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INVESTOR PRESENTATION NASDAQ: ARIS FY15 ARI Network Services, Inc. | investor.arinet.com

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Page 1: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

INVESTOR PRESENTATION

NASDAQ: ARIS

FY15 ARI Network Services, Inc. | investor.arinet.com

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SAFE HARBOR STATEMENT

Statements in this presentation are "forward-looking statements" within the meaning of the Private Securities Litigation

Reform Act. The forward-looking statements can generally be identified by words such as "believes," "anticipates,"

"expects" or words of similar meaning. Forward-looking statements also include statements relating to the Company's

future performance, such as future prospects, revenues, profits and cash flows. The forward-looking statements are

subject to risks and uncertainties, which may cause actual results to be materially different from any future performance

suggested in the forward-looking statements. Such risks and uncertainties include those factors described in Part 1A of

the Company’s most recent Annual Report on Form 10-K, as such may be amended or supplemented by subsequent

Quarterly Reports on Form 10-Q or other reports filed with the Securities and Exchange Commission. Readers are

cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made

only as of the date hereof, and the Company undertakes no obligation to publicly release the result of any revisions to

these forward-looking statements. For more information, please refer to the Company’s filings with the Securities and

Exchange Commission.

During this presentation, we will discuss GAAP measure such as net income, as well as certain non-GAAP measures

such as EBITDA. We have posted on www.investor.arinet.com, a reconciliation of these non-GAAP financial measures

to the most comparable financial measures under GAAP.

1

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COMPANY OVERVIEW

Roy W. Olivier, President & CEO

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ARI’S INVESTMENT HIGHLIGHTS

Strategic Financial

• Industry-leading provider of software tools and

marketing services

• Leader in solutions to help dealers, distributors and

OEMs in selected markets Sell More Stuff!

• #1 or #2 in all core markets served

• Dominant player in powersports, outdoor power and

marine markets with 40%+ market share

• Manage largest content library in markets served

• Attractive market opportunity

• Breadth of offering means no single competitor

competes across every vertical

• Recently entered new verticals that expand total

addressable market by 5X

• Multiple growth opportunities

• Expanded service offerings to grow both customer

base and average revenue per customer

• Europe and Asia remain largely untapped

• Consistent track record of growth and

profitability

• 22% revenue CAGR over last three years

• In FY15, Adjusted EBITDA and cash flow growth

outpacing revenue growth

• Strong recurring revenue profile• Roughly 90% of revenue is recurring

• Highly diversified customer base

• 22,000+ equipment dealers

• 195+ distributors

• 1,500+ manufacturers

• Profitable and Cash Flow Positive

• TTM Adjusted EBITDA margins of 16%

• Operational cash flow inline with Adjusted EBITDA

• Low capital intensity• Strong free cash flow given low capital expenditure

requirements

3

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WHAT DO WE DO?

We help our customers Sell More Stuff™

In-Store

• Dealer business management system

• OEM parts lookup

• Aftermarket Parts, Garments &

accessories (PG&A) lookup

• Lead management

Online

• Lead generation

• eCommerce

• OEM parts

• Aftermarket PG&A

• Digital marketing services

4

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WHO ARE OUR CUSTOMERS

Dealers Distributors Manufacturers (OEM)

Our Customers are:

PowersportsOutdoor Power Marine RVAppliances

CORE

Tire & Wheel HME

Markets We Serve:

GROWTH

Aftermarket

Auto Service

What “Stuff”?Whole Goods

(Tires, Bike, Boat,

RV)

OEM PartsAftermarket Parts,

Garments &

Accessories (PG&A)

Service & Tire

5

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CONTENT THAT DRIVES COMMERCE

Aftermarket PG&A1,400+ Manufacturers

500K Parts

Whole Goods315 Manufacturers

176K Models

OEM Parts120+ Manufacturers

500K Models

10MParts

MONETIZED VIA

Lead Gen

Websites

eCommerce

Websites DaaSDigital

Marketing

Mobile

Apps

Business

Management

6

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HOW DO WE HELP?

CONTENT

OEM Parts120+ Manufacturers

500K Models

10MParts

Aftermarket PG&A1,400+ Manufacturers

500K Parts

Whole Goods315 Manufacturers

176K Models

7

Improves productivity and

profitability at Dealership

Business

Management

POS / Inventory Mgmt.

& Accounting

SEM

ORM

SOCIAL

EMAIL / TEXT

Digital Marketing

Leads for major units

eCommerce sales

Web Presence

Lead Gen &

eCommerce

Websites

eCatalogs

Increases sales in Dealership

Improves customer satisfaction

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BUSINESS MODEL

Business Mgmt.eCatalogsLead Gen + eCommerce

Websites

ARPD = Average Recurring Revenue Per Dealer

Data as of and for the year ending July 31, 2015

¹Does not include bulk customers

Digital Marketing

SaaS / Subscription

55% of Total Revenue

ARPD: $3,000

Target Growth: 10% - 20%

34% of Total Revenue

ARPD: $1,800¹

Target Growth: 2% - 4%

5% of Total Revenue

New Offering with

TCS Acquisition

(Acquired 9/30/14)

3% of Total Revenue

ARPD: $6,400

8

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SERVICING MULTI-LINE DEALERS

Appliances Marine & RV Outdoor Power Wheel & Tire Powersports

9

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GROWTH DRIVERS

All Markets

• New Logos

• Increase ARPD²

• Lower Churn

• Digital Marketing

Acquisitions that align with our strategy

¹Total addressable market represented by the green bars . Percentages represent ARI’s market share , or the percentage of U.S. dealers that currently use 1 or more of our

products. For example, ARI currently has 40% market-share of the OPE vertical; with 40% of those dealers using 1 or more of ARI’s products.

²Average revenue per dealer

³Home Medical Equipment

66%

40%

90%10%

25K dealers

MA

RK

ET

SIZ

E

New Markets

• HME³

• Tire & Wheel

• Aftermarket Auto

Service

66%

40%

90% 10%

2%

17%

0%

25K dealers 125K dealers

10

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HISTORICAL GROWTH

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Revenue

Other

Non-Strategic RevenueNon-Recurring Revenue• Pro Svcs• Older Businesses

11

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HISTORICAL GROWTH

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Revenue

Other eCatalog

eCatalog• $14M Revenue• 16,000 +Dealers• 100 Countries

12

Page 14: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

HISTORICAL GROWTH

In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf

of our customers.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Revenue

Other eCatalog Website

Lead Gen/eCom Websites• $22M Revenue• 6,000 Websites

13

Page 15: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

HISTORICAL GROWTH

In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf

of our customers.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Revenue

Other eCatalog Website Digital Marketing

Digital Marketing Services• $1M Revenues• 175 Customers

14

Page 16: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

HISTORICAL GROWTH

¹Point of Sale

In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf

of our customers.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Historical Revenue

Other eCatalog Website Digital Marketing POS

Business Mgmt System/POS¹• $2M Revenues• 1,500 Locations

15

Page 17: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

HISTORICAL GROWTH

¹Point of Sale

In FY13 Q3 we made a change to our lead generation service business model, eliminating the pass-through cost of purchased ad words from the search engine providers on behalf

of our customers.

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Other eCatalog Website Digital Marketing POS

Over $40 M in Revenue for FY15

16

Page 18: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

RESULT OF STRATEGY

FY12 FY15

Revenues $22.5M $40.4M

Sales & Marketing Spend 20.4% 25.8%

Sales & Marketing Head Count 38 121

TAM in Dollars $100 Million $1.5+ Billion

TAM – Total Addressable MarketFY12 results based on public filings; TAM based on 4 verticals and two productsFY15 results based on public filings; TAM based on 7 verticals and four products

17

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MANAGEMENT TEAM

Roy W. Olivier President & CEO

Rob A. Ostermann Chief Technology Officer

Bill Nurthen Chief Financial Officer

Brad Smith V.P. Product Management

Management & Insiders own 8.65%

Robert JonesV.P. of Sales

Joined ARI September 2006 as Vice President of Global Sales and Marketing / Appointed as President and CEO in May 2008 /

Director since 2008 / Previously worked for three Fortune 500 companies before starting his first software company in 1989 focused

on developing multi-media CD-ROM titles. Sold that company in 1993 to start a software company focused on developing software to

help dealers in the construction, material handling, mining, and outdoor power vertical markets which was sold to ProQuest (now

Snap-On) in 2000.

Joined ARI as Chief Financial Officer in November 2013 / CFO of Cabrera Capital Markets, LLC 2011-2013 / CFO of bioLytical

Laboratories 2008 to 2011 / Vice President of Finance and then CFO of Inforte Corp., NASDAQ (INFT) 1999 to 2007 / Financial

operations roles at Platinum Technology International NASDAQ (PLAT) / MBA from The Kellogg School of Management at

Northwestern University / BBA undergraduate degree from The University of Notre Dame.

Appointed Chief Technology Officer of ARI in August 2012 having served as Executive Director of Technology since November 2011

and Director of Product Engineering since joining the Company in June 2008 / Served in various technology management and

development roles at Parcel Pro Inc. in Torrance, California and The California Breath Clinics in Los Angeles, California from 2003-

2008 / Lead developer at OC-Net, Inc. in Cypress, California / B.S. in Business Administration, Computer Information Systems from

California State University.

Appointed Vice President of Sales in August 2014 / Most recently served as ARI’s Executive Director of Sales and served as Director

of Dealer Sales following ARI’s November 2012 acquisition of Duluth, Minn.-based 50 Below / Joined 50 Below as supervisor of the

UPS Program in the Financial Services Division in 2011 / Promoted to Sales Manager of the Powersports division in January 2012

and Director of Sales and Service in May 2012.

Appointed Vice President of Product Management in January 2014 / Joined ARI in 2007 and most recently served as Director of

Product Management and General Manager of Aftermarket / Double B.A. in Web/Technology Development and Spanish from the

University of Wisconsin-Stevens Point / MBA from the University of Wisconsin-Eau Claire in 2012 / In conjunction with MBA program,

consulted on an East Asian supply-chain consultancy for a Fortune 500 marine manufacturer.

*Long-term equity bonus plan aligned with Shareholder interests. Management team granted restricted stock that vests at $6, $7, $8 & $9

18

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FINANCIAL OVERVIEW

Bill Nurthen, CFO

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MOST RECENT QUARTER HIGHLIGHTS¹

1 as of and for the quarter ending July 31, 2015

² YoY for the year ending July 31, 2015

³ Customer Acquisition Costs

10 years of Positive Adjusted EBITDA & Operating Cash Flows

• Total Revenue $10.9M

• 90.1% Recurring Revenue

• 82.5% Gross Margin

• Dealer Sales Bookings Up 17.0%²

• Operating Cash Flow of $1.7M

• Total CAC³ ‐ 11.3 months

• Adjusted EBITDA Margin of 16.5%

Mill

ion

s

Quarterly Recurring Revenue (QRR)

FY 13 FY 14 FY 15

$5.0

$6.0

$7.0

$8.0

$9.0

$10.0

$11.0

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

QRR

20

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$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0

FY11 FY12 FY13 FY14 FY15

Mill

ion

s

FY = Fiscal Year Ending July 31

Recurring Revenue Total Revenue

5-yr Total Company Recurring Revenue Growth CAGR = 16.4%

$21.3 $22.5

$30.1

$40.4

81.7%

$33.0

REVENUE GROWTH

83.2% 89.7% 93.6% 90.2%

21

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-$1.0

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

FY11 FY12 FY13 FY14 FY15

Adjusted EBITDA Operating Cash Flow Free Cash Flow

$4.6

$3.8

$4.4

$6.6

Mill

ion

s

24.4% 20.5% 12.7%

FY = Fiscal Year Ending July 31

13.4% 16.3%

ADJUSTED EBITDA & CASH FLOW

Includes $1.2M of

acquisition-related costs.

Integration related cost-reduction in

FY14Q2, $2.5M annualized

$3.5

22

$5.2

$3.5

$2.4 $2.4

$6.3

$1.1 $1.1

($0.1)

$4.2

Free Cash Flow = cash flow from operations less capital expenditures and capitalized software development

($0.0)

Page 24: SAFE HARBOR STATEMENTarinet.com/investor-relations/uploads/financial/fy15-q4/15Q4 IR Presentation.pdfDuring this presentation, we will discuss GAAP measure such as net income, as well

BALANCE SHEET HIGHLIGHTS¹

FY15

Cash and Investments: $2.3M

Federal NOLs of $4.5M

Total Debt and Lease Obligations: $10.8M

Shares Outstanding: 17.1M

Stock Price*: $3.96

Market Cap.: $67.7M

Enterprise Value: $76.3M

TTM Enterprise Value/Adjusted EBITDA: 11.6x

TTM Enterprise Value/Revenues: 1.9x

¹ As of and for the year ending July 31, 2015

* As of Market Close 11/6/15

23

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DCi ACQUISITION

Direct Communications Inc. (“DCi”) is a leading provider of differentiated product content and electronic parts catalog software serving manufacturers, distributors, jobbers and independent retailers in the $300 billion automotive aftermarket.

Date: 7/14/15

Consideration: $3.75M cash at closing

$2.0M Seller Note (4 yrs., 4% interest to be adjusted based on

working capital adjustment as defined in the Purchase Agreement)

$0.5M equity (159,795 shares of ARI Common Stock)

Funded: Primarily through proceeds from the May 2015 equity offering.

Financial Commentary: Expected to add $4M to FY16 revenue and be accretive to FY16

adjusted EBITDA.

24

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PEER GROUP ANALYSIS

Software Equity Group Multiples1

ARI2 SaaS Index3 Software Index4 Internet Index5

EV/Revenue 1.9 5.6 – 7.3 2.9 – 3.1 1.8 – 2.1

EV/EBITDA 11.6* 46.2 – 61.7 14.6 – 15.5 16.7 – 19.1

1 Based on the Software Equity Group’s Software Industry Financial Report for Q1 152 As of Market Close 11/6/15*Adjusted EBITDA3 57 Public Companies4 137 Public Companies5 104 Public Companies

25

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RECENT TRANSACTIONS

• Cox Acquires DealerTrack (TRAK) (6/15)

– 4.7x EV/Revenue

– 36.1x EV/EBITDA

– 60% Premium¹

• INCADEA (INCA) Acquired by DealerTrack (12/14)

– 3.0x TEV/Revenue

– 19.3x TEV/EBITDA

– 70% Premium²

26

¹ Offer represents premium of 60% to 6/12/15 stock price.

² Offer represents premium of over 70% to 1 year average.

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APPENDICES

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YEAR COMPANY PRODUCT VERTICAL

2015 DCi eCat Automotive Aftermarket

2015 TASCO Corporation Business Management Systems (“BMS”) Tire & Wheel

2014 TCS DMS, Lead Gen/eCommerce Tire & Wheel

2013 DUO Web Services Digital Marketing Services Powersports

2012 50 Below Lead Gen/eCommerce Home Medical, Tire & Wheel

2012 Ready2Ride eCat Powersports

2009 Channel Blade Lead Gen/eCommerce Marine

2008 Info Access eCat Appliances

2007 OC-Net Lead Gen/eCommerce Powersports

2003 VertX Commerce Lead Gen/eCommerce Powersports

1999 Network Dynamics eCat Outdoor Power

1998 POWERCOM-2000 eCat Outdoor Power

1997 Empart Technologies eCat RV

1996 CD*\.IMG eCat Outdoor Power, Powersports, Marine

APPENDIX 1: ACQUISITION HISTORY

28

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# U.S.

Dealers4,700 11,000 3,100 30,000 2,000 18,000 25,000 80,000

ARI Website

Customers1,721 1,222 418 N/A 20 3,250** 490 0

ARI

eCatalog

Customers

4,200* 4,011* 3,000* 1,700* 20 N/A N/A 0

ARI POS¹

Customers0 0 0 0 0 1,500² 0 0

*total number is approximate and includes a large bulk customer’s estimates

** includes TCS acquisition

¹ Point of Sale

² Total number of physical location rooftops

Powersports Outdoor Power Marine RVAppliances

CORE

Tire & Wheel HME

GROWTH

APPENDIX 2: TOTAL ADDRESSABLE MARKET (TAM)

Aftermarket

Auto Service

29

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3 Sales

Channels• OEM Sales

• Dealer Inside Sales

• International Sales

100Over

Countries Served

2 Geographic

MarketsAmericas & EMEA

Headquarters Milwaukee, WI Int’l Sales/Support The Netherlands

387Employees

*

*includes DCi, TCS & TASCO acquisitions

APPENDIX 3: LOCATIONS

eCatalog Installs

Website Installs 30

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APPENDIX 4: BENEFICIAL OWNERSHIP¹

Amount of Beneficial Ownership1

Percent Ownership

Wellington Management Company (2) 1,725,300 9.65%

Michael D. Sifen, Inc. (3) 1,205,128 6.74%

Samjo Capital, LLC (4) 1,100,000 6.15%

Park City Capital, LLC (5) 1,000,000 5.59%

Grand Slam Asset Management, LLC (6) 945,861 5.29%

All affiliates as a group 5,976,28 33.43%

31

(1) Except as otherwise noted, the persons named in the above table have sole voting and investment power with respect to all shares shown as beneficially owned by them. Includes options exercisable within

60 days of June 1, 2015.

(2) Ownership information is provided as of December 31, 2014 based upon Schedule 13G amendment filed on February 12, 2015. Includes 250,000 shares acquired in connection with the May 7, 2015 equity

offering.

(3) Ownership information is provided as of March 15, 2013 based upon Schedule 13G filed on May 22, 2013 by Michael D. Sifen, Inc. Total includes 498,461 shares of common stock held by Michael D. Sifen

and 706,667 shares of common stock held by Michael D. Sifen, Inc., an entity controlled by Mr. Sifen.

(4) Ownership information is provided as of May 12, 2015 as the result of the purchase through a public offering by the Company.

(5) Ownership information is provided as of the Schedule 13D filed December 10, 2014.

(6) Ownership information is provided as December 31, 2014, based upon Schedule 13G amendment filed February 11, 2015. Includes 150,000 shares acquired in connection with the May 7, 2015 equity

offering.

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APPENDIX 5: INSIDER OWNERSHIP¹

Name of Officer / Director Amount of Direct Beneficial Ownership Percent Ownership

Roy W. Olivier (2)(3) – President & CEO 856,645 4.79%

William A. Nurthen (3) – Chief Financial Officer 151,215 *

Chad J. Cooper – Director 138,040 *

William C. Mortimore – Director 107,726 *

William H. Luden, III – Director 95,315 *

Robert Y. Newell, IV - Director 80,826 *

P. Lee Poseidon – Director 60,064 *

Marvin A. Berg, III (4) – VP Operations 55,636 *

All current executive officers and directors as a group 1,545,467 8.65%

32

* Denotes less than 1%

(1) Except as otherwise noted, the persons named in the above table have sole voting and investment power with respect to all shares shown as beneficially owned by them. Includes options exercisable within

60 days of October 21, 2015.

(2) Mr. Olivier’s total includes 172,955 shares held in the Company’s 401(k) plan, of which Mr. Olivier is a trustee with voting power. Mr. Olivier disclaims any beneficial ownership in these shares in excess of his

pecuniary interest 13,246 shares.

(3) Management team granted 110,000 shares of performance based restricted stock that vests at $6, $7, $8 & $9.

(4) Mr. Berg resigned from the Company effective July 31, 2015.

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APPENDIX 6: COMPETITIVE LANDSCAPE

eCatalogs

Lead Gen +

eCommerce Websites

Business Management

Digital Marketing

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APPENDIX 7: COMPANY ANNOUNCES PRICING OF

UNDERWRITTEN OFFERING ALIGNED WITH ITS

ACQUISITION STRATEGY

ARI communicated its intention to use the net proceeds from the offering to

invest in or to acquire, from time to time, businesses that align with ARI’s core

acquisition strategy, to repay the outstanding balance of $1,750,000 on its

line of credit which was incurred in connection with its recent acquisition of

the assets of TASCO Corporation, thus making it fully available for additional

transactions, and for general corporate purposes.

Date: 5/7/2015

Shares: 1,760,000

Price: $3.00

Gross Proceeds: $5.3M

Net Proceeds: $4.8M

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APPENDIX 8: TASCO ACQUISITION

TASCO Corporation (“TASCO”), is a leading provider of business management,

point of sale and other software exclusively designed for automotive tire and

wheel dealers (“T&W”).

Date: 4/28/15

Consideration: $1.75M cash at closing

$800K equity (242,424 shares ARI Common Stock)

$200K cash payment on anniversary of transaction (subject to

set-off & working capital adjustment)

Funded: Cash from operations & Line of Credit with Silicon Valley Bank

Consolidates two industry-leading business management software platforms

cementing ARI’s position as the most complete technology provider in the T&W

market.

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APPENDIX 9: TCS ACQUISITION

Tire Company Solutions, LLC (“TCS”), a leading provider of software,

websites and marketing services designed exclusively for automotive tire and

wheel dealers.

Date: 10/1/14

Consideration: $4.2M cash at closing

$3.0M Seller Note

$1.9M equity (619K shares of ARI Common Stock)

Earn-out (to be paid contingent upon specified revenue goals)

Funded: Combination of refinancing Senior Debt with Silicon Valley

Bank, our Line of Credit and cash from operations.

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