UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-KSB
(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2002

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                    For the transition period from N/A to N/A

                        Commission file number: 000-28675

                                TRIBEWORKS, INC.
                 (Name of Small Business Issuer in Its Charter)

                    DELAWARE                                94-3370795
   (State or Other Jurisdiction of Incorporation or       (I.R.S. Employer
                   Organization)                           Identification No.)

                                988 MARKET STREET
                             SAN FRANCISCO, CA 94102
               (Address of principal executive offices) (zip code)
         Issuer's Telephone Number, Including Area Code: (415) 674-5555

           Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

         Securities registered under Section 12(g) of the Exchange Act:
                                  COMMON STOCK

    Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months (or for such shorter period than 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 [ ]

    Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-8 is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

    State issuer's revenues for its most recent fiscal year. $972,959

    The aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 31, 2002 was approximately $301,086 based upon the
closing price per share of the Common stock of $0.03 on that date.

    There were 18,634,628 shares of the registrant's Common Stock issued and
outstanding as of December 31, 2002.


                                       1
<PAGE>



                                TABLE OF CONTENTS

                                                                            Page

PART I.........................................................................3

Item 1.  Description of Business...............................................3

Item 2.  Description of Property...............................................6

Item 3.  Legal Proceedings.....................................................6

Item 4.  Submission of Matters to a Vote of Security Holders...................6

PART II........................................................................7

Item 5.  Market for Common Equity and Related Stockholder Matters..............7

Item 6.  Management's Discussion and Analysis or Plan of Operation.............7

Item 7.  Financial Statements.................................................15

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.................................................31

PART III......................................................................31

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act....................31

Item 10. Executive Compensation...............................................32

Item 11. Security Ownership of Certain Beneficial Owners and Management.......34

Item 12. Certain Relationships and Related Transactions.......................34

Item 13. Exhibits and Reports on Form 8-K.....................................35

SIGNATURES....................................................................36

                                       2
<PAGE>


                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

    OVERVIEW

    Tribeworks provides tools for creating and delivering multimedia
applications. We generate revenue in two ways: our Tools business where we sell
our software directly to buyers of graphics software, and our Enterprise
business where we create custom versions of our tools for large customers.

    Tools customers license our multimedia authoring tool iShell(R), which was
introduced in January 1999. iShell is a cross-platform software product that
allows developers to create multimedia applications in a variety of categories,
including sales and business presentations, informational/catalog titles,
training courses and modules for corporations and/or educational institutions,
games, learning aids, Enhanced CDs (audio CDs that also have videos and other
visual digital content on the disk), video yearbooks, recruitment presentations
and more. Tools customers, usually graphics industry professionals who also use
complementary graphics software products from other companies, pay an annual
membership fee to use our iShell software and supplemental products and
services.

    Enterprise customers, usually large corporations that require development of
custom multimedia tools or complex multimedia applications, license our software
for a fixed fee or on a per unit basis. Enterprise customers also pay for
professional engineering services performed by Tribeworks' employees and
consultants.

    As of December 31, 2002, hundreds of companies in twenty countries have
delivered applications based on our technology at some of world's largest
organizations and most respected educational institutions including: Apple
Computer, AMD, 3Com, Pioneer Electronics, Morgan Stanley Dean Witter, Burger
King, Tower Records, Airbus, United Airlines, Nike, Nokia, the US Navy, New York
University, UCLA, Michigan State, CalTech, The University of Iowa, Brigham Young
University, The University of Hong Kong, and The Canadian Film Center.

    We incorporated in California in August 1998 as California Tribeworks. On
November 2, 1999, we entered into a transaction with Pan World Corporation, a
publicly traded Nevada corporation (Pan World), whereby Pan World agreed to
provide financing in connection with the merger of a newly formed subsidiary of
Pan World into California Tribeworks (the Recapitalization). Prior to the
Recapitalization, Pan World never had any material operations. As a result of
the Recapitalization, shareholders of California Tribeworks exchanged all their
shares in California Tribeworks for Pan World common stock. Subsequent to the
Recapitalization, we reincorporated in Delaware as Tribeworks, Inc. We opened a
wholly owned subsidiary in Japan (Tribeworks Japan) in August 2000, which
engages in sales and professional services activities primarily in our
Enterprise application development business.

    We are currently a fully reporting registrant with the SEC, and our stock is
traded on the OTC Bulletin Board under the symbol TRWX. During 2002, our Board
of Directors held discussions about possible alternatives to take the Company
private in order to maximize shareholder value. However, we do not currently
have any formalized plans for a going private transaction.

    PRODUCTS AND SERVICES

    TOOLS BUSINESS

    Our Tools business is focused on direct sales of licenses and bundled
support services to our proprietary graphical software application, iShell(R),
and complementary products such as software plug-ins and product documentation.
For the year ended December 31, 2002, the Tools business accounted for 34% of
total revenues.

    iShell is a graphical software application that allows creation of
interactive rich-media applications. Applications can be deployed via the
Internet, a CD-ROM, a kiosk (interactive retail display), or a combination
thereof. iShell offers the ability to reuse common interactive elements in an
expandable, drag-and-drop, object-oriented environment that can save significant
production time for developers. iShell has been released for Windows and
Macintosh operating systems.

                                       3
<PAGE>

    We attract new Tools customers primarily through our website,
Tribeworks.com, where iShell can be downloaded for trial use. Potential Tools
customers register on our website and provide contact information which we use
to attempt to convert them to paying customers. As of December 31, 2002, more
than 53,000 users had registered at Tribeworks.com. Tools customers, who use
iShell for commercial purposes, referred to as Members, pay an annual membership
fee that includes a license to use our software and customer support services.
We currently sell three membership levels: Gold, Silver, and Educational. Gold
and Silver Members have the right to use the iShell editor to create and the
iShell runtime environment to distribute commercial products during their annual
membership period. Educational Members, who must be students or faculty at an
accredited educational institution, are not permitted to use their software for
any type of commercial purpose. Gold and Educational Members also receive a
restricted license to utilize, but not to distribute, the iShell source code,
the computer language used in writing a software program, which allows them to
more effectively customize and modify their software applications. In addition,
we provide an option to purchase a permanent license for iShell in lieu of
paying for a license via a membership. Members can also develop software tools
that enhance the functionality of our products. These functional plug-ins are
either incorporated into updated versions of iShell or sold on a consignment
basis through our website. Tribeworks retains ownership of all plug-ins that are
incorporated into iShell.

    During 2002, we announced iShell Mobile Edition (iShell ME), our first new
Tools product since the introduction of iShell. iShell ME features comprehensive
support for designing and publishing interactive digital media that can be
delivered to devices running the Palm OS. iShell ME is being built in
collaboration with Kinoma, Inc. iShell ME represents a new opportunity for
application development for Tribeworks customers. With over 24 Million Palm
powered handhelds on the market and over 15,000 applications, Palm OS is the
leading platform in the handheld market. iShell ME is currently in the beta
stage of development and we expect to release version 1.0 in mid-2003.

    During 2003, we plan to continue to sell our Tools products directly to end
customers, but also plan to investigate selling through reseller channels.

    ENTERPRISE BUSINESS

    Enterprise customers are large companies and other entities that require
development of customized multimedia authoring tools or multimedia applications
that we provide though specialized enhancements to our iShell software. For the
year ended December 31, 2002, the Enterprise business accounted for 66% of our
revenue.

    Enterprise customers, who are frequently also subscribers to our Tools
products, pay for professional services, which we provide for a fixed fee or on
an hourly basis via our employees and outside consultants, and also license
customized versions of our software tools for a fixed fee or on a per unit
basis. Unlike most services businesses, we own most of the work we create during
Enterprise engagements which, in turn, helps to underwrite our research and
development costs. Often, new business opportunities for the Enterprise division
grow from the Tools membership base and, as a result, we have been able to
secure large Enterprise customers without a dedicated sales force. Ultimately,
we do not intend to grow a large professional services organization, but at this
stage in our growth, we believe it is vital that we provide direct services for
certain key customers. We believe this allows us to develop new products
suitable for large customers who carry the potential for large, recurring
licensing fees.

    During 2002, three customers accounted for 92% of our Enterprise revenue.
Our relationships with these customers are described below:

            -  Pioneer Corporation, a consumer electronics company with more
               than 30,000 employees and more than 5 billion $USD in sales, has
               been a customer since 2000. We have created customized tools for
               Pioneer to complement a number of their hardware products,
               including DVD drives and Plasma Display Screens. During 2001,
               Tribeworks and Pioneer filed a joint patent application related
               to certain interactive display technologies. During 2002, we
               entered into an agreement to build software tools and systems to
               support Pioneer's efforts in selling more Plasma Display Systems
               in Japan

           -   iVAST, Inc., developers of end-to-end MPEG-4 solutions, hired us
               in late 2001 to develop a set of MPEG-4 authoring tools that
               harness the power of the MPEG-4 standard. Building on the success
               of MPEG-1 and MPEG-2 standards, MPEG-4 enables integrated,
               interactive, targeted multimedia delivery across any network,
               whether broadcast or broadband, wireless or wireline, and via
               electronic or physical distribution to any device, from set-top
               boxes to PCs and personal digital assistants. iVAST will begin to
               market their tools during 2002.

           -   Licross Inc., a Japanese services company, contracted with us on
               several projects during 2002. We recognized more than 90% of our
               revenue derived from Licross in the first half of 2002. During
               the second half of 2002,

                                       4
<PAGE>

               Licross restructured its operations, which included dismantling
               its digital media division. As a result, we do not expect to
               derive significant future revenues from Licross.

    Our wholly-owned Japanese subsidiary was incorporated in August 2000, and we
believe it will significantly contribute to future revenues. In January 2001, we
announced iShell-J, the Japanese language version of our iShell software
product, which includes support for two-byte characters. We intend to release an
updated version of iShell-J during 2003. We anticipate that we will derive most
of our Japanese revenues from Enterprise customers.

    PRODUCT DEVELOPMENT

    Our products and services enable our customers to save time and cost
building and deploying rich-media applications. We believe that our future
success depends on our ability to enhance existing products, and develop and
introduce new products on a timely basis. We maintain an internal staff to
develop the software that we market and sell to customers. A significant portion
of our software is created as a result of work that we perform for our
Enterprise customers. To date, we have structured our contracts with Enterprise
customers so that we retain most intellectual property rights in the software
that we develop for them. Due to the changing technological environment for
computer systems and other electronic devices that are connected to one another
via the Internet, we continue to adapt our products to new hardware and software
platforms and to embrace emerging technology standards. For the years ended
December 31, 2002, and December 31, 2001, respectively, research and development
expenditures were $88,078 and $186,981.

    TECHNICAL SUPPORT AND EDUCATION

    We provide technical support to Members, which includes rapid response to
support questions via email and phone, a project upload and test service,
discussion lists, a web board, and printed documentation. Technical support
varies with membership levels. We are able to limit expenditures for customer
support because Members are able to answer most questions for one another
through our discussion lists and web boards.

    We offer a training course for iShell, "Train with the Tribe," which is a
one-day introductory training session to iShell offered in a growing number of
locations worldwide. Training serves as a sales mechanism and more than 30% of
trainees decide to purchase a membership. Gold Members receive complementary
"Train with the Tribe" passes with an annual membership, and other training
attendees pay per session. Advanced iShell fee-based training sessions are also
offered, which are not available with the complementary passes received by Gold
Members.

    We also hold an annual Tribeworks Developer Conference in San Francisco, a
two-day event that provides customers an opportunity to meet one another, to
meet Tribeworks' engineers, and learn about the latest product developments.

    COMPETITION

    We compete in markets that are new, intensely competitive, highly
fragmented, and rapidly changing. We have experienced increased competition from
current and potential competitors, many of which are larger and more profitable
and as a result have greater technical, marketing, and other resources. We
expect the competition will continue, and we will compete with the major
graphics and multimedia software tools companies, as well as service companies
building custom Internet multimedia applications for corporate clients. We
believe that the primary competitive factors in providing multimedia software
applications to businesses and educational institutions are ease of use, price,
quality of service, availability of customer support, reliability, technical
expertise, and experience. Our success will depend on our ability to provide
quality development tools and value-added services, including:

           -   Augmenting the ability of the software application to function on
               different hardware platforms and operating systems, such as
               Windows, Windows NT, Macintosh, and Macintosh OSX environments;

           -   Delivery of our software to new devices such as mobile phones
               and personal digital assistants (PDA's);

           -   Providing flexibility in the degree and level of customization
               of software applications;

           -   Increasing product functionality and system performance;

           -   Improving quality of product;

           -   Reducing total cost of ownership;

           -   Improving sales and distribution efficiency;

           -   Improving brand name recognition; and

                                       5
<PAGE>

           -   Providing high quality professional support services.

    We experience competition in each area of our business. Companies in the
graphics software tools area include Macromedia, Adobe Systems, and Autodesk.
These companies market a variety of products addressing our target markets,
including software tools for authoring and delivering interactive information
targeted to computer-based training specialists and educators, as well as
multimedia professionals. They also offer graphics and publishing products for
on-line publishing as well as print-based publishing. In addition, competitors
also provide extensive product training to support their products.

    Most of our current and potential competitors in the Internet services and
graphics and multimedia industries have longer operating histories, greater name
recognition, and larger existing customer bases than we have. These competitors
may be able to respond faster to new or emerging technologies and changes in
customer requirements. Accordingly, there can be no assurance that we will be
able to compete successfully.

    PROPRIETARY RIGHTS

    We rely on a combination of copyright laws, trademark laws, contract laws,
and other intellectual property protection methods to protect our technology,
including our logo and the names "Tribeworks" and "iShell" in the United States
and other countries. We believe that our trademarks and the use of material in
our website are protected under current provisions of copyright law, although
legal rights to Internet content and commerce are not clearly settled by law. We
were granted trademarks to "Tribeworks", the Tribeworks faces logo, and "iShell"
in 2000.

    In November 1999, we entered into a software agreement (Keepsake Software
Agreement) with Keepsake SPRL (Keepsake) and Gilbert Amar (one of our
co-founders) pursuant to which we acquired the right, title, and interest to
iShell, our lead product. Mr. Patrick Soquet (one of our co-founders and a
Director) performs software development services for us through Keepsake, a
Belgian entity wholly owned by him.

    In April 2001, we jointly filed a United States patent application with
Pioneer Electric Corporation in the area of interactive display technology.

    EMPLOYEES

    As of December 31, 2002, we had a total of 6 employees and 6 consultants
working on a full-time basis.

ITEM 2. DESCRIPTION OF PROPERTY.

    We lease approximately 3,300 square feet, which includes approximately
2,600 square feet in San Francisco, California for our sales, engineering, and
administrative offices and 700 square feet in Tokyo, Japan for our Japanese
subsidiary. The current annual rent for the San Francisco facility is
approximately $69,000 and the lease expires in February 2004 with an option to
extend the lease for two years. Since October 2002, we have been paying a
reduced annual rent of approximately $36,000, and we anticipate that this lower
rate will continue through the end of the lease term. The annual rent for the
Tokyo facility is approximately $13,000 and the sublease expires April 2004.
Both facilities are in satisfactory condition for their purposes.

ITEM 3. LEGAL PROCEEDINGS.

    The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject that are pending, threatened or
contemplated or any unsatisfied judgments against the Company.

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

None.

                                       6

<PAGE>


                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

    Tribeworks, Inc. common stock is traded on the OTC bulletin board under the
symbol TRWX. The following table sets forth the range of high and low closing
sales prices for each period indicated and reflects all stock splits effected by
the Company:

<TABLE>
<CAPTION>


                          ---------------------------------------------- ---------------------------------------------
                                              2002                                           2001
                          ---------------------------------------------- ---------------------------------------------
                                  High                    Low                    High                    Low
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S>                              <C>                     <C>                    <C>                    <C>

First quarter                    $0.120                  $0.050                 $0.800                 $0.250
------------------------- ---------------------- ----------------------- ---------------------- ----------------------

Second quarter                   $0.080                  $0.040                 $0.390                 $0.080
------------------------- ---------------------- ----------------------- ---------------------- ----------------------

Third quarter                    $0.070                  $0.030                 $0.140                 $0.050
------------------------- ---------------------- ----------------------- ---------------------- ----------------------

Fourth quarter                   $0.050                  $0.020                 $0.150                 $0.040
------------------------- ---------------------- ----------------------- ---------------------- ----------------------

</TABLE>


    The above quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.


    The Company had approximately 212 stockholders of record as of December 31,
2002. The Company has not declared or paid any cash dividends on its common
stock and presently intends to retain its future earnings, if any, to fund the
development and growth of its business and, therefore, does not anticipate
paying any cash dividends in the foreseeable future.

    We made no sales of the Company's unregistered common stock during the
quarter ended December 31, 2002.

    During the quarter ended December 31, 2002, we issued incentive stock option
to employees giving them the right to purchase 150,000 shares of our common
stock at an exercise price of $0.04 per share. These options were issued from
our 1999 Stock Option Plan.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

    FORWARD LOOKING STATEMENTS

The following discussion contains forward-looking statements that are subject to
risks and uncertainties. There are several important factors that could cause
actual results to differ materially from historical results and percentages and
results anticipated by the forward-looking statements, such as:

     -   Whether or not our products are accepted by the marketplace and the
         pace of any such acceptance,

     -   Our ability to continue to grow our Tools and Enterprise businesses,

     -   Improvements in the technologies of our competitors,

     -   Changing economic conditions, and

     -   Other factors, some of which will be outside of our control.

    We have sought to identify most risks to our business but cannot predict
whether or to what extent any of such risks may be realized. There can be no
assurance that we have identified all possible risks that might arise. Investors
should carefully consider all such risks before making an investment decision
with respect to our common stock.

                                       7
<PAGE>


    RESULTS OF OPERATIONS

    We witnessed our first profitable year in 2002, with net income of $20,634.
While this is a modest net income figure, the fact that we achieved
profitability is a significant milestone for us. This achievement is a direct
result of our ability to operate our business efficiently in spite of difficult
economic times and without an influx of outside capital. While revenues
decreased during 2002 compared to 2001, we were able to achieve profitability
primarily because we increased our gross margin percentage to 75% in 2002,
compared to 53% in 2001, and we reduced our operating expenses, to $707,508 in
2002, compared to $1,301,626 in 2001. We were able to increase our gross margin
percentage due to a more efficient use of outside contractors for our
professional services engagements. We were able to reduce our operating expenses
primarily by reducing our overhead in our Japanese subsidiary, streamlining our
operations, including bringing wages and outside contractor fees in line with
cash inflows, and shifting the burden of product development expenses to our
professional services engagements.

    While we are encouraged by our 2002 results, we cannot make assurances that
we will continue to operate profitability. In addition, while we currently
operate our business with limited resources and outstanding debt, because we
have been able to achieve positive results and because raising money at our
current market valuation would be highly dilutive for existing shareholders, we
do not have current plans for equity financing. Subsequent to December 31, 2002,
we filed our 2001 tax returns.

    REVENUES

    Revenues were $972,959 for the year ended December 31, 2002, a decrease of
36% compared to revenues of $1,521,839 for the year ended December 31, 2001. The
Tools business, which includes sales of memberships, and sales of books and
third party plug-ins from our website, and revenues from training sessions and
events, decreased in 2002 by 14% to $334,556, compared with $391,257 for 2001.
We attribute most of the decrease to difficult economic times for our customers
and for potential customers. We are trying to increase Tools revenues in 2003 by
releasing a new version of our iShell product, releasing a new Tools product,
iShell Mobile Edition, making improvements to our website which we use to market
and deliver our tools, and exploring the prospects for utilizing resellers and
distributors for our Tools. The Enterprise business decreased in 2002 by 44% to
$638,403, compared with $1,130,582 for 2001. Enterprise revenues in 2002
consisted of $532,363 in professional services revenues and $106,038 in
licensing revenues, compared with $1,020,963 in professional services revenues
and $109,619 in licensing revenues in 2001. The Enterprise business was
substantially initiated in 2001. International revenues, which consist of sales
to foreign customers, represented 45% of revenues in 2002, compared to 74% of
revenues in 2001. The Company's revenues from Japanese customers increased to
32% of total revenues in 2002 from 64% in 2001. For 2003, we expect Enterprise
revenues to increase compared to 2002, and for Japanese revenues to increase as
a percentage of total revenues, primarily due to a new contract with Pioneer
Corporation.

    COST OF SALES

    Cost of sales includes royalties paid to third parties for licensed
technology, amortization costs related to acquired technology, costs associated
with order fulfillment, and costs associated with customer development services.
Cost of sales was $244,817 for the year ended December 31, 2002, down from
$716,737 for the year ended December 31, 2001. Gross margins increased on a
percentage basis to 75% for 2002 from 53% for 2001. This improvement is due to a
more efficient use of outside contractors for our professional services
engagements. We believe that our gross margins in the Enterprise business will
improve even further if we are able to sell more software licenses relative to
professional services, which we believe will occur as our product suite matures
for our Enterprise markets, and as we move away from the role of project manager
on large contracts.

    OPERATING EXPENSES

    Product support expenses consist mainly of compensation, benefits and
consulting fees paid to product support personnel. Product support expenses were
$46,761 and $77,387 for the years ended December 31, 2002 and 2001,
respectively. As a percentage of Tools sales, product support expenses were 14%
and 20% for 2002 and 2001, respectively. The decrease is due to a reallocation
of one of our product support personnel to product development, efficiencies
achieved in the support process, and reallocation of part of the product support
manpower to Enterprise projects.

    Product development expenses consist primarily of compensation and benefits
to support product

                                       8
<PAGE>

development.  Product  development  expenses  were  $88,078 and $186,981 for the
years ended December 31, 2002 and 2001,  respectively.  This decrease  primarily
reflects the assignment of several software  engineers to billable  professional
services  projects.  We did not experience a decrease in  engineering  headcount
during 2002.  The reduction in product  development  expenses does not reflect a
diminished  emphasis on growing our base of  intellectual  property,  as we have
been effective to date at retaining  intellectual  property  rights for software
created by way of  billable  projects  to outside  parties.  We expect to remain
effective in retaining of these intellectual property rights in the future.

    Sales and marketing expenses consist primarily of compensation and benefits,
advertising, mailing costs, trade show expenses, and other public relations and
marketing costs. Sales and marketing expenses were $173,491and $241,406 for the
years ended December 31, 2002 and 2001, respectively. This decrease reflects a
decrease in discretionary spending in the sales and marketing areas and
decreased wages for certain sales personnel. We reduced expenditures in the
sales and marketing areas so we could position ourselves toward profitability.
We do not believe that such reductions adversely affected our sales efforts.

    General and administrative expenses consist primarily of compensation and
benefits, fees for professional services, and overhead. General and
administrative expenses were $399,178 and $795,852 for the years ended December
31, 2002 and 2001, respectively. Part of the reason for this decrease was
because we paid reduced salaries and fees to key employees and consultants.
Should our cash position materially improve, we expect to pay increased salaries
and fees to these key employees and consultants, and therefore experience
increased operating expenses, especially in the general and administrative
category.

    PROVISION (BENEFIT) FOR INCOME TAXES

    We recorded an income tax benefit of $0 for the year ended December 31,
2002, compared to $72,800 for the year ended December 31, 2001. The benefit in
2001 related to the utilization of our loss to offset the income taxes from the
gain of the settlement of outstanding payables to certain employees and
consultants in exchange for equity that occurred during the third and fourth
quarters of 2001.

    EXTRAORDINARY INCOME

    We recorded no extraordinary income for the year ended December 31, 2002,
compared to extraordinary income of $110,129 for the year ended December 31,
2001. The extraordinary item in 2001 related to a settlement of outstanding
payables to certain employees and consultants in exchange for equity that
occurred during the third and fourth quarters of 2001. In the fourth quarter of
2001, an adjustment of $172,929 was made to recognize as an extraordinary item
the effects of the settlement that occurred in the third quarter, which was
originally recognized as an equity transaction.

    NET INCOME (LOSS)

    Net income was $20,634 for the year ended December 31, 2002, compared to a
net loss of $313,595 for the year ended December 31, 2001.

    LIQUIDITY AND CAPITAL RESOURCES

    At December 31, 2002, the Company had cash and cash equivalents of $143,153
compared to $47,753 at December 31, 2001.

    Since inception, the Company has financed its operations through issuance of
stock and revenues derived from the Tools and Enterprise businesses. Through
December 31, 2002, the Company had raised $2,672,656 from the sale of stock. At
December 31, 2002, the principal source of liquidity for the Company was
$143,153 of cash and cash equivalents.

    For the years ended December 31, 2002 and 2001, cash provided by operating
activities was $95,400 and cash used in operating activities was $110,807,
respectively. The favorable result was due primarily to cost-cutting measures.

    Cash used in investing activities for the year ended December 31, 2002 and
2001 was $0 and $4,473, respectively. We made no equipment purchases in 2002.

    Cash provided by financing activities for the year ended December 31, 2002
and 2001 was $0 and $150,000, respectively.

                                       9
<PAGE>

    Our capital requirements depend on numerous factors, including market
acceptance of our products, resources we devote to developing, marketing,
selling and supporting our products, timing of our operations, extent and timing
of investments, potential acquisition of other concerns, and other factors. We
expect to devote substantial capital resources to hire and expand our sales,
support, marketing and product development organizations, to expand marketing
programs, and for other general corporate activities.

    RISK FACTORS

WE HAVE A LIMITED OPERATING HISTORY AND THERE IS A GREAT DEGREE OF UNCERTAINTY
AS TO OUR FUTURE RESULTS. WE HAVE NEVER BEEN PROFITABLE AND MAY NEVER ACHIEVE
SUSTAINED PROFITABILITY.

    We have a limited operating history upon which an evaluation of our business
and prospects can be based. Our prospects must be evaluated with a view to the
risks encountered by a company in an early stage of development, particularly in
light of the uncertainties relating to the new and evolving markets in which we
intend to operate and in light of the uncertainty as to market acceptance of our
business model. We will be incurring costs in marketing our products and
services to clients and in building an administrative organization. To the
extent that revenues do not match these expenses, our business, results of
operations, and financial conditions will be materially adversely affected.
There can be no assurance that we will be able to generate sufficient revenues
from the Tools business or Enterprise business to maintain profitability on a
quarterly or annual basis in the future. We may not be able to sustain or
increase profitability on a quarterly basis or achieve profitability on an
annual basis.

WE EXPECT TO INCUR OPERATING LOSSES FOR THE FORESEEABLE FUTURE AS WE CONTINUE TO
DEVELOP AND MARKET OUR BUSINESS.

    We have incurred operating losses each year since our inception. As a
result, we cannot be certain when or if we will achieve sustained profitability.
Failure to become profitable on an annual basis may adversely affect the market
price of our common stock and our ability to raise capital and continue
operations.

    We expect high variability and uncertainty as to our future operations and
financial results. As we continue to develop and market our business, our
quarterly operating results may fluctuate as a result of a variety of factors.
Many of these factors are outside our control, including demand for the
development of rich-media applications, the introduction of new products and
services by our competitors, price competition or pricing changes in the
industry, technical difficulties or system downtime, general economic
conditions, and economic conditions specific to the Internet and related media.
Due to these factors, among others, our operating results may fall below our
expectations and the expectations of investors.

OUR PRODUCTS AND SERVICES MAY NOT BE ACCEPTED BY THE INDUSTRIES THAT USE
RICH-MEDIA APPLICATIONS.

    Our future success depends on our ability to create and deliver
sophisticated rich-media tools and applications. If our products and related
services are not widely accepted, our ability to make sales in the Tools
business and Enterprise business will be hampered. There can be no assurance
that our products and tools will be attractive to a sufficient number of users
to generate significant revenues. If we are unable to evolve our present
products and to develop new products that allow us to attract, retain, and
expand a loyal membership base, our business, results of operations, and
financial condition will be materially adversely affected.

THE RICH-MEDIA MARKET IS INTENSELY COMPETITIVE. WE CANNOT ASSURE YOU THAT WE
WILL BE ABLE TO ACHIEVE MARKET ACCEPTANCE.

    The rich-media market is intensely competitive. We expect the competition to
increase as new competitors enter the market. Many of our competitors may have
greater technical, marketing, and other resources. We believe that the primary
competitive factors in providing rich-media application services and tools to
development organizations and large corporations to be value-added services,
ease of use, price, quality of service, availability of customer support,
reliability, technical expertise, and experience. To the extent that we are not
able to attract sources of revenues from the Tools business and the Enterprise
business, our business, results of operations, and financial condition will be
materially adversely affected.

                                       10
<PAGE>

    A number of companies currently offer services or products that compete
directly or indirectly with our current products and service offerings. These
companies include Macromedia and Tekadence. These companies market a variety of
products addressing our target markets, including software tools for authoring
multimedia content. If we are unable to introduce competitive products with
competitive training and consulting services, our business, results of
operations, and financial condition will be materially adversely affected.

    Most of our current and potential significant competitors in the Internet
services, graphics, and multimedia industries have longer operating histories,
greater name recognition, and larger existing customer bases than us. These
competitors may be able to respond faster to new or emerging technologies and
changes in customer requirements. Because of their greater resources, they will
be able to make more responsive changes to market conditions. Accordingly, there
can be no assurance that we will be able to compete successfully in these
industries.

OUR SOFTWARE DEPENDS ON APPLE'S QUICKTIME TECHNOLOGY TO FUNCTION PROPERLY. WE
CANNOT ASSURE YOU THAT APPLE WILL CONTINUE TO DEVELOP THE QUICKTIME TECHNOLOGY
OR DISTRIBUTE IT FREE OF CHARGE, OR WILL NOT DEVELOP SOFTWARE APPLICATIONS WHICH
COMPETE DIRECTLY WITH TRIBEWORKS ISHELL PRODUCT.

    Our iShell product line currently requires installation of Apple Computer's
QuickTime software in order to function properly on both Windows and Macintosh
systems. We have no control over whether, and cannot assure that Apple's
QuickTime will maintain or enlarge its current market share against competitive
technologies. In addition, although Apple's QuickTime technology has been under
development for more than nine years, we cannot assure that Apple will continue
to develop the technology or distribute it free of charge to consumers. Apple
may also substantially alter its business or licensing strategy with QuickTime
in a way that could adversely impact our business, resulting in increases in our
development costs. In addition, Apple has increased its graphic software
development efforts and may decide to compete directly in the multimedia
authoring tool market.

WE CANNOT BE CERTAIN THAT WE WILL BE ABLE TO ESTABLISH AND MAINTAIN THE
TRIBEWORKS BRAND, WHICH IS CRITICAL TO OUR EFFORTS TO ATTRACT AND EXPAND OUR
MARKET.

    We believe that establishing and maintaining the Tribeworks brand is a
critical aspect of our efforts to attract and expand our Internet audience. The
importance of brand recognition will increase due to the growing number of
Internet sites and the relative lack of significant barriers to entry in
providing Internet services, tools, products, and content. If we fail to promote
and maintain our brand, or if we incur excessive expenses in an attempt to
promote and maintain our brand, our business, financial condition and operating
results will be materially adversely affected.

OUR SUCCESS DEPENDS ON OUR ABILITY TO ADDRESS POTENTIAL MARKET OPPORTUNITIES
WHILE MANAGING OUR EXPENSES. IF WE ARE UNABLE TO MANAGE OUR EXPENSES, OUR
BUSINESS AND FINANCIAL CONDITIONS WILL BE MATERIALLY ADVERSELY AFFECTED.

    Our future success depends upon our ability to address market opportunities
while managing our expenses to match our ability to finance our operations. Our
need to manage expenses will place a strain on our management and operational
resources. If we are unable to manage our expenses effectively, our business,
financial condition, and operating results will be materially adversely
affected.

OUR SUCCESS DEPENDS ON OUR KEY PERSONNEL AND THE CONSULTING SERVICES PROVIDED BY
KEEPSAKE. WE MAY BE UNABLE TO ATTRACT AND RETAIN QUALIFIED EMPLOYEES AND MAY NOT
BE ABLE TO RETAIN THE SERVICES OF KEEPSAKE AFTER THE EXPIRATION OF THE KEEPSAKE
SOFTWARE AGREEMENT.

    Our performance and success depend substantially on the services of Duncan
Kennedy, our President and CEO, and Robert Davidorf, our Chief Financial
Officer, as well as on our ability to recruit, retain and motivate our other
officers and key employees.

    We do not currently have employment contracts with key officers or
employees, and their relationships with us are terminable at-will. Our success
also depends on our ability to attract and retain additional qualified employees
in the San

                                       11
<PAGE>

Francisco Bay Area and in Tokyo.  Competition for qualified personnel in the San
Francisco  Bay Area and Tokyo is  intense  and  there  are a  limited  number of
persons with knowledge of and experience in our field of business.  There can be
no assurance that we will be able to attract and retain key personnel.  The loss
of one or more  key  employees  or of our key  service  providers  could  have a
material adverse effect on the Company.

OUR SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP SERVICES THAT MEET OUR CUSTOMERS'
REQUIREMENTS. WE MAY NOT BE ABLE TO MEET THOSE REQUIREMENTS IF WE ARE UNABLE TO
KEEP PACE WITH TECHNOLOGY TRENDS AND THE EVOLVING RICH-MEDIA INDUSTRY STANDARDS.

    Our success depends on our ability to develop and provide new services that
meet our customers' changing requirements. The Internet is characterized by
rapidly changing technology, evolving industry standards, changes in customer
needs and frequent new service and product innovations. Our future success will
depend, in part, on our ability to assess and effectively use unproven
technologies and unproven standards. We must evaluate and utilize technical
standards developed by industry committees. We must also evaluate and use
proprietary multimedia development software provided by companies such as Apple,
Microsoft, and RealNetworks to continue to develop our technological expertise,
enhance our current services, develop new services that meet changing customer
needs, and influence and respond to emerging industry standards and other
technological changes on a timely and cost-effective basis. If we fail to
adequately assess or utilize these standards or proprietary technologies at the
appropriate time in the marketplace, the competitive advantages of our products
and services and our business, financial condition, and operating results could
be materially adversely affected.

INCREASING GOVERNMENTAL REGULATION ON ELECTRONIC COMMERCE AND LEGAL
UNCERTAINTIES COULD LIMIT OUR GROWTH.

    The adoption of new laws or the adaptation of existing laws to the Internet
may decrease the growth in the use of the Internet, which could in turn decrease
the demand for our services, increase our cost of doing business or otherwise
harm our business. Federal, state, local and foreign governments are considering
a number of legislative and regulatory proposals relating to Internet commerce.
As a result, a number of laws or regulations may be adopted regarding Internet
user privacy, security, taxation, pricing, quality of products and services, and
intellectual property ownership, which may also be applicable to us. How
existing laws will be applied to the Internet, in areas such as property
ownership, copyrights, trademarks, trade secrets, and obscene or indecent
communications, is uncertain.

CAPACITY CONSTRAINTS AND SYSTEM DISRUPTIONS COULD SUBSTANTIALLY REDUCE THE
PRODUCTS WE SELL AND UNDERMINE OUR REPUTATION FOR RELIABILITY AMONG OUR
CUSTOMERS AND POTENTIAL CUSTOMERS.

    The satisfactory performance, reliability and availability of our Internet
sites and our network infrastructure are critical to attracting Internet users
and maintaining relationships with subscribing customers. System interruptions
that result in the unavailability of our Internet sites and slower response
times for users could reduce the number of products and multi-media services we
deliver and reduce the attractiveness of our services to Members and
subscribers. Any disruption of our services would materially adversely affect
our business, financial condition and results of operations.

OUR INTERNET OPERATIONS ARE LOCATED IN A SINGLE FACILITY, WHICH IS LOCATED IN
THE SAN FRANCISCO BAY AREA IN CALIFORNIA. A NATURAL DISASTER IS POSSIBLE AND
COULD RESULT IN PROLONGED INTERRUPTION OF OUR BUSINESS.

    Our Internet operations are located in the San Francisco Bay Area. This area
is seismically active. With our operations centralized in a single facility, a
natural disaster, such as an earthquake, fire, or flood, could substantially
disrupt our manufacturing operations or destroy our facilities. This could cause
delays and cause us to incur additional expenses and adversely affect our
reputation with our customers. In addition, since the real estate market in the
San Francisco Bay Area is extremely competitive and is likely to remain
competitive, an alternative facility may not be available on commercially
reasonable terms if we suffer a catastrophic loss from a natural disaster.

WE ARE SUSCEPTIBLE TO PARTIES WHO MAY COMPROMISE OUR SECURITY MEASURES, WHICH
COULD CAUSE US TO EXPEND CAPITAL AND MATERIALLY ADVERSELY AFFECT OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

                                       12
<PAGE>

    Hackers may be able to circumvent our security measures and could
misappropriate proprietary information or cause interruptions in our Internet
operations. In the past, computer viruses or software programs that disable or
impair computers have been distributed and have rapidly spread over the
Internet. Computer viruses could be introduced into our systems or those of our
users, which could disrupt our network or make our systems inaccessible to
users. Any of these events could damage our reputation among our customers and
potential customers and substantially harm our business. We may be required to
expend capital and resources to protect against the threat of security breaches
or to alleviate problems caused by these breaches. Consumer concern over
Internet security has been, and could continue to be, a barrier to commercial
activities requiring consumers to send their credit card information over the
Internet. Computer viruses, break-ins, or other security problems could lead to
misappropriation of proprietary information and interruptions, delays or
cessation in service to our customers. Moreover, until more comprehensive
security technologies are developed, the security and privacy concerns of
existing and potential customers may inhibit the growth of the Internet as a
merchandising medium. Further, our business is subject to the effects of war and
acts of terrorism.

WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OR WE MAY INFRINGE
THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS, WHICH MAY RESULT IN LAWSUITS AND
PREVENT US FROM SELLING OUR PRODUCTS.

    We rely on copyright, patent, and trade secret laws to protect our
trademarks, content, and proprietary technologies and information. However,
there can be no assurance that such laws will provide sufficient protection to
us, other parties will not develop technologies that are similar or superior to
ours, or, given the availability of our products' source-code, other parties
will not copy or otherwise obtain and use our content or technologies without
authorization.

    There are no pending lawsuits against us regarding infringement of any
existing patents or other intellectual property rights or any material notices
that we are infringing the intellectual property rights of others. However,
there can be no assurance that third parties will not assert infringement claims
in the future. If any claims are asserted and determined to be valid, there can
be no assurance that we will be able to obtain licenses of the intellectual
property rights in question or obtain licenses on commercially reasonable terms.
Our involvement in any patent dispute or other intellectual property dispute or
action to protect proprietary rights may have a material adverse effect on our
business, operating results, and financial condition. Adverse determinations in
any litigation may subject us to liabilities, require us to seek licenses from
third parties, and prevent us from marketing and selling our products. Any of
these situations can have a material adverse effect on our business, operating
results, and financial condition.

    Effective trademark, copyright, and other intellectual property protection
may not be available in every country in which our technology is distributed or
made available through the Internet. There can be no assurance that our means of
protecting our proprietary rights in the United States or abroad will be
adequate or that competitors will not independently develop similar technology.

OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT CUSTOMERS FROM OUTSIDE THE
UNITED STATES. JURISDICTIONS OUTSIDE THE UNITED STATES MAY IMPOSE TAX AND
REGULATORY BURDENS ON OUR BUSINESS, WHICH COULD HAVE A MATERIAL ADVERSE AFFECT
ON OUR BUSINESS, FINANCIAL CONDITION, AND RESULTS OF OPERATIONS.

    Our future success will be affected by our ability to attract customers and
subscribe Members from countries outside the United States including Japan where
we maintain a wholly-owned subsidiary. We believe that the growth of the
Internet in foreign countries will outpace growth of the Internet in the United
States in the next decade. Foreign countries could impose withholding taxes or
otherwise tax our foreign income, impose tariffs, embargoes or exchange
controls, or adopt other restrictions on foreign trade or restrictions relating
to use or access of or distribution of software through electronic means. The
laws of certain countries also do not protect our intellectual property rights
to the same extent as the laws of the United States. In addition, we are subject
to the United States export control regulations that may restrict our ability to
market and sell our products to certain countries outside of the United States.
Failure in successfully marketing our products in international markets could
have a material adverse effect on our business, operating results and financial
conditions.

WE EXPECT QUARTERLY REVENUE AND OPERATING RESULTS TO VARY IN FUTURE PERIODS,
WHICH COULD CAUSE OUR STOCK PRICE TO FLUCTUATE.

                                       13
<PAGE>

    Our limited operating results have varied widely in the past, and we expect
they will continue to vary from quarter to quarter as we attempt to
commercialize our product. Our quarterly results may fluctuate for many reasons,
including:

           -  Limited operating history

           -  Dependence on a limited number of customers for a significant
              portion of our revenue; and - Dependence on membership fees to
              provide future revenue.

    As a result of these fluctuations and uncertainties in our operating
results, we believe quarter-to-quarter or annual comparisons of our operating
results are not a good indication of our future performance. In addition, at
some point in the future, these fluctuations may likely cause us to perform
below the expectations of public market analysts or investors. If our results
fall below market expectations, the price of our common stock will be adversely
affected.

OUR STOCK PRICE IS VOLATILE AND, AS A RESULT, YOU COULD LOSE SOME OR ALL OF YOUR
MONEY.

    We believe that various factors may cause the market price of our common
stock to fluctuate, including announcements of:

           -  New products by us or our competitors;

           -  Developments or disputes concerning intellectual property
              proprietary rights;

           -  Our failing to achieve our operational milestones; and

           -  Changes in our financial conditions or securities analysts'
              recommendations.

    The stock markets, in general, and the shares of Internet companies, in
particular, have experienced extreme price fluctuations. These broad market and
industry fluctuations may cause the market price of our common stock to decline.
In addition, the low trading volume of our stock will accentuate price swings of
our stock.

                                       14

<PAGE>


ITEM 7. FINANCIAL STATEMENTS.












                        TRIBEWORKS, INC. AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2002 AND 2001







                                       15

<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES


                                Table of Contents


                                                                            Page

Independent Auditors' Report..................................................17

Consolidated Balance Sheet....................................................18

Consolidated Statements of Income (Loss)......................................19

Consolidated Statements of Cash Flows.........................................20

Consolidated Statements of Stockholders' Deficit..............................21

Notes to Consolidated Financial Statements....................................22



                                       16

<PAGE>



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Stockholders
Tribeworks, Inc.

We have audited the accompanying consolidated balance sheet of Tribeworks, Inc.
and subsidiaries as of December 31, 2002, and the related consolidated
statements of income (loss), cash flows, and stockholders' deficit for the years
ended December 31, 2002 and 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tribeworks, Inc. and
subsidiaries as of December 31, 2002, and the results of their operations and
their cash flows for the years ended December 31, 2002 and 2001 in conformity
with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company's limited capital resources, its financial
position, and recent results in operations raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note C. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.


/s/ TAUBER & Balser, P.C.
-------------------------
    Tauber & Balser, P.C.

Atlanta, Georgia
March 5, 2002







                                       17

<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2002





Current Assets
   Cash                                                              $   143,153
   Accounts receivable, net of allowance
   for doubtful account of $3,442                                         32,445
   Prepaid expenses                                                       38,054
                                                                     -----------
     TOTAL CURRENT ASSETS                                                213,652
                                                                     -----------
   Equipment, net of accumulated depreciation of $45,007                   3,588
                                                                     -----------
TOTAL ASSETS                                                         $   217,240
                                                                     ===========


                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Accounts payable                                                  $   248,504

   Accrued expenses                                                       55,553
   Due to shareholders                                                     6,232
   Billings in excess of costs and estimated earnings
     on uncompleted contracts                                             41,404
   Deferred revenue                                                      127,416
   Convertible note payable                                              100,000
                                                                     -----------
     TOTAL CURRENT LIABILITIES                                           579,109
                                                                     -----------
Stockholders' Deficit
   Preferred stock: 10,000,000 shares authorized, none issued
   Common stock: $.0001 par value, 200,000,000 shares authorized,
     18,634,628 shares issued and outstanding                              1,843
   Additional paid-in capital                                          3,009,765
   Unearned compensation                                                (10,675)
   Accumulated deficit                                               (3,362,802)
                                                                     -----------
     TOTAL STOCKHOLDERS' DEFICIT                                       (361,869)
                                                                     -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                          $   217,240
                                                                     ===========


        The accompanying notes are an integral part of these consolidated
                              financial statements

                                       18
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                    2002               2001
                                                    ----               ----

REVENUES                                         $ 972,959           $ 1,521,839

COST OF SALES                                      244,817               716,737
                                                   --------             -------

GROSS PROFIT                                       728,142               805,102
                                                   --------             -------

OPERATING EXPENSES
   Product support                                  46,761                77,387
   Product development                              88,078               186,981
   Sales and marketing                             173,491               241,406
   General and administrative                      399,178               795,852
                                                   --------             -------
                                                   707,508             1,301,626
                                                   --------            ---------

INCOME (LOSS) FROM OPERATIONS                       20,634             (496,524)
                                                   -------             ---------

INCOME TAXES
   Current                                           9,400              (72,800)
   Deferred benefit                                (9,400)                     -
                                                   -------             ---------
                                                         -              (72,800)
                                                   -------             ---------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM             20,634             (423,724)
                                                   =======             =========
EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT
   OF DEBT (NET OF INCOME TAXES OF $72,800)        -------               110,129


NET INCOME (LOSS)                                  $20,634            $(313,595)
                                                   =======             =========

BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE
   Income (loss) before extraordinary item         $  0.00             $  (0.03)
   Extraordinary item                                 0.00                  0.01
                                                   -------             ---------
   Net income (loss)                               $  0.00             $  (0.02)
                                                   =======             =========

WEIGHTED AVERAGE NUMBER OF COMMON
   SHARES OUTSTANDING                           18,533,806            17,377,545
                                                ==========            ==========


       The accompanying notes are an integral part of these consolidated
                              financial statements

                                       19
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                    2002                 2001
                                                    ----                 ----

CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                           $  20,634            $(313,595)
                                                   -------             ---------
     Adjustments:
          Depreciation and amortization             52,309                59,700
          Common stock issued for services          14,000                24,334
          Cancellation of stock for services not
          performed                                (7,000)                     -
          Amortization of unearned compensation     14,022                50,890
          Gain on extinguishment of debt                               (182,929)
          Changes in:
               Accounts receivable                   5,066             (198,247)
               Costs and estimated earnings in
               excess of billings on
                  uncompleted contracts            200,433                     -
               Prepaid expenses                    (9,109)                35,494
               Note receivable, employee                 -                 5,622
               Accounts payable                   (166,490)              394,720
               Deferred revenue and billings in
               excess of costs and estimated
               earnings on uncompleted contracts   (32,055)                6,180
               Other liabilities                     3,590                 7,024
                                                   -------             ---------
                    Total adjustments               74,766               202,788
                                                   -------             ---------
          Net cash provided by (used in) operating
          activities                               95,400              (110,807)
                                                   -------             ---------

CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of equipment                              -               (4,473)
                                                   -------             ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock              -                50,000
     Proceeds from convertible note payable              -               100,000
                                                   -------             ---------
          Net cash provided by financing
          activities                                     -               150,000
                                                   -------             ---------

NET INCREASE IN CASH                                95,400                34,720

CASH, BEGINNING OF YEAR                             47,753                13,033
                                                   -------             -------

CASH, END OF YEAR                                 $143,153             $  47,753
                                                   =======             =========

SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES
     Reclassification between additional
     paid-in capital and unearned
        compensation                             $ (28,063)            $(13,775)
                                                   ========            =========


              The accompanying notes are an integral part of these
                       consolidated financial statements

                                       20

<PAGE>

<TABLE>
<CAPTION>

                        TRIBEWORKS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                     YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                                  Additional
                                           Common Stock            Paid-In        Unearned         Accumulated
                                       ____________________
                                         Shares      Amount        Capital      Compensation         Deficit        Total
                                       __________    ______       __________     _________         ___________    _________
<S>                                    <C>            <C>          <C>           <C>                <C>            <C>

Balances at December 31, 2000          17,163,649    $1,717       $2,929,158     $(117,425)        $(3,069,841)   $(256,391)

Issuance of common stock                  200,000        20           49,980             -                   -       50,000
Return of stock issued in error           (25,000)        -                -             -                   -            -
Stock issued for services                 322,738        32           24,302             -                   -       24,334
Stock issued in extinguishment of debt    773,241        77            3,812             -                   -       33,889
Stock warrants issued in extinguishment
of debt                                         -         -            7,348             -                   -        7,348
Stock options issued for services               -         -            8,959        (8,959)                  -            -
Stock warrants issued for services              -         -              366          (366)                  -            -
Cancellation of stock options                   -         -          (23,100)       23,100                   -            -
Amortization of unearned compensation           -         -                -        50,890                   -       50,890
Net loss                                                                                              (313,595)    (313,595)
                                       __________    ______       __________     _________         ___________    _________

Balances at December 31, 2001          18,434,628     1,846        3,030,825       (52,760)         (3,383,436)    (403,525)
Stock issued for services
                                          400,000        17           13,983             -                   -       14,000
Cancellation of stock for
services previously expensed             (200,000)      (20)          (6,980)            -                   -       (7,000)
Stock warrants issued for services              -         -              320          (320)                  -            -
Cancellation of stock options                   -         -          (28,078)       28,078                   -            -
Cancellation of stock warrants                  -         -             (305)          305                   -            -
Amortization of unearned compensation           -         -                -        14,022                   -       14,022
Net income                                                                                              20,634       20,634
                                       __________    ______       __________     _________         ___________    _________


Balances at December 31, 2002          18,634,628    $1,843       $3,009,765     $ (10,675)        $(3,362,802)   $(361,869)
                                       ===========   ======       ==========      ========         ===========    =========
</TABLE>

       The accompanying notes are an integral part of these consolidated
                              financial statements

                                       21
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE A - NATURE OF BUSINESS AND ORGANIZATION

On August 20, 1998, the Company began its business activities. The Company's
business activity results from a technology that provides tools for creating and
delivering multimedia applications. Internet media developers use the technology
for creation and deployment of electronic content that utilizes interactive
features combining audio, video, animation and graphics content. The Company
exploits its software primarily through memberships and customized licensed
versions that include professional engineering to meet contract requirements.


NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The financial statements of the Company are presented on a consolidated basis
and include the Company and its wholly-owned subsidiaries, Tribeworks
Development Corporation and Tribeworks Japan Limited, which started business on
August 30, 2000. The Company's operations are conducted through its
subsidiaries. All material intercompany transactions have been eliminated.

USE OF ESTIMATES

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 and 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. Estimates and assumptions are reviewed periodically and
the effects of revisions are reflected in the consolidated financial statements
in the period they are determined.

CUSTOMER CONCENTRATIONS

Accounts receivable are unsecured, and the Company is at risk to the extent that
such amounts become uncollectible. In 2002 revenues from three customers
accounted for 27%, 18% and 16% of total revenue, respectively. In 2001 revenues
from three customers accounted for 16%, 14% and 40% of total revenue,
respectively.

Revenues from international customers were approximately 45% and 74% of total
revenues in 2002 and 2001, respectively. Revenues are paid in U.S. dollars and
Japanese yen. Approximately 32% of revenues in 2002 were generated from Japanese
customers.


The accompanying notes are an integral part of these consolidated financial
statements


                                       22

<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

EQUIPMENT

Equipment is stated at cost less accumulated depreciation. The Company has
adopted a policy of capitalizing all equipment over $1,000. Depreciation is
determined using the straight-line method over the estimated useful lives of the
assets. Useful lives are estimated to be three years.

TECHNOLOGY LICENSE

The Company's principal business activity centers around the commercialization
of iShell, which was developed by an officer and director of the Company and an
affiliate of the Company. In November 1999 the Company purchased all rights,
title and interest in iShell in exchange for $100,000 and warrants to purchase
303,030 shares of common stock at an exercise price of $0.33 per share, valued
at $30,000. The $130,000 cost has been fully amortized.

REVENUE RECOGNITION

Revenue is generally recognized when all contractual or transfer obligations
have been satisfied and collection of the resulting receivable is probable.

Revenues from membership subscriptions are recognized proportionally over the
membership period, usually one year. Revenues and estimated profits on customer
development services are generally recognized under the percentage-of-completion
method of accounting using an input measurement methodology; profit estimates
are revised periodically based on changes in facts; any losses on contracts are
recognized immediately. Revenue from the sale of licenses are recognized when
all the following criteria are met: persuasive evidence of an agreement exists,
delivery has occurred, the fee is fixed or determinable and collectability is
probable. If all aspects but the last have not been met or if post contract
customer support could be material, revenue is recognized as payments from
customers as the become due.

CUSTOMER ACCOUNTS RECEIVABLE

Customer accounts receivable are reported at the amount management expects to
collect on balances outstanding at year-end. Based on management's evaluation of
uncollected accounts receivable at the end of each year, bad debts are provided
for on the allowance method.

COMPENSATED ABSENCES

The Company accrues vacation pay for all full-time employees.

The accompanying notes are an integral part of these consolidated financial
statements


                                       23
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001



NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

SOFTWARE DEVELOPMENT COSTS

The Company expenses all software development costs in the period the costs are
incurred.

STOCK-BASED AWARDS

The Company accounts for stock based awards to employees under its "Equity
Incentive Plan" in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," which generally did not result in
compensation expense in the financial statements. The Company also issues stock
based awards for services performed by consultants and other non-employees and
accounts for them in accordance with Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation," which results in
compensation expense being recorded in the financial statements.

Financial Accounting Standards Board Statement No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure" (SFAS 148) requires the
Company to provide pro forma information regarding net loss and loss per share
as if compensation cost for all awards had been determined in accordance with
fair value based on the method prescribed in SFAS 123.

The Company estimates the fair value of each stock option at the grant date by
using the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2002 and 2001: no dividend yield for each year;
expected volatility of 25%; weighted-average risk-free interest rates of 3.40%
and 4.55%, respectively; and weighted-average expected option lives of three
years.

                                                              2002          2001

           Net income (loss), as reported                  $ 20,634  $ (313,595)



           Add:  Stock-based  compensation  expense
           included in net income or loss, no
           tax effect                                        14,022       50,890


           Deduct:  Total stock-based  compensation
           expense determined   under  fair  value
           method  for  all awards, no tax effect          (50,281)    (108,336)
                                                           ---------   ---------
           Pro forma net loss                            $ (15,625)   $(371,041)
                                                         ==========    =========


Since the difference between the reported and pro forma net loss available to
common shareholders is insignificant, there is no effect on the net loss per
common share.

The accompanying notes are an integral part of these consolidated financial
statements


                                       24
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001



NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

FOREIGN CURRENCY TRANSLATION

Tribeworks Japan prepares its financial statements in a currency other than U.S.
dollars. Results of operations and cash flows are translated at average exchange
rates during the period, and assets and liabilities are translated at
end-of-period exchange rates. To date, the foreign currency translation effect
was immaterial and, therefore, translation adjustments were not included as a
separate component of accumulated other comprehensive income (loss) in
stockholders' equity (deficit).

NET INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per share (EPS) is computed based on net income (loss)
divided by the weighted average number of common shares outstanding. Diluted EPS
is computed based on net income (loss) divided by the weighted average number of
common and potential common share equivalents. Potential common share
equivalents are those related to stock options and warrants and the convertible
note payable; however, such potential common share equivalents are anti-dilutive
for 2001 and immaterial for 2002. Therefore the diluted EPS is the same as basic
EPS.


NOTE C - GOING CONCERN

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate the
continuation of the Company as a going concern. However, and although the
Company reported net income during 2002, the Company incurred a net loss of
approximately $314,000 and $1,950,000 for the years ended December 31, 2001 and
2000, respectively, and had a working capital deficiency of approximately
$365,000 and an equity deficiency of approximately $362,000 at December 31,
2002. The Company has also deferred payment of certain accounts payable and
accrued expenses. Given these results, additional capital or improved operations
will be needed to sustain the Company's operations.

Management's plans in this regard include additional marketing of its product
line with special emphasis on custom development services and technology
licensing opportunities in the U.S. and in Japan via its U.S. entity or its
Tribeworks Japan subsidiary.

In view of the matters described, there is substantial doubt about the Company's
ability to continue as a going concern. The recoverability of the recorded
assets and satisfaction of the liabilities reflected in the accompanying balance
sheet is dependent upon continued operation of the Company, which is in turn
dependent upon the Company's ability to meet its cash flow requirements on a
continuing basis and to succeed in its future operations. There can be no
assurance that management will be successful in implementing its plans. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


The accompanying notes are an integral part of these consolidated financial
statements


                                       25
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE D - COSTS, ESTIMATED EARNINGS AND BILLINGS ON UNCOMPLETED CONTRACTS

At December 31, 2002, billings in excess of costs and estimated earnings on
uncompleted contracts consisted of approximately $48,900 of costs, $47,400 of
estimated earnings, less $137,700 of billings.


NOTE E - INCOME TAXES


Deferred income tax assets and the related valuation allowances result
principally from the potential tax benefits of net operating loss carryforwards.
The Company has recorded a valuation allowance to reflect the uncertainty of the
ultimate utilization of the deferred income tax assets as follows:

                                                    2002              2001
                                                 ------------      ------------

         Deferred tax assets                     $ 1,288,000        $ 1,306,000
         Less valuation allowance                (1,288,000)        (1,306,000)
                                                 ------------      ------------
         Net deferred tax assets                 $         -       $          -
                                                 ===========       ============

The following is a reconciliation of applicable U.S. federal income tax rates
(credits) to the effective tax rates included in the consolidated statements of
operations:

                                                    2002              2001
                                                 ------------      ------------

         U.S. federal income tax rate                (15.0)%            (34.0)%
         State income tax rate, net of federal
         rate                                          (7.5)              (5.8)
         Valuation allowance                            22.5               39.8
                                                       -----              -----
                                                        0.0%               0.0%
                                                      ======             ======

At December 31, 2002, the Company had available net operating loss carryforwards
for income tax reporting purposes of approximately $3,068,000, which will expire
in various periods through 2021. At December 31, 2002, the Company had not filed
its 2001 federal and state income tax returns.


NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS


The Company's financial instruments include cash and receivables for which the
Company believes that the fair value approximates their carrying amounts. It was
impracticable to estimate the fair value of the other financial INSTRUMENTS
BECAUSE OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS OF THE COMPANY



The accompanying notes are an integral part of these consolidated financial
statements


                                       26
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE G - STOCK OPTIONS AND STOCK WARRANTS

STOCK OPTIONS

The Company has reserved 1,600,000 shares of its common stock for the exercise
of options under its 1999 Equity Incentive Plan. The exercise price is generally
the estimated fair market value at the grant date as determined by the Company's
Board of Directors. The options vest over a period up to four years. At December
31, 2002, there were approximately 1,400,000 shares reserved for issuance under
the 1999 Equity Incentive Plan.

A summary of the Company's stock option plan as of December 31, 2002 and 2001
and changes during the years ending on those dates is presented below:

<TABLE>
<CAPTION>

                                                            2002                              2001
                                                -----------------------------     ------------------------------
                                                                  Weighted                          Weighted
                                                                   Average                           Average
                                                  Options      Exercise Price       Options      Exercise Price
<S>                                                <C>              <C>               <C>             <C>
Outstanding at beginning of year                   838,915          $0.95             872,668         $1.59
Granted                                            650,000           0.05             365,000          0.26
Cancelled                                          (81,000)          3.09            (398,753)         1.70
                                                ----------         ------           ---------        ------
Outstanding at end of year                       1,407,915          $3.09             838,915         $0.95
                                                 =========          =====           =========         =====
Options exercisable at end of year                 993,324          $0.45             535,897         $0.94
                                                 =========          =====           =========         =====
Weighted-average fair value of options
     granted during the year                                        $0.01                             $0.08
                                                                    =====                             =====
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 2002:

<TABLE>
<CAPTION>

                                           Options Outstanding                           Options Exercisable
                             -------------------------------------------------    --------------------------------
                                                Weighted           Weighted                           Weighted
                                 Options         Average            Average          Options           Average
                               Outstanding   Remaining Life     Exercise Price     Exercisable     Exercise Price
PRICE                          -----------   --------------     --------------     -----------     --------------
<S>                               <C>           <C>                  <C>              <C>               <C>
                                  60,000        7.55 years           $3.09            36,250            $3.09
                                  45,000        7.41 years            2.80            45,000             2.80
                                  34,000        7.65 years            2.50            24,500             2.50
                                  12,000        7.11 years            1.75             9,000             1.75
                                  32,000        7.88 years            1.00            16,667             1.00
                                 180,000        8.01 years            0.38           180,000             0.38
                                  55,000        8.22 years            0.25            48,125             0.25
                                 490,000        8.18 years            0.06           442,500             0.06
                                 149,915        7.92 years            0.05           116,282             0.05
                                 150,000        7.50 years            0.04            25,000             0.04
                                 200,000        9.47 years            0.03            50,000             0.03
                             -----------                                           ---------
                               1,407,915                                             993,324
                              ==========                                            ========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements


                                       27
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE G - STOCK OPTIONS AND STOCK WARRANTS (CONTINUED)

STOCK WARRANTS

The Company has issued stock warrants in conjunction with the issuance of common
stock, debt, the settlement of debt and for services. Activity related to stock
warrants was as follows:

<TABLE>
<CAPTION>

                                                                                         Weighted Average
                                                                   Warrants               Exercise Price
                                                                --------------         --------------------
<S>                                                               <C>                       <C>
         Outstanding at December 31, 2000                                 -                 $      -
              Granted                                             3,415,415                     0.26
              Cancelled                                            (700,000)                    0.38
                                                                -----------                    -----
         Outstanding at December 31, 2001                         2,715,415                     0.23
              Granted                                                40,000                     0.04
              Cancelled                                            (300,000)                    0.10
                                                                -----------                   ------
         Outstanding at December 31, 2002                         2,455,415                    $0.24
                                                                 ==========                    =====
</TABLE>

<TABLE>
<CAPTION>


                                                                           2002           2001
                                                                         --------       --------

<S>                                                                        <C>           <C>
         Weighted-average fair value of warrants
           granted during the year                                         $0.01         $0.06
                                                                           =====         =====
</TABLE>


The following table summarizes information about stock warrants outstanding at
December 31, 2002:

<TABLE>

                                          Warrants Outstanding                          Warrants Exercisable
                             -------------------------------------------------    --------------------------------
                                                Weighted           Weighted                           Weighted
                                Warrants         Average            Average         Warrants           Average
                               Outstanding   Remaining Life     Exercise Price     Exercisable     Exercise Price
                               -----------   --------------     --------------     -----------     --------------
<S>                              <C>            <C>                  <C>             <C>                <C>

PRICE                            125,000        0.76 years           $1.75           125,000            $1.75
                                 792,500        0.69 years            0.38           702,000             0.38
                                 851,340        0.74 years            0.06           851,340             0.60
                                 617,075        0.76 years            0.05           617,075             0.05
                                  40,000        1.45 years            0.04            20,000             0.04
                                  30,000        0.09 years            0.01            30,000             0.01
                             -----------                                         -----------
                               2,455,415                                           2,345,415
                              ==========                                          ==========
</TABLE>


The accompanying notes are an integral part of these consolidated financial
statements


                                       28
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE H - COMMITMENTS

LEASES

On October 24, 2002, the Company and its lessor revised an existing lease
agreement for office space that had an original monthly rental rate of $5,774.
The revised lease term is at a monthly rental rate of $3,000 through February
2004. In addition, the monthly rent in Japan is approximately $1,083 on a
two-year lease agreement that runs through April 2004, which has also been
decreased. Total rent expense for the years ended December 31, 2002 and 2001 was
$81,802 and $48,269, respectively.

Future minimum lease payments under the long-term lease at December 31, 2002 are
approximately:

             Year Ending
             December 31
             -----------

               2003                                                    $  49,000
               2004                                                       10,333
                                                                      ----------
                                                                       $  59,333


DIRECTOR COMPENSATION

In October 2000 the Company entered into an agreement with a new member of the
Board of Directors that provided for the issuance of 700,000 shares of common
stock over twenty-four months in consideration for his services on the Board.
Through February 4, 2001, 87,500 shares were issued under the terms of the
agreement. On February 4, 2001, the Board of Directors cancelled the remaining
portion of the agreement, 612,500 shares. The Board then agreed to issue 612,500
stock warrants at $0.375 per share. These warrants vest pro rata over a twenty
month period. If the director's services cease prior to vesting, all unvested
warrants are forfeited.


NOTE I - RELATED PARTY TRANSACTIONS


OFFICER AND DIRECTOR OPTIONS AND WARRANTS

At December 31, 2002, the Company had outstanding the following qualified and
nonqualified stock options granted to officers and directors which are included
in Note G:

<TABLE>
<CAPTION>

             Common Shares                      Exercise                         Expiration
              Under Option                        Price                             Date
            ---------------                     ---------                   --------------------
<S>              <C>                             <C>                          <C>
                 90,000                          $0.06                         June 30, 2009
                 180,000                          0.38                       January 11, 2011
                 300,000                          0.06                        March 26, 2011
               ---------
                 570,000
               =========
</TABLE>



The accompanying notes are an integral part of these consolidated financial
statements


                                       29
<PAGE>


                        TRIBEWORKS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2002 AND 2001


NOTE I - RELATED PARTY TRANSACTIONS (CONTINUED)


Of the total outstanding options granted to officers and directors as discussed
above, options to acquire up to an aggregate of 275,750 shares of common stock
are exercisable at December 31, 2002.

At December 31, 2002, the Company had outstanding the following warrants to
officers and directors which are included in Note G:

<TABLE>
<CAPTION>

             Common Shares                      Exercise                         Expiration
             Under Warrant                        Price                             Date
           ----------------                     ---------                   --------------------
<S>              <C>                              <C>                                <C>
                 125,000                          $1.75                      October 5, 2003
                 612,000                           0.38                      February 4, 2003
                 180,000                           0.38                      January 1, 2006
                 601,340                           0.06                      September 26, 2003
                  10,000                           0.01                      February 21, 2003
            ------------
               1,528,340
</TABLE>

Of the total outstanding warrants granted to officers and directors as discussed
above, warrants to acquire up to an aggregate of 1,408,340 shares of common
stock are exercisable at December 31, 2002.

DUE TO SHAREHOLDERS


During the period ended December 31, 1998, certain shareholders of the Company
loaned $18,732 to the Company to finance some of its start-up costs. The $6,232
remaining balance of the loan at December 31, 2002 is non-interest bearing and
payable on demand.

NOTE J - CONVERTIBLE NOTE


On January 21, 2001, the Company borrowed $100,000 under a Private Placement
Agreement. Under the terms of the agreement the lender, upon the closing of a
"Qualified Financing" (as that term is defined in the agreement), can convert
the loan to common stock of the Company. The note is convertible at a price per
share equal to the lesser of (1) the average closing price of the Company's
stock for ten days prior to issuance of the note or (2) the price per share paid
by investors in the Qualified Financing. As part of the agreement, the Company
issued 20,000 two-year warrants to purchase common stock at $0.01 per share. The
note bears interest at 10% per annum payable at maturity. The holder has the
right to demand payment within 30 days of January 3, 2003 or upon a "Company
Sale", and the note is unsecured.

NOTE K - EXTRAORDINARY ITEM


During 2001 the Company settled approximately $224,000 of accounts payable and
accrued expenses for shares of common stock and warrants for common stock having
a combined value of approximately $41,000. This extinguishment of debt resulted
in an extraordinary gain of approximately $183,000.


The accompanying notes are an integral part of these consolidated financial
statements


                                       30
<PAGE>


ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

    Effective March 9, 2001, the Board of Directors approved a change in
certifying accountants from W. Alan Jorgensen, CPA ("Jorgensen") to Tauber &
Balser, P.C. The previous accountant, Jorgensen, sold his business and resigned
as the principal accountant for Tribeworks, Inc. ( the "Company"). The reports
of Jorgensen on the financial statements for the past two fiscal years contained
no adverse opinion or disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope or accounting principles, except that Jorgensen
has advised the Company that his opinion on the Company's financial statements
has been modified to express a "going concern qualification" regarding his
uncertainties about the Company's ability to continue as a going concern.

    During the Company's fiscal years ended December 31, 1998 and December 31,
1999, and the period subsequent to November 14, 2000 preceding Jorgensen's
resignation, there were no disagreements between the Company and Jorgensen on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure. Attached hereto as Exhibit 16.1 is a
letter from Jorgensen stating whether he agrees with the statements made by the
Company in this Form 10-KSB.

    On March 9, 2001, the Board of Directors of the Company selected Tauber &
Balser, P.C., as the independent public accountants to examine the financial
statements of the Company for fiscal year 2000. The Company had not consulted
with Tauber & Balser, P.C. prior to its engagement regarding (i) either the
application of accounting principles to a specific transaction, either completed
or prosposed, or the type of audit opinion that might be rendered on the
Company's financial statements; or (ii) any matter that was either the subject
of a disagreement or a reportable event within the meaning of Item 304(a)(1) of
Regulation S-B.

                                    PART III

ITEM 9. DIRECTORS,  EXECUTIVE OFFICERS,  PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

    The following table sets forth the name, age and positions of our directors,
    officers, executive officers and key employees.

<TABLE>
<CAPTION>

                                                                                                        Director or
                Name                                    Age  Position                                     Officer
                                                                                                           Since
<S>             <C>                                     <C>  <C>                                           <C>
                Duncan J. Kennedy                       38   President, Chief Executive Officer            1998
                                                             and Director
                Robert C. Davidorf                      34   Chief Financial Officer and Director          2001
                Patrick Soquet                          41   Director                                      1998
                William R. Woodward                     43   Director                                      2000
</TABLE>

DUNCAN KENNEDY, President, Chief Executive Officer, and Director. Mr. Kennedy is
a co-founder of Tribeworks and has served as President, Chief Executive Officer
and Director since our inception in August 1998. From December 1997 to July
1998, Mr. Kennedy served as Senior Vice President of business development at
Mjuice.com, a distributor of syndicated digital music. From March 1997 to
November 1997, Mr. Kennedy was Senior Vice President, Business Development at
MYCD, a distributor of digital music. From January 1990 to February 1997, Mr.
Kennedy worked at Apple Computer, Inc. where he held various positions, the most
recent of which was Senior Manager. Mr. Kennedy holds a B.S. from the University
of British Columbia.

ROBERT C. DAVIDORF, Chief Financial Officer, and Director. Mr. Davidorf joined
Tribeworks in January 2001 as CFO, and served as a Director since August 2001.
Mr. Davidorf most recently served as General Manager of the San Francisco office
for Los Angeles-based ARTISTdirect, Inc., where he oversaw the group responsible
for the Company's digital music distribution efforts. Prior to ARTISTdirect, Mr.
Davidorf founded Mjuice.com, an Internet technology company focusing on the
secure delivery of MP3 music files, which was later sold to ARTISTdirect. At
Mjuice.com, Mr. Davidorf served as the CFO and was a member of the Board of
Directors. Before founding Mjuice.com, Davidorf served as Controller and
interim-CFO of Oceania, Inc. and prior to that was a Consultant for the
Corporate Finance, Recovery & Disputes division of Price Waterhouse, LLP. Mr.
Davidorf holds a B.S. in Economics, magna cum laude, from The University of
Pennsylvania and is a Certified Public Accountant.

                                       31
<PAGE>


PATRICK SOQUET, Director. Mr. Soquet is a co-founder of Tribeworks and has
served as Director since our inception in August 1998. From February 1998
through July 1998, Mr. Soquet was self-employed as a software developer. From
January 1990 to January 1998, Mr. Soquet served as consultant to Arborescence, a
French software development company, and Havas Interactive, a European software
company. Mr. Soquet holds a Masters Degree from the ENSAV de La Cambre in
Belgium.

WILLIAM R. WOODWARD, Director. Mr. Woodward has served as a Director of
Tribeworks since September 2000. He is currently the Managing Director and
founder of Anthem Venture Partners. Prior to Anthem, Mr. Woodward was a Managing
Director of Avalon Investments, a $100 million early-stage technology venture
capital firm. At Avalon, Bill was the lead partner in the Los Angeles office.
Mr. Woodward was also the founder and chairman of San Francisco-based Pulse
Entertainment, a 3D animation engine and tools company, was a founder board
member of Launch Media, a leading Internet music publisher that was acquired by
Yahoo! Inc., and a founder of Paracomp, which merged with Macromind in 1991 to
form what is now known as Macromedia.

     SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file certain reports regarding ownership
of, and transactions in, the Company's securities with the Securities and
Exchange Commission (the "SEC"). Such officers, directors and 10% stockholders
are also required by SEC rules to furnish the Company with copies of all Section
16(a) forms that they file.

Based solely on its review of copies of Forms 3 and 4 and amendments thereto
furnished to the Company pursuant to Rule 16(a)-(e) and Forms 5 and amendments
thereto furnished to the Company with respect to the last fiscal year, and any
written representations referred to in Item 405(b)(2)(i) of Regulation S-B
stating that no Forms 5 were applicable to the Company's officers, directors and
10% stockholders were complied with.

ITEM 10.   EXECUTIVE COMPENSATION.

     DIRECTOR COMPENSATION

One Director, William R. Woodward, receives stock compensation for serving as a
Director. The other Directors do not receive any compensation for their services
as members of the Board of Directors. Directors are reimbursed for expenses in
connection with attendance at Board of Directors and committee meetings.
Directors are eligible to participate as optionees under our 1999 Stock Option
Plan. During 2002, we also issued 400,000 shares of our common stock to director
William R. Woodward, who is providing us services valued at $40,000 outside the
scope of his directorship. These shares were issued pursuant to our 2001
Tribeworks, Inc. Stock Plan.

     EXECUTIVE COMPENSATION

     The following table provides certain summary information concerning
compensation of our Chief Executive Officer. No other current executive officer
received annual salary and bonus in excess of $100,000 for the year ended
December 31, 2002.

<TABLE>
<CAPTION>

                           Summary Compensation Table

                                                   Annual Compensation                           Long-Term Compensation

                                                                                      Awards                        Payouts

                                                                Other                        Securities
                                                                Annual      Restricted      Underlying    LTIP     All Other
                                           Salary      Bonus Compensation  Stock Award(s)  Options/SARs  Payouts  Compensation
<S>                                         <C>        <C>        <C>          <C>              <C>        <C>        <C>

                                            ($)        ($)        ($)          ($)              ($)        ($)        ($)
Name and Principal Position(a)   Year (b)   (c)        (d)        (e)          (f)              (g)        (h)        (I)

Duncan   Kennedy, President,       2002    $55,335      --         --           --               --         --         --
Chief  Executive  Officer,  and
Director
                                   2001    $69,123      --         --           --             325,000      --         --

                                   2000    $126,583     --         --           --               --         --         --
</TABLE>
                                       32
<PAGE>


                        OPTION GRANTS IN LAST FISCAL YEAR

     There were no grants of stock  options or warrants to any of the  executive
officers named in the compensation table above during fiscal year 2002.


                   AGGREGATED OPTION EXERCISES IN LAST FISCAL
                     YEAR AND FISCAL YEAR END OPTION VALUES

The following table sets forth information concerning option and warrant
exercises in during 2002 and exercisable and unexercisable stock options and
warrants held by the executive officers named in the summary compensation table
at December 31, 2002. The value of unexercised in-the-money options and warrants
is based on a value of $0.03 per share, the fair market value of our common
stock as of December 31, 2002, as determined by our board of directors minus the
actual per share exercise prices, multiplied by the number of shares underlying
the option or warrant. All options and warrants were granted under the 1999
Stock Option Plan or the Tribeworks, Inc. 2001 Stock Plan.
<TABLE>
<CAPTION>

                                                                   Number Of Securities                Value Of Unexercised
                                 Shares                           Underlying Unexercised              In-The-Money Options At
                                Acquired        Value                   Options At                            F-Y End
Name And Principal                 On         Realized                    F-Y End                               ($)
                                                         ----------------------------------------------------------
Position                        Exercise         ($)         Exercisable       Unexercisable     Exercisable        Unexercisable
----------------------        ------------  -----------  ------------------ ---------------- ------------------  ----------------
<S>                                   <C>          <C>         <C>                  <C>                 <C>              <C>
Duncan Kennedy, President,            --           --          415,000              --                  $0               --
Chief
Executive Officer and
Director

</TABLE>




     CHANGE OF CONTROL ARRANGEMENTS

Upon consummation of the Recapitalization, each of Duncan Kennedy, Gilbert Amar
and Keepsake exchanged their shares of California Tribeworks common stock for
shares of our common stock pursuant to Restricted Stock Purchase Agreements.
Each of these agreements provided for Company's repurchase rights of the shares
upon termination of each of these person's employment. Duncan Kennedy received
2,022,759 shares of common stock; we had the right to repurchase 500,000 as of
the consummation of the Recapitalization. Gilbert Amar received 3,034,037 shares
of our common stock; we had the right to repurchase 750,000 of those shares as
of the consummation of the Recapitalization. Keepsake received 3,034,037 shares
of common stock; we had the right to repurchase 750,000 of those shares as of
the consummation of the Recapitalization. Each of these agreements provided that
upon a change of control, the expiration of certain milestones, or by a
resolution of the Board of Directors, the lapsing of the repurchase right will
be accelerated such that our repurchase right with respect to 100% of the common
stock would lapse. On June 17, 2002, the Board of Directors resolved to
eliminate the Company's repurchase rights for these shares and return the shares
to each of Duncan Kennedy, Gilbert Amar and Keepsake.

                                       33

<PAGE>


ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth information regarding the beneficial
ownership of our common stock at March 31, 2003, by (i) each of our directors
and named executive officers; (ii) all of our directors and executive officers
as a group, and (iii) each person or group known to us to own beneficially more
than 5% of the outstanding common stock.
<TABLE>
<CAPTION>

                                                                           Amount And
                                                                            Nature Of
                           Name And Address Of                             Beneficial      Percent Of
                           Beneficial Owner(1)                              Ownership         Class
                           ------------------------                     ---------------  ----------
<S>                        <C>                                             <C>               <C>
                           Duncan J. Kennedy (2)                           2,048,760         10.99%
                           Robert C. Davidorf (3)                          1,026,440         5.51%
                           Patrick Soquet (4)                              3,480,668         18.68%
                           William R. Woodward (5)                           812,500         4.36%
                           All Directors and Officers                                        39.54%
                                 As a Group (4 persons)
                           Gilbert Amar (6)                                2,986,398         16.03%

(1) Unless  otherwise  noted,  the  address  of each of the named  directors,  officers  and  individuals  is:  c/o
    Tribeworks, Inc., 988 Market Street, San Francisco, CA 94102.

(2) Includes 415,000 shares issuable upon the exercise of options and warrants
    that are exercisable within 60 days of March 31, 2003.

(3) Includes 866,340 shares issuable upon the exercise of options and warrants
    that are exercisable within 60 days of March 31, 2003.

(4) All of the shares are owned of record by Keepsake, a Belgian entity owned by Mr. Soquet.

(5) Includes 125,000 shares issuable upon the exercise of options and warrants
    that are exercisable within 60 days of March 31, 2003.

(6) Includes 350,000 shares issuable upon the exercise of options and warrants
    that are exercisable within 60 days of March 31, 2003.

</TABLE>


ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     On August 21, 2001 we retained the services of the investor relations firm,
de Jong & Associates (de Jong), for a period of one year. As compensation for
services rendered, the firm has received 200,000 shares of our restricted common
stock. We have also granted to the firm a warrant to purchase an additional
300,000 shares of our common stock, subject to the firm's ability to meet
certain milestones. The warrant exercise price is $0.10 per share. On May 31,
2002, de Jong transferred the all of the shares back to us and we cancelled the
all of the warrants pursuant to the cessation of consulting services by de Jong.

     In September 2000, we had entered into a contract with GF Consulting Corp
(GF), a Canadian entity wholly owned by Gary Freeman, to assist us with its fund
raising efforts. We had issued GF 60,852 shares of common stock during the
fourth quarter of 2000 and the first quarter of 2001. On September 28, 2001 GF
transferred these shares back to us due to non-performance of services. GF has
signed an agreement to fully and completely release us from any and all claims,
actions or causes of actions that GF may have against us for payment for GF's
past consulting services.

                                       34
<PAGE>


                                     PART IV

ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K.

(a) The following is a list of exhibits, some of which are incorporated by
    reference:

    EXHIBIT
    NUMBER       DESCRIPTION OF EXHIBITS

      2.1        Agreement of Merger between Tribeworks,  Inc., a California
                 corporation,  and  Tribeworks  Acquisition  Corporation,  dated
                 November 2, 1999  (Incorporated  by reference to Exhibit 2.1 to
                 the Registrant's Form 10-SB/A filed July 10, 2000).

      3.1        Certificate of Incorporation of Tribeworks,  Inc., a Delaware
                 Corporation  (Incorporated  by  reference to Exhibit 3.1 to the
                 Registrant's Form 10-SB/A filed July 10, 2000).

      3.2        Bylaws of Tribeworks,  Inc., a Delaware Corporation
                 (Incorporated  by reference to Exhibit 3.2 to the  Registrant's
                 Form 10-SB/A filed July 10, 2000).

     10.1        Consulting  Agreement  by and  between  Tribeworks,  Inc.,  a
                 Delaware Corporation, and William R. Woodward, dated January 1,
                 2002   (Incorporated  by  reference  to  Exhibit  10.1  to  the
                 Registrant's Form 10-QSB filed August 14, 2002).

     16.1        Letter dated March 28, 2001 by W. Alan Jorgensen to Securities
                 and Exchange Commission (Incorporated by reference to Exhibit
                 16.1 to the Registrant's Form 10-KSB filed April 2, 2001).
     24.1        Power of Attorney (appears on the signature page of this
                 report).
     99.1        Certification-CEO Pursuant to 18 U.S.C. Section 1350.
     99.2        Certification-CFO Pursuant to 18 U.S.C. Section 1350.




(b) The following reports on Form 8-K were filed during the quarter ended
December 31, 2002:

None

                                       35
<PAGE>


SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                          TRIBEWORKS, INC.


                           By: /s/ ROBERT C. DAVIDORF
                          -----------------------------
                           Robert C. Davidorf
                           Chief Financial Officer

Date: March 31, 2003


                                POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert C. Davidorf and Duncan J. Kennedy,
jointly and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Report on Form 10-K, and to file the same, with exhibits thereto and
other documents in connection therewith with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes may do or cause to be
done by virtue hereof.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

        Signature                   Title                               Date

 /s/ DUNCAN J. KENNEDY        Chief Executive Officer             March 31, 2003
 ----------------------
     Duncan J. Kennedy      (Principal Executive Officer)



 /s/ ROBERT C. DAVIDORF       Chief Financial Officer             March 31, 2003
 -----------------------
     Robert C. Davidorf   (Principal Financial and Accounting
                                      Officer)



 /s/ PATRICK SOQUET                Director                       March 31, 2003
-------------------
     Patrick Soquet



 /s/ WILLIAM R. WOODWARD           Director                       March 31, 2003
------------------------
     William R. Woodward


                                       36

<PAGE>



                           CERTIFICATIONS PURSUANT TO
                         RULES 13a-14 AND 15d-14 OF THE
                  SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


    In connection with the Quarterly Report of Tribeworks, Inc., a Delaware
corporation (the "Company"), on Form 10-KSB for the period ending September 30,
2002, as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Robert C. Davidorf, the Company's Chief Financial Officer
(the "Officer"), certify, pursuant to Rule 13a-14 or 15d-14 of the Securities
Exchange Act of 1934, as amended, that:

    (1) The Officer has reviewed the Report.

    (2) Based on the Officer's knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report.

    (3) Based on the Officer's knowledge, the financial statements and other
financial information included in the Report fairly present in all material
respects the Company's financial condition and results of operations as of, and
for, the periods presented in the Report.

    (4) The Officer and the other certifying officer:

        (a)Are responsible for establishing and maintaining "disclosure controls
and procedures," as that term is defined by the Securities and Exchange
Commission, for the Company.

        (b)Have designed such disclosure controls and procedures to ensure that
material information relating to the Company is made known to them, particularly
during the period in which the periodic Report is being prepared.

        (c)Have evaluated the effectiveness of the Company's disclosure controls
and procedures within 90 days prior to the filing date of the Report.

        (d)Have presented in the Report their conclusions about the
effectiveness of the disclosure controls and procedures based on the required
evaluation as of that date.

    (5) The Officer and the other certifying officer have disclosed to the
Company's auditors and audit committee of the board of directors (or persons
fulfilling the equivalent function):

        (a)All significant deficiencies in the design or operation of internal
controls, as that term is defined by the Securities and Exchange Commission,
which could adversely affect the Company's ability to record, process, summarize
and report financial data and have identified for the Company's auditors any
material weaknesses in internal controls; and

        (b)Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal controls.

    (6) The Officer and the other certifying officer have indicated in the
Report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


Dated:  December 31, 2002


                 By: /s/ DUNCAN J. KENNEDY
                 -------------------------
                 Duncan J. Kennedy
                 Chief Executive Officer

                                       37
<PAGE>


    In connection with the Quarterly Report of Tribeworks, Inc., a Delaware
corporation (the "Company"), on Form 10-KSB for the period ending September 30,
2002, as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Robert C. Davidorf, the Company's Chief Financial Officer
(the "Officer"), certify, pursuant to Rule 13a-14 or 15d-14 of the Securities
Exchange Act of 1934, as amended, that:

    (1) The Officer has reviewed the Report.

    (2) Based on the Officer's knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report.

    (3) Based on the Officer's knowledge, the financial statements and other
financial information included in the Report fairly present in all material
respects the Company's financial condition and results of operations as of, and
for, the periods presented in the Report.

    (4) The Officer and the other certifying officer:

        (a)Are responsible for establishing and maintaining "disclosure controls
and procedures," as that term is defined by the Securities and Exchange
Commission, for the Company.

        (b)Have designed such disclosure controls and procedures to ensure that
material information relating to the Company is made known to them, particularly
during the period in which the periodic Report is being prepared.

        (c)Have evaluated the effectiveness of the Company's disclosure controls
and procedures within 90 days prior to the filing date of the Report.

        (d)Have presented in the Report their conclusions about the
effectiveness of the disclosure controls and procedures based on the required
evaluation as of that date.

    (5) The Officer and the other certifying officer have disclosed to the
Company's auditors and audit committee of the board of directors (or persons
fulfilling the equivalent function):

        (a)All significant deficiencies in the design or operation of internal
controls, as that term is defined by the Securities and Exchange Commission,
which could adversely affect the Company's ability to record, process, summarize
and report financial data and have identified for the Company's auditors any
material weaknesses in internal controls; and

        (b)Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company's internal controls.

    (6) The Officer and the other certifying officer have indicated in the
Report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


Dated:  December 31, 2002


                  /s/ ROBERT C. DAVIDORF
                  --------------------------
                  Robert C. Davidorf
                  Chief Financial Officer


                                       38