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
For the quarterly period ended September 30, 2001
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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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Commission File Number: 000-28675
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Tribeworks, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 94-3370795
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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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(Issuer'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 November 14, 2001: 18,434,628 shares.
Transitional Small Business Disclosure Format: Yes X No
--- ---
TRIBEWORKS, INC.
THIRD QUARTER 2001 REPORT ON FORM 10-QSB
TABLE OF CONTENTS
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Unaudited Consolidated Balance Sheet
September 30, 2001 ................................................ 3
Unaudited Consolidated Statements of Operations
Three Months and Nine Months Ended September 30, 2001 and 2000..... 4
Unaudited Consolidated Statements of Cash Flows
Nine Months Ended September 30, 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
Item 2. Changes in Securities............................................ 11
Item 5. Other Information................................................ 11
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
SEPTEMBER 30, 2001
ASSETS
Current Assets
Cash $ 111,370
Accounts receivable, net 33,781
Supplies 5,644
Prepaids and deposits 45,128
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Total Current Assets 195,923
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Other Assets
Equipment, net of accumulated depreciation of $23,473 25,122
Technology license, net of accumulated amortization of $84,174 45,826
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70,948
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TOTAL ASSETS $ 266,871
===================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 341,532
Accrued expenses 41,396
Due to shareholders 6,232
Deferred revenue 248,299
Note Payable 100,000
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Total Current Liabilities 737,459
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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, 18,434,628 shares issued and outstanding
2,128
Additional paid-in capital 3,295,416
Unearned compensation (120,378)
Accumulated deficit (3,647,754)
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Total Stockholders' Deficit (470,588)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 266,871
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TRIBEWORKS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended September 30, Nine Months Ended September 30,
2001 2000 2001 2000
---- ---- ---- ----
REVENUES $ 488,160 $ 163,428 $ 974,715 $ 567,468
COST OF SALES 190,574 65,675 474,451 141,950
-------------- ---------------- -------------- -----------
GROSS PROFIT 297,586 97,753 500,264 425,518
-------------- ---------------- -------------- -----------
OPERATING EXPENSES
Product support 15,258 29,812 60,019 63,045
Product development 13,228 137,233 153,327 352,730
Sales and marketing 39,380 171,524 221,954 541,250
General and administrative 172,872 306,264 642,878 729,369
-------------- -------------- -------------- -----------
240,737 644,833 1,078,177 1,686,394
-------------- -------------- -------------- -----------
GAIN / (LOSS) FROM OPERATIONS 56,849 (547,080) (577,913) (1,260,876)
INCOME TAXES - 2,553 - 3,443
-------------- -------------- -------------- -----------
NET GAIN / (LOSS) $ 56,849 $ (549,633) $ (577,913) $(1,264,319)
============== ============== ============== ===========
BASIC AND DILUTED LOSS PER COMMON SHARE $ 0.00 $ (0.03) $ (0.03) $ (0.08)
============== ============== ============== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 17,544,495 16,652,343 17,269,020 16,398,268
============== =========== =========== ===========
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TRIBEWORKS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(577,913) $(1,264,320)
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Adjustments:
Depreciation and amortization 44,649 40,037
Common stock issued for services 228,501 -
Amortization of unearned compensation 85,214 -
Changes in:
Accounts receivable 5,916 (48,070)
Other receivables, prepaids and deposits 8,102 (68,802)
Supplies 5,565 -
Note receivable, employee 5,622 -
Accounts payable 147,091 (96,944)
Deferred revenue 53,605 12,908
Other liabilities (53,542) 13,645
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Total adjustments 530,724 (147,226)
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Net cash used in operating activities (47,190) (1,411,546)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (4,473) (65,921)
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Net cash used in investing activities (4,473) (65,921)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 50,000 1,334,185
Proceeds from issuance of note payable 100,000 -
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Net cash provided by financing activities 150,000 1,334,185
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NET INCREASE IN CASH 98,337 (143,282)
CASH, BEGINNING OF PERIOD 13,033 157,353
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CASH, END OF PERIOD $ 111,370 $ 14,071
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NOTE A - NATURE OF BUSINESS AND ORGANIZATION
On August 20, 1998, Tribeworks, Inc. (the "Company") began doing business. The
Company's principal business activity centers around the commercialization of
its iShell technology. 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 software licensing and the performance of
professional engineering services to build customized applications.
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)
Revenue from membership subscriptions is recognized proportionally over the
membership period, usually one year. Revenue 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 September 30, 2001,
translation adjustments based on the transactions of Tribeworks Japan were
immaterial to the consolidated balance sheet, results of operations, and cash
flows.
INCOME TAXES
The Company files a consolidated income tax return with its subsidiaries. No
current provision for income taxes has been provided since the Company has
sufficient net tax operating losses to offset any current taxable income.
Deferred income tax assets at September 30, 2001 have been fully offset by a
valuation allowance, as the Company has not demonstrated the sustained
profitability necessary to record such asset.
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.
RESTATEMENT
In October 2000 the Company entered into an agreement with a consultant that
provided for the issuance of common stock over six months in consideration for
his services. Through December 31, 2000, 13,332 shares were issued under the
terms of the agreement. During 2001, 47,520 additional shares were issued under
the agreement.
During 2001 it was determined that the services agreed upon had not been
performed. Therefore, an adjustment of $30,000 was made to the December 31, 2000
accumulated deficit and an adjustment of $30,000 was made to accumulated deficit
in the first quarter of 2001. The September 30, 2001 balance sheet and income
statement reflect these restatements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
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, such as:
o whether or not our products are accepted by the marketplace and the
pace of any such acceptance,
o our ability to continue to grow our Tools and Enterprise businesses,
o improvements in the technologies of our competitors,
o changing economic conditions, and
o other factors, some of which will be outside of our control.
We have sought to identify most risks to our business but cannot predict whether
or to what extent any of such risks may be realized. There can be no assurance
that we have identified all possible risks that might arise. Investors should
carefully consider all such risks before making an investment decision with
respect to our common stock.
MANAGEMENT'S DISCUSSION
During the third quarter, we achieved profitability for the first time in our
existence. We were cash flow positive for the second consecutive quarter. We
also recorded record sales, growing the business by 95% from the previous
quarter, which had also been a record revenue quarter. We achieved these
positive results despite a significant downturn in the overall economy. We
accomplished these results primarily through continued growth in our Japanese
Enterprise business and continued company-wide cost reductions. In addition, on
September 26, 2001, we reduced our accounts payable and accrued expenses
balances by a total of $204,166, by issuing stock and warrants to certain
consultants and employees. See Part II, Item 2 of this 10-QSB for additional
information on this transaction.
During the quarter, we continued to sell software and services to two categories
of customers. 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.
We plan to expand our Tools business and our Enterprise business. Specifically,
we plan to grow our Tools business in the regulated way it has grown since we
first launched our flagship software product iShell. We plan to accomplish this
growth through ongoing addition of features to our core iShell product and
through the direct sales method we have used since our initial iShell product
launch. This sales method is based on a subscription model where an annual
membership is required to use our products commercially. Using this sales
method, we have been able to produce high renewal rates. In general, we
anticipate Enterprise business growth, particularly Enterprise professional
services revenue, to be less predictable and "bumpier" than our Tools business
revenue in the foreseeable future, and this could impact whether or not we
continue to be profitable on a quarter-to-quarter basis. The primary reason is
that our Enterprise business has a smaller number of customers. For the
three-month period ending September 30, 2001, we recognized revenue from four
Enterprise customers. We expect to derive most of our Enterprise revenue for the
last quarter of 2001 from Japanese customers. We expect to continue to
underwrite the cost of software research and development with money received
from Enterprise customers. To date, all of our Enterprise customer contracts
allow us to retain the intellectual property to new software created. In
addition, we plan to focus our selling efforts in the Enterprise business on
customers that represent a reseller channel for our software.
ANALYSIS OF OPERATIONS
Our revenue base is continuing to grow while at the same time we are cutting
operating costs. For the quarter ended September 30, 2001, cash generated from
operating activities was $15,673, compared to cash used in operating activities
of $512,715 for the quarter ended September 30, 2000. This improvement is a
result of significant operating improvements in the business, including
increased revenue and reduced costs. In addition, we accumulated a substantial
deferred revenue balance for the quarter ended September 30, 2001, based on
advanced payments for software licenses and professional services. We expect to
recognize all of the $248,299 of deferred revenue during the next 12 months.
Going forward, the recognition of this revenue will negatively impact cash from
operating activities, but positively impact our statement of operations.
-8-
REVENUES
Revenues were $488,160 for the quarter ended September 30, 2001, an increase of
199% over revenues of $163,428 for the quarter ended September 30, 2000. The
revenues for this quarter are the highest recorded in our Company's history. The
Tools Business, which includes sales of memberships, and sales of books and 3rd
party plug-ins from the Tribeworks website, grew in the third quarter of 2001 by
52% to $112,022, compared with $73,518 for third quarter of 2000. The increase
was primarily due to membership renewals and increased acceptance and awareness
of our iShell application-authoring tool. In addition, we recorded $14,599 in
sales of a third party product based on a promotion we ran in July. The
Enterprise business increased in the third quarter of 2001 by 199% to $376,139,
compared with $89,910 for the third quarter of 2000. Enterprise revenues for the
third quarter of 2001 consisted of $356,139 in professional services revenues
and $20,000 in licensing revenues, compared with $89,910 in professional
services revenues and $0 licensing revenues for the third quarter of 2000. The
Enterprise business was substantially initiated in 2000. The largest contributor
to third quarter 2001 revenue was our NTKR contract, which contributed $232,234
in professional services revenue. A significant portion of the non-software
programming work on this contract was outsourced to third parties, who are to be
paid in full upon completion of this contract, expected in Q1 2002. Accordingly,
we booked $94,680 in accounts payable during the quarter for amounts owed to
these consultants. International revenues, which consist of sales to foreign
customers, represented 87% of revenues for the third quarter of 2001, compared
to 43% of revenues for the third quarter of 2000. The Company's revenues from
Japanese customers increased to 73% of total revenues for the third quarter of
2001, from 28% for the third quarter of 2000.
Revenues were $974,715 for the nine months ended September 30, 2001, an increase
of 72% over revenues of $567,468 for the nine months ended September 30, 2000.
The Tools Business grew in the first nine months of 2001 by 36% to $294,384,
compared with $216,017 for the first nine months of 2000. The Enterprise
business grew in the first nine months of 2001 by 94% to $680,330, compared with
$351,451 for 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 $190,574 for the quarter ended September 30, 2001, up from $65,675 for
the quarter ended September 30, 2000. Gross margins increased on a percentage
basis from 60% for the third quarter of 2000 to 61% for the third quarter of
2001. We believe that our gross margins in the Enterprise business will improve
if we are able to sell more software licenses relative to professional services,
which we believe will occur as our product suite matures for our Enterprise
markets.
Cost of sales was $474,451for the nine months ended September 30, 2001, up from
$141,950 for the nine months ended September 30, 2000. Gross margins decreased
on a percentage basis from 75% for the first nine months of 2000 to 51% for the
first nine months of 2001.
OPERATING EXPENSES
Product support expenses consist mainly of compensation, benefits and consulting
fees paid to product support personnel. Product support expenses were $15,258
and $29,812 for the quarters ended September 30, 2001 and September 30, 2000,
respectively. As a percentage of Tools sales, product support expenses were 14%
and 41% for the third quarters of 2001 and 2000, respectively. The decrease is
due to a reduction in product support staff, efficiencies achieved in the
support process, and reallocation of part of the product support manpower to
Enterprise projects. Product support expenses were $60,019 and $63,045 for the
nine months ended September 30, 2001 and September 30, 2000, respectively.
Product development expenses consist primarily of compensation and benefits to
support product development. Product development expenses were $13,228 and
$137,233 for the quarters ended September 30, 2001 and 2000, respectively. This
decrease primarily reflects the assignment of several software engineers to
billable professional services projects, and also a small decrease in
engineering headcount. Product development expenses were $153,327 and $352,140
for the nine months ended September 30, 2001 and September 30, 2000,
respectively. The reduction in product development expenses does not reflect a
diminished emphasis on growing our base of intellectual property. The reason is
that we have been effective to date at retaining intellectual property rights
for software that is created by way of billable projects to outside parties.
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 $39,390 and $171,524 for
the quarters ended September 30, 2001 and 2000, respectively. This decrease
reflects a reduction in personnel and discretionary spending in the sales and
marketing areas. We reduced headcount in these areas so we could position
ourselves 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, resulting in more effective closing
of sales transactions. Sales and marketing expenses were $221,953 and $541,249
for the nine months ended September 30, 2001 and September 30, 2000,
respectively.
-9-
General and administrative expenses consist primarily of compensation and
benefits, fees for professional services, and overhead. General and
administrative expenses were $172,872 and $306,264 for the quarters ended
September 30, 2001 and 2000, respectively. The decrease was due primarily to
cost cutting measures enacted beginning in the second quarter of 2001, compared
to a ramp in headcount and expenditures during the third quarter of 2000. During
the quarter we paid reduced salaries and fees to key employees and consultants.
Should our cash position materially improve, we expect to pay increased salaries
and fees to these key employees and consultants, and therefore experience
increased operating expenses, especially in the general and administrative
category. General and administrative expenses were $642,879 and $729,958 for the
nine months ended September 30, 2001 and September 30, 2000, respectively.
PROVISION (BENEFIT) FOR INCOME TAXES
We recorded no tax provision for the quarter ended September 30, 2001 and $2,553
for the quarter ended September 30, 2000. We recorded no tax provision for the
nine months ended September 30, 2001 and $3,443 for the nine months ended
September 30, 2000.
NET INCOME/LOSS
Net income was $56,849 for the quarter ended September 30, 2001, compared to a
net loss of $549,633 for the quarter ended September 30, 2000. Net loss was
$577,913 for the nine months ended September 30, 2001, compared to a net loss of
$1,264,317 for the nine months ended September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2001, we had cash of $111,370 compared to $14,071 at September
30, 2000.
Our capital requirements have been reduced significantly from previous quarters
based on cost reductions. We have been cash flow positive from operating
activities for two consecutive quarters. While our capital requirements continue
to be significant, we are not currently pursuing equity financing, due our
stabilized cash position and our low market capitalization. Since inception, the
Company has financed its operations through issuance of stock and revenues in
the Tools and Enterprise businesses. Through September 30, 2001, the Company had
raised $2,672,656 from the sale of stock. At September 30, 2001, the principal
source of liquidity for the Company was $111,370 of cash.
Cash generated from operating activities was $15,673 for the quarter ended
September 30, 2001 and cash used in operating activities was $512,715 for the
quarter ended September 30, 2000. The decrease was due primarily to increased
revenues, cost-cutting measures, and an increase in deferred revenues. Cash used
in operating activities for the nine months ended September 30, 2001 and 2000
was $47,190 and $1,411,546, respectively.
Cash used in investing activities for the quarters ended September 30, 2001 and
2000 was $0 and $13,668, respectively. Expenditures were for equipment purchases
for the quarter ended September 30, 2000. Cash used in investing activities for
the nine months ended September 30, 2001 and 2000 was $4,473 and $65,921,
respectively.
Cash provided by financing activities for the quarters ended September 30, 2001
and 2000 was $0 and $350,321, respectively. Cash inflows for the quarter ended
September 30, 2000 were from stock sales. Cash provided by financing activities
for the nine months ended September 30, 2001 and 2000 was $150,000 and
$1,334,185, respectively.
We cannot make assurances that we will continue to be profitable and that should
investment funds become necessary, that such 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.
-10-
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
We made the following recent sales of the Company's unregistered common stock
during the quarter ended September 30, 2001. All sales or awards were made
pursuant to section 4(2) of the Securities Act of 1933 and none of the sales or
awards were made with the assistance of underwriters.
On August 16, 2001, we issued a nonstatutory stock option to a consultant giving
him the right to purchase 100,000 shares of our common stock at an exercise
price of $0.05 per share. This option was issued from our 1999 Stock Option
Plan.
On August 21, 2001 we retained the services of the investor relations firm, de
Jong & Associates, for a period of one year. As compensation for services
rendered, the firm has received 200,000 shares of our restricted common stock.
We have also granted to the firm a warrant to purchase an additional 300,000
shares of our common stock, subject to the firm's ability to meet certain
milestones. The warrant exercise price is $0.10 per share.
On September 26, 2001 we issued 773,241 shares of our common stock to certain
consultants who had provided services to us valued in total at $73,241. On that
same date, also issued warrants to certain of our employees and other
consultants who had provided services to us valued in total at $126,842, giving
them the right to collectively purchase a total of 1,268,418 shares of our
common stock at prices ranging from $0.05 to $0.06 per share. Both the common
stock and the warrants were issued pursuant to our 2001 Tribeworks, Inc. Stock
Plan. 81,653 of the shares of common stock that we issued were registered
pursuant to the S-8 registration statement filed on September 26, 2001.
One-quarter of the shares underlying the warrant issuances to those employees
and consultants that are non-affiliates will be registered pursuant to the to
the S-8 registration statement filed on September 26, 2001.
ITEM 5. OTHER INFORMATION.
On October 9, 2001, Robert Levine resigned from our Board of Directors. Mr.
Levine's resignation was not the result of a disagreement with the Company.
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
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2.1 Form of Agreement of Merger between Tribeworks, Inc., a
California corporation, and Tribeworks Acquisition corporation,
dated November 2, 1999 (Incorporated by reference to Exhibit
2.1 to the Registrant's Form 10-SB/A filed July 10, 2000).
3.1 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).
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
September 30, 2001:
None
-11-
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: November 14, 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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