UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20548
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
THINKPATH INC.
--------------
(Exact name of registrant as specified in its charter)
ONTARIO 52-209027
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(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
55 UNIVERSITY AVENUE, SUITE 400
TORONTO, ONTARIO, CANADA M5J 2H7
(416) 364-8800
CONSULTING AGREEMENT - MARK YOUNG (THE "BUSINESS CONSULTANT")
CONSULTING AGREEMENT - GEORGE GEORGIOU (THE "BUSINESS CONSULTANT")
(Full title of the plan)
THINKPATH INC.
55 UNIVERSITY AVENUE, SUITE 400
TORONTO, ONTARIO, CANADA M5J 2H7
ATTENTION: DECLAN FRENCH
CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER
(Name and address of agent for service)
(416) 364-8800
(Telephone number, including area code, of agent for service)
Copies of all communications, including all communications sent to
the agent for service, should be sent to:
ARTHUR S. MARCUS, ESQ.
GERSTEN, SAVAGE, KAPLOWITZ, WOLF & MARCUS LLP
101 EAST 52ND STREET, 9TH FLOOR
NEW YORK, NEW YORK 10022
(212) 752-9700 (212) 980-5192 (FAX)
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF SECURITIES TO MAXIMUM OFFERING MAXIMUM AGGREGATE
BE REGISTERED AMOUNT TO BE REGISTERED PRICE PER SHARE OFFERING PRICE AMOUNT OF REGISTRATION FEE
------------- ----------------------- --------------- -------------- --------------------------
Common Shares 2,250,000 $0.16 $360,000.00 $33.12
No Par Value Per Share
<FN>
(1) The price is estimated in accordance with Rule 457(h)(1) under the
Securities Act of 1933, as amended, solely for the purpose of
calculating the registration fee, based on the last sale price of the
shares of common stock as reported on the Nasdaq SmallCap Market on
June 24, 2002 ($0.16 ).
(2) Pursuant to a Consulting Agreements between Thinkpath Inc. and Mark
Young and Thinkpath Inc. and George Georgiou dated June 24, 2002,
Thinkpath Inc. issued 2,250,000 and 1,000,000 shares of its common
stock, respectively, to Messrs. Young and Georgiou in consideration
for consulting services performed and to be performed for the benefit
of Thinkpath Inc.
</FN>
EXPLANATORY NOTE
We prepared this registration statement in accordance with the requirements of
Form S-8 under the Securities Act of 1933, as amended, to register an aggregate
of 2,250,000 shares of our common stock, no par value per share, which were
issued pursuant to Consulting Agreements between Thinkpath Inc. and Mark Young
and Thinkpath Inc. and George Georgiou dated June 24, 2002.
Under cover of this Form S-8 is our reoffer prospectus, prepared in accordance
with Part I of Form S-3 under the Securities Act of 1933 Act, as amended. This
reoffer prospectus has been prepared pursuant to Instruction C of Form S-8, in
accordance with the requirements of Part I of Form S-3, and may be used for
reofferings and resales on a continuous or delayed basis in the future of up to
an aggregate of 2,250,000 "restricted securities" which have been issued
pursuant to the Consulting Agreements.
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
We will send or give the documents containing the information specified in Part
I of Form S-8 to Mark Young and George Georgiou as specified by the Securities
and Exchange Commission Rule 428(b)(1) under the Securities Act of 1933, as
amended. We do not need to file these documents with the Securities and Exchange
Commission either as part of this registration statement or as a prospectus or
prospectus supplement under Rule 424 of the Securities Act of 1933 Act, as
amended.
REOFFER PROSPECTUS
The date of this prospectus is
June 26, 2002.
THINKPATH INC.
55 UNIVERSITY AVENUE, SUITE 400
TORONTO, ONTARIO, CANADA M5J 2H7
2,250,000 Shares of Common Stock
The shares of our common stock being registered pursuant to this registration
statement are offered by our consultants, Mark Young, and George Georgiou (the
"Business Consultants"). The shares of common stock issued to the Business
Consultants may be offered for sale from time to time at market prices
prevailing at the time of sale or at negotiated prices, and without payments of
any underwriting discounts or commission, except for usual and customary selling
commissions paid to brokers or dealers. We will not receive any proceeds from
the sale of any of the shares of common stock by the Business Consultants. Mark
Young and George Georgiou are Business Consultants who have acquired the shares
of common stock pursuant to Consulting Agreements (See Exhibits 10.1 and 10.2).
We are paying the expenses incurred in registering the shares of common stock.
The 2,250,000 shares of common stock are "restricted securities" under the
Securities Act of 1933, as amended, because they were issued to the Business
Consultants prior to the filing of this registration statement. The reoffer
prospectus has been prepared for the purpose of registering the shares of common
stock under the Securities Act of 1933, as amended, to allow for future sales by
the Business Consultants (the selling shareholders), on a continuous or delayed
basis, to the public in accordance with the volume restrictions imposed by
Instruction C of Form S-8. To our knowledge, the selling shareholders have no
arrangement with any brokerage firm for the sale of the 2,250,000 shares of
common stock. The selling shareholders may be deemed to be an "underwriter"
within the meaning of the Securities Act of 1933, as amended. Any commissions
received by a broker or dealer in connection with the resales of the shares of
common stock may be deemed to be underwriting commissions or discounts under the
Securities Act of 1933, as amended.
Our shares of common stock are traded on the Nasdaq SmallCap Market under the
symbol THTH. As of June 24, 2002, the last reported sale price for of our shares
of common stock as reported on the Nasdaq SmallCap Market was $0.16.
THE SHARES OF COMMON STOCK OFFERED PURSUANT TO THIS REGISTRATION STATEMENT
INVOLVE A HIGH DEGREE OF RISK.SEE "RISK FACTORS" ON PAGE 7 OF THE REOFFER
PROSPECTUS. THESE ARE SPECULATIVE SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENCE.
TABLE OF CONTENTS
Page
Reoffer Prospectus 1
Available Information 1
Incorporation of Documents by Reference 1
Business of Thinkpath Inc. 4
Risk Factors 7
Use of Proceeds 12
Selling Shareholders 14
Plan of Distribution 14
Experts 15
Legal Matters 15
Disclosure of Commission Position 15
REOFFER PROSPECTUS
AVAILABLE INFORMATION
You should only rely on the information incorporated by reference or provided in
this reoffer prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The shares of common stock are not being
offered in any state where the offer and sale is not permitted. You should not
assume that the information in this reoffer prospectus or any supplement is
accurate as of any date other than the date on the front of this reoffer
prospectus.
Thinkpath Inc. files annual, quarterly and special reports, proxy statements,
and other information with the Securities and Exchange Commission (the "SEC") as
is required by the Securities Exchange Act of 1934, as amended. You may read and
copy any reports, statements or other information we have filed at the SEC's
Public Reference Room at 450 Fifth Street N.W., Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the Public Reference
Rooms. In addition, copies may be obtained (at prescribed rates) at the SEC's
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's Regional offices at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 75 Park Place, Room 1228, New
York, New York 10007. Our filings are also available on the Internet at the
SEC's website at http:\\www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this reoffer
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this reoffer prospectus,
except for any information superseded by information in this reoffer prospectus.
We filed the following documents, which are incorporated into this reoffer
prospectus by reference:
1. Our Form 10-Q Quarterly Report, filed on May 20, 2002.
2. Our Form 10-KSB Annual Report, filed on April 16, 2002.
In addition to the foregoing, all documents that we subsequently file pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment indicating that
all of the securities offered pursuant to this reoffer prospectus have been sold
or deregistering all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated by reference in this registration statement shall be deemed to be
modified or superseded for purposes of this registration statement to the extent
that a statement contained in this reoffer prospectus or in any subsequently
filed document that is also incorporated by reference in this reoffer prospectus
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this registration statement.
WE WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS REOFFER
PROSPECTUS IS DELIVERED, UPON ORAL OR WRITTEN REQUEST, A COPY OF ANY OR ALL
DOCUMENTS INCORPORATED BY REFERENCE INTO THIS REOFFER PROSPECTUS (EXCLUDING
EXHIBITS, UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION THE REOFFER PROSPECTUS INCORPORATES). REQUESTS SHOULD BE
DIRECTED TO DECLAN FRENCH, THINKPATH INC., 55 UNIVERSITY AVENUE, SUITE 400,
TORONTO, ONTARIO, CANADA, M5J 2H7. OUR TELEPHONE NUMBER AT THAT LOCATION IS
(416) 364-8800.
You may read and copy any reports, statements or other information we have filed
at the SEC's Public Reference Rooms at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Rooms. Our filings are also available on the Internet at the
SEC's website at http:\\www.sec.gov, and from commercial document retrieval
services, such as Primark, whose telephone number is 1-800-777-3272.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this reoffer prospectus. Consequently, this summary does not contain all of the
information that you should consider before investing in our common stock. You
should carefully read the entire prospectus, including the "Risk Factors"
section and the documents and information incorporated by reference into this
reoffer prospectus.
-1-
SUMMARY FINANCIAL DATA
The summarized consolidated financial data presented below is derived from and
should be read in conjunction with the the interim consolidated financial
statements, including the notes to those interim financial statements which are
incorporated by reference from our quarterly report on Form 10-Q and the
consolidated financial statements, including the notes to those financial
statements which are incorporated by reference from our annual report on Form
10-KSB.
FOR THE FOR THE FOR THE FOR THE
THREE MONTHS THREE MONTHS FISCAL YEAR FISCAL YEAR
ENDED ENDED ENDED ENDED
MARCH 31, 2002 MARCH 31, 2001 DECEMBER 31, 2001 DECEMBER 31, 2000
-------------- -------------- ----------------- -----------------
Revenue 7,405,677 10,441,155 36,926,211 44,325,780
Net Loss for the Period (499,470) (490,296) (9,683,442) (8,398,317)
Net Loss Per Share -
after preferred dividends,
basic and diluted (0.03) (0.06) (0.70) (2.27)
AS AT AS AT AS AT AS AT
MARCH 31, 2002 MARCH 31, 2001 DECEMBER 31, 2001 DECEMBER 31, 2000
Working Capital (3,069,174) (2,534,095) (3,354,362) 3,087,131
Total Assets 15,386,020 25,200,095 17,174,978 25,685,940
Total Stockholders' Equity 3,171,672 10,364,658 3,246,946 10,799,006
This reoffer prospectus contains forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Unless otherwise indicated, all reference to "Thinkpath", "us", "our" and "we"
refer to Thinkpath Inc. and its wholly-owned subsidiaries: Systemsearch
Consulting Services Inc., an Ontario corporation, International Career
Specialists Ltd., an Ontario corporation, Thinkpath Inc. (formerly Cad Cam,
Inc.), an Ohio corporation, Thinkpath Technical Services Inc. (formerly Cad Cam
Technical Services Inc.), an Ohio corporation, Thinkpath Michigan Inc. (formerly
Cad Cam Michigan Inc.), a Michigan corporation, Thinkpath Training Inc.
(formerly ObjectArts Inc.), an Ontario corporation, Thinkpath Training US Inc.
(formerly ObjectArts US Inc.), a New York corporation, MicroTech Professionals
Inc., a Massachusetts corporation, and TidalBeach Inc., an Ontario corporation.
BUSINESS OF THINKPATH INC.
GENERAL
Thinkpath provides technological solutions and services in engineering knowledge
management including design, drafting, technical publishing, e-learning and
staffing. Our customers include Department of Defense ("DOD") contractors,
aerospace, automotive and financial services companies, Canadian and American
governmental entities and large multinational companies, including Lockheed
Martin, General Dynamics, General Electric, General Motors, Ford Motors, Goldman
Sachs, CIBC and EDS Canada Inc.
We were incorporated under the laws of the Province of Ontario, Canada in 1994.
Our principal executive offices are located at 55 University Avenue, Suite 400,
Toronto, Ontario, Canada, M5J 2H7, telephone number (416) 364-8800 and our
website is www.thinkpath.com.
Our consolidated sales for the three months ended March 31, 2002 and fiscal year
ended December 31, 2001 was $7,400,000 and $36,900,000, respectively, and our
consolidated net loss was $500,000 and $9,700,000, respectively, during such
periods.
TECHNICAL PUBLISHING
We provide technical publishing programs for complete integration into
engineering and design departments of government, military contractors,
aerospace and automotive customers. Our software performs technical
documentation through desktop publishing, technical illustration and web
animation and produces printed materials, e-publications for CD rom and web, and
SGML/XML tagged electronic manuals. Our technology can also capture existing
publications and convert the data to assemble electronic publications specific
to a customer's requirements.
-2-
We maintain a complete staff of technical publication personnel consisting of
highly skilled engineers and drafters. As a result, we can draw heavily upon our
engineering resources to handle every step of the documentation process,
including researching, writing, editing, illustration, printing and
distribution. We have also made a substantial investment into high-end
engineering software tools in order to fully use existing engineering data in
developing new material. We believe this gives us an advantage over competitors
because it reduces the time needed to generate illustrations, as well as the
amount of customer support time required in developing new documentation.
We provide technical translation services in over 30 different languages ranging
from Spanish to Mandarin Chinese. Our translators come from diverse technical
and cultural backgrounds, which results in an accurate translation within the
customer's industrial discipline. In addition, our typesetters work with
cutting-edge software specific to each language conversion.
We can guide a company's entire ISO documentation process, from developing
requirements to delivering detailed publications that meet all ISO9001
regulations.
Our technical publication library includes hundreds of documents written to meet
a variety of military, industry, and individual corporate specifications. We
practice the MIL-SPEC (Military Specifications guidelines)rules for graphics,
the ATA(American Transportation Association) rules for content, as well as the
AICC*(Aviation Industry Computer Based Training Commitee) rules for format and
interchangeability. We also produce CE (Communaute Europeenne) compliant
documentation for CE and compliant machinery.
DESIGN ENGINEERING
Our engineering and design services cover every facet of a project from concept
to SLA prototyping to a complete turnkey package that delivers a finished,
operating system. Our engineers handle the drafting, the detailing and the
parametric modeling. We have experienced engineers on staff as well as a pool of
skilled consultants that we can call on to provide internal design services.
RECRUITMENT
We offer full-service recruitment services, including permanent placement,
contract placement, and executive search in the IT and engineering fields. We
have particular expertise in recruiting for Web-based and e-commerce
applications, Customer Relationship Management (CRM) technologies, technical
documentation and technical training. We can and do find candidates from the
entire spectrum of responsibility levels -- from newly graduated junior
technicians to senior technical executives.
Our careful evaluation process tests candidates on their technical proficiency,
soft skills, fit with company culture, and attitude towards finding a new
position. We guarantee that all potential hires are interviewed and reference
checked and that no resume is ever forwarded to a customer without the
candidate's prior permission and knowledge.
TRAINING
We provide technical, instructor led and e-learning training in all Microsoft
and Cisco software products as well as Catia, ProEngineer and Unigraphics
products. We maintain state-of-the-art facilities offering a full range of
advanced technical training services. We offer an array of technical training
and certification options including instructor led, private group training,
one-on-one mentoring in the workplace, seminar instruction, and Internet-based
learning modules.
The training services we provide are segregated between the traditional
Microsoft-based classroom training offered in our offices in New York and
Toronto under our Training division, Thinkpath Training Inc. and the engineering
and e-learning training offered by our engineering services division.
Due to the dramatic decline in revenue and recurring losses from Thinkpath
Training Inc. and our decision to focus on growing our engineering services
division, on May 1, 2002, we sold certain assets of our Toronto training office
to triOS Training Centres Limited, an Ontario company, for a nominal amount of
cash. As part of the transaction, triOS assumed the Toronto training staff and
is now subletting the classroom facilities. In a further effort to focus on our
engineering services division, we also intend to divest our New York training
office once we have settled our outstanding insurance claim related to losses
incurred after September 11, 2001.
-3-
Our focus going forward will be on the engineering services group and the
training derived from those services. Some of engineering products we train on
include:
- - Archibus;
- - AutoCAD;
- - AutoCAD LT;
- - AutoDesk Mechanical Desktop;
- - CADPLUS;
- - Computer Aided Facilities Management (CAFM);
- - MicroStation;
- - SDRC;
- - Solid Edge;
- - Solid Works;
- - ProENGINEER; and
- - Unigraphics.
We have developed and delivered custom engineering courses on engines, presses,
weaponry and various equipment and machinery to General Electric, J&L,
Caterpillar, Kellogg, DOW Brands, Heidleberg, and many others. In addition, we
have developed e-learning programs that teach engineering design software usage,
machine operation, aircraft jet engine repairs, CIM programs that register
students and monitor their progress and accomplishments, pretests, in-process
testing and final exams.
TECHNOLOGY
We had developed proprietary software applications in two areas: human capital
management and Web development. Njoyn is a web-based human capital management
system that automates and manages the hiring process. SecondWave is a Web
development software that allows companies to create, manage and automate their
own dynamic, adaptive Web sites. The software learns from each visitor's
behavior and targets his or her needs and interests with customized content and
communications.
As part of our strategic decision to focus on building our engineering services
division and cut expenses,on March 1, 2002 we sold our subsidiary Njoyn Software
Incorporated to Cognicase Inc., a Canadian company. As part of the transaction,
Cognicase assumed all of our technology staff and has contracted the services of
our Chief Information Officer for a period of six months. We will continue to
have usage of the software for an extended period, however, we will no longer be
recognizing revenue from the sale of the technology.
CUSTOMERS
Our customers are large and high-growth corporations from a wide variety of
industries across North America. These customers include Fortune 500 companies
as well as other high-profile companies. We believe that our customer base
provides credibility when pursuing other customers.
The following is a partial listing of our customers:
EDS Canada Inc.
Lockheed Martin
General Dynamics
General Electric
General Motors
Bank of Montreal
Boeing
CIBC
Cummins Engine
FUJITSU Group
ESI Fiscal
Ford Motor Co.
Goldman Sachs
Merrill Lynch
Microsoft
Toronto Stock Exchange
COMPETITION
The information technology staffing industry is highly competitive and
fragmented and is characterized by low barriers to entry. We compete for
potential customers with other providers of information technology staffing
services, systems integrators, internet-based recruitment management systems,
computer consultants, employment listing services and temporary personnel
agencies. Many of our current and potential competitors have longer operating
histories, significantly greater financial, marketing and human resources,
greater name recognition and a larger base of information technology
professionals and customers than we do, all of which may provide these
competitors with a competitive advantage. In addition, many of these
competitors, including numerous smaller privately held companies, may be able to
respond more quickly to customer requirements and to devote greater resources to
the marketing of services than we can. Because there are relatively low barriers
to entry, we expect that competition will increase in the future.
-4-
The engineering services, technical publishing and e-learning industry is also
very competitive but has much higher barriers to entry due to high capital costs
for tools and equipment and the specialized skills and knowledge required.
Increased competition could result in price reductions, reduced margins or loss
of market share, any of which could materially and adversely affect our
business, prospects, financial condition and results of operations. Further, we
cannot assure you that we will be able to compete successfully against current
and future competitors or that the competitive pressures we face will not have a
material adverse effect on our business, prospects, financial condition and
results of operations. We believe that the principal factors relevant to
competition in the information technology, staffing and engineering services
industry are the recruitment and retention of highly qualified information
technology and engineering professionals, rapid and accurate response to
customer requirements and, to a lesser extent, price. We believe that we compete
favorably with respect to these factors.
BUSINESS STRATEGY
For 2002 and beyond we plan to exploit our track record in engineering services
by offering a unique blend of design engineering, technical publishing and
customized e-learning courseware. In early 2001, we began to focus our marketing
efforts on the defense, aerospace and automotive industries and it is here that
we expect significant growth in 2002 and 2003. By combining design engineering
and technical publishing we believe we have become experts in content management
and thus are positioned to deliver high margin customized e-learning products.
Engineering services offers higher margins and growth as well as more
predictability and stability than the IT services arena. Although our focus will
be on growing the engineering services division, we plan to maintain our current
level of activity in IT services without investing further capital.
Our business objective is to increase our gross revenue and improve our gross
margins by replacing fixed priced projects with time and materials based
contracts. We intend to increase our market share through the addition of
engineering sales staff and through the marketing and promotion support services
of Johnston and Associates and Ogilvie Rothchild, two of our outside
consultants. The primary components of our strategy to achieve this objective
are as follows:
- - Expand our DOD contractor customer base;
- - Grow our aerospace and automotive customer base; and
- - Further penetrate existing customer base, inclduing Fortune 500 companies.
We have established an extensive technology strategy and infrastructure that we
believe provides us with a competitive advantage over less technologically
advanced competitors. The primary components of this strategy and infrastructure
are described below.
BACK OFFICE INFRASTRUCTURE
We have invested heavily in the creation and support of an integrated
technological infrastructure that links all offices and employees and promotes
uniformity in certain functions. Our accounting program provides for real-time
financial reporting across dispersed branch offices. Our intranet and
recruitment management software application, Njoyn provides each of our
employees with access to the tools and information that help them to be
successful and productive. This infrastructure helps us integrate our
acquisitions more easily and cost-effectively than would otherwise be possible.
MARKETING AND PROMOTION
Our marketing and brand strategy is to position ourselves as experts of content
in engineering knowledge management. As a provider of engineering services, we
will emphasize our flexible service options, the depth of our expertise, and the
global delivery capabilities of our North American offices.
We believe this positioning will be achieved through a variety of means,
including:
- - Strong and easy-to-access sales and marketing support at the branch level;
- - Investment in awareness and branding campaigns; and
- - Exploration and establishment of various business partnerships and alliances.
COLLATERAL AND SALES SUPPORT
A major marketing and promotion program is underway to update our collateral
material and Web sites to more accurately reflect our renewed focus on
engineering services. This update will be supervised by Ogilvie Rothchild and is
scheduled to be completed by June 30, 2002.
-5-
TARGET MARKETS
Our target customers are DOD contractors, the United States military, aerospace
and automotive corporations throughout North America. Some of our current
customers include General Motors, Lockheed Martin, General Dynamics CIBC,
General Electric, FedEx, EDS Canada, and Microsoft. This existing customer base
can be penetrated much further. We will therefore focus on maximizing the value
from our current customer relationships, while also looking at capturing new
opportunities.
EMPLOYEES AND CONSULTANTS
EMPLOYEES
Our staff as of June 24, 2002, consists of 62 full-time employees which includes
30 sales personnel and 32 administrative and technical employees. Our staff at
March 31, 2002 consisted of 74 full-time employees which includes 34 sales
personnel and 40 administrative and technical employees. Our staff at December
31, 2001 consisted of 98 full-time employees, including 46 sales personnel and
52 administrative and technical employees. We are not party to any collective
bargaining agreements covering any of our employees, have never experienced any
material labor disruption and are unaware of any current efforts or plans to
organize our employees.
CONSULTANTS
We enter into consulting agreements with information technology and engineering
professionals at hourly rates based on each individual's technical skills and
experience. As of June 24, 2002, approximately 320 professionals were performing
services for our customers. At March 31, 2002 there were 313 professionals
placed by us, performing services for our customers. At December 31, 2001 there
were 309 professionals placed by us, performing services for our customers.
RECENT EVENTS
On April 4, 2002, we retained Johnston & Associates, LLC, a Washington company,
to provide strategic governmental relations counseling and marketing
representation before the United Stated Department of Defense, the United States
Congress and targeted companies in connection with marketing our engineering
services related to specific government contracts. Johnston & Associates will be
compensated at a rate of $10,000 per month for twelve months beginning April
2002 and ending March 31, 2003. In addition, Johnston & Associates will be
issued 200,000 warrants to purchase our common stock at the fair market value on
the date of grant and will vest at 50% per year. Such warrants will be issued at
a future date to be agreed upon by the parties.
On April 8, 2002, we closed our Etobicoke office and sold certain assets of
Systemsearch Consulting Services Inc. to its prior owner in consideration of the
assumption of the lease and certain liabilities. Existing contracts were
transferred to another office and all sales and administrative staff were
terminated.
On April 26, 2002, Ronan McGrath resigned from our Board of Directors as a
result of changes in the corporate policy of his employer regarding outside
directorships. Such resignation was not a result of any disagreements or
conflicts with Thinkpath.
Effective April 30, 2002, we restructured our note payable to Denise Dunne,
reducing the principal from $1,740,536 to $990,536 in consideration of the
issuance of 2,000,000 shares of our common stock to be issued at a future date.
We will continue to make monthly interest payments of $14,397 until December 31,
2002. Beginning January 1, 2003, we will begin monthly principal payments of
$15,000 with interest at 4.2%. The loan will mature January 1, 2007 at which
time the remaining principal of $270,536 will be due and payable.
On May 1, 2002, we entered into an agreement with triOS Training Centres
Limited, an Ontario company, for the purchase of certain assets of our Toronto
training division, Thinkpath Training in consideration of a nominal amount of
cash and the assumption of all prepaid training liabilities. As part of the
transaction, triOS assumed the Toronto training staff and will sublet classroom
facilities.
On May 20, 2002, Robert Escobio resigned from the Board of Directors due to
personal matters and not as a result of any disagreements or conflicts with
Thinkpath.
On May 24, 2002, we entered into a loan agreement with Tazbaz Holdings Inc., an
Ontario Corporation. Pursuant to the agreement, Tazbaz securitized an overdraft
position of Thinkpath with Bank One in the amount of $650,000 in consideration
of an aggregate of 5,000,000 shares of our common stock. To date, 2,400,000
shares have been issued to Tazbaz, with the balance to be issued upon an
amendment to our Articles of Incorporation permitting an increase in our
authorized capital stock.
On June 7, 2002, we entered into a non-binding subscription agreement with
Olgivie Rothchild Inc., an Ontario Corporation, pursuant to which Olgivie
Rothchild Inc. subscribed for and agreed to purchase 15,000,000 shares of our
common stock for an aggregate consideration of $1,500,000. It is anticipated
that the transaction contemplated by the subscription agreement, if consummated,
will close on or before July 15, 2002.
On June 14, 2002, a former employee, Christopher Killarney, filed a statement of
claim against us with the Superior Court of Justice of Ontario, Canada, Court
File No. 02-CV-229385CMS, alleging wrongful dismissal and breach of contract.
Mr. Killarney is seeking between approximately $120,000 and $650,000 in damages.
We intend to defend this claim vigorously.
-6-
On June 19, 2002, we entered into a non-binding letter of intent with Morrison
Financial Services Limited, an Ontario Corporation, for the provision of a
full-recourse receivable discounting facility. Morrison is currently conducting
due diligence.
Pursuant to the Series C Preferred Stock Purchase Agreement dated April 18, 2001
and amended on June 6, 2001 and November 1, 2001, we are required to issue
shares of our common stock to the Series C preferred stockholders upon
conversion of their Series C Preferred Stock. As of June 25, 2002, there are
four conversion notices for an aggregate of 464 shares of Series C Preferred
Stock that we are unable to honor until we file an amendment to our Articles of
Incorporation increasing our authorized capital stock, which amendment is
subject to shareholder approval. Upon the filing of the amendment, we will be
required to issue approximately 5,421,386 shares of our common stock to such
Series C preferred stockholders.
On June 25, 2002, we received letters from two of the holders of the Series C
Preferred Stock demanding that we pay them an aggregate of $253,250 in
liquidated damages as a result of a default of certain registration rights. We
intend to contest such demands as management beleives that the parties entered
into an oral agreement whereby such holders would forgo any liquidated damages.
On June 24, 2002, we entered into consulting agreements with each of Mark Young
and George Georgiou pursuant to which Messrs. Young and Georgiou shall perform
consulting services with respect to corporate and debt restructuring. In
consideration for such services we issued 1,250,000 and 1,000,000 shares of our
common stock to Messrs. Young and Georgiou, respectively. Pursuant to the
agreement we are registering such shares of common stock under this registration
statement.
RISK FACTORS
An investment in our common stock involves a number of very significant risks.
You should carefully consider the following risks and uncertainties in addition
to other information in this reoffer prospectus in evaluating our company and
our business before purchasing shares of our common stock. Our business,
operating results and financial condition could be seriously harmed due to any
of the following risks. The trading price of the shares of our common stock
could decline due to any of these risks, and you could lose all or part of your
investment.
OUR SIGNIFICANT OPERATING LOSSES, WORKING CAPITAL DEFICIENCIES AND VIOLATIONS OF
CERTAIN LOAN COVENANTS MAY PROHIBIT US FROM CONTINUING AS A GOING CONCERN.
At March 31, 2002 and December 31, 2001 we had zero cash and cash equivalents
and a working capital deficiency of $3,070,000 and $3,350,000, respectively. At
March 31, 2002 and December 31, 2001 we had a cash flow deficiency from
operations of $1,090,000 and $200,000, respectively. At March 31, 2002 we had a
deficit of $23,242,194 and had suffered recurring losses from operations. With
insufficient working capital from operations, our primary sources of cash have
been our revolving line of credit with Bank One and proceeds from the sale of
equity securities. In order to continue our current operations and develop our
business, we will require significant additional funds for the expansion of our
sales force, the acquisition of capital assets to support our staff, and the
financing of continuing operations and debt obligations. We cannot assure you
that we will be able to raise or generate the funds required, failure in which
may harm our financial condition. Although we have implemented significant
restructuring plans during the past year, including the termination of redundant
staff and the closure of non-performing offices, we cannot assure you that our
operations will generate sufficient funds to maintain current levels or allow
for growth.
WE RELY UPON A REVOLVING LINE OF CREDIT WITH BANK ONE, THE REDUCTION OR
CANCELLATION OF WHICH WOULD SEVERELY HAMPER OUR FUTURE DEVELOPMENT AND CURTAIL
OUR OPERATIONS.
We have a revolving line of credit with Bank One of $7,000,000 based on eligible
receivables. At March 31, 2002 and December 31, 2001, the balance of the
revolving line of credit was $4,200,000 and $4,900,000 respectively. At March
31, 2002 and December 31, 2001, the revolving line of credit provided for a
maximum borrowing amount of $4,700,000 and $4,800,000 respectively. No assurance
can be given that we will be able to generate sufficient receivables to drawn
down additional funds on our revolving line of credit. In addition, at March 31,
2002 and thereafter, we have exceeded our borrowing capacity by approximately
$500,000. Although we do not have an authorized overdraft facility with Bank
One, they have allowed us to maintain an overdraft of approximately $500,000
periodically over the past nine months. No assurance can be made that Bank One
will continue this overdraft facility.
OUR CURRENT FAILURE TO MEET THE REQUIREMENTS OF OUR REVOLVING LINE OF CREDIT
WITH BANK ONE COULD RESULT IN THE REDUCTION OR CANCELLATION OF THE LINE OF
CREDIT WHICH WOULD SEVERELY HAMPER OUR FUTURE DEVELOPMENT AND CURTAIL OUR
OPERATIONS.
Bank One's revolving line of credit agreement requires us to meet various
restrictive covenants, including a senior debt to EBITDA ratio, debt service
coverage ratio, debt to tangible net worth ratio and certain other covenants. At
March 31, 2002 and thereafter, we were not in compliance with the covenants
contained in the revolving line of credit agreement. Bank One has indicated its
intention to enter into a forbearance agreement with us pursuant to which the
bank would refrain from exercising any rights or remedies based on existing or
continuing defaults, including accelerating the maturity of the loans under the
credit facility. Any agreement reached with the bank could result in new terms
which are less favourable than current terms under the existing agreement and
could involve a reduction in availability of funds, an increase in interest
rates and shorter maturities, among other things.
-7-
OUR FAILURE TO REMEDY OUR DEFAULTS UNDER THE BANK ONE REVOLVING LINE OF CREDIT
COULD SEVERELY CURTAIL OUR SOURCES OF FINANCING WHICH WOULD REQUIRE US TO
CURTAIL OUR CURRENT OPERATIONS.
If we are not successful in securing a forbearance agreement or a waiver of Bank
One's rights and remedies as a result of the defaults we will be required to
seek new financing arrangements with other lenders. Such alternative financing
arrangements may be unavailable to us or available on terms substantially less
favorable to us than our existing line of credit facility. If we are unable to
either procure a waiver from the bank or acceptable alternative financing, such
failures could have a material adverse effect on our financial condition and
results of operations. No assurance can be given that we will be able to obtain
a waiver from the bank on the default of loan covenants or refinance our
existing obligations. We also cannot predict whether additional financing will
be in the form of equity or debt, or be in another form. We may not be able to
obtain the necessary additional capital on a timely basis or on acceptable
terms, if at all.
ANY FUTURE FINANCINGS MAY REQUIRE US TO ISSUE ADDITIONAL SECURITIES WHICH MAY
RESULT IN THE SUBSTANTIAL DILUTION TO EXISTING HOLDERS OF COMMON STOCK.
In the event that any future financing should take the form of equity
securities, the holders of our common stock will experience additional dilution.
We are currently exploring options including equity lines of credit. The ability
to draw down on equity lines is determined by price and volume restrictions.
Equity lines of credit can be extremely dilutive and because of their
restrictions, may not generate sufficient cash to fund our operations. If we
were to undertake a private placement with preferred stock and common stock
purchase warrants and the investors were to convert their stock and exercise
their warrants, there would be a significant dilution or reduction in the value
of our common stock. If the current holders of the Series C Preferred Stock were
to convert their remaining shares of preferred stock and exercise their
warrants, there would be a change in control of the ownership of our common
stock. No assurance can be given that we can find alternative financing to
equity securities.
OUR FAILURE TO SUCCESSFULLY IMPLEMENT OUR STRATEGY OF ENTERING INTO A JOINT
VENTURE, STRATEGIC PARTNERSHIP AND/OR THE SALE OF CERTAIN OF OUR NON-PERFORMING
DIVISIONS COULD REQUIRE US TO CURTAIL OUR CURRENT OPERATIONS.
In addition to seeking debt and/or equity financings, we are exploring
investment banking opportunities including joint ventures, strategic
partnerships and the potential sale of certain non-performing divisions. In the
event that we do not secure financing and are unable to divest or merge certain
divisions, we may be forced to close these divisions. Although our revenue may
be materially impacted by the sale of certain divisions, we beleive that our
immediate cash flows will improve.
OUR CURRENT FINANCING ARRANGEMENTS AND CURRENT CASH FLOWS FROM OPERATIONS MAY
NOT BE ADEQUATE FOR US TO MEET OUR CURRENT CAPITAL NEEDS FOR THE NEXT TWELVE
MONTHS.
We can give no assurances that our current cash flows from operations, if any,
borrowings available under our line of credit and proceeds from the sale of
securities or from an equity line will be adequate to fund our expected
operating and capital needs for the next twelve months. The adequacy of our cash
resources over the next twelve months is primarily dependent on our operating
results and our ability to procure a waiver from the bank on our current
defaults, to find alternate financing or to draw down on our equity line, all of
which are subject to substantial uncertainties. Cash flow from operations for
the next twelve months will be dependent upon, among other things, the effect of
the current economic slowdown on our sales, the impact of our restructuring plan
and management's ability to implement our business plan. The failure to return
to profitability and optimize operating cash flow in the short term and to
successfully procure a waiver from the bank or alternate financing could have a
material adverse effect on our liquidity position and capital resources.
BECAUSE OUR PROFESSIONALS AND CONSULTANTS MAY TERMINATE THEIR EMPLOYMENT WITH US
AT ANY TIME, WE MAY NOT BE ABLE TO MEET OUR CUSTOMERS' REQUIREMENTS.
If we are not able to provide our customers with the technical personnel they
require, our customers will fill their requirements from other companies.
Because our revenue is dependent upon the number of information technology,
engineering and technical training professionals and consultants we place on
assignment, our results of operations depend on our ability to attract and
retain qualified technical personnel with the skills and experience necessary to
meet our customers' requirements. Aside from competition with other firms in our
industry, we face the following challenges:
- - We often employ our technical personnel for a specific project on an at will
basis, which permits the professional to terminate his or her employment with us
on little or no notice, and
- The technical personnel have in the past and may in the future accept
assignments from other companies upon completion of their assignments with us.
-8-
The average employee remains with us for a period of six months and our annual
turnover rate is 40%. Any decrease in the average time served or increase in the
percentage of turnover would have a material adverse effect n our results of
operations and financial condition, in particular, our ability to generate
revenue.
OUR FAILURE TO IMPLEMENT OUR EXPANSION STRATEGY COULD HARM OUR FINANCIAL
CONDITION AND PREVENT US FROM ACHIEVING OUR FUTURE REVENUE GOALS.
We believe that we need to successfully expand our business in order to expand
our revenue and achieve profitability. We cannot assure you that our expansion
strategy will be successful. The success of our expansion plans depend on our
ability to:
- Enter new regional markets;
- Expand our existing operations;
- Add additional areas of expertise;
- Attract, hire, integrate and retain qualified employees;
- Develop, recruit and maintain a base of qualified professionals within
each regional market;
- Accurately assess the demand for our services in such markets, and
- Initiate, develop and sustain corporate customer relationships.
In addition the failure to implement our expansion strategy would hinder our
ability to attract multinational and other large corporations. We believe that
our future prospects are heavily influence by our ability to acquire larger
clients. Any inability on our part to acquire larger clients could have a
material, adverse effect on our ability to increase our revenue.
WE MAY BE LIABLE FOR PAYROLL TAXES AND PENALTIES IN CANADA BECAUSE WE CLASSIFY
OUR PERSONNEL PROVIDING CONTRACT SERVICES AS INDEPENDENT CONTRACTORS. A
DETERMINATION BY THE CANADIAN FISCAL AUTHORITIES THAT THIS CLASSIFICATION IS
INCORRECT WOULD RESULT IN CONSIDERABLE HARM TO OUR FINANCIAL CONDITION.
We treat our contract service providers in Canada as independent contractors
rather than employees. Accordingly, we have not withheld the relevant payroll
deductions, nor have we paid the employer's portion of the related taxes or
recorded a reserve on our financial statements for such taxes and penalties. If
the Canadian fiscal authorities determine that our contract service providers
are in fact employees, we would be subject to significant taxes and penalties.
We estimate that the taxes payable would be approximately $500,000 on an annual
basis, and that the aggregate penalties levied for past infringements of the law
would amount to approximately $250,000. The payment of these taxes and penalties
would have a material, adverse effect on our financial condition. In addition,
to the extent that we are required to pay these taxes in the future, our gross
margin would be reduced to reflect the additional costs, which costs would be
considerable.
In the United States, all of our contract service professionals are classified
as employees and all relevant employee and employer payroll taxes are withheld.
ANY FAILURE TO MAINTAIN THE OPERATION OF OUR WEB SITE COULD SERIOUSLY HARM OUR
BUSINESS.
We have developed a Web site for internal communications as well as marketing
and recruiting. The satisfactory performance, reliability and availability of
our Web site and network infrastructure are and will remain crucial to our
ability to attract and retain customers and technical personnel, and sustain
adequate levels of customer service.
Further, while many companies' Web sites are vulnerable to computer viruses,
break-ins and similarly disruptive problems, we rely very heavily on the secure
and continual operation of our Web site. While we have implemented certain
network security measures, we cannot assure you that they will adequately
protect our Web site. Any breach or circumvention of the implemented security
measures could lead to:
- Our liability for damages;
- Misappropriation of proprietary information, and;
- Cessation of service to our customers.
All or any of the above could harm our business. In addition, any systemic
interruptions or reduced performance of our Web site would materially and
adversely affect our ability to attract new customers and technical personnel.
In addition to representing a threat to our reputation, the inability to retain
our technical personnel and customers would harm our results of operations and
any inability to attract new customers would have a material, adverse effect on
our ability to generate revenue as well as our future prospects.
-9-
WE MAY BE HELD LIABLE FOR THE ACTIONS OF OUR CONTRACT SERVICE PROVIDERS WHEN ON
ASSIGNMENT DESPITE HAVING OBTAINED INSURANCE COVERAGE TO PROTECT US FROM SUCH
LIABILITY.
Although our customer agreements disclaim responsibility for the conduct of our
contract service providers, we may be liable for damage suffered by our
customers as a result of actions taken or failures to take appropriate actions
by our professionals while on assignment. This damage may be caused by our
contract service providers' misuse of customer proprietary information, theft of
customer property or other errors and improper conduct. Any damage for which we
are held liable would adversely affect our results of operations to the extent
of such damage and could lead to a material, adverse effect on our financial
condition.
We cannot assure you, due to the nature of the assignments, that the insurance
coverage will continue to be available on reasonable terms, if at all, or that
it will be adequate to cover any liability as a result of our professionals
actions or inactions. Any inability to maintain or adequately replace suitable
insurance coverage for the actions of our contract service providers would
result in adverse effects on our business to the corresponding extent of such
inability, which effects could be material.
BECAUSE WE HAVE LIMITED MANAGEMENT, WE DEPEND UPON OUR SENIOR MANAGEMENT, AND
THEIR LOSS OR UNAVAILABILITY COULD PUT US AT A COMPETITIVE DISADVANTAGE.
Our future success will depend to a significant extent on the efforts of Declan
A. French, our Chairman of the Board and Chief Executive Officer and other key
employees. The loss or unavailability of Mr. French could have a material,
adverse effect on our business. In addition, we believe that our future success
will depend in large part upon our continued ability to attract and retain
highly qualified recruiters, who often serve as the contact person for our
customers. We cannot assure you that we will be able to attract and retain the
qualified personnel necessary for our business.
OUR MANAGEMENT RETAINS SUBSTANTIAL INFLUENCE OVER OUR OPERATIONS.
Our directors and executive officers beneficially own approximately 4,044,890,
or 13.6% of our common stock. As a result, they will have substantial influence
with respect to the election of our directors and the outcome of all matters on
which shareholders are entitled to vote.
While we do not believe that the interests of our management presently conflict
with the interests of our shareholders, we cannot assure you that this belief is
shared by our shareholders or that our management's interests will not in the
future be different from that of our shareholders.
THE CONVERSION OF THE SERIES C 7% CONVERTIBLE PREFERRED STOCK AND THE EXERCISE
OF THE WARRANTS ISSUED TO INVESTORS MAY LEAD TO A CHANGE IN CONTROL.
As of June 24, 2002, there are outstanding 29,706,124 shares of our common
stock. Our directors and executive officers currently beneficially own 13.6% of
the shares of common stock outstanding. Pursuant to the April 2001 private
placement offering of Series C Preferred Stock, we issued an aggregate of 1,230
shares of Series C Preferred Stock and 723,076 common stock purchase warrants.
As of the date of this reoffer prospectus, 600 shares of Series C Preferred
Stock and all 723,076 warrants remain outstanding. To date, 630 shares of Series
C Preferred Stock have been converted into 5,783,922 shares of our common stock.
Pursuant to the terms of the offering, we are obligated to issue an additional
375 shares of Series C Preferred Stock and approximately 576,332 common stock
purchase warrants upon the effective date of a registration statement.
As of June 24, 2002, if all 1,230 shares of Series C Preferred were to be
converted and all 1,539,408 common stock warrants and options were to be
exercised we would be obligated to issue approximately 12,872,439 shares of our
common stock according to the Series C conversion formula, exercise price of the
warrants and the closing price of our common stock on such date. Such conversion
and exercise would result in the holders of the Series C Preferred Stock and
common stock purchase warrants owning approximately 34.98% of our issued and
outstanding common stock resulting in a significant change in control of the
ownership of our common stock. As a result, the investors in the April 2001
private placement offering will have substantial influence with respect to the
election of our directors and the outcome of all matters on which shareholders
are entitled to vote.
CURRENCY FLUCTUATIONS MAY ADVERSELY AFFECT OUR OPERATING RESULTS.
Revenue denominated in Canadian dollars accounted for 47% of our revenue for the
three months ended March 31, 2002, 45% for the year ended December 31, 2001, and
35% for the year ended December 31, 2000. Accordingly, the relationship of the
Canadian dollar to the value of the United States dollar may materially affect
our operating results. In the event that the Canadian dollar was materially
devalued against the United States dollar, our operating results could be
materially, adversely affected.
-10-
THE SUCCESS OF OUR BUSINESS IS CLOSELY LINKED TO OUR ABILITY TO ATTRACT AND
RETAIN QUALIFIED INFORMATION TECHNOLOGY PROFESSIONALS AND ENGINEERS. THE
COMPETITION FOR SUCH INDIVIDUALS IS INTENSE, AND WE MAY NOT BE ABLE TO RETAIN AN
ADEQUATE EMPLOYEE POOL TO MEET OUR CUSTOMERS' REQUIREMENTS.
Our business depends to a significant extent on our ability to identify,
attract, hire and retain qualified information technology, engineering and
technical training professionals and consultants. If we fail to attract and
retain a sufficient number of qualified professionals, our business will be
materially and adversely affected. We may have difficulty in meeting our
staffing requirements for a number of reasons, including, but not limited to,
the following:
- Information technology, engineering and technical training
professionals are in high demand worldwide;
- The industry in which we operate is characterized by low barriers to
entry;
- The demand for such professionals is increasing, and;
- Turnover in the industry is very high compared with other industries.
If we fail to overcome these challenges and are unable to sustain an adequate
number of contract service providers to meet our needs, our business will be
materially, adversely affected.
BECAUSE OF OUR RELATIVELY SMALL SIZE AND SHORT OPERATING HISTORY, WE MAY NOT BE
ABLE TO COMPETE WITH OTHER SERVICE PROVIDERS, MANY OF WHICH ENJOY A NUMBER OF
ADVANTAGES SUCH AS POSSESSING FINANCIAL AND OTHER RESOURCES THAT EXCEED OUR OWN.
We compete for potential customers with many other providers of information
technology, engineering and technical training services, consulting services,
systems integrators, providers of outsourcing services, computer consultants,
employment listing services, and temporary personnel agencies. Many of our
current and potential competitors enjoy considerable advantages over us,
including, without limitation:
- Longer operating histories;
- Significantly greater financial, marketing and human resources;
- Greater ability to adapt and quickly respond to rapid technological
change, evolving industry standards, changing client preferences and
new product and service introductions;
- Greater name recognition;
- A larger base of information technology, engineering, and technical
training and consulting professionals, and
- A larger customer base.
These competitive advantages, if successfully capitalized on, would likely have
a material, adverse effect on our business. In addition, we expect that
competition will increase. Any such increase is likely to result in general
price reductions and reduced margins that could materially, adversely affect our
results of operations.
WE MAY FAIL TO MEET THE EXPECTATIONS OF OUR INVESTORS AND ANALYSTS, WHICH MAY
CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO FLUCTUATE OR DECLINE. THE
LIKELIHOOD OF SUCH FAILURE IS INCREASED BY THE FACT THAT OUR OPERATING RESULTS
TEND TO VARY FROM QUARTER TO QUARTER.
Analysts frequently issue reports based on the results of a single quarter. Our
revenues and earnings have fluctuated significantly in the past, and we expect
that they will continue to do so in the future. Relatively poor results in one
quarter could significantly and adversely influence such reports, which may in
turn lead to depreciation of the market price of our common stock, which in turn
may result in the loss of some or all of our shareholders' investment. Factors
that influence the fluctuating nature of our quarterly results include, without
limitation:
- the demand for our services;
- any change in our ability to attract and retain information
technology, engineering and technical training professionals and
consultants and customers;
- the timing and significance of new services and products introduced by
us and our competitors;
- the level of services provided and prices charged by us and by our
competition;
- unexpected changes in operating expenses, such as a determination by
the Canadian fiscal authorities that we must pay payroll taxes for our
Canadian contract service providers and penalties for not having done
so in the past; and
- general economic factors.
These factors, many of which are beyond our control, substantially curtail your
ability to predict our future performance based on our past performance, as do
many of the other risks discussed in this prospectus. In addition, many
companies that generate increasing revenues and earnings nevertheless experience
devaluation of the market price of their publicly traded equities. We cannot
assure you that even positive results of operations will not negatively affect
the market price of our common stock.
-11-
YOUR OWNERSHIP INTEREST IN US WILL BE SUBSTANTIALLY DILUTED UPON THE CONVERSION
OF THE SERIES C 7% CONVERTIBLE PREFERRED STOCK AND THE EXERCISE OF THE WARRANTS
ISSUED IN THE APRIL 2001 PRIVATE PLACEMENT OFFERING.
As of June 24, 2002, there are 29,706,124 shares of our common stock
outstanding. Pursuant to the April 2001 private placement offering of Series C
Preferred Stock, we issued an aggregate of 1,230 shares of Series C Preferred
Stock and 723,436 common stock purchase warrants. As of the date of this
prospectus, 600 shares of Series C Preferred Stock and all 723,436 warrants
remain outstanding. To date, 600 shares of have been converted into 5,783,922
shares of common stock. Pursuant to the terms of the offering, we are obligated
to issue an additional 375 shares of Series C Preferred Stock and approximately
576,332 common stock purchase warrants upon the effective date of a registration
statement. As of June 24, 2002, if all 1,230 shares of Series C Preferred were
to be converted and all 1,539,408 common stock warrants and options were to be
exercised we would be obligated to issue approximately 12,872,439 shares of our
common stock according to the Series C conversion formula, exercise price of the
warrants and the closing price of our common stock on such date. The conversion
and exercise thereof would represent an increase in the number of shares of our
common stock outstanding equal to approximately 43.3%. Your ownership in us
would be diluted proportionately to any such increase.
The conversion formula is based on the market price of our common stock.
Consequently, we cannot currently determine the number of shares of common stock
into which the shares of Series C Preferred Stock shall be convertible. The
number used above is accurate only as of the date of this prospectus.
The chart provided below shows the number of shares of our common stock into
which one share of Series C Preferred Stock would be convertible, assuming a
decline in the current market price of our publicly traded shares to 75%, 50%
and 25% of the market price using the market price as of June 24, 2002 or $0.16
as the baseline.
The chart provided below is based on the following assumptions:
1. The conversion formula is as follows:
The number of shares of our common stock into which the Series C Preferred Stock
shall be convertible into is that number of shares of common stock equal to (i)
the sum of (A) the stated value per share and (B) at the holder's election,
accrued and unpaid dividends on such share, divided by (ii) the "Conversion
Price". The "Conversion Price" shall be the lesser of (x) 87.5% of the average
of the 5 lowest daily volume weighted average prices of our common stock during
the period of 60 consecutive trading days immediately prior to the date of the
conversion notice; or (y) 90% of the average of the daily volume weighted
average prices during the period of the 5 trading days prior to the applicable
closing date. The Conversion Price is subject to the following limitations: (a)
for the 120 calendar days following April 18, 2001, the Conversion Price shall
not be less than $.375 per share; (b) during the period commencing on the 121st
calendar day following April 18, 2001 and ending on the 180th calendar day
following April 18, 2001, the Conversion Price of 50% of each of the holders
shares of Series C Preferred Stock shall not be less than $.375; and (c) on any
day after the 180th calendar day following April 18, 2001, there shall be no
floor on the Conversion Price.
2. We make the assumption that the Conversion Price is calculated as follows:
The "Conversion Price" shall equal 87.5% of the average of the 5 lowest daily
volume weighted average prices of our common stock during the period of 60
consecutive trading days immediately prior the date of the conversion notice.
3. We make the assumption that the applicable date of the conversion notice is
June 24, 2002.
4. We make the assumption that the average of the 5 lowest daily volume weighted
average prices of our common stock during the 60 consecutive days immediately
prior to the date of the conversion equals the applicable market price of our
common stock on June 24, 2002, or $0.16.
Shares of common stock
issuable per share of
Series C Preferred Stock
Percentage Conversion Price ($1,000 stated value)
75% $.12 8,333
50% $.08 12,500
25% $.04 25,000
APPROXIMATELY 11,540,001 OR APPROXIMATELY 48% OF OUR TOTAL OUTSTANDING SHARES
ARE RESTRICTED OF WHICH 4,456,890 MAY BE PUBLICLY SOLD PURSUANT TO RULE 144K OF
THE SECURITIES ACT OF 1933, AS AMENDED. IF A SIGNIFICANT NUMBER WERE TO BE SOLD,
OR IF IT WERE ANTICIPATED THAT A SIGNIFICANT NUMBER WAS TO BE SOLD, THE MARKET
PRICE OF OUR COMMON STOCK WOULD LIKELY DECREASE.
-12-
A large number of our shares of common stock issued and outstanding but not
currently part of the public float could presently be sold on the open market.
As of June 24, 2002 we have 29,706,124 outstanding shares of common stock,
13,709,233 of which may be resold in the public market immediately, subject to
applicable contractual restrictions and the volume limitation imposed by Rule
144. Approximately 4,456,890 or approximately 15% of our outstanding shares are
available for resale in the public market pursuant to Rule 144k of the
Securities Act of 1933, as amended.
OUR SHARES OF COMMON STOCK MAY SOON BE DELISTED FROM THE NASDAQ SMALLCAP MARKET,
THE EFFECT OF WHICH WOULD BE THAT TRADING IN OUR COMMON STOCK WOULD BE SHARPLY
REDUCED, LEADING TO A FURTHER DEPRECIATION IN THE MARKET PRICE OF OUR COMMON
STOCK.
According to Rule 4310(c)(8)(B) of the NASD, shares that trade on the Nasdaq
SmallCap Market must meet a minimum bid price of one dollar. Any deficiency in
this regard for a period of 30 consecutive business days will cause Nasdaq
notify the issuer of its non-compliance with Rule 4310(c)(8)(B). If the traded
shares fall below one dollar for a period of 90 calendar days, Nasdaq will
delist the shares. To avoid delisting, the issuer must raise the price of its
shares to a minimum of one dollar, and maintain that price for no less than 10
consecutive trading days within the 90-day period.
On July 20, 2001, we received a Nasdaq Staff Determination letter indicating
that we were not in compliance with the bid price requirements for continued
listing, as set forth in Nasdaq's Marketplace Rule 4310(c)(4). On September 27,
2001, Nasdaq announced a moratorium on the minimum bid and public float
requirements for continued listing on the exchange until January 2, 2002. On
February 14, 2002, we again received from Nasdaq a letter that we were not in
compliance with the minimum bid price requirements for continued listing. As a
result, we were provided with a period of 180 calendar days, or until August 13,
2002, during which time the bid price of our common stock must close at $1.00
per share or more for a minimum of 10 consecutive trading days to regain
compliance. If compliance cannot be demonstrated by August 13, 2002, Nasdaq will
determine whether we meet the initial listing criteria including minimum
stockholders' equity of $5 million, market capitalization of $50 million or net
income of $750,000 (excluding extraordinary or non-recurring items) in the most
recently completed fiscal year or in two of the last three most recently
completed fiscal years. If we meet the initial listing criteria, we will be
granted an additional 180 calendar-day grace period to demonstrate compliance.
Otherwise, our stock will be delisted, at which time, we may file an appeal to
the Listing Qualifications Panel.
In the event we are unable to maintain a minimum bid price of one dollar for the
requisite period of time, we may be required to reappear before the Nasdaq
Listing Qualification Panel to present a plan, to the Nasdaq's satisfaction, of
how we intend to comply with Nasdaq's listing requirements. There can be no
assurance that the Panel will grant our request for continued listing and that
our common stock will continue to be listed on the Nasdaq SmallCap Market. In
the event our common stock is de-listed from the Nasdaq SmallCap Market, the
trading in our common stock would likely be sharply reduced leading to the
depreciation in its market price. If our common stock becomes subject to the
penny stock regulation, trading in the shares of our common stock will likely be
further reduced, which would in all probability further depress the market price
of the common stock.
The Securities Enforcement and Penny Stock Reform Act of 1990 requires
additional disclosure relating to the market for penny stocks in connection with
trades in any stock defined as a penny stock. Commission regulations generally
define a penny stock to be an equity security that has a market or exercise
price of less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on Nasdaq and any equity security
issued by an issuer that has net tangible assets of at least $2,000,000, if such
issuer has been in continuous operation for three years. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith. The penny stock rules require a
broker/dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker/dealer must also provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker/dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and broker/dealer and salesperson compensation information
must be given to the customer orally or in writing prior to effecting the
transaction and must be given in writing before or with the customer's
confirmation. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the
broker/dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for securities
that become subject to the penny stock rules. If our securities became subject
to the penny stock rules, the market for our common shares would become
increasingly illiquid.
WE HAVE NOT, AND DO NOT INTEND, TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not paid any cash dividends on our common stock and do not intend to pay
cash dividends in the foreseeable future. We intend to retain future earnings,
if any, for reinvestment in the development and expansion of our business.
Pursuant to our agreement with the Business Development Bank and Bank One, we
will not pay dividends so long as our loans remain outstanding. Dividend
payments in the future may also be limited by other loan agreements or covenants
contained in other securities which we may issue. Any dividend payments that we
may make would be subject to Canadian withholding tax requirements. Any future
determination to pay cash dividends will be at the discretion of our Board of
Directors and be dependent upon our financial condition, results of operations,
capital and legal requirements and such other factors as our Board of Directors
deems relevant.
-13-
USE OF PROCEEDS
We will not receive any proceeds from the sale of any of the 2,250,000 common
shares by the Business Consultants.
SELLING SHAREHOLDERS
The following table identifies the selling shareholders and indicates (i) the
nature of any material relationship that such selling shareholders have had with
us for the past three years, (ii) the number of shares held by the selling
shareholders, (iii) the amount to be offered for the selling shareholders'
accounts, and (iv) the number of shares and percentage of outstanding shares of
the common shares in our capital to be owned by the selling shareholders after
the sale of the shares offered by the selling shareholders pursuant to this
offering. The selling shareholders are not obligated to sell the shares offered
in this reoffer prospectus and may choose not to sell any of the shares or only
a part of the shares. SEC rules require that we assume that the selling
shareholders sell all of the shares offered with this reoffer prospectus.
Under the Securities Exchange Act of 1934, as amended, any person engaged in a
distribution of the shares offered by this reoffer prospectus may not
simultaneously engage in market making activities with respect to our common
shares during the applicable "cooling off" periods prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the selling
shareholders will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of the shares by the
selling shareholders. As of June 24, 2002, there were 29,706,124 shares of
common stock issued and outstanding.
MARK YOUNG (BUSINESS CONSULTANT)
Relationship: Consultant
(since June 24, 2002)
Shares Beneficially Owned Prior to Offering: 2,250,000
Percentage Beneficially Owned Prior to Offering: 7.6%
Shares to be Sold: 2,250,000
Shares Beneficially Owned After Offering 0
Percentage Beneficially Owned After Offering: 0%
GEORGE GEORGIOU (BUSINESS CONSULTANT)
Relationship: Consultant
(since June 24, 2002)
Shares Beneficially Owned Prior to Offering: 1,000,000
Percentage Beneficially Owned Prior to Offering: 3.4%
Shares to be Sold: 1,000,000
Shares Beneficially Owned After Offering 0
Percentage Beneficially Owned After Offering: 0%
THE INFORMATION PROVIDED IN THE TABLE ABOVE WITH RESPECT TO THE SELLING
SHAREHOLDERS HAS BEEN OBTAINED FROM THE SELLING SHAREHOLDERS. BECAUSE EACH OF
THE SELLING SHAREHOLDERS MAY SELL ALL OR SOME PORTION OF THE SHARES OF COMMON
STOCK BENEFICIALLY OWNED BY HIM, ONLY AN ESTIMATE (ASSUMING THE SELLING
SHAREHOLDERS SELL ALL OF THE SHARES OFFERED HEREBY) CAN BE GIVEN AS TO THE
NUMBER OF SHARES OF COMMON STOCK THAT WILL BE BENEFICIALLY OWNED BY EACH OF THE
SELLING SHAREHOLDERS AFTER THIS OFFERING. IN ADDITION, EITHER OF THE SELLING
SHAREHOLDERS MAY HAVE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF, OR MAY SELL,
TRANSFER OR OTHERWISE DISPOSE OF, AT ANY TIME OR FROM TIME TO TIME SINCE THE
DATE ON WHICH HE PROVIDED THE INFORMATION REGARDING THE SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY HIM, ALL OR A PORTION OF THE SHARES OF COMMON STOCK
BENEFICIALLY OWNED BY HIM IN TRANSACTIONS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED.
PLAN OF DISTRIBUTION
The selling shareholders may sell the 2,250,000 common shares for value from
time to time under this reoffer prospectus in one or more transactions on the
Nasdaq SmallCap Market, in negotiated transactions or in a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at prices otherwise negotiated. The
selling shareholders may effect such transactions by selling the shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the respective
selling shareholders and/or the purchasers of the shares for whom such
broker-dealers may act as agent (which compensation may be less than or in
excess of customary commissions).
-14-
The selling shareholders and any broker-dealers that participate in the
distribution of the shares may be deemed to be an "underwriter" within the
meaning of Section 2(11) of the Securities Act of 1933, as amended, and any
commissions received by them and any profit on the resale of the shares sold by
them may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933, as amended. All selling and other expenses incurred by
the selling shareholders will be borne by the selling shareholders.
In addition to any shares sold hereunder, the selling shareholders may, at the
same time, sell any shares of common shares, including the shares, owned by him
in compliance with all of the requirements of Rule 144, regardless of whether
such shares are covered by this reoffer prospectus.
There is no assurance that the selling shareholders will sell all or any portion
of the shares offered hereby.
We will pay all expenses in connection with this offering and we will not
receive any proceeds from sales of any shares by the selling shareholders.
EXPERTS
Our unaudited interim consolidated financial statements (filed May 20, 2002) and
our year end audited consolidated financial statements (filed April 16, 2002),
including the report of Schwartz Levitsky Feldman llp, Toronto, Ontario, Canada
accompanying the financial statements, which is also incorporated into this
reoffer prospectus by reference. The unaudited interim consolidated financial
statements, the year end audited consolidated financial statements and
accompanying independent auditors' report are included in reliance upon the
report, given on the authority of the firm, as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the shares of common stock offered by this reoffer prospectus
will be passed upon for us and the selling shareholders by Gersten, Savage,
Kaplowitz, Wolf & Marcus, LLP.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers or persons controlling
our business pursuant to the provision in the section entitled "Indemnification
of Directors and Officers" (see below), we have been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is therefore unenforceable.
-15-
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
registration statement, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this registration
statement, except for any information superseded by information in this
registration statement.
We filed the following documents, which are incorporated into this registration
statement by reference:
1. Our Form 10-Q Quarterly Report, filed on May 20, 2002.
2. Our Form 10-KSB Annual Report, filed on April 16, 2002.
In addition to the foregoing, all documents that we subsequently file pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment indicating that
all of the securities offered pursuant to this reoffer prospectus have been sold
or deregistering all securities then remaining unsold, shall be deemed to be
incorporated by reference in this registration statement and to be part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated by reference in this registration statement shall be deemed to be
modified or superseded for purposes of this registration statement to the extent
that a statement contained in this reoffer prospectus or in any subsequently
filed document that is also incorporated by reference in this reoffer prospectus
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this registration statement.
WE WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS REOFFER
PROSPECTUS IS DELIVERED, UPON ORAL OR WRITTEN REQUEST, A COPY OF ANY OR ALL
DOCUMENTS INCORPORATED BY REFERENCE INTO THIS REOFFER PROSPECTUS (EXCLUDING
EXHIBITS, UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION THE REOFFER PROSPECTUS INCORPORATES). REQUESTS SHOULD BE
DIRECTED TO DECLAN FRENCH, THINKPATH INC. , 55 UNIVERSITY AVENUE, SUITE 400,
TORONTO, ONTARIO, CANADA, M5J 2H7. OUR TELEPHONE NUMBER AT THAT LOCATION IS
(416) 364-8800.
You may read and copy any reports, statements or other information we have filed
at the SEC's Public Reference Rooms at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Rooms. Our filings are also available on the Internet at the
SEC's website at http:\\www.sec.gov, and from commercial document retrieval
services, such as Primark, whose telephone number is 1-800-777-3272.
DESCRIPTION OF SECURITIES.
Not applicable.
INTERESTS OF NAMED EXPERTS AND COUNSEL
As of the date of this prospectus we have issued to Gersten, Savage, Kaplowitz,
Wolf & Marcus, LLP, our United States legal counsel an aggregate of 188,997
shares of common stock in consideration for legal services rendered. Arthur S.
Marcus, one of our directors, is a partner of Gersten, Savage, Kaplowitz, Wolf &
Marcus, LLP.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Bylaws provide that we shall indemnify our directors and officers. The
pertinent section of Canadian law is set forth below in full. In addition, we
currently have officers' and directors' liability insurance.
Section 136 of the Business Corporations Act (Ontario) provides as follows:
(1) INDEMNIFICATION OF DIRECTORS. A corporation may indemnify a director or
officer of the corporation, a former director or officer of the corporation or a
person who acts or acted at the corporation's request as a director or officer
of a body corporate of which the corporation is or was a shareholder or
creditor, and his or her heirs and legal representatives, against all costs,
charges and expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him or her in respect of any civil, criminal or
administrative action or proceeding to which he or she is a party by reason of
being or having been a director or officer of such corporation or body
corporate, if;
(a) he or she acted honestly and in good faith with a view to the best interests
of the corporation; and
-16-
(b) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, he or she had reasonable grounds for believing
that his or her conduct was lawful.
(2) IDEM. A corporation may, with the approval of the court, indemnify a person
referred to in subsection (1) in respect of an action by or behalf of the
corporation or body corporate to procure a judgment in its favor, to which the
person is made a party by reason of being or having been a director or an
officer of the corporation or body corporate, against all costs, charges and
expenses reasonably incurred by the person in connection with such action if he
or she fulfils the conditions set out in clauses (1)(a) and (b).
(3) IDEM. Despite anything in this section, a person referred to in subsection
(1) is entitled to indemnity from the corporation in respect of all costs,
charges and expenses reasonably incurred by him in connection with the defense
of any civil, criminal or administrative action or proceeding to which he or she
is made a party by reason of being or having been a director or officer of the
corporation or body corporate, if the person seeking indemnity;
(a) was substantially successful on the merits in his or her defense of the
action or proceeding; and
(b) fulfills the conditions set out in clauses (1)(a) and (b).
(4) LIABILITY INSURANCE. A corporation may purchase and maintain insurance for
the benefit of any person referred to in subsection
(1) against any liability incurred by the person,
(a) in his or her capacity as a director of the corporation, except where the
liability relates to the person's failure to act honestly and in good faith with
a view to the best interests of the corporation; or
(b) in his or her capacity as a director or officer of another body corporate
where the person acts or acted in that capacity at the corporation's request,
except where the liability relates to the person's failure to act honestly and
in good faith with a view to the best interests of the body corporate.
(5) APPLICATION TO COURT. A corporation or a person referred to in subsection
(1) may apply to the court for an order approving an indemnity under this
section and the court may so order and make any further order it thinks fit.
(6) IDEM. Upon application under subsection (5), the court may order notice to
be given to any interested person and such person is entitled to appear and be
heard in person or by counsel.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
Thinkpath under Ontario law or otherwise, we have been advised the opinion of
the Securities and Exchange Commission is that such indemnification is against
public policy as expressed in the Securities Act of 1933, as amended and is,
therefore, unenforceable. In the event a claim for indemnification against such
liabilities (other than payment by Thinkpath for expenses incurred or paid by a
director, officer or controlling person of Thinkpath in successful defense of
any action, suit, or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, Thinkpath
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction, the
question of whether such indemnification by it is against public policy in said
Act and will be governed by the final adjudication of such issue.
EXEMPTION FROM REGISTRATION CLAIMED
On June 24, 2002, we entered into Consulting Agreements with each of Mark Young
and George Georgiou pursuant to which we agreed to pay fees, payable in shares
of our common stock, since the Company was unable to pay a cash fee at the time
that the contracts were executed. The transactions were private in nature and we
had reasonable grounds to believe that each of Mark Young and George Georgiou
are accredited investors, capable of evaluating the merits and risks of their
investment, bearing the economic risks of the investment and acquired the shares
for investment purposes. In June 2002, we issued the shares relying on Sections
4(2) and 4(6) and Rule 506 of Regulation D of the Securities Act of 1933,as
amended.
EXHIBITS.
5.1 Opinion of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP.
10.1 Consulting Agreement between Thinkpath Inc. and Mark Young dated June
24, 2002.
10.2 Consulting Agreement between Thinkpath Inc. and George Georgiou dated
June 24, 2002.
23.1 Consent of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP (included in
Exhibit 5.1)
23.2 Consent of Independent Auditor (Schwartz Levitsky Feldman llp,
Toronto, Ontario, Canada)
-17-
UNDERTAKINGS.
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective
amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in this registration statement or any
material change to such information in this
registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by our company pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) We hereby undertake that, for purposes of determining any liability
under the Securities Act of 1933, each filing of our annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
persons controlling our company pursuant to the foregoing provisions,
or otherwise, has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by our company of expenses
incurred or paid by a director, officer or controlling person of our
company in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection
with the securities being registered, we will, unless in the opinion of
our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
-18-
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on June 26, 2002.
THINKPATH INC.
By:/S/ DECLAN A. FRENCH
-----------------------
Declan A. French, Chairman and
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons in
the capacities and on the date indicated.
SIGNATURE TITLE DATE
/S/ DECLAN A. FRENCH Chief Executive Officer and
- -------------------------- Chairman of the Board June 26, 2002
Declan A. French
/S/ KELLY L. HANKINSON Chief Financial Officer June 26, 2002
- -------------------------- Secretary and Director
Kelly L. Hankinson
/S/ LAURIE BRADLEY President June 26, 2002
- --------------------------
Laurie Bradley
/S/ JOHN DUNNE Director June 26, 2002
- --------------------------
John Dunne
Director June 26, 2002
- --------------------------
Arthur Marcus
-19-
EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
Exhibit
Number Description
5.1 Opinion of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP.
10.1 Consulting Agreement between Thinkpath Inc. and Mark Young dated June
24, 2002.
10.2 Consulting Agreement between Thinkpath Inc. and George Georgiou dated
June 24, 2002.
23.1 Consent of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP (included in
Exhibit 5.1)
23.2 Consent of Independent Auditor (Schwartz Levitsky Feldman llp,
Toronto, Ontario, Canada)
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