Thinkpath Inc. Reports Second Quarter Results; All Results Reported in United States Dollars
TORONTO--Aug. 20, 2002--Thinkpath Inc. (BSE:THTH) today reported results for the second quarter ended June 30, 2002.Financial Results
Revenue for the three and six months ended June 30, 2002 was US$7.4 million and US$14.8 million respectively compared to $9.7 million and $20.2 million for the same periods in the prior year.
The net loss for the three and six months ended June 30, 2002 was US$500,000 and US$1 million, representing a loss per share before preferred dividends of US$0.02 and US$0.05 and after preferred dividends of US$0.02 and US$0.05. The net loss for the three and six months ended June 30, 2001 was US$1.6 million and US$2.1 million, representing a loss per share before preferred dividends of US$0.11 and US$0.15 and US$0.14 and US$0.20 after preferred dividends.
Gross profit for the three and six months ended June 30, 2002 was US$1.8 million and US$3.7 million compared with US$3.2 and US$6.8 for the same periods in the prior year.
During the quarter the company continued to reduce its operating costs significantly. For the three months ended June 30, 2002, operating expenses (excluding depreciation) were US$1.8 million, a 54% reduction from second quarter of the prior year. For the six months ended June 30, 2002, operating expenses (excluding depreciation) were US$4 million, a 43% reduction from the same period of the prior year.
Business Updates
During the quarter and thereafter, the company made significant progress on a number of initiatives consistent with the restructuring plans outlined early in the year such as:
| -- | Closure and sale of non-profitable and non-complimentary operations; |
| -- | Termination of redundant staff and implementation of other cost-cutting measures; |
| -- | Reduction of current and long-term debt obligations; |
| -- | Focus on growth in the technical publications, e-learning and engineering service division |
| -- | Secure new financing to purchase current lender's debt and security |
During the quarter, the company completed the sale of certain assets of its training division, closed 1 office, and reduced its staff by 25, resulting in savings of approximately US$1 million per annum. Subsequent to June 30, 2002, the company terminated 10 employees representing additional savings of approximately US$600,000 per annum.
Also subsequent to June 30, 2002, the company restructured its note payables, reducing its cash obligation and increasing its stockholder's equity by approximately US$1.6 million.
During the quarter, the company continued to win new business in its technical publications, e-learning and engineering services division, including a US $2.6 million Computer System Validation and GMP Librarian services contract, an e-learning contract worth more than US$600,000, and a US$2 million engineering publication contract.
Subsequent to the quarter, the company received a commitment for a US$4 million financing to replace its current lender, Bank One.
Investors are advised to read the notes accompanying the financial statements as filed with the Form 10-Q to be found on nasdaq.com or contact Investor Relations for a full copy of the statements.
About Thinkpath Inc.
Thinkpath is a global provider of technological solutions and services in engineering knowledge management including design, drafting, technical publishing, e-learning, technical training and staffing. Thinkpath enables corporations to reinvent themselves structurally; drive strategies of innovation, speed to market, globalization and focus in new and bold ways. We are experts in the aerospace, automotive, manufacturing and health care industries.
Headquartered in Toronto, Canada, Thinkpath has 390 employees in 11 offices across North America. Further information about the company, its services and products can be found at www.thinkpath.com.
Forward-looking Statement
This press release contains certain 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.
-UNAUDITED-
THINKPATH INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2002 AND DECEMBER 31, 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
June 30, December 31,
2002 2001
---------- ----------
$ $
ASSETS
CURRENT ASSETS
Cash 56,330 482,233
Accounts receivable 5,167,076 5,502,113
Inventory 39,003 40,057
Income taxes receivable 162,100 431,817
Prepaid expenses 877,514 345,341
---------- ----------
6,302,023 6,801,561
CAPITAL ASSETS 2,522,697 2,859,340
GOODWILL 5,128,991 5,128,991
INVESTMENT IN NON-RELATED COMPANIES 1,013,926 1,013,926
LONG-TERM RECEIVABLE 83,450 83,450
OTHER ASSETS 436,390 1,287,710
---------- ----------
15,487,477 17,174,978
========== ==========
-UNAUDITED-
THINKPATH INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2002 AND DECEMBER 31, 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
June 30, December 31,
2002 2001
---------- ----------
$ $
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness 4,478,367 5,039,171
Accounts payable 3,667,110 4,073,444
Deferred revenue 242,045 365,023
Current portion of long-term debt 607,010 528,285
Current portion of notes payable 230,000 150,000
---------- ----------
9,224,532 10,155,923
DEFERRED INCOME TAXES 150,380 150,380
LONG-TERM DEBT 398,284 582,432
NOTES PAYABLE 2,185,000 2,340,000
LIABILITIES PAYABLE IN CAPITAL STOCK 225,000 699,297
---------- ----------
12,183,196 13,928,032
---------- ----------
STOCKHOLDERS' EQUITY
CAPITAL STOCK 27,906,817 26,571,481
DEFICIT (23,780,992) (22,719,044)
ACCUMULATED OTHER COMPREHENSIVE LOSS (821,544) (605,491)
---------- ----------
3,304,281 3,246,946
---------- ----------
15,487,477 17,174,978
========== ==========
-UNAUDITED-
THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30
(AMOUNTS EXPRESSED IN US DOLLARS)
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------
$ $ $ $
REVENUE 7,377,052 9,740,937 14,782,729 20,239,138
COST OF SERVICES 5,622,032 6,585,033 11,120,434 13,453,559
---------- ---------- ---------- ----------
GROSS PROFIT 1,755,020 3,155,904 3,662,295 6,785,579
---------- ---------- ---------- ----------
EXPENSES
Administrative 875,058 2,254,873 2,026,132 2,925,818
Selling 926,000 1,606,838 1,967,162 3,196,378
Financing Expenses -- (51,111) -- 573,525
Depreciation and
amortization 307,430 471,902 605,585 951,218
Restructuring costs -- 62,006 -- 303,457
---------- ---------- ---------- ----------
2,108,488 4,344,508 4,598,879 7,950,396
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INTEREST CHARGES (353,468)(1,188,604) (936,584)(1,164,817)
Interest Charges 232,892 241,787 468,471 474,493
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES (586,360)(1,430,391)(1,405,055)(1,639,310)
Income taxes 110 200,030 (25,300) 403,992
---------- ---------- ---------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS (586,470)(1,630,421)(1,379,753)(2,043,302)
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS
(INCLUDING GAIN ON
DISPOSAL OF $497,579) 79,165 11,387 372,980 (66,028)
---------- ---------- ---------- ----------
NET INCOME (LOSS) (507,305)(1,619,034)(1,006,775)(2,109,330)
PREFERRED STOCK
DIVIDEND REQUIREMENTS 31,493 438,231 55,173 664,731
EARNINGS APPLICABLE
TO COMMON STOCK (538,798)(2,057,265)(1,061,948)(2,774,061)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON STOCK
OUTSTANDING BASIC
AND FULLY DILUTED 24,511,005 14,713,383 21,182,368 13,869,253
========== ========== ========== ==========
INCOME (LOSS) PER WEIGHTED
AVERAGE COMMON STOCK BEFORE
PREFERRED DIVIDENDS
BASIC AND FULLY DILUTED (0.02) (0.11) (0.05) (0.15)
========== ========== ========== ==========
INCOME (LOSS) PER WEIGHTED
AVERAGE COMMON STOCK AFTER
PREFERRED DIVIDENDS
BASIC AND FULLY DILUTED (0.02) (0.14) (0.05) (0.20)
========== ========== ========== ==========
-UNAUDITED-
THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND
THE YEAR ENDED DECEMBER 31, 2001
(AMOUNTS EXPRESSED IN US DOLLARS)
COMMON STOCK PREFERRED STOCK CAPITAL
NUMBER OF NUMBER OF SHARES STOCK
SHARES A B C AMOUNTS
---------- ----- ----- ----- ----------
Balance as of
December 31, 2000 11,915,138 1,050 750 - 23,759,415
Net loss for the year - - - - -
Other comprehensive
income (loss), net of tax:
Foreign currency translation - - - - -
Adjustment to market value - - - - -
Other comprehensive income
Comprehensive loss
Issuance of common
stock for cash 525,000 - - - 400,000
Issuance of
preferred stock - - - 1,230 1,230,000
Options exercised 22,122 - - - 1
Common stock and warrants
issued in consideration
of services 714,267 - - - 519,994
Reduction in common
stock payable 596,667 - - - 709,005
Dividend on preferred stock - - - - 414,848
Conversion of preferred
stock to common stock 3,864,634 (1,050) (750) (285) -
Beneficial conversion on
Issuance of preferred stock - - - - 284,093
Debt settled through
the issuance of
common stock 93,883 - - - 44,125
Allowance for deferred
taxes recoverable on
issue expenses - - - - (790,000)
---------- ----- ----- ----- ----------
Balance as of
December 31, 2001 17,731,711 - - 945 26,571,481
========== ===== ===== ===== ==========
Net loss for the period - - - - -
Other comprehensive income
(loss), net of tax:
Foreign currency translation - - - - -
Adjustment to market value - - - - -
Other comprehensive income
Comprehensive loss
Reduction in common
stock payable 1,756,655 - - - 474,297
Dividend on preferred stock - - - - 21,617
Conversion of preferred
stock to common stock 541,593 - - (65) -
Beneficial conversion on
Issuance of preferred stock - - - - 2,063
Debt settled through
the issuance of
common stock 1,253,752 - - - 226,956
---------- ----- ----- ----- ----------
Balance as of
March 31, 2002 21,283,711 - - 880 27,296,414
========== ===== ===== ===== ==========
Net loss for the period - - - - -
Other comprehensive income
(loss), net of tax:
Foreign currency translation - - - - -
Adjustment to market value - - - - -
Other comprehensive income
Comprehensive loss
Common stock and warrants
issued in consideration
of services 3,681,818 - - - 578,910
Dividend on preferred stock - - - - 7,842
Conversion of preferred
stock to common stock 3,253,534 - - (280) -
Beneficial conversion on
Issuance of preferred stock - - - - 23,651
Debt settled through
the issuance of
common stock - -
---------- ----- ----- ----- ----------
Balance as of
June 30, 2002 28,219,063 - - 600 27,906,817
========== ===== ===== ===== ==========
ACCUMULATED
OTHER
RETAINED COMPREHENSIVE COMPREHENSIVE
EARNINGS INCOME (LOSS) INCOME (LOSS)
---------- ---------- ----------
Balance as of
December 31, 2000 (12,306,862) (653,547)
Net loss for the year (9,683,442) (9,683,442)
---------
Other comprehensive
income (loss), net of tax:
Foreign currency translation - 209,506
Adjustment to market value - (161,450)
---------
Other comprehensive income 48,056 48,056
---------
Comprehensive loss (9,635,386)
=========
Issuance of common
stock for cash -
Issuance of
preferred stock -
Options exercised -
Common stock and warrants
issued in consideration
of services -
Reduction in common
stock payable -
Dividend on preferred stock (444,647)
Conversion of preferred
stock to common stock -
Beneficial conversion on
Issuance of preferred stock (284,093)
Debt settled through
the issuance of
common stock -
Allowance for deferred taxes
recoverable on issue expenses -
----------- --------
Balance as of
December 31, 2001 (22,719,044) (605,491)
=========== ========
Net loss for the period (499,470) (499,470)
--------
Other comprehensive income
(loss), net of tax:
Foreign currency translation - (277,058)
Adjustment to market value - -
--------
Other comprehensive income (277,058) (277,058)
--------
Comprehensive loss (776,528)
========
Reduction in common
stock payable -
Dividend on preferred stock (21,617)
Conversion of preferred
stock to common stock -
Beneficial conversion on
Issuance of preferred stock (2,063)
Debt settled through
the issuance of
common stock -
----------- --------
Balance as of
March 31, 2002 (23,242,194) (882,549)
=========== ========
Net loss for the period (507,305) (507,305)
--------
Other comprehensive income
(loss), net of tax:
Foreign currency translation - 61,005
Adjustment to market value - -
--------
Other comprehensive income 61,005 61,005
--------
Comprehensive loss (446,300)
========
Common stock and warrants
issued in consideration
of services -
Dividend on preferred stock (7,842)
Conversion of preferred
stock to common stock -
Beneficial conversion on
Issuance of preferred stock (23,651)
Debt settled through the
issuance of common stock -
----------- --------
Balance as of June 30, 2002 (23,780,992) (821,544)
=========== ========
THINKPATH INC. - UNAUDITED -
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(AMOUNTS EXPRESSED IN US DOLLARS)
2002 2001
---- ----
$ $
Cash flows from operating activities
Net income (loss) (1,006,775) (2,109,330)
----------- -----------
Adjustments to reconcile
net loss to net cash (used in)
provided by operating activities:
Amortization 692,134 1,123,705
Decrease (increase) in
accounts receivable 483,589 840,226
Decrease (increase) in
prepaid expenses (599,840) (50,568)
Increase (decrease) in
accounts payable (512,012) 167,969
Decrease (increase) in
deferred income taxes -- 397,362
Decrease (increase) in
inventory 1,122 30,472
Increase (decrease) in
deferred revenue (124,036) (44,685)
Increase in income taxes
payable (receivable) 269,699 --
Common stock and warrants
issued for services 578,909 354,682
Long-term investment received
for services -- (205,242)
Gain on disposal of subsidiary (497,579) --
----------- -----------
Total adjustments 291,986 2,613,921
----------- -----------
Net cash used in operating activities (714,789) 504,591
----------- -----------
Cash flows from investing activities
Purchase of capital assets (246,570) (214,691)
Disposal (purchase) of other assets 16,156 (294,202)
Increase in long-term receivable -- (188,626)
Proceeds on disposal of subsidiary 1,320,786 --
----------- -----------
Net cash used in investing activities 1,090,372 (697,519)
----------- -----------
Cash flows from financing activities
Repayment of notes payable (75,000) (192,164)
Repayment of long-term debt (390,768) (475,845)
Cash received (paid) on long-term debt 259,350 225,000
Proceeds from issuance of common stock -- 400,000
Proceeds from issuance of
preferred stock -- 1,100,000
Increase (decrease) in bank indebtedness (617,516) (812,515)
----------- -----------
Net cash provided by financing activities (823,934) 244,476
----------- -----------
Effect of foreign currency exchange
rate changes 22,448 (51,548)
----------- -----------
Net increase (decrease) in cash and
cash equivalents (425,903) --
Cash and cash equivalents
-Beginning of period 482,233 --
----------- -----------
-End of period 56,330 --
=========== ===========
SUPPLEMENTAL CASH ITEMS:
Interest paid 476,838 300,434
=========== ===========
Income taxes paid (recovered) (25,300) 3,992
=========== ===========
SUPPLEMENTAL NON-CASH ITEM:
Preferred stock dividend 55,173 664,731
Common shares issued for liabilities 701,253 --
=========== ===========