ARKONA's 10-K Highlights Record Revenues & Earnings; Company Grows Earnings by 228%; EPS at $.06/Share

SALT LAKE CITY--July 12, 2004--ARKONA Inc. (OTCBB: ARKN), the emerging leader and the pioneer in Web-enabled dealer management solutions for the automobile and powersports dealerships, today announced the filing of its Form 10-KSB containing its full audit report and other information. The filing reflects record revenues and earnings for the company's fourth quarter and fiscal year 2004.

For the fiscal year ending March 31, 2004, revenues were $5,365,353, with net income of $1,996,971, as compared to revenues of $3,072,282 and a net loss of ($1,559,085) for the previous year. Net income before income tax was $436,971 for the fiscal year ending March 31, 2004, as compared to a net loss before income tax of ($1,559,085) for the same period in 2003. On a fully diluted basis, the company reported earnings of $.06 per share, as compared to a ($.06) per share loss in the prior year.

For its fourth quarter, the company reported pre-tax earnings of $66,809 on revenues of $1,732,675, as compared to a loss of ($344,202) on revenues of $702,598 for the same period last year. Net income for the fourth quarter was $566,052, as compared to the net loss of ($344,202) for the fourth quarter in 2003.

Due to ARKONA's profitability in FY2004, the company recognized a tax asset and benefit related to accumulated losses, which will decrease income tax expense in the future. For the fiscal year ending March 31, 2004, the company recognized $1,560,000 in income tax benefit. In the current fiscal period ending March 31, 2005, the company expects to recognize up to an additional $7,057,603 in income tax benefit.

"The significant growth in revenues and earnings is a continuing validation from the dealer industry that ARKONA and the Internet are being embraced to increase productivity and substantially lower the cost of technology ownership," commented Alan Rudd, chairman & chief executive officer. "Our research and development organization continues to make remarkable strides in scaling our technology to satisfy the needs of customers of every size. Our market share continues to grow at the expense of legacy systems providers. We expect demand to remain strong during FY2005."

A significant achievement for the company this past year has been the integration and enhancement of ARKONA's Web-based platform with key automobile manufacturers including General Motors, Daimler-Chrysler, Ford, Honda, Lincoln Mercury, Mazda, Acura, Suzuki and Mitsubishi. ARKONA continues to devote significant development resources in this area and anticipates further integration announcements.

In addition to record gains in revenues and earnings, the recently concluded fiscal year saw significant enhancements to ARKONA's balance sheet.

"In FY2004, ARKONA's balance sheet underwent a significant transformation," stated Stephen L. Russo, vice president and chief financial officer. "Not including the tax asset, the company increased total assets by nearly 300% to just over $1,800,000, while virtually eliminating its long-term debt. At fiscal year-end, current liabilities were less than $500,000 while current assets increased to more than $900,000, with cash in excess of $350,000. These are extreme achievements in a relatively short period of time."

About ARKONA Inc.

ARKONA was the first to offer a true Application Services Provider (ASP) solution for the automotive industry and continues to be a market leader in providing innovative e-business solutions for automobile dealers. A public company, ARKONA was founded in 1996 and trades under the symbol ARKN. For more information, visit ARKONA's Web site at www.arkona.com.

This release may contain forward-looking statements as well as historical information. Forward-looking statements, which are included in accordance with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, may involve known or unknown risks, uncertainties and other factors that may cause the company's actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this release. Such risks include, without limitation, the risk that revenue will not continue to grow as expected during fiscal 2005 because of competition in the marketplace or for other reasons and the risk that the company will not experience net income from operations in the coming year because of reduced revenue, unanticipated expenses or for other reasons. Such forward-looking statements speak only as of the date of this release. The company expressly disclaims any obligation to update or revise any forward-looking statements found herein to reflect any changes in company expectations or results or any change in events.