capital and general corporate purposes.


Item 3:  DEFAULTS UPON SENIOR SECURITIES.

None


<PAGE>17



Item 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
         HOLDERS.

None


Item 5:  OTHER INFORMATION

None


Item 6:  EXHIBITS AND REPORTS ON FORM 8-K

None


<PAGE>18



                                                    SIGNATURES


Pursuant  to the  requirements  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.


                                                     AREMISSOFT CORPORATION,
                                                     a Delaware Corporation


Date:   July 28, 1999
        _____________                   /s/ DR. LYCOURGOS KYPRIANOU
                                            ___________________________________
                                            Dr. Lycourgos Kyprianou
                                            Chairman & Chief Executive Officer



Date: July 28, 1999
      ________________
                                        /s/ ROYS POYIADJIS
                                            ___________________________________
                                            Roys Poyiadjis
                                            President & Chief Financial Officer