<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                 ______________

                                   FORM 10-Q

             X     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
           -----     OF THE SECURITIES EXCHANGE ACT OF 1934  
                 For the Quarterly Period Ended March 31, 1999      
                                                                    
                   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 of          (I.R.S. Employer Identification Number)
incorporation or organization)             
 
       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
March 31, 1999 was 10,947,697.
<PAGE>
 
                               ARIS CORPORATION
                                   FORM 10-Q
 
<TABLE> 
<CAPTION> 
 
Index                                                                       Page
<S>                                                                         <C> 
PART I.  FINANCIAL INFORMATION

Item 1      Financial Statements
            a)  Condensed Consolidated Balance Sheets
                as of March 31, 1999 and December 31, 1998                    3
            
            b)  Condensed Consolidated Statements of
                Income for the Quarters Ended March 31,
                1999 and 1998.                                                4
            
            c)  Condensed Consolidated Statements of
                Cash Flows for the Quarters Ended March
                31, 1999 and 1998                                             5
            
            d)  Condensed Consolidated Statement of
                Changes in Shareholders' Equity as of
                March 31, 1999                                                6
            
            e)  Notes to Condensed Consolidated
                Financial Statements                                        6-8
            
Item 2      Management's Discussion and Analysis of
            Financial Condition and Results of
            Operations                                                     8-15
            
Item 3      Qualitative and Quantitative Disclosures
            About Market Risk                                                15
 
PART II.  OTHER INFORMATION

Item 1      Legal Proceedings                                                15
Item 2      Changes in Securities                                            15
Item 3      Defaults Upon Senior Securities                                  16
Item 4      Submission of Matters to a Vote of                               16
            Security Holder
Item 5      Other Information                                                16
Item 6      Exhibits and Reports on Form 8-K                                 16

</TABLE>

                                    Page 2
<PAGE>
 
                                     PART I
                             FINANCIAL INFORMATION
 
 
Item 1.    Financial Statements

ARIS CORPORATION

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

<TABLE>
<CAPTION>
                                                                               March 31,    December 31,
                                                                                  1999          1998
                                                                              -----------   ------------
                                                                              (unaudited)   
<S>                                                                           <C>           <C>
Assets                                                                                      
Current assets:                                                                             
      Cash and cash equivalents                                                  $ 6,414      $ 5,225
      Investments in marketable securities                                         2,006        6,513
      Accounts receivable, net of allowance for                                               
        doubtful accounts of $1,197 and $1,263                                    26,766       26,734
      Other current assets                                                         5,301        4,083
                                                                                 -------      -------
               Total current assets                                               40,487       42,555
                                                                                              
Property and equipment, net                                                       15,713       16,075
Intanngible and other assets, net                                                 10,814       10,851
                                                                                 -------      -------
               Total assets                                                      $67,014      $69,481
                                                                                 =======      =======
                                                                                              
Liabilities and Shareholders' Equity                                                          
Current liabilities:                                                                          
      Accounts payable                                                           $ 2,477      $ 3,345
      Accrued liabilities                                                          8,134        8,177
      Deferred revenue                                                             2,336        2,333
                                                                                 -------      -------
               Total current liabilities                                          12,947       13,855
                                                                                 -------      -------
Deferred income taxes                                                                296          312
                                                                                 -------      -------
Commitments and contingencies                                                                 
Shareholders' equity:                                                                         
      Preferred stock, 5,000,000 shares authorized, none issued and                           
        outstanding                                                                           
     Common stock, no par value; 100,000,000 shares authorized                                
     Additional paid-in-capital                                                   44,426       47,347
     Retained earnings                                                             9,549        7,956
     Accumulated other comprehensive income                                         (204)          11
                                                                                 -------      -------
               Total shareholders' equity                                         53,771       55,314
                                                                                 -------      -------
               Total liabilities and shareholders' equity                        $67,014      $69,481
                                                                                 =======      =======
</TABLE>

                            See accompanying notes

                                    Page 3
<PAGE>
 
ARIS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for share and per share data)  (Unaudited)

<TABLE>
<CAPTION>
                                                                     For the Quarter Ended
                                                                --------------------------------
                                                                 March 31,            March 31,
                                                                    1999                1998
                                                                -----------          ----------
<S>                                                             <C>                  <C>
Revenue, net:                                                   
 Consulting.................................................    $    17,932          $    13,017
 Training...................................................          9,864                9,597
 Software...................................................          2,424                2,609
                                                                -----------          -----------
   Total revenue............................................         30,220               25,223
Cost of sales:                                                       14,845               11,511
                                                                -----------          -----------
   Gross profit.............................................         15,375               13,712
Selling, general and administrative.........................         12,790               10,262
Amortization of intangible assets...........................            178                  132
Charges related to acquisitions.............................                               1,257
                                                                -----------          -----------
   Income from operations...................................          2,407                2,061
Other income, net...........................................            166                  409
                                                                -----------          -----------
   Income before income tax.................................          2,573                2,470
Income tax expense..........................................            980                1,024
                                                                -----------          -----------
Net income..................................................    $     1,593          $     1,446
                                                                
Basic earnings per share....................................          $0.14                $0.13
                                                                
Weighted average number of common shares                         
   outstanding..............................................     11,227,000           11,035,000
                                                                
Diluted earnings per share..................................          $0.14                $0.12
Weighted average number of common and common equivalent          
 shares outstanding.........................................     11,750,000           11,900,000
                                                                ===========          ===========
</TABLE>
                                        
                            See accompanying notes

                                    Page 4
<PAGE>
 
ARIS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)     (Unaudited)
<TABLE>
<CAPTION>
                                                                         For the Quarter Ended
                                                                       -----------------------------
                                                                       March 31,           March 31,
                                                                         1999                1998
                                                                       ---------           ---------
<S>                                                                    <C>                 <C>
Net cash provided by (used in) operating activities.......              $   291             $  (903)
                                                                        -------             -------
Cash flows from investing activities:
Sales of investments in marketable securities.............                4,506               5,543
Purchases of property and equipment.......................                 (473)             (5,866)
                                                                        -------             -------
Net cash provided by (used in) investing activities.......                4,033                (323) 
                                                                        -------             -------
Cash flows from financing activities:
Repurchase of common stock................................               (3,073) 
Proceeds from exercise of stock options...................                  125                 278
Tax benefit of stock options exercised....................                   27                  43
                                                                        -------             -------
Net cash (used in) provided by financing activities.......               (2,921)                321
                                                                        -------             -------
Net increase (decrease) in cash...........................                1,403                (905)
Effect of exchange rate changes on cash and cash
     equivalents..........................................                 (214)                 14
Adjustment to conform fiscal year of Barefoot Computer
     Training Limited.....................................                                     (213)
Cash and cash equivalents at beginning of period..........                5,225               7,196
                                                                        -------             -------
Cash and cash equivalents at end of period................               $6,414              $6,092
                                                                        =======             =======
</TABLE>

                            See accompanying notes

                                    Page 5
<PAGE>
 
ARIS CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands, except for share data)  (Unaudited)

<TABLE>
<CAPTION>
                                                      Common Stock
                                                 ----------------------
                                                                                                      Accumulated    
                                                                            Additional                   Other          Total
                                                    Shares                   Paid-in      Retained    Comprehensive  Shareholders' 
                                                    Issued       Amount      Capital      Earnings      Income          Equity
                                                  --------------------------------------------------------------------------------
<S>                                               <C>            <C>        <C>           <C>         <C>            <C>
Balance at December 31, 1998                      11,269,000     $    -      $47,347        $7,956       $  11          $55,314
Stock options exercised                               35,000                     125                                        125
Stock redemption                                    (356,000)                 (3,073)                                    (3,073)
Tax benefit related to dispositions of stock                                      27                                         27
Comprehensive income:                                                                                                   
   Net income                                                                                1,593                      
   Other comprehensive income, net of tax:                                                                               
    Foreign currency translation adjustments                                                              (214)         
    Unrealized gains on securities, net of                                                                              
        reclassification adjustment                                                                         (1)         
          Comprehensive income                                                                                            1,378
                                                  ----------     ------      -------        ------       -----          -------
Balance at March 31, 1999                         10,948,000     $    -      $44,426        $9,549       $(204)         $53,771
                                                  ==========     ======      =======        ======       =====          =======
                                                                                
Disclosure of reclassification amount:
  Unrealized holding gain (loss) arising during the period                   $(1)
    Less:  reclassification adjustment for gains or losses
             included in net income                                           --
                                                                             ---
  Net unrealized gains (loss) on securities                                  $(1)
                                                                             ===
</TABLE>
                                                                                
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 which are necessary to state fairly the condensed consolidated
   balance sheets, and condensed consolidated statements of income, statements
   of cash flows and statement of changes in shareholders' equity 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 and that the adequacy
   of additional disclosure needed for a fair presentation, except in regard to
   material contingencies or recent significant events, may be determined in
   that context. Accordingly, footnote and other disclosures which would
   substantially duplicate the disclosures contained in the Company's Annual
   Report on Form 10-K filed on March 31, 1999, have been omitted.

2. On February 28, 1998, the Company completed its acquisition of Barefoot
   Computer Training Limited ("Barefoot), a company that provides information
   technology training services in London, England. The acquisition was
   accounted for as a pooling-of-interests, in which the Company issued 278,611
   shares of common stock in exchange for all of the outstanding share capital
   of Barefoot. Accordingly, all periods included in the financial information
   furnished hyerein have been restated to give effect to the acquisition.
   Barefoot had a November 30 fiscal year end and, in order to conform
   Barefoot's year end to ARIS's year end, Barefoot's

                                    Page 6
<PAGE>
 
   financial statements for the month of December 1997 are not included in the 
   statements of income or cash flows for the quarter ended March 31, 1998.

   On June 30, 1998, the Company completed a merger with InTime Systems
   International, Inc. ("InTime"), a Delaware corporation having its principal
   offices in West Palm Beach, Florida. InTime, now a division of the Company,
   provides information technology and human resource management systems
   consulting services focusing primarily on Oracle and PeopleSoft technologies.
   The acquisition was accounted for as a pooling-of-interests, in which the
   Company issued 786,710 shares of Common Stock in exchange for all of the
   outstanding shares of InTime common stock and warrants (the "Warrants") to
   purchase 718,997 shares of the Company's Common Stock in exchange for all of
   the outstanding warrants to purchase shares of InTime common stock.
   Accordingly, all periods included in the financial information furnished
   herein have been restated to give effect to the merger. A reconciliation of
   amounts of revenue and earnings for the quarter ended March 31, 1998,
   previously reported by ARIS to the combined amounts presented herein follows:

   <TABLE>
   <CAPTION>
   Quarter Ended                 ARIS as         Adjustment
   March 31, 1998:              reported          InTime         Combined
                               -----------       ----------      -----------
   <S>                         <C>               <C>              <C>
     Revenue                   $20,737,000       $4,486,000      $25,223,000
     Net income                $ 1,045,000       $  401,000      $ 1,446,000

   </TABLE>

   On April 30, 1998, ARIS, through ARIS (UK) Limited, a wholly-owned
   subsidiary, acquired all of the outstanding share capital of MMT Computer
   (Reading) Limited, an information technology consulting company located in
   Reading, England, in exchange for $2,499,000 cash ((Pounds)1,500,000). The
   acquisition was accounted for under the purchase method of accounting.
   Goodwill resulting from this acquisition is amortized over fifteen years.

   On August 10, 1998, ARIS, through ARIS Software, Inc., a wholly-owned
   subsidiary, acquired all of the assets of db-Centric, Inc., a decision
   support systems administrative software company focusing on distributed data
   warehouse management, in exchange for $1,000,000 cash. The acquisition was
   accounted for under the purchase method of accounting. Goodwill resulting
   from this acquisition is amortized over fifteen years.

3. Basic earnings per share is calculated as income available to common
   shareholders divided by the weighted average number of common shares
   outstanding during the periods. Diluted earnings per share is based on the
   weighted average number of shares of common stock and common stock
   equivalents outstanding during the periods, including options and warrants
   computed using the treasury stock method. All earnings per share amounts from
   prior periods have been restated to conform with the current period
   presentation.

   The difference between the weighted average number of common shares
   outstanding used to calculate basic earnings per share and the weighted
   average number of common and common equivalent shares outstanding used to
   calculate diluted earnings per share is the incremental shares attributed to
   outstanding options and warrants to purchase common stock computed using the
   treasury stock method:

<TABLE>
<CAPTION>
                                                                 For the Quarter Ended
                                                                        March 31,
                                                          -----------------------------------
                                                             1999                     1998
                                                          ----------               ----------
<S>                                                       <C>                      <C>
Weighted average number of common                         
      shares outstanding                                  11,227,000               11,035,000
                                                          ----------               ----------
Effect of dilutive securities:                            
      Warrants                                                    --                    4,000
      Options                                                523,000                  861,000
                                                          ----------               ----------
                                                             523,000                  865,000
                                                          ----------               ----------
Weighted average number of common                         
      and common equivalent shares outstanding            11,750,000               11,900,000
                                                          ==========               ==========
</TABLE>

                                    Page 7
<PAGE>
 
4. ARIS is engaged in three distinct businesses consisting of information
   technology consulting services, information technology training and software
   sales. Total revenue by segment represents sales to unaffiliated customers.
   Inter-segment sales have been eliminated. Operating profit represents total
   revenue less operating expenses.  Summarized financial information by
   business group for the quarters ended March 31 1998 and 1999 follows:

<TABLE>
<CAPTION>
                                       CONSULTING         TRAINING         SOFTWARE
                                         GROUP             GROUP             GROUP           CORPORATE           TOTAL
                                    ----------------  ----------------  ---------------  ------------------  -------------
<S>                                 <C>               <C>               <C>              <C>                 <C>
Quarter ended
 March 31, 1998:
 
  Revenue                                $13,017,000       $9,597,000        $2,609,000                        $25,223,000
 
  Operating profit                       $ 2,205,000       $ (613,000)       $1,602,000        $(1,133,000)    $ 2,061,000
 
Quarter ended
March 31, 1999:
 
  Revenue                                $17,932,000       $9,864,000        $2,424,000                        $30,220,000
 
  Operating profit                       $ 2,224,000       $ (569,000)       $  788,000        $   (36,000)    $ 2,407,000
</TABLE>

5. The Financial Accounting Standards Board ("FASB") issued Statement of
   Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
   Income," in June 1997.  This statement establishes new standards for
   reporting and displaying comprehensive income in the financial statements.
   In addition to net income, comprehensive income includes charges or credits
   to equity that are not the result of transactions with shareholders.  This
   statement is effective for fiscal years beginning after December 15, 1997.
   The Company has adopted SFAS No. 130.

   In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
   "Disclosures about Segments of an Enterprise and Related Information." SFAS
   No. 131 establishes new standards for reporting information about operating
   segments in interim and annual financial statements. This statement is
   effective for fiscal years beginning after December 15, 1997. The Company has
   adopted SFAS No. 131.

   In June 1998, FASB issued SFAS No.133, "Accounting for Derivative Instruments
   and Hedging Activities." SFAS 133 establishes accounting and reporting
   standards for derivative instruments for hedging activities. If adopted by
   the Company, the Company expects that SFAS 133 will have no material impact
   on its financial statements.

                                    Page 8
<PAGE>
 
Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations


     The Company's revenue is derived from the sale and delivery of its
consulting and training services and sales of licenses and maintenance and
support agreements for its software products. Consulting revenue is derived
primarily from fees billed to clients for consulting services.  Revenue from
contracts that are billed on a 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.  The Company
bills its 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 work in progress. Occasionally, the Company is requested to provide
hardware and software in conjunction with its consulting projects. In such
cases, the Company recognizes as revenue only the difference between its cost
and the resale price for the software and hardware.

     Training revenue is derived 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
is provided at client facilities, at ARIS' training centers, and over the
Internet or corporate intranets.  In its open enrollment classes, the Company
seeks to fill each available seat in each scheduled class. The Company
continuously monitors this fill rate and may cancel or reschedule classes that
are under-enrolled.

     The Company derives software revenue from the sale of its proprietary
software products, ARIS DFRAG, TAMS, TAMS/O, and the NoetixViews suite of
products, and from maintenance and support contracts with clients who purchase
the software products. Revenue is recognized when the software product has been
shipped, collection is probable and there are no significant obligations of the
Company remaining to be performed. Software maintenance and support is billed at
the beginning of the contract period and is recognized ratably throughout the
term of the contract.

     This commentary should be read in conjunction with the following documents
for a full understanding of the Company's financial condition and results of
operations:

     . The Company's Annual Report on Form 10-K for the year ended December 31,
       1998.

     . The Company's Quarterly Reports on Form 10-Q for the periods ended March
       31, 1998, June 30, 1998 and September 30, 1998.

     . The Registration Statement on Form S-4 filed May 5, 1998, as amended, in
       connection with the Company's merger with InTime Systems International,
       Inc. ("InTime"), including the Consolidated Financial Statements and
       Notes to

                                    Page 9
<PAGE>
 
       Consolidated Financial Statements.

     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," and other similar expressions, constitute
forward-looking statements.  These forward-looking statements are subject to
business and economic risks, and the Company's actual results of operations may
differ materially from those contained in the forward-looking statements.

     Recent Acquisitions and Restatement of Previously Issued Financial
Statements

     Effective February 28, 1998 the Company acquired all of the outstanding
stock of Barefoot Computer Training Limited ("Barefoot"), an IT training company
with operations in London, England, in exchange for 278,611 shares of the
Company's common stock.  The acquisition has been accounted for as a pooling-of-
interests of the Company and Barefoot. Accordingly, financial statements of the
Company have been restated to include the accounts of Barefoot for all periods
and for all comparable statistics presented.

     In April 1998, the ARIS (UK) Limited acquired all of the outstanding share
capital of MMT Computing (Reading) Limited ("MMT"), a consulting company focused
primarily on Lotus technologies, for (Pounds)1,500,000 cash ($2,499,000).  In
May 1998, the assets and operations of MMT were merged into ARIS (UK).

       In June 1998, InTime merged with and into ARIS (the "InTime Merger") in
exchange for 786,710 shares of ARIS Common Stock and warrants to purchase
718,997 shares of ARIS Common Stock. InTime provided systems integration
services and software products relating to the selection, implementation and use
of human resources, payroll and selected software systems. The transaction was
accounted for as a pooling-of-interests.  Accordingly, financial statements of
the Company have been restated to include the accounts of InTime for all periods
and for all comparable statistics presented.

       In August 1998, ASI acquired substantially all of the assets of db-
Centric, Inc. ("db-Centric"), a software development company located in San
Francisco, California, in exchange for $1,000,000 cash.  db-Centric's primary
business involved the development of a distributed data warehouse query and
resource management system.

FIRST QUARTER 1999 COMPARED TO FIRST QUARTER 1998


     Total Revenue

     Total revenues increased $4,997,000 to $30,220,000 for the quarter ended
March 31, 1999 from $25,223,000 for the quarter ended March 31, 1998,
representing a 20% increase. The increase in total revenue is a result of an
increase in revenue for the training and consulting divisions over the
comparison period, which offset a slight decrease in revenue in the software
division.

                                    Page 10
<PAGE>
 
     Consulting Revenue

     Consulting revenues increased $4,915,000 to $17,932,000 for the quarter
ended March 31, 1999 from $13,017,000 for the quarter ended March 31, 1998
representing a 38% increase.  Consulting revenue increased as a result of an
overall increase in the level of consulting activity.  The Company employed or
contracted for the services of an average of 387 full-time consultants and
project managers during the quarter ended March 31, 1999 compared to 261 during
the same quarter in 1998.

     Training Revenue

     Training revenue increased $267,000 to $9,864,000 for the quarter ended
March 31, 1999 from $9,597,000 for the quarter ended March 31, 1998,
representing a 3% increase. Revenues increased in the first quarter of 1999 as a
result of a significant increase in the number of classes and class training
days offered.  The Company offered 2,642 classes and 5,385 training days in the
quarter ended March 31, 1999 as compared to 1,698 classes and 4,767 training
days in the quarter ended March 31, 1998.

     Software Revenue

     Software revenue decreased $185,000 to $2,424,000 for the quarter ended
March 31, 1999 from $2,609,000 in the quarter ended March 31, 1998, representing
a decrease of 7%.  The decrease in revenue is primarily attributable to reduced
sales of the NoetixViews suite of products developed by the Company's software
subsidiary.

     Cost of Sales

     Cost of sales consists primarily of salaries and employee benefits for
consultants, project managers and instructors; subcontractor fees; non-
reimbursable travel expenses related to consulting and training activities and
the cost of production of software modules and amortization of capitalized
software costs.  Cost of sales increased $3,334,000 to $14,845,000 in the
quarter ended March 31, 1999 from $11,511,000 in the quarter ended March 31,
1998.  The increase in cost of sales is primarily a reflection of the increase
in sales.  Cost of sales as a percentage of sales increased from 46% for the
quarter ended March 31, 1998 to 49% for the quarter ended March 31, 1999.  This
increase is a result of the relative increase in the proportion of consulting
revenues and costs compared to training and software revenues. Relative to the
Company's training and software operation, consulting operations utilize a
higher proportion of professional labor and benefits, which are included in cost
of sales, and lower proportions of marketing, facilities and general office
administration costs which are included in SG&A expense.

     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; amortization of capitalized computer hardware and equipment
costs; software license fees, travel and business development costs.  SG&A
expense increased $2,528,000 to $12,790,000 for the 

                                    Page 11
<PAGE>
 
quarter ended March 31, 1999 from $10,262,000 for the quarter ended March 31,
1998 which represents an increase of 25%. Total SG&A expense as a percentage of
total revenue increased from 41% for the quarter ended March 31, 1998 to 42% for
the quarter ended March 31, 1999. The increase is primarily the result of the
Company's increased expenditures for sales staffing and increases in marketing
activities.

     During the quarter ended March 31, 1998, the Company incurred expenses
associated with the acquisition of Barefoot such as business brokerage, legal
and accounting fees and integration costs amounting to $1,257,000 or 5% of
revenue. There were no comparable costs in the period ended March 31, 1999.

     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
decreased from $409,000 for the quarter ended March 31, 1998 to $166,000 for the
quarter ended March 31, 1999.  The decrease is primarily attributable to a
decrease in the Company's investment yield on proceeds from the Company's
initial public offering completed on June 19, 1997.  Average invested proceeds
during the quarter ended March 31, 1999 were $9,280,000 compared to $20,285,000
during the quarter ended March 31, 1998.

     Income Tax Expense

     Income tax expense decreased from $1,024,000 in the quarter ended March 31,
1998 to $980,000 in the quarter ended March 31, 1999. As discussed above, the
Company incurred acquisition-related expenses in the quarter ended March 31,
1998 and did not incur any such expenses in the comparable period in 1999. A
significant portion of these acquisition-related expenses are not deductible in
the determination of taxable income and accordingly, the resultant tax expense
of the quarter ended March 31, 1998 is higher.  The effective tax rate in the
quarter ended March 31, 1998 was 41% compared to 38% in the quarter ended March
31, 1999.

     Net Income

     Net income increased $147,000 to $1,593,000 for the quarter ended March 31,
1999, from $1,446,000 for the quarter ended March 31, 1998. Net income as a
percentage of sales decreased from 6% to 5%, primarily as a result of the
decrease in the Company's gross profit from 54% of revenue in the quarter ended
March 31, 1998 to 51% of revenue in the quarter ended March 31, 1999 as a result
of the increase in Cost of Sales and the increase in SG&A Expense, discussed
above.

LIQUIDITY AND CAPITAL RESOURCES

     On January 11, 1999, the Company's Board of Directors authorized the
repurchase of up to 500,000 shares of the Company's common stock for the purpose
of making additional shares available to the Company's 1997 Stock Option Plan
and its Employee Stock Purchase Plan. During the quarter 355,600 shares were
purchased for $3,073,000 at an average purchase price of $8.64 per share. On
April 15, 1999, the Board of Directors formally terminated any further purchases
of the Company's common stock pursuant to the January 1999 share repurchase
authorization.

                                    Page 12
<PAGE>
 
     The Company's cash increased $1,189,000 in the quarter ended March 31, 1999
compared to a reduction of cash of  $1,104,000 in the quarter ended March 31,
1998.  In addition to $291,000 provided by operations in the period ended March
31, 1999, the Company sold investments in marketable securities amounting to
$4,506,000 primarily to repurchase 355,600 shares of its common stock at an
aggregate purchase price of  $3,073,000 and to purchase $473,000 of property and
equipment.  In the quarter ended March 31, 1998, the Company expensed $1,257,000
pursuant to its merger with Barefoot, resulting in $903,000 of cash used in its
operating activities.  Additionally, the Company sold $5,543,000 of investments
primarily to pay for the construction of its headquarters in Bellevue,
Washington.

     The Company anticipates that capital expenditures related to expected
expansion will continue in the coming year and will continue to be financed by
operational cash flows generated as well as utilization of invested funds, if
needed.  Management anticipates that in 1999 cash and marketable securities will
be employed for general corporate purposes including the opening of new offices,
potential acquisitions of companies and other business opportunities that may
arise.

     At March 31, 1998, the Company had accounts receivable of $26,766,000 and
80 days sales outstanding.  At March 31, 1998, accounts receivable were
$19,301,000 and 97 days sales outstanding.  The substantial improvement of days
sales outstanding results from improved collection and account maintenance
procedures.

     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 secured 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. The credit line expires on June 1, 2000.  Management anticipates that
the credit line will be renewed in an amount suitable to meet its requirements
upon expiration of the existing agreement.

EFFECT OF YEAR 2000 (Y2K) ISSUE AND Y2K READINESS DISCLOSURE

     The following disclosure shall be considered Y2K Readiness Disclosure to
the maximum extent allowed under the Year 2000 Information and Readiness
Disclosure Act. The Company has developed a phased Y2K readiness plan to help it
identify and resolve Y2K issues associated with the Company's internal systems
and the services it provides.  The plan includes development of corporate
awareness, assessment, implementation, validation testing and contingency
planning.

     The Y2K issue is the result of computer programs being written using two
digits rather than four to define the applicable year.  Any of the Company's
computer programs or products that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000.  Even if ARIS'
systems are fully Y2K compliant, if any of its material suppliers or vendors are
not fully Y2K compliant, it is possible that a system failure or miscalculations
could cause disruptions to the Company's operations or potential problems with
its product and service 

                                    Page 13
<PAGE>
 
offerings.

     The Company's consulting engagements often involve the implementation of
software applications that replace legacy systems of the client that are not Y2K
compliant. In the event that the Company is not able for any reason to meet its
contractual obligations with a client, the Company could be found liable for
damages as a result of that client's Y2K exposure.  Such damages could include
costs associated with re-mediating the client's legacy systems to make them Y2K
compliant, and any other direct, indirect, consequential or incidental damages.
Although assessment and testing is ongoing, the Company believes that its
software products, ARIS DFRAG, TAMS, and the NoetixViews suite of products are
Y2K compliant. The Company endeavors to negotiate appropriate limitations of
liability and disclaimers regarding its Y2K and other liability in its
agreements with clients. Although the Company does not carry any endorsement or
policy specifically written for Y2K liability, the Company believes that its
insurance includes adequate coverage for damages that may result from any Y2K
related claim. However, there can be no guarantee that the Company will not be
found liable for Y2K-related damages as a result of services performed by the
Company on behalf of that client.

     The Company has begun its assessment of its IT and non-IT systems, material
client and other third party relationships, and service and product offerings to
determine whether the Company faces any business or financial risk from the Y2K
issue.  The Company's reliance on key suppliers, and therefore on the proper
function of their IT and non-IT systems, means that their failure to address Y2K
issues could have a material impact on the Company's operations and financial
results.  Through its assessment, the Company has begun to identify areas where
the Company faces any business or financial risk, identify potential solutions
to address those risks, and to implement the solutions or develop a
comprehensive contingency plan in a timely manner in an effort to minimize the
Company's Y2K exposure. In addition to the Company's internal systems, the
Company relies on third party relationships in the conduct of its business. For
example, the Company relies on the services of the landlords of its facilities,
telecommunication companies, banks, utilities, and commercial airlines. The
Company intends to devise contingency plans to ameliorate the negative effects
on it in the event the Y2K issue results in the unavailability of services.
There can be no assurance that any contingency plans developed by the Company
will prevent any such service interruption on the part of one or more of the
Company's third party vendors or suppliers from having a material adverse effect
on the Company's business, results of operations or financial condition. In
addition, the failure on the part of the accounting systems of the Company's
clients due to Y2K issues could result in a delay in the payment of invoices
issued by the Company for services and expenses. A failure of the accounting
systems of a significant number of the Company's clients would have a material
adverse effect on the Company's business, results of operations and financial
condition.  The Company has completed its risk assessment of its IT systems and
will complete its assessment of its other Y2K business and financial risks by
the end of the second quarter of 1999, including an assessment of the Y2K
exposure and readiness of material suppliers and vendors with whom the Company
does business.  The Company has completed its upgrade to a Y2K compliant version
of both its internal accounting software and its proprietary time and billing,
class registration and operational software, ACETS.  If further tests of the
Company's IT and non-IT systems, material third party relationships, and service
and product offerings reveal other Y2K compliance problems, or any of the
Company's material third party suppliers or vendors do not successfully 

                                    Page 14
<PAGE>
 
and in a timely manner achieve Y2K compliance, the Company's business or
operations could be adversely affected.

     The foregoing discussion of the Company's Y2K readiness contains forward-
looking statements including estimates of the timeframes and costs for
addressing the known Y2K issues confronting the Company and is based on
management's current estimates, which were derived using numerous assumptions.
There can be no assurance that these estimates will be achieved and actual
events and results could differ materially from those anticipated. Specific
factors that might cause such material differences include, but are not limited
to, the ability of the Company to identify and correct all Y2K problems and the
success of third parties with whom the Company does business in addressing their
Y2K issues.

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET
         RISK

     The primary market risks to ARIS are the effects of changes in foreign
currency exchange rates.  Income from ARIS' foreign operations is frequently
denominated in foreign currencies, thereby creating exposures to changes 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 immaterial relative to other factors
that also affect earnings, such as sales and operating margins.


                                    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, 1999, the Company was not involved
in any material legal proceedings.

Item 2.  Changes in Securities

     In connection with the Company's initial public offering (the "Offering")
of its common stock, without par value (the "Common Stock"), the Company filed a
Registration Statement on Form S-1 on April 18, 1997 (Registration No. 333-
25409), as amended (the "Registration Statement"), pursuant to which the Company
registered 2,320,800 shares of its Common Stock, of which 2,300,000 shares were
sold by the Company, and the remaining 20,800 shares were sold by certain
selling shareholders.  The Registration Statement was declared effective by the
Securities and Exchange Commission on June 17, 1997.  Deutsche Morgan Grenfell
was the managing underwriter of the Offering.  The Offering commenced on June
18, 1997, and terminated following the sale of all of the securities registered
under the Registration Statement.  The Common Stock was offered, and sold, to
the public at $15.00 per share, for aggregate 

                                    Page 15
<PAGE>
 
consideration of $34,812,000, of which the Company received gross proceeds of
$32,085,000, the selling shareholders received gross proceeds of $290,160, and
the remaining $2,436,840 was allocated as the underwriting discount.

     From the effective date of the Registration Statement through March 31,
1999, the Company has incurred an estimated $3,255,000 in expenses for the
Company's account in connection with the issuance and distribution of the Common
Stock, including underwriting discounts and commissions ($2,415,000) and other
expenses ($840,000).  No finders' fees or expenses were paid to or for the
underwriters.  The Company believes that none of these payments were made,
directly or indirectly, to: (i) directors or officers of the Company, or their
associates; (ii) persons owning ten percent or more of any class of equity
securities of the Company; or (iii) affiliates of the Company.

     From the effective date of the Registration Statement through March 31,
1999, the Company has applied $4,000,000 of the proceeds from its initial public
offering (the "Offering") to the repayment of the Company's revolving bank loan,
$5,376,000 in connection with the acquisition of other companies, and
$14,338,000 to capital expenditures.  The Company believes that none of these
payments were made, directly or indirectly, to: (i) directors or officers of the
Company, or their associates; (ii) persons owning ten percent or more of any
class of equity securities of the Company; or (iii) affiliates of the Company.
To date, the Company believes that its has used the Offering proceeds in a
manner consistent with the use of proceeds described in the Registration
Statement.  As of March 31, 1999, the remaining $7,528,000 of the Offering
proceeds were invested in short term marketable securities.

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

          See Exhibit Table on page 18.

     (B)  REPORTS ON FORM 8-K

          None

                                    Page 16
<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.

Dated this 14th day of                 ARIS Corporation
May 1999.
 
 
                                       By: /s/ Thomas W. Averill
                                           -----------------------------------
                                           Thomas W. Averill
                                           Vice President, Finance;
                                           Chief Financial Officer
                                           (Principal Financial and Accounting
                                           Officer and Duly Authorized Officer)

                                    Page 17
<PAGE>
 
                                   EXHIBITS
                                        
                                        
<TABLE>
<CAPTION>
Page    Exhibit Number     Exhibit Name
----    ---------------    ------------
<S>     <C>                <C>
              27.1         Financial Data Schedule

</TABLE>

                                    Page 18