----

----

| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------|

| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT |
|---|-----------------------------------------------------------------|

| For the transition period from |   | to |   |   |
|--------------------------------|--------|----|--------|--------|

| WISCONSIN                                                      |   | 39-1388360                        |
|----------------------------------------------------------------|--------|-----------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification No.) |

| YES     o | NO      þ |
|-------------------------------|----------------------------------------------|

| YES      o | NO      o |
|------------------------------------------|-----------------------------------------|

| Large accelerated filer  o | Accelerated filer  o                   |
|---------------------------------|---------------------------------------------|
| Non-accelerated filer  o   | Smaller reporting company  þ |

| YES      o | NO      þ |
|------------------------------------------|-----------------------------------------|

----

----

----

etwor

| PART I - FINANCIAL INFORMATION |
|--------------------------------|
|                           |   | Page |
| Item 1                         | Financial statements |   |
|                           |   |   |
|                           | Consolidated balance sheets – April 30, 2009 (unaudited) and July 31, 2008. | 3 |
|                           |   |   |
|                           | Consolidated statements of income (unaudited) for the three and nine months ended April 30, 2009 and 2008 | 4 |
|                           |   |   |
|                           | Consolidated statements of cash flows (unaudited) for the nine months ended April 30, 2009 and 2008 | 5 |
|                           |   |   |
|                           | Notes to unaudited consolidated financial statements | 6-14 |
|                           |   |   |
| Item 2                         | Management's discussion and analysis of financial condition and results of  operations | 14-24 |
|                           |   |   |
| Item 3                         | Quantitative and qualitative disclosures about market risk | 24 |
|                           |   |   |
| Item 4T                        | Controls and procedures | 24 |
|                           |   |   |
| PART II - OTHER INFORMATION    |   |
|                           |   |
| Item 1                         | Legal proceedings | 25 |
|                           |   |   |
| Item 2                         | Unregistered sales of equity securities and use of proceeds | 25 |
|                           |   |   |
| Item 3                         | Defaults upon senior securities | 25 |
|                           |   |   |
| Item 4                         | Submission of matters to a vote of security holders | 25 |
|                           |   |   |
| Item 5                         | Other information | 25 |
|                           |   |   |
| Item 6                         | Exhibits | 25 |
|                           |   |   |
| Signatures                     |   | 26 |

----

Index

NANCI

| ARI Network Services, Inc.                                                                                                                                                     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Consolidated Balance Sheets                                                                                                                                                    |   |
| (Dollars in Thousands, Except Per Share Data)                                                                                                                                  |   |
|                                                                                                                                                                           |   | (Unaudited) |   |   | (Audited) |   |
|                                                                                                                                                                           |   | April 30 |   |   | July 31 |   |
|                                                                                                                                                                           |   | 2009 |   |   | 2008 |   |
| ASSETS                                                                                                                                                                         |   |   |   |   |   |   |
| Current Assets:                                                                                                                                                                |   |   |   |   |   |   |
| Cash                                                                                                                                                                           |   | $ | 1,083 |   |   | $ | 1,086 |   |
| Trade receivables, less allowance for doubtful accounts of $285 and $175 at April 30, 2009 and July 31, 2008, respectively                                                     |   |   | 1,644 |   |   |   | 1,304 |   |
| Work in Process                                                                                                                                                                |   |   | 161 |   |   |   | 264 |   |
| Prepaid expenses and other                                                                                                                                                     |   |   | 447 |   |   |   | 392 |   |
| Deferred income taxes                                                                                                                                                          |   |   | - |   |   |   | 330 |   |
| Total Current Assets                                                                                                                                                           |   |   | 3,335 |   |   |   | 3,376 |   |
| Equipment and leasehold improvements:                                                                                                                                          |   |   |   |   |   |   |   |   |
| Computer equipment                                                                                                                                                             |   |   | 6,199 |   |   |   | 5,647 |   |
| Leasehold improvements                                                                                                                                                         |   |   | 305 |   |   |   | 198 |   |
| Furniture and equipment                                                                                                                                                        |   |   | 3,402 |   |   |   | 2,842 |   |
|                                                                                                                                                                           |   |   | 9,906 |   |   |   | 8,687 |   |
| Less accumulated depreciation and amortization                                                                                                                                 |   |   | 7,888 |   |   |   | 7,523 |   |
| Net equipment and leasehold improvements                                                                                                                                       |   |   | 2,018 |   |   |   | 1,164 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Deferred income taxes                                                                                                                                                          |   |   | 2,509 |   |   |   | 2,412 |   |
| Goodwill and unallocated acquired intangibles (Note 4)                                                                                                                         |   |   | 7,115 |   |   |   | 2,196 |   |
| Other intangible assets                                                                                                                                                        |   |   | 1,217 |   |   |   | 1,396 |   |
| Other long term assets                                                                                                                                                         |   |   | 57 |   |   |   | 53 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Capitalized software product costs:                                                                                                                                            |   |   |   |   |   |   |   |   |
| Amounts capitalized for software product costs                                                                                                                                 |   |   | 13,717 |   |   |   | 13,209 |   |
| Less accumulated amortization                                                                                                                                                  |   |   | 12,232 |   |   |   | 11,613 |   |
| Net capitalized software product costs                                                                                                                                         |   |   | 1,485 |   |   |   | 1,596 |   |
| Total Assets                                                                                                                                                                   |   | $ | 17,736 |   |   | $ | 12,193 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                           |   |   |   |   |   |   |   |   |
| Current liabilities:                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Current borrowings on line of credit                                                                                                                                           |   | $ | 500 |   |   | $ | 700 |   |
| Current portion of notes payable                                                                                                                                               |   |   | 376 |   |   |   | 676 |   |
| Accounts payable                                                                                                                                                               |   |   | 314 |   |   |   | 408 |   |
| Deferred revenue                                                                                                                                                               |   |   | 4,796 |   |   |   | 5,071 |   |
| Accrued payroll and related liabilities                                                                                                                                        |   |   | 1,100 |   |   |   | 922 |   |
| Accrued sales, use and income taxes                                                                                                                                            |   |   | 44 |   |   |   | 80 |   |
| Other accrued liabilities                                                                                                                                                      |   |   | 1,010 |   |   |   | 899 |   |
| Current portion of capital lease obligations                                                                                                                                   |   |   | 95 |   |   |   | 95 |   |
| Total Current Liabilities                                                                                                                                                      |   |   | 8,235 |   |   |   | 8,851 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Non-current liabilities                                                                                                                                                        |   |   |   |   |   |   |   |   |
| Notes payable                                                                                                                                                                  |   |   | 5,000 |   |   |   | 116 |   |
| Long-term portion of accrued compensation                                                                                                                                      |   |   | 77 |   |   |   | 97 |   |
| Capital lease obligations                                                                                                                                                      |   |   | 167 |   |   |   | 233 |   |
| Total Non-current Liabilities                                                                                                                                                  |   |   | 5,244 |   |   |   | 446 |   |
|                                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Shareholders' equity:                                                                                                                                                          |   |   |   |   |   |   |   |   |
| Cumulative preferred stock, par value $.001 per share, 1,000,000 shares authorized; 0 shares issued and outstanding at April 30, 2009 and July 31, 2008                        |   |   | - |   |   |   | - |   |
| Junior preferred stock, par value $.001 per share, 100,000 shares authorized; 0 shares issued and outstanding at April 30, 2009 and July 31, 2008                              |   |   | - |   |   |   | - |   |
| Common stock, par value $.001 per share, 25,000,000 shares authorized; 7,693,510 and 6,971,927 shares issued and outstanding at April 30, 2009 and July 31, 2008, respectively |   |   | 7 |   |   |   | 7 |   |
| Common stock warrants and options                                                                                                                                              |   |   | 748 |   |   |   | 501 |   |
| Additional paid-in-capital                                                                                                                                                     |   |   | 95,681 |   |   |   | 95,148 |   |
| Accumulated deficit                                                                                                                                                            |   |   | (92,170 | ) |   |   | (92,708 | ) |
| Other accumulated comprehensive loss                                                                                                                                           |   |   | (9 | ) |   |   | (52 | ) |
| Total Shareholders' Equity                                                                                                                                                     |   |   | 4,257 |   |   |   | 2,896 |   |
| Total Liabilities and Shareholders' Equity                                                                                                                                     |   | $ | 17,736 |   |   | $ | 12,193 |   |

----

Index

| ARI Network Services, Inc.                    |   |
|-----------------------------------------------|--------|
| Consolidated Statements of Income - Unaudited |   |
| (Amounts in Thousands, Except Per Share Data) |   |
|                                          |   | (Unaudited) |   |   | (Unaudited) |   |
|                                          |   | Three months ended |   |   | Nine months ended |   |
|                                          |   | April 30 |   |   | April 30 |   |
|                                          |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                       |   | $ | 4,166 |   |   | $ | 4,158 |   |   | $ | 12,290 |   |   | $ | 12,604 |   |
| Cost of products and services sold*           |   |   | 768 |   |   |   | 674 |   |   |   | 2,229 |   |   |   | 2,201 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Margin                                  |   |   | 3,398 |   |   |   | 3,484 |   |   |   | 10,061 |   |   |   | 10,403 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and amortization+                |   |   | 233 |   |   |   | 180 |   |   |   | 691 |   |   |   | 561 |   |
| Customer operations and support               |   |   | 307 |   |   |   | 252 |   |   |   | 838 |   |   |   | 788 |   |
| Selling, general and administrative           |   |   | 2,323 |   |   |   | 2,292 |   |   |   | 6,627 |   |   |   | 6,976 |   |
| Software development and technical support    |   |   | 257 |   |   |   | 333 |   |   |   | 1,033 |   |   |   | 1,021 |   |
| Net operating expenses                        |   |   | 3,120 |   |   |   | 3,057 |   |   |   | 9,189 |   |   |   | 9,346 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income                              |   |   | 278 |   |   |   | 427 |   |   |   | 872 |   |   |   | 1,057 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other expense                                 |   |   | (23 | ) |   |   | (9 | ) |   |   | (88 | ) |   |   | (60 | ) |
| Income before provision for income taxes      |   |   | 255 |   |   |   | 418 |   |   |   | 784 |   |   |   | 997 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit (expense)                  |   |   | (29 | ) |   |   | 9 |   |   |   | (246 | ) |   |   | 8 |   |
| Net income                                    |   | $ | 226 |   |   | $ | 427 |   |   | $ | 538 |   |   | $ | 1,005 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding:   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |   |   | 7,099 |   |   |   | 6,659 |   |   |   | 7,040 |   |   |   | 6,650 |   |
| Diluted                                       |   |   | 7,115 |   |   |   | 7,069 |   |   |   | 7,056 |   |   |   | 7,060 |   |
|                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income per share:                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                         |   | $ | 0.03 |   |   | $ | 0.06 |   |   | $ | 0.08 |   |   | $ | 0.15 |   |
| Diluted                                       |   | $ | 0.03 |   |   | $ | 0.06 |   |   | $ | 0.08 |   |   | $ | 0.14 |   |

----

Index

| ARI Network Services, Inc.                                                                                          |   |
|---------------------------------------------------------------------------------------------------------------------|--------|
| Consolidated Statements of Cash Flows                                                                               |   |
| (Dollars in Thousands)                                                                                              |   |
|                                                                                                                |   | (Unaudited) |   |
|                                                                                                                |   | Nine months ended |   |
|                                                                                                                |   | April 30 |   |
|                                                                                                                |   | 2009 |   |   | 2008 |   |
|                                                                                                                |   |   |   |   |   |   |
| Operating activities                                                                                                |   |   |   |   |   |   |
| Net income                                                                                                          |   | $ | 538 |   |   | $ | 1,005 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:                                   |   |   |   |   |   |   |   |   |
| Amortization of software products                                                                                   |   |   | 619 |   |   |   | 568 |   |
| Amortization of deferred financing costs, debt discount and excess carrying value over face amount of notes payable |   |   | 8 |   |   |   | 22 |   |
| Depreciation and other amortization                                                                                 |   |   | 681 |   |   |   | 561 |   |
| Deferred income taxes                                                                                               |   |   | 233 |   |   |   | - |   |
| Stock based compensation related to stock options                                                                   |   |   | 247 |   |   |   | 65 |   |
| Stock issued as contribution to 401(k) plan                                                                         |   |   | 45 |   |   |   | 37 |   |
| Net change in assets and liabilities:                                                                               |   |   |   |   |   |   |   |   |
| Trade receivables, net                                                                                              |   |   | 110 |   |   |   | 272 |   |
| Work in process                                                                                                     |   |   | 122 |   |   |   | (15 | ) |
| Prepaid expenses and other                                                                                          |   |   | (36 | ) |   |   | 36 |   |
| Other long term assets                                                                                              |   |   | (3 | ) |   |   | (293 | ) |
| Accounts payable                                                                                                    |   |   | (94 | ) |   |   | (496 | ) |
| Deferred revenue                                                                                                    |   |   | (285 | ) |   |   | (810 | ) |
| Accrued payroll related liabilities                                                                                 |   |   | 165 |   |   |   | (14 | ) |
| Accrued sales, use and income taxes                                                                                 |   |   | (36 | ) |   |   | 16 |   |
| Other accrued liabilities                                                                                           |   |   | (88 | ) |   |   | 621 |   |
| Net cash provided by operating activities                                                                           |   |   | 2,226 |   |   |   | 1,575 |   |
| Investing activities                                                                                                |   |   |   |   |   |   |   |   |
| Purchase of equipment, software and leasehold improvements                                                          |   |   | (413 | ) |   |   | (63 | ) |
| Cash paid for goodwill and intangible assets related to acquisition                                                 |   |   | (410 | ) |   |   | - |   |
| Cash paid for other net assets related to acquisition                                                               |   |   | (215 | ) |   |   | - |   |
| Software product costs capitalized                                                                                  |   |   | (508 | ) |   |   | (365 | ) |
| Net cash used in investing activities                                                                               |   |   | (1,546 | ) |   |   | (428 | ) |
| Financing activities                                                                                                |   |   |   |   |   |   |   |   |
| Repayments under line of credit                                                                                     |   |   | (200 | ) |   |   | - |   |
| Payments under notes payable                                                                                        |   |   | (425 | ) |   |   | (977 | ) |
| Payments of capital lease obligations                                                                               |   |   | (66 | ) |   |   | (4 | ) |
| Proceeds from issuance of common stock                                                                              |   |   | 18 |   |   |   | 15 |   |
| Net cash used in financing activities                                                                               |   |   | (673 | ) |   |   | (966 | ) |
| Effect of foreign currency exchange rate changes on cash                                                            |   |   | (10 | ) |   |   | 13 |   |
| Net change in cash                                                                                                  |   |   | (3 | ) |   |   | 194 |   |
| Cash at beginning of period                                                                                         |   |   | 1,086 |   |   |   | 1,050 |   |
| Cash at end of period                                                                                               |   | $ | 1,083 |   |   | $ | 1,244 |   |
| Cash paid for interest                                                                                              |   | $ | 70 |   |   | $ | 88 |   |
| Cash paid for income taxes                                                                                          |   | $ | 28 |   |   | $ | 3 |   |
|                                                                                                                |   |   |   |   |   |   |   |   |
| Noncash investing and financing activities                                                                          |   |   |   |   |   |   |   |   |
| Capital lease obligations incurred for computer equipment                                                           |   | $ | - |   |   | $ | 10 |   |
| Issuance of common stock in connection with acquisitions                                                            |   |   | 462 |   |   |   | - |   |
| Debt issued in connection with acquisitions                                                                         |   |   | 5,000 |   |   |   | - |   |
| Liabilities assumed in connection with acquisitions                                                                 |   |   | 275 |   |   |   | - |   |

----

Index

nci

| 1. | BASIS OF PRESENTATION |
|----|-----------------------|

|                                                                                                                                                                                             |   |               |   |   |              |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                                                                                             |   | Three months ended |   |   | Nine months ended |   |
|                                                                                                                                                                                             |   | April 30           |   |   | April 30          |   |
|                                                                                                                                                                                             |   | 2009               |   |   | 2008              |   |   | 2009   |   |   | 2008   |   |
| Net income                                                                                                                                                                                       |   | $                  | 226    |   |              | $      | 427    |   |   | $      | 538    |   |   | $ | 1,005 |   |
| Weighted-average common shares outstanding                                                                                                                                                       |   |               | 7,099  |   |              |   | 6,659  |   |   |   | 7,040  |   |   |   | 6,650 |   |
| Effect of dilutive stock options and warrants                                                                                                                                                    |   |               | 16     |   |              |   | 410    |   |   |   | 16     |   |   |   | 410 |   |
| Diluted weighted-average common shares outstanding                                                                                                                                               |   |               | 7,115  |   |              |   | 7,069  |   |   |   | 7,056  |   |   |   | 7,060 |   |
| Net income per share:                                                                                                                                                                            |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                            |   | $                  | 0.03   |   |              | $      | 0.06   |   |   | $      | 0.08   |   |   | $ | 0.15 |   |
| Diluted                                                                                                                                                                                          |   | $                  | 0.03   |   |              | $      | 0.06   |   |   | $      | 0.08   |   |   | $ | 0.14 |   |
|                                                                                                                                                                                             |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Options and warrants that could potentially dilute net income per share in the future that are not included in the computation of diluted net income per share, as their impact is anti-dilutive |   |               | 1,449  |   |              |   | 678    |   |   |   | 1,449  |   |   |   | 678 |   |

----

Index

| Three months ended April 30, |   |
|------------------------------|--------|
|                         |   | 2009 |   |   | 2008 |   |
| Expected life (years)        |   | 10 years |   |   | 10 years |   |
| Risk-free interest rate      |   |   | 2.9 | % |   |   | 4.9 | % |
| Expected volatility          |   |   | 86.0 | % |   |   | 102.0 | % |
| Expected forfeiture rate     |   |   | 17.0 | % |   |   | 29.0 | % |
| Expected dividend yield      |   |   | 0.0 | % |   |   | 0.0 | % |

----

Index

|                                   |   | Three Months ended |    |   | Three Months ended  |   |
|----------------------------------------|--------|--------------------|---------|--------|--------------------------|--------|
|                                   |   | April 30, 2009     |    |   | April 30, 2008           |   |
|                                   |   | Options            |    |   | Wt-Avg Exercise Price    |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |
| Outstanding at the beginning of period |   |               | 37,000  |   |                     | $      | 2.45 |   |   |   | 1.57 |   |   | $ | - |   |   |   | 125,186 |   |   | $ | 2.30 |   |   |   | 1.39 |   |   | $ | - |   |
| Granted                                |   |               | -       |   |                     |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Exercised                              |   |               | -       |   |                     |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Forfeited                              |   |               | -       |   |                     |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Outstanding at the end of period       |   |               | 37,000  |   |                     | $      | 2.45 |   |   |   | 1.33 |   |   | $ | - |   |   |   | 125,186 |   |   | $ | 2.30 |   |   |   | 1.14 |   |   | $ | - |   |
| Exercisable at the end of period       |   |               | 37,000  |   |                     | $      | 2.45 |   |   |   | 1.33 |   |   | $ | - |   |   |   | 125,186 |   |   | $ | 2.30 |   |   |   | 1.14 |   |   | $ | - |   |
|                                   |   |               |    |   |                     |   |
|                                   |   | Nine Months ended  |    |   | Nine Months ended        |   |
|                                   |   | April 30, 2009     |    |   | April 30, 2008           |   |
|                                   |   | Options            |    |   | Wt-Avg Exercise Price    |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |
| Outstanding at the beginning of period |   |               | 93,186  |   |                     | $      | 2.27 |   |   |   | 1.23 |   |   | $ | - |   |   |   | 125,686 |   |   | $ | 2.30 |   |   |   | 1.89 |   |   | $ | - |   |
| Granted                                |   |               | -       |   |                     |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Exercised                              |   |               | -       |   |                     |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Forfeited                              |   |               | (56,186 | )      |                     | $      | 2.15 |   |   |   | n/a |   |   |   | n/a |   |   |   | (500 | ) |   | $ | 4.06 |   |   |   | n/a |   |   |   | n/a |   |
| Outstanding at the end of period       |   |               | 37,000  |   |                     | $      | 2.45 |   |   |   | 1.33 |   |   | $ | - |   |   |   | 125,186 |   |   | $ | 2.30 |   |   |   | 1.14 |   |   | $ | - |   |
| Exercisable at the end of period       |   |               | 37,000  |   |                     | $      | 2.45 |   |   |   | 1.33 |   |   | $ | - |   |   |   | 125,186 |   |   | $ | 2.30 |   |   |   | 1.14 |   |   | $ | - |   |

----

Index

|                                   |   | Three Months ended |   |   | Three Months ended    |   |
|----------------------------------------|--------|--------------------|--------|--------|-----------------------|--------|
|                                   |   | April 30, 2009     |   |   | April 30, 2008        |   |
|                                   |   | Options            |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |
| Outstanding at the beginning of period |   |               | 1,313  |   |                  | $      | 2.65 |   |   |   | 1.47 |   |   | $ | - |   |   |   | 1,313 |   |   | $ | 2.65 |   |   |   | 2.47 |   |   | $ | - |   |
| Granted                                |   |               | -      |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Exercised                              |   |               | -      |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Forfeited                              |   |               | -      |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Outstanding at the end of period       |   |               | 1,313  |   |                  | $      | 2.65 |   |   |   | 1.22 |   |   | $ | - |   |   |   | 1,313 |   |   | $ | 2.65 |   |   |   | 2.22 |   |   | $ | - |   |
| Exercisable at the end of period       |   |               | 1,313  |   |                  | $      | 2.65 |   |   |   | 1.22 |   |   | $ | - |   |   |   | 1,313 |   |   | $ | 2.65 |   |   |   | 2.22 |   |   | $ | - |   |
|                                   |   |               |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | Nine Months ended  |   |   | Nine Months ended     |   |
|                                   |   | April 30, 2009     |   |   | April 30, 2008        |   |
|                                   |   | Options            |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |
| Outstanding at the beginning of period |   |               | 1,313  |   |                  | $      | 2.65 |   |   |   | 1.97 |   |   | $ | - |   |   |   | 1,313 |   |   | $ | 2.65 |   |   |   | 2.97 |   |   | $ | - |   |
| Granted                                |   |               | -      |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Exercised                              |   |               | -      |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Forfeited                              |   |               | -      |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Outstanding at the end of period       |   |               | 1,313  |   |                  | $      | 2.65 |   |   |   | 1.22 |   |   | $ | - |   |   |   | 1,313 |   |   | $ | 2.65 |   |   |   | 2.22 |   |   | $ | - |   |
| Exercisable at the end of period       |   |               | 1,313  |   |                  | $      | 2.65 |   |   |   | 1.22 |   |   | $ | - |   |   |   | 1,313 |   |   | $ | 2.65 |   |   |   | 2.22 |   |   | $ | - |   |

----

Index

|                                   |   | Three Months Ended |      |   | Three Months ended    |   |
|----------------------------------------|--------|--------------------|-----------|--------|-----------------------|--------|
|                                   |   | April 30, 2009     |      |   | April 30, 2008        |   |
|                                   |   | Options            |      |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |
| Outstanding at the beginning of period |   |               | 1,207,463 |   |                  | $      | 1.54 |   |   |   | 7.51 |   |   | $ | 27,807 |   |   |   | 890,975 |   |   | $ | 1.52 |   |   |   | 6.43 |   |   | $ | 289,823 |   |
| Granted                                |   |               | 15,000    |   |                  | $      | 0.82 |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Exercised                              |   |               | -         |   |                  |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Forfeited                              |   |               | (1,125    | )      |                  | $      | (2.15 | ) |   |   | n/a |   |   |   | n/a |   |   |   | (8,500 | ) |   | $ | 2.00 |   |   |   | n/a |   |   |   | n/a |   |
| Outstanding at the end of period       |   |               | 1,221,338 |   |                  | $      | 1.53 |   |   |   | 7.30 |   |   | $ | 38,458 |   |   |   | 882,475 |   |   | $ | 1.51 |   |   |   | 6.16 |   |   | $ | 167,802 |   |
| Exercisable at the end of period       |   |               | 682,627   |   |                  | $      | 1.58 |   |   |   | 5.92 |   |   | $ | 30,933 |   |   |   | 730,329 |   |   | $ | 1.45 |   |   |   | 5.71 |   |   | $ | 166,124 |   |
|                                   |   |               |      |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                   |   | Nine Months Ended  |      |   | Nine Months Ended     |   |
|                                   |   | April 30, 2009     |      |   | April 30, 2008        |   |
|                                   |   | Options            |      |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Wt-Avg Remaining Contractual Period |   |   | Aggregate Intrinsic Value |   |
| Outstanding at the beginning of period |   |               | 1,380,538 |   |                  | $      | 1.51 |   |   |   | 7.36 |   |   | $ | 150,967 |   |   |   | 1,013,100 |   |   | $ | 1.45 |   |   |   | 6.61 |   |   | $ | 320,062 |   |
| Granted                                |   |               | 104,000   |   |                  | $      | 1.07 |   |   |   | n/a |   |   |   | n/a |   |   |   | 35,500 |   |   | $ | 1.63 |   |   |   | n/a |   |   |   | n/a |   |
| Exercised                              |   |               | (60,242   | )      |                  | $      | (0.26 | ) |   |   | n/a |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Forfeited                              |   |               | (202,958  | )      |                  | $      | (1.51 | ) |   |   | n/a |   |   |   | n/a |   |   |   | (166,125 | ) |   | $ | 1.15 |   |   |   | n/a |   |   |   | n/a |   |
| Outstanding at the end of period       |   |               | 1,221,338 |   |                  | $      | 1.53 |   |   |   | 7.30 |   |   | $ | 38,458 |   |   |   | 882,475 |   |   | $ | 1.51 |   |   |   | 6.16 |   |   | $ | 167,802 |   |
| Exercisable at the end of period       |   |               | 682,627   |   |                  | $      | 1.58 |   |   |   | 5.92 |   |   | $ | 30,933 |   |   |   | 730,329 |   |   | $ | 1.45 |   |   |   | 5.71 |   |   | $ | 166,124 |   |

|                                  |   | Three Months Ended April 30, |    |   | Nine Months Ended April 30, |   |
|---------------------------------------|--------|------------------------------|---------|--------|-----------------------------|--------|
|                                  |   | 2009                         |    |   | 2008                        |   |   | 2009 |   |   | 2008 |   |
|                                  |   | Options                      |    |   | Wt-Avg Exercise Price       |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Options |   |   | Wt-Avg Exercise Price |   |   | Options |   |   | Wt-Avg Exercise Price |   |
| Non-vested at the beginning of period |   |                         | 523,711 |   |                        | $      | 1.49 |   |   |   | 158,364 |   |   | $ | 1.80 |   |   |   | 443,335 |   |   | $ | 1.76 |   |   |   | 137,675 |   |   | $ | 1.79 |   |
| Granted                               |   |                         | 15,000  |   |                        | $      | 0.82 |   |   |   | - |   |   |   | n/a |   |   |   | 104,000 |   |   | $ | 1.07 |   |   |   | 35,500 |   |   | $ | 1.63 |   |
| Vested                                |   |                         | -       |   |                        |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |   |   | - |   |   |   | n/a |   |
| Forfeited                             |   |                         | -       |   |                        |   | n/a |   |   |   | (6,218 | ) |   | $ | 2.00 |   |   |   | (8,624 | ) |   | $ | 1.63 |   |   |   | (21,029 | ) |   | $ | 1.50 |   |
| Non-vested at the end of period       |   |                         | 538,711 |   |                        | $      | 1.47 |   |   |   | 152,146 |   |   | $ | 1.79 |   |   |   | 538,711 |   |   | $ | 1.47 |   |   |   | 152,146 |   |   | $ | 1.79 |   |

----

Index

| Debt Schedule                                                              |   |
|----------------------------------------------------------------------------|--------|
| (Dollars in thousands)                                                     |   |
|                                                                       |   |   |   |   |   |   |   |   |   |
|                                                                       |   | April 30 |   |   | July 31 |   |   | Percent |   |
|                                                                       |   | 2009 |   |   | 2008 |   |   | Change |   |
|                                                                       |   |   |   |   |   |   |   |   |   |
| Long term Debt related to acquisition of Channel Blade Technologies, Inc.: |   | $ | 5,000 |   |   | $ | - |   |   |   | n/a | % |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt related to acquisition of OC-Net, Inc.:                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Current portion of notes payable                                           |   |   | 176 |   |   |   | 233 |   |   |   | (24.5 | ) |
| Long term portion of notes payable                                         |   |   | - |   |   |   | 117 |   |   |   | (100.0 | ) |
| Total notes payable                                                        |   |   | 176 |   |   |   | 350 |   |   |   | (49.7 | ) |
| Current cash earnout                                                       |   |   | - |   |   |   | 150 |   |   |   | (100.0 | ) |
| Imputed interest on cash earnout/holdback                                  |   |   | - |   |   |   | (8 | ) |   |   | (100.0 | ) |
| Total debt related to acquisition of OC-Net                                |   |   | 176 |   |   |   | 492 |   |   |   | (64.2 | ) |
|                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Notes payable to Eye Communication Systems, Inc. - current                 |   |   | 200 |   |   |   | 300 |   |   |   | (33.3 | ) |
| Current borrowings on line of credit                                       |   |   | 500 |   |   |   | 700 |   |   |   | (28.6 | ) |
| Total Debt                                                                 |   | $ | 5,876 |   |   | $ | 1,492 |   |   |   | 293.8 | % |

----

Index

|                                                         |   | Three months ended |   |   | Nine months ended |   |
|--------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                         |   | April 30           |   |   | April 30          |   |
|                                                         |   | 2009               |   |   | 2008              |   |   | 2009 |   |   | 2008 |   |
| Current:                                                     |   |               |   |   |              |   |   |   |   |   |   |   |
| Federal - Effect                                             |   | $                  | 187    |   |              | $      | 164 |   |   | $ | 198 |   |   | $ | 193 |   |
| State - Effect                                               |   |               | 21     |   |              |   | 45 |   |   |   | 23 |   |   |   | 53 |   |
| Generation (utilization) of net operating loss carryforwards |   |               | (199   | )      |              |   | (218 | ) |   |   | (212 | ) |   |   | (254 | ) |
| AMT and other                                                |   |               | 4      |   |              |   | - |   |   |   | 4 |   |   |   | - |   |
| Deferred, net                                                |   |               | 16     |   |              |   | - |   |   |   | 233 |   |   |   | - |   |
|                                                         |   | $                  | 29     |   |              | $      | (9 | ) |   | $ | 246 |   |   | $ | (8 | ) |

----

Index

| Business Segment Information |   |
|------------------------------|--------|
| (In thousands)               |   |
|                         |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   | Three months ended |   |   | Nine months ended |   |
|                         |   | April 30 |   |   | April 30 |   |
|  Revenue                |   | 2009 |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
| Netherlands                  |   | $ | 153 |   |   | $ | 189 |   |   | $ | 486 |   |   | $ | 527 |   |
| United States                |   |   | 4,013 |   |   |   | 3,969 |   |   |   | 11,804 |   |   |   | 12,077 |   |
| Consolidated                 |   | $ | 4,166 |   |   | $ | 4,158 |   |   | $ | 12,290 |   |   | $ | 12,604 |   |
|                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Netherlands                  |   | $ | (15 | ) |   | $ | (107 | ) |   | $ | (70 | ) |   | $ | (283 | ) |
| United States                |   |   | 241 |   |   |   | 534 |   |   |   | 608 |   |   |   | 1,288 |   |
| Consolidated                 |   | $ | 226 |   |   | $ | 427 |   |   | $ | 538 |   |   | $ | 1,005 |   |
|                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |   | April 30 |   |   | July 31 |   |   |   |   |   |   |   |   |   |
| Total Assets                 |   | 2009 |   |   | 2008 |   |   |   |   |   |   |   |   |   |
| Netherlands                  |   | $ | 175 |   |   | $ | 272 |   |   |   |   |   |   |   |   |   |
| United States                |   |   | 17,561 |   |   |   | 11,921 |   |   |   |   |   |   |   |   |   |
| Consolidated                 |   | $ | 17,736 |   |   | $ | 12,193 |   |   |   |   |   |   |   |   |   |

|                            |   | Balance |   |   | Payments      |   |   | Balance  |   |
|---------------------------------|--------|---------|--------|--------|---------------|--------|--------|----------|--------|
|                            |   | July 31 |   |   | August 2008 - |   |   | April 30 |   |
|                            |   | 2008    |   |   | April 2009    |   |   | 2009     |   |
| Severance and related benefits  |   | $       | 292    |   |          | $      | (222   | )        |   | $ | 70 |   |
| Net future lease costs          |   |    | 204    |   |          |   | (101   | )        |   |   | 103 |   |
| Equipment disposition and other |   |    | 33     |   |          |   | (29    | )        |   |   | 4 |   |
| Total restructuring costs       |   | $       | 529    |   |          | $      | (352   | )        |   | $ | 177 |   |

----

Index

SCUS

----

Index

----

Index

----

Index

| Electronic Catalog Products And Services           |
|----------------------------------------------------|
| Product or Service                                 | Description | Primary Industry/Market |
| PartSmart® ClassicTM                     | Electronic parts catalog for equipment dealers, formerly PartSmart Version 6 | Equipment- all sub-markets |
| PartSmart® 8TM                           | Electronic parts catalog for equipment dealers | Equipment- all sub-markets |
| PartSmart® WebTM                         | Web based electronic parts catalog, formerly EMPARTweb | Equipment - all sub-markets |
| Lookupparts.com                                    | PartSmart Web-based lookup service offered to dealers on a subscription basis | Equipment - all sub-markets |
| PartSmart® WebTM ASP                     | Electronic parts catalog viewing software offered as a hosted service for individual distributors and manufacturers, formerly EMPARTweb ASP | Equipment - all sub-markets |
| PartSmart® CartTM                        | Add-on product to PartSmart Web that facilitates order taking from the catalog | Equipment - all sub-markets |
| PartSmart® Data ManagerTM                | Electronic parts catalog creation software used to produce catalogs for viewing on PartSmart Classic, PartSmart 8, and PartSmart Web | Equipment - all sub-markets |
| PartSmart® Data PublisherTM              | Add-on product to PartSmart Data Manager that facilitates the creation of a file of parts and related information for use in PartSmart PDF Catalog Composer Module | Equipment – all sub-markets |
| PartSmart® PDF Catalog ComposerTM Module | Add-on product to PartSmart Data Manager that facilitates the creation of a parts manual, price sheet or other parts-related publications in the Adobe Acrobat format for printing, electronic distribution or online display | Equipment – all sub-markets |
| PartSmart® IPLTM                         | Electronic parts catalog for equipment dealers | Appliance |
| PartSmart® IPL WebTM                     | Web based electronic parts catalog, formerly EMPARTweb | Appliance |
| Electronic publishing services                     | Project management, data conversion, editing, production, and distribution services for manufacturers who wish to outsource catalog production operations | Equipment - all sub-markets |
| EMPARTviewerTM                                | Electronic parts catalog viewing software | Equipment - RV |
| Professional services                              | Project management, software customization, back-end system integration, roll-out management, and help desk support services | Equipment - all sub-markets |

----

Index

| Marketing Services          |
|-----------------------------|
| Product or Service          | Description | Primary Industry/Market |
| WebsiteSmart ProTM     | Software to create customized websites and conduct business electronically, including optional shopping cart, superseding WebsiteSmart | Equipment - outdoor power, power sports |
| WebsiteSmartTM         | Software to create customized websites and conduct business electronically, including optional shopping cart | Equipment - outdoor power, power sports |
| Professional Services       | Large-scale website creation, hosting  and maintenance services | Equipment – all sub-markets |
| ARI MailSmartTM        | Direct mail solution that enables users to cost-effectively and efficiently reach customers and prospects with customized messages | Equipment – all sub-markets |
| eMailSmartTM           | Email solution that enables users to stay in touch with customers through special offers and a quarterly newsletter | Equipment – all sub-markets |
| Content Management Services | Add-on solution to WebsiteSmart and Website Smart Pro that automatically updates a website with weather alerts, promotions based on customer seasonality and supplier promotions | Equipment – all sub-markets |
| eXceleratePro               | Websites available as custom or from design gallery. One of three website offering with Channel Blade. Full website capability with news, testimonials, Boat/RV Notifier, and more. | Equipment – marine, recreation vehicle, power sports |
| eXceleratePro 2             | New website platform.  ePro1 plus enhancements. | Equipment – marine, recreation vehicle, power sports |
| Lead Storm                  | New website product based on ePro2 platform. Offers 3 template options. No custom designs. Lead generation and inventory-focused. All inventory search-engine optimized | Equipment – marine, recreation vehicle, power sports |
| ePro Mobile                 | Customers’ website are  optimized to fully function on smart mobile phones. Inventory from websites automatically populates on the smart phone website. | Equipment – marine, recreation vehicle, power sports |
| Footsteps                   | Lead management tool to help customers follow up to incoming leads faster and professionally. Includes email campaigns, automated responses, daily follow up calendar and reminders. Serves as a complete database of prospects and clients to keep in touch in the long-term to increase sales beyond the first purchase. | Equipment – all sub-markets |
| Jumpstart                   | An add-on custom Foosteps solution. Helps customer launch Footsteps in minimal time to get sales staff using the tool to its full potential. Eliminates time and effort having customer set up lead management process up on their own. | Equipment – all sub-markets |
| Quickstart                  | OEM tradeshow or in-house lead management tool. Serves as a quick lead entry and search tool to help shorten the follow up cycle in short time frames. | Equipment – all sub-markets |
| SearchEngineSmartTM    | Provides customers the opportunity for paid advertising on all major search engines so potential customers find their website. | Equipment – outdoor power, power sports, marine, recreation vehicle |
| Managed Services            | Provided by Pro Lead Management. Add on solution to websites and/or Footsteps. Program manages customers’ website content, inventory, initial lead response, and outbound email campaigns. | Equipment – all sub-markets |
| Boat/RV Notifier            | Website add-on that notifies consumer when a unit in their specified requests come in stock.  Allows customer to stay in the consumer’s mind beyond their initial search. | Equipment – marine |
| Site Encore                 | Website add-on that with one click upon entry or exit of site pops up a lead-generating form. Before consumer leaves the Internet the customer’s ad/brand is the last image they see. | Equipment – marine, recreation vehicle, power sports |

----

Index

| F&I Products and Services (F&I SmartTM Product Family) |
|---------------------------------------------------------------------|
| Product or Service                                                  | Description | Primary Industry/Market |
| Outsourced F&I Services                                         | Acting as the dealer’s outsourced F&I (Finance and Insurance) department, we obtain financing for their customers and provide them with Extended Service Agreements, Gap insurance, Tire & Wheel Protection, and other after-sale products. | Equipment – Powersports, RV, and Marine in the U.S. Northeast region |

| eCommerce Products and Services |
|---------------------------------|
| Product or Service              | Description | Primary Industry/Market |
| TradeRoute®                | Document handling and communications for product ordering, warranty claims and other business documents | Equipment - Outdoor power and recreation vehicle |
| WarrantySmartTM            | Web-based end-to-end warranty claims processing system that enables dealers, distributors and manufacturers to streamline product registration and warranty claim submission and processing, as well as check claim status online | Equipment – all sub-markets |

| Revenue by Location and Service |   |
|---------------------------------|--------|
| (Dollars in Thousands)          |   |
|                            |   | Three months ended |   |   |   |   |   | Nine months ended |   |   |   |   |
|                            |   | April 30 |   |   | Percent |   |   | April 30 |   |   | Percent |   |
|                            |   | 2009 |   |   | 2008 |   |   | Change |   |   | 2009 |   |   | 2008 |   |   | Change |   |
| North America                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Catalog subscriptions           |   | $ | 2,667 |   |   | $ | 2,435 |   |   |   | 9.5 | % |   | $ | 7,725 |   |   | $ | 7,464 |   |   |   | 3.5 | % |
| Catalog professional services   |   |   | 175 |   |   |   | 311 |   |   |   | (43.8 | ) |   |   | 678 |   |   |   | 920 |   |   |   | (26.3 | ) |
| Marketing services              |   |   | 783 |   |   |   | 588 |   |   |   | 33.3 |   |   |   | 2,061 |   |   |   | 1,705 |   |   |   | 20.9 |   |
| Marketing professional services |   |   | 164 |   |   |   | 373 |   |   |   | (56.0 | ) |   |   | 704 |   |   |   | 1,201 |   |   |   | (41.4 | ) |
| Other revenue                   |   |   | 174 |   |   |   | 181 |   |   |   | (4.1 | ) |   |   | 496 |   |   |   | 496 |   |   |   | (0.1 | ) |
|                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal North America          |   |   | 3,963 |   |   |   | 3,888 |   |   |   | 1.9 |   |   |   | 11,664 |   |   |   | 11,786 |   |   |   | (1.0 | ) |
|                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Rest of the World               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Catalog subscriptions           |   |   | 203 |   |   |   | 268 |   |   |   | (24.3 | ) |   |   | 612 |   |   |   | 813 |   |   |   | (24.7 | ) |
| Catalog professional services   |   |   | - |   |   |   | 2 |   |   |   | (100.0 | ) |   |   | 14 |   |   |   | 5 |   |   |   | 180.0 |   |
|                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Subtotal Rest of the World      |   |   | 203 |   |   |   | 270 |   |   |   | (24.8 | ) |   |   | 626 |   |   |   | 818 |   |   |   | (23.5 | ) |
|                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Revenue                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Catalog subscriptions           |   |   | 2,870 |   |   |   | 2,703 |   |   |   | 6.2 |   |   |   | 8,337 |   |   |   | 8,277 |   |   |   | 0.7 |   |
| Catalog professional services   |   |   | 175 |   |   |   | 313 |   |   |   | (44.1 | ) |   |   | 692 |   |   |   | 925 |   |   |   | (25.2 | ) |
| Marketing services              |   |   | 783 |   |   |   | 588 |   |   |   | 33.3 |   |   |   | 2,061 |   |   |   | 1,705 |   |   |   | 20.9 |   |
| Marketing professional services |   |   | 164 |   |   |   | 373 |   |   |   | (56.0 | ) |   |   | 704 |   |   |   | 1,201 |   |   |   | (41.4 | ) |
| Other revenues                  |   |   | 174 |   |   |   | 181 |   |   |   | (4.1 | ) |   |   | 496 |   |   |   | 496 |   |   |   | (0.1 | ) |
|                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Revenue                   |   | $ | 4,166 |   |   | $ | 4,158 |   |   |   | 0.2 | % |   | $ | 12,290 |   |   | $ | 12,604 |   |   |   | (2.5 | ) % |

----

Index

----

Index

| Gross Margin by Revenue Type                   |   |
|------------------------------------------------|--------|
| (Dollars in thousands)                         |   |
|                                           |   | Three months ended |   |   |   |   |   | Nine months ended |   |   |   |   |
|                                           |   | April 30 |   |   | Percent |   |   | April 30 |   |   | Percent |   |
|                                           |   | 2009 |   |   | 2008 |   |   | Change |   |   | 2009 |   |   | 2008 |   |   | Change |   |
| Catalog subscriptions                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                        |   |   | 2,870 |   |   |   | 2,703 |   |   |   | 6.2 | % |   |   | 8,337 |   |   |   | 8,277 |   |   |   | 0.7 | % |
| Cost of revenue                                |   |   | 437 |   |   |   | 265 |   |   |   | 64.9 |   |   |   | 1,298 |   |   |   | 923 |   |   |   | 40.6 |   |
| Gross margin - Catalog subscriptions           |   |   | 2,433 |   |   |   | 2,438 |   |   |   | (0.2 | ) |   |   | 7,039 |   |   |   | 7,354 |   |   |   | (4.3 | ) |
| Gross margin percentage                        |   |   | 84.8 | % |   |   | 90.2 | % |   |   |   |   |   |   | 84.4 | % |   |   | 88.8 | % |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Catalog professional services                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                        |   |   | 175 |   |   |   | 313 |   |   |   | (44.1 | ) |   |   | 692 |   |   |   | 925 |   |   |   | (25.2 | ) |
| Cost of revenue                                |   |   | 68 |   |   |   | 138 |   |   |   | (50.7 | ) |   |   | 247 |   |   |   | 389 |   |   |   | (36.5 | ) |
| Gross margin - Catalog professional services   |   |   | 107 |   |   |   | 175 |   |   |   | (39.0 | ) |   |   | 445 |   |   |   | 536 |   |   |   | (17.0 | ) |
| Gross margin percentage                        |   |   | 61.1 | % |   |   | 55.9 | % |   |   |   |   |   |   | 64.3 | % |   |   | 58.0 | % |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing services                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                        |   |   | 783 |   |   |   | 588 |   |   |   | 33.3 |   |   |   | 2,061 |   |   |   | 1,705 |   |   |   | 20.9 |   |
| Cost of revenue                                |   |   | 213 |   |   |   | 139 |   |   |   | 53.2 |   |   |   | 470 |   |   |   | 487 |   |   |   | (3.5 | ) |
| Gross margin - Marketing services              |   |   | 570 |   |   |   | 449 |   |   |   | 27.1 |   |   |   | 1,591 |   |   |   | 1,218 |   |   |   | 30.7 |   |
| Gross margin percentage                        |   |   | 72.8 | % |   |   | 76.3 | % |   |   |   |   |   |   | 77.2 | % |   |   | 71.4 | % |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing professional services                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                        |   |   | 164 |   |   |   | 373 |   |   |   | (56.0 | ) |   |   | 704 |   |   |   | 1,201 |   |   |   | (41.4 | ) |
| Cost of revenue                                |   |   | 46 |   |   |   | 129 |   |   |   | (64.3 | ) |   |   | 200 |   |   |   | 392 |   |   |   | (49.0 | ) |
| Gross margin - Marketing professional services |   |   | 118 |   |   |   | 244 |   |   |   | (51.6 | ) |   |   | 504 |   |   |   | 809 |   |   |   | (37.7 | ) |
| Gross margin percentage                        |   |   | 72.0 | % |   |   | 65.4 | % |   |   |   |   |   |   | 71.6 | % |   |   | 67.4 | % |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other revenue                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                        |   |   | 174 |   |   |   | 181 |   |   |   | (4.1 | ) |   |   | 496 |   |   |   | 496 |   |   |   | (0.1 | ) |
| Cost of revenue                                |   |   | 4 |   |   |   | 4 |   |   |   | 0.0 |   |   |   | 14 |   |   |   | 10 |   |   |   | 40.0 |   |
| Gross margin - Other revenue                   |   |   | 170 |   |   |   | 177 |   |   |   | (4.2 | ) |   |   | 482 |   |   |   | 486 |   |   |   | (0.9 | ) |
| Gross margin percentage                        |   |   | 97.7 | % |   |   | 97.8 | % |   |   |   |   |   |   | 97.2 | % |   |   | 98.0 | % |   |   |   |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                        |   |   | 4,166 |   |   |   | 4,158 |   |   |   | 0.2 |   |   |   | 12,290 |   |   |   | 12,604 |   |   |   | (2.5 | ) |
| Cost of revenue                                |   |   | 768 |   |   |   | 675 |   |   |   | 13.8 |   |   |   | 2,229 |   |   |   | 2,201 |   |   |   | 1.3 |   |
| Gross margin                                   |   |   | 3,398 |   |   |   | 3,483 |   |   |   | (2.4 | ) % |   |   | 10,061 |   |   |   | 10,403 |   |   |   | (3.3 | ) % |
| Gross margin percentage                        |   |   | 81.6 | % |   |   | 83.8 | % |   |   |   |   |   |   | 81.9 | % |   |   | 82.5 | % |   |   |   |   |

----

Index

| (Dollars in thousands)                                                                                                        |
|-------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                          |   | Three months ended |   |   |   |   |   | Nine months ended |   |   |   |   |
|                                                                                                                          |   | April 30 |   |   | Percent |   |   | April 30 |   |   | Percent |   |
|                                                                                                                          |   | 2009 |   |   | 2008 |   |   | Change |   |   | 2009 |   |   | 2008 |   |   | Change |   |
| Customer operations and support                                                                                               |   | $ | 307 |   |   | $ | 252 |   |   |   | 21.8 | % |   | $ | 838 |   |   | $ | 788 |   |   |   | 6.3 | % |
| Selling, general and administrative                                                                                           |   |   | 2,323 |   |   |   | 2,292 |   |   |   | 1.4 |   |   |   | 6,627 |   |   |   | 6,976 |   |   |   | (5.0 | ) |
| Software development and technical support                                                                                    |   |   | 257 |   |   |   | 333 |   |   |   | (22.8 | ) |   |   | 1,033 |   |   |   | 1,021 |   |   |   | 1.2 |   |
| Depreciation and amortization (exclusive of amortization of software products included in cost of products and services sold) |   |   | 233 |   |   |   | 180 |   |   |   | 29.4 |   |   |   | 691 |   |   |   | 561 |   |   |   | 23.2 |   |
| Net operating expenses                                                                                                        |   | $ | 3,120 |   |   | $ | 3,057 |   |   |   | 2.1 | % |   | $ | 9,189 |   |   | $ | 9,346 |   |   |   | (1.7 | ) % |

----

Index

| (Dollars in thousands)                                                            |
|-----------------------------------------------------------------------------------|
|                                                                              |   | Nine months ended |   |   |   |   |
|                                                                              |   | April 30, 2009 |   |   | Percent |   |
|                                                                              |   | 2009 |   |   | 2008 |   |   | Change |   |
| Net income                                                                        |   | $ | 538 |   |   | $ | 1,005 |   |   |   | (46.5 | ) % |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of software products                                                 |   |   | 619 |   |   |   | 568 |   |   |   | 9.0 |   |
| Amortization of debt discount and other                                           |   |   | 8 |   |   |   | 22 |   |   |   | (63.6 | ) |
| Depreciation and other amortization                                               |   |   | 681 |   |   |   | 561 |   |   |   | 21.4 |   |
| Deferred income taxes                                                             |   |   | 233 |   |   |   | - |   |   |   | 100.0 |   |
| Stock based compensation                                                          |   |   | 247 |   |   |   | 65 |   |   |   | 280.0 |   |
| Stock issued to 401(k) plan                                                       |   |   | 45 |   |   |   | 37 |   |   |   | 21.6 |   |
| Net change in working capital                                                     |   |   | (145 | ) |   |   | (683 | ) |   |   | 78.8 |   |
|                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities                                         |   |   | 2,226 |   |   |   | 1,575 |   |   |   | 41.3 |   |
| Net cash used in investing activities                                             |   |   | (1,546 | ) |   |   | (428 | ) |   |   | (261.2 | ) |
| Net cash used in financing activities                                             |   |   | (673 | ) |   |   | (966 | ) |   |   | 30.3 |   |
| Effect of foreign currency exchange rate changes on cash                          |   |   | (10 | ) |   |   | 13 |   |   |   | (176.9 | ) |
| Net change in cash                                                                |   | $ | (3 | ) |   | $ | 194 |   |   |   | (101.5 | ) % |

----

Index

TITATIV

PROC

----

Index

CEED

QUIT

ULT

ATTER

FOR

IBIT

|   | 10.1 | Note Modification Agreement dated April 6, 2009, between the Company and JP Morgan Chase Bank, NA, successor by merger to Bank One, NA. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.1  | Section 302 Certification of Chief Executive Officer. |
|--------|------------|-------------------------------------------------------|

|   | 31.2  | Section 302 Certification of Chief Financial Officer. |
|--------|------------|-------------------------------------------------------|

|   | 32.1  | Section 906 Certification of Chief Executive Officer. |
|--------|------------|-------------------------------------------------------|

|   | 32.2  | Section 906 Certification of Chief Financial Officer. |
|--------|------------|-------------------------------------------------------|

----

Index

GNAT

|   | ARI Network Services, Inc. |                                        |
|--------|----------------------------|---------------------------------------------|
|   | (Registrant)               |                                        |
|   |                       |                                        |
|   |                       |                                        |
| Date:  | June 15, 2009              | /s/ Roy W. Olivier                          |
|   |                       | Roy W. Olivier, Chief Executive Officer     |
|   |                       |                                        |
|   |                       | /s/ Kenneth S. Folberg                      |
|   |                       | Kenneth S. Folberg, Chief Financial Officer |

----