UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
March 31, 2001
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For the quarterly period ended
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
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000-28675
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Commission File Number
Tribeworks, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-3370795
- --------------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
988 Market Street, San Francisco, CA 94102
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(Address of principal executive offices) (Zip Code)
(415) 674-5555
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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. [X] Yes [ ] No
The number of shares outstanding of registrant's $0.0001 par value common
stock, as of the close of business on March 31, 2001: 17,428,668 shares.
Transitional Small Business Disclosure Format: [ ] Yes [X] No
TRIBEWORKS, INC.
FIRST QUARTER 2001 REPORT ON FORM 10-QSB
TABLE OF CONTENTS
PAGE
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PART I. FINANCIAL INFORMATION
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Item 1. Consolidated Financial Statements
Unaudited Consolidated Balance Sheet
March 31, 2001 3
Unaudited Consolidated Statements of Operations
Three Months Ended March 31, 2001 and 2000 4
Unaudited Consolidated Statements of Cash Flows
Three Months Ended March 31, 2001 and 2000 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
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Item 2. Changes in Securities 10
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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PART I - FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS.
TRIBEWORKS, INC.
UNAUDITED CONSOLIDATED BALANCE SHEET
MARCH 31, 2001
ASSETS
Current Assets
Cash $ 93,403
Accounts receivable, net
33,904
Supplies
3,893
Prepaids and deposits
61,121
Total Current Assets 192,320
-----------
Other Assets
Equipment, net of accumulated depreciation of $ 16,119
32,476
Technology license, net of accumulated amortization of $ 61,762
68,238
Note receivable, employee
5,227
105,941
TOTAL ASSETS $ 298,261
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 369,026
Accrued expenses 109,849
Due to shareholders
6,232
Deferred revenue 245,464
Note Payable 100,000
-----------
Total Current Liabilities 830,571
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Stockholders' Deficit
Preferred stock: 50,000,000 shares authorized, none issued
Common stock: 200,000,000 shares authorized, $.0001 par
value, 17,428,668 shares issued and outstanding
1,746
Additional paid-in capital 3,179,886
Unearned compensation (203,411)
Accumulated deficit (3,510,531)
-----------
Total Stockholders' Deficit (532,310)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 298,261
===========
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TRIBEWORKS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
2001 2000
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REVENUES $ 236,641 $ 164,863
COST OF SALES 140,557 32,858
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GROSS PROFIT 96,084 132,005
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OPERATING EXPENSES
Product support 29,285 19,938
Product development 74,075 90,475
Sales and marketing 100,556 158,760
General and administrative 302,857 159,643
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506,773 428,816
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LOSS FROM OPERATIONS (410,689) (296,811)
INCOME TAXES - -
----------- -----------
NET LOSS $ (410,689) $ (296,811)
=========== ===========
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.02) $ (0.02)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 17,290,917 16,397,500
=========== ===========
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TRIBEWORKS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(410,689) $(296,811)
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Adjustments:
Depreciation and amortization 26,089 11,966
Common stock issued for services 37,656 -
Amortization of unearned compensation 47,114 -
Changes in:
Accounts receivable 5,793 (51,508)
Other receivables, prepaids and deposits 7,316 (27,457)
Supplies (7,891) -
Note receivable, employee 395 -
Accounts payable 174,585 (83,884)
Deferred revenue 50,770 (13,304)
Other liabilities 14,911 (3,181)
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Total adjustments 356,738 (167,368)
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Net cash used in operating activities (53,951) (464,179)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (15,679) (8,830)
Purchase of technology license - (11,687)
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Net cash used by investing activities (15,679) (20,517)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 50,000 735,000
Proceeds from issuance of note payable 100,000 -
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Net cash provided by financing activities 150,000 735,000
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NET (DECREASE) INCREASE IN CASH 80,371 250,304
CASH, BEGINNING OF PERIOD 13,033 157,353
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CASH, END OF PERIOD $ 93,403 $ 407,657
========= =========
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NOTE A - NATURE OF BUSINESS AND ORGANIZATION
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On August 20, 1998, Tribeworks, Inc. (the "Company") began its business
activities. The Company's business activity results from a technology known as
iShell. Internet media developers use the technology for creation and deployment
of electronic content that utilizes interactive features combining audio, video,
animation and graphics content. The Company exploits its software primarily
through memberships and customized licensed versions that include professional
engineering to meet contract requirements.
On November 2, 1999, Tribeworks Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Pan World Corporation ("PWC"), a Nevada corporation,
merged with Tribeworks, Inc., a California corporation ("California
Tribeworks"). Subsequent to the merger California Tribeworks renamed itself
Tribeworks Development Corporation ("Tribeworks Development") and PWC, the sole
shareholder of Tribeworks Development, reincorporated as Tribeworks, Inc., a
Delaware corporation. The merger was accounted for as a reverse acquisition
whereby California Tribeworks was treated as the accounting acquirer and PWC as
the accounting acquiree.
NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------------------------------------------
BASIS OF CONSOLIDATION
For the period prior to the reverse acquisition, the financial statements
reflect California Tribeworks' financial position, results of operations and
cash flows. For periods subsequent to the reverse acquisition, the financial
statements of the Company are presented on a consolidated basis and include the
Company and its wholly-owned subsidiaries, Tribeworks Development and Tribeworks
Japan which started business on August 30, 2000. The Company's operations are
conducted through the subsidiaries. All material intercompany transactions have
been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and requires 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 necessary.
EQUIPMENT
Equipment is stated at cost less accumulated depreciation. Depreciation is
determined using the straight-line method over the estimated useful lives of the
assets. Useful lives are estimated to be three years.
TECHNOLOGY LICENSE
The Company's principal business activity centers around the commercialization
of iShell, which was developed by an officer and director of the Company and an
affiliate of the Company. In November 1999 the Company purchased all rights,
title and interest in iShell in exchange for $100,000 and warrants to purchase
303,030 shares of common stock at an exercise price of $0.33 per share, valued
at $30,000. This agreement is reflected in the financial statements as a
technology license valued at $130,000 and is being amortized on a straight-line
basis over the estimated three year useful life.
IMPAIRMENT
The technology license asset is reviewed quarterly for impairment. Impairment
will be recognized when events and circumstances indicate that the carrying
amount may not be recoverable. The Company considers factors such as significant
changes in the business climate and projected cash flows from the asset.
Impairment losses are measured as the amount by which the carrying amount of the
asset exceeds the fair value of the asset.
REVENUE RECOGNITION
Revenue is generally recognized when all contractual or transfer obligations
have been satisfied and collection of the resulting receivable is probable.
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NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
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Revenue from membership subscriptions are recognized proportionally over the
membership period, usually one year. Revenues and estimated profits on customer
development services are generally recognized under the percentage-of-completion
method of accounting using an hours to hours methodology; profit estimates are
revised periodically based on changes in facts; any losses on contracts are
recognized immediately. Revenue from license agreements is recognized
proportionally over the lease term, usually one year.
COMPENSATED ABSENCES
The Company accrues vacation pay for all full-time employees.
SOFTWARE DEVELOPMENT COSTS
The Company expenses all software development costs in the period the costs are
incurred.
STOCK-BASED AWARDS
The Company accounts for stock based awards to employees under its "Equity
Incentive Plan" as non-compensatory in accordance with Accounting Principles
Board Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES."
FOREIGN CURRENCY TRANSLATION
Tribeworks Japan prepares its financial statements in a currency other than U.S.
dollars. Results of operations and cash flows are translated at average exchange
rates during the period, and assets and liabilities are translated at
end-of-period exchange rates. Translation adjustments will be included as a
separate component of accumulated other comprehensive income (loss) in
stockholders' equity (deficit). For the quarter ended March 31, 2001,
translation adjustments based on the transactions of Tribeworks Japan were
immaterial to the consolidated balance sheet, results of operations, and cash
flows.
NET LOSS PER COMMON SHARE
Basic loss per share (EPS) is computed based on net loss divided by the weighted
average number of common shares outstanding. Diluted EPS is computed based on
net loss divided by weighted average number of common and potential common
shares. The only potential common share equivalents are those related to stock
options and warrants; however, such potential common share equivalents are
anti-dilutive. Therefore the diluted EPS is the same as basic EPS.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS.
The following discussion contains forward-looking statements that are subject to
risks and uncertainties. There are several important factors that could cause
actual results to differ materially from historical results and percentages and
results anticipated by the forward-looking statements. We have sought to
identify the 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 the
Company's stock.
MANAGEMENT'S DISCUSSION
Our strategy is to continue to expand our Tools business and Enterprise
business. Tools customers license our iShell(R) multimedia application authoring
tool by paying an annual membership fee to use our iShell software and
supplemental products and services. Enterprise customers, usually large
corporations that require development of complex multimedia applications,
license customized versions of our software for a fixed fee or on a per unit
basis. Enterprise customers also pay for professional engineering services
performed by Tribeworks' employees and consultants. During the three-month
period ending March 31, 2001, we recognized revenue from three Enterprise
customers. We are continuing to grow our revenue base while at the same time
cutting operating costs. For the quarter ended March 31, 2001, cash used in
operating activities was $53,951, compared to $407,657 for the quarter ended
March 31, 2000.
ANALYSIS OF OPERATIONS
REVENUES
Revenues were $236,641 for the quarter ended March 31, 2001, an increase of 44%
over revenues of $164,863 for the quarter ended March 31, 2000. The Tools
Business, which includes sales of memberships, and sales of books and 3rd party
plug-ins from the Tribeworks website, grew in the first quarter of 2001 by 37%
to $89,968, compared with $65,613 for first quarter of 2000. The increase was
primarily due to membership renewals and increased acceptance and awareness of
our iShell application authoring tool. The Enterprise business grew in 2001 by
48% to $146,673, compared with $99,250 for 2001. Enterprise revenues for the
first quarter of 2001 consisted of $128,339 in professional services revenues
and $18,333 in licensing revenues, compared with $99,250 in professional
services revenues and no licensing revenues in the first quarter of 2000. The
Enterprise business was substantially initiated in 2000. International revenues,
which consist of sales to foreign customers, represented 47% of revenues for the
first quarter of 2001, compared to 44% of revenues for the first quarter of
2000. The Company's revenues from Japanese customers increased to 33% of total
revenues in 2001 from 0% in 2000.
COST OF SALES
Cost of sales includes royalties paid to third parties for licensed technology,
amortization costs related to acquired technology, costs associated with order
fulfillment, and costs associated with customer development services. Cost of
sales was $140,557 for the quarter ended March 31, 2001, up from $32,858 for the
quarter ended March 31, 2000. The increase was due to an increase in sales
volume in the Tools businesses and increased custom development services in the
Enterprise business. Gross margins decreased on a percentage basis from 80% for
the first quarter of 2000 to 41% for the first quarter of 2001. This is because
we performed more custom development services in the Enterprise business for the
first quarter of 2001 relative to the first quarter of 2000. We believe that our
gross margins in the Enterprise business will improve if we are able to sell
more software licenses relative to custom development, which we believe will
occur as our product suite matures for our Enterprise markets.
OPERATING EXPENSES
Product support expenses consist mainly of compensation, benefits and consulting
fees paid to product support personnel. Product support expenses were $29,285
and $19,938 for the quarters ended March 31, 2001 and March 31, 2000,
respectively, reflecting the addition of one customer support person. As a
percentage of Tools sales, product support expenses were 33% and 30% for 2001
and 2000, respectively.
Product development expenses consist primarily of compensation and benefits to
support product development. Product development expenses were $74,075 and
$90,475 for the quarters ended March 31, 2001 and 2000, respectively. This
decrease reflects the assignment of several software engineers to billable
custom development projects.
Sales and marketing expenses consist primarily of compensation and benefits,
advertising, mail order costs, trade show expenses, and other public relations
and marketing costs. Sales and marketing expenses were $100,556 and $158,760 for
the quarters ended March 31, 2001 and 2000, respectively. This decrease reflects
a reduction in personnel in the sales and marketing areas. We reduced headcount
in these areas because we are positioning the Company toward profitability. We
do not believe that such reductions adversely affected our sales efforts, and in
fact believe these reductions allowed our current sales team to become more
focused on closing sales deals.
-8-
General and administrative expenses consist primarily of compensation and
benefits, fees for professional services, and overhead. General and
administrative expenses were $302,857 and $159,643 for the quarters ended March
31, 2001 and 2000, respectively. The increase was due primarily to equity
compensation for certain directors and consultants, which totaled $84,770 for
the quarter, the growth in administrative infrastructure, including the hiring a
full-time Chief Financial Officer, as well as an increase in legal and insurance
costs.
PROVISION (BENEFIT) FOR INCOME TAXES
We recorded no tax provision for the quarters ended March 31, 2001 or March 31,
2000.
NET INCOME/LOSS
Net loss was $410,689 for the quarter ended March 31, 2001, compared to a net
loss of $296,811 for the quarter ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, we had cash and cash equivalents of $93,403 compared to
$407,657 at March 31, 2000.
The Company's capital requirements have been, and will continue to be,
significant. Since inception, the Company has financed its operations through
issuance of stock and revenues in the Tools and Enterprise businesses. Through
March 31, 2001, the Company had raised $2,672,656 from the sale of stock. At
March 31, 2001, the principal source of liquidity for the Company was $93,403 of
cash and cash equivalents.
For the quarters ended March 31, 2001 and 2000, cash used in operating
activities was $53,951 and $464,179 respectively. The decrease was due primarily
to increased revenues, cost-cutting measures, and an increase in accounts
payable.
Cash used in investing activities for the quarters ended March 31, 2001 and 2000
was $15,679 and $20,517, respectively. Expenditures were for equipment purchases
and leasehold improvements associated with an office move in 2001 and for
equipment purchases in 2000.
Cash provided by financing activities for the quarters ended March 31, 2001 and
2000 was $150,000 and $735,000, respectively. Cash inflow during the quarter
ended March 31, 2001 was from the issuance of a convertible note and a sale of
our stock, via a direct stock sale. Cash inflow for the quarter ended March 31,
2000 was from stock sales.
We anticipate that we do not have sufficient funds to enable us to maintain our
operations for the next twelve months unless we become profitable or raise
additional funds from investors. We cannot make assurances that we will become
profitable or that investment funds will be available to us or available on
commercially reasonable terms. We do not expect to devote substantial capital
resources to additional hiring of personnel if more funds do not become
available to us. In addition, the inability to obtain sufficient funds from
operations and external sources would have a material adverse effect on our
business, results of operations, and financial condition.
-9-
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
We made the following recent sales of unregistered sales of the Company's Common
Stock during the quarter ended March 31, 2001:
NAME OF PERSONS OR CLASS OF
TRANSACTION AMOUNT OF UNDERWRITER OR CONSIDERATION PERSONS TO WHOM EXEMPTION FROM
DATE SECURITIES SOLD PLACEMENT AGENT RECEIVED THE SECURITIES WERE SOLD REGISTRATION CLAIMED
1/05/01 29,167 Shares None (1) William R. Woodward (1)
1/19/01 15,840 Shares None (2) GF Consulting Corp (2)
2/19/01 15,840 Shares None (2) GF Consulting Corp (2)
2/21/01 200,000 Shares None $50,000.00 William R. Woodward (3)
3/19/01 15,840 Shares None (2) GF Consulting Corp (2)
<FN>
(1) We elected a new Director, William R. Woodward, to our Board of Directors on
October 5, 2000. Mr. Woodward, an entrepreneur with experience building
multimedia software companies, has been engaged to provide guidance to the
Company on a wide range of issues, especially in raising capital. He received
the following compensation for service on the Board of Directors: 700,000 shares
of Tribeworks restricted common stock, to be issued pro rata over a period of
two years, and a warrant to purchase up to 125,000 shares of common stock at
$1.75 per share. At March 31, 2000, 58,333 of the 700,000 shares had been
issued. The 125,000 warrants will vest if Mr. Woodward (or his contact) has
either introduced participants to the Company, or played an active role in
negotiating the terms of the arrangements of future financings. These securities
were offered and sold pursuant to our exemption from registration under Rule
506, Regulation D of the Securities Act. During the first quarter of 2001, Mr.
Woodward's compensation was restructured such that the 612,500 shares of
restricted stock that remained unissued at February 5, 2001 were cancelled, and
Mr. Woodward was issued a Warrant to purchase 612,500 shares of the Company's
common stock at $0.375 per share that vests pro rata over 21 months. No change
was made to the warrant to purchase 125,000 shares of common stock.
(2) In September 2000, we entered into a contract with GF Consulting Corp (GF),
a Canadian entity wholly owned by Gary Freeman, to assist the company with its
fund raising efforts. The Company issued GF 47,520 shares of common stock during
the first quarter of 2001. These securities were offered and sold pursuant to
our exemption from registration under Rule 506, Regulation D of the Securities
Act.
(3) On February 21, 2001, we sold 200,000 shares of common stock at a price of
$0.25 per share to William R. Woodward, who is a member of our Board of
Directors. In conjunction with his investment, on February 21, 2001 we also
issued Mr. Woodward a warrant to purchase 10,000 shares of our common stock at
an exercise price of $0.01 per share. These securities were offered and sold
pursuant to our exemption from registration under Rule 506, Regulation D of the
Securities Act of 1933, as amended (the "Securities Act").
</FN>
On January 1, 2001, we elected a new Chief Financial Officer, Robert C.
Davidorf. Prior to joining Tribeworks, Mr. Davidorf served as General Manager of
the San Francisco office for Los Angeles-based ARTISTdirect, Inc., where he
oversaw the group responsible for digital music distribution efforts. Prior to
ARTISTdirect, Mr. Davidorf founded Mjuice.com, an Internet technology company
focusing on the secure delivery of MP3 music files, later sold to ARTISTdirect.
Mr. Davidorf served as the CFO and sat on the Board of Directors. Before
founding Mjuice.com, Mr. Davidorf served as Controller and interim-CFO of
Oceania, Inc., a software company, and prior to that as a Consultant for the
Corporate Finance, Recovery & Disputes division of Price Waterhouse, LLP. Mr.
Davidorf Graduated Magna Cum Laude with a Bachelor of Science in Economics from
The Wharton School at The University of Pennsylvania in Philadelphia and is a
Certified Public Accountant. We issued Mr. Davidorf 180,000 stock options that
vest pro rata over 18 months, and a warrant to purchase 180,000 shares of common
stock at an exercise price of $0.375 that vest pro rata over 18 months beginning
July 1, 2002. Vesting for the options and warrants ceases if Mr. Davidorf ceases
to be an employee of the Company.
On January 21, 2001, we issued a convertible note to Licross Inc., a business
partner in Japan, in the amount of $100,000. The note accrues interest at a rate
of 10% per annum and will convert to common stock if the Company achieves
certain financing milestones. There are no beneficial conversion interests
included in the convertible note agreement. We may prepay the note at any time.
If not previously converted or prepaid, the principal amount of the note plus
accrued interest is due and payable after January 4, 2003 upon written demand by
the note holder. In conjunction with the issuance of this note, we also issued
Licross Inc. a warrant to purchase 10,000 shares of common stock at an exercise
price of $0.01 per share. These securities were offered and sold pursuant to our
exemption from registration under Rule 506, Regulation D of the Securities Act
of 1933, as amended (the "Securities Act").
On March 9, 2001 we issued a warrant to purchase 700,000 shares of common stock
at an exercise price of $0.375, to Michael Doherty, a member of our board of
directors. The right to purchase 100,000 shares vested as of March 9, 2001, and
the right to purchase 600,000 shares vest pro rata over 30 months. Vesting for
the warrants ceases if Mr. Doherty ceases to be a Director of the
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Company. Mr. Doherty has been engaged to take the lead role in Tribeworks'
financing efforts. Mr. Doherty filled the board seat vacated by Thomas J.L.
Williams on March 5, 2001. Mr. Doherty is President and Chief Executive Officer
of Doherty & Company, LLC, a firm specializing in venture capital and private
equity for early stage companies. Mr. Doherty has over 20 years of experience in
international and domestic corporate finance and institutional private equity.
Most of his career was spent in New York with Arnhold & S. Bleichroeder, Inc., a
private international investment bank. More recently, Mr. Doherty was a Senior
Managing Director with Spencer Trask Securities, Inc. Mr. Doherty serves on the
board of public and private companies, including those of ACLN Limited (NASDAQ:
ACLNF), Xycom Automation, Inc., and IPAXS Corporation.
We granted options to purchase 265,000 shares of common stock during the first
quarter of 2001 to 5 employees and 2 consultants, at an exercise price of
between $0.25 and $0.375 per share. Vesting periods varied between 18 and 24
months. These options were granted pursuant to our 1999 Equity Incentive Plan
(the "1999 Plan"), which was approved by our Board of Directors and our
stockholders in December 1999. Such grants were exempt from registration under
the Securities Act pursuant to Rule 701. Our 1999 Plan provides for the grant to
our employees, including officers and employee Directors, of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code and for
the grant of nonstatutory stock options and restricted stock awards to our
employees, Directors and consultants. Our 1999 Plan is currently administered by
the Board of Directors, which selects the optionees, determines the number of
shares to be subject to each option, and determines the exercise price of each
option. Our 1999 Plan authorizes the issuance of an aggregate of up to 1,600,000
shares of our common stock. The exercise price of all incentive stock options
granted under our 1999 Plan must be at least equal to the fair market value of
our common stock on the date of grant. The exercise price of all nonstatutory
stock options granted must be at least equal to 85% of the fair market value on
the date of grant. With respect to any participant who owns stock possessing
more than 10% of the total combined voting power of all classes of our stock,
the exercise price of any incentive option and nonstatutory option granted must
equal at least 110% of the fair market value on the grant date. The term of the
options granted under our 1999 Plan may not exceed ten years. Stock purchase
rights may be issued either alone or in addition to other awards under the 1999
Plan. Unless otherwise specified in the stock purchase right award, the Company
will have a repurchase right exercisable upon the voluntary or involuntary
termination of the grantee with the Company for any reason. The repurchase right
lapses at such rate as set forth in the stock purchase right award. With respect
to stock purchase rights awards, the repurchase right lapses upon a change of
control. Our 1999 Plan will terminate in 2009. Our Board of Directors has
authority to amend or terminate our 1999 Plan, provided that such action will
not impair the rights of the holder of any outstanding awards without the
written consent of that holder.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are incorporated by reference into this report:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
2.1 Form of Agreement of Merger between Tribeworks, Inc., a
California corporation, and Tribeworks Acquisition corpora-
tion, dated November 2, 1999 (Incorporated by reference to
Exhibit 2.1 to the Registrant's Form 10-SB/A filed July 10,
2000).
3.1 Articles of Incorporation of Tribeworks, Inc., a Delaware
Corporation (Incorporated by reference to Exhibit 3.1 to the
Registrant's Form 10-SB/A filed July 10, 2000).
3.2 Bylaws of Tribeworks, Inc., a Delaware Corporation
(Incorporated by reference to Exhibit 3.2 to the Registrant's
Form 10-SB/A filed July 10, 2000).
10.1 Software Agreement by and between Tribeworks, Inc., a
California corporation, Keepsake SPRL, and Gilbert Amar dated
November 1999 (Incorporated by reference to Exhibit 10.1 to the
Registrant's Form 10-SB/A filed July 10, 2000).
10.2 Amendment No. 1 to Software Agreement by and between Tribe-
works, Inc., a Delaware Corporation, Keepsake SPRL, and
Gilbert Amar dated November 2, 2000 (Incorporated by
reference to Exhibit 10.2 to the Registrant's for 10-K filed
April 2, 2001).
15.1 Letter on Unaudited Interim Financial Information (Incorporated
by reference to Exhibit 15.1 to the Registrant's Form 10-QSB
filed August 11, 2000).
16.1 Letter dated March 28, 2001 by W. Alan Jorgensen to Securities
and Exchange Commission (Incorporated by reference to Exhibit
10.2 to the Registrant's for 10-K filed April 2, 2001).
(b) The following reports on Form 8-K were filed during the quarter ended March
31, 2001:
Current Report on Form 8-K (Item 4) filed with the Securities and Exchange
Commission on April 16, 2001.
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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.
TRIBEWORKS, INC.,
a Delaware corporation
Date: May 21, 2001 /s/ DUNCAN J. KENNEDY
-----------------------------------------
Duncan J. Kennedy,
President and Chief Executive Officer
/s/ ROBERT C. DAVIDORF
------------------------------------------
Robert C. Davidorf,
Chief Financial Officer
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