UNITED
STATES
SECURITIES
AND EXCHANGE
COMMISSION
WASHINGTON,
DC 20549
FORM
10-QSB
(Mark
one)
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
|
For
the
quarterly period ended March 31, 2008
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
|
For
the
transition period from __________ to __________
ATLAS
TECHNOLOGY GROUP, INC.
(Exact
Name of Small Business Issuer as Specified in Its Charter)
Delaware
|
|
94-3370795
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
2001
152nd
AVENUE NE
REDMOND,
WASHINGTON 98052
|
(Address
of Principal Executive Offices)
|
|
(425)
458-2360
|
(Issuer’s
Telephone Number, Including Area Code)
|
|
|
(Former
Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
|
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
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
As
of the
close of business on May 19, 2008, there were 39,513,949 shares outstanding
of
the issuer’s common stock, par value $0.0004 per share.
Transitional
Small Business Disclosure Format: Yes o
No
x
ATLAS
TECHNOLOGY GROUP, INC.
FORM
10-QSB FOR THE QUARTER ENDED MARCH 31, 2008
TABLE
OF CONTENTS
|
PAGE
|
|
FINANCIAL
INFORMATION
|
3
|
|
|
|
|
Item
1. Financial Statements
|
3
|
|
|
|
|
UNAUDITED
CONSOLIDATED BALANCE SHEET
|
3
|
|
|
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
|
4
|
|
|
|
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
5
|
|
|
|
|
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
|
6
|
|
|
|
|
Item
2. Management’s Discussion and Analysis or Plan of
Operation
|
12
|
|
|
|
|
Item
3. Controls and Procedures
|
16
|
|
|
|
|
Item
3A(T). Controls and Procedures
|
16
|
|
|
|
|
PART
II OTHER INFORMATION
|
17
|
|
|
|
|
Item
1. Legal Proceedings
|
17
|
|
|
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
17
|
|
|
|
|
Item
3. Defaults Upon Senior Securities
|
17
|
|
|
|
|
Item
4. Submission of Matters to a Vote of Security Holders
|
17
|
|
|
|
|
Item
5. Other Information
|
17
|
|
|
|
|
Item
6. Exhibits
|
18
|
|
|
|
|
SIGNATURES
|
19
|
|
|
|
|
Exhibits
|
20
|
|
|
|
|
Certification
of
Chief Executive Officer |
|
|
|
|
|
Certification
of
Chief Financial Officer |
|
|
|
|
|
Certification
of Chief Executive Officer Pursuant to Section 906 |
|
|
|
|
|
Certification
of Chief Financial Officer Pursuant to Section 906 |
|
|
PART
I - FINANCIAL INFORMATION
Item
1. Financial
Statements.
ATLAS
TECHNOLOGY GROUP, INC.
CONSOLIDATED
BALANCE SHEETS
MARCH
31, 2008
|
|
March
31,
2008
|
|
|
December
31,
2007
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$
|
803,959
|
|
$
|
25,724
|
|
Cash
Escrow Deposit
|
|
—
|
|
|
4,011,107
|
|
Accounts
receivable
|
|
108,452
|
|
|
64,387
|
|
VAT
receivable
|
|
30,311
|
|
|
13,345
|
|
Prepaids
and deposits
|
|
19,125
|
|
|
18,636
|
|
Total
Current Assets
|
|
961,847
|
|
|
4,133,199
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
Equipment
and furniture, net
|
|
180,633
|
|
|
168,024
|
|
Software
development, net
|
|
626,406
|
|
|
647,782
|
|
IT
technology, net
|
|
1,102,340
|
|
|
1,216,827
|
|
Customer
lists and Trademarks, net
|
|
371,139
|
|
|
414,388
|
|
Total
Other Assets
|
|
2,280,518
|
|
|
2,447,021
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
3,242,365
|
|
$
|
6,580,220
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
Bank
Overdrafts
|
$
|
—
|
|
$
|
47,896
|
|
Accounts
payable
|
|
708,120
|
|
|
972,977
|
|
Accrued
expenses
|
|
270,153
|
|
|
341,304
|
|
Income
taxes payable
|
|
2,393
|
|
|
2,292
|
|
Loans
payable, related parties
|
|
103,057
|
|
|
241,481
|
|
Loans
payable
|
|
—
|
|
|
132,000
|
|
WCOF
Loan of $3,500,000 less accrued finance charges of $2,231,250 ($5,000,000
less $2,975,000)
|
|
1,268,750
|
|
|
2,025,000
|
|
Total
Current Liabilities
|
|
2,352,473
|
|
|
3,762,950
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
Redeemable
convertible preferred stock: 10,000,000 authorized - None issued
|
|
—
|
|
|
—
|
|
Common
stock, $0.0004 par value; 200,000,000 shares authorized
39,513,949
and 39,513,949 shares issued and outstanding
respectively
for March 31, 2008 and December 31, 2007
|
|
15,797
|
|
|
15,797
|
|
Additional
paid-in capital
|
|
20,905,146
|
|
|
20,905,146
|
|
Accumulated
(Deficit)
|
|
(19,765,378
|
)
|
|
(17,857,014
|
)
|
Other
comprehensive income (loss)
|
|
(265,673
|
)
|
|
(246,659
|
)
|
Total
Stockholders’ Equity
|
|
889,892
|
|
|
2,817,270
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
3,242,365
|
|
$
|
6,580,220
|
|
The
accompanying notes are an integral part of these consolidated interim financial
statements.
ATLAS
TECHNOLOGY GROUP, INC.
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
|
Three
Months Ended
March 31,
|
|
|
|
2008
|
|
|
2007
|
|
REVENUES
|
$
|
139,810
|
|
$
|
105,813
|
|
COST
OF SALES
|
|
82,066
|
|
|
83,712
|
|
GROSS
PROFIT
|
|
57,744
|
|
|
22,101
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
IT
software support and development
|
|
355,086
|
|
|
235,377
|
|
Sales
and marketing
|
|
132,396
|
|
|
66,315
|
|
Depreciation
and amortization
|
|
191,574
|
|
|
22,522
|
|
General
and administrative
|
|
313,704
|
|
|
310,979
|
|
|
|
992,760
|
|
|
635,193
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
|
(935,016
|
)
|
|
(613,092
|
)
|
|
|
|
|
|
|
|
Interest
income
|
|
909
|
|
|
44
|
|
Interest
expense
|
|
(50,482
|
)
|
|
(11,293
|
)
|
Other
financing charges and amortization
|
|
(923,750
|
)
|
|
—
|
|
|
|
(973,323
|
)
|
|
(11,249
|
)
|
|
|
|
|
|
|
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
|
(1,908,339
|
)
|
|
(624,341
|
)
|
INCOME
TAXES
|
|
(25
|
)
|
|
(17
|
)
|
NET
INCOME (LOSS) AFTER TAXES from continuing operations
|
|
(1,908,364
|
)
|
|
(624,358
|
)
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
Foreign
Exchange Translation Gains (Losses)
|
|
(19,014
|
)
|
|
(158,449
|
)
|
COMPREHENSIVE
LOSS
|
|
(1,927,378
|
)
|
|
(782,807
|
)
|
|
|
|
|
|
|
|
EARNINGS
(LOSS) PER COMMON SHARE, BASIC AND DILUTED
|
|
|
|
|
|
|
Continuing
operations
|
|
(0.05
|
)
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
DILUTED
|
|
39,513,949
|
|
|
25,601,286
|
|
The
accompanying notes are an integral part of these consolidated interim financial
statements.
ATLAS
TECHNOLOGY GROUP, INC.
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
Three
Months Ended
March
31,
|
|
|
|
2008
|
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
(Loss)
|
|
(1,908,364
|
)
|
|
(624,358
|
)
|
Adjustments
to reconcile net loss to net cash (used) by operating
activities:
|
|
|
|
|
|
|
Non-cash
financing charges associated with issue of stock and
warrants
|
|
743,750
|
|
|
—
|
|
Depreciation
and amortization
|
|
191,574
|
|
|
22,522
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
(Increase)
decrease in accounts receivable
|
|
(44,065
|
)
|
|
(9,783
|
)
|
(Increase)
decrease in VAT receivable
|
|
(16,966
|
)
|
|
(16,256
|
)
|
(Increase)
decrease in prepaid expenses
|
|
(489
|
)
|
|
(15,097
|
)
|
Increase
(decrease) in bank overdrafts
|
|
(47,896
|
)
|
|
—
|
|
Increase
(decrease) in accounts payable
|
|
(264,857
|
)
|
|
84,701
|
|
Increase
(decrease) in accrued expenses
|
|
(71,151
|
)
|
|
258,145
|
|
Increase
(decrease) in taxes payable
|
|
101
|
|
|
(3,807
|
)
|
Total
adjustments
|
|
490,001
|
|
|
320,425
|
|
Net
cash provided (used) by operating activities
|
|
(1,418,363
|
)
|
|
(303,933
|
)
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
Cash
acquired in acquisition of assets
|
|
—
|
|
|
414
|
|
Purchase
of furniture and equipment
|
|
(25,072
|
)
|
|
(
3,940
|
)
|
Software
development costs
|
|
—
|
|
|
(59,769
|
)
|
Net
cash provided (used) by investing activities
|
|
(25,072
|
)
|
|
(63,295
|
)
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
Drawdown
restricted cash escrow
|
|
4,011,107
|
|
|
—
|
|
(Repay)
term loan
|
|
(1,500,000
|
)
|
|
—
|
|
(Repay)
drawdown short term loans
|
|
(138,424
|
)
|
|
200,993
|
|
(Repay)
increase in note payable
|
|
(132,000
|
)
|
|
—
|
|
Net
proceeds from issue of shares and application monies received
|
|
—
|
|
|
297,375
|
|
Net
cash provided (used) by financing activities
|
|
2,240,683
|
|
|
498,368
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
797,248
|
|
|
131,140
|
|
Gain
(Loss) on foreign exchange
|
|
(19,013
|
)
|
|
(47,365
|
)
|
CASH,
BEGINNING OF PERIOD
|
|
25,724
|
|
|
130,991
|
|
|
|
|
|
|
|
|
CASH,
END OF PERIOD
|
|
803,959
|
|
$
|
214,766
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|
|
Mar.
31, 2008
|
|
|
Mar.
31, 2007
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
669
|
|
$
|
2,453
|
|
Income
taxes paid
|
|
$
|
—
|
|
$
|
3,897
|
|
NON-CASH
TRANSACTIONS:
|
|
|
|
|
|
|
|
Acquisition
of IT Technology
|
|
$
|
—
|
|
$
|
505,121
|
|
Acquisition
of customer list and trademarks
|
|
$
|
—
|
|
$
|
555,312
|
|
The
accompanying notes are an integral part of these consolidated interim financial
statements.
ATLAS
TECHNOLOGY GROUP, INC.
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2008
NOTE
A — PRINCIPLES OF PRESENTATION AND NATURE OF BUSINESS
These
financial statements are presented on a consolidated basis and include Atlas
Technology Group Inc (formerly Tribeworks Inc) and its wholly owned
subsidiaries, Atlas Technology Group Holdings Limited, a Malta corporation;
Atlas Technology Group Limited, a Malta corporation; Atlas Technology Group
(NZ)
Limited, a New Zealand corporation; Atlas Technology Group (US), Inc., a
Delaware corporation; Atlas Technology Group Consulting Inc., a Delaware
corporation, and BLive Networks Inc (formerly Infobuild Systems (Canada)
Inc), a
British Columbia, Canada corporation, which has been consolidated into these
financial statements from January 26, 2007, collectively the “Company” or
“AtlasTG”.
All
material intercompany transactions have been eliminated.
The
Company acquired Atlas Technology Group Holdings Ltd, a Malta Corporation
that
was established in September 2004, to provide external Information Technology
(“IT”)
application support services for organizations with IT functions, as a wholly
owned subsidiary on January 20, 2006. At the annual general meeting of the
Company on July 12, 2007, the name of the Company was changed from Tribeworks,
Inc. to Atlas Technology Group, Inc. 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.
On
January 26, 2007 the Company acquired all of the assets and customers of
BLive
Networks Inc, further expanding the Company’s capability of delivering high
quality outsourced support into the annual IT Support market. Prior to our
acquisition, BLive Networks Inc had developed and operated interactive support
tools for companies providing IT support worldwide. Utilizing proprietary
technology, BLive’s systems are used by companies for remote technical support
and sales, both externally, and for internal corporate ‘Helpdesk’ support
departments. This technology enables service providers to deliver faster
response times and a personal connection with users and is complimentary
to the
tools developed by the Company and is generating revenue.
Following
the acquisition of Atlas Technology Group Holdings Ltd. on January 20, 2006,
the
services performed by the Company have been considered our new operating
business. The services previously offered by the Company that were transferred
into the Tribeworks Development Corporation (“TDC”)
were
sold on September 14, 2006.
The
accompanying unaudited financial statements of AtlasTG have been prepared
in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB. Accordingly, they do
not
include all of the information and footnotes required by U.S. generally accepted
accounting principles for complete financial statements, although the Company
believes that the disclosures are adequate to make the information presented
not
misleading. In the opinion of management, all adjustments necessary for a
fair
presentation of the Company’s financial position at March 31, 2008, and its
results of operations for the three months ended March 31, 2008 and 2007,
and
the operations and cash flows for the three months ended March 31, 2008 have
been made. However, operating results for the interim periods noted are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2008. This report should be read in conjunction with the Company’s
financial statements and notes thereto contained in the Company’s Annual Report
on Form 10-KSB for the year ended December 31, 2007.
NOTE
B —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that
affect the reported amounts of assets and liabilities and 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.
Foreign
Currency Translation
The
Company reports in United States Dollars (“USD”)
but
through its subsidiaries does business in the USA, Malta, and New Zealand.
BLive
does business both in US and Canadian dollars, but primarily in USD. The
Company
seeks to borrow in USD to match with the reporting currency, but business
units
outside of the US receive some revenue and incur expenses and credit in foreign
currencies. 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 the end-of-period exchange rates and the translation
differences are reported as other 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
operating losses in both calendar years 2006 and 2007 of $1,780,896 and
$3,190,059 respectively. The Company has reported a further operating loss
of
$935,016 for the three months ended March 31, 2008, and an accumulated deficit
of $19,765,378.
The
recoverability of the recorded assets and satisfaction of the liabilities
reflected in the accompanying balance sheets is dependent upon continued
operation of the Company, which is in turn dependent upon the Company’s ability
to succeed in its future operations. There can be no assurance that management
will be successful in implementing its plans. The accompanying consolidated
financial statements do not include any adjustments that might result from
the
outcome of this uncertainty.
Concentration
of Credit Risk
AtlasTG
and each subsidiary maintain cash in both local currency and US dollar
commercial bank accounts with major reputable financial institutions. The
financial institutions are considered credit worthy and have not experienced
any
losses on their deposits at March 31, 2008. At March 31, 2008, cash balances
held with Wells Fargo by the Company were $680,995 which exceeded Federal
Deposit Insurance Corporation (FDIC) limits within the United States, by
$580,995. In addition, funds were held in accounts with HSBC in Malta and
New
Zealand, countries not covered by FDIC.
Net
Earnings (Loss) Per Share of Common Stock
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.
Intangible
Assets
Software
Development Costs
From
January 1, 2006, the Board of Directors has adopted Statement of Financial
Accounting Standards No. 86, “Accounting for the Costs of Computer Software to
Be Sold, Leased, or Otherwise Marketed” (“SFAS
86”)
and
has capitalized certain development costs that meet the requirements of SFAS
86.
As
a
result of the adoption of SFAS 86 a total of $748,164 of software development
costs have been capitalized. These capitalized costs are now being amortized
over three years and this amortization is being included along with normal
depreciation of fixed assets in the Consolidated Statement of Operations
and
Comprehensive Loss.
IT
Technology
As
part
of the acquisition of Atlas Technology Group Holdings Ltd, the Company acquired
various software that had been developed at the date of acquisition. This
software was valued at $835,192 and treated as IT Technology and is now being
amortized over three years. In addition with the acquisition of BLive, the
Company acquired IT Technology valued at $505,121. As BLive had already
commercialized their IT technology and is generating revenue, the IT Technology
acquired from BLive is also being amortized over three years. Again this
amortization is being included along with normal depreciation of fixed assets
in
the Consolidated Statement of Operations and Comprehensive Loss.
Customer
List and Trademarks
As
part
of the acquisition of BLive, the Company acquired 700 customers and various
trademarks and has valued this customer list and trademarks by way of the
value
of the future revenue these customers can generate over the next three years
with an allowance for their diminishing value. Again as BLive had already
commercialized their technology and is generating revenue, this customer
list
and trademarks acquired from BLive are being amortized over three years and
this
amortization is being included along with normal depreciation of fixed assets
in
the Consolidated Statement of Operations and Comprehensive Loss.
.
The
Company’s intangible assets are summarized as follows:
|
|
March
31, 2008
|
|
|
December
31, 2007
|
|
Software
Development
|
|
748,164
|
|
|
748,164
|
|
IT
Technology Acquired
|
|
1,340,313
|
|
|
1,340,313
|
|
Customer
List and Trademarks
|
|
555,312
|
|
|
555,312
|
|
Less:
Accumulated Amortization
|
|
(543,904
|
)
|
|
(364,792
|
)
|
|
$
|
2,099,885
|
|
$
|
2,278,997
|
|
Stock-Based
Awards
The
Company did not grant any options to purchase shares of the Company’s Common
Stock during the three months ended March 31, 2008, or during the same
period in 2007.
NOTE
C — LOANS, ADVANCES AND NOTE PAYABLE
During
the quarter ended March 31, 2008, the Company repaid $132,000 being the balance
of the original note associated with the plan of reorganization of March
2005
that included the transfer of most assets and liabilities to the Company’s
operating subsidiary, TDC. This note was renegotiated during 2006 with the
lender agreeing to take 100,000 shares of Common Stock of the Company at
$1.00
per share plus a warrant to purchase 50,000 shares of Common Stock of the
Company exercisable for two years at a price of $1.25 per new share as part
repayment with the balance plus accrued interest then owing, with the balance
being converted into a new note issued for $120,000 repayable on March 30,
2007. This repayment date was subsequently extended to September 30, 2007,
with penalty interest provisions for any late payment, which was exercised
at a
penalty cost of $12,000, in exchange for the issuance of 25,000 fully paid
shares of Common Stock of the Company and a warrant exercisable for two years
to
purchase 50,000 shares of Common Stock of the Company at an exercise price
of
$1.00 per share.
Also
during quarter ended March 31, 2008, a loan denominated in Euro originally
for
the equivalent of US$100,000 was repaid. The loans repayable of $102,764
comprises advances from a stockholder and has no fixed repayment dates, but
are
considered to be of a short-term nature.
In
June
2007, the Company entered into a Securities Purchase Agreement (the
“Securities
Purchase Agreement”)
with
West Coast Opportunity Fund, LLC, a Delaware limited liability company
(“WCOF”).
Pursuant to the terms of the Securities Purchase Agreement, a subsidiary
of the
Company, issued to WCOF two senior secured non-convertible promissory notes
totalling $5,000,000 with $4,000,000 being placed in escrow with Wells Fargo
Bank, N.A. until the Company or any of its subsidiaries enters into contracts
with certain entities.
On
December 31, 2007, the Company entered into a Note Amendment and Securities
Purchase Agreement (the “WCOF
Amendment Agreement”)
with
WCOF. The WCOF Amendment 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
Amendment Agreement, the WCOF agreed to cancel and return the Warrants to
the
Company, in consideration for which the Company has agreed to: (i) enter
into
the WCOF Amendment 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 on this Promissory
Note from 5% to 7.5% per annum; (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 $2,975,000 at December 31, 2007 and a further
charge of $743,750 in the quarter ended March 31, 2008 and a further $2,231,250
will be amortized over the remainder of the year to December 31, 2008. As
a
result of the WCOF Amendment Agreement, the $4 million Escrow Deposit was
released on January 3, 2008 and $1,500,000 was used to reduce the amended
June
15, 2007 note. The balance now repayable on December 31, 2008 is $3,500,000
NOTE
C — 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.
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 $80,000 on the closing date
for
the initial Promissory Note and issued a 5-year warrant 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. 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 during the
quarter ended March 31, 2008 (and included as a financing charge under the
heading “Other financing charges and amortization” within the Unaudited
Consolidated Statements of Operations and Comprehensive Loss. ESP is also
entitled to 40,000 shares of Common Stock in the Company) and a 3-year warrant
to purchase 280,000 shares of Common Stock at a strike price of $0.70 per
share.
NOTE
D — FAIR VALUE OF FINANCIAL INSTRUMENTS
In
September 2006, the FASB issued FASB Statement No. 157, “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. The provisions of SFAS
157
were adopted January 1, 2008.
SFAS
157
establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy
under SFAS 157 are described below:
Level
1 -
Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical unrestricted assets or liabilities.
Level
2 -
Quoted prices in markets that are not active, or inputs that are observable,
either directly or indirectly, for substantially the full term of the asset
or
liability.
Level
3 -
Prices or valuation techniques that require inputs that are both significant
to
fair value measurement and unobservable (supported by little or no market
activity).
The
Company’s cash instruments are classified within Level 1 of the fair value
hierarchy because they are valued using quoted market prices.
NOTE
E — COMMON STOCK AND WARRANT ISSUANCES
During
the quarter ended March 31, 2008, the Company did not issue any Common Stock
or
Warrants.
As
of
March 31, 2008, the total number of shares of Common Stock issued and
outstanding was 39,513,949.
The
Company also entered into a registration rights agreement with WCOF (the
“Registration
Rights Agreement”)
requiring the Company to register the resale of the shares of Common Stock
and
the resale of the shares underlying the warrants (the “Registrable
Securities”) issued
to
WCOF under the Securities Act of 1933, as amended (the “Securities
Act”).
Pursuant to the terms of the Registration Rights Agreement, the Company is
required to register the Registrable Securities with the SEC. The Registration
Rights Statement covering a portion of WCOF’s registrable securities has been
filed with the SEC and was declared effective on November 7, 2007 and it
is
anticipated that further registration rights statements covering the resale
of
additional shares will be filed during 2008.
NOTE
F — SUBSEQUENT EVENTS
There
have been no material events subsequent to March 31, 2008.
Item
2. Management’s Discussion and Analysis or Plan of
Operation.
SPECIAL
NOTE REGARDING FORWARD LOOKING STATEMENTS
In
addition to historical information, the following discussion contains statements
that plan for or anticipate the future. These forward-looking statements
include
statements about our future business plans and strategies, future actions,
future performance, costs and expenses, interest rates, outcome of
contingencies, financial condition, results of operations, liquidity, objectives
of management, and other such matters, as well as certain projections and
business trends, and most other statements that are not historical in nature,
that are "forward-looking" within the meaning of the Private Securities
Litigation Reform Act of 1995.
The
Private Securities Litigation Reform Act of 1995 provides a “safe harbour” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the information.
Forward-looking information may be included in this Quarterly Report or may
be
incorporated by reference from other documents we have filed with the Securities
and Exchange Commission (the “SEC”).
You
can identify these forward-looking statements by the use of words like “may,”
“will,” “could,” “should,” “project,” “believe,” “anticipate,” “expect,” “plan,”
“estimate,” “forecast,” “potential,” “intend,” “continue” and variations of
these words or comparable words. Forward-looking statements do not guarantee
future performance, and because forward-looking statements involve future
risks
and uncertainties, there are factors that could cause actual results to differ
materially from those expressed or implied. These risks and uncertainties
include, without limitation, those detailed from time to time in our filings
with the SEC.
We
have
based the forward-looking statements relating to our operations on management's
current beliefs expectations, estimates, and projections about us and the
industry in which we operate, as well as assumptions and information currently
available to us. These statements are not guarantees of future performance
and
involve risks, uncertainties and assumptions that we cannot predict. In
particular, we have based many of these forward-looking statements on
assumptions about future events that may prove to be inaccurate. Because
forward-looking statements involve future risks and uncertainties, there
are
several important factors that could cause actual results to differ materially
from historical results and percentages and from the results anticipated
by
these forward-looking statements.
For
example, a few of the uncertainties that could affect the accuracy of
forward-looking statements include, without limitation:
·
|
Whether
or not our products are accepted by the marketplace and the pace
of any
such acceptance;
|
·
|
Our
ability to continue to grow our Tools and Enterprise
businesses;
|
·
|
Improvements
in the technologies of our
competitors;
|
·
|
Changing
economic conditions; and
|
·
|
Other
factors, some of which will be outside of our
control.
|
Our
business model is primarily focused on delivering IT support services. We
are
leveraging the recent advances in software, IT monitoring systems, and
communications, to build a new, leading edge, global support infrastructure,
providing 24x7 software support to large and medium sized companies. The
new
application onboarding and monitoring processes that we have developed should
allow for cost savings over existing IT service providers. We believe the
IT
support offerings offered using our software, systems and processes will
provide
a quality product to a wide range of business enterprises and provide a maximum
return on our investment.
RISK
FACTORS
We
wish
to caution you that there are risks and uncertainties that could cause our
actual results to be materially different from those indicated by
forward-looking statements that we make from time to time in filings with
the
SEC, news releases, reports, proxy statements, registration statements and
other
written communications, as well as oral forward-looking statements made from
time to time by representatives of our Company. These risks and uncertainties
include, but are not limited to, those listed in the Company’s Annual Report on
Form 10-KSB for the year ended December 31, 2007. These risks and uncertainties
and additional risks and uncertainties not presently known to us or that
we
currently deem immaterial may cause our business, financial condition, operating
results and cash flows to be materially adversely affected. Except for the
historical information contained herein, the matters discussed in this analysis
are forward-looking statements that involve risks and uncertainties, including
but not limited to general business conditions, the impact of competition,
and
other factors which are often beyond the control of the Company. The Company
does not undertake any obligation to update forward-looking statements except
as
required by law. You should refer to and carefully review the information
in
future documents we file with the SEC.
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
We
experienced a net operating loss (EBIT) of $935,016 for the quarter ended
March
31, 2008, compared to a net operating loss of $613,092 for the quarter ended
March 31, 2007.
2006
and
2007 were transitional years for us with the acquisition of AtlasTG on January
20, 2006 and BLive on January 26, 2007 and the sale of our previous business,
operated from within Tribeworks Development Corporation (“TDC”),
on
September 14, 2006.
Set
out
in the following sections is an analysis of our results for the quarter.
Revenues
Total
revenues the quarter ended March 31, 2008 were $139,810, compared to $105,813
for the three months ended March 31, 2007. The revenue of $139,810 can be
split
into two categories: a) onboarding and support sales (including recovery
of
expenses and third party costs) of $99,121 and b) revenue from consulting
services and placing consultants with third parties of $40,689, compared
with
$33,260 and $105,813, respectively, for the first three months to March 31,
2007. What this shows is an increase in revenue from our mainstream IT support
business and a decrease in our consulting and placement business now that
we are
getting further into our IT support mainstream business.
We
are
now regularly billing monthly support revenue to four customers and are in
the
process of finalizing support contracts with two others after going through
the
onboarding process with them. In addition we are a month into a direct marketing
campaign which has raised a significant number of new leads and we are currently
putting support proposals to a number of these potential customers. We have
refocused our marketing toward small to medium sized businesses for which
we can
provide 24x7 support at a substantial cost saving compared with these businesses
maintaining their own in-house support. The savings arise because we have
support teams in two locations on opposite sides of the world that just
specialize on IT support and can service and support more than one customer
at
the same time, compared to the resources needed by individual small to medium
sized companies. As we carry out our support remotely from our servers and
systems, this does not preclude these small to medium sized businesses from
maintaining their own IT department that focuses on the development of new
applications.
We
anticipate that revenue from our new IT support services will increase during
the 2008 year as new customers are recruited and onboarded.
Cost
of Sales and Gross Margin
Our
cost
of sales for the three months ended March 31, 2008 was $82,066, compared
to
$83,712 for the first three months ended March 31, 2007. Cost of sales includes
an allocation of salary costs related to the consulting work performed and
the
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 IT support services
business are included under operating expenses with the IT software development
and support line.
This
resulted in a gross margin for the three months ended March 31, 2008 of $57,744,
compared to a gross margin of $22,101 for the first three months to March
31,
2007. The gross margin has improved due to the better utilization of our
staff
generating additional revenue for the same basis static cost. As we are still
getting systems established it is too early to predict what gross margin
percentages of revenue will be going forward.
Operating
Expenses
Our
operating expenses are broken down into four categories: i) IT software support
and development; ii) Sales and marketing; iii) Depreciation and amortization;
and iv) General and administrative.
During
2006 and 2007, we developed our new software tools for onboarding and monitoring
of our customer’s software applications. Part of these costs have been
capitalized in accordance with Statement of Financial Accounting Standards
No.
86, “Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed” (“SFAS
86”)
and
the balance has been treated as an operating expense. This was the case in
2007,
but has not been the case since September 30, 2007 when we deemed that our
software and systems had reached the commercial operating stage and since
October 1, 2007 all costs associated with software development and support
have
been expensed.
In
the
first three months ended March 31, 2008, our IT software support and
development expenses were $355,086, compared to $235,377 for the first three
months ended March 31, 2007. The increase is due in part to all software
development and support costs now being expensed, whereas, $59,769 was
capitalized in the first three months of 2007. In addition with the value
of the
US dollar falling against both the Euro and the New Zealand dollar, the cost
of
our operations in both Malta and New Zealand have increased in US dollar
terms
and adversely impacted our results, even though the local costs in Malta
and New
Zealand have been held to previous levels.
Sales
and
marketing expenses for the three months ended March 31, 2008 were $132,396
(which is in line with the level of expenditure in the last two quarters
of
2007) compared to $66,315 for the three months ended March 31, 2007. Sales
and
marketing expense consists primarily of compensation and benefits for our
sales
and marketing team, plus direct marketing costs and advertising expenses
which
are primarily the costs incurred in the design, development, and printing
of our
literature and marketing materials. We expense all advertising expenditures
as
incurred. Sales and marketing expenses will continue to grow as we move into
the
growth stage and as we continue to expand our market presence in
2008.
Depreciation
and amortization expense increased substantially in the three months ended
March
31, 2008 to $191,574, compared to $22,522 in the first three months ended
March
31, 2007. The reason for the increase is that we are now amortizing IT
technology purchased with the acquisition of Atlas Technology Holdings Ltd
in
January 2006, as well as the IT technology and customer lists that we purchased
as part of BLive in January 2007. These intangibles are being amortized over
three years and the level depreciation and amortization will remain at the
current level for the remainder of 2008.
General
and administrative expenses consist primarily of head office compensation
and
benefits plus fees for professional services such as legal and audit. General
and administrative expenses were $313,704 for the three months ended March
31,
2008 compared to $310,979 for the three months ended March 31, 2007.
Loss
from Operations
The
loss
from operations for the three months ended March 31, 2008 was $935,016, compared
to a loss of $613,092 for the three months ended March 31, 2007. This increased
loss was primarily due to additional sales and marketing expense and
depreciation and amortization as detailed above. As revenue increases the
loss
from operations will reduce as we have sufficient staff to take on additional
customers and sufficient office space in all three locations to accommodate
our
immediate needs and to accommodate additional staff we need to hire. In
addition, general and administrative costs are expected to remain at the
same
levels as we build up revenue over the coming twelve months.
Interest
Income, Expense and other financing charges
Interest
income for the first three months ended March 31, 2008 was $909, compared
with
$44 for the first three months ended March 31, 2007.
Interest
expense was $50,482 for the three months ended March 31, 2008, compared to
$11,293 for the three months ended March 31, 2007. The increase is due to
the
accrual of interest on the WCOF term loan which was borrowed back in mid
2007.
The quarterly cost will remain at this level with the loan being repayable
on
December 31, 2008.
Following
the issuance to WCOF of 3,500,000 shares of Common Stock in the form of “yield
enhancement shares” as part of the WCOF amended securities transaction detailed
elsewhere in this report, $2,975,000 of non-cash prepaid financing charges
were
accrued as additional paid-in capital and this amount will be amortized over
the
twelve months to repayment on December 31, 2008 with $743,750 being expensed
in
the first quarter ended March 31, 2008. In addition, the broker for the
transaction was paid $180,000 of commissions during the first quarter of
2008,
and together with the amortization, these make up the $923,750 of other
financing charges and amortization expense. There were no similar charges
in the
first three months ended March 31, 2007.
The
offering of these unregistered securities to WCOF were exempt from registration
pursuant to Rule 506 promulgated under the Securities Act of 1933. WCOF
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
of 1933. The proceeds from the sale of unregistered securities are being
used
for general working capital purposes and to repay $1,500,000 of the WCOF
debt.
Provision
for Income Taxes
Income
taxes for the three months ended March 31, 2008 were $25 (which consists
of
income taxes and withholding taxes deducted from interest income). The
comparative figures for the three months ended March 31, 2007 were
$17.
Net
Income (Loss)
In
summary and as discussed above, we experienced a net operating loss (EBIT)
of
$935,016 for the three months ended March 31, 2008, compared to a net operating
loss of $613,092 for the first three months ended March 31, 2007. When our
net
operating loss is added to our net interest and other financing charges of
$973,323, taxes of $25 and foreign exchange translation losses of $19,014,
our
comprehensive loss for the three months ended March 31, 2008 is $1,927,378,
compared to a comprehensive loss of $782,807 for the three months ended March
31, 2007. We do not expect to be profitable during 2008, but we expect our
level
of operating losses to reduce as we gain new application support customers
and
increase our revenue throughout the year.
Liquidity
and Capital Resources
At
March
31, 2008 we had total cash resources of $803,959 compared to $214,766 at
March
31, 2007 and $25,724 at December 31, 2007.
With
the
signing of the WCOF Amendment Agreement on December 31, 2007, this enabled
the
previously restricted escrowed WCOF funds of $4,011,107 to be released. These
funds have been used to repay WCOF $1,500,000, pay $180,000 of commissions
due
on this fundraising, to repay $318,320 of overdrafts and short-term debt
raised
from shareholders and to reduce creditors and accruals by $336,008.
Related
Party Transactions
As
of
March 31, 2008, we have not entered into any contractual arrangements with
related parties other than for short term advances from a stockholder who
is a
director. There are no other currently proposed transactions, or series of
the
same, to which we are a party, in which the amount involved exceeds $60,000
and
in which, to our knowledge, any director, executive officer, nominee, 5%
stockholder or any member of the immediate family of any of the foregoing
persons have or will have a direct or indirect material interest.
Recently
Issued Financial Accounting Pronouncements
None.
Off-Balance
Sheet Arrangements
We
have
no off-balance sheet arrangements that have or are reasonably likely to have
a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to investors.
Item
3. Controls
and Procedures
Our
Chief
Executive Officer and Chief Financial Officer have concluded, based on their
evaluation required by Rule 13a-15(b) promulgated under the Exchange Act,
that
as of March 31, 2008 our disclosure controls and procedures (as defined in
Rule
13a-15(e) promulgated under the Exchange Act) are effective in alerting them
on
a timely basis to material information relating to us (including our
consolidated subsidiaries) required to be included in our periodic filings
under
the Exchange Act, and include controls and procedures designed to ensure
that
information required to be disclosed by us in such periodic filings is
accumulated and communicated to our management, including our Chief Executive
Officer, as appropriate to allow timely decisions regarding required disclosure.
Since March 31, 2008, there have not been any significant changes in our
disclosure controls and procedures or in other factors that could significantly
affect such controls.
There
were no significant changes in our internal control over financial reporting
identified in connection with the evaluation required by Rule 13a-15(d)
promulgated under the Exchange Act that occurred during the fiscal quarter
ended
September 30, 2007 that has materially affected, or is reasonably likely
to
materially affect, our internal control over financial reporting.
Item
3A(T). Controls and Procedures
Our
Company's Principal Executive Officer and Principal Financial Officer have
determined that, during the period covered by this quarterly report, there
were
no material changes in our Company's internal control over financial reporting
that materially affected, or are reasonably likely to materially affect,
our
Company’s internal control over financial reporting.
PART
II — OTHER INFORMATION
Item
1. Legal
Proceedings
None.
Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds.
During
the quarter ended March 31, 2008, the Company did not issue any
securities.
Item
3. Defaults
upon Senior Securities.
None.
Item
4. Submission
of Matters to a Vote of Security Holders.
None.
Item
5. Other
Information.
None.
Item
6. Exhibits.
(a) The
following exhibits are included in this report or incorporated by reference
into
this report:
Exhibit
Number
|
|
Description
of Exhibits
|
|
|
|
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
|
|
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)*
|
|
|
|
3.3
|
|
Bylaws
of Tribeworks, Inc., a Delaware Corporation (incorporated by reference
to
Exhibit 3.2 to the Registrant’s Form 10-SB/A filed July 10,
2000)*
|
|
|
|
10.1
|
|
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)*
|
|
|
|
10.2
|
|
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)*
|
|
|
|
10.3
|
|
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)*
|
|
|
|
10.4
|
|
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)*
|
|
|
|
10.5
|
|
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)*
|
|
|
|
10.6
|
|
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)*
|
|
|
|
10.7
|
|
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)*
|
|
|
|
10.8
|
|
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)*
|
|
|
|
31.1
|
|
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 Code
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 1350 of Title 18
of the
United States Code
|
|
|
|
*
Previously filed.
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
|
|
|
ATLAS
TECHNLOGY GROUP, INC.,
a
Delaware corporation
|
|
|
|
Date:
May 20, 2008
|
By: |
/s/
Peter B
Jacobson
|
|
Peter
B Jacobson
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
Date:
May 20, 2008
|
By: |
/s/
B. S. P.
Marra
|
|
B.
S. P. Marra
|
|
Chief
Financial Officer
|
Index
to Exhibits
EXHIBIT
NUMBER
|
|
DESCRIPTION
OF EXHIBITS
|
|
|
|
|
|
|
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
|
|
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)*
|
|
|
|
3.3
|
|
Bylaws
of Tribeworks, Inc., a Delaware Corporation (incorporated by reference
to
Exhibit 3.2 to the Registrant’s Form 10-SB/A filed July 10,
2000)*
|
|
|
|
10.1
|
|
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)*
|
|
|
|
10.2
|
|
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)*
|
|
|
|
10.3
|
|
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)*
|
|
|
|
10.4
|
|
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)*
|
|
|
|
10.5
|
|
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)*
|
|
|
|
10.6
|
|
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)*
|
|
|
|
10.7
|
|
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)*
|
|
|
|
10.8
|
|
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)*
|
|
|
|
31.1
|
|
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 Code
|
|
|
|
32.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 1350 of Title 18
of the
United States Code
|
|
|
|
*
Previously filed.
Exhibit
31.1
CERTIFICATION
PURSUANT TO SECTION 302
OF
THE SARBANES-OXLEY ACT OF 2002
I,
Peter
B. Jacobson, certify that:
1. I
have
reviewed this Quarterly Report on Form 10-QSB of Atlas Technology Group,
Inc.;
2. Based
on
my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on
my knowledge, the financial statements, and other financial information
included
in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for,
the
periods presented in this report;
4. I
am
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
a. Designed
such disclosure controls and procedures, or caused such disclosure controls
and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during
the
period in which this report is being prepared;
b. Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered
by this
report based on such evaluation; and
c. Disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. I
have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors:
a. All
significant deficiencies and material weaknesses in the design or operation
of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any
fraud, whether or not material, that involves management or other employees
who
have a significant role in the registrant’s internal control over financial
reporting.
Date:
May
20, 2008
By: /s/ Peter B.
Jacobson |
Peter
B. Jacobson
|
Chief
Executive Officer
|
Exhibit
31.2
CERTIFICATION
PURSUANT TO SECTION 302
OF
THE SARBANES-OXLEY ACT OF 2002
I,
B.S.P.
Marra, certify that:
1. I
have
reviewed this Annual Report on Form 10-QSB of Atlas Technology Group,
Inc.;
2. Based
on
my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on
my knowledge, the financial statements, and other financial information
included
in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for,
the
periods presented in this report;
4. I
am
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
a. Designed
such disclosure controls and procedures, or caused such disclosure controls
and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during
the
period in which this report is being prepared;
b. Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered
by this
report based on such evaluation; and
c. Disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. I
have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors:
a. All
significant deficiencies and material weaknesses in the design or operation
of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any
fraud, whether or not material, that involves management or other employees
who
have a significant role in the registrant’s internal control over financial
reporting.
Date:
May
20, 2008
By: /s/
B.S.P. Marra |
B.S.P.
Marra
|
Chief
Financial Officer
|
Exhibit
32.1
CERTIFICATION
PURSUANT TO 18
U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report on Form 10-QSB of Atlas Technology
Group, Inc.
(the “Registrant”)
for
the fiscal quarter ended March 31, 2008 as filed with the Securities
and
Exchange Commission on the date hereof (the “Report”),
I,
Peter B. Jacobson, Chief Executive Officer of the Registrant, certify,
pursuant
to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, that to my knowledge:
(1) The
Report fully complies with the requirements of section 13(a) or 15(d)
of the
Securities Exchange Act of 1934, as amended; and
(2) The
information contained in the Report fairly presents, in all material
respects,
the financial condition and results of operations of the
Registrant.
Date:
May
20, 2008
By:
/s/
Peter
B. Jacobson |
Peter
B. Jacobson
|
Chief
Executive Officer
|
This
certification accompanies this report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required
by such
Act, be deemed filed by the registrant for purposes of Section 18 of
the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
Such
certification will not be deemed to be incorporated by reference into
any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except
to the
extent that the registrant specifically incorporates it by
reference.
Exhibit
32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906
OF THE
SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report on Form 10-QSB of Atlas Technology
Group, Inc.
(the “Registrant”)
for
the fiscal quarter ended March 31, 2008 as filed with the Securities
and
Exchange Commission on the date hereof (the “Report”),
I,
B.S.P. Marra, Chief Financial Officer of the registrant, certify, pursuant
to 18
U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that to my knowledge:
(1) The
Report fully complies with the requirements of section 13(a) or 15(d)
of the
Securities Exchange Act of 1934, as amended; and
(2) The
information contained in the Report fairly presents, in all material
respects,
the financial condition and results of operations of the
Registrant.
Date:
May
20, 2008
By: /s/ B.S.P.
Marra |
B.S.P.
Marra
|
Chief
Financial Officer
|
This
certification accompanies this report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required
by such
Act, be deemed filed by the registrant for purposes of Section 18 of
the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”).
Such
certification will not be deemed to be incorporated by reference into
any filing
under the Securities Act of 1933, as amended, or the Exchange Act, except
to the
extent that the registrant specifically incorporates it by
reference.