ATOSS IN FIGURES ATOSS IN FIGURES CONTENTS

Coporate Overview according to IF R S: 12- Mouth comparison in T Eur

	2007							2006
	until December	until September	until June	until March	until December	until September	until June	until March
Software	14,648	10,748	6,966	3,373	12,929	9,470	6,124	3,056
Software licence	5,409	3,990	2,508	1,163	4,612	3,360	2,112	1,074
Software maintenance	9,240	6,758	4,459	2,210	8,317	6,110	4,012	1,982
Consulting	6,207	4,467	2,978	1,492	5,558	4,069	2,708	1,346
Hardware	2,683	2,005	1,361	697	2,809	1,906	1,258	587
Other	883	532	347	167	695	486	302	129

Total Sales	24,422	17,752	11,653	5,729	21,991	15,930	10,392	5,117

EBITDA	4,206	3,155	2,135	988	3,210	2,412	1,503	811
EBIT	3,730	2,789	1,882	868	2,779	2,095	1,293	706
EBT	4,172	3,097	2,069	960	3,193	2,385	1,529	862
Net Income	2,501	1,808	1,244	580	1,885	1,396	855	497
Cash Flow	4,152	5,477	2,239	3,000	4,312	5,358	2,757	2,650
Liquidity*	13,468	14,841	11,743	13,619	10,784	11,664	9,119	30,543
EPS in EUR	0.63	0.46	0.31	0.15	0.48	0.36	0.22	0.13
Employees**	195	192	188	180	169	171	162	165

Coporate Over view accor ding to IF R S: Quarterl y comparison in T Eur
		2007					2006
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Software	3,900	3,782	3,594	3,373	3,459	3,346	3,068	3,056
Software licence	1,419	1,482	1,345	1,163	1,252	1,248	1,038	1,074
Software maintenance	2,481	2,300	2,249	2,210	2,206	2,098	2,030	1,982
Consulting	1,740	1,489	1,486	1,492	1,489	1,361	1,362	1,346
Hardware	678	644	664	697	904	648	671	587
Other	352	184	180	167	209	184	173	129

Total Sales	6,670	6,099	5,924	5,729	6,061	5,538	5,275	5,117

EBITDA	1,050	1,020	1,147	988	798	910	692	811
EBIT	941	907	1,014	868	684	802	587	706
EBT	1,075	1,028	1,108	960	809	856	666	862
Net Income	693	564	664	580	488	542	358	497
Cash Flow	-1,325	3,238	-762	3,000	-1,045	2,600	107	2,650
Liquidity*	13,468	14,841	11,743	13,619	10,784	11,664	9,119	30,543
EPS in EUR	0.17	0.14	0.17	0.15	0.12	0.14	0.09	0.13
Employees**	195	192	188	180	169	171	162	165

* Liquidity: Cash and marketable securities

** Employees: end of quarter

ATOSS IN FIGURES ATOSS IN FIGURES CONTENTS CONTENTS

6	INTERVIEW WITH ANDREAS F. J. OBEREDER
8	THE COMPANY
10	THE TEAM
12	THE MARKETS
14	SOFTWARE AND SERVICES
16	CUSTOMERS
18	RETAILING
20	HEALTH CARE AND MEDICAL
22	CIVIL SERVICE
24	PARTNERS AND ALLIANCES
26	LETTER TO SHAREHOLDERS
28	INVESTOR RELATIONS
32	CORPORATE GOVERNANCE REPORT
40	SUPERVISORY BOARD REPORT
44	GROUP MANAGEMENT REPORT
56	CONSOLIDATED BALANCE SHEET
57	CONSOLIDATED INCOME STATEMENT
58	CONSOLIDATED CASH FLOW STATEMENT
59	CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
60	NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT
106	AUDIT OPINION
107	DECLARATION BY THE LEGAL REPRESENTATIVES
109	IMPRINT

¹⁹⁸⁹ » We set ambitious targets for 2007, our anniversary year. And we have achieved these goals, as the record sales and performance figures document. Our innovative capabilities in the workforce management area will continue to drive customer benefits and productivity gains, as well as growth now and in future. This achievement clearly demonstrates our competitive strength. «

Andreas F. J. Obereder, Company founder and Chairman of the management board, ATOSS Software AG

YEARS OF ATOSS ^0320042005 ²⁰⁰⁶ ²⁰⁰⁷

THE RE VOLUT ION FROM THE BACK YARD THE RE VOLUT ION FROM THE BACK YARD

20 years of ATOSS – time to look back, and to look forward

Mr. Obereder, in the IT sector, 20 years are a long time. Do you still recall your early days?

Certainly, it was a very defining phase, while from today's viewpoint we were almost in the IT Stone Age. In those years, the business software area was ruled by proprietary systems in which hardware and software were very closely tied to each other. This situation was not always very satisfactory for users. The strong dependence on hardware and software vendors, high operating costs and lacking flexibility were just a few of the problems that most users were complaining about. This situation was also what prompted us to develop standard software for working time management, solutions that would be available for companies of all sizes and branches, and would run on all the standard computer platforms. In our area of activity, this approach was a small revolution at the time.

So you were one of the first …

You are correct - and the markets rewarded us. Right in the first year, following the launch of our TARIS product, Deutsche Bahn and Lufthansa made the decision in our favor. And both companies have remained our customers to date, naturally with the latest generation of our software in place.

As opposed to many founders of the nineties, you started off without venture capital and outside financing.

That is true. In the eighties, these were still foreign concepts. We earned the money for software development the hard way, over a four-year period with services. With a small team we performed the development work in a backyard office, while the other team members were involved in projects. Today, all this would hardly be conceivable. We ploughed just about every penny we earned back into our new software. We were driven by a tremendous ambition to put a great product on the market.

A look at the expenditures on research and development at ATOSS today would suggest that you have remained true to this ambition.

You are right there. For a company of our size we do commit some sizable R&D investments. Our aim is to provide our customers with products that are genuinely on the leading edge of technology, while offering the utmost measure of investment security. Take our flagship product, the ATOSS Staff Efficiency Suite, for example. Since 2005 it is available on a 100 percent Java basis, and is therefore independent of platforms, databases and terminals. According to my knowledge, we are the only player on the market to offer this. At first glance this may all sound very technical, but for our customers this new architecture means the potential of considerable savings in operating costs. Apart from the functionality of our software, I regard this as a very significant factor. This also includes the aspect that our customers are not dependent on hours of expensive consulting services for their ongoing operations. By way of parameterization, they are able to make the majority of adaptations and changes themselves.

Over the past 20 years, the market in the area of workforce management has changed significantly. How do you view this situation?

Some 20 years ago, there were hundreds of small and very small providers of working time management software in Germany. A specialized company of the size of ATOSS did not exist at the time. In the meantime, a market concentration process has set in, and this is readily understandable, for there are only a few companies that can generate sufficient sales to carry the costs of the ongoing, further development of such complex software.

And what about customer demands and requirements? Here we have certainly experienced the most change. It is fascinating for me to see how the market has changed from conventional working time management to demand-driven workforce management and scheduling. Together with our customers we have undergone some tremendous developments. From our viewpoint, workforce management and scheduling will also hold great potential over the coming years. At present, only about ten percent of all German companies are making professional use of these functionalities.

Where do you see developments leading in the next years?

Workforce management will remain a key determining factor. I am pleased to note that these issues are also attracting increasing attention in the international arena. Formerly, workforce management was a niche topic that attracted very little interest. Today, international analysts and consultants are placing far greater emphasis on these topics. All this comes as no surprise to me, given that we are looking at a market that runs into a volume of billions worldwide. The more experts become involved in our topics the better.

What kind of developments do you expect with regard to technical and specialist requirements?

I envisage that in future we will be able, and will also be called on to consider even more factors still than is currently the case. Already today, our customers are utilizing information such as sales and POS data, frequency analyses or weather forecasts in their staff demand forecasts. In this respect, the retail trade is certainly playing a pioneering role. The demographic shifts on the labor market will force companies to make far more deliberate and focused use of staff as a valuable resource. I can well imagine that factors such as qualifications or the personality profiles of employees will enter more strongly into planning in future.

board, Andreas F. J. Obereder, the founder of ATOSS

Can you outline a future vision for your market? Globalization will force us to address the issue of how virtual teams, distributed across the globe, can be synchronized. Today, there are many international projects of this type. If you think this development through in a consistent manner, it becomes clear that within the context of workforce scheduling, the organization of such virtual teams will become an issue that must be addressed. In future, more and more people will be working with colleagues they have never seen or only rarely at best. In this respect, management will be confronted with completely new demands and requirements.

Are you prepared for this?

As one of the leading companies in this area, we naturally always aspire to offer whatever will benefit our customers. This is the benchmark we measure ourselves by. To cite a concrete example in this context: in future, we will be even more strongly engaged with partner companies that can smoothly integrate their special applications into our open architecture. In this way, gradually, an entire eco-system of solutions will arise that revolve around the topics of working time and workforce management.

THE COMPANY THE COMPANY

A pioneer turns 20. Since 1987, ATOSS has been fielding innovative consulting approaches and highly sophisticated software solutions, shaping and determining the market for working time and workforce management and scheduling. Today, the company ranks among Germany's most successful stock market listed software houses.

Working time management is our decisive strength. The right employee with the right qualifications at the right time and the right place: up to the minute information from the working time management system forms the foundation for professional working time management and workforce scheduling. Deutsche Bahn and Lufthansa were among the first customers, and have remained on the reference client list to date.

20 years of Atoss Big computers, big plans. We founded ATOSS Software GmbH in 1987. In those days, computers had hefty dimensions and boasted around 1987 64 megabytes of memory.

»Today, we look back on 20 years of success, while facing the new challenges that lie ahead: Our vision is to shape and design working environments that will secure our customers' future. «

ATOSS Customer HARIBO Lakritzen Hans Riegel Betriebsges.m.b.H ATOSS Customer Deutsche Bahn AG

Demand-driven workforce management is our core competence. From administrative tools to strategic instruments: The synchronization of personnel demand and personnel deployment holds tremendous potentials for higher productivity that are only being tapped by a small share of companies to date. With our integrated solutions comprising consulting, software, services and support, we help companies to perceive these opportunities, and to make intelligent use of their available scope for design. Drawing on many years of in-depth know-how, with keen eyes and ears trained on the markets, and our living innovation culture, we guarantee our customers solutions that deliver measurable efficiency benefits and competitive capabilities. This is the benchmark of everything we do.

Leading edge technology is our aspiration. ATOSS ranks among the pioneers in the flexible working time and demand driven workforce management segment. We have placed our software on a new technology platform, namely on Java (J2EE). In this way, we ensure that our products deliver top performance, optimal scalability, low integration costs and the free choice of databases and operating systems. For our customers, this spells more independence, lower operating costs, as well as high planning and investment security.

THE TEAM THE TEAM

People make the difference. ATOSS is charting a clear growth course in sales, earnings and corporate value. Our employees are the driving force behind this success – the competent, creative and committed professionals at ATOSS. Active at some 9 subsidiaries and branch offices, around 200 highly motivated members of staff are joining forces to ensure that ATOSS continues to provide state-of-the-art technology, efficient solutions and professional consulting. Now and in future.

Our decisive assets. The know-how and commitment of our staff is a key element of our success - proven time and time again in day to day work. And that is why employee satisfaction is one of the key aspects of our personnel policies.

Small company, big customers.

With a great deal of pioneering spirit and innovative acumen, we started out as a team of ten professionals pitching to the giants in the branch – and with success. Deutsche Bahn was one of the first customers 1991 to opt for our products, and has stayed with us up to this day. » 20 at last! Our people reflect the core competencies of our company: the right mixture of innovation, stability and continuity is the foundation of our success. «

Motivation drives our lead. At ATOSS, top performance and strong commitment are closely linked. Companies that strive to keep ahead of their competitors need motivated and loyal employees. For us, promoting and advancing our people not only includes vocational training and further training, but also involves a diverse range of sports and cultural offerings. In promoting and advancing our staff, we also ensure that – apart from the demanding work we all need to cope with – there is enough time for leisure and family.

Performance is our success concept. Top performance and passion are what count for us. Performance for our customers, passion for our topics and subject matter. Our performance generates profitability and thereby secures the future of our customers, employees and investors. We engage in close and partnership based cooperation with our customers, and we make the most of our growth

opportunities.

THE MARKETS MARKETS

Rising personnel costs, increasing competitive pressure and the continuous contraction of the share of gainfully employed individuals mean that workforce management will become a vital strategic instrument. Our survey entitled "Germany as a business location: Securing the future by intelligent workforce management" shows the following: more than three quarters of the top 1,000 companies regard flexible working time models as very important in securing their future capability, and also as very important in order to be able to hold their position on tomorrow's markets.

It's all about Java.

As the first company in our branch, we have based our Web client entirely on Java. That called for some impressive 1998 development power, but it was well worth all the effort.

» Growing potential for workforce management in a global working world – international analysts are pointing to a market measured in billions. «

Flexible and demand oriented working hours enable fast and cost optimized response to market requirements. Today, more than ever before, order fluctuations, longer opening hours, higher service levels and shorter product life cycles all have to be coped with. And this is quite simply impossible with fixed working hours and rigid shift arrangements. Employees must be available on a "just in time" basis. This is especially the case in personnel intensive branches such as health care, retailing, logistics or in the public sector.

ATOSS customer W.L. Gore&Associates GmbH ATOSS customer Feldschlösschen Getränke AG

Professional working time management systems are only in place at one third of the leading German companies. And the growth potential of the market for workforce management solutions is just as sizable: IMS Research indicates a total volume of 2.7 billion dollars for the United States and EMEA in the year 2010. As drivers of these developments, IMS perceives above all the urgent need to cut costs, while increasing productivity at the same time. But demand-driven workforce management and employee scheduling not only delivers economic benefits, it also makes valuable ecological contributions. When employees are only on the job according to actual requirements, work related energy consumption is also reduced.

SOFTWARE AND SERV ICES SOFTWARE AND SERV ICES

Programmed for the future. Companies opting for ATOSS trust the security of their investments. We are committed to developing state-of-the-art software that generates measurable benefits, while remaining open for future changes and modifications. ATOSS is one of the few companies active in the segment for flexible working time management and demand-driven workforce management that has converted its products 100 percent to Java. We are investing around 20 percent of our annual revenues into the further development of our solutions. This is because we are convinced that our software must not only offer all the relevant functionalities, but must also remain firmly on the leading edge of technology.

The look behind the scenes. Concentrated software development power for faster customer benefits. While release issue cycles of 18 months used to be common in the software branch, ATOSS now has a dynamic model in place. Today, one major release and up to four minor releases in short intervals are launched on the market within the same time frame. An agile process model is the key to success here, while faster response periods to market and customer requirements are the gratifying results.

Growing together.

ATOSS takes over CSD Systemhaus GmbH in Cham, Germany. SMEs welcome our extended consulting and solutions portfolio. We are pleased to have new, highly committed colleagues on board, 2000 as well as adding a great new product to our portfolio.

» We combine demand-driven workforce management with leading edge technology. We embarked on this endeavor 20 years ago – this remains our claim and our aspiration to this day.«

Comprehensive, integrated solutions. As a software and consulting company we not only offer our customers state-of-the-art technology, but also an extensive portfolio of professional services. Know-how, experience and closeness to our customers guarantee hands-on, results driven consulting – from staffing demand forecasts through to the design of working time models, and on to employee scheduling and working time management. At ATOSS, staff from the areas of development, product management and sales, as well as consulting, services and support join forces and pool their resources in developing the best solutions for our customers.

ATOSS customer Key Safety Systems Deutschland GmbH

At home in all industries. With our ATOSS Staff Efficiency Suite, ATOSS Startup Edition and ATOSS Time Control product families, we offer the right solutions for all branches, company sizes and requirements profiles. We developed special software packages for the health care sector and the retailing trade: ATOSS Medical Solution and ATOSS Retail Solution address the requirements of the specific branches and give due consideration to the particular key factors relevant for demand-driven workforce management.

CUSTOMERS CUSTOMERS

Customers from A to Z. What do ALDI Süd, BLG Logistics Group, Deutsche Bahn, Klinikum Ingolstadt, Lufthansa, Magna Steyr, Meyer Werft, Pepsi-Cola, Schmitz Cargobull and Zillertaler Verkehrsbetriebe all have in common? They rely on ATOSS solutions to administrate their working time as efficiently as possible and in line with market requirements. In this way, our 3,500 customers are achieving productivity gains of up to 25 percent – while returns on investment within an 8 to 12 month period are not uncommon.

Stock market fever.

With great expectations we floated the company on the stock market in Frankfurt. And our expectations were not only fulfilled, in fact, we are one 2000 of the most successful companies of our branch on the stock market today. » The focus is on productivity gains – we bolster our customers' fitness for global competition.«

The optimization of personnel costs is one of the most important strategic targets for many large scale companies. This was one of the results of the Cap Gemini HR-Barometer 2007. But what applies to major corporations has long become a tough reality for SMEs. They are not only competing with low-wage countries, but also with large corporations. Whether globe spanning corporation with tens of thousands of employees or SMEs – efficient and demand-driven workforce management and scheduling is a practice proven concept that reduces personnel costs, without compromising on product and service quality. Fielding a unique product portfolio, ATOSS is offering the right solutions for companies of all sizes and all branches and sectors. More than 2 million employees are currently being managed with the help of ATOSS solutions.

Technology and globalization are not only drivers of higher productivity and economic efficiency. They are impacting our world of work – today and in future. An assignment is placed from Japan, the project manager works in Germany, while the production operations are based in Brazil. Coordinating and steering multinational work groups interacting in virtual offices is one of the major challenges. We help our customers to cope with these future challenges and to make the most of their opportunities. Today, we are already improving our customers' performance day by day, supporting their innovative strengths and enhancing the motivation and satisfaction of their employees. These are the reasons why ATOSS solutions and consulting services are so successful and we are gaining so many new customers year after year.

RETAILING RETAILING

Customers should reign as kings again. Years of downbeat consumer sentiment and rising competitive and earnings pressure have resulted in declining sales staff levels. According to recent surveys, in clothing stores only one quarter of the individuals are attended to in a qualified manner. Three quarters, by contrast, leave the sales rooms without any direct contact with sales personnel, while only every fifth visitor actually makes a purchase. In this way, huge sales potentials are lost. The causes for this situation, however, are frequently not to be found in the volume of resources to be deployed, but in the lacking planning of sales personnel.

Precise planning and flexible scheduling of working time is the logical way out of this dilemma. It is essential to synchronize personnel deployment with customer frequency, in order to increase service levels, while reducing costs at the same time. But it is not enough to merely observe sales developments. According to retailing format and intensity of customer care, individual factors such as item sales, frequency analyses, sales, events and weather forecasts must enter into planning.

Hard work, lively celebrations.

15 years of success are a good reason for celebration. The ATOSS team now counts some 150 members of staff, while the customer 2002 list shows more than 2,000 companies. » The retail trade is taking the lead in demand-driven workforce management. Here, personnel is one of the major cost factors – and the essential guarantee of service quality at the same time. «

ATOSS customer mister * lady GmbH ATOSS customer Max Bahr

75 percent less overtime. Just how high the benefits of demand-driven workforce management and scheduling can be is aptly illustrated by the example of our customer Thalia. The Swiss bookshop chain, a company of the Douglas Group, has consistently geared workforce deployment to customer frequency. Thanks to targeted planning and scheduling, Thalia succeeded in reducing overtime by 75 percent within a period of seven months.

With our ATOSS Retail Solution we offer retailers a powerful tool for demand-driven workforce management. The solution was specifically developed for retailing chains and large outlets – independent of central or decentral planning. The software integrates staffing demand forecasts, workforce scheduling, working time management as well as delivering management informations and providing extensive planning and forecasting functions.

HEALTH CARE AND MED ICAL HEALTH CARE AND MED ICAL

ATOSS customer Kongregation der Barmherzige Schwestern ATOSS customer HSK Dr. Horst Schmidt Klinik GmbH

Time to act. There is no other branch that is undergoing such strong transformation driven by ongoing reforms as the health care and medical sector. The reasons are readily apparent: high staff and administration costs, rising quality and care standards, as well as pressure exerted by cost carrying parties necessitate flexible concepts with regard to working time and organization. Information systems ensuring the constant availability and consistent formats of

key data also play a major role here. The introduction of digital patient files is geared to creating the foundation for high quality medical care. On the other hand, personnel data such as qualifications, attendance time, working time accounts and individual working hour preferences must be at hand in order to guarantee patient oriented and cost efficient duty planning.

ATOSS wins coveted Creative Award

Lower costs, better patient care and more favorable working conditions thanks to intelligent personnel management and scheduling – these joint achievements of Klinikum Ingolstadt and ATOSS attracted the Creative Award of the Bavarian Tax Payers Association (Bund der Steuerzahler in Bayern e.V.). ATOSS is the first private enterprise to win the award.

» Major change in the international health care sector: We are cutting personnel costs – without risks and side effects.«

Personnel costs accounting for a 70 percent cost share are the order of the day in health care facilities such as hospitals, senior citizen residences and care facilities. All areas of management are faced with the challenge of ensuring good and requirements oriented care, in spite of greater pressure on costs. This is possible thanks to the flexibilization and extension of service and operating hours. In this context, complex collectively bargained regulations and general legislative conditions must also be considered. Since January 2007 the implementation of the new working time legislation is being officially monitored in hospitals. High time for clinics to act and make changes.

ATOSS Medical Solution is the solution for demand-driven personnel management in the health care sector. The integration of electronic time recording and duty planning, including standby duty and duty on call, provide the necessary real-time data to adapt personnel deployment to actual requirements, also at short notice. A rule verification function ensures that all relevant legislative and ergonomic specifications are fully met. Physicians and care personnel also benefit from more flexibility and working life quality: the preferential duty plan also offers scope for short notice changes in working hours, and the shift exchange area allows members of staff to change working hours and shifts at own initiative and responsibility.

CIVIL SERVICE CIVIL SERVICE

Innovative concepts. The collective bargaining parties in civil service negotiate the working hours of 1.3 million employees. The long since overdue debates in this sector revolve around the demands for more quality and customer service from Germany's largest employer, namely the Federal government and local authorities. Strong

fluctuations in work volume call for broader latitudes in designing work in the interest of achieving costs optimization as well as service orientation. The introduction of a new collectively bargained agreement in civil service (TVöD) in the year 2005 paved the way for change. Now, the issues at hand are to implement innovative concepts into the ongoing activities and operations.

A lion for ATOSS.

We rank among "Bavaria's Best 50". The Bavarian Ministry of State awarded our company for five years of continuous growth. 2003 And we continue to write new chapters of our growth story … » Our future vision for the public sector: top availability – in line with cost efficiency and service quality. «

Flexible service. Service from 6:00 to 20:00, and weekend shifts as well – a scenario with future potential. The introduction of flexible working hours and extended operating hours represent a tremendous challenge for civil and government service. New working hour regulations often meet with skeptical response. Professional solutions for working time management support service providers and companies in extending their operating hours, without losing sight of employee interests. Overtime can be compensated for according to the fluctuations in service demand. This promotes work-life balance and enhances service quality at the same time.

ATOSS customer Kassenärztliche Vereinigung Nordrhein

Service takes center stage. Whether chamber of crafts, registered practitioners' associations or municipal administration – customers expect their assignments and requests to be handled on time, in addition to service orientation and information on demand. With competent consulting services and practice proven solutions we support civil service and government institutions in making necessary changes and implementing the resulting measures. Ultimately, the key issue is making the best possible use of the existing working hours and the legislative scope available. In any case, more time for key competencies is guaranteed.

PARTNERS AND ALL IANCES PARTNERS AND ALL IANCES

Team spirit is what has allowed ATOSS to grow and enjoy such success over the years. A strong community, in which all participants stand to benefit. Together with out partners, we are charting new courses, and expanding our strong position on the market. In this way, we are able to bundle resources and competences in order to serve our customers with the best solutions.

Not just a conventional release … but a quantum leap to a completely new software generation: ATOSS Staff Efficiency Suite 3, an innovation success based on many years of intensive development work. Leading edge Java architecture 2005 (J 2EE) and even more flexibility! » Reaching goals together: We are committed to creating win-win situations. After all, by joining forces, we all gain strength. «

Best of breed is our claim. In cooperation with some 60 sales and OEM partners, we offer our customers best of breed solutions from a single source. Whether data warehouse, ERP, or wages and salary accounting – we have the right partners at hand. Especially with a look to SMEs, who place special emphasis on regional presence, our area-wide network offers direct access to our portfolio and complementary services. Customers benefit from high performance partners on location, as well as specialists with in-depth know-how, also in highly specific, technical areas. Our partners understand the language and the requirements of all the relevant markets.

A strong network. Our aim is to stake out even larger shares of the market for workforce management. To this end, we are consistently expanding our intensive cooperation with competent companies in all regions and industries. Our partners profit from an established network drawing on many years of in-depth experience, an attractive partner concept and tailored cooperation options. As a stock market listed company, we also offer transparency and investment security. In our cooperation activities we create win-win situations and place a strong emphasis on fair and long term business relations. At ATOSS we are firmly convinced that competent partners are the essential precondition for the successful and forward looking marketing of our solutions.

LET TER TO SHAREHOLDERS LET TER TO SHAREHOLDERS

Dear Shareholders, Ladies and Gentlemen,

2007 was not only an anniversary year for ATOSS, it was above all a year of record sales and results.

The decisive factors behind this development have been, and remain, our outstanding range of products and solutions in the field of working time management and personnel resource planning, the excellent care and support provided for our customers, the ability to inspire new customers with enthusiasm for our solutions and the skills and competence of our employees. For 20 years we have pursued our vision of bringing radical change to the world of work for the benefit of companies, employees and society. Over the past 20 years, this vision has made ATOSS one of the leading providers of working time management and personnel resource planning solutions, and in future will continue to be the guiding principle of our growth strategy. In recognition of the commitment our members of staff have displayed and of the outstanding cooperation we have enjoyed with our customers and partners, we would like, at this point, our express sincere gratitude.

We were proud in our anniversary year to report at EUR 24.4 million the highest sales, and at EUR 3.7 million, the best operating result in our company's history. In the process we have succeeded in basing our growth upon a broad foundation. Our innovative range of products and solutions have sparked enthusiasm and convinced users across the board. As a result, we have not only gained many new customers in retailing, public services and other attractive sectors, but also inspired existing customers to opt for our new solutions.

Growth accelerated in 2007

Following the record result achieved in 2006, ATOSS again succeeded in accelerating the pace of growth in 2007. In every quarter we exceeded the sales and results (EBIT) for the same period in the preceding year. This growth was driven by orders for software licenses. Consequently, we were able to substantially improve on all of the key figures of importance to us: Orders received for software licenses rose by 13 percent over the year before, software licensing sales by 17 percent and software license orders on hand by as much as 52 percent. In view of the strong trend apparent at the end of the year, we look forward with confidence to the current year 2008.

Commitment to research and development forms the basis for future growth

Our continued success is founded on our sustained commitment to the continuing development of our solutions. The strong investment made in financial year 2007 materially improved the real net output of the business as a whole. Our products comply with the Java (J2EE) standard, thereby perceptibly shortening development times, supporting firstclass integration with third-party products and contributing overall to a marked increase in development efficiency. What's more, by migrating to our Java (J2EE) solutions, customers benefit from forward-looking prospects and technological security for the next 10 years. All of the customer's data, all of the processes mirrored in their solution and their customer-specific expertise are automatically migrated and thereby safeguarded for our clients. Consequently, our customers enjoy sound reliability and investment security.

We have already made the paradigm shift in technology that others are only now facing! This investment security and these prospects have already become a reality for more than 50 % of our existing customers. Such success confirms our intention to further expand our commitment to research and development and thereby sustainably advance our strategy for growth.

High liquidity, strong cash flow

The positive development in business at ATOSS is reflected also in our traditionally strong cash flow of EUR 4.2 million which helped lift liquidity by 25 percent to EUR 13.5 million. The financial strength of ATOSS expressed in these figures presents us with a first-class opportunity to shape and exploit sound growth in the future.

High equity and excellent returns

ATOSS also recorded an increase in equity. On December 31, 2007, the equity ratio stood at 59 percent, well up on the previous year's figure of 55 percent. Based on the net income for the year, the return on equity by December 31, 2007, had reached 24 percent, setting a new post-flotation record.

A particular word of thanks to our Supervisory Board

Our thanks are due not only to our staff and customers, for all that they have contributed so substantially to our corporate success! A particular word of thanks is due to our Supervisory Board, and especially to its Deputy Chairman Mr. Bernhard Dorn, who passed away on February 10, 2008. Mr. Dorn had been a member of the company's Supervisory Board since August 2001 and played a major role in defining the orientation and development of ATOSS Software AG. His

contribution was characterized by his considerable expertise, by his talent for constructive criticism and by his vigor. We would therefore like to dedicate this moment to him in respect and appreciation.

ATOSS is excellently positioned

We are excellently positioned for financial year 2008. Our pipeline is strong and our prospects of winning and successfully implementing major projects are very good. We have some fantastic development opportunities ahead of us in 2008, in the retailing sector, in public services and elsewhere. To realize these opportunities we can point to some impressive flagship projects, excellent solutions and a pool of consulting and development staff with years of experience in working time management and personnel resource planning, as well in technology issues.

ATOSS Software AG therefore expects that its profitable growth will continue in the current financial year 2008, with new records to be set for both sales and results!

Yours truly,

Andreas F. J. Obereder Christof Leiber (Vorstandsvorsitzender) (Vorstand)

INVESTOR REL AT IONS INVESTOR REL AT IONS

» Based on continued sound corporate development, the ATOSS share will offer good perspectives for positive share price performance. «

ATOSS STOCK
EUR		Reporting period	Previous year
		2007	2006
ISIN/WKN	DE0005104400 / 510440
Class	no par value bearer shares

Capital stock		4,025,667	4,025,667
Number of shares		4,025,667	4,025,667
Free float		44.30%	44.30%
Founding family		55.70%	55.70%

Listings	Prime Standard (Regulated Market, F)
	XETRA and OTC B-B, D, HH, M, S
Indices	Prime All Share, Prime Software, Technology All Share
Designated sponsor	Gebhard & Co. Wertpapierhandelsbank AG
Financial year	January 01 to December 31
First listing	March 21, 2000
Stock exchange symbol	AOF

Dividend paid	in this period for the preceding year	0.24	5.50
Dividend proposed	for approval at the AGM 2008	0.31
Earnings per share		0.63	0.48

Annual low		11.21	19.00
Annual low		7.60	6.69
Average price		8.68	9.53

P/E ratio high		18	40
P/E low		12	14
P/E average		14	20

Opening price	on January 02	11.21	8.93
Closing price	on December 28	8.29	10.25

Market capitalization	on December 28, 2007 / December 29, 2006	Mio. EUR 33.37	Mio. EUR 41.26

Shareholders ATOSS AG

Key figures per share

EUR	2007				2006
	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
High	9.35	9.63	9.70	11.21	10.34	8.15	19.00	14.00
Low	7.60	8.02	7.95	8.00	6.76	6.65	6.69	8.57
Share price at end of quarter	8.29	8.50	8.19	8.58	10.34	7.00	6.85	13.85
Treasury stock	31,881	65,881	65,881	65,881	76,054	97,221	114,755	122,666
Dividend paid per share	0.00	0.00	0.24	0.00	0.00	0.00	5.50	0.00
Cash flow per share	-0.33	0.82	-0.19	0.76	-0.27	0.66	0.03	0.68
Liquidity per share	3.39	3.75	2.97	3.44	2.75	2.98	2.34	7.85
EPS	0.17	0.14	0.17	0.15	0.12	0.14	0.09	0.13
EPS (diluted)	0.17	0.14	0.16	0.14	0.12	0.13	0.09	0.12

2007 – a difficult year for investors

The year 2007 was not a year for investors with weak nerves. The established stock markets began the year on an outstandingly successful note. The DAX outshone many of its international competitors with a 21 % spurt, which put it among the top performers worldwide, though there were some marked differences between individual companies. In June the DAX passed the 8,000 mark but was unable to hold its ground, and slipped steadily backward instead.

Sub-prime lending crisis sparks fears of recession

In the second half of the year the effects of the sub-prime lending crisis began to make themselves felt: US real estate owners were no longer the only ones to feel the pressure of falling property prices, as the scale of the crisis now spread to European commercial banks and their customers who had bought up wholesale bundles of mortgage debt. By the end of the year the repeated writedowns reported by the banks led to a substantial loss of confidence, culminating on January 22, 2008, in huge losses being wiped off the value of international stock markets. The majority of investors rushed to reduce their stock positions, prompting a situation viewed by many analysts as a golden opportunity with excellent growth potential, albeit with commensurate risk.

ATOSS: Strong start to the new year

Towards the end of 2006 the ATOSS stock price rose sharply to reach a high of EUR 11.00 around the turn of the year. However, the strong sales and profit figures published in January for financial year 2006 and the continuing results in 2007 were not reflected in the share price. The 2006 figures published in January 2007 set a new record for ATOSS, exceeding both the company's own forecasts and those of analysts. Yet despite this, the share price followed the general downward trend in software stocks in 2007. Even the exceptionally strong quarterly figures announced during the year were unable to stimulate a sustained improvement.

SES Research raises target price: "Running ATOSS"

At the start of the year 2007 analysts were still pricing ATOSS stock at EUR 10.20, however a detailed analysis that accompanied publication of the annual report prompted an increase on February 22, 2007, to EUR 11.00.

Rating increased - ATOSS attractive once more

In a news flash on March 23, 2007, against the background of a falling share price in the preceding months SES Research lifted its rating from "hold" to "buy". Based on the valuation models it applied, SES considered the stock to be attractively priced.

The balance sheet press conference and our presentation on Small- and Mid-cap Day at the CeBIT computer fair generated renewed interest in ATOSS and the downward trend was halted.

Due not least to the announcement of a proposed dividend of EUR 0.24 and the enticing yield this represented, the share price staged a recovery in the run-up to the annual general meeting.

Outstanding second quarter

When it announced its key figures for sales and results on July 9, 2008, the excellent results in the second quarter gave the company cause to raise its profit forecast to EUR 3.0 million. The results for Q2 exceeded analysts' expectations and SES Research in turn lifted its earnings forecast to EUR 0.54 per share.

More excellent figures in the third quarter

With fears of recession beginning to emerge in the USA, the market for software stocks suffered some setbacks in the fourth quarter. When ATOSS once again raised its forecast to EUR 3.4 million on October 10, 2007, SES Research then increased its target price to EUR 11.50 and the share price initially headed upwards. However, our stock was unable to entirely escape the general downward trend in the fourth quarter, ending the year at EUR 8,29.

Record figures and losses on the international stock markets

On January 16, 2008, the company reported record full-year sales and results for financial year 2007 which once again exceeded both analysts' and the company's own forecasts. In response, SES Research raised its stock price target to EUR 12.00. Then, in a separate development on January 22, 2008, share prices tumbled on the international markets. ATOSS stock, however, proved resistant to the trend and given a continuation in the company's strong development the outlook remains good for a continuing positive movement in the share price.

CORPOR ATE GOVERNANCE REPORT

» The efficient cooperation between management board and supervisory board is a central element of our company management. We place a strong emphasis on open communication, reliability and transparency. «

1. INTRODUCTION
1. DECLARATION OF CONFORMITY
1. BOARD OF MANAGEMENT REMUNERATION REPORT
1. SUPERVISIORY BOARD REMUNERATION REPORT
1. OWNERSHIP OF AND DEALINGS IN SHARES AND FINANCIAL INSTRUMENTS
1. SECURITIES-BASED INCENTIVE SYSTEMS

1. Introduction

Responsible and sustainable management is integral to the corporate culture of ATOSS Software AG. The primary foundations are provided by the German Stock Corporation Act and the German Corporate Governance Code. The company believes firmly that compliance with corporate governance standards and guidelines is an important factor in securing the enduring confidence of customers, employees and shareholders in the management of our enterprise and thereby supports the sustained success of ATOSS Software AG.

The central pillars of good corporate governance are efficient cooperation between the Board of Management and the Supervisory Board, the protection of the interests of all those with a stake in the success of the enterprise, and openness, reliability and transparency in corporate communication.

Since 2001, the company has therefore regularly reported on its Principles of Corporate Governance and on its annual declarations of conformity, directors' dealings and other essential information regarding the corporate governance of the company. This information in transparent and up to date form is available in equal measure to customers, employees and shareholders. Details of the development in business and accounting information are disclosed in quarterly, half-yearly and annual reports. Other relevant information is published in ad hoc announcements and press releases. All information is continuously available for inspection on the company's Web site (www.atoss.com) in the Investor Relations section.

2. Declaration of conformity 2007

Once again in 2007, the Board of Management and Supervisory Board have concerned themselves intensively with the new requirements of the German Corporate Governance Code, comparing these with the company's own principles and identifying those points in which deviations exist from the recommendations of June 14, 2007, of the Government Commission on the German Corporate Governance Code.

are complied with, with the exception of those points stated in the declaration. This declaration is published on the Company's Web site. It is consequently evident that the company fundamentally conforms with the recommendations and deviates in three points only.

Deviations apply in respect of the following three points:

The existing directors' and officers' insurance contracts do not include an agreed self-insured deductible. The company boards are of the opinion that the commitment and responsibility with which they perform their duties are not to be improved by the integration of a self-insured deductible, and they therefore do not anticipate making such provision.
In accordance with the margin of discretion afforded by the German Corporate Governance Code, in view of the specific circumstances pertaining at the company and in particular the size of the company the Supervisory Board has dispensed with the formation of separate committees and in particular of an audit committee.
When share options and comparable schemes are granted, the German Corporate Governance Code further foresees that these should be linked with demanding and relevant parameters for comparison; and when such are granted to members of the Board of Management, some means of limitation or cap should be entailed. The convertible bonds already issued in favor of organs of the company in accordance with the legal specifications for such instruments do not contain specific performance criteria which need be fulfilled in order to exercise the conversion rights, nor do they provide for any means of limitation or cap. In the estimation of the company, because of the inherent capital commitment over their lifetime, convertible bonds exercise a loyalty effect which in the view of the company is just as significant.

3. Board of Management remuneration report

The members of the Board of Management are:

Andreas F. J. Obereder	Chief Executive Officer	Appointed until December 31, 2008
Christof Leiber	Member of the Board of Management	Appointed until March 31, 2012

The remuneration paid to members of the Board of Management is oriented towards their contribution to the success of the business, and towards industry standards. It includes performance-related and non-performance-related elements as well as components with a long-term incentive effect dependent on the development in the price of ATOSS stock. The non-performance-related remuneration is paid monthly in the form of a salary. An advance on the performance-related remuneration is paid monthly up to a maximum of 50 % of the target profit-share payment for the financial year in question.

The Supervisory Board turns its attention at least once per year to the appropriateness of this remuneration and sets new performance targets for the performance-related elements yearly in advance. The level of the performancerelated remuneration (profit-share payment) is oriented towards the Group sales target and operating profit target before adjustment for the effects of the company's convertible bond programs.

The remuneration component with long-term incentive effect (securities-based incentive systems) took the form of convertible bonds awarded in the years 2000 to 2004 and is described separately in this Corporate Governance Report.

Moreover, the contracts with members of the Board of Management also include other elements of remuneration in the form of insurance premiums paid by the company and other ancillary benefits, as well as the provision of company motor vehicles. The corresponding benefit of these elements in money's worth is listed below under "Miscellaneous".

The remuneration paid to the Board of Management in the financial year was composed as follows:

Andreas F. J. Obereder	2007 EUR	2006 EUR
Non-performance-related remuneration
Salary	290,000	290,000
Miscellaneous	95,775	93,642
Performance-related remuneration
Profit-share payment	114,326	139,650
Total remuneration	500,101	523,292

Christof Leiber	2007 EUR	2006 EUR
Non-performance-related remuneration
Salary	141,250	115,000
Miscellaneous	37,546	21,065
Performance-related remuneration
Profit-share payment	116,367	89,745
Total remuneration	295,163	225,810

The profit-share payments shown here relate to entitlements deriving from the achievement of targets in the respective financial year. Since these entitlements are determined only after the conclusion of the financial year, actual payments deviate.

Finally, a non-forfeitable pension commitment also exists in favor of the CEO which is classified as a defined-benefits plan. Pursuant to this agreement, pension payments will commence when the recipient reaches the age of 65 and will be paid for life. The level of future pension rights will vary during the accrual period to an extent equal to future adjustments in the fixed salary of the CEO.

4. Supervisory Board remuneration report

The Supervisory Board of ATOSS Software AG is comprised of three members who were appointed by a resolution of the General Meeting on April 30, 2003. In accordance with § 9 of the Articles of Association of ATOSS Software AG, the term of office of the members of the Supervisory Board continues until the conclusion of the General Meeting at which the said Supervisory Board members are formally discharged for the financial year 2007.

The members of the Supervisory Board are:

Peter Kirn	Chairman, corporate consultant, Böblingen
Bernhard Dorn	Deputy Chairman, corporate consultant, Leonberg
Rolf Baron Vielhauer von Hohenhau	President of the Bavarian Taxpayers Association, Munich.

The remuneration paid to the Chairman, Deputy Chairman and members of the Supervisory Board was determined by resolutions adopted at the General Meetings on May 22, 2001, May 22, 2002, and April 22, 2004, and is oriented towards the extent of their responsibility, and towards industry standards. In each case this remuneration includes performance-related elements as well as components with a long-term incentive effect (securities-based incentive systems) which are described separately in this Corporate Governance Report.

The remuneration paid to Supervisory Board members was composed as follows:

Peter Kirn	2007 EUR	2006 EUR
Remuneration pursuant to the Articles of Association	20,000	20,000
Attendance allowances	7,500	7,500
Total	27,500	27,500

37 CORPORATE GOVERNANCE SUPERVISORY BOARD OWNERSHIP OF AND DEALINGS IN SHARES AND FINANCIAL INSTRUMENTS

Bernhard Dorn	2007 EUR	2006 EUR
Remuneration pursuant to the Articles of Association	20,000	20,000
Attendance allowances	7,500	7,500
Total	27,500	27,500

Rolf Baron Vielhauer von Hohenhau	2007 EUR	2006 EUR

Remuneration pursuant to the Articles of Association	10,000	10,000
Attendance allowances	3,750	3,750
Total	13,750	13,750

In financial year 2007, as in the preceding year, there were no payments made for consultancy work beyond the scope of Supervisory Board activities.

5. Ownership of and dealings in shares and financial instruments

5.1 Ownership of shares and financial instruments

The company reports the ownership of shares by members of company boards and the possession of convertible bonds relating to company shares in its annual and interim reports.

Share ownership on the part of board members on December 31, 2007, in comparison with the preceding year was as follows:

	Dec. 31, 2007	Dec. 31, 2006
Andreas F. J. Obereder	1,981,184	1,981,184
Peter Kirn	29,760	23,760
Bernhard Dorn	25,000	19,000
Rolf Baron Vielhauer von Hohenhau	5,675	0
Total	2,041,619	2,023,944

Board members' holdings of convertible bonds relating to company shares on December 31, 2007, in comparison with the preceding year were as follows.

On the relevant balance sheet closing date, by subscribing for convertible bonds board members held conversion rights to the following numbers of shares in ATOSS Software AG:

	Dec. 31, 2007 Unit numbers	Dec. 31, 2006 Unit numbers
Christof Leiber	5,000	10,000
Peter Kirn	0	6,000
Bernhard Dorn	0	6,000
Rolf Baron Vielhauer von Hohenhau	0	12,000
Totoal	5,000	34,000

5.2 Reportable securities transactions

The company publishes details of all reportable securities transactions by board members on its Web site at http://www.atoss.com/atoss/de/Company/ Investor_Relations/Directors_Dealings/default.htm. This information remains available for at least 12 months following publication.

In financial year 2007 the following reportable transactions were undertaken by board members and disclosed.

Name	Transaction	Date of trasaction	Number	Price EUR	Date of publication
Christof Leiber	Purchase through the exercise of convertible bonds	Oct. 29, 2007	5,000	6.18	Oct. 30, 2007
	Sale	Oct. 29, 2007	2,000	9.01	Oct. 30, 2007
	Sale	Oct. 30, 2007	3,000	8.71	Oct. 30, 2007
Peter Kirn	Purchase through the exercise of convertible bonds	July 31, 2007	6,000	4.01	July 31, 2007
Renate Kirn	Transfer	July 10, 2007	700	0	July 11, 2007
Bernhard Dorn	Purchase through the exercise of convertible bonds	Nov. 12, 2007	6,000	4.01	Nov. 15, 2007
Rolf Baron Vielhauer von Hohenhau	Purchase through the exercise of convertible bonds	Nov. 12, 2007	12,000	4.01	Nov. 12, 2007
	Sale	Nov. 26, 2007	5,000	8.2	Nov. 27, 2007
	Sale	Nov. 30, 2007	1,325	8.4	Dec. 04, 2007

6. Securities-based incentive systems

Elements of the remuneration received by members of the Board of Management and Supervisory Board are oriented towards the stock price; these components take the form of convertible bonds.

The structure and terms of the convertible bonds programs were determined by resolutions adopted at General Meetings. The principal structural elements of these convertible bonds are summarized as follows, insofar as board members still held such bonds on December 31, 2007.

Wandelschuldverschreibungsprogramm 2002/2010:

This program affords the opportunity to subscribe for convertible bonds at a nominal price of EUR 1.00. Upon expiry of two and three years, the convertible bonds on each occasion permit the holder to convert one half of his or her holding into company shares upon payment of the conversion price. The relevant conversion price equates to the average closing price in Xetra trading on the last five trading days before the convertible bond was granted. The convertible bonds have a term of seven years from date of offer. Convertible bonds are granted to members of the Board of Management by a resolution of the Supervisory Board. By a resolution of the General Meeting in the year 2004 the convertible bonds program for members of the Board of Management and Company employees (Convertible bonds program 2002/2011) was extended for three years, and is now designated as the "Convertible bonds program 2002/2014".

Following authorization granted by the General Meeting on May 2, 2006, by a resolution also passed by the Board of Management and Supervisory Board on May 2, 2006, the conversion price for all convertible bonds in circulation at the time of the dividend distribution was reduced by EUR 5.50, this being the amount of the dividend paid per share, or alternatively – should a reduction in price of EUR 5.50 result in a conversion price of less than EUR 1.00 – to the level of EUR 1.00.

Board members' convertible bond holdings on December 31, 2007, were as follows.

	Program	Exercise price EUR	Outstanding options	Contractual validity in years	Potenial rights
Christof Leiber	2002/2010	6.18	5,000	3.5	5,000
			5,000		5,000

SUPERV ISORY BOARD REPORT SUPERV ISORY BOARD REPORT

Dear Shareholders,

The year 2007, the 20th year in the company's history, saw a continuation of the excellent development in business. The company has exceeded the welcome growth rates in Germany's economy as a whole and recorded a sustained improvement in its results. The Supervisory Board fully supports the strategy of the Board of Management in continuously developing the Company as a specialist provider in the field of working time management and personnel resource planning. This extends both to the ongoing and sustained development of the company's solutions portfolio in these core areas, as well as to strengthening market access.

We are convinced that this strategy for ATOSS Software AG will continue to constitute a sound basis for sustained sales and earnings growth in future financial years

Five Supervisory Board meetings in 2007

Once again in the 2007 reporting period the Supervisory Board fulfilled its duties under the law and in accordance with the Articles of Association to advise the Board of Management and continuously supervise the management of the business. In the course of our work we have paid particular attention to the requirements incumbent upon the Supervisory Board to comply with the provisions of the German Corporate Control and Transparency Act (Kon-TraG), the Transparency and Disclosure Act (TransPuG) and the recommendations and proposals contained in the German Corporate Governance Code.

In 2007 we held a total of five meetings, each of which was attended by all members. Consultations with the Board of

Management were preceded by internal discussions, during which a review of the efficiency of our activities was regularly on the agenda. We continue to verify the efficiency of our supervisory activities by way of self-evaluation. Our recommendations are recorded in writing and reviewed by us in committee on an going basis.

We were kept promptly and comprehensively informed by the Board of Management throughout the year by means of both written and verbal reports. Items on the agenda at our joint meetings regularly included the current course of business, in particular the development in sales and the situation of the company, ongoing corporate strategy, product development and matters relating to personnel, investment and financing and risk management, as well as other business events of particular significance. Members of the Supervisory Board were sent all essential documents in good time in order to prepare prior to these meetings.

In addition to these meetings, several telephone conferences took place and various discussions were held both in person and by telephone. The Chairman of the Supervisory Board in particular was in continuous contact with the Board of Management and was directly involved in all decisions of material importance. Decisions made outside of Supervisory Board meetings were adopted by a process of consultation. Resolutions adopted by a written procedure concerned the remuneration paid to the Board of Management as well as other topics outside of regular meetings.

In addition, outside of our joint meetings, the Board of

» First class business developments span the entire 20 years of our company's history. We are convinced that the strategy of ATOSS Software AG will remain a first-class foundation for sustained sales and earnings growth – now, and in future. «

Management kept the Supervisory Board informed in writing in full and detailed form on a monthly basis. Among other items, each of these reports included an income statement, cash flow analysis, individual departmental costs, types of sales as well as progress in the development of new products and ongoing projects. These documents were in each case reviewed by the Supervisory Board upon receipt to confirm their plausibility, accuracy when compared over time and on a sectoral basis, and completeness.

Due to the size of the company and to the fact that in the interests of lean efficiency the Supervisory Board is intentionally composed of only three members, once again in financial year 2007 we dispensed with the formation of committees

Other matters discussed at the individual meetings of the Supervisory Board:

At the meeting on March 5, 2007

This was also the Supervisory Board meeting scheduled to approve the accounts for financial year 2006. Together with the Board of Management and the auditors, Ernst & Young AG Wirtschaftsprüfungsgesellschaft, Munich, the annual financial statements, consolidated financial statements and management reports prepared by the Board of Management were discussed in detail. The verifications performed by the Supervisory Board gave rise to no reservations. The annual financial statements and consolidated financial statements for financial year 2005,

each of which was awarded an unqualified audit certificate, were approved and the annual financial statements were adopted. The Supervisory Board endorsed the proposal by the Board of Management regarding the application of surplus profits.

In addition the resolutions proposed as agenda items for the forthcoming Ordinary General Meeting on April 26, 2007, were discussed and agreed.

The Board of Management also reported on the profitability of the Company, in particular the return on equity, as well as on intended business policy and other fundamental matters of business planning.

At the meeting on April 26, 2007

This meeting took place in conjunction with the preceding Ordinary General Meeting, the proceedings at which were a central focus of discussion. Another agenda item of material importance was the report by the Board of Management on the progress of business and the outlook for the first half of the financial year 2007.

At the meeting on July 18, 2007

The Board of Management having raised its forecasts on July 9, 2007, the Supervisory Board concerned itself with an analysis of the highly gratifying development in business. The Board of Management gave an explanation of the course of business to date and described its expectations for further progress. Other topics included the successful introduction of the Java version of the ATOSS Staff Efficiency

Suite at Deutsche Bahn AG and other important existing customers. The meeting concluded with a discussion of the initial planning outlook for 2008.

At the meeting on October 22, 2007

During the discussions the Board of Management first reported on the course of business in the first three quarters, the background to the recent forecast upgrade on October 10, 2007, and the outlook for the year 2007 as a whole. On this basis, the Board of Management then proceeded to explain the status of planning for 2008.

At the meeting on December 03, 2007

The Supervisory Board meeting on December 3, 2007, was scheduled to include a detailed discussion of plans for 2008 as well a debate on the corporate governance report and approval of the declaration of conformity for 2007. In advance of this meeting, the Supervisory Board was furnished with the relevant planning documentation for in-depth analysis. The company's sales and budget planning as well the projected accounts and cash flow plans for 2008 were presented and approved.

Similarly the corporate governance report for 2007 was explained and the declaration of conformity pursuant to § 161 of the German Stock Corporation Act was adopted.

Appointment of Ernst & Young AG Wirtschaftsprüfungsgesellschaft as auditors

At the Ordinary General Meeting held on April 26, 2007, in Munich, the shareholders voted in favor of Ernst & Young AG, Wirtschaftsprüfungsgesellschaft, Stuttgart (Munich Branch) as auditors for the financial year 2007. The Supervisory Board duly made the appointment in particular consideration of the rules contained in the corporate governance principles of ATOSS Software AG regarding cooperation on the part of the Supervisory Board with the auditors.

The scope of the auditors' instructions also included the early warning system for the detection of risk and the declaration of compliance given by the Management and Supervisory Boards pursuant to § 161 of the German Stock Corporation Act.

Changes to the Supervisory Board

Mr. Bernhard Dorn, Deputy Chairman of the Supervisory Board, passed away on February 10, 2008. Mr. Dorn had been a member of the company's Supervisory Board since August 2001. He played an essential role in the successful orientation and development of ATOSS Software AG. With the death of Mr. Dorn we have lost a valued colleague whose experience, steadfastness and advisory skills were an example to us all. We shall honor his memory always.

By a resolution adopted by the Municipal Court of Munich, Mr. Winfried Wolf was appointed as a member of the Supervisory Board on February 18, 2008. His term of office expires upon the conclusion of the General Meeting at which the Supervisory Board is formally discharged for the financial year 2007.

Supervisory Board meeting on February 27, 2008 to adopt the annual financial statements

In good time prior to this meeting scheduled to adopt the financial statements, all members of the Supervisory Board were furnished with the annual financial statements and consolidated financial statements, as well as the management reports for financial year 2007 prepared by the Board of Management and each awarded unqualified audit certificates. Prior to discussions with the Board of Management and the auditors, the members of the Supervisory Board had the opportunity to inspect the accounts documentation and verify this also.

At a joint meeting the annual financial statements were then discussed in detail with the Board of Management and the auditors. The Supervisory Board endorsed the report by the auditors as well as the annual financial statements, consolidated financial statements and management reports by the Board of Management. The 2007 annual financial statements and consolidated statements for ATOSS Software AG were approved by the Supervisory Board without reservation and the annual financial statements are accordingly adopted. The Supervisory Board further

endorses the proposal by the Board of Management regarding the appropriation of surplus profits.

We should like to express our sincere thanks to the Board of Management for their endeavors and for their trust and cooperation in financial year 2007. Our thanks are due equally to all members of staff.

Munich, February 2008

Peter Kirn Chairman of the Supervisory Board

Peter Kirn

Members of the Supervisory Board, with a summary of other supervisory board positions held

Peter Kirn

Corporate consultant, Böblingen. Mr. Kirn holds the following other supervisory board positions:

Member of the Supervisory Board of businessMart AG, Stuttgart
Member of the Supervisory Board of UNILOG Integrata Training AG, Stuttgart

Rolf Baron Vielhauer von Hohenhau

President of the Bavarian Taxpayers Association, Munich. Baron Vielhauer von Hohenhau holds the following other supervisory board positions:

• Chairman of the Supervisory Board of ce Consumer Electronic AG, Munich

Bernhard Dorn

Corporate consultant, Leonberg

Mr. Dorn held the following other supervisory board positions (until February 10, 2008):

Deputy Chairman of the Supervisory Board of United Internet AG, Montabaur
Member of the Supervisory Board of AXA Service AG, Cologne
Member of the Supervisory Board of 1&1 Internet AG, Montabaur
Member of the Supervisory Board of Inverto AG, Cologne

Winfried Wolf

(member of the Supervisory Board since February 18, 2008) Corporate consultant, St. Gallen, Switzerland Mr. Wolf holds no other supervisory board positions

The members of the Supervisory Board are not members of other comparable controlling bodies of commercial enterprises in Germany or abroad.

GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT

» 2007 was the most successful year in the history of the company. ATOSS was successful in all customer segments. With a look to the upcoming years, and assuming favorable general conditions, we anticipate continued company growth. «

1. BUSINESS AND CONDITIONS
1. EARNINGS
1. FINANCIAL AND ASSET POSITION
1. REPORT ON SUBSEQUENT EVENTS
1. RISK REPORT
1. DIVIDEND DISTRIBUTION
1. OUTLOOK: FUTURE ECONOMIC AND SECTOR CLIMATE, FUTURE POSITION OF TH COMPANY

1. Business and conditions

Economic climate

Despite the pressure the real estate crisis in the USA and the resulting credit squeeze exerted on the financial system worldwide, the German Institute for Economic Research in Berlin remains confident. Following on from the 2.4 percent growth in economic performance recorded in 2007, the Institute forecasts somewhat weaker, but nonetheless sustained growth in 2008. At the end of January 2008, the German Federal Government put a figure of 1.7 percent on expected growth in the current year.

In the view of the DIW, the technology leadership German companies enjoy will continue to ensure that the credit crisis, the weak dollar and the high price of oil will impact no more than marginally on economic growth. Demand, especially as experienced by export oriented companies, will remain stable.

Segmental environment and market background

The DIW confirms the status of the IT sector as a stable driving force in the German economy: With a 30 percent increase in employment over the period from 1998 to 2006, the IT sector continues to record above-average growth. Over the same period, the industry's share in the economy as a whole rose from 2.0 to 2.6 percent. with the Munich region retaining its leading position in the IT business, ahead of Hamburg and Berlin.

According to a survey by industry association BITKOM, the situation in the IT sector underwent a marked improvement in 2007: The majority of companies are hiring additional staff, and software specialists and IT service providers in particular are currently engaged in an intensive search for new employees. On the other hand, the shortage of skilled, qualified staff is preventing the majority of IT companies from participating in further growth.

Most of companies most recently surveyed by BITKOM expect to see a continuing upward trend in sales in 2008. In the opinion of BITKOM President Prof. August-Wilhelm Scheer, the prospects are good. Demand from industrial, public- and private-sector customers for modern information and communications systems should rise steadily in the coming year. The shopping list will be headed by computers, software and IT services.

The market ATOSS addresses is comprised on the one hand of extensive numbers of small and medium-sized enterprises (the SME market) with up to 500 employees, and on the other of the premium market represented by the highend small businesses and major companies. It is evident that particularly in the case of applications which make no more than modest demands on personnel resource planning systems, the competitive pressure is growing. On the other hand, when complex solutions are called for which necessitate a high degree of integration between working time management (WTM) and personnel resource planning (PRP), our technology leadership, consulting skills and reliable and experienced corporate management constitute convincing features and decision-making criteria which set ATOSS clearly apart.

This is reflected in the highly successful sales figures and results ATOSS posted for the past year: In 2007 the company achieved at EUR 24.4 million (previous year: EUR 22.0 million) the highest sales and at EUR 3.7 million (previous year: EUR 2.8 million) for the second year in succession the best result (EBIT) in its history. The company has now been recording growth for nine quarters in succession. What's more, the substantial volume of orders on hand allows us to predict sales in the near future and plan ahead with security. Our operating cash flow at EUR 4.2 million (previous year: EUR 4.3 million) also continues at a very high level.

Positioning of the ATOSS Group

Since the company was first founded, ATOSS has pursued a vision of offering solutions which impact on the structures

of the modern working world so as enable more creative, more intelligent and more humane ways of working.

The products and services ATOSS develops are designed to solve the problems its customers experience in ascertaining optimum staffing needs, developing ideal working time models, allocating working hours to meaningful advantage, ensuring access and deploying personnel efficiently. By utilizing personnel resources in a manner which is both economically advantageous, as well as sensitive to employee and customer needs, the clients of the ATOSS Group are thereby able to improve their own performance and efficiency.

ATOSS has positioned itself as a best-of-breed specialist in its core fields of working time management and scheduling and personnel resource planning, offering an in-depth range of integrated solutions which meet even the highest functional and technological demands. And with the availability of interfaces to solutions from complementary providers, we can meaningfully address the needs of customers of every size and in every industry. ATOSS has thereby achieved great success in all customer segments. What's more, the company offers supremely competent consultancy services coupled with solutions of convincing depth, with the guarantee that its customers will benefit from improved efficiency and enhanced productivity. As a financially independent partner with a committed long-term outlook, ATOSS ultimately offers investment security.

Our own observations and sales successes, as well as numerous productivity studies point to the fact that the market requires solutions capable of meeting the most complex requirements in the interests of improving productivity.

The right staff

ATOSS' end-to-end portfolio includes solutions highlight the qualifications of available personnel, thereby facilitating rapid deployment. Short-term, as well as seasonal bottlenecks can be overcome by accessing a large number of employees.

At the right time

In almost every industry, demands on capacity are likely to fluctuate, whereas staff cannot always be employed on a pattern which mirrors these fluctuations. Taking into account operational requirements, wage agreements and statutory regulations, as well as factors such as vacations, sickness, part-time employment and so on, ATOSS provides solutions that optimize personnel management and scheduling to cover both peaks and troughs in demand.

In the right place

Flexible staff management and scheduling at varying locations enable decentrally organized businesses and branch-based operations to make more efficient use of capacity and raise their productivity levels.

Working on the right job

It is rare today for personnel resource management and scheduling to be integrated into the process of production planning. Nevertheless a meaningful exchange of data in this very instance can underpin planning reliability and accelerate production processes.

At the right cost

Nowadays, operational working time models can often yield more flexible options for staff deployment than is possible with rigid working hours. Assigning staff under optimized cost conditions, however, can only be achieved by evaluating hours worked in association with wage supplements and ancillary costs.

Many ATOSS customers have seen significant improvements thanks to ATOSS solutions, as their own analyses have shown. ATOSS offers appropriate individual concepts and functional competence supported by the latest technologies for customers of all sizes.

When deciding upon a long-term partnership, major customers in particular are increasingly focusing on independent companies with a sound financial base. When investment decisions are made, our robust equity ratio of 59 percent (previous year: 55 percent), our strong operating cash flow amounting to EUR 4.2 million (previous year: EUR 4.3 million) and our continuing high level of expenditure on technological development are among the determining factors.

The company continues to pursue a strategy aimed at consolidating growth in its domestic market. In the past financial year were once again successful in achieving this objective. Domestic sales came in at EUR 22.3 million, up by ten percent on the previous year's figure of EUR 20.3 million. Looking further afield, the company plans to accompany its international clients at their locations abroad.

Business development

The company regards the key figures for sales, operating profits (EBIT) and cash flow as the essential measures of its success. The development in software licensing revenues is of central importance since this is the driving force behind the company's business model. In this context, the volumes of orders received and orders on hand for software licenses represent essential indicators for the future development of the company.

In financial year 2007 ATOSS achieved sales amounting to EUR 24.4 million (previous year: EUR 22.0 million). This growth continued the welcome pattern set in the preceding year, which is attributable not least to the advanced Javabased technology embodied in our software since 2004. The many references that now support the ATOSS Staff Efficiency Suite provide a sound basis on which to secure further business successes. In particular, major customers such as Deutsche Bahn AG and important Lufthansa group subsidiaries were converted to Java-based technology in 2007.

Development in sales of software licenses and maintenance, software license order situation

Software sales were increased in 2007 with revenues rising 13 percent to EUR 14.6 million (previous year: EUR 12.9 million). The proportion of sales accounted for by software stood at 60 percent (previous year: 59 percent).

Software maintenance sales during the year rose by 11 percent to reach a total of EUR 9.2 million (previous year: EUR 8.3 million).

Sales of software licenses grew by 17 percent from EUR 4.6 million in 2006 to EUR 5.4 million in 2007 due to additional purchases by existing customers, progress on projects for major customers and further orders from new customers.

The development in orders received for software licenses was also most gratifying: Order intake was up by 13 percent from EUR 5.4 million in 2006 to EUR 6.1 million in 2007. In view of the fact that projects for major customers in particular are implemented over an extended period, orders on hand for software licenses on December 31, 2007, were 52 % higher at EUR 1.9 million (previous year: EUR 1.3 million).

Development in consultancy sales

Consultancy sales in 2007 reached EUR 6.2 million, up by 12 percent over the previous year's figure of EUR 5.6 million. As a result, consultancy accounted for 25 percent of total sales as in the previous year. Strong demand from customers both actual and potential ensured a high level of capacity utilization among our consultants.

Development in hardware and other sales

Revenues from the sale of hardware declined in 2007. Last year's figure of EUR 2.7 million was 4 percent lower than the EUR 2.8 million recorded in 2006. As a proportion of total sales, this represented some 11 percent (previous year 13 percent). Other sales, the heading under which notably identification media and customer-specific programming services are reported, amounted to EUR 0.9 million, up by 4 percent from EUR 0.7 million the year before.

Long-term production orders

As in previous years, the company realizes long-term orders in application of the percentage of completion method. In financial year 2007 this applied to 13 orders (previous year: 9) which were realized to a value of EUR 1.3 million (previous year: EUR 1.7 million) in line with project progress.

Corporate strategy and opportunities

At the heart of our business activities lie the continuous acquisition of new customers and the development of existing customer installations in the fields of working time management and personnel resource planning. Some significant progress was made in both areas in 2007. For example, products incorporating the company's latest generation of software solutions were placed with existing customers of major importance. Furthermore, a large number of new customers were acquired, including additional orders from major clients. In addition, 2007 also witnessed the successful implementation of major projects acquired in the preceding year. We regard these successes as continuing confirmation that we are pursuing the correct strategy to enhance both sales and results.

Although we see further opportunities for growth in the German-speaking territories, our products are deployed in ten countries and in eight languages. Therefore, in the medium term we also have the potential for international growth, with the premium market in particular offering substantial opportunities for development.

The first-class positioning which the company enjoys is underpinned by prominent reference customers, pioneering technologies (Java J2EE), a convincing range of products and services, extensive competence in the implementation of software projects and in consulting, as well as by the stability and independence of the company itself.

In order to develop these competitive advantages for the long-term, we will continue to allocate a high level of funding to secure market access and thereby also future growth.

Research and development

Our customers' security of knowing that they will be able to master the most complex requirements now and in future, is a decisive aspect. At the same time, they also need to deploy technologically sophisticated solutions which will be equally at home in the system environments of the future and therefore capable of returning long-term economic

benefits. For this reason, we shall continue to maintain our strong, substantial commitment to the development of our products.

We draw on advanced technology platforms as a basis on which to create solutions that can replicate every customerand industry-specific requirement, covering all aspects of intelligent personnel management and scheduling. In order to obviate problems in updating from one release to the next, we guarantee full upward compatibility, thereby allowing the latest solutions to be implemented at any time.

We also aim to facilitate integration of our solutions in a wide variety of system environments, as we have already succeeded in doing with the new Java version of ASES (ATOSS Staff Efficiency Suite) and ASE (ATOSS Startup Edition). Future versions will offer facilities to link to and with other applications via so-called service-oriented architecture (SOA), thereby enabling our customers to profit from additional potential benefits. The exchange of data between widely varying systems will then become even simpler.

Our fully Java-based package of solutions for softwaresupported working time management and scheduling is suitable for use in a wide range of industries. The ATOSS Startup Edition and ATOSS Time Control (ATC) are distinguished by the simplicity of their user interface. The ATOSS Startup Edition is a stepping stone for customers using a variety of system environments. As their requirements become more complex in future, they can easily migrate to the ATOSS Staff Efficiency Suite. On the other hand, ATOSS Time Control is focused on customers in the Microsoft world.

Expenditure on research and development in 2007 amounted to EUR 4.6 million (previous year: EUR 3.9 million). The bulk of this figure in the amount of EUR 3.6 million (previous year: EUR 2.9 million) was accounted for by the personnel costs for 68 (previous year: 51) software developers. Despite the increase in sales, the proportion of overall turnover represented by research and development rose to 19 percent (previous year: 18 percent).

As in preceding years, expenditure on research and development is not capitalized but is instead reported in full as an expense.

Subsidiaries and international business

All of our subsidiaries continued to record positive development in financial year 2007 and all of them reported positive results to December 31, 2007. The proportion of Group sales accounted for by our international business in 2007 amounted to 9 percent, against 8 percent in the preceding year.

Officers, employees, development in personnel

At the end of the end of the year 2007 the Company employed a staff of 195 (December 31, 2006: 169). Of these 68 (previous year: 51) were employed in product development, 58 (previous year: 49) in consulting and 35 (previous year: 40) in sales and marketing. Personnel costs in 2007 rose to EUR 12.6 million, compared with the figure of EUR 11.6 for the preceding year. The company is managed primarily on the basis of a broad system of targets. Company, departmental and individual targets are agreed with almost every member of staff and linked with an appropriate variable salary component, dependent on each employee's level of responsibility. These variable components range between 10 percent and 50 percent of the contractually agreed target salary. The company targets are in turn keyed to the relevant scheduled sales and operating profit data for the financial year. Departmental targets take the form of a uniform table of sales or performance targets dependent on position and responsibility, while individual targets are linked to the performance of each individual employee.

On December 31, 2007, there were 7 positions for trainees (previous year: 6)

The Supervisory Board of the company remained unchanged in 2007, comprising Peter Kirn as Chairman, Bernhard Dorn as Deputy Chairman and Rolf Baron Vielhauer von Hohenhau. Similarly the Board of Management continues to comprise Andreas F.J. Obereder as CEO and Christof Leiber as Finance Director.

Corporate Governance

Since its activities in connection with its flotation, ATOSS Software AG has concerned itself intensively with the subject of corporate governance and the associated statutory regulations. The company has reported regularly since 2001 on its activities in this regard. The company's boards examine developments and changes in the German Corporate Governance Code in particular detail. In contrast to the provisions of the law, however, the Code is not binding in its standardizing effect and in fact allows deviations from its recommendations.

Once again in 2007, the Board of Management and Supervisory Board have concerned themselves intensively with the new requirements of the German Corporate Governance Code, comparing these with the company's own principles and identifying those points in which deviations exist from the recommendations issued on June 14, 2007, by the Government Commission on the German Corporate Governance Code.

On December 3, 2007, the Board of Management and Supervisory Board adopted a new declaration of conformity pursuant to § 161 of the German Stock Corporation Act in which it is confirmed that the recommendations of the Commission on Corporate Governance appointed by the German Government are complied with, with the exception of those points stated in the declaration. This declaration is published on the company's web site. It is consequently evident that the company in broad measure conforms with the recommendations and deviates only in respect of a small number of points which in the company's view are of only marginal importance.

Deviations apply in respect of the following three points:

The existing directors and officers insurance contracts do not include a self-insured deductible. The company boards are of the opinion that the commitment and responsibility with which they perform their duties are not to be improved by the integration of a self-insured deductible, and they therefore do not anticipate making such provision.

In accordance with the margin of discretion afforded by the recommendations of the Government Commission, in view of the specific circumstances pertaining at the company and in particular the size of the company the Supervisory Board has dispensed with the formation of separate committees and in particular of an audit committee.

When share options and comparable schemes are granted, the German Corporate Governance Code further foresees that these should be linked with demanding and relevant parameters for comparison; and when such are granted to members of the Board of Management, some means of limitation or cap should be entailed. The convertible bonds already issued in favor of organs of the company in accordance with the legal specifications for such instruments do not contain specific performance criteria which need be fulfilled in order to exercise the conversion rights, nor do they provide for any means of limitation or cap. In the estimation of the company, because of the inherent capital commitment over their lifetime, convertible bonds exercise a loyalty effect which in the view of the company is just as significant.

The remuneration paid to members of the Board of Management is oriented towards their contribution to the success of the business, and towards industry standards. It includes performance-related and non-performancerelated elements as well as components with a long-term incentive effect dependent on the development in the price of ATOSS stock. The non-performance-related remuneration is paid monthly in the form of a salary. An advance on the performance-related remuneration is paid monthly up to a maximum of 50 % of the target profit-share payment for the financial year in question.

The remuneration system for board members is also described in a separate Corporate Governance Report published as part of the Annual Report.

Other information

The company's capital is divided into 4,025,667 bearer shares each with a nominal value of one euro which carry full voting and dividend rights. Of this total the majority shareholder, Andreas F.J. Obereder, holds 1,981,184 shares, representing a proportion of 49.2 percent. No other shareholders with a notifiable holding of more than 10 percent of voting rights are known to the company.

By a resolution adopted by the General Meeting on April 22, 2004, the Board of Management is authorized on or before April 22, 2009, with the approval of the Supervisory Board to increase the company's capital stock by up to EUR 2,012,833 through the issue of new bearer shares in return for contributions in cash or kind, whereby the right of shareholders to subscribe may be excluded.

By a resolution adopted by the General Meeting on April 26, 2007, the Board of Management is further authorized on or before October 25, 2008, to purchase company shares in the amount of 10 percent of capital stock, in consideration of the statutory restrictions.

Members of the Board of Management are appointed and dismissed in accordance with § 84 and § 85 of the German Stock Corporation Act and § 6 of the company's articles of association.

Changes to the articles of association follow the regulations contained in § 133 and §§ 179 ff. of the Stock Corporation Act.

No material agreements exist which are contingent upon a

51 GROUP MANAGEMENT REPORT EARNINGS FINANCIAL AND ASSET POSITION

change of control resulting from a takeover offer. Nor have any agreements been entered into with members of the Board of Management or employees regarding compensation in the event that a takeover offer is made.

In addition to its subsidiaries ATOSS Software Ges. mbH, Vienna, ATOSS Software AG, Zürich, ATOSS CSD Software GmbH, Cham, and ATOSS Software SRL, Timisoara, the parent company ATOSS Software AG of Munich also has business premises in Frankfurt, Hamburg, Meerbusch and Stuttgart.

2. Earnings

The earnings situation in financial year 2007 was defined on the one hand by an 11 percent increase in sales of all types which totaled EUR 24.4 million (previous year: EUR 22.0 million) and on the other by a lesser increase of 6 percent in costs – without taking account of sales input – which amounted to EUR 18.3 million (previous year: EUR 17.1 million); the increase in expenses being essentially attributable to higher personnel costs resulting from new staff appointments. As a result, profitability was increased in excess of intra-year forecasts.

The essential key figure determining the success of the company's operating performance, namely its earnings before interest and taxes (EBIT) was improved from EUR 2.8 million in the preceding year to EUR 3.7 million. The return on sales represented by EBIT stood at 15 percent (previous year: 13 percent).

Earnings before taxes (EBT) amounted to EUR 4.2 million (previous year: EUR 3.2 million) and the net income came in at EUR 2.5 million (previous year: EUR 1.9 million). As a result, earnings per share increased to EUR 0.63 (previous year: EUR 0.48); after adjustment for the dilution effect of convertible bonds in circulation the figure was EUR 0.62 (previous year: EUR 0.47).

Thus thanks in particular to its success in winning further premium customers while maintaining a high level of expenditure on the development of functionally superior products, the company has increased its profitability and

secured a sound financial basis for a long-term strategy which is proving to be correct.

3. Financial and asset position

The company regards equity as an essential control parameter in guarding against economic, sector- and company-specific risks. Therefore the company's financial strategy is directed towards maintaining a level of equity commensurate with such risks. The intention is to guarantee shareholders an appropriate return on equity and offer customers and suppliers investment security for their software decisions through the medium of long-term partnerships.

In this respect the ATOSS Group was highly successful in financial year 2007:

Operating cash flow developed most satisfactorily during the reporting period, amounting to EUR 4.2 million as of December 31, 2007 (previous year: EUR 4.3 million). As a result the company's liquidity (financial resources) which had been reduced by some EUR 1.0 million following the dividend distribution was restored through ongoing business activities. The ability of the company to meet its payment obligations therefore remains securely guaranteed.

Cash flow from investment activities amounted to - EUR 0.6 million, following on from - EUR 0.2 million in the year before. Due in particular to the EUR 1.0 million dividend distribution, cash flow from financing as of December 31, 2007, amounted to - EUR 0.8 million (previous year: - EUR 21.1 million).

The balance sheet total to December 31, 2007, stood at EUR 17.6 million, against EUR 15.7 million in the year before. Supported by the positive development in business, liquidity (cash and cash equivalents) increased from EUR 10.8 million to EUR 13.5 million. Liquidity as a proportion of total assets now amounts to 76 percent, compared with 69 percent in the preceding year. Liquidity per share – based on the average of 3,975,237 shares in circulation (previous year: 3,916,853) – amounts to EUR 3.39 (previous year: EUR 2.75).

Despite the rise in sales, trade accounts receivable were reduced substantially from EUR 3.7 million to EUR 2.8 million. This was largely attributable to the successful completion of customer projects and further improvements in our accounts control. The average age of our receivables fell to 42 days, compared with 61 days in the preceding year.

The company is financed through the ongoing cash flow generated from operations. Short-term liabilities included trade accounts payable in the amount of EUR 0.4 million (previous year: EUR 0.5 million), accruals amounting to EUR 3.0 (previous year: EUR 2.4 million), deferred revenues of EUR 1.0 million (previous year: EUR 1.5 million), tax provisions amounting to EUR 0.8 million (previous year: EUR 0.5 million) and miscellaneous short-term liabilities of EUR 0.6 million (previous year: EUR 0.5 million). In total, shortterm liabilities on December 31, 2007 had risen to EUR 5.8 million (previous year: EUR 5.5 million). The increase was essentially attributable to the formation of provisions for accrued liabilities and taxes.

The accruals relate predominantly to commitments to employees in respect of variable salary components to be disbursed in the following year, and also to anticipated accounts payable. Among the items reported under longterm liabilities are the deposits on convertible bonds. Of the 85,673 convertible bonds outstanding at December 31, 2006, some 44,173 were converted during the financial year and 3,000 surrendered, with the result that by December 31, 2007, there were 38,500 bonds still in circulation.

Group equity capital as of December 31, 2007, amounted to EUR 10.5 million (previous year: EUR 8.7 million), resulting in an equity ratio of 59 percent in comparison with 55 percent on December 31, 2006. The return on equity as of December 31, 2007, stood at 24 percent (previous year: 22 percent).

As a matter of principle, ATOSS reports its expenditure on research and development in its income statement. As in the past, intangible assets of our own manufacture are not capitalized.

Investments in fixed assets (excluding financial investments) rose in the financial year from EUR 0.3 million to EUR 0.7 million. Revenues from the sale of fixed assets in 2007 amounted to thousands EUR 24 (previous year: thousands EUR 107.

To reduce administrative costs, the company vehicle fleet is leased. As of December 31, 2007, there were 55 leasing agreements for company vehicles (previous year: 54). In addition individual servers are on long-term lease from their manufacturers. In fact at the end of 2007, there was one leasing agreement in existence for one server (previous year: 2).

Thanks to its excellent earnings and to its continuing sound asset position, the company expects its ability to meet its financial commitments to remain unchanged in the future.

4. Report on subsequent events

After the balance sheet closing date between January 22 and January 25, 2008, the company purchased 6,619 own shares at a cost of EUR 48,526. There have been no further reportable events of particular import subsequent to the closing date.

5.Risk report

In accordance with its long-term business strategy the company endeavors to avoid exposure to any unreasonable risks. Nevertheless in the course of its ordinary business activities the company is unavoidably exposed to a variety of risks which arise from these business operations as well as from changes in environmental conditions.

In order to make these risks transparently clear and to evaluate these and the accompanying opportunities that present themselves, the company has developed a comprehensive risk management system. The object is not merely to identify and monitor risks on an ongoing basis, but also having assessed the probability of their occurrence and the conceivable level of damage that may be caused, to provide decision-making criteria which convey a transparent picture of the company's willingness to accept risk exposure.

53 GROUP MANAGEMENT REPORT REPORT ON SUBSEQUENT EVENTS RISK REPORT

The risk management system was revised in the preceding year and adapted in line with changes in organizational structure. Some slight modifications only were made in the period under review. The system also takes account of risks arising from deficiencies in data security. Overall in the view of the Board of Management, ATOSS has at its disposal an extremely comprehensive and easily comprehended system which meaningfully supports the Company's risk strategy.

In the past financial year two extensive risk reviews were undertaken. The results were compiled by the risk management committee in a risk report and submitted to the Board of Management. The risks described in these reports are essentially the same as those which have been described in previous reports.

In addition to risks arising from data protection and data security, particular attention was paid to market risks relating to competitive situations, including for example consolidation on the part of competitors and changes in the market environment. Risks are also perceived as a result of technological changes and from the loss of key personnel.

The company continues in its endeavors to counter these risks by organizational means. The risk resulting from the loss of key personnel is fundamentally covered by the fact that knowledge is distributed within departments.

The company counters risks contingent upon the competitive environment by consolidating its functionality in the key areas of working time management and personnel resource planning. In these areas the company clearly distinguishes itself from its competitors, for whom access to the market is proportionately more difficult.

Financial risk continues to be countered by an unvaryingly conservative investment strategy. Given the possible risk of interest rate changes and other credit risks, the company invests its funds in short-term fixed deposits with reputable financial institutions, in due consideration of the liability limits imposed by the deposit guarantee fund. The market price risk associated with financial assets thus remains negligible.

Trade accounts receivable are continuously assessed in terms of feasibility and allowances are made where noticeable problems arise. Since the company has no single customers which account for more than 10 percent of sales, the credit risk does not present a potential hazard to the continued existence of the business.

In view of the substantial cash funds available at short notice and as well as the long-term positive cash flow from operations, the company is not subject to any liquidity risk.

Risks arising from existing and future customer contracts are continuously monitored and assessed.

It is possible that legal risks or changes to regulatory requirements may impair business operations. Similarly, as a stock market-listed company there is a risk that at some point it may no longer be possible to satisfy increasing legal requirements in an economically tenable manner. For this eventuality formal procedures are created within our organization, the purpose of which is to take account of changes in conditions.

Finally, there is also the possibility that as yet unrecognized and unreported risks may arise which might also have negative effects on business activities. The combination of in principle mutually independent risks may present additional hazards to the company which may amplify one another. Therefore ATOSS will continue to constantly monitor its environment and review the effectiveness of measures taken and of the risk management system as a whole. Despite continuous adjustments to the risk management system, it is not possible to entirely quantify either the probability of the described risks occurring or their financial impact.

6. Dividend distribution

As in the preceding year, in considering the dividend to be paid, the Management and Supervisory Boards have based their proposal upon the long-term dividend policy applied by the Company, under which between 30 percent and 50 percent of the profit per share generated in the financial year is distributed as a dividend. The Board of Management has accordingly resolved to propose to the General Meeting that a dividend of EUR 0.31 be paid for the financial year 2007.

7. Outlook: Future economic and sector climate, future position of the company

The economic environment in the past financial year was favorable to corporate investment. In line with the DIW's autumn forecasts, growth in the economy as a whole in 2007 amounted to 2.4 percent. However in view of the effects of the weak dollar on exports, the high prices for oil and energy and the credit squeeze triggered by the US real estate lending crisis, expectations for economic growth in future years are somewhat reduced.

The overwhelming majority of IT companies surveyed by the industry association BITKOM look forward to another year of growth. 78 percent of these businesses expect sales to rise and a further 16 percent expect turnover to equal the 2007 level.

For the ATOSS Group, it is essential that we continue to exploit existing market potential to safeguard future growth. The Group must convince both present and future customers not only of the benefits of our products and skills, but also of the long-term investment security to be gained by entering into partnership with a financially independent solution provider. Favorable market conditions alone are not enough to guarantee future growth for a niche provider such as ATOSS. Consequently, successful market access remains the deciding factor in determining future growth.

The company anticipates that the strong response to its new products will be sustained and that the successful order intake in 2007 will continue in the coming year. In view of the very substantial volume of orders on hand at the close

55 GROUP MANAGEMENT REPORT DIVIDEND DISTRIBUTION OUTLOOK

of the year 2007, the company anticipates a further rise in sales. Coupled with a lower rise in costs, this trend will then also yield an increase in results. Looking further ahead, provided that the climate remains favorable, it is expected that ATOSS will continue to record further growth.

The Board of Management gives an assurance to the best of its knowledge and belief that the development in business, including the results and the situation of the company, are described in this management report so as to convey an impression which accords with the true facts, and that the essential opportunities and risks are so described accordingly.

Munich, January 29, 2008

Andreas F.J. Obereder Christof Leiber

CONSOL IDATED BAL ANCE SHEET CONSOL IDATED BAL ANCE SHEET

CONSOLIDATED BLANCE SHEET TO DECEMBER 31, 2007
Assets (EUR)	Note	Dec. 31, 2007	Dec. 31, 2006
Non-current assets	11
Tangible fixed assets (net)	12, 28	529,798	373,373
Intangible assets (net)	13, 28	149,841	125,284
Deferred taxes	14, 29	295,319	395,271
Total non-current assets		974,958	893,928

Current assets
Inventories	10, 26	26,120	12,267
Trade accounts receivable (net)	25	2,833,419	3,675,459
Other current assets	27	340,627	372,036
Cash and cash equivalents	8, 9, 24	13,467,767	10,784,323
Total current assets		16,667,933	14,844,085
Total assets		17,642,891	15,738,013

Equity and liabilities (EUR)	Note	Dec. 31, 2007	Dec. 31, 2006
Shareholders' equity	38
Subscribed capital	39	4,025,667	4,025,667
Capital reserve	40	-134,511	362,241
Treasury stock	19, 41	-406,608	-1,102,252
Unappropriated retained earnings	67	6,981,913	5,431,461
Total equity		10,466,461	8,717,117

Long-term liabilities	30
Convertible bonds	17, 35, 36	35,922	81,421
Pension provisions	18, 37	1,212,551	1,219,232
Deferred taxes	14, 29	102,958	253,547
Total long-term liabilities		1,351,431	1,554,200

Short-term liabilities	15, 30
Trade accounts payable	30	446,476	526,526
Short-term accruals	16, 32	3,012,888	2,381,674
Deferred revenues	33	1,005,811	1,501,730
Tax provisions		791,439	504,061
Other short-term liabilities	34	568,385	552,705
Total short-term liabilities		5,824,999	5,466,696
Total equity and liabilities		17,642,891	15,738,013

57 CONSOLOIDATED BLANCE SHEET CONSOLIDATED INCOME STATEMENT

CONSOL IDATED INCOME STATEMENT CONSOL IDATED INCOME STATEMENT

CONSOLIDATED INCOME STATEMENT FOR FINANCIAL YEAR 2007
EUR	Note	Jan. 01, 2007 - Dec. 31,2007	Jan. 01, 2006 - Dec. 31, 2006
Sales revenues	20, 42	24,421,916	21,990,970
Cost of sales	43	-7,882,074	-7,173,793
Gross profit on sales		16,539,842	14,817,177
Marketing costs	44	-5,752,028	-6,024,661
Administration costs	45	-2,543,245	-2,604,599
Research and development costs	21, 46	-4,632,118	-3,936,225
Other operating income	49	117,422	526,991
Operating result		3,729,873	2,778,683
Interest and similar income	48	495,157	472,091
Interest and similar expenses	22, 48	-53,230	-57,594
Earnings before taxes		4,171,800	3,193,180
Taxes on income and earnings	51	-1,671,000	-1,308,324
Net income for the year		2,500,800	1,884,856

Earnings per share (undiluted)	52	0,63	0,48
Earnings per share (diluted)	52	0,62	0,47

Average number of shares in circulation (undiluted)		3,975,237	3,916,853
Average number of shares in circulation (diluted)		4,045,434	4,037,839

CONSOL IDATED CA SH FLOW STATEMENT CONSOL IDATED CA SH FLOW STATEMENT

CONSOLIDATED CASH FLOW STATEMENT FOR FINANCIAL YEAR 2007
EUR	Note	Jan. 01, 2007 - Dec. 31,2007	Jan. 01, 2006 - Dec. 31, 2006
Net income for the year	52	2,500,800	1,884,856
Depreciation of fixed assets	28	476,014	431,229
Profit (previous year: loss) on the disposal of fixed assets	28	-7,205	11,863
Change in deferred taxes	29	-50,637	345,542
Personnel costs arising from the convertible bonds program	35	21,859	89,279
Provisions for pension commitments	37	-6,681	-10,679

Change in net current assets
Trade accounts receivable	25	842,040	10,010
Inventories and other short-term assets		17,556	-27,668
Trade accounts payable		-80,050	-193,768
Short-term provisions	32	631,214	991,128
Deferred revenues		-495,919	807,181
Tax provisions	29	287,378	72,325
Other short-term liabilities	34	15,680	-99,281
Cash flow generated through business operations (1)	53	4,152,049	4,312,017

Cash flow from investment activities
Acquisition of tangible and intangible assets	28, 54	-674,176	-321,786
Income from fixed asset disposals	54	24,385	107,442
Cash flow generated through investment activities (2)	54	-649,791	-214,344

Cash flow from financing activities
Dividend paid	67	-950,348	-21,466,506
Tax refund on flotation costs	40	0	98,477
Disbursements resulting from the redemption of convertible bonds	35	-3,000	-1,500
Income from the sale of treasury stock	19, 41	134,534	220,194
Cash flow generated through financing activities (3)	55	-818,814	-21,149,335

Change in liquidity - total of (1) to (3)		2,683,444	-17,051,632
Liquidity at beginning of year	24	10,784,323	27,835,985
Liquidity at end of year	24	13,467,767	10,784,323

Income tax paid		1,434,259	904,137
Interest paid		657	2,444
Interest received		429,235	528,010

59 CONSOLIDATED CASH FLOW STATEMENT CONSOLIDATED STATEMENT OF SHAREHOLDERS'S EQUITY

CONSOL IDATED STATEMENT OF SHAREHOLDERS'S EQU IT Y CONSOL IDATED STATEMENT OF SHAREHOLDERS'S EQU IT Y

CONSOLIDATED STATEMENT OF SHAREHOLDER'S EQUITY TO DECEMBER 31, 2007
EUR	Subscribed capital	Capital reserve	Treasury stock	Unappropriated retained earnings	Changes in equity not recognized in the Income Statement	Total
Note	39	40	19, 41	67
As at Jan. 01, 2006	4,025,667	450,013	-1,670,304	25,013,111	18	27,818,505
Net income 2006	0	0	0	1,884,856	0	1,884,856
Dividend	0	0	0	-21,466,506	0	-21,466,506
Sale of treasury stock	0	-275,528	568,052	0	0	292,524
Transfer to capital reserve deriving from convertible bonds	0	89,279	0	0	0	89,279
Withdrawal from capital reserve	0	98,477	0	0	0	98,477
Other changes in equity not recognized in the income statement	0	0	0	0	-18	-18
As at Dec. 31, 2006 / Jan. 01, 2007	4,025,667	362,241	-1,102,252	5,431,461	0	8,717,117
Net income 2007	0	0	0	2,500,800	0	2,500,800
Dividend	0	0	0	-950,348	0	-950,348
Sale of treasury stock	0	-518,611	695,644	0	0	177,033
Transfer to capital reserve deriving from convertible bonds	0	21,859	0	0	0	21,859
As at Dec. 31, 2007	4,025,667	-134,511	-406,608	6,981,913	0	10,466,461

One share corresponds to a proportion of 1 euro of subscribed capital.

NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS NOTES ON THE CONSOLIDATED FINANCIAL STATEMENTS

» The record sales in 2007 were followed by record performance figures. At more than EUR 3.7 million, the net operating results (EBIT) clearly exceeded the previous year's figures by 34 percent. «

I. HEADQUARTERS AND BUSINESS ACTIVITIES
II. ACCOUNTING AND VALUATION METHODES
III. NOTES TO THE CONSOLIDATED BALANCE SHEET
IV. NOTES TO THE CONSOLIDATED INCOME STATEMENT
V. SEGMENT REPORTING
VI. NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
VII. OTHER INFORMATION

HEADQUARTERS AND BUSINESS ACTIVITIES ACCOUNTING AND VALUATION METHODS

I. Headquarters and business activities

ATOSS Software AG with headquarters at Am Moosfeld 3 in Munich, Germany, hereinafter also referred to as "ATOSS" or "the company", is a leading provider engaged in the development and sale of software licenses, software maintenance, hardware and consulting services pertaining to the provision of electronic support for all corporate processes involved in the efficient management, scheduling and deployment of personnel resources at companies and public institutions. Each of the ATOSS product lines consists of integrated software modules which are employed by large numbers of customers.

II. Accounting and valuation methods

1. International Financial Reporting Standards (IFRS)

As in the preceding year, the present consolidated financial statements were prepared for both the parent company and subsidiaries in accordance with the International Financial Reporting Standards (IFRS) as applicable in the EU and with the supplementary provisions of German commercial law applicable pursuant to § 315a, Para. 1 of the German Commercial Code (HGB).

Pursuant to § 315a of the German Commercial Code, consolidated accounts prepared in accordance with the provisions of the Code were dispensed with.

The same accounting and valuation methods were applied as in the preceding year.

The Group has in this financial year applied the new and revised IFRS standards and interpretations listed hereinafter. No effects on the net assets, financial position and earnings situation of the company resulted from the application of these standards and interpretations. They did, however, lead to additional information being reported, and in some cases to changes in the balance sheet reporting and valuation methods.

Standard or interpretation	Description	For financial years with effect from
IFRS 7	Financial Instruments: Disclosures	Jan. 01, 2007
IAS 1	Presentation of Financial Statements	Jan. 01, 2007
IFRIC 10	Interim Financial Reporting and Impairment	Jan. 01, 2007

In addition, the Group has applied the following interpretations ahead of time. No effects on the net assets, financial position and earnings situation of the company resulted from the application of these interpretations. They did however lead to changes in balance sheet reporting and valuation methods.

Standard or interpretation	Description	For financial years with effect from
IFRIC 11	IFRS 2 – Group and Treasury Share Transactions	Jan. 01, 2009
IFRIC 12	Service Concession Arrangements	Jan. 01, 2008
IFRIC 13	Customer Loyalty Programs	Jan. 01, 2008
IFRIC 14	AS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction	Jan. 01, 2008

The essential effects of these changes are as follows:

IFRS 7 requires disclosures to be made which will enable those to whom the financial statements are addressed to assess the significance of financial instruments with regard to the financial position and earnings power of the Group, as well as the nature and extent of risks arising from these financial instruments. The resulting new disclosures permeate the entire financial statements. However there were no effects on the net assets, financial position and earnings situation of the Group. The relevant information provided for comparison purposes has been adjusted accordingly.

The change in IAS 1 results in new disclosures which will enable readers of the financial statements to assess the Group's objectives, policies and processes for managing capital. The new disclosures are presented in Note 62.

The Group has applied IFRIC 10 for the first time with effect from January 01, 2007. This specifies that an impairment loss recognized in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost must not be reversed in the accounts for the next period. Since the Group has not in the past made any such adjustments to previously recognized impairment losses, this interpretation has no effect on the net assets, financial position or earnings situation of the Group.

The Group has decided to apply IFRIC 11 for the first time with effect from January 01, 2007, insofar as it is relevant to the consolidated financial statements. In accordance with this interpretation, agreements under which employees are granted rights to a company's own equity instruments must be reported as share-based payments settled out of equity even if the company purchases the instruments from a third party or if the shareholders provide the necessary equity instruments. These equity instruments have already in the past, as now required by IFRIC 11, been treated as share-based payments pursuant to IFRS 2. Note 24 gives a detailed description of the effects of share-based payments.

ACCOUNTING AND VALUATION METHODS

IFRIC 12 defines how obligations accepted and rights acquired in connection with service concessions are to be treated in the concession-holder's accounts. The companies included in the consolidated financial statements are not concessionholders within the meaning of IFRIC 12. This interpretation is therefore not relevant to the Group.

In accordance with IFRIC 13, credits granted to customers ("awards") must be recognized as a separate component of the sale transaction in connection with which they were granted. Therefore a part of the attributable fair value of the consideration received must be allocated to the award credits granted and carried as a liability. The deferred proceeds are to be recognized as revenue in the period in which the credits granted are either used or expire. Since the Group currently has no such customer loyalty programs, this interpretation is not relevant to the Group.

IFRIC 14 contains guidelines on how to determine the maximum surplus arising from a defined benefit plan which may in accordance with IAS 19 - Employee Benefits be carried as an asset. However, the company's pension plan makes no such provision. For this reason IFRIC 14 does not affect the Group's financial reporting.

The following standards and IFRIC interpretations, which have been published but have not yet come into force, have not been applied ahead of time by the Group. The essential effects resulting from these changes are explained hereinafter.

Standard or interpretation	Description	For financial years with effect from
IAS 23	Borrowing Costs	Jan. 01, 2009
IFRS 8	Operating Segments	Jan. 01, 2009

The revised standard IAS 23 – Borrowing Costs was published in March 2007 and will be applicable for the first time for financial years commencing on or after January 01, 2009. This standard requires borrowing costs attributable to a qualifying asset to be capitalized. A qualifying asset is an asset that takes a substantial period of time to make ready for its intended use or sale. The Group intends to apply this standard in accordance with the transitional stipulations. Accordingly, borrowing costs attributable to qualifying assets will be capitalized with effect from January 01, 2009. This will not lead to any changes with regard to borrowing costs previously recognized immediately as an expense.

IFRS 8 – Operating Segments was published in November 2006 and will be applicable for the first time for financial years commencing on or after January 01, 2009. In accordance with IFRS 8, segment information must be reported in the measure that it is available to the chief operating decision maker. In the

assessment of the Group, the operating segments pursuant to IFRS 8 conform with the business segments identified in accordance with IAS 14. The effect of this standard on other segment information has not yet been finally clarified. However since the standard concerns disclosure requirements, its application in financial year 2009 will have no effects on the net assets, financial position and earnings situation of the Group.

2. Reporting period

The present consolidated financial statements were prepared to December 31, 2007, for the reporting period from January 01 to December 31, 2007. The financial year for all Group companies coincides with the calendar year.

3. Reporting currency

The present consolidated financial statements were prepared in euro. Figures are rounded up to whole euro units..

4. Group of consolidated companies

In the consolidated financial statements for ATOSS Software AG, Munich, all subsidiaries are fully consolidated in accordance with IAS 27.12. Subsidiary companies are fully consolidated from the time of acquisition, that is to say, from the time at which the Group acquires control. Companies cease to be consolidated when the parent company no longer has control. Their annual financial statements have been prepared in accordance with national regulations and reconciled in accordance with IFRS.

Company	Share of subscribed capital	Equity as of Dec. 31, 2007 in EUR	Result for the year 2007 in EUR
ATOSS CSD Software GmbH, Cham, Germany	100%	527,432	112,486
ATOSS Software Gesellschaft m.b.H., Vienna, Austria	100%	249,616	294,478
ATOSS Software AG, Zurich, Switzerland	100%	236,582	112,367
ATOSS Software S.R.L., Timisoara, Romania	100%	45,708	21,260

5. Principles of consolidation

In addition to the parent company ATOSS Software AG, Munich, the consolidated annual financial statements also include all subsidiaries.

For consolidation purposes the national financial statements of the subsidiary companies have been adjusted in line with the accounting and valuation methods applied by the parent company. All inter-company transactions as well as receivables, provisions, liabilities and deferrals have been eliminated.

Pursuant to IFRS 3.16-65 the capital consolidation of fully consolidated companies was undertaken in accordance with the acquisition method. The recognized values of assets assigned and debts accepted representing the acquisition cost

6 5 NOTES

ACCOUNTING AND VALUATION METHODS

of the interest in each relevant company were offset pursuant to IAS 27.22 ff. against the equity capital reported by the subsidiary at the time of acquisition. Capital consolidation of the interest in ATOSS CSD Software GmbH, Cham, acquired in the year 2000 continues to be undertaken in accordance with IFRS 1 B1 by the pooling of interests method.

6. Estimates and assumptions made in preparing the consolidated financial statements

Preparing the annual financial statements in compliance with International Financial Reporting Standards (IFRS) necessitates estimates and assumptions which affect the figures shown in the consolidated balance sheet, consolidated income statement and the notes to the consolidated accounts:

Thus for example estimates are made in determining sales revenues for long-term production orders. The amount here is dependent upon the anticipated duration of implementation and the resulting proportionate progress of the project. The carrying value of sales deriving from projects in work on the balance sheet closing date amounted to EUR 20,401 (previous year: EUR 73,859).

In addition when convertible bonds are issued, the likelihood of their being exercised in future is estimated on the basis of anticipated employee fluctuation. Impairments in the value of receivables are likewise calculated by estimating those factors which may influence their sustained value. The carrying value of impairment losses on receivables as of December 31, 2007, amounted to EUR 11,237 (previous year: EUR 44,389).

Further estimates are made when forming and assessing provisions for risks arising from processes, commissions or other future risks. The carrying value of provisions and accruals on December 31, 2007, amounted to EUR 3,012,888 compared with EUR 2,381,674 at the end of 2006.

The anticipated service life of fixed assets is also subject to estimation. The carrying value of tangible and intangible fixed assets on December 31, 2007, stood at EUR 679,639 (previous year: EUR 498,657).

7. Currency conversion

Balance sheet items in foreign currency are valued at the exchange rate on the balance sheet closing date; income and expenses are valued at the exchange rate for the transaction. Corresponding foreign currency profits and losses are recognized in the consolidated income statement. Accountable events at subsidiaries are booked in the functional currency at the time of origination.

The functional currency for all Group companies is the euro.

8. Financial assets

Financial assets within the meaning of IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or financial investments available for sale. Financial assets are measured on initial recognition at fair value. In the case of financial investments which are not classified as valued at fair value through profit or loss, transaction costs directly attributable to the acquisition of the asset are also taken into consideration.

Financial assets are designated as belonging to one or other of these categories upon first recognition. Reclassifications, insofar as these are permissible and necessary, are made at the end of the financial year.

All regular way purchases and sales of financial assets are recognized for accounting purposes on the trade date, that is to say, on the date on which the Group entered into a commitment to buy or sell the asset. Regular way purchases and sales are purchases or sales of financial assets which specify delivery of the assets within a period of time defined by market regulations or conventions.

The category of financial assets at fair value through profit and loss includes financial assets held for trading and financial assets that are designated on initial recognition as ones to be measured at fair value.

Financial assets are classified as held for trading if they are acquired for the purpose of selling in the short term. Profits or losses on financial assets held for trading are recognized in the income statement.

Non-derivative financial assets with fixed or determinable payments and fixed maturity dates are classified as financial assets held to maturity, provided that the Group intends and is in a position to hold these to maturity. Subsequent to initial recognition, held-to-maturity investments are valued at amortized cost using the effective interest method. Profits and losses are recognized in the result for the period if the financial investments are written off or impaired, and in the context of amortization.

Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in an active market. Subsequent to initial recognition, loans and receivables are valued at amortized cost using the effective interest method less any impairments. Profits and losses are recognized in the result for the period if the loans and receivables are written off or impaired, and in the context of amortization.

Financial investments available for sale are non-derivative financial assets that are classified as available for sale and not assigned to one of the three previously named categories. Subsequent to their initial valuation, financial assets available for sale are measured at fair value. Unrealized profits or losses are recognized directly in equity. If such a financial asset is written off or impaired, the cumulative profit or loss previously recognized in equity is recognized in the income statement.

ACCOUNTING AND VALUATION METHODS

The fair value of financial investments traded on organized markets is determined by the market price (bid price) quoted on the balance sheet closing date. The fair value of financial investments for which no active market exists is determined in application of certain valuation methods. These methods include reference to recent transactions between independent, expert, willing partners, comparison with the current fair value of another, essentially identical financial instrument, an analysis of discounted cash flow, as well as the use of other valuation models.

Held-to-maturity investments and loans and receivables are valued at amortized cost. This is calculated by the effective interest method, less any impairments, and in consideration of discounts and premiums at time of acquisition and includes transaction costs and fees that are an integral part of the effective interest rate.

9. Impairment of financial assets

At every balance sheet closing date the Group investigates whether the value of a financial asset or group of financial assets is impaired.

If there are objective grounds to believe that financial assets recognized at amortized cost are impaired, the impairment loss is calculated as the difference between the carrying value of the asset and the cash value of the expected future cash flow (with the exception of expected future loan losses which have yet to occur), discounted at the original effective interest rate for the financial asset, that is to say, the effective interest rate calculated at initial recognition. The carrying value of the asset is reduced with the aid of a value adjustment account. The impairment loss is recognized in profit and loss.

If the level of impairment reduces in subsequent reporting periods and if this reduction can be objectively attributed to a circumstance which has arisen after the impairment was recognized, the value adjustment previously recognized is reversed. The new carrying value of the asset must not however exceed the amortized cost at the time of the write-up. The write-up is recognized in profit and loss.

If in the case of trade receivables there are objective indicators that not all of the amounts due will be received in accordance with the originally agreed terms of invoice (for example in the event of probable insolvency or significant financial difficulties on the part of the debtor), a reduction in value is made with the aid of a value adjustment account. If they are classified as uncollectable, the receivables are written off.

If an asset available for sale suffers an impairment, an amount equal to the difference between the cost of acquisition (less any redemption and amortization) and the current fair value (less any value adjustments previously recognized in profit and loss), is transferred from equity to the income statement. Write-ups on equity instruments classified as available for sale are not recognized in the income statement. Write-ups on debt instruments classified as available for sale

are recognized in the income statement if the increase in the fair value of the instrument may objectively be considered to result from an event that has occurred after the value impairment was recognized in profit and loss.

A financial asset (or a part of a financial asset or a part of a group of similar financial assets) is written off if the contractual rights to receive the cash flow from the asset have expired.

10. Inventories

In accordance with IAS 2.9 the company values its inventories at cost or lower net disposal value. Inventories which are interchangeable are valued at cost using the first in first out (FIFO) method.

The net disposal value is the estimated proceeds of a sale in the normal course of business less the estimated costs up to completion and the estimated marketing costs.

Reasonable reductions in value are made to take account of all recognizable risks arising from above-average storage periods or reduced usability.

11. Non-current assets

At every balance sheet closing date the Group investigates whether there are grounds to believe that the value of an asset is impaired. If such grounds exist or if an annual review of the sustained value of an asset is required, the Group makes an estimate of the amount that may be achieved for the asset in question. The achievable amount is the higher of either the fair value of an asset or cashgenerating item less disposal costs or its utility value. The achievable amount must be determined for each individual asset, unless an asset generates no cash flow which is essentially independent of those generated by other assets or groups of assets. If the carrying value of an asset exceeds its achievable value, the asset is impaired and is written down to its achievable value. To determine the utility value, the expected future cash flows are discounted to their cash value at a pre-tax discount rate which reflects current market expectations regarding the interest effect and the risks specific to the asset. An appropriate valuation model is applied to determine the fair value less sales costs. This model is based on valuation multipliers or other available indicators of fair value.

Impairment costs at going-concern business units are recognized in the income statements under cost headings which correspond with the function of the impaired asset.

An investigation is similarly made at every balance sheet closing date to determine whether there are grounds to believe that a previously recognized impairment no longer exists or is reduced. If such grounds exist the Group makes an estimate of the achievable amount. A previously recognized impairment will only be reversed if the estimated amount that may be achieved has changed since the last occasion on which an impairment was recognized in. Should this be the case, the carrying

6 9 NOTES

ACCOUNTING AND VALUATION METHODS

value of the asset is increased to its achievable value. This amount must not however exceed the carrying value that would apply after scheduled depreciation if no impairment of the asset were to have been recognized in preceding years. A write-up is recognized in the result for the period.

In the financial year under review there were no impairments of non-current assets pursuant to IAS 36.

12. Tangible fixed assets

Tangible fixed assets are valued at cost less cumulative scheduled linear depreciation. Assets are depreciated over periods of between three and five years. Leasehold fixtures are depreciated over the term of the lease or over their estimated service life if this is shorter.

Write-downs on tangible fixed assets are allocated to the relevant expense items in the income statement.

A tangible fixed asset is eliminated either when it is disposed of or when there is no economic benefit to be expected from the continuing use or sale of the asset. The profits or losses resulting from the elimination of the asset are calculated as the difference between the net sale proceeds and the carrying value of the asset and recognized in the income statement in the period in which the asset is eliminated.

Residual values, service lives and methods of depreciation are reviewed at the end of each financial year and adjusted as required.

13. Intangible assets

Intangible assets are valued at cost upon acquisition and assuming a limited service life are subject to linear depreciation over an anticipated useful life of between three and five years. On the qualifying date the company had no intangible assets with an indefinite service life.

Write-downs on intangible assets with limited service life are recognized in the income statement under the expense heading which corresponds with the function of the intangible asset.

Where there are indications that intangible assets with limited service life may be impaired, these assets are reviewed accordingly. The depreciation period and the method by which intangible assets with limited service life are depreciated are as a minimum reviewed at the end of each financial year. Alterations to the method or period of depreciation necessitated by changes in the expected service life or expected consumption of the future economic benefit of the asset are treated as changes in estimates.

Profits or losses resulting from the elimination of intangible assets are calculated as the difference between the net sale proceeds and the carrying value of the asset and recognized in the income statement in the period in which the asset is eliminated.

Residual values, service lives and methods of depreciation are reviewed at the end of each financial year and adjusted as required.

14. Taxes

Actual taxes on income

The actual tax refund claims and tax liabilities for current and previous periods are measured at the amount in which a refund is expected from or payment expected to the tax authorities. This amount is in turn calculated on the basis of the tax rates and tax regulations applying on the balance sheet closing date.

Actual taxes relating to items recognized directly in equity are themselves recognized not in the income statement but in equity also.

Deferred taxes

Tax deferrals are formed in application of the liability method, based on temporary differences existing on the balance sheet closing date between the value at which an asset or liability is reported on the balance sheet and its value for tax purposes.

Deferred tax claims are recognized for all tax-deductible temporary differences, unused tax loss carryforwards and unused tax credits in the amount in which taxable income against which tax-deductible temporary differences and unused tax loss carryforwards and tax credits can be offset is likely to be available.

The carrying value of deferred tax claims is reviewed on each balance sheet closing date and reduced accordingly if it is no longer likely that adequate taxable income will be available against which the deferred tax claim might at least in part be offset. Deferred tax claims not carried on balance sheet are reviewed on each balance sheet closing date and taken on balance sheet in the amount in which it is now likely that future taxable income will allow the deferred tax claim to be realized.

Deferred tax claims and liabilities are calculated at the tax rates likely to apply in the period in which an asset is realized or a liability satisfied. The tax rates (and tax regulations) applying on the balance sheet closing date are taken as a basis. Future changes in tax rates must be taken into account on the balance sheet closing date provided that the necessary material conditions for these changes to become effective are fulfilled in the form of legislation.

Deferred taxes relating to items recognized directly in equity are themselves recognized not in the income statement but in equity also.

Deferred tax claims and deferred tax liabilities are offset against one another provided that the Group has an enforceable claim to set off actual tax refund claims against actual tax liabilities and these relate to income taxes on the same taxable entity, levied by the same tax authority.

71 NOTES

ACCOUNTING AND VALUATION METHODS

Turnover tax

Sales revenues, expenses and assets are generally recognized after deduction of turnover tax. Exceptions apply in the following cases:

If the turnover tax incurred when assets or services are purchased cannot be reclaimed from the tax authority, the tax paid is recognized as a part of the manufacturing cost of the asset or as part of the expense.
Receivables and liabilities are reported at an amount including the turnover tax.

The amount of turnover tax refunded by or remitted to the tax authority is recognized in the consolidated balance sheet under either receivables or liabilities.

15. Financial liabilities

The value reported for trade accounts payable corresponds to the net book value.

Deferred revenues are carried at attributable fair value and essentially include amounts invoiced and received in advance for maintenance works and long-term orders not implemented until later and therefore pertaining to sales in later periods.

A financial liability is eliminated when the underlying obligation is satisfied, terminated or expired. If an existing financial liability is exchanged for another liability to the same creditor under substantially different terms of contract, or if the conditions pertaining to an existing liability are materially altered, the exchange or alteration is treated as if the original liability were eliminated and a new liability taken up. The difference between the respective book values is recognized in profit and loss.

16. Short-term provisions

A provision is reported if the Group is under a present (statutory or actual) obligation resulting from a past event, if it is likely that resources having an economic value will be expended to satisfy the obligation and a reliable estimate can be made of the extent of the obligation. Insofar as the Group expects a provision carried as a liability to be at least in part reimbursed (as for example under an insurance contract), provided that it is as good as certain that it will be received, the reimbursement is carried as a separate asset. The cost of forming the provision is reported in the income statement after deduction of the reimbursement.

The company anticipates that the remaining time to maturity of short-term provisions will be less than one year.

17. Convertible bonds

Convertible bonds are compound financial instruments which contain both equity (conversion rights) and liability (bond) components.

In the case of all convertible bonds, the bond feature as the liability component is carried at amortized cost using the effective interest method as per IAS 39. The hidden margin arising from the discounted interest payable due to the difference between the nominal value and cash value of the bond is allocated to the capital reserve.

In the case of the equity component, the conversion right, a distinction is made dependent on the date of issue: In the case of convertible bonds issued prior to the publication of the draft version of IFRS 2 on November 07, 2002, the conversion right is recognized in equity. On the other hand in the case of bonds issued after November 07, 2002, the equity component is valued in accordance with IFRS 2 at attributable fair value. The value of the conversion right is expensed over the expected period of time until the bond is converted into shares and allocated to the capital reserve.

The expense to be recognized is measured in accordance with the Black-Scholes model which was developed to assess the fair value of such options which are subject to no conditions and are fully transferable. Given that the options valuation model is based upon subjective assumptions, real deviations from these assumptions can have a sustained effect on the value of the options. Moreover the company's convertible bonds are subject to further restrictions which are only approximately comparable with traded options, with the result that the valuation model does not necessarily provide a reliable option valuation.

In calculating the attributable fair value using the Black-Scholes model, the company applies the following parameters:

Date	Number	Average expected term in months	Risk-free interest rate	Standard deviation	Expected fluctuation 31.12.2007	Reduction due to discounted interest	Convertible bonds returned	Valuation of amount to be expensed post returns
August 2003	62,000	30	3.80%	80.30%	0%	-17,295	26,000	228,630
May 2004	52,000	30	3.80%	108.26%	0%	-9,193	10,500	291,440
August 2004	36,000	30	3.70%	102.80%	0%	-298	0	205,901
November 2004	5,000	30	3.40%	97.33%	0%	0	2,000	16,282

73 NOTES

ACCOUNTING AND VALUATION METHODS

The standard deviation used in calculating the apportionable expense is determined from the daily closing price in the XETRA trading system operated by Deutsche Börse and published by the latter.

The company made the assumption in financial year 2007 that no further convertible bonds would be handed back due to fluctuation. Underlying this assumption was the fact that the number of persons holding convertible bonds on the qualifying date was very limited. In deviation from this assumption, 3,000 convertible bonds were surrendered. As a result, the expense to be apportioned over the average expected term of the programs was reduced from EUR 763,320 to EUR 742,253. A total of EUR 720,394 was recognized as an expense for the years 2003 to 2006. For financial year 2007, personnel costs in the amount of EUR 21,859 were booked (previous year: EUR 89,279). The fair value of the existing programs was thereby recognized in full to December 31, 2007.

18. Pension provisions

A non-forfeitable pension commitment exists in favor of the CEO of ATOSS Software AG, Munich, which is classified as a defined benefits plan. Pursuant to this plan, pension payments will commence when the recipient reaches the age of 65 and will be paid for life. The level of future pension rights will vary during the accrual period to an extent equal to future adjustments in the fixed salary of the CEO. To cover this pension commitment the company has arranged pension liability insurance cover and assigned the entitlements arising there from with the result that since financial year 2005 in accordance with IAS 19.54d the attributable fair value of the assets of the plan deriving from the pension liability insurance policies are netted against the benefit obligation.

The pension commitment is underpinned by an actuarial report prepared on the basis of IAS 19 - Employee Benefits. The figure reported for the accrued and predicted pension obligation corresponds with the actuarially calculated cash value which since 2005 has been reduced by the fair value of the plan assets. The rules governing benefit commitments contained in IAS 19.63 ff. have been taken as a basis.

In accordance with IAS 19.64f, the projected unit credit method is applied. In accordance with this method, the pension units accrued in individual years are regarded as building blocks which collectively form the pension obligation. The cost of the pension is a product of the cost of interest on accrued pension rights already reported at cash value, the current service cost and the expected income from the plan assets. The defined benefit obligation is the dynamic cash value of the pro rata accrued pension units, taking into account the fact that future pension rights have already been proportionately accrued.

For the purpose of measuring actuarial profits and losses the company applies what is termed the corridor method, in accordance with which with effect from

the next balance sheet qualifying date actuarial profits and losses must be apportioned over the residual period of service if and when they exceed 10 % either of the actual cash value or of the fair value of the plan assets. In financial year 2007 as in the preceding year, there was no actuarial profit or loss to apportion.

The pension provision was calculated on the basis of an assumed interest rate of 5.50 % (previous year 4.40 %), a salary trend of 2 % (previous year 2 %) and a pension trend of 2 % (previous year 2 %). The biometric tables prepared by Prof. Klaus Heubeck [Richttafeln 2005 G] were applied. It was further assumed that the plan assets would in future attract interest at an annual rate of 4 % (previous year 4 %).

A contribution-based plan also exists for a member of the Board of Management. For employees with 15 or more years service, the company makes contributions to a private retirement pension scheme in the form of a pension fund for the duration of their employment. These contributions in financial year 2007 amounted to EUR 15,000 (previous year: EUR 0).

19. Treasury stock

Treasury stock is valued at cost and reported as a separate deduction item under equity. The purchase, sale, issue or withdrawal of treasury stock is not recognized in profit and loss.

20. Recognition of sales revenues and income

The company generates sales revenues by licensing software products to end users and resellers, as well as from maintenance contracts, services and other receivables.

Discounts, rebates and turnover tax are not considered.

Pursuant to IAS 18.14, licensing revenues are regarded as realized when

(a) The essential risks and rewards associated with the contractual rights to the use of licensed software have been transferred;
(b) The company has no further rights to dispose over the licensed material;
(c) The level of revenues can be reliably determined;
(d) It is sufficiently probable that the economic benefits will flow (the receivable will be received), and
(e) The costs incurred in association with the sale can be reliably measured.

75 NOTES

ACCOUNTING AND VALUATION METHODS

The company has also entered into reseller agreements in accordance with which resellers are granted discounts on the list prices for license fees. The license fees retained by the company are in principle regarded as having been realized when rights of use to the licensed software have been granted to the reseller's end customer and the essential risks and rewards have thereby been transferred either to the end user or to the reseller.

Consultancy sales are directly associated with services rendered under essentially separate contracts. Pursuant to IAS 18.20, income from the rendering of services is realized when

(a) The level of income can be reliably measured;
(b) It is sufficiently probable that the economic benefit of the transaction will flow to the company (the receivable will be received);
(c) The degree of completion on the balance sheet qualifying date can be reliably measured, and
(d) The costs incurred in rendering the service can be reliably measured.

Maintenance sales are accrued over the period during which maintenance works are performed.

Software licenses and maintenance works are generally sold together. Pursuant to IAS 18.13 the sales are realized by the residual value method, since a market value can be assigned to the maintenance sales.

Construction contracts are deemed to exist insofar as the contractual agreements are structured in accordance with the law on contracts for work and services or the orders cannot be fulfilled by ATOSS partners or by services rendered by the customer on own account.

If a customer commissions a long-term construction order, the sales revenues and income are measured by the percentage of completion method, provided that the conditions required by IAS 11.23 are met. Individual sales components are in principle realized in the ratio of the progress of the project services thus far rendered to the anticipated overall volume of services. The progress of the project is in turn measured on the basis of documentation maintained by the project managers and the overall assessment of the management.

If on the hand through the medium of a long-term construction order the customer commissions part-performances which are mutually discrete and are based on separate orders, following the percentage of completion method the individual sales components are valued independently provided that the criteria for these part-performances contained in IAS 11.23 are fulfilled and a separate valuation appears appropriate in arriving at an overall assessment.

Pursuant to IAS 18.14, revenues deriving from other receivables are regarded as realized when

(a) The essential risks and rewards associated with ownership of the goods or products sold have been transferred;
(b) The company has no further rights to dispose over the receivables;
(c) The level of revenues can be reliably determined;
(d) It is sufficiently probable that the economic benefits will flow (the receivable will be received), and
(e) The costs incurred in association with the sale can be reliably measured.

Interest earnings are recognized when the interest arises.

21. Expenditure on research and development

The company recognizes the costs of researching and developing its software products as an expense in its income statement. The criteria contained in IAS 38.57 which would provide for development costs to be carried as assets are not fulfilled, since the original development of today's products to some extent took place through the medium of customer projects and it is not possible to reliably measure the income achievable in future from the development of individual functions and releases.

22. Borrowing costs

Borrowing costs are recognized as an expense in the period in which they are incurred.

23. Leasing

Whether an arrangement contains a lease is determined on the basis of the economic content of the arrangement at the time the arrangement is entered into and necessitates an estimate of whether fulfillment of the contractual agreement is dependent on the use of a specific asset or assets and whether the agreement affords a right to use the asset.

The company regularly reviews its contractual relationships with suppliers to determine whether pursuant to the provisions of IFRIC 4 - Determining Whether an Arrangement Contains a Lease they should be classified as leases. On December 31, 2007, as in the preceding year there were no contractual arrangements which meet the criteria specified in IFRIC 4.

Lease payments for operating leases are recognized over the relevant periods in linear fashion as expenses in the income statement.

III. Notes to the consolidated balance sheet

24. Cash and cash equivalents

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Fixed-term deposits	10,977,026	8,198,876
Other cash sums	2,490,741	2,585,447
Total of cash and cash equivalents	13,467,767	10,784,323

Fixed-term deposits have times to maturity of up to 3 months and are invested at interest rates of between 1.66 % (Switzerland) and 4.68 % per annum. The other cash sums earn interest at up to 2.75 %.

As a result of the positive cash flow from operations in the amount of EUR 4,152,049 as well as the acquisition of tangible fixed assets at EUR 674,176 and the dividend distribution at EUR 950,348, holdings of cash and cash equivalents rose from EUR 10,784,323 to EUR 13,467,767.

Fixed term deposits and other cash sums are invested with financial institutions with a sound and solvent financial background.

The fair value of cash and cash equivalents stood at EUR 13,467,767 (previous year: EUR 10,784,323).

25. Forderungen aus Lieferungen und Leistungen

The reported trade accounts receivable were composed as follows:

	Dec. 31, 2007	Dec. 31, 2006
	EUR	EUR
Gross receivables	2,844,656	3,719,848
Less value impairments	-11,237	-44,389
Net receivables	2,833,419	3,675,459

As of December 31, 2007, there were no receivables (previous year: EUR 83,078) with due dates which had been extended.

During the financial year revenues resulting from the upward valuation of previously devalued receivables in the amount of EUR 41,511 (previous year: EUR 16,259) were taken to income. As in the preceding year there were no receivables with a remaining time to maturity of more than one year.

The age structure of overdue and unadjusted receivables on December 31, 2007,
was as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Neither overdue nor value-adjusted	1,693,654	2,077,051
Up to 30 days overdue	940,719	1,394,988
31 to 60 days overdue	118,867	66,232
61 to 90 days overdue	3,736	88,237
91 to 120 days overdue	61,082	1,355
More than 120 days overdue	26,598	91,985
Gross receivables	2,844,656	3,719,848
Value adjustments	-11,237	-44,389
Net receivables	2,833,419	3,675,459

As of the qualifying date, value adjustments on doubtful trade receivables amounted to EUR 11,237 (previous year: EUR 44,389). These were based on assessments by the Management of the feasibility of collecting the same. Reductions in value are implemented in the amount of the carrying value of the receivable if the due date has been exceeded by more than 120 days and an assessment of the general payment pattern and credit-worthiness of the customer indicates that such action is appropriate. In the event of a customer becoming insolvent, the full value of the receivable is reported as a loss.

As a matter of principle, trade accounts receivable are due for payment within 10 days. For works and services and fixed-price projects, in exceptional cases varying terms of payment may be granted.

	2007 EUR	2006 EUR
Account balance on January 01	44,389	19,955
Expense allocations	11,238	44,231
Consumed	-2,879	-3,538
Liquidated	-41,511	-16,259
Account balance on December 31	11,237	44,389

The value adjustment account developed as follows:

The Company demands no security from its customers. A description of the risk management system which also covers risks arising from financial instruments can be found in section 5 of the Group management report.

NOTES TO THE CONSOLIDATED BALANCE SHEET

26. Inventories

The book value of inventories essentially relates to hardware components held in small quantities by the subsidiary ATOSS CSD Software GmbH, Cham. In the reporting period, as in the preceding year, there were no writedowns on the value of inventory assets.

27. Other current assets

Other current assets in the amount of EUR 340,627 (previous year: EUR 372,036) are reported at fair value and essentially include deferred items amounting to EUR 197,068 (previous year: EUR 266,938) and deferred interest in the amount of EUR 81,293 (previous year: EUR 15,377) as well as tax refund claims at EUR 6,516 (previous year: EUR 17,628).

These other current assets do not yield interest and have an average time to maturity of six months.

	Acquisition and manufacturing costs
	Jan. 01, 2006	Additions	Disposals	Dec. 31, 2006
I. Tangible fixed assets
Technical plant and equipment	371,651	49,985	0	421,636
Office and business equipment	2,812,731	225,492	121,001	2,917,222
Vehicle fleet	89,152	0	19,316	69,836
	3,273,534	275,477	140,317	3,408,694

II. Intangible assets
Software	2,817,467	46,309	2,074,356	789,420
	2,817,467	46,309	2,074,356	789,420

Total	6,091,001	321,786	2,214,673	4,198,114

		28. Fixed assets
--	--	------------------	--

Fixed assets developed as follows in the financial year:

	Acquisition and manufacturing costs
	Jan. 01, 2007	Additions	Disposals	Dec. 31, 2007
I. Tangible fixed assets
Technical plant	421,636	11,343	0	432,979
Office and business equipment	2,917,222	423,331	390,713	2,949,840
Vehicle fleet	69,836	74,370	69,836	74,370
	3,408,694	509,044	460,549	3,457,189

II. Intangible assets
Software	789,420	165,132	0	954,552
	789,420	165,132	0	954,552

Total	4.198.114	674,176	460,549	4,411,741

8 1 NOTES

NOTES TO THE CONSOLIDATED BALANCE SHEET

	Net book values			Cumulative depreciation
Dec. 31, 2005	Dec. 31, 2006	Dec. 31, 2006	Disposals	Additions	Jan. 01, 2006

30,473	62,509	359,127	0	17,949	341,178
304,612	290,099	2,627,123	119,914	238,918	2,508,119
34,609	20,765	49,071	19,315	13,843	54,543
369,694	373,373	3,035,321	139,229	270,710	2,903,840


255,036	125,284	664,136	2,058,813	160,519	2,562,430
255,036	125,284	664,136	2,058,813	160,519	2,562,430

624,730	498,657	3,699,457	2,198,042	431,229	5,466,270

	Net book values			Cumulative depreciation
Dec. 31, 2006	Dec. 31, 2007	Dec. 31, 2007	Disposals	Additions	Jan. 01, 2007

62,509	50,207	382,772	0	23,645	359,127
290,099	420,094	2,529,746	387,375	289,998	2,627,123
20,765	59,497	14,873	55,994	21,796	49,071
373,373	529,798	2,927,391	443,369	335,439	3,035,321


125,284	149,841	804,711	0	140,575	664,136
125,284	149,841	804,711	0	140,575	664,136

498,657	679,639	3,732,102	443,369	476,014	3,699,457

29. Taxes on income

The tax provisions in each case comprise the taxes on income for the past financial year and also preceding years if appropriate. For an explanation of tax charges and tax income, please refer to note 58 .

The deferred taxes reported in the accounts were composed as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2007 EUR
ATOSS Software Ges.mbH, Vienna	2,867	216,199
Losses carried forward at foreign companies	2,867	216,199

Deferred taxes on tax carryforwards reported as assets	717	57,674
Deferred taxes on valuation differences reported as assets
- Pension provisions	294,602	337,597
Sub-total	295,319	337,597
Deferred taxes on valuation differences carried as liabilities
Long-term construction orders	-102,958	-253,547
Sub-total	-102,958	-253,547
Total	192,361	141,724

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Tax charge resulting from the accrual of deferred taxes carried as assets
- On pension provisions	-42,995	0
Tax charge resulting from the accrual of deferred taxes carried as liabilities
- On long-term construction orders	-307,658	-253,547
Tax charge resulting from the reversal of deferred taxes carried as assets
- On tax carry-forwards	-56,957	-31,562
- On capitalized software	0	-19,862
- On pension provisions	0	-40,578
Tax income resulting from the reversal of deferred taxes carried as liabilities
- On long-term construction orders	458,247	0
Total	50,637	-345,549

8 3 NOTES

NOTES TO THE CONSOLIDATED BALANCE SHEET

The tax rate applicable to ATOSS Software AG, Munich, is composed as follows:

	2008	2007	2006
Earnings before taxes	100%	100.00%	100.00%
Trade tax	-17.15%	-19.68%	-19.68%
Profits liable for corporation tax		80.32%	80.32%
Up to 2007: Corporation tax at 25.00 % on taxable profits	-15.00%	-20.08%	-20.08%
Solidarity surcharge of 5.50 % on corporation tax	-0.83%	-1.10%	-1.10%
Computed proportion of earnings after tax	67.02%	59.14%	59.14%
Computed tax rate	32.98%	40.86%	40.86%

The tax rates for subsidiary companies amounted in Austria to 25 %, in Switzerland to 23.8 % and in Romania to 16 %. The transition from the expected tax charge at the parent company to the actual tax charge as per IAS 12.81 is illustrated as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Pre-tax earnings as per IFRS	4,171,800	3,193,180
Expected tax charge (2007: 40.86%, 2006: 40.86%)	-1,704,597	-1,304,734
Non-deductible operating expenses	-28,910	-29,703
Expenses resulting from convertible bonds	-8,932	-36,479
Tax income resulting from the liquidation of tax provisions formed in previous years	22,908	0
Revaluation of deferred taxes as a result of the 2008 business tax reform	-40,555	0
Lower tax rates at Group companies	89,086	62,592
Actual Group tax charge	-1,671,000	-1,308,324

The effects of the 2008 business tax reform – insofar as these apply to deferred taxes not due to be reversed until financial year 2008 or later – have been recognized in financial year 2007.

As a result of the business tax reform, the company anticipates that in future financial years the tax rate applicable to the parent company will be 32.98 %. The actual tax charge will be somewhat higher than this figure due to the fact that finance leasing and rental costs are not deductible for trade tax purposes.

30. Schulden

The remaining times to maturity are illustrated individually in the breakdown of liabilities:

	Qualifying date	Remaining time to maturity up to 1 year	Remaining time to maturity 1-5 years	Total
Convertible bonds	Dec. 31, 2007	0	35,922	35,922
	Dec. 31, 2006	6,342	75,079	81,421
Trade accounts payable	Dec. 31, 2007	446,476	0	446,476
	Dec. 31, 2006	526,526	0	526,526
Short-term accruals	Dec. 31, 2007	3,012,888	0	3,012,888
	Dec. 31, 2006	2,381,674	0	2,381,674
Deferred revenues	Dec. 31, 2007	1,005,811	0	1,005,811
	Dec. 31, 2006	1,501,730	0	1,501,730
Tax provisions	Dec. 31, 2007	791,439	0	791,439
	Dec. 31, 2006	504,061	0	504,061
Other short-term liabilities	Dec. 31, 2007	568,385	0	568,385
	Dec. 31, 2006	552,705	0	552,705
Total	Dec. 31, 2007	5,824,999	35,922	5,860,921
	Dec. 31, 2006	5,473,038	75,079	5,548,117

Trade accounts payable and other short-term liabilities do not attract interest. Convertible bonds attract interest at a rate of 2 % per annum.

31. Credit lines

Unsecured current account credit lines in the amount of EUR 0.5 million (previous year: EUR 0.6 million) are available with the principal banks of the integrated companies. Borrowings (on current account) in the context of this arrangement are taken up as operating capital and for other general Group purposes and attract interest at up 8.10 % (previous year 7.20 %). As in the preceding year, the Group did not avail itself of these credit lines.

32. Short-term accruals and provisions

The short-term accruals and provisions essentially comprise the following amounts:

	Dec. 31, 2006 EUR	Drawn down	Liquidated	Allocated	Dec. 31, 2007 EUR
Provisions for salaries and commissions	1,614,373	1,409,397	0	1,941,229	2,146,205
Warranties	100,000	100,000	0	0	0
Anticipated charges	189,217	105,199	72,682	223,973	235,309
Other personnel provisions	158,333	0	0	176,533	334,866
Other provisions	319,751	181,986	44,616	203,359	296,508
Total	2,381,674	1,796,582	117,298	2,545,094	3,012,888

8 5 NOTES

NOTES TO THE CONSOLIDATED BALANCE SHEET

The provisions for salaries and commissions include claims deriving from variable salary components arising in the reporting period but not disbursed until the following year. Warranty provisions are formed to cover foreseeable reworking in the course of customer projects which may have to be undertaken in subsequent periods after the balance sheet closing date. The anticipated charges relate to performances received but not yet billed prior to the qualifying date.

33. Deferred revenues

Deferred revenues as of December 31, 2007, were composed as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Amounts invoiced in advance for maintenance works	270,687	228,596
Amounts invoiced in advance for long-term construction orders	322,284	774,318
Miscellaneous	412,840	498,816
Total	1.005,811	1,501,730

The miscellaneous amounts here stated include sums invoiced in advance for hotline services as well as for software, hardware and services yet to be supplied.

34. Other short-term liabilities

Other short-term liabilities essentially include turnover, wage and church tax liabilities and vacation provisions.

35. Convertible bonds

On the basis of the contingent capital created for the purpose and described under section 39, the company has issued convertible bonds under the following programs:

An employee convertible bonds program was initiated in spring 2000 (Convertible bonds program 2000/2010) with the issue of convertible bonds. At the time of the company's flotation and during the year, employees were afforded the opportunity to subscribe for convertible bonds at a nominal cost of EUR 1.00. Conversion prices were determined at the time the bonds were granted. For this purpose the conversion price was defined as the average taken over the last five trading days prior to the bonds being granted. Employees had the option upon expiry of two, three and four years to in each case convert one third of their bond holdings into company shares upon payment of the conversion price. Contingent capital 2000/I in the amount of EUR 280,000 was formed for this purpose.

In financial year 2002 at its General Meeting on May 22 of that year the company approved two convertible bonds programs for Supervisory Board members (Convertible bonds program 2002/2010) and for Board of Management members and employees of the company (Convertible bonds program 2002/2011). For this

purpose Contingent capital 2002/II in the amount of EUR 50,000 and Contingent capital 2002/I in the amount of EUR 360,000 were partially drawn down.

Under the convertible bonds program for Supervisory Board members (Convertible bonds programme 2002/2010) the members of the Supervisory Board were each granted the right to subscribe for 12,000 convertible bonds at a nominal EUR 1.00 per bond. Conversion prices were determined at the time the offer was made. The offer was made within two weeks following publication of the half-yearly figures for the financial year 2002 and the conversion price corresponds to the average taken over the last five trading days prior to the offer being made. Upon expiry of two and three years, Supervisory Board members had the option to in each case convert one half of their holding into company shares upon payment of the conversion price. The convertible bonds have a term of seven years from date of offer.

Convertible bonds program 2002/2011 for Board of Management members and company employees is subject to the same conditions as the program for Supervisory Board members.

In financial year 2004, the company at its General Meeting on April 22 of that year resolved upon a further convertible bonds program for members of the Supervisory Board (Convertible bonds program 2004/2012). The same terms and conditions apply as in the case of the Convertible bonds program 2002/2010. The Convertible bonds program for Board of Management members and company employees (Convertible bonds program 2002/2011) was extended for three years and is now designated as the "Convertible bonds program 2002/2014". To provide an appropriate basis, Contingent capital 2004/I was approved by the General Meeting in the amount of EUR 50,000.

The following table shows the development in convertible bonds in circulation in financial years 2007 and 2006:

Convertible bonds	Units numbers	Weighted average exercise price
Outstanding on January 01, 2006	161,177	8.71
Exercised in 2006	74,004	2.37
Repaid in 2006	1,500	6.18
Outstanding on December 31, 2006 / January 01, 2007	85,673	4.64
Exercised in 2007	44,173	4.01
Repaid in 2007	3,000	6.18
Outstanding on December 31, 2007	38,500	5.25

8 7 NOTES

NOTES TO THE CONSOLIDATED BALANCE SHEET

Details of convertible bonds outstanding on December 31, 2007, are summarized in the following table:

	Exercise price EUR	Outstanding options	Contractual validity in years	Possible rights remaining to be exercised as of Dec. 31, 2007
Board members
	6.18	5,000	3.5	5,000
Total held by board members		5,000		5,000

Employees
	3.52	11,000	2.7	11,000
	6.18	19,500	3.5	19,500
	3.97	3,000	3.9	3,000

Total held by employees		33,500		33,500
Total		38,500		38,500

The obligations existing as a result of convertible bonds are reported in the balance sheet under the heading of Convertible bonds. These liabilities have residual times to maturity of between 2.7 and 3.9 years within which they can be converted.

The expense recognized in accordance with IFRS 2 resulting from the valuation of the conversion rights carried by these convertible bonds amounted in financial year 2007 to EUR 21,859 (previous year: EUR 89,279).

36. Convertible bonds held by board members

On the relevant balance sheet closing date, board members who subscribed for convertible bonds held conversion rights to the following numbers of shares in ATOSS Software AG:

	Dec. 31, 2007 unit numbers	Dec. 31, 2006 unit numbers
Christof Leiber	5,000	10,000
Peter Kirn	0	6,000
Bernhard Dorn	0	6,000
Rolf Baron Vielhauer von Hohenhau	0	12,000
Total	5,000	34,000

37. Pension provisions

Pension costs are comprised as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Current service cost	85,467	87,658
Cost of interest	72,041	67,898
Less anticipated earnings (previous year: losses) on plan assets	-20,138	14,628
Pension expenses	137,370	170,184

The current service cost is reported in the income statement under administration costs, while the cost of interest is reflected in the net interest.

For the year 2008 the company expects pension expenses to stand at EUR 108,371.

The obligation translates to the balance sheet as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR	Dec. 31, 2005 EUR	Dec. 31, 2004 EUR
Defined benefits obligation	1,442,834	1,637,300	1,597,600	1,299,440
Attributable fair value of plan assets	-567,755	-427,656	-290,006	0
	875,079	1,209,644	1,307,594	1,299,440
Unrecognized actuarial profits and losses	337,472	9,589	-77,682	79,705
Pension provision	1,212,551	1,219,233	1,229,912	1,379,145

The company assigned its claims arising from the pension liability insurance arranged to cover the pension commitment in 2005.

The changes in the cash value of the defined benefits obligations are illustrated as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Defined benefits obligation effective Jan. 01	1,637,300	1,597,600
Cost of interest	72,041	67,898
Current service cost	85,467	87,658
Actuarial profits and losses	-351,974	-115,856
Defined benefits obligation effective Dec. 31	1,442,834	1,637,300

8 9 NOTES

The changes in the fair value of plan assets are illustrated as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR
Attributable fair value of plan assets effective Jan. 01	427,656	290,006
Anticipated returns	20,138	14,628
Employer's contributions	144,052	151,607
Actuarial profits and losses	-24,091	-28,585
Attributable fair value of plan assets effective Dec. 31	567,755	427,656

The figures for the current reporting period and five preceding periods are as follows:

	Dec. 31, 2007 EUR	Dec. 31, 2006 EUR	Dec. 31, 2005 EUR	Dec. 31, 2004 EUR	31.12.2003 EUR
Defined benefits obligation	1,442,834	1,637,300	1.597,600	1,299,440	1,205,841
Plan assets	-567,755	-427,656	-290,006	0	0
Shortfall in cover	875,079	1,209,644	1,307,594	1,299,440	1,205,841

38. Shareholders' equity

The development in equity is evident from the statement of shareholders' equity.

39. Subscribed capital

Issued shares in circulation

The company's capital is divided into 4,025,667 shares each with a nominal value of EUR 1.00. All shares carry full voting and dividend rights. On average during the year there were 4,025,667 shares in circulation, less the average of 50,430 own shares held in treasury, leaving a total of 3,975,237 shares (previous year 3,916,853 shares).

ATOSS Software AG shares held by board members

On the respective balance sheet closing dates, board members possessed the following holdings of ATOSS Software AG stock:

	Dec. 31, 2007	Dec. 31, 2006
Andreas F. J. Obereder	1,981,184	1,981,184
Peter Kirn	29,760	23,760
Bernhard Dorn	25,000	19,000
Rolf Baron Vielhauer von Hohenhau	5,675	0
Total	2,041,619	2,023,944

Authorized capital

By a resolution of the General Meeting on April 22, 2004, entered in the Commercial Register at the Municipal Court of Munich on June 11, 2004, the Board of Management is authorized with the approval of the Supervisory Board to increase the share capital of the company on one or more occasions on or before April 22, 2009 (inclusive) by a total of EUR 2,012,833 by issuing 2,012,833 new bearer shares in return for contributions in cash or kind, whereby the right of shareholders to subscribe may be excluded (Authorized capital 2004/I).

Contingent capital

By a resolution of the General Meeting on February 16, 2000, entered in the Commercial Register at the Municipal Court of Munich on March 10, 2000, the share capital was contingently increased by EUR 280,000 (Contingent capital 2000/I). This contingent capital relates to the Convertible bonds program 2000/2010.

Furthermore by resolutions adopted by the General Meetings on May 22, 2002, April 30, 2003, and April 22, 2004, for the purpose of satisfying the conversion rights held by members of the Board of Management, managers of associated companies and other high-achieving personnel (Convertible bonds program 2002/2011), the share capital of the company was contingently increased by EUR 360,000 (Contingent capital 2002/I); also for the purpose of satisfying the conversion rights held by members of the Supervisory Board (Convertible bonds program 2002/2010) the share capital was contingently increased by EUR 50,000 (Contingent capital 2002/II).

Finally, by a resolution adopted by the General Meeting on April 22, 2004, entered in the Commercial Register at the Municipal Court of Munich on June 11, 2004, for the purpose of satisfying the conversion rights held by members of the Supervisory Board (Convertible bonds program 2004/2012) the share capital was contingently increased by EUR 50,000 (Contingent capital 2004/I).

40. Capital reserve

On December 31, 2005, the capital reserve stood at EUR 450,013. Subsequently in the course of financial year 2006, the sum of EUR 89,279 was allocated to the reserve as a result of convertible bonds issued in preceding years, while the sum of EUR 275,528 was withdrawn as a result of sales of treasury stock. On the basis of a judgement by the European Court of Justice dated May 26, 2005, regarding input tax relief on flotation costs, in financial year 2006 input tax in the amount of EUR 166,528 originally deducted in the year 2000 was refunded to the Company in respect of the costs of its flotation. Just as the costs of the flotation were netted against the capital reserve, so this refund after adjustment for associated taxes was allocated to the capital reserve in the amount of EUR 98,477. As a result on December 31, 2006, the capital reserve stood at EUR 326,241.

NOTES TO THE CONSOLIDATED BALANCE SHEET

In financial year 2007 the sum of EUR 518,611 was withdrawn from the capital reserve as a result of sales of treasury stock. While as a result of convertible bonds issued in previous years, in financial year 2007 the sum of EUR 21,859 was allocated to the capital reserve. On December 31, 2007, the capital reserve stood at - EUR 134,511.

41. Treasury stock

In December 2000 the company bought back 27,285 shares from a former member of the Board of Management at a price of EUR 10.00 per share. This price was slightly below the then current market price of EUR 11.00.

Following authorization by the General Meeting on May 20, 2001, in financial year 2001 some 21,715 shares were bought back at prices of between EUR 4.50 and EUR 10.00.

Own shares continued to be repurchased in financial year 2002 when 184,760 shares were acquired at a total price of EUR 1,470,244.

In 2003 a further 18,000 shares were purchased at a price of EUR 15.34. Some 23,107 own shares held in treasury were utilized in financial year 2003 in respect of convertible bonds exercised in that year.

In financial year 2004 some 75,718 own shares were so utilized and in financial year 2005 a further 80,544 own shares held in treasury were used to meet the needs of the convertible bonds program.

In financial year 2007 some 44,173 treasury shares were utilized to service the convertible bonds program. On December 31, 2007, the company held 31,881 own shares in treasury (previous year 76,054) at an average price of EUR 12.75 (previous year EUR 14.49). As a result on the qualifying date there were 3,993,786 shares in circulation (previous year 3,949,613).

IV. Notes to the consolidated income statement

42. Sales revenues

The sales revenues were composed as follows:

	2007 EUR	2006 EUR
Software licenses	5,408,665	4,611,944
Software maintenance	9,239,640	8,316,738
Total software	14,648,305	12,928,682
Consulting	6,206,864	5,558,005
Hardware	2,683,477	2,809,463
Miscellaneous	883,270	694,820
Total sales revenues	24,421,916	21,990,970

Included among the sales revenues is an amount of EUR 20,401 (previous year: EUR 73,859) arrived at in application of the percentage of completion method which is reported among other current assets. This revenue figure compares with expenses in the amount of EUR 14,337 (previous year: EUR 15,036), comprising the costs directly and indirectly attributable to the relevant orders as well as costs which in accordance with contract may be billed to the customer. Project progress is calculated on the basis of costs incurred relative to scheduled costs, mirroring the manner in which sales revenues are realized. The profits on projects realized by the percentage of completion method and not yet billed amounted on December 31, 2007 to EUR 7,780 (previous year: EUR 17,113).

Overall in financial year 2007 the amount of EUR 1,307,186 (previous year: EUR 1,745,170) deriving from long-term construction orders was realized as sales revenues.

The company has customers in all branches of industry as well as in the public sector. In financial years 2007 and 2006 no single customer accounted for a proportion of 10 % or more of total sales.

The geographic breakdown of sales revenues was as follows:

	2007 EUR	2006 EUR
Germany	22,289,213	20,239,776
Austria	1,624,560	1,266,484
Switzerland	375,864	362,987
German-speaking territories in total	24,289,636	21,869,247
Other countries	132,279	121,723
Total	24,421,916	21,990,970

93 NOTES

NOTES TO THE CONSOLIDATED INCOME STATEMENT

43. Cost of sales

In addition to the material cost of goods bought for resale (hardware and other merchandise), the cost of sales also includes expenditure on external services as well as the personnel costs and overhead incurred in the provision of services by the Professional Services and Consulting departments..

	2007 EUR	2006 EUR
Material costs (goods for resale)	2,244,984	2,337,125
Material costs (external services)	304,666	280,171
Personnel costs	3,764,266	3,358,247
Scheduled depreciation	85,624	63,450
Overheads	1,482,534	1,134,800
Total	7,882,074	7,173,793

44. Marketing costs

The marketing costs include personnel costs and overheads attributable to marketing as well as advertising costs recognized as an immediate expense.

	2007 EUR	2006 EUR
Marketing personnel costs	3,461,803	3,594,378
Scheduled depreciation	167,438	175,027
Marketing overheads	1,433,044	1,636,779
Advertising costs	689,742	618,477
Total marketing costs	5,752,027	6,024,661

45. General and administrative costs

The general and administrative costs were composed as follows:

	2007 EUR	2006 EUR
Personnel costs	1,761,735	1,767,027
Scheduled depreciation	81,127	100,193
Overheads	700,383	737,379
Total of general and administrative costs	2,543,245	2,604,599

46. Expenditure on research and development

The expenditure on research and development was composed as follows:

	2007 EUR	2006 EUR
Research and development personnel costs	3,592,720	2,863,177
Scheduled depreciation	141,825	92,559
Research and development overheads	897,573	980,489
Total of research and development costs	4,632,118	3,936,225

47. Personnel costs

	2007 EUR	2006 EUR
Wages and salaries	10,582,289	9,764,131
Social security contributions and expenditure on retirement pensions and welfare	1,976,375	1,729,419
of which pension costs EUR 188,366 (previous year EUR 154,745)
Costs of convertible bonds	21,859	89,279
TotaL	12,580,523	11,582,829

48. Financial investment income and expenditure

Die Finanzerträge betreffThe financial investment income essentially comprises interest earned on fixed-term deposits.

The expenditure is essentially incurred as a result of the interest charges included among the pension costs.

49. Other income

In the previous year the sum of EUR 435,000 was reported under Other income, deriving essentially from the sale of the software product AENEIS.

50. Currency conversion

In financial year 2007 currency conversions resulted in costs amounting to EUR 27,622 (previous year: EUR 16,553) and earnings amounting to EUR 11,096 (previous year: EUR 5,816)..

NOTES TO THE CONSOLIDATED INCOME STATEMENT

51. Steueraufwand/Steuerertrag

	2007 EUR	2006 EUR
Current tax	1.744.545	962.776
Deferred taxes	-50.637	345.548
Tax income resulting from the liquidation of provisions formed in	-22.908	0
Tax expenses	1.671.000	1.308.324

52. Earnings per share

The figure for earnings per share is arrived at in accordance with IAS 33 by dividing the result for the year by the weighted average number of shares issued. To calculate diluted earnings per share, the average number of shares is increased with the inclusion of potential shares which may be issued as a result of convertible bonds, and the underlying net income for the year is increased by the net interest cost of the convertible bonds.

	2007 EUR	2006 EUR
Net income for the year	2,500,800	1,884,856
Weighted average number of shares outstanding	3,975,237	3,916,853
Earnings per share	0.63	0.48

Effect of the interest cost of convertible bonds on results	1,406	2,415
Net income for the year after adjustment for dilution effects	2,502,206	1,887,271
Dilution effect of convertible bonds	70,197	120,986
Weighted average number of shares outstanding assuming dilution	4,045,434	4,037,839
Earnings per share (diluted)	0.62	0.47

V. Segment reporting

The company has only one uniform business segment within the meaning of IAS 14, which comprises the creation, sale, and implementation of software solutions directed towards the efficient management, scheduling and deployment of personnel. In accordance with the company's strategy as a provider of end-toend solutions to issues of working time management and personnel resource planning, these software solutions comprising software licenses, maintenance services, consulting services and the supply of hardware for time recording and access control purposes (merchandise for resale) are offered to customers as integrated packages and exhibit a comparable risk structure. These software solutions are employed both by small and medium-sized customers comprising the SME market and by high-end small businesses and major customers who comprise the premium market. The choice of software solution is essentially dependent on the specific technical and functional requirements of the individual customer. The company's endeavors in addressing the SME and premium markets differ only in terms of the marketing approach.

Similarly within the meaning of IAS 14, ATOSS operates in a single geographical segment comprising the German-speaking territories (Germany, Austria, Switzerland), which also exhibits a uniform risk structure. In accordance with IAS 14.35 transactions in other countries are of subsidiary importance from the Group's perspective and are managed centrally by the senior company in the Group.

The following tables illustrate the company's sales revenues as distributed between software solutions and the associated income from software licensing, maintenance, consulting and hardware and the relevant contributions to the end result.

• ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE): ASES and ASE are working time management and personnel resource planning solutions for customers of all sizes in all industries. Alongside these software solutions other services are generally also provided to implement the solutions at the customer's place of business and train the customer's employees. In addition, consulting services are rendered with the object of making meaningful use of the available scope and developing optimum solutions for the efficient deployment of personnel under specific operating conditions and in consideration of works agreements and industry-wide pay deals. The company also sells hardware components for time recording and access control purposes. ASES/ASE software is used in conjunction with all major standard system platforms and databases. Moreover thanks to the extensive facility to define customer-specific parameters these solutions are capable of satisfying even the most sophisticated requirements of customers of all sizes in a wide variety of industries.

ATOSS Time Control (ATC): ATC offers a software solution to working time management and personnel resource planning for small and medium-sized customers as well as large but decentrally organized clients. Likewise in conjunction with ATC, ATOSS offers software implementation and training services, as well as consulting services to optimize efficient personnel deployment. Merchandise, including hardware and recording media is also available. ATC software is installed on the Microsoft Windows system platform in association with standard SQL databases and is particularly user-friendly and convenient for small to medium-sized customers, as well as large decentralized organizations.
Other software products: The other operating income reported under this heading relates to the disposal of the software product AENEIS in the preceding year.

The sales revenues were composed as follows:

	2007 EUR	2006 EUR
ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE)	22,582,950	20,442,069
ATOSS Time Control	1,838,966	1,548,721
Total	24,421,916	21,990,790

Earnings before interest and taxes (EBIT) were composed as follows:

	2007 EUR	2006 EUR
ATOSS Staff Efficiency Suite (ASES) and ATOSS Startup Edition (ASE)	3,299,875	2,150,785
ATOSS Time Control	429,998	189,111
Other software products	0	438,787
Operating result	3,729,873	2,778,683

VI. Notes to the consolidated cash flow statement

53. Cash flow from business operations

The cash flow from operating activities for the period from January 01 to December 31, 2007, amounted to EUR 4,152,049 (previous year: EUR 4,312,017) and was thus EUR 159,968 lower than in the year before.

Positive factors contributing to the cash flow from operations included the increase in profits in financial year 2007 which were well above the year before, the decline in trade receivables and the sharp rise in short-term provisions and tax provisioning. Other cash flow-enhancing effects arose from non-cash depreciation and the personnel costs associated with the convertible bonds program. By contrast the reduction in liabilities and the decline in deferred revenues had a negative effect.

Since the company does not finance its investments by borrowing, interest income and expenses are allocated in full to the cash flow from business operations.

Similarly, operating taxes also impact in full on the cash flow from operations.

54. Cash flow from investment activities

The cash flow from investment activities for the period from January 01 to December 31, 2007, amounted to - EUR 649,791 (previous year: - EUR 214,344) and was thus EUR 435,447 lower than in the year before.

Factors affecting the cash flow from investment activities for the year 2007 included plant and equipment investment expenditure amounting to EUR 647,176 (previous year: EUR 321,786) as well as receipts from the disposal of fixed assets amounting to EUR 24,385 (previous year: EUR 107,439).

55. Cash flow from financing activities

The cash flow from financing activities for the period from January 01 to December 31, 2007, amounted to - EUR 818,814 (previous year: - EUR 21,149,335) and was thus EUR 20,330,521 higher than in the year before.

The essential factor impacting on the cash flow from financing activities in the year 2007 was the dividend distribution amounting to EUR 950,348 (previous year: EUR 21,466,506), equating to EUR 0.24 per share (previous year: EUR 5.50).

99 NOTES

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT OTHER INFORMATION

VII. Other information

56. Supervisory Board

The members of the Supervisory Board are:

Peter Kirn	Chairman, corporate consultant, Böblingen
Bernhard Dorn	Deputy Chairman, corporate consultant, Leonberg
Rolf Baron Vielhauer von Hohenhau	President of the Bavarian Taxpayers Association, Munich

On December 31, 2007, the members of the Supervisory Board held other supervisory board positions with the following companies:

Peter Kirn	businessMart AG, Stuttgart
	UNILOG Integrata Training AG, Stuttgart
Bernhard Dorn	AXA Service AG, Köln
	Inverto AG, Köln
	United Internet AG, Montabaur
	1&1 Internet AG, Montabaur
Rolf Baron Vielhauer von Hohenhau	ce Consumer Electronic AG, München

Mr. Dorn resigned his supervisory board position with TDS AG, Neckarsulm, effective March 31, 2007. The position held by Mr. Kirn with NIIT Technologies AG, Mohnheim, ended effective September 30, 2007. During the financial year 2007, Baron von Hohenhau also stepped down from his position with Pro Cura Buchprüfungs AG, Augsburg.

The remuneration paid to Supervisory Board members was composed as follows:

Peter Kirn	2007 EUR	2006 EUR
Remuneration pursuant to the Articles of Association	20,000	20,000
Attendance allowances	7,500	7,500
Total	27,500	27,500

Bernhard Dorn	2007 EUR	2006 EUR
Remuneration pursuant to the Articles of Association	20,000	20,000
Attendance allowances	7,500	7,500
Total	27,500	27,500

Rolf Baron Vielhauer von Hohenhau	2007 EUR	2006 EUR
Remuneration pursuant to the Articles of Association	10,000	10,000
Attendance allowances	3,750	3,750
Total	13,750	13,750

In financial year 2007, as in the preceding year, there were no payments made for consultancy work beyond the scope of Supervisory Board activities.

57. Board of Management

The members of the Board of Management are:

Andreas F. J. Obereder	Chief Executive Officer, businessman, Grünwald
Christof Leiber	Member of the Board of Management, lawyer, Munich

The remuneration paid to the Board of Management in the financial year was composed as follows:

Andreas F. J. Obereder	2007 EUR	2006 EUR
Non-performance-related remuneration
Salary	290,000	290,000
Miscellaneous	95,775	93,642
Performance-related remuneration
Profit-share payment	114,326	139,650
Total remuneration	500,101	523,292

Christof Leiber	2007 EUR	2006 EUR
Non-performance-related remuneration
Salary	141,250	115,000
Miscellaneous	37,546	21,065
Performance-related remuneration
Profit-share payment	116,367	89,745
Total remuneration	295,163	225,810

The profit-share payments shown here relate to entitlements deriving from the achievement of targets in the respective financial year. Given that these entitlements are confirmed only after the financial year has ended, actual payments may deviate. The miscellaneous amounts include insurance premiums paid by the company and the benefit in money's worth of other ancillary items such as the provision of company cars.

As of December 31, 2007, there were liabilities to members of the Board of Management amounting to EUR 174,359 in respect of variable remuneration elements not yet paid (previous year: EUR 167,375).

58. Business transactions with closely related persons

A business relationship exists with the wife of the Chief Executive Officer, from whom the company rents business premises in Meerbusch. These premises comprise 1,176 square meters of office space which are rented at a cost of EUR 228,804 per annum (previous year: EUR 228,879) including ancillary costs. The company is satisfied that these are standard market terms.

Moreover, the wife of the Chief Executive Officer provides services to the company. In 2007 the value of services provided amounted to EUR 14,974 (previous year: EUR 9,464). These are standard market terms.

In the 2007 reporting period, as in the preceding year, no further transactions took place with members of the Board of Management, Supervisory Board or other affiliated persons other than those specified in section 56 (Supervisory Board), section 36 (Convertible bonds held by board members) or section 37 (Pension provisions).

59. Employees

On December 31, 2007, the company employed 195 persons (previous year 169). The average for the year was 189 (previous year 167); excluding the Board of Management, trainees and interns, the average number of employees was 172 (previous year 151).

The quarterly average number of employees was as follows:

	2007	2006
Sales and marketing	37	40
Consulting	56	49
Development	63	51
Administration	33	29
Total	189	169
Of which trainees	7	6
Of which temporary staff and interns	8	10
Of which Board of Management members	2	2

60. Fees paid to auditors and tax consultants

The following fees were paid to Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Stuttgart, Munich branch, and associated companies for auditing, consulting and valuation services and tax consultancy:

	2007 EUR	2006 EUR
Audit of the annual financial statements	53,500	53,500
Of which for the individual financial statements EUR 26,750 (previous year: EUR 26,750)
Of which for the consolidated financial statements EUR 26,750 (previous year: EUR 26,750)
Other consulting and valuation services	6,000	18,910
Total of fees	59,500	72,410

On April 16, 2007, the company received an auditors' independence declaration from Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft Stuttgart, Munich branch.

61. Financial obligations

The financial obligations relate to rental and leasing contracts.

The company leases its vehicle fleet, as well as servers from various leasing companies. The arrangements are classified as operating leases since essentially all risks and rewards associated with ownership remain with the lessor. In individual cases expiring leases may be extended. No provision is made for an option to buy at the end of the term. Pursuant to IAS 17.33 the lease payments are recognized over the relevant periods in linear fashion as expenses in the income statement. The lease contracts have an average term of between three and five years.

The company also rents various items of office and business equipment at an annual cost of € 40,494 with flexible notice periods for termination purposes.

The company's office premises are rented. The lease and rental contracts include no purchase options or price adjustment clauses.

Future rents and lease payments for coming financial years are composed as follows:

	Rents	Lease payments
2008	690.285	340.308
2009 to 2012	233.691	343.450
post 2012	0	0

The overall costs of all rental and lease contracts in the reporting period amounted to EUR 1,157,837 (previous year: EUR 1,157,821).

62. Objectives and methods of managing financial risk

The Group manages its capital structure and makes adjustments in consideration of changes in the economic climate. In order to maintain or modify its capital structure, the Group can adjust its dividend payments to shareholders, or make a repayment of capital to the shareholders, or issue new shares. As of December 31, 2006, no changes had been made in the Group's objectives, policies or procedures; nor had such changes been made as of December 31, 2007. Further information on how the capital structure of the Group is managed is contained in the Management Report.

The principle financial liabilities of which the Group avails itself are convertible bonds and trade accounts payable. The main purpose of these financial liabilities is to finance the business activities of the Group. The Group has various financial assets at its disposal, including for example trade accounts receivable and cash and cash equivalents that derive directly from its business activities.

The Group disposes over no derivative financial instruments. In accordance with internal policy, the Group did not engage in any trading in derivatives in financial years 2007 and 2006, nor will it do so in future.

The essential risks to the Group arising from financial instruments comprise liquidity and credit risks.

To manage these credit risks the Group enters into transactions exclusively with creditworthy third parties. All customers with whom the Group wishes to enter into credit-based transactions are subjected to credit checks. In addition the trade accounts receivable are permanently monitored with the result that the Group is not exposed to any significant risk of default. The maximum default risk is limited to the book value detailed in Note 25. In the case of the Group's other financial assets such as cash and cash equivalents, the maximum credit risk in the event of a counterparty default equates to the book value of these instruments.

Moreover the Group also permanently monitors the risk of a liquidity squeeze.

The strategies and procedures adopted by company management for the purpose of managing risks of varying types are described in the Management Report.

63. Events after the balance sheet closing date

64. German Corporate Governance Code

The Board of Management and Supervisory Board issued a declaration of conformity with the German Corporate Governance Code as required by § 161 of the German Stock Corporation Act on December 03, 2007. The full text of the declaration is available on the Internet at http://www.atoss.com/NR/rdonlyres/ 5FDBCF4A-B579-4595-B9E1-3F9A4AEF12A7/0/ATOSS_Entsprechenserklaerung_2007.pdf. The Management Board and Supervisory Board each year study and form an opinion on the recommendations of the German Corporate Governance Code and report their findings in the Annual Report.

65. Notifiable participating interests

In financial year 2007 the company received no notifications regarding changes in participating interests pursuant to §§ 21 ff. of the German Securities Trading Act.

66. Approval of the consolidated financial statements

The present annual financial statements were approved on January 29, 2008, by the Board of Management and submitted to the Supervisory Board, which may make alterations to the said statements up to and including the time of the Supervisory Board meeting to adopt the accounts on February 11, 2008.

The Board of Management is satisfied that all of the information given conveys an impression of the economic situation of the company, its net assets, financial position and earnings situation and its cash flow that accords with the true circumstances.

67. Appropriation of net income

The Board of Management and Supervisory Board propose that surplus net income from the past financial year 2007 in the amount of EUR 4,043,756 should be used to pay a dividend of EUR 0.31 per dividend-bearing share. On the basis of information currently available the company anticipates that in the case of shareholders not holding a material stake in the company this sum will be subject to withholding tax at 20 % plus a solidarity surcharge due thereon of 5.5 %. Taxes in the amount of EUR 0.07 per share would thus be withheld by the Company.

The remainder of the net income will be carried forward to new account.

Munich, January 29, 2008

Andreas F.J. Obereder Christof Leiber

AUDIT OPINION OPINION

We have audited the consolidated financial statements prepared by ATOSS Software AG, Munich, comprising the balance sheet, the income statement, notes, cash flow statement and the statement of changes in equity to the consolidated financial statements, together with the group management report for the fiscal year from January 1 to December 31, 2007. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB ["Handelsgesetzbuch": "German Commercial Code"] are the responsibility of the parent company's management. Our responsibility is to express an opinion on the consolidated financial statements and on the group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Sec. 317 HGB and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with the applicable financial reporting framework and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the Group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a

test basis within the framework of the audit. The audit includes assessing the annual financial statements of those entities included in consolidation, the determination of entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion.

Our audit has not led to any reservations. In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRSs as adopted by the EU, the additional requirements of German commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group's position and suitably presents the opportunities and risks of future development.

Munich, February 1, 2008

Ernst & Young AG Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft

Marxer Haucke Wirtschaftsprüfer Wirtschaftsprüferin

German Public Auditor German Public Auditor

107 AUDIT OPINION DECLARATION BY THE LEGAL REPRESENTATIVES

DECLARATION BY THE LEGAL REPRESENTATIVES DECLARATION BY THE LEGAL REPRESENTATIVES

We hereby give an assurance to the best of our knowledge and belief that in accordance with the applicable reporting standards the consolidated annual financial statements and consolidated management report for ATOSS Software AG and the annual financial statements and management report for ATOSS Software AG, Munich, each convey an impression of the net assets, financial position and earnings situation of the Group and of ATOSS Software AG which accords with the true facts; and that the development in business including the results and the situation of the Group and of the company are so described in the consolidated management report and in the management report for ATOSS Software AG, Munich, as to convey an impression which likewise accords with the true facts; and that the essential opportunities and risks associated with the anticipated development of the Group and of ATOSS Software AG are so described.

Munich, January 29, 2008

Andreas F. J. Obereder Christof Leiber

IMPRINT IMPRINT

RESPONSIBLE

ATOSS Software AG Am Moosfeld 3 D-81829 Munich Fon +49.89.4 27 71-0 Fax +49.89.4 27 71-100 www.atoss.com

CONTACT INVESTOR RELATIONS

ATOSS Software AG Investor Relations Christof Leiber Fon +49.89.4 27 71-265 Fax +49.89.4 27 71-100 [email protected]

REPRESENTATIONS Germany

ATOSS Düsseldorf +49.2150.9 65-0

ATOSS Frankfurt +49.69.66 05 99-0

ATOSS Hamburg +49.40.27 81 63-0

ATOSS Stuttgart +49.711.7 28 73 20-0

AFFILIATED COMPANIES

ATOSS CSD Software GmbH, Cham +49. 99 71. 85 18-0

Austria

ATOSS Software Ges.mbH, Vienna +43.1.7 17 28-334

Switzerland

ATOSS Software AG, Zurich +41. 44. 308 39-56

DESIGN designfactory-munich.de Michael Steiner

PHOTOGRAPHY

ATOSS Software AG Deutsche Bahn AG (S. 9) Kurbetriebe Wiesbaden, Horst Goebel (S.22) Stadt Regensburg, Peter Ferstl (S. 23)

» We are very well positioned for the 2008 business year. Our perspectives for winning and realizing larger projects are excellent. With regard to the current financial year, we are expecting continued profitable growth and new record figures in sales and earnings. «

Christof Leiber Member of Executive Board, ATOSS Software AG

ATOSS Software AG

Am Moosfeld 3 D-81829 Munich Fon +49.89.4 27 71-0 Fax +49.89.4 27 71-100

[email protected] www.atoss.com

AI assistant

ATOSS Software AG — Annual Report 2007

38_10-k_2008-03-12_a9958da0-129b-4f38-b326-ee02d775504b.pdf

ATOSS IN FIGURES ATOSS IN FIGURES CONTENTS

Coporate Overview according to IF R S: 12- Mouth comparison in T Eur

ATOSS IN FIGURES ATOSS IN FIGURES CONTENTS CONTENTS

YEARS OF ATOSS 0320042005 2006 2007

THE RE VOLUT ION FROM THE BACK YARD THE RE VOLUT ION FROM THE BACK YARD

Mr. Obereder, in the IT sector, 20 years are a long time. Do you still recall your early days?

So you were one of the first …

As opposed to many founders of the nineties, you started off without venture capital and outside financing.

A look at the expenditures on research and development at ATOSS today would suggest that you have remained true to this ambition.

Over the past 20 years, the market in the area of workforce management has changed significantly. How do you view this situation?

Where do you see developments leading in the next years?

Are you prepared for this?

THE COMPANY THE COMPANY

THE TEAM THE TEAM

Small company, big customers.

THE MARKETS MARKETS

It's all about Java.

SOFTWARE AND SERV ICES SOFTWARE AND SERV ICES

Growing together.

CUSTOMERS CUSTOMERS

Stock market fever.

RETAILING RETAILING

Hard work, lively celebrations.

HEALTH CARE AND MED ICAL HEALTH CARE AND MED ICAL

ATOSS wins coveted Creative Award

CIVIL SERVICE CIVIL SERVICE

A lion for ATOSS.

PARTNERS AND ALL IANCES PARTNERS AND ALL IANCES

LET TER TO SHAREHOLDERS LET TER TO SHAREHOLDERS

Dear Shareholders, Ladies and Gentlemen,

Growth accelerated in 2007

Commitment to research and development forms the basis for future growth

High liquidity, strong cash flow

High equity and excellent returns

A particular word of thanks to our Supervisory Board

ATOSS is excellently positioned

INVESTOR REL AT IONS INVESTOR REL AT IONS

Shareholders ATOSS AG

Key figures per share

2007 – a difficult year for investors

ATOSS: Strong start to the new year

SES Research raises target price: "Running ATOSS"

Rating increased - ATOSS attractive once more

Outstanding second quarter

More excellent figures in the third quarter

Record figures and losses on the international stock markets

CORPOR ATE GOVERNANCE REPORT

1. Introduction

2. Declaration of conformity 2007

3. Board of Management remuneration report

4. Supervisory Board remuneration report

5. Ownership of and dealings in shares and financial instruments

5.1 Ownership of shares and financial instruments

5.2 Reportable securities transactions

6. Securities-based incentive systems

Wandelschuldverschreibungsprogramm 2002/2010:

SUPERV ISORY BOARD REPORT SUPERV ISORY BOARD REPORT

Dear Shareholders,

Five Supervisory Board meetings in 2007

Other matters discussed at the individual meetings of the Supervisory Board:

At the meeting on March 5, 2007

At the meeting on April 26, 2007

At the meeting on July 18, 2007

At the meeting on October 22, 2007

At the meeting on December 03, 2007

Appointment of Ernst & Young AG Wirtschaftsprüfungsgesellschaft as auditors

Changes to the Supervisory Board

Supervisory Board meeting on February 27, 2008 to adopt the annual financial statements

Peter Kirn

Members of the Supervisory Board, with a summary of other supervisory board positions held

Peter Kirn

Rolf Baron Vielhauer von Hohenhau

Bernhard Dorn

Winfried Wolf

GROUP MANAGEMENT REPORT GROUP MANAGEMENT REPORT

1. Business and conditions

Economic climate

ATOSS Software AG Annual Report 2007

YEARS OF ATOSS ^0320042005 ²⁰⁰⁶ ²⁰⁰⁷