SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
THINKPATH INC.
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(Name of Registrant as specified in its charter)
(Name of Person(s) Filing Proxy Statement), if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (A)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THINKPATH INC.
201 WESTCREEK BOULEVARD
BRAMPTON, ONTARIO, CANADA L6T 5S6
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 14, 2005
TO THE SHAREHOLDERS OF THINKPATH INC.:
NOTICE IS HEREBY GIVEN, that the Annual Meeting (the "Meeting") of
shareholders of Thinkpath Inc. (the "Company") will be held at 10:00 A.M. on
January 14, 2005 at the Company's executive offices located at 201 Westcreek
Boulevard, Brampton, Ontario, Canada, L6T 5S6, for the following purposes:
1. To elect the Board of Directors of the Company for the ensuing year;
2. To ratify the appointment of Schwartz, Levitsky, Feldman, llp, as the
Company's independent chartered accountants for the ensuing year;
3. To vote upon the proposal to approve certain compensation to Declan
French, our chairman of the board of directors, chief executive officer
and president;
4. To transact such other business as may properly come before the Meeting
and any continuations and adjournments thereof.
Shareholders of record at the close of business on December 10, 2004 are
entitled to notice of and to vote at the Meeting.
In order to ensure a quorum, it is important that the shareholders
representing a majority of the total number of shares issued and outstanding and
entitled to vote be present in person or represented by their proxies.
Therefore, whether you expect to attend the Meeting in person or not, please
sign, fill out, date and return the enclosed proxy in the self-addressed,
postage-paid envelope also enclosed. If a shareholder attends the Meeting and
prefers to vote in person, such shareholder can revoke such shareholder's proxy.
In addition, please note that abstentions and broker non-votes are each
included in the determination of the number of shares present and voting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Neither abstentions nor broker non-votes are counted as voted
either for or against a proposal.
By Order of the Board of Directors, December __, 2004
/s/ Declan A. French
Chairman of the Board of Directors
THINKPATH INC.
201 WESTCREEK BOULEVARD
BRAMPTON, ONTARIO, CANADA L6T 5S6
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PRELIMINARY PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 14, 2005
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Thinkpath Inc. (the "Company") for use
at the Annual Meeting (the "Meeting") of shareholders of the Company to be held
on January 14, 2005 at 10:00 A.M. at the Company's executive offices located at
201 Westcreek Boulevard, Brampton, Ontario, Canada, L6T 5S6 and at any
continuation and adjournment thereof. Anyone giving a proxy may revoke it at any
time before it is exercised by giving the Chairman of the Board of Directors of
the Company written notice of the revocation, by submitting a proxy bearing a
later date, or by attending the Meeting and voting. This statement, the
accompanying Notice of Meeting and form of Proxy have been first sent to the
shareholders on or about December __, 2004.
In addition, please note that abstentions and broker non-votes are
included in the determination of the number of shares present and voting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Neither abstentions nor broker non-votes are counted as voted
either for or against a proposal.
All properly executed, unrevoked proxies on the enclosed form, which are
received in time will be voted in accordance with the shareholder's directions,
and unless contrary directions are given, will be voted for the proposals
described below.
Please note that all references to dollar amounts in this Proxy, unless
otherwise indicated, are to United States dollars.
OWNERSHIP OF SECURITIES
Only shareholders of record at the close of business on December 10, 2004,
the date fixed by the Board of Directors in accordance with the Company's
By-Laws (the "Record Date"), are entitled to vote at the Meeting. As of the
Record Date there were 11,334,558,179 issued and outstanding shares of the
Company's common stock.
Each outstanding share of common stock is entitled to one vote on all
matters properly coming before the Meeting. A majority of the shares of the
outstanding common stock is necessary to constitute a quorum for the Meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of December 10, 2004, the names and
beneficial ownership of the Company's common stock beneficially owned, directly
or indirectly, by: (i) each person who is a director or executive officer of the
Company; (ii) all directors and executive officers of the Company as a group;
and (iii) all holders of 5% or more of the outstanding shares of the common
stock of the Company:
Name and Address of Amount and Nature of Percentage of
Beneficial Owner (1) Beneficial Ownership (2) Shares Outstanding
Declan A. French 2,910,684 (3) *
Kelly Hankinson 180,167 (4) *
Lloyd MacLean -- *
Arthur S. Marcus 30,500 (5) *
Alpha Capital 555,393,351 (6) 4.9%
Bristol Investment Fund 555,393,351 (7) 4.9%
Tazbaz Holdings LImited 555,393,351 (8) 4.9%
All Directors and Officers as
a Group (6 persons) (3 - 7) 3,121,351 *
* Less than 1%.
(1) Except as set forth above, the address of each individual is 201 Westcreek
Boulevard, Brampton, Ontario, Canada, L6T 5S6
(2) Based upon information furnished to us by the directors and executive
officers or obtained from our stock transfer books. We have been informed that
these persons hold the sole voting and dispositive power with respect to the
common stock except as noted herein. For purposes of computing "beneficial
ownership" and the percentage of outstanding common stock held by each person or
group of persons named above as of December 10, 2004 or, 11,334,558,179 shares,
any security which such person or group of persons has the right to acquire
within 60 days after such date is deemed to be outstanding for the purpose of
computing beneficial ownership and the percentage ownership of such person or
persons, but is not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(3) Includes 101,333 shares of common stock issuable upon the exercise of
options granted to Declan A. French that are currently exercisable or
exercisable within the next 60 days. Also includes 2,809,351 shares of common
stock issued to Declan A. French pursuant to an amendment of his employment
agreement dated January 27, 2003.
(4) Includes 1,333 shares of common stock issuable upon the exercise of options
that are currently exercisable or exercisable within the next 60 days.
(5) Includes 27,500 shares of common stock issuable upon the exercise of options
that are currently exercisable or exercisable within the next 60 days. Excludes
347,902 shares of common stock issued in the name of Gersten, Savage, Kaplowitz,
Wolf & Marcus, LLP, our United States legal counsel, of which Mr. Marcus is a
partner.
(6) Includes 555,393,351 shares of common stock issuable upon the exercise of
warrants.
Pursuant to the warrant agreement, in no event shall the holder be permitted to
exercise outstanding warrants to the extent that the number of shares of common
stock owned by such holder will be equal to or exceed 4.9% of the number of
shares of common stock then issued and outstanding. Does not include up to
1,134,249,506 of warrants that may be exercised upon 60 days prior notice or
shares of common stock issuable upon the conversion of $422,500 principal amount
convertible debentures.
(7) Includes 555,393,351 shares of common stock issuable upon the exercise of
warrants. Pursuant to the warrant agreement, in no event shall the holder be
permitted to exercise outstanding warrants to the extent that the number of
shares of common stock owned by such holder will be equal to or exceed 4.9% of
the number of shares of common stock then issued and outstanding. Does not
include up to 3,610,429,097 of warrants that may be exercised upon 60 days prior
notice or shares of common stock issuable upon the conversion of $886,100
principal amount convertible debentures.
(8) Includes 555,393,351 shares of common stock issuable upon the exercise of
warrants. Pursuant to the warrant agreement, in no event shall the holder be
permitted to exercise outstanding warrants to the extent that the number of
shares of common stock owned by such holder will be equal to or exceed 4.9% of
the number of shares of common stock then issued and outstanding. Does not
include up to 2,414,249,506 of warrants that may be exercised upon 60 days prior
notice or shares of common stock issuable upon the conversion of $280,000
principal amount convertible debentures.
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Number of securities
Number of securities to Weighted-average remaining available
be issued upon exercise exercise price of for future issuance
of outstanding options, outstanding options, under equity
warrants and rights warrants and rights compensation plans
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Equity compensation plans
approved by security holders 659,500 1.53 20,450,992
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Equity compensation plans not
approved by security holders -- -- --
Total 659,500 1.53 20,450,992
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DESCRIPTION OF SECURITIES
The Company's total authorized capital stock currently consists of an
unlimited number of shares of common stock, with no par value, and 1,000,000
shares of preferred stock, with no par value per share. The following
descriptions contain all material terms and features of the Company's securities
and are qualified in all respects by reference to the Company's Articles of
Incorporation and Bylaws, each as amended.
COMMON STOCK
The Company is currently authorized to issue an unlimited number of shares
of common stock, no par value per share, of which as of December 10, 2004,
11,334,558,179 shares of common stock are outstanding, excluding the shares of
common stock to be issued (i) upon conversion of the 12% Senior Secured and
Original Issue Discount Convertible Debentures, and (ii) upon the exercise of
all outstanding warrants and options. All outstanding shares of common stock
are, and all shares of common stock to be outstanding upon the conversion of the
outstanding shares of 12% Senior Secured Convertible Debenture, and the exercise
of outstanding warrants and options, validly authorized and issued, fully paid,
and non-assessable.
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of shareholders. Holders of common
stock are entitled to receive ratably dividends as may be declared by the
Company's Board of Directors out of funds legally available therefor. In the
event of a liquidation, dissolution or winding up of the Company, holders of the
common stock are entitled to share ratably in all assets remaining, if any,
after payment of liabilities. Holders of common stock have no preemptive rights
and have no rights to convert their shares of common stock into any other
securities.
Pursuant to the Business Corporation Act, Ontario, a shareholder of an
Ontario Corporation has the right to have the corporation pay the shareholder
the fair market value for his shares of the corporation in the event such
shareholder dissents to certain actions taken by the corporation, such as
amalgamation or the sale of all or substantially all of the assets of the
corporation and such shareholder follows the procedures set forth in the
Business Corporation Act, Ontario.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of up to
1,000,000 shares of preferred stock with designations, rights and preferences
determined from time to time by its Board of Directors. Accordingly, the
Company's Board of Directors is empowered, without shareholder approval, to
issue preferred shares with dividend, liquidation, conversion, or other rights
that could adversely affect the rights of the holders of the common stock.
SERIES A 8% CONVERTIBLE PREFERRED STOCK
There were 17,500 shares of Series A 8% Convertible Preferred Stock
authorized and issued, none of which remain outstanding.
SERIES B 8% CONVERTIBLE PREFERRED STOCK
There were 1,500 shares of Series B 8% Convertible Preferred Stock
authorized and issued, none of which remain outstanding.
SERIES C 7% CONVERTIBLE PREFERRED STOCK
Pursuant to a share purchase agreement dated April 18, 2001, (the "Series
C Preferred Stock Purchase Agreement") as amended on June 6, 2001, the Company
issued 1,230 shares of Series C 7% Cumulative Convertible Preferred Stock (the
"Series C Preferred Stock"). Each share of Series C Preferred Stock has a stated
value of $1,000 per share. The shares of Series C Preferred Stock are
convertible into shares of the Company's common stock at the option of the
holders, at any time after issuance until such shares of Series C Preferred
Stock are mandatorily converted or redeemed by the Company, under certain
conditions.
As of December 10, 2004, there are no Series C Preferred Stock
outstanding. All of the 1,230 shares of Series C preferred stock have been
converted into an aggregate of 25,267,242 shares of common stock. As of December
10, 2004, all 723,436 warrants issued in connection with the purchase of the
Series C Preferred Stock remain outstanding and none have been exercised.
12% SENIOR SECURED CONVERTIBLE DEBENTURE
Pursuant to a share purchase agreement dated December 5, 2002, the Company
entered into an agreement (the "12% Senior Secured Convertible Debenture
Agreement"), with a syndicate of investors for debentures of up to $3,000,000.
The first debenture of $800,000 was purchased together with 50,285,714 warrants
on closing. The debenture will become due twelve months from the date of
issuance. The investors will have the right to acquire up to $800,000 worth of
the Company's common stock at a price the lesser of $.0175 or 50% of the average
of the three lowest prices on three separate trading days during the sixty-day
trading period prior to conversion. The warrants are exercisable at any time and
in any amount until December 5, 2009 at a purchase price of $.0175 per share.
The Company is required to pay interest to the debenture holder on the aggregate
unconverted and outstanding principal amount of the debenture at the rate of 12%
per annum, payable on each conversion date and maturity date in cash or shares
of common stock. On June 30, 2003 and July 22, 2003, 12,571,428 of these
warrants were repriced from $.0175 to $.00137 per share. On October 14, 2003,
12,571,428 of these warrants were repriced from $.00137 to $.00075 per share. On
June 18, 2004, 1,142,857 of these warrants were repriced from $.00075 to $.00025
per share.
On December 18, 2002, the Company entered into a share purchase agreement
with Tazbaz Holdings Limited for the issuance and sale by the Company of a
$100,000 principal amount Convertible Debenture and 5,625,000 warrants to
purchase shares of the Company's common stock. The debenture will become due
twelve months from the date of issuance. Tazbaz Holdings Limited will have the
right to acquire up to $100,000 worth of our common stock at a price the lesser
of $.0175 or 50% of the average of the three lowest prices on three separate
trading days during the sixty-day trading period prior to conversion. The
warrants are exercisable at any time and in any amount until December 18, 2009
at a purchase price of $.0175 per share. The Company is required to pay interest
to Tazbaz Holdings Limited on the aggregate unconverted and outstanding
principal amount of the debenture at
the rate of 12% per annum, payable on each conversion date and maturity date in
cash or shares of common stock. On April 7, 2004, all of these warrants were
repriced from $.0175 to $.0004 per share.
During the year ended December 31, 2003, the Company sold an additional
$2,075,000 in convertible debentures along with 770,033,457 warrants. The
debentures will become due twelve months from the date of issuance. The
investors will have the right to acquire up to $2,075,000 worth of the Company's
common stock at a price the lesser of $.0175 or 50% of the average of the three
lowest prices on three separate trading days during the sixty-day trading period
prior to conversion. The warrants are exercisable at any time and in any amount
for a period of seven years from closing at purchase prices ranging from $.0175
to $.00075 per share. The Company is required to pay interest to the debenture
holder on the aggregate unconverted and outstanding principal amount of the
debenture at the rate of 12% per annum, payable on each conversion date and
maturity date in cash or shares of common stock. On April 7, 2004, 11,999,999 of
these warrants were repriced from $.0175 to $.0004 per share. On June 18, 2004,
279,324,980 of these warrants were repriced from $.00075 to $.00025 per share.
On January 8, 2004, the Company sold an additional $25,000 in convertible
debentures along with 1,428,571 warrants pursuant to the share purchase
agreement (the "12% Senior Secured Convertible Debenture Agreement") dated
December 5, 2002. The debentures will become due twelve months from the date of
issuance. The investors will have the right to acquire up to $25,000 worth of
the Company's common stock at a price the lesser of $.0175 or 50% of the average
of the three lowest prices on three separate trading days during the sixty-day
trading period prior to conversion. The warrants are exercisable at any time and
in any amount for a period of seven years from closing at a purchase price of
$.0175 per share. The Company is required to pay interest to the debenture
holder on the aggregate unconverted and outstanding principal amount of the
debenture at the rate of 12% per annum, payable on each conversion date and
maturity date in cash or shares of common stock. On April 7, 2004 all of these
warrants were repriced from $.0175 to $0.0004 per share
On March 25, 2004, the Company entered into a new share purchase agreement
with Bristol Investment Fund, Ltd. for the issuance and sale by the Company of
debentures of up to $1,000,000. The first debenture of $350,000 was purchased
together with 924,000,000 warrants on closing. The debenture will become due
twelve months from the date of issuance. Bristol will have the right to acquire
up to $350,000 worth of the Company's common stock at a price the lesser of
$.0175 or 50% of the average of the three lowest prices on three separate
trading days during the sixty-day trading period prior to conversion. The
warrants are exercisable at any time and in any amount until March 25, 2011 at a
purchase price of $.000417 per share. The Company is required to pay interest to
Bristol on the aggregate unconverted and outstanding principal amount of the
debenture at the rate of 12% per annum, payable on each conversion date and
maturity date in cash or shares of common stock. On June 18, 2004, all of these
warrants were repriced from $.000417 to $.00025 per share.
On March 29, 2004, the Company entered into a new share purchase agreement
with Tazbaz Holdings Limited for the issuance and sale by the Company of a
$100,000 principal amount Convertible Debenture and 250,000,000 warrants to
purchase shares of the Company's common stock. The debenture will become due
twelve months from the date of issuance. Tazbaz Holdings Limited will have the
right to acquire up to $100,000 worth of the Company's common stock at a price
the lesser of $.0175 or 50% of the average of the three lowest prices on three
separate trading days during the sixty-day trading period prior to conversion.
The warrants are exercisable at any time and in any amount
until March 29, 2011 at a purchase price of $.0004 per share. The Company is
required to pay interest to Tazbaz Holdings Limited on the aggregate unconverted
and outstanding principal amount of the debenture at the rate of 12% per annum,
payable on each conversion date and maturity date in cash or shares of common
stock.
On May 20 and June 18, 2004, the Company sold an additional $400,000 in
convertible debentures together with 1,682,352,942 warrants to Bristol
Investment Fund, Ltd. pursuant to the March 25, 2004 share purchase agreement.
The debentures will become due twelve months from the date of issuance. Bristol
will have the right to acquire up to $400,000 worth of the Company's common
stock at a price the lesser of $.0175 or 50% of the average of the three lowest
prices on three separate trading days during the sixty-day trading period prior
to conversion. The warrants are exercisable at any time and in any amount for a
period of seven years from closing at a purchase price of $.00025 per share. The
Company is required to pay interest to Bristol on the aggregate unconverted and
outstanding principal amount of the debenture at the rate of 12% per annum,
payable on each conversion date and maturity date in cash or shares of common
stock.
On May 24, 2004 and June 18, 2004, the Company entered into new share
purchase agreements with Tazbaz Holdings Limited for the issuance and sale by
the Company of $300,000 principal amount Convertible Debentures and
1,157,142,857 warrants to purchase shares of the Company's common stock. The
debentures will become due twelve months from the date of issuance. Tazbaz
Holdings Limited will have the right to acquire up to $300,000 worth of the
Company's common stock at a price the lesser of $.0175 or 50% of the average of
the three lowest prices on three separate trading days during the sixty-day
trading period prior to conversion. The warrants are exercisable at any time and
in any amount for a period of seven years from closing at a purchase price of
$.00025 per share. The Company is required to pay interest to Tazbaz Holdings
Limited on the aggregate unconverted and outstanding principal amount of the
debenture at the rate of 12% per annum, payable on each conversion date and
maturity date in cash or shares of common stock.
ORIGINAL ISSUE DISCOUNT CONVERTIBLE DEBENTURES
On November 12, 2004, the Company sold an additional $875,000 in
convertible debentures with original issue discount (OID) together with
4,750,000,000 warrants to a group of investors including Bristol Investment Fund
Ltd., Alpha Capital and Tazbaz Holdings Inc. Pursuant to the Share Purchase
Agreement, the debentures will become due twelve months from the date of
issuance. The investors will have the right to acquire up to $875,000 (equal to
125% of the aggregate subscription amount of $700,000) worth of the Company's
common stock at a price the lesser of $.0002 or 80% of the average of the three
lowest intraday prices on three separate trading days during the twenty days
trading period prior to conversion. The warrants are exercisable at any time and
in any amount for a period of seven years from closing at a purchase price of
$.0002 per share.
As of December 10, 2004, if the outstanding debentures of $1,568,600 were
to be converted and all common stock warrants held by the debenture holders were
to be exercised we would be obligated to issue approximately 33,976,488,132
shares of our common stock.
COMMON STOCK PURCHASE WARRANTS
There are outstanding warrants to purchase an aggregate of 9,057,417,698
shares of the Company's common stock as follows:
On December 30, 1999, 475,000 warrants were issued in conjunction with the
private placement of the Series A, preferred stock. They are exercisable at any
time and in any amount until December 30, 2004 at a purchase price of $3.24 per
share.
On April 16, 2000, we issued 50,000 warrants in connection with a private
placement of Series A stock and 300,000 warrants on the issue of Class B
preferred shares. The warrants were issued with a strike price of $3.71 and
expire April 16, 2005. On January 26, 2001, 100,000 of these warrants were
repriced from $3.71 per share to $1.00 per share.
In connection with the private placement of Series B preferred stock
225,000 warrants were issued. They are exercisable at a purchase price of $3.58.
In 2000, in connection with the purchase of the investment in E-Wink
500,000 warrants were issued. They are exercisable at a purchase price of $3.25
and expire March 6, 2005.
In 2000, in connection with the private placement of August 22, 2000,
560,627 warrants were issued. They are exercisable at a purchase price of $2.46
and expire August 22, 2005. On January 26, 2001, 280,693 of these warrants were
repriced from $2.46 per share to $1.00 per share.
On January 26, 2001, the Company issued warrants to purchase up to 250,000
shares of its common stock exercisable at any time and in any amount until
January 26, 2006 at a purchase price of $1.50 per share. In February 2001,
150,000 of such warrants were exercised by KSH Investment Group, the placement
agent in the Company's August 2000 private placement offering.
Following verbal agreements in December 2000, on January 24, 2001, the
Company signed an agreement with The Del Mar Consulting Group, a California
corporation, to represent it in investors' communications and public relations
with existing shareholders, brokers, dealers and other investment professionals.
The Company issued warrants to purchase 400,000 shares of common stock at $1.00
per share which expire January 24, 2005 and which are exercisable commencing
August 1, 2001. In April 2001, the warrants were cancelled and 400,000 new
warrants were issued which are exercisable at $0.55.
During the year ended December 31, 2001, the Company issued 723,436
warrants to the Series C Preferred Stock investors of which 663,484 have a
strike price of $0.54 and expire on April 18, 2005. The balance of 59,952 have a
strike price of $0.63 and expire on June 8, 2005.
On May 24, 2002, the Company entered into an agreement with Tazbaz
Holdings Limited, pursuant to which Tazbaz securitized an overdraft position of
the Company with Bank One in the amount of $650,000 until the Bank's repayment
on December 5, 2002. Pursuant to this agreement the Company issued 10,000,000
warrants; 6,000,000 of which are exercisable at any time and in any amount until
November 15, 2009 at a purchase price of $.08 per share, and 4,000,000 of which
are exercisable at any time and in any amount until November 15, 2009 at a
purchase price of $.04 per share.
On October 1, 2002, the Company entered into consulting agreements with a
group of seven consultants with expertise in restructuring, financing, legal and
management services for one-year terms to
assist the Company with its restructuring and refinancing efforts. In
consideration for such services the Company issued 10,600,000 warrants which are
exercisable at any time and in any amount until September 30, 2003 at a purchase
price of $.025 per share. As of December 10, 2004, 9,980,000 of these warrants
had been exercised with net proceeds of $249,500.
On December 5, 2002, the Company issued 50,285,713 warrants to holders of
the 12% Senior Secured Convertible Debentures which are exercisable at any time
and in any amount until December 5, 2009 at a purchase price of $.0175 per
share. On June 30, 2003 and July 22, 2003, 12,571,428 of these warrants were
repriced from $.0175 to $.00137 per share. On October 14, 2003, 12,571,428 of
these warrants were repriced from $.00137 to $.00075 per share. On June 18,
2004, 1,142,857 of these warrants were repriced from $.00075 to $.00025 per
share. As of December 10, 2004, 22,857,142 of these warrants had been exercised
with net proceeds of $17,142.86
Pursuant to the December 18, 2002 convertible debenture, the Company
issued 5,625,000 warrants to Tazbaz Holdings Limited, which are exercisable at
any time and in any amount until December 18, 2009 also at a purchase price of
$0.175 per share. On April 7, 2004, all of these warrants were repriced from
$.0175 to $.0004 per share. As of December 10, 2004, all of these warrants had
been exercised with net proceeds of $2,250.00
During the year ended December 31, 2003, the Company issued 783,366,790
warrants to holders of the 12% Senior Secured Convertible Debentures which are
exercisable at any time and in any amount for seven years from the date of
closing at purchase prices ranging from $.0175 to $.00075 per share. On June 30,
2003, 45,714,286 of these warrants were repriced from $.0175 to $.00875 per
share. On October 14, 2003, 314,576,307 of these warrants were repriced from
$.00137 to $.00075 per share. On April 7, 2004, 11,999,999 of these warrants
were repriced from $.0175 to $.0004 per share. On June 18, 2004, 279,324,980 of
these warrants were repriced from $.00075 to $.00025 per share. As of December
10, 2004, 368,327,525 of these warrants had been exercised with net proceeds of
$272,046.
On January 8, 2004, the Company sold issued 1,428,571 warrants to holders
of the 12% Senior Secured Convertible Debentures which are exercisable at any
time and in any amount for seven years from the date of closing at a purchase
price of $.0175 per share. On April 7, 2004 all of these warrants were repriced
from $.0175 to $0.0004 per share. As of December 10, 2004, all of these warrants
had been exercised with net proceeds of $571.43.
On March 25, 2004, the Company issued 924,000,000 warrants to Bristol
Investment Fund, Ltd. which are exercisable at any time and in any amount until
March 25, 2011 at a purchase price of $.000417 per share. On June 18, 2004, all
of these warrants were repriced from $.000417 to $.00025 per share.
On March 25, 2004 the Company issued 250,000,000 warrants to Tazbaz
Holdings Limited, which are exercisable at any time and in any amount until
March 29, 2011 at a purchase price of $0.0004 per share.
On May 20 and June 18, 2004, the Company issued 1,682,352,942 warrants to
Bristol Investment Fund, Ltd. which are exercisable at any time and in any
amount for a period of seven years from closing at a purchase price of $.00025
per share.
On May 24, 2004, the Company issued 357,142,857 warrants to Tazbaz
Holdings Limited which
are exercisable at any time and in any amount for a period of seven years from
closing at a purchase price of $.00028 per share. As of December 10, 2004,
100,000,000 of these warrants had been exercised with net proceeds of
$28,000.00.
On June 18, 2004, the Company issued 800,000,000 warrants to Tazbaz
Holdings Limited which are exercisable at any time and in any amount for a
period of seven years from closing at a purchase price of $.00025 per share.
On November 12, 2004, the Company issued 4,687,500,000 warrants to holders
of the Original Discount Convertible Debentures which are exercisable at any
time and in any amount for seven years from the date of closing at a purchase
price of $.0002 per share.
Warrant-holders are not entitled, by virtue of being warrant-holders, to
receive dividends, to vote at or receive notice of any meeting of shareholders
or to exercise any other rights whatsoever as shareholders. In order to receive
one share of the Company's common stock a warrant-holder must surrender one
warrant, accompanied by payment of the aggregate exercise price of the warrants
to be exercised, which payment may be made, at the warrant-holder's election, in
cash or by delivery of a cashiers or certified check or any combination of the
foregoing. Upon receipt of duly executed warrants and payment of the exercise
price, the Company will issue and cause to be delivered to warrant-holders
certificates representing the number of shares of common stock so purchased.
THIS PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTITIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH BELOW AND ELSEWHERE IN THIS PROXY STATEMENT.
PROPOSAL 1
TO ELECT THE BOARD OF DIRECTORS OF THE COMPANY FOR THE ENSUING YEAR.
Three directors are to be elected at the Meeting to hold office until the
next annual meeting of shareholders or until their successors have been duly
elected and qualified. The election of directors requires the affirmative vote
of at least the majority of shares of common stock present or represented at an
annual meeting at which a quorum is present or represented. The By-Laws of the
Company provide that the authorized number of directors shall be as set by the
Board of Directors but shall not be less than one.
MANAGEMENT
NAME AGE POSITION WITH THE COMPANY POSITION HELD SINCE
Declan A. French 60 Chairman of the Board of 1994
Directors, Chief Executive
Officer and President
Arthur S. Marcus * 40 Director 2000
Lloyd MacLean 51 Director 2003
Patrick Power 44 Director Nominee 2004
* Mr. Marcus informed the Company on December 15, 2004 that he does not intend
to stand for re-election to the Board of Directors.
Set forth below is a biographical description of each of the Company's
directors and director nominees based on information supplied by each of them:
DECLAN A. FRENCH has served as the Company's Chairman of the Board of
Directors, Chief Executive Officer and President since its inception in February
1994. Prior to founding Thinkpath, Mr. French was President and Chief Executive
Officer of TEC Partners Ltd., an information technology recruiting firm in
Toronto, Canada. Mr. French has a diploma in Psychology and Philosophy from the
University of St. Thomas in Rome, Italy.
ARTHUR S. MARCUS has served on the Company's Board of Directors since
April 2000. Mr. Marcus is a partner at the New York law firm of Gersten, Savage,
Kaplowitz, Wolf and Marcus, LLP, the Company's United States securities counsel.
Mr. Marcus joined Gersten, Savage & Kaplowitz, LLP in 1991 and became a partner
in 1996. Mr. Marcus specializes in the practice of United States Securities Law
and has been involved in approximately 50 initial public offerings and numerous
mergers and acquisitions. Mr. Marcus received a Juris Doctorate from Benjamin N.
Cardozo School of Law in 1989.
LLOYD MACLEAN has served on the Company's Board of Directors since
February 14, 2003. Mr. MacLean served as the Company's Chief Financial Officer
and a Director from September 1997 until May 2000, at which time he departed to
pursue other business opportunities. Mr. MacLean is the sole officer and
director of Globe Capital Corporation. From 1996 to 1997, Mr. MacLean was
Vice-President and Chief Financial Officer of ING Direct Bank of Canada. From
1994 until 1996, he was Vice-President and Chief Financial Officer of North
American Trust, Inc., where he also served as a Vice President from 1990 until
1994. Mr. MacLean has an MBA from Harvard University and is a member of the
Canadian Institute of Chartered Accountants.
PATRICK POWER, director nominee, is a General Manager at Netlan Technology
Center. Mr. Power was the former Director of Business Development for Thinkpath
Training LLC, a Microsoft partner for Learning Solutions in New York from 2001
until 2004. In 1997, Mr. Power opened the New York IT recruitment office of
Thinkpath Inc. where he served as Business Development Manager from 1997 until
2001. In 2001, Mr. Power was transferred to Thinkpath's New York training
division. In 2002 Thinkpath sold this division, to Thinkpath Training, LLC, a
privately held independent company. Mr. Power has a National Diploma in Civil
Engineering (NDEA) from The Waterford Institute of Technology in Ireland. Mr.
Power is the nephew of Mr. French, our Chief Executive Officer.
COMMITTEES OF THE BOARD OF DIRECTORS
In July 1998, the Company's Board of Directors formalized the creation of
a Compensation Committee, which is currently comprised of Arthur S. Marcus,
Lloyd MacLean and Patrick Power. The Compensation Committee has: (i) full power
and authority to interpret the provisions of, and supervise the administration
of, the Company's 1998 Stock Option Plan, 2000 Stock Option Plan, 2001 Stock
Option Plan and 2002 Stock Option Plan, as well as any stock option plans
adopted in the future; and (ii) the authority to review all compensation matters
relating to the Company. The Compensation Committee has not yet formulated
compensation policies for senior management and executive officers. However, it
is anticipated that the Compensation Committee will develop a company-wide
program covering all employees and that the goals of such program will be to
attract, maintain, and motivate the Company's employees. It is further
anticipated that one of the aspects of the program will be to link an employee's
compensation to his or her performance, and that the grant of stock options or
other awards related to the price of the shares of our common stock will be used
in order to make an employee's compensation consistent with shareholders' gains.
It is expected that salaries will be set competitively relative to the
information technology and engineering services and consulting industry and that
individual experience and performance will be considered in setting such
salaries.
In July 1998, the Company's Board of Directors also formalized the
creation of an Audit Committee, which currently consists of Lloyd MacLean and
Patrick Power. The Audit Committee is charged with reviewing the following
matters and advising and consulting with the Company's entire Board of Directors
with respect thereto: (i) the preparation of the Company's annual financial
statements in collaboration with the Company's chartered accountants; (ii)
annual review of the Company's financial statements and annual reports; and
(iii) all contracts between the Company and the Company's officers, directors
and other of the Company's affiliates. The Audit Committee, like most
independent committees
of public companies, does not have explicit authority to veto any actions of our
entire Board of Directors relating to the foregoing or other matters; however,
the Company's senior management, recognizing their own fiduciary duty to the
Company and the Company's shareholders, is committed not to take any action
contrary to the recommendation of the Audit Committee in any matter within the
scope of its review.
The Company has established an Executive committee, comprised of certain
of the Company's executive officers and key employees, which allows for the
exchange of information on industry trends and promotes "best practices" among
the Company's business units. Currently, the Executive Committee consists of
Declan A. French, Kelly Hankinson, and Robert Trick.
During the year ended December 31, 2003, the Board of Directors met four
times on the following dates: April 15, 2003, May 19, 2003, August 14, 2003 and
November 10, 2003 at which all of the directors were present; and acted by
written consent in lieu of a meeting four times on the following dates: January
24, 2003, January 31, 2003, February 14, 2003 and June 26, 2003. During the year
ended December 31, 2003, the Compensation Committee met on January 31, 2003, the
Audit Committee met on April 15, 2003 and the Executive Committee met monthly.
BOARD AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the Company's audited financial
statements for the fiscal year ended December 31, 2003 with management and has
received the written disclosures and the letter from Schwartz Levitsky Feldman
llp, the Company's independent auditors, required by Independence Standards
Board Standard No. 1 (Independent Discussions with Audit Committee). The Audit
Committee has also discussed with Schwartz Levitsky Feldman llp the Company's
audited financial statements for the fiscal year ended December 31, 2003,
including among other things the quality of the Company's accounting principles,
the methodologies and accounting principles applied to significant transactions,
the underlying processes and estimates used by management in its financial
statements and the basis for the auditor's conclusions regarding the
reasonableness of those estimates, and the auditor's independence, as well as
the other matters required by Statement on Auditing Standards No. 61 of the
Auditing Standards Board of the American Institute of Certified Public
Accountants.
Based on these discussions with Schwartz Levitsky Feldman llp and the results of
the audit of the Company's financial statements, the Audit Committee members
recommended unanimously to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2003. The members of the Audit Committee are
Lloyd MacLean and Patrick Power. Each of the above named Audit Committee members
is an independent director as defined by Rule 4200 (a)(15) of the National
Association of Securities Dealers, Inc.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Board of Directors has a Compensation Committee comprised of
Arthur S. Marcus, Lloyd MacLean and Patrick Power. Each of Lloyd MacLean and
Patrick Power are independent pursuant to Rule 4200 (a)(15) of the National
Association of Securities Dealers, Inc. Arthur Marcus is a partner in the Law
Firm of Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, the Company's outside
U.S. securities counsel.
BOARD COMPENSATION REPORT
EXECUTIVE COMPENSATION POLICY
Thinkpath's executive compensation policy is designed to attract,
motivate, reward and retain the key executive talent necessary to achieve our
business objectives and contribute to our long-term success. In order to meet
these goals, Thinkpath's compensation policy for our executive officers focuses
primarily on determining appropriate salary levels and providing long-term
stock-based incentives. To a lesser extent, Thinkpath's compensation policy also
contemplates performance-based cash bonuses. Thinkpath's compensation principles
for the Chief Executive Officer are identical to those of Thinkpath's other
executive officers.
CASH COMPENSATION. In determining its recommendations for adjustments to
officers' base salaries for Fiscal 2003, we focused primarily on the scope of
each officer's responsibilities, each officer's contributions to Thinkpath's
success in moving toward its long-term goals during the fiscal year, the
accomplishment of goals set by the officer and approved by the Board for that
year, our assessment of the quality of services rendered by the officer,
comparison with compensation for officers of comparable companies and an
appraisal of our financial position. In certain situations, relating primarily
to the completion of important transactions or developments, we may also pay
cash bonuses, the amount of which will be determined based on the contribution
of the officer and the benefit to Thinkpath of the transaction or development.
EQUITY COMPENSATION. The grant of stock options to executive officers
constitutes an important element of long-term compensation for the executive
officers. The grant of stock options increases management's equity ownership in
us with the goal of ensuring that the interests of management remain closely
aligned with those of our stockholders. The Board believes that stock options in
Thinkpath provide a direct link between executive compensation and stockholder
value. By attaching vesting requirements, stock options also create an incentive
for executive officers to remain with us for the long term.
CHIEF EXECUTIVE OFFICER COMPENSATION
As indicated above, the factors and criteria upon which the compensation
of Declan French, our Chief Executive Officer, is based are identical to the
criteria used in evaluating the compensation packages of the other executive
officers of Thinkpath. The Chief Executive Officer's individual contributions to
Thinkpath include his leadership role in establishing and retaining a strong
management team, developing and implementing our business plans and attracting
investment capital to Thinkpath. In addition, we have reviewed compensation
levels of chief executive officers at comparable companies within our industry.
Respectfully submitted:
By the Members of Thinkpath's Compensation Committee
Arthur Marcus, Lloyd MacLean and Patrick Power
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's By-laws provide that the Company shall indemnify to the
fullest extent permitted by Canadian law the Company's directors and officers
(and former officers and directors). Such indemnification includes all costs and
expenses and charges reasonably incurred in connection with the defense of any
civil, criminal or administrative action or proceeding to which such person is
made a party by reason of being or having been the Company's officer or director
if such person was substantially successful on the merits in his or her defense
of the action and he or she acted honestly and in good faith with a view to the
Company's best interests, and if a criminal or administrative action that is
enforced by a monetary penalty, such person had reasonable grounds to believe
his or her conduct was lawful.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted, the Company's directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, the
Company 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, as amended, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses, incurred or paid by one of the Company's
directors, officers or controlling persons in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person, the Company 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 as expressed in the Securities Act of 1933, as amended, and will
be governed by the final adjudication of such issue.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
paid by the Company during each of the last three fiscal years to the Company's
Chief Executive Officer and to each of the Company's executive officers who
earned in excess of $100,000 during the year ended December 31, 2003:
SUMMARY COMPENSATION TABLE
Name and Restricted
Principal Annual Stock Other
Position Year Salary Bonus Awards Options/SARs Compensation
- -------- ---- ------ ----- ------ ------------ -------------
Declan A. French 2003 150,000 100,000(1) -0- -0- -0-
Chief Executive Officer 2002 150,000 100,000(2) -0- -0- -0-
and Chairman of the Board 2001 150,000 100,000(2) -0- -0- -0-
(1) This reflects a cash bonus of $100,000 accrued but not paid as at December
31, 2003 pursuant to Mr. French's employment agreement.
(2) This reflects the dollar value of 3,571,429 shares of common stock issued to
Mr. French in lieu of cash bonuses for the fiscal year 2002 and 588,235 shares
for the fiscal year 2001.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Declan A. French
whereby he will serve as Chairman of the Board, Chief Executive Officer and
President for a period of two years commencing on November 28, 2001. Mr. French
shall be paid a base salary of $150,000 and a bonus to be determined by the
Company's EBITDA (earnings before interest, taxes, depreciation and
amortization) as a percentage of annual gross revenue with a minimum guaranteed
bonus of $100,000. The bonus will be paid in cash or shares at the Company's
discretion. In January 2003, the Company issued an aggregate of 12,427,535
shares of its common stock to Mr. French for extinguishment of certain
indebtedness of the company to Mr. French pursuant to the amendment to his
employment agreement dated January 27, 2003. This included 3,571,429 shares as
payment in full for the bonus due for the fiscal year ended 2002. In April 2002,
the Company issued 588,235 shares of its common stock to Mr. French as payment
in full for the bonus due for the fiscal year 2001. In February 2001, the
Company issued 1,200,000 shares of its common stock as payment in full for the
bonuses due to Mr. French for the fiscal years of 1999 and 2000 pursuant to the
terms of his previous employment agreement. Mr. French continues to serve as
Chairman, Chief Executive Officer and President.
On March 1, 2001, the Company entered into an employment agreement with
Kelly Hankinson whereby she will serve as Chief Financial Officer. Ms. Hankinson
shall be paid an annual salary of $100,000. The employment agreement is for an
indeterminate period of time. In 2003, Ms. Hankinson was paid approximately
$75,000. In the event Ms. Hankinson is terminated for any reason, including but
not limited to, the acquisition of Thinkpath, Ms. Hankinson shall be entitled to
a severance payment equal to one year's salary.
No other officer or director has an employment contract with the Company.
COMPENSATION OF DIRECTORS
Effective August 28, 2002, each non-employee member of the Company's Board
of Directors shall receive the following annual compensation in consideration
for services rendered as a director: (i) 5 year option to purchase up to 50,000
shares of our common stock exercisable at a price equal to fair market value of
our common stock as of the date of grant; (ii) a cash amount of $4,000 per
annum, paid on a quarterly basis; and, (iii) reimbursement of reasonable and
ordinary expenses in connection with such member's attendance at Board or
committee meetings. To date, the Company has not made any such payments to its
outside directors.
Directors who receive a salary from the company shall not be entitled to
receive any additional compensation for their services as a member of the
Company's Board of Directors.
Board of Directors and shareholders have adopted the 1998 Stock Option
Plan, 2000 Stock Option Plan, 2001 Stock Option Plan, and 2002 Stock Option
Plan, pursuant to which options have been or may be granted to officers,
directors, consultants, key employees, advisors and similar parties who provide
their skills and expertise to the Company.
OPTIONS, WARRANTS OR RIGHTS
No options were issued to any of the Company's officers or directors
during 2002 and 2003.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1998, the Company purchased certain assets of Southport
Consulting, Inc. from Michael Carrazza, one of the Company's former directors,
for an aggregate of $250,000.00 in cash and shares of the Company's common
stock. In February 2001, Mr. Carrazza instituted an action against the Company
in the Supreme Court of the State of New York alleging breach of contract and
unjust enrichment and seeking at least $250,000 in damages. Specifically, Mr.
Carrazza claimed that the Company failed to deliver cash or stock under an asset
purchase agreement, and that he was entitled to recovery of his attorney's fees.
The Company filed a counterclaim against Mr. Carrazza, seeking $162,000 in
damages, plus punitive damages and attorneys' fees, on the ground that Mr.
Carrazza, as then president and sole stockholder of Southport Consulting Co.,
fraudulently induced the Company into executing the asset purchase agreement by
misrepresenting the value of the assets being purchased. After the commencement
of discovery, Mr. Carrazza filed a motion for summary judgment, which was
granted in his favor in the sum of $264,602. On October 21, 2002, the Company
entered into a settlement agreement with Michael Carrazza, in the sum of
$330,000 to be paid $50,000 on October 31, 2002 and $17,500 per month thereafter
until paid in full, bearing interest at 9% per annum. This liability was paid in
full as of April 28th, 2004.
In September 1999, the Company completed the acquisition of all the issued
and outstanding capital stock of Cad Cam, Inc. for $2,000,000 in cash,
$2,500,000 pursuant to a promissory note and the issuance of $1,500,000 worth of
shares of the Company's common stock to Roger W. Walters, Cad Cam, Inc.'s former
president. As part of the transaction, Mr. Walters was elected to serve on the
Company's Board of Directors. The share purchase agreement was executed on
January 1, 1999 and the transaction
was effective as of September 16, 1999. Mr. Rogers was not affiliated with the
Company prior to the acquisition.
On January 1, 2000, the share purchase agreement by and among the Company,
Cad Cam, Inc., and Roger W. Walters was amended. Pursuant to the amendment, the
parties agreed that $1,000,000 of the $2,000,000 cash payment to be made to Mr.
Walters was to be paid in 4 equal quarterly payments of $250,000 commencing on
January 1, 2000. In consideration for accepting the cash payment in
installments, the Company issued Mr. Walters options to purchase an aggregate of
100,000 shares of common stock at an exercise prices ranging from $2.12 to $3.25
per share, which options expired on December 31, 2000. On March 14, 2001, the
Company repriced such options belonging to Roger W. Walters to an exercise price
of $1.00 per share in consideration of debt forgiveness of $75,000 and
restructuring of debt totaling $250,000 on the notes payable to Mr. Walters in
connection with the Company's purchase of Cad Cam, Inc. In addition, the term of
such option was extended to April 4, 2004.
In September 2001, the note payable to Rogers Walters was further amended
whereby the principal was reduced from $1,200,000 to $750,000 in consideration
of capital stock of $450,000 or 1,756,655 shares. In addition, all principal
payments were postponed until January 1, 2003, at which time, the Company was to
pay $12,500 per month plus interest at 4.5% until December 31, 2006. The balance
of $150,000 was to be due on December 31, 2006.
On August 1, 2002, the Company further restructured its note payable to
Roger Walters, reducing the principal from $675,000 to $240,000 in consideration
of the issuance of 1,000,000 shares of its common stock. The company agreed to
issue and register the shares upon obtaining shareholder approval of an
amendment to its Articles of Incorporation increasing its authorized capital
stock. Principal payments of $4,000 were to be made monthly beginning September
1, 2002 until August 1, 2007. This loan is non-interest bearing.
In addition, the Company agreed to price protection on the 1,756,655
shares that were issued to Mr. Walters in January 2002. In the event that the
bid price is less than $.27 per share when Mr. Walters seeks to sell his shares
in an open market transaction, the Company will be obligated to issue additional
shares of unregistered common stock with a value equal to the difference between
$.27 per share and the closing bid price to a floor of $.14 per share. Pursuant
to this agreement, the Company issued Mr. Walters 1,631,185 shares of our common
stock in December 2002.
The price of the shares at the time of conversion of Mr. Walter's debt on
August 1, 2002 was 0.0942, representing approximately $340,800 in debt
forgiveness. In accordance with FAS 15, the gain was measured by the excess of
the carrying amount of the note payable settled less accrued interest, finance
charges or other debt obligations. On December 5, 2002, the shares were issued
to Roger Walters and the Company debited liabilities payable in capital stock
and credited capital stock in the amount of $247,858 and debt forgiveness in the
amount of $187,142.
On November 12, 2004, the Company reached a settlement with Roger Walters
with respect to the note payable to Walters by the Company in the amount of
$224,000 plus accrued interest. In consideration of a monetary payment by the
Company of $33,600 and execution of a Full and Final Release, Walters released
the Company of all rights and debt held by him and forgave the balance of the
note payable and accrued interest of approximately $237,400.
On April 1, 2000, the Company completed the acquisition of all of the
issued and outstanding capital stock of Micro Tech Professionals, Inc., a
Massachusetts corporation in consideration of up to an aggregate of $4,500,000
in a combination of cash, notes payable and shares of our common stock, subject
to specific performance criteria be met. On April 25, 2000, the Company paid to
Denise Dunne-Fushi, the sole shareholder of Micro Tech Professionals, Inc.,
$2,500,000 of the aggregate of $4,500,000, which was paid in accordance with the
following schedule: (i) $1,250,000 in cash; (ii) the issuance of a $750,000
principal amount unsecured promissory note; and (iii) the issuance of 133,333
shares of the Company's common stock. As part of the transaction, the Company
entered into an employment agreement with Mrs. Dunne-Fushi, the former President
of Micro Tech Professionals, Inc. Such employment agreement was for a term of
one year commencing on April 25, 2000, the effective date of the acquisition,
with an annual salary of $125,000 per year and a bonus of $25,000. Mrs.
Dunne-Fushi was not affiliated with the Company prior to the acquisition.
On August 1, 2002, the Company restructured its note payable to Denise
Dunne-Fushi, reducing the principal from $1,740,536 to $600,000 in consideration
of the issuance of 4,000,000 shares of its common stock. In addition a prior
debt conversion of $225,000 that was to be paid in capital was forgiven. The
Company agreed to issue and register the shares upon obtaining shareholder
approval of an amendment to our Articles of Incorporation increasing its
authorized capital stock. Principal payments of $10,000 per month were to begin
November 1, 2002 bearing 5% interest until October 2, 2007. In addition, the
Company agreed to cover the monthly expense associated with Ms. Dunne-Fushi's
family health benefits and vehicle lease for a period of four years.
The price of the shares at the time of conversion was 0.0942, representing
approximately $763,763 in debt forgiveness. In accordance with FAS 15, the gain
was measured by the excess of the carrying amount of the note payable settled
less accrued interest, benefits and car lease payments as per the settlement
agreement. On December 5, 2002, the shares were issued to Denise Dunne and the
Company debited liabilities payable in capital stock and credited capital stock
in the amount of $475,787 and debt forgiveness in the amount of $889,749.
On November 12, 2004, the Company reached a settlement with Denise
Dunne-Fushi with respect to the note payable to Dunne-Fushi by the Company in
the amount of $629,491. In consideration of a monetary payment by the Company of
$202,000 and execution of a Full and Final Release, Dunne-Fushi released the
Company of all rights and debt held by her and forgave the balance of the note
payable of approximately $427,491.
During the fiscal year ended December 31, 2003, the Company paid to
Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP, the Company's United States
legal counsel, approximately $96,000 for legal services rendered. Arthur S.
Marcus, one of the Company's directors, is a partner of Gersten, Savage,
Kaplowitz, Wolf & Marcus, LLP.
On November 1, 2002, the Company entered into a series of agreements with
Thinkpath Training LLC, a New York company, for the sale of certain assets of
its New York training division for a nominal amount of cash and the assumption
of all prepaid training liabilities. As part of the transaction, Thinkpath
Training LLC assumed the New York training staff, some assets and is subletting
the classroom facilities. The owner of Thinkpath Training LLC, is the daughter
of Declan French, the Company's Chief Executive
Officer and President. At December 31, 2003, there were no balances owing to or
from the Company by Thinkpath Training LLC.
All future transactions between the Company and the Company's officers,
directors or 5% shareholders, and their respective affiliates, will be on terms
no less favorable than could be obtained from unaffiliated third parties. In the
event that the Company's enters into future affiliated transactions, they will
be approved by the Company's independent directors who do not have an interest
in the transactions and who have access, at the Company's expense, to the
Company's counsel or independent legal counsel.
SHAREHOLDER VOTE REQUIRED
The election of the directors will require the affirmative vote of the majority
of the shares present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NAMED
DIRECTORS.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF SCHWARTZ LEVITSKY FELDMAN, LLP, CHARTERED
ACCOUNTANTS AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Subject to ratification by the shareholders, the Board of Directors
appointed Schwartz Levitsky Feldman LLP as independent auditors to audit the
financial statements of the Company for the fiscal year ending December 31,
2004.
The following summarizes the fees paid to Schwartz Levitsky Feldman, LLP
for the years ended December 31, 2003, 2002 and 2001:
2003 2002 2001
-------------------------------------------------------------
AUDIT $45,000 $100,000 $90,000
-------------------------------------------------------------
TAX $5,000 $10,000 $10,000
-------------------------------------------------------------
ALL OTHER $15,000 $22,000 $15,500
-------------------------------------------------------------
TOTAL FEES $65,000 $132,000 $115,500
-------------------------------------------------------------
Schwartz Levitsky Feldman, LLP were engaged as our independent auditors in
1999. In connection with the audit of our annual financial statements for the
fiscal years ended December 31, 2003, 2002 and 2001, we paid Schwartz Levitsky
Feldman, LLP, $45,000 $100,000 and $90,000.
Tax fees are primarily attributable to various corporate tax planning
activities and preparation of our tax returns for which we were billed by
Schwartz Levitsky Feldman, LLP, $5,000, $10,000 and $10,000 for the fiscal years
ended December 31, 2003, 2002 and 2001.
All other fees are attributable to consultations on accounting standards
and other miscellaneous services for which we were billed by Schwartz Levitsky
Feldman, LLP, $15,000 $22,000 and $15,500 for the fiscal years ended December
31, 2003, 2002 and 2001.
The Audit Committee has considered whether provision of the services
described above under "Tax" and "All Other" by Schwartz Levitsky Feldman, LLP,
are compatible with maintaining that firm's independence.
From and after the effective date of the SEC rule requiring Audit
Committee pre-approval of all audit and permissible non-audit services provided
by independent auditors, the Audit Committee has pre-approved all audit and
permissible non-audit services by Schwartz Levitsky Feldman, LLP.
A representative of Schwartz Levitsky Feldman is expected to be present at
the Annual Meeting and will have the opportunity to make a statement, and will
be available to respond to appropriate questions from shareholders.
STOCKHOLDER VOTE REQUIRED
Ratification of the appointment of Schwartz Levitsky Feldman as
independent certified public accountants requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting of Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT OF
SCHWARTZ LEVITSKY FELDMAN, LLP, CHARTERED ACCOUNTANTS AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
PROPOSAL NO. 3
TO VOTE UPON THE PROPOSAL TO APPROVE CERTAIN COMPENSATION PAYABLE TO DECLAN
FRENCH, OUR CHAIRMAN, CHIEF EXECUTIVE OFFICER AND PRESIDENT.
Declan French was formerly a principal shareholder of the Company, but has
seen his share holding reduced to a number that he believes provides him
insufficient motivation to promote the Company's business. Accordingly, the
Compensation Committee considered the matter and determined that the past
performance rendered by Mr. French to the Company, consisting of:
His personal guarantee on a currently outstanding loan of the Company to
W. Terry Lyons for approximately $220,000;
His prior personal guarantees on now extinguished debt of the Company;
His personal indemnification provided to Denise Dunne-Fushi effective in
the event the Company were to file for bankruptcy protection and the money paid
to her in settlement of her claim against the Company were to be deemed the
property of the Company's shareholders by a court of competent jurisdiction, in
which case Mr. French agreed to indemnify up to $200,000 of such claims;
His acceptance of shares of our common stock in lieu of cash for his
annual bonus in 2000, 2001 and 2002; and
His acceptance of shares of our common stock in lieu of cash for repayment
of a loan payable to him in 2002 of $100,000, amounted to a present value in
excess of the compensation proposed for shareholder approval hereby and that in
view of such past performance and the Company's continuing interest in having
Mr. French serve as its chairman of the Board of Directors, chief executive
officer and president, that it was in the Company's best interest to award him
an additional one hundred thousand dollars ($100,000), payable in shares of the
Company's common stock based on the closing market price of such shares on
December 10, 2004, the Record Date set in connection with this Meeting. The
closing market price on such date was $0.0002, which would result in the
issuance to Mr. French of 500,000,000 shares of our common stock. In the event
that such number of shares were issued to Mr. French, he would be the beneficial
owner of 502,910,684shares of our common stock, or approximately 4.25% shares of
our common stock.
The Compensation Committee has adopted a resolution unanimously approving
the issuance of the 500,000,000 shares to Mr. French, and the board has agreed
to submit such proposal for the consideration of the shareholders without taking
a position on the merits of the proposal. The Compensation Committee expressly
conditioned its favorable recommendation on the receipt by the Company of the
affirmative vote of shareholders holding a 2/3 majority of the shares of our
common stock present in person or by proxy at the meeting, excluding the shares
held by Mr. French or any other member of the board.
SHAREHOLDER VOTE REQUIRED
The ratification of the proposal to pay the additional compensation to Mr.
French will require the affirmative vote of 2/3 of the shares of common stock in
person or represented by proxy at the Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE IN FAVOR OF THE
RATIFICATION OF THE PROPOSAL TO PAY THE ADDITIONAL COMPENSATION TO MR. FRENCH.
SECTION 16(A) REPORTING
Under the securities laws of the United States, the Company's directors,
its executive (and certain other) officers, and any persons holding 10% or more
of the Company's common stock must report their ownership of the Company's
common stock and any changes in that ownership to the Securities and Exchange
Commission. Specific due dates for these reports have been established. During
the year ended December 31, 2004, the Company believes all reports required to
be filed under Section 16(a) were filed on a timely basis.
OTHER MATTERS
The Board of Directors does not know of any matters other than those
referred to in the Notice of Meeting, which will be presented for consideration
at the Meeting. However, it is possible that certain proposals may be raised at
the Meeting by one or more shareholders. In such case, or if any other matter
should properly come before the meeting, it is the intention of the person named
in the accompanying proxy to vote such proxy with his or her or its best
judgement.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. Solicitations
may be made by mail, personal interview, telephone, and telegram by directors,
officers and employees of the Company. The Company will reimburse banks,
brokerage firms, other custodians, nominees and fiduciaries for reasonable
expenses incurred in sending proxy material to beneficial owners of the
Company's capital stock.
SHAREHOLDER PROPOSALS
In order to be included in the proxy materials for the Company's next
Annual Meeting of shareholders, shareholder proposals must be received by the
Company on or before October 31, 2005.
FORM 10-K
A copy of the Company's annual report on Form 10-K for the fiscal year
ended December 31, 2003 as filed with the Securities and Exchange Commission is
available to shareholders free of charge by writing to:
Thinkpath Inc.
201 Westcreek Boulevard
Brampton, Ontario
Canada, L6T 5S6
Attention: Corporate Secretary
FINANCIAL STATEMENTS
The Company's audited consolidated financial statements for the fiscal
year ended December 31, 2003 and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations are included in the
Company's Form 10-K and are incorporated by herein by reference.
By order of the Board of Directors, December __, 2004
/s/ Declan A. French
Chairman of the Board of Directors