SOURCE: Thinkpath Inc.

August 22, 2006 06:30 ET

Thinkpath Releases Financial Results for the Quarter Ended June 30, 2006

TORONTO -- (MARKET WIRE) -- August 22, 2006 -- Thinkpath Inc. (OTCBB: THPHF) today announced financial results for the quarter ended June 30, 2006.

Revenues for the three months ended June 30, 2006 increased by $190,000 or 5% to $3,790,000 as compared to $3,600,000 for the three months ended June 30, 2005. This increase is largely attributable to the acquisition of The Multitech Group Inc. (TMG) which contributed $750,000 in revenue since its effective date of April 1, 2006. Without the TMG contribution, revenue from original operations was down $560,000. This decrease is a direct result of the decline in sales of approximately $600,000 from one major customer located in the United States who represented only 8% of our consolidated revenue for the three months ended June 30, 2006 compared to 25% for the three months ended June 30, 2005.

Revenue for the six months ended June 30, 2006 decreased by $500,000 or 7% to $6,700,000 as compared to $7,200,000 for the six months ended June 30, 2005. This decrease is largely attributable to the aforementioned decline in sales of approximately $1,570,000 from one major customer who only represented 11% of our total revenue for the six months ended June 30, 2006 compared to 32% for the six months ended June 30, 2005.

Gross profit for the three months ended June 30, 2006 increased by $160,000 or 15% to $1,230,000 compared to $1,070,000 for the three months ended June 30, 2005. This increase is due to the increase in gross profit in Canada from 13% for the three months ended June 30, 2005 to 32% for the three months ended June 30, 2006 resulting from the addition of several higher margin engineering service projects and contract placements.

Gross profit for the six months ended June 30, 2006 decreased by $210,000 or 4% to $4,660,000 as compared to $4,870,000 for the six months ended June 30, 2005. This decrease is directly related to the above mentioned decrease in revenue for the six months ended June 30, 2006.

For the three months ended June 30, 2006, the company recorded a loss from continuing operations of $960,000 compared to a loss of $820,000 for the three months ended June 30, 2005. This loss can be attributed to the increase in administrative and sales expenses for the three months ended June 30, 2006 of approximately $230,000 and $130,000 respectively, related to the additional salaries and overhead incurred as a result of the TMG acquisition since its effective date of April 1, 2006. In addition, depreciation and amortization costs for the three months ended June 30, 2006 increased by $90,000 related to the amortization of additional capital assets and other assets including contracts and customer lists acquired with the TMG acquisition. Non-cash financing costs related to the company's debt with Laurus Master Fund, Ltd. increased to $580,000 for the three months ended June 30, 2006 compared to $5,000 for the same period last year.

For the six months ended June 30, 2006, the company recorded a loss from continuing operations of $1,340,000 compared to a loss of $960,000 for the three months ended June 30, 2005. This decrease is a result of the decline in revenue and gross profit for the six months ended June 30, 2006. Also, as with the three months ended June 30, 2006, this loss can be attributed to the increase in administrative, selling and depreciation/amortization expenses relating to the TMG acquisition. Non-cash financing costs related to the company's debt with Laurus Master Fund, Ltd. increased to $450,000 for the three months ended June 30, 2006 compared to $5,000 for the same period last year.

For the three months ended June 30, 2006, the company recorded a net loss of $960,000 or (0.22) per share compared to a net loss of $800,000 or (0.20) per share for the three months ended June 30, 2005.

For the six months ended June 30, 2006, the company recorded a net loss of $1,340,000 or (0.31) per share compared to a net loss of $940,000 or (0.26) per share for the three months ended June 30, 2005.

At June 30, 2006, the company had a working capital deficiency of $1,790,000 largely related to the new debt associated with the TMG acquisition compared to a working capital deficiency of $780,000 at December 31, 2005. At June 30, 2006 the company had stockholder's equity of $2,400,000 compared to stockholder's equity of $2,020,000 at December 31, 2005.

"We realize the second quarter results we are reporting today are a disappointment especially after the positive announcements made about the acquisition of TMG and our recent contract awards," said Declan French, Chairman and Chief Executive Officer. "Nonetheless, we are still confident that we have made a strong acquisition that not only provides solid customers, increased geographic scope and service offerings, but most importantly, experienced management and staff. Unfortunately, the timing of the acquisition coincided with what has historically been TMG's weakest quarter as well as the delay of several major material handling construction projects until the later part of the year. This, coupled with our own struggles to recoup the sales lost from our major customer and the increased expenses associated with the acquisition and investments into our sales team, resulted in greater losses for the second quarter than anticipated. With TMG's pipeline and the slow but gradual successes of our sales team, we expect to see positive results in the later part of the third quarter and fourth quarter of this year."

ABOUT THINKPATH INC.

Thinkpath is a global provider of engineering solutions. The Company's engineering and design services cover every facet of the project from concept to SLA prototyping to complete turnkey packages that deliver a finished, operating system. Thinkpath engineers handle the drafting, detailing and parametric modeling. They work in diverse engineering disciplines including aeronautical, civil, electrical, environmental, mechanical and structural engineering. For further information about the Company, please visit www.thinkpath.com.

Forward-Looking Statement

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, any statement, express or implied, concerning future events or expectations is a forward-looking statement. Use of words such as "expect," "fully expect," "expected," "appears," "believe," "plan," "anticipate," "would," "goal," "potential," "potentially," "range," "pursuit," "run rate," "stronger," "preliminarily," etc., is intended to identify forward-looking statements that are subject to risks and uncertainties as set forth in our Annual Report on 10-KSB filed Monday, April 17, 2006, particularly those identified in Risk Factors Affecting Our Business. There can be no assurance that any expectation, express or implied, in a forward-looking statement will prove correct or that the contemplated event or result will occur as anticipated.

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