ARKONA Posts Third Quarter Fiscal 2007 Results.

Pace of Sales Wins Increased During the Quarter

Conference Call Scheduled for Today, 12:00 noon Eastern Time

SALT LAKE CITY -- ARKONA, Inc. (OTCBB:ARKN), a leader in supplying fully integrated on-demand business management solutions to automotive and powersports dealerships, today announced financial results for its fiscal third quarter ending December 31, 2006. Financial information for the third quarter of fiscal year ending December 31, 2005 contained in this press release has been restated as described on Form 8-K, filed August 11, 2006.

Highlights for the third fiscal quarter and nine months ended December 31, 2006 included:

* Sales increased 30% over the quarter ending December 31, 2005, as the Company's sales funnel yielded increased business wins at a faster pace than during the previous quarter;

* Gross profit rose to $1.7 million from $1.3 million during the same quarter in the prior year;

* Operating cash flows increased to $1.2 million for the nine month period ending December 31, 2006 from $0.6 million in the nine month period ending December 31, 2005. Cash and cash equivalents totaled $1.1 million at December 31, 2006 compared to $0.6 million at March 31, 2006.

* The ARKONA ASP solution was installed at 736 U.S. dealer "rooftops" (defined as a single dealer location that may include dealership franchises for one or more manufacturers) at the end of December 2006, up from 539 at the end of December last year. Sixty-five new rooftops were added in the December quarter.

* High-margin, reoccurring support revenues accounted for 57% of total revenues for the quarter compared to 56% of revenues for the same quarter in the prior year.

* The Company completed its integration and certification process with VW/Audi, enhancing its dealer management system available to over 1,000 VW/Audi dealers. The Company also developed integration with Gulf States Toyota and its more than 150 affiliated dealerships. The Company also won a contract to provide management software and services for two BMW service centers.

* The Company launched its eMail Sync and Reflections software that add customer email relationship management and document management solutions, respectively, to the ARKONA suite of services.

Third Quarter Ended December 31, 2006

For the quarter ending December 31, 2006, total revenues increased to $3.5 million compared to $2.7 million in the quarter ending December 31, 2005. The increase reflects ARKONA's further penetration of the dealer management system market and the resulting increase in installation, maintenance and service, consulting and hardware sales revenue streams. Gross profit increased 33%, from $1.3 million in the quarter ending December 31, 2005 to $1.7 million in the third quarter ending December 31, 2006.

Total operating expenses increased 22% in the third quarter ending December 31, 2006, to $1.3 million compared to $1.1 million in the corresponding 2005 period. The increases in operating costs compared to the prior year were due to a number of factors, including increases in the Company's sales and marketing expenses, research and development expenses related to software development, and the costs of stock option compensation in compliance with SFAS 123R.

Net income before taxes for the quarter was $0.35 million compared to $0.17 million in the same period a year ago. After accounting for income tax benefits of $0.12 million and $0.24 million in the quarters ending December 31, 2006 and 2005, respectively, net income was $0.48 million in the quarter ending December 31, 2006, compared to $0.41 million in the same quarter in the prior year. Fully diluted earnings per share were $0.012 for the quarter ending December 31, 2006 compared to $0.010 in the same quarter last year.

Nine Months Ended December 31, 2006

For the nine months ending December 31, 2006, total revenues increased to $9.6 million from $7.9 million in the nine months ending December 31, 2005, an increase of 21%. Gross profit increased 22%, from $3.8 million in the nine months ending December 31, 2005 to $4.6 million in the nine months ending December 31, 2006. Total operating expenses increased 34% in the nine months ending December 31, 2006, to $4.2 million compared to $3.2 million in the corresponding 2005 period. Income before taxes for the nine month period was $0.42 million compared to $0.63 million in the same period a year ago. After accounting for income tax benefits of $0.16 million in the nine month period ending December 31, 2006, and $0.86 million in the nine month period ending December 31, 2005, respectively, net income was $0.59 million in the nine month period ending December 31, 2006, a decrease from $1.5 million posted in the same nine month period in the prior year. Fully diluted earnings per share were $0.015 for the nine months ended December 31, 2006 compared to $0.038 in the same period last year.

ARKONA's Chief Executive Officer, Alan Rudd, commented, "The rate at which we continue to add market share increased markedly this quarter. Customers began to make decisions more rapidly as the competitive environment became clearer and dealers were able to confirm that the ARKONA offering still represented the best value once they had considered all options. The investment we made in R&D and sales and marketing infrastructure, particularly during fiscal 2007, has added to our operating costs, but it was vindicated by our ability to close and execute on the increased flow of orders. As we enter our fourth fiscal quarter, sales momentum continues to be strong and we are confident in our ability to service our increased base of business and prospects."

Conference call and webcast scheduled for today, 12:00 noon Eastern Time

Alan Rudd, Chairman and Chief Executive Officer, and Lee Boardman, Chief Financial Officer, are scheduled to discuss results for the 2007 third quarter, ending December 31, 2006, in a conference call and webcast on Tuesday, February 13, at 10:00 a.m. Mountain Time (9:00 a.m. Pacific; 12:00 noon Eastern).

To participate in ARKONA's conference call live by telephone, please dial 800-262-1292 (toll-free/domestic) or 719-457-2680 (toll/international) approximately ten to fifteen minutes prior to the start time for registration, and reference the conference code 5374766. A webcast of the event can also be monitored by clicking on the webcast link on the Company's Web site, on the Investors Information page, at: http://www.ARKONA.com/company/investors.php.

About ARKONA, Inc.

Founded in 1996, ARKONA is a leading supplier of fully integrated business management solutions for automotive and powersports dealerships. The Company's industry-leading application service provider or ASP model provides state-of-the-art technology and high-level technical support and training at low cost. The Company serves dealerships representing every major car manufacturer throughout all regions of the United States. ARKONA's Dealer Management System (DMS) also leads the market in technologically superior e-business solutions for automotive dealers that fully integrate back-office systems with a retail Web presence. ARKONA's DMS supports all major back-office functions, including accounting, payroll and sales management. The ARKONA DMS is based on flexible, industry-standard technology. For more information visit the Company's Web site at www.ARKONA.com.

Forward-Looking Statements 

This news release contains forward-looking statements made in reliance upon the safe harbor provision of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results may differ materially from those indicated by these statements. Forward-looking statements may include statements addressing future financial and operational results of the company. The following factors, among others, could cause actual results to differ materially from those described in any forward-looking statements: the risk that revenue will not grow in fiscal 2007, as expected, because of the entry of new competitors into the market or the intensification of competition generally; continued slowing of our sales cycle; factors harming the economy generally or automobile dealers specifically; operational or intellectual property issues and other factors; and the risk that net profits will not expand or that the company will cease to be profitable because of potential decreases in gross margins as competition expands; potential increases in travel, labor and hosting expenses; and unexpected litigation or transactional expenses. In addition, other risks are identified in the Company's most recent Annual Report on Form 10-KSB, as filed with the SEC. 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.

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