<PAGE>
 
                      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, 1997

                                      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

                           THE THORSDEN GROUP, LTD.
       (Exact name of small business issuer as specified in its charter)



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


                      4505 South Wasatch Blvd., Suite 340
                          Salt Lake City, Utah 84124
             (Address of principal executive offices and Zip Code)

                                (801) 424-0044
             (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 December 31, 1997, there were issued and outstanding 20,000,000 shares of
the Company's Common Stock, par value $.001 per share.


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

<PAGE>
 
                               TABLE OF CONTENTS


PART I.   FINANCIAL INFORMATION
                                                                            Page
                                                                             No.
                                                                            ----
     1.   Financial Statements

          Unaudited Condensed Consolidated Balance Sheets as of
          December 31, 1997 and March 31, 1997..............................  3

          Unaudited Condensed Consolidated Statements of Income for
          the three and nine months ended December 31, 1997 and 1996........  4


          Unaudited Condensed Consolidated Statements of Cash Flows for
          the three and nine months ended December 31, 1997 and 1996........  5


          Notes to Unaudited Condensed Consolidated Financial Statements....  6


     2.   Management's Discussion and Analysis or Plan of Operation.........  7


PART II.  OTHER INFORMATION................................................. 11


                                       2
<PAGE>
 
                                     PART I

 ITEM 1 - FINANCIAL STATEMENTS

                           THE THORSDEN GROUP, LTD.
                         (A Development Stage Company)
<TABLE>
<CAPTION>
 
Consolidated Condensed Balance Sheets (Unaudited)      December 31    March 31
                                                           1997         1997
                                                       ------------  ----------
<S>                                                    <C>           <C>
ASSETS
CURRENT ASSETS
  Cash and Cash Equivalents                            $    900,087    $ 11,614
  Marketable Securities                                     840,610           -
  Accounts Receivable                                        15,125     (30,000)
  Prepaid Expenses                                            3,650           -
                                                         ----------    --------
 
  Total Current Assets                                    1,759,472     (18,386)
                                                         ----------    --------
  Equipment                                                 114,271       1,004
  Less Accumulated Depreciation                                 705           -
                                                         ----------    --------
  EQUIPMENT, NET                                            113,566       1,004
  OTHER ASSETS                                                9,374           -
                                                         ----------    --------
 
  TOTAL ASSETS                                           $1,882,412    $(17,382)
                                                         ==========    ========
  LIABILITIES AND STOCKHOLDERS' EQUITY
 
  CURRENT LIABILITIES
  Accounts Payable                                       $   68,283    $  8,771
  Deferred Income on Maintenance Contracts                   16,667           -
  Equipment Lease Obligations                                33,273           -
  Accrued Liabilities                                        34,592      41,253
                                                         ----------    --------
  Total Current Liabilities                                 152,815      50,024
                                                         ----------    --------
  Equipment Lease Obligations                                22,145           -
 
  STOCKHOLDERS' EQUITY
  Common Stock                                               20,000         425
  Additional Paid in Capital                              1,909,956         821
  Accumulated (Deficit)                                    (222,504)    (68,652)
                                                         ----------    --------
  Total Stockholders' Equity                              1,707,452     (67,406)
                                                         ----------    --------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $1,882,412    $(17,382)
                                                         ==========    ========
</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      -3-
<PAGE>
 
                           THE THORSDEN GROUP, LTD.
                         (A Development Stage Company)

            CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
 
                                                                                                    Cumulative from
                                                                                                 Inception (Sept.25, 1996)
                                   Three Months Ended              Nine Months Ended               to December 31, 1997
                             --------------------------------------------------------------------------------------------
                                        December 31                   December 31
                                   1997           1996             1997            1996
                             --------------------------------------------------------------------------------------------  
<S>                          <C>               <C>              <C>             <C>                  <C> 
NET REVENUES                  $      10,959       $       0      $    135,959     $        0          $     135,959
                              -------------       ---------      -------------    ----------          -------------
COSTS AND EXPENSES:                                                                                   
                                                                                                      
Cost and Sales                          852               0               852              0                    852     
Research and Development             55,062           5,716            73,263          5,716                 79,338
Marketing, General and                                                                                
Administrative                      193,904          26,402           227,209         26,458                289,827               
                              -------------       ---------      ------------     ----------          -------------
OPERATING COSTS AND EXPENSES        249,818          32,118           301,324         32,174                370,017       
                              -------------       ---------      ------------     ----------          -------------
OPERATING (LOSS)                   (238,859)        (32,118)         (165,365)       (32,174)              (234,058)          
Interest Income                      11,344              71            11,513             71                 11,554              
                              -------------       ---------      ------------     -----------         -------------     
         NET (LOSS)           $    (227,515)      $ (32,047)     $   (153,852)    $  (32,103)         $    (222,504)
                              =============       =========      ============     ==========          =============      
NET LOSS PER SHARE            $       (0.01)      $   (0.08)     $      (0.01)    $    (0.08)         $       (0.01) 
                              =============       =========      ============     ==========          =============
WEIGHTED AVERAGE NUMBER OF                                                                                          
SHARES OUTSTANDING               20,000,000         424,600        20,000,000        424,600             20,000,000
                              =============       =========      ============     ==========          =============  
                                                                                                                         
</TABLE>
 
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      -4-
<PAGE>
 
THE THORSDEN GROUP, LTD.
(A Development Stage Company)

CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE> 
<CAPTION>                                                                                                      
                                                                  Nine Months Ended                     
                                                        --------------------------------------          Cumulative From             
                                                                      December 31                       Inception (Sept. 25,        
                                                                 1997                1996               1996) to Dec. 31, 1997      
                                                        --------------------------------------       ---------------------------- 
<S>                                                           <C>             <C>                               <C> 
CASH FLOWS (USED BY) OPERATING ACTIVITIES:

Net (Loss)                                                    $(153,852)      $     (32,102)                    $(222,504) 
Adjustments to reconcile net income to net cash used for      ----------      -------------                     ---------   
operating activities:                                                                                                      
                                                                                                                           
Depreciation                                                        705                   0                           705
Changes in Assets and Liabilities:                                                                                         
 Accounts Receivable                                            (45,125)                  0                       (15,125) 
 Prepaid Expenses                                                (3,650)                  0                        (3,650) 
 Other Assets                                                    (9,374)                  0                        (9,374) 
 Accounts Payable                                                59,512               1,094                        68,283 
 Deferred Income                                                 16,667                   0                        16,667 
 Accrued Liabilities                                             (6,661)             43,762                        34,592  
                                                              ----------      -------------                     ---------   
                                                                 12,074              44,855                        92,098           
                                                              ----------      -------------                     ---------   
NET CASH (USED FOR)/PROVIDED BY OPERATING ACTIVITIES           (141,778)             12,753                      (130,406)      
                                                              ----------      -------------                     ---------   
CASH FLOWS USED FOR INVESTING ACTIVITIES                                                                   
                                                                                                                           
Additions to Equipment                                         (113,267)      $           0                      (114,271)  
                                                              ----------      -------------                     ---------   
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:                                                                   
                                                                                                               
Proceeds from Private Placement of Shares                     1,928,710                   0                     1,929,956
(Increase) in Marketable Securities                            (840,610)                  0                      (840,610)
Increase in Lease Obligations                                    55,418                   0                        55,418
                                                              ----------      -------------                     ---------   
NET CASH PROVIDED BY FINANCING ACTIVITIES                     1,143,518                   0                     1,144,764  
-----------------------------------------------               ----------      -------------                     ---------   
NET INCREASE IN CASH AND CASH EQUIVALENTS                       888,473              12,753                       900,087
                                                              ----------      -------------                     ---------    
Beginning cash:                                               $  11,614                   0                     $       0          
                                                              ----------      -------------                     ---------   
Ending with:                                                  $ 900,087       $      12,753                     $ 900,087 
                                                              ----------      -------------                     ---------   
Supplemental Disclosure of Cash Flow Information:                                                               
                                                                                                                            
Cash paid during the period for interest                      $   1,559       $           0                     $   1,559
                                                              ----------      -------------                     ---------   
                                                                                                            
                                                                                                            
</TABLE> 
                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                      -5-
<PAGE>
 
                           THE THORSDEN GROUP, LTD.
                   Notes to Consolidated Financial Statements

Preliminary Note
----------------

        The accompanying condensed consolidated financial statements have been
        prepared by the Company, without audit, pursuant to the rules and
        regulations of the Securities and Exchange Commission.  Certain
        information and disclosures normally included in financial statements
        prepared in accordance with generally accepted accounting principles
        have been condensed or omitted pursuant to such rules and regulations,
        although the Company believes that the following disclosures are
        adequate to make the information presented not misleading.  These
        condensed financial statements reflect all adjustments (consisting only
        of normal recurring adjustments) that, in the opinion of management, are
        necessary to present fairly the financial position and results of
        operations of the Company for the periods presented.  It is suggested
        that these condensed financial statements be read in conjunction with
        the financial statements and the notes thereto included in the Company's
        Annual Report on Form 10-KSB for the fiscal year ended March 31, 1997,
        as amended.

        The Company was incorporated on June 11, 1992.  Its activities since
        inception until October 7, 1997 were limited to organizational matters.
        For the purpose of merging with Arkona, Inc., a Utah corporation
        pursuant to an agreement dated October 7, 1997, the Company formed a
        wholly owned subsidiary, Thorsden Acquisition Corp.  An Agreement and
        Plan of Merger was executed on October 7, 1997 resulting in a reverse
        triangular merger, accounted for as a purchase.

        The merger resulted in Thorsden Acquisition Corp. ceasing to exist with
        the surviving entity now operating as a wholly owned subsidiary of
        Thorsden under the name of Arkona, Inc.

        Arkona, Inc. was incorporated from a Limited Liability Company ("LLC")
        on or about September 30, 1997.  All the assets and liabilities of the
        LLC were transferred into the corporation and the LLC ceased to exist.

        The Agreement and Plan of Merger set forth that Thorsden would issue
        14,000,000 shares to Arkona Inc.'s shareholders.  At that time Thorsden
        had 424,500 shares outstanding and issued additional 1,575,500 shares to
        Thorsden's shareholders.  Immediately after this issuance Arkona Inc.'s
        shareholders owned 14,000,000 of the total outstanding of 16,000,000
        shares, or 87.5%.

        Comparative figures in this report have been restated, where necessary,
        for the effects of this merger.

        Also, on October 7, 1997, a private placement of securities was
        completed wherein the Company received cash and marketable securities of
        approximately $2,000,000.  A total of 4,000,000 additional shares were
        issued in conjunction with the private placement.  The total current
        outstanding shares are 20,000,000.  Thorsden incurred approximately
        $68,000 in transaction costs associated with the private placement and
        has recorded these against equity.

Interest income is all bank interest.
<TABLE>
<CAPTION>
 
Cash and cash equivalents includes:
                                       December 31, 1997  March 31, 1997
                                       -----------------  --------------
<S>                                    <C>                <C>
     Cash and Bank                              $797,226              $0
     Certificates of Deposit                    $102,861               0
                                                --------              --
     Total                                      $900,087              $0
                                                ========              ==
</TABLE>

The certificates of deposit mature in December 1998 and November 1999. These are
held jointly with First Security Bank, Salt lake City, as guarantee for payment
of office rent and equipment leases.

                                      -6-
<PAGE>
 
ITEM 2 -  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

             PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

ALL FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE
COVERED BY AND TO QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 (THE "1995 ACT"). SHAREHOLDERS AND
PROSPECTIVE SHAREHOLDERS SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER
ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY
ONE OF THOSE FACTORS COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED HEREIN. THESE FORWARD-LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES
OF MANAGEMENT FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO
THE PRODUCTS AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY.  ASSUMPTIONS
RELATING 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 THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD-
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENTS, THE IMPACT OF WHICH 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 SIGNIFICANT
UNCERTAINTIES INHERENT IN THE FORWARD-LOOKING STATEMENTS INCLUDED HEREIN, THE
INCLUSION OF ANY SUCH STATEMENT SHOULD NOT BE REGARDED AS A REPRESENTATION BY
THE COMPANY OR ANY OTHER PERSON THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL
BE ACHIEVED

The following discussion should be read in conjunction with the consolidated
financial statements and the notes thereto appearing elsewhere in this Quarterly
Report on Form 10-QSB.

                                    GENERAL

The Thorsden Group, Ltd. (the "Company") is a Delaware corporation organized in
1992 for the purpose of seeking and acquiring business opportunities.  In
October  1997, the Company merged with Arkona, Inc., a Utah corporation in a
reverse triangular merger, accounted for as a purchase.  Arkona's predecessor,
Arkona LLC, a limited liability company was founded in September 1996. Since the
merger, the Company has continued the business of Arkona, which is as follows:

                                      -7-
<PAGE>
 
DISTRIBUTED COMPUTING
---------------------

For more than a decade, the computer industry has been striving to extend the
value of stored information from large enterprise systems to networked desktop
computers. Networked computing allowed corporations to empower knowledge workers
by giving them direct control of information and applications - productivity
skyrocketed. In recent years, the Internet has allowed companies to extend the
scope and value of their networks even further. Members of the Internet's
"connected" community can obtain a wide variety of corporate data. Finally, a
third iteration of the theme is quietly but forcefully gaining momentum.
Information access is once again being extended further than ever before - this
time to a wave of mobile, disconnected, and geographically distributed
employees, partners, and customers. Organizations that take advantage of this
third wave can finally apply corporate knowledge at its final and most critical
destination - the customer point of service.

INTELLIGENT SYNCHRONIZATION
---------------------------

Arkona's unique software solutions are helping to bring about this "Distributed"
information wave by extending a business's most critical information and
applications - large knowledge databases. These databases are monolithic in size
and complexity making them inherently poor applications for mobile workers such
as field sales and service representatives.

When field personnel visit customers for sales or service calls, it is paramount
that they arrive with all pertinent customer information, including detailed
information on products, pricing, contracts, and any other information which
might affect the customer. The great challenge is that this kind of structured
information is ideally suited for large corporate databases and workhorse
computers. To make matters worse, the information is rarely stored in a single
repository. The result is a complex computing environment difficult to mobilize
for field service professionals.

Surprisingly, this simple requirement of efficiently extracting information from
larger, disparate databases and seamlessly synchronizing it upon check in from
the field is a struggle that costs corporations millions in lost knowledge
capital, lost sales, and lost customers. This challenge represents enormous
waste and frustration both for corporations and their customers. The need to
resolve this dilemma was the genesis of Arkona's software solutions.

Instead of aiming to displace large corporate databases, which function very
well at the home office where there is ample computing power, Arkona extends the
value of these databases by cleanly extracting mission critical information for
point of service use. And Arkona's software maximizes existing software
investments by working equally well with any of the widely used database systems
including Oracle, Sybase, Informix, PeopleSoft, BAAN, SAP, Microsoft, and
others.

HOW THE CUSTOMER BENEFITS
-------------------------
Arkona's products and services help customers to:

OPTIMIZE SYNCHRONIZATION OF DATA AND APPLICATIONS: Arkona's Universal Update
     technology optimizes the process of synchronizing distributed and mobile
     data sources. The Universal Update Server reduces bandwidth requirements by
     distributing and reconciling only incremental differences between client
     and server data sources. Administrators may also define profiles for
     individual users, groups, or other servers. Information is customized and
     distributed based on business logic stored in the user profile.

                                      -8-
<PAGE>
 
REDUCE THE HIGH COST OF INFORMATION AND APPLICATION UPDATES: Arkona's
     synchronization solutions eliminate data "snapshots" mailed to the field,
     costly downtime for application updates, and time consuming support of
     remote installation procedures. Arkona's technology allows customers to
     simply, inexpensively and securely update and synchronize critical
     information and distributed applications.

SIMPLIFY THE DELIVERY OF INFORMATION: End-users can update information and
     applications with the click of a button, avoiding data/application
     reconciliation problems.

PROFIT FROM FLEXIBLE SYNCHRONIZATION SOLUTIONS: True object design and reusable
     code libraries allow Arkona to quickly and efficiently create proven
     synchronization solutions to a customer's exact specifications. Arkona's
     custom solutions take advantage of multiple data sources, data types, OS
     platforms, and various mobile devices.

LEVERAGE AND REVITALIZE LEGACY SYSTEMS: Arkona's custom solutions easily
     integrate with existing corporate information and knowledge systems. Arkona
     designs distributed applications that extend a company's information system
     investments instead of replacing them.

ARKONA'S SOLUTIONS
------------------
Universal Update(TM)

The Universal Update client and server represent Arkona's core technology. These
modules work as embedded components within specific vertical solutions. Arkona's
customers and solution providers may choose to license the Universal Update
technology for use in their own products, or can work with Arkona to build more
specific vertical solutions.

Arkona OnSite(TM) Field Service

Arkona OnSite Field Service is Arkona's first vertical solution, designed
specifically for field service engineers. Arkona OnSite gives field service
engineers access to critical customer, product, and inventory information even
when disconnected at the customer's site.

Arkona OnSite(TM) Publisher

Arkona OnSite Publisher is currently being designed in collaboration with an
Arkona solution provider.  Arkona OnSite Publisher will allow large reference
publishers to virtually eliminate production and distribution of CD ROM
publications in favor of on-line distribution. Electronic titles will be
synchronized automatically with publisher archives and placed directly into a
subscribers own electronic library solution. The first implementation will be
released to large legal publishers and law firms.

RESULTS OF OPERATIONS
---------------------

Quarter Ended December 31, 1997

Revenues for the quarter ended December 31, 1997 were $10,959, compared to $0
for the comparable quarter in 1996.  Cost of revenues totaled $249,818 in the
quarter ended December 31, 1997, compared to $26,402 in the quarter ended
December 31, 1996.  The 1997 expenses included $55,062 in research and
development expense compared to $5,716.  The increased expenses in 1997 reflect
the addition of personnel and costs associated with the merger of the Company
with Arkona.  The Company had $11,344 in interest income during the quarter
ended December 31, 1997 compared to $71 in the same period of 1996.  The net
loss for the quarter was $227,515 (or $.01 per share) compared to a loss
$32,047 (or $.08 per share) in 1996.

                                      -9-
<PAGE>
 
Following the successful completion of the merger management's focus for the
third quarter was to ensure the recruitment of the core team necessary for the
success of the Company.  Management believes it has made progress in securing
key engineering talent in a very competitive and tight marketplace.  This will
be an ongoing task in successive quarters.

Revenues for the quarter were primarily related to ongoing service contracts
with existing customers and cost of sales reflects the costs associated with
delivery of these services.  The Company is currently bidding for a number of
projects utilizing its core technologies and expects to report successes in
subsequent quarters.

Expenses for the quarter reflect the cost of people, engineering research and
marketing and selling efforts, which will form the foundation of future
increased revenue and profitability growth.

The Company's primary marketing focus for the quarter was to establish the
Company's identity in the marketplace and to build a secure platform for future
growth.

During the three months ended December 31, 1997, the Company completed a private
placement of its Common Stock, generating gross proceeds of $2,000,000 in cash
and marketable securities.  The Company funded its operations during the period
with the proceeds of this offering.  Capital spending of $113,267 was primarily
for computer and related equipment used in the Company's operations.  During the
nine months ended December 31, 1997, the Company's operating activities used
$141,778 of cash.

Research and development expenditures totaled $55,062 during the three months
ended December 31, 1997.  The Company expects that research and development
expenditures will continue to increase during the next 12 months as development
of existing and new products continues.  It is expected that new personnel in
the research and development area will increase these expenses by approximately
5% in the fourth quarter.

Nine Months Ended December 31, 1997 Compared With Nine Months Ended December 31,
1996

The Company had no revenues or business activity prior to the merger with
Arkona.  Since the completion of the merger in October 1997, the primary focus
of management was to recruit a core team of personnel for various aspects of the
Company's business.  It is expected that additional employees will be needed to
complete planned product development during the balance of calendar 1998.
During the nine months ended December 31, 1997, the Company had revenues of
$135,959 compared to no revenues in the comparable nine-month period ended
December 31, 1996.   All operating revenues for the period were generated from
one customer of the Company.

Research and development costs for the nine months ended December 31, 1997
totaled $73,263, compared to $5,716 during the same period in 1996.  Marketing,
general and administrative expenses were $227,209 for the nine months ended
December 31, 1997, compared to $26,458 for the nine months ended December 31,
1996.  All of these amounts relate to Arkona's activity to develop and market
its software products.

Interest income was $11,513 for the nine months ended December 31, 1997 and
resulted from the investment of the Company's cash proceeds from the sale of its
Common Stock.

The net loss for the period totaled $153,852, compared to a net loss of $32,103
for the nine months ended December 31, 1996.  The net loss applicable to common
shares was $.01 per share for the nine months ended December 31, 1997 compared
to $.08 per share in the same period one year ago.

                                      -10-
<PAGE>
 
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

At December 31, 1997, the Company had cash and cash equivalents of $1,740,697,
as compared to cash and cash equivalents of $11,614 as of March 31, 1997.  Cash
and cash equivalents include certificates of deposit held with First Security
Bank, Salt Lake City, Utah, as a guarantee for payment of office rent and
equipment leases.

Management believes that the cash available to the Company from the recently
completed private placement and cash provided by operations will be sufficient
to meet the business requirements of the Company for the next twelve months.  If
the Company expands its efforts to develop new products, it may be required to
seek additional funding through the sale of its securities or through borrowing.
Presently the Company does not have an established bank line of credit or
similar facility.

OUTLOOK
-------

This section contains forward-looking statements, all of which are based on
current expectations.  The purpose of this section is to inform shareholders of
anticipated developments in the Company.  The reader is cautioned that because
of certain risks applicable to the Company's business and to the industry in
which the Company operates, actual results may vary from those anticipated by
the Company.  Such risks and related factors may include, but are not limited
to, potential financial and other effects of future acquisitions, one-time
charges and related operational risks associated with such transactions, moves
into new market segments and the cost of managing growth of the business,
business and economic conditions and growth of the Company's target market
segments and of the economy generally, changes in customer order patterns,
including timing of project initiation and completion, competitive factors,
timing of the release of new products, and possible litigation involving
intellectual property matters.

The Company's corporate launch will be held at the upcoming Java-One Conference
in San Francisco in March 1998, at which time it will describe its offerings and
product portfolio.  This will be the first time the Company's potential
customers and competitors will be aware of the Company's capabilities and
strategies.  This is Sun Microsystems' premier event of the year for its Java
users and represents a significant opportunity to increase the Company's
visibility in the industry.

The Company expects earnings in the fourth quarter of the fiscal year to be
relatively flat, as the Company continues its marketing efforts.  Orders written
during the fourth quarter will not produce revenues until the next fiscal year.
The Company intends to continue its focus on products related to the mobile
worker, but will also be exploring opportunities in related fields.

                         PART II.    OTHER INFORMATION

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Subsequent to the end of the period covered by this report, in January 1998, the
Board of Directors approved an amendment to the Certificate of Incorporation of
the Company, increasing the authorized shares of the Company to 50,000,000
shares of Common Stock and 10,000,000 shares of Preferred Stock.  This change
has been approved by consent of 70% of the outstanding shares of the Company's
Common Stock and the Company will notify the remaining shareholders of this
change in due course.

In October 1997, the Company merged with Arkona.  A new board of directors was
appointed as a consequence of the merger and with the issuance of shares in the
merger, the Company underwent a change of control.  The Company filed a Current
Report on Form 8-K to report this change and to identify the new directors and
officers of the Company. Those new directors and officers are:

                                      -11-
<PAGE>
 
          John Blumenthal, 36, President and Director.  Mr. Blumenthal has
worked in the information technology industry for more than 12 years, much of
that time as a software engineer and architect for Deutsche Bank AG in New York.
He has also been a software engineer with RasterOps and has provided independent
consulting services in the field for US West and Micron.  In 1994 he was
employed by Veritas Software to lead technical development in that company's Far
East and South American operations.  He was instrumental in positioning the
Veritas product line in the Internet marketplace.  He has also served as an
advisor to the US House of Representatives Subcommittee on Technology concerning
US encryption export laws.  He has a BA degree from Columbia University in New
York.

          Stephen Russell, 45, Vice President Finance, Chief Financial Officer
and Director.  Mr. Russell has a BS in Physics and Mathematics from the
University of Glasgow in Scotland.  He is a Chartered Accountant and a graduate
of the International Advanced Management Program from The International
Institute for Management Development in Lausanne, Switzerland.  Mr. Russell
worked as a senior manager for Price Waterhouse in Glasgow, London and Seattle
prior to joining Digital Equipment Corporation where he served as the CEO of a
Digital UK, a subsidiary in London and European Product Finance Manager in
Geneva, Switzerland.

          John Zollinger, 29, Vice President Engineering, Chief Technical
Officer and Director.  Mr. Zollinger has been involved in the software
engineering industry for more than 10 years.  He was previously employed by
Moore Business Communications Services, where he designed, implemented and
deployed a calling card order fulfillment system that allowed AT&T to launch a
new successful business unit.  He was also a consultant to EOTT Energy Partners.

          Tim Kapp, 28, Vice President Marketing and Director.  Mr. Kapp holds a
BA in Economics and Econometric Modeling and an MBA from Brigham Young
University.  He was Senior Market Research Analyst for Folio Corporation and
served as Product Marketing Manager most recently.  He has also served as a
member of the Internet Engineering Task Force, the SGML Open Consortium, and as
a representative to the W3C Internet standards body.

          Gary Wright, 36, Director of Product Marketing and Director.  Mr.
Wright has a BS in Business Administration from the University of Utah.  He was
an original founding member of CAAMS, Inc. in Salt Lake City, Utah.  Mr. Wright
was Divisional Manager for RasterOps, Inc. and was employed by Serius
Corporation as Vice President.  Most recently Mr. Wright was International
Product Marketing Manager for Folio Corporation.

          Dave Valenti, 43, Director of Business Development, is a physician at
a Level 1 Trauma Center in Salt Lake City, Utah.  He holds a BS in Engineering
Science from Arizona State University and an MD from the University of Arizona.
He is board certified in Internal Medicine and Emergency Medicine and is a
Fellow of the American College of Emergency Physicians.

          Jeff Barlow, 34, Vice President Technical Operations and Director.
Mr. Barlow has a BS in Business Administration, Production Management from Utah
State University and has been involved in the software development industry for
more than a decade.  Mr. Barlow was previously employed by Wescor, inc., a Utah-
based high technology medical device development and manufacturing company.

          Martin Alfred, 38, Director of Operations, Secretary and Director.
Mr. Alfred has a BS in Business Administration from Valparaiso University.
Prior to joining the Company, Mr. Alfred was a partner in a company located in
Denver, Colorado.

          Bruce Baird, 42, Corporate Counsel and Director.  Mr. Baird has a BS
in Economics and a JD from the University of Utah.  For nearly 20 years he has
been engaged in private practice of law in Salt Lake City, Utah.

                                      -12-
<PAGE>

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits
               --------

               27   Financial Data Schedule

          (b)  Reports on Form 8-K
               -------------------

               On October 29, 1997, the Company filed a Current Report on
               Form 8-K (subsequently amended on December 22, 1997), to report
               the merger with Arkona.

                                      -13-
<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 by the
undersigned thereunto duly authorized.

                                    THE THORSDEN GROUP, LTD.
                                    ------------------------
                                    (Registrant)



Date: February 9, 1998               /s/ John Blumenthal
                                    ----------------------------------------
                                    John Blumentlal, Chief Executive Officer

 

Date: February 9, 1998              /s/ Stephen Russell
                                    -------------------------------------------
                                    Stephen Russell chief Financial Officer and
                                    Controller (Principal Financial and
                                    Accounting Officer)

                                      -14-