SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
                                   -----------

[x]      Annual report under section 13 or 15(d) of the Securities  Exchange Act
         of 1934 for the fiscal year ended March 31, 2001

[ ]      Transition report under section 13 or 15(d) of the Securities  Exchange
         Act of 1934 for the transition period from to


                         Commission File Number 0-24372
                         ------------------------------

                                  ARKONA, Inc.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

                            Sundog Technologies, Inc.
                     --------------------------------------
                     (Former name of small business issuer)



            DELAWARE                                      33-0611746
            --------                                      ----------
(State or other  jurisdiction  of              (IRS Employer Identification No.)
 incorporation or organization)




                           10542 South Jordan Gateway
                            South Jordan, Utah 84095
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (801) 501-7100


Securities  registered  under to Section  12(b) of the Act:  Name of exchange on
which registered: N/A None

Securities  registered  under to Section  12(g) of the Name of exchange on which
registered: OTC Bulletin Board Act: Common Stock, par value $.001

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Securities  Exchange  Act  during the past 12 months (or for
such shorter period that the registrant was required to file such reports),  and
(2) has been subject to such filing requirements for the past 90 days.
                                                            Yes   X    No
                                                                 ---      ---


Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

        Issuer's revenues for its most recent fiscal year were $327,015.


The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant as of March 31, 2001 was $4,843,091. The number of shares outstanding
of the issuer's common stock, par value $.001 per share, as of June 15, 2001 was
14,408,912 shares.



                     Transitional Small Business Disclosure
                               Format (Check one):

                                   Yes      No X
                                      ---     ---
<PAGE>




<TABLE>
<CAPTION>

                                Table of Contents
                                -----------------


<S>                                                                                                              <C>
PART I............................................................................................................1


   Item 1.   Description of Business..............................................................................1


   Item 2.  Description of Property..............................................................................32


   Item 3.  Legal Proceedings....................................................................................33


   Item 4.   Submission of Matters to a Vote of Security Holders.................................................33


PART II..........................................................................................................33


   Item 5.   Market for Common Equity and Related Stockholder Matters............................................33


   Item 6.   Management's Discussion and Analysis................................................................36


   Item 7.   Financial Statements................................................................................40


   Item 8. Changes in and Disagreement With Accountants on Accounting and Financial Disclosure...................40


PART III.........................................................................................................41


   Item 9.  Directors and Executive Officers of the Registrant...................................................41


   Item 10.  Executive Compensation..............................................................................47


   Item 11.   Security Ownership of Certain Beneficial Owners and Management.....................................52


   Item 12.  Certain Relationships and Related Transactions......................................................56


   Item 13.  Exhibits and Reports on Form 8-K....................................................................57

   Consolidated Financial Statements............................................................................F-1
</TABLE>

<PAGE>

                                     PART I

Item 1.   Description of Business

Certain statements in this Annual Report on Form 10-K constitute forward-looking
statements  within the meaning of Section 27A of the  Securities Act and Section
21E of the Exchange Act. You should regard any statement in these  sections that
is not a statement  of  historical  fact to be a  forward-looking  statement  of
management's  beliefs,  expectations  and plans,  all of which may be  adversely
affected by risks and other factors  outside the control of the Company.  Actual
results   may  differ   significantly   from  the  results   discussed   in  the
forward-looking statements. Factors that might cause actual results to vary from
the views expressed in forward-looking  statements include,  but are not limited
to, risk factors discussed below in " - Certain Risk Factors."

Introduction


         ARKONA,   Inc.   ("we,"  "ARKONA"  or  the  "Company")  is  a  Delaware
corporation  organized in 1992 and engaged in the software development business.
Since our acquisition of substantially  all of the assets of Ensign  Information
Systems  ("Ensign") in November  2000, we have been  principally  engaged in the
business of developing,  marketing and selling software  products for use in new
and used-car dealership markets.


History


         Arkona was  organized  in 1992 for the  initial  purpose of seeking and
acquiring  business  opportunities.  We were  originally  known as The  Thorsden
Group, Ltd but changed our name to Sundog  Technologies,  Inc. in April 1999. In
February  2001,  we changed our name from Sundog  Technologies,  Inc. to ARKONA,
Inc.  in  order  to  avoid  a  dispute  with  Sun  Microsystems  over  trademark
infringement.

Acquisition of Ensign Information Systems

         In late 2000, we discovered Ensign  Management  Systems and its primary
product, the Centari Dealer Management Suite ("CDMS"). Ensign was a company that
had a proven product,  great technology and  technologists  but lacked extensive
management,  sales and marketing resource.  On November 9, 2000, we entered into
an Asset Purchase and Sale Agreement with Ensign Information  Systems.  Pursuant
to such agreement,  we issued 1,500,000 shares of common stock for substantially
all of the assets of Ensign,  including intellectual property. We structured the
acquisition to be non-dilutive to shareholders. In order to make the transaction
non-dilutive,  the Company  purchased  from certain key  shareholders  1,740,250
shares of outstanding common stock at a price of $0.02 per share.

         At the time of the  asset  purchase,  Ensign  was  installing  its CDMS
product in nine dealerships per year.  Today, we are installing our CDMS product
in more than six automobile  dealerships  per month and are optimistic  that the
number of installation will continue to grow during 2001.

Merger with Arkona, Inc.; Suspension of Universal Update(TM)

         In October 1997, we acquired Arkona,  Inc., a Utah  corporation  ("Utah
Arkona"),  as a  wholly-owned  subsidiary  corporation.  In 1997,  Utah Arkona's
founders  anticipated  the  growth  of  an  emerging  market  niche,  enterprise
information   exchange   (EIX),   an   outgrowth   of   the   traditional   data
replication/synchronization    marketplace.   This   technology   allows   rapid
integration of business  information  systems throughout the enterprise and easy
sharing of critical information with remote,  occasionally connected workers and
partners around the world. During December 1998, Utah Arkona completed the first

                                       1
<PAGE>


shipping version of its core product, Universal Update(TM). We shipped a revised
Universal  Update(TM) v. 1.5, in June 1999.  Although the results of pre-release
evaluations  were promising,  early versions of Universal  Update(TM) v. 1.5 did
not sell well.

         In 2000,  with new management and an expanded sales force,  we marketed
Universal  Update(TM) to more than 2000 potential customers and repositioned the
technology  in  the  mobile  computing  market.  Nevertheless,  soon  after  the
acquisition  of the Ensign  assets in  November  2000,  in light of the  limited
resources  at our  disposal  and  concerns  over the amount of  additional  work
required to make  Universal  Update(TM) a profitable  endeavor,  our  management
determined to suspend further development and marketing of Universal  Update(TM)
and focus our resources and attention to the automobile  dealership  back office
products  developed by Ensign.  In January  2001, we merged Utah Arkona with and
into the Company,  with the Company  surviving,  in order make the name "Arkona"
available to the Company.

Sale of Qui Vive; Envision Write-Off.

         On June 5,  1998,  we  formed a new  subsidiary  called,  Qui Vive Inc.
("QV"). QV was engaged in the development of e-mail security software.  On April
7, 2000,  we sold our  interest in QV to  Envision  Development  Corporation,  a
Florida  corporation  ("Envision") in exchange for 1,482,500  shares of Envision
common  stock.  We have since written down to zero all of our shares of Envision
common stock.

Our Centari Dealer Management Suite

         Our Centari  Dealer  Management  Suite (CDMS) is our flagship  product.
This  innovative  software  solution  is  fully  integrated  and is  capable  of
automating  all major aspects of an automobile  dealership,  including the parts
department, sales, finance, insurance, customer management and service. CDMS was
developed to run on IBM's iSeries (AS400)  platform,  a technology that has been
market-proven  and  offers  tremendous  stability.  We  also  offer  CDMS  in an
application service provider ("ASP") format.  Whether a client wants an in-house
or an ASP  implementation,  ARKONA is  prepared  to  deliver a fully  integrated
turn-key solution.

Feature Overview

The  standard  new  car  dealership  management  version  of CDMS  includes  the
following features and functions.

Vehicle Sales: The Business Office application supports the sales department and
features deal desking,  deal  contracting,  managing  front and back-end  gross,
vehicle inventory  management,  customer follow-up and prospect  management.  It
also supports integrated purchase orders, and several sales tracking reports for
deals and  salespeople.  Some  features  related to vehicle  sales  include  the
following:

o   The deal screen has real time  vehicle  costs  including  detail for repair
    orders, purchase orders and parts invoices.

o   This  application  tracks  every  customer  contact  within any  dealership
    department.

o   The prospective  customer follow up on-line  analysis  integrates with deal
    program.

o   It includes real-time online analysis of front and back sales and gross for
    capped and/or uncapped deals in a date range.

o   It includes F&I department sales, gross, and percentage penetration.

o   It can track by individual salesperson or by sales team.

o   It  produces  follow  up  reports  for  sales  in a date  range  and  lease
    expiration.

Document Generation:  Document Generation allows the user to program,  maintain,
and print F&I forms.

                                       2
<PAGE>

General Ledger: All applications integrate with the general ledger in real-time.
Authorized  users have easy  access to G/L detail for any open or closed  month.
The general ledger application features accounts  receivable,  accounts payable,
purchase orders,  journal entries, cash receipts,  check writing, bank deposits,
cashiering,   bank   reconciliation,   scheduled  entries,   full  reporting  of
transaction detail, and is multiple company compatible.

o   Real-time online financial analysis includes:
    o    Custom  financial  reports  with up to 16  columns  online and in print
         format
    o    Dynamic column headings and date ranges
    o    Drill down to source  documents
    o    Forecasting
    o    Compare MTD, QTD, YTD for current and any previous year.

o   The general ledger function includes  on-screen G/L trial balance detail by
    account number sorted by document number, control number, journal, or date.
o   This application produces individual laser A/R statements, lien payoff laser
    checks, flooring laser checks and flooring EFT's.
o   An electronic  laser purchase order system is available for all departments;
    un-posted  purchase orders are included in vehicle cost; the system includes
    a closed purchase order report.
o   The  journal  entry  system  includes  real-time  posting to any open month,
    document void,  selective void within a document,  no batches,  month-end or
    year-end close.
o   It handles bank  deposits and bank  approved  laser  deposit slips for cash,
    checks, and credit cards.
o   Accounting copies of checks reprint on demand.
o   This application features on-screen G/L detail by document number with drill
    down and  reprint  of  source  document.  It also  features  on-screen  bank
    statement reconciliation.
o   All asset and  liability  accounts  are  controlled  (scheduled)  by control
    number, non-aged and aged detail and summary reports.
o   It  includes a powerful  G/L  transaction  list in a date range by  journal,
    account  type,  and/or  account  number.  It is also  sorted and  subtotaled
    dynamically by journal, account, date, document, and/or control number.
o   Combined  financial  statements  include multiple  franchises on one factory
    financial and/or multiple companies printed from one company.
o   Parts invoices,  purchase orders, checks,  receipts, or repair orders can be
    reprinted individually, by date range, or by quantity for auditing purposes.

Vehicle Inventory:  The Vehicle Information application tracks,  maintains,  and
reports on the vehicle inventory.

o    G/L is automatically  updated when vehicles are entered into inventory.
o    One keystroke  shows  number of  vehicles,  their value and age.
o    It includes user defined fields and a paperless special order system.

Parts Inventory and Invoicing:  Parts inventory & invoicing application supports
the parts  department  and features  parts  inquiry,  billing,  special  orders,
integrated  purchase  orders,  demand  tracking,  recommended  stock  orders,  a
physical  inventory  system,  phase-in/phase-out,   factory  parts  information,
comprehensive sales and inventory analysis reporting,  and full integration with
the general ledger and accounts receivable.

o    This application makes available  real-time A/R customer  information about
     credit limits, balances and more.
o    It includes a paperless special order system.
o    Parts kits and a related  parts system  automatically  bills  complementary
     parts.
o    It can receive on-screen requests for parts from technicians.

                                       3
<PAGE>

o   It includes an inter-company parts locater.
o   It includes a  comprehensive  dynamic days supply stock ordering system with
    EOQ adjustment.
o   Easy on-screen physical  inventory includes perpetual  inventory and random
    or user-defined bin selection for count sheets and comprehensive  on-screen
    and/or printed variance reports.
o   Factory  and manual  supersessions  and parts  inter-changes  system  sells
    oldest part  numbers  first and looks for any on-hand  quantity of any part
    number in a supersession chain.
o   Overnight,  phone or Internet  factory part price updates  require no update
    tapes.
o   This  application  includes  on-screen or printed  real-time  parts analysis
    reports by manufacturer or stocking group.

Portfolio  Management:  Portfolio Management integrates with the business office
and allows the  dealership  to initiate  and service  finance  contracts  in the
Buy-here/Pay-here  format.  It also includes  reporting for payment  receipt and
investment company management.

Payroll  &  Personnel  Management:  Payroll  &  Personnel  Management  is a full
in-house payroll check and tax reporting application.

Service  Department:  The Service  Department  application  supports  mechanical
department and body shop. It features an integrated  appointment system,  repair
order  writing,   sales  and  technician   analysis   reports,   work-in-process
management,   and  full   integration  with  the  general  ledger  and  accounts
receivable.

        o It  includes a complete  on-screen  appointment  system;  appointments
          convert to repair orders.
        o On-screen work in process  management  includes dynamic  selection and
          display of open repair orders by service writer and/or status.
        o It features a menu for pricing, discounts, and coupons.
        o Service can check the status of special order parts.
        o It includes an electronic repair order for actual technician time log.
        o Technicians can send a message to parts department.

Contact Management:The Contact Management application is an integrated follow-up
system that  features an automatic  follow-up  letter  generation  program.  The
application  prints mailing labels,  lists, or sends data to a file for selected
customers. The application automatically generate letters, postcards, envelopes,
or system  messages  based on  user-defined  events such as birth  dates,  sales
anniversaries, and receipted special orders.

These features allow the Centari Dealer Management  Solutions to be functionally
competitive with other DMS systems while maintaining  greater  flexibility and a
significant cost advantage.


                                       4
<PAGE>


Flexibility And Full Package Integration

         CDMS was  created  using a modular  approach  with an  object  oriented
development scheme. Each fully featured module is tightly integrated so that all
modules  work  together.  As  customers  request new  features,  new modules are
created without having to modify the entire  software.  Each new module is added
to the  software as a "plug and play"  feature.  This modular  approach  enables
ARKONA to enhance and customize  CDMS in a fraction of the time required by some
other software providers.

         ARKONA's unique process for  integrating  modules permits more users to
share  information  and allows for  widespread use of company data. As a result,
management and other decisions can be made based on information  obtained from a
variety of areas and applications.  The effect can be increased productivity and
a solid basis for making sound business decisions.

         In February  2001,  ARKONA  made CDMS  available  using an  Application
Service  Provider  (ASP)  model.  We believe that this  solution  gives ARKONA a
significant  advantage over the  competition by allowing  dealers to access CDMS
across  the  Internet  using  inexpensive   access   technologies  and  personal
computers.  An ASP  implementation  has the following  advantages  over the more
traditional  approach:  o It significantly  reduces cost of entry because of the
reduced need to purchase computers and
         software.

o It significantly reduces on-going hardware maintenance costs.

o It eliminates the need to maintain or periodically upgrade operating systems.

o  It  reduces   information  system  headcount  expense  since  ARKONA  assumes
responsibility for the system.


Easy-To-Use Software

         ARKONA's  CDMS is  packed  with  features  that make it easy to use and
manage. CDMS was designed with the dealer in mind, not computer technicians.  No
programming  or technical  knowledge is required to use the features,  including
the  products   analytical  tools.  The  Help  Text  key  is  one  of  our  most
user-friendly features. It often provides our clients with on-screen information
when they need it, without the necessity of going to the documentation.

         Not every  feature of CDMS is used by a particular  dealer on a regular
basis.  ARKONA's  streamlined  design  emphasizes more frequently used features,
while not neglecting the less-used. For instance, Physical Inventory is integral
to the Parts  module.  It's a handy  feature  that fully  automates an annual or
perpetual  inventory  count.  But when it's not needed,  it's off to the side so
that it won't get in the way.

                                       5
<PAGE>

Security

         Our  software  includes   state-of-the-art   on-line  access  security.
Multiple  phases of security  allow an  operator  maintenance,  entry,  inquiry,
report or complete lockout. In addition, our security system allows a dealership
to have one  operator  enter data and  another to  process  it.  With the use of
Virtual Private Network (VPN), transactions pass securely over the Internet from
server to workstation and back again.

Easy Recovery

         Recovery  is built  into all  operations.  If for any reason the system
were to fail,  such as during an Accounts  Receivable  statement run, the dealer
need only  restart  the system  and the task will pick up where it left off.  In
General Ledger,  if the hardware fails during a major posting,  the program will
remember where it was and keep running from that point.

         With the  release  of our ASP  technology,  ARKONA  is now  looking  to
provide our clients  with data backup and  mirroring  services.  This service is
offered to assure 24/7 data  availability  and recovery from data  corruption or
natural  disasters.  For clients that elect our ASP package,  data availability,
protection  and recovery is a built-in  feature.  For clients  operating CDMS in
house,  we offer this service for a monthly fee. Our ASP systems are hosted in a
physical  environment  that is  operational  24 hours a day, 7 days a week,  has
multiple fiber trunks from multiple sources, backup generators and runs of fully
redundant hardware, power and ISP connections.  The hosting facility also offers
raised floors and HVAC  temperature  control systems with separate cooling zones
and  seismically  braced  racks.  It  has a wide  range  of  security  features,
including  state-of-the-art smoke detection and fire suppression systems, motion
sensors,  and 24x7  secured  access,  as well as video camera  surveillance  and
security breach alarms.

Client Services


         Our goal is to ensure  that,  when a new  dealership  becomes an ARKONA
client, it is just the beginning of a close working relationship. It is far less
costly to keep a customer than to find a new one. Following  implementation,  we
continue to monitor our clients experience to assure that they are using all the
productivity tools and features built-in the product.  Currently,  we offer free
unlimited  phone  support  between  the hours of 7:00 am and 6:00 pm MST  Monday
through Friday, and on Saturdays from 7:00 am until 2:00 pm.

         Since November,  2000, ARKONA's Client Services  organization has grown
by 500% in order to meet the demand for our CDMS product.

         As part of our ongoing  training  commitment to our clients,  ARKONA is
currently  organizing  "ARKONA  University." This program is designed to provide
ongoing  training to our  clients.  Clients will be given the choice of detailed
self-help manuals,  classroom-style training offered at ARKONA, on-site training
at the client's location or training via the Internet.  We recently entered into
an agreement with Web-X that enables ARKONA to provide Internet-based training.

         At ARKONA, we focus on solutions for client challenges.  In some cases,
that  means  providing  a  lower  priced   solution.   It  might  mean  software
customization  for a  particular  dealership.  It might be  better  support  and
training  than a customer is getting from its existing  vendor.  It might mean a
more robust,  easier to use technology.  Or, it might be just mean more personal
attention to a smaller dealer than our larger  competitors  can afford to offer.
To  assist in this  endeavor,  we have  organized  an  Dealer  Advisory  Council
comprised  of 7-10 dealers from across the country for the purpose of helping us
define and  evaluate  industry  trends and  direction.  Experience  continues to
reinforce  the  business  axiom  that  listening  to your  customer  is the most
effective way to stay ahead of the competition.

Market Overview


Market Definition

         The market for our CDMS product consists of the over 22,000  automobile
dealerships  in the United States.  Data from recent  industry  surveys  clearly
defines the use of information  systems in auto  dealerships.  The National Auto
Dealer Association (NADA) reports:

        o 97% of auto dealers use computers, 70% use a mainframe.

        o 18% will upgrade or replace their system in each calendar year.

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<PAGE>

o The average  annual  dealer  systems  expenditure on  information  systems is
  $96,000.

        o $45,000 average for dealerships selling 150 units annually.

        o $68,000 for dealerships selling 350 new units annually.

        o $132,000 for dealerships selling 750 units annually.

o The Average Dealerships uses 13 workstations.

        o 5 terminals average for dealerships selling 150 units annually.

        o 19 terminals for dealerships selling over 750 units annually.


Market Opportunity

         ARKONA currently has approximately 100 installed  dealership  locations
in a  market  consisting  of over  22,000  dealerships  in which  automation  is
mandatory to staying competitive. Annually, 18% (3900 dealerships) of the target
market replace upgrade or add to their systems,  which creates tremendous growth
potential. There are several defining market characteristics that present both a
significant  challenge,  and a  significant  opportunity,  for ARKONA.  o Market
domination by older  technology.  Eighty  percent of the  automotive  dealership
software  market is dominated by two  solutions - Reynolds & Reynolds  (R&R) and
Automatic Data  Processing  Inc.  (ADP).  Both of these products are based on 15
year-old   proprietary   technologies.   ARKONA   software   is   built  on  the
state-of-the-art  IBM iSeries (AS400) platform,  making it extremely flexible to
implement and maintain.  It addition,  the use of IBM's iSeries  platform allows
ARKONA to embrace newer computing  models such as the ASP  (Application  Service
Provider) or mobile computing models.

o        The market  leaders'  solutions  are expensive to install and maintain.
         Because the market leaders have captured such a large percentage of the
         market,  there is little natural market pressure to control pricing. As
         a result,  the prices charged by these  competitors are extremely high.
         These extremely high prices permit ARKONA to offer its price at a price
         that is consistent with long-term profitability but is well below those
         of R&R and ADP.

o        Increased  competition in the automobile dealer industry.  The National
         Automobile   Dealers   Association   (NADA)  has   identified   several
         significant  trends in the retail car and truck  environment  that will
         force dealers to better manage their business, including:

o        Pressure  on profit  margins  in all  departments  are  expect to force
         dealers  to  upgrade  management   procedures,   marketing  skills  and
         performance  in  each  department.   Reliable,  timely  information  is
         required to accomplish this.

o        Franchise  concentration  is forcing  dealers to increase  volumes even
         while profit margins are shrinking.

o        Continued  improvements in product quality and extended warranties have
         significantly  reduced  the  required  service for new  vehicles,  thus
         impacting  automobile  dealers'  traditional  source  of  revenue.  The
         shrinking service  opportunity and the growth of competing  third-party
         service providers (i.e.: Jiffy-Lube, Midas Mufflers, Brake-O, etc.) are
         pressuring  dealers  to operate  their  service  departments  as a true
         business entity with greater emphasis on customer satisfaction.

                                       7
<PAGE>

o        Manufacturers  are demanding more control over the marketing channel in
         an effort to manage  customer  satisfaction  and  volumes.  This effort
         includes  increased  requirements  in reporting,  physical  facilities,
         communications and computer systems.


The low  cost  and  high  functionality  of  ARKONA'S  CDMS  solution  can  help
automobile dealers face many of these challenges.  We view the challenges facing
today's automobile dealers as a great business opportunity for ARKONA.


Protection of Intellectual Property


We regard our intellectual  property as critical to our success,  and we rely on
copyright,  trademark  and trade secret  protection  to protect our  proprietary
rights in intellectual  property.  We are in the process of registering  certain
trademarks  related to our CDMS  product and  believe  that we have a common law
copyright that protects the source code of such product. In addition, all of our
employees  involved  in the  creation of any  software or other  products we are
developing are asked to sign confidentiality and invention  agreements.  We have
not,  however,  attempted to apply for a formal,  registered patent or copyright
with respect to our CDMS  product.  Although we intend to continue to take steps
to protect our intellectual property, there remains a risk that our intellectual
property rights may be challenged,  invalidated or  circumvented,  or the rights
granted thereunder may not provide any competitive advantage.

 Competition


         The  marketplace  for  automobile  dealership  information  systems  is
dominated by two large companies which have established severe barriers to entry
for  new  competitors.   Market  share  among  the  major  suppliers  of  dealer
information  systems is equally divided between  Automated Data Processing (ADP)
and Reynolds & Reynolds (R&R) with a combined market share of 80%. The remaining
20% is  shared by the rest,  including  Electronic  Data  Systems,  Inc.  (EDS),
Universal Computer Systems (UCS) and ARKONA.

         The  following  summaries  provide  general  information  on the  major
offerings  of the two  market  leaders,  ADP and R&R.  The  number of  installed
systems relates to total installations and does not breakout stand alone modules
such as dealer  communication  systems  (DCS) or  finance  and  insurance  (F&I)
services. The strengths and weaknesses of each vendor are briefly mentioned.

Automated Data Processing
Dealership Systems Division
Hoffman Estates (Chicago), IL

         ADP is a large,  international  firm with over $1.5  billion in revenue
and  over  200,000  clients  in all  divisions,  making  it  one of the  largest
independent  computing and consulting  firms in the U.S. The Dealership  Systems
Division  generates  an  estimated  $800  million  in  revenues  from  sales  to
automotive dealers.

Install Base:    8,000 Dealerships.
Hardware:        Proprietary.
Software:        Proprietary - PICK Operating System.

Strengths:       Large install base of dealers.
                 Highly rated in the marketplace.
                 Strong in accounting applications.
                 Local user groups in many cities.
                 Wide pricing ranges for systems.
                 National service and support.
                 Provides time sharing and service bureau services.

                                       8
<PAGE>

Weaknesses:      Very highly priced for performance.
                 Hardware has limited name recognition.
                 Hardware  maintained by ADP,  which is not  responsive  during
                 down-time.  Lack of flexibility in software performance.  High
                 internal  turnover  of skilled  personnel,  Service and Sales.
                 Lack  standard  features  such  as  check  reconciliation  for
                 payroll or Accounts Payable.


Reynolds & Reynolds (R&R)
Computer Systems Division
Dayton, OH

         Reynolds & Reynolds  has  revenues of  approximately  $1 billion with a
major  presence  in several  automotive  market  segments  including  auto parts
wholesale  distribution,  automotive  jobbers,  auto parts retail and  services.
Reynolds & Reynolds  also  markets  electronic  parts  catalog  systems,  dealer
communications  systems (DCS) and is the major supplier of custom computer forms
for dealer systems.

Install Base:     7,000 Dealerships
Hardware:         NCR Tower
Software:         Proprietary

Strengths:        Large dealership installed base.
                  Good references.
                  Competitive pricing.
                  Well-organized service and support.
                  Strong sales and marketing organizations.
                  Form sales to competitive installations.

Weaknesses:       Frequent hardware changes.
                  Software re-licensing with hardware change.
                  New product release problems.
                  Poor customer follow-up and release problems.
                  Poor customer follow-up and servicing.


         The  current  market  dominance  of ADP and R&R  creates a  significant
barrier to entry for ARKONA.  ADP and R&R benefit from the natural reluctance of
some dealerships to abandon the dominant technology and adopt a solution that is
new to the dealer and backed by a  relatively  unknown  company that has limited
resources.  In  addition,  we  believe  that  certain  automobile  manufacturers
(including Saturn,  Volvo and Lexus) require their franchisee car dealerships to
use  either  the ADP  solution  or the R&R  solution.  We are in the  process of
working with car dealerships,  the NADA and automobile manufacturers in order to
reduce or eliminate some of these barriers to entry.

         Although there are significant barriers to entry into the dealer market
and competition is strong, there is great opportunity for ARKONA solutions. Many
of the ADP and Reynolds & Reynolds  systems are over 5 years old. The  equipment
is paid for but the systems still require high maintenance with low reliability.
One of the key strengths of ARKONA is flexibility. Most dealers desire much more
autonomy than what our competitive vendors can allow.

         Additionally,  ADP and R&R charge very high monthly maintenance fees on
both hardware and software. In some cases, they mark up hardware  manufacturer's
prices by 300 to 400 percent.  This enables a  competitor  to bid a  replacement
system at equal or lower monthly costs even though the system is paid for.

                                       9
<PAGE>

         R&R has been  particularly  vulnerable  because of a regular shift from
one hardware supplier to another with little or no  transferability of software.
A dealer  must  re-purchase  the  software  with each new model R&R  introduces.
ARKONA has been able to provide a  continuous  flow of software  upgrades to all
users regardless of purchase date or hardware model.

Employees


         As of March 31, 2001, in addition to our executive officers,  we had 33
employees, including 6 computer programmers, 7 marketing and sales employees, 18
installation and support employees, and 2 administrative and clerical employees.
None of our employees is  represented by a collective  bargaining  organization,
and we consider our relationship with all our employees to be satisfactory.

Certain Risk Factors


Our short and long-term  success is subject to certain risks,  many of which are
substantial in nature. You should consider carefully the following risk factors,
in addition to other information contained in this report as you evaluate us and
our  business.  Any one of these  factors  could  cause  actual  results  of our
operations to differ materially from projected results.

We are in the development stage and may never have significant sales.

         We  are is in the  development  stage  and  have  a  limited  operating
history. There can be no assurance that we will be able to achieve a significant
level of sales or attain profitability.  As of March 31, 2001, we have installed
our Centari Dealer  Management  Suite in approximately  100 car dealerships.  We
must  significantly  increase  the number of  dealerships  using our products in
order to attain profitability.  We may never generate significant sales. Even if
we generate  significant sales,  revenues from sales may never exceed associated
costs.

We have  incurred  substantial  losses since our  inception  and may continue to
incur losses indefinitely into the future.

         We have  incurred  operating  losses each year since our  inception  in
1992.  As  of  March  31,  2001,  our  accumulated   deficit  was  approximately
$15,234,817.  We expect to incur additional losses during the fiscal year ending
on March 31, 2002. Our operating  expenses are expected to increase as we expand
our sales force,  installation  employees  and  technical  employees.  Our sales
revenues  may not  increase  during  our  upcoming  fiscal  year.  Even if sales
revenues do increase,  sales revenues may not exceed operating expenses,  and we
may continue to incur losses indefinitely into the future.

We require  additional  capital to meet our short term  obligations and continue
development of our products.

         We do not  presently  have  working  capital  sufficient  to  meet  our
immediate term  obligations.  We expect to continue to rely primarily on outside
financing to fund our  operations  for the near term and cannot  assure you that
additional  financing will be available on terms  favorable to us, or at all. If
adequate funds are not available,  or are not available on acceptable terms, our
ability to fund our  marketing  and  planned  product  development  programs  or
otherwise respond to competitive  pressures would be significantly  limited.  If
capital  were to  continue  to be  unavailable,  we  would  be  forced  to cease
operations.

                                       10
<PAGE>

Our  accountants  have  included  an  explanatory  paragraph  on  our  financial
statements regarding our status as a "going concern."

         Our consolidated financial statements included in this report have been
prepared  on the  assumption  that we will  continue  as a  going  concern.  Our
independent  public  accountants  have issued  their report dated  June 22, 2001
that includes an  explanatory  paragraph  stating that our recurring  losses and
accumulated  deficit,  among other  things,  raise  substantial  doubt about our
ability to continue as a going  concern.  Our product line is limited and it has
been necessary to rely upon financing from the sale of our equity securities and
certain  assets  consisting  of  marketable  securities  to sustain  operations.
Additional financing will be required if we are to continue as a going concern.

The market may not accept our CDMS product or other future offerings.

         Our Centari Dealer  Management  Suite product is relatively new, and we
are  operating in a market where two  competitors  control 80% of the market and
have a  significant  advantage  relative  to market  acceptance.  End-users  may
determine not to purchase our CMDS product because of our insignificant position
in the market, because of concerns about our product and related services or for
various  other  reasons.  We can provide no  assurance  that  end-users  will be
interested in purchasing any of our existing or future products in the near term
or the longer term.

We face significant competition from data management software developers.

         The market for automobile dealership data management software is highly
competitive,  and we must compete with companies that possess greater financial,
technical and marketing  resources than we do. These  advantages may enable them
to respond more quickly to new or emerging  technologies and changes in customer
preferences.  These  advantages  may also allow them to engage in more extensive
research and development,  undertake extensive far-reaching marketing campaigns,
adopt  more  aggressive  pricing  policies  and make more  attractive  offers to
potential  employees and strategic  partners.  As a result,  we may be unable to
obtain a significant  market share in the automobile dealer management  software
business. In addition, competition may result in price reductions, reduced gross
margin and loss of market share. We may not be able to compete successfully, and
competitive  pressures may adversely affect our business,  results of operations
and financial condition.

We are dependent upon highly qualified personnel, and the loss of such personnel
is a risk to our success.

         We are highly  dependent upon the efforts of management and technically
skilled personnel,  including programmers,  installers and engineers, and future
performance  will  depend in part upon our  ability to  increase  sales,  manage
growth effectively,  and to retain the services of our management, our technical
staff and sales staff.  Because competition for management,  technical and sales
personnel  is intense,  we may be unable to retain our key  employees or attract
other highly qualified  employees in the future. The loss of the services of any
of our management,  technical or sales team of the failure to attract and retain
additional key employees  could have a material  adverse effect on our business,
financial condition and results of operations.

We rely on our  intellectual  property  rights,  and if we are unable to protect
these  rights  we  may  face  increased  competition  and  our  business  may be
materially adversely affected.

         We regard our  intellectual  property,  particularly our Centari Dealer
Management Suite, as critical to our success, and we rely on copyright and trade
secret  protection to protect our proprietary  rights in intellectual  property.
Any of our  intellectual  property  rights  may be  challenged,  invalidated  or
circumvented,  or the rights granted  thereunder may not provide any competitive
advantage.  We could also incur  substantial costs in asserting our intellectual
property  or  proprietary  rights  against  others,  including  any such  rights
obtained from third parties,  and/or  defending any  infringement  suits brought
against us.  Although each of our employees and  consultants is asked to entered
into a confidentiality and invention  agreement,  there can be no assurance that
such agreements  will be honored or that we will be able to protect  effectively
our rights to trade secrets and know-how.

                                       11
<PAGE>

         In  addition,   there  can  be  no  assurance   that  others  will  not
independently  develop  substantially  equivalent  proprietary  information  and
techniques or otherwise gain access to our trade secrets and know-how. We may be
required  to  obtain  licenses  to  certain   intellectual   property  or  other
proprietary  rights from third parties.  Such licenses or proprietary rights may
not be made available  under  acceptable  terms,  if at all. If we do not obtain
required  licenses or proprietary  rights,  we could encounter delays in product
development  or find that the  development  or sale of products  requiring  such
licenses is foreclosed.

Software  products  tend to evolve  rapidly,  and our  competitors  may  develop
products that are technically superior to our products.

         Our primary product,  the Centari Dealer Management Suite, is primarily
a software  product.  The software market is recognized for rapid  technological
developments,   frequent  new  product   introductions   and  evolving  industry
standards. The rapid evolution of software products requires that we continually
improve the performance,  features and reliability of our software, particularly
in  response  to  competitive  offerings  by other  companies.  There  can be no
assurance  that we will  successfully  respond  quickly,  cost  effectively  and
sufficiently to these developments.

         In addition,  the widespread  adoption of new technologies or standards
could  require  substantial  expenditures  to modify or adapt our  products  and
services  and which  could  have a  material  adverse  effect  on our  business,
financial  condition and results of  operations.  Furthermore,  our new software
enhancements  may  contain  design  flaws  or other  defects  that  limit  their
marketability.

         There  can also be no  assurance  that  research  and  development  and
discoveries  by others will not render some or all of our  products or potential
product  offerings  uncompetitive  or  obsolete.  We  compete  with a number  of
entities that are currently  developing  and  producing  software  products that
compete with our current and proposed  products.  Many of these competitors have
substantially greater capital resources,  research and development capabilities,
and production and marketing resources, capabilities and experience than we have
available to us. These  competitors may succeed in developing  products that are
more  effective  or less costly than any products  that we may develop,  or that
gain market acceptance prior to any of our products,  making market  penetration
more difficult for us.

Although our license  terms limit our liability  for product  liability  claims,
there can be no assurance that such a claim will not be brought in the future.

         We have not experienced product liability claims to date. However,  our
products include programs designed for mission critical  applications,  creating
the risk that the failure or  malfunction  of our products may result in serious
damage or loss and open us to a claim for damages. Although contract terms limit
our  exposure,  there  can be no  assurance  that a court  would  not rule  such
provisions  to be invalid  or  unenforceable,  or that  changes in the law would
render  such  terms  void or  unenforceable.  A  successful  claim  could have a
material adverse effect on our operations and finances. Furthermore, the cost of
defending against a claim, even  successfully,  could be material and could have
an adverse  effect on our  results of  operations  and an adverse  effect on the
marketing of our products.

Trading in our common  stock is thin,  and there is a limit to the  liquidity of
our common stock.

         Our common stock is quoted on the Nasdaq OTC Bulletin Board. The volume
of  trading  in our  common  stock is  limited  and  likely  dominated  by a few
individuals.  Because of the thinness of the market for our stock,  the price of
our common stock may be subject to manipulation by one or more shareholders.  In
addition,  the  limited  volume of trading  limits  significantly  the number of
shares that one can purchase or sale in a short period of time. Consequently, an
investor may find it more  difficult to dispose of shares of our common stock or
obtain a fair price for our common stock in the market.

                                       12
<PAGE>

Our founders and officers hold a significant  number of our outstanding  shares,
which  will  allow  them to  influence  the  outcome  of  matters  submitted  to
stockholders for approval.

         The founders of ARKONA,  most of whom are no longer affiliated with the
Company, and Caldera Holdings,  L.C. collectively own and have the power to vote
23% of our issued and  outstanding  common  stock.  In addition,  management  of
ARKONA  owns  and has the  power  to vote  apprximately  16% of our  issued  and
outstanding  common stock.  As a result,  these  stockholders  have  substantial
control  over  matters  requiring  approval  by our  stockholders,  such  as the
election of directors and approval of  significant  corporate  transactions.  In
addition,  this  concentration of ownership may also have the effect of delaying
or preventing a change in control.

Our shareholder rights plan and certain provisions in the Delaware corporate law
may permit the our board to block a takeover  attempt and  adversely  affect the
value of our common stock.

         Our board of directors adopted a shareholder  rights plan, and declared
a  dividend  of an  associated  right,  which are  expected  to have the  effect
deterring any takeover of the Company that is not preceded by board  approval of
the proposed  transaction.  The  existence of such  shareholder  rights plan may
deter potential tender offers for our common stock or other  acquisition  offers
and may have the effect of delaying or preventing a change of control.

         In addition,  the Delaware  General  Corporation Law prohibits  certain
mergers,  consolidations,  sales of assets  or  similar  transactions  between a
corporation on the one hand and another company which is, or is an affiliate of,
a beneficial holder of 15% or more of such  corporation's  voting power (defined
as an  "Interested  Stockholder")  for three years after the  acquisition of the
voting power, unless the acquisition of the voting power was approved beforehand
by the  corporation's  board of  directors or the  transaction  is approved by a
majority  of  such   corporation's   shareholders   (excluding   the  Interested
Stockholder).  These provisions prohibiting Interested Stockholder  transactions
could also preserve management's control of ARKONA.

Obtaining  additional  capital  through the sale of common  stock will result in
dilution of shareholder interests.

We plan to raise additional funds in the future by issuing  additional shares of
common stock, or securities such as options or warrants or preferred stock, that
are  convertible  into  common  stock.  Any such sale of  common  stock or other
securities  will lead to further  dilution of the equity  ownership  of existing
holders of our common stock.

Our stock price is volatile and subject to manipulation.

The  market  price of our common  stock,  like that of the  securities  of other
development stage companies,  may be highly volatile. Our stock price may change
dramatically as the result of various factors, including the following:

         o Manipulation of our stock price by existing or future shareholders;
         o  Announcements   by  us  or  competitors   concerning   technological
         innovations,  new  products  or  procedures  developed  by  us  or  our
         competitors,
         o The  adoption or amendment of  governmental  regulations  and similar
         developments in the United States and foreign countries that affect our
         products or markets specifically or our markets generally,
         o Disputes relating to patents or proprietary rights,
         o Publicity  regarding actual or potential  results relating to product
         candidates under development by us or a competitor,
         o Delays in product development,
         o Slow acceptance of our products in new or existing markets, and

                                       13
<PAGE>


         o Economic  and other  external  factors,  as well as  period-to-period
         fluctuations in financial results.

Our ability to issue  preferred  stock may  significantly  dilute  ownership and
voting power and negatively affect the price of our common stock.

Under our Certificate of Incorporation,  as amended,  we are authorized to issue
up to  10,000,000  shares of preferred  stock.  Our Board of  Directors  has the
authority to create various series of preferred stock with such voting and other
rights  superior  to those of our common  stock and to issue such stock  without
shareholder  approval.  This issuance of such  preferred  stock would dilute the
ownership  and voting  power of the  holders of our common  stock and may have a
negative effect on the price of our common stock

We have not declared any dividends with respect to our common stock.

We have  never paid cash  dividends  on our  common  stock.  We intend to retain
earnings,  if any, to finance the  operation  and expansion of our business and,
therefore,  we do not expect to pay cash dividends on our shares of common stock
in the foreseeable future.

Our common stock may be a "low-priced  stock" and subject to certain  regulatory
action that limits or restricts the market for such stock.

Shares of our  common  stock may be deemed  to be "penny  stock,"  resulting  in
increased risks to our investors and certain  requirements being imposed on some
brokers who execute  transactions in our common stock. In general, a penny stock
is a an equity security that:

         o Is priced under five dollars;

         o Is not  traded on a national  stock  exchange,  the  Nasdaq  National
         Market or the Nasdaq SmallCap Market;

         o May be listed in the "pink sheets" or the NASDAQ OTC Bulletin  Board;
         and

         o Is issued by a company  that has less than $5 million  dollars in net
         tangible  assets (if it has been in business  less than three years) or
         has less than $2 million dollars in net tangible assets (if it has been
         in business for at least three years); and

         o Is issued  by a company  that has  average  revenues  of less than $6
         million for the past three years.

Our common stock has a trading price below five dollars; our common stock is not
trading on an  exchange  or NASDAQ;  we have  average  revenues  of less than $6
million  and,  as a result of the  recent  write-off  of our  share of  Envision
Development  Corporation  common stock,  we have less than $2 million dollars in
net tangible assets.  Accordingly, we believe that our common stock is presently
a "penny  stock." At any time the common stock  qualifies as a penny stock,  the
following requirements, among others, will generally apply:

         o        Certain  broker-dealers  who recommend  penny stock to persons
                  other than established customers and accredited investors must
                  make a  special  written  suitability  determination  for  the
                  purchaser and receive the purchaser's  written  agreement to a
                  transaction prior to sale.

         o        Prior to executing  any  transaction  involving a penny stock,
                  certain  broker-dealers  must deliver to certain  purchasers a
                  disclosure  schedule  explaining  the risks involved in owning
                  penny stock,  the  broker-dealer's  duties to the customer,  a
                  toll-free   telephone   number   for   inquiries   about   the
                  broker-dealer's   disciplinary  history,  and  the  customer's
                  rights and remedies in case of fraud or abuse in the sale.

                                       14
<PAGE>

         o        In connection with the execution of any transaction  involving
                  a penny stock,  certain broker dealers must deliver to certain
                  purchasers  the  following:
                  o bid and offer price quotes and volume information;
                  o  the  broker-dealer's  compensation  for  the  trade;
                  o the  compensation  received by certain  salespersons for the
                  trade;
                  o monthly accounts statements; and
                  o a written  statement of the customer's  financial  situation
                  and investment goals.

These  requirements  significantly  add to the burden of the  broker-dealer  and
limit the market for penny stocks.  These regulatory burdens may severely affect
the liquidity and market price for our common stock.


Item 2.  Description of Property

         ARKONA owns no real property.  We currently  lease a 11,800 square foot
facility  located at 10542 South Jordan Gateway,  Suite 200, South Jordan,  Utah
84005. We conduct all of our corporate, administrative, research and development
activities  at this  facility.  The lease of the  facility  will expire July 31,
2005, and our base monthly lease payment is $18,743.50 per month. The facilities
are in good condition, and we believe they will adequately serve us for at least
another year. Because our current facilities are adequate,  we do not anticipate
any expansion of existing facilities or any acquisition of additional facilities
for at least one year.

         As part of our  acquisition of Ensign we assume a lease with respect to
2800 square feet of office space in Salt Lake City, Utah. The lease will expired
on April 1, 2002, and our base monthly lease payment is $4,825.93. We do not use
such office for our  operations  and are  presently  subleasing  such office for
approximately $4,600 per month.

Item 3.  Legal Proceedings

         None.

Item 4.   Submission of Matters to a Vote of Security Holders

         No matter was  submitted to a vote of the security  holders  during the
fourth quarter of the fiscal year covered by this report.


                                     PART II

Item 5.   Market for Common Equity and Related Stockholder Matters

Market Price

         On approximately October 26, 2000, the OTC Bulletin Board began quoting
our common stock under the symbol  ARKN.OB.  The table below sets forth the high
and low bid quotations for our common stock as reported on the  over-the-counter
bulletin  board.  Prior to the time the OTC  Bulletin  Board  began  quoting our
common stock,  our common stock was traded only on the "pink  sheets." We do not
have access to price information for those periods.

                                       15
<PAGE>

 Fiscal Year Ended March 31, 2001                 Low              High
                                            ----------------   ----------------

 Quarter ended December 31, 2000                 $0.19            $0.56
 Quarter ended March 31, 2001                    $0.34            $1.09

         The quotations  set forth above reflect  inter-dealer  prices,  without
retail  mark-up,  mark  down  or  commission,   and  may  not  represent  actual
transactions.  The last sale price of our common  stock,  as reported on the OTB
Bulletin Board on June 26, 2001 was $.21 per share.

Outstanding Shares and Number of Shareholders

         As of March 31, 2001, there were approximately 14,347,578 shares of our
common  stock  issued  and  outstanding,  which were held by  approximately  425
holders  of record.  We have never  issued  preferred  stock,  and we have never
declared or paid dividends on any class of our equity securities.

Recent Sales of Unregistered Securities

         During the fiscal  year ended  March 31,  2001,  the  Company  sold and
issued  2,772,728  shares of common stock for cash  proceeds of  $2,759,081 at a
average price of approximately  $1.00 per share in transactions that were exempt
from registration  under the Securities Act of 1933, as amended (the "Securities
Act").  The Company also issued  46,632  shares at an average  price of $4.00 in
connection  with the exercise of warrants,  30,000 shares at an average price of
$1.00 per  share in  connection  with the  exercise  of  employees  options  and
1,500,000  shares  in  connection  with its  purchase  of the  assets  of Ensign
Information Systems in transactions that were exempt from registration under the
Securities  Act.  During  the  same  period,  the  Company  repurchase  from key
shareholders  1,740,250 shares of common stock in transactions  that were exempt
from  registration  under the  Securities  Act.  Except for the sales  occurring
during the quarter  ended March 31, 2001,  which are  disclosed in the following
paragraph,  information regarding such sales is included in the Quarterly Report
on Form 10Q-SB relating to the quarter in which such sales occurred.

         During the quarter  ended March 31,  2001,  we offered and sold 400,000
shares at $.75 per share and  480,000  shares at $1.00 per shares in two related
transactions  to a single  accredited  investors.  The  offers and sales of such
shares of our common  stock were  effected in reliance  upon the  exemption  for
sales of  securities  not involving a public  offering,  as set forth in Section
4(2) of the  Securities Act of 1933, as amended,  based upon the following:  (a)
the investors confirmed to us that they were "accredited  investors," as defined
in Rule 501 of Regulation D promulgated  under the  Securities  Act and had such
background,  education and experience in financial and business matters as to be
able to evaluate the merits and risks of an  investment in the  securities;  (b)
there was no public  offering  or  general  solicitation  with  respect  to each
offering;  (c) the investors were provided with certain disclosure materials and
all other information  requested with respect to the Company,  (d) the investors
acknowledged  that all securities being purchased were  "restricted  securities"
for purposes of the Securities  Act, and agreed to transfer such securities only
in a transaction registered under the Securities Act or exempt from registration
under the  Securities  Act;  and (e) a legend  was  placed  on the  certificates
representing each such security stating that it was restricted and could only be
transferred if subsequently  registered  under the Securities Act or transferred
in a transaction exempt from registration under the Securities Act.

Item 6.   Management's Discussion and Analysis

Overview

         From 1996  through  late 2000,  the  primary  product  of ARKONA,  Inc.
(formerly Sundog Technologies, Inc.) was a data base technology called Universal
Update.  Universal  Update  allows  rapid  integration  of business  information
systems throughout the enterprise and easy sharing of critical  information with
remote,  occasionally  connected  workers and partners  around the world.  Until
early  2001,  the  Company  worked  to  develop  and sell the  Universal  Update
technology.

         The fiscal year ended March 31, 2001 was a year marked with substantial
change for ARKONA.  During the year,  our focus and  direction  changed from our
Universal  Update  products  and the  mobile  computing  industry  to our  newly
acquired Centari Dealer Management Solution (CDMS) and the automobile dealership
management industry.

         We began the year focused on Universal Update as a stand-alone  product
and on  positioning  Universal  Update's  underlying  technology  in the  mobile
computing  market.  During  the  late  summer  of  2000,  we  began  acquisition
discussions with Ensign Information  Systems.  In November 2000, ARKONA acquired
substantially all of the assets and specific  liabilities of Ensign  Information
Systems, a developer of automotive  dealership software.  In late 2000 and early
2001, we determined that we became  concerned over the amount of additional work
required to make  Universal  Update a profitable  endeavor  and, in light of our
limited  resources,  determined to suspend further  development and marketing of
Universal  Update  and  focus  our  resources  and  attention  on  CDMS  and the
automobile dealership management industry.

         Our present focus is to develop the growth  potential in the automotive
dealership  software  industry of our CDMS  product.  When we acquired  the CDMS
product from Ensign, it already had a customer base and was a proven product. At
the time of the  acquisition,  Ensign  had  installed  9 systems in the prior 12
months. The company is currently installing an average of 6 systems per month.

Results of Operations

Fiscal Year Ended March 31, 2001  ("FY2001")  Compared With Year Ended March 31,
2001 ("FY2001")

         Revenues for the FY2001 were $327,015,  compared to $45,975 for FY2000.
Revenues  for the current  year were  generated  through  the sale of CDMS,  the
Company's  automobile  dealer management  solution and monthly  maintenance fees
from dealers using CDMS. Revenues for the year ended FY2000 were due to fees for
consulting  services and the sale of Universal  Update  software  licenses.  The
reason for the increase in revenue in FY 2001 is  attributable to sales of CDMS.
We believe that sales will continue to increase in the future.

         Cost of sales  totaled  $183,447  in  FY2001,  compared  to  $47,125 in
FY2000.  Operating  expenses  for  FY2001  totaled  $7,253,869  as  compared  to
$4,001,682  for  FY2001.  The  increase  in cost  of  sales  is due to  expenses

                                       16
<PAGE>

associated  with providing  support to existing CDMS customers and  installation
and training expenses in connection with new CDMS sales. Marketing,  general and
administrative  expenses totaled $3,358,901 in FY2001, compared to $1,849,283 in
FY2000.  The  increase  was due to an increase in sales and  marketing  salaries
associated with Universal Update,  all of which were eliminated by the end of FY
2001  due  to  the  change  in  focus  to the  automobile  dealership  industry.
Depreciation  and  amortization  expense  increased by $94,499 to $266.984 in FY
2001. The increase was due primarily to  amortization  expense  associated  with
goodwill  and  Ensign  intellectual   property.   The  Company  also  recognized
$3,135,500 of deferred  compensation  during FY 2001 as compared with $1,507,500
for the year ended March 31,  2000.  The  deferred  compensation  is a result of
options  that vested  during the period that were  granted at a price lower than
the then market value. Most of this compensation  expense is not attributable to
options  granted by the  Company;  rather,  it is  attributable  to the grant by
Caldera  Holdings,  L.C. to  employees  of the Company and others of  derivative
options to purchase  outstanding  common stock owned by founders of the Company.
(See "Item 12 Certain Relationships and Related Transactions.")

         Operating   expenses  in  FY2001  included  $576,021  in  research  and
development expense,  compared to $597,774 FY2000. The change in development was
minimal relative to cost.  However,  the change in development  staff was nearly
complete with only one engineer still with the Company that was with the company
before the Ensign acquisition. Notwithstanding the minimal change in development
expense,  we expect that research and development  expenditures will increase in
the coming year due to planned increases in engineering.

         On June 5, 1998, we formed a new  subsidiary  called,  Qui Vive Inc. QV
was engaged in the development of e-mail security software. On April 7, 2000, we
sold  our  interest  in  QV  to  Envision  Development  Corporation,  a  Florida
corporation in exchange for 1,482,500  shares of Envision  common stock.  During
late  2000,  following  a  restatement  of its assets  and a  liquidity  crisis,
Envision  discontinued  operations.  As a result,  we have since written down to
zero all of our  shares  of  Envision  common  stock.  The  $20,465,829  loss on
disposal of  investment  securities  reflected on our Statement of Operations is
the result of our write of the value of our shares of Envision common stock.

         The net loss for the year ended March 31, 2001 was $6,926,854 (or $0.46
per share)  compared  to a loss of  $6,265,746  (or $0.54 per share) in the year
ended March 31, 2000. The increased loss was primarily due to the recognition of
deferred  compensation and increases in marketing and general and administrative
expenses.

         Despite  all  the  changes  during  FY  2001,  we are  very  optimistic
concerning  the  Company's  future.  Sales  of CDMS  have  increased  since  our
acquisition of the product,  and nearly all of last year's sales occurred in the
4th  Quarter.  First  quarter  FY 2002 is  currently  winding  up, and we expect
substantial increases in sales to continue.

                                       17
<PAGE>

Liquidity and Capital Resources

         At March 31,  2001,  we had cash and cash  equivalents  of  $35,221  as
compared to cash and cash  equivalents  of $492,657  as of March 31,  2000.  The
decrease in due to a decrease in cash on hand.

         We have been  unable to  finance  our  operations  from cash flows from
operating activities. Because operating activities have not produced significant
revenues to date and because we will require  significant  capital to accomplish
the  objectives set forth above,  additional  equity and/or debt funding will be
required. Such funding may not be available or may not be available on favorable
terms.

         Our current  cash and cash  equivalents  are  insufficient  to fund our
activities during the coming year. Management currently expects, but can provide
no assurance, that its revenues will be sufficient to fund the operations of the
Company  sometime  during the coming  fiscal  year.  However,  until our revenue
increases,  or if we are not successful in increasing our revenues as projected,
we  will  be  required  to  seek  additional  funding  through  the  sale of our
securities.   Although  we  are  seeking  financing  from  several  private  and
institutional  sources, we do not have any commitments to provide the capital we
expect to need during the coming fiscal year.

         Although we do not expect to make any  purchases  of new plants  during
coming year, we do plan to purchase  significant  amounts of additional computer
equipment for our ASP hosting facility and research and development  efforts. We
also continue to evaluate new product opportunities and may, if necessary,  seek
to add equipment and personnel to pursue such opportunities in the future. If we
purchase  significant  amounts of  additional  computer  equipment or expand our
operations to develop new  products,  we may need to seek  additional  financing
through borrowing or the sale of securities.

         There can be no assurance that additional  funding will be available as
required or on terms that are  favorable to the Company.  The issuance of shares
of the  Company's  common  stock  or  other  securities  convertible  into  such
securities  will result in dilution to the  shareholders of the Company and such
dilution may be material and substantial.

         Our  consolidated  financial  statements  have  been  prepared  on  the
assumption  that the Company will continue as a going concern.  Our  independent
public  accountants  have issued their report dated March 31, 2001 that includes
an  explanatory  paragraph  stating that our  recurring  losses and  accumulated
deficit,  among  other  things,  raise  substantial  doubt  about our ability to
continue  as a going  concern.  Our  product  line is  limited,  and it has been
necessary  to rely upon  financing  from the sale of its  equity  securities  to
sustain operations in the past.  Additional financing will be required if we are
to continue as a going concern.  If such additional  funding cannot be obtained,
we may be required to scale back or  discontinue  its  operations.  Even if such
additional financing is available,  there can be no assurance that it will be on
terms  favorable to the Company.  In any event,  such  financing  will result in
immediate and possibly substantial dilution to existing shareholders.

                                       18
<PAGE>

Item 7.  Financial Statements

         The Company's  consolidated  financial  statements and associated notes
are set forth on pages F-1 through F-13 of this report.

Item 8. Changes in and Disagreement With Accountants on Accounting and Financial
Disclosure.

         None.

                                    PART III

Item 9.  Directors and Executive Officers of the Registrant

Directors and Executive Officers

         The following tables sets forth the names, ages, positions,  and tenure
of the directors of the Company as March 31, 2001.
<TABLE>
<CAPTION>

         Name                  Age                 Position                            Director Since
----------------------     -----------    -------------------------------------     ---------------------
<S>                            <C>                                                      <C>
Alan Rudd                      49         CEO, Chairman of the Board                    January 2000
Richard Holland                40         President, Vice President of                  November 2000
                                          Engineering, Director
Bryan Allen                    34         Director                                      August 2000
</TABLE>


         The following  paragraphs sets forth certain  biographical  information
about each of the foregoing:

         ALAN RUDD, 49, joined ARKONA as Chairman and Chief Executive Officer on
January 1, 2000.  Rudd  brings  more than 20 years  experience  in the  computer
industry to ARKONA.  From March 1996 to November  1999 Rudd was the CEO of Vinca
Corporation, a Utah-based company that provided continuous availability software
for Microsoft-,  Novell- and  IBM-distributed  network  platforms.  Under Rudd's
leadership  Vinca  became a  recognized  worldwide  leader in high  availability
solutions.  In  recognition  of his  achievements,  Rudd was named  Utah's  1999
Entrepreneur  of the Year.  Vinca was  acquired by Legato  Systems of Palo Alto,
California (NASDAQ: LGTO) on July 31, 1999.

         In addition to building Vinca  Corporation  into a market leader,  Rudd
spent ten years in senior management positions at Novell where he helped to grow
Novell into the worldwide  leader in network  computing  with sales of more than
$1.4 billion. His positions at Novell included Legal Counsel,  Regional Manager,
Area Director and Vice President of OEM Operations.

         Rudd has a bachelor's degree in Business Administration and Finance and
a juris doctorate from Brigham Young University.  Following law school, he spent
seven years as in-house legal counsel for several corporations,  including State
Farm  Insurance  and Prime  Computer,  before  joining  Novell and  moving  into
corporate management.

         RICHARD  HOLLAND,  40,  joined  ARKONA  in  November  2000 and has been
President  of ARKONA  since  April  2001.  Holland was  formerly  president  and
co-founder of Ensign  Information  Systems and has been designing and developing
cutting-edge  technology  systems  for more  than 23  years.  He wrote his first


                                       19
<PAGE>


computer  program at the age of 17 and has been a leading  innovator  since that
time. As co-founder of Ensign,  Holland was the chief system  architect of their
fully integrated business  management software that has improved  communications
within organizations to improve customer relationships and profitability. Before
starting   Ensign  in  1994,   Holland  was  the  national   sales  manager  for
Cars/Dyatron,  a specialist in General Motors dealership software,  from 1980 to
1994.  Under his  leadership  sales  increased  more  than 240% over a  two-year
period.  Prior  working at  Cars/Dyatron,  he was  general  manager of  Advanced
Computer  Systems (ACS), the first company to introduce IBM PC-based systems for
the automotive dealer industry.

         Holland has a Bachelor of Science  degree in Tax Accounting and Finance
from the University of Utah. He is also a Certified IBM Professional.

         BRYAN  ALLEN,  33,  is  outside  counsel  to ARKONA  and has  served as
director of ARKONA since August 2000.  Since  October,  2002,  Allen has been of
counsel  at the law firm of Stoel  Rives LLP in Salt Lake City,  Utah,  where he
advises  clients  on  corporate,  securities,  acquisition  and  other  business
matters.  Prior to joining Stoel Rives LLP,  Allen was a shareholder  at the law
firm of Parr  Waddoups  Brown Gee &  Loveless  in Salt Lake  City,  Utah.  Allen
received  bachelors  degrees,  summa cum laude,  from the  University of Utah in
Economics and Chinese Studies, received a masters degree in religion, cum laude,
from the Yale Divinity  School,  and received his Juris  Doctorate from Yale Law
School.

         The following tables sets forth the names, ages, positions,  and tenure
of the officers of the Company as March 31,  2001(excluding the officers who are
also directors and are described above).

<TABLE>
<CAPTION>

              Name                        Age                       Position                       Officer Since
----------------------------------     -----------    -------------------------------------     ---------------------
<S>                                        <C>        <C>                                          <C>
Steve Russo                                43         Vice President of Operations, Chief          February 2000
                                                      Financial Officer

Arthur Dearing                             42         Vice President of Worldwide                  February 2000
                                                      Business Development

Jeffrey Swain                              42         Vice President of Strategic                  February 2000
                                                      Relations

Blake Nielson                              40         Vice President - Client Services             November 2000
</TABLE>


         STEPHEN L. RUSSO, 42, has been the Vice President of Operations and the
Chief  Financial  Officer of ARKONA since  February  2000.  He is a CPA, and his
education and experience in accounting  and  operations  span more than 19 years
and  include  expertise  in  financial  system  design and  implementation  with
significant  experience in SEC disclosure and  compliance.  From October 1992 to
October  1999,  Russo served as vice  president of  operations  and CFO of Vinca
Corporation,  where he was  instrumental in growing the company to the worldwide
leader in high  availability  solutions.  From  September  1989 to October 1992,
Russo served as president of Merisoft,  a high-tech voice  recognition  company,
where he was also  instrumental  in growing  the  company  and  selling it for a
substantial  profit.  Russo is a graduate  of Brigham  Young  University  with a
degree in Accounting.

         ARTHUR DEARING,  41, has been the Vice President of Worldwide  Business
Development  for ARKONA since February 2000.  Dearing brings more than seventeen
years  of  experience  in  high  technology,  including  the  ownership  of  two
successful  computer  businesses  offering complete system design and consulting
services.  He was the  principal  architect  of a POS system that is still being
used today by a major retail grocery chain.  Prior to commencing work at ARKONA,
Dearing was Director of Strategic  Relations for Vinca Corporation from December
of 1993 to  January  of 2000,  where he  demonstrated  the  ability to more than
double revenue through an OEM and marketing  relationship  with IBM. Through the
IBM partnership he was the key player in multi-million  dollar sales to both the
Bank of Brazil and Wal-Mart. Dearing has extensive experience in setting product
strategy with his broad range of technical expertise. He spent approximately two

                                       20
<PAGE>


years, from January of 1992 to November of 1993, at DEC in Technical  Consulting
where he was responsible for supporting  sales in the design and  implementation
of systems for large  enterprise  customers.  While at DEC,  Dearing was largely
responsible  for a  multi-million  dollar  deal with  Micron  for the  technical
support  of PC LANs in  eight  states.  Arthur  has a  Bachelor  of  Science  in
Engineering from San Diego State University.


         JEFFREY L. SWAIN,  41, has been Vice  President of Strategic  Relations
for ARKONA since February 2000. His role includes the  development of a two-tier
distribution  channel as well as the development of OEM partners with the intent
of proliferating ARKONA's technologies into hot markets such as mobile computing
and Web content update.  Swain brings more than twelve years of sales experience
in the network computing industry having served as Director of Channel Sales for
Legato Systems,  Inc., a leader in enterprise storage  management,  from January
1999 to February 2000. While at Legato, Jeff increased channel sales over 40% in
less  than six  months.  He  managed  the  inside  sales  team and in one  sales
promotion his team increased software maintenance sales by 400%. Swain has shown
an in-depth  knowledge of selling through a channel and has developed strong and
sustained relationships with the key channel partners in this industry. Prior to
working at Legato,  he was a Major  Market  Account  Manager for Informix in the
Southeastern  region from April 1996 to December  1997. He proved his ability to
sell to large complex  companies  such as Walt Disney World,  W.R. Grace and the
State of Florida.  Swain also sold a site license to twelve  counties in Florida
to be  used  for  statewide  electronic  ticketing.  Jeff  developed  particular
expertise in selling to state and local  government  entities as State and Local
Government  Sales  Manager for Novell  from July 1994 to April 1996.  He and his
team sold a master site license  agreement to seventeen of the twenty top states
in the United States, plus multi-million  dollar site licenses to the EPA and US
Courts.  Swain attended  Brigham Young  University  with an emphasis in Business
Management and Psychology.


         In addition to the  foregoing  directors and  executive  officers,  the
following  employees  are  expected to make a  significant  contribution  to the
business of ARKONA:

         BLAKE  NIELSON,  40,  Vice  President--Client  Services  and founder of
Ensign  Information  Systems,  brings  over 14 years  of  experience  in  client
services with other automotive industry related companies. He is responsible for
customer satisfaction through successful product installations,  client training
and ongoing  product  support and  maintenance.  Before becoming part of ARKONA,
Blake  was one of the  founders  of  Ensign  Information  Systems  and the  vice
president of  operations.  He has proven his ability to start a company from the
beginning  and  make  it  successful  financially  and  technologically.  Before
founding  Ensign in 1994,  Nielson was the regional  director of Client Services
for Sunguard  Business System beginning in 1992. Prior to Sunguard,  Nielsen was
head of Client Services at Advanced Computer Systems from 1990 to 1992.

         Nielson has a Bachelor of Science degree from Brigham Young  University
in Financial Planning and an AS/400 Certified Specialist.  He also served on the
Internal Revenue Service Technology Committee for one term.


         SUSAN RICHARDS, 52 , Vice President of Marketing--Communications joined
ARKONA in April of 2000, bringing with her more than fifteen years of experience
in the network computing industry in all facets of marketing communications. She
has been  instrumental in building company and brand  recognition for both large
and small  companies  through public  relations,  advertising,  events and other
marketing programs.

         Prior to joining ARKONA, Richards directed all marketing communications
for Vinca Corporation,  the worldwide leader in high availability solutions from
April  1993  to  April  1999.  She  jointed  Legato  Systems,  Inc.  when  Vinca
Corporation was sold to Legato in April 1999 and, until March 2000, directed all

                                       21
<PAGE>


public  relations  worldwide for Legato.  Richards held several key positions at
Novell in Corporate  Communications and Marketing Communications for Service and
Education from June 1986 to April 1993, and she was also a senior associate with
Network  Associates  handling public  relations  activities for numerous clients
including Novell and WordPerfect.

Item 10.  Executive Compensation

Summary Compensation Table

         The following table summarizes the compensation  paid or accrued by the
Company to or on behalf of the Company's Chief Executive Officer, as well as all
other  executive  officers of the Company whose aggregate  compensation  for the
fiscal year ended March 31, 2001  exceeded  $100,000  (collectively,  the "Named
Executive Officers").

<TABLE>
<CAPTION>


                Annual Compensation                                              Long-Term Compensation
           ---------------------------                                      -------------------------------
                                                                                 Awards                Payouts
                                                                                 ------                -------

                                                             Other
                                                             Annual       Restricted     Securities                     All Other
 Name and Principal                     Salary    Bonus     Compensa-       Stock        Underlying    LTIP Payouts    Compensation
     Position                   Year      ($)     ($)       tion ($)     Award(s) ($)     Options         ($)               ($)
     --------                   ----      ---     ---       --------     ------------     -------         ---               ---
<S>                             <C>     <C>       <C>        <C>           <C>         <C>               <C>               <C>
 Alan Rudd, CEO                 2001    205,800    --          --            --            --              --               --
                                2000     56,250    --          --            --            --              --               --
                                1999       --      --          --            --            --              --               --

                                2001   113,750     --          --            --          25,000            --               --
Stephen L. Russo, VP of         2000    21,666     --          --            --         125,000            --               --
Operations and CFO              1999       --      --          --            --            --              --               --

                                2001    136,711    --          --            --          25,000            --               --
Jeffrey Swain, VP of            2000    26,666     --          --            --         100,000            --               --
Strategic Relations             1999       --      --          --            --            --              --               --

Arthur Dearing, VP of           2001   115,945     --          --            --          25,000            --               --
Worldwide Business              2000    20,833     --          --            --         100,000            --               --
Development                     1999       --      --          --            --            --              --               --

</TABLE>


Option Grants in Last Fiscal Year

         The following table sets forth-individual  grants of options to acquire
shares of Common  Stock  made by the  Company  to the Named  Executive  Officers
during the fiscal year ended March 31, 2001.

<TABLE>
<CAPTION>

                                                    Percent of Total
                                                   Options Granted to
                                                  Employees in Fiscal
    Name                      Options Granted            Year              Exercise Price         Expiration Date
-------------                 ---------------            ----              --------------         ---------------

<S>                              <C>                      <C>                    <C>                   <C>
Alan Rudd                          --                      --                     Nil                    Nil

Stephen Russo                    25,000                   3 %                    $0.30                 10/1/06

Jeffrey Swain                    25,000                   3 %                    $0.30                 10/1/06

Arthur Dearing                   25,000                   3 %                    $0.30                 10/1/06
</TABLE>

                                       22
<PAGE>

Aggregated Option Exercises and Year-end Option Values

         The following table provides information  regarding options held by the
Named  Executive  Officers as of March 31,  2001and  options  exercised  by them
during the year ended March 31, 2001:

<TABLE>
<CAPTION>


                        Securities
                        Acquired on                   Unexercised Options at                Value of Unexercised
                         Exercise       Aggregate       March 31, 2001                    In-the-money Options at
                          Value           Value     Exercisable   Unexercisable             March 31, 2001(*)
 Name and Position         (#)          Realized       (#)            (#)              Exercisable          Unexercisable
---------------------- ------------- -------------- -------------- ----------------- -------------------- ----------------

<S>                         <C>            <C>         <C>              <C>                <C>                <C>
Alan Rudd, CEO              Nil            Nil           Nil             Nil                 Nil                Nil
---------------------- ------------- -------------- -------------- ----------------- -------------------- ----------------

Stephen L. Russo, VP        Nil            Nil         100,000          15,000             $21,000              Nil
of Operations and CFO                                  35,000                                Nil
---------------------- ------------- -------------- -------------- ----------------- -------------------- ----------------

Jeffrey Swain, VP of        Nil            Nil         25,000           50,000             $5,250             $10,500
Strategic Relations                                    35,000           15,000               Nil                Nil

---------------------- ------------- -------------- -------------- ----------------- -------------------- ----------------

Arthur Dearing, VP          Nil            Nil         25,000           50,000             $5,250             $10,500
of Worldwide                                           35,000           15,000               Nil                Nil
Business Development
---------------------- ------------- -------------- -------------- ----------------- -------------------- ----------------
</TABLE>

* On March 30, 2001,  the closing sale price for a share of ARKONA  common stock
on the OTC Bulletin Board was $.51 per share.

Director Compensation

         Currently,  non-employee directors are not compensated. The Company may
consider  providing  stock  options and other  incentive  awards to directors in
order to align their interests with the overall interests of the Company.

Employment Agreements and Change of Control Arrangements

         The Company does not currently have written  employment  agreement with
any of its Named Executive Officers.

Item 11.   Security Ownership of Certain Beneficial Owners and Management

         The following  table sets forth  information  as of March 31, 2001 with
respect to the beneficial ownership of shares of the Common Stock by each person
known by the  Company to be the  beneficial  owner of more than 5% of the Common
Stock, by each director or nominee,  by each of the Named Executive Officers and
by all directors and officers as a group.  Unless otherwise  noted,  each person
named has sole voting and investment power with respect to the shares indicated.

                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                                               Beneficial Ownership
                                                                   -------------------------------------------------
                                                                                as of June 15, 2001(1)
 Name and Address of Beneficial Owner                                  Number of Shares       Percentage of Class(2)
 ------------------------------------                                  ----------------       ----------------------

Directors and Named Executive Officers

<S>                                                                          <C>                          <C>
Alan Rudd  (CEO and Director)
6769 Walker Mill Drive
Salt Lake City, UT 84124                                                     1,117,000                    7.7 %

Richard Holland (President and Director)
3257 Shelby Court
Salt Lake City, UT  84121                                                      731,000                    5.0 %

Bryan Allen (Director)
2172 East Kensington Avenue
Salt Lake City, UT  84093                                                         Nil                      Nil

Blake Nielsen (VP - Client Services)
10073 Silver Streak Dr.
South Jordan, UT 84095                                                         360,000                    2.5 %

Stephen Russo ( VP-Operations and CFO)
530 South 330 West
Orem, UT  84058                                                                183,000(3)                 1.3 %

Jeffrey Swain (VP-Strategic Relations)
1236 East 1440 South
Spanish Fork, UT 84660                                                         110,000(4)                   *


Arthur Dearing (VP-Worldwide Business Development)
4269 West Lochshire Cir.
South Jordan, UT 84095                                                         125,600(5)                   *
Principal Holders of Common Stock

Caldera Holdings LLC
36 South State St.
Suite 2000
Salt Lake City, UT 84111                                                     1,550,000(6)                10.7 %

John Blumenthal
4432 Emigration Canyon
Salt Lake City, UT 84108                                                     1,178,000                    8.1 %

All officers and directors as a group (8 persons)                            2,664,100(7)                18.5 %
</TABLE>

* Indicates the ownership of less than 1% of the outstanding common stock.
---------------------------

(1)  Beneficial  ownership as a percentage of the class for each person  holding
options,  warrants or other rights  exercisable  within 60 days of June 15, 2001
has been  calculated  as though  shares of Common Stock  subject to such options
were  outstanding,  but such  shares have not been  deemed  outstanding  for the
purpose of calculating the percentage of the class owned by any other person.

(2) The  percentage  indicated  represents the number of shares of Common Stock,
warrants  and  options   exercisable  within  60  days  held  by  the  indicated
shareholder  divided by the sum of (a) the  number of shares  subject to options
exercisable by such shareholder within 60 days and (b) 14,347,578,  which is the
number of shares of Common Stock issued and outstanding as of March 31, 2001.

                                       24
<PAGE>

(3)  Includes  35,000  options  issued under the  Company's  option plan with an
exercise price of $0.60 and 100,000 options granted to Mr. Russo by Caldera with
an exercise  price of $0.30 per share.  See "Certain  Relationships  and Related
Transactions."

(4)  Includes  35,000  options  issued under the  Company's  option plan with an
exercise price of $0.60 and 75,000 options granted to Mr. Swain by Caldera.  See
"Certain Relationships and Related Transactions."

(5)  Includes  35,000  options  issued under the  Company's  option plan with an
exercise  price of $0.60 and 100,000  options  granted to Mr. Dearing by Caldera
with an  exercise  price of $0.30 per  share.  See  "Certain  Relationships  and
Related Transactions."

(6) Caldera became beneficial owner of such shares pursuant to an agreement with
certain founding shareholders of the Company described in this Form 10-KSB under
the heading "Certain Relationships And Related  Transactions."  Although Caldera
does  not  have the  right  to  receive  any  dividends  or  financial  benefits
associated with such shares,  Caldera is considered the beneficial  owner of the
shares  subject to its agreement with the founding  shareholders  because it has
dispositive power and voting power with respect thereto.

(7) Includes 407,500 options to purchase Common Stock exercisable within 60 days
of June 15, 2001.

Item 12.  Certain Relationships and Related Transactions

         Certain founding shareholders, specifically, Marty Alfred, Bruce Baird,
Jeffrey Barlow, John Blumenthal,  Tim Kapp, Stephen Russell,  Dave Valenti, Gary
Wright and John Zollinger, obtained Common Stock in return for contributions and
development of the Company predecessor,  Arkona,  L.L.C., which was subsequently
merged into The Thorsden Group Ltd. and renamed Sundog Technologies,  Inc. These
founding  shareholders  received a total of 7,000,000 shares of Common Stock and
then,  collectively,  entered into an agreement  with Caldera  Holding  Company,
L.C.,  wherein Caldera was given the right to grant derivative  options to third
parties with respect to 3,761,500  (reduced to 1,550,000 as a result of buybacks
of founder's  shares) of such shares in order to encourage the  development  and
increased   productivity  of  ARKONA.  Holders  of  the  shares  underlying  the
derivative  options are entitled to dividends and distributions  with respect to
such shares until the options are exercised.  However,  Caldera has been granted
dispositive  voting  power with respect to all shares  subject to its  agreement
with the founding  shareholders so long as the agreement  remains in place.  The
agreement  expires upon the earlier of January 2003 and  Caldera's  award of the
last of the  derivative  options,  at which  time  voting  power  returns to the
founding shareholders.  As an inducement to the new management team of ARKONA to
join the  Company,  Caldera  has granted the  following  officers  the number of
derivative  options following each of their names:  Steve Russo (100,000),  Jeff
Swain  (75,000),   and  Arthur  Dearing  (75,000).   Caldera  granted  1,087,500
derivative  options to Alan Rudd, who transferred such options to the Company in
December 2000.

         Bryan Allen,  Director,  is of counsel with the law firm of Stoel Rives
LLP. Mr. Allen  provides  legal  services to ARKONA when, if and as requested by
ARKONA.  During the fiscal year ended March 31, 2001,  Stoel Rives billed ARKONA
for $27,777 in legal services.

         Alan Rudd,  CEO and  Director,  has loaned the Company  $385,000 at 14%
interest under a promissory note due December 31, 2001.  Accumulated interest as
of March 31, 2001 was $9,128.

         On November 9, 2000 the Company entered into an Asset Purchase and Sale
Agreement with Ensign Information Systems. Pursuant to such agreement, we issued
1,500,000  shares of common stock  (adjusted  to reflect the reverse  split) for
substantially  all of the assets of  Ensign,  including  intellectual  property.
Richard  Holland  and Blake  Nielson,  who  joined  the  Company  following  its
acquisition  of  Ensign  and  are  currently   serving  as  President  and  Vice
President--Client  Services  respectively,  each  owned  50% of the  outstanding
common  stock of Ensign at the time our  acquisition  of the  Ensign  assets was
consummated.

                                       25
<PAGE>

Item 13.  Exhibits and Reports on Form 8-K

         (a)      Exhibits.

<TABLE>
<CAPTION>

   Exhibit
    Number                       Title of Document                                  Location
---------------    ----------------------------------------------    ---------------------------------------

<S>                <C>                                               <C>
2.1                Asset  Purchase  and Sale  Agreement  between     Incorporated by reference to the
                   the Company and Ensign Information Systems        Company's Quarterly Report on Form
                                                                     10-QSB filed with the SEC on November
                                                                     14, 2000

2.2                Agreement  and  Plan of  Merger  between  the     Incorporated by reference to the
                   Company and Arkona, Inc. (a Utah corporation)     Company's Quarterly Report on Form
                                                                     10-QSB filed with the SEC on February
                                                                     13, 2001

3.1                Certificate of Incorporation                      Incorporated by reference to
                                                                     Company's registration statement on
                                                                     Form 10-SB, File No. 0-24372

3.2                Amendment to Certificate of Incorporation         Incorporated by reference to
                                                                     Definitive Information Statement on
                                                                     Form 14C filed with the SEC on May 6,
                                                                     1998

3.3                Certificate of Designation  regarding  Series     Incorporated   by   reference  to  the
                   A Preferred Stock                                 Current  Report on Form 8-K filed with
                                                                     the SEC on January 18, 2001.

3.4                Amendment  to  Certificate  of  Incorporation     Incorporated by reference to the
                   (reverse stock split; name change)                Company's Quarterly Report on Form
                                                                     10-QSB filed with the SEC on February
                                                                     13, 2001

3.5                Certificate  of Merger  (Company  and  Arkona     Incorporated by reference to the
                   Utah)                                             Company's Quarterly Report on Form
                                                                     10-QSB filed with the SEC on February
                                                                     13, 2001

3.6                Bylaws                                            Incorporated by reference to
                                                                     Company's registration statement on
                                                                     Form 10-SB, File No. 0-24372

4.1                Specimen Stock Certificate                        Incorporated by reference to
                                                                     Company's registration statement on
                                                                     Form 10-SB, File No. 0-24372

10.1               1992 Stock Option Plan                            Incorporated by reference to
                                                                     Company's registration statement on
                                                                     Form 10-SB, File No. 0-24372

10.2               Form  of   Employee   Confidentiality,   Work     Incorporated by reference to the
                   Product and Non-competition Agreement             Company's Quarterly Report on Form
                                                                     10-QSB for the quarter ended December
                                                                     31, 1997, as amended, filed with the
                                                                     SEC on May 7, 1998
</TABLE>

                                       26
<PAGE>
<TABLE>
<CAPTION>

   Exhibit
    Number                       Title of Document                                  Location
---------------    ----------------------------------------------    ---------------------------------------

<S>                <C>                                               <C>
10.3               1999 Stock Option Plan                            Incorporated  by reference to the
                                                                     Company's  Annual Report on
                                                                     Form 10-KSB for the year ended March 31, 1999
                                                                     filed with the SEC on June 29, 1999


10.4               Amended and Restated Stock Acquisition            Incorporated by reference to the
                   Agreement by and among Envision Development       Company's Current Report on Form 8K
                   Corporation, Qui Vive Acquisition                 filed with the SEC on April 24, 2000
                   Corporation, the Company and
                   RockMountain Ventures
                   Fund, LP, dated as of March 31, 2000.

10.5               Master Lease between Parkway Tower, L.L.C.        Incorporated by reference to Annual
                   and the Company.                                  Report on Form 10-KSB filed with the
                                                                     SEC on July 14, 2000

10.6               Rights Agreement dated December 22, 2000          Incorporated by reference to the
                                                                     Current Reporton form 8-K filed with
                                                                     the SEC on January 18, 2001
</TABLE>


         (b)      Reports on Form 8-K

         The Company  filed four  reports on Form 8-K during the  quarter  ended
March 31, 2001. On January 18, 2001,  the Company filed a Current Report on Form
8-K in which it  reported  its  adoption  of a  shareholder  rights plan and the
declaration  of a  dividend  of one Right for each  outstanding  share of common
stock of the Company. Each Right entitles the registered holder to purchase from
the Company one one-hundredth of a share of Series A Preferred Stock.

         On January 19,  2001,  January 23, 2001 and March 8, 2001,  the Company
filed Current Reports on Form 8-K in which it included Regulation FD disclosure.


                                       27
<PAGE>


                                   SIGNATURES
                                   ----------

         In  accordance  with the  requirements  of  Section  13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-KSB
to be signed on its behalf by the  undersigned,  thereunto duly  authorized,  on
June 28, 2001.

                            ARKONA Technologies, Inc.


                            By: /s/ Alan S.Rudd
                                --------------------------------------
 .
                                    Alan S. Rudd
                                    President, Chief Executive Officer


                   POWER OF ATTORNEY AND ADDITIONAL SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this Form 10-KSB has been signed by the following  persons in the capacities and
on the dates indicated.  Each person whose signature to this Form 10-KSB appears
below hereby  constitutes and appoints Alan S. Rudd and Stephen Russo,  and each
of them, as his true and lawful  attorney-in-fact  and agent, with full power of
substitution,  to sign on his behalf  individually  and in the  capacity  stated
below  and to  perform  any  acts  necessary  to be done in  order  to file  all
amendments and  post-effective  amendments to this Form 10-KSB,  and any and all
instruments or documents filed as part of or in connection with this Form 10-KSB
or the  amendments  thereto and each of the  undersigned  does hereby ratify and
confirm all that said  attorney-in-fact and agent, or his substitutes,  shall do
or cause to be done by virtue hereof.

<TABLE>
<CAPTION>

          Signature                                      Title                                       Date
          ---------                                      -----                                       ----

<S>                                                  <C>                                        <C>
           /s/ Alan S. Rudd                          Chief Executive Officer and                June 28, 2001
           -----------------                         Director (Principal Executive
               Alan S. Rudd                          Officer)


           /s/ Richard Holland
           --------------------                      President, Vice   President   of           June 28, 2001
               Richard Holland                       Engineering and Director


           /s/ Stephen Russo
           --------------------                      Chief Financial Officer                    June 28, 2001
               Stephen Russo                         (Principal Financial and
                                                     Accounting Officer)


          /s/ Bryan Allen                            Director                                   June 28, 2001
          ----------------
              Bryan Allen
</TABLE>


                                       28
<PAGE>










                                  ARKONA, INC.

                          [A DEVELOPMENT STAGE COMPANY]

                                 March 31, 2001

                       [WITH INDEPENDENT AUDITORS' REPORT]



                                       29
<PAGE>



<TABLE>
<CAPTION>


                                  ARKONA, INC.
                          [A DEVELOPMENT STAGE COMPANY]
                                TABLE OF CONTENTS

                                                                                                           Page
                                                                                                           ----

<S>                                                                                                        <C>
Independent  Auditors'  Report                                                                              F-1

Balance Sheet -- March 31, 2001                                                                             F-2

Statements of Operations and Comprehensive Income for the years ended March 31, 2001 and 1999,
and for the  period  from  inception  [June 11,  1992]  through  March 31,  2001                            F-3



Statement of  Stockholders'  Equity/(Deficit)  for the period from inception  [June 11, 1992] through
March 31, 2001                                                                                              F-4

Statements  of Cash  Flows for the years  ended  March 31,  2001 and 1999,  and for the  period  from
inception [June 11, 1992] through March 31, 2001                                                            F-5

Notes to Financial Statements                                                                            F-6 - F-13

</TABLE>


<PAGE>

Independent Auditors' Report
The Board of Directors and Shareholders
ARKONA, Inc.[a development stage company]


We have audited the accompanying  balance sheet of ARKONA,  Inc., [a development
stage  company]  formerly  known as Sundog  Technologies,  Inc., as of March 31,
2001, and the related statements of operations,  stockholders'  equity, and cash
flows for the years ended March 31, 2001 and 2000,  and for the period from June
11, 1992 [inception] through March 31, 2001. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statements  based  on our  audit.  The  financial
statements  of Arkona,  LLC, a limited  liability  company  and  predecessor  of
Arkona,  Inc., for the period from  inception  through  December 31, 1996,  were
audited by other  auditors whose report dated  September 30, 1997,  expressed an
unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial  position of ARKONA,  Inc., [a development
stage  company] as of March 31,  2001,  and the results of  operations  and cash
flows  for the  periods  ended  March  31,  2001 and 2000,  in  conformity  with
generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 10 to the
consolidated  financial  statements,  the  Company has  experienced  losses from
operations  since its  inception  and has not yet begun  generating  significant
revenue, which raises substantial doubt about the ability to continue as a going
concern.  Management's  plans in regard to these  matters are also  described in
Note 10. The  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.



                                             /s/ MANTYLA McREYNOLDS
Salt Lake City, Utah                         ----------------------
June 22, 2001                                    MANTYLA McREYNOLDS


                                      F-1
<PAGE>

<TABLE>
<CAPTION>

                                  ARKONA, INC.
                          [A Development Stage Company]
                                  Balance Sheet
                                 March 31, 2001

                                     ASSETS
                                     ------
<S>                                                                          <C>
Current Assets
  Cash & cash equivalents - Notes 1 & 2                                      $     35,221
  Accounts receivable                                                              81,683
  Employee advances                                                                 8,540
  Marketable securities available for sale - Note 8                                 1,410
  Prepaid expenses                                                                 10,787
                                                                             ------------
                        Total Current Assets                                      137,641
                                                                             ------------
Property and Equipment - Note 6
  Property and equipment                                                          550,163
  Less: Accumulated depreciation                                                 (286,276)
                                                                             ------------
                     Net Property and Equipment                                   263,887
Other Assets
  Deposits - Note 9                                                                17,779
  Goodwill from Ensign purchase (net) - Note                                      261,037
  Intellectual property (net) - Note                                              241,998
  Intangible assets - Note 4                                                       42,605
                                                                             ------------
                         Total Other Assets                                       563,419
                                                                             ------------
                            TOTAL ASSETS                                     $    964,947
                                                                             ------------

                  LIABILITIES & STOCKHOLDERS' EQUITY/(DEFICIT)
                  --------------------------------------------
Current Liabilities
  Accounts payable                                                           $    421,740
  Accrued liabilities                                                              13,959
  Deferred revenue                                                                174,653
  Current portion of capital leases - Note 5                                       28,672
                         Total Current Liabilities                               639,0244
Long-Term Liabilities
  Capital leases payable - Note 5                                                  61,790
  Note payable - related party - Note                                             109,128
  Less current portion of capital leases                                          (28,672)
                                                                             ------------
                        Total Long-Term Liabilities                               142,246
                                                                             ------------
                             Total Liabilities                                    781,270
                                                                             ------------
Stockholders'  Equity/(Deficit) --      Notes   7,   8, 11 & 13

Preferred  stock  -- 10,000,000 shares authorized, $.001 par
    value; no shares issued and outstanding                                             0

  Capital stock -- 50,000,000 shares authorized, $.001 par
    value; 14,408,912 shares issued and outstanding                                14,409

  Additional paid-in capital                                                   18,322,868

  Unearned compensation                                                        (2,903,250)

  Accumulated unrealized losses on investments                                    (15,532)

  Deficit accumulated during the development stage                            (15,234,817)
                                                                             ------------
                   Total Stockholders' Equity/(Deficit)                           183,678
                                                                             ------------
            TOTAL LIABILITIES & STOCKHOLDERS' EQUITY/(DEFICIT)               $    964,948
                                                                             ------------
                 See accompanying notes to financial statements
</TABLE>

                                      F-2
<PAGE>

<TABLE>
<CAPTION>

                                  ARKONA, INC.
                          [A Development Stage Company]
                Statements of Operations and Comprehensive Income
      For the Years Ended March 31, 2001 and 2000, and for the Period from
                Inception[June 11, 1992] through March 31, 2001
                                                       Year                    Year                  Period from
                                                       ended                  ended             June 11,1992 Through
                                                      3/31/01                3/31/00                   3/31/01
                                                 ------------------     -------------------     ----------------------
<S>                                          <C>                    <C>                     <C>
Revenues - Note 1                            $             327,015  $               45,975  $                592,428
Operating Expenses
 Cost of sales                                             183,447                  47,125                    282,438
 Research and development                                  576,021                 597,774                  2,315,266
 Marketing, general and administrative                   3,358,901               1,849,283                  6,625,909
 Amortization of unearned compensation
                                                         3,135,500               1,507,500                  4,643,000
                                                 ------------------     -------------------     ----------------------
  Total Operating Expenses                               7,253,869               4,001,682                 13,866,613
                                                 ------------------     -------------------     ----------------------
        Net Loss from Operations                       (6,926,854)              (3,955,707)               (13,274,185)
Other Income/(Expense)
  Interest income                            $               6,609  $               38,208  $                 112,428
  Interest expense                                        (53,571)                 (6,202)                    (69,657)
  Other income                                                 496                      19                        785
  Other expense                                                  0                       0                      (288)
  Loss on disposal of investment
securities                                            (20,465,829)                       0                (20,469,897)
                                                 ------------------     -------------------     ----------------------
      Total Other Income/(Expense)                    (20,512,295)                  32,025                (20,426,629)
                                                 ------------------     -------------------     ----------------------
        Net Loss From Continuing
          Operations                                  (27,439,149)              (3,923,682)               (33,700,814)
  Gain on disposal of segment                           21,531,554                       0                 21,531,554
Discontinued Operations: Note 14
     Loss from discontinued operations                           0              (2,342,064)                (3,065,557)
                                                 ------------------     -------------------     ----------------------
Net Loss                                     $         (5,907,595)  $           (6,265,746)  $            (15,234,817)
Other comprehensive income:
   Unrealized holding gains(loss)                          (1,950)                     172                    (15,532)
                                                 ------------------     -------------------     ----------------------
Comprehensive Income (Loss)                            (6,909,545)              (6,265,574)               (15,250,349)
Basic & Diluted Loss/share - Note 1
  Continuing Operations                      $              (2.12)  $                (0.34)  $                  (7.24)
  Gain on disposal of segment                                 1.66                    0.00                       4.63
  Discontinued Operations                                     0.00                   (0.20)                     (0.66)
                                                 ------------------     -------------------     ----------------------
     Basic & Diluted Net Loss per share                     (0.46)                   (0.54)                     (3.27)
                                                 ------------------     -------------------     ----------------------
Weighted average number shares                          12,919,299              11,587,788                  4,655,467
                                                 ------------------     -------------------     ----------------------
</TABLE>

                 See accompanying notes to financial statements

                                      F-3
<PAGE>


<TABLE>
<CAPTION>

                                  ARKONA, INC.
                          [A Development Stage Company]
                   Statement of Stockholders' Equity/(Deficit)
For the Period from Inception [June 11, 1992] through March 31, 2001

                                                                                    Accum.                              Total
                                                                   Additnl        Unrealized       Accum. Loss        Stockholders'
                                     Shares          Common        Paid-In         Loss on            Devel            Equity/
                                     Issued          Stock         Capital        Investments         Stage            Deficit)
                                  -------------  -------------   -------------    -------------    -------------      -------------

<S>                                <C>           <C>            <C>            <C>                <C>                <C>
Balance, June 11, 1992                      0    $         0    $         0    $         0        $         0        $         0

Issued  common  stock
for cash through
March 31, 1993,
$0.00125 per share                    400,000            400            100           --                 --                  500

Net loss for the year ended
March 31, 1993                           (269)          (269)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1993               400,000    $       400    $       100    $         0        $      (269)       $       231

Capital contribution                     --             --              500           --                 --                  500

Issued  shares  in
Private  Placement                     24,500             25            221           --                 --                  246
for cash, $0.01 per share

Net loss for the year ended
March 31, 1994                           --             --             --             --                 (221)              (221)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1994               424,500    $       425    $       821    $         0        $      (490)       $       756

Net loss for the year ended
March 31, 1995                         (2,262)        (2,262)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1995               424,500    $       425    $       821    $         0        $    (2,752)       $    (1,506)

Net loss for the year ended
March 31, 1996                           --             --             --             --               (1,078)            (1,078)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1996               424,500    $       425    $       821    $         0        $    (3,830)       $    (2,584)

Net loss for the year ended
March 31, 1997                           --             --             --             --              (64,706)           (64,706)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1997               424,500    $       425    $       821    $         0        $   (68,536)       $   (67,290)

Issued  stock  for
assets  as part of
Arkona merger, $0.001 per share    15,575,500         15,575           --             --                 --               15,575

Issued  shares  in
Private  Placement
for cash  and                            --
securities, $ 0.48 per              4,000,000          4,000      1,926,486           --                 --            1,930,486
share

Issued  shares  in
Private  Placement
for cash                              132,500            133        264,867           --                 --              265,000

Adjustment  for  unrealized
loss  on investments                     --             --         (159,010)          --             (159,010)

Net loss for the year ended
March 31, 1998                           --             --             --             --             (636,180)          (636,180)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1998            20,132,500    $    20,133    $ 2,192,174    $  (159,010)       $  (704,716)       $ 1,348,581

Issued  shares  in
Private  Placement
for cash, $1.40 per share           2,397,601          2,397      3,365,352           --                 --            3,367,749

Adjustment  to
unrealized loss  on
investments                              --             --             --          145,256               --              145,256

Net loss for the year ended
March 31, 1999                           --             --             --             --           (2,356,758)        (2,356,758)
                                  -------------  -------------   -------------    -------------    -------------      -------------
Balance, March 31, 1999            22,530,101    $    22,530    $ 5,557,526    $   (13,754)       $(3,061,474)       $ 2,504,828

</TABLE>

                 See accompanying notes to financial statements

                                      F-4

<PAGE>

<TABLE>
<CAPTION>

                                  ARKONA, INC.
                          [A Development Stage Company]
             Statement of Stockholders' Equity/(Deficit)(continued)
      For the Period from Inception [June 11, 1992] through March 31, 2001

                                  Accum. Total
                                                               Additnl        Unrealized    Accum. Loss     Unearned  Stockholders'
                                 Shares          Common        Paid-In         Loss on         Devel        Compen-      Equity/
                                 Issued          Stock         Capital        Investments      Stage        sation       Deficit)
                              -------------  -------------   -------------   ------------- -------------  ------------- -----------

<S>                            <C>           <C>             <C>             <C>                <C>     <C>             <C>
Balance, March 31, 1999        22,530,101    $     22,530    $  5,557,526    $    (13,754)              0 $(3,061,474)  $ 2,504,828

Issued  shares in  Private
Placement for cash,$1.50          107,668             108         161,392            --              --            --
per share

Exercise of A & B
warrants  for cash, $2.00          42,867              43          85,691            --              --            --        85,734
per share (3/98 PPM)

Exercise of A &  B
warrants  for cash, $0.95         855,718             856         812,077            --              --            --       812,933
per share (October offer)

Exercise   of  B  warrants
for cash,  $3.00 per share          1,667               2           4,999            --              --            --         5,001
(3/98PPM)

Issued  shares in  Private
Placement (2000) for             287,500             287         574,713             --              --            --       575,000
cash, $2.00 per share

Adjustment  to  unrealized
loss on investments                  --              --              --               172            --            --           172

Adjustment to record
options granted                      --              --         6,951,250            --        (6,951,250)         --             0

Compensation  expense  for
stock options granted                --              --              --              --         1,507,500          --     1,507,500
Net loss  for  the  year
ended March 31, 2000                 --              --              --              --              --    (6,265,748)   (6,265,748)
                              -------------  -------------   -------------   ------------- -------------  ------------- -----------
Balance, March 31, 2000        23,825,521    $     23,826    $ 14,147,648    ($    13,582)   $ (5,443,750)$(9,327,222)  $  (613,080)

One for two reverse  split
of common shares              (12,031,719)        (12,032)         12,032            --              --            --             0

Cancelled treasury shares      (1,740,250)         (1,740)        (33,065)           --              --            --       (34,805)

Issued  shares in  private
placement at  $ 4.00 per
share                              37,500              37         149,963            --              --            --       150,000

Options exercised at
$1.00 per post-split share         30,000              30          29,970            --              --            --        30,000

Options exercised at
$4.00 per post split share         46,632              47         187,104            --              --            --       187,151

Issued  shares  for Ensign
asset purchase                  1,500,000           1,500         627,870            --              --            --       629,370

Issued  shares for debt at
$2.00 per share                   767,728             768       1,534,688            --              --            --     1,535,456

Issued  shares to  offic
at $0.27 per share              1,087,500           1,087         292,538            --              --            --       293,625

Issued  shares in  private
placement at $ 0.75  per
share                             400,000             400         299,600            --              --            --      300,000

Issued  shares in  private
placement at $ 1.00 per
share                             480,000             480         479,520            --              --            --       480,000

Granted stock options,
record unearned comp                 --              --           595,000            --          (595,000)         --             0

Adjustment  to  unrealized
loss on investments                  --              --              --              --            (1,950)         --        (1,950)

Compensation  expense  for
stock options granted                --              --              --              --         3,135,500          --     3,135,500

Gifted  stock  to trust of
employee                            6,000               6            --              --              --            --          --
Net   loss  for  the  year
ended March 31, 2001                 --              --              --              --              --    (5,907,595)   (5,907,595)
                              -------------  -------------   -------------   ------------- -------------  ------------- -----------
Balance, March 31, 2001        14,408,912              69      18,322,868         (15,532)     (2,903,250)(15,234,817)      183,678
                              -------------  -------------   -------------   ------------- -------------  ------------- -----------
</TABLE>

                 See accompanying notes to financial statements

                                      F-5
<PAGE>

<TABLE>
<CAPTION>

                                  ARKONA, INC.
                          [A Development Stage Company]
                            Statements of Cash Flows
                   For the Years Ended March 31, 2001 and 2000
            and for the Period from Inception [June 11, 1992] through
                                 March 31, 2001

                                                                                                   Period from
                                                           Year ended           Year ended          6/11/92
                                                            3/31/01              3/31/00          to 3/31/01
                                                        ---------------     ----------------      ---------------
<S>                                                     <C>                   <C>                   <C>
Cash Flows from Operating Activities
Net Loss                                                $ (5,907,595)         $ (6,265,748)         $(15,234,817)
Minority interest net loss                                         0              (612,635)             (612,635)
Adjustments  to  reconcile  net  income  to net  cash
provided by operating activities:
    Depreciation and amortization                            266,984               172,485               491,645
    Amortization of stock options                          3,135,500             1,954,808             5,090,308
    Gain on sale of property                                    (496)                 (496)
    Recorded gain on disposal of segment                 (21,531,554)             (920,811)          (22,452,365)
    Loss on disposal of securities                        20,465,829            20,465,829
    Decrease/(increase) in accounts receivable               (90,223)               51,200               (90,223)
    Increase/(decrease) in accounts payable                  215,262               342,736               698,746
    Increase/(decrease) in other current liabilities         (50,815)               40,903                65,910
    Increase/(decrease) in deferred income                   173,153                 1,500               174,653
    Decrease in prepaid expenses                              13,528                 1,235               (10,787)
                                                        ---------------     ----------------      ---------------
          Net Cash Used for Operating Activities          (3,310,428)           (5,234,327)          (11,414,232)
Cash Flows from Investing Activities
  Long-term security deposits                                  3,413                52,158               (50,034)
  Sale of Marketable Securities                                    0               823,668
  Patent costs                                                (4,687)             (127,933)             (192,603)
  Proceeds from sale of minority interest                          0             1,503,756             1,503,756
  Proceeds from sale of property                               6,293                 6,293
  Capital expenditures                                      (167,438)             (263,300)             (811,174)
                                                        ---------------     ----------------      ---------------
          Net Cash Used for Investing Activities           1,164,681             1,164,681             1,279,906
Cash Flows from Financing Activities
  Bank overdraft in discontinued operation                   140,619               140,619
  Principal on equipment financed                            (22,033)              (37,464)                8,511
  Proceeds from issuance of common shares                  2,940,803             1,640,168             9,319,417
  Proceeds from borrowing                                    100,000               600,000               700,000
  Cash contribution                                             --                    --                   1,000
                                                        ---------------     ----------------      ---------------

Net Cash Provided by Financing Activities                  3,018,770             2,343,323            10,169,547
              Net Increase/(Decrease) in Cash               (454,076)           (1,726,323)               35,221
Beginning Cash Balance                                       489,297             2,215,620                   -0-
Ending Cash Balance                                     $     35,221               489,297          $     35,221

Supplemental Disclosure of Cash Flow Information:
  Cash paid during the year for interest                $     44,437                 6,202          $     60,523
  Cash  paid  during  the year  for  income/franchise   $       --                     134          $        134
taxes
Noncash Financing Activities:
  Issued stock for marketable securities                $          0                   -0-          $    840,610
  Issued stock for Ensign assets                        $    630,000                   --           $    630,000

</TABLE>


                 See accompanying notes to financial statements



                                      F-6
<PAGE>

                                  ARKONA, INC.
                          [A Development Stage Company]
                    Notes to Financial Statements [continued]
                                 March 31, 2001

Note 1            Organization    and   Summary   of   Significant    Accounting
                  --------------------------------------------------------------
                  Policies[continued]
                  -------------------

                  (h) Software Costs

                  Costs incurred in the  development of software  products to be
                  sold, leased or otherwise marketed by the Company are expensed
                  as research and development when incurred


                  (i) Advertising Costs

                  Advertising  costs of the  Company  are  charged to expense as
                  incurred.

Note 2            Concentration
                  -------------

                  The Company maintains cash balances in a financial institution
                  located in Salt Lake City, Utah.  Accounts at this institution
                  are insured by the Federal Deposit Insurance Corporation up to
                  $100,000.


Note 3            Income Taxes
                  ------------

                  The Company has the following  temporary  differences and loss
                  carryforward  amounts as of the balance sheet date. The timing
                  difference  multiplied  by the  estimated  tax  rate,  for the
                  period the  temporary  differences  are  expected  to reverse,
                  becomes a deferred tax asset or liability.
<TABLE>
<CAPTION>

                           Description                                                            Tax             Rate
                                                                            --------------- ----------------- --------------
<S>                                                                            <C>                <C>              <C>
                              Net operating loss (expires thru 2021)           $11,653,474        $4,544,855       39%
                              Stock compensation                                 4,643,000         1,810,770       39%
                              Valuation allowance                                                 (6,355,625)
                                   Deferred tax asset 3/31/2000                                           $0
</TABLE>

                  The allowance has increased  $2,718,008  from $3,637,617 as of
                  March 31,  2000.  For the years ending March 31, 2001 and 2000
                  the Company had no significant income tax expense or liability
                  as a result of net operating losses incurred. Currently, there
                  is no  reasonable  assurance  that the Company will be able to
                  take  advantage of deferred tax assets,  thus,  an  offsetting
                  allowance has been established for the deferred asset.



Note 4            Intangible Assets
                  -----------------

                  The Company has applied and been granted patent protection for
                  its proprietary  technology  relating to Universal Update. The
                  patent was granted on  December  7, 1999.  Since that time the
                  Company has applied and received  additional  protection under
                  its  patent.  Amortization  of cost began on December 7, 1999.
                  Amortization  expense  for the years  ended March 31, 2000 and
                  2001 was $3,482 and $7,351  respectively.  Unamortized  patent
                  costs, related to continuing operations, as of March 31, 2001,
                  is $42,606.

Note 5            Leases
                  ------

                  The   Company   has   various    capital   lease    agreements
                  collateralized  with  property  and  equipment as of March 31,
                  2001. These leases bear interest at various interest rates and
                  have  remaining  terms of one to three years.  Future  minimum
                  lease payments are as follows:

                                      F-7
<PAGE>

<TABLE>
<CAPTION>

                                                                   Minimum
                                     Year Ending               Lease Payments         Principal        Interest
                                     -----------            --------------------- ---------------- -----------------
<S>                                                         <C>                    <C>              <C>
                                      3/31/2002             $             34,937   $       28,672   $         6,265
                                      3/31/2003                           22,069           19,316             2,753
                                      3/31/2004                           14,489           13,802               687
                                                            --------------------- ---------------- -----------------
                                        Total                             71,495           61,790             9,705
                                                            --------------------- ---------------- -----------------
</TABLE>


                  The Company  has  operating  leases for its office  facilities
                  which expire at various times through June 2005.


                                                             Minimum


                        Year Ending                      Lease Payments

                         3/31/2002                   $              229,856

                         3/31/2003                                  235,774

                         3/31/2004                                  241,793

                         3/31/2005                                  247,632

                  3/31/2005 and thereafter                           83,853
                                                     -----------------------
                           Total                     $            1,038,908
                                                     -----------------------


                  Rent expense during the current year was $193,226 for 2001 and
                  $84,062 for 2000.


Note 6            Property and Equipment
                  ----------------------

                  Property and equipment are summarized by major classifications
                  as follows:
<TABLE>
<CAPTION>

                                                                                          Accumulated
                                                                   Acquisition           Amortization/         Net Book
                                                                      Cost               Depreciation            Value
                                                            ------------------------ --------------------- ---------------
<S>                                                         <C>                       <C>                   <C>
                           Office Furniture                 $                56,645   $            15,773   $      40,872
                           Computer Software                                 58,219                56,332           1,887
                           Computer Equipment                               384,692               205,878         178,814
                           Leasehold Improvements                            50,607                 8,293          42,314
                                                            ------------------------ --------------------- ---------------
                                        Total               $               550,163   $           286,276   $     263,887
                                                            ------------------------ --------------------- ---------------
</TABLE>

                  The  Company  acquired   approximately  $153,300  in  computer
                  equipment some of which is financed  through  capital  leases.
                  Depreciation  expense,  including the  amortization  of assets
                  acquired by capital  lease,  amounted to $125,947 and $172,485
                  ($63,063  attributable to discontinued  operations) during the
                  years ended March 31, 2001 and 2000, respectively. The Company
                  computes  depreciation  using the  straight-line  method  over
                  three years.


Note 7            Acquisition of Arkona, Inc.
                  ---------------------------

                  Effective  October 7, 1997, the predecessor  corporation  (the
                  Predecessor Entity")of Arkona, Inc., a Utah corporation ("Utah
                  Arkona") merged with an into a wholly-owned  subsidiary of the
                  Company,   with  Utah  Arkona   surviving  as  a  wholly-owned
                  subsidiary of the Company.  All of the issued and  outstanding
                  stock of the Predecessor  Entity was cancelled in exchange for
                  1,486,1000   shares  of  common  stock  of  the  Company.   In
                  connection with the transaction,  5,513,900  additional shares
                  of common  stock of the Company were issued to the founders of
                  the Predecessor  Entity,  and 787,750  additional  shares were
                  issued  to   shareholders   of  the  Company.   The  financial
                  statements in this report have been restated, where necessary,
                  for the effects of this merger.

                  In January  2002,  Utah  Arkona  was merged  with and into the
                  Company,  with the Company  surviving,  in order make the name
                  "Arkona" available to the Company.

                                      F-8
<PAGE>

Note 8            Private Placement Memorandum/Marketable Securities
                  --------------------------------------------------

                  Closing of the merger  referred to in Note 7 was subject to an
                  offering of 4,000,000 shares of common stock through a private
                  placement memorandum.  The shares are exempt from registration
                  under  the  Securities  Act  of  1933,  and  applicable  state
                  securities  laws,  pursuant to exemptions  contained  therein.
                  Accordingly,  the  shares  were  offered  by the  Company to a
                  limited  number of persons.  The 4,000,000  shares ($.001 par)
                  were issued for cash  ($1,159,390  less  $69,514 in costs) and
                  securities  (valued at $840,610) to equal  $2,000,000  or $.50
                  per share, prior to settlement fees. The securities  delivered
                  in  the  placement   consisted  of  3,000  shares  of  Eurogas
                  Corporation  (valued at $7.00 per share) and 204,200 shares of
                  InterjetNet   Corporation  (valued  at  $5.00  per  share).  A
                  provision for accepting the securities allowed for the Company
                  to receive,  upon sale of said  securities,  at least $.50 per
                  share in cash  proceeds for the Sundog (then  Thorsden)  stock
                  issued under the  offering.  Any shortfall in the value of the
                  securities when sold would result in a reduction of the number
                  of shares issued  through the  offering.  Rather than reducing
                  the  number of shares  issued,  the  subscriber  made a verbal
                  commitment to contribute  additional  shares of InterjetNet to
                  ensure that the  Company is able to realize  cash equal to the
                  original market value. All of the InterjetNet shares were sold
                  in June of 1998 for approximately $820,000. The net unrealized
                  loss  on   investments   was   reduced   during  the  year  by
                  approximately  $145,000 due to the market  value  increase and
                  subsequent sale of the InterjetNet stock.

                  The March 31, 2001  unrealized  loss on  investments of $1,950
                  was related to the Eurogas securities.  The unrealized loss is
                  based on the original cost of the  securities  verses  current
                  market  value.  As of March 31,  2001,  the  Company had 3,000
                  shares remaining.  These securities are available for sale and
                  have been adjusted to fair market value as of March, 31, 2001.

                  Beginning on March 4, 1998, the Company  commenced an offering
                  of up to  2,000,000  units,  each  consisting  of one share of
                  common stock and one warrant to purchase common stock. In July
                  of 1998,  the terms of the offering were amended to change the
                  share to  warrant  ratio  from 1:1 to 1:.5,  to  increase  the
                  number of shares  to  2,666,666,  to  decrease  the  number of
                  warrants to 1,333,333 and to reduce the purchase price for the
                  units  from  $2.00 per unit to $1.50 per  unit.  The  warrants
                  enable  the  purchasers  to buy  shares of common  stock at at
                  prices ranging from $2 to $3 per share over a two year period.
                  Proceeds from this offering,  of approximately  $3.83 million,
                  have been used primarily to fund the development and marketing
                  of the Company.

                  In  October  1999,  the  Company  offered  the  holders of the
                  above-described  warrants the  opportunity  to exercise at the
                  special  purchase  price  of $.95  per  share.  Warrants  were
                  exercised to purchase 812,077 common shares for  approximately
                  $812,933.


Note 9            Deposits
                  --------

                  In  conjunction  with its lease  obligations,  the Company has
                  placed  security  deposits  with its  landlords.  A deposit of
                  $13,205 was paid at the inception of the current office lease.
                  An  additional  deposit of $4,574 was acquired  along with the
                  lease  obligation  associated  with  the  purchase  of  Ensign
                  Information Systems.


Note 10           Going Concern
                  -------------

                  The Company has  incurred  losses from  inception to March 31,
                  2001  amounting  to   $15,234,817.   Financing  the  Company's
                  activities  to date has  primarily  been the result of private
                  placement offerings.  The Company's ability to achieve a level
                  of  profitable  operations  and/or  additional  financing  may
                  impact the  Company's  ability to continue as it is  presently
                  organized.   Management   anticipates   reaching  a  level  of
                  profitable   operations.   To  the   extent   that  cash  flow
                  requirements are not met by operations,  management intends to
                  raise additional capital through private placement offerings.

                                      F-9
<PAGE>

Note 11           Stock Option Plans
                  ------------------

                  The Company has  established  two Stock Option Plans (1992 and
                  1999)  to  provide  incentives  to  its  directors,  officers,
                  employees and advisors,  to do business with the Company,  and
                  to enable the Company to obtain and retain the services of the
                  type of directors, officers, advisors and employees considered
                  essential for  long-range  success.  Granting of options is at
                  the discretion of the Stock Option Committee of the Board. The
                  Committee may  determine the terms and  conditions of options,
                  consistent  with the Plan.  Each plan currently has authorized
                  1,000,000 shares.

                  Through March 31, 2001,  the 1992 Plan has  currently  granted
                  and outstanding 245,000 options to purchase AKONA common stock
                  at  $1.00,  $3.00,  and  $4.00  per  share.  The 1999 Plan has
                  currently  granted and  outstanding  a total of 858,000  stock
                  options to purchase  ARKONA common stock at $0.30 to $1.20 per
                  share.  Options under both plans vest over a two to three year
                  period. In the 1992 plan,  203,666 options have vested through
                  the date of this  report.  In the 1999 plan,  110,000  options
                  have vested and 30,000 options have been exercised.

                  Compensation cost for stock options is measured as the excess,
                  if any, of the  estimated  fair market value of the  Company's
                  stock at the date of grant over the amount the recipient  must
                  pay to acquire  the  stock.  Unearned  compensation,  which is
                  shown as a separate  component of stockholders'  equity,  as a
                  result of  compensatory  stock  options is being  amortized to
                  expense  over the  vesting  periods  of the  underlying  stock
                  options.  The amounts  amortized to expense  through March 31,
                  2001 were $5,090,308 . Unearned compensation at March 31, 2001
                  represents  the intrinsic  value of stock options  granted but
                  not yet vested.

                  Information on stock options  outstanding at March 31, 2001 is
                  summarized as follows:

<TABLE>
<CAPTION>

  Options Outstanding                                                                      Options Exercisable
                                               Weighted Average
                                                   Remaining              Weighted                                    Weighted
                                               Contractual Life            Average                                    Average
    Exercise prices            Number                                  Exercise Price      Number Exercisable         Exercise
                            Outstanding                                                                                Price
  -------------------- --- --------------- -- -------------------- --- ---------------- -- -------------------- --- -------------
<S>             <C>               <C>                   <C>                      <C>                   <C>                 <C>
                $0.60             425,000               23 months                                      110,000
                $1.00             473,000               29 months                                       76,666
                $0.40              50,000               33 months                                            0
                $1.20              25,000               28 months                                            0
                $3.00             125,000                0 months                                      125,000
                $4.00               5,000               21 months                                        2,000
  --------------------     ---------------    --------------------     ----------------    --------------------     -------------
                                1,103,000               24 months                $1.06                 313,666             $1.68
</TABLE>



Note 12           401K Profit Sharing Plan
                  ------------------------

                  On January 15, 1998, the Directors adopted an employee benefit
                  program  consisting of a 401K Profit  Sharing  Plan.  The 401K
                  Plan  provides for  employees to contribute on a pretax basis,
                  employer matching, and a broad portfolio of investment options
                  within  the  plan to be  selected  by the  employee.  Employer
                  matching  contributions  are  made at the sole  discretion  of
                  management.  Profit sharing expense recognized under this plan
                  was $62,233 and $18,247 for the years ended March 31, 2001 and
                  2000, respectively.

                                      F-10
<PAGE>

Note 13           Minority Interest in Qui Vive, Inc.
                  -----------------------------------

                  In   October   1999   the   Company   effected   a   plan   of
                  recapitalization  of Qui Vive,  Inc.  whereby it converted its
                  entire  common stock  holding  (550,000  shares) into Series A
                  preferred stock at a one for one conversion rate.

                  On  November  9, 1999,  Sundog  closed an  agreement  to issue
                  180,000  shares  of  Series B  preferred  stock of Qui Vive at
                  $8.333 per share to  RockMountain  Ventures Fund, LP through a
                  private  placement  (aggregate  proceeds  of  $1,499,940  less
                  $25,142 in costs). In conjunction with this private placement,
                  and in  consideration  of $60,  warrants  were  issued  to the
                  investor to purchase an aggregate of 52,500 shares of Qui Vive
                  Series B preferred stock at an exercise price of $10.41625 per
                  share.

                  The  holders  of  Series A and  Series B  preferred  stock are
                  entitled to receive  dividends  at the rate of $0.25 and $0.58
                  per  share,  per  annum,  respectively.   The  right  to  such
                  dividends  on  preferred  stock  shall  not  be  mandatory  or
                  cumulative,  and no right shall accrue to holders of preferred
                  stock by reason of the fact that dividends are not declared in
                  any prior year.  Holders of Series A and B preferred stock are
                  entitled,  voting as  separate  classes,  to elect two and one
                  directors of the board, respectively.  Preferred stock holders
                  are also  allowed to  participate  with  common  stockholders,
                  voting as single class, to elect the remaining board members.

                  In  December  1999,  Qui Vive issued  70,775  shares of common
                  stock for cash of $3,757,  pursuant  to the  exercise of stock
                  options. This further reduced Sundog's interest in Qui Vive.

                  The Minority  Interest at March 31, 2000,  ($1,338,429) is the
                  net  of  cash  proceeds   ($1,503,756)   plus  earned  options
                  ($447,308),  less the minority share of loss from discontinued
                  operations  ($612,635).  The minority  interest was eliminated
                  with the sale of Qui Vive, Inc. (see Note 14)


Note 14           Sale of Qui Vive, Inc.
                  ----------------------

                  On February 10, 2000, the Company  entered into an Acquisition
                  Agreement   (the   "Initial   Acquisition   Agreement")   with
                  Perfumania.com,  QV  Acquisition  Co., which is a wholly owned
                  subsidiary  of  Perfumania.com.,  and Rock  Mountain  Ventures
                  Fund, LP to sell its entire  ownership in the Company's wholly
                  owned  subsidiary,  Qui Vive, Inc. ("QV").  If the acquisition
                  would  have  been   consummated,   pursuant   to  the  Initial
                  Acquisition  Agreement,  Perfumania.com  would  have  received
                  550,000 of Qui Vive Series A Preferred stock, representing the
                  Company's  entire equity  interest in Qui Vive in exchange for
                  1,530,000 shares of Perfumania.com common stock. Additionally,
                  the   Company   would   have   received   10,000   shares   of
                  Perfumania.com  common stock in exchange for licensing  rights
                  associated with Qui Vive technology.

                  Subsequent  to signing the  Acquisition  Agreement on February
                  10, 2000, we conducted  additional  discussions  with Envision
                  Development    Corporation    (successor    in   interest   to
                  "Perfumania.com")  ("Envision") concerning Envision's interest
                  in acquiring  QV.  After  extensive  arms-length  negotiations
                  between Envision and Sundog, on March 31, 2000 we entered into
                  an   Amended   and   Restated   Acquisition   Agreement   (the
                  "Acquisition  Agreement")  with Envision,  QV Acquisition Co.,
                  and  Rock  Mountain   Ventures  Fund,  LP.   Pursuant  to  the
                  Acquisition  Agreement,  on April 7, 2000, we  transferred  to
                  Envision all of our  interest in QV in exchange for  1,492,000
                  shares of Envision  common stock.  As discussed in Note 15, we
                  have since written down to zero the value of all of our shares
                  of Envision common stock.

Note 15           Investment  in Envision  Development  Corporation;  Subsequent
                  --------------------------------------------------------------
                  Write Down.
                  -----------

                  On  April 7,  2000,  we  transferred  to  Envision  all of our
                  interest in QV in exchange  for  1,492,000  shares of Envision
                  common  stock.  On that date,  Envision's  common  stock had a
                  market  value of $66.25  per  share as quoted by the  American
                  Stock Exchange;  however, due to various factors,  including a
                  contractual  restriction prohibiting sale of the shares on the
                  market prior to October 7, 2001, we initially  discounted  the
                  value of such shares of Envision's  common stock to $21.63 per
                  share in order to more  accurately  reflect  the  value of the
                  transaction.  During the quarter ended  December 31, 2000, the
                  following events occurred:

                                      F-11
<PAGE>

                  o            On  November  6, 2000,  Envisions'  common  stock
                               ceased  trading on the American Stock Exchange as
                               a result of  Envision's  failure to meet  certain
                               exchange requirements for continued listing.

                  o            On  October  31,  2000,  Envision  disposed  of a
                               majority  of  the  assets  of  its   wholly-owned
                               subsidiary,  Envision Massachusetts,  pursuant to
                               the terms of a letter  agreement,  dated  October
                               31,2000,  by and among Business Solutions Outpost
                               Corporation ("BSOC") and Envision. As a result of
                               the  agreement,  Envision  recorded a loss on the
                               disposition   of   Envision    Massachusetts   of
                               approximately  $10.5  million,  including a $19.0
                               million  impairment  of  the  remaining  goodwill
                               associated   with  the   Envision   Massachusetts
                               acquisition.

                  o            Envision  had  historically  relied on funding to
                               finance   operations   under  various   financing
                               arrangements with ZERO.NET, Inc. ("Zero.Net"),  a
                               significant  shareholder,   and  Dominion  Income
                               Management  Corporation  ("Dominion"),  a related
                               company.   These  lending  sources  continued  to
                               provide  loans until late  November 2000 when the
                               borrowings  of  Envision  and  its   subsidiaries
                               approached $5.0 million,  including interest.  At
                               this point, further lending was terminated due to
                               the  delisting of Envision  common stock from the
                               American Stock Exchange and Envision's  inability
                               to meet revenue forecasts and specific  financial
                               requirements of the lender.  Efforts to establish
                               alternative  financing sources were unsuccessful.
                               In November 2000,  Envision's  Board of Directors
                               directed  management  to  cease  operations.  The
                               Board of Directors at Interosa,  a key subsidiary
                               of  Envision,  took  similar  action and directed
                               that  management  team  to  cease  operations  in
                               November 2000.

                  Due to the nature of the events  that have  taken  place,  the
                  Company  believes  that  no  value  can be  derived  from  our
                  Envision  stock,  and  therefore,  the Company has written the
                  investment  in  Envision   Development   Corporation  off  its
                  financial  statements.  Due to the write off of the investment
                  in Envision  Development  Corporation,  the  Company  realized
                  $20,465,829 loss on marketable  securities  during the quarter
                  ended December 31, 2000.

Note 16           Purchase of Ensign Information Systems
                  --------------------------------------

                  On November 9, 2000 the Company entered into an Asset Purchase
                  and  Sale  Agreement  ("Agreement")  with  Ensign  Information
                  Systems  ("Ensign").  In accordance  with the  Agreement,  the
                  Company issued  1,500,000  shares of common stock (adjusted to
                  reflect the reverse split) for substantially all of the assets
                  of  Ensign,   including  intellectual  property.  The  Company
                  structured the acquisition to be non-dilutive to shareholders.
                  In order to make the  transaction  non-dilutive,  the  Company
                  purchased from certain key  shareholders  1,740,250  shares of
                  outstanding  common  stock  at a  price  of  $0.02  per  share
                  (adjusted to reflect the reverse split).

Note 17           Reverse Stock Split
                  -------------------

                  On November 19, 2000, the shareholders of the Company approved
                  a proposed  amendment to the Certificate of  Incorporation  to
                  reverse  split the stock 2 for 1 effective  as of December 15,
                  2000.  We believed  that the number of shares of Common  Stock
                  outstanding or subject to outstanding purchase rights was high
                  enough  that  it may  have  the  effect  of  deterring  future
                  investment  in the Company.  The purpose of the reverse  stock
                  split was to  decrease  the  number of  outstanding  shares of
                  Common  Stock in order to  increase  the  market  price of the
                  Common Stock and make the Company more  attractive  for future
                  investment.  The  reverse  stock  split  became  effective  on
                  December 15, 2000.


Note 18           Related Party/Stock Options
                  ----------------------------

                  Certain founding shareholders, obtained Common Stock in return
                  for contributions and development of the Company  predecessor,
                  Arkona,   L.L.C.,  which  was  subsequently  merged  into  The
                  Thorsden  Group Ltd.  and renamed  Sundog  Technologies,  Inc.
                  These  founding  shareholders  received  a total of  7,000,000
                  shares of Common Stock and then, collectively, entered into an
                  agreement with Caldera Holding Company,  L.C., wherein Caldera
                  was  given  the  right to grant  derivative  options  to third
                  parties  with  respect to 1,550,000 of such shares in order to
                  encourage  the  development  and  increased   productivity  of

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                  ARKONA.  Holders  of  the  shares  underlying  the  derivative
                  options  are  entitled to  dividends  and  distributions  with
                  respect  to such  shares  until  the  options  are  exercised.
                  However,  Caldera has been  granted  dispositive  voting power
                  with respect to all shares  subject to its agreement  with the
                  founding  shareholders  so long as the  agreement  remains  in
                  place. The agreement  expires upon the earlier of January 2003
                  and Caldera's award of the last of the derivative  options, at
                  which time voting power returns to the founding shareholders.


Note 19           Shareholder Rights Agreement
                  ----------------------------


                  Effective  as of January 31,  2001,  the Board of Directors of
                  the  Company  declared  a  dividend  of  one  Right  for  each
                  outstanding   share  of  Common   Stock  of  the   Company  to
                  shareholders of record at the close of business on January 31,
                  2001.  Each Right entitles the  registered  holder to purchase
                  from the  Company  one  one-hundredth  of a share of  Series A
                  Preferred   Shares  at  a  purchase   price  of  $60.00.   The
                  description  and  terms  of the  Rights  are  set  forth  in a
                  Shareholder  Rights  Agreement  between  the Company and Atlas
                  Stock Transfer Corporation, as Rights Agent.

                  The Board of Directors of the Company believes that the market
                  price of Arkona's common stock does not reflect the real value
                  of our  common  stock.  In  light of the low  market  price of
                  common  stock,  management  and the Board have been  concerned
                  that a person may seek to  acquire  the Arkona at a price that
                  is in line with current  market value,  but not the real value
                  of the common stock. The structure of such acquisition  offers
                  can often be coercive and leave  shareholders no choice but to
                  participate  even if they  believe the offer price is too low.
                  The  purpose of the  Shareholder  Rights  Plan is to allow any
                  person  contemplating  an  acquisition  of Arkona to negotiate
                  with the Board of Directors first, prior to making an offer to
                  shareholders,  so that the board can ensure that the price and
                  other terms of the offer are fair to all shareholders.



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