Ari Network Services 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.3

Unaudited pro forma combined financial statements of
ARI Network Services, Inc. and OC-NET, Inc.

The following unaudited pro forma financial information relates to the Company’s January 26, 2007 acquisition of all of the outstanding stock of OC-Net, Inc. The pro forma amounts have been prepared based on certain purchase accounting and other pro forma adjustments (as described in the accompanying notes) to the historical financial statements of the Company and OC-Net.

The Company’s historical financial position at January 31, 2007 includes the estimated preliminary purchase price allocation of the January 26, 2007 acquisition of OC-Net. The unaudited pro forma condensed balance sheet at January 31, 2007 reflects the historical financial position of the Company at January 31, 2007, with pro forma adjustments to reflect the historical financial position of OC-Net at January 26, 2007 and adjust for the actual purchase price allocation. The unaudited pro forma condensed statement of operations for the six months ended January 31, 2007 reflects the historical results of both companies with pro forma adjustments as if the acquisition had occurred on August 1, 2006. The unaudited pro forma condensed statement of operations for the year ended July 31, 2006 reflects the historical results of operations of the Company for the twelve months ended July, 31, 2006 and OC-Net for the twelve months ended December 31, 2006, with pro forma adjustments as if the acquisition had occurred on August 1, 2005. The pro forma adjustments are described in the accompanying notes and give effect to events that are (a) directly attributable to the acquisition, (b) factually supportable, and (c) in the case of certain statement of operations adjustments, expected to have a continuing impact. Statement of operations information of OC-Net for the months of August, September, October, November and December of 2006 are included in both the annual and the interim pro forma consolidated statements of operations.

The unaudited pro forma condensed financial statements should be read in connection with the Company’s and OC-Net’s historical financial statements and related footnotes.

The unaudited pro forma financial information presented is for information purposes only and does not purport to represent what the Company’s and OC-Net’s financial position or results of operations as of the dates presented would have been had the acquisition in fact occurred on such date or at the beginning of the period indicated or to project the Company’s and OC-Net’s financial position or results of operations for any future date or period.

ARI Network Services, Inc.
Unaudited Pro Forma Balance Sheet

(In thousands, except share and per share data)

	ARI			Pro Forma			Pro Forma
	as of 1/31/07			Adjustments			as of 1/31/07
ASSETS
Current Assets:
Cash and cash equivalents	$	1,639		$	(12	)1	$	1,627
Trade receivables, less allowance for doubtful accounts		1,446			18			1,464
Work in Process		168			—			168
Prepaid expenses and other		238			21			259
Deferred income taxes		675			—			675
Total Current Assets		4,166			27			4,193
Equipment and leasehold improvements (net)		1,143			16			1,159
Deferred income taxes		1,419			—			1,419
Other assets		2,629			(2,545	)		84
Goodwill		—			1,911	7		1,911
Capitalized software product costs (net)		1,270			580	6		1,850
Total Long Term Assets		6,461			(38	)		6,423
Total Assets	$	10,627		$	(11	)	$	10,616
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Current portion of notes payable	$	1,520		$	(27	)2	$	1,493
Accounts payable		234			12			246
Deferred revenue		5,560			19			5,579
Accrued payroll and related liabilities		834			—			834
Accrued sales, use and income taxes		22			—			22
Accrued vendor specific liabilities		—			—			—
Other accrued liabilities		579			23			602
Total Current Liabilities		8,749			27			8,776
Long term liabilities:
Notes payable (net of discount)		627			(35	)2,4		592
Long term payroll related		202			—			202
Other long term liabilities		41			16			57
Total Long Term Liabilities		870			(19	)		851
Shareholders’ equity (deficit):
Cumulative preferred stock, par value $.001 per share,					—			—
Common stock		7			—	3,5		7
Common stock warrants and options		104			—			104
Additional paid-in-capital		94,616			—	3		94,616
Accumulated deficit		(93,719	)		(19	)5		(93,738	)
Total Shareholders’ Equity (Deficit)		1,008			(19	)		989
Total Liabilities and Shareholders’ Equity	$	10,627		$	(11	)	$	10,616

ARI Network Services, Inc.
Pro Forma Statements of Operations
(In thousands, except per share data)

	8/1/06-			8/1/06-
	1/31/07			1/26/07			Pro Forma
	ARI			OC-Net			Adjustments				Pro Forma
Revenue	$	7,194		$	647						$	7,841
Cost of products and services sold		1,130			110			53		c		1,292
Gross Margin		6,064			538			(53	)			6,549
Operating expenses:
Depreciation and amortization (exclusive of amortization of software products included in cost of products and services sold)		216			48			102		d		367
Software development, operations and support		1,272			348							1,620
Selling, general and administrative		4,086			159			(7)		e		4,238
Net operating expenses		5,574			555			96				6,224
Operating income		490			(17	)		(148	)			325
Other income (expense)
Interest expense		(70	)		(6	)		(64)		f		(141	)
Other, net		61			—							61
Total other expense		(9	)		(6	)		(64	)			(80	)
Income before provision for income taxes		481			(23	)		(213	)			245
Income tax benefit (provision)		(8	)		6			(6)		g		(8	)
Net income	$	473		$	(17	)	$	(218	)		$	237
Average common shares outstanding:
Basic		6,257			0			0				6,257
Diluted		6,660			0			0				6,660
Basic and diluted net income (loss) per share:
Basic	$	0.08									$	0.04
Diluted	$	0.07									$	0.04

ARI Network Services, Inc.
Pro Forma Statements of Operations
(In thousands, except per share data)

	Twelve months ended
	7/31/06			12/31/06			Pro Forma
	ARI			OC-Net			Adjustments				Pro Forma
Revenue	$	14,002		$	1,328						$	15,330
Cost of products and services sold		2,001			222			105		c		2,328
Gross Margin		12,001			1,106			(105	)			13,002
Operating expenses:
Depreciation and amortization (exclusive of amortization of software products included in cost of products and services sold)		382			99			205		d		686
Software development, operations and support		2,365			703							3,068
Selling, general and administrative		7,185			342			(33)		e		7,494
Net operating expenses		9,932			1,144			172				11,248
Operating income		2,069			(38	)		(277	)			1,754
Other income (expense) Interest expense		(191	)		(13	)		(69)		f		(273	)
Other, net		132			—							132
Total other expense		(59	)		(13	)		(69	)			(141	)
Income before provision for income taxes		2,010			(51	)		(345	)			1,614
Income tax benefit (provision)		1,200			14			(14)		g		1,200
Net income	$	3,210		$	(37	)	$	(359	)		$	2,814
Average common shares outstanding:
Basic		6,130			0			350		h		6,480
Diluted		6,510			0			350		h		6,860
Basic and diluted net income (loss) per share:
Basic	$	0.52									$	0.43
Diluted	$	0.49									$	0.41

ARI Network Services Inc.
Notes to Unaudited Pro Forma Condensed Financial Statements

a.) To eliminate the transactions estimated to record the purchase of OC-Net included in the January 31, 2007 financial statements of ARI.

b.) To record the actual January 26, 2007 transactions related to the acquisition of OC-Net. Purchase accounting adjustments include:

1)	the transfer of a cash wire in the amount of $1,092,000;
2)	the issuance of a $700,000 three year note paid quarterly with interest compounded daily at the prime interest rate plus 2%;
3)	the issuance of 350,000 shares of ARI common stock at $2.02 per share;
4)	the recording of an accrued cash holdback of $150,000 payable on January 26, 2009;
5)	the elimination of OC-Net’s equity prior to the acquisition including common stock of $2,000 and retained earnings of $186,000;
6)	the adjustment of $525,000 to record capitalized software costs at market value;
7)	the recognition of $1,190,000 of intangible assets related to customer relationships, assembled and trained workforce; and
8)	the recognition of $721,000 to record goodwill.

c.) To record the increase in amortization costs related to the increase in capitalized software costs amortized over five years.

d.) To record the increase in amortization of intangibles related to capitalized customer lists and assembled and trained workforce amortized over six and five years, respectively.

e.) To eliminate selling, general & administrative expense to reflect reductions in administra- tive force implemented at closing.

f.) To record interest expense on the notes payable at an effective interest rate of 10.25%.

g.) To eliminate income tax expense due to NOL carryovers of ARI.

h.) The weighted average number of shares of Common Stock outstanding are adjusted for the the issuance of 350,000 shares of ARI Common Stock for the acquisition of OC-Net.