**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, 2007ORo
            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**





**ATLAS
      TECHNOLOGY GROUP, INC.**


(Name
      of
      Small Business Issuer in Its Charter)





**DELAWARE**
            
            **494-33707951**(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. x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act): YES o NO x





State
      issuer’s revenues for its most recent fiscal year. $574,861.





The
      aggregate market value of the voting stock held by non-affiliates of the
      registrant as of April 10, 2008 was approximately $10,017,216 based upon the
      closing price per share of the Common stock of $0.70 on that date.





There
      were 39,513,949 shares of the registrant’s Common Stock issued and outstanding
      as of April 10, 2008.





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
            
            22Item
                8. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure
            
            48Item
                8A. Controls and Procedures
            
            49Item
                8A(T). Controls and Procedures.
            
            49Item
                8B. Other Information
            
            50PART
                III
            
            51Item
                9. Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act
            
            51Item
                10. Executive Compensation
            
            54Item
                11. Security Ownership of Certain Beneficial Owners and Management
                and
                Related Stockholder Matters
            
            57Item
                12. Certain Relationships and Related Transactions
            
            58Item
                13. Exhibits
            
            59Item
                14. Principal Accountant Fees and Services
            
            61SIGNATURES
            
            62





In
      this
      report, the terms “we,” “our” and “us,” refer to Atlas Technology Group, Inc.
      and its direct and indirect wholly owned subsidiaries, 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 had no material operations. As a result
      of
      the Recapitalization, shareholders of California Tribeworks exchanged all of
      their shares of California Tribeworks for Pan World common stock.
      Subsequent to the Recapitalization, we were reincorporated in Delaware as
      Tribeworks, Inc and at our Annual General Meeting held on July 12, 2007, we
      changed our name to Atlas Technology Group, Inc. (the "Company").





During
      2005, the enterprise application development business of Tribeworks was
      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 mid-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 were reclassified as
      discontinued operations in the financial statements in this annual report for
      the year ended December 31, 2006 on Form 10-KSB.





On
      January 20, 2006, we acquired TakeCareofIT Holdings Ltd., doing business as
      Atlas Technology Group, a Malta Corporation that was established in September
      2004 to provide external Information Technology (“ IT ”)
      application support services for organizations with large IT functions as is
      referred to hereafter as “ AtlasTG ”
or
      the
“ AtlasTG
      business. ”
This
      IT
      support business will be our primary business focus going forward and thus
      2006
      was a transitional year for us. We plan to become a leading IT outsourcing
      support company for custom software applications worldwide. After extensive
      beta
      testing, the Atlas business line is now generating revenue with the first
      support customers signed on in February 2007. Our in-house developed tools
      and
      processes, which are needed to customize the monitoring and support IT
      applications and provide remote IT application support and feedback to our
      customers.





On
      January 26, 2007, the Company acquired all of the assets (but not the
      liabilities) and customers of BLive Networks, Inc. Included with these assets
      was a Canadian company called InfoBuild Networks (Canada) Inc. The assets
      acquired were added to InfoBuild Networks (Canada), Inc. and the name
      of it has been changed to BLive Networks Inc. (“ BLive ”),
      and
      the business has continued to trade as BLive.




Our
      head
      operating office is located in Malta. We also have subsidiary offices in
      Wellington, New Zealand, and Redmond, Washington, and a data center in Seattle,
      Washington. We currently have twenty-one employees and three 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, is maintained by our
      state-of-the-art data centers in Seattle and Malta, and
“follow-the-sun” 24x7 hour 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 onboarding and monitoring processes allows 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.




We
      offer
      our services worldwide, with the majority of our targeted customers having
      significant in-country or 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.





3


Global
      purchases of IT goods and services - which equal IT vendors’ revenues - will
      equal $1.7 trillion in 2008, growing by 6% after a 12% increase in 2007. A
      declining U.S. dollar boosted 2007 growth rates and is expected to do so in
      2008
      as well; measured in Euros, global IT purchases growth is expected to be 4%.
      Total global spending on technology goods, services, and staff is expected
      to
      reach $2.4 trillion in 2008, an 8% increase from 2007. (Source: Forrester
      Research, Inc. www.forrester.com)





In
      terms
      of the outsourced IT support services market, this market is also growing,
      due
      to the increasing complexity of business software applications worldwide.
      Application support for large-scale enterprise systems is the last IT service
      area that is still primarily kept “in-house,” creating a large potential demand
      for AtlasTG’s services. Of the global IT annual expenditure, application and
      business support services are projected to be $197.5 billion by 2009 and exceed
      $245 billion by 2011. (Source: Gartner, Inc. www.gartner.com)





According
      to Forrester Research Inc. (“ Forrester ”),
      the
      percentage of IT budgets spent on maintaining existing applications is over
      70%
      and increasing. (Source: Forrester Research, Inc. “2005 Enterprise IT Outlook:
      Business Technographics North America”).





For
      many
      industry leaders, outsourcing IT support, or “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 billion is
      expected to grow at a compound annual growth rate (“ CAGR ”)
      of
      7.6% from 2004 to 2008. Remote monitoring and management is the hottest growing
      segment expected to grow at 36% CAGR though 2008 in North America. A recent
      study by Forrester stated that the SMB market consists of 48% of the U.S.’s
      overall 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 customers of BLive. This
      acquisition strengthens and widens our capability of delivering high quality
      outsourced support into the worldwide IT Support market. The BLive systems
      can
      be used by companies for remote technical support and sales, both for
      external and internal corporate “Helpdesk” support departments. This technology
      enables our service providers to deliver faster response times and to create
      a
      personal connection with users. This acquisition is discussed further in Note
      15
      - "Acquisition of BLive,” as stated in 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 ATYG.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 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.





Our
      support centers are based in Malta and Wellington, New Zealand, and further
      technical support is provided by a small team located in Redmond, Washington,
      which will allow us to provide “follow-the-sun” 24x7 hour coverage. As needed,
      additional locations will be added to increase capacity. State of the art VoIP,
      call tracking, and monitoring technology provide each employee with the
      tools needed to maximize support delivery.





Our
      proprietary software, including our unique onboarding and monitoring processes,
      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 in January 2007. We are now servicing five customers, and
      our objective is to quadruple this number during 2008; however, there is no
      assurance that we will be able to achieve this objective.




4





**Technical
      Support and Education**





We
      provide technical support and training to our customers, as well as in-house
      and
      external training to our staff. Successfully training our technical support
      staff is key to our success. During 2007, all of our technical staff  received
      training for various Microsoft technical qualifications.





During
      2008, we anticipate becoming a Microsoft “Gold Partner” with advanced
      infrastructure and learning solutions specializations. We believe that becoming
      a Microsoft “Gold Partner” will provide us with additional recognition and,
      therefore, additional 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.
      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 with 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 revenue are: (1) HP with total
      revenues of $104.3 billion in 2007 and $91.7 billion in 2006, of which
      approximately $18.8 billion in 2007 and $15.6 billion in 2006 represents
      services, including IT outsourcing (Source: www.HP.com); and (2) IBM with total
      sales in 2007 of $98.8 billion and $91.4 billion in 2006 of which approximately
      half, or $54 billion in 2007 and $49 billion in 2006, represents services,
      and
      of this amount approximately $18.7 billion in 2007 and $17.0 billion in 2006
      was
      derived from the sales of strategic outsourcing services. Strategic outsourcing
      services is one of IBM’s fastest growing business segments and is growing
      at 9.7% annually (Source: www.IBM.com.)





The
      pure-play IT service providers, with the majority of their 2007 revenues coming
      from IT support services include EDS, with $22.1 billion in 2007 and $21.3
      billion in 2006 in revenue (Source: www.EDS.com), Computer Sciences Corporation
      with $14.9 billion in 2007 and $14.6 billion in 2006 (Source: www.CSC.com),
      Accenture with $19.7 billion in 2007 and $16.6 billion in 2006 in revenue
      (Source: www.Accenture.com), and BearingPoint Inc with $3.5 billion in 2007
      and
      $3.4 billion in 2006 revenue (Source: www.BearingPoint.com). Our advantage
      over
      those larger competitors is that IT support is our main business focus and
      not
      an ancillary service.





Other
      competitors 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 primary competitor that competes with us globally. There are other
      regional players that are targeting the SMB market, such as Wavex Technology
      Limited (“ Wavex ”)
      and
      Motive Inc. (“ Motive ”).





Our
      principal advantage 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 clients in our sector.  IT support is our
      sole business focus, unlike many of our competitors who offer IT support as
      an
      adjunct to their existing hardware or software sales.





In
      addition to the small and large competitors described above, we believe that
      our
      single biggest competitor is existing in-house support staff maintained by
      businesses who are currently providing over 90% of IT support services
      worldwide.





**Government
      Regulation**





Laws
      regulating the Internet both in the United States and internationally 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
      or amended regarding Internet user privacy, Internet security, taxation,
      pricing, quality of products and services, and intellectual property
      ownership, which may apply to us. The impact of additional or amended
      legislation related to the Internet, in areas such as property ownership,
      copyrights, trademarks, and trade secrets is uncertain.





5


**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 where we conduct
      our
      business.





On
      January 20, 2006, we acquired the AtlasTG business. This acquisition resulted
      in
      our obtaining additional proprietary rights, such as AtlasTG’s unique onboarding
      and monitoring processes, as well as a range of trade secrets relating to its
      IT
      support technologies. Similarly, through the acquisition of BLive, we acquired
      further proprietary rights and processes, as well as a trademark. During 2007,
      we established our own marketing and branding program.





**Employees**





We
      have a
      total of twenty-one employees and consultants and three working executive
      directors working on a full-time basis.





**ITEM
      2. DESCRIPTION OF PROPERTY**





We
      have a
      six 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 € 37,270
      (approximately US$55,900), which increases € 4,660 per annum (approximately
      US$7,000) until the final year.





We
      have a
      four year office lease on the second floor of 139-141 Featherston Street in
      Wellington, New Zealand, expiring on July 31, 2009. The office comprises of
      approximately 300 square meters with an annual rental of NZ$66,000 per annum
      (approximately US$51,500) plus a 12.5% Goods and Services Tax (“GST”), which is
      claimable against GST revenue tax payable or is refundable.





We
      have a
      three year office lease on 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.





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, 2007.




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 ATYG.OB. The following table sets forth the range of closing high and
      low
      closing quotes for each period indicated as reported by the OTC
      Bulletin Board and reflects all stock splits effected by us:


**2007**
            
            **2006****High**
            
            **Low**
            
            **High**
            
            **Low**First
                quarter
            
            $
            1.02
            
            $
            0.90
            
            $
            1.80
            
            $
            1.50Second
                quarter
            
            $
            1.01
            
            $
            0.75
            
            $
            1.70
            
            $
            1.46Third
                quarter
            
            $
            1.01
            
            $
            0.70
            
            $
            1.60
            
            $
            1.10Fourth
                quarter
            
            $
            0.85
            
            $
            0.70
            
            $
            1.19
            
            $
            0.90





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





We
      have
      approximately 200 stockholders as of April 10, 2008, comprising both registered
      stockholders and those held in “street name.”





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 9,878,487 shares on December 31, 2007. 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 on December 31, 2006, and December 31, 2007, 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,
                2006
            
            
            134,084
            
            $
            3.10
            
            
            6,123,867Equity
                Compensation Plans approved by security holders at December 31,
                2007
            
            
            33,084
            
            $
            5.86
            
            
            9,845,403





During
      the year ended December 31, 2007, no options were granted or exercised. 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. On December 29,
      2006,
      new options to purchase 90,000 shares of our Common Stock were granted 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.
      70,000 of these options were cancelled during 2007 because one employee and
      the
      consultant resigned and 15,000 earlier options from the 1999 Plan also expired
      during 2007. 4,000 of the remaining options vested during 2007.





7


**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.





$200,000
      was paid to the Company on October 29, 2007, for 585,715 shares of Common Stock
      and warrants exercisable for three years to purchase 292,858 shares of Common
      Stock at an exercise price of $0.70 per share. These warrants expire on October
      29, 2010. Financing charges of $279,828 were booked with regard to these shares
      and warrants.





$200,000
      was paid to the Company on November 30, 2007, for 1,000,000 shares of Common
      Stock and warrants exercisable for three years to purchase 1,000,000 shares
      of
      Common Stock at an exercise price of $0.20 per share. These warrants expire
      on
      November 30, 2012. Financing charges of $1,075,388 were booked with regard
      to
      these shares and warrants.





On
      December 31, 2007, the Company entered into a Note Amendment and Securities
      Purchase Agreement (the “ WCOF
      Agreement ”)
      with
      West Coast Opportunity Fund LLC (“ WCOF ”),
      as
      buyer, (the “ Buyer ”).
      The
      WCOF Agreement amends the earlier Securities Purchase Agreement of June 15,
      2007, under which our wholly-owned subsidiary, Atlas Technology Group (US)
      Inc
      (“ ATG
      US ”)
      issued
      to the Buyer two senior secured promissory notes, each in the principal amount
      of $2,500,000.00, dated June 15, 2007 and July 11, 2007 (each, a “ Promissory
      Note ,”
and
      together, the “ Promissory
      Notes ”);
      6,500,000 shares of the Company’s Common Stock and 6,500,000 warrants to
      purchase Common Stock, exercisable for a period of five years from the date
      of
      issuance at an initial exercise price of $2.60 per share. Pursuant to the WCOF
      Agreement, the Buyer agreed to cancel and return the Warrants to the Registrant,
      in consideration for which the Company has agreed to: (i) enter into the WCOF
      Agreement, amending the earlier agreement; (ii) amend the Promissory Note dated
      June 15, 2007, to extend the maturity date from November 30, 2008 to December
      31, 2008; (iii) amend and restate the Promissory Note dated July 11, 2007;
      and
      (iv) issue a yield enhancement consisting of 3,500,000 shares (the “ Yield
      Enhancement Shares ”)
      of
      Common Stock. As a result of issuing the Yield Enhancement Shares, the Company
      incurred a financing charge of $2,973,600.





**Repurchases
      of Equity Securities**




We
      did
      not repurchase any of our equity securities during the fourth quarter of fiscal
      2007.




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;





·
            improvements
                in the technologies of our
                competitors;





·
            changing
                economic conditions; and





·
            other
                factors, some of which will be outside of our
                control.





We
      have
      sought to identify most risks to our business but cannot predict whether or
      to
      what extent any of such risks may be realized. There can be no assurance that
      we
      have identified all possible risks that might arise. Investors should carefully
      consider all such risks before making an investment decision with respect to
      our
      Common Stock. 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 primarily focuses on delivering remote IT support services.
      We
      leverage the recent advances in software, IT monitoring systems, and
      communications to build a new leading edge global support infrastructure,
      providing “follow-the-sun” 24x7 hour 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 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.





After
      two
      years of development and testing, we started onboarding our first pilot customer
      in the first quarter of the 2007 and, by year end, we were supporting one
      customer on a 24x7 support basis and were in various stages of onboarding three
      other customers. We now have three customers onboarded and are in the final
      stages of onboarding two others.





**Results
      of Operations**





The
      year
      2006 through 2007 was a transitional period for us with the acquisition of
      AtlasTG on January 20, 2006, the acquisition of BLive in January 2007, and
      the
      sale of our previous business, operated from within TDC, on September 14,
      2006.





We
      incurred an operations net loss of $3,190,059 for the year ended December 31,
      2007, as compared to an operations net loss of $1,780,896 for the year ended
      December 31, 2006, which is further explained in the sections below.





9


**Revenues**





Total
      revenues were $574,861 for the year ended December 31, 2007. 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.





The
      2007
      revenue of $574,861 can be split into three categories: (i) revenue from
      consulting services and placing of consultants with third parties of $205,713;
      (ii) sale of IT support services software through our BLive operations of
      $102,456 for the eleven months following the acquisition of BLive; and (iii)
      $266,692 of onboarding and support sales revenue. The onboarding and support
      revenue in 2007 is the first revenue generated by our new mainstream business
      and will build over the coming months as new customers are onboarded and become
      mainstream support customers. Consulting services are being provided to
      potential software support customers from our Redmond office, and the provision
      of consultants is through 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.





While
      the
      revenue in the first quarter came from the provision of consulting services
      and
      from our new BLive operation, the bulk of the increase in our revenue for the
      second, third, and fourth quarters came primarily from onboarding and support
      to
      our first IT support customers, for whom we began providing services in March
      2007.





We
      completed the onboarding of our first customer, Mobile Content Networks, Inc.
      (“ MCN ”),
      in
      Palo Alto, California, in March 2007. 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.





Subsequent
      to December 31, 2007, we have completed the onboarding of our second, third,
      and
      fourth IT application support customers, Shoe Pavilion Inc (“ Shoe
      Pavilion ”),
      Operative, Inc (“ Operative ”),
      and
      Pay Plus Benefits, Inc  (“ PayPlus ”)
      using
      our own staff, and we expect support revenue from these customers to increase
      during the year 2008.





Shoe
      Pavilion is a Sherman Oaks, California, based independent off-price
      footwear retailer with 108 stores located in the western and southwestern United
      States. Operative is a New York, New York, provider of ad operations
      software, technology, and outsourcing services.  PayPlus is a Pasco,
      Washington, based nationally recognized, award-winning Professional
      Employer Organization, who outsources human resources administration
      and payroll functions for companies.





We
      anticipate that revenue from our new IT support services will increase during
      the year 2008 as new customers are recruited and onboarded through a direct
      marketing campaign and also through our sales and onboarding partners, such
      as
      Cascade Business Group and Slalom Consulting in the USA, PA Consulting and
      Universal Information Technology Group Ltd in the UK, and Bizmatica Sistemi
      s.r.l.in Italy. All of these are IT consulting companies with whom we have
      signed reseller or partner agreements.





With
      the
      acquisition of BLive in January 2007, we acquired several hundred established
      customers and an established annual revenue base. We are planning to
      integrate BLive and its proprietary support tools to strengthen our remote
      technical support and sales, both externally and for our internal corporate
      Helpdesk support departments and to upgrade the BLive product. BLive targets
      users in the worldwide Helpdesk support market, which diversifies our revenue
      base.




**Cost
      of Sales**





Our
      cost
      of sales for the year end December 31, 2007, was $359,749 compared to $269,091
      for the nine months ended September 30, 2007; $193,691 for the first six months
      to June 30, 2007; and $83,711 in the first three months to March 31, 2007.
      There
      was no comparable cost of sales for 2006 because AtlasTG was still developing
      its software tools and BLive was acquired in January 2007. Cost of sales
      includes an allocation of salary costs related to the consulting work performed
      and BLive support services provided, as well as the salaries and engagement
      fees
      for the consultants provided to third parties and the share of income for our
      joint venture partner. The salary costs for our mainstream support services
      are
      included under operating expenses with the IT software development and support
      line.





The
      Gross
      Margin for the year ended December 31, 2007, was $215,118 compared to a loss
      of
      $28,294 for the year ended December 31, 2006. Because we are still getting
      systems established, it is too early to predict what gross margin percentages
      of
      revenue will be going forward. As we get into full support operations, salary
      costs of our support staff will be charged as a cost of sales. Previously,
      they
      have been charged as IT software development expenses since they were primarily
      employed over the past two years on the development and testing of our new
      suite
      of tools and training and preparing for the support function. Some internal
      staff was used in the onboarding of the pilot customers so that the tools can
      be
      tested and further refined for future use.





10




**Operating
      Expenses**





During
      2006, we continued to develop our new software tools for onboarding and
      monitoring of our customers’ software applications acquired through the AtlasTG
      acquisition. 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 2006, the production implementation
      stage, our Board of Directors 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
      capitalized certain software development costs that meet the requirements of
      SFAS No. 86. As a result of the adoption of SFAS No. 86, $293,222 of our
      software development costs were capitalized during the year ended December
      31,
      2007; whereas, $454,942 of software development costs were capitalized during
      the year ended December 31, 2006: which are in addition to the $835,192 of
      IT software costs we acquired from AtlasTG on January 20, 2006, and the $505,121
      of software development costs that we acquired from the acquisition of BLive
      assets.





These
      capitalized costs will be amortized over three years as the new AtlasTG business
      goes into full commercialization. The BLive acquired costs were amortized during
      2007 and $126,280 of this amortization is included in the depreciation and
      amortization cost of the attached consolidated financial statements. However,
      not all of the software development costs for the year met the requirements
      of
      SFAS No. 86, and these costs have been charged as an expense to IT software
      development in the consolidated statement of operations. The total cost of
      this
      expenses item was $1,432,633 for the year ended December 31, 2007, compared
      to
      $829,780 expensed in the year ended December 31, 2006.





Sales
      and
      marketing expenses for the year ended December 31, 2007 were $314,664 compared
      to $136,260 for the year ended December 31, 2006. Sales marketing expenses
      consist primarily of compensation and benefits for sales and marketing staff
      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. We spent
      more on sales and marketing expenses in 2007 than the prior year because we
      are
      in the growth stage of marketing our new remote IT support business line and
      towards the end of the year took on extra staff. As we further ramp up our
      marketing effort, we expect that this expense will increase as we continue
      to
      expand our market presence in 2008.





General
      and administrative expenses consist primarily of compensation and benefits,
      fees
      for professional services, and overhead. General and administrative expenses
      were $1,199,138 for the year ended December 31, 2007, compared to $650,236
      for
      the year ended December 31, 2006. The increase between 2006 and 2007 is
      attributed to the increase in employees and consultants and extra legal expense
      associated with the WCOF financing transaction. In addition, three members
      of
      the executive team worked without compensation in the first quarter of 2006.
      It
      is expected that general and administrative costs will not increase further
      in
      2008 since our aim is to reduce overheads wherever possible over the coming
      months.





Depreciation
      and amortization expense increased substantially in during 2007. For the year
      ended December 31, 2007, it was $458,741 compared to $106,326 for the year
      ended
      December 31, 2006. The reason for the sharp increase has been amortization
      of
      the IT technology and customer lists that we purchased as part of BLive, which
      are being amortized over three years and amounted to $264,410 in the current
      year. As we move into the full support phase during 2008, the amortization
      of
      the capitalized software over three years will begin. This will also be a
      significant expense in future periods, which will offset the increase in revenue
      from our application support operations.





**Loss
      from Operations**





Loss
      from
      operations for the continuing business for the year ended December 31, 2007,
      was
      $3,190,059 compared to a loss of $1,780,896 for the year ended December 31,
      2006. This increased loss was due to additional support cost, sales and
      marketing expense, general and administrative expenses, and depreciation and
      amortization as detailed in the above sections. For the quarter ended December
      31, 2007, the loss was $957,739 compared to a loss of  $833,743 in the
      third quarter of 2007 and compared to a loss of $414,929 for the fourth quarter
      of 2006. Again, the main factors causing the increased loss were additional
      IT
      support cost, sales and marketing expense, and depreciation and amortization.
      As
      revenue increases, the loss from operations will reduce because we have
      sufficient office space in all three locations to accommodate our immediate
      needs and to accommodate additional staff that we need to hire, and we have
      existing staff resource for the initial customers. In addition, general and
      administrative costs will remain at the same levels as we build up revenue
      over
      the coming twelve months.





11


**Interest
      Income, Expense, and Other Financing Charges**





Interest
      expense was $155,269 for the year ended December 31, 2007, of which $71,050
      was
      incurred in the fourth quarter of 2007. The increase is due to the accrual
      of
      interest on the WCOF term loan and the accrual of $3,000 per quarter of interest
      on the Note Payable, which was repaid shortly after December 31, 2007. Interest
      expense for the year ended December 31, 2006, was $36,209 and the largest
      component of that related to the Note Payable.





Interest
      income for the year ended December 31, 2007, was $76,171 compared to $468 for
      the year ended December 31, 2006. The increase in the interest income is
      primarily attributable to the accrual of interest on the $4,000,000 borrowed
      from WCOF that was placed in escrow as detailed in Note 5 to the financial
      statements. Interest expense will be an increasing cost during 2008 as interest
      expense is accrued and paid on the full WCOF facility of $3.5 million ($1.5
      million was repaid early in January 2008 using funds released from escrow)
      at an
      interest rate of 5% on $2.5 million and 7.5% on the remaining $1 million.





Following
      the issuance to WCOF of 6,500,000 shares of Common Stock in the form of “yield
      enhancement shares” and the warrants exercisable for five years to purchase
      6,500,000 shares of Common Stock at an exercise price of $2.60 per share (see
      Notes 5 and 8 to the financial statements) and other associated transactions,
      we
      have been required to carry out a series of Black-Scholes valuations to fair
      value the various securities that have been issued and then to account for
      them
      as additional paid in capital. As a result of the issuance of the shares of
      Common Stock and warrants associated with the initial WCOF promissory notes,
      the
      Company and Atlas US incurred and expensed financing charges of $854,375 for
      the
      three months ended June 30, 2007 and also booked as discount on debt of
      $2,429,775. With the drawdown of the Second Note on July 11, 2007, a further
      $1,082,071 of financing charges were taken up in the three months ended
      September 30, 2007, and $814,606 of the total discount of $5 million dollars
      was
      amortized. The remaining discount of $4,115,168 was written off to other
      financing charges at December 31, 2007, and the net effect is shown in the
      Consolidated Statement of Operations for the year ended December 31, 2007.
      The
      corresponding credit was booked to additional paid-in capital and is included
      in
      the Stockholder’s equity in the balance sheet. The WCOF transaction accounts for
      $6,850,621 of the $9,076,514 of other financing charges during the year ended
      December 31, 2007 (nil 2006).





The
      remaining $2,225,893 of other financing charges relates to the issue of warrants
      associated with the raising of both debt and equity as detailed in Notes 5,
      8,
      and 9 of the accompanying financial statements.





**Other
      Comprehensive Income (Expense)**





We
      incurred a loss on unrealized foreign exchange balances of $247,443 for the
      year
      ended December 31, 2007 (as compared to a gain of $784 in the year ended
      December 31, 2006). These exchange fluctuations occurred during the year due
      to
      the fall of the U.S. dollar relative to the Euro as our Malta office incurs
      costs in Euro tied currency and a large proportion of our creditors and
      short-term advances are in Euro-related currencies and, to a significantly
      lesser extent, the fall of the U.S. dollar against the New Zealand
      dollar.





**Provision
      for Income Taxes**





Our
      income tax expense for the year ended December 31, 2007, was $804 compared
      to
      $1,914 for the year ended December 31, 2006. This cost relates to adjustments
      for prior years and a minimum tax charge in the current year.





**Comprehensive
      Net Income (Loss)**





The
      comprehensive net loss for the year ended December 31, 2007, was $12,593,918
      compared to $1,817,767 for the year ended December 31, 2006, due to the SG&A
      previously discussed. With the sale of TDC we made a recovery of $173,853 (after
      taxes), which was treated as income from discontinued operations and offset
      against the operating loss of $1,991,620 from continuing operations to obtain
      the comprehensive loss of $1,817,767 in year ended December 31, 2006.





12


**Liquidity
      and Capital Resources**





During
      the year ended December 31, 2007, we raised $1,417,000 compared to $2,439,753
      in
      the year ended December 31, 2006, through the sale of new equity securities
      (before costs) and $5 million of debt to finance the development of the new
      AtlasTG business. This new equity and debt was used to fund the business working
      capital requirements to develop our IT support tools and platform for our
      new business line during the year ended December 31, 2007, and the
      working capital requirements going forward into 2008. .





On
      December 31, 2007, we had cash on hand of $25,724 compared to $130,991 at
      December 31, 2006. We also had the WCOF Escrow Deposit of $4,011,107. This
      was
      released on January 3, 2008, and $1,500,000 was used to partially repay the
      WCOF
      debt and $132,000 was used to repay the loan payable showing in the current
      liabilities section of the Consolidated Balance Sheet. A further $550,000 of
      creditors and short-term debt was repaid, and $180,000 of placement agent fees
      were paid on the release of the WCOF debt proceeds.




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 2008 to have sufficient working capital to successfully
      bring online new customers to achieve our revenue targets and to enable us
      to
      repay the balance of the WCOF loan now standing at $3,500,000, plus the interest
      accrued thereon. We anticipate that during 2008, revenue will increase as a
      result of sales to our existing IT support customers and new customers, which
      we
      are targeting as part of our marketing plans so that we can reach a point where
      assets are equal to or higher than liabilities during the 2 nd half of
      the 2008 year.





13


**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.




***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: (i) persuasive
      evidence that contractual agreement exists, (ii) delivery has occurred, and
      (iii) 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
      lesser or greater than the amount that we recorded. Such adjustments, if any,
      could have a material impact on our results of our operations.





***Stock
      Based Compensation***





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 2004, the FASB issued a revision to SFAS No. 123R, “Accounting for
      Stock Based Compensation.”  This statement supersedes Accounting
      Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees,”  and its related implementation guidance.  This
      statement establishes standards for the accounting of transactions in which
      an
      entity exchanges its equity instruments for goods or services.  It
      also addresses transactions in which an entity incurs liabilities in exchange
      for goods or services that are based on the fair value of the entity’s equity
      instruments or that may be settled by the issuance of those equity
      instruments.  This statement focuses primarily on accounting for
      transactions in which an entity obtains employee services in share-based payment
      transactions.  This statement does not change the accounting guidance
      for share-based payment transactions with parties other than employees provided
      in SFAS No. 123R.  This statement does not address the accounting for
      employee share ownership plans, which are subject to the American Institute
      of
      Certified Public Accountants Statement of Position 93-6, “Employers’ Accounting
      for Employee Stock Ownership Plans.”  The Company expects no changes
      to its financial reporting as a result of the application of the foregoing
      because it is already reporting and complying with the fair value method of
      SFAS
      No. 123R.




14




New
      Accounting Pronouncements





In
      December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
      Consolidated Financial Statements, an amendment of ARB No. 51"("SFAS No. 160"),
      which will change the accounting and reporting for minority interests, which
      will be recharacterized as noncontrolling interests and classified as a
      component of equity within the consolidated balance sheets. SFAS No. 160 is
      effective as of the beginning of the first fiscal year beginning on or after
      December 15, 2008. Earlier adoption is prohibited and the Company is currently
      evaluating the effect, if any, that the adoption will have on its financial
      position, results of operations or cash flows but we believe that this will
      not
      affect us.





In
      December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
      Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
      business combinations. Under SFAS No. 141R, an acquiring entity will be required
      to recognize all the assets acquired and liabilities assumed in a transaction
      at
      the acquisition-date fair value with limited exceptions. SFAS No. 141R will
      change the accounting treatment and disclosure for certain specific items in
      a
      business combination. SFAS No. 141R applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008.
      Accordingly, any business combinations we engage in will be recorded and
      disclosed following existing GAAP until January 1, 2009. We expect SFAS No.
      141R
      will have an impact on accounting for business combinations once adopted but
      the
      effect is dependent upon acquisitions at that time. We are still assessing
      the
      impact of SFAS No. 141R.





In
      February 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter “SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings cause by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition for results of operations.




15


**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 over the past few years 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
      might require additional capital to support business growth, and this capital
      might not be available.*** **




We
      intend
      to continue to make investments to support our business growth and may require
      additional funds to respond to business challenges or opportunities, including
      the need to develop new services or enhance our existing service, enhance our
      operating infrastructure, or acquire complementary businesses and technologies.
      Accordingly, we may need to engage in equity or debt financings to secure
      additional funds. In addition, if we raise additional funds through further
      issuances of equity or securities, our existing stockholders would suffer
      dilution.





***We
      face substantial competition in our industry*** **.**





While
      we
      are seeking to position ourselves in a new and unique space, there are also
      a
      large number of traditional consultancy competitors competing in this space,
      including IBM Global Services (“ IBM ”),
      Hewlett-Packard (“ HP ”),
      Electronic Data Systems Corporation (“ EDS ”),
      and
      Accenture Ltd. (“ Accenture ”),
      as
      well as a number of smaller independent service providers. 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.





The
      improvement of infrastructure has meant the introduction of additional
      competitors to the competitive picture, notably in India, where Wipro Limited
      (“ Wipro ”)
      and
      Infosys Technologies Limited (“ Infosys ”)
      provide support services and call centers. 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.




***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
      unprofitable years during 2006 and 2007, and we expect increased marketing
      and
      operational 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.





16




***Our
      future success depends on our ability to attract customers from both within
      and
      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. 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.





***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.





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 2008. 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.





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





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 of our control, including demand for the development
      and introduction of new products and services by our competitors, price
      competition or pricing changes in the industry, foreign exchange rate changes,
      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
      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 are
      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.




17




***Our
      Independent Auditor’s Report contains a going concern qualification which means
      there is substantial doubt about our ability to continue as a going concern***





Our
      independent registered public accounting firm has concluded that we have
      suffered recurring losses from operations and have a working capital deficiency
      that raises substantial doubt about our ability to continue as a going concern.
      Additionally, we have incurred significant operating and net losses and have
      been unable to meet our cash flow needs with internally generated funds. Our
      cash requirements (primarily working capital requirements and cash for product
      development activities) have been satisfied through borrowings and the issuance
      of securities in a number of private placements. At December 31, 2007, we
      had cash and cash equivalents on hand of approximately $4,036,831, including
      $4,011,107 of restricted cash, current accounts payable, accruals and short
      term
      loans of $1,737,951 and promissory notes payable of $5,000,000 due on December
      31, 2008.  We may need to continue to raise additional equity or debt
      financing to adequately fund our strategies and to satisfy our ongoing working
      capital requirements. If we are unable to obtain such financing in a timely
      manner, we could be forced to curtail or cease operations. Even if we are able
      to pursue these strategies, there can be no assurances that we will ever attain
      profitability. The financial statements included herein do not include any
      adjustments that might result from the outcome of this uncertainty.





***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 limit or 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 or amended 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 could have an adverse effect on our
      business.





***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 have a materially adverse effect on 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 our 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, as well as having redundancy capacity within the existing
      system.





We
      do
      have an insurance policy that partially alleviates some of the financial losses
      that could be incurred due to hacking or other external factors, but this does
      not compensate for reputation loss.




18


***There
      may be conflicts of interest among our officers, directors, and
      stockholders.***





Our
      executive officers, directors, and their affiliates may engage in other
      activities and have interests in other entities on their own behalf or on behalf
      of other persons. Neither we nor any of our stockholders will have any rights
      in
      these ventures or their income or profits. In particular:





·
            Our
                executive officers, directors, or their affiliates may have an economic
                interest in, or other business relationship with, partner companies
                that
                invest in us; and





·
            Our
                executive officers, directors, or their affiliates may have interests
                in
                entities that provide products or services to
                us.





In
      any of
      these cases:





·
            Our
                executive officers or directors may have a conflict between our current
                interests and their personal financial and other interests in another
                business venture;





·
            Our
                executive officers or directors may have conflicting fiduciary duties
                to
                us and the other entity; and





·
            The
                terms of transactions with the other entity may not be subject to
                arm’s
                length negotiations and therefore may be on terms less favorable
                to us
                than those that could be procured through arm’s length
                negotiations.




***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.





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.





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, other intellectual property dispute or action
      to protect proprietary rights may have a materially 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.





19


***We
      are susceptible to parties who may compromise our security measures, which
      could
      cause us to expend capital and have a materially adverse effect on 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.





**The
      following risk factors apply to the securities markets and investments in our
      Common Stock:**





***Our
      stock price is volatile and a stockholder’s investment in our Common Stock could
      suffer a decline in value.***





The
      trading price of our Common Stock has fluctuated significantly in the past.
      The
      future trading price of our common stock may continue experiencing wide price
      fluctuations in response to a number of factors, some of which are beyond our
      control, such as:





·
            actual
                or anticipated fluctuations in revenue or operating
                results;





·
            changes
                in market valuation of companies in our industry
                generally;





·
            announcements
                of research activities and technology innovations or new products
                or
                services by us or our competitors;





·
            failure
                to meet expectations of
                performance;





·
            developments
                in or disputes regarding copyrights, trademarks, patents, and other
                proprietary rights; and





·
            general
                economic conditions.





As
      a
      result of the registration statement which was filed and declared effective
      in
      the 4 th quarter
      of 2007, a significant number of restricted shares have been registered and
      made
      available for resale. Sales of a substantial number of shares of our Common
      Stock in the public market, including the shares offered under registration
      statements and shares available for resale under Rule 144 of the Securities
      Act,
      or the perception that such sales could occur, could significantly depress
      the
      prevailing market price of our Common Stock.





***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 our new IT support business. Our quarterly results may
      fluctuate for many reasons, including a 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.





20




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.





***We
      have an existing obligation pursuant to a registration rights agreement to
      register the resale of additional shares of Common Stock that could
      have substantial diminution and other materially adverse effects on
      existing stockholders and investors.***





In
      regards to WCOF, we have an existing registration rights agreement with various
      investors under which we could be obligated to register the resale of
      additional shares of Common Stock. As the rights under this agreement
      are exercised, then the additional number of freely-tradable shares
      of Common Stock c ould
      significantly depress the prevailing market price of our Common
      Stock and our
      existing srtockholders could suffer substantial diminution in the value of
      their
      shares of Common Stock and other materially adverse effects.





***The
      market for our stock has not been liquid*** .





Our
      Common Stock is currently quoted for trading on the OTC Bulletin Board. As
      a
      result, the liquidity of our common stock is limited, not only in the number
      of
      shares that are bought and sold, but also through delays in the timing of
      transactions, and the lack of coverage by security analysts, and the lack of
      coverage by news media of the Company. Therefore, holders of our Common Stock
      may have difficulty selling their shares in the public markets.





***Our
      ability to issue additional securities without stockholder approval could have
      substantial dilutive and other adverse effects on existing stockholders and
      investors.***





We
      have
      the authority to issue additional shares of Common Stock and to issue options
      and warrants to purchase shares of our Common Stock without stockholder
      approval.  Future issuance of Common Stock could be at values substantially
      below the offered price of the Common Stock offered in the past, and, therefore,
      could represent further substantial dilution.  As of December 31, 2007, we
      had outstanding options exercisable to purchase up to 33,084 shares of Common
      Stock and outstanding warrants exercisable to purchase up to 4,107,092 shares
      of
      Common Stock.  Exercise of these warrants and options could have a further
      dilutive effect on existing stockholders.





21


**ITEM
      7. FINANCIAL STATEMENTS**




**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





**YEARS
      ENDED DECEMBER 31, 2007 AND 2006**




22


**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**





**TABLE
      OF CONTENTS**





**Page**Report
                of Independent Registered Public Accounting Firm
            
            24Consolidated
                Balance Sheets
            
            25Consolidated
                Statements of Operations
            
            26Consolidated
                Statements of Cash Flows
            
            27-28Consolidated
                Statements of Stockholders’ Equity (Deficit)
            
            29Notes
                to Consolidated Financial Statements
            
            30




23


Atlas
      Technology Group, Inc


Redmond,
      WA





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





We
      have
      audited the accompanying balance sheet of Atlas Technology Group, Inc as of
      December 31, 2007 and 2006, 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 audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement .
      The
      Company is not required to have, nor were we engaged to perform, an audit of
      its
      internal control over financial reporting. Our audit included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion. 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 audit provides 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 Atlas Technology Group, Inc as
      of
      December 31, 2007 and 2006 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


April
      10,
      2008





24


**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2007 AND 2006**




**2007**
            
            **2006****ASSETS**CURRENT
                ASSETSCash
                and cash equivalents
            
            $
            25,724
            
            $
            130,991Cash
                Escrow Deposit
            
            
            4,011,107
            
            
            —Accounts
                receivable
            
            
            64,387
            
            
            10,229VAT
                receivable
            
            
            13,345
            
            
            40,705Prepaids
                and deposits
            
            
            18,636
            
            
            23,731Total
                Current Assets
            
            
            4,133,199
            
            
            205,656OTHER
                ASSETSEquipment
                and furniture, net
            
            
            168,024
            
            
            209,853Software
                development, net
            
            
            647,782
            
            
            421,727IT
                technology, net
            
            
            1,216,827
            
            
            835,193Customer
                lists and Trademarks, net
            
            
            414,388Total
                Other Assets
            
            
            2,447,021
            
            
            1,466,773**TOTAL
                ASSETS**
            
            $
            6,580,220
            
            $
            1,672,429**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**CURRENT
                LIABILITIESBank
                Overdrafts
            
            $
            47,896
            
            $
            —Accounts
                payable
            
            
            972,977
            
            
            552,971Accrued
                expenses
            
            
            341,304
            
            
            150,999Income
                taxes payable
            
            
            2,292
            
            
            5,440Loans
                payable, related parties
            
            
            241,481
            
            
            70,582Loans
                payable
            
            
            132,000
            
            
            120,000WCOF
                Loan of $5,000,000 less accrued finance charges of $2,975,000
            
            
            3,025,000
            
            
            —Total
                Current Liabilities
            
            
            3,762,950
            
            
            899,992COMMITMENTS
                AND CONTINGENCIES
            
            
            —
            
            
            —STOCKHOLDERS’
                EQUITYRedeemable
                convertible preferred stock: 10,000,000 authorized - None issued
            
            
            —
            
            
            —Common
                stock, $0.0004 par value; 200,000,000 shares authorized39,513,949
                and 25,081,805 shares issued and outstanding respectively for 2007
                and
                2006
            
            
            15,797
            
            
            10,024Additional
                paid-in capital
            
            
            20,905,146
            
            
            6,272,168Accumulated
                (Deficit)
            
            
            (17,857,014
            )
            
            (5,510,539
            )Other
                comprehensive income (loss)
            
            
            (246,659
            )
            
            784Total
                Stockholders’ Equity
            
            
            2,817,270
            
            
            772,437**TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY**
            
            $
            6,580,220
            
            $
            1,672,429




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




25


**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006**




**2007**
            
            **2006**REVENUES
            
            $
            574,861
            
            $
            39,706COST
                OF REVENUE
            
            
            359,743
            
            
            68,000GROSS
                PROFIT (LOSS)
            
            
            215,118
            
            
            (28,294
            )EXPENSESIT
                software development
            
            
            1,432,633
            
            
            829,780Sales
                and marketing
            
            
            314,664
            
            
            136,260General
                and administrative
            
            
            1,199,138
            
            
            650,236Depreciation
            
            
            458,741
            
            
            106,326Total
                Expenses
            
            
            3,405,177
            
            
            1,
                752,602LOSS
                FROM OPERATIONS
            
            
            (3,190,059
            )
            
            (1,780,896
            )OTHER
                INCOME (EXPENSE)Interest
                Income
            
            
            76,171
            
            
            468Interest
                expense
            
            
            (155,269
            )
            
            (27,558
            )Other
                financing charges and amortization
            
            
            (9,076,514
            )
            
            (8,651
            )Total
                Other Income/Expenses
            
            
            (9,155,612
            )
            
            (35,741
            )NET
                LOSS
            
            
            (12,345,671
            )
            
            (1,816,637
            )INCOME
                TAX EXPENSE
            
            
            (804
            )
            
            (1,914
            )**NET
                LOSS**
            
            
            (12,346,475
            )
            
            (1,818,551
            )**LOSS
                FROM CONTINUING OPERATIONS**
            
            
            (12,346,475
            )
            
            (1,992,404
            )**INCOME
                FROM DISCONTINUED OPERATIONS**
            
            
            —
            
            
            173,853**OTHER
                COMPREHENSIVE INCOME (LOSS)**Foreign
                exchange translation
            
            
            (247,443
            )
            
            784**COMPREHENSIVE
                LOSS**
            
            $
            (12,593,918
            )
            $
            (1,817,767
            )NET
                LOSS PER SHARE OF COMMON STOCK:BASIC
                AND DILUTED FROM CONTINUING OPERATIONS
            
            $
            (0.37
            )
            $
            (0.09
            )NET
                LOSS PER SHARE OF COMMON STOCK:BASIC
                AND DILUTED FROM DISCONTINUED OPERATIONS
            
            $
            —
            
            $
            0.01WEIGHTED
                AVERAGE NUMBER OF SHARES OF COMMONSTOCK
                OUTSTANDING, BASIC AND DILUTED
            
            
            33,853,472
            
            
            22,582,863




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




26




**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006**




**2007**
            
            **2006****Cash
                Flows from Operating Activities**Net
                (loss)
            
            $
            (12,346,475
            )
            $
            (1,992,404
            )Discontinued
                operations income
            
            
            —
            
            
            173,853(12,346,475
            )
            
            (1,818,551
            )Adjustments
                to reconcile net loss to net cash (used) by operating
                activities:Non-cash
                financing charges associated with issue of stock and
                warrants
            
            
            9,076,514
            
            
            8,651Depreciation
                and amortization
            
            
            458,741
            
            
            104,587Changes
                in assets and liabilities:(Increase)
                decrease in accounts receivable
            
            
            (54,158
            )
            
            10,229(Increase)
                decrease in VAT receivable
            
            
            27,360
            
            
            —(Increase)
                decrease in prepaids and deposits
            
            
            5,096
            
            
            9,476Increase
                (decrease) in Overdrafts
            
            
            47,896
            
            
            —Increase
                (decrease) in accounts payable
            
            
            420,006
            
            
            10,480Increase
                (decrease) in accrued expenses
            
            
            190,305
            
            
            (153,915
            )Increase
                (decrease) in tax payable
            
            
            (3,148
            )
            
            1,558Net
                cash provided (used) by discontinued operations
            
            
            —
            
            
            (169,610
            )Net
                cash provided (used) by operating activities
            
            
            10,168,612
            
            
            (1,997,095
            )**Cash
                Flows from Investing Activities**Purchase
                of Atlas Technology Group
            
            
            —
            
            
            (37,235
            )Cash
                from acquisition of BLive Networks/Atlas Technology Group
            
            
            414
            
            
            93,273Purchase
                of equipment and furniture
            
            
            (83,145
            )
            
            (55,869
            )Purchase
                of software and software development
            
            
            (433,465
            )
            
            (455,267
            )Net
                cash provided (used) by discontinued operations
            
            
            —
            
            
            1,912Net
                cash used in investing activities
            
            
            (516,196
            )
            
            (453,186
            )**Cash
                Flows from Financing Activities**Proceeds
                from issuance of stock
            
            
            1,417,000
            
            
            2,439,753Repayment
                of borrowing
            
            
            —
            
            
            (175,175
            )Increase
                in Note Payable
            
            
            12,000
            
            
            —Proceeds
                from borrowing
            
            
            5,170,899
            
            
            270,582Restricted
                cash in escrow
            
            
            (4,011,107
            )
            
            —Net
                cash provided (used) by discontinued operations
            
            
            —
            
            
            (6,232
            )Net
                cash provided by financing activities
            
            
            2,588,792
            
            
            2,528,928Net
                increase (decrease) in cash and cash equivalents
            
            
            (105,267
            )
            
            78,,647**Cash
                and cash equivalents beginning of period**
            
            
            130,991
            
            
            52,344**Cash
                and cash equivalents**
            
            $
            25,724
            
            $
            130,991




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




27




**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006**




SUPPLEMENTAL
                  CASH FLOW INFORMATION:
              
              **2007**
              
              **2006**Income
                  taxes paid
              
              $
              3,299
              
              $
              —Interest
                  paid
              
              $
              134,036
              
              $
              23,715NON-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
              
              $
              —
              
              $
              100,000Cash
              
              $
              414
              
              $
              —Accounts
                  Receivable, net (since collected)
              
              $
              150,520
              
              $
              —Computer
                  equipment
              
              $
              57,204
              
              $
              —Acquisition
                  of IT Technology from BLive
              
              $
              505,121
              
              $
              —Acquisition
                  of customer list and trademarks from BLive
              
              $
              555,312
              
              $
              —




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




28


**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006**




**Additional****Common
                Stock**
            
            **Preferred
                Stock**
            
            **Paid-in**
            
            **Accumulated****Shares**
            
            **Amount**
              **$**
            
            **Shares**
            
            **Amount**
              **$**
            
            **Capital**
              $
            
            **Deficit**
              $
            
            **Total**
              $Opening
                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 per share
            
            
            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 per share
            
            
            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


Issue
                of 1,150,000 shares of Common stock re acquisition of BLive Networks
                Inc
                at $1.00
            
            
            1,150,000
            
            
            460
            
            
            —
            
            
            —
            
            
            1,149,540
            
            
            —
            
            
            1,150,000Adjustment
                for warrants issued re BLive acquisition
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            87,900
            
            
            —
            
            
            87,900Placement
                of Common stock issued at $1.00
            
            
            100,000
            
            
            40
            
            
            —
            
            
            —
            
            
            99,960
            
            
            —
            
            
            100,000Placement
                of Common stock issued at $1.00
            
            
            200,000
            
            
            80
            
            
            —
            
            
            —
            
            
            199,920
            
            
            —
            
            
            200,000Adjustment
                for warrants issued in association with debt raised
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            32,982
            
            
            —
            
            
            32,982Shares
                issued to West Coast Opportunity Fund at effective rate of
                $0.85
            
            
            3,250,000
            
            
            1,300
            
            
            —
            
            
            —
            
            
            2,761,200
            
            
            —
            
            
            2,762,500Adjustment
                for warrants issued in association with WCOF debt
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            507,650
            
            
            —
            
            
            507,650Adjustment
                for warrants issued to WCOF broker
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            40,612
            
            
            —
            
            
            40,612Adjustment
                for shares issued in association with consulting work done
            
            
            140,000
            
            
            56
            
            
            —
            
            
            —
            
            
            118,944
            
            
            —
            
            
            119,000Shares
                issued for repayment of debt with adjustment for warrants issued
                in
                association with repayment of debt
            
            
            650,000
            
            
            260
            
            
            —
            
            
            —
            
            
            750,425
            
            
            —
            
            
            750,685Adjustment
                for shares and warrants issued in association with extension of debt
                Note
            
            
            25,000
            
            
            10
            
            
            —
            
            
            —
            
            
            35,265
            
            
            —
            
            
            35,275Shares
                issued to West Coast Opportunity Fund at effective rate of
                $0.92
            
            
            3,250,000
            
            
            1,300
            
            
            —
            
            
            —
            
            
            2,988,700
            
            
            —
            
            
            2,990,000Adjustment
                for warrants issued in association with WCOF debt
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            593,172
            
            
            —
            
            
            593,172Exercise
                of Warrants at $1.00 per common share
            
            
            10,000
            
            
            4
            
            
            —
            
            
            —
            
            
            9,996
            
            
            —
            
            
            10,000Placement
                of Common Stock at $0.35
            
            
            571,429
            
            
            229
            
            
            —
            
            
            —
            
            
            399,772
            
            
            —
            
            
            400,000Adjustment
                for warrants issued in association with $0.35 Stock
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            73,003
            
            
            —
            
            
            73,003Placement
                of Common Stock at $0.35
            
            
            585,715
            
            
            234
            
            
            —
            
            
            —
            
            
            409,766
            
            
            —
            
            
            410,001Adjustment
                for warrants issued in association with $0.35 Stock
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            74,828
            
            
            —
            
            
            74,828Placement
                of Common Stock at $0.20 and issue of 1 million warrants
            
            
            1,000,000
            
            
            400
            
            
            —
            
            
            —
            
            
            1,274,988
            
            
            —
            
            
            1,275,388Shares
                issued to West Coast Opportunity Fund on reorganization of
                loan
            
            
            3,500,000
            
            
            1,400
            
            
            —
            
            
            —
            
            
            2,973,600
            
            
            —
            
            
            2,975,000Warrants
                issued for consulting
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            50,756
            
            
            —
            
            
            50,756Net
                Income (Loss)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (12,346,475
            )
            
            (12,346,475
            )Other
                Comprehensive Income (Loss) - foreign exchange
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (247,443
            )
            
            (247,443
            )Balances
                at December 30, 2007
            
            
            39,513,949
            
            $
            15,797
            
            
            —
            
            $
            —
            
            $
            20,905,146
            
            $
            (18,103,673
            )
            $
            2,817,270




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




29


**ATLAS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITY**


**YEARS
      ENDED DECEMBER 31, 2007 AND 2006**





**NOTE
      1 - NATURE OF BUSINESS**





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 had no material operations. As a result
      of
      the Recapitalization, shareholders of California Tribeworks exchanged all of
      their shares of California Tribeworks for Pan World common stock.
      Subsequent to the Recapitalization, we were reincorporated in Delaware as
      Tribeworks, Inc and at our Annual General Meeting held on July 12, 2007, the
      name of the Company was changed to Atlas Technology Group, Inc.





During
      2005, the enterprise application development business of Tribeworks was
      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 mid-2006, the iShell line of products and the enterprise application
      development business were our primary product offering and business. The former
      assets, liabilities, and business operations of TDC were reclassified as
      discontinued operations in the financial statements in this annual report for
      the year ended December 31, 2006 on Form 10-KSB.





On
      January 20, 2006, we acquired TakeCareofIT Holdings Ltd., doing business as
      Atlas Technology Group, a Malta Corporation that was established in September
      2004 to provide external Information Technology (“ IT ”)
      application support services for organizations with large IT functions as is
      referred to hereafter as “ AtlasTG ”
or
      the
“ AtlasTG
      business. ”
This
      IT
      support business will be our primary business focus going forward and thus
      2006
      was a transitional year for us. We plan to become a leading IT outsourcing
      support company for custom software applications worldwide. After extensive
      beta
      testing, the Atlas business line is now generating revenue with the first
      support customers signed on in February 2007. Our in-house developed tools
      and
      processes, which are needed to customize the monitoring and support IT
      applications and provide remote IT application support and feedback to our
      customers, are now ready to meet the needs of our customers and are being
      marketed to five customers who are either fully utilizing our remote IT support
      or in the final process of being installed (“O nboarded ”)
      as
      fully serviced customers.





On
      January 26, 2007, the Company acquired all of the assets (but not the
      liabilities) and customers of BLive Networks, Inc. Included with these assets
      was a Canadian company called InfoBuild Networks (Canada) Inc. The assets
      acquired were added to this Company and the name of it has been changed to
      BLive
      Networks Inc. (“ BLive ”),
      and
      the business has continued to trade through this Company.




Our
      head
      operating office is located in Malta. We also have subsidiary offices in
      Wellington, New Zealand, and Redmond, Washington, and a data center in Seattle,
      Washington. We currently have twenty-one employees and three 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, is maintained by our
      state-of-the-art data centers in Seattle and Malta, and “follow-the-sun” 24x7
      hour support centers in Malta, Redmond/Seattle, and Wellington.





30




After
      two
      years of development and testing, the Company is now implementing and marketing
      its IT application support services and is pursuing sales in the western United
      States and in the European Union (“ EU ”),
      specifically the United Kingdom (“ UK ”)
      and
      Italy. The Company now has support contracts with five customers in the United
      States. The Company will continue to target customers in Italy, the UK, and
      the
      United States before it later expands its sales efforts worldwide. The Company
      is initially marketing to four targeted groups of potential
      clients:





1)
            Directly
                to initial pilot customers, who will serve as final beta test
                opportunities for the Company’s systems, software monitoring, and incident
                management systems and directly to smaller customers with existing
                in-house support operations;




2)
            Agent
                companies, who are strategic partners and will represent the Company
                in
                specific regions in defining strategic reseller and onboarding
                partners;




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




4)
            Reseller
                channel partners who will be the backbone of the Company’s sales strategy.
                With existing customer bases of large and complex software systems,
                resellers will be provided the advanced AtlasTG tools and systems
                to
                monitor and support highly complex software systems on an ongoing
                basis.





**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. As the acquisition of
      Atlas TG business was January 20, 2006, the 2006 comparative figures include
      that business for 2006, while the business and assets of TDC (sold September
      14,
      2006) have been treated as discontinued operations.





On
      January 26, 2007, the Company acquired all of the assets (but not the
      liabilities), (including IT Technology, trademarks, and customers of BLive
      Networks Inc.) in exchange for 1,150,000 shares of Common Stock of the Company.
      Included in these assets purchased from BLive Networks Inc was 49% of a Canadian
      company called InfoBuild Networks (Canada) Inc., and subsequent to the initial
      acquisition an option to purchase the remaining 51% of InfoBuild Networks
      (Canada) Inc was exercised. The assets acquired have been injected into this
      company and the name of it has been changed to BLive Networks Inc. and the
      BLive
      business has continued to trade through this company and this business is
      referred to as “ BLive ”.
      The
      assets acquired have been consolidated into these financial statements and
      the
      results of BLive from January 26, 2007.





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
            
            MaltaAtlas
                Technology Group Limited
            
            MaltaAtlas
                Technology Group (NZ) Limited
            
            New
                ZealandAtlas
                Technology Group (US) Inc.
            
            Washington
                State, USAAtlas
                Technology Group Consulting Inc.
              BLive
                Networks Inc
            
            Washington
                State, USA
              British
                Columbia, Canada




The
      Company and its two U.S. subsidiaries listed above are all Delaware companies,
      operating in Washington State.





All
      material inter-company transactions have been eliminated.




31


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 $45,163 and $36,260 for the years ended December 31, 2007 and 2006,
      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, 2007, we had $64,387 (2006: $10,229) outstanding accounts
      receivable plus $13,345 of valued added tax refunds receivable at December
      31,
      2007 (2006: $40,705).




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 the small number of employees who have been
      with
      us for more than a year and who have leave owing.





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





The
      Company and each subsidiary maintain cash in both local currency and U.S. 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, 2007 or 2006. Cash balances did not
      exceed Federal Deposit Insurance Corporation (FDIC) limits within the United
      States, except the Cash Escrow Deposit with Wells Fargo Trust, which exceeds
      the
      limit by $3,911,107. Funds were held in accounts with HSBC in Canada, Malta,
      and
      New Zealand, countries not covered by FDIC.





Customer
      Concentrations




In
      2007,
      three customers accounted for 35%, 29%, and 5% of total revenues, respectively.
      In 2006, three customers accounted for 77%, 13%, and 10% of total revenues,
      respectively. At December 31, 2007 and 2006, accounts receivable from these
      major customers totaled $23,961 and $10,229 respectively.





Revenues
      from international customers were approximately 4% and 90% of total revenues
      in
      2007 and 2006, respectively. Revenues are paid in U.S. dollars and Euros.
      Approximately 4% and 11% of revenues in 2007 and 2006, respectively, were
      generated from non-U.S. based customers. At December 31, 2007 and 2006, accounts
      receivable from all international customers totalled approximately $4,424 and
      $10,301, respectively.




32


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.




Estimates




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States 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, 2007.





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 Atlas Technology Group Limited functional
      currency during 2007 and 2006 was 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. As from January 1, 2008, Malta adopted the Euro and this
      will
      be the functional currency in future years. The U.S. companies use U.S. dollars
      and the New Zealand subsidiary uses New Zealand dollars as their functional
      currencies. The AtlasTG financial statements have been converted into U.S.
      dollars and reformatted to conform to U.S. 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 2007 and 2006. These factors, among others, indicate that the
      Company may be unable to continue as a going concern for a reasonable period
      of
      time unless breakeven (where assets are equal to liabilities) can be attained
      within a reasonable time. The financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.





To
      continue developing the AtlasTG business stream, which is now in the initial
      production stages and is being deployed with customers, management plans to
      raise additional equity before the end of 2008. Unless breakeven (where assests
      are equal to liabilities) is achieved and new equity is raised there is
      substantial doubt about the Company’s ability to continue as a going concern.
      The recoverability of the recorded assets and satisfaction of the liabilities
      reflected in the accompanying balance 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.




33


Income
      Taxes





The
      Company accounts for income taxes and the related amounts under the liability
      method. Deferred tax assets and liabilities are determined based on the
      differences between the financial statement carrying amounts and the income
      tax
      basis of assets and liabilities. A valuation allowance is applied against any
      net deferred tax asset if, based on available evidence, it is more likely than
      not that some or all for the deferred tax assets will not be
      realized.





In
      July
      2006, FASB issued FASB Interpretation No. (FIN) 48, “Accounting for Uncertainty
      in Income Taxes - an Interpretation of FASB Statement 109”, which clarifies the
      accounting for uncertainty in tax positions. Under FIN 48, the impact of an
      uncertain income tax position on the income tax return must be recognized at
      the
      largest amount that is more likely than not to be sustained upon audit by the
      relevant taxing authority. An uncertain income tax position will not be
      recognized if it has less than a 50% likelihood of being sustained.
      Additionally, FIN 48 provides guidance on de-recognition, classification,
      interest, penalties, accounting in interim periods, disclosure, and transition.
      We adopted the provisions of FIN 48 on January 1. 2007. There were no
      unrecognized tax benefits as of the date of adoption. As a result of the
      implementation of FIN 48, we did not recognize an increase in the liability
      for
      unrecognized tax benefits. The adoption of FIN 48 did not impact our financial
      condition, results of operations, or cash flows.





Our
      policy is to recognize interest and/or penalties related to income tax matters
      in income tax expense. We had no accrual for interest or penalties on our
      balance sheets at December 31, 2007 or 2006.





New
      Accounting Pronouncements





In
      December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interest in
      Consolidated Financial Statements, an amendment of ARB No. 51"("SFAS No. 160"),
      which will change the accounting and reporting for minority interests, which
      will be recharacterized as noncontrolling interests and classified as a
      component of equity within the consolidated balance sheets. SFAS No. 160 is
      effective as of the beginning of the first fiscal year beginning on or after
      December 15, 2008. Earlier adoption is prohibited and the Company is currently
      evaluating the effect, if any, that the adoption will have on its financial
      position, results of operations or cash flows but we believe that this will
      not
      affect us.





In
      December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
      Combinations, or SFAS No. 141R. SFAS No. 141R will change the accounting for
      business combinations. Under SFAS No. 141R, an acquiring entity will be required
      to recognize all the assets acquired and liabilities assumed in a transaction
      at
      the acquisition-date fair value with limited exceptions. SFAS No. 141R will
      change the accounting treatment and disclosure for certain specific items in
      a
      business combination. SFAS No. 141R applies prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008.
      Accordingly, any business combinations we engage in will be recorded and
      disclosed following existing GAAP until January 1, 2009. We expect SFAS No.
      141R
      will have an impact on accounting for business combinations once adopted but
      the
      effect is dependent upon acquisitions at that time. We are still assessing
      the
      impact of SFAS No. 141R.








In
      February 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter “SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings cause by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition for results of operations.





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.




34





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
      June
      2006, the Financial Accounting Standards Board issued FASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109”, which prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a tax return. FIN 48 also provides
      guidance on de-recognition, classification, interest and penalties, accounting
      in interim periods, disclosure and transition. FIN 48 is effective for fiscal
      years beginning after December 15, 2006. The Company does not expect the
      adoption of FIN 48 to have a material impact on its financial reporting, and
      the
      Company is currently evaluating the impact, if any, the adoption of FIN 48
      will
      have on its disclosure requirements.





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.




35


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 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 $1,432,633 (2006: $859,780)
      of
      software development costs have been expensed in the period. Our intangible
      assets are summarized as follows:




2007
            
            2006Software
                Development
            
            $
            748,164
            
            $
            454,942IT
                Technology Acquired
            
            
            1,340,313
            
            
            835,192Customer
                List and Trademarks
            
            
            555,312
            
            
            —Less:
                Accumulated Amortization
            
            
            (364,792
            )
            
            (33,540
            )$
            2,278,997
            
            $
            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 2004, the FASB issued a revision to SFAS No. 123R, “Accounting for
      Stock Based Compensation.”  This statement supersedes Accounting
      Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees,”  and its related implementation guidance.  This
      statement establishes standards for the accounting of transactions in which
      an
      entity exchanges its equity instruments for goods or services.  It
      also addresses transactions in which an entity incurs liabilities in exchange
      for goods or services that are based on the fair value of the entity’s equity
      instruments or that may be settled by the issuance of those equity
      instruments.  This statement focuses primarily on accounting for
      transactions in which an entity obtains employee services in share-based payment
      transactions.  This statement does not change the accounting guidance
      for share-based payment transactions with parties other than employees provided
      in SFAS No. 123R.  This statement does not address the accounting for
      employee share ownership plans, which are subject to the American Institute
      of
      Certified Public Accountants Statement of Position 93-6, “Employers’ Accounting
      for Employee Stock Ownership Plans.”  The Company expects no changes
      to its financial reporting as a result of the application of the foregoing
      because it is already reporting and complying with the fair value method of
      SFAS
      No. 123R.




36


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





During
      2005, Tribeworks advanced $1,073,744 to Atlas Technology Group Holdings Limited,
      then controlled by the current directors of AtlasTG, to pursue its business
      plan. Subsequent to the acquisition of Atlas Technology Group Limited on January
      20, 2006, that company 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:





2007
            
            2006Computer
                Equipment
            
            $
            317,299
            
            $
            234,154Office
                Furniture and Fittings
            
            
            46,746
            
            
            46,746Total
                Property and Equipment
            
            
            364,045
            
            
            280,900Less:
                Accumulated Amortization
            
            
            (196,021
            )
            
            (71,047
            )$
            168,024
            
            $
            209,853





Depreciation
      and amortization expense for the year ended December 31, 2007 was $124,974
      (2006: $71,047). 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. During 2007, further interest of $12,000
      was accrued. Subsequent to balance date, the Note showing in the Consolidated
      Balance Sheet as a Loan payable for $132,000 has been repaid in
      full.





In
      addition to the Note, parties associated with shareholders who hold more than
      5%
      of the Common Stock of the Company ( “Related
      Parties” )
      have
      made various advances totalling $241,481 during 2007 and $70,582 during 2006.
      Since December 31, 2007 one advance made in Euros equivalent to $100,000 has
      been repaid and the lender of a further $100,000 has agreed to accept Common
      Stock in exchange for those advances.





On
      June
      15, 2007, Atlas Technology Group (US), Inc., (“ Atlas
      US ”)
      entered into a Securities Purchase Agreement with West Coast Opportunity Fund
      LLC (“ WCOF”) .
      Pursuant to the terms of the Securities Purchase Agreement, Atlas US agreed
      to
      issue and sell to WCOF two senior secured non-convertible promissory notes
      in
      the initial amount of $2,500,000 (the *“* Initial
      Note *”* )
      which
      was issued on June 15, 2007 and a second promissory note in the amount of
      $2,500,000 (the “ Second
      Note ”
and
      together with the Initial Note, the “ Promissory
      Notes ”),
      which
      was issued on July 11, 2007.




37


**NOTE
      5 — LOANS, ADVANCES, AND NOTE PAYABLE (Continued)**





Interest
      on the Promissory Notes was calculated at an annual rate of 5% and is due and
      payable bi-annually and the first interest payment was made November 30, 2007.





In
      connection with the issuance of the Initial Promissory Note, pursuant to the
      Securities Purchase Agreement, the Company issued WCOF a warrant to purchase
      3,250,000 shares of Common Stock of the Company and upon the issuance of the
      Second Promissory Note, the Company issued WCOF an additional warrant for the
      purchase of 3,250,000 shares of Common Stock of the Company. These warrants
      were
      exercisable for a period of five years at a price of $2.60 per share - see
      further comment below. The Company was also permitted to force the exercise
      of
      these warrants if the Common Stock of the Company closes at a price above $10.00
      per share for twenty out of thirty days, certain trading volume requirements
      are
      satisfied and the resale of the Common Stock underlying these warrants have
      been
      registered with the U.S. Securities and Exchange Commission (the “ SEC ”)
      and
      such registration statement has been declared effective.




In
      connection with the issuance of the Promissory Notes, the Company and all of
      its
      subsidiaries (other than Atlas US) signed a Guaranty Agreement (the
“ Guaranty ”)
      that
      provides WCOF with a guarantee to repay the Promissory Notes on behalf of Atlas
      US if Atlas US fails to repay the Promissory Notes. In addition to the Guaranty,
      the Company and all of its subsidiaries provided WCOF a first lien security
      interest in all of each entity’s assets pursuant to the terms of a Pledge and
      Security Agreement (the “ Security
      Agreement ”).





Of
      the
      $2,500,000 paid by WCOF for the Initial Note on June 15, 2007, Atlas US received
      $1,000,000 less certain fees and expenses and $1,500,000 was placed into escrow
      pursuant to the terms of an escrow agreement (the “ Escrow
      Agreement ”)
      between Atlas US, WCOF and Wells Fargo Bank, N.A. and the Company or any of
      its
      subsidiaries was required to enter into contracts with certain customer
      entities, totalling $1,000,000 in annual, non-contingent future revenues prior
      to 5:00 p.m. on December 31, 2007.  In addition, the entire proceeds of the
      Second Note were also placed into the escrow account and again the Company
      or
      any of its subsidiaries were required to enter into contracts with certain
      customer entities, totalling $5,000,000 in non-contingent future revenues prior
      to 5:00 p.m. on December 31, 2007.





On
      December 31, 2007, the Company entered into a Note Amendment and Securities
      Purchase Agreement (the “ WCOF
      Agreement ”),
      with
      WCOF. The WCOF Agreement amends the earlier Securities Purchase Agreement of
      June 15, 2007 under which ATG US issued to WCOF the above promissory notes,
      shares, and warrants. Pursuant to the WCOF Agreement, WCOF agreed to cancel
      and
      return the 6,500,0000 warrants to the Company in consideration for which the
      Company has agreed to the following: (i) enter into the WCOF Agreement, amending
      the earlier agreement; (ii) amend the Promissory Note dated June 15, 2007,
      to
      extend the maturity date from November 30, 2008 to December 31, 2008 and
      increase the interest rate to 7.5% per annum; (iii) amend and restate the
      Promissory Note dated July 11, 2007 to extend the maturity date from November
      30, 2008 to December 31, 2008; and (iv) issue a yield enhancement consisting
      of
      3,500,000 shares (the “ Yield
      Enhancement Shares ”)
      of
      Common Stock. As a result of issuing the Yield Enhancement Shares, the Company
      incurred a financing charge of $2,975,000, which has been offset against the
      $5,000,000 of debt owing to WCOF and this will be amortized evenly over 2008
      until the debt becomes repayable on December 31, 2008.





As
      a
      result of the issuance of the shares of Common Stock and warrants associated
      with the initial Promissory Note, the Company and Atlas US incurred and expensed
      financing charges of $854,375 for the three months ended June 30, 2007 and
      also
      booked as discount on debt of $2,429,775. With the drawdown of the second
      Promissory Note on July 11, 2007, a further $1,082,071 of financing charges
      were
      taken up in the three months ended September 30, 2007, and $814,606 of the
      total
      discount of $5 million dollars was amortized. The remaining discount of
      $4,115,168 was written off to other financing charges at December 31, 2007,
      and
      the net effect is shown in the Consolidated Statement of Operations for the
      year
      ended December 31, 2007. The corresponding credit was booked to additional
      paid-in capital and is included in the Stockholder’s equity in the balance
      sheet.





In
      the
      event that Atlas US, the Company, or any of its subsidiaries has not entered
      into the contracts described above, the amounts in the escrow account will
      be
      returned to WCOF and will be applied to the repayment of the Promissory Notes.




38


**NOTE
      5 — LOANS, ADVANCES, AND NOTE PAYABLE (Continued)**





Subject
      to certain grace periods, the Promissory Notes provide the following events
      of
      default (among others):





·
            Failure
                of the Company to pay principal and interest when
                due;





·
            Any
                form of bankruptcy or insolvency proceeding is instituted by or against
                the Company or any of its subsidiaries that is not withdrawn within
                90
                days;





·
            A
                breach by the Company or Atlas US of any material representation
                or
                warranty made in the Securities Purchase
                Agreement;





·
            An
                uncured breach by the Company or Atlas US of any material covenant,
                term,
                or condition in the Securities Purchase Agreement or the Promissory
                Notes;
                and





·
            Any
                event of default set forth in the Security
                Agreement.





Subject
      to certain grace periods, the Security Agreement provides the following events
      of default (among others):




·
            Any
                event of default set forth in the Promissory
                Notes;





·
            A
                breach by the Company, or any of its subsidiaries, of any material
                representation or warranty made in the Security Agreement;
                and





·
            Failure
                of the Company, or any of its subsidiaries, to observe or perform
                any of
                its obligations under the Security
                Agreement.





Upon
      the
      occurrence of an event of default, the payment of the principal amounts under
      the Promissory Notes may be accelerated and the interest rate applicable to
      the
      principal amounts is increased to 7.5% per annum during the period the default
      exists.





As
      further consideration for the purchase of the Initial Note, the Company issued
      and sold 3,250,000 shares of Common Stock of the Company to WCOF, for a purchase
      price of $1,000 pursuant to the terms of the Securities Purchase Agreement.
      Upon
      the issuance of the Second Note, the Company issued and sold an additional
      3,250,000 shares of Common Stock to WCOF for a purchase price of $1,000.





Members
      of the Company’s management team and certain of its stockholders executed a
      lock-up agreement with WCOF that prohibits them from selling any of their
      holdings of Common Stock until ninety (90) days following the repayment of
      the
      Promissory Notes.





The
      Company paid its placement agent, Equity Source Partners, LLC (“ ESP ”),
      a
      NASD member investment firm, cash commissions of approximately $80,000 on the
      closing date for the initial Promissory Note and issued 5-year warrants to
      purchase 30,769 shares of common stock of the Company on equal terms to the
      warrants issued to WCOF. Atlas US also agreed to pay the legal fees of counsel
      to WCOF in an amount not to exceed $15,000. ESP will receive further commissions
      equal to 8% of the funds released from escrow and issued warrants on similar
      terms as for the first funds release. The Company has also reimbursed ESP for
      its reasonable expenses incurred in connection with the WCOF financing
      transaction. With renegotiation of the WCOF Agreement ESP became eligible to
      receive further fees of $200,000 (which they agreed to take in cash of $180,000
      paid subsequent to balance date and 40,000 shares of Common Stock in the
      Company) and 280,000 3 year warrants at a strike price of $0.70.




39




**NOTE
      6 - INCOME TAXES**





The
      Company accounts for income taxes and the related accounts under the liability
      method. Deferred tax assets and liabilities are determined based on the
      difference between the financial statement carrying amounts and the income
      tax
      basis of assets and liabilities. A valuation allowance is applied against any
      net deferred tax asset if, based on available evidence, it is more likely than
      not that some or all of the deferred tax assets will not be
      realized.





At
      December 31, 2007 and 2006, the Company had gross deferred tax assets calculated
      at the expected rate of 34% of $1,855,181 and $743,668, respectively,
      principally arising from net operating loss carryforwards for income tax
      purposes. Because management of the Company cannot determine that it is more
      likely than not that the Company will realize the benefit of the deferred tax
      asset, a valuation allowance of  $1,855,181 and $743,668 has been
      established at December 31, 2007 and 2006, respectively.





Additionally,
      the future utilization of our net operating loss carryforwards to offset future
      taxable income may be subject to annual limitations, pursuant to IRC Section
      382
      and 383 as a result of ownership changes that have occurred previously or that
      could occur in the future.





The
      significant components of the deferred tax assets at December 31, 2007 and
      2006
      were as follows:




December
                31,
              2007
            
            December
                31,
              2006Net
                operating loss carryforwards
            
            $
            5,456,416
            
            $
            2,187,259Gross
                deferred tax assets (liabilities):Deferred
                tax asset
            
            $
            1,855,181
            
            $
            743,668Valuation
                allowance
            
            $
            (1,855,181
            )
            $
            (743,668
            )




At
      December 31, 2007 and 2006, the Company has net operating loss carryforwards
      of
      $5,456,416 and $2,187,259, respectively, which expire in the years 2021 through
      2025. The net change in the allowance account was an increase of $1,111,513
      and
      $677,151, for December 31, 2007 and 2006, respectively.




The
      majority of these losses are in companies outside of the United States and
      are
      subject to various restrictions as to their 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.





We
      have
      not determined the amount of net operating losses allowed for inclusion in
      our
      U.S. federal filing from our operations outside of the United States at this
      time, therefore, these net operating losses are not included.





**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.





The
      Company has sold a number of placements of equity at various prices, which
      have
      been both over and under market value. For each placement of Common Stock or
      warrants, a fair value calculation is made at the issuance date using a
      Black-Scholes option pricing model with the following assumptions: risk free
      interest rate of 4-5%, expected volatility of 45-48%, expected option life
      of
      3-5 years, and dividend yield of $0.00.





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.




40


During
      the quarter ended June 30, 2006, 1,140,000 shares of Common Stock were sold
      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 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.





The
      Board
      of Directors exercised its discretion to convert the 84,000 Series B Preferred
      Stock on December 29, 2006 into 84,000 shares of Common Stock per the terms
      of
      the issue together with the issue of one warrant for every two 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.




During
      the fourth quarter of 2006, 50,000 warrants to purchase shares of Common Stock
      at $1.00 per share were exercised. In addition 100,000 shares of Common Stock
      were issued for debt at $1.00 per share including 50,000 warrants exercisable
      at
      $1.25 per share, 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
      one warrant for every two 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. Financing charges of $45,347 were booked to
      additional paid in capital with regard to these shares and warrant.





During
      the quarter ended March 31, 2007, the Company issued 1,150,000 of shares of
      Common Stock for the acquisition of the assets of BLive. 150,000 of these
      1,150,000 shares of Common Stock were an M&A advisory fee. 100,000 of shares
      of Common Stock (at a price of $1 per share) were sold along with a warrant
      to
      purchase 300,000 shares of Common Stock exercisable for a period of two years
      with an exercise price of $1.25 per share at an aggregate purchase price of
      $100,010. The warrants have a fair market value of $87,900, which has been
      recorded as a financing charge and as additional paid-in capital.





During
      the quarter ended June 30, 2007, the Company issued 200,000 shares of Common
      Stock at a price of $1.00 per share. This was in exchange for $200,000 of
      subscription monies held by us as of March 31, 2007. In addition, we issued
      a
      warrant exercisable for a period of two years to purchase 200,000 shares of
      Common Stock at an exercise price of $1.25 per share in connection with this
      placement of 200,000 shares of Common Stock. These warrants expire on February
      28, 2009.





On
      June
      15 and on July 11, two tranches of 3,250,000 shares of Common Stock and a
      warrant exercisable for five years to purchase 3,250,000 shares of Common Stock
      at an exercise price of $2.60 per share were issued to WCOF as part of a
      Securities Purchase Agreement. As a result of the issuance of the shares of
      Common Stock and warrants, associated with this issue, the Company (described
      in
      Note 5 above) incurred and expensed financing charges of $854,375 for the three
      months ended June 30, 2007, a further $1,082,071 of financing charges were
      taken
      up in the three months ended September 30, 2007, and $814,606 of financing
      charges were booked in the quarter ended December 3, 2007, with the
      corresponding credit being booked to additional paid-in capital and is included
      in the Stockholder’s equity in the Consolidated Balance Sheet.





During
      the quarter ended June 30, 2007, 650,000 shares of Common Stock and a warrant
      exercisable for three years to purchase 650,000 shares of Common Stock at an
      exercise price of $1.30 per share were issued in exchange for $500,000 of debt.
      These warrants expire on June 26, 2010. In addition, 140,000 shares of Common
      Stock were issued in exchange for a debt owing for previously incurred
      consulting fees. Financing charges of $398,917 were booked regarding these
      shares and warrants.





During
      the quarter ended September 30, 2007, the Company issued 10,000 shares of Common
      Stock with regard to the exercise of 10,000 warrants. In addition, 25,000 shares
      of Common Stock and warrants exercisable for two years to purchase 50,000 shares
      of Common Stock at an exercise price of $1.00 per share were issued regarding
      the extension of the repayment terms of a Note Payable. The warrant expires
      on
      July 26, 2009. Financing charges of $35,765 were booked regarding these shares
      and warrants.





$200,000
      was paid to the Company on September 28, 2007 for 571,429 shares of Common
      Stock
      and warrants exercisable for three years to purchase 285,715 shares of Common
      Stock at an exercise price of $0.70 per share. These warrants expire on
      September 28, 2010. Financing charges of $273,003 were booked with regard to
      these shares and warrants.





$205,000
      was paid to the Company on October 29, 2007 for 585,715 shares of Common Stock
      and warrants exercisable for three years to purchase 292,858 shares of Common
      Stock at an exercise price of $0.70 per share. These warrants expire on October
      29, 2010. Financing charges of $279,828 were booked with regard to these shares
      and warrants.





$200,000
      was paid to the Company on November 30, 2007 for 1,000,000 shares of Common
      Stock and warrant exercisable for three years to purchase 1,000,000 shares
      of
      Common Stock at an exercise price of $0.20 per share. These warrants expire
      on
      November 30, 2012. Financing charges of $1,075,388 were booked with regard
      to
      these shares and warrants.




41


**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. 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. 15,000 of shares
      under this plan have been cancelled leaving 29,084 still outstanding.





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, 2007, it was
      possible to award a total of options for 9,878,487 shares under the 2004
      Employee Stock Incentive Plan, which equated to 25% of the issued Common Stock
      of the Company. 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. 70,000 of these options were forfeited
      and 4,000 of the remaining options have vested.




A
      summary
      of the Company’s stock options as of December 31, 2007 and 2006 and changes
      during the years ending on those dates is presented below:




2007
            
            2006Shares
                Under
              Options
            
            Weighted
                Ave Exercise Price
            
            Shares
                Under
              Options
            
            Weighted
                Ave
              Exercise
                PriceOutstanding
                at beginning of year
            
            
            134,084
            
            $
            3.10
            
            
            50,334
            
            $
            6.53Exercised
                during the year
            
            
            
            
            
            
            
            
            (6,250
            )
            $
            (0.48
            )Issued
                during the year
            
            
            
            
            
            
            
            
            90,000
            
            $
            1.00Cancelled
            
            
            (85,000
            )
            
            (1.62
            )Outstanding
                at end of year
            
            
            49,084
            
            $
            2.91
            
            
            134,084
            
            $
            3.10Options
                exercisable at end of year
            
            
            33,084
            
            $
            5.86
            
            
            44,084
            
            $
            7.39Weighted-average
                fair value of options granted during the year
            
            
            
            
            
            
            
            
            90,000
            
            $
            1.00Fair
                market value of non-vested stock options
            
            $
            13,600




The
                following table summarizes information about stock options outstanding
                at
                December 31, 2007:





Options
                Outstanding
            
            Options
                ExercisableOptions
                Outstanding
            
            Weighted
                Average
              Remaining
                Life
            
            Weighted
                Average
              Exercise
                Price
            
            Options
              Exercisable
            
            Weighted
                Average
              Exercise
                Price1,667
            
            
            1.50
                years
            
            $
            0.60
            
            
            1,667
            
            $
            0.602,083
            
            
            2.40
                years
            
            
            33.60
            
            
            2,083
            
            
            33.602,500
            
            
            2.55
                years
            
            
            37.08
            
            
            2,500
            
            
            37.082,000
            
            
            2.65
                years
            
            
            30.00
            
            
            2,000
            
            
            30.001,667
            
            
            2.88
                years
            
            
            12.00
            
            
            1,667
            
            
            12.002,500
            
            
            3.22
                years
            
            
            3.00
            
            
            2,500
            
            
            3.0016,667
            
            
            4.47
                years
            
            
            0.42
            
            
            16,667
            
            
            0.4220,000
            
            
            5.00
                years
            
            
            1.00
            
            
            4,000
            
            
            1.0049,084
            
            
            
            
            
            2.91
            
            
            33,084
            
            
            5.86





42


**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
                Ave**
              **Exercise
                Price**Outstanding
                at December 31, 2005
            
            
            534,000
            
            
            1.10Expired
            
            
            (15,000
            )
            
            (4.50
            )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
            
            
            1,366,500
            
            
            1.43Expired
            
            
            (511,000
            )
            
            (1.00
            )Exercised
            
            
            (10,000
            )
            
            1.00Issued
                during 2007
            
            
            202,250
            
            
            1.00Issued
                during 2007
            
            
            500,000
            
            
            1.25Issued
                during 2007
            
            
            650,000
            
            
            1.30Issued
                during 2007
            
            
            30,769
            
            
            2.60Issued
                during 2007
            
            
            878,573
            
            
            0.70Issued
                during 2007
            
            
            1,000,000
            
            
            0.20Outstanding
                at December 31, 2006
            
            
            4,107,092
            
            
            0.96




15,000
                warrants outstanding from pre-December 31, 2004 expired on January
                1, 2006
                and were not exercised.50,000
                warrants due to expire on January 5, 2007 were exercised during the
                2006
                year570,000
                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, 200885,500
                2 year warrants with an exercise price of $1.75 per share were issued
                as
                part of the brokerage fees paid for placement of1,140,000
                common shares. These warrants expire on June 16, 2008200,000
                2 year warrants with an exercise price of $1.25 per share were issued
                in
                conjunction placement of 400,000 shares ofCommon
                Stock. These warrants expire on December 29, 200842,000
                warrants were granted in conjunction with the conversion of 84,000
                Series
                ‘B’ Preferred shares.300,000
                2 year warrants with an exercise price of $1.25 per share were issued
                in
                conjunction with the acquisition of the assets and business of BLive
                Networks Inc. These warrants expire on January 19, 2009469,000
                warrants outstanding at December 31, 2005 expired on January 7, 2007
                and
                were not exercised.200,000
                2 year warrants with an exercise price of $1.25 per share were issued
                in
                conjunction placement of 200,000 shares ofCommon
                Stock. These warrants expire on February 28, 200931,500
                2 year warrants with an exercise price of $1.00 per share were issued
                in
                conjunction with borrowing $150,000. Thesewarrants
                expire on March 29, 200947,250
                2 year warrants with an exercise price of $1.00 per share were issued
                in
                conjunction with borrowing $150,000. Thesewarrants
                expire on April 26, 200952,250
                2 year warrants with an exercise price of $1.00 per share were issued
                in
                conjunction with borrowing $150,000. Thesewarrants
                expire on May 29, 20093,250,000
                5 year warrants with an exercise price of $2.60 per share were issued
                in
                conjunction with borrowing $2,500,000.These
                warrants were cancelled on December 31, 200730,769
                5 year warrants with an exercise price of $2.60 per share were issued
                in
                conjunction with borrowing $2,500,000. Thesewarrants
                expire on June 15, 2012




43




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





650,000
                5 year warrants with an exercise price of $1.30 per share were issued
                in
                conjunction with conversion of $500,000 of
              borrowings
                to Common Stock. These warrants expire on June 26, 2012
              50,000
                2 year warrants with an exercise price of $1.00 per share were issued
                in
                conjunction with extension of debt note. These
              warrants
                expire on July 26, 20093,250,000
                5 year warrants with an exercise price of $2.60 per share were issued
                in
                conjunction with borrowing $2,500,000. These warrants were cancelled
                on
                December 31, 2007285,715
                3 year warrants with an exercise price of $0.70 per share were issued
                in
                conjunction placement of 571,429 shares of
              Common
                Stock. These warrants expire on September 27, 201021,000
                3 year warrants with an exercise price of $1.00 per share were issued
                in
                conjunction with a loan of US$100,000. These
              warrants
                expire on September 28, 2010300,000
                2 year warrants with an exercise price of $0.70 per share were issued
                in
                conjunction with a Consulting engagement.
              These
                warrants expire on October 15, 2009292,858
                3 year warrants with an exercise price of $0.70 per share were issued
                in
                conjunction placement of 585,715 shares of
              Common
                Stock. These warrants expire on October 29, 20101,000,000
                5 year warrants with an exercise price of $0.20 per share were issued
                in
                conjunction placement of 1,000,000 shares
              of
                Common Stock. These warrants expire on November 30,
                2012.


The
      following table summarizes information about stock warrants outstanding at
      December 31, 2007:




Warrants
                Outstanding
            
            Warrants
                Exercisable**Warrants**
              **Outstanding**
            
            **Weighted
                Average**
              **Remaining
                Life**
            
            **Exercise**
              **Price**
            
            **Warrants**
              **Exercisable**
            
            **Exercise**
              **Price**
            
            **Expiration**
              **Date**560,000
            
            
            5
                months
            
            $
            1.75
            
            
            560,000
            
            $
            1.75
            
            
            5/31/0885,500
            
            
            6
                months
            
            $
            1.75
            
            
            85,500
            
            $
            1.75
            
            
            6/16/08150,000
            
            
            11
                months
            
            $
            1.25
            
            
            150,000
            
            $
            1.25
            
            
            11/28/0850,000
            
            
            12
                months
            
            $
            1.25
            
            
            50,000
            
            $
            1.25
            
            
            12/29/08300,000
            
            
            13
                months
            
            $
            1.25
            
            
            300,000
            
            $
            1.25
            
            
            1/19/09200,000
            
            
            14
                months
            
            $
            1.25
            
            
            200,000
            
            $
            1.25
            
            
            2/28/0931,500
            
            
            15
                months
            
            $
            1.00
            
            
            31,500
            
            $
            1.00
            
            
            3/29/0947,250
            
            
            16
                months
            
            $
            1.00
            
            
            47,250
            
            $
            1.00
            
            
            4/26/0952,500
            
            
            17
                months
            
            $
            1.00
            
            
            52,500
            
            $
            1.00
            
            
            5/29/0930,769
            
            
            54
                months
            
            $
            2.60
            
            
            30,769
            
            $
            2.60
            
            
            6/15/12650,000
            
            
            55
                months
            
            $
            1.30
            
            
            650,000
            
            $
            1.30
            
            
            6/26/1250,000
            
            
            17
                months
            
            $
            1.00
            
            
            50,000
            
            $
            1.00
            
            
            7/28/09285,715
            
            
            33
                months
            
            $
            0.70
            
            
            285,715
            
            $
            0.70
            
            
            9/27/1021,000
            
            
            33
                months
            
            $
            1.00
            
            
            21,000
            
            $
            1.00
            
            
            9/28/10300,000
            
            
            20
                months
            
            $
            0.70
            
            
            300,000
            
            $
            0.70
            
            
            10/15/09292,858
            
            
            32
                months
            
            $
            0.70
            
            
            292,858
            
            $
            0.70
            
            
            10/29/091,000,000
            
            
            31
                months
            
            $
            0.20
            
            
            1,000,000
            
            $
            0.20
            
            
            11/30/104,107,092
            
            
            
            
            
            
            
            
            4,107,092




44




**NOTE
      9 - COMMITMENTS**





Leases




AtlasTG
      has a six 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 Euro37,270 (approx US$55,900), which escalates
      by
      Euro4,660 per annum (approximately US$7,000) 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 square meters with an annual rental of NZ$66,000 per annum
      (approximately US$51,500) 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
            
            $
            183,2502009
            
            $
            149,5002010
            
            $
            70,000




**NOTE
      10 - RELATED PARTY TRANSACTIONS**





Due
      to
      Shareholders and Related Parties




The
      $241,481 (2006: $70,582) of advances and loans showing in current liabilities
      are owed to shareholders who hold more than 5% of the Company which makes them
      a
      related party. $100,000 of these loans incurred interest of 5% and has also
      been
      repaid since December 31, 2007. The remaining advances are at call and interest
      free and the party loaning $100,000 of the remaining advances has agreed to
      accept Common Stock in the Company as repayment.





The
      Loan
      payable of $132,000 is interest bearing at 10% per annum and has been repaid
      subsequent to balance date.





**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.




During
      2005, the former business of the Company was transferred into a wholly-owned
      subsidiary called Tribeworks Development Corporation ( “TDC” ).
      On
      September 14, 2006, TDC was sold to two of the former management team by way
      of
      a sale to 541368 LLC, a California limited liability company, which purchased
      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. In addition, the Company agreed to make a one-time cash payment of
      $44,500 to TDC in full satisfaction of the Company’s obligations under an
      existing support agreement dated as of August 1, 2005 between the Company 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.




45


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:




December
                31,
              2006Net
                Sales
            
            
            122,370Net
                Income (Loss)
            
            $
            173,853




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




On
      January 20, 2006, Tribeworks acquired 100 percent of the issued capital of
      Atlas
      Technology Group Holdings Limited (formerly called TakeCareofIT Holdings
      Limited, a Malta corporation, and its subsidiaries, which had been collectively
      doing business as Atlas Technology Group, 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 the Company). Atlas Technology Group Holdings Ltd (“ ATG
      Holdings”) was
      established in September 2004 to provide external Information Technology (IT)
      application support services for organizations with large IT
      functions.




The
      acquisition of ATG Holdings 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, ATG Holdings became a wholly-owned subsidiary of the Company.
      The
      results of ATG Holdings operations, commencing with the date of acquisition,
      January 20, 2006, are included in these financial statements.




46





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 - ACQUISITION OF BLIVE**





On
      January 19, 2007, the Company entered into an Asset and Stock Purchase Agreement
      (the “ BLive
      Agreement ”)
      with
      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 warrants to purchase 300,000 shares of Common Stock of the
      Company at $1.25 per share exercisable 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). In connection with the BLive Agreement,
      the
      Company 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 will be held in escrow until
      the
      receipt of certain Canadian tax refunds owed to InfoBuild (refunds since
      received); and (b) an Escrow Indemnification Agreement between Forte and the
      Company, whereby the 150,000 shares of Common Stock issued to Forte will be
      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, the Company has also acquired a 49% 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. The Company subsequently exercised
      an option agreement to purchase the remaining 51% and this is now 100%
      owned.





47





The
      offering of these unregistered securities were exempt from registration pursuant
      to Rule 506 promulgated under the Securities Act. Each of these investors
      represented to us, in writing, that it was an “accredited investor” as that term
      is defined in Rule 501(a) of Regulation D promulgated under the Securities
      Act.
      The proceeds from these sales of unregistered securities are being used for
      general working capital purposes.




The
      purchase price was allocated as follows:


Cash
            
            $
            414Accounts
                Receivable, net (since collected)
            
            
            150,520Computer
                equipment
            
            
            57,204Customer
                list and Trademarks
            
            
            555,312IT
                Technology
            
            
            505,1211,268,571Less
                Creditors
            
            
            (6,448
            )$
            1,262,123




**NOTE
      14 - SUBSEQUENT EVENTS**





On
      December 31, 2007, the Company entered into a Note Amendment and Securities
      Purchase Agreement (the “ WCOF
      Agreement ”),
      with
      West Coast Opportunity Fund, LLC, a Delaware limited liability company (the
      “ Buyer ”).
      The
      WCOF Agreement amends the earlier Securities Purchase Agreement of June 15,
      2007, under which ATG US issued to the Buyer two senior secured promissory
      notes, each in the principal amount of $2,500,000.00, dated June 15, 2007 and
      July 11, 2007 (each, a “ Promissory
      Note ,”
and
      together, the “ Promissory
      Notes ”),
      6,500,000 shares of the Company’s common stock and 6,500,000 warrants to
      purchase common stock, exercisable for a period of five years from the date
      of
      issuance at an initial exercise price of $2.60 per share. Pursuant to the WCOF
      Agreement, the Buyer agreed to cancel and return the warrants to the Registrant,
      in consideration for which the Company has agreed to: (i) enter into the WCOF
      Agreement, amending the earlier agreement; (ii) amend the Promissory Note dated
      June 15, 2007, to extend the maturity date from November 30, 2008 to December
      31, 2008; (iii) amend and restate the Promissory Note dated July 11, 2007;
      and
      (iv) issue a yield enhancement consisting of 3,500,000 shares (the “ Yield
      Enhancement Shares ”)
      of
      Common Stock.





The
      Escrow Deposit of $4,011,107 was drawn down on January 3, 3008, and $1,500,000
      was repaid to WCOF leaving an outstanding loan balance of $3,500,000 now
      repayable on December 31, 2008. From the balance of the funds, $132,000 was
      used
      to repay the Note Payable and $550,000 was used to repay old creditors and
      short-term debt, as well as $180,000 of brokerage to ESP in relation to
      arranging the WCOF debt. 680,000 of shares of Common Stock will also be issued
      subsequent to balance date and will used in association with some of the cash
      paid out to further reduce accounts payable and short-term debt.





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





On
      October 13, 2006, the Board of Directors approved the dismissal of HLB Cinnamon,
      Jang, Willoughby, Chartered Accountants, as our independent registered public
      accounting firm (who were originally appointed on August 19, 2005).





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).




48


**ITEM
      8A. CONTROLS AND PROCEDURES**





EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES





In
      connection with the preparation of this annual report on Form 10-KSB, an
      evaluation was carried out by Atlas TG’s management, with the participation of
      the Chief Executive Officer and the Chief Financial Officer, of the
      effectiveness of the Company’s disclosure controls and procedures (as defined in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
      (“Exchange Act”)) as of December 31, 2007. Disclosure controls and procedures
      are designed to ensure that information required to be disclosed in reports
      filed or submitted under the Exchange Act is recorded, processed, summarized,
      and reported within the time periods specified in the SEC rules and forms and
      that such information is accumulated and communicated to management, including
      the Chief Executive Officer and the Chief Financial Officer, to allow timely
      decisions regarding required disclosures.





Based
      on
      that evaluation, our management concluded, as of the end of the period
      covered by this report, that the Company’s disclosure controls and procedures
      were effective in recording, processing, summarizing, and reporting information
      required to be disclosed, within the time periods specified in the SEC’s rules
      and forms.





**ITEM
      8A (T). CONTROLS AND PROCEDURES.**





MANAGEMENT’S
      REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING





Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting. AtlasTG’s internal control over financial
      reporting is a process, under the supervision of the Chief Executive Officer
      and
      the Chief Financial Officer, designed to provide reasonable assurance regarding
      the reliability of financial reporting and the preparation of the Company’s
      financial statements for external purposes in accordance with United States
      generally accepted accounting principles (GAAP). Internal control over financial
      reporting includes those policies and procedures that:





·
            Pertain
                to the maintenance of records that in reasonable detail accurately
                and
                fairly reflect the transactions and dispositions of the Company’s
                assets;


·
            Provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of the financial statements in accordance with generally
                accepted accounting principles, and that receipts and expenditures
                are
                being made only in accordance with authorizations of management and
                the
                Board of Directors; and


·
            Provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use, or disposition of the Company’s assets that
                could have a material effect on the financial
                statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions or that the degree of compliance
      with the policies or procedures may deteriorate.





AtlasTG
      management conducted an assessment of the effectiveness of the Company’s
      internal control over financial reporting as of December 31, 2007, based on
      criteria established in *Internal
      Control - Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission
      (“COSO”). In the course of the evaluation, management identified a material
      weakness in internal control over financial reporting.





A
      material weakness is a control deficiency, or a combination of deficiencies,
      in
      internal control over financial reporting such that there is a reasonable
      possibility that a material misstatement of the Company’s annual or interim
      financial statements will not be prevented or detected on a timely
      basis.





The
      material weakness identified is described below:





Procedures
      for preparation of the financial reports from the Company’s books and records
      are currently manually intensive, and rely heavily on the knowledge and
      expertise of two individuals.   Circumstances arose in the preparation
      of the 2007 financial statements that prevented one of the individuals with
      expertise from fully participating in the preparation of financial reports,
      resulting in untimely detection of required adjustments to the financial
      statements.





49





As
      a
      result of the material weaknesses in internal control over financial reporting
      described above, our management has concluded that, as of December 31,
      2007, the Company’s internal control over financial reporting was not effective
      based on the criteria in *Internal
      Control - Integrated Framework* issued
      by the COSO.





This
      annual report does not include an attestation report of our independent
      registered public accounting firm regarding internal control over financial
      reporting. We were not required to have, nor have we, engaged our independent
      registered public accounting firm to perform an audit of internal control over
      financial reporting pursuant to the rules of the SEC that permit us to provide
      only management’s report in this annual report.








CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING





As
      of the
      end of the period covered by this report, there have been no changes in internal
      control over financial reporting (as defined in Rule 13a-15(f) of the Exchange
      Act) during the quarter ended December 31, 2007, that materially affected,
      or
      are reasonably likely to materially affect the Company’s internal control over
      financial reporting.





**ITEM
      8B. OTHER INFORMATION**





**None**




50


**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 the Company as of March 31, 2008.




**Name**
            
            **Age**
            
            **Position**
            
            **Director
                Since**Robert
                E Altinger
            
            46
            
            Director
            
            August
                2005Andrew
                J E Berger
            
            47
            
            Director
            
            June
                2006W.
                Gordon Blankstein
            
            57
            
            Director
            
            August
                2005Robert
                C. Gardner
            
            67
            
            Director
            
            August
                2005Peter
                B. Jacobson
            
            47
            
            Director
                and CEO
            
            June
                2005
              CEO
                since August 2005B.S.P.
                (Paddy) Marra
            
            61
            
            Director
                and CFO
            
            December
                2005
              CFO
                since September 2005Michael
                T Murphy
            
            40
            
            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 2008. 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 2007, 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.




51


**Biographical
      Information of Executive Officers and Directors**





*Robert
      Altinger, 46 - 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 twenty 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, 47 - 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, 57 - Director*




Gordon
      Blankstein is currently a member of the Board of Directors of Genco Resources,
      Ltd., a publicly-traded mining company listed on the Toronto Stock Exchange
      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, 67 - Director*




Robert
      Gardner is currently Chairman of the Boards of Directors of Genco Resources,
      Ltd., a publicly-traded mining company listed on the Toronto Stock Exchange;
      Andover Ventures, Inc., a publicly-traded mining company listed on the Toronto
      Stock Exchange; and Stealth Energy, Inc., a publicly-traded oil and gas
      company traded on the Canadian Venture Exchange. He is also a Director of
      Kootenay Gold Inc., a publicly-traded mining company listed on the Toronto
      Stock
      Exchange, and is a partner in the law firm of Gardner & Associates in
      Vancouver, BC, Canada. Mr. Gardner is a corporate lawyer and has practiced
      law
      there since 1989. Mr. Gardner obtained a M.A. from Cambridge University in
      Cambridge, United Kingdom, in 1961 and a L.L.M. degree from Cambridge University
      in 1962.





*Peter
      B. Jacobson, 47 - 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 obtained a
      BA
      from the University of Washington in 1985.





*Byran
      S.P. (Paddy) Marra, 61 - Director and CFO*




Paddy
      Marra has over thirty 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 of 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 of Directors and directorships of publicly-traded
      companies. Paddy Marra acts as Corporate Secretary to the Board of
      Directors.




52




*Michael
      Murphy, 40 - Chief Operating Officer*




Mike
      Murphy joined us after a successful fifteen 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 United
      States, Europe, Eastern Asia, and India. Mr. Murphy holds a B.A. in Information
      Systems from Washington State University.




**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,
      but
      the Company is in the process of adopting one.  At this time, and pending
      final review and approval, the Board of Directors plans to
      adopt a written Code of Ethics for the Company in the year
      2008.





**Audit
      Committee Financial Expert**





We
      do not
      have an audit committee or an "audit committee financial expert" within the
      meaning of such phrases under applicable regulations of the Securities and
      Exchange Commission. Our Board of Directors 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 for estimates, 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."





53




**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, 2007, 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, 2007, 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,
      2007:





**Name**
            
            **Number
                of**
              **Late
                Reports**
            
            **Number
                of**
              **Transactions
                Not**
              **Reported
                on a**
              **Timely
                Basis**
            
            **Known
                Failures to File a Required Form**Robert
                Altinger
            
            
            0
            
            
            0
            
            
            -Andrew
                Berger
            
            
            0
            
            
            0
            
            
            -W.
                Gordon Blankstein
            
            
            0
            
            
            0
            
            
            -Robert
                C. Gardner
            
            
            0
            
            
            0
            
            
            -Peter
                Jacobson
            
            
            0
            
            
            0
            
            
            -B.S.P.
                (Paddy) Marra
            
            
            0
            
            
            0
            
            
            -Michael
                T. Murphy
            
            
            0
            
            
            0
            
            
            -





**ITEM
      10. EXECUTIVE COMPENSATION**





**Compensation
      Discussion and Analysis**





*Compensation
      Philosophy and Overall Objectives*





We
      believe that the compensation program for our Chief Executive Officer, Chief
      Financial Officer, Chief Operating Officer, and other directors and key
      consultants (collectively, the “Named Executive Officers”), should be designed
      to reward the achievement of specific annual, long-term and strategic goals,
      and
      should align executives, directors, and consultants’ interests with those of the
      stockholders by rewarding performance above established goals, with the ultimate
      objective of improving shareholder value. The compensation program should
      also be sufficient to attract and retain highly qualified leaders who can create
      value for us, as well as provide meaningful incentives for superior performance.





*Setting
      Executive Compensation*





Due
      to
      the unique nature of each Named Executive Officer’s duties, our criteria for
      assessing performance and determining the compensation in any given year are
      inherently subjective and are not based upon specific formulas, benchmark,
      or
      weighting of factors.  We also use companies in similar industries as
      benchmarks when initially establishing Named Executive Officers’ compensation.
      However, we are a growth stage company that has a limited operating history
      and
      has  experienced
      losses over the past few years .
       As a result, our compensation plan necessarily reflects our limitations in
      this respect.





*Discussion
      of Specific Compensation Elements*





Base
      Salary :
      We
      determine the base salaries for all Named Executive Officers by reviewing
      company and individual performance, the value each Named Executive Officer
      brings to us, and general labor market conditions.  The base salary for
      each Named Executive Officer is determined on a subjective basis after
      consideration of these factors and is not based on target percentiles or other
      formal criteria. The base salaries of Named Executive Officers are reviewed
      on
      an annual basis and any annual increase is the result of an evaluation of our
      performance and of the individual Named Executive Officer’s performance for the
      period. An increase or decrease in base pay may also result from a promotion
      or
      other significant change in a Named Executive Officer’s responsibilities during
      the year.





54


Performance-Based
      Incentive Compensation :
      We do
      not have a performance-based incentive compensation program at this time.




Long-Term
      Incentive Compensation :
      We
      provide long-term incentive compensation through awards of stock options,
      restricted stock, warrants, and/or stock awards.  Our equity compensation
      program is intended to align the interests of the Named Executive Officers
      with
      those of our shareholders by creating an incentive for our officers and
      consultants to maximize shareholder value.


The
      equity compensation program also is designed to encourage officers and
      consultants to remain employed with us despite a competitive labor market,
      and
      the fact that we are a growth stage company that has a limited operating history
      and has ** experienced
      losses over the past few years *,* and may
      not necessarily be able to sustain a market rate base salary.  Stock
      options, stock grants, warrants, and other incentives are based on combination
      of factors including the need and urgency for such an executive, the experience
      level of the executive, and the balance of such incentives with a lower than
      market base salary or fees that is paid in cash. Employees, directors, and
      consultants are granted such incentives from time to time to maintain their
      continuing services, sometimes without increases in salaries or fees. To such
      end, t he
      Company maintains the 1999 Equity Incentive Plan for the issuance of stock
      options to employees, directors, and consultants. The Company also maintains
      the
      2004 Employee Stock Incentive Plan for the issuance of stock options, Common
      Stock, restricted stock, and stock bonuses to employees, officers, and key
      consultants.





Deferred
      Compensation Benefits :
       We do not have a deferred compensation program at this time.





Retirement
      Benefits :
       We do not have a 401(k) plan or other retirement program at this time.





Executive
      Perquisites and Generally Available Benefits :
       We have no executive perquisite program at this time.





Compensation
      Committee :
       As of February 15, 2008, we have a compensation committee that consists of
      directors Andrew Berger, W. Gordon Blankstein and Robert C.
      Gardner.





*Tax
      and Accounting Implications*





We
      review
      and consider the deductibility of executive compensation under Section 162(m)
      of
      the Internal Revenue Code, which provides that we may not deduct compensation
      of
      more than $1,000,000 that is paid to certain individuals.  We believe that
      compensation paid under the management incentive plans are generally fully
      deductible for federal income tax purposes.





*Role
      of Executive Officers in Compensation Decisions*





Decisions
      as to the compensation of our executive officers are made by the Board of
      Directors.  The executive officers who are also Board members participate
      in the discussion and determination of their compensation.





**Director
      Compensation**





Directors
      do not receive any compensation for their services as members of the Board
      of
      Directors during 2007, although this could be subject to change during
      2008. 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.





55


**Executive
      Compensation**





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




**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
            
            
            2007
            
            
            145,000
            (1)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Peter
                B. Jacobson, Chief Executive Officer and Director
            
            
            2007
            
            
            120,000
            (1)
            
            0
            
            
            1,820
            
            
            0
            
            
            0
            
            
            0
            
            
            0B.
                S. P. (Paddy) Marra, Chief Financial Officer, and Director
            
            
            2007
            
            
            120,000
            (1)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Michael
                T Murphy, Chief Operating Officer
            
            
            2007
            
            
            168,000
            
            
            0
            
            
            1,544
            
            
            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 2006 or
      2007.





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





No
      options or warrants were granted or exercised in 2006 or 2007 by any executive
      officers.




56


**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 10, 2008, contains certain information
      regarding the beneficial ownership of our Common Stock by: (i) all persons
      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 indicated, 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
                  Beneficially Owned (1)
              
              Percent
                  of Class (2)West
                  Coast Asset Management Inc2151
                  Alessandro Drive, Suite 100Ventura
                  CA 93001
              
              
              10,000,000
              (3)
              
              25.30
              %Cede
                  & Co
                P.O.
                  Box 222
                Bowling
                  Green Station
                New
                  York, N.Y. 10274
              
              
              5,821,289
              
              
              14.7
              %Michael
                  T. Murphy
                2812
                  West Lake Sammamish Pkwy NE
                Redmond,
                  WA 98052
              
              
              4,338,636
              (4)
              
              11.0
              %Robert
                  Blankstein
                Suite
                  550 - 999 Hastings Street West
                Vancouver,
                  B.C., Canada
              
              
              3,767,144
              
              
              9.5
              %WebConsult
                  Limited
                Bankhaus
                  Carl Spangler
                Schwatzstr
                  17 A 5030, Austria
              
              
              2,202,274
              
              
              5.6
              %Pharaoh
                  Properties Corporation
                Alves
                  De Souza Houman Colart
                6
                  Cours De Rive
                1204
                  Geneva, Switzerland
              
              
              2,002,272
              
              
              5.1
              %Peter
                  Jacobson
                111
                  Via Quito
                Newport
                  Beach, CA 92663-5503
              
              
              1,575,000
              (5)
              
              4.0
              %Robert
                  Altinger
                The
                  Ridge
                31stMarch Street
                Gharghur,
                  Malta
              
              
              1,575,000
              (6)
              
              4.0
              %W.
                  Gordon Blankstein
                8011
                  240 St.
                Vancouver,
                  B.C., Canada
              
              
              600,000
              (7)
              
              1.5
              %Robert
                  C. Gardner
                2153,
                  349 West Georgia St.
                Vancouver,
                  B.C., Canada
              
              
              500,000
              
              
              1.3
              %Officers
                  and Directors as a group (7 persons)
              
              
              6,638,636
              (8)
              
              16.8
              %




57


(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.




(2)
      Based
      upon 39,513,949 shares of our Common Stock issued and outstanding as of April
      10, 2008.





(3)
      West
      Coast Asset Management Inc holds these shares on behalf of West Coast
      Opportunity Fund LLC.





(4)
      This
      figure 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.





(5)
      Mr.
      Jacobson personally owns 600,000 shares of our Common Stock. This figure also
      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.





(6)
      This
      figure 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.





(7)
      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.





(8)
      This
      group includes seven people, five 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 (5), (7),
      and
      (8) above).




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





As
      of
      March 31, 2007, other than as already disclosed above we have not entered into
      any other contractual arrangements with any related parties. There are no 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, promoter, control person, 5% shareholder,
      or any member of the immediate family of the foregoing persons, have or will
      have a direct or indirect material interest.





58


**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)*3.3
            
            Certificate
                of Amendment to Certificate of Incorporation (incorporated by reference
                to
                Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed July 31,
                2007)*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
            
            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)*10.5
            
            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)*10.6
            
            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)*




59




10.7
            
            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)*10.8
            
            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)*10.9
            
            Securities
                Purchase Agreement, dated June 15, 2007, by and among Tribeworks,
                Inc.,
                all of its subsidiaries and West Coast Opportunity Fund, LLC (incorporated
                by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
                8-K filed June 19, 2007)*10.10
            
            Promissory
                Note, dated June 15, 2007, between Atlas Technology Group (US ),
                Inc. and
                West Coast Opportunity Fund, LLC (incorporated by reference to Exhibit
                10.2 to the Registrant’s Current Report on Form 8-K filed June 19,
                2007)*10.11
            
            Pledge
                and Security Agreement, dated June 15, 2007, between Tribeworks,
                Inc., all
                of its subsidiaries and West Coast Opportunity Fund, LLC (incorporated
                by
                reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K
                filed June 19, 2007)*10.12
            
            Guaranty,
                dated June 15, 2007, between Tribeworks, Inc. and all of its subsidiaries
                other than Atlas Technology Group (US), Inc. and West Coast Opportunity
                Fund, LLC (incorporated by reference to Exhibit 10.4 to the Registrant’s
                Current Report on Form 8-K filed June 19, 2007)*10.13
            
            Escrow
                Agreement, dated June 15, 2007, by and among Tribeworks, Inc., Atlas
                Technology Group (US), Inc. and West Coast Opportunity Fund, LLC
                (incorporated by reference to the Registrant’s Current Report on Form 8-K
                filed June 19, 2007)*10.14
            
            Registration
                Rights Agreement, dated June 15, 2007, between Tribeworks, Inc. and
                West
                Coast Opportunity Fund, LLC (incorporated by reference to Exhibit
                10.6 to
                the Registrant’s Current Report on Form 8-K filed June 19,
                2007)*10.15
            
            Form
                of Warrant issued by Tribeworks, Inc., to West Coast Opportunity
                Fund, LLC
                (incorporated by reference to Exhibit 10.7 to the Registrant’s Current
                Report on Form 8-K filed June 19, 2007)*10.16
            
            Form
                of Lock-up Agreement, dated June 15, 2007, between West Coast Opportunity
                Fund, LLC and certain stockholders of Tribeworks, Inc. (incorporated
                by
                reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K
                filed June 19, 2007)*10.17
            
            Promissory
                Note, dated July 11, 2007, between Atlas Technology Group (US), Inc.
                and
                West Coast Opportunity Fund(incorporated by reference to Exhibit 10.1 to the Registrant’s Current
                Report on Form 8-K filed July 13, 2007)*10.18
            
            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)*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 Code


*
      Previously filed




60




**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, 2007 and 2006:


**Fees
                  for the Year Ended****December
                  31,**
                **2007**
              
              **December
                  31,**
                **2006**Audit
                  fees (1)
              
              $
              42,876
              
              $
              51,284Audit-related
                  fees (2)
              
              
              36,822
              
              
              25,855Tax
                  fees (3)
              
              
              —
              
              
              —All
                  other fees (4)
              
              
              9,371
              
              
              2,727Total
                  fees for services
              
              $
              89,069
              
              $
              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 the Company by its independent auditor.




61





**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.




Atlas
                Technology Group, Inc.
              a
                Delaware corporationDate:
                April 14, 2008
            By:
            /s/
                Peter B. JacobsonPeter
                B. Jacobson, Chief Executive Officer(Registrant’s
                Principal Executive Officer)





Date:
                April 14, 2008
            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 14, 2008
            
            /s/
                Robert AltingerRobert
                Altinger, Director





Date:
                April 14, 2008
            
            /s/
                Andrew J E BergerAndrew
                J E Berger, DirectorDate:
                April 14, 2008
            
            /s/
                W. Gordon BlanksteinW.
                Gordon Blankstein, Director





Date:
                April 14, 2008
            
            /s/
                Robert C. GardnerRobert
                C. Gardner, Director





Date:
                April 14, 2008
            
            /s/
                Peter B. JacobsonPeter
                B. Jacobson, Director





Date:
                April 14, 2008
            
            /s/
                B.S.P. MarraB.S.P.
                Marra, Director




62