SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-QSB

(Mark One)

(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the quarterly period ended December 31, 2001

                                       OR

( ) Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from _____________ to _____________

                         Commission File Number 0-24372

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

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

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

                      10542 South Jordan Gateway, Suite 200
                            South Jordan, Utah 84095
                            ------------------------
              (Address of principal executive offices and Zip Code)

                                 (801) 501-7100
                                 --------------
              (Registrant's telephone number, including Area Code)

Check  whether the  registrant:  (1) filed all  reports  required to be filed by
Section 13 or 15(d) of the  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 [ ]

As of February 12, 2002, there were issued and outstanding  24,505,848 shares of
the Company's Common Stock, par value $.001 per share.



Transitional Small Business Disclosure Format (check one):        Yes [ ] No [X]


<PAGE>

                      PART I - Item 1. Financial Statements

                                  ARKONA, INC.
                          (A Development Stage Company)

                                 Balance Sheets
ASSETS                                             31-Dec-01      31-Mar-01
                                                  (Unaudited)     (Audited)
                                                  -----------    -----------
    Current Assets
        Cash and cash equivalents                     170,088         35,221
        Marketable securities                             450          1,410
        Accounts receivable                           199,328         90,223
        Prepaid expenses                                9,863         10,787
                                                  -----------    -----------
    Total Current Assets                              379,730        137,641
                                                  -----------    -----------
    Equipment                                         610,793        550,163
        Less: Accumulated depreciation               (385,055)      (286,276)
                                                  -----------    -----------
    Equipment, Net                                    225,738        263,887
                                                  -----------    -----------
    Other Assets
        Deposits                                       17,779         17,779
        Intellectual property, net amortization       165,579        241,998
        Goodwill, net amortization                    182,726        261,037
        Other assets, net amortization                 75,623         42,605
                                                  -----------    -----------
    Total Other Assets                                441,707        563,419
                                                  -----------    -----------
TOTAL ASSETS                                        1,047,175        964,947
                                                  ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities
        Accounts payable                              619,126        421,740
        Accrued liabilities                            77,543         13,959
        Deferred revenue                              140,676        174,653
        Current portion of capital leases              28,672         28,672
                                                  -----------    -----------
    Total Current Liabilities                         866,016        639,024
                                                  -----------    -----------
     Long-Term Liabilities
       Capital Lease Obligations,
         net of current portion                        20,007         33,118
     Note payable - related party                      50,537        109,128
                                                  -----------    -----------
     Total Long-Term Liabilities                       70,544        142,246
                                                  -----------    -----------
Total Liabilities                                     936,560        781,270
                                                  ===========    ===========
Stockholders' Equity
    Common Stock                                       23,153         14,409
     Treasury Stock
    Additional paid in Capital                     20,092,755     18,322,868
    Unearned Compensation                          (1,182,350)    (2,903,250)
    Accumulated unrealized loss on investment
        securities available for sale                 (16,492)       (15,532)
    Retained Earnings (Deficit)                   (18,806,451)   (15,234,817)
                                                  -----------    -----------
Total Stockholders' Equity                            110,615        183,678
                                                  -----------    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          1,047,175        964,948
                                                  ===========    ===========

       SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       1
<PAGE>

                                  ARKONA, INC.
                          (A Development Stage Company)

            Unaudited Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
                                                                                                    From Inception
                                               Nine Months Ended           Three Months Ended       June 11, 1992
                                          31-Dec-01      31-Dec-00      31-Dec-01      31-Dec-00      31-Dec-01
                                         -----------    -----------    -----------    -----------    -----------
<S>                                        <C>              <C>            <C>             <C>         <C>
Revenues                                   1,666,788        117,965        364,777         45,832      2,259,216

Operating Expenses
  Cost of Sales                            1,252,771         35,621        342,626         32,269      1,535,210
  Research and Development                   402,657        432,632        138,722        147,488      2,783,366
  Marketing, Admin & Sales                 1,832,504      2,273,547        547,183        758,596      8,445,546
  Recog. of deferred compensation          1,720,900      1,850,000           --          925,000      6,363,900

                                         -----------    -----------    -----------    -----------    -----------
Total Operating Expenses                   5,208,832      4,591,800      1,028,531      1,863,353     19,128,022
                                         -----------    -----------    -----------    -----------    -----------

Net Loss From Operations                  (3,542,044)    (4,473,835)      (663,754)    (1,817,521)   (16,868,806)

  Interest Income                               --            6,179           --            1,880        112,428
  Interest Expense                           (29,591)       (41,816)        (1,268)       (26,063)       (42,604)

  Other Income                                   785
  Other Expense                                 --              494           --              647           (288)
  Realized loss on disposal of
   securities                                   --      (20,465,829)          --      (20,465,829)   (20,469,897)
  Loss on sale of securities avail for
   sale                                         --             --             --             --           (4,068)
                                         -----------    -----------    -----------    -----------    -----------
Net Loss From Contining Operations        (3,571,635)   (24,974,807)      (665,022)   (22,306,886)   (37,272,450)
                                         -----------    -----------    -----------    -----------    -----------

  Gain on disposal of segment                   --       21,531,555           --             --       21,531,555
  Loss from discontinued operations             --             --             --             --       (3,065,557)
                                         -----------    -----------    -----------    -----------    -----------
Net Loss                                  (3,571,635)    (3,443,253)      (665,022)   (22,306,886)   (18,806,452)
                                         ===========    ===========    ===========    ===========    ===========


Basic Net Income (Loss) per share              (0.15)         (0.28)         (0.03)         (1.78)         (3.81)
                                         -----------    -----------    -----------    -----------    -----------
Weighted average number
Of Shares Outstanding                     23,152,778     12,122,858     23,152,778     12,508,198      4,937,764
                                         -----------    -----------    -----------    -----------    -----------

Diluted Net Income (Loss) per share            (0.15)         (0.28)         (0.03)         (1.76)         (3.81)
Weighted Average Diluted
Shares Outstanding                        23,152,778     12,300,377     23,152,778     12,685,717      4,937,764
                                         -----------    -----------    -----------    -----------    -----------
</TABLE>

       SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       2
<PAGE>

                                  ARKONA, INC.
                          (A Development Stage Company)

            Unaudited Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
                                                            Nine Months Ended
                                                        31-Dec-01      31-Dec-00
                                                       -----------    -----------
<S>                                                     <C>            <C>
Cash Flows (used by) Operating Activities:
    Net (Loss)/Income                                   (3,571,634)    18,863,633
    Adjustments  to  reconcile  net  income  to
    net cash  used for operating activities:
        Depreciation and Amortization                      258,480         72,923

        Gain on disposal of segment                           --      (21,531,554)
        Amortization of unearned compensation            1,720,900        925,000
        Changes is assets and liabilities:
             Accounts receivable                          (109,105)       (72,198)
             Prepaid Expenses                                  924         (9,488)

             Inventory                                        --           (4,800)
             Accounts Payable                              198,879        870,158
              Deferred revenue                             (33,997)          --
             Accrued Liabilities                            63,584         (6,156)
                                                       -----------    -----------
Net Cash (Used By) Operating Activities                 (1,471,969)      (892,482)
                                                       -----------    -----------

Cash Flows (Used for) Investing Activities:
    Additions to Equipment                                 (67,524)       (79,977)
    Other assets                                           (33,018)        (4,207)
                                                       -----------    -----------
Net Cash Used for Investing Activities                    (100,542)       (84,184)
                                                       -----------    -----------

Cash Flows Provided By Financing Activities:
    Proceeds from Issuance of Common Stock               1,779,080        466,526
    Loan from officer                                      (58,591)       100,000
    Leases                                                 (13,111)        (8,784)
                                                       -----------    -----------
Net Cash Provided By Financing Activities                1,707,378        557,742
                                                       -----------    -----------

                                                       -----------    -----------
Net Increase/(Decrease) in Cash and Cash Equivalents       134,867       (418,924)
                                                       -----------    -----------

Beginning Cash Balance                                      35,221        489,297

                                                       -----------    -----------
Ending Cash Balance                                        170,088         70,373
                                                       ===========    ===========
</TABLE>

       SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                       3
<PAGE>

                                  ARKONA, INC.

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS

Note 1  Basis of Presentation

The  Company has  prepared  the  accompanying  condensed  financial  statements,
without  audit,  according to the  applicable  regulations of the Securities and
Exchange  Commission.  Certain information and disclosures  normally included in
financial   statements  prepared  according  to  generally  accepted  accounting
principles  have been  condensed  or  omitted.  The  Company  believes  that the
following disclosures are adequate and not misleading. These unaudited condensed
financial  statements  reflect  all  adjustments   (consisting  only  of  normal
recurring  adjustments) that, in management's  opinion, are necessary to present
fairly the  financial  position and results of operations of the Company for the
periods presented.  The Company suggests that you read these unaudited condensed
financial  statements in conjunction with the consolidated  financial statements
and the notes thereto  included in the Company's  Annual Report on Form 10-KSB/A
for the fiscal year ended March 31, 2001.


Note 2  Concentration

The Company's  automobile  dealer's  management product is currently selling and
beginning to generate  revenues.  The Company  currently has  approximately  150
customers using its automobile dealer's management product.


Note 3  Equity

During the three months ended December 31, 2001,  the Company  issued  4,615,128
shares of common stock at an average price of $0.22 per share.


                                       4
<PAGE>

Item 2. 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.

During  late 2000 and early  2001,  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.  In November  2000, we 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 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.

Results of  Operations--Three  Months and Nine-Month Ended December 31, 2001 and
2000

Revenues  for the quarter  ended  December  31, 2001 were  $364,777  compared to
$45,832 for the same period in 2000. For the nine months ended December 31, 2001
revenues  were  $1,666,788  as compared  to $117,965  for the same period in the
prior  year.  The  increase in revenue is due to a  substantial  increase in the
sales and  implementation of the Company's  dealership  management  software and
associated  monthly  maintenance and support  revenue.  Our revenues of $364,777
during the quarter ended  December 31, 2001  represented a substantial  decrease
from the  $683,127  we earned in the  quarter  ended  September  30,  2001.  The
decrease in revenue from last quarter to this quarter is due to a combination of
the September 11th world trade center attacks, the holiday season and the end of
the year for many of our clients.  After the  September  11th world trade center
attacks, travel restrictions and consumer confidence hampered the implementation
process in October and early November.  One of our clients that was beginning an
installation in October  decided to put that  installation on hold. In addition,
many of our prospective  clients are on a calendar year for financial  reporting
and resist changing systems close to the end. This year-end resistance, combined
with the holidays  and  compounded  with the events of  September  11th made our
third  quarter  very  difficult.  The effects of the  September  11th  terrorist
attacks  are still  being  felt,  but we have seen sales in the  fourth  quarter
increasing  and it appears that business will for the most part return to normal
by the end of our fiscal year March 31, 2002.

Cost of sales totaled  $342,626 for the quarter ended December 31, 2001 compared
to $32,269  for quarter  ended  December  31,  2000.  For the nine months  ended
December  31, 2001 cost of sales was  $1,252,771  as compared to $35,621 for the
same period in the prior year. This  significant  increase in cost of goods sold
is largely  due to a  substantial  increase in sales and the  difference  in the
costs  associated  with selling CDMS compared to Universal  Update.  Our primary
product at this time last year was  Universal  Update,  a software  product that
customers  purchased  out of the box.  Today,  our  primary  product is our CDMS
automobile dealer management software, which requires a significant installation
and training process and hardware.  As a percentage of sales,  cost of sales was
93% for the quarter ended December 31, 2001. This is a significant increase over

                                       5
<PAGE>

the  costs of sales  for the  quarter  ended  September  30,  2001  which,  as a
percentage,  was 69%.  Like  revenue  for the  quarter,  cost of sales  was also
significantly  impacted by the events of  September  11th and the other  factors
discussed  above.  During  that time our  installation  consultants  focused the
majority  of their  efforts on customer  support.  We were able to give a lot of
attention  to  customers  due to  thee  additional  support  personnel.  We also
continued  the  training   process  with  our  new  hires.   With  the  training
requirements  for an  installation  technician  best met on the job, we send new
technicians with trained technicians  together on our installs.  As a result, we
continue to incur  unusually  high salary expense on each  installation.  We are
still  experiencing  growth in the  installation  part of the  business,  and we
expect  to the cost of  sales as a  percentage  of  sales  to  decrease,  but to
decrease  slowly in the near  future.  We are also  looking at  alternatives  to
increase the margins on hardware sold as a part of the installation process.

Operating  expenses  totaled  $1,028,531 in the quarter ended  December 31, 2001
compared to  $1,863,353  for quarter  ended  December 31, 2000.  The decrease in
operating  expenses  is due  primarily  to a charge  for  deferred  compensation
expense of  $925,000  in the  quarter  ended  December  31,  2000.  No  deferred
compensation  expense was recognized during the quarter ended December 31, 2001;
a similar  deferred  compensation  expense of $1,720,900  was  recognized in the
quarter  ended  September 30, 2001.  The  recognition  of deferred  compensation
during these quarters relates to options granted below market by shareholders of
the Company on their own shares to management  and other  persons.  When options
are granted below the market value, the Company records deferred compensation in
the equity  section of its  balance  sheet.  As the  options  vest,  the Company
recognizes the compensation expense (whether or not it granted the options).  It
is  important to note that the majority of the options with respect to which the
Company recognized  deferred  compensation  expense were granted by shareholders
and cover  outstanding  shares of common  stock held by such  shareholders.  The
Company will not be required to issue  additional  shares upon  exercise of such
options,  which are  non-dilutive to shareholders  other than those whose shares
are subject to the grant.

Without  the  non-cash  charge for  deferred  compensation,  operating  expenses
actually  increased  from  $938,353 for the quarter  ended  December 31, 2000 to
$1,028,531  for the quarter  ended  December  31,  2001.  For the quarter  ended
December  31,  2001,  marketing,  sales and  administrative  expenses  decreased
$211,413 from  $758,596 for the quarter ended  December 31, 2000 to $547,183 for
the quarter  ended  December  31,  2001.  Similarly,  for the nine months  ended
December  31,  2001,  marketing,  sales and  administrative  expenses  decreased
$441,043 from  $2,273,547 for the  nine-month  period ended December 31, 2000 to
$1,832,504  for the  nine-month  period ended  December 31, 2001.  This decrease
resulted  primarily from the  reorganization of sales to meet the needs of a new
product and its selling  requirements.  Our sales force for Universal Update had
outside sales  representatives  in Chicago,  Los Angeles,  Washington  DC, North
Carolina  and New York.  With the change  from  Universal  Update to our current
product/service   CDMS,  our  sales  staff  is  comprised  of  only  Utah  sales
representatives. Currently, our sales force is comprised of Utah representatives
only is able to sell more CDMS product  that we are able to install.  We believe
that if our  capability  to  install  more  dealers  increases  that in the near
future,  our sales force will also need to increase.  Operating expenses for the
quarter ended December 31, 2001 included  $138,722 for research and  development
as compared to $147,488 for the quarter  ended  December  31,  2000.  Similarly,
operating expenses for the nine months ended December 31, 2001 included $402,657
for research and  development as compared to $432,632 for the nine-month  period
ended December 31, 2000.  The decrease in research and  development is small and
not  expected to last.  We are  currently  looking to increase  our  engineering
capabilities in order to meet our engineering needs.

                                       6
<PAGE>

We expect  expenditures to increase in all areas of our business during the next
twelve  months  as  development  and  promotion  of  existing  and new  products
continues,  assuming  available working capital.  One of our biggest  challenges
currently is meeting the demand for our Centari Dealer Management  Solution.  We
currently have the capacity to install the Ensign Management Suite in 5-6 stores
per month. Our sales of CDMS are presently  outpacing our ability to install it.
We are working to bring on board and train skilled people.

We had no interest  income during the quarter ended December 31, 2001,  compared
to $6,179 for the quarter  ended  December  31,  2000.  The decrease in interest
income is due to decreased cash balances we maintained in banks.

The net loss for the quarter ended  December 31, 2001 was  ($665,022) or ($0.03)
per share,  compared  to a loss of  ($22,306,886)  or $(1.78)  per share for the
quarter ended December 31, 2000. The loss of ($22,306,886) for the quarter ended
December  31,  2000  resulted  from  our  sale  to  Envision  Development  Corp.
(Envision)  of our  interest  in Qui Vive,  Inc.  in April of 2000.  During  the
quarter  ended  December  31, 2000,  we were  required to write down to zero the
value of the stock  received  from  Envision for our interest in Qui Vive,  Inc.
after Envision ceased operations.

For the nine months  ended  December 31, 2001 the net loss was  ($3,571,635)  or
($0.15) per share  compared to a loss of  $(3,443,253)  or $(0.28) per share for
the nine  months  ended  December  31,  2000.  Without  the charge for  deferred
compensation,  the loss for the  nine-month  period ended  December 31, 2001 was
($1,791,536).  The  primary  marketing  focus for the  quarter  continued  to be
establishing  our identity in the marketplace and building a secure platform for
future  growth,  including  recruiting  the key personnel and business  partners
required to build end-user solutions.

Liquidity and Capital Resources

At December 31, 2001, we had cash and cash equivalents of $170,088,  as compared
to cash and cash equivalents of $35,221 as of March 31, 2001. As of December 31,
2001 and February 12, 2002, we did not have working  capital  sufficient to meet
its short-term obligations.

We expect our revenues to continue to increase and expect to reach break even by
the end of this fiscal year.  Nonetheless,  it is unlikely that such anticipated
increase in revenues will be  sufficient  to fund our ongoing  operations in the
near future. We will need to raise additional funds to fund our rapid expansion,
to  develop  new or  enhance  existing  services  or  products  or to respond to
competitive  pressures.  We cannot provide  assurance 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 limited.

We hold a small amount of marketable  securities  available for sale at December
31, 2001.  Although we are not in the business of investing in, buying,  selling
or holding  securities of other  companies,  these  securities  were received as
partial  consideration  in  connection  with the sale of common stock in October
1997. These marketable  securities were 3,000 shares of common stock of Eurogas,
Inc.  ("EUGS").  At December  31,  2001,  the closing  sale price of EUGS common
stock, as reported by the  over-the-counter  ("OTC") electronic  bulletin board,
was $0.15 per share.  Shares traded in the NASDAQ OTC markets are  characterized
by volatile changes in price and thin trading volumes. The relatively low volume
of securities traded and the dramatic effect that sales of even a few shares can
have on the market price of such  securities  may have an adverse  effect on the
Company's  ability to  liquidate  its  remaining  holdings or to realize  values
similar to those shown above.


                                       7
<PAGE>

Cautionary Statement Regarding Forward-Looking Statements

We consider all forward-looking statements contained in this Quarterly Report to
be covered by and to qualify for the safe harbor protection  provided by Section
21E of the  Securities  Exchange  Act of  1934,  as  amended.  Shareholders  and
prospective  shareholders  should understand that several factors govern whether
the results  described by any such  forward-looking  statement will be or can be
achieved.  Any one of  those  factors  could  cause  actual  results  to  differ
materially from those projected in this Report.

The  forward-looking  statements  contained  in this  report  include  plans and
objectives of management for future  operations,  plans relating to the products
and predictions  regarding the economic performance of the Company.  Assumptions
applicable  to the  foregoing  involve  judgments  with  respect to, among other
things,  future economic,  competitive,  and market conditions,  future business
decisions,  and the time and money required to successfully complete development
projects,  all of which are difficult or impossible  to predict  accurately  and
many of which are beyond our control.  Although we believe that the  assumptions
underlying  the  forward-looking   statements  are  reasonable,   any  of  those
assumptions could prove inaccurate. Therefore, we cannot assure that the results
contemplated in any of the forward-looking  statements  contained herein will be
realized.  The impact of actual  experience and business  developments may cause
the Company to alter its marketing, capital expenditure plans, or other budgets,
which may in turn affect the Company's  results of  operations.  In light of the
inherent uncertainties in forward-looking  statements, the inclusion of any such
statement does not guarantee that the objectives or plans of the Company will be
achieved. Among other risk factors to consider are the factors identified in the
subsection entitled "Factors That May Affect Future Results" below.


                     Factors That May Affect Future Results

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 the
Company and its 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 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 December 31, 2001, we have  installed our
Centari Dealer  Management Suite in approximately  150 car dealerships.  We must
significantly  increase the number of dealerships using our products in order to
attain  profitability.  We may never generate significant sales, and our current
ability to  generate  sales is  hampered by the  September  11,  2001  terrorist
attacks and  difficulties  in installing  our software in car  dealerships  at a
rapid pace. 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 December  31,  2001,  our  accumulated  deficit  was  approximately
$18,806,452.  We expect to incur  additional  losses during the remainder 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.

                                       8
<PAGE>

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.

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 with
respect to the fiscal  year ended 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 our equity securities, a promissory note, 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

                                       9
<PAGE>

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.

         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.

                                       10
<PAGE>

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 sell 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.

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,  Inc.,  most of whom are no longer  affiliated
with the Company, and Caldera Holdings, L.C. collectively own and have the power
to  vote  10.7%  of our  issued  and  outstanding  common  stock.  In  addition,
management of Arkona, Inc. owns and has the power to vote approximately 27.1% 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 the Company.

                                       11
<PAGE>

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  Speculation  regarding  mergers,   acquisitions  or  other  significant
         transactions,

      o  Slow acceptance of our products in new or existing markets, and

      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.

         We believe  that  shares of our common  stock are "penny  stock"  under
governing SEC rules,  resulting in increased  risks to our investors and certain

                                       12
<PAGE>

requirements  being  imposed on some  brokers  who execute  transactions  in our
common  stock.  At any time our 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.

         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.

                                       13
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 2.  Changes In Securities And Use Of Proceeds

Recent Sales of Unregistered Securities.
----------------------------------------

During the three months ended  December 31, 2001, we issued a total of 4,615,128
shares of common stock to six accredited investors in exchange for consideration
of $1,030,973  ($0.22 per share) in a series of transactions  that were effected
in reliance upon the  exemptions  for sales of securities not involving a public
offering set forth in Rule 506 promulgated  under the Securities Act and Section
4(2) of the  Securities  Act.  Specifically,  on  October  1,  2001,  we  issued
2,652,873  shares  of  common  stock  at a price  of $.20  per  share  upon  the
conversion of  outstanding  convertible  debt held by an officer of the Company.
Between  October 3, 2001 and October 16, 2001, we sold 631,579  shares of common
stock at a price of $.19 per share to two accredited investors,  one of which is
an officer of the Company.  Between  October 10, 2001 and December 19, 2001,  we
sold  340,000  shares  of  common  stock at a price  of $.25 per  share to three
accredited  investors at the price of $.25 per share.  On December 21, 2001,  we
sold 606,061  units  consisting  of one share of common stock and one warrant to
purchase  common  stock at $.33 per share  during a one-year  period to a single
accredited  investor for a price of $.33 per unit. On December 26, 2001, we sold
384,615  shares of common stock to a single  accredited  investor for a price of
$.26 per share.

Each of these  transactions  was effected in reliance  upon the  exemptions  for
sales of  securities  not  involving  a public  offering  set  forth in Rule 506
promulgated  under the Securities  Act and Section 4(2) of the Securities  based
upon the following:  (a) the investors represented and warranted to us that they
were "accredited  investors," as defined in Rule 501 of Regulation D promulgated
under the Securities Act, and had such  background,  sophistication,  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 the offering, and the investors
represented  and warranted that they were acquiring the securities for their own
account and not with an intent to distribute such securities;  (c) the investors
were provided certain disclosure materials regarding the Company and any 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 with the SEC under the Securities Act or exempt from
registration  under  the  Securities  Act;  and (e) a legend  was  placed on the
certificates and other documents 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.

On December 1, 2001, the Board of Directors of the Company  approved the Arkona,
Inc. 2001 Stock Incentive Plan with respect to 6,000,000 shares of common stock.

ITEM 4.  Submission of Matters to a Vote of the Security Holders.

The Company held an Annual  Meeting of  Shareholders  on December  31, 2001,  at
which the Company's  shareholders  considered  and voted as follows on the items
described below:

                                       14
<PAGE>

         1. Our shareholders  considered  whether to elect the following persons
         as  directors  of the  Company,  each to serve  until  the next  annual
         meeting  of  shareholders  of the  Company  and  until  his  respective
         successor shall have been duly elected and shall qualify:

         Name of Nominee      Votes For        Abstentions     Broker Non-Votes
         ---------------      ---------        -----------     ----------------
         Alan Rudd            12,593,815         30,158              None
         Richard Holland      12,593,815         30,158              None
         Bryan Allen          12,593,815         30,158              None

         2. Our shareholders  considered and voted upon a proposal to ratify the
         appointment  of Mantyla  McReynolds,  a  Professional  Corporation,  as
         independent  auditors of the  Company for the fiscal year ending  March
         31, 2002.  There were  12,623,973,  votes cast in favor,  no votes cast
         against, no abstentions, and no broker non-votes.

ITEM 6.   Exhibits And Reports On Form 8-K

         (a) Exhibits.  See the  Exhibit  Index  following  the  signature  page
             hereof.

         (b) Reports on form 8-K.  None.

                                       15
<PAGE>

                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this report to be signed on its behalf on February
12, 2002 by the undersigned thereunto duly authorized.



                              ARKONA, INC.



February 12, 2002             By: /s/ Alan Rudd
                              -----------------
                                      Alan Rudd, Chief Executive Officer


February 12, 2002             By: /s/ Stephen Russo
                              ---------------------
                                      Stephen Russo,Chief Financial Officer
                                      (Principal Accounting Officer)


<PAGE>

<TABLE>
<CAPTION>
                                  EXHIBIT INDEX

   Exhibit
    Number                       Title of Document                                  Location
---------------    ----------------------------------------------    ---------------------------------------
<S>                <C>                                               <C>
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

4.2                Rights Agreement dated December 22, 2000          Incorporated by reference to the
                                                                     Current Report on form 8-K filed with
                                                                     the SEC on January 18, 2001

4.3                Warrant Agreement                                 Filed Herewith

10.1               Arkona, Inc. 2001 Stock Incentive Plan            Filed Herewith
</TABLE>