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 MARCH 31, 1999

                                       OR

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

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

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


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

                                GOLDSWORTH HOUSE
                                   DENTON WAY
                              WOKING SURREY GU213LG
                                 UNITED KINGDOM
                               011-44-171-309-1555
          (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
                                GOLDSWORTH HOUSE
                                   DENTON WAY
                              WOKING SURREY GU213LG
                                 UNITED KINGDOM
                               011-44-171-309-1555
            (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   [    ]        No [  X  ]

The number of shares  outstanding of the Registrant's  Common Stock on April 28,
1999 was 13,300,051 shares.




<PAGE>2



                                AREMISSOFT CORPORATION

                                         INDEX



PART I - FINANCIAL INFORMATION                                            PAGE

Item 1.   Financial Statements (unaudited):

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

       Consolidated Statements of Operations                                 4
       for the three months ended  March 31, 1999
       and March 31, 1998

       Consolidated Statements of Cash Flows                                 5
       for the three months ended   March 31, 1999 and March 31, 1998

       Notes to Interim Consolidated Financial Statements                    6


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


Item 3:  Quantitative and Qualitative disclosures about market risk         16


PART  II - OTHER INFORMATION

Item 1--Legal Proceedings                                                   17

Item 2--Changes in Securities and Use of Proceeds                           17

Item 3--Defaults upon Senior Securities                                     17

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

Item 5--Other Information                                                   17

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

SIGNATURES                                                                  18




<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 DEC. 31     AS AT MARCH 31
                                                                     1998               1999
                         ASSETS                               (See Footnote 1)     (unaudited)
Current Assets
Cash and cash equivalents                                            $149             $1,082
Accounts receivable, less allowances for doubtful accounts of
  $971 and $639 at March 31,1998 and 1999, respectively            16,166             14,850
Other receivables                                                     903                942
Inventory                                                             787              1,090
Deposit paid on Service and Maintenance Contracts                   3,531              1,005
Prepaid Expenses and other assets                                   1,135              2,040
                                                                 --------             ------
Total Current Assets                                               22,671             21,009

Loan receivable-related party                                       1,886              1,898
Property and equipment, net                                         1,774              1,985
Purchased and developed software, net of accumulated 
 amortization of $5,772 and $6,137 at Dec. 31, 1998 and
 March 31, 1999 respectively                                        1,284              1,222

Intangible assets, net of accumulated amortization of 
  $12,790 and $13,124 at Dec, 31, 1998 and March 31, 1999, 
  respectively                                                        337                249
                                                                  -------            -------
Total  Assets                                                     $27,952            $26,363
                                                                  -------            -------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable                                                    3,669              4,814
Accrued payroll taxes                                                 586                510
Accrued value added taxes                                           1,649                418
Accrued income taxes                                                2,059              2,059
Current portion of capital lease obligations                           55                 55
Other accrued expenses                                              2,946              1,610
Bank loans and short term demand facility                          15,530             15,530
Deferred revenue                                                    6,693              5,810
                                                                  -------             ------
Total Current Liabilities                                          33,187             30,806

Long-term debt                                                          -                  0
Loan and accrued interest payable -related party                    1,781              1,794
Capital lease obligations, less current portion                        93                 93
                                                                  -------             ------

Total liabilities                                                  35,061             32,693
                                                                   ------             ------
Stockholders' equity (deficit)
Series-A convertible preferred stock, par value $0.001;
  authorized 2,100 shares; 1,137 and no shares issued and 
  outstanding at Dec. 31, 1998 and March 31, 1999 respectively,
  liquidating preference at par value                                   -                  0
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 issued and outstanding at Dec. 31, 1998 and
  March 31, 1999                                                       10                 10
Additional paid-in-capital                                         27,107             27,107
Accumulated deficit                                               (32,201)           (31,398)
Accumulated other comprehensive income                             (2,025)            (2,049)
                                                                  --------          ---------
Total stockholders' equity (deficit)                               (7,109)            (6,330)
                                                                  --------          ---------

Total liabilities and stockholders' equity (deficit)              $27,952            $26,363
                                                                  -------            --------
</TABLE>

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



<PAGE>4




                             AREMISSOFT CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<S>                                                         <C>                 <C>  


                                                            For three months ended March 31
                                                                  1998             1999
                                                              (Unaudited)      (Unaudited)

Revenues
Software Licenses                                               $4,108           $5,360
Maintenance and Services                                         4,563            6,274
Hardware and other                                               1,425            1,478
                                                                 -----         --------

Total revenues                                                  10,096           13,112
                                                                ------         --------

Cost of revenues
Software Licenses                                                  480              716
Maintenance and Services                                         1,257            1,987
Hardware and other                                               1,139            1,037
Amortization of purchased software and capitalized software
Development cost                                                    17               62
                                                             ---------         --------

Total cost of revenues                                           2,893            3,802

Gross Profit                                                     7,203            9,310
                                                                ------        ---------

Operating Expenses
Sales and marketing                                              3,901            4,865
Research and development                                         1,496            1,464
General and administrative                                       1,069            1,188
Amortization of intangible assets                                   24               88
                                                              --------        ---------

Total operating expenses                                         6,490            7,605
                                                                ------        ---------

Profit from operations                                             713            1,705
Interest expense, net                                              457              507
                                                               -------        ---------

Income before income taxes                                         256            1,198
Income tax expense                                                 100              395
                                                                ------        ---------

Net income                                                      $  156           $  803
                                                                ------        ---------

Basic net income per share                                       $0.02            $0.08

Diluted net income per share                                     $0.02            $0.08

Basic weighted average shares outstanding                        8,281           10,000

Diluted weighted average shares outstanding                      9,433           10,015
</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 three months ended March 31

                                                                       1998          1999
                                                                   (unaudited)   (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                             156            803
Adjustments to reconcile net income to net cash provided
  (used) in operating activities:
Depreciation                                                           230            250
Amortization of capitalized software and intangible assets              41            150

Changes in assets and liabilities:
Accounts receivable                                                   (170)         1,316
Other receivables                                                      (94)           (39)
Inventory                                                              (83)          (303)
Deposits paid on service and maintenance contracts                       -          2,526
Prepaid expenses and other assets                                   (1,423)          (905)
Accounts Payable                                                      (999)         1,145
Deferred revenue                                                       884           (883)
Accrued taxes payable                                               (1,250)        (1,307)
Other accrued expenses                                                (917)        (1,336)
                                                                    -------      ---------          

Net cash provided (used) in operating activities                    (3,625)         1,417
                                                                    -------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                                   (249)          (461)
Capitalized software development costs                                 (38)             -
Loan to related party (net)                                              -            (12)
                                                                    -------      ---------

Net cash (used in) investing activities                               (287)          (473)
                                                                    -------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of stock                                  9,302              -
Principal repayments of long-term borrowings                           166              -
Loan from related party                                                  -             13
Principal payments of capital lease obligations                       (104)             -
Short-term demand facility                                            (520)             -
                                                                    -------      ---------

Net cash provided by financing activities                             8,844            13
                                                                    -------      ---------

Net increase(decrease) in cash & cash equivalents                     4,932           957
Effect of foreign currency exchange rates on cash and                    99           (24)
cash equivalents
Cash and cash equivalents, at beginning of period                       239           149
                                                                    -------      --------
Cash and cash equivalents, at end of period                          $5,270        $1,082
                                                                    -------      --------

Supplemental disclosure:
Interest paid                                                        $  457        $  507
                                                                    -------       -------
</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  period  ended  March 31, 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 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):




                                                         For three Months Ended
                                                                March 31
                                                            1998        1999
                                                           -------    -------
Numerator used for both basic and diluted earnings 
 (loss) per share                                            156         803

Denominator for basic earnings per share;
  Weighted average shares outstanding                      8,281      10,000
Denominator for diluted earnings per share:
  Denominator for basic earnings per share                 9,433      10,000
  Effect of dilutive securities:
     Warrants                                                 15          15
     Preferred stock                                       1.137           -
                                                            9433      10,015

Basic Earnings (loss) per share                            $0.02       $0.08
Diluted Earnings (loss) per share                          $0.02       $0.08



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.  The  accompanying  consolidated  financial  statements  have  been
restated to conform to the SFAS No. 130 requirements.

Comprehensive  income for the three  months ended March 31, 1998 and 1999 are as
follows (in thousands):
                                                    1998                 1999
                                                   -------              ------

        Net income                                 $ 156                $ 803
        Foreign currency translation adjustments     (29)                 (24)
                                                   ------               ------

        Comprehensive income                       $ 127                $ 779
                                                   ------               ------



<PAGE>8



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.

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 a 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>          <C>


                                   MANUFACTURING     HEALTHCARE     HOSPITALITY     CONSTRUCTION      OTHER       TOTAL

Segmental analysis for 
the three months ended 3/31/99


Revenues from external  customers    4,145            3,984            3,438           1,102          443       13,112
Depreciation and amortization           72               84               80              17          147          400
Profit (loss) from operations          942              344              451             101         (133)       1,705
Total segment assets                11,803            6,302            5,977           1,227        1,054       26,363


Segmental analysis for the
three months ended 3/31/98

Revenues from external customers     2,847            3,362           2,645             959          283       10,096
Depreciation and amortization           50               59              51              12           99          271
Profit (loss) from operations          393              238              88              38          (44)         713
Total segment assets                11,077            5,951           5,355           1,120          556       24,059

</TABLE>



<PAGE>9



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.


                               Revenues                 Long-Lived Assets
                              ----------                ------------------ 
                     Mar 31, 1998 Mar 31, 1999       Mar 31, 1998  Mar 31, 1999
                    ------------- ------------      -------------  ------------
United Kingdom         7,572          7,748               2,248      1,886
Rest of Europe         1,196          3,257                 444        465
United States            454            378                 119        124
Asia                     323            449                 887        532
Rest of World            551          1,280                   0         10

                      10,096         13,112               3,698      3,017

6.   SUBSEQUENT EVENT

Public Offering

In April 1999 the Company  offered 3.3  million  shares of its common  stock for
public  subscription.  The Common Stock has been  approved for  quotation on the
NASDAQ national market under the symbol "AREM".  The initial price to public was
$5 per share and the underwriting discount was $0.4 per share.


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.




<PAGE>10



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. 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.

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  access 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 for 1998. 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).


<PAGE>11



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 29.9% to $13.1 million for the three months ended March
31, 1999 from $10.1  million for the three  months  ended March 31,  1998.  This
increase was due primarily to higher software license revenues as a result of an
increase in the sale of higher margin licenses,  and associated  maintenance and
service contract revenues.

Software license  revenues  increased 30.5% to $5.4 million for the three months
ended March 31,  1999 from $4.1  million  for the three  months  ended March 31,
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
increased  to 40.9% for the three months ended March 31, 1999 from 40.7% for the
period ended March 31, 1998.

Maintenance and service  contract  revenues  increased 37.5% to $6.3 million for
the three  months  ended March 31, 1999 from $4.6  million for the three  months
ended March 31,  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 revenues increased to 47.8% for three
months ended March 31, 1999 from 45.3% for 1998.

Hardware and other revenues  increased 3.7% to $1.5 million for the three months
ended March 31,  1999 from $1.4  million  for the three  months  ended March 31,
1998. As a percentage of total revenues,  hardware and other revenues  decreased
to 11.2% for the three  months  ended  March 31,  1999 from  14.1% for the three
months ended March 31, 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  31.4% to $3.8  million for the three  months  ended
March 31, 1999 from $2.9 million for the three months ended March 31, 1998. As a
percentage of total revenues,  cost of revenues increased to 29.0% for the three
month ended March 31, 1999 from 28.7% for the three months ended March 31, 1998.

Software  license  cost  increased  49.6% to $0.72  million for the three months
ended March 31, 1999 from $0.48  million  for the three  months  ended March 31,
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

<PAGE>12



increased  to 5.5% for the three  months  ended March 31, 1999 from 4.8% for the
period ended March 31, 1998.

Maintenance and service  contract Cost increased 58% to $2 million for the three
months  ended March 31, 1999 from $1.3  million for the three months ended March
31, 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 15.2% for three months ended
March 31, 1999 from 12.5% for 1998.

Hardware  and other Cost  decreased  9.0% to $1.04  million for the three months
ended March 31, 1999 from $1.14  million  for the three  months  ended March 31,
1998. As a percentage of total  revenues,  hardware and other cost  decreased to
7.9% for the three  months  ended March 31, 1999 from 11.3% for the three months
ended March 31, 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 24.7% to $4.9 million for
the three  months  ended March 31, 1999 from $3.9  million for the three  months
ended March 31, 1998,  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 37.1% for three months ended
March 31, 1999, from 38.6% for the three months ended March 31, 1998,  primarily
due to increased efficiencies in the Company's sales and marketing operations.

Research and Development

Research and  development  expenses were $1.5 million for the period ended March
31, 1999 and March 31, 1998.  As a percentage  of total  revenues,  research and
development  expenses  decreased  to 11.1% for the three  months ended March 31,
1999 from 14.8% of  revenues  for the three  months  ended March 31,  1998.  The
decrease was primarily due to a significant portion of the planned  expenditures
relating  to the  Company's  new  generation  of software  products  having been
incurred in prior accounting periods.

General and Administrative

General and  administrative  expenses  increased  11.1% to $1.2  million for the
three  months  ended March 31, 1999 from $1.1 million for the three months ended
March 31, 1998. As a percentage of total  revenues,  general and  administrative
expenses  decreased to 9.1% for the three months ended March 31, 1999 from 10.6%
for the three months ended March 31, 1998. This decrease  reflects the effect of
the Company's cost-cutting and cost control measures.



<PAGE>13



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 increased 11%
to $.51  million for the three months ended March 31, 1999 from $.46 million for
the three months ended March 31, 1998,  primarily  due to an increase in amounts
outstanding under the Company's credit facilities.

Income Tax Provision

There is a provision  for income taxes for the three months ended March 31, 1999
of $0.4  million.  There was a provision  for income  taxes for $0.1 million the
three months ended March 31, 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 March 31, 1999,
and although certain subsidiaries  generated taxable income in the period ending
March 31, 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. As of March 31, 1999, the
Company had $1.08  million of cash and cash  equivalents  and $15.53  million in
short-term borrowings. The Company had a working capital deficit of $9.8 million
as of March 31, 1999. In connection  with the Company's  initial public offering
which closed on April 27, 1999,  the Company  agreed with its lender to repay $5
million of its short-term  borrowings and to restructure the Company's remaining
indebtedness of  approximately  $9 million as long-term debt,  maturing in 2004,
bearing interest at LIBOR plus three percent per annum.

The Company  believes  that the net proceeds from its initial  public  offering,
which was declared effective on April 22, 1999,  together with existing cash and
cash  equivalents,  will be sufficient to meet the Company's working capital and
currently planned  expenditure  requirements for the next 9 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 $1.4  million for the three
months ended March 31, 1999.  This  surplus was  primarily  due to a decrease in
receivables and deposits and an increase in accounts  payables  partially offset
by a decrease  in accrued  expenses.  The  Company  had an  operating  cash flow
deficit of $3.6 million for the three  months  ended March 31,  1998.  Operating
cash flow is affected by seasonality, among other factors.


<PAGE>14



Accounts  receivable  increased  to $14.9  million  at March 31,  1999 from $9.6
million at March 31,  1998.  Accounts  receivable  as at December 31, 1998 was
$16.2  million.  The decrease in accounts  receivable  as of March 31, 1999 was
primarily the result of a higher collection rate of accounts  receivable for the
period. The average days sales outstanding was 102 days for the period March 31,
1998 and 112 for December 31, 1998.

Accrued  taxes  decreased  from $3.5 million at March 31, 1998 to  approximately
$2.98 million at March 31, 1999.

The Company  utilized  cash for  investing  activities  of $0.5 million and $0.3
million  for  the  three  months  ended  March  31,  1999  and  March  31,  1998
respectively.

Cash provided by financing activities was approximately $13,000 and $8.8 million
for the three  months  ended  March 31,  1999 and March 31,  1998  respectively.
Financing  activities  for the 1st  quarter  of 1998  primarily  consisted  of a
private  placement in February 1998 of approximately  1,294,500 shares of Common
Stock, the net proceeds of which were $9.3 million.

In April 1999, the Company  offered 3.3 million shares of its common stock in an
initial public offering. The common stock has been approved for quotation on the
NASDAQ  national  market under the symbol AREM.  The initial price to the public
was $5 per share  and the  underwriting  discount  was $0.4 per  share.  The net
proceeds  received  by the Company  from the sale of the shares of Common  Stock
were approximately $12.6 million,  after deducting the underwriting discount and
estimated offering expenses payable by the Company.

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.



<PAGE>15



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.

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 March 31, 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 March 31, 1999 in connection
with Year 2000 compliance were approximately  $752,000,  of which  approximately
$123,000,  $186,000,  $126,000 and $20,000 were incurred in 1996,  1997,1998 and
for the three months period ended March 31, 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  $60,000 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


<PAGE>16



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
Company's  interest expense.  However,  at March 31, 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.



<PAGE>17



PART II - OTHER INFORMATION

Item 1:        LEGAL PROCEEDINGS

None

Item 2:        CHANGES IN SECURITIES AND USE OF PROCEEDS.

None

Item 3:        DEFAULTS UPON SENIOR SECURITIES.

None

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

None

Item 5:        OTHER INFORMATION

None

Item 6:        EXHIBITS AND REPORTS ON FORM 8-K

None


<PAGE>18


                                      SIGNATURES


Pursuant to the  requirements  of the Securities Act of 1934, the registrant has
duly  caused  this  registration  statement  to be signed  on its  behalf by the
undersigned,  thereunder duly  authorized,  in the City of Sacramento,  State of
California on May 12, 1999.




                             AREMISSOFT CORPORATION,
                             a Delaware Corporation


Date:  May 12, 1999
                             /s/ DR. LYCOURGOS KYPRIANOU
                                -----------------------------------
                                Dr. Lycourgos Kyprianou
                                Chairman & Chief Executive Officer




                            /s/ ROYS POYIADJIS
                                ------------------------------------
                                Roys Poyiadjis
                                President & Chief Financial Officer