8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  June 5, 2013

    ARI NETWORK SERVICES, INC.    

(Exact name of registrant as specified in its charter)

   Wisconsin   
(State or other jurisdiction
of incorporation)  0-19608 
(Commission
File Number)  39-1388360 
(IRS Employer
Identification No.)

10850 West Park Place, Suite 1200
          Milwaukee, Wisconsin          
(Address of principal executive offices) 53224 
(Zip Code)

Registrant’s telephone number, including area code:  (414) 973-4300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On June 11, 2013, ARI Network Services, Inc. (the “Company”) issued a press release announcing its operating results for the third quarter ended April 30, 2013.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 5, 2013, the Board of Directors of the Company appointed Dwight B. Mamanteo as a member of the Company’s Board, to hold office until the Company’s Annual Meeting of Shareholders in January 2014 and until his successor is elected.

Mr. Mamanteo is a Portfolio Manager at Wynnefield Capital, Inc. (“Wynnefield Capital”), a private investment management firm that is an affiliate of Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, LP I, and Wynnefield Small Cap Value Offshore Fund, Ltd. (collectively, the “Wynnefield Funds”).  Under the previously disclosed Securities Purchase Agreement dated March 12, 2013 among the Company, the Wynnefield Funds and certain other investors, the Wynnefield Funds acquired, in aggregate, 900,000 shares of the Company’s Common Stock at a purchase of $1.50 per share, along with warrants to purchase, in aggregate, 300,000 shares of Common Stock at an exercise price of $2.00 per share.  Mr. Mamanteo’s appointment to Company’s Board of Directors was not pursuant to any arrangement or understanding between Mr. Mamanteo and any other person.

As a non-employee director of the Company, Mr. Mamanteo will participate in the same compensation arrangements as the other non-employee directors of the Company, which currently consists of a cash retainer of $22,000 per year and an annual grant of an option to purchase shares of the Company’s common stock as determined by the Compensation Committee of the Company’s Board.  In addition, in connection with his appointment, Mr. Mamanteo was granted an option to purchase 10,000 shares of the Company’s common stock under the Company’s 2010 Equity Incentive Plan.  This option will become exercisable as to 50% of the shares on July 31, 2013 and as to the remaining 50% of the shares on July 31, 2014.

Item 8.01. Other Events.

On June 10, 2013, the Company announced the appointment of Mr. Mamanteo to the Company’s Board of Directors, as described in Item 5.02 above.  The press release issued by the Company is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

2

Item 9.01. Financial Statements and Exhibits.

(d)

Exhibits

Exhibit No	Description
99.1	Press Release dated June 11, 2013
99.2	Press Release dated June 10, 2013

3

SIGNATURE

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:  June 11, 2013

ARI NETWORK SERVICES, INC.

By:

/s/ Darin R.Janecek                          

Darin R. Janecek
Vice President of Finance and Chief Financial Officer

4

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated June 11, 2013
99.2	Press Release dated June 10, 2013

5

EX-99.1

Exhibit 99.1

For Immediate Release

ARI Network Services Announces 2013 Fiscal Third Quarter Results

Milwaukee, Wis., June 11, 2013 – ARI Network Services (OTCBB: ARIS), a leading provider of website, software, and data solutions that help dealers, distributors, and manufacturers Sell More Stuff!^TM, reported financial results today for its third quarter of fiscal 2013 ended April 30, 2013.  

Highlights for the quarter included:

● Total revenue for the quarter was $8.2 million, a 44.0% increase over the third quarter of fiscal year 2012.

● Recurring revenue for the quarter increased 60.1% to $7.7 million, or 93.0% of total revenue, from $4.8 million, or 83.7% of total revenue, for the same period in fiscal 2012.  

● On November 28, 2012, the Company acquired the assets of the retail division of 50 Below Sales & Marketing, Inc., a leading provider of eCommerce websites to the powersports, automotive tire and wheel aftermarket and medical equipment industries. The 50 Below operation, which was purchased out of bankruptcy, generated an operating profit during the quarter, only the second quarter under ARI ownership.

● On March 13, 2013, the Company announced that it entered into agreements with various accredited investors in a private placement of $4.8 million (3.2 million shares) of its common stock at a purchase price of $1.50 per share.  The Company also issued warrants to purchase 1.1 million shares at a price per share of $2.00.  The funds raised in the private placement were used to pay down a substantial portion of the Company’s outstanding debt.

● On April 25, 2013, the Company announced that it closed new senior secured credit facilities with Silicon Valley Bank. The facilities include a $4.5 million term loan and a $3.0 million revolving credit facility.  The proceeds from the transaction were used to pay down the remaining portion of the Company’s outstanding debt with Fifth Third Bank and with a shareholder.

Fiscal Year 2013 Third Quarter Financials

ARI reported revenue of $8.2 million for the third quarter of fiscal 2013 versus $5.7 million for the same period last year, an increase of 44.0%. Recurring revenue comprised 93.0% of total revenue during the quarter versus 88.3% last quarter and 83.7% for the third quarter of fiscal year 2012.

Gross margin for the third quarter was 77.1%, versus 75.9% for the same period last year.

The company incurred a net loss of $571,000 or $0.05 per share for the quarter ended April 30, 2013, compared to net income of $210,000 or $0.03 per share for the same period last year, primarily due to a non-cash loss of $682,000 related to the early repayment of debt and a $420,000 impairment charge to a long-lived asset.  

Management Discussion

Roy W. Olivier, President and Chief Executive Officer of ARI, commented, “We are pleased with the progress we have made integrating our two fiscal 2013 acquisitions.  We were able to generate a profit from the 50 Below operation in the second quarter of our ownership.  For the most recent fiscal year prior to the acquisition ended July 31, 2012, the 50 Below operations lost approximately $4 million on $9 million revenue.  Integration activities will continue over the next 9-12 months and we expect the 50 Below operations, as well as our combined operations, to become increasingly more profitable.”

Mr. Olivier continued, “ARI is now one of the leading providers of websites in each of the markets we serve; we currently host and maintain more than 5,500 sites, and we expect this number to continue to grow. Our new AccessorySmart^TM aftermarket parts lookup solution, which is a first of its kind in the powersports industry, continues to gain traction in the marketplace after its February launch.  We have also launched significant improvements to our products aimed at the automotive wheel and tire aftermarket, a market for which we have significant growth expectations.”

Darin Janecek, Chief Financial Officer of ARI, commented, “While our fiscal 2013 operating results continue to be affected by the various events and one-time charges that have occurred year-to-date, including two acquisitions, a $4.8 million private placement, and a debt refinancing and transition to a new banking partner, we do expect a return to profitability in the fourth quarter and anticipate further revenue growth and increased profitability in fiscal 2014.”

Third Quarter Conference Call

ARI will conduct a conference call on Tuesday June 11, 2013 at 4:30 pm EST to review the financial results for the third quarter of fiscal 2013 ended April 30, 2013. Interested parties can access the conference call by dialing (877) 359-3639 or (408) 427-3725 and referring to conference ID: 79028219.  The conference call is also being webcast, which is available in the Investor Relations section of the company’s website at www.investor.arinet.com.  A replay of the webcast will be archived on the Company’s website for 60 days.   

About ARI

ARI Network Services, Inc. (“ARI”) (OTCBB: ARIS), creates award-winning software-as-a-service (“SaaS”) and data-as-a-service (“DaaS”) solutions that help equipment manufacturers, distributors and dealers in selected vertical markets Sell More Stuff!™ – online and in-store. Our innovative products are powered by a proprietary library of enriched original equipment and aftermarket content that spans more than 10.5 million active part and accessory SKUs, 469,000 models and $1.7 billion in retail product value.  We remove the complexity of selling and servicing new and used inventory, parts, garments, and accessories (“PG&A”) for customers in automotive tire and wheel, powersports, outdoor power equipment, marine, RV and white goods industries. More than 22,000 equipment dealers, 195 distributors and 140 manufacturers worldwide leverage our web and eCatalog platforms to Sell More Stuff!™.  For more information on ARI, visit www.investor.arinet.com.

Additional Information

·

Follow @ARI_Net on Twitter: www.twitter.com/ARI_Net

·

Become a fan of ARI on Facebook: www.facebook.com/ARINetwork

·

Read more about ARI: www.investor.arinet.com/about-us

(Roy W. Olivier Photo: http://arinet.com/images/uploads/press_release_images/RoyWOlivier1.png)

(ARI Logo: http://arinet.com/images/uploads/press_release_images/NewLogoTransparency_Black.jpg)

Forward-Looking Statements

Certain statements in this news release contain "forward‐looking statements" regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933.  All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements.  These statements are based on current expectations, estimates, forecasts, and projects about the markets in which we operate and the beliefs and assumptions of our management.  Words such as  "expects," "anticipates," “targets,” “goals,” “projects”, “intends,” “plans,” "believes," “seeks,” “estimates,” “endeavors,” “strives,” “may,” or variations of such words, and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward‐looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  Such risks and uncertainties include those related to the ongoing integration of our recently acquired businesses, as well as those factors described in Part 1A of the Company’s annual report on Form 10‐K for fiscal year ended July 31, 2012, and in Amendment No. 3 of our registration statement on Form S-1/A under “Risk Factors, filed with the Securities and Exchange Commission, and in subsequent filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward‐looking statements. The forward‐looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward‐looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission.

For More Information, contact
Darin Janecek, Chief Financial Officer, +1-414-973-4300, Darin.Janecek@arinet.com; or
Gregory V. Taylor, CFA, Three Part Advisors, +1-214-295-8370, gtaylor@threepa.com

ARI Network Services, Inc.
Consolidated Statements of Income
(Dollars in Thousands, Except per Share Data)
(Unaudited)
	Three months ended April 30				Nine months ended April 30
	2013		2012		2013		2012
Net revenue	$	8,228	$	5,712	$	21,648	$	16,623
Cost of revenue		1,885		1,378		5,014		3,765
Gross profit		6,343		4,334		16,634		12,858
Operating expenses:
Sales and marketing		2,154		1,121		4,944		3,272
Customer operations and support		1,496		800		3,974		2,496
Software development and technical support (net
of capitalized software product costs)		641		467		1,890		1,345
General and administrative		1,791		1,304		5,209		3,630
Depreciation and amortization (exclusive of amortization
of software product costs included in cost of revenue)		334		315		953		1,122
Loss on impairment of long-lived assets		420		-		420		-
Net operating expenses		6,836		4,007		17,390		11,865
Operating income (loss)		(493)		327		(756)		993
Other income (expense):
Interest expense		(197)		(40)		(534)		(161)
Loss on debt extinguishment		(682)		-		(682)		-
Gain on sale of a component of the business		64		-		64		-
Other, net		(1)		79		7		96
Total other income (expense)		(816)		39		(1,145)		(65)
Income (loss) before provision for income tax		(1,309)		366		(1,901)		928
Income tax benefit (expense)		738		(156)		1,447		(385)
Net income (loss)	$	(571)	$	210	$	(454)	$	543
Net income (loss) per common share:
Basic	$	(0.05)	$	0.03	$	(0.05)	$	0.07
Diluted	$	(0.05)	$	0.03	$	(0.05)	$	0.07

ARI Network Services, Inc.
Consolidated Balance Sheets
(Dollars in Thousands, Except per Share Data)
	(Unaudited)
	April 30		July 31
	2013		2012
ASSETS
Cash and cash equivalents	$	1,164	$	1,350
Trade receivables, less allowance for doubtful accounts of $271
and $215 at April 30, 2013 and July 31, 2012, respectively		1,440		1,187
Work in process		158		151
Prepaid expenses and other		924		766
Deferred income taxes		3,112		2,686
Total current assets		6,798		6,140
Equipment and leasehold improvements:
Computer equipment and software for internal use		2,280		2,592
Leasehold improvements		609		584
Furniture and equipment		2,476		1,989
		5,365		5,165
Less accumulated depreciation and amortization		3,797		3,214
Net equipment and leasehold improvements		1,568		1,951
Capitalized software product costs:
Amounts capitalized for software product costs		20,842		18,247
Less accumulated amortization		16,610		15,298
Net capitalized software product costs		4,232		2,949
Deferred income taxes		3,554		2,443
Other long term assets		143		148
Other intangible assets		4,249		1,439
Goodwill		12,239		5,439
Total assets	$	32,783	$	20,509

ARI Network Services, Inc.
Consolidated Balance Sheets
(Dollars in Thousands, Except per Share Data)
	(Unaudited)
	April 30		July 31
	2013		2012
LIABILITIES
Current borrowings on line of credit	$	750	$	-
Current portion of long-term debt		338		1,084
Current portion of contingent liabilities		363		-
Accounts payable		792		725
Deferred revenue		9,228		4,926
Accrued payroll and related liabilities		1,321		758
Accrued sales, use and income taxes		117		216
Other accrued liabilities		625		214
Current portion of capital lease obligations		-		150
Total current liabilities		13,534		8,073
Long-term debt		4,162		2,888
Long-term portion of contingent liabilities		499		-
Capital lease obligations		-		58
Other long term liabilities		238		274
Total non-current liabilities		4,899		3,220
Total liabilities		18,433		11,293
SHAREHOLDERS' EQUITY
Cumulative preferred stock, par value $.001 per share, 1,000,000 shares authorized; 0 shares issued and outstanding at April 30, 2013 and July 31, 2012, respectively		-		-
Junior preferred stock, par value $.001 per share, 100,000 shares authorized; 0 shares issued and outstanding at April 30, 2013 and July 31, 2012, respectively		-		-
Common stock, par value $.001 per share, 25,000,000 shares authorized; 12,055,921 and 8,037,750 shares issued and outstanding at April 30, 2013 and July 31, 2012, respectively		12		8
Additional paid-in capital		102,817		97,218
Accumulated deficit		(88,463)		(88,009)
Other accumulated comprehensive loss		(16)		(1)
Total shareholders' equity		14,350		9,216
Total liabilities and shareholders' equity	$	32,783	$	20,509

EX-99.2

Exhibit 99.2

For Immediate Release

ARI Announces the Election of Dwight B. Mamanteo to Board of Directors

Brings deep Wall Street and automotive aftermarket experience to the Board

Milwaukee, Wis., June 10, 2013 - ARI Network Services (OTCBB: ARIS), a leading provider of website, software and data solutions that help dealers, distributors, and manufacturers Sell More Stuff!™, announced today that Dwight B. Mamanteo, of New York City, NY, has been elected to its Board of Directors. Mr. Mamanteo will serve until the company’s Annual Meeting in January 2014, at which time he will be subject to election by the shareholders.  

Currently, Mr. Mamanteo is a Portfolio Manager at Wynnefield Capital, Inc., a private investment management firm. He is also a Director of MAM Software Group, Inc. (NasdaqCM: MAMS), a leading provider of innovative software and data solutions for a wide range of businesses, including automotive aftermarket. Prior to joining Wynnefield Capital, Mamanteo worked in the technology sector holding various positions with BEA Systems, VISA International, Ericsson, UNISYS, and as an independent consultant. Mr. Mamanteo has also served on the Board of Directors of CDC Software Corporation, a leading provider of Enterprise CRM and ERP software and EasyLink Services International Corporation, a leading global provider of on-demand electronic messaging and transaction services. Mr. Mamanteo holds an M.B.A. from the Columbia University Graduate School of Business and a B.Eng. in Electrical Engineering from Concordia University in Montreal, Quebec.

 “The addition of Dwight to our Board of Directors expands the Board’s Wall Street and automotive aftermarket experience,” said Roy W. Olivier, President and CEO of ARI. “In addition, Dwight’s experience with MAM Software’s recent listing on NASDAQ and help to increase their recent share price from $0.60 to over $4.00, will provide us with invaluable insight as we work to increase our own shareholder value. I look forward to working with him and am confident that his contributions will help us grow the business.”

“With nearly 20 years of experience investing and working with technology-related companies, Dwight will help strengthen our Board,” said Brian E. Dearing, ARI’s Chairman of the Board. “We are delighted to welcome Dwight as our newest independent member of the Board of Directors.”

“I’m excited to join ARI’s Board of Directors, and have the opportunity to be a part of ARI’s promising future,” said Mamanteo. “Roy and the ARI team have worked diligently to set the stage for continued success and expansion into new high-growth industries, including automotive aftermarket. I look forward to playing a role in helping our company achieve its full potential.”

About ARI

ARI Network Services, Inc. (“ARI”) (OTCBB: ARIS), creates award-winning software-as-a-service (“SaaS”) and data-as-a-service (“DaaS”) solutions that help equipment manufacturers, distributors and dealers in selected vertical markets Sell More Stuff!™ – online and in-store. Our innovative products are powered by a proprietary library of enriched original equipment and aftermarket content that spans more than 10.5 million active part and accessory SKUs, 469,000 models and $1.7 billion in retail product value.  We remove the complexity of selling and servicing new and used inventory, parts, garments, and accessories (“PG&A”) for customers in automotive tire and wheel, powersports, outdoor power equipment, marine, RV and white goods industries. More than 22,000 equipment dealers, 195 distributors and 140 manufacturers worldwide leverage our web and eCatalog platforms to Sell More Stuff!™.  For more information on ARI, visit www.investor.arinet.com.

Additional Information

·

Follow @ARI_Net on Twitter: www.twitter.com/ARI_Net

·

Become a fan of ARI on Facebook: www.facebook.com/ARINetwork

·

Read more about ARI: www.investor.arinet.com/about-us

(Roy W. Olivier Photo: http://arinet.com/images/uploads/press_release_images/RoyWOlivier1.png)

(ARI Logo: http://arinet.com/images/uploads/press_release_images/NewLogoTransparency_Black.jpg)

Forward-Looking Statements

Certain statements in this news release contain "forward‐looking statements" regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933.  All statements other than statements of historical facts are statements that could be deemed to be forward-looking statements.  These statements are based on current expectations, estimates, forecasts, and projects about the markets in which we operate and the beliefs and assumptions of our management.  Words such as  "expects," "anticipates," “targets,” “goals,” “projects”, “intends,” “plans,” "believes," “seeks,” “estimates,” “endeavors,” “strives,” “may,” or variations of such words, and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward‐looking statements are subject to a number of risks, uncertainties and assumptions that are difficult to predict, estimate or verify.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  Such risks and uncertainties include those related to the ongoing integration of our recently acquired businesses, as well as those factors described in Part 1A of the Company’s annual report on Form 10‐K for fiscal year ended July 31, 2012, and in Amendment No. 3 of our registration statement on Form S-1/A under “Risk Factors, filed with the Securities and Exchange Commission, and in subsequent filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward‐looking statements. The forward‐looking statements are made only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to these forward‐looking statements. For more information, please refer to the Company’s filings with the Securities and Exchange Commission.

For More Information, contact
Darin Janecek, Chief Financial Officer, +1-414-973-4300, Darin.Janecek@arinet.com; or
Gregory V. Taylor, CFA, Three Part Advisors, +1-214-295-8370, gtaylor@threepa.com