<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 SEPTEMBER 30, 1998
 
                                       OR
 
[_] 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)
 
<TABLE>
<S>                                            <C>
                 WASHINGTON                                      91-1497147
        (STATE OR OTHER JURISDICTION                          (I.R.S. EMPLOYER
      OF INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)
</TABLE>
 
             2229 112TH AVENUE NE, BELLEVUE, WASHINGTON 98004-2936
                   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
 
                                (425) 372-2747
             (REGISTRANT'S TELEPHONE NUMBER, 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 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
September 30, 1998 was 11,166,719.
 
================================================================================
<PAGE>
 
                                ARIS CORPORATION
 
                                   FORM 10-Q
 
<TABLE>
<CAPTION>
INDEX                                                                             PAGE
<S>       <C>                                                                     <C>
PART I.   FINANCIAL INFORMATION
Item 1    Financial Statements
          a) Condensed Consolidated Balance Sheets as of September 30, 1998 and
             December 31, 1997                                                       3
          b) Condensed Consolidated Statements of Income for the Quarter and
             Nine Months Ended September 30, 1998 and 1997                           4
          c) Condensed Consolidated Statements of Cash Flows for the Quarter and
             Nine Months Ended September 30, 1998 and 1997                           5
          d) Condensed Consolidated Statement of Changes in Shareholders' Equity
             for the Nine Months Ended September 30, 1998                            6
          e) Notes to Condensed Consolidated Financial Statements                  7-8
Item 2    Management's Discussion and Analysis of Financial Condition and
           Results of Operations                                                  9-15
Item 3    Qualitative And Quantitative Disclosures About Market Risk                15
PART II.  OTHER INFORMATION
Item 1    Legal Proceedings                                                         16
Item 2    Changes in Securities                                                     16
Item 3    Defaults Upon Senior Securities                                           16
Item 4    Submission of Matters to a Vote of Security Holders                       16
Item 5    Other Information                                                         16
Item 6    Exhibits and Reports on Form 8-K                                          17
</TABLE>
 
 
                                       2
<PAGE>
 
                                     PART I
 
                             FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
                                ARIS CORPORATION
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT FOR SHARE DATA)
 
<TABLE>
<CAPTION>
                                                     SEPTEMBER 30, DECEMBER 31,
                                                         1998          1997
                                                      (UNAUDITED)
<S>                                                  <C>           <C>
                       ASSETS
                       ------
Current assets:
  Cash and Cash equivalents                             $ 5,653      $11,395
  Investments in marketable securities                    5,513       15,464
  Accounts receivable, net of allowance for doubtful
   accounts
   of $947 and $698                                      28,624       15,314
  Other current assets                                    3,406        2,970
                                                        -------      -------
    Total current assets                                 43,196       45,143
Property and equipment, net                              16,415        7,156
Intangible and other assets, net                         10,392        8,252
                                                        -------      -------
    Total assets                                        $70,003      $60,551
                                                        =======      =======
        LIABILITIES AND SHAREHOLDERS' EQUITY
        ------------------------------------
Current liabilities:
  Accounts payable                                      $ 3,310      $ 3,270
  Accrued liabilities                                     6,494        3,164
  Other current liabilities                               4,640        3,050
                                                        -------      -------
    Total current liabilities                            14,444        9,484
                                                        -------      -------
Deferred income taxes                                       238          585
                                                        -------      -------
Commitments and contingencies
Shareholder's 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                             45,953       43,749
  Retained earnings                                       9,359        6,769
  Accumulated other comprehensive income                      9          (36)
                                                        -------      -------
    Total shareholders' equity                           55,321       50,482
                                                        -------      -------
    Total liabilities and shareholders' equity          $70,003      $60,551
                                                        =======      =======
</TABLE>
 
 
                             See accompanying notes
 
                                       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     FOR THE NINE MONTHS ENDED
                          --------------------------- ---------------------------
                          SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
                              1998          1997          1998          1997
<S>                       <C>           <C>           <C>           <C>
Revenue, net:
  Consulting               $   17,730    $   11,269    $   46,591    $   31,285
  Training                     10,765         7,207        30,620        19,372
  Software                      2,993         1,370         8,672         3,185
                           ----------    ----------    ----------    ----------
  Total revenue                31,488        19,846        85,883        53,842
Cost of sales                  14,506         9,659        39,296        26,538
                           ----------    ----------    ----------    ----------
  Gross profit                 16,982        10,187        46,587        27,304
Selling, general and
 administrative                13,077         8,219        41,473        21,255
                           ----------    ----------    ----------    ----------
  Income from operations        3,905         1,968         5,114         6,049
Other income, net                 206           477           896           733
                           ----------    ----------    ----------    ----------
  Income before income
   tax                          4,111         2,445         6,010         6,782
Income tax expense              1,654           959         3,207         2,519
                           ----------    ----------    ----------    ----------
  Net income               $    2,457    $    1,486    $    2,803    $    4,263
                           ==========    ==========    ==========    ==========
Basic earnings per share   $      .22    $      .14    $      .25    $      .45
                           ==========    ==========    ==========    ==========
Weighted average number
 of common shares
 outstanding               11,125,000    10,826,000    11,083,000     9,416,000
                           ==========    ==========    ==========    ==========
Diluted earnings per
 share                     $      .21    $      .13    $      .23    $      .42
                           ==========    ==========    ==========    ==========
Weighted average number
 of common and common
 equivalent shares
 outstanding               11,928,000    11,741,000    12,022,000    10,139,000
                           ==========    ==========    ==========    ==========
</TABLE>
 
 
 
                             See accompanying notes
 
                                       4
<PAGE>
 
                                ARIS CORPORATION
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                   FOR THE NINE MONTHS ENDED
                                                  ---------------------------
                                                  SEPTEMBER 30, SEPTEMBER 30,
                                                      1998          1997
<S>                                               <C>           <C>
Net cash (used in) provided by operating
 activities                                          $(2,133)      $ 3,613
                                                     -------       -------
Cash flows from investing activities:
  Sales of investments in marketable securities       15,625         1,171
  Purchases of investments                            (5,603)      (27,491)
  Acquisition of businesses, net of cash acquired     (3,498)          (93)
  Purchases of property and equipment                (11,137)       (1,668)
                                                     -------       -------
    Net cash (used in) investing activities           (4,613)      (28,081)
                                                     -------       -------
Cash flows from financing activities:
  Proceeds from initial public offering, net of
   offering costs                                                   31,246
  Repurchase of common stock                                        (4,026)
  Payments on notes payable                                        (10,195)
  Proceeds from long-term debt                                       8,575
  Proceeds from issuance of common stock                 668
  Proceeds from exercise of stock options                455            58
  Tax benefit of stock options exercised                 121
                                                     -------       -------
    Net cash provided by financing activities          1,244        25,658
                                                     -------       -------
Net (decrease) increase in cash                       (5,502)        1,190
Effect of exchange rate changes on cash and cash
 equivalents                                             (27)            7
Adjustment to conform fiscal year of Barefoot
 Computer Training Limited                             (213)
Cash and cash equivalents at beginning of period      11,395         2,120
                                                     -------       -------
Cash and cash equivalents at end of period           $ 5,653       $ 3,317
                                                     =======       =======
</TABLE>
 
 
 
                             See accompanying notes
 
                                       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,
 1997                     10,987,171  $ --   $43,749    $6,769      $(36)        $50,482
Adjustment to conform
 fiscal year of Barefoot
 Computer Training
  Limited                                                 (213)                     (213)
Shares issued                 42,609             818                                 818
Stock options exercised      136,939           1,386                               1,386
Comprehensive income:
 Net income                                              2,803
 Other comprehensive
  income, net of tax:
   Foreign currency
    translation
    adjustments                                                      (19)
   Unrealized gains on
    securities, net of
    reclassification
    adjustment                                                        64
     Comprehensive income                                                          2,848
                          ----------  ----   -------    ------      ----         -------
Balance at September 30,
 1998                     11,166,719  $ --   $45,953    $9,359      $  9         $55,321
                          ==========  ====   =======    ======      ====         =======
</TABLE>
 
<TABLE>
<S>                                    <C>
Disclosure of reclassification
 amount:
 Unrealized holding gain arising
  during the period                    $60
 Less: reclassification adjustment
  for losses
  included in net income                 4
                                       ---
 Net unrealized gains on securities    $64
                                       ===
</TABLE>
 
                                       6
<PAGE>
 
                               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 sheet, 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, footnotes and other disclosures
   which would substantially duplicate the disclosures contained in the
   Company's Annual Report on Form 10-K filed on March 31, 1998, have been
   omitted. Additionally, footnotes and other disclosures which would
   substantially duplicate the disclosures contained in the Company's
   Registration Statement on Form S-4 filed on May 5, 1998, as amended, have
   been omitted.
 
2. On February 28, 1998, the Company completed a merger with 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 its
   common stock (the "Common Stock") in exchange for all of the outstanding
   shares of Barefoot capital stock. Accordingly, all periods included in the
   financial information furnished herein have been restated to give effect to
   the merger. Barefoot's assets were subsequently transferred by the Company
   to its wholly-owned United Kingdom subsidiary, ARIS UK Limited (formerly
   Oxford Computer Group Limited). Barefoot had a November 30 year end and,
   accordingly, the Barefoot balance sheet at November 30, 1997, has been
   combined with the balance sheet of ARIS at December 31, 1997; Barefoot's
   statements of income for the quarter and nine months ended August 31, 1997,
   have been combined with the ARIS statements of income for the quarter and
   nine months ended September 30, 1997; and Barefoot's statement of cash
   flows for the nine months ended August 31, 1997, has been combined with the
   ARIS statement of cash flows for the nine months ended September 30, 1997.
   In order to conform Barefoot's year end to ARIS' year end, Barefoot's
   financial statements for the month of December are not included in the
   statements of income or cash flows for the quarter and nine months ended
   September 30, 1998.
 
3. 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 761,656 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 and
  nine months ended September 30, 1997, previously reported by ARIS to the
  combined amounts presented herein follows:
 
<TABLE>
<CAPTION>
                           AS REPORTED ADJUSTMENT ADJUSTMENT
                              ARIS      BAREFOOT    INTIME      COMBINED
     <S>                   <C>         <C>        <C>          <C>
     For the three months
      ended September 30,
      1997:
      Revenue              $14,582,000 $1,679,000 $ 3,585,000  $19,846,000
      Net income           $ 1,588,000     13,000 $  (115,000) $ 1,486,000
     For the nine months
      ended September 30,
      1997:
      Revenue              $38,498,000 $5,229,000 $10,115,000  $53,842,000
      Net income           $ 3,935,000 $  361,000 $   (33,000) $ 4,263,000
</TABLE>
 
                                       7
<PAGE>
 
                               ARIS CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
 
4. Basic earnings per share is calculated as income available to common
   shareholders divided by the weighted average number of shares of Common
   Stock 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 shares of Common Stock
   outstanding used to calculate basic earnings per share and the weighted
   average number of shares of Common Stock and Common Stock equivalents
   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  FOR THE NINE MONTHS
                                        SEPTEMBER 30,      ENDED SEPTEMBER 30,
                                    --------------------- ---------------------
                                       1998       1997       1998       1997
     <S>                            <C>        <C>        <C>        <C>
     Weighted average number of
      common shares outstanding     11,125,000 10,826,000 11,083,000  9,416,000
     Effect of dilutive
      securities:
      Warrants                          79,000      4,000     90,000      4,000
      Options                          724,000    911,000    849,000    719,000
                                    ---------- ---------- ---------- ----------
                                       803,000    915,000    939,000    723,000
                                    ---------- ---------- ---------- ----------
     Weighted average number of
      common and common equivalent
      shares outstanding            11,928,000 11,741,000 12,022,000 10,139,000
                                    ========== ========== ========== ==========
</TABLE>
 
5. On April 30, 1998, the Company, through ARIS UK Limited, acquired all the
   outstanding stock of MMT Computer (Reading) Limited ("MMT"), an information
   technology consulting company located in Reading, England, in exchange for
   $2,499,000 cash. The acquisition was accounted for under the purchase
   method of accounting.
 
6. On August 10, 1998, the Company, through ARIS Software, Inc. ("ASI"), a
   wholly-owned subsidiary, acquired all of the assets of dbcentric, Inc., a
   decision support systems administrative software company focusing on
   distributed data warehouse management ("dbcentric"), in exchange for
   $1,000,000 cash. The acquisition was accounted for under the purchase
   method of accounting.
 
7. The Financial Accounting Standards Board issued SFAS No. 130, "Reporting
   Comprehensive Income," in June 1997. The 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 this
   standard as of March 31, 1998.
 
                                       8
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS
 
OVERVIEW
 
  ARIS provides an integrated information technology ("IT") solution
consisting of consulting and training services primarily focused on Oracle,
Microsoft, PeopleSoft and Lotus technologies. ARIS currently focuses on three
core consulting competencies: packaged application implementation, custom
application development and systems architecture planning and deployment. With
the completion of its merger with InTime Systems International, Inc., a
Delaware corporation having its principal offices in West Palm Beach, Florida
("InTime") on June 30, 1998 (the "InTime Merger"), the Company has broadened
its service offering to include a specialization in human resource management
systems ("HRMS") consulting services, focusing primarily on Oracle and
PeopleSoft technologies. The Company offers instructor-led training for IT
professionals conducted at ARIS' training centers and at client facilities and
offers interactive on-line training on the Internet. The Company also
develops, markets and supports proprietary software products that enhance
Oracle database management and Oracle packaged applications. The Company's
software products are marketed under the names NoetixViews and ARIS DFRAG and
as a result of the InTime Merger, the Company has increased its software
offering to include additional proprietary software products, TAMS and TAMS/O,
which are complementary to InTime's HRMS focus. The Company believes that its
ability to provide clients with an integrated IT solution, coupled with its
focus on leading-edge technologies, provide it with a unique competitive
advantage.
 
  This commentary should be read in conjunction with the sections of 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, 1997; the Company's Quarterly Reports on Form
10-Q for the periods ended March 31, 1998 and June 30, 1998; and the
Registration Statement on Form S-4 filed May 5, 1998, as amended, in
connection with the InTime Merger, including the Consolidated Financial
Statements and Notes to Consolidated Financial Statements, pages F-1 to F-37.
 
  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.
 
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997
 
 Recent Acquisitions and Restatement of Previously Issued Financial Statements
 
  In August 1998, Oxford Computer Group Limited ("OCG"), the Company's wholly-
owned United Kingdom subsidiary changed its name to ARIS UK Limited ("ARIS
UK").
 
  On February 28, 1998, the Company completed a merger with 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 its Common
Stock in exchange for all of the outstanding shares of Barefoot's capital
stock. Accordingly, all periods included in the financial information
furnished herein have been restated to give effect to the merger. On April 30,
1998, the Company transferred all of the assets of Barefoot to ARIS UK.
 
  Barefoot had a November 30 year end and, accordingly, the Barefoot balance
sheet at November 30, 1997, has been combined with the balance sheet of ARIS
at December 31, 1997; Barefoot's statements of income for the quarter and nine
months ended August 31, 1997, have been combined with the ARIS statements of
income for the quarter and nine months ended September 30, 1997; and
Barefoot's statement of cash flows for the nine months ended August 31, 1997,
has been combined with the ARIS statement of cash flows for the nine months
 
                                       9
<PAGE>
 
ended September 30, 1997. In order to conform Barefoot's year end to ARIS'
year end, Barefoot's financial statements for the month of December are not
included in the statements of income or cash flows for the quarter and nine
months ended September 30, 1998.
 
  On June 30, 1998, the Company completed the InTime Merger. The InTime Merger
was accounted for as a pooling-of-interests, in which the Company issued
786,710 shares of its Common Stock in exchange for all of the outstanding
shares of InTime common stock and Warrants to purchase 761,656 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 InTime Merger.
 
  On April 30, 1998, the Company, through ARIS UK, acquired all the
outstanding stock of MMT Computer (Reading) Limited ("MMT"), an information
technology consulting company, in exchange for $2,499,000 cash. The
acquisition was accounted for under the purchase method of accounting. MMT
conducts consulting projects focusing primarily on Lotus technologies in the
United Kingdom.
 
  On August 10, 1998, the Company, through ARIS Software, Inc. ("ASI"), a
wholly-owned subsidiary, acquired all of the assets of dbcentric, Inc., a
decision support systems administrative software company focusing on
distributed data warehouse management ("dbcentric"), in exchange for
$1,000,000 cash. The acquisition was accounted for under the purchase method
of accounting.
 
 Total Revenue
 
  Total revenue increased $11,642,000 to $31,488,000 for the quarter ended
September 30, 1998 from $19,846,000 for the quarter ended September 30, 1997,
representing a 59% increase. During the calendar year 1997 and through
September 30, 1998, the Company has merged with or acquired the following
companies: ARIS UK Limited on February 28, 1997; Enterprise Computing, Inc.
d/b/a Buller Owens & Associates ("Buller Owens") on October 1, 1997; Agiliti,
Inc. ("Agiliti") and Absolute! Inc. ("Absolute!") on November 3, 1997;
Barefoot on February 28, 1998; MMT on April 30, 1998; InTime on June 30, 1998
and dbcentric on August 10, 1998.
 
 Consulting Revenue
 
  Consulting revenue increased $6,461,000 to $17,730,000 for the quarter ended
September 30, 1998 from $11,269,000 for the quarter ended September 30, 1997,
representing a 57% increase. Consulting revenue increased as a result of an
overall increase in the level of consulting activity as well as the
acquisition of MMT. Management estimates that MMT contributed $1.2 million in
consulting revenue during the quarter ended September 30, 1998. The Company
employed or contracted for the services of 375 full-time consultants and
project managers at September 30, 1998 compared to 240 at September 30, 1997.
 
 Training Revenue
 
  Training revenue increased $3,558,000 to $10,765,000 for the quarter ended
September 30, 1998 from $7,207,000 for the quarter ended September 30, 1997,
representing a 49% increase. A significant portion of the increase in training
revenue for the third quarter of 1998 is attributable to the acquisitions of
Buller Owens, Absolute! and Agiliti. On a pro forma basis (assuming these
acquired companies had been owned throughout the comparison periods), total
revenue increased approximately 29%. Revenue increased in the comparison
period as a result of a significant increase in the number of classes and
class training days offered. The Company offered 2,279 classes and 5,676
training days in the quarter ended September 30, 1998 as compared to 1,394
classes and 4,767 training days in the quarter ended September 30, 1997.
 
 Software Revenue
 
  Software revenue increased $1,623,000 to $2,993,000 for the quarter ended
September 30, 1998 from $1,370,000 in the quarter ended September 30, 1997,
representing an increase of 118%. The increase in revenue is primarily
attributable to increased sales of the NoetixViews suite of products by ASI.
 
 
                                      10
<PAGE>
 
 Cost of Sales
 
  Cost of sales consists primarily of salaries and employee benefits for
consultants, project managers and instructors; subcontractor fees; and non-
reimbursable travel expenses related to consulting and training activities, as
well as cost of production of software modules and amortization of capitalized
software costs. Cost of sales increased $4,847,000 to $14,506,000 in the
quarter ended September 30, 1998 from $9,659,000 in the quarter ended
September 30, 1997. The increase in cost of sales is primarily a reflection of
the increase in sales and the activities associated with such sales. Cost of
sales as a percentage of sales decreased from 49% for the quarter ended
September 30, 1997 to 46% for the quarter ended September 30, 1998. The
decrease is a result of a relative increase in sales of software products.
Software sales have a lower percentage of cost of sales compared to the
Company's consulting and training operations.
 
 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
as well as amortization of intangibles and non-recurring acquisition costs.
SG&A expense increased $4,858,000 to $13,077,000 for the quarter ended
September 30, 1998 from $8,219,000 for the quarter ended September 30, 1997,
representing an increase of 59%. The increase in SG&A expenses is primarily
the result of the Company's growth in sales. SG&A expenses include
amortization of intangibles amounting to $169,000 and $83,000 for the quarters
ended September 30, 1998 and 1997, respectively.
 
  SG&A expenses increased due to growth in the number of management, sales and
administrative staff from 216 at September 30, 1997 to 403 at September 30,
1998 and the Company's increased focus on recruiting, sales staffing and
marketing. SG&A expenses as a percentage of sales are 41.5% and 41.4% in the
quarters ended September 30, 1998 and September 30, 1997, respectively.
 
 Other Income, Net
 
  Other income, net, consists primarily of interest income on cash and cash
equivalents and partially from finance charges on accounts receivable. These
are offset by interest expense associated with short-term borrowings. Other
income, net, decreased $271,000 from $477,000 for the quarter ended September
30, 1997 to $206,000 for the quarter ended September 30, 1998. The reduction
in other income is primarily the result of a decrease in invested cash, cash
equivalents and marketable securities. Average invested proceeds during the
quarters ended September 30, 1998 and 1997 were $12,421,469 and $27,927,622,
respectively.
 
 Income Tax Expense
 
  Income tax expense increased $695,000 to $1,654,000 in the quarter ended
September 30, 1998 from $959,000 for the quarter ended September 30, 1997,
primarily as a result of the increase in the amount of income subject to tax.
As a percentage of revenue, income tax expense increased from 4.8% for the
quarter ended September 30, 1997 to 5.3% for the quarter ended September 30,
1998 and the effective tax rate on income before tax increased from 39.2% to
40.2%. The increase in taxes as a percentage of revenue and the increase in
the effective tax rate are as a result of the Company doing business in an
increasing number of states where the Company has become subject to state
income taxes.
 
 Net Income
 
  Net income increased $971,000 to $2,457,000 (7.8% of revenue) for the
quarter ended September 30, 1998 from net income of $1,486,000 (7.5% of
revenue) for the quarter ended September 30, 1997. The increase in net income
is primarily a result of the increase in sales and the decrease in the cost of
sales as a percentage of sales.
 
                                      11
<PAGE>
 
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997
 
 Total Revenue
 
  Total revenue increased $32,041,000 to $85,883,000 for the nine months ended
September 30, 1998 from $53,842,000 for the nine months ended September 30,
1997, representing a 60% increase. As discussed below, increases in revenue
were reflected in all three lines of business.
 
 Consulting Revenue
 
  Consulting revenue increased $15,306,000 to $46,591,000 for the nine months
ended September 30, 1998 from $31,285,000 for the nine months ended September
30, 1997, representing a 49% increase. Consulting revenue increased as a
result of an overall increase in the level of consulting activity as well as
the acquisition of MMT.
 
 Training Revenue
 
  Training revenue increased $11,248,000 to $30,620,000 for the nine months
ended September 30, 1998 from $19,372,000 for the nine months ended September
30, 1997, representing a 58% increase. A significant portion of the increase
in training revenue for the first nine months of 1998 is attributable to
businesses acquired by the Company subsequent to September 30, 1997. Revenue
increased in the comparison period as a result of a significant increase in
the number of classes and class training days offered. The Company offered
5,637 classes and 14,650 training days in the nine months ended September 30,
1998 as compared to 3,366 classes and 8,614 training days in the nine months
ended September 30, 1997.
 
 Software Revenue
 
  Software revenue increased $5,487,000 to $8,672,000 for the nine months
ended September 30, 1998 from $3,185,000 for the nine months ended September
30, 1997, representing an increase of 172%. The increase in revenue is
primarily attributable to sales of the NoetixViews suite of products by ASI.
 
 Cost of Sales
 
  Cost of sales increased $12,758,000 to $39,296,000 in the nine months ended
September 30, 1998 from $26,538,000 in the nine months ended September 30,
1997. The increase in cost of sales is primarily a reflection of the increase
in sales and the activities associated with such sales. Cost of sales as a
percentage of sales decreased from 49% for the nine months ended September 30,
1997 to 46% for the nine months ended September 30, 1998. The reduction in
cost of sales as a percentage of sales was caused by the relative increase in
sale of software products. Software sales have a lower percentage of costs of
sales compared to the Company's training and consulting operations.
 
 Selling, General and Administrative Expense
 
  SG&A expense increased $20,218,000 to $41,473,000 for the nine months ended
September 30, 1998 from $21,255,000 for the nine months ended September 30,
1997, representing an increase of 95%. The increase in SG&A expenses is
primarily the result of the Company's general growth in sales and the
inclusion of acquisition expenses. Included in SG&A expenses are costs
associated with acquisitions completed during the nine months ended September
30, 1998 amounting to $5,655,000 (6.6% of revenue) and $88,000 during the nine
months ended September 30, 1997. SG&A expense also includes amortization of
intangibles of $440,000 during the nine months ended September 30, 1998 and
$231,000 during the nine months ended September 30, 1997. Management believes
that the non-recurring costs expensed in the first nine months of 1998 should
be sufficient to provide for the cost of integration of Barefoot, InTime and
MMT without further material cost to the Company.
 
                                      12
<PAGE>
 
  Exclusive of costs associated with acquisitions and amortization of
intangibles, SG&A expenses increased from 39% of revenue for the nine months
ended September 30, 1997 to 41% of revenue for the nine months ended September
30, 1998 due to growth in the number of management, sales and administrative
staff from 216 at September 30, 1997 to 403 at September 30, 1998 and the
Company's increased focus on recruiting, sales staffing and marketing.
 
 Other Income, Net
 
  Other income, net, increased $163,000 from $733,000 for the nine months
ended September 30, 1997 to $896,000 for the nine months ended September 30,
1998. Other income, net, consists primarily of interest income on cash and
cash equivalents and partially from finance charges on accounts receivable.
These are offset by interest expense associated with short-term borrowings. In
the nine months ended September 30, 1997 other income, net, included
approximately $282,000 from the gain on sale of investments. Average invested
proceeds during the nine months ended September 30, 1998 and 1997 were
$15,800,893 and $11,755,000, respectively.
 
 Income Tax Expense
 
  Income tax expense increased $688,000 to $3,207,000 in the nine months ended
September 30, 1998 from $2,519,000 for the nine months ended September 30,
1997. As a percentage of revenue, income tax expense decreased from 4.7% in
the nine months ended September 30, 1997 to 3.7% in the nine months ended
September 30, 1998. There is no tax benefit at statutory rates for certain
acquisition-related expenses incurred during the nine months ended September
30, 1998. Management estimates that exclusive of the acquisition-related
charges, the Company's effective tax rate increased from 37.1% in the nine
months ended September 30, 1997 to 39.7% for the comparable period ended
September 30, 1998. The increase in the effective tax rate is primarily
attributable to an increase in state income taxes payable as a result of the
Company doing business in more states having state income taxes.
 
 Net Income
 
  Net income decreased $1,460,000 to $2,803,000 (3.3% of revenue) for the nine
months ended September 30, 1998 from net income of $4,263,000 (7.9% of
revenue) for the nine months ended September 30, 1997, primarily as a result
of acquisition-related expenses. Exclusive of acquisition-related expenses, a
one-time gain and related taxes, net income as a percentage of sales increased
from $4,147,000 and 7.7% of revenue to $7,030,000 and 8.2% of revenue for the
nine months ended September 30, 1997 and 1998 respectively. The cumulative
effect of acquisition costs net of related income taxes amounted to $4,227,000
or 4.9% of revenue for the nine months ended September 30, 1998.
 
 Liquidity and Capital Resources
 
  As of September 30, 1998 the Company had working capital of $28,752,000
including cash and cash equivalents and marketable debt securities of
$11,166,000. At December 31, 1997, the Company had working capital of
$35,659,000 including cash, cash equivalents and marketable debt securities of
$26,859,000. The Company intends to finance its working capital needs, as well
as purchases of additional property and equipment for its operations, from
cash generated by operations and available cash.
 
  Net cash in the amount of $5,502,000 was used in the nine month period ended
September 30, 1998. Included in this amount is $5.6 million used for
acquisition-related costs. The Company liquidated $15.6 million of its
investment in marketable securities to provide cash for its purchase of
property and equipment, including an office building used for its corporate
headquarters as well as cash related to the purchase of MMT and dbcentric.
During the nine months ended September 30, 1997, the Company increased its net
cash position by $1,190,000.
 
  Net cash of $2,133,000 was used by operations in the nine months ended
September 30, 1998. As a result of the Company's significant increase in
sales, cash utilization in the amount of $12,815,000 was attributed to
 
                                      13
<PAGE>
 
growth of accounts receivable. In the nine months ended September 30, 1997,
cash was provided by operating activities in the amount of $3,613,000. During
this period, cash utilization in the amount of $4,132,000 was attributed to
growth of accounts receivable.
 
  The Company's primary financing activity during the nine months ended
September 30, 1997 was the completion of its initial public offering which
provided cash proceeds of $31.2 million net of costs of the offering. In
February 1997, the Company utilized $4,026,000 cash to repurchase 415,000
shares of its common stock. The Company used $10,161,000 of the proceeds from
its initial public offering to repay the Company's line of credit with US
Bank, including $8,575,000 which had been borrowed during the nine months
ended September 30, 1997. As a result, financing activities provided cash of
$25,658,000 during the nine months ended September 30, 1997 and substantially
all of the proceeds from the public stock offering were invested in marketable
debt securities.
 
  The Company has financed its acquisitions of businesses through cash
generated by operating activities and its initial public offering, promissory
notes and the issuance of warrants and common stock. The Company believes that
it will be able to continue to fund all capital required to acquire new
businesses (if management determines to make further acquisitions) with cash
generated from operations, cash currently on hand and bank financing. 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 as
well as the acquisition of companies, 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. At September 30, 1998
there were no borrowings against the credit line. The credit line expires on
June 1, 2000. To continue its growth strategy, however, the Company may need
to issue additional debt or equity securities.
 
  Management anticipates that through the remainder of 1998, cash and
marketable securities will continue to be employed for general corporate
purposes including the potential opening of new offices, potential
acquisitions of companies and other business opportunities as they may arise.
The Company anticipates that capital expenditures related to these purposes
will continue to be financed by operational cash flows as well as utilization
of invested funds, if needed.
 
 Impact Of Year 2000
 
  The Year-2000 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.
Additionally, even if ARIS' systems are fully Year-2000 compliant, if any of
its material suppliers or vendors are not fully Year-2000 compliant, it is
possible that a system failure or miscalculations causing disruptions in the
Company's operations or potential problems with its product and service
offerings could result.
 
  The Company has begun an assessment of its IT and non-IT systems, material
third party relationships, and service and product offerings to determine
whether the Company faces any business or financial risk from the Year-2000
issue. 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 Year-2000 exposure. The Company has completed its risk assessment of
its IT systems and is still in the initial phase of assessing its other Year-
2000 business and financial risks, including development of a comprehensive
questionnaire designed to elicit responses from material suppliers and vendors
with whom the Company does business as to their Year-2000 exposure and
readiness. Based on the Company's initial assessment of its IT systems, the
Company has determined that its accounting system runs on a version of a
software product, MAS 90, which is not Year-2000 compliant. The Company
intends to upgrade to a new Year-2000 compliant version of MAS 90 prior to the
end of the first quarter of 1999 at a cost of approximately $50,000.
Additionally, although
 
                                      14
<PAGE>
 
the Oracle database on which the Company runs its proprietary time and
billing, class registration and operational software, ACETS, is Year-2000
compliant, ACETS is reliant upon an end-user software application, Oracle
Forms 3.0, which is not Year-2000 compliant. The Company intends to upgrade to
a new Year-2000 compliant version of Oracle Forms prior to December 31, 1999
at a cost of approximately $150,000. If further tests of the Company's IT and
non-IT systems, material third party relationships, and service and product
offerings reveal other Year-2000 compliance problems, or the Company is unable
to upgrade to a Year-2000 compliant version of MAS 90 or Oracle Forms or other
comparable software, or any of the Company's material third party suppliers or
vendors do not successfully and in a timely manner achieve Year-2000
compliance, the Company's business or operations could be adversely affected.
Based on these early indications from the Company's assessment, and the non-
material cost of upgrading the Company's accounting system and ACETS to
currently available Year-2000 compliant software, the Company does not
currently anticipate any material business or financial risk to the Company
resulting from the Year-2000 issue.
 
 Recent Accounting Pronouncement
 
  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
continues to evaluate the impact, if any, this statement will have on
disclosures in the consolidated financial statements.
 
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
 
  The primary market risk to which ARIS' operations are exposed is the effects
of changes in foreign currency exchange rates. Income from ARIS' foreign
operations is frequently denominated in foreign currencies, thereby creating
exposure 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.
 
 
                                      15
<PAGE>
 
                                    PART II
 
                               OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
  The Company is involved from time to time in legal proceedings incidental to
its business. As of September 30, 1998, 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, 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 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 September 30,
1998, 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 September 30,
1998, the Company has applied $4,000,000 of the Offering proceeds to the
repayment of the Company's revolving credit line. The Company has used $20.1
million of the offering proceeds for working capital and expansion of the
Company's business, including acquiring and investing in complementary
businesses and the purchase of the Company's headquarters in Bellevue,
Washington. 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 it has used the Offering proceeds in a manner consistent
with the use of proceeds described in the Registration Statement. The
remaining $11.1 million of the Offering proceeds is invested in short term
marketable debt securities and money market funds.
 
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.
 
 
                                      16
<PAGE>
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
  (A) EXHIBITS
 
      See Exhibit Table on page 19.
 
  (B) REPORTS ON FORM 8-K
 
      None.
 
                                       17
<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 12th day of November, 1998.
 
                                          ARIS Corporation
 
                                                   /s/ Thomas W. Averill
                                          By:__________________________________
                                                     Thomas W. Averill 
                                                  Vice President, Finance;
                                                  Chief Financial Officer
                                                 (Principal Financial and
                                                Accounting Officer and Duly
                                                    Authorized Officer)
 
                                       18
<PAGE>
 
                                    EXHIBITS
 
<TABLE>
<CAPTION>
 EXHIBIT
 NUMBER  EXHIBIT NAME              PAGE
 ------- ------------              ----
 <C>     <S>                       <C>
  27.1   Financial Data Schedule
</TABLE>