**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





(Mark
      One)




x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934FOR
                THE FISCAL YEAR ENDED DECEMBER 31, 2006ORo
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
                1934FOR
                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 Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)**2001
                152****nd****AVENUE NE**
              **REDMOND,
                WASHINGTON 98052**(Address
                of Principal Executive Offices)**(425)
                458-2360**(Issuer’s
                Telephone Number, Including Area
                Code)





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





Securities
      registered under Section 12(g) of the Exchange Act: COMMON STOCK, par value
      $0.0004 per share





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. YES x NO o





Check
      if
      disclosure of delinquent filers in response to Item 405 of Regulation S-B is
      not
      contained in this form, and no disclosure will 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. $39,706.





The
      aggregate market value of the voting stock held by non-affiliates of the
      registrant as of April 11 , 2007 was
      approximately $11,055,186 based upon the closing price per share of the Common
      stock of $0.90 on that date.





There
      were 26,331,805 shares of the registrant’s Common Stock issued and outstanding
      as of April 11, 2007.





Transitional
      Small Business Disclosure Format (check one) YES o NO x







**TABLE
      OF CONTENTS**





**Page**PART
                I
            3Item
                1. Description of Business
            3Item
                2. Description of Property
            6Item
                3. Legal Proceedings
            6Item
                4. Submission of Matters to a Vote of Security Holders
            6PART
                II
            7Item
                5. Market for Common Equity and Related Stockholder
                Matters
            7Item
                6. Management’s Discussion and Analysis or Plan of
                Operation
            9Item
                7. Financial Statements
            18Item
                8. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure
            41Item
                8A. Controls and Procedures
            42PART
                III
            43Item
                9. Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act
            43Item
                10. Executive Compensation
            47Item
                11. Security Ownership of Certain Beneficial Owners and Management
                and
                Related Stockholder Matters
            48Item
                12. Certain Relationships and Related Transactions
            49Item
                13. Exhibits
            50Item
                14. Principal Accountant Fees and Services
            52SIGNATURES
            53





In
      this
      report ,
      the
      terms “we,” “our” and “us,” refer to Tribeworks, Inc. and its direct and
      indirect wholly owned subsidiaries, including Atlas Technology Group, which
      we
      refer to as “ AtlasTG ” .




2


**PART
      I**


**ITEM
      1. DESCRIPTION OF BUSINESS**





**Overview**





We
      were
      incorporated in August
      1998 as Tribeworks Inc .,
      a
      California corporation (“ 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 of t heir
      shares of  California
      Tribeworks for Pan World common stock. Subsequent to the Recapitalization,
      we
      were reincorporated in Delaware as Tribeworks, Inc. We opened a wholly-owned
      subsidiary in Japan ( “ Tribeworks
      Japan ” )
      in
      August 2000, which engaged in sales and professional services activities
      primarily in our Enterprise application development business, until it was
      closed during the third quarter of 2004.





Beginning
      in 2003, we partnered with Kinoma, Inc. (“ Kinoma ”)
      to
      create new products for the mobile software market, specifically targeting
      Palm
      OS devices. Kinoma makes Kinoma Player, which is a high-resolution, interactive
      movie player for handhelds running the Palm OS. We developed two products in
      partnership with Kinoma that create Kinoma Player content, iShell Mobile, an
      iShell-based application development tool, launched in October 2003, and Kinoma
      Media Album, a consumer multimedia management tool, launched in May of 2004.
      Kinoma received a per unit royalty on sales of iShell Mobile and Kinoma Media
      Album.





During
      2005, the previous business lines of Tribeworks were separated into a wholly owned subsidiary named Tribeworks
      Development Corporation (“ TDC ”).
      The
      TDC business was primarily built around the sale of software through two main
      distribution channels: the graphics software tools business and proprietary
      products called iShell® or iShell Mobile and an enterprise application
      development business. TDC was sold to its former management on September 14, 2006. Until
      approximately the middle part of 2006, the iShell line of products and an
      enterprise application development business were our primary product offering
      and business. The former assets, liabilities and business operations of TDC
      have
      been reclassified as discontinued operations in the financial
      statements in
      this
      annual report for the year ended December 31, 2006 on Form 10-KSB (the
“ Annual
      Report ”).
      References  to
      the
      former business of Tribeworks in these financial statements will
      be
      to the TDC business to separate it from the new  b usiness
      stream of the going forward business.





On
      January 20, 2006 we acquired TakeCareofIT Holdings Ltd., doing business as
      Atlas
      Technology Group (“ AtlasTG ”),
      a
      Malta Corporation that was established in September 2004 to provide external
      Information Technology (“ IT ”)
      application support services for organizations with large IT functions. The
      AtlasTG IT support business will be our primary business focus
      going forward. We
      plan to
      become a leading IT
      outsourcing support company for custom software applications worldwide. After
      extensive beta testing , the
      AtlasTG business line is now
      at the revenue launch stage with the first support customers being signed on
      in
      February 2007. Our in-house
      developed tools and processes needed to onboard IT
      applications and provide remote
      IT application support are now ready to meet the needs of our customers.





Our head operating office is
      located i n
      Malta .
      We also
      have  subsidiary
      offices in Wellington, New Zealand and Redmond, Washington and
      a
      data center in Seattle, Washington. We
      currently have 28
      employees and 3 working executive directors. Our
      primary service of  remotely
      supporting custom and complex software applications for customers who want
      to
      outsource non-core
      business processes  and
      focus
      on their core competencies ,
      through
      the use of proprietary processes and monitoring systems, i s
      maintained by  our
      state-of-the-art data centers in Seattle and Malta, and 24x7 “follow the sun”
support centers in Malta, Redmond/Seattle, and Wellington.





We
      are
      leveraging the recent advances in software, monitoring systems, and
      communications, to build a new, leading edge, global support infrastructure,
      providing 24x7 software support to large and medium sized companies. Our  new
      application on-boarding and monitoring processes allow for dramatic cost savings
      over existing IT service providers. With more
      than thirty
      years of combined experience
      in IT support, our management team brings a
      significant level of
      knowledge and experience in outsourced application
      support. Our
      management team’s experience includes worldwide application support for companies such as JP
      Morgan, Microsoft, and Avanade.




3


We
      intend
      to offer our services worldwide, with the majority of our targeted customers
      having multi-national operations. Our operations are designed to be a highly
      distributable venture, with the ability to place people in the best possible
      locations so
      that
      we can  provide
      a
      seamless service offering across the world. The worldwide IT market is
      approximately one trillion dollars in size including hardware, software and
      communications. (Source: Gartner Group, Inc. (“ Gartner ”)
      available at http://www3.gartner.com/Init )





The
      latest trend in outsourcing toward outsourcing application support is dramatic.
      According to Forrester Research Inc. (“ Forrester ”),
      Tier
      2 application support and business outsourcing is forecast to represent a $220
      billion market by 2006 with additional growth averaging 10% annually. According
      to Forrester the percentage of IT budgets spent on maintaining existing
      applications was 73% in 2004 and 76% in 2005, and the trend is expected to
      continue. (Source: Forrester Research, Inc. “2005 Enterprise IT Outlook:
      Business Technographics North America”).





To
      many
      industry leaders, managed services represent an important change to how
      technology is delivered and consumed. The managed services market has expanded
      rapidly over the past several years, particularly in the under-served small-
      and
      medium-sized business (“ SMB ”)
      market. The SMB IT
      services market estimated to be worth $220 is expected to grow at a compound
      annual growth rate (“ CAGR ”)
      of
      7.6% from 2004 to 2008. Remote monitoring and management (“ RMM ”)
      is the
      hottest growing segment expected to grow at 36% CAGR though
      2008 in North America. A recent study by Forrester cited the SMB market
      at 48% of overall U.S. IT
      spending, stating that it will surpass enterprise IT spending by 2007.
      ( Source:
      Gartner - Forecast IT Service, Worldwide, November 2005).





In
      January of
      2007, we
      acquired all of the assets and approximately 700 customers of BLive Networks,
      Inc. (“ BLive ”).
      This
      acquisition further strengthens our capability of delivering high quality
      outsourced support into the US$220 billion worldwide IT Support market. The
      BLive acquisition strengthens our proprietary
      interactive support tools for companies providing IT support worldwide. The
      BLive systems can
      be  used
      by
      companies for remote technical support and sales, both externally, and for
      internal corporate “ Helpdesk ”
support
      departments. This technology enables our service
      providers to deliver faster response times and a personal connection with users. This
      acquisition is discussed further in Note 14 (Subsequent Events) to our Consolidated
      Financial Statements and below.





We
      are
      currently a reporting
      company under Section 12(g) of the Securities Exchange Act of 1934, as amended, (the
      “ Exchange
      Act ”) and
      our
      common stock (“ Common
      Stock ”) is
      quoted
      on the OTC Bulletin Board under the symbol TWKS.OB





**Products
      and Services**





We
      are in
      the business of providing custom, outsourced, application software support
      services to our customers. These services range from supporting specialized
      networks and single applications to providing the entire IT infrastructure
      management for customers who want to outsource IT
      application support and focus on their core business competencies .
      Through
      partnerships with other IT development consultants, fully
      outsourced IT services can be
      provided, with hard performance metrics and predictable costs.





We
      have
      spent two years developing our own proprietary software tools and
      processes .
      We
      are  currently leveraging
      the recent advances in software, monitoring systems, and communications, to
      build a new, leading edge, global support infrastructure that
      provides 24x7
      software support to large and medium sized companies. These new application
      on-boarding and monitoring processes should allow for dramatic cost savings
      over
      existing legacy IT service providers. Our service offerings will be worldwide,
      with the majority of the targeted customers having multi-national
      operations..





Our
      initial support centers are based in Malta and Wellington, New Zealand, and
      further technical support will be from a small team in Redmond, Washington,
      which will allow us to provide a “follow-the-sun”, 24 hour coverage. Additional
      locations will be added to increase capacity as needed. State of the art VoIP,
      call tracking and monitoring technology provide  each
      employee with the tools needed to maximize support delivery .





We
      are now in
      the final testing and implementation phase of our suite of
      software including our unique
      onboarding and
      monitoring processes which allow cost savings over existing legacy IT service
      providers. Real time monitoring and support of our first customer started in
      March 2007 after onboarding began during January 2007.  We
      anticipate that onboarding of our
      second customer will begin shortly.




4


During 2006, we
      increased and trained our support
      staff .
      Further support
      staff will be added and
      trained as our business
      expands. With the onboarding and monitoring tools now fully operational our
      sales and marketing efforts are also being increased.




**Technical
      Support and Education**





We
      provide both technical support and training to our customers as well as in-house
      and external training to our staff. Successful
      training of our
      technical support staff
      is key to
      our success. During 2006, all of
      our technical
      staff  received
      training for
      various Microsoft technical qualifications. During
      2007, we anticipate becoming a
      Microsoft “Gold
      Partner” with advanced infrastructure and learning solutions specializations. We
      believe that by becoming a Microsoft “Gold Partner” this will provide us with
      additional recognition and therefore revenue opportunities.





**Competition**





IT
      software application support is one of the last available outsourcing
      opportunities in the IT field. While many other IT functions have been
      outsourced , software
      application support has traditionally been kept in-house so that management is
      able
      to maintain control of this
      function. In recent years , a number
      of companies have outsourced all
      of their IT needs to large
      IT companies .





There
      are
      a large number of traditional consultant competitors
      competing in the
      same businesses as us,
      including IBM Global Services (“ IBM ”) ,
      Hewlett-Packard (“ HP ”), Electronic Data Systems Corporation (“ EDS ”) ,
      and
      Accenture Ltd . (“ Accenture ”)
      as
      well as a number of smaller  companies. The
      industry is broken down into three segments :
      (i) the
      hardware manufacturers that provide additional IT services; (ii) the
      large pure-play IT service providers targeting Fortune 500 companies, and (iii) smaller
      independent companies that generally specialize in specific local
      markets.





The
      largest firms that
      we
      compete with in
      terms
      of 2006
      revenue are HP with total revenue of $91.7 billion, of which approximately
      $15.6  billion
      is services including IT outsourcing. Source:
      HP.com.





IBM
      with
      total sales of $ 91.4 billion,
      of which approximately half, or $ 49 billion,
      represents services, and of this amount approximately $17.0 billion
      is strategic outsourcing services. Strategic outsourcing services is one of
      IBM’s fastest growing business segments and is growing at  3.2%
      annually, almost twice as fast as IMB Global Services total revenue. Source:
      IBM.com .





The
      pure-play IT service providers, with the majority of
      their fiscal
      year ended 2006 revenues
      coming from IT support services include EDS, with $ 21.3 billion
      in revenue (Source:
      EDS.com) ,
      Computer Sciences Corporation with $14.6 billion (Source:
      CSC.com) ,
      Accenture with $ 18.2 billion (Source:
      Accenture.com) ,
      and
      BearingPoint Inc with $3.4 billion in 2005 revenue
      (2006 revenues have not yet been disclosed, Source: BearingPoint.com). Our
      advantage over our larger competitors is that IT support is our main business
      focus and is not an ancillary service.





Other
      competitors of ours that provide
      support services and call centers ,
      especially in India, include Wipro
      Limited (“ Wipro ”)
      and
      Infosys Technologies Limited (“ Infosys ”).
      Tata
      Consultancy Services, Ltd. (“ TCS ”)
      is
      another of our primary competitors that competes with us globally .
      M any
      hosting providers are also  attempting to offer
      Application Service Provider (“ ASP ’)
      services as an add-on. There are other regional players, such as Wavex
      Technology Limited (“ Wavex ”)
      and
      Motive Inc . (“ Motive ”)
      that
      are also targeting the SMB market.





The
      principal advantage of what we offer is the
      ability to access the computers of our customers remotely. This allows our
      customers to maintain physical possession of their computers and continue their
      daily operations. We also compete against our competitors by establishing
      ourselves as a service provider with deep industry expertise in our sector,
      which enables us to respond rapidly to market trends and the evolving needs
      of
      our clients in our sector.   IT
      support is our sole business focus, unlike many of our competitors who offer
      IT
      support as an adjunct to there existing hardware or software sales.





In
      addition to the small and large competitors described above, we believe
      that our single biggest competitive factor is existing in-house support groups. We believe
      that in-house
      support groups are
      currently providing over 90%
      of IT
      support services .




5


**Government
      Regulation**





Laws regulating the
      Internet are constantly changing.  A number
      of new legislative and regulatory proposals relating to Internet
      commerce  are
      under
      consideration with federal ,
      state,
      local and foreign governments .
      A number
      of laws or regulations may be adopted regarding Internet user privacy, Internet security,
      taxation, pricing, quality of  products
      and services, and intellectual property ownership, which may be
      applicable to us. The
      impact of additional legislation related to the
      Internet, in areas such as property ownership, copyrights, trademarks and trade
      secrets is uncertain.





**Proprietary
      Rights**





We
      rely
      on a combination of copyright laws, trademark laws, contract laws, and other
      intellectual property protection methods (such as signing confidentiality and
      non-disclosure agreements with potential clients) to protect our technology, names and logos in the
      United States and other countries. Tribeworks’
      patented and trademarked “iShell” product and logo ,
      which
      until mid 2006 was our lead product , were
      sold during 2006 to a former staff member of ours .





On
      January 20, 2006,
      we acquired
      AtlasTG. This acquisition
      resulted in additional proprietary rights such as AtlasTG’s unique OnBoarding processes as well as a
      range of trade secrets relating to
      its IT
      support technologies. We are now
      in the process of applying for a number of patents and trademarks for these
      systems, processes and their unique names as part of securing our proprietary
      products and establishing our marketing and branding.





**Employees**





AtlasTG
      has a total of 28 employees and consultants a nd
      three
      working executive directors working
      on a full-time basis.





**ITEM
      2. DESCRIPTION OF PROPERTY**





AtlasTG
      has a six (6) year office lease covering approximately 471 square meters located
      at Level 3, 9 Empire Stadium Street, Gzira GZR04, Malta expiring on August
      14,
      2010 at a base annual rent of MTL16,000 (approx US$48,000), which escalates
      by
      MTL2,000 per annum (approx US$6,000) until the final year.





AtlasTG
      has a four year office lease of the second floor of 139-141 Featherston Street
      in Wellington, New Zealand expiring on July 31, 2009. The office comprises
      approximately 300 sq meters with a base annual rental of NZ$55,500 per annum
      (approx US$38,500) plus 12.5% Goods and Services Tax (“GST”) which is claimable
      against GST revenue tax payable or is refundable.





AtlasTG
      has a three year office lease of Suite 2001 at the Limited Edition Office Park,
      2001 152 nd Avenue
      NE, Redmond, Washington, expiring on July 31, 2009. The office comprises 3,825
      rentable square feet at a base annual rental of US$61,200 in the first year,
      escalating to $68,850 in the 2 nd year and
      $76,500 in the 3 rd year.





All
      of
      the aforementioned leased facilities are adequate for our current
      needs.





**ITEM
      3. LEGAL PROCEEDINGS**





We
      are
      not aware of any legal proceedings (either presently engaged in or contemplated)
      by any government authority or other party involving us , our
      properties or our products.





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





No
      matters were submitted to a vote of security holders during the fourth quarter
      of the fiscal year ended December 31, 2006.




6


**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





Our
      Common Stock is currently quoted
      on the OTC bulletin board under the trading symbol
      TWKS.OB. The following table sets forth the range of closing high and low bid
      quotes for each period indicated as reported by stockwatch.com and reflects
      all
      stock splits effected by us :





**2006**
            
            **2005****High**
            
            **Low**
            
            **High**
            
            **Low**First
                quarter
            
            $
            1.80
            
            $
            1.50
            
            $
            1.40
            
            $
            0.90Second
                quarter
            
            $
            1.70
            
            $
            1.46
            
            $
            1.35
            
            $
            0.72Third
                quarter
            
            $
            1.60
            
            $
            1.10
            
            $
            1.75
            
            $
            1.26Fourth
                quarter
            
            $
            1.19
            
            $
            0.90
            
            $
            1.80
            
            $
            1.25





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





We
      have
      approximately 300 stockholders as of April 11, 2007 comprising both registered stockholders and
      those held in “street n ame ”.





We
      have not previously declared
      or paid any cash dividends on our Common
      Stock and
      presently intend to retain our future earnings, if any, to fund the development
      and growth of our business and, therefore, do not anticipate paying any cash
      dividends in the foreseeable future. We have accrued $5,880 of dividends owed
      to
      holders of our Series
“B” Convertible Preferred
      Stock (“ Series
      B Preferred Stock ”).
      The
      Series B Preferred Stock was
      converted into Common Stock on December 29, 2006.





We
      established our 1999 Stock Option Plan (the “ 1999
      Plan ”)
      on
      November 2, 1999 with 133,333 shares of
      Common
      Stock (on
      an
      adjusted basis) approved for issuance. We established our 2001 Stock Plan
      ( the “ 2001
      Plan ”)
      on
      August 16, 2001 with 250,000 shares of
      Common
      Stock (on
      an
      adjusted basis) approved for issuance. We established our 2004 Employee Stock
      Incentive Plan ( the “ 2004
      Plan ”)
      on
      March 24, 2004 which allows us to issue options to staff and consultants of up
      to 25%
      of our outstanding Common
      Stock ,
      as
      determined from time to time, which was equal to
      6,257,951 shares at December 31, 2006. The purpose of the 1999 Plan is to grant our
      Common Stock and
      options to purchase our Common
      Stock to our
      employees and key consultants .
      The purpose
      of the 2001 Plan is to grant stock and warrants to purchase our Common stock to
      employees and key consultants for outstanding cash payments due .
      The purpose
      of the 2004 Plan is to grant stock options to purchase our  Common
      Stock ,
      restricted stock (“ Restricted
      Stock ”) ,
      and
      stock bonuses to employees, officers and key consultants. The outstanding
      options at December 31, 2005 and December 31, 2006 were:




**Plan
                  Category**
              
              **Number
                  of securities to be issued upon exercise of outstanding options,
                  warrants
                  and rights**
              
              **Weighted-average
                  exercise price of outstanding options, warrants and
                  rights******
              
              **Number
                  of securities remaining available for future issuance under equity
                  compensation plans******Equity
                  Compensation Plans approved by security holders at December 31,
                  2005
              
              
              50,334
              
              $
              6.53
              
              
              5,702,221Equity
                  Compensation Plans approved by security holders at December 31,
                  2006
              
              
              134,084
              
              $
              3.10
              
              
              6,123,867





During
      the year ended December
      31, 2006, options to
      purchase 6,250 shares of our Common Stock were
      exercised at an
      exercise price
      $0.48 per share.




7


On
      December 29, 2 006, new
      options to
      purchase 90,000 shares of our Common Stock were
      issued under the 2004 Plan to two staff members and a consultant at an exercise
      price of $1.00 per share with the options vesting 20% annually starting December
      31, 2007.





**Recent
      Sales of Unregistered Securities**





All
      of
      the following offerings and sales were deemed or determined by us to be exempt
      under Section 4(2) of the Securities Act of 1933,
      as
      amended (the “ Securities
      Act ”). The
      offerings and sales were made in
      a
      number of private placements to
      a
      limited number of persons, all of whom represented
      in writing to us that they were
      accredited investors, as
      that
      term is defined in Rule
      501 of Regulation D promulgated under
      the
      Securities Act.





During
      the quarter ended March 31, 2006, a staff option holder under the 1999 Stock
      Incentive Plan exercised 6,250
      options to purchase one share of our Common Stock into 6,250 shares of our Common
      Stock for a
      total consideration of $3,000.





1,140,000 restricted shares
      of our Common
      Stock were sold
      and issued
      during the quarter ended June 30, 2006,
      in
      a private placement to five
      European investment funds at a price of $1.25 per share, resulting in an
      aggregate purchase price received
      by us of
      $1,425,000.  Along
      with these shares we also
      issued one warrant to
      purchase one share of our Common Stock for
      every two new shares of Common
      Stock purchased. The warrants have an exercise price of $1.75 per share. The warrants
      have a two year expiration date and expire on May 31, 2008.





We
      paid brokerage and commission fees of $85,500 for raising the funds obtained from
      the
      European investment funds discussed above to Westmount Capital and issued
      warrants to
      purchase 85,500 shares of our Common Stock at an
      exercise price of $1.75 per share. of our
      Common Stock to Westmount Capital. These
      warrants have a two year term and will expire
      on
      June 16, 2008.





In
      the
      fourth quarter of
      2006, warrants to
      purchase 50,000 shares of our Common Stock at $1.00
      per share were
      exercised.





On
      December 29, 2006, a total of 480,000 restricted shares
      of our Common
      Stock were
      issued to various investors. These issuances consisted of 80,000 shares purchased
      at a price of
      $0.50 per share of
      Common
      Stock and
      400,000 shares purchased
      at a price $1.00
      per share of
      Common Stock .
      Warrants to purchase 200,000 shares of our
      Common Stock at a
      price of $1.25 per share exercisable for a period of two years were issued
      in
      connection with the private
      placement of
      300,000 shares of our
      Common Stock and
      100,000 shares of our Common Stock issued as part repayment of debt .
      On
      December 29, 2006, we
      converted 84,000 shares
      of our Series B
      Preferred Stock into
      84,000 restricted shares of our Common
      Stock ,
      bringing the total number of outstanding shares of Common
      Stock to 25,081,805 at December 31, 2006.





**Repurchases
      of Equity Securities**




We
      did not repurchase any of
      our equity securities during the fourth quarter of fiscal 2006.




8


**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS**





**Forward
      Looking Statements**





The
      following discussion contains “forward-looking statements” within the meaning of
      Section 27A of the Securities Act and
      Section 21E of the Securities Exchange Act that are
      subject to risks and uncertainties. These forward-looking statements are based
      on our management’s beliefs as well as assumptions and information currently
      available to us. When used in this report, the words “believe,” “expect,”
“anticipate,” “estimate” and similar expressions are intended to identify
      forward-looking statements. 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, but not limited
      to:





·
            whether
                or not our products are accepted by the marketplace and the pace
                of any
                such acceptance;





·
            improvementsin
                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 .
      We
      caution you not to place undue reliance on any forward-looking statements,
      all
      of which speak only as of the date of this report. You should refer to and
      carefully review the information in future documents we file with the Securities
      and Exchange Commission.





**Management** **’s** **** **Discussion
      and Analysis**





Our
      business model is primarily focused on delivering
      IT support services. We are leveraging the recent advances in software, IT monitoring systems, and
      communications, to build a new, leading edge, global support infrastructure,
      providing 24x7 software support to large and medium sized companies. The new
      application onboarding and monitoring processes that we have developed should
      allow for cost savings over existing IT
      service providers. We believe the IT support offerings offered using our software, systems and processes will provide a quality product to a wide range
      of business enterprises and provide a maximum return on our investment.





**Results
      of Operations**





2006
      was
      a transitional year for
      us with the
      acquisition of AtlasTG on January 20, 2006 and the sale of our previous
      business, operated from within TDC, on September 14, 2006. We
      incurred an
      overall net loss of $1,817,767 for the year ended December
      31, 2006,
      a
      net loss of $0.08 per share. The loss
      for
      the year ended December
      31, 2005 was $175,791, a
      net
      loss of $0.02 per share. This change is attributed to the sale of certain of
      our
      TDC product lines that generated revenue in 2005. As
      AtlasTG was not acquired until January 20, 2006, there are no operating results
      for AtlasTG
      included in the 2005 results other than $23,667 of interest income earned on
      the
      advances made to AtlasTG in 2005.




**Revenues**





Because
      2006 was a transitional and development year , revenue was
      limited to $39,706 from consulting activities performed during
      the third and four quarters of fiscal year 2006. Our
      revenue for the year ended December 31, 2006 came from these consulting
      services, which were an adjunct to our new main business focus. This
      figure is  substantially
      lower than our December 31, 2005 revenue of $593,595 when we had the TDC product
      lines. The
      TDC
      business was sold to the former management on September 14, 2006 and the TDC
      revenue and expenses have been treated as discontinued operations in the
      attached financial statements for the year ended December 31, 2006 .




9




TDC
      earned 73% of total revenues in 2005 from developing customized multimedia
      authoring tools or multimedia applications or presentations for three large
      multi-national corporations and
      the
      balance of its revenue came from sales of its proprietary iShell® or iShell
      Mobile products.





We
      believe that revenue in 2007
      will come primarily from our first IT support customers starting in March 2007
      with the completion of the onboarding of Mobile Content Networks, Inc.
      ( “ MCN ” )
      in Palo
      Alto, California.
      MCN provides real-time mobile search solutions to 3GSM
      mobile telephone networks such as D2 of Japan and Total Access Communications
      Plc ( “ DTAC ” ) of
      Thailand .
      At the
      end of 2006, D2 Communications, the largest mobile advertising agency in the
      world, released its FM Radio Search service to DoCoMo handset users providing
      listeners of FM radio with one click access to ringtones, music downloads,
      CDs
      and DVDs through MCN’s
      MobileSearch.net platform. MCN
      is
      currently working with over twenty partners in ten countries who are developing
      solutions based on its
      platform.





We
      anticipate that revenue from our
      new IT support services will increase during
      the year as new customers are recruited and onboarded by our newly appointed
      sales and onboarding partners. To date , we have
      appointed Universal Information Technology Group, Ltd ( “ UniTech ” )
      from
      the UK and the Italian IT consulting company Bizmatica Sistemi s.r.l., as onboarding partners
      for our software
      services and IT support. We are currently negotiating with another party in
      Europe and are close to finalizing an agreement with a large international consulting
      firm t o
      also
      become our onboarding partner in the United States.





We expect
      to
      receive revenue from an agreement we recently
      entered into with Viewpath.com. The agreement calls for us to provide 24x7 support to Viewpath's customers and to
      monitor its highly sophisticated .NET application.





With
      the
      acquisition of the business of BLive in
      January 2007, we acquired 700 customers and an established annual revenue
      base of approximately $ 200,000. We are
      planning to integrate the BLive business and proprietary support tools to
      strengthen our remote technical support and sales, both externally, and for
      our
      internal corporate Helpdesk support
      departments . BLive
      targets users within the $13 billion  worldwide Helpdesk
      support market, which diversifies our revenue base.





We
      also
      perform consulting services for potential customers from our Redmond
      office . We
      are
      also involved in a
      joint venture with
      Breard LLC where we
      are
      operating a staff augmentation consulting service for
      potential support customers as a first step in developing a relationship with these potential
      customers .





**Cost
      of Sales**





Our
      cost
      of sales was $68,000, which includes an allocation of salary costs related
      to
      the consulting work performed and
      engagement fees. Some of these costs are expected to be recovered from revenue
      expected to be generated in 2007.  For
      the
      year ended December 31, 2005, the cost of
      sales, from the now discontinued TDC business, included royalties paid to third
      parties for licensed technology, costs associated with order fulfilment, credit
      card fees, web hosting fees, and costs associated with consulting services,
      including salaries, subcontractor fees, and out-of-pocket expenses. Our cost
      of
      sales were $214,606 for the year ended December 31, 2005. Because these
      operations were discontinued, our cost of sales were significantly decreased
      in
      2006.




10




**Operating
      Expenses**





During
      2006, we have been developing our new
      software tools for onboarding and monitoring of our
      customer’s software applications. In the past we
      have expensed
      all of our software
      development costs in the period the costs were incurred. With the new software
      purchased and developed through
      our AtlasTG line of
      business reaching
      the live beta and production testing stages, and by year end the production
      implementation stage, our
      board
      of directors ( the “ Board
      of Directors ”) has
      adopted Statement of Financial Accounting Standards No. 86, “Accounting for the
      Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed”
(“ SFAS
      86 ”)
      and
      has capitalized certain software development costs that meet the requirements
      of
      SFAS No. 86. There are no 2005 comparative figures as AtlasTG was acquired
      on
      January 20, 2006 and the
      expenses from the TDC line of business have been
      treated as discontinued operations.




As
      a
      result of the adoption of SFAS No. 86, $454,942 of software development costs
      have been capitalized during the year ended December 31, 2006, which are in
      addition  to
      the
      $835,192 of IT software costs we acquired with AtlasTG on January 20, 2006.
      These capitalized costs will be amortized over three years from the date on
      which the new AtlasTG business goes into full commercialization. However, not
      all of the software development costs for the year met the requirements of
      SFAS
      No. 86, and $859,780 of software development costs have been expensed in the
      year ended December 31, 2006.





Sales
      and
      marketing expenses for the period ended December 31, 2006 were $136,260 and
      consist primarily of compensation and benefits, plus advertising expenses which
      are primarily the costs incurred in the design, development, and printing of
      our
      literature and marketing materials including website design. We expense all
      advertising expenditures as incurred. Sales and marketing expenses for the
      previous business for the year ended December
      31, 2005, were
      $132,262. These expenses have
      been
      reclassified as discontinued operations. We spent
      more on sales and marketing expenses in 2006 than the prior year because we
      are
      in the growth stage of a new business line. We expect that this expense will
      increase as we continue to expand our market presence in 2007.





General
      and administrative expenses consist primarily of compensation and benefits,
      fees
      for professional services, and overhead. General and administrative expenses
      were $650,236 for the year ended December 31, 2006, while the
      general and administrative expenses for the year ended December 31, 2005 were
      $ 359,050.
      $ 194,896 of
      this
      figure for 2005
      is
      attributed to the
      ongoing business with the rest reclassified as part of discontinued
      operations. The
      difference between 2005 and 2006 is attributed to the increase in employees
      and
      additional operating locations in 2006. With the acquisition of AtlasTG, we
      also
      incurred additional overhead expenses with the addition of a new group operating
      head office in Malta, the addition of a subsidiary office in New Zealand and
      a
      subsidiary office in Redmond, Washington. Following the sale of TDC we closed
      the previous operating head office in San Francisco.





With
      the
      acquisition of AtlasTG we acquired a substantial amount of computer equipment,
      as well as office furniture and fittings in the various offices. As a result
      we
      incurred depreciation expense for the year ended December 31, 2006 of $106,326
      compared to $1,232 for the TDC business in the 2005 year.





**Other
      Income (Expense)**





The
      sale
      of our TDC line of business, in early 2006, resulted in income of $173,853
      (after taxes). This sale of assets offsets some of the losses we experienced
      in
      2006.





Interest
      expense and financing charges for the year ended December 31, 2006 were $36,209
      and arose primarily from an advance received from a third party during the
      year
      which is repayable on March 30, 2007 and evidenced by a Note
      Payable.





There
      was
      also interest earned of $468 on credit bank balances during the year ended
      December 31, 2006. In the year ended December 31, 2005 the we accrued
      $22,667 of interest income on
      the
      advances made to AtlasTG in the 2 nd half of
      2005. With
      the
      acquisition of AtlasTG in January 2006, this interest income was eliminated
      as a
      consolidation entry.





There
      was
      also $784 of other income for the year ended December 31, 2006. We
      earned other income of $1,058 for the year ended December 31, 2005.




11




**Provision
      for Income Taxes**





$ 1,914
      of
      income tax provision was recorded for the year ended December 31, 2006, which
      related to the taxes due for the 2005 year. Income taxes in the amount of
      $ 3,882 was reported
      in the year ended December 31, 2005 which related to taxes for the years 2003
      and 2004. The 2003 tax return had not been prepared when the 2004 financial
      statements were completed and therefore there was no tax provided in the 2004
      financial statements.





**Net
      Income (Loss)**





The
      comprehensive net loss for the year ended December 31, 2006 was $1,817,767. We incurred
      an operating loss of $1,991,620 from
      continuing operations which
      was offset
      by the recovery
      of $173,853 (after
      taxes) on
      the
      sale of the
      assets associated with the TDC business .
      The net
      loss for the year ended December
      31, 2005 was $ 175,791.
      The 2005 net loss consists of a loss
      of $199,521 for the parent company, Tribeworks, and a profit of $23,730 from
      discontinued TDC operations sold in September 2006.




**Liquidity
      and Capital Resources**





On
      December 31, 2006, we had cash on hand of $130,991 compared to $52,344 at
      December 31, 2005. During the year ended December 31, 2006 we raised $2,439,753
      through the sale of new equity securities (before costs) to finance the
      development of the new AtlasTG business compared to $1,069,755 raised in the
      year ended December 31, 2005. Sales
      of
      equity have historically been our
      primary source of funding.
      We will
      need
      to continue to successfully raise additional capital through the sale of our
      equity securities throughout 2007 to finish the development phase of our
      software, hire and train staff and successfully bring in new customers to
      achieve our revenue targets .





The capital raised
      during both 2006 and 2005 has been used to develop the IT support tools and
      platform for our new  business  line.
      We
      may need to raise further capital during 2007. We
      anticipate that revenues from the new IT support business will be first earned
      during the first quarter of 2007 and will continue to grow throughout 2007.
      The
      net loss for 2006 was funded out of our new
      equity issuances.





We a nticipate
      that during 2007, revenue will increase as a result of sales to customers
      of the
      established BLive business, consulting services and from our new main stream
      IT
      support business. We have also received two substantial tax refunds relating
      to
      software development work carried out with the BLive business that have improved
      our liquidity.





**Critical
      Accounting Policies**





***Our
      critical accounting policies are described in Note 2 - Basis of Presentation
      and
      Summary of Significant Accounting Policies of the Notes to our financial
      statements*** .





Our
      discussion and analysis of financial conditions and results of operations are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States.
      The preparation of the financial statements requires us to make estimates and
      judgments that affect the reported amounts of assets, liabilities, revenues,
      expenses, and related disclosure of contingent assets and liabilities. On an
      on-going basis, we evaluate the estimates that we have made. These estimates
      have been based upon historical experience and on various other assumptions
      that
      we believe to be reasonable under the circumstances. Actual results may differ
      from these estimates under different assumptions or conditions. We believe
      the
      following critical accounting policies affect our more significant judgments
      and
      estimates used in the preparation of our consolidated financial
      statements.




12




***Allowance
      for Doubtful Accounts.***





We
      regularly review our accounts receivable and where necessary, set up and
      maintain an allowance for doubtful accounts for estimated losses resulting
      from
      the inability of our customers to make required payments, which is included
      in our bad debt
      expense. Management determines the adequacy of this allowance by regularly
      reviewing our accounts receivable aging and evaluating individual customer
      receivables, considering customers’ financial condition, credit history and
      current economic conditions. If the financial condition of our customers were
      to
      deteriorate, resulting in an impairment of their ability to make payments,
      additional allowances may be required.




***Revenue
      Recognition.***





Revenue
      is generally recognized when all the following criteria are met: (a) persuasive
      evidence that contractual agreement exists, (b) delivery
      has occurred and
      (c) the fee
      is fixed or determinable and collection is
      probable. If all aspects but the last have been met or if post contract customer
      support could be material, revenue is recognized with payments
      from customers are received. Any losses on contracts are recognized
      immediately.





***Income
      Taxes.***





We
      account for income taxes in accordance with SFAS No. 109, “Accounting for Income
      Taxes.” Significant judgment is required in determining our provision for income
      taxes. We assess the likelihood that our deferred tax asset will be recovered
      from future taxable income, and to the extent we believe that recovery is not
      likely, we establish a valuation allowance. We consider future taxable income
      projections, historical results and ongoing tax planning strategies in assessing
      the recoverability of deferred tax assets. However, adjustments could be
      required in the future if we determine that the amount to be realized is less
      or
      greater than the amount that we recorded. Such adjustments, if any, could have
      a
      material impact on our results of our operations.




**Off-Balance
      Sheet Arrangements**




We
      have
      no off-balance sheet arrangements.





**Risk
      Factors**





The
      following risk factors apply to our business.





***We
      have a limited operating history and there is a great degree of uncertainty
      as
      to our future results. We have experienced losses recently 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 customers and in building and developing 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 new IT support 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
      face substantial competition in our industry*** **.**





While we
      are seeking
      to position ourself in a new
      and unique space, there are also a large number of traditional consultancy
      competitors competing in this space, including IBM Global Services, HP, EDS,
      and
      Accenture as well as a number of smaller independents. The industry is broken
      down into three segments; first are the hardware manufacturers that provide
      additional IT services; second, are the large pure-play IT service providers
      targeting fortune 500 companies, and third are smaller independent companies
      that generally specialize in specific local markets.




13




The improvement
      of infrastructure has meant the introduction of the additional
      competitors to the
      competitive picture, notably in India, where Wipro and Infosys provide
      support services and call centers. Many hosting providers are also trying to
      offer ASP services as an add-on. There are other smaller regional players,
      such
      as Wavex and Motive that are also targeting the SMB market.





In
      addition, we believe that the single biggest competitive factor is existing
      in-house support groups . We believe
      that we will be competing with in-house support groups rather than external
      competitors in over 90% of competitive cases. Having stated all of the
      above , we
      believe that there is a market for our IT
      support services and that we
      are well
      positioned to take advantage of large customers deciding to outsource the final
      element of the there IT business, specifically their IT
      application support.





***Our
      IT support services may not be accepted by the industries that require IT
      support.***





Our
      future success depends on our ability to create and deliver sophisticated tools
      to support our new IT support business in order to be attractive to a sufficient
      number of users to generate significant revenues. We need to develop, attract,
      retain, and expand a loyal customer base for our new services, so that the
      results of our operations and financial condition will materially improve over
      the next twelve months.





***We
      expect high variability and uncertainty as to our future operations and
      financial results.***





Failure
      to continue to operate profitably 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
      IT support services may not be accepted by the industries that require IT
      support.***





Our
      future success depends on our ability to create and deliver sophisticated tools
      to support our new IT support business in order to be attractive to a sufficient
      number of users to generate significant revenues. We need to develop, attract,
      retain, and expand a loyal customer base for our new services, so that the
      results of our operations and financial condition will materially
      improve over the next twelve months.




***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 successfully
      balance maximizing market
      opportunities and managing
      our expenses .
      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. We have experienced an unprofitable year during 2006, and we expect
      increased expenses in the near future as we increase
      the size of our operations and continue to
      comply with the requirements of the Sarbanes-Oxley Act of 2002.




***Our
      success depends on our key personnel and attracting suitably skilled staff.
      We
      may be unable to attract and retain qualified
      employees***





Our
      performance and success of the existing business is dependent substantially
      on
      the services of our existing
      small group of experienced senior staff as well as on our ability to recruit,
      retain and motivate our key employees. We will
      require a much larger staff as
      our
      business grows.




14




We
      do not
      have employment contracts with our key
      officers .
      Their relationships with us are terminable at-will. We
      intend to address
      the issue of employment contracts with our key officers in 2007. Support and
      general staff have employment contracts appropriate to their
      particular locale and the type of services they provide. Our
      success also depends on our ability to attract and retain additional qualified
      employees. Competition for qualified personnel in all of our
      locations is intense and there are a limited number of persons with the
      knowledge and
      experience in our industry .
      There
      can be no assurance that we will be able to attract and retain key personnel
      in
      our key initial recruitment areas of Malta and Wellington, New Zealand.





***Our
      success depends on our ability to develop services that meet our customers’
requirements and to keep pace with technology trends in an ever evolving IT
      sectors.***





Our
      success depends on our ability to develop and provide new services that meet
      our
      customers’ changing requirements. The IT sector and the Internet is
      characterized by rapidly changing technology, evolving industry standards,
      changes in customer needs and frequent new service and product innovations.
      Our
      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 and 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 limit 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 related to
      Internet commerce. A number
      of laws and regulations may be adopted related
      to Internet
      user privacy, Internet security,
      taxation, pricing, quality of products and services on the
      Internet ,
      and
      intellectual property ownership .
      The
      application of existing
      laws to the
      Internet, in areas such as property ownership, copyrights, trademarks and trade
      secrets.





***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 data centers
      and
      our network infrastructure are critical to attracting and maintaining
      relationships with customers. While the primary data center has back-up
      measures built
      into it, and we have some duplication and back-up in our Malta and Wellington
      offices, any system interruptions that result in the unavailability of our
      data
      center and slower response times over the Internet for users could reduce the
      attractiveness of our services to our customers. Any disruption of our services
      would materially adversely affect our business, financial condition and results
      of operations.





Our
      primary data center is now located in Seattle, Washington. While this area
      is
      not seismically active, with our operations centralized in a single facility,
      a
      natural disaster, such as an earthquake, fire, or flood, could substantially
      disrupt our operations or destroy our facilities. This could cause delays and
      cause us to incur additional expenses and adversely affect our reputation with
      our customers if we suffer a catastrophic loss from a natural
      disaster.




As
      resources allow and growth develops , it is
      intended that a second data center will be established so that we can
      continue operating following a natural
      or other disaster in one
      of our locations .
      Until
      this second data center is established some duplicate files are being kept
      on
      the local systems in Malta and New Zealand.




15




***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.***





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 do have
      an
      insurance policy that partially alleviates some of the financial losses that
      could be incurred, but this does not compensate for reputation loss.





***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. 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 from
      countries outside the United States. 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. AtlasTG intends marketing its products initially in both North
      America and Europe and already we have pilot customers in both the United States
      and Italy.




16




***We
      expect quarterly revenue and operating results to vary in future periods, which
      could cause our stock price to fluctuate.***





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 and develop the new IT support business under AtlasTG. Our quarterly
      results may fluctuate for many reasons, including:





·Limited
                operating history; and·Dependence
                on a limited number of customers for a significant portion of our
                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.





In
      addition we believe that various other factors may cause the market price of
      our Common
      Stock to
      fluctuate, including announcements of:





·New
                services being offered by 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 or analysts’
                recommendations.





The
      stock
      markets, in general, and the shares of IT 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.




17




**ITEM
      7. FINANCIAL STATEMENTS**




**TRIBEWORKS,
      INC. AND SUBSIDIARIES**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**




18




**TRIBEWORKS,
      INC. AND SUBSIDIARIES**





**TABLE
      OF CONTENTS**





**Page**Report
                of Independent Registered Public Accounting Firm
            
            20Consolidated
                Balance Sheets
            
            21-22Consolidated
                Statements of Operations
            
            23Consolidated
                Statements of Cash Flows
            
            24-25Consolidated
                Statements of Stockholders’ Equity (Deficit)
            
            26Notes
                to Consolidated Financial Statements
            
            27




19




Tribeworks,
                Inc.
              Redmond,
                Washington
              
              **REPORT
                OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
              
              We
                have audited the accompanying balance sheets of Tribeworks, Inc.
                as of
                December 31, 2006 and 2005 and the related statements of operations,
                stockholders’ equity and cash flows for the years then ended. 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 the standards of the Public
                Company Accounting Oversight Board (United States). Those standards
                require that we plan and perform the audits 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 financial statements referred to above present fairly,
                in
                all material respects, the financial position of Tribeworks, Inc.
                as of
                December 31, 2006 and 2005 and the results of its operations, stockholders
                equity and its cash flows for the years then ended in conformity
                with
                accounting principles generally accepted in the United States of
                America.
              
              The
                accompanying financial statements have been prepared assuming that
                the
                Company will continue as a going concern. As discussed in Note 2
                to the
                financial statements, the Company has limited cash. In addition,
                the
                Company’s significant operating losses raise substantial doubt about its
                ability to continue as a going concern. Management’s plans regarding those
                matters also are described in Note 2. The financial statements do
                not
                include any adjustments that might result from the outcome of this
                uncertainty.
              
              
              Williams
                & Webster, P.S.
              *Certified
                Public Accountants*
              Spokane,
                Washington
              March
                23, 2007





20


**TRIBEWORKS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2006 AND 2005**







**2006**
              
              **2005****ASSETS**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              130,991
              
              $
              52,344Accounts
                  receivable
              
              
              10,229
              
              
              —VAT
                  receivable
              
              
              40,705
              
              
              —Prepaids
                  and deposits
              
              
              23,731
              
              
              21,083Total
                  Current Assets
              
              
              205,656
              
              
              73,427OTHER
                  ASSETSEquipment
                  and furniture, net
              
              
              209,853
              
              
              —Software
                  development, net
              
              
              421,727
              
              
              —IT
                  technology
              
              
              835,193
              
              
              —Loans
                  to Atlas TG
              
              
              —
              
              
              1,073,744Total
                  Other Assets
              
              
              1,466,773
              
              
              1,073,744Net
                  assets of discontinued operations
              
              
              —
              
              
              52,855**TOTAL
                  ASSETS**
              
              $
              1,672,429
              
              $
              1,200,026**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (DEFICIT)**CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              552,971
              
              $
              220,499Accrued
                  expenses
              
              
              150,999
              
              
              39,302Income
                  taxes payable
              
              
              5,440
              
              
              3,882Deferred
                  revenue
              
              
              —
              
              
              —Loans
                  payable, related parties
              
              
              70,582
              
              
              —Loan
                  payable
              
              
              120,000
              
              
              175,175Total
                  Current Liabilities
              
              
              899,992
              
              
              438,858Net
                  liabilities of discontinued operations
              
              
              —
              
              
              345,585COMMITMENTS
                  AND CONTINGENCIES
              
              
              —
              
              
              —STOCKHOLDERS’
                  EQUITY (DEFICIT)Redeemable
                  convertible preferred stock:
              
              
              —
              
              
              34Common
                  stock, $0.0004 par value; 200,000,000 shares authorized
                25,081,805
                  and 21,607,555 shares issued and outstanding respectively
              
              
              10,024
              
              
              8,635Additional
                  paid-in capital
              
              
              6,272,168
              
              
              4,098,902Accumulated
                  (Deficit)
              
              
              (5,510,539
              )
              
              (3,691,988
              )Other
                  comprehensive income (loss)
              
              
              784
              
              
              —Total
                  Stockholders’ Equity (Deficit)
              
              
              772,437
              
              
              415,583**TOTAL
                  LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)**
              
              $
              1,672,429
              
              $
              1,200,026




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




21




**TRIBEWORKS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**2006**
              
              **2005**REVENUES
              
              $
              39,706
              
              $
              —COST
                  OF REVENUE
              
              
              68,000
              
              
              —GROSS
                  PROFIT (LOSS)
              
              
              (28,294
              )
              
              —EXPENSESMarketing
                  and advertising
              
              
              136,260
              
              
              —IT
                  software development
              
              
              859,780
              
              
              —General
                  and administrative
              
              
              650,236
              
              
              194,896Depreciation
              
              
              106,326
              
              
              —Total
                  Expenses
              
              
              1,752,602
              
              
              194,896LOSS
                  FROM OPERATIONS
              
              
              (1,780,896
              )
              
              (194,896
              )OTHER
                  INCOME (EXPENSE)Interest
                  expense
              
              
              (36,209
              )
              
              —Interest
                  and other income
              
              
              468
              
              
              22,987Total
                  Other Income/Expenses
              
              
              (35,741
              )
              
              22,987NET
                  LOSS
              
              
              (1,816,637
              )
              
              (171,909
              )INCOME
                  TAX EXPENSE
              
              
              (1,914
              )
              
              (3,882
              )**NET
                  LOSS**
              
              
              (1,818,551
              )
              
              (175,791
              )**LOSS
                  FROM CONTINUING OPERATIONS**
              
              
              (1,992,404
              )
              
              (199,521
              )**INCOME
                  FROM DISCONTINUED OPERATIONS**
              
              
              173,853
              
              
              23,730**OTHER
                  COMPREHENSIVE INCOME (LOSS)**Foreign
                  exchange translation
              
              
              784**COMPREHENSIVE
                  LOSS**
              
              
              (1,817,767
              )
              
              (175,791
              )NET
                  LOSS PERSHARE
                  OFCOMMONSTOCK:BASIC
                  AND DILUTED FROM CONTINUING OPERATIONS
              
              
              (0.09
              )
              
              (0.02
              )NET
                  LOSS PERSHARE
                  OFCOMMONSTOCK:BASIC
                  AND DILUTED FROM DISCONTINUED OPERATIONS
              
              
              0.01
              
              
              —WEIGHTED
                  AVERAGE NUMBER OFSHARES
                  OFCOMMON
                STOCK
                  OUTSTANDING, BASIC AND DILUTED
              
              
              22,582,863
              
              
              10,325,995




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




22


**TRIBEWORKS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**





**2006**
              
              **2005****Cash
                  Flows from Operating Activities**Net
                  (loss)
              
              $
              (1,992,404
              )
              $
              (199,521
              )Discontinued
                  operations income
              
              
              173,853
              
              
              23,730(1,818,551
              )
              
              (175,791
              )Adjustments
                  to reconcile net loss to net cash (used) by operating
                  activities:Warrants
                  issued for financing fee
              
              
              8,651
              
              
              —Depreciation
              
              
              104,587
              
              
              —Changes
                  in assets and liabilities:(Increase)
                  decrease in accounts receivable
              
              
              10,229
              
              
              —(Increase)
                  decrease in prepaids and deposits
              
              
              9,476
              
              
              19,943(Increase)
                  decrease in accounts payable
              
              
              10,480
              
              
              —(Increase)
                  decrease in accrued expenses
              
              
              (173,915
              )
              
              —(Increase)
                  decrease in accrued interest
              
              
              20,000
              
              
              —(Increase)
                  decrease in tax payable
              
              
              1,558
              
              
              3,882Net
                  cash provided (used) by discontinued operations
              
              
              (169,610
              )
              
              90,777Net
                  cash provided (used) by operating activities
              
              
              (1,997,095
              )
              
              (61,189
              )**Cash
                  Flows from Investing Activities**Purchase
                  of Atlas Technology Group
              
              
              (37,235
              )
              
              —Cash
                  from acquisition ofAtlas
                  Technology Group
              
              
              93,273
              
              
              —Purchase
                  of equipment and furniture
              
              
              (55,869
              )
              
              —Software
                  development
              
              
              (455,267
              )
              
              —Loans
                  to Atlas Technology Group
              
              
              —
              
              
              (1,073,744
              )Net
                  cash provided (used) by discontinued operations
              
              
              1,912
              
              
              —Net
                  cash used in investing activities
              
              
              (453,186
              )
              
              (1,073,744
              )**Cash
                  Flows from Financing Activities**Proceeds
                  from issuance of stock
              
              
              2,439,753
              
              
              1,069,755Repayment
                  of borrowing
              
              
              (175,175
              )
              
              —Proceeds
                  from borrowing
              
              
              270,582
              
              
              91,473Net
                  cash provided (used) by discontinued operations
              
              
              (6,232
              )
              
              —Net
                  cash provided by financing activities
              
              
              2,528,928
              
              
              1,161,228Net
                  increase (decrease) in cash and cash equivalents
              
              
              78,647
              
              
              26,295**Cash
                  and cash equivalents beginning of period**
              
              
              52,344
              
              
              26,049**Cash
                  and cash equivalents**
              
              $
              130,991
              
              $
              52,344




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




23




**TRIBEWORKS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**





SUPPLEMENTAL
                  CASH FLOW INFORMATION:
              
              **2006******
              
              **2005**Income
                  taxes paid
              
              $
              —
              
              $
              —Interest
                  paid
              
              $
              23,715
              
              
              —NON-CASH
                  FINANCING AND INVESTING ACTIVITIESAcquired
                  IT technology from Atlas TG
              
              $
              835,193VAT
                  receivable from Atlas TG
              
              $
              22,596Loan
                  and interest exchanged from AtlasTG
              
              $
              1,143,690Equipment
                  acquired from AtlasTG
              
              $
              225,030Deposits
                  and prepaid expenses acquired from AtlasTG
              
              $
              4,924Stock
                  issued for debt
              
              $
              100,000




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




24




**TRIBEWORKS,
      INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY**


**YEARS
      ENDED DECEMBER 31, 2006 AND 2005**


**Additional****Common
                    Stock**
              
              **Preferred
                    Stock**
              
              **Paid-in**
              
              **Accumulated****Shares**
              
              **Amount**
                **$**
              
              **Shares**
              
              **Amount**
                    **$**
              
              **Capital**$
              
              **Deficit**$
              
              **Total**$Balances
                  at December 31, 2004
              
              
              1,569,555
              
              
              628
              
              
              —
              
              
              —
              
              
              3,036,980
              
              
              (3,515,989
              )
              
              (478,381
              )Common
                  stock issued at $0.01 approved at AGM
              
              
              19,000,000
              
              
              7,600
              
              
              —
              
              
              —
              
              
              182,400
              
              
              —
              
              
              190,000Common
                  stock issued at $0.50
              
              
              220,000
              
              
              80
              
              
              —
              
              
              —
              
              
              109,920
              
              
              —
              
              
              110,000Preferred
                  ‘A’ stock issued at $0.50
              
              
              —
              
              
              —
              
              
              818,000
              
              
              327
              
              
              408,673
              
              
              —
              
              
              409,000Converted
                  to common stock
              
              
              818,000
              
              
              327
              
              
              (818,000
              )
              
              (327
              )
              
              —
              
              
              —
              
              
              —Preferred
                  ‘B’ Stock issued at $0.50
              
              
              —
              
              
              —
              
              
              84,000
              
              
              34
              
              
              41,966
              
              
              —
              
              
              42,000Net
                  costs of new issues
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (98,326
              )
              
              (208
              )
              
              (98,534
              )Application
                  monies for unallocated stock
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              417,289
              
              
              —
              
              
              417,289Net
                  income (loss)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (175,791
              )
              
              (175,791
              )Balances
                  at December 31, 2005
              
              
              21,607,555
              
              $
              8,635
              
              
              84,000
              
              $
              34
              
              $
              4,098,902
              
              $
              (3,691,988
              )
              $
              415,583Exercise
                  of staff options at $0.48 pershare
              
              
              6,250
              
              
              2
              
              
              —
              
              
              —
              
              
              2,998
              
              
              —
              
              
              3,000Placement
                  of common stock issued at $0.50
              
              
              1,714,000
              
              
              686
              
              
              —
              
              
              —
              
              
              439,025
              
              
              —
              
              
              439,711Placement
                  of common stock issued at $1.25
              
              
              1,140,000
              
              
              456
              
              
              —
              
              
              —
              
              
              1,424,544
              
              
              —
              
              
              1,425,000Placement
                  of common stock issued at $0.50
              
              
              80,000
              
              
              32
              
              
              —
              
              
              —
              
              
              39,968
              
              
              —
              
              
              40,000Placement
                  of common stock issued at $1.00
              
              
              300,000
              
              
              120
              
              
              —
              
              
              —
              
              
              299,880
              
              
              —
              
              
              300,000Exercise
                  of Warrants at $1.00 pershare
              
              
              50,000
              
              
              20
              
              
              —
              
              
              —
              
              
              49,980
              
              
              —
              
              
              50,000Common
                  Stock issued in settlement of debt at $1.00 per share and 50,000
                  warrants
              
              
              100,000
              
              
              40
              
              
              —
              
              
              —
              
              
              108,611
              
              
              —
              
              
              108,651Application
                  monies for unallocated stock
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              43,540
              
              
              —
              
              
              43,540Warrants
                  issued for issuance costs
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              8,550
              
              
              —
              
              
              8,550Preferred
                  ‘B’ stock converted to common stock and warrants
              
              
              84,000
              
              
              34
              
              
              (84,000
              )
              
              (34
              )
              
              (5,880
              )
              
              —
              
              
              (5,880
              )Net
                  costs of new issues
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (237,950
              )
              
              —
              
              
              (237,950
              )Other
                  comprehensive income, foreign exchange
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              784
              
              
              784Net
                  income (loss)
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (1,818,551
              )
              
              (1,818,551
              )Balances
                  at December 31, 2006
              
              
              25,081,805
              
              $
              10,024
              
              
              —
              
              $
              —
              
              $
              6,272,168
              
              $
              (5,509,755
              )
              $
              772,437




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





25


**TRIBEWORKS,
      INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2006 AND 2005**





**NOTE
      1 - NATURE OF BUSINESS**





Our
      business activity during 2005 and 2004 results from a mixture of consulting
      services based on a technology and the sale of a technology that provided tools
      for creating and delivering multimedia applications. Internet media developers
      used the technology for creation and deployment of electronic content that
      utilizes interactive features combining graphics, video, and audio
      content.





On
      March
      30, 2005, Tribeworks announced that it had determined that this business was
      insufficient to sustain a viable public company, and that we had decided to
      pursue a plan of reorganization to attempt to increase its scope and
      profitability. The plan of reorganization that the Board of Directors approved
      included the transfer of most assets and liabilities (including the accrued
      salary obligations described in Note 11 to Tribeworks Development Corporation
      (“ TDC ”),
      a
      wholly owned subsidiary, and Tribeworks began investing in a new business stream
      via advances to TakeCareofIT Holdings Ltd., doing business as Atlas Technology
      Group (“ AtlasTG ”),
      a
      Malta Corporation
      that was established in September 2004 to provide external Information
      Technology ( “ IT ” )
      application support services for organizations with large IT functions. AtlasTG
      was acquired as a wholly owned subsidiary on January
      20, 2006. The advances from Tribeworks that were initially written off to
      product development costs in the 2005 financial statements and then reinstated in
      amended financial statements (see Notes 12 and 13) and treated as a loan to
      AtlasTG in those financial statements.





TDC
      was
      sold to its former management on September 14, 2006 and a significant number
      of
      the deferred payment obligations (including the accrued salary obligations
      - see
      Note 11) that appeared in the 2005 financial statements were transferred with
      this business or were released as a result of that sale. The former assets,
      liabilities and business operations of TDC have been reclassified as
      discontinued operations in these financial statements and when referring to
      our
      former business in these financial statements the reference will be to the
      TDC
      business to separate it from the new AtlasTG business stream of the going
      forward business. The TDC business was built around the sale of software through
      two main distribution channels: the graphics software tools business and
      proprietary products called iShell® or iShell Mobile and an enterprise
      application development business.





We
      plan to
      become a leading IT outsourcing support company for custom software applications worldwide. The
      AtlasTG business is a start-up business and is now at the revenue launch stage
      with the first support customers going live in March 2007 after extensive beta
      testing of the new in-house developed tools.




The
      initial support centers are based in Malta and Wellington, New Zealand, with
      technical support from a small staff in Redmond, Washington ,
      creating “follow-the-sun”,
      24 hour coverage. As business grows, third and fourth locations are planned
      to be added to
      increase capacity, as needed. State of the art VoIP, call tracking and
      monitoring technology provide each employee with leverage needed to maximize
      support delivery to the fullest possible extent.




The
      Company continues to test its new software tools and is now beginning to implement
      its
      plan of selling software support services, and is pursuing sales in the western US ,
      the
      European Union (“EU”), specifically the United Kingdom and Italy. The
      Company now has support
      contracts with two customers  in
      the
      US .
      The
      Company will
      continue to target customers in Italy, the UK and the west coast of the US
      before it later expands its sales efforts worldwide. The
      Company is
      initially marketing to four targeted groups of potential clients:





1)
            Directly
                to initialpilotcustomers, who will serve as final beta test opportunities forthe
                Company’s
                systems, software monitoring and incident management
                systems;





2)
            Agent
                companies, who are strategic partners and will represent the company
                in
                specific regions in defining strategicresellerandonboardingpartners;





3)
            Onboardingpartnerswho have the internal capabilities to select and technically audit,
                harden, stress-test, and document complex software systems,
                and;




26




4)
            Resellerchannel
                partnerswho will be the backbone ofthe
                Company’s
                sales strategy. With existing large customer bases of large and complex
                software systems,resellerswill be provided the advancedAtlasTGtools and systems to monitor and support highly complex software
                systems
                on an ongoing basis.





The
      Company began
      actively marketing its software support services on October 1, 2006 and has
      signed commitments from two onboarding partners
      in the EU, as well as two support customers in the U S.





**NOTE
      2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





This
      summary of significant accounting policies is presented to assist in
      understanding the financial statements. The financial statements and notes
      are
      representations of our management, which is responsible for their integrity
      and
      objectivity. These accounting policies conform to accounting principles
      generally accepted in the United States of America and have been consistently
      applied in the preparation of the financial statements.




Accounting
      Methods




The
      Company’s financial statements are prepared using the accrual basis of
      accounting in accordance with accounting principles generally accepted in the
      United States of America.




Basis
      of Consolidation




The
      financial statements of the Company are presented on a consolidated basis and
      include the Company and its wholly owned subsidiaries since the first quarter
      of
      2006:




Atlas
                Technology Group Holdings Limited
            
            MaltaTakeCareofIT
                Limited
            
            MaltaAtlas
                Technology Group (NZ) Limited
            
            New
                ZealandAtlas
                Technology Group (US) Inc.
            
            Washington
                State, USAAtlas
                Technology Group Consulting Inc.
            
            Washington
                State, USA




These
      subsidiaries were incorporated at various dates ranging from September 2004
      through to August 2006 and have been included in the consolidated financial
      results following the acquisition  of
      A tlasTG on
      January 20, 2006. In addition The Company’s wholly owned subsidiary, TDC, which
      was sold September 14, 2006, was included in the 2005 financial statements,
      but
      was reclassified as a discontinued activity once an agreement
      to sell TDC
      was reached.





All
      material inter-company transactions have been eliminated.





Advertising
      Expenses





Advertising
      expenses consist primarily of costs incurred in the design, development, and
      printing of literature and marketing materials including website design. The
      Company expenses all advertising expenditures as incurred. Advertising expenses
      were $36,260 and $ 0 for the
      years ended December 31, 2006 and 2005, respectively.





Accounts
      Receivable





Accounts
      receivable are reported at net realizable value. The Company provides an
      allowance for doubtful accounts and records bad debts based on a periodic review
      of accounts receivable to consider the collectability of each
      account.





At
      December 31, 2006, we had $50,934 (2005 : $0 )
      outstanding accounts receivable. Included in accounts receivable were valued
      added tax refunds receivable at December 31, 2006 of $40,705 and $10,229 of
      trade accounts receivable. AtlasTG had $22,596 of VAT refunds due at December
      31, 2005 which have been received during 2006 and the tax refunds recorded
      in
      2006 are expected to be collected in 2007.




27


Cash
      and Cash Equivalents





For
      purposes of the statements of cash flows, the Company considers all highly
      liquid investments (or short term instruments) with original maturities of
      three
      months or less to be cash equivalents.





Compensated
      Absences





Employees
      are entitled to paid vacation, sick, and personal days off, depending on job
      classification, length of service, and other factors, after the employee has
      worked for a minimum period of one year. The Company’s policy is to recognize
      the cost of compensated absences when actually paid to employees as the
      compensation can also be lost if not taken within a specified time. If the
      amounts were estimable, it would not be currently recognized as the amount
      would
      be deemed immaterial because of our small size and
      number of employees who have been with us for less than a year.





Comprehensive
      Income





The
      Company has adopted Statement of Financial Accounting Standards No. 130,
“Reporting Comprehensive Income” (hereinafter “ SFAS
      No. 130 ”),
      which
      was issued in June 1997. SFAS No. 130 established rules for the reporting and
      display of comprehensive income and its components. SFAS No. 130 requires
      unrealized gains and losses on our
      foreign currency translation to be included in comprehensive
      income.





Concentration
      of Credit Risk





Tribeworks
      and each subsidiary maintain cash in both local currency and US
      dollar commercial bank accounts with major reputable financial institutions.
      The
      financial institutions are considered credit worthy and have not experienced
      any
      losses on their deposits at December 31, 2006. Cash balances did not exceed
      Federal Deposit Insurance Corporation (FDIC) limits within the United States,
      however, funds were held in accounts with HSBC in Malta and New Zealand,
      countries not covered by FDIC.





Customer
      Concentrations




In
      2006,
      three customers accounted for 77%, 13% and 10% of total revenues, respectively.
      In 2005, three customers accounted for 42%, 20% and 3% of total revenues,
      respectively. At December 31, 2006 and 2005, accounts receivable from these
      major customers totalled $10,229 and $3,814 respectively.





Revenues
      from international customers were approximately 90% and 42% of total revenues
      in
      2006 and 2005, respectively. Revenues are paid in US dollars
      and Euros. Approximately 11% and 42% of revenues in 2006 and 2005, respectively,
      were generated from non-US based customers. At December 31, 2006 and 2005,
      accounts receivable from all international customers totalled approximately
      $10,301 and $3,814, respectively.




Earnings
      (Loss) per Share




Basic
      earnings per share (“ EPS ”)
      is
      computed based on net income (loss) divided by the weighted average number
      of shares of
      Common Stock outstanding. Diluted EPS is computed based on net income (loss) divided by
      the
      weighted average number of shares of
      Common Stock and
      potential Common
      Stock equivalents outstanding. At our annual meeting of stockholders held August
      19,
      2005, a one-for-three reverse stock split was approved, which reduced the number
      of shares of
      Common Stock outstanding by two-thirds. All references in the accompanying consolidated
      financial statements to the number of shares of
      Common Stock ,
      number
      and exercise price of stock options and stock warrants, and per share amounts
      for the periods prior to the reverse stock split have been restated to reflect
      the reverse stock split.




28


Estimates




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and the disclosure of 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.





Fair
      Value of Financial Instruments





The
      Company’s financial instruments defined by SFAS No. 107 “Disclosures about Fair
      Value of Financial Instruments”, include cash, receivables and short-term debt
      for which the Company believes, due to the short maturity of these financial
      Instruments, approximates fair value at December 31, 2006.





Foreign
      Currency Translation




Transactions
      in foreign currencies are translated at the rates of exchange ruling on the
      dates of the transactions. Monetary assets and liabilities expressed in foreign
      currencies are translated at the rates of exchange  prevailing
      at the end-of-period exchange rates and the translation differences are dealt
      with through the profit and loss account.





Atlas
      Technology Group Holdings Limited and TakeCareofIT Limited functional
      currency is Maltese Lira ( “ MTL ” ), however,
      the statutory financial statements are presented in terms of Euros as required
      by Article 187 of the Companies Act, 1995 (Malta), which stipulates that a
      company must draw up its annual accounts in the same currency as that of its
      share capital. The US companies use US dollars and the New Zealand subsidiary
      uses New Zealand dollars as their functional currencies. The AtlasTG financial
      statements have been converted into US Dollars and reformatted to conform to
      US
      GAAP. The prime accounting records transactions denominated in foreign
      currencies are translated at the rates of exchange ruling on the dates of the
      transactions. Monetary assets and liabilities expressed in foreign currencies
      are translated at the rates of exchange prevailing at balance sheet date.
      Transaction differences are dealt with through the operating statement.
      Unrealized gains or losses on foreign currency translations are included in
      comprehensive income.




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. The Company reported net losses
      during both 2006 and 2005 and had a working capital deficiency. These factors,
      among others, indicate that the Company may be unable to continue as a going
      concern for a reasonable period of time. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.





To
      fully
      develop the new AtlasTG business
      stream, which is now in the initial productions stages and is being deployed
      with customers, management plans to raise additional equity. This process is
      currently underway and unless this equity is raised there is substantial doubt
      about our ability to continue as a going concern. The recoverability of the
      recorded assets and satisfaction of the liabilities reflected in the
      accompanying balance sheets is dependent upon our continued operation, which
      is
      in turn dependent upon our ability to raise additional equity 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.




29


New
      Accounting Pronouncements





In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87,88,106, and 132(R)” (hereinafter “ SFAS
      No. 158 ”).
      This
      statement requires an employer to recognize the overfunded or underfunded status of a
      defined benefit postretirement plan (other than a multiemployer plan) as an
      asset or liability in its statement of financial position and to recognize
      changes in that funded status in the year in which the changes occur through
      comprehensive income of a business entity or changes in unrestricted net assets
      of a not for profit organization. This statement also requires an employer
      to
      measure the funded status of a plan as of the date of its year end statement
      of
      financial position, with limited exceptions. The adoption of this statement
      had
      no immediate material effect on our financial condition or results of
      operations.





In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“ SFAS
      No. 157 ”).
      This
      statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles ( “ GAAP ” ),
      and
      expands disclosure about fair value measurements. This statement applies under
      other accounting pronouncements that require or permit fair value measurements.
      This statement does not require any new fair value measurements, but for some
      entities, the application of this statement may change current practice. The
      adoption of this statement had no immediate material effect on our financial
      condition or results of operations.





In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 156, “Accounting for Servicing of Financial Assets - an
      amendment of FASB Statement No. 140.” This statement requires an entity to
      recognize a servicing asset or servicing liability each time it undertakes
      an
      obligation to service a financial asset by entering into a servicing contract
      in
      any of the following situations: a transfer of the servicer’s financial assets
      that meets the requirements for sale accounting; a transfer of the servicer’s
      financial assets to a qualifying special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale securities or trading
      securities; or an acquisition or assumption of an obligation to service a
      financial asset that does not relate to financial assets of the servicer or
      its
      consolidated affiliates. The statement also requires all separately recognized
      servicing assets and servicing liabilities to be initially measured at fair
      value, if practicable and permits an entity to choose either the amortization
      or
      fair value method for subsequent measurement of each class of servicing assets
      and liabilities. The statement further permits, at its initial adoption, a
      one-time reclassification of available for sale securities to trading securities
      by entities with recognized servicing rights, without calling into question the
      treatment of other available for sale securities under Statement 115, provided
      that the available for sale securities are identified in some manner as
      offsetting the entity’s exposure to changes in fair value of servicing assets or
      servicing liabilities that a servicer elects to subsequently measure at fair
      value and requires separate presentation of servicing assets and servicing
      liabilities subsequently measured at fair value in the statement of financial
      position and additional disclosures for all separately recognized servicing
      assets and servicing liabilities. This statement is effective for fiscal years
      beginning after September 15, 2006, with early adoption permitted as of the
      beginning of an entity’s fiscal year. Management believes adoption of this
      statement will have no immediate impact on our financial condition or result
      of
      operations.





In
      February 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 155, “Accounting for Certain Hybrid Financial
      Instruments, an amendment of FASB Standards No. 133 and 140” (hereinafter
“ SFAS
      No. 155 ”).
      This
      statement established the accounting for certain derivatives embedded in other
      instruments. It simplifies accounting for certain hybrid financial instruments
      by permitting fair value remeasurement for any hybrid instrument that contains
      an embedded derivative that otherwise would require bifurcation under SFAS
      No.
      133 as well as eliminating a restriction on the passive derivative instruments
      that a qualifying special-purpose entity (“ SPE ”)
      may
      hold under SFAS No. 140. This statement allows a public entity to irrevocably
      elect to initially and subsequently measure a hybrid instrument that would
      be
      required to be separated into a host contract and derivative in its entirety
      at
      fair value (with changes in fair value recognized in earnings) so long as that
      instrument is not designated as a hedging instrument pursuant to the statement.
      SFAS No. 140 previously prohibited a qualifying special-purpose entity from
      holding a derivative financial instrument that pertains to a beneficial interest
      other than another derivative financial instrument. This statement is effective
      for fiscal years beginning after September 15, 2006, with early adoption
      permitted as of the beginning of an entity’s fiscal year. Management believes
      the adoption of this statement will have no impact on our financial condition
      or
      results of operations.




30


In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 154, “Accounting Changes and Error Corrections,”
(hereinafter “SFAS No.154”) which replaces Accounting Principles Board Opinion
      No. 20, “Accounting Changes”, and SFAS No. 3, “Reporting Accounting Changes in
      Interim Financial Statements - An Amendment of APB Opinion No. 28”. SFAS No. 154
      provides guidance on accounting for and reporting changes in accounting
      principle and error corrections. SFAS No. 154 requires that changes in
      accounting principle be applied retrospectively to prior period financial
      statements and is effective for fiscal years beginning after December 15, 2005.
      See Note 13.





Property
      and Equipment





Property
      and equipment are stated at cost. Depreciation of property and equipment is
      calculated using the straight-line method over the estimated useful lives of
      the
      assets, which range from three to seven years. See Note 4.





Revenue
      Recognition





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





Software
      Development Costs




The
      Company has in the past expensed all of its software development costs in the
      period the costs are incurred. With the new software purchased with AtlasTG
      and
      being developed by AtlasTG reaching the beta stage, the Company has adopted
      Statement of Financial Accounting Standards No. 86, “Accounting for the Costs of
      Computer Software to Be Sold, Leased, or Otherwise Marketed” (“ SFAS
      86 ”)
      and
      has capitalized certain development costs that meet the requirements of SFAS
      86.


Capitalized
      costs will be amortized over three years from the date on which the new AtlasTG
      business goes into full commercialization. Not all of the development costs
      for
      the period meet the requirements of SFAS 86, and $859,780 of software
      development costs have been expensed in the period. Our intangible assets are
      summarized as follows:




2006
            
            2005Software
                Development
            
            $
            454,942
            
            $
            —IT
                Technology Acquired
            
            
            835,192
            
            
            —Less:
                Accumulated Amortization
            
            
            (33,540
            )
            
            —$
            1,256,594
            
            $
            —




Stock-Based
      Awards




Prior
      to
      2006, the Company accounted for stock based awards to employees under its
“Equity Incentive Plan” as compensatory in accordance with Accounting Principles
      Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“ APB
      25 ”).
      The
      Company also recorded stock-based awards for services performed by consultants
      and other non-employees in accordance with Statement of Financial Accounting
      Standards No. 123, “Accounting for Stock-Based Compensation” (“ SFAS
      123 ”).




In
      December 2002, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation
      - Transition and Disclosure” (hereinafter “SFAS No. 148”). SFAS No. 148 amends
      SFAS No. 123, “Accounting for Stock-Based Compensation,” to provide alternative
      methods of transition for a voluntary change to the fair value based method
      of
      accounting for stock-based employee compensation. In addition, the statement
      amends the disclosure requirements of SFAS No. 123 to require prominent
      disclosure in both annual and interim financial statements about the method
      of
      accounting for stock-based employee compensation and the effect of the method
      used on reported results. The provisions of the statement are effective for
      financial statements for fiscal years ending after December 15, 2002. The
      Company has adopted SFAS No. 123(R) in 2006.




31


**NOTE
      3 - LOAN TO ATLAS TECHNOLOGY GROUP**





During
      2005, Tribeworks advanced $1,073,744 to AtlasTG, a group of companies then controlled
      by the current directors of Tribeworks, in order for AtlasTG to pursue its business plan.
      AtlasTG had not yet established profitable operations, nor is it in a position
      to repay the loan. Subsequent to the acquisition of AtlasTG on January 20,
      2006,
      AtlasTG is now fully consolidated into the consolidated accounts presented
      in
      these financial statements and the loan is now treated as an inter-company
      advance and eliminated in the consolidation.





**NOTE
      4 - PROPERTY AND EQUIPMENT**





Property
      and equipment are stated at cost. Depreciation is provided using the
      straight-line method over the estimated useful lives of the assets. The useful
      lives of property, plant and equipment for purposes of computing depreciation
      are five to forty years. The following is a summary of property, equipment,
      and
      accumulated depreciation:





December
                31, 2006Computer
                Equipment
            
            
            234,154Office
                Furniture and fittings
            
            
            46,746Total
                assets
            
            
            280,900Less
                accumulated depreciation
            
            
            (71,047
            )$
            209,853





Depreciation
      and amortization expense for the year ended December 31, 2006 was $71,047
      (2005 : $0 ).
      We
      evaluate the recoverability of property and equipment when events and
      circumstances indicate that such assets might be impaired. We determine
      impairment by comparing the undiscounted future cash flows estimated to be
      generated by these assets to their respective carrying amounts. Maintenance
      and
      repairs are expensed as incurred. Replacements and betterments are capitalized.
      The cost and related reserves of assets sold or retired are removed from the
      accounts, and any resulting gain or loss is reflected in results of
      operations.





**NOTE
      5 - LOANS, ADVANCES AND NOTE PAYABLE**





On
      March
      30, 2005, the Company announced a plan of reorganization, intended to allow
      the
      Company to maintain its public reporting requirements, reduce its debt, and
      explore new business directions. The plan of reorganization included the
      transfer of most assets and liabilities to the Company’s operating subsidiary, TDC .
      As part
      of this initial reorganization the balance of an earlier Note issued on January
      21, 2001 was acquired by a financier who agreed to provide under a new note
      agreement (“ Note ”)
      which
      provided for unsecured borrowing at 4% in an amount of up to $100,000 to help
      cover reorganization costs. As of December 31, 2005, the Company had borrowed
      $91,474 against the new Note agreement increasing the total amount owing under
      the Note to $175,175.





During
      2006, the Note was renegotiated with the financing party agreeing to take up
      100,000 shares in the Company at $1.00 per share plus 50,000 2 year warrants
      exercisable at $1.25 per new share with balance plus accrued interest being
      converted into a new Note for $120,000 repayable on March 30, 2007. Interest
      has
      been accrued and added to the original Note balance and is included in the
      $190,582 balance of other loans and advances at December 31, 2006.





The
      balance of the $190,582 comprises advances from shareholders and related parties
      partially evidenced by a Note Payable of $120,000 (inclusive of interest accrued
      and accruing) and repayable on March 30, 2007. The other advances have no fixed
      repayment dates, but are considered to be of a short-term nature.




32


**NOTE
      6 - INCOME TAXES**





Deferred
      income tax assets and the related valuation allowances result principally from
      the potential tax benefits of net operating loss carryforwards. With the changes
      in shareholdings that have taken place since August 2005 many of the previous
      losses carried forward may have been lost and the losses incurred in the 2005
      and 2006 years have not yet been confirmed by the various taxing authorities.
      With the Company’s historical losses, the Company cannot record and value the
      tax benefit of its losses with any certainty.





Losses
      have been incurred not only in the US, but also in Malta and in New Zealand
      where the rates differ from those of the US, as to the carry forward rules.
      The
      Company has incurred losses in all of its jurisdictions. The tax accrued is
      for
      the minimum tax payable to the state of
      California where Tribeworks had
      its
      US offices until
      September 2006 when it was moved to Redmond, Washington .





Based
      on
      the losses incurred for the years to December 31, 2006 and 2005, the Company
      had
      deferred tax assets of approximately $743,668 and $66,517, respectively,
      principally arising from net operating loss carryforwards for income tax
      purposes multiplied by an average expected tax rate of 34%. As management of
      the
      Company cannot determine that it is more likely than not that the Company will
      realize its benefit of the deferred tax assets, a valuation allowance equal
      to
      the deferred tax assets was present at December 31, 2006 and 2005.




The
      significant components of the deferred tax assets at December 31, 2006 and
      2005
      were as follows:




December
                31,
              2006
            
            December
                31,
              2005Net
                operating loss carryforward
            
            $
            2,187,259
            
            $
            195,639Deferred
                tax asset
            
            $
            743,668
            
            $
            66,517Deferred
                tax asset valuation allowance
            
            $
            (743,668
            )
            $
            (66,517
            )




December
      31, 2006 and 2005, the Company has net operating loss carryforwards of
      approximately $2,187,000 and $195,000, respectively, which expire in the years
      2021 through 2025. The change in the allowance account from December 31, 2005
      to
      2006 was $677,151.




The
      majority of these losses are in companies outside of the United States of
      America and are subject to various restrictions as to there future use and
      any
      changes in ownership not dissimilar to the restrictions imposed by The Tax Reform Act of
      1986 and Internal Revenue Code. Under such circumstances, the Company’s ability
      to utilize its net operating losses against future income may be
      reduced





**NOTE
      7 - CAPITAL STOCK**





The
      Company has an authorized share capital of: 200,000,000 shares of Common
      Stock of
      $0.0004 each; and 10,000,000 shares of preferred stock of $0.0004
      each.





At
      the
      Company’s annual
      general meeting held on
      August 19, 2005, the shareholders approved a 1-for-3 reverse share split such
      that post the 1-for-3 reverse split there were 1,569,555 shares of Common
      Stock issued
      and outstanding. The reverse share split did not affect the number of authorized
      shares. Subsequent to the Company’s 2005
      annual general meeting where
      shareholders approved the private placement of up to 19,000,000 post-reverse
      split shares of Common
      Stock at a
      price of $0.01 per share, subscription monies of $190,000 were received and
      19,000,000 shares of
      Common Stock were
      issued.




The
      Company raised a further $42,000 by placement of 84,000 shares of Series B Preferred Stock at a
      stated value $0.50 per share during the third quarter of
      2005. Each
      share is fully convertible on a one-for-one basis into shares of
      Common Stock of the
      Company at the discretion of the board. The board exercised its discretion
      and
      these shares of
      Series B Preferred Stock were
      converted on December 29, 2006 into 84,000 shares of Common
      Stock per the
      terms of the issue together with the issue of one (1) warrant for every two
      (2)
      new shares of
      Common Stock to
      subscribe for shares of
      Common
      Stock at $1.00
      per share of
      Common Stock within
      one year. Dividends totalling $5,880 were accrued, being the entitlement to
      an
      annual cumulative dividend of 10% of the Stated Value.




33





In
      the
      third quarter of 2005 the Company also raised $110,000 by way of a private
      placement of 220,000 shares of Common
      Stock at a
      value of $0.50 per share with these shares having attached to them one (1)
      warrant for every two (2) new shares of
      Common Stock to
      subscribe for shares of
      Common
      Stock of the
      Company at $1.00 per share of
      Common Stock within
      one year of these new shares of
      Common Stock being
      issued.





In
      the
      fourth quarter of 2005, the Company received $417,289 of subscription monies
      to
      subscribe for shares. Further private placement subscription monies were
      received during the first quarter of 2006 and the Company then issued 1,714,000
      shares of Common
      Stock at a
      price of $0.50 per share.





During
      the quarter ended March 31, 2006, a staff option holder under the 1999 Stock
      Incentive Plan exercised 6,250
      options into 6,250 shares of Common
      Stock for a
      total consideration of $3,000.





During
      the year ended December 31, 2006, 1,140,000 shares of Common
      Stock were
      placed during the quarter ended June 30, 2006 to five European investment funds
      at a price of $1.25 per share. Along with these shares , the
      Company also issued one warrant for every two new shares of Common Stock
      purchased. The warrants have an exercise price of $1.75 per share. The warrants
      have a two year term
      and
      will expire
      on May 31, 2008. Each investor represented in writing to the Company that it is “accredited
      investor” as that term is defined in Rule
      501 of Regulation D promulgated under
      the Securities
      Act .





In
      addition to brokerage and commission fees of $85,500 for raising the funds
      discussed above,
      Westmount Capital was issued 85,500 warrants with an exercise price of $1.75
      per
      share. These warrants have a two year term that
      expires on June
      16, 2008 and have a fair market value of $8,550.





In
      the
      fourth quarter of
      2006, 50,000
      warrants to
      purchase shares of Common Stock at $1.00
      per share were
      exercised. 80,000
      shares of
      Common
      Stock were
      issued at
      50
      cents per share. Additionally, 300,000
      shares were issued at $1.00 per
      share , along with (1)
      warrant for every two (2) shares
      of Common Stock issued. These warrants are exercisable at a price of $1.25
      per
      share of Common Stock and are exercisable for a period of two years.





During
      the fourth quarter of 2006, 100,000
      shares of Common
      Stock were
      issued for debt at $1.00 per share including 50,000 warrants exercisable a t $1.25
      per
      share.




**NOTE
      8 - STOCK OPTIONS AND STOCK WARRANTS**





Stock
      Options




The
      Company maintains a 1999 Equity Incentive Plan for the issuance of stock options
      to employees, directors and consultants. 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, 2005, there were 50,334 shares reserved for issuance under the 1999 Equity
      Incentive Plan after adjusting for the two subsequent reverse splits. During
      the
      quarter ended March 31, 2006, a staff option holder under the 1999 Stock
      Incentive Plan exercised 6,250
      options at
      an
      option price of 48 cents per share for a
      total consideration of $ 3,000.





The
      Company also maintains a 2004 Employee Stock Incentive Plan (“ 2004
      Plan ”)
      for
      the issuance of stock options, Common
      Stock ,
      restricted stock, and stock bonuses to employees, officers and key consultants.
      At December 31, 2005, it was possible to award a total of options for
      5,401,888 shares under the 2004 Employee Stock Incentive Plan, which equated
      to
      25% of the issued Common
      Stock of the
      Company, however, no awards had been issued from the plan as of December 31,
      2005 and therefore no shares have been reserved for issuance under that Plan.
      On
      December 29, 2006 the Company made the first issue of 90,000 options under
      the 2004 Plan. These options have an exercise price of $1.00, which was the
      market price on the date of issue, and vest as to 20% per annum
      starting December 31, 2007.




34


A
      summary
      of the Company’s stock options as of December 31, 2006 and 2005 and changes
      during the years ending on those dates is presented
      below:




2006
            
            2005Shares
              Under
              Options
            
            Weighted
                Ave Exercise Price
            
            Shares
              Under
              Options
            
            Weighted
                Ave
              Exercise
                PriceOutstanding
                at beginning of year
            
            
            50,334
            
            $
            6.53
            
            
            82,834
            
            $
            4.26Exercised
                during the year
            
            
            (6,250
            )
            
            (0.48
            )Issued
                during the year
            
            
            90,000
            
            
            1.00Cancelled
            
            
            
            
            
            
            
            
            (32,500
            )
            $
            2.16Outstanding
                at end of year
            
            
            134,084
            
            $
            3.10
            
            
            50,334
            
            $
            6.53Options
                exercisable at end of year
            
            
            44,084
            
            $
            3.10
            
            
            50,334
            
            $
            6.53Weighted-average
                fair value of options granted during the year
            
            
            90,000
            
            $
            1.00
            
            
            
            
            $
            —Fair
                market value of non-vested stock options
            
            $
            43,278




The
                following table summarizes information about stock options outstanding
                at
                December 31, 2006:




Options
                Outstanding
            
            Options
                ExercisableOptions
                Outstanding
            
            Weighted
              Average
              Remaining
              Life
            
            Weighted
              Average
              Exercise
              Price
            
            Options
              Exercisable
            
            Weighted
              Average
              Exercise
              Price1,667
            
            
            2.50
                years
            
            $
            0.60
            
            
            1,667
            
            $
            0.602,083
            
            
            3.40
                years
            
            
            33.60
            
            
            2,083
            
            
            33.602,500
            
            
            3.55
                years
            
            
            37.08
            
            
            2,500
            
            
            37.082,000
            
            
            3.65
                years
            
            
            30.00
            
            
            2,000
            
            
            30.001,667
            
            
            3.88
                years
            
            
            12.00
            
            
            1,667
            
            
            12.0015,000
            
            
            4.01
                years
            
            
            4.50
            
            
            15,000
            
            
            4.502,500
            
            
            4.22
                years
            
            
            3.00
            
            
            2,500
            
            
            3.0016,667
            
            
            5.47
                years
            
            
            0.42
            
            
            16,667
            
            
            0.4290,000
            
            
            6.00
                years
            
            
            1.00
            
            
            90,000
            
            
            1.00134,084
            
            
            
            
            
            
            
            
            134,084
            
            
            3.10





35


**NOTE
      8 - STOCK OPTIONS AND STOCK WARRANTS (cont’d)**





Stock
      Warrants




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





**Warrants**
            
            **Weighted
                Average**
              **Exercise
                Price**Outstanding
                at December 31, 2004
            
            
            15,000
            
            
            4.50Issued
                during 2005
            
            
            519,000
            
            
            1.00Outstanding
                at December 31, 2005
            
            
            534,000
            
            
            1.10Expired
            
            
            (15,000
            )
            
            (4.50
            )Expired
            
            
            (110,000
            )
            
            (1.00
            )Exercised
            
            
            (50,000
            )
            
            1.00Issued
                during 2006
            
            
            655,500
            
            
            1.75Issued
                during 2006
            
            
            200,000
            
            
            1.25Issued
                during 2006
            
            
            42,000
            
            
            1.00Outstanding
                at December 31, 2006
            
            
            1,256,500
            
            
            1.43





·
            519,000
                warrants were granted in 2005 in connection with the issue of 220,000sharesof
                Common Stockand the issue and conversion of 818,000 Series A Preferred
                Stock.





·
            15,000
                (post reverse stock split) warrants outstanding from pre December
                31, 2004
                expired on January 1, 2006without
                being exercised and have expired.





·
            110,000
                warrants outstanding at December 31, 2005 expired on October 26,
                2006
                without being exercised.





·
            50,000
                warrants due to expire on January 5, 2007 were exercised during 2006
                at
                $1.00 per share.





·
            570,000
                2 year warrants with an exercise price of $1.75 per share were issued
                in
                conjunction placement of 1,140,000 shares ofCommon
                Stock.
                These warrants expire on May 31,
                2008.





·
            85,500
                2 year warrants with an exercise price of $1.75 per share were issued
                as
                part of the brokerage fees paid for placement of 1,140,000sharesof
                Common Stock.





·
            150,000
                2 year warrants with an exercise price of $1.25 per share were issued
                in
                conjunction placement of 300,000 shares ofCommon
                Stock.





·
            50,000
                2 year warrants with an exercise price of $1.25 per share were issued
                in
                conjunction with the issue of 100,000 share ofCommon
                Stockfor the partial conversion of an advance. Financing charge of $8,651
                has
                been taken to expense and credited into additional paid in capital
                in
                regard to these warrants.





·
            42,000
                warrants were granted in conjunction with the conversion of 84,000shares
                ofSeriesBPreferredStock.





The
      following table summarizes information about stock warrants outstanding at
      December 31, 2006:




Warrants
                Outstanding
            
            Warrants
                Exercisable**Warrants**
              **Outstanding**
            
            **Weighted**
              **Average**
              **Remaining**
              **Life**
            
            **Exercise**
              **Price**
            
            **Warrants**
              **Exercisable**
            
            **Exercise**
              **Price**
            
            **Expiration**
              **Date**359,000
            
            
            5
                days
            
            $
            1.00
            
            
            359,000
            
            $
            1.00
            
            
            1/05/07570,000
            
            
            17
                months
            
            $
            1.75
            
            
            570,000
            
            $
            1.75
            
            
            5/31/0885,500
            
            
            18
                months
            
            $
            1.75
            
            
            85,500
            
            $
            1.75
            
            
            6/16/08150,000
            
            
            23
                months
            
            $
            1.25
            
            
            150,000
            
            $
            1.25
            
            
            11/28/0850,000
            
            
            24
                months
            
            $
            1.25
            
            
            50,000
            
            $
            1.25
            
            
            12/29/0842,000
            
            
            12
                months
            
            $
            1.00
            
            
            42,000
            
            $
            1.00
            
            
            12/29/071,256,500
            
            
            
            
            
            
            
            
            1,256,500




36




**NOTE
      9 - COMMITMENTS**





Leases




AtlasTG
      has a six (6) year office lease covering approximately 471 square meters located
      at Level 3, 9 Empire Stadium Street, Gzira GZR04, Malta expiring on August
      14,
      2010 at a base annual rent of MTL16,000 (approx US$48,000), which escalates
      by
      MTL2,000 per annum (approx US$6,000) until the final year.





AtlasTG
      has a four year office lease of the second floor of 139-141 Featherston Street
      in Wellington, New Zealand expiring on July 31, 2009. The office comprises
      approximately 300 sq meters with a base annual rental of NZ$55,500 per annum
      (approx US$38,500) plus 12.5% Goods and Services Tax (“GST”) which is claimable
      against GST revenue tax payable or is refundable.





AtlasTG
      has a three year office lease of Suite 2001 at the Limited Edition Office Park,
      2001 152 nd Avenue
      NE, Redmond, WA., expiring on July 31, 2009. The office comprises 3,825 rentable
      square feet at a base annual rental of US$61,200 in the first year, escalating
      to $68,850 in the 2 nd year and
      $76,500 in the 3 rd year.





Approximate
      future lease commitments are as follows:




2007
            
            $
            150,0002008
            
            $
            160,0002009
            
            $
            90,0002010
            
            $
            30,000




**NOTE
      10 - RELATED PARTY TRANSACTIONS**





Due
      to
      Shareholders




The
      $190,582 of advances and loans showing in current liabilities are owed to
      shareholders and/or a company which is a related party of a shareholder. The
      advances are all interest bearing at 6% per annum and the largest is
      collateralized by a note payable equal to $120,000 at maturity on March 30,
      2007. The interest content of this advance is being amortized over the life
      to
      maturity. At December 31, 2005 there was a $6,232 non-interest
      bearing advance from a shareholder to a subsidiary that has been reclassified
      into discontinued operations in 2006.





Transactions
      with Related Parties





On
      January 20, 2006 Tribeworks acquired AtlasTG, which over the previous 18 months
      had been developing its new software system for providing external IT
      application support services for organizations with large IT functions. Since
      January 2006 this work has been carried out by both AtlasTG employees and
      specialist consultants engaged to prepare modules of this new software system.
      Some of these consultants are engaged through WebConsult, a company formerly
      associated with Robert Altinger, a director of the Company, and two of the
      consultants engaged through WebConsult continue to carry out such work on normal
      commercial terms. WebConsult Inc. is managed by Robert Altinger’s
      wife.




**NOTE
      11 - DISCONTINUED OPERATIONS AND SALE OF TDC**





The
      Company’s principal business activity in 2005 and prior years was focused on the
      commercialization of the iShell® technology. The rights to the iShell®
technology were sold to a former staff member in mid 2006 together with the
      lease commitments to the office in San Francisco.




On
        April
        12, 2006, Robert Davidorf, a former director and officer of the Company,
        and on
        that date a director and officer of TDC, resigned. In his letter of resignation,
        Mr. Davidorf made certain claims for payment of approximately $130,000 in
        accrued salaries (including $95,388 relating to an deferred compensation
        arrangement) and expenses allegedly owed to him. This matter was settled
        without
        payment of any extra compensation as part of the sale of the Company’s wholly
        owned subsidiary, TDC, which was completed on September 14, 2006 by way of
        a
        sale to 541368 LLC, a California limited liability company, purchasing 100%
        of
        the stock of TDC for an aggregate consideration of $100 and the settlement
        of
        certain disputes between Tribeworks and certain members of the management
        of
        541368 LLC, who formerly served as the management of Tribeworks and TDC (see
        above). In addition, Tribeworks agreed to make a one-time cash payment of
        $44,500 to TDC in full satisfaction of Tribeworks’ obligations under an existing
        support agreement dated as of August 1, 2005 between Tribeworks and TDC,
        and the
        support agreement was terminated pursuant to the sale agreement. The sale
        agreement also contained customary representations, warranties, covenants
        and
        mutual indemnity provisions.




37




The
      assets and liabilities disposed of from the discontinued operations of TDC
      at
      June 30, 2006 (the financial statements used in the sale) were as
      follows:





**Assets:**Accounts
                receivable
            
            $
            108,661Prepayments
            
            
            4,291Computers
                and equipments, net
            
            
            811Total
                assets
            
            $
            113,763**Liabilities:**Bank
                overdraft
            
            $
            14,810Accounts
                payable and accruals
            
            
            373,676Total
                Liabilities
            
            $
            388,486




In
      June
      2002, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 146, “Accounting for Costs Associated with Exit or
      Disposal Activities” (hereinafter “ SFAS
      No. 146 ”).
      SFAS
      No. 146 addresses significant issues regarding the recognition, measurement,
      and
      reporting of costs associated with exit and disposal activities, including
      restructuring activities. SFAS No. 146 also addresses recognition of certain
      costs related to terminating a contract that is not a capital lease, costs
      to
      consolidate facilities or relocate employees, and termination benefits provided
      to employees that are involuntarily terminated under the terms of a one-time
      benefit arrangement that is not an ongoing benefit arrangement or an individual
      deferred-compensation contract. SFAS No. 146 was issued in June 2002, effective
      December 31, 2002 with early adoption encouraged. The effect on the Company’s
      financial statement of the adoption of SFAS No. 146 is reflected in discontinued
      operations.




The
      Company’s financial results for prior periods have been reclassified to reflect
      the discontinued operations of TDC in 2005. Condensed results of discontinued
      segments are as follows:




June
                30,
              2006
            
            December
                31,
              2005Net
                Sales
            
            $
            122,370
            
            
            593,597Net
                Income (Loss)
            
            $
            (42,752
            )
            $
            23,730




**NOTE
      12 — ACQUISITION OF ATLAS TECHNOLOGY GROUP**




On
      January 20, 2006, the Tribeworks acquired 100 percent of the issued capital
      of
      TakeCareofIT Holdings Limited, a Malta corporation, and its subsidiaries, which
      had been collectively doing business as Atlas Technology Group (collectively,
      “AtlasTG”), for $37,235 in cash and the assumption of $1,144,106 of current
      liabilities (of which $1,073,744 plus interest was due to Tribeworks). AtlasTG
      was established in September 2004 to provide external Information Technology
      (IT) application support services for organizations with large IT
      functions.




The
        acquisition of AtlasTG was accounted for using the purchase method of
        accounting. The purchase price was allocated to the tangible and intangible
        net
        assets acquired based on the management’s evaluation of their respective
        replacement values on the acquisition date in accordance with SFAS No. 141.
        Upon
        acquisition, AtlasTG became a wholly owned subsidiary of Tribeworks, Inc.
        The
        results of AtlasTG operations, commencing with the date of acquisition, January
        20, 2006, are included in these financial statements.




38




The
      purchase price was allocated as follows:




Cash
            
            $
            93,273VAT
                receivable
            
            
            22,596Deposits/prepaids
            
            
            4,924Equipment
            
            
            225,030IT
                Technology
            
            
            835,192$
            1,181,015





**NOTE
      13 - CORRECTION OF AN ERROR**





On
      January 20, 2006, Tribeworks completed the acquisition of 100% of the
      outstanding shares of TakeCareofIT Holdings Limited and its subsidiaries (d/b/a
      the Atlas Technology Group) (“ AtlasTG ”).
      The
      effect of this acquisition has been filed in a Current Report on Form 8-K/A
      on
      November 17, 2006, which included a pro forma consolidation of AtlasTG 's
      financial results with those of Tribeworks at December 31, 2005. These changes
      were reflected in the restated financial statements for the year ending December
      31, 2005 and set out in an amended filing in a Current Report Form 8-K/A filed
      on March 28, 2007. As
      a result of these amendments and corrections of errors the following adjustments
      were made:





·
            Advance
                to AtlasTG of $1,073,744 has been brought into the December 31, 2005
                assets in the Balance Sheet as a correction of an error and change
                in
                accounting policies to be consistent with the accounting policies
                adopted
                following the acquisition of AtlasTG on January 20, 2006 (the assets
                acquired in AtlasTG are set out in the table in Note
                12);





·
            The
                accumulated deficit at December 31, 2005 was reduced by $1,073,744
                and as
                a result the Total Stockholders’ Equity was restated as
                $415,583;





·
            The
                amount of product development expense was been reduced from $1,141,031
                to
                $67,287 and this in turn reduced the loss from continuing operations
                to
                $191,283 from the previous $1,265,027, the net loss before income
                taxes to
                $171,021 (previously $1,244,765) and the net loss to $175,791 from
                $1,249,535, before the subsequent adjustment for discontinued operations
                on the sale of TDC in September
                2006);





·
            The
                2005 loss per share has been reduced to $0.02 for continuing operations
                from the previous $0.06.





·
            The
                reduced loss from operating activities has been reflected in the
                Consolidated Statement of Cash Flows with a compensating investment
                in
                Atlas of $1,073,744.





·
            Further
                note explanations were added or amended to explain these changes
                and
                appropriate accounting standards associated with the amended results.





·
            In
                addition, with the sale of TDC and the reclassification of the results
                of
                TDC as discontinued operations, there have been further amendments
                to some
                of these 2005 comparative figures in the financial statements for
                the year
                ended December 31, 2006.




39


**NOTE
      14 - SUBSEQUENT EVENTS**





Purchase
      of the business of BLive Networks Inc




On
      January 19, 2007, Tribeworks, Inc., entered into an Asset and Stock Purchase
      Agreement with BLive Networks Inc., a Delaware corporation ( *“* BLive ” *)* ,
      Forte
      Finance Limited, a Maltese limited liability company ( “ Forte ” *)* and
      Petroleum Corporation of Canada Limited, an Alberta corporation ( “ Petroleum
      Corp. ” *)* ,
      pursuant to which the Company purchased substantially all of the assets of
      BLive
      in exchange for 1,000,000 fully paid shares of Common
      Stock in the
      Company. This agreement was closed on January 26, 2007.




Additionally,
      in consideration of the payment by Petroleum Corp. of $100,010, the Company
      agreed to issue to Petroleum Corp. 100,000 fully paid shares of the Company’s Common
      Stock and a
      warrant to purchase 300,000 shares of Common
      Stock of
      Tribeworks at $1.25 per share for a period of two years. The shares issued
      in
      connection with this transaction have been issued to Petroleum Corp., as a
      creditor of BLive. In addition, 150,000 shares of Common
      Stock have
      been issued to Forte as an M&A fee for the transaction (“ Advisory
      Shares ”).
      The
      shares issued in connection with this transaction are “restricted securities”
(as defined in the Securities Act of 1933, as amended, (the *“* Act *”* ).
      In
      connection with the BLive Agreement, Tribeworks also entered into an escrow
      agreement with the following parties with the following terms: (a) an Escrow
      Agreement between Petroleum Corp. and the Company, whereby 300,000 shares of Common
      Stock are held
      in escrow until the receipt of certain Canadian tax refunds owed to Infobuild
      (refund since received); and (b) an Escrow Indemnification Agreement between
      Forte and the Company, whereby the 150,000 shares of Common
      Stock issued
      to Forte are held in escrow until the expiration of a twelve month indemnity
      period that was signed pursuant to an agreement with Forte, dated January 19,
      2007.





As
      part
      of the BLive Agreement, Tribeworks has also acquired a forty-nine percent
      ownership interest in BLive’s Canadian affiliate, Infobuild Networks (Canada)
      Inc. Infobuild Networks (Canada) Inc has subsequently been renamed BLive
      Networks Inc., and the business is now trading through this entity. Tribeworks
      has also entered into an option agreement to purchase the remaining 51% of
      Infobuild which can be exercised at any time over the next twelve months at
      the
      option of Tribeworks.





40


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





On August
      19, 2005, HLB Cinnamon , Jang , Willoughby Chartered
      Accountants were
      appointed our
      new auditors .
      On
      October 13, 2006, the board of directors of Tribeworks, Inc. approved the
      dismissal of HLB Cinnamon, Jang, Willoughby, Chartered Accountants, as our independent registered public accounting firm.





No
      report
      of HLB Cinnamon, Jang, Willoughby, Chartered Accountants, on the financial
      statements for either of the past two years contained any adverse opinion or
      disclaimer of opinion or was qualified or modified as to uncertainty, audit
      scope, or accounting principle. During the fiscal years ended December 31,
      2005
      and 2006 and through October 13, 2006, there were no disagreements with HLB
      Cinnamon, Jang, Willoughby, Chartered Accountants, on any matter of accounting
      principles or practices, financial statement disclosure, or auditing scope
      or
      procedure, which disagreement(s), if not resolved to the satisfaction of HLB
      Cinnamon, Jang, Willoughby, Chartered Accountants, would have caused it to
      make
      reference thereto in any report. During the fiscal years ended December 31,
      2005
      and 2006 and through October 13, 2006, there were no reportable events (as
      defined in Item 304(a)(1)(v) of Regulation S-K). We requested that HLB Cinnamon, Jang, Willoughby, Chartered Accountants, furnish us with a
      letter addressed to the Securities and Exchange Commission (“ SEC ”)
      stating whether or not it agrees with the above statements and such a letter
      was
      filed with the SEC as an exhibit to a Current
      Report on Form
      8-K.





On
      October 13, 2006, we engaged
      the firm of Williams & Webster, P.S. as our principal independent accountant to audit our financial statements. Since we
      do not
      currently maintain an audit committee, our full
      board of directors approved
      the engagement of Williams & Webster, P.S. Prior
      to
      the engagement of Williams & Webster, P.S., neither we, nor any
      person on our behalf
      consulted Williams & Webster, P.S. regarding either (i) the application of
      accounting principles to a specified completed or proposed transaction or the
      type of audit opinion that might be rendered on our financial statements, or (ii) any matter that was the subject of a disagreement
      (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions
      to such Item) or a reportable event (as defined in Item 304(a)(1)(v) of
      Regulation S-K).




41


**ITEM
      8A. CONTROLS AND PROCEDURES**





Our Chief
      Executive Officer and our Chief
      Financial Officer have
      concluded, based on their evaluation as of the end of the period covered by
      this
      Annual Report, that our disclosure controls and procedures are effective to ensure that information
      required to be disclosed in
      the
      reports filed or submitted by it under the Securities Act of 1934, as amended,
      is recorded, processed, summarized and reported within the time periods
      specified in the SEC ’s
      rules
      and forms, and include controls and procedures designed to ensure that
      information required to be disclosed by the US in such
      reports is accumulated and communicated to our management, including our Chief
      Executive Officer, as appropriate to allow timely decisions regarding required
      disclosure.





In our Annual
      Report on Form 10-KSB for the year ended December 31, 2005, filed on April
      17,
      2006, as amended
      and reported in a Form 10-KSB/A on December 21, 2006
      and
      as amended in a Form 10-KSB/A on April 4, 2007, our
      management concluded that our internal control over financial reporting
      disclosures and procedures were effective as of December 31, 2005. The amended
      filing made on December 21, 2006 was a result
      of the filing of a Form 8-K/A on
      November 17, 2006 related to the
      acquisition of AtlasTG and the filing of pro forma financial statements
      reflecting the result of the satisfaction of the purchase agreement between
      Tribeworks and the
      shareholders of AtlasTG.  The
      pro
      forma financial statements were prepared utilizing the historical financial
      statements of Tribeworks and AtlasTG. The pro forma consolidated statement
      of
      operations assumes that the combination occurred at the beginning of the periods
      presented in the statements. All intercompany accounts and transactions were
      eliminated and certain adjustments to the December 2005 pro forma balance sheets
      were made as set out in Note 13 above and these were filed in an amended
      Form10-KSB/A on December 21, 2006.





We
      subsequently determined the
      changes made with regard to the capitalization of software development costs
      and
      restatement of assets following the AtlasTG acquisition needed to be
      disclosed as a correction of an error and full disclosure of this has been
      made
      in the Notes accompanying  the financial statements in this
      Annual Report and the
      refiled Forms 10-KSB/A and 10-QSB/A that have been filed in late
      March and early April of 2007. When AtlasTG was
      acquired by us on
      January 20, 2006, AtlasTG had in place internal procedures and controls for
      the
      capitalization of software development costs, whereas we had an
      accounting policy of writing off all development costs as
      the
      TDC software was regarding a mature product .
      Therefore the write-off made in our financial statements for the year ended December 31, 2005 was in accordance
      with existing accounting
      policies, but following the acquisition and subsequent sale of the former
      business operations of Tribeworks and during the preparation of a restatement
      of the AtlasTG financial statements for the Form 8-K/A filed on November 17,
      2006, it was thought more appropriate that the AtlasTG accounting policies, be
      adopted as our accounting policy since AtlasTG’s business was now our primary
      business. Our auditors
      agreed with this
      conclusion .
      We now
      realize the subsequent adjustments should have been filed as corrections of
      an
      error rather than as a change in accounting policy as previously filed.





An
      amended Form
      10-KSB/A making it clear that this was a correction of error and a fundamental
      change in accounting policy with regard to the adoption of Statement of
      Financial Accounting Standards No. 86, “Accounting for the Costs of Computer
      Software to Be Sold, Leased, or Otherwise Marketed” (“SFAS 86”) with regard to
      the capitalized of certain software development costs that meet the requirements
      of SFAS 86 - see sub-heading Software Development Costs within Note 2
      was
      filed on April 4, 2007.





These
      corrections and restatements (see Notes 12 and
      13 in
      the
      financial statements above) changed our reported
      net loss and earnings per share. Previously ,
      we expensed
      the loan to AtlasTG as
      software development costs. This has been reclassified as an investment in AtlasTG at
      December 31, 2005, which reduced the loss at December 31, 2005 from $1,249,535
      to $175,791 and as a result the reported net loss per share was reduced from
      $0.06 to $0.02, before subsequent reclassifications to take account of
      discontinued operations.





Apart
      from the matters explained above, there were no significant changes in the Company’s internal
      controls or  other
      factors that could significantly affect these controls subsequent to the date
      of
      such evaluation.




42


**PART
      III**





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





**Our** **Management**





Set
      forth
      below is the name, age, years of service and positions of the executive officers
      and directors of Tribeworks as of March 30, 2007.




**Name**
            
            **Age**
            
            **Position**
            
            **Director
                Since**Robert
                E Altinger
            
            45
            
            Director
            
            August,
                2005Andrew
                J E Berger
            
            46
            
            Director
            
            June
                2006W.
                Gordon Blankstein
            
            56
            
            Director
            
            August,
                2005Robert
                C. Gardner
            
            66
            
            Director
            
            August,
                2005Peter
                B. Jacobson
            
            46
            
            Director
                and CEO
            
            June,
                2005
              CEO
                since August 2005B
                S
                P (Paddy) Marra
            
            60
            
            Director
                and CFO
            
            December
                2005
              CFO
                since Sept. 2005Michael
                T Murphy
            
            39
            
            Chief
                Operating Officer
            
            June
                2006





The directors serve
      until their successors are elected by the stockholders. Vacancies on the Board
      of Directors may be filled by appointment of the majority of the continuing
      directors. The executive officers serve at the discretion of the Board of
      Directors. The directors named
      above will serve until our next
      annual general meeting of stockholders in
      2007.
      Directors will be elected for one-year terms at the annual general meeting.
      All
      officers and directors listed above will remain in office until the next annual
      general meeting of our stockholders, and until their successors have been duly
      elected and qualified.





There
      are
      no agreements with respect to the election of directors.
      During 2006, we have not
      compensated our directors for
      service on our Board of Directors, any committee thereof, or
      reimbursed them for
      expenses incurred for attendance at meetings of our Board of Directors and/or
      any committee of our Board of Directors. Officers are appointed annually by
      our
      Board of Directors and each Executive Officer serves at the discretion of our
      Board of Directors. We do not have any standing committees. Our Board of
      Directors may in the future determine to pay directors ’
fees
      and reimburse directors for
      expenses related to their activities.





None
      of
      our officers and/or directors have
      ever filed any bankruptcy petition, been convicted of or been the subject of
      any
      criminal proceedings or the subject of any order, judgment or decree involving
      the violation of any state or federal securities laws.





43


**Biographical
      Information of Executive Officers and** **Directors**





*Robert
      Altinger, 45 - Director*




Prior
      to
      founding AtlasTG ,
      Robert
      Altinger was Principal Consultant of WebConsult, Inc, a Microsoft- approved
      vendor of IT consulting services since September 2001. Prior to joining
      WebConsult, Inc.,
      Mr. Altinger had over 20
      years of IT experience, including serving as Director of Worldwide IT Operations
      for Avanade Corp, in various capacities at Microsoft, including Director of
      Product Group IT Services, and prior to that at JP Morgan. Mr Altinger obtained
      a BSc (Eng) from Exeter University in the United Kingdom in 1986.





*Andrew
      Berger, 46 - Director*




Andrew
      Berger recently retired from the position of Vice President of Alien Technology
      Europe, a world leader in RFID technologies .
      Mr.
      Berger was responsible for all European activity. Prior to joining Alien Technology, Mr.
      Berger was an equity Partner and founding member of Accenture's strategy
      practice. He also led Accenture's Northern European supply chain practice and
      global Supply Chain Innovation team. Prior to joining Accenture, he served
      as an
      operational Intelligence Officer with the Airborne and Special Forces divisions
      of the British Army. He has a Bachelor's of Science from Bristol University
      and
      an MBA with Distinction from London Business School.




*W.
      Gordon Blankstein, 56 - Director*




Gordon
      Blankstein is currently a member of the board of directors of Genco Resources,
      Ltd., a publicly- traded
      mining company and has been since 2002. He is also a
      director of
      Digifonica (International) Limited From 1997 through 2002, Mr. Blankstein was
      Chairman and Chief Executive Officer of Global Light Telecommunications, Inc.,
      an American Stock Exchange-listed company. Mr. Blankstein obtained a B.Sc.
      (Agri.) from the University of British Columbia in 1973 and an MBA from the
      University of British Columbia in 1976.





*Robert
      C. Gardner, 66 - Director*




Robert
      Gardner is currently Chairman of the Board of Genco Resources Ltd and a partner
      in the law firm of Gardner & Associates in Vancouver, BC, Canada. He is also
      a Director of Kootenay Gold Inc and United Bolero. Mr. Gardner is a corporate
      lawyer and has practiced law there since 1989. Mr. Gardner and obtained a M.A.
      from Cambridge University in Cambridge, United Kingdom in 1961 and a L.L.M.
      degree from Cambridge University in 1962. Robert Gardner acts as Corporate
      Secretary to the board.





*Peter
      B. Jacobson, 46 - Director and CEO*




Prior
      to
      joining Atlas and Tribeworks, Peter Jacobson was founder and President of
      Monitor Technologies, Inc., an IT network and support company to Fortune 1000
      firms from 1985 to 1995, a partner and Marketing Director of OceanPC, Inc.,
      a
      leader in computer-based marine GPS navigation systems from 1995 to 2002, and
      subsequently, was President of First Call Wireless, LLC., a worldwide cellular
      distribution company, from 2002 until 2005. Peter Jacobson has served on
      numerous boards of directors, including The Seattle Center, Northwest Children’s
      Fund, Lakeside Technology Foundation and Creditnet.com. He is a past President
      of the Washington Young Entrepreneurs Organization. Mr Jacobson ob tained
      a
      BA from the University
      of Washington in 1985.





*Byran
      S P (Paddy) Marra, 60 - Director and CFO*




Paddy
      Marra has over 30 years of corporate finance experience, including, recently
      with FreshXtend Technologies Corp. (Canada) (CEO and now Deputy Chairman) a
      TSX-V listed company, CFO of the Brierley Investments Limited group (New
      Zealand), and Chairman and CEO, Chamundi Power Corporation Ltd (India). Paddy
      Marra has degrees  in
      both
      Accounting and Finance (BCA) and in Economics and Economic History (BA) from
      Victoria University of Wellington, New Zealand. He
      is
      also a Fellow (FCA) of the Institute of Chartered Accountants of New Zealand
      and
      is a former member of the Financial Reporting Standards Board in New Zealand
      and
      numerous other Boards and Directorships of publicly traded
      companies.





*Michael
      Murphy, 39 -- Chief Operating Officer*




Mike
      Murphy joined us after a
      successful 15 year career at Microsoft Corporation where he was most recently
      the Senior Director leading the Business Group IT organization. At
      Microsoft, Mr. Murphy was  responsible
      for critical aspects of Microsoft’s business, including source code management
      and product localization. His experience includes leading teams throughout
      the
      US, Europe, Eastern Asia, and India. Mr. Murphy holds a B.A. in Information
      Systems from Washington State University.




44




**Family
      Relationships**




None





**Certain
      Legal Proceedings**




No
      director, nominee for director, or executive officer of ours has
      appeared as a party in any legal proceeding material to an evaluation of his
      ability or integrity during the past five years.





**Code
      of Ethics**




We
      have
      not yet adopted a code of ethics for our officers, directors or employees.





**Audit
      Committee Financial Expert**





We
      do not
      have an audit committee or an "audit committee financial expert" within the
      meaning of such phrase under applicable regulations of the Securities
      and Exchange Commission .
      Our
      board believes that each of its directors is financially literate and
      experienced in business matters, and that one or more directors are capable
      of:




·
              understanding
                  generally accepted accounting principles, or GAAP, and financial
                  statements;


·
              assessing
                  the general application of GAAP principles in connection with our
                  accounting forestimates,
                  accruals and reserves;


·
              analyzing
                  and evaluating our financial statements;
                  and


·
              understanding
                  our internal controls and procedures for financial reporting;





all
      of
      which are attributes of an audit committee financial expert. However, the Board
      of Directors believes that our directors have not obtained these attributes
      through the experience specified in the SEC's definition of "audit committee
      financial expert."





45


**Section
      16(a) Beneficial Ownership Reporting Compliance**





Based
      solely upon a review of Forms 3 and 4 and amendments thereto furnished to us
      during, and Forms 5 and amendments thereto furnished to us with respect to,
      the
      fiscal year ended December 31, 2006, and any written representations from
      reporting persons that no Form 5 is required, the following table sets forth
      information regarding each person who, at any time during the fiscal year ended
      December 31, 2006, was a director, officer or beneficial owner of more than
      10%
      of our common stock who failed to file on a timely basis, as disclosed in the
      above forms, reports required by Section 16(a) of the Exchange Act during the
      fiscal year ended December 31, 2006 or prior fiscal years:





**Name**
            
            **Number
                of****Late
                Reports**
            
            **Number
                ofTransactions NotReported on a****Timely
                Basis**
            
            **Known
                Failures to File a Required Form**Robert
                Altinger
            
            2
            
            3
            
            Form
                3 due upon becoming a director in August of 2005. Form 4 due October
                24,
                2005 upon personal acquisition of 600,000 shares of Common Stock
                and
                acquisition of 1,075,000 shares of Common Stock by AMJ Holdings.
                Form 4
                due July 20, 2006 upon reduction of shares held by AMJ Holdings by
                100,000
                shares of Common Stock.Andrew
                Berger
            
            1
            
            1
            
            Form
                3 due June 15, 2006 upon becoming a director.W.
                Gordon Blankstein
            
            3
            
            3
            
            Form
                4 due October 24, 2005 upon acquisition of 400,000 shares of Common
                Stock.
                Form 4 due May 4, 2006 upon acquisition of 200,000 shares of Common
                Stock.Robert
                C. Gardner
            
            2
            
            2
            
            Form
                4 due upon October 24, 2005 upon acquisition of 500,000 shares of
                Common
                Stock.Peter
                Jacobson
            
            2
            
            3
            
            Form
                4 due October 24, 2005 upon personal acquisition of 600,000 shares
                of
                Common Stock and acquisition of 1,075,000 shares of Common Stock
                by AMJ
                Holdings. Form 4 due July 20, 2006 upon reduction of shares held
                by AMJ
                Holdings by 100,000 shares of Common Stock.Paddy
                Marra
            
            1
            
            1Michael
                T. Murphy
            
            3
            
            4
            
            Form
                3 due October 24, 2005 upon becoming a 10% beneficial owner following
                the
                acquisition of 3,363,636 shares of Common Stock. Form 4 due October
                24,
                2005 upon personal acquisition of 3,363,636 shares of Common Stock
                and
                acquisition of 1,075,500 shares of Common Stock by AMJ Holdings.
                Form 4
                due July 20, 2006 upon reduction of shares held by AMJ Holdings by
                100,000
                shares of Common Stock.





46




**ITEM
      10. EXECUTIVE COMPENSATION**





**Director
      Compensation**





Directors
      do not receive any compensation for their services as members of the Board
      of
      Directors  during
      2006, although
      this could be subject to change during 2007. 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
      compensatory equity plans.





**Executive
      Compensation**





The
      following table provides certain summary information concerning compensation
      of
      our executives for the year ended December 31, 2006. No executive
      offic er ,
      other
      than as listed below, received total
      compensation from us in
      excess of $100,000 during 2005.
      The current CEO and CFO do not have employment agreements. These are to be
      negotiated during 2007.




**Annual
                  Compensation**
              
              **Long
                  Term Compensation****Awards**
              
              **Payouts****Name
                  and Principal Position**
              
              **Year**
              
              **Salary/**
                **Fees**
                **($)**
              
              **Bonus**
                **($)**
              
              **Other**
                **Annual**
                **Compensation**
              
              **Restricted**
                **Stock**
                **Awards**
                **($)**
              
              **Securities**
                **Underlying**
                **Options/SARs**
              
              **LTIP**
                **Payout**
                **($)**
              
              **All
                  Other Compensation**
                **($)**Robert
                  Altinger, Executive Chairman
              
              
              2006
              
              
              145,000
              (1)
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Peter
                  B. Jacobson,
                Chief
                  Executive Officer, President and Director
              
              
              2006
              
              
              100,000
              (1)
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0B
                  S
                  P Paddy Marra Chief Financial Officer, and Director
              
              
              2006
              
              
              100,000
              (1)
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0Michael
                  T Murphy Chief Operating Officer
              
              
              2006
              
              
              70,000
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0
              
              
              0




(1) Robert
      Altinger and Paddy Marra are not direct employees ,
      but are
      engaged through consulting companies who are responsible for paying their
      salaries, taxes and benefits .
      Peter
      Jacobson receives his salary on an independent contractor basis .





**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 years 2005 or
      2006.





**Aggregated
      Option Exercises in Last Fiscal Year and Fiscal Year End Option
      Values**





No
      options or warrants were granted or exercised in 2005 or 2006 by any executive
      officers.




47




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





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





The
      following table sets forth as of April 11, 2007, certain information regarding
      the beneficial ownership of our Common Stock by (i) all person known to the
      Company who own more than 5% of the outstanding Common Stock, (ii) each
      director, (iii) each of our executive officers, and (iv) all executive officers
      and directors as a group. Unless otherwise indicate, the persons named in the
      table below have sole voting and investment power with respect to all shares
      of
      Common Stock shown as beneficially owned by them.




Name
                  and Address of Beneficial Owner
              
              Shares
                  BeneficiallyOwned(1)
              
              Percent
                  of Class(2)Michael
                  T. Murphy
                2812
                  West Lake Sammamish Pkwy NE
                Redmond,
                  WA 98052
              
              
              4,338,636
              (3)
              
              16.5
              %WebConsult
                  Limited
                Bankhaus
                  Carl Spangler
                Schwatzstr
                  17 A 5030, Austria
              
              
              2,202,274
              
              
              8.4
              %Robert
                  Blankstein
                8032
                  Government Rd.
                Burnaby,
                  B.C., Canada
              
              
              2,135,000
              (4)
              
              8.1
              %Pharaoh
                  Properties Corporation
                Alves
                  De Souza Houman Colart
                6
                  Cours De Rive
                1204
                  Geneva, Switzerland
              
              
              2,002,272
              
              
              7.6
              %W.
                  Gordon Blankstein
                8011
                  240 St.
                Vancouver,
                  B.C., Canada
              
              
              600,000
              (5)
              
              2.3
              %Peter
                  Jacobson
                111
                  Via Quito
                Newport
                  Beach, CA 92663-5503
              
              
              1,575,000
              (6)
              
              6.0
              %Robert
                  Altinger
                The
                  Ridge
                31stMarch Street
                Gharghur,
                  Malta
              
              
              1,575,000
              (7)
              
              6.0
              %Robert
                  C. Gardner
                2153,
                  349 West Georgia St.
                Vancouver,
                  B.C., Canada
              
              
              500,000
              
              
              1.9
              %Officers
                  and Directors as a group (7 persons)
              
              
              6,638,636
              (8)
              
              25.2
              %





(1)
      Includes all shares of our Common Stock with respect to which each holder
      directly, through any contract, arrangement, understanding, relationship or
      otherwise has or shares the power to vote or direct voting of such shares or
      to
      dispose or direct the disposition of such shares.




48




(2)
      Based
      upon 26,331,805 shares of our Common Stock issued and outstanding as of April
      11, 2007.





(3)
      Includes 975,000 shares held by AMJ Holdings. We anticipate that the shares
      held
      by AMJ Holdings will be granted in the form of stock options to our employees
      in
      the future. Mr. Murphy, Mr. Altinger and Mr. Jacobson serve as co-trustees
      of
      shares held by AMJ Holdings.





(4) Mr.
      Blankstein personally owns 1,560,000 shares of our Common Stock and holds
      575,000 shares of Common Stock in trust for the benefit of Charles
      Blankstein.





(5)
      Mr.
      Blankstein personally owns 600,000 shares of our Common Stock. Yvonne
      Blankstein, the wife of Gordon Blankstein, owns 530,083 shares of our Common
      Stock and holds 500,000 shares of Common Stock in trust for Shelby Blankstein.
      Mr. Blankstein expressly disclaims beneficial ownership of shares owned by
      his
      wife and shares that his wife holds in trust for Shelby Blankstein.





(6)
      Mr.
      Jacobson personally owns 600,000 shares of our Common Stock. Includes 975,000
      shares held by AMJ Holdings. We anticipate that the shares held by AMJ Holdings
      will be granted in the form of stock options to our employees in the future.
      Mr.
      Murphy, Mr. Altinger and Mr. Jacobson serve as co-trustees of shares held by
      AMJ
      Holdings. Mr. Jacobson’s wife, Georgina Jacobson, owns 40,000 shares of our
      Common Stock. Mr. Jacobson expressly disclaims beneficial ownership of shares
      owned by his wife.





(7)
      Includes 975,000 shares held by AMJ Holdings. We anticipate that the shares
      held
      by AMJ Holdings will be granted in the form of stock options to our employees
      in
      the future. Mr. Murphy, Mr. Altinger and Mr. Jacobson serve as co-trustees
      of
      shares held by AMJ Holdings.





(8)
      This
      group includes 7 people, 5 of whom are listed on the accompanying table. Paddy
      Marra, an officer and director, and Andrew Berger, a director, are not listed
      on
      the accompanying table and do not currently own any of our Common Stock. To
      avoid double-counting:  the 975,000 shares of Common Stock held by AMJ
      Holdings and deemed to be beneficially owned by Robert Altinger, Peter Jacobson
      and Michael Murphy as a result of their position as co-trustees of AMJ Holdings
      have only been included once in the total (see Note (2), (6) and (7)
      above).




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





On
      April
      1, 2005, TDC entered
      into a contract with a Canadian company wholly owned by our former CEO,
      Chairman, and President, Duncan Kennedy, to provide the services of Mr. Kennedy
      to continue to serve as President of Tribeworks Development
      Corporation.





On
      January 20, 2006 we acquired AtlasTG, which over the previous 18 months had
      been
      developing its new software system for providing external IT application support
      services for organizations with large IT functions. Since January 2006 this
      work
      has been carried out by both our employees and specialist consultants engaged
      to
      prepare modules of this new software system. WebConsult, Inc . and
      WebConsult Ltd, companies with which Robert Altinger is a
      consultant for,
      has
      performed consulting work for us
      in the
      past and
      still performs such
      work on normal commercial terms .
      We
      currently pay WebConsult, Inc. for Mr. Altinger’s services to us as our
      Executive Chairman .
      Mr.
      Altinger’s wife is a shareholder of WebConsult, Inc.





As
      of
      April 11, 2007, other than as already disclosed above we have not entered into
      any other contractual arrangements with related parties. There is not any other
      currently proposed transaction, or series of the same, to which we are a party,
      in which the amount involved exceeds $60,000 and in which, to our knowledge,
      any
      director, executive officer, nominee, 5% shareholder or any
      member of the immediate family of the foregoing persons, have or will have
      a
      direct or indirect material interest.




49


**ITEM
        13. EXHIBITS**
 
 (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)*2.2
              
              Share
                  Transfer Agreement between Tribeworks Inc. and TakeCareofIT Limited,
                  dated
                  January 20, 2006 (incorporated by reference to Exhibit 2.01 to
                  the
                  Registrant’s Current Report in Form 8-K filed January 26,
                  2006)*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 and Exhibit A to the Registrant’s Proxy Statement on Schedule 14A
                  filed April 14, 2004)*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)*4.1
              
              Certificate
                  of Designation, Preferences, Rights and Limitations of Series B
                  Convertible Redeemable Preferred Stock of Tribeworks Inc. (incorporated
                  by
                  reference to Exhibit 4.1 to the Registrant’s Current Report in Form 8-K
                  filed October 11, 2005)*10.1
              
              Pan
                  World Corporation 1999 Stock Option Plan (incorporated by reference
                  to
                  Exhibit 4.1 to the Registrant’s Registration Statement on Form S-8 filed
                  September 26, 2001)*10.2
              
              Tribeworks,
                  Inc. 2001 Stock Plan (incorporated by reference to Exhibit 4.1
                  to the
                  Registrant’s Registration Statement on Form S-8 filed September 26,
                  2001)*10.3
              
              Tribeworks,
                  Inc. 2004 Employee Stock Incentive Plan (incorporated by reference
                  to
                  Exhibit B to the Registrant’s Proxy Statement on Schedule 14A filed April
                  14, 2004)*10.4
              
              Asset
                  and Liability Assignment and Indemnification Agreement, dated March
                  29,
                  2005 (incorporated by reference to Exhibit 99.2 to the Registrant’s
                  Current Report in Form 8-K filed March 29, 2005)*10.5
              
              Form
                  of Subscription Agreement for Common Stock of Tribeworks, Inc.
                  (incorporated by reference to Exhibit 4.1 to the Registrant’s Current
                  Report in Form 8-K filed November 3, 2005)*10.6
              
              Share
                  Transfer Agreement, dated January 19, 2006, between TakeCareofIT
                  Limited
                  and Tribeworks, Inc., (incorporated by reference to Exhibit 2.01
                  to the
                  Registrant’s Current Report in Form 8-K filed January 26,
                  2006)*10.7
              
              Stock
                  Transfer Agreement, dated September 14, 2006, between and 541368
                  LLC and
                  Tribeworks, Inc. (incorporated by reference to Exhibit 10.1 to
                  the
                  Registrant’s Current Report in Form 8-K filed October 5,
                  2006)*10.8
              
              Asset
                  and Stock Purchase Agreement, dated January 19, 2007, between BLive
                  Networks, Inc., Forte Finance Limited, Petroleum Corporation of
                  Canada
                  Limited and Tribeworks, Inc. (incorporated by reference to Exhibit
                  10.1 to
                  the Registrant’s Current Report in Form 8-K filed January 25,
                  2007)*
  50
  10.9
              
              Registration
                  Rights Agreement, dated January 19, 2007, between Petroleum Corporation
                  of
                  Canada Limited and Tribeworks, Inc. (incorporated by reference
                  to Exhibit
                  10.2 to the Registrant’s Current Report in Form 8-K filed January 25,
                  2007)*10.10
              
              Forte
                  Agreement, dated January 19, 2007, between Forte Finance Limited
                  and
                  Tribeworks, Inc. (incorporated by reference to Exhibit 10.3 to
                  the
                  Registrant’s Current Report in Form 8-K filed January 25,
                  2007)*21.1
              
              Subsidiaries
                  of the Issuer31.1
              
              Certification
                  of Chief Executive Officer Pursuant to Rule 13a-14(a) and
                  15d-14(a)31.2
              
              Certification
                  of Chief Financial Officer Pursuant to Rule 13a-14(a) and
                  15(d)-14(a)32.1
              
              Certification
                  of Chief Executive Officer Pursuant to Section 1350 of Title 18
                  of the
                  United States Code32.2
              
              Certification
                  of Chief Financial Officer Pursuant to Section 1350 of Title 18
                  of the
                  United States Code99.1
              
              Asset
                  and Liability Assignment and Indemnification Agreement, dated March
                  29,
                  2005 (incorporated by reference to Exhibit 99.2 to the Registrant’s
                  Current Report on Form 8-K filed on March 31, 2005)*99.2
              
              Promissory
                  Note, dated March 29, 2005 (incorporated by reference to Exhibit
                  99.3 to
                  the Registrant’s Current Report on Form 8-K filed on March 31,
                  2005)*
 
 (b)  The
        following reports on Form 8-K were filed during the quarter ended December
        31, 2006 :
 
 10.1
              
              Stock
                  Transfer Agreement, dated September 14, 2006, between and 541368
                  LLC
                  andTribeworks,Inc. (incorporated by reference to Exhibit10.1to
                  the Registrant’s Current Report in Form 8-K filed October5,
                  2006)*
  *
        Previously filed
  51
 
 **ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**
 
 Set
        out
        below are the various fees paid to or accrued for our present auditors, Williams
        & Webster P S, and for our previous auditors, HLB Cinnamon , Jang , Willoughby ,
        Chartered Accountants for
        services provided during the years ended December 31, 2006 and
        2005:
  **Fees
                  for the Year Ended****December
                  31,**
                **2006**
              
              **December
                  31,**
                **2005**Audit
                  fees (1)
              
              $
              51,284
              
              $
              41,342Audit-related
                  fees (2)
              
              
              25,855
              
              
              13,836Tax
                  fees (3)
              
              
              —
              
              
              —All
                  other fees (4)
              
              
              2,727
              
              
              1,158Total
                  fees for services
              
              $
              79,866
              
              $
              56,336
 
 (1)
              Audit
                  fees are the fees billed for professional services rendered for
                  the audit
                  of our annual financial statements. This category also includes
                  fees for
                  statutory audits required domestically and internationally, comfort
                  letters, consents, assistance with and review of documents filed
                  with the
                  SEC, attest services, work done by tax professionals in connection
                  with
                  the audit or quarterly reviews, and accounting consultations and
                  research
                  work necessary to comply with generally accepted auditing
                  standards.
 
 (2)
              Audit
                  Related fees are the fees billed for assurance and related services
                  by the
                  principal accountant that are reasonably related to the performance
                  of the
                  audit or review and are not reported as audit
                  fees.
 
 (3)
              Tax
                  fees are the fees billed for professional services rendered for
                  tax
                  compliance, tax advice and tax planning, except those provided
                  in
                  connection with the audit or quarterly
                  reviews.
 
 (4)
              All
                  other fees include fees billed for professional services not covered
                  by
                  (1) through (3) above.
 
 The
        Board
        of Directors, acting as the Audit Committee, pre-approves all audit and
        permitted non-audit services (including the fees and terms thereof) to be
        performed for  us by our independent auditor.
  52
  **SIGNATURES**
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
  Tribeworks,
                  Inc.,
                a
                  Delaware corporationDate:
            April 16, 2007
              By:
              /s/
                  Peter B. JacobsonPeter
                  B. Jacobson, Chief Executive Officer(Registrant’s
                  Principal Executive Officer)
 Date:
            April 16, 2007
              By:
              /s/
                  B.S.P. MarraB.S.P.
                  Marra, Chief Financial Officer(Registrant’s
                  Principal Financial Officer)
  In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the Registrant and in the capacities and on
        the
        dates indicated.
  Date:
            April 16, 2007
              
              /s/
                  Robert AltingerRobert
                  Altinger, Director
 Date:
            April 16, 2007
              
              /s/
                  Andrew J E BergerAndrew
                  J E Berger, DirectorDate:
            April 16, 2007
              
              /s/
                  W. Gordon BlanksteinW.
                  Gordon Blankstein, Director
 Date:
            April 16, 2007
              
              /s/
                  Robert C. GardnerRobert
                  C. Gardner, Director
 Date:
            April 16, 2007
              
              /s/
                  Peter B. JacobsonPeter
                  B. Jacobson,Director
 Date:
            April 16, 2007
              
              /s/
                  B.S.P. MarraB.S.P.
                  Marra, Director
  53