--------------------------------------------------------------------------------

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

                                 --------------

                                    FORM 10-Q

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

                 For the Quarterly Period Ended March 31, 2001

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

                  For the Transition Period From ____ to ____

                                 --------------

                        Commission File Number 000-22649

                                ARIS CORPORATION
             (Exact name of registrant as specified in its charter)

           Washington                                           91-1497147
  (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                         Identification Number)

     2229 - 112th Avenue N.E.                          (425) 372-2747
   Bellevue, Washington 98004-2936              (Registrant's telephone number,
(Address of principal executive office)               including area code)

      Indicate by check mark whether the registrant:

      (1) Has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file for such reports), and

      (2) Has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|

      The number of shares outstanding of the registrant's common stock as of
May 1, 2001 was 11,321,116.

--------------------------------------------------------------------------------
<PAGE>

                                ARIS CORPORATION
                                    FORM 10-Q


Index                                                                      Page

PART I. FINANCIAL INFORMATION

Item 1      Financial Statements (unaudited)

            a)    Condensed Consolidated Balance Sheets as of March 31,
                  2001 and December 31, 2000                                 3

            b)    Condensed Consolidated Statements of Operations for the
                  Quarters Ended March 31, 2001 and 2000                     4

            c)    Condensed Consolidated Statements of Cash Flows for the
                  Quarters Ended March 31, 2001 and 2000                     5

            d)    Condensed Consolidated Statements of Comprehensive Loss
                  for the Quarters Ended March 31, 2001 and 2000             6

            e)    Notes to Condensed Consolidated Financial Statements      6-9

Item 2      Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                      9-14

Item 3      Qualitative and Quantitative Disclosures About Market Risk      14

PART II. OTHER INFORMATION

Item 1      Legal Proceedings                                               15

Item 2      Changes in Securities                                           15

Item 3      Defaults Upon Senior Securities                                 15

Item 4      Submission of Matters to a Vote of Security Holders             15

Item 5      Other Information                                               15

Item 6      Exhibits and Reports on Form 8-K                                15


--------------------------------------------------------------------------------
                                     Page 2

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.       FINANCIAL STATEMENTS

ARIS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share data) (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 March 31,         December 31,
                                                                                   2001                2000
                                                                               -------------       -------------
<S>                                                                            <C>                 <C>
Assets
Current assets:
    Cash and cash equivalents ...........................................      $       5,337       $       7,367
    Investments in marketable securities ................................              5,503               6,501
    Accounts receivable, net of allowance for
      doubtful accounts of $2,223 and $2,675 ............................             16,648              14,640
    Other current assets ................................................              6,671               5,670
                                                                               -------------       -------------
       Total current assets .............................................             34,159              34,178
Property and equipment, net .............................................              8,798               9,258
Intangible and other assets, net ........................................             10,025              11,069
                                                                               -------------       -------------
       Total assets .....................................................      $      52,982       $      54,505
                                                                               =============       =============

Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable ....................................................      $       1,603       $       1,272
    Accrued liabilities .................................................              6,579               7,876
    Deferred revenue ....................................................                 25                  27
                                                                               -------------       -------------
       Total current liabilities ........................................              8,207               9,175
                                                                               -------------       -------------
Commitments
Shareholders' equity:
    Preferred Stock, without par value; 5,000,000 shares
    authorized; none issued and outstanding .............................                 --                  --
    Common Stock, without par value; 100,000,000 shares authorized,
    11,321,116 and 11,228,754 issued and outstanding ....................                 --                  --
    Additional paid-in capital ..........................................             51,341              51,199
    Retained earnings (deficit) .........................................             (5,562)             (5,295)
    Accumulated other comprehensive loss ................................             (1,004)               (574)
                                                                               -------------       -------------
       Total shareholders' equity .......................................             44,775              45,330
                                                                               -------------       -------------
       Total liabilities and shareholders' equity .......................      $      52,982       $      54,505
                                                                               =============       =============
</TABLE>

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

--------------------------------------------------------------------------------


                                     Page 3
<PAGE>

ARIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)  (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                     For the Quarter Ended
                                                                               ---------------------------------
                                                                                 March 31,           March 31,
                                                                                    2001                2000
                                                                               -------------       -------------
<S>                                                                            <C>                 <C>
Revenues, net:
    Consulting ..........................................................      $      13,913       $      15,495
    Software and royalties ..............................................                447               1,801
                                                                               -------------       -------------
        Total revenues, net .............................................             14,360              17,296
Cost of revenues ........................................................              8,761              10,944
                                                                               -------------       -------------
    Gross profit ........................................................              5,599               6,352
Selling, general and administrative expense .............................              7,499               9,181
Amortization of intangible assets .......................................                835                 924
Charges related to reorganization .......................................                194                  --
                                                                               -------------       -------------
        Loss from operations ............................................             (2,929)             (3,753)
Other income, net:
    Income from sale of Noetix Corporation warrants .....................              2,500                  --
    Other, net ..........................................................                311                 200
                                                                               -------------       -------------
Loss from continuing operations before income tax .......................               (118)             (3,553)
Income tax expense (benefit) ............................................                 69              (1,252)
                                                                               -------------       -------------
Loss from continuing operations .........................................               (187)             (2,301)

Loss from discontinued operations, net of income tax benefits of $40
     and $1,032 .........................................................                (80)             (4,205)
                                                                               -------------       -------------
Net loss ................................................................      $        (267)      $      (6,506)
                                                                               =============       =============
Basic and diluted loss per share - continuing operations ................      $       (0.02)      $       (0.18)
                                                                               =============       =============
Basic and diluted loss per share - discontinued operations ..............      $       (0.00)      $       (0.33)
                                                                               =============       =============
Basic and diluted net loss per share ....................................      $       (0.02)      $       (0.51)
                                                                               =============       =============
Weighted average number of common shares - basic and diluted ............             11,319              12,780
                                                                               =============       =============
</TABLE>

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

--------------------------------------------------------------------------------


                                     Page 4
<PAGE>

ARIS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)   (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                    For the Quarter Ended
                                                                               --------------------------------
                                                                                 March 31,           March 31,
                                                                                   2001                2000
                                                                               -------------       -------------
<S>                                                                            <C>                 <C>
Cash flows from operating activities:
   Net loss .............................................................      $        (267)      $      (6,506)
   Adjustments to reconcile net loss to
       net cash used in operating activities:
       Depreciation and amortization ....................................              1,291               1,763
       Non-cash impairment charges and write-offs .......................                120               4,000
       Provision for doubtful accounts receivable .......................               (452)                534
       Income from sale of Noetix Corporation warrants ..................             (2,500)                 --
       Decrease in unrealized gain on investments .......................               (148)                 --
       Tax benefit related to stock options exercised ...................                 --                 266
       Other ............................................................                 11                  --
       Changes in assets and liabilities net of effects of acquisitions:
          (Increase) decrease in accounts receivable ....................             (1,556)                 90
          (Increase) decrease in consulting contracts in progress .......               (348)              1,288
          Decrease in income tax receivable .............................                164               1,659
          Increase in prepaid expenses and other assets .................               (676)             (4,694)
          Increase (decrease) in accounts payable .......................                331                (345)
          Decrease in accrued expenses ..................................             (1,186)             (1,518)
          Increase (decrease) in deferred revenue .......................                 (2)              1,170
          Increase (decrease) in income taxes payable ...................               (230)                 14
          Decrease in deferred taxes ....................................                 --                (216)
                                                                               -------------       -------------
       Net cash used in operating activities ............................             (5,448)             (2,495)
                                                                               -------------       -------------
Cash flows from investing activities:
   Proceeds from the sale of investments ................................                998                  --
   Purchases of property and equipment ..................................               (368)               (509)
   Proceeds from the sale of Noetix Corporation warrants ................              2,500                  --
   Proceeds from the sale of property and equipment .....................                235                  --
                                                                               -------------       -------------
        Net cash provided by (used in) investing activities .............              3,365                (509)
                                                                               -------------       -------------
Cash flows from financing activities:
   Issuance of Common Stock .............................................                142                 457
   Stock options exercised ..............................................                 --                 695
                                                                               -------------       -------------
       Net cash provided by financing activities ........................                142               1,152
                                                                               -------------       -------------
Net decrease in cash and cash equivalents ...............................             (1,941)             (1,852)
Effect of exchange rate changes on cash and cash equivalents ............                (89)                (84)
Cash and cash equivalents at beginning of year ..........................              7,367              10,500
                                                                               -------------       -------------
Cash and cash equivalents at end of year ................................      $       5,337       $       8,564
                                                                               =============       =============
Supplemental schedule of cash flow information and noncash investing and
   financing activites:
   Interest paid ........................................................      $           7       $          25
                                                                               =============       =============
   Income taxes paid ....................................................      $          --       $         105
                                                                               =============       =============
</TABLE>

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

--------------------------------------------------------------------------------


                                     Page 5

<PAGE>

ARIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)  (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           For the Quarter Ended
                                                     ---------------------------------
                                                       March 31,           March 31,
                                                         2001                2000
                                                     -------------       -------------
<S>                                                  <C>                 <C>
Net loss                                             $        (267)      $      (6,506)
Foreign currency translation adjustments                      (282)                (84)
Unrealized loss on available-for-sale securities              (148)                 --
                                                     -------------       -------------
Total comprehensive loss                             $        (697)      $      (6,590)
                                                     =============       =============
</TABLE>

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

ARIS CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

-------------------------------------------------------------------------------

1.    The unaudited financial information furnished herein, in the opinion of
      management, reflects all adjustments, consisting only of normal recurring
      adjustments necessary to state fairly the condensed consolidated balance
      sheets, and condensed consolidated statements of operations, of cash flows
      and comprehensive loss of Aris Corporation ("Aris" or the "Company") as of
      and for the periods indicated. Aris presumes that users of the interim
      financial information herein have read or have access to the Company's
      audited consolidated financial statements and Management's Discussion and
      Analysis of Financial Condition and Results of Operations for the
      preceding fiscal year.

2.    Certain reclassifications have been made to prior year amounts to conform
      to current year presentations. Such reclassifications had no effect on
      previously reported net loss, comprehensive loss or shareholders' equity.

3.    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
      No. 133, " Accounting for Derivative Instruments and Hedging Activities."
      This statement requires that all derivative instruments be recorded on the
      balance sheet at their fair value. Changes in the fair value of
      derivatives are recorded each period in current earnings or other
      comprehensive income, depending on whether a derivative is designated as
      part of a hedge transaction and, if it is, the type of hedge transaction.
      SFAS No. 133, as amended, was effective for the Company beginning in the
      quarter ended March 31, 2001. Adoption of this statement did not have a
      material effect on results of operations, financial position or cash
      flows.

4.    Basic earnings (loss) per share is calculated as income (loss) available
      to common shareholders divided by the weighted-average number of shares of
      Common Stock outstanding during the periods. Diluted earnings (loss) per
      share is based on the weighted average number of shares of Common Stock
      and potential common stock outstanding during the periods, including
      options and warrants computed using the treasury stock method to the
      extent they are dilutive.

      A reconciliation of the difference between the weighted-average number of
      common shares outstanding used to


                                     Page 6
<PAGE>

      calculate basic earnings (loss) per share and the weighted-average number
      of common and potential common shares outstanding used to calculate
      diluted earnings (loss) per share is as follows:

                                                     For the Quarter Ended
                                                 ------------------------------
                                                   March 31,         March 31,
                                                     2001              2000
                                                 ------------      ------------
Weighted average number of common
      shares outstanding                           11,319,000        12,780,000

Effect of dilutive options                                 --                --
                                                 ------------      ------------

  Weighted average number of common
      and potential common shares outstanding      11,319,000        12,780,000
                                                 ============      ============

      Options to purchase 2,136,000 and 2,689,000 shares of Common Stock were
      outstanding at March 31, 2000 and 2001, respectively but were not included
      in the computation of diluted earnings (loss) per share because the loss
      from continuing operations made this inclusion anti-dilutive.

5.    The Company's reportable segments have been determined based on the nature
      of its operations, products offered to customers and information used by
      the Chief Operating Decision Maker, as defined by SFAS No. 131. Aris
      operates its database and Internet consulting businesses in two distinct
      geographic regions--the United States and the United Kingdom. Corporate
      costs are allocated between the United States and the United Kingdom based
      on revenues. Information technology training operations were discontinued
      during the year ended December 31, 2000 (see Note 6). Software operations
      were divested of during the year ended December 31, 2000 through the sale
      of 85% of its stock in Noetix Corporation, formerly Aris Software, Inc.,
      (see Note 8). As a result, the Company has changed its internal management
      reporting to reflect segments of its business by geographical regions and
      therefore has reclassified the March 31, 2000 reportable segment
      disclosure to conform to the current classification. Segment operating
      results are measured based on net income (loss). Total revenue by segment
      represents sales to unaffiliated customers. Summarized financial
      information by segment for the quarters ended March 31, 2001 and 2000 are
      as follows:

      (In thousands)               UNITED            UNITED         CONTINUING
                                   STATES            KINGDOM        OPERATIONS
                                 -----------       -----------      -----------
      Quarter ended
      March 31, 2001:

           Revenues, net         $     9,340       $     5,020      $    14,360

           Net income (loss)     $      (563)      $       376      $      (187)

      Quarter ended
      March 31, 2000:

           Revenues, net         $    13,147       $     4,149      $    17,296

           Net income (loss)     $    (2,389)      $        88      $    (2,301)


                                     Page 7
<PAGE>

6.    On October 16, 2000, the Company's Board of Directors approved a plan to
      divest its on-line training subsidiary. Since on-line training was the
      final remaining element of the Company's training business segment, all
      related training operating results were required to be reported separately
      as discontinued operations. The consolidated financial statements have
      therefore been reclassified to present this business as a discontinued
      operation for all periods presented. The following is a summary of
      significant events related to training operations for the periods
      presented, including the quarter ended March 31, 2001:

            In August 1999, in an effort to improve the profitability of its
            training division, Aris closed three unprofitable training centers
            located in New York, Minneapolis and Chicago. The Company completed
            the restructuring and utilized all of the accrued costs by December
            31, 2000. A summary of the related costs and accrual activity is as
            follows (in thousands):

<TABLE>
<CAPTION>
                                                          Contract &      Reduction in
                                            Employee         lease        carrying value       Other
                                            severance     terminations      of assets      related costs      Total
                                            ---------     ------------    --------------   -------------      -----
<S>                                          <C>             <C>             <C>             <C>             <C>
      Accrual, December 31, 1999             $   --          $  896          $   --          $   --          $  896
      Amounts utilized in 2000                   --            (717)             --              --            (717)
      Reversal of excess accrual to
         income from discontinued
         operations                              --            (179)             --              --            (179)
                                             ------          ------          ------          ------          ------
      Accrual, December 31, 2000             $   --          $   --          $   --          $   --          $   --
                                             ======          ======          ======          ======          ======
</TABLE>

            In March 2000, the Company announced the closing and divestiture of
            its remaining U.S. "brick and mortar" training operations. The
            operations in Denver, CO and Washington, DC were closed during the
            second quarter of 2000. The operations of the Bellevue, WA and
            Portland, OR centers were sold to former members of the Company's
            management team on May 1, 2000. The operations of the Texas centers
            were sold to former members of the Company's management team on June
            2, 2000. Approximately 140 employees were terminated in connection
            with these closings and divestitures. The net cost of closure of
            approximately $4 million was charged to expense in the quarter ended
            March 31, 2000. Revenue from these centers was $3.7 million or 15%
            of total revenues for the quarter ended March 31, 2000. From January
            1, 2001 through March 31, 2001 the estimated loss from discontinued
            operations increased by approximately $120,000. A summary of the
            related costs and accrual activity is as follows (in thousands):

<TABLE>
<CAPTION>
                                                       Contract &       Reduction in
                                        Employee          lease        carrying value      Other
                                        severance      terminations       of assets     related costs       Total
                                        ---------      ------------    --------------   -------------       -----
<S>                                       <C>             <C>             <C>               <C>            <C>
      Initial expense                     $ 413           $ 894           $ 2,639           $ 54           $ 4,000
      Amounts utilized in 2000             (425)           (842)           (2,639)           (58)           (3,964)
      Increase in accrual                    12             163                --              4               179
                                          -----           -----           -------           ----           -------
      Accrual, December 31, 2000             --             215                --             --               215
                                          -----           -----           -------           ----           -------
      Amounts utilized in 2001               --             (37)               --             --               (37)
      Increase in accrual                    --             120                --             --               120
                                          -----           -----           -------           ----           -------
      Accrual, March 31, 2001             $  --           $ 298           $    --           $ --           $   298
                                          =====           =====           =======           ====           =======
</TABLE>

            This accrual is for remaining liabilities from discontinued training
            operations, which are primarily related to properties leased, not
            yet sublet.

            On September 18, 2000, the Company completed the sale of its
            European training operations to Gilat Communications Ltd., John
            Bryce Training Ltd., Winford Management Limited and John Bryce
            Training (Europe) B.V., collectively referred to as "Gilat" or
            "buyer". Pursuant to the terms of an asset purchase agreement, the
            Company received approximately $10.8 million of which $6.6 million
            was cash and the balance in 295,454 shares of Gilat common stock. In
            exchange, the buyer received substantially all of the assets of
            Aris' European education operations and all of the outstanding stock
            of Aris Computer Services


                                     Page 8
<PAGE>

            GmbH, which was sold to John Bryce Training (Europe) B.V. as part of
            the transaction. The total gain recorded on the disposal of the
            European education operations was $6,472,000. For the quarter ended
            March 31, 2001 the Company recorded an unrealized loss totaling
            $148,000 on the Gilat common stock received in the sale. This loss
            is included as part of the accumulated other comprehensive loss in
            the equity section of the balance sheet since it is considered
            temporary in nature.

            On December 21, 2000, the Company completed the sale of its on-line
            training subsidiary to former members of its management team.

            From January 1, 2001 through March 31, 2001 the estimated loss from
            discontinued operations increased by approximately $120,000, net of
            $40,000 income tax, related to additional estimated losses for
            leases from discontinued operations.

7.    In April 2000, the Company entered into a master services agreement to
      provide $6.0 million of eBusiness consulting services to General Electric
      Company ("GE") over a period of 12 months. If GE fails to meet its
      obligation to purchase such services by June 30, 2001, GE agrees to pay
      the Company the difference between the $6.0 million and the total of the
      amount paid for actual services provided during such period. As of the
      quarter ended March 31, 2001 the Company had provided GE with $5.8 million
      in services. In conjunction with GE's commitment to the aforementioned
      services, the Company granted GE warrants to purchase 150,000 shares of
      the Company's Common Stock at a purchase price of $6.4375 per share. The
      warrants vest immediately upon issuance and expire on April 20, 2003. The
      fair value of these warrants has resulted in a non-cash charge of
      approximately $523,000, which is reflected as a reduction of revenues over
      the period services are provided. During the quarter ended March 31, 2001
      this reduction to revenue was $131,000.

8.    On September 1, 2000, the Company sold 85% of its stock in Noetix
      Corporation, formerly Aris Software, Inc., ("Noetix") to investors led by
      Paul Song, the Company's Chairman of the Board and former Chief Executive
      Officer. Under the terms of a stock purchase agreement, the Company
      received 285,714 shares of Aris Common Stock. The Company retained 15%
      ownership in Noetix and accounts for such investment using the equity
      method. Additionally, Aris was granted warrants for the right to purchase
      3.5 million shares of Noetix common stock. The Company recorded a gain on
      the sale of $287,000 during the year ended December 31, 2000. The Company
      receives approximately $68,000 monthly for rental of facilities and
      providing administrative and systems support services to Noetix through
      August 2001. Subsequent to August 2001, Noetix will pay $31,000 in rent to
      the Company through February 2002, with an option for another 12 months
      extension.

      On February 8, 2001, Aris returned all of its warrants to purchase 3.5
      million shares of Noetix common stock to Noetix Corporation. The Company
      received total consideration of $2.5 million in cash from Noetix.
      Subsequent to this transaction, Aris retains 2 million shares of Noetix
      stock following a two-for-one stock split in February 2001.

9.    On January 8, 2001 the Company closed its Fairfax, VA consulting office as
      a result of inadequate sales and prospects for future revenue growth. The
      Company incurred charges of $194,000 in severance and asset disposal costs
      associated with this closure.

10.   During the quarter ended March 31, 2001, the Company recorded its equity
      interest in the net loss of Noetix of approximately $52,000 as a component
      of other income, net. The Company also had a receivable due from Noetix of
      $207,000 and payable balance due to Noetix of $45,000 at March 31, 2001.

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

      Aris' revenue is derived primarily from the sale and delivery of its
consulting services. Consulting revenue is derived primarily from fees billed to
clients for consulting services. Revenue from contracts that are billed on a


                                     Page 9
<PAGE>

time and materials basis is recognized as services are performed. Revenue from
fixed price contracts is recognized on the percentage-of-completion method,
measured by the cost incurred to date and cost to complete compared to estimated
total costs for the contract. Aris bills clients on a monthly or semi-monthly
basis. Where revenue is recognized before an invoice is sent, the revenue in
excess of billings is recorded as consulting contracts in progress.
Occasionally, clients request that Aris provide hardware and software in
conjunction with consulting projects. In such cases, Aris recognizes as revenue
only the difference between its cost and the resale price for the software and
hardware.

      Training, now a discontinued operation, had derived revenue primarily from
fees charged to corporate clients for employee training, fees charged to
individual students for open enrollment classes, fees from curriculum and custom
courseware development for corporate clients and vendors such as Microsoft, fees
derived from the licensing of proprietary courseware to third parties, and fees
from performance improvement consulting and other consulting-based education
services. Training was provided at client facilities, at Aris' training centers,
and over the Internet or corporate intranets. In open enrollment classes, the
Company sought to fill each available seat in each scheduled class. The Company
continuously monitored this fill rate and canceled or rescheduled classes that
were under-enrolled. The Company divested of its US "brick and mortar" training
operations during the second quarter of 2000. The Company sold its European
training operations during the third quarter of 2000. The Company's final
training business element, its on-line training subsidiary, Netcisive, Inc., was
sold on December 21, 2000.

      The Company generated software revenue from the sale of its proprietary
software products, Aris DFRAG, TAMS, TAMS/O, Noetix Web Query and the
NoetixViews suite of products, and from maintenance and support contracts with
clients who purchased the software products. Revenue was recognized when there
was pervasive evidence of an arrangement with a fixed or determinable fee, the
software product was shipped and collection was probable. Software maintenance
and support was billed at the beginning of the contract period and was
recognized ratably throughout the term of the contract. On September 1, 2000,
the Company sold 85% of the shares of Noetix Corporation, formerly Aris
Software, Inc. ("Noetix"), a wholly owned subsidiary. The Company uses the
equity method to account for the remaining 15% ownership in Noetix.

      This commentary should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 2000 and the Company's
Current Reports on Form 8-K for a full understanding of the Company's financial
condition and results of operations.

      All statements, trend analysis and other information contained herein
relative to markets for the Company's services and products and trends in
revenue, gross margin and anticipated expense levels, as well as other
statements including words such as "seek," "anticipate," "believe," "plan,"
"estimate," "expect," "intend," or statements that an event or result "will,"
"may," "could" or "might" occur or be achieved, and other similar expressions,
constitute forward-looking statements. These forward-looking statements are
subject to risks, uncertainties and other factors that may cause the Company's
actual results of operations to differ materially from those contained in the
forward-looking statements.

SIGNIFICANT EVENTS

      During the first quarter of 2001, the Company increased its liability
related to the closings and divestitures of its United States training
operations by $120,000 related to additional estimated losses for leases from
discontinued operations.

      The Company recorded a non-cash charge of $131,000 as a reduction of
revenues related to warrants previously issued to GE during the quarter ended
March 31, 2001.

      During the quarter ended March 31, 2001, the Company recorded its equity
interest in the net loss of Noetix Corporation of approximately $52,000.


                                    Page 10
<PAGE>

      For the quarter ended March 31, 2001 the Company recorded an unrealized
loss totaling $148,000 on the Gilat common stock received in the sale of
European training operations. This loss is included as part of the accumulated
other comprehensive loss in the equity section of the balance sheet since it is
considered temporary in nature.

      On February 8, 2001, Aris returned all of its warrants to purchase 3.5
million shares of Noetix common stock to Noetix Corporation. The Company
received total consideration of $2.5 million in cash from Noetix. Subsequent to
this transaction, Aris retains 2 million shares of Noetix stock following a
two-for-one stock split in February 2001.

FIRST QUARTER 2001 COMPARED TO FIRST QUARTER 2000

      Total Revenue

      Total revenues decreased $3 million, or 17%, to $14.3 million for the
quarter ended March 31, 2001 from $17.3 million for the quarter ended March 31,
2000. The reasons for the decline in revenue are as follows:

      Consulting Revenue

      Consulting revenues decreased $1.6 million, or 10.2%, to $13.9 million for
the quarter ended March 31, 2001 from $15.5 million for the quarter ended March
31, 2000. Consulting revenue decreased as a result of an overall decrease in the
level of consulting activity. This is due to a slower than anticipated growth in
client spending on information technology consulting services and high staffing
turnover, both voluntary and involuntary, as a result of the change in focus to
eBusiness. The Company employed or contracted for the services of an average of
292 full-time consultants and project managers during the quarter ended March
31, 2001 compared to 394 during the same quarter in 2000.

      Software and Royalties Revenue

      Software and royalties revenue decreased $1.4 million to $447,000 for the
quarter ended March 31, 2001 from $1,801,000 in the quarter ended March 31,
2000, representing a decrease of 75.2%. The decrease in revenue is due primarily
to the sale of the Company's wholly owned software subsidiary on September 1,
2000. The revenue in 2001 represents royalty revenue from Oracle Corporation
product sales, which includes the Company's time management software.

      Cost of Revenues

      Cost of revenues consists primarily of salaries and employee benefits for
consultants, project managers, subcontractor fees and non-reimbursable travel
expenses. Cost of revenues decreased $2.1 million to $8.8 million in the quarter
ended March 31, 2001 from $10.9 million in the quarter ended March 31, 2000,
representing a decrease of 19.9%. The decrease in cost of revenues is due to the
use of fewer consultants. Cost of revenues as a percentage of revenues decreased
from 63.3% for 2000 to 61.0% for 2001. This decrease as a percent of revenues is
due to higher relative average utilization in 2001 over 2000 (60% compared with
56%, respectively).


                                    Page 11
<PAGE>

      Selling, General and Administrative Expense

      Selling, general and administrative ("SG&A") expense consists of salaries
and employee benefits for executive, managerial, administrative and sales
personnel; facility leases and related costs; bad debt expense; depreciation of
fixed assets; software license fees and maintenance contracts; and travel and
related expenses. SG&A expense decreased $1.7 million to $7.5 million for the
quarter ended March 31, 2001 from $9.2 million for the quarter ended March 31,
2000, which represents a decrease of 18.3%. This decrease is a result of overall
corporate headcount and cost reductions in streamlining operations. Total SG&A
expense, as a percentage of total revenue, decreased from 53.1% for the quarter
ended March 31, 2000 to 52.2% for the quarter ended March 31, 2001.

      Amortization of Intangible Assets

      Amortization of intangibles was $835,000 during the quarter ended March
31, 2001 and $924,000 during the quarter ended March 31, 2000. The $89,000
decrease in amortization of intangibles arises because certain portions became
fully amortized.

      Charges Related to Reorganization

      The Company incurred $194,000 during the quarter ended March 31, 2001 in
severance and asset disposal costs associated with the closure of its Fairfax,
VA office on January 8, 2001. The Company closed this office due to inadequate
revenues and lack of future growth potential.

      Income From Sale of Noetix Corporation Warrants

      On February 8, 2001, Aris returned all of its warrants to purchase 3.5
million shares of Noetix common stock to Noetix Corporation. The Company
received total consideration of $2.5 million in cash from Noetix.

      Other Income, Net

      Other income, net, consists primarily of interest income on cash and cash
equivalents and finance charges due on accounts receivable. Other income, net
increased $111,000 from $200,000 for the quarter ended March 31, 2000 to
$311,000 for the quarter ended March 31, 2001. This increase is due to higher
interest income in 2001 compared with 2000 resulting from higher levels of cash
and short-term investments.

      Income Tax Expense/(Benefit)

      Income tax expense/(benefit) decreased from a $1.3 million benefit in the
quarter ended March 31, 2000 to a tax expense of $69,000 in the quarter ended
March 31, 2001. The shift to a tax expense from a tax benefit is due to the
Company experiencing significantly lower net operating losses in 2001 compared
to the same period in 2000. The primary reason for a tax expense during the
quarter ended March 31, 2001 when the Company experienced a loss from operations
is due to amortization of intangibles, a portion of which is not deductible for
tax purposes but is expensed for financial reporting purposes.


                                    Page 12
<PAGE>

      Discontinued Operations

      During the year ended December 31, 2000, the Company approved a plan to
discontinue training operations and all training business operating results are
reported as discontinued operations. The consolidated financial statements have
been reclassified to segregate continuing and discontinued operating results.
Loss from discontinued operations, net of tax, represents the results of
training operations and changes to estimates of such losses. The Company had
losses of $4.2 million ($5.2 million loss, net of tax benefit of $1.0 million)
for the quarter ended March 31, 2000 and $80,000 ($120,000 loss net of tax
benefit of $40,000) for the quarter ended March 31, 2001, respectively, a
decrease of $4.1 million or 98.1%. The losses in 2000 relate primarily to net
operating losses and costs associated with the closure or sale of training
centers. These losses are less in 2001 relative to 2000 since the majority of
the closure or sale activity was initiated and completed in 2000. The loss in
2001 is related to additional estimated losses for leases of discontinued
operations.

LIQUIDITY AND CAPITAL RESOURCES

      As of March 31, 2001, the Company had working capital of $25.9 million,
including cash and cash equivalents of $5.3 million. As of December 31, 2000,
Aris had working capital of $25.0 million including cash and cash equivalents of
$7.4 million. Aris intends to finance its working capital needs, as well as
purchases of additional property and equipment for its operations, from existing
cash balances and any cash generated by operations.

      During the quarter ended March 31, 2001, the Company used net cash of $1.9
million. Net cash of $5.4 million was used in operations. Investing activities
provided $3.4 million in cash, primarily from the return of Noetix Corporation
warrants for $2.5 million and the sale of short-term investments for
approximately $1 million. Financing activities provided $142,000 from the sale
of stock for the Employee Stock Purchase Plan.

      At March 31, 2001, the Company had accounts receivable of $16.6 million
equivalent to 104 days sales outstanding (DSO). At December 31, 2000, the
Company had accounts receivable of $14.6 million equivalent to 84 days sales
outstanding. The change in DSO is primarily a function of timing differences in
invoicing activity and collection patterns at those two points in time.
Invoicing activity and related accounts receivable increased in March of 2001
from December 2000. In addition, a customer with several significant outstanding
invoices did not remit payment until early April 2001.

      The Company has a $10 million line of credit with US Bank, a division of
First Bank Systems. The credit line provides funds for general business purposes
and is collateralized by substantially all of the Company's assets. The credit
line contains various affirmative and negative covenants, which require, among
other things, maintenance of a certain level of working capital and a certain
current ratio. The Company is in compliance with all requirements of the
agreement as of March 31, 2001. The credit line expires on June 1, 2001. There
are no amounts outstanding on the credit line at March 31, 2001. Management
anticipates that the credit line will be renewed in an amount suitable to meet
its requirements upon expiration of the existing agreement.


                                     Page 13
<PAGE>

RECENT ACCOUNTING PROUNCEMENTS

      In June 1998, FASB issued SFAS No. 133, " Accounting for Derivative
Instruments and Hedging Activities." This statement requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. SFAS No. 133,
as amended, was effective for the Company in the quarter ended March 31, 2001.
The Company's adoption of this statement did not have a material impact on
results of operations, financial position or cash flows.

ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

      The primary market risk to Aris is the effect of changes in foreign
currency exchange rates. Income from Aris' foreign operations is frequently
denominated in foreign currencies, thereby creating exposures to fluctuations in
exchange rates. This foreign currency exposure is monitored by the Company as an
integral part of the Company's overall risk management program, which recognizes
the unpredictability of financial markets and seeks to reduce the potentially
adverse effect on the Company's results. The effect of changes in exchange rates
on Aris' earnings has been small relative to other factors that also affect
earnings, such as sales and operating margins.

      Aris maintains an investment portfolio of certificates of deposits and
equity securities. These investments are classified as available for sale and,
consequently, are recorded on the balance sheet at fair value with any
unrealized gains or losses reported as a separate component of accumulated other
comprehensive income unless they represent an other than temporary decline, in
which case, they are recorded as a loss from operations. Part of this portfolio
includes an investment in 295,454 shares of Gilat common stock (NASDAQ National
Market, symbol "GICOF"), received as part of the proceeds from the sale of our
European training operations. The value of these securities is subject to market
price volatility. For example, as a result of recent market price volatility, we
experienced a $148,000 unrealized loss during the first quarter of 2001. Since
we considered this price decline to be temporary, we included the loss in
accumulated other comprehensive loss in shareholders' equity on the balance
sheet.


                                    Page 14
<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      The Company is involved from time to time in routine legal proceedings
incidental to its business. As of March 31, 2001, the Company was not involved
in any material legal proceedings.

ITEM 2. CHANGES IN SECURITIES

      Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      Not applicable.

ITEM 5. OTHER INFORMATION

      Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

      (A)   EXHIBITS

            None.

      (B)   REPORTS ON FORM 8-K

            On February 8, 2001, the Company filed a Current Report Form 8-K
under Item 5 reporting that the Company sold warrants it held to purchase 3.5
million shares of Noetix Corporation common stock. Noetix, a leading provider of
data access management solutions, repurchased the warrants from the Company for
$2.5 million in cash. The Company retains two million shares of Noetix common
stock following a two-for-one stock split in February 2001. The Company did not
file financial statements with that Current Report on Form 8-K.


                                    Page 15
<PAGE>

                                    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 thereunto duly authorized.

                                        Aris Corporation

      Dated this 11th day of
      May 2001.                         By: /s/ Fred Schapelhouman
                                            ------------------------------------
                                            Fred Schapelhouman
                                            Vice President, Finance;
                                            Chief Financial Officer
                                            (Principal Financial and Accounting
                                            Officer and Duly Authorized Officer)


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