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 pexiod ended June 30, 2002

                                       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 Identification No.)
incorporation or organization)


                      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 August 13, 2002,  there were issued and outstanding  24,288,330  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

<TABLE>
<CAPTION>

                                  ARKONA, INC.
                                 Balance Sheets

                                                          June 30, 2002   March 31, 2002
                                                            (Unaudted)     (Audited)
                                                           -----------    -----------
ASSETS

<S>                                                            <C>            <C>
    Current Assets

        Cash and cash equivalents                              104,747        120,290
        Accounts receivable                                    201,607        182,200
        Prepaid expenses                                        10,182         12,050
                                                           -----------    -----------
    Total Current Assets                                       316,536        314,540
                                                           -----------    -----------
    Equipment                                                  620,548        607,148
        Less: Accumulated depreciation                        (434,381)      (405,474)
                                                           -----------    -----------
    Equipment, Net                                             186,167        201,674
                                                           -----------    -----------
    Other Assets

        Deposits                                                17,779         17,779
        Intellectual property, net amortization                130,519        156,622
        Goodwill, net amortization                              50,947         89,157
                                                           -----------    -----------
        Other assets, net amortization                          32,905         34,845
    Total Other Assets                                         232,150        298,403
                                                           -----------    -----------
TOTAL ASSETS                                                   734,852        814,617

LIABILITIES AND STOCKHOLDERS' EQUITY
    Current Liabilities

        Accounts payable                                       565,566        453,487
        Accrued liabilities                                    206,334        210,384
        Deferred revenue                                       128,607        108,750
        Current portion of capital leases                       31,396         32,394
    Total Current Liabilities                                  931,903        805,015
     Long-Term Liabilities
       Capital Lease Obligations, net of current portion        10,658         12,889
     Note payable - related party                              200,537        100,537
     Total Long-Term Liabilities                               211,195        113,426
Total Liabilities                                            1,143,098        918,441
Stockholders' Equity
    Common Stock                                                24,346         23,843
     Treasury Stock
    Additional paid in Capital                              20,832,005     20,672,508
    Accumulated unrealized loss on investment
        securities available for sale                          (16,942)       (16,942)
    Retained Earnings (Deficit)                            (21,247,655)   (20,783,233)
Total Stockholders' Equity                                    (408,246)      (103,824)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     734,852        814,617
                                                           -----------    -----------
</TABLE>

SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                       1
<PAGE>


<PAGE>



                                  ARKONA, INC.

            Unaudited Condensed Consolidated Statements of Operations

                                             Three Months Ended

                                      June 30, 2002  June 30, 2001
                                       ----------     ----------
Revenues                                  641,720        618,884

Operating Expenses

  Cost of Sales                           320,714        438,213
  Research and Development                196,587        162,344
  Marketing, Admin & Sales                573,992        625,365
                                       ----------     ----------
Total Operating Expenses                1,091,293      1,225,922
                                       ----------     ----------
Net Loss From Operations                 (449,574)      (607,038)

  Interest Income                            --             --
  Interest Expense                         (2,112)       (10,544)
  Other Income
  Other Expense                              --             --
                                       ----------     ----------
Net Loss                                 (451,686)      (617,582)
                                       ==========     ==========


Baset Net Income (Loss) per share           (0.02)         (0.04)
                                       ----------     ----------
Weighted average number

Of Shares Outstanding                  23,947,579     14,565,948
                                       ----------     ----------
Diluted Net Income (Loss) per share         (0.02)         (0.04)
Weighted Average Diluted
Shares Outstanding                     23,947,579     14,565,948
                                       ----------     ----------



SEE NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                       2
<PAGE>


                                  ARKONA, INC.

            Unaudited Condensed Consolidated Statements of Cash Flows



Sundog Technologies, Inc.

Statement of Cash Flows
(A Company in the Development Stage)
                                                         Three Months Ended

                                                               30-Jun
                                                         2002            2001
                                                       --------       --------
Cash Flows (used by) Operating Activities:
    Net (Loss)                                         (451,686)      (617,582)
    Adjustments to reconcile net income to
    net cash used for operating activities:
        Depreciation and Amortization                    83,765         81,843
        Changes is assets and liabilities:                 --
             Accounts receivable                        (18,879)      (146,179)
             Prepaid Expenses                              --              508
             Accounts Payable                           112,079        249,807
              Deferred revenue                           19,857         21,852
             Accrued Liabilities                         (5,047)         9,833
                                                       --------       --------
Net Cash (Used By) Operating Activities                (259,912)      (399,918)
                                                       --------       --------

Cash Flows (Used for) Investing Activities:
    Additions to Equipment                               (3,000)       (26,110)
    Other assets                                        (10,400)       (20,350)
                                                       --------       --------
Net Cash Used for Investing Activities                  (13,400)       (46,460)
                                                       --------       --------
Cash Flows Provided By Financing Activities:
    Proceeds from Issuance of Common Stock              160,000        165,000
    Loan from officer                                   100,000        294,887
    Leases                                               (2,231)        (4,893)
                                                       --------       --------
Net Cash Provided By Financing Activities               257,769        454,994
                                                       --------       --------
Net Increase/(Decrease) in Cash and Cash Equivalents    (15,543)         8,616
                                                       --------       --------
Beginning Cash Balance                                  120,290         35,221
                                                       --------       --------
Ending Cash Balance                                     104,747         43,837
                                                       ========       ========


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.  It is suggested that these  unaudited  condensed  financial
statements are read in conjunction  with the consolidated  financial  statements
and the notes thereto  included in the Company's Annual Report on Form 10-KSBfor
the fiscal year ended March 31, 2002.

Note 2  Concentration

The Company is limited in that its product and service are specifically designed
for  customers  in the auto  dealership  industry.  However,  sales  of  Company
products and services are not limited to any  geographic  area.  If the industry
environment  were to experience  significant  negative  conditions,  the Company
could also be affected.

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 Equity

During the three months ended June 30, 2002,  the Company  issued 503,030 shares
of common stock at an average price of $0.31 per share.

Note 4  Significant Accounting Policies

(a) Income Taxes

The  Company  applies  the  provisions  of  Statement  of  Financial  Accounting
Standards No. 109 [the Statement],  "Accounting for Income Taxes." The Statement
requires an asset and liability approach for financial  accounting and reporting
for income taxes, and the recognition of deferred tax assets and liabilities for
the temporary differences between the financial reporting bases and tax bases of
the  Company's  assets and  liabilities  at enacted tax rates  expected to be in
effect when such amounts are realized or settled.

(b) Net Loss Per Common Share

In accordance with Financial Accounting Standards No. 128, "Earnings Per Share,"
basic loss per common  share is computed  using the weighted  average  number of
common shares outstanding. Diluted earnings per share is computed using weighted
average  number  of  common  shares  plus  dilutive  common  share   equivalents
outstanding  during the period using the  treasury  stock  method.  Common stock
equivalents  were not  included  in the  computation  of loss per  share for the
periods presented because their inclusion is antidilutive.

                                       4

<PAGE>
                                  ARKONA, INC.

                    NOTES TO UNAUDITED CONDENSED CONSOLIDATED

                              FINANCIAL STATEMENTS

(c) Cash & Cash Equivalents

For purposes of the  statements  of cash flows,  the Company  considers  cash on
deposit in the bank and other unrestricted  investments with original maturities
of three months or less at the time of purchase to be cash equivalents.

(d) Use of Estimates in Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities,  disclosure of contingent
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues and expenses  during the reporting  period.  Actual  results
could differ from those estimates.

(e) Revenue Recognition

The Company  recognizes  revenue in accordance  with the Securities and Exchange
Commission,  Staff Accounting  Bulletin (SAB) No. 101,  "Revenue  Recognition in
Financial  Statements."  SAB 101  clarifies  application  of generally  accepted
accounting  principles to revenue  transactions.  During the course of business,
the Company recognizes revenue for the following activities:  Support,  Hardware
Sales,  Consulting,  and Implementation of Products.  Support charges are billed
monthly and are recognized as earned and stipulated in contracts with customers.
Hardware  Sales  revenue  is  recognized  when the  goods are  delivered  to the
customer.  Consulting  fees are  recognized  as services are  rendered.  Product
Installation  revenue is recognized in accordance  with terms of each  contract,
generally on a percentage of completion basis. Advance deposits are deferred and
recognized  over the life of the contract  which is often complete in one month.
Components  of the Product  Installation  process  include  software  licensing,
training, forms programming data conversion, and hardware installation.

(f) Patents

The Company has obtained  various  patents for certain  aspects of its products.
The costs of obtaining  patents are  capitalized  as incurred and are  amortized
over  estimated  useful  lives.  Amortization  is computed on the  straight-line
method.  One patent has been issued as of June 30, 2002, and is being  amortized
over seven years (see Note 4).

(g) Investment in Marketable Securities

Investments in marketable securities are  "available-for-sale"  and are recorded
at fair market value with the  associated  adjustment  recorded as an unrealized
gain  or  loss.  The  unrealized  loss  is  based  on the  original  cost of the
securities  verses current market value.  The June 30, 2002  unrealized  loss on
investments  of $1,410 is related to  securities  that have been written down to
zero but not disposed.

(h) Software Costs

Costs incurred to establish the  technological  feasibility of software products
to be sold, leased or otherwise marketed by the Company are expensed as research
and  development.  Once  technological  feasibility  is  established,  costs are
capitalized  until the product is available  for general  release to  customers.
Capitalized  costs  are  amortized  on  a  product-by-product  basis  and  using
straight-line methods over the established economic life of the product.

(i) Advertising Costs

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

                                       5

<PAGE>

Item 2.  Management's Discussion and Analysis
Overview

         ARKONA,  Inc.  (formerly  The Thorsden  Group and Sundog  Technologies,
Inc.) was  organized in 1992 as a data base  technology  company with  Universal
Update(TM) as its primary product. Universal Update(TM) 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.  Prior to 2001,  we  primarily  worked to develop and sell the
Universal Update(TM) technology. We have since determined to suspend development
and marketing of Universal Update(TM).

         Following our acquisition of the assets of Ensign Information System in
late 2000,  our focus and direction  has changed from our  Universal  Update(TM)
products and the mobile  computing  industry to our newly acquired Arkona Dealer
Management Solutions (ADMS) and the automobile  dealership  management industry.
When we acquired  the assets of Ensign,  their  predecessor  to our ADMS product
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.  We are
currently installing 4-6 systems per month. We expect our number of installation
per month to increase in the foreseeable future, due in part to our relationship
with Mitsubishi.  In July of this year at it annual conference for U.S. dealers,
Mitsubishi  announced  that Arkona was its  preferred  provider of DMS products.
Arkona and  Mitsubishi  entered into and  agreement to work together to roll out
joint marketing programs to all existing and new Mitsubishi dealers.

Results of Operations-- Three Months Ended June 30, 2002 and 2001

Revenues for the quarter ended June 30, 2002 were $641,720  compared to $618,884
for the same  period in the prior  year.  The  increase  in revenue is due to an
increase in the sales and implementation of the Company's dealership  management
software  and  associated  monthly  maintenance  and support  revenue.  The true
increase in the sales and implementation of our software is not reflected in the
revenue  numbers.  During the quarter ended June 30, 2001, we installed our ADMS
product in five new-car dealerships.  During the quarter ended June 30, 2002, we
installed  our ADMS product in 10 new-car  dealerships.  That  represents a 100%
increase  in the number of  dealerships  installed.  The reason we do not have a
comparable  increase in revenues between the quarter ended June 30, 2001 and the
quarter ended June 30, 2002 is that, in connection with our installations during
the quarter ended June 30, 2001,  45% of our net revenues  reflected our sale to
the relevant  dealerships of computers and other hardware products  necessary to
operate our  software.  During the quarter  ended June 30, 2002,  we sold only a
nominal amount of hardware in connection with our installation.  This is because
we have determined to outsource hardware sales to certain partners, who are able
to give our  customers  more  favorable  pricing,  rather than selling  software
directly to our customers.  The effect is this decision is to reduce our revenue
numbers.  However,  our  outsourcing of hardware  sales has created  significant
customer goodwill and has permitted an approximately 30% decrease in our cost of
sales.

We expect to install eighteen new-car  dealerships in the next quarter.  We have
already booked installations through September of 2002. We believe that revenues
will continue to increase in the future.

Cost of sales  totaled  $320,714 for the quarter ended June 30, 2002 compared to
$438,213  for quarter  ended June 30,  2001.  This  decrease in cost of sales is
primarily due our decision to outsource  hardware  sales,  which  eliminates the
costs associated with purchasing, and then reselling,  hardware. As a percentage
of sales, cost of sales decreased from 70% for the period ended June 30, 2001 to
49% for the quarter  ended June 30, 2002,  primarily as a result of our decision
to outsource  hardware  sales.  We expect the cost of sales as a  percentage  of
sales to continue to decrease, but to decrease slowly in the future.

                                       6

<PAGE>

Operating  expenses  totaled  $1,091,293  in the  quarter  ended  June 30,  2002
compared to $1,225,922  for quarter ended June 30, 2001.  The decrease is due to
the decrease in cost of sales and additional  decreases in our marketing,  sales
and administrative  expense from $573,992 for the quarter ended June 30, 2002 as
compared to $625,365 for the quarter ended June 30, 2001. This decrease resulted
primarily from restructuring our sales force by eliminating the last two outside
sales positions.

Operating  expenses  for the three  months  ended  June 30,  2002 also  included
$196,587 for research and  development  expenses.  This compares to research and
development  expenses  of  $162,344  for the quarter  ended June 30,  2001.  The
increase in research  and  development  is due to  additional  hires in order to
update and  augment  our ADMS  product in order to meet  customer  requests.  We
expect our research and development expenses to increase on a nominal basis, but
decrease and as a percentage of sales, in the foreseeable future.

We had no interest income during the quarters ended June 30, 2002 and 2001. This
was due to decreased cash balances we maintained in banks.

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 ADMS  product.  We  currently  have the
capacity to install  the Ensign  Management  Suite in 6-8 stores per month.  Our
sales of ADMS are presently outpacing our ability to install it.

The net loss for the quarter  ended June 30, 2002 was  ($451,686) or ($0.02) per
share,  compared  to a loss of  ($617,582)  or ($0.04) per share for the quarter
ended June 30, 2001.  The  decrease in the loss is due to increased  revenue and
decreases in operating expenses.

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 June 30, 2002, we had cash and cash  equivalents of $104,747,  as compared to
cash and cash  equivalents of $120,290 as of March 31, 2002. As of June 30, 2002
and August 13, 2002,  we did not have  working  capital  sufficient  to meet our
short-term obligations.

In order to meet  operating  costs during the quarter  ended June 30,  2002,  we
relied upon recurring  revenues,  the issuance of 503,030 shares of common stock
at an average price of $0.31 per share and the issuance to an Executive Officer,
at face value, a $150,000 12% promissory note convertible into 750,000 shares of
common stock at an exercise price of $0.20 per share.

We expect our  revenues to continue to increase  and expect to become  cash-flow
positive by the end of our 2003 fiscal year in March 2003. Nonetheless, until we
become  cash-flow  positive,  we will need to raise additional funds to fund our
operations,  to develop new or enhance  existing  services  or  products  and to
respond to  competitive  pressures.  In order to raise such funds,  we expect to
continue to rely upon the proceeds of sales of equity securities and convertible
notes in the  immediate  future.  During the past year, we have sought to obtain
funding from various sources,  including banks and other institutions.  To date,
we have  been  unable  to  secure  financing  on terms we deem  reasonable  from
unaffiliated funding sources and have continued to rely upon capital provided by
our Chief Executive Officer and a few other key investors. We intend to continue
to seek for large-block  financing from institutional sources for our short-term
and long-term  financing;  however, we have not received any favorable proposals
from such  institutional  sources and  expect,  in the short run, to continue to
rely on  insiders  and key  shareholders  as  long  as  such  financing  remains
available.

                                       7

<PAGE>

In the short-term, 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.

During the  long-term,  we hope to become  cash-flow  positive by March 2003 and
expect to be able to fund our ongoing  operations with revenues from operations.
To the  extent  we do not  become  cash-flow  positive  when  projected  or need
financing  for  an  acquisition,   capital  improvements  or  other  non-routine
transactions,  we  expect  to rely  upon  the  sale of  equity  and  convertible
securities  to obtain  such  financing.  In the  long-term,  we  cannot  provide
assurance that additional  financing will be available on terms favorable to us,
or at all.

The  following  table  discloses  aggregate  information  about our  contractual
obligations  including long-term debt,  operating and capital lease payments and
office lease payments,  and the periods in which payments are due as of June 30,
2002:

<TABLE>
<CAPTION>

--------------------------------------- ------------- ------------- -------------- ------------- -------------
                                                      Less Than                                  After
Contractual Obligations                 Total         1 Year        1-3 years      4-5 Years     5 Years
--------------------------------------- ------------- ------------- -------------- ------------- -------------
<S>                                     <C>           <C>           <C>              <C>           <C>
Long-term debt                          $   200,000   $  100,000    $  100,000       $0            $0
--------------------------------------- ------------- ------------- -------------- ------------- -------------

Operating Leases                             93,501       40,072        53,429        0             0
--------------------------------------- ------------- ------------- -------------- ------------- -------------

Capital Leases                               42,448       27,712        13,736        0             0

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

Office Lease                                 750,109     176,831       573,278        0             0
--------------------------------------- ============= ============= ============== ============= =============

Total Contractual Obligations           $  1,036,058  $  294,615    $  740,443       $0            $0
--------------------------------------- ------------- ------------- -------------- ------------- -------------
</TABLE>

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.

                                       8

<PAGE>

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

         We  acquired  the assets that  generate  all of our revenue in November
2000, and,  accordingly,  our current business has a limited  operating  history
upon  which  an  evaluation  of our  prospects  and us can  be  based.  We  have
experienced  net losses in each quarter  since  inception,  with an  accumulated
deficit  of  approximately  $(21,247,655)  as of June 30,  2002.  We  expect  to
continue  to operate  at a net loss and to  experience  negative  cash flow from
operations  until at least  sometime in late 2002 or early  2003,  as we seek to
develop our business and customer base. In order to achieve  positive  operating
cash  flow and  profitability,  we must  significantly  increase  the  number of
dealerships using our products.  Even if we generate significant sales, revenues
from sales may never exceed  associated costs, and we may not be able to achieve
profitability.

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 the offer
and sale of  convertible  notes,  warrants  and  equity  securities  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 will be significantly limited. If capital were to continue
to be unavailable, we would be forced to cease operations.

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

         Our Arkona 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 ADMS 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.

Our competitors have greater resources than we do.
--------------------------------------------------------------------------------

         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.

                                       9

<PAGE>

Our services are subject to system failure and security risks.
--------------------------------------------------------------------------------

         Our operations,  particularly  our ASP product,  are dependent upon our
ability to protect  our  network  infrastructure  against  damage  from  natural
disasters,  such as  fire,  earthquakes  and  floods,  as well  as  power  loss,
telecommunications  failures and similar events. All of our network and computer
equipment,  including  components  critical  to our  operations,  are  currently
concentrated  in a co-location  facility  provided by WorldCom.  Notwithstanding
precautionary  measures  that  we and  our  co-location  host  have  taken,  the
occurrence of a natural disaster or other unanticipated system or power failures
could cause  interruptions in the services we provide.  In addition,  failure of
our telecommunications  providers to provide the data communications capacity we
require as a result of natural disasters,  financial  difficulties,  operational
disruptions or for any other reason could cause interruptions in the services we
provide. Any damage or failure that causes interruptions in our operations could
have a material adverse effect on our business,  financial condition and results
of operations.

         Our ASP network is subject to factors that could cause interruptions in
service or reduced  capacity for our customers.  Despite the  implementation  of
security  measures,  the core of our network  infrastructure  is  vulnerable  to
unauthorized  access,  computer viruses,  equipment failure and other disruptive
problems, including the following:

o    We and our users may experience interruptions in service as a result of the
     accidental or  intentional  actions of Internet  users,  current and former
     employees or others.

o    Unauthorized access may jeopardize the security of confidential information
     stored in our computer systems and our customers'  computer systems,  which
     may  result in  liability  to our  customers  and also may deter  potential
     customers.

o    We may face liability for transmitting viruses to third parties that damage
     or impair their access to computer networks, programs, data or information.

o    There may be a systemic  failure  of  Internet  communications,  leading to
     claims associated with the general unavailability of the Internet.

o    Eliminating  computer viruses and alleviating  other security  problems may
     require interruptions, delays or cessation of service to our customers.

The occurrence of any unauthorized access,  computer virus, equipment failure or
other  disruptive  problem could have a material adverse affect on our business,
financial condition and results of operations.

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. Competition for management, technical and sales personnel
is intense, and we do not have long-term  employment  agreements with any of our
employees.  As a result, 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.

                                       10

<PAGE>

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 Arkona 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 Arkona 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

                                       11

<PAGE>

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.

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.
--------------------------------------------------------------------------------

         Our management owns and has the power to vote  approximately 20% of our
issued and outstanding common stock. Two additional  shareholders have the power
to vote  approximately  12% 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 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  convertible  notes,  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.

                                       12

<PAGE>

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

         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;

         o  A  general  lack of trust in the  financial  markets  as a result of
            accounting scandals or for other reasons; 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.
--------------------------------------------------------------------------------

         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

                                       13

<PAGE>

         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 less than $2 million
dollars in net  tangible  assets and we have  average  revenues  of less than $6
million.  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.

         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.

                                       14

<PAGE>

                           PART II. OTHER INFORMATION

Item 2.   Changes In Securities And Use Of Proceeds

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

During the three months ended June 30, 2002, we issued  503,030 shares of common
stock and a $150,000  promissory note  convertible into common stock at the rate
of $0.20 per share in transactions that were not registered under the Securities
Act of 1933, as amended (the "Securities Act"), as follows:

         o  We sold 303,030 shares of Common Stock to one accredited investor in
            exchange for cash consideration of $100,000, or $0.33 per share.

         o  We sold 200,000 shares of Common Stock to one accredited investor in
            exchange for cash consideration of $60,000 or $0.30 per share.

         o  In exchange for $150,000 in cash,  we issued to our Chief  Executive
            Officer a  promissory  note in the  amount of  $150,000  that  bears
            interest at the rate of 12% percent per annum and is due and payable
            on or before May 29,  2003.  All  principal  and  accrued but unpaid
            interest  under the promissory  note is  convertible  into shares of
            common  stock of the  Company  at any time at the rate of $0.20  per
            share.

The  above-described  issuances of our shares of common  stock 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,  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  (alone,   or  together  with  a  purchaser
representative)  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.

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 August 13,
2002 by the undersigned thereunto duly authorized.

                                      Arkona, Inc.

          August 13, 2002
                                      /s/ Alan Rudd
                                      --------------------------------------
                                          Alan Rudd, Chief Executive Officer

         August 13, 2002              /s/ Stephen Russo
                                      --------------------------------------
                                          Stephen Russo,
                                          Chief Financial Officer
                                          (Principal Accounting Officer)

                                       16
<PAGE>

                                  EXHIBIT INDEX
                                  -------------


<TABLE>
<CAPTION>

   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                $150,000 12% Convertible Promissory Note          Filed herewith
                   dated May 29, 2002

99.1               Certification of Chief Executive Officer          Filed herewith

99.2               Certification of Chief Financial Officer          Filed herewith

</TABLE>

                                       17