As filed with the Securities and Exchange Commission on May 12, 2000
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM S-3
Registration Statement Under The Securities Act of 1933
________________
ARI NETWORK SERVICES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1388360
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 East Kilbourn Avenue
Milwaukee, Wisconsin 53202-3149
(414) 278-7676
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Copies of all communications to:
Brian E. Dearing Larry D. Lieberman
330 East Kilbourn Avenue Godfrey & Kahn, S.C.
Milwaukee, Wisconsin 53202-3149 780 North Water Street
(414) 278-7676 Milwaukee, WI 53202
(Address, including zip code, and telephone (414) 273-3500
number, including area code, of agent
for service)
________________
Approximate date of commencement of proposed sale to
the public: From time to time after the effective date
of this Registration Statement.
If the only securities being registered on this
Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933,
other than securities offered only in connection with
dividend or interest reinvestment plans, check the
following box. [X]
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b)
under the Securities Act, please check the following
box and list the Securities Act registration statement
number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check
the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be
made pursuant to Rule 434, please check the following
box. [ ]
Calculation of Registration Fee
Proposed Proposed
Title of each Amount maximum maximum
class of to be offering aggregate Amount of
securities to be registered(1) price per offering registration
registered unit(2) price(2) fee
Common Stock,
$0.001 par value 3,262,500 $3 27/32 $12,540,234 $3,311
per share
(1) The shares of Common Stock which may be offered
pursuant to this Registration Statement consist of
(i) 1,210,000 shares issuable upon conversion of
principal and interest on a subordinated debenture,
(ii) 800,000 shares issuable upon exercise of
investment options, (iii) 600,000 shares issuable
upon exercise of warrants and (iv) 652,500 shares
reserved for issuance pursuant to antidilution and
default provisions of the securities. In addition
to the shares set forth in the table, the amount to
be registered includes an indeterminate number of
shares issuable upon conversion of or in respect of
the debenture, and exercise of the investment
options and the warrants, as such number may be
adjusted as a result of stock splits, stock
dividends and similar transactions in accordance
with Rule 416 under the Securities Act.
(2) Estimated solely for the purpose of calculating
the registration fee in accordance with Rule 457(c)
under the Securities Act of 1933 based on the average
of the high and low prices of the Common Stock on the
Nasdaq National Market on May 10, 2000, as reported in
the Midwest Edition of The Wall Street Journal.
_______________________
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
The information in this preliminary prospectus is not complete
and may be changed. These securities may not be sold until
the registration statement filed with the Securities and Exchange
Commission is effective. The preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
Subject to completion. Dated May 12, 2000
Prospectus
ARI Network Services, Inc.
3,262,500 Shares of Common Stock
The selling shareholder identified in this
prospectus may offer and sell from time to time up to
3,262,500 shares of our common stock by using this
prospectus.
The shares of common stock covered by this
prospectus may be offered and sold in accordance with
the Plan of Distribution described on page 7.
Our common stock trades on The Nasdaq Stock Market
under the symbol "ARIS." The last reported sale price
of our common stock on May 11, 2000 was $3 3/4 per
share.
Investing in our common stock involves a high
degree of risk. See "Risk Factors" beginning on page 1
of this Prospectus.
Neither the Securities and Exchange Commission nor
any state securities commission has approved or
disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.
The date of this prospectus is May __, 2000.
<PAGE>
TABLE OF CONTENTS
Page
The Company 1
Risk Factors 1
Forward-Looking Statements 5
Selling Shareholder 6
Plan of Distribution 7
Use of Proceeds 8
Legal Matters 8
Experts 8
Where You Can Find More Information 8
Documents Incorporated by Reference 9
_______________
You should rely only on the information contained
in this prospectus. We have not authorized anyone to
provide you with different information. Neither we nor
the selling shareholder are making an offer of these
securities in any state where the offer is not
permitted. You should not assume that the information
provided by this prospectus or any supplement is
accurate as of any date other than the date on the
front of those documents.
<PAGE>
THE COMPANY
Unless the context requires otherwise, the terms
"we," "our," "us" and "ARI" refer to ARI Network
Services, Inc. and its subsidiaries.
We are a provider of business-to-business e-
commerce solutions to manufacturers in selected
industries with shared service networks and
distribution channels. We focus our sales and
marketing on the U.S., Canadian, European and
Australian manufactured equipment industry, providing
direct sales and service in North America and operating
through value-added sales and service agents elsewhere.
We also provide e-commerce services to certain non-
equipment industries, including the U.S. and Canadian
agribusiness industry, the U.S. and Canadian freight
transportation industry and the U.S. non-daily
newspaper publishing industry.
We were founded in 1981 and are incorporated under
the laws of the State of Wisconsin. Our common stock
is listed on The Nasdaq Stock Market under the symbol
"ARIS." Our executive offices are located at 330 East
Kilbourn Avenue, Milwaukee, Wisconsin 53202 (telephone:
(414) 278-7676). We maintain a website at
http://www.arinet.com.T
A more complete description of our business and
its recent activities can be found in the documents
described in "Where You Can Find More Information."
RISK FACTORS
Investing in our common stock involves a high
degree of risk. Please carefully consider the specific
risk factors set forth below as well as other
information contained in, or incorporated by reference
into, this prospectus before purchasing our common
stock.
We may not have income in the future. Since our
organization in 1981, we have experienced net losses in
each fiscal year resulting in an accumulated deficit of
$82,381,000 at January 31, 2000. During the fiscal
years ended July 31, 1999, 1998 and 1997, we
experienced net losses of $3,415,000, $2,140,000 and
$3,275,000, respectively. For the six months ended
January 31, 2000, we experienced a net loss of
$2,896,000. We require significant increases in
revenues to achieve a profitable level of operations.
We do not anticipate reporting net income for fiscal
2000 or fiscal 2001 and there can be no assurance that
we will be profitable after then.
We may have problems raising money in the future.
We currently do not generate sufficient cash to cover
our operating costs and investment activities and,
therefore, may need to raise additional financing in
the future. We have funded our substantial network
development costs, acquisitions and negative cash flow
from operations principally from the sale of
securities. Our recent private placement transaction
with the selling shareholder raised $4 million. We may
need to raise additional financing in the future in
order to continue to make acquisitions or to increase
our investments in areas such as marketing and new
product development. In this event, we may need to
obtain additional financing and issue securities to
outside sources with greater rights than those
currently possessed by holders of our common stock.
Any additional financing may be dilutive to existing
shareholders or may be on terms that are not favorable
to us.
We are subject to intense competition. The market
for e-commerce products and services is highly
competitive. Several companies offer electronic
commerce services or software products that are similar
to those offered by us. Moreover, companies within our
target markets may develop and implement private
computer-to-computer networks, thereby reducing demand
for our network services. Because the market for
Internet products and services lack significant
barriers to entry, new competitors could enter our
market relatively easily. Our competitive environment
is characterized by rapid
<PAGE>
technological changes,
dynamic customer demands and frequent product
enhancements and product introductions. The pace of
technological changes, such as developments in Internet
commerce, is so great that new competitors may emerge
quickly based on new technologies. Many of our current
and potential competitors have greater financial,
technical, operational and marketing resources than us,
and we may not be able to compete successfully against
these competitors.
Our success depends on new product development and
responding to technological change. The market for our
products and services is characterized by technological
advances, changes in customer requirements and frequent
new product introductions and enhancements. Our growth
and future financial performance will depend in part
upon our ability to enhance existing products and
services and develop and introduce new products and
services that meet technological advances, respond to
evolving customer requirements, respond to competitive
products or announcements and achieve market
acceptance. There can be no assurance that we will be
successful in developing and marketing products or
services on a timely basis, or that our products and
services will adequately address the changing needs of
the marketplace and achieve market acceptance. The e-
commerce industry in general is also characterized by
evolving standards and technology. Our ability to
anticipate or guide these standards in our targeted
sectors and to fund advances in computer and
telecommunications technology and software will be a
significant factor in our ability to grow and remain
competitive.
Our success depends greatly on the Internet. Our
future success depends greatly on more businesses using
the Internet to transact business-to-business
electronic commerce in the future. Commercial use of
the Internet is currently at an early stage of
development. It is unclear how popular various uses of
the Internet will be in the future. Because our
products and services use the Internet for data
transport, user interfaces and data presentation, if
commercial use of the Internet does not grow in the
future for any reason our business will suffer.
Furthermore, even if use of the Internet grows,
businesses using the Internet may not be interested in
our products and services.
Our operating results fluctuate from quarter to
quarter. We expect that a significant portion of our
revenue in the future will be derived from non-
recurring fee income, which consists primarily of
revenues from professional services such as software
customization and training, software sales and one-time
network installation fees. The timing of receipt of
this revenue is dependent upon several factors that we
cannot predict. These factors include:
* The time required to close large license fee and
development agreements. These agreements can be
delayed due to customer requirements and decision-
making processes.
* The seasonality of certain sectors of the
equipment industry in which we operate.
* Delays in the introduction of new products or
services and their acceptance by customers.
* Delays in delivering customized software to our
customers.
Recurring revenues are also difficult to estimate.
Recurring revenues from maintenance and subscription
fees may be estimated based on the number of
subscribers to our services, but will be affected by
the renewal rate which cannot be determined in advance.
Renewal revenues can vary based on:
* competitive technologies or procedures,
* specific economic conditions in e-commerce and in
our target markets,
* general economic conditions, and
<PAGE>
* delays in delivering customized software to our
customers.
The emerging nature of commercial use of the
Internet makes predictions concerning our future
revenues difficult. We believe that period-to-period
comparisons of our results of operations will not
necessarily be meaningful and should not be relied upon
as indicative of our future performance. It is also
possible that in some future quarters our operating
results will be below the expectations of securities
analysts and investors, although we do not have any
analysts following our stock at this time. In such
circumstances, the price of our stock may decline.
We face risks in accelerating our growth. Our
ability to accelerate and sustain significant revenue
growth is affected by many factors including the
following:
* the growth rate of our selected markets;
* the positioning of our products and services in
our selected markets;
* variations in demand for and cost of customer
services and technical support;
* customer adoption of Internet applications and
their willingness to upgrade from client-server
versions of software;
* our ability to release new software applications
and upgrades on a timely basis;
* our ability to establish and maintain strategic
alliances;
* our ability to continue to make acquisitions; and
* our ability to attract and retain a high-
performance sales team.
Our pricing models may be negatively impacted by
increased competition. The market in which we operate
has been, and we believe will continue to be, affected
by competitors that sell products and services at very
low prices in order to increase their market share. We
may have to lower our prices to levels which would
negatively affect our net income in order to compete
with these competitors and maintain our customer base.
Alternatively, we may have to exit certain market
segments and/or product lines if we are unable to
provide products and services at competitive prices.
We depend on Mr. Dearing and the loss of his
services would harm our business. Mr. Dearing is our
Chairman of the Board, Chief Executive Officer and
acting Chief Financial Officer. Following the
resignation of our previous Executive Vice President of
Business Development and Administration, Mr. Dearing is
also now responsible for our business development
program. If we lose the services of Mr. Dearing, our
business would be harmed substantially.
Our acquisition strategy presents special risks.
We intend to continue to expand through the acquisition
of businesses, technologies, products and services from
other businesses. Acquisitions involve a number of
special problems, including:
* difficulty in integrating acquired technologies,
operations and personnel with our existing business;
* diversion of management attention in connection
with negotiating the acquisitions and integrating the
assets;
<PAGE>
* strain on managerial and operational resources as
we oversee larger and/or more geographically dispersed
operations;
* exposure to unforeseen liabilities of acquired
companies;
* the need to incur or assume additional debt;
* the requirement to record additional future
operating costs for the amortization of goodwill and
other intangible assets, which amounts could be
significant; and
* the assumption of contracts which may be
unfavorable to us under which we are obligated to
perform.
We may not be able to successfully address these
problems. Moreover, our future operating results will
depend to a significant degree on our ability to
successfully manage internal growth and integrate new
acquisitions.
We are actively recruiting for a Vice President of
Mergers and Acquisitions to lead our acquisition
program but continued delays in hiring a qualified
candidate may delay or slow our acquisition activity.
We may need to modify our business model. Today,
our business model is that of a services business: two-
thirds of our yearly revenue is recurring revenue and
one-third is from new sales and services. As we move
our products to the Internet, we may need to modify our
business model to focus more on initial sales of our
software and less on continuing service. This
modification would make our revenue streams more
volatile and could significantly change our financial
performance.
We face risks with our international strategy.
Our business strategy includes increasing our presence
in the non-U.S. equipment markets. This strategy
presents a number of special risks including:
* managing more geographically diverse operations;
* dealing with currency fluctuations;
* the increased costs of operation;
* only having a small number of employees in these
markets;
* our dependence on value-added resellers and
contractors to sell and service our products;
* a much smaller and more concentrated current
customer base; and
* the assumption that U.S. international policy will
remain favorable towards the countries in which we sell
our products and services.
Revenues from our non-equipment industry business
are not increasing. We believe that our non-equipment
industry business revenues will not grow and may
gradually decline because we have almost reached
saturation of the specific market niches in which we
participate. However, it is very possible that
revenues in the non-equipment businesses may decrease
more rapidly due to business combinations in these
markets, new technology or substitutes for our products
and services.
Our costs are not entirely predictable. We are
highly dependent on software development to obtain new
customers and maintain those we already have. We may
substantially underestimate the time
<PAGE>
and expense necessary to create the software we sell.
Furthermore, competition for skilled software developers
may cause our employee costs to rise more rapidly than planned.
Our stock price is volatile. The market price of
our stock has been, and is likely to continue to be,
volatile, experiencing wide fluctuations.
In recent months the stock market has experienced
significant price and volume fluctuations which have
particularly affected the market prices of equity
securities of many companies providing Internet-related
products and services. Some of these fluctuations
appear unrelated or disproportionate to the operating
performance of such companies. Future market movements
may adversely affect the market price of our stock.
We do not pay cash dividends. We do not
anticipate paying any cash dividends in the foreseeable
future.
FORWARD-LOOKING STATEMENTS
In accordance with the Private Securities
Litigation Reform Act of 1995, we can obtain a "safe-
harbor" for forward-looking statements by identifying
those statements and by accompanying those statements
with cautionary statements which identify factors that
could cause actual results to differ materially from
those in the forward-looking statements. Accordingly,
the following information contains or may contain
forward-looking statements: (1) information included
or incorporated by reference in this registration
statement on Form S-3, including, without limitation,
statements with respect to growth plans, projected
sales, revenues, earnings and costs, and product
development schedules and plans, (2) information
included or incorporated by reference in our future
filings with the Commission including, without
limitation, statements with respect to growth plans,
projected sales, revenues, earnings and costs, and
product development schedules and plans and (3)
information contained in written material, releases and
oral statements issued by us, or on our behalf,
including, without limitation, statements with respect
to growth plans, projected sales, revenues, earnings
and costs, and product development schedules and plans.
Generally, the words "anticipates," "believes,"
"expects," "intends" and similar expressions identify
forward-looking statements. Our actual results may
differ materially from those contained in the forward-
looking statements identified above. Factors which may
cause such a difference to occur include, but are not
limited to, those factors set forth in the section
entitled "Risk Factors," above.
<PAGE>
SELLING SHAREHOLDER
The following information regarding the common
stock offered hereby has been provided to us by the
selling shareholder identified below and reflects
information concerning beneficial ownership of common
stock as of the date of this prospectus.
Shares Shares Shares Owned
Beneficially Which After
Owned are Being Completion
Prior to Offered of this
Selling Shareholder Offering Hereby Offering
Number Percent
RGC International Investors, LDL 3,262,500 3,262,500 0 --
On April 27, 2000, the selling shareholder
purchased from us for $4 million a 3-year debenture
convertible into common stock at $4 per share, 18-month
investment options exercisable at $6 per share and 5-
year warrants exercisable at $6 per share. The shares
underlying these securities may be offered by this
prospectus. The actual number of shares of common
stock issuable upon conversion of the debenture and
exercise of the investment options and warrants is
indeterminate, is subject to adjustment and could be
materially more than the number covered by this
prospectus depending on factors which cannot be
predicted by us at this time. In addition, the actual
number of shares of common stock offered in this
prospectus, and included in this registration statement
of which this prospectus is a part, includes an
additional number of shares of common stock as may be
issued or issuable upon conversion of the debenture or
exercise of the investment options and warrants by
reason of any stock split, stock dividend or similar
transaction involving our common stock, in accordance
with Rule 416 under the Securities Act.
The shares covered by this prospectus can be
summarized as follows:
Shares
Conversion of principal of debenture
1,000,000
Reserve for conversion of interest on debenture 210,000
Investment options 800,000
Warrants 600,000
Reserve for adjustment as a result of default
provisions and antidilution provisions of securities 652,500
----------
Total 3,262,500
==========
Under the terms of the debenture and the related
investment options and warrants, the debenture is
convertible and the investment options and warrants are
exercisable by the holder only to the extent that the
number of shares of common stock issuable pursuant to
such securities, together with the number of shares of
common stock owned by such holder and its affiliates
generally would not exceed 4.9% of the then outstanding
common stock. In certain circumstances where we have
the right to force conversion of the debenture and
exercise of the investment options, the selling
shareholder's percentage ownership may exceed 4.9% but
cannot exceed 9.9%. Accordingly, the number of shares
of common stock set forth in the table for the selling
<PAGE>
shareholder exceeds the number of shares of common
stock that the selling shareholder could own
beneficially at any given time through its ownership of
the debenture, investment options and warrants.
PLAN OF DISTRIBUTION
The shares being offered by the selling
shareholder or its respective pledgees, donees,
transferees or other successors in interest, will be
sold from time to time in one or more transactions
(which may involve block transactions):
* on The Nasdaq Stock Market or on such other market
on which the common stock may from time to time be
trading;
* in privately-negotiated transactions;
* through the writing of options on the shares;
* short sales; or
* any combination thereof.
The sale price to the public may be:
* the market price prevailing at the time of sale;
* a price related to such prevailing market price;
* at negotiated prices; or
* such other price as the selling shareholder
determines from time to time.
The shares may also be sold pursuant to Rule 144
under the Securities Act. The selling shareholder
shall have the sole and absolute discretion not to
accept any purchase offer or make any sale of shares if
it deems the purchase price to be unsatisfactory at any
particular time.
The selling shareholder or its pledgees, donees,
transferees or other successors in interest may also
sell the shares directly to market makers acting as
principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may
receive compensation in the form of discounts,
concessions or commissions from the selling shareholder
and/or the purchasers of shares for whom such broker-
dealers may act as agents or to whom they sell as
principal or both, which compensation as to a
particular broker-dealer might be in excess of
customary commissions. Market makers and block
purchasers purchasing the shares will do so for their
own account and at their own risk. It is possible that
the selling shareholder will attempt to sell shares of
common stock in block transactions to market makers or
other purchasers at a price per share which may be
below the then market price. The selling shareholder
cannot assure that all or any of the shares offered in
this prospectus will be issued to, or sold by, the
selling shareholder. The selling shareholder and any
brokers, dealers or agents, upon effecting the sale of
any of the shares offered in this prospectus, may be
deemed "underwriters" as that term is defined under the
Securities Act or the Exchange Act, or the rules and
regulations under such acts.
The selling shareholder and any other persons
participating in the sale or distribution of the shares
will be subject to applicable provisions of the
Exchange Act and the rules and regulations under such
act, including, without limitation, Regulation M.
These provisions may restrict certain activities of,
and limit
<PAGE>
the timing of purchases and sales of any of
the shares by, the selling shareholder or any other
such person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and
certain other activities with respect to such
securities for a specified period of time prior to the
commencement of such distributions, subject to
specified exceptions or exemptions. All of these
limitations may affect the marketability of the shares.
We have agreed to indemnify the selling
shareholder, or its transferees or assignees, against
certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the
selling shareholder or their respective pledgees,
donees, transferees or other successors in interest,
may be required to make in respect of such liabilities.
USE OF PROCEEDS
The proceeds from the sale of shares of common
stock covered by this prospectus are entirely for the
benefit of the selling shareholder. We will not
receive any proceeds from the sale of shares of common
stock by the selling shareholder.
LEGAL MATTERS
The validity of the shares of common stock offered
hereby has been passed upon by Godfrey & Kahn, S.C.,
Milwaukee, Wisconsin. In the opinion of Godfrey &
Kahn, S.C., the shares are duly and validly authorized,
fully paid and, subject to Section 180.0622(2)(b) of
the Wisconsin Statutes, nonassessable. Section
180.0622(2)(b) of the Wisconsin Statutes provides that
shareholders of a corporation may be assessed up to the
par value of their shares to satisfy the obligations of
such corporation to its employees for services
rendered, but not exceeding six months' service in the
case of any individual employee. Certain Wisconsin
courts have interpreted "par value" to mean the full
amount paid by the purchaser of shares upon issuance
thereof.
EXPERTS
Ernst & Young LLP, independent auditors, have
audited our financial statements and schedule included
in our Annual Report on Form 10-K for the year ended
July 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial
statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of
the Exchange Act, and in accordance therewith, file
reports, proxy and information statements and other
information with the Commission. We have filed with
the Commission a registration statement on Form S-3
under the Securities Act with respect to the common
stock offered by this prospectus. This prospectus does
not contain all the information included or
incorporated in the registration statement. Such
reports, proxy and information statements, registration
statement and other information filed by us may be
inspected and, upon payment of prescribed fees, copied
at the public reference facilities of the Commission at
450 Fifth Street N.W., Washington, D.C. 20549, and at
the regional offices of the Commission at Seven World
Trade Center, New York, New York 10048, and at Citicorp
Center, 500 West Madison Street, Chicago, Illinois
60661.
You may obtain information on the operation of the
public reference facilities by calling the Commission
at 1-800-SEC-0330. Such information may also be
accessed electronically by means of the Commission's
website on the Internet at http://www.sec.gov.
<PAGE>
In addition, our common stock is listed on the
Nasdaq National Market, and such reports, proxy and
information statements, registration statement and
other information should be available for inspection
and copying at the offices of the National Association
of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The Commission allows us to "incorporate by
reference" into this prospectus the information we file
with them, which means that we can disclose important
information to you by referring you to those documents.
The information incorporated by reference is considered
to be part of this prospectus, and information that we
file later with the Commission will automatically
update and supercede this information. We incorporate
by reference the documents listed below and any future
filings we will make with the Commission under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act,
including any we make after the date we file the
registration statement of which this prospectus is a
part and before the registration statement becomes
effective:
* our annual report on Form 10-K for the year ended
July 31, 1999;
* our quarterly reports on Form 10-Q for the
quarters ended October 31, 1999 and January 31, 2000;
* our current reports on Form 8-K dated February 18,
2000 and April 27, 2000;
* the description of our common stock contained in
our registration statement filed pursuant to Section 12
of the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
We will provide without charge to each person to
whom a copy of this prospectus has been delivered, upon
written or oral request, a copy of any or all of the
incorporated documents, other than exhibits to such
documents. Requests for such copies should be directed
to Corporate Secretary, ARI Network Services, Inc., 330
East Kilbourn Avenue, Milwaukee, Wisconsin 53202;
telephone (414) 278-7676.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated
expenses to be incurred by the Registrant in connection
with the distribution of the securities being
registered hereby:
SEC registration fee $ 3,311
Nasdaq listing fee 65,250
Accounting fees and expenses 4,000
Legal fees and expenses 9,000
Miscellaneous 3,439
--------
TOTAL $85,000
========
All of the above expenses, other than the SEC
registration fee, are estimates. All of the expenses
listed will be paid by the Registrant.
Item 15. Indemnification of Directors and Officers.
Section 180.0851 of the Wisconsin Business
Corporation Law (the "WBCL") requires a corporation to
indemnify a director or officer, to the extent such
person is successful on the merits or otherwise in the
defense of a proceeding, for all reasonable expenses
incurred in the proceeding, if such person was a party
to such proceeding because he or she was a director or
officer of the corporation. In cases where a director
or officer is not successful on the merits or otherwise
in the defense of a proceeding, a corporation is
required to indemnify a director or officer against
liability incurred by the director or officer in a
proceeding if such person was a party to such
proceeding because he or she is a director or officer
of the corporation unless it is determined that he or
she breached or failed to perform a duty owed to the
corporation and such breach or failure to perform
constitutes: (i) a willful failure to deal fairly with
the corporation or its shareholders in connection with
a matter in which the director or officer has a
material conflict of interest; (ii) a violation of
criminal law, unless the director or officer had
reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her
conduct was unlawful; (iii) a transaction from which
the director or officer derived an improper personal
profit; or (iv) willful misconduct.
Section 180.0858 of the WBCL provides that subject
to certain limitations, the mandatory indemnification
provisions do not preclude any additional right to
indemnification or allowance of expenses that a
director or officer may have under a corporation's
articles of incorporation or by-laws, a written
agreement between the director or officer and the
corporation or a resolution of the board of directors
or the shareholders.
Unless otherwise provided in the articles of
incorporation or by-laws, or by written agreement
between the director or officer and the corporation, an
officer or director seeking indemnification is entitled
to indemnification if approved in any of the following
manners as specified in Section 180.0855 of the WBCL:
(i) by majority vote of a disinterested quorum of the
board of directors, or if such disinterested quorum
cannot be obtained, by a majority vote of a committee
of two or more disinterested directors; (ii) by
independent legal counsel chosen by a quorum of
disinterested directors or its committee (or if unable
to obtain such a quorum or committee, by a majority
vote of the full board of directors); (iii) by a panel
of three arbitrators (one of which is chosen by a
quorum of disinterested directors); (iv) by the vote of
the shareholders; (v) by a court; or (vi) by any other
method permitted in Section 180.0858 of the WBCL.
<PAGE>
Reasonable expenses incurred by a director or
officer who is a party to a proceeding may be
reimbursed by a corporation, pursuant to Section
180.0853 of the WBCL, at such time as the director or
officer furnishes to the corporation written
affirmation of his or her good faith belief that he or
she has not breached or failed to perform his or her
duties; and written confirmation to repay any amounts
advanced if it is determined that indemnification by
the corporation is not required.
Section 180.0859 of the WBCL provides that it is
the public policy of the State of Wisconsin to require
or permit indemnification, allowance of expenses and
insurance to the extent required or permitted under
Sections 180.0850 to 180.0858 of the WBCL for any
liability incurred in connection with any proceeding
involving a federal or state statute, rule or
regulation regulating the offer, sale or purchase of
securities.
As permitted by Section 180.0858, the Registrant
has adopted indemnification provisions in its by-laws
which closely track the statutory indemnification
provisions with certain exceptions. In particular,
Section 7.1 of the Registrant's by-laws, among other
items, provides that (i) an individual shall be
indemnified unless it is proved by a final judicial
adjudication that indemnification is prohibited and
(ii) payment or reimbursement of expenses, subject to
certain limitations, will be mandatory rather than
permissive. The Registrant has purchased directors'
and officers' liability insurance which insures the
Registrant's officers and directors against certain
liabilities which may arise under the Securities Act of
1933.
Item 16. Exhibits.
See "Exhibit Index."
Item 17. Undertakings.
*(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which
offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) to include any prospectus required
by Section 10(a)(3) of the Securities Act of
1933;
(ii) to reflect in the prospectus any
facts or events arising after the effective
date of the Registration Statement (or the
most recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar value
of securities offered would not exceed that
which was registered) and any deviation from
the low or high end of the estimated maximum
offering range may be reflected in the form
of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume
and price represent no more than a 20% change
in the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective Registration
Statement.
(iii) to include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change
to such information in the Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by
<PAGE>
the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of
a post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
*(b) The undersigned Registrant hereby undertakes
that, for purposes of determining any liability under
the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
*(h) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
____________
* Paragraph references correspond to those of Item 512
of Regulations S-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the
City of Milwaukee, State of Wisconsin, on May 12, 2000.
ARI NETWORK SERVICES, INC.
By: /s/ Brian E. Dearing
-----------------------
Brian E. Dearing
Chairman and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officer and directors of ARI
Network Services, Inc., hereby severally constitute and
appoint Brian E. Dearing and Jason D. Bartel and each
of them singly, our true and lawful attorneys, with
full power to them in any and all capacities (including
substitutions), to sign any amendments to this
Registration Statement on Form S-3 (including any pre-
and post-effective amendments), and any related Rule
462(b) registration statement or amendment thereto, and
to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities
and Exchange Commission, and any other regulatory
authority, hereby ratifying and confirming all that
each of said attorneys-in-fact may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Registration Statement has been signed
below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
/s/ Brian E. Dearing Chairman and Chief Executive Officer, May 12, 2000
- -------------------- Acting Chief Financial Officer and
Brian E. Dearing Acting Chief Accounting Officer
(Principal Executive Officer and Principal
Financial and Accounting Officer)
/s/ Gordon J. Bridge Director May 12, 2000
- --------------------
Gordon J. Bridge
/s/ Francis Brzezinski Director May 12, 2000
- ----------------------
Francis Brzezinski
/s/ George D. Dalton Director May 12, 2000
- --------------------
George D. Dalton
Director May __, 2000
- ---------------------
Ted C. Feierstein
/s/ Richard W. Weening Director May 12, 2000
- ----------------------
Richard W. Weening
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1 Securities Purchase Agreement dated as of April
25, 2000 by and among the Registrant and RGC
International Investors, LDC, incorporated herein by
reference to Exhibit 99.1 of the Registrant's Current
Report on Form 8-K dated April 27, 2000
4.2 Convertible Subordinated Debenture dated as of
April 27, 2000, incorporated herein by reference to
Exhibit 99.2 of the Registrant's Current Report on Form
8-K dated April 27, 2000
4.3 Stock Purchase Warrant dated as of April 27, 2000,
incorporated herein by reference to Exhibit 99.3 of the
Registrant's Current Report on Form 8-K dated April 27,
2000
4.4 Investment Option dated as of April 27, 2000,
incorporated herein by reference to Exhibit 99.4 of the
Registrant's Current Report on Form 8-K dated April 27,
2000
4.5 Registration Rights Agreement dated as of April
27, 2000 by and among the Registrant and the Investor,
incorporated herein by reference to Exhibit 99.5 of the
Registrant's Current Report on Form 8-K dated April 27,
2000
5.1 Opinion of Godfrey & Kahn, S.C.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Godfrey & Kahn, S.C. (included in Exhibit 5.1)
24.1 Powers of Attorney (included on the signature
page of this Registration Statement)
Exhibit 5.1
May 12, 2000
ARI Network Services, Inc.
330 East Kilbourn Avenue
Milwaukee, Wisconsin 53202-3149
Ladies and Gentlemen:
We have acted as counsel to ARI Network Services,
Inc., a Wisconsin corporation (the "Company"), in
connection with the preparation of a Registration
Statement on Form S-3 to be filed with the Securities
and Exchange Commission on or about May 12, 2000 (the
"Registration Statement"). The Registration Statement
relates to the sale by a selling shareholder of up to
3,262,500 shares of the Company's common stock, $0.001
par value (the "Shares").
In connection with this opinion we have examined:
(a) the Registration Statement, (b) copies of the
Company's Amended and Restated Articles of
Incorporation and By-laws, (c) certain resolutions of
the Company's Board of Directors, (d) the subordinated
debenture (the "Debenture"), investment options (the
"Investment Options") and warrants (the "Warrants")
referred to in the Registration Statement and (e) such
other proceedings, documents and records as we have
deemed necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion
that the Shares, when issued in accordance with the
terms of the Debenture, Investment Options or Warrants,
as the case may be, will be duly and validly
authorized, fully paid and nonassessable, subject to
Section 180.0622(2)(b) of the Wisconsin Statutes.
Section 180.0622(2)(b) of the Wisconsin Statutes
provides that shareholders of a corporation may be
assessed up to the par value of their shares to satisfy
the obligations of such corporation to its employees
for services rendered, but not exceeding six months
service in the case of any individual employee.
Certain Wisconsin courts have interpreted "par value"
to mean the full amount paid by the purchaser of shares
upon issuance thereof.
We consent to the use of this opinion as an
exhibit to the Registration Statement. In giving this
consent, however, we do not admit that we are "experts"
within the meaning of Section 11 of the Securities Act
of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
/s/ Godfrey & Kahn. S.C.
GODFREY & KAHN, S.C.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the
caption "Experts" in the Registration Statement (Form S-
3) and related Prospectus of ARI Network Services, Inc.
for the registration of 3,262,500 share of its common
stock and to the incorporation by reference therein of
our report dated September 24, 1999, except for Notes 3
and 10 as to which the date is September 30, 1999 and
September 28, 1999, respectively, with respect to the
financial statements and schedule of ARI Network
Services, Inc. included in its Annual Report (Form 10-
K) for the year ended July 31, 1999, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Milwaukee, Wisconsin
May 9, 2000
