PROMISSORY NOTE

Principal Amount:  $150,000.00                              Dated: May 29, 2002
Maturity Date:  May 29, 2003


For value  received,  Arkona,  Inc., a Delaware  corporation  with an address at
10542 South Jordan  Gateway,  Suite 200, South Jordan,  Utah 80495 (the "Maker")
promises to pay Alan Rudd at 6769 Walker Mill Drive,  Salt Lake City, Utah 84121
(the  "Holder"),  the  principal  sum of One  Hundred Ten  Thousand  Dollars and
No/Cents  ($150,000.00)  lawful  money of the  United  States of  America,  with
interest  from the date  hereof at the rate of 12 percent  simple  interest  per
annum on the terms hereinafter set forth.

1.  Payment Terms

o        Interest.  Interest  is due on  the  last  day  of  each  quarter  with
         "quarters"  being  determined  form  the  issuance  date of this  Note.
         Interest is  calculated  on a "simple"  basis,  i.e.  one-fourth of the
         Interest Rate is due at the end of each quarter.

o        All amounts are stated and payable in U.S. Dollars.

 2. Prepayment Limitation

The Maker may prepay any and all principal at any time. If only a portion of the
Principal Amount is repaid,  no interest need to be concurrently  repaid (unless
due).  However,  if the entire  principal  amount is repaid,  or that portion of
principal  which  extinguishes  the balance of the  principal,  then all accrued
interest must also be paid to effect cancellation of the entire obligation.

3. Convertibility

This note shall be convertible to Arkona Inc. common stock solely at the holders
option, at any time during the term of the note. The conversion rate shall be at
$0.20 per share

4.  Default Interest

Any  principal  or interest  not paid when due, in addition to being an Event of
Default,  shall bear interest thereafter at the aforesaid rate plus five percent
per annum simple interest.

5.  Events of Default

The  occurrence of any one or more of the following  events shall  constitute an
"Event of Default" hereunder:

(a)  Maker  shall  have made an  assignment  for the  benefit  of  creditors  or
composition  with  creditors;  or, any  proceeding  relating  to Maker under any
bankruptcy, bankruptcy reorganization, receivership, dissolution liquidation law
or statute of any jurisdiction,  whether now or hereafter in effect is commenced
by or against Maker.

(b) Any representation or warranty made by Maker in the Agreement shall be false
or misleading in material respect; or

(c) Maker  shall  breach or fail to take any  actions  required,  obligated,  or
necessary  to maintain or fulfill  the  Agreement,  and fail to cure same within
thirty (30) calendar days of discovering  such fact or receiving  notice of such
fact; or

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(d) Maker shall fail to make a timely interest  payment or principal  repayment.
"Timely" shall mean within thirty (30) calendar days of when it was due.

6.        Acceleration;Remedies

Should any Event of Default  occur  hereunder,  then  Holder,  at its option and
without  notice to Maker,  unless  expressly  required  elsewhere,  may  declare
immediately due and payable the entire unpaid balance of principal and all other
sums due by Maker hereunder with interest accrued thereon at the Default Rate as
set forth  herein;  and,  payment  thereof may be enforced  by  liquidating  the
collateral.  "Liquidation" shall mean the Holder may dispose of the Stock by any
commercially reasonably means to satisfy the Maker's obligation. "Dispose of the
Stock  by  any  commercially  reasonable  means"  includes:   sale,  assignment,
hypothecation,  transfer,  or other any  method.  If Holder  employs  counsel to
enforce this Note to ensure title and liquidation of the  collateral,  such cost
shall be taken out of any proceeds obtained in such liquidation.  Holder,  after
deducting said interest,  late fees,  principal repayment amount, legal charges,
other costs  associated  with the  liquidation,  or other costs  realized by the
Lessee,  shall  refund  any  excess  monies  to the  Maker.  "Monies"  shall  be
interpreted  strictly as cash receipts  realized by the Holder.  The  definition
shall not include non-monetary  benefits,  credit lines, or other benefits which
the Holder may enjoy from deployment of such collateral.

Notwithstanding  anything to the contrary in this Note or any related agreement,
Maker shall retain a right of redemption in accordance with Section 9-506 of the
Uniform Commercial Code.

Any collateral held under the Collateral  Loan Agreement may be sold,  assigned,
hypothecated, or otherwise disposed of to recover amounts enumerated above.

The Holder accepts no liability as to price,  purchaser, or other considerations
in the disposition of such  collateral,  other than a covenant to use good faith
and  prudent  judgment to maximize  the price in any such sale;  and,  the Maker
waives any right  through  arbitration  or legal  remedy to seek to make  Holder
accountable for such.

7.  Partial Invalidity

If any provision of this Note is held to be invalid or  unenforceable by a court
of competent  jurisdiction,  the other  provisions  of this Note shall remain in
full  force and effect and shall be  liberally  construed  in favor of Holder in
order to effect the provisions of this Note. In addition,  in no event shall the
rate of interest exceed the maximum rate of interest  permitted to be charged by
applicable  law  (including  the choice of law rules) and any  interest  paid in
excess of the  permitted  rate shall be refunded to Maker.  Such refund shall be
made by  application  of the excessive  amount of interest paid against any sums
outstanding  and shall be applied in such order as Holder may determine.  If the
excessive  amount of interest  paid  exceeds the sums  outstanding,  the portion
exceeding the said sums outstanding  shall be refunded in cash by Holder.  Maker
agrees,  however,  that in determining whether or not any interest payable under
this Note exceeds the highest rate permitted by law, any non-principal  payment,
including without limitation  prepayment fees and late charges,  shall be deemed
to the extent permitted by law to be an expense,  fee, premium or penalty rather
than interest.

8.  Waivers by Holder

Holder shall not be deemed, by any act of omission or commission, to have waived
any of its rights or  remedies  hereunder  unless  such waiver is in writing and
signed by  Holder,  and then only to the  extent  specifically  set forth in the
writing.  A waiver on one event shall not be construed as continuing or as a bar
to or waiver of any right or remedy to a subsequent event.

9.  Governing Law

This instrument shall be governed by and construed  according to the laws of the
state of Utah.

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10.  Parties

Whenever  used,  the singular  number shall  include the plural,  the plural the
singular, the use of any gender shall be applicable to all genders, and the word
"Holder" and "Maker" shall be deemed to include the  respective  successors  and
assigns of Holder and Maker.

IN  WITNESS  WHEREOF,  Maker has hereby  executed  this Note on the day and year
first above written.

Arkona, Inc. (Maker)

/s/ Stephen Russo
-----------------------------
    Stephen Russo
    Chief Financial Officer
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