<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-KA
AMENDMENT NO.1
(AMENDING ITEM 7 (a) and (b))
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1997
ARI NETWORK SERVICES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 0-19608 39-1388360
- --------------- ------------ --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
330 E. Kilbourn Avenue
Milwaukee, Wisconsin 53202
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (414) 278-7676
<PAGE> 2
This Amendment No. 1 supplements the Current Report on Form 8-K filed on October
10, 1997 (the "Form 8-K") by ARI Network Services, Inc. (the "Company"). At the
time of filing the Form 8-K, it was impracticable for the Company to provide the
financial statements of the business acquired and pro forma financial
information required by Item 7(a) and (b).
Item 7. Financial Statements and Exhibits
(a) Audited Financial Statements as of June 30, 1997 of Business
Acquired.
(b) Pro Forma Financial Information.
Included in this Report are the following pro forma financial
statements of ARI Network Services, Inc.:
1. ARI Network Services, Inc. unaudited Pro Forma Condensed
Balance Sheet at July 31, 1997;
2. ARI Network Services, Inc. unaudited Pro Forma Condensed
Statement of Operations for the Year Ended July 31,
1997;
3. ARI Network Services, Inc. unaudited Notes to Pro Forma
Condensed Financial Statements.
(c) Exhibits
23.1 Consent of Arthur Andersen LLP
<PAGE> 3
ITEM 7 (A)
EMPART TECHNOLOGIES, INC.
FINANCIAL STATEMENTS
AS OF JUNE 30, 1997
TOGETHER WITH REPORT OF
INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
Empart Technologies, Inc.
We have audited the accompanying balance sheet of Empart Technologies, Inc. (the
Company) as of June 30, 1997, and the related statements of operations,
stockholders' equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Empart Technologies, Inc. as of
June 30, 1997, and the results of its operations and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company
has incurred significant operating losses during the year ended June 30, 1997.
As discussed in Note 9, subsequent to year-end, the Company entered into an
agreement to have an unrelated company assume that portion of its operations
that represented approximately 91 percent of its revenue for the year ended June
30, 1997. In addition, as further discussed in Note 9, the Company has entered
into a letter of intent to sell the net assets of the Company. Under the terms
of the proposed sale, the proceeds of the sale would be distributed to the
stockholders upon liquidation of the Company. Should the sale not be
consummated, there is substantial doubt as to the Company's ability to continue
as a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
Arthur Andersen LLP
San Francisco, California,
September 19, 1997
<PAGE> 5
EMPART TECHNOLOGIES, INC.
BALANCE SHEET
JUNE 30, 1997
ASSETS
<TABLE>
<CAPTION>
CURRENT ASSETS:
<S> <C>
Cash and cash equivalents $ 9,400
Accounts receivable, net of allowance for doubtful accounts of $21,800 119,900
Income taxes receivable 291,800
Prepaid expenses and other current assets 9,000
---------
Total current assets 430,100
PROPERTY AND EQUIPMENT, net 228,300
---------
Total assets $ 658,400
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 95,200
Accrued payroll and other 85,200
Accrued vacation 76,800
Line of credit 75,600
Advances from officer 15,000
Deferred revenue 60,000
---------
Total current liabilities 407,800
---------
STOCKHOLDERS' EQUITY:
Common stock, no par value, 10,000,000 shares authorized, 8,855,106 shares
issued and outstanding 303,100
Retained earnings (52,500)
---------
Total stockholders' equity 250,600
---------
Total liabilities and stockholders' equity $ 658,400
=========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 6
EMPART TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
Consulting revenue $ 3,087,600
Product revenue 292,000
Maintenance revenue 8,600
-----------
3,388,200
DIRECT COST OF REVENUES 2,084,900
-----------
Gross profit 1,303,300
-----------
OPERATING EXPENSES:
Research and development 669,400
Selling and marketing 684,100
General and administrative 901,900
-----------
Total operating expenses 2,255,400
-----------
Loss from operations (952,100)
INTEREST INCOME, net 8,300
-----------
Loss before benefit for income taxes (943,800)
BENEFIT FOR INCOME TAXES 246,800
-----------
NET LOSS $ (697,000)
===========
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 7
EMPART TECHNOLOGIES, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Common Stock
---------------------- Retained
Shares Amount Earnings Total
---------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, JULY 1, 1996 8,503,750 $248,100 $ 644,500 $ 892,600
Sale of common stock 351,356 55,000 0 55,000
Net loss 0 0 (697,000) (697,000)
---------------------------------------------------
BALANCE, JUNE 30, 1997 8,855,106 $303,100 $ (52,500) $ 250,600
===================================================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 8
EMPART TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $(697,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 54,700
Change in deferred tax assets 45,000
Changes in current assets and liabilities:
Accounts receivable, net 599,400
Income taxes receivable (291,800)
Prepaid expenses and other current assets 13,200
Accounts payable (134,700)
Accrued vacation 20,900
Income taxes payable (142,900)
Accrued payroll and other (125,000)
Deferred revenue 60,000
---------
Net cash used in operating activities (598,200)
---------
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment
(98,200)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit 75,600
Proceeds from issuance of common stock 55,000
Loan from officer 15,000
---------
Net cash provided by financing activities 145,600
---------
Net decrease in cash and cash equivalents (550,800)
CASH AND CASH EQUIVALENTS, JULY 1, 1996 560,200
---------
CASH AND CASH EQUIVALENTS, JUNE 30, 1997 $ 9,400
=========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 2,500
Cash paid for income taxes 173,400
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 9
EMPART TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
1. NATURE OF OPERATIONS:
Empart Technologies, Inc. (the Company), formerly known as Summit Data Group,
was incorporated in the state of California in August 1992. The Company provides
integrated product support management to end-user customers through a
combination of consulting services and software products. The Company provides
consulting services both to customers who have purchased the Company's products
and to customers using third-party products.
The market for the Company's software products is characterized by frequent new
product introductions and enhancements, rapid technological advances, and rapid
changes in customer requirements and preferences. The Company's future success
will depend on its ability to enhance its existing products and to develop and
market new products on a timely basis that respond to evolving customer
requirements, achieve market acceptance, keep pace with technological
developments, retain key individuals, and maintain positive cash flows from
operations. There can be no assurance that the Company will be successful in
developing, introducing on a timely basis and marketing such products or
enhancements, or that any such new products or enhancements will be accepted by
the market.
The market for the Company's consulting services is dependent on its ability to
compete effectively against a number of other consulting organizations, both
large and small.
For the year ended June 30, 1997, one customer accounted for 90 percent of the
Company's total revenue.
The Company incurred an operating loss of approximately $952,000 during the year
ended June 30, 1997. In addition, in August 1997, the Company entered into an
agreement to have an unrelated company assume that portion of its operations
that accounted for approximately 91 percent of its revenues for the year ended
June 30, 1997 (see also Note 9). These matters raise substantial doubt about the
Company's ability to continue as a going concern.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION AND DEFERRED REVENUE
Revenue from software products is recognized when delivery of the software has
occurred, a signed noncancelable agreement has been received from the customer,
any remaining obligations under the agreement are insignificant, and
collectibility is reasonably assured. Revenue from annual or other renewals of
maintenance contracts is deferred and recognized straight-line over the term of
the contracts. Revenue from consulting services is generally billed on a time
and materials basis and does not involve significant customization or
modification of the licensed software.
Such consulting fees are recognized as the related services are provided.
CASH AND CASH EQUIVALENTS
The Company considers all cash investments and related deposits with a maturity
of three months or less to be cash equivalents.
<PAGE> 10
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is computed using the
straight-line method over the useful lives of assets as follows:
Furniture and fixtures 7 years
Office equipment 5 years
Computers and software 3-5 years
INCOME TAXES
The Company provides for income taxes in accordance with Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which
requires the asset and liability method of accounting for income taxes. Under
this method, deferred taxes are recognized for the tax consequences of
"temporary differences" by applying the statutory rate to the difference between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities.
MANAGEMENT'S USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires certain estimates to be made by management.
Actual results could differ from those estimates.
SOFTWARE DEVELOPMENT COSTS
Under the criteria set forth in SFAS No. 86, "Accounting for the Costs of
Computer Software to Be Sold, Leased or Otherwise Marketed," capitalization of
software development costs begins upon the establishment of technological
feasibility. The on-going assessment of the recoverability of these costs
requires considerable judgment by management with respect to certain external
factors, including, but not limited to, anticipated future gross product
revenues, estimated economic life, and changes in software and hardware
technology. After considering the above factors, the Company has determined that
software development costs incurred through June 30, 1997, should be properly
expensed.
3. PROPERTY AND EQUIPMENT:
Property and equipment consists of the following at June 30, 1997:
Furniture and fixtures $ 34,500
Office equipment 37,000
Computers and software 285,500
---------
357,000
Less: Accumulated depreciation (128,700)
---------
$ 228,300
=========
<PAGE> 11
Depreciation expense was $54,700 for the year ended June 30, 1997.
4. LINE OF CREDIT:
The Company entered into a line of credit agreement with a bank in April 1997.
This line accrues interest at the greater of 8.5 percent or the sum of the
bank's base rate plus 7 percent. The interest rate at June 30, 1997, was 15.5
percent. The maximum amount that can be drawn down on the line is the lesser of
80 percent of the Company's eligible accounts receivable or $200,000. The
Company owed $75,600 at June 30, 1997. The provisions of the line also require a
commitment fee of .5 percent of the minimum facility each year. Borrowings under
the line are secured by the Company's accounts receivable. The line expires on
April 15, 1998.
5. LOAN FROM OFFICER:
During the year ended June 30, 1997, an officer (also a 46 percent stockholder)
loaned the Company $15,000. This amount was repaid on July 1, 1997. Subsequent
to July 1, 1997, the office loaned $39,000 to the Company.
6. INCOME TAXES:
The benefit for income taxes for the year ended June 30, 1997, consisted of the
following:
Current:
Federal $291,800
State 0
Deferred:
Federal (40,000)
State (5,000)
--------
$246,800
========
Components of deferred income tax assets and liabilities at June 30, 1997:
Deferred tax assets:
Reserve for doubtful accounts $ 8,700
Accrued vacation 32,500
State net operating losses carryforward 37,400
--------
78,600
Deferred tax liabilities: depreciation (23,700)
--------
Net deferred tax asset 54,900
Valuation allowance (54,900)
--------
$ 0
========
The Company has approximately $400,000 of tax net operating loss carryforwards
available for state tax purposes which are available to reduce future taxable
income of the Company, if any.
<PAGE> 12
These carryforwards begin to expire in fiscal year 2007. SFAS No. 109 requires
that the tax benefit of such net operating loss be recorded as an asset.
However, SFAS No. 109 also requires that a valuation allowance be provided to
the extent that management assesses that it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
The Tax Reform Act of 1986 contains certain provisions that may limit, for
federal and state tax purposes, the loss carryforwards available to be used in
any given year in certain situations, including significant changes in
ownership. However, only the timing of utilizing those loss carryforwards is
impacted.
7. COMMITMENTS AND CONTINGENCIES:
The Company occupies its main offices under an operating lease. The future
minimum lease payments in the aggregate are as follows:
Year Ending
June 30
-----------
1998 $129,000
1999 11,000
--------
$140,000
========
Total rent expense for the year ended June 30, 1997, was $134,400.
8. EMPLOYEE BENEFIT PLANS:
401(K) PLAN
The 401(k) (salary reduction) plan (the Plan) was started in October 1995.
Employees are eligible to participate in the Plan on the date of their
employment. Under the terms of the plan, employees may make contributions
(salary deferrals) that for any taxable year may not exceed the dollar limit set
by law. The Plan allows for, but does not require, matching employer
contributions. Matching employer contributions for the year ended June 30, 1997,
were $23,000.
STOCK OPTION PLAN
The Company maintains an incentive stock option plan for its employees. Under
the terms of the plan, a total of 1,200,000 shares of the Company's common stock
are reserved for issuance. At June 30, 1997, 828,100 shares remained for
issuance.
The Company accounts for the plan under APB Opinion No. 25, under which no
compensation cost has been recognized, since under the option plan the option
exercise price equals the market value of stock on the date of grant. The plan
options are exercisable as defined in the option agreements, and all options
expire at various dates through 2007.
Had compensation costs for the plan been determined consistently with currently
enacted SFAS No. 123, "Accounting for Stock Based Compensation," the Company's
net loss would have been increased to the following pro forma amounts:
Net loss:
As reported $(697,000)
Pro forma (709,000)
<PAGE> 13
A summary of the status of the Company stock option plan at June 30, 1997, and
changes during the year then ended is presented in the table and narrative
below:
Weighted
Average
Exercise
Shares Price
----------------------
Outstanding at beginning of period 785,000 $ 0.47
Granted 308,700 1.15
Exercised (161,900) 0.18
Expired (385,900) 0.47
----------------------
Outstanding at end of period 545,900 $ 1.08
======================
Exercisable at end of period 194,100
Weighted average fair value of options
granted $ 0.26
<TABLE>
<CAPTION>
Number of Weighted Average Number of
Options Outstanding Exercise Price Contractual Life Options Exercisable
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
418,300 $0.17 7 years 137,400
17,100 0.84 8 years 10,900
110,500 1.15 9 years 45,800
- ------------------- -------------------
545,900 194,100
=================== ===================
</TABLE>
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option pricing model, with the following weighted-average
assumptions used for grants for the year ended June 30, 1997: weighted average
risk-free interest rate of 6.4 percent, expected dividend yields of 0 percent,
expected lives of four years for the plan options, and expected volatility of 0
percent.
In connection with the proposed sale discussed in Note 9, all options granted
under this stock option plan will expire.
9. SUBSEQUENT EVENT:
Subsequent to the end of the year, the Company entered into a letter of intent
to sell all of its net assets (total assets less liabilities) to a publicly
traded company (the Purchaser). As a result of the purchase, it is the intent of
the Company that the transaction be treated as a tax-free reorganization under
the Internal Revenue Code and that the Company be liquidated. The Purchaser
intends to operate the software products business. In addition, in August 1997,
the consulting services business, which accounted for 91 percent of the
Company's revenue for the year ended June 30, 1997, was assumed by an unrelated
consulting firm. In return for this assumption, the Company will receive for a
period of six months a percentage of all consulting revenue earned by this firm
on projects involving any consultants formally employed by the Company.
<PAGE> 14
ARI NETWORK SERVICES, INC.
UNAUDITED PRO FORMA CONSENSED FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to the
September 30, 1997 acquisition of substantially all of the assets of Empart
Technologies, Inc. (Empart) and the assumption of specified liabilities of
Empart. The transaction will be accounted for as a purchase business
combination. The pro forma amounts have been prepared based on certain purchase
accounting and other pro forma adjustments (as described in the accompanying
notes) to the historical financial statements of the Company and Empart.
The unaudited pro forma condensed balance sheet at July 31, 1997
reflects the historical financial position of the Company at July 31, 1997 and
Empart at June 30, 1997, with pro forma adjustments as if the acquisition had
occurred on July 31, 1997. The unaudited pro forma condensed statement of
operations for the year ended July 31, 1997 reflects the historical results of
operations of both companies with pro forma acquisition adjustments as if the
acquisition had occurred on August 1, 1996. The pro forma adjustments are
described in the accompanying notes and give effect to events that are (a)
directly attributable to the acquisition, (b) factually supportable, and (c) in
the case of certain statement of operations adjustments, expected to have a
continuing impact.
The unaudited pro forma condensed financial statements should be read
in connection with the Company's and Empart's historical financial statements
and related footnotes.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what the Company's
and Empart's financial position or results of operations as of the dates
presented would have been had the acquisition in fact occurred on such date or
at the beginning of the period indicated or to project the Company's and
Empart's financial position or results of operations for any future date or
period.
<PAGE> 15
Item 7 (b)
ARI NETWORK SERVICES, INC.
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
ARI EMPART
JULY 31, 1997 JUNE 30, 1997 PRO FORMA PRO FORMA
------------- ------------- --------- ---------
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 64 $ 9 $ 73
Receivables:
Trade 1,549 120 1,669
Other 19 19
Income taxes receivable - 292 292
Prepaid expenses and other 140 9 149
------------ ------------- ---------
Total current assets 1,772 430 2,202
Net equipment & leasehold improvements 315 228 543
Other assets 372 - 26(a) 398
Network system:
Network platform 11,467 - 11,467
Industry specific applications 17,925 - 435(a) 18,360
------------ ------------- --------- ---------
29,392 - 435 29,827
Less accumulated amortization 20,435 - - 20,435
------------ ------------- --------- ---------
Net network system 8,957 - 435 9,392
------------ ------------- --------- ---------
Total assets $ 11,416 $ 658 $ 461 $ 12,535
============ ============= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit $ 500 76 576
Note payable 46 - 46
Accounts payable 650 95 57(a) 802
Unearned income 543 60 603
Accrued payroll and related expenses 493 162 655
Other accrued liabilities 165 15 180
Current portion of capital lease obligations 64 - 64
------------ ------------- --------- ---------
Total current liabilities 2,461 408 57 2,926
Capital lease obligations 8 - 8
Shareholders' equity:
Preferred stock - - - -
Common stock 4 303 (302)(a) 5
Additional paid-in-capital 82,873 - 653(a) 83,526
Accumulated deficit (73,930) (53) 53(a) (73,930)
------------ ------------- ---------- ---------
Total shareholders' equity 8,947 250 404 9,601
------------ ------------- ---------- ---------
Total liabilities & shareholders'equity $ 11,416 $ 658 $ 461 $ 12,535
============ ============= ========== =========
</TABLE>
<PAGE> 16
ARI NETWORK SERVICES, INC.
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
ARI EMPART
JULY 31, 1997 JUNE 30, 1997 PRO FORMA PRO FORMA
------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Consulting $ 0 $ 3,088 $ (3,088)(c) $ 0
Network & other services 5,235 - 5,235
Software & development 1,678 300 1,978
------------- ------------- --------- ---------
6,913 3,388 (3,088) 7,213
Operating expenses:
Variable costs of products and services sold:
Network & other services 1,035 1,921 (1,921)(c) 1,035
Software & development 652 164 0 816
------------- ------------- --------- ---------
1,687 2,085 (1,921) 1,851
Depreciation and amortization 1,722 55 150(b,d) 1,927
Network operations 1,004 - - 1,004
Selling, general and administrative 4,819 1,531 (1,441)(c) 4,909
Network construction and expansion 1,897 669 (435)(d) 2,131
-------------- ------------- --------- ---------
11,129 4,340 (3,647) 11,822
Less capitalized portion (1,155) (1,155)
-------------- ------------- --------- ---------
Total operating expenses 9,974 4,340 (3,647) 10,667
Operating loss (3,061) (952) 559 (3,454)
Other income (expense) (214) 8 0 (206)
-------------- ------------- --------- ---------
Loss before benefit for income taxes (3,275) (944) 559 (3,660)
Benefit for income taxes 0 247 (247)(e) 0
-------------- ------------- --------- ---------
Net loss $ (3,275) $ (697) $ 312 $ (3,660)
============== ============= ========= =========
Average common shares outstanding 3,611 164(f) 3,775
Net loss per share (0.91) (0.97)
</TABLE>
<PAGE> 17
ARI NETWORK SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS
a) To record the acquisition of the September 30, 1997 acquisition of Empart
Technologies, Inc. (Empart) for a total purchase price of $653,957 through
the issuance of 163,490 shares of common stock. Purchase accounting
adjustments include: (i) the elimination of Empart's equity prior to the
acquisition including common stock of $303,000 and accumulated deficit of
$53,000, (ii) the recognition of $26,000 of goodwill, and (iii) the
recording of the asset for the Empart viewer(TM) and Empart publisher(TM)
software products for $435,000.
b) To record the increase in goodwill amortization of $5,000 (amortized over
5 years) due to the increase in goodwill from the Empart acquisition.
c) To eliminate the effect of the Integration Services business that was not
included in the purchase of Empart including: (i) $3,088,000 elimination of
consulting revenue; (ii) $1,921,000 elimination of direct cost of revenue,
and (iii) $1,441,000 elimination of selling, general and administrative
expenses associated with consulting revenue.
d) Empart research and development costs were incurred in the development of
the Empart software. This adjustment capitalizes $435,000 of the expenses
and depreciates $145,000 of the assets over three years to be consistent
with the Company's accounting policy.
e) To eliminate the Benefit for income taxes of $247,000 that would not be
received by the combined company.
f) The weighted average number of shares of Common Stock outstanding are
adjusted for the issuance of the 163,490 shares of common stock for the
acquisition of Empart.
<PAGE> 18
ITEM 7(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated September 19, 1997 included in this Amendment
No. 1 to Form 8-K, in Form S-8 (No. 33-48316) pertaining to the 1991 Stock
Option Plan of ARI Network Services, Inc. and the Registration Statement Form
S-8 (No. 33-54144) pertaining to the 1992 Employee Stock Purchase Plan of ARI
Network Services, Inc. It should be noted that we have not audited any
financial statements of the company subsequent to September 19, 1997 or
performed any audit procedures subsequent to the date of our report.
San Francisco, California Arthur Andersen LLP
December 11, 1997
<PAGE> 19
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 hereunto duly authorized.
Date: December 10, 1997 ARI NETWORK SERVICES, INC.
By: /s/ Mark L Koczela
----------------------------------
Mark L. Koczela, Executive Vice
President of Business Development
and Administration
