TORONTO, Aug. 23, 2005 (PRIMEZONE) -- Thinkpath Inc. (OTCBB:THPHF) today announced financial results for the second quarter ended June 30, 2005.
Revenues for the three and six months ended June 30, 2005 were $3,603,870 and $7,206,809 compared to $3,325,184 and $6,381,885 for the same periods in 2004. The increase in revenue is largely attributable to new engineering contracts won in Canada as well as continuing contracts with existing customers in the defense industry awarded in 2004.
Gross profit for the three and six months ended June 30, 2005 was 30% and 32% compared to 38% and 36% for the same periods in 2004. The decrease in gross profit is attributable to the addition of lower margin projects during the second quarter as a means of establishing a new client base, delayed start dates of higher margin defense projects and the increase in lower margin contract placement sales compared to higher margin project sales.
For the three and six months ended June 30, 2005, the company recorded operating income from continuing operations of $69,063 and $298,775 compared to $298,775 and $181,376 for the same periods in 2004.
For the three and six months ended June 30, 2005, the company recorded a net loss of $820,529 or (0.21) per share and $965,617 or (0.27) per share compared to a net loss of $835,388 or (1.15) per share and $1,627,618 or (2.29) per share for the same period in 2004. Included in the net loss for the three and six months ended June 30, 2005 is interest expense of $733,273 and $1,007,323 related to the beneficial conversion features on the Company's convertible debt. The interest charges on convertible debt for the same periods last year were $872,845 and $1,488,421.
At June 30, 2005, the company had a cash flow deficiency from operations of $110,528 largely attributable to the increase in accounts receivable. At June 30, 2004, the company had a cash flow deficiency from operations of $840,898 attributable to the significant increase in accounts receivable and the decrease in accounts payable.
At June 30, 2005, the company had cash of $607,437, working capital of $544,985 and stockholder's equity of $5,294,804, which is a considerable improvement over December 31, 2004 at which time the company had cash of $180,121, a working capital deficiency of $121,509 and stockholder's equity of $3,999,951.
"The second quarter was a pivotal period for us," stated Declan French, CEO and Chairman of Thinkpath Inc. "We closed a $3.5 million financing facility with Laurus Master Fund Ltd. ("Laurus"), which enabled us to pay off the balance of the 12% Senior Secured Convertible Debentures as well as our high interest receivable discount facility with Morrison Financial Services Limited. The debt with the Debenture Holders was settled without prepayment penalty, all accrued interest was forgiven, and the warrants held by the debenture holders were cancelled. In addition, we used a portion of the Laurus proceeds to redeem for cancellation all shares held by the Debenture Holders. We also implemented a 1:5,000 reverse stock split of our common stock which should provide more leverage to our stock price and better traction in the marketplace. This, coupled with our new financial partner, Laurus, will provide us with additional capital to continue our growth organically and pursue strategic acquisitions."
Further information about the company may be found at www.thinkpath.com.
Forward-Looking Statement
This press release contains forward-looking statements regarding Thinkpath Inc., its business prospects and results of operations that are subject to certain risks and uncertainties posed by many factors and events that could cause Thinkpath's actual business, prospects and results of operations to differ materially from those that may be anticipated by such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by Thinkpath in this news release and other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect Thinkpath's business.