UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

         FOR THE TRANSITION PERIOD FROM            TO
                                        ----------    -----------

                        COMMISSION FILE NUMBER
                                               ------------------

                                 THINKPATH INC.
        -----------------------------------------------------------------
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)


                ONTARIO                               52-209027
      -------------------------------             --------------------
      (STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)              IDENTIFICATION NO.)
                                                  201 WESTCREEK BOULEVARD

                       BRAMPTON, ONTARIO L6T 5S6
             ---------------------------------------------------
           (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                                 (905) 460-3040
                ------------------------------------------------
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

     CHECK WHETHER THE ISSUER: (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
 SECTION 13 OR 15(D) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH
 SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2)

        HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
                                 YES [X] NO [ ]

         AS OF AUGUST 20, 2004 THERE WERE 5,562,295,779 SHARES OF COMMON
                   STOCK, NO PAR VALUE PER SHARE, OUTSTANDING.



<PAGE>


                                 THINKPATH INC.

                   JUNE 30, 2004 QUARTERLY REPORT ON FORM 10-Q

                                TABLE OF CONTENTS



                         PART I - FINANCIAL INFORMATION



                                                                           Page
                                                                         Number
Item 1.  Financial Statements
             Interim Consolidated Balance Sheets as of June 30, 2004 and
             December 31, 2003..................................................
             Interim Consolidated Statements of Operations for the three and six
             months ended June 30, 2004 and 2003................................
             Interim Consolidated Statements of Changes in Stockholders' Equity
             for the six months ended June 30, 2004 and the year ended
             December 31, 2003..................................................
             Interim Consolidated Statements of Cash Flows for the six months
             ended June 30, 2004 and 2003.......................................
             Notes to Interim Consolidated Financial Statements.................

Item 2.  Management's Discussion and Analysis of Financial Conditions and
         Results of Operations..................................................

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.............

Item 4.  Controls and Procedures................................................


                          PART II - OTHER INFORMATION

Item 1.  Legal Proceedings .....................................................

Item 2.  Changes in Securities and Use of Proceeds .............................

Item 3.  Defaults Upon Senior Securities .......................................

Item 4.  Submission of Matters to a Vote of Security Holders ...................

Item 5.  Other Information .....................................................

Item 6.  Exhibits and Reports on Form 8-K ......................................



<PAGE>

ITEM 1.  FINANCIAL STATEMENTS





                                 THINKPATH INC.

                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                               AS OF JUNE 30, 2004
                                   (UNAUDITED)

                        (AMOUNTS EXPRESSED IN US DOLLARS)



<PAGE>

THINKPATH INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2004 (UNAUDITED) AND DECEMBER 31, 2003
(AMOUNTS EXPRESSED IN US DOLLARS)


                                          JUNE 30, 2004  DECEMBER 31, 2003
                                          -------------  -----------------
                                                      $                  $
                       ASSETS

CURRENT ASSETS
     Cash                                      766,499            483,443
     Accounts receivable                     2,243,143          1,766,061
     Prepaid expenses                          308,638            128,612
                                          ------------       ------------
                                             3,318,280          2,378,116

PROPERTY AND EQUIPMENT                         965,744          1,182,751

GOODWILL                                     3,748,732          3,748,732

INVESTMENT IN NON-RELATED COMPANIES             45,669             45,669

OTHER ASSET                                     57,425             53,321
                                          ------------       ------------
                                             8,135,850          7,408,589
                                          ============       ============
<PAGE>




THINKPATH INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2004 (UNAUDITED) AND DECEMBER 31, 2003
(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                        JUNE 30, 2004   DECEMBER 31, 2003
                                                        -------------   -----------------
                                                                    $                   $
                          LIABILITIES
<S>                                                      <C>            <C>
CURRENT LIABILITIES
     Receivable Discount Facility                             935,605           1,128,444
     Accounts payable                                       2,068,598           2,650,783
     Current portion of long-term debt                        123,430             279,800
     Current portion of notes payable                         853,491             859,936
     12% Convertible Debenture                                296,803             215,558
                                                         ------------        ------------

                                                            4,277,927           5,134,521

LONG-TERM DEBT                                                171,960              13,176
                                                         ------------        ------------

                                                            4,449,887           5,147,697
                                                         ============        ============

COMMITMENTS AND CONTINGENCIES (NOTE 20)

                              STOCKHOLDERS' EQUITY


CAPITAL STOCK                                              46,634,021          43,576,292

DEFICIT                                                   (41,627,329)        (39,999,711)

ACCUMULATED OTHER COMPREHENSIVE LOSS                       (1,320,729)         (1,315,689)
                                                         ------------        ------------

                                                            3,685,963           2,260,892
                                                         ------------        ------------
                                                            8,135,850           7,408,589
                                                         ============        ============
</TABLE>




                 The accompanying notes are an integral part of
                 these interim consolidated financial statements

<PAGE>


THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(AMOUNTS EXPRESSED IN US DOLLARS)


<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED JUNE 30,                SIX MONTHS ENDED JUNE 30,
                                                       2004               2003                     2004             2003
                                                  --------------    --------------           --------------    --------------
                                                               $                 $                        $                 $
<S>                                               <C>               <C>                      <C>               <C>
REVENUE                                                3,325,184         2,471,706                6,381,885         4,961,993

COST OF SERVICES                                       2,050,188         1,615,654                4,107,616         3,383,606
                                                  --------------    --------------           --------------    --------------

GROSS PROFIT                                           1,274,996           856,052                2,274,269         1,578,387
                                                  --------------    --------------           --------------    --------------
EXPENSES
     Administrative                                      579,321           541,999                1,152,726         1,194,042
     Selling                                             346,235           250,385                  659,151           503,017
     Depreciation and amortization                       138,750           184,571                  281,016           376,636
                                                  --------------    --------------           --------------    --------------
                                                       1,064,306           976,955                2,092,893         2,073,695

INCOME (LOSS) FROM CONTINUING OPERATIONS
     BEFORE INTEREST CHARGES                             210,690          (120,903)                 181,376          (495,308)

     Interest Charges                                  1,028,551           796,120                1,777,495         5,076,882
                                                  --------------    --------------           --------------    --------------
LOSS FROM CONTINUING OPERATIONS
     BEFORE INCOME TAXES                                (817,861)         (917,023)              (1,596,119)       (5,572,190)

     Income Taxes                                          3,208             8,404                    4,476            12,023
                                                  --------------    --------------           --------------    --------------

LOSS FROM CONTINUING OPERATIONS                         (821,069)         (925,427)              (1,600,595)       (5,584,213)

INCOME (LOSS) FROM
     DISCONTINUED OPERATIONS
     (INCLUDING GAIN ON DISPOSAL)                        (14,319)          280,152                  (27,023)          283,355
                                                  --------------    --------------           --------------    --------------

NET LOSS                                                (835,388)         (645,275)              (1,627,618)       (5,300,858)
                                                  ==============    ==============           ==============    ==============
WEIGHTED AVERAGE NUMBER OF
     COMMON STOCK OUTSTANDING
     BASIC AND DILUTED                             3,563,071,348       201,863,253            3,492,747,948       148,567,552
                                                  ==============    ==============           ==============    ==============

LOSS FROM CONTINUING OPERATIONS
     PER WEIGHTED AVERAGE COMMON
     STOCK BASIC AND DILUTED                               (0.00)            (0.00)                   (0.00)            (0.04)
                                                  ==============    ==============           ==============    ==============

</TABLE>




                 The accompanying notes are an integral part of
                 these interim consolidated financial statements


<PAGE>


THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND THE YEAR ENDED DECEMBER 31, 2003
(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                    COMMON                                                             ACCUMULATED
                                                     STOCK            CAPITAL                                                OTHER
                                                 NUMBER OF              STOCK                      COMPREHENSIVE     COMPREHENSIVE
                                                    SHARES            AMOUNTS        DEFICIT           LOSS                   LOSS
                                             --------------    --------------    --------------   --------------    --------------
<S>                                          <C>               <C>               <C>              <C>               <C>
Balance as of December 31, 2002                  66,258,043        33,367,034       (30,966,083)                        (1,077,521)
                                             ==============    ==============    ==============                     ==============

Net loss for the year                                   --                --         (9,033,628)       (9,033,628)
                                                                                                   --------------
Other comprehensive loss, net of tax
   Foreign currency translation                                                                          (238,168)      (238,168)
                                                                                                   --------------
Comprehensive loss                                                                                     (9,271,796)
                                                                                                   ==============
Conversion of 12% senior secured
convertible debenture                        2,368,413, 224           901,891              --

Interest on 12% senior secured
convertible debenture                           153,405,397           142,875              --

Debt settled through the issuance of
common stock                                     16,997,854           449,333              --

Common stock and warrants issued for
services                                         10,980,000           226,500              --

Warrants issued for cash                        121,184,669         1,241,514              --

Beneficial conversion on issuance of
convertible debt                                       --           7,247,145              --
                                             --------------    --------------    --------------                     --------------

Balance as of December 31, 2003               2,737,239,187        43,576,292       (39,999,711)                        (1,315,689)
                                             ==============    ==============    ==============                     ==============

Net loss for the period                                 --                --         (1,627,618)       (1,627.618)
                                                                                                   --------------

Other comprehensive loss, net of tax
  Foreign currency translation                                                                             (5,040)           (5,040)
                                                                                                   --------------
Comprehensive loss                                                                                     (1,632,658)
                                                                                                   ==============
Conversion of 12% senior secured
convertible debenture                         1,293,665,573           222,651              --

Interest on 12% senior secured
convertible debenture                            42,253,716            19,077              --

Common stock and warrants issued for
services                                        250,197,488           175,336              --

Warrants issued for cash                        377,053,570         1,100,225              --

Beneficial conversion on issuance of
convertible debt                                       --           1,540,440              --
                                             --------------    --------------    --------------                     --------------

Balance as of June 30, 2004                   4,700,409,534        46,634,021       (41,627,329)                        (1,320,729)
                                             ==============    ==============    ==============                     ==============

</TABLE>



                   The accompanying notes are an integral part
               of these interim consolidated financial statements.

<PAGE>


THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(AMOUNTS EXPRESSED IN US DOLLARS)


<TABLE>
<CAPTION>
                                                                      2004           2003
                                                                   ----------    ----------
                                                                            $             $
<S>                                                                <C>           <C>
Cash flows from operating activities
    Net loss                                                       (1,627,618)   (5,300,858)
                                                                   ----------    ----------
    Adjustments to reconcile net loss to net cash (used in)
     provided by operating activities:
    Amortization                                                      302,969       387,023
    Amortization of beneficial conversion (included in interest)    1,540,440     4,650,706
    Interest on 12% senior secured convertible debentures              19,077        23,802
    Decrease (increase) in accounts receivable                       (470,466)      866,321
    Increase in prepaid expenses                                     (180,990)       (7,813)
    Decrease in accounts payable                                     (599,646)     (873,870)
    Decrease in long-term receivable                                     --          57,775
    Decrease in deferred revenue                                         --        (163,593)
    Common stock and warrants issued for services                     175,336       226,500
    Accounts payable settled with common stock                           --         449,333
    Gain on disposal of IT Recruitment division                          --        (190,627)
                                                                   ----------    ----------

    Net cash provided by (used in) operating activities              (840,898)      124,699
                                                                   ----------    ----------

Cash flows from investing activities
    Purchase of property and equipment                                (83,904)      (65,209)
    Proceeds on disposal of IT Recruitment division                      --         146,406
                                                                   ----------    ----------

    Net cash used in investing activities                             (83,904)       81,197
                                                                   ----------    ----------

Cash flows from financing activities
    Repayment of notes payable                                         (6,444)       (7,138)
    Repayment of long-term debt                                      (234,879)   (1,243,377)
    Proceeds from issuance of capital stock                           229,121          --
    Proceeds from issuance of debentures and warrants               1,175,000     1,450,000
                                                                   ----------    ----------

    Net cash provided by financing activities                       1,162,798       199,485
                                                                   ----------    ----------

Effect of foreign currency exchange rate changes                       45,060        58,639
                                                                   ----------    ----------

Net increase in cash                                                  283,056       464,020
Cash
    Beginning of period                                               483,443       114,018
                                                                   ----------    ----------
    End of period                                                     766,499       578,038
                                                                   ==========    ==========

SUPPLEMENTAL CASH ITEMS:
    Interest paid                                                     222,592       332,963
                                                                   ==========    ==========
    Income taxes paid                                                   8,404        12,023
                                                                   ==========    ==========

SUPPLEMENTAL NON-CASH ITEMS:
    Common shares issued for liabilities                                 --         449,333
                                                                   ==========    ==========

</TABLE>


                   The accompanying notes are an integral part
               of these interim consolidated financial statements.


<PAGE>


THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2004
(AMOUNTS EXPRESSED IN US DOLLARS)


1.   MANAGEMENT'S INTENTIONS AND GOING CONCERN

     Certain principal conditions and events are prevalent which indicate that
     there could be substantial doubt about the Company's ability to continue as
     a going concern for a reasonable period of time. These conditions and
     events include significant operating losses, working capital deficiencies,
     and violation of certain loan covenants. At June 30, 2004, the Company had
     a working capital deficiency of $959,647, a deficit of $41,627,329 and has
     suffered recurring losses from operations.

     With insufficient working capital from operations, the Company's primary
     sources of cash are a receivable discount facility with Morrison Financial
     Services Limited and proceeds from the sale of equity securities. At June
     30, 2004, the balance on the receivable discount facility was approximately
     $935,605. The Company is currently within margin of its receivable discount
     facility with Morrison Financial Services Limited based on 75% of
     qualifying accounts receivable.

     During the three months ended June 30, 2004, the Company closed $700,000 in
     12% senior secured convertible debentures pursuant to a financing
     arrangement entered into on March 25, 2004. The funds were used for various
     debt settlements and critical payables.

     As at August 20, 2004 management's plans to mitigate and alleviate these
     adverse conditions and events include:

     a) Ongoing restructuring of debt obligations and settlement of
        outstanding legal claims.
     b) Focus on growth in the engineering division, including design
        services and technical publications.
     c) Expansion of the engineering service offerings in Ontario, Canada.

     Although there can be no assurances, it is anticipated that continued cash
     flow improvements will be sufficient to cover current operating costs and
     will permit payments to certain vendors and interest payments on debt.
     Despite its negative working capital and deficit, the Company believes that
     its management has developed a business plan that if successfully
     implemented could substantially improve the Company's operational results
     and financial condition. However, the Company can give no assurances that
     its current cash flows from operations, if any, borrowings available under
     its receivable discounting facility with Morrison Financial Services
     Limited, and proceeds from the sale of securities, will be adequate to fund
     its expected operating and capital needs for the next twelve months. The
     adequacy of cash resources over the next twelve months is primarily
     dependent on its operating results, and the closing of new financing, all
     of which are subject to substantial uncertainties. Cash flows from
     operations for the next twelve months will be dependent, among other
     factors, upon the effect of the current economic slowdown on sales, the
     impact of the restructuring plan and management's ability to implement its
     business plan. The failure to return to profitability and optimize
     operating cash flows in the short term, and close alternate financing,
     could have a material adverse effect on the Company's liquidity position
     and capital resources.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a) Going Concern

     These consolidated financial statements have been prepared on the going
     concern basis, which assumes the realization of assets and liquidation of
     liabilities and commitments in the normal course of business. The
     application of the going concern concept is dependent on the Company's
     ability to generate sufficient working capital from operations and external
     investors. These consolidated financial statements do not give effect to
     any adjustments should the Company be unable to continue as a going concern
     and, therefore, be required to realize its assets and discharge its
     liabilities in other than the normal course of business and at amounts
     differing from those reflected in the consolidated financial statements.
     Management plans to obtain sufficient working capital from operations and
     external financing to meet the Company's liabilities and commitments as
     they become payable over the next twelve months. There can be no assurance
     that management's plans will be successful. Failure to obtain sufficient
     working capital from operations and external financing will cause the
     Company to curtail operations. These consolidated financial statements do
     not include any adjustments that might result from the outcome of this
     uncertainty.

     b) Change of Name

     On June 6, 2001, the Company changed its name from Thinkpath.com Inc. to
     Thinkpath Inc.



<PAGE>


     c) Principal Business Activities

     Thinkpath Inc. is an engineering services company which, along with its
     wholly-owned subsidiaries Thinkpath US Inc. (formerly Cad Cam Inc.),
     Thinkpath Michigan Inc. (formerly Cad Cam of Michigan Inc.), Thinkpath
     Technical Services Inc. (formerly Cad Cam Technical Services Inc.),
     provides engineering, design, technical publications and staffing, services
     to enhance the resource performance of clients. In addition, the Company
     owns the following companies which are currently inactive: Systemsearch
     Consulting Services Inc., International Career Specialists Ltd., Microtech
     Professionals Inc., E-Wink Inc. (80%), Thinkpath Training Inc. (formerly
     ObjectArts Inc.), Thinkpath Training US Inc. (formerly ObjectArts US Inc.)
     and TidalBeach Inc. In 2002, the Company sold Njoyn Software Incorporated,
     a wholly-owned subsidiary.

     d) Basis of consolidated financial statement presentation

     The consolidated financial statements include the accounts of the Company
     and its controlled subsidiaries. The earnings of the subsidiaries are
     included from the date of acquisition for acquisitions accounted for using
     the purchase method. For subsidiaries accounted for by the pooling of
     interest method their earnings have been included for all periods reported.
     All significant inter-company accounts and transactions have been
     eliminated.

     e) Cash and Cash Equivalents

     Cash and cash equivalents include cash on hand, amounts from and to banks,
     and any other highly liquid investments purchased with a maturity of three
     months or less. The carrying amount approximates fair value because of the
     short maturity of those instruments.

     f) Other Financial Instruments

     The carrying amounts of the Company's other financial instruments
     approximate fair values because of the short maturity of these instruments
     or the current nature of interest rates borne by these instruments.

     g) Long-Term Financial Instruments

     The fair value of each of the Company's long-term financial assets and debt
     instruments is based on the amount of future cash flows associated with
     each instrument discounted using an estimate of what the Company's current
     borrowing rate for similar instruments of comparable maturity would be.

     h) Property and Equipment

     Property and equipment are recorded at cost and are amortized over the
     estimated useful lives of the assets principally using the declining
     balance method.

     The Company's policy is to record leases, which transfer substantially all
     benefits and risks incidental to ownership of property, as acquisition of
     property and equipment and to record the occurrences of corresponding
     obligations as long-term liabilities. Obligations under capital leases are
     reduced by rental payments net of imputed interest.

     i) Net Income (Loss) and Diluted Net Income (Loss) Per Weighted Average
     Common Stock

     Net income (Loss) per common stock is computed by dividing net income
     (loss) for the year by the weighted average number of common stock
     outstanding during the year.

     Diluted net income (loss) per common stock is computed by dividing net
     income for the year by the weighted average number of common stock
     outstanding during the year, assuming that all convertible preferred stock,
     stock options and warrants as described in note 13 were converted or
     exercised. Stock conversions, stock options and warrants which are
     anti-dilutive are not included in the calculation of diluted net income
     (loss) per weighted average common stock.

     j) Revenue

     1) The Company provides the services of engineering staff on a project
     basis. The services provided are defined by guidelines to be accomplished
     by clearly defined milestones and revenue is recognized upon the
     accomplishment of the relevant milestone. As services are rendered, the
     costs incurred are reflected as Work in Progress. Revenue is recognized
     upon the persuasive evidence of an agreement, delivery has occurred, the
     fee is fixed or determinable and collection reasonably assured.

     2) Prior to the sale of the IT recruitment division (Note 16), the Company
     provided the services of information technology consultants on a contract
     basis and revenue was recognized as services were performed.


<PAGE>


     3) Prior to the sale of the IT recruitment division (Note 16), the Company
     placed information technology professionals on a permanent basis and
     revenue was recognized upon candidates' acceptance of employment. If the
     Company received non-refundable upfront fees for "retained searches", the
     revenue was recognized upon the candidates' acceptance of employment.

     4) Prior to the sale of the training division (Note 16), the Company
     provided advanced training and certification in a variety of technologies
     and revenue was recognized on delivery.

     5) Prior to the sale of the technology division (Note 16), the Company
     licensed software in the form of a Human Capital Management System called
     Njoyn. The revenue associated with providing this software consisted of an
     initial set up fee, customization and training as agreed and an ongoing
     monthly per user fee. The allocation of revenue to the various elements was
     based on the Company's determination of the fair value of the elements if
     they had been sold separately. The customers had the right to choose a
     provider to host the software which was unrelated to the Company. The
     set-up fee and customization revenue was recognized upon delivery of access
     to the software with customization completed in accordance with milestones
     determined by the contract.

     Revenue was recognized on a percentage of completion basis for contracts
     with significant amounts of customization and clearly defined milestones
     agreed to by the customer and an enforceable right to invoice and collect
     on a partial completion basis.

     For contracts which required significant customization, without clearly
     defined milestones, and an inability to estimate costs, revenue was
     reflected on a completed contract basis. Substantial completion was
     determined based on customer acceptance of the software.

     6) Prior to the sale of the technology division (Note 16), the Company also
     signed contracts for the customization or development of SecondWave, a web
     development software in accordance with specifications of its clients. The
     project plan defined milestones to be accomplished and the costs
     associated. These amounts were billed as they were accomplished and revenue
     was recognized as the milestones were reached. The work in progress for
     costs incurred beyond the last accomplished milestone was reflected at the
     period end. The contracts did not include any post-contract customer
     support. Additional customer support services were provided at standard
     daily rates, as services are required.

     k)   Goodwill

     In July 2001, the Financial Accounting Standards Board (FASB) issued
     Statements of Financial Accounting Standards (SFAS) No. 141, "Business
     Combinations" and No. 142, "Goodwill and Other Intangible Assets." Under
     the new rules, goodwill and indefinite lived intangible assets are no
     longer amortized but are reviewed annually for impairment.

     Separable intangible assets that are not deemed to have an indefinite life
     will continue to be amortized over their useful lives. The amortization
     provisions of SFAS No. 142 apply to goodwill and intangible assets acquired
     after June 30, 2001. With respect to goodwill and intangible assets
     acquired prior to July 1, 2001, the Company began applying the new
     accounting rules effective January 1, 2002.

     Thinkpath completed SFAS No.142 impairment test and concluded that there
     was no impairment of recorded goodwill, as the fair value of its reporting
     units exceeded their carrying amount.

     l) Income Taxes

     The Company accounts for income tax under the provision of SFAS No. 109,
     which requires recognition of deferred tax assets and liabilities for the
     expected future tax consequences of events that have been included in the
     financial statement or tax returns.

     Deferred income taxes are provided using the liability method. Under the
     liability method, deferred income taxes are recognized for all significant
     temporary differences between the tax and financial statement bases of
     assets and liabilities.

     Effects of changes in enacted tax laws on deferred tax assets and
     liabilities are reflected as adjustments to tax expense in the period of
     enactment. Deferred tax assets may be reduced, if deemed necessary based on
     a judgmental assessment of available evidence, by a valuation allowance for
     the amount of any tax benefits which are more likely, based on current
     circumstances, not expected to be realized.

     m)  Foreign Currency

     The Company is a foreign private issuer and maintains its books and records
     in Canadian dollars (the functional currency). The financial statements are
     converted to US dollars as the Company has elected to report in US dollars
     consistent with Regulation S-X, Rule 3-20. The translation method used is
     the current rate method which is the method mandated by FAS 52 where the
     functional currency is the foreign currency. Under the current method all
     assets and liabilities are translated at the current rate, stockholders'
     equity accounts are translated at historical rates and revenues and
     expenses are translated at average rates for the year.


<PAGE>



     Due to the fact that items in the financial statements are being translated
     at different rates according to their nature, a translation adjustment is
     created. This translation adjustment has been included in accumulated other
     comprehensive income. Gains and losses on foreign currency transactions are
     included in financial expenses.

     n) Use of Estimates

     The preparation of consolidated financial statements in conformity with
     generally accepted accounting principles in the United States of America
     requires management to make estimates and assumptions that affect certain
     reported amounts of assets and liabilities and disclosures of contingent
     assets and liabilities at the date of the consolidated financial statements
     and the reported amounts of revenues and expenses during the reporting
     period. Actual results could differ from those estimates. These estimates
     are reviewed periodically and as adjustments become necessary, they are
     reported in earnings in the period in which they become known.

     o) Long-Lived Assets

     On January 1, 1996, the Company adopted the provisions of SFAS No. 121,
     Accounting for the Impairment of Long-Lived Assets and for Long-Lived
     Assets to be Disposed of. SFAS No. 121 requires that long-lived assets held
     and used by an entity be reviewed for impairment whenever events or changes
     in circumstances indicate that the carrying amount of an asset may not be
     recoverable. Management used its best estimate of the undiscounted cash
     flows to evaluate the carrying amount and have reflected the impairment.

     In August 2001, FASB issued SFAS 144, "Accounting for the Impairment or
     Disposal of Long-Lived Assets." SFAS 144 addresses financial accounting and
     reporting for the impairment or disposal of long-lived assets. The Company
     adopted SFAS 144, effective January 1, 2002. The adoption of SFAS 144 did
     not have a material impact on the Company's results of operations or
     financial condition.

     p) Comprehensive Income

     In 1999, the Company adopted the provisions of SFAS No. 130 "Reporting
     Comprehensive Income". This standard requires companies to disclose
     comprehensive income in their financial statements. In addition to items
     included in net income, comprehensive income includes items currently
     charged or credited directly to stockholders' equity, such as the changes
     in unrealized appreciation (depreciation) of securities and foreign
     currency translation adjustments.

     q) Accounting for Stock-Based Compensation

     In December 1995, SFAS No. 123, Accounting for Stock-Based Compensation,
     was issued. It introduced the use of a fair value-based method of
     accounting for stock-based compensation. It encourages, but does not
     require, companies to recognize stock-based compensation expenses to
     employees based on the new fair value accounting rules. Companies that
     choose not to adopt the new rules will continue to apply the existing
     accounting rules continued in Accounting Principles Board Option No. 25,
     Accounting for stock issued to employees. However, SFAS No. 123 requires
     companies that choose not to adopt the new fair value accounting rules to
     disclose pro forma net income and earnings per share under the new method.
     SFAS No. 123 is effective for financial statements for fiscal years
     beginning after December 31, 1995. The Company has adopted the disclosure
     provisions of SFAS No. 123. SFAS No. 123 was amended by SFAS No. 148 which
     requires more prominent disclosure of stock based compensation.

     r) Computer software costs

     Prior to the sale of its wholly-owned subsidiary Njoyn Software
     Incorporated, the Company accounted for the cost of developing computer
     software. The Company recorded these costs as research and development
     expenses until the technological feasibility of the product had been
     established at which time the costs were deferred. At the end of each year,
     the Company compared the unamortized costs represented by deferred
     development costs in Other Assets to the net realizable value of the
     product to determine if a reduction in carrying value is warranted. The
     software developed for own use which may be sold as a separate product is
     the Njoyn software and during development, the Company decided to market
     the software and therefore for the costs incurred after technological
     feasibility was reached has been treated as Deferred Development costs and
     the amount evaluated on an annual basis to determine if a reduction in
     carrying value is warranted. On March 8, 2002, Thinkpath sold all of its
     shares in Njoyn Software Incorporated.

     s) Investments in Non-Related Companies

     The Company records its investments in companies in which it holds a 20% or
     more interest and in which the Company can exercise significant influence
     over the investee's operating and financial policies on the equity basis.


<PAGE>


     The Company records its investment in companies in which it holds less than
     20% interest or in which the Company has a 20% or greater interest but the
     Company is unable to exercise significant influence at fair market value.
     Changes in fair market value are adjusted in comprehensive income, unless
     the impairments are of a permanent nature, in which case the adjustments
     are recorded in earnings.

     t) Recent Pronouncements

     In April 2002, FASB issued SFAS No. 145, which, among other factors,
     changed the presentation of gains and losses on the extinguishments of
     debt. Any gain or loss on extinguishments of debt that does not meet the
     criteria in APB Opinion 30, "Reporting the Results of Operations -
     Reporting the Effects of Disposal of a Segment of a Business, and
     Extraordinary, Unusual and Infrequently Occurring Events and Transactions",
     shall be included in operating earnings and not presented separately as an
     extraordinary item. The new standard is effective for companies with fiscal
     years beginning after May 15, 2002. However, the Company has elected to
     adopt the standard as the debt restructuring gain in the current period, as
     permitted by SFAS No. 145.

     In June 2002, FASB issued SFAS No. 146, "Accounting for Costs Associated
     with Exit or Disposal Activities," which addresses accounting for
     restructuring and similar costs. SFAS No.146 supersedes previous accounting
     guidance, principally Emerging Issues Task Force Issue, or EITF, No. 94-3
     "Liability Recognition for Certain Employee Termination Benefits and Other
     Costs to Exit on Activity (including Certain Costs Incurred in a
     Restructuring)". The Company will adopt the provisions of SFAS No. 146 for
     restructuring activities initiated after December 31, 2002. SFAS No. 146
     may affect the timing of recognizing future restructuring costs as well as
     the amounts recognized.

     In January 2003, FASB issued SFAS No. 148, Accounting for Stock -Based
     Compensation - Transition and Disclosures. This statement provides
     alternative methods of transition for a voluntary change to the fair value
     based method of accounting for stock-based employee compensation. In
     addition, this statement also amends the disclosure requirements of SFAS
     No. 123 to require more prominent and frequent disclosures in the financial
     statements about the effects of stock-based compensation. The transitional
     guidance and annual disclosure provisions of this Statement was effective
     for the December 31, 2002 financial statements. The interim reporting
     disclosure requirements was effective for the March 31, 2003 financial
     statements.

     In November 2002, FASB issued Interpretation No. 45, "Guarantor's
     Accounting and Disclosure Requirements for Guarantees, Including Indirect
     Guarantees of Indebtedness of Others" ("Interpretation"). This
     Interpretation elaborates on the existing disclosure requirement for most
     guarantees including loan guarantees, and clarifies that at the time a
     company issues a guarantee, the company must recognize an initial liability
     for the fair market value of the obligations it assumes under that
     guarantee and must disclose that information in its interim and annual
     financial statements. The initial recognition and measurement provisions of
     the Interpretation apply on a prospective basis to guarantees issued or
     modified after December 31, 2002.

     In January 2003, FASB issued Interpretation No. 46, "Consolidation of
     Variable Interest Entities," which addresses consolidation by business
     enterprises of variable interest entities. In general, a variable interest
     entity is a corporation, partnership, trust, or any other legal structure
     used for business purposes that either (a) does not have equity investors
     with voting rights or (b) has equity investors that do not provide
     sufficient financial resources for the entity to support its activities. A
     variable interest entity often holds financial assets, including loans or
     receivables, real estate or other property. A variable interest entity may
     be essentially passive or it may engage in research and development or
     other activities on behalf of another company. The objective of
     Interpretation No. 46 is not to restrict the use of variable interest
     entities but to improve financial reporting by companies involved with
     variable interest entities. Until now, a company generally has included
     another entity in its consolidated financial statements only if it
     controlled the entity through voting interests. Interpretation No. 46
     changes that by requiring a variable interest entity to be consolidated by
     a company if that company is subject to a majority of the risk of loss from
     the variable interest entity's activities or entitled to receive a majority
     of the entity's residual returns or both. The consolidation requirements of
     Interpretation No. 46 apply immediately to variable interest entities
     created after January 31, 2003. The consolidation requirements apply to
     older entities in the first fiscal year or interim period beginning after
     June 15, 2003. Certain of the disclosure requirements apply in all
     financial statements issued after January 31, 2003, regardless of when the
     variable interest entity was established. The Company does not have any
     variable interest entities, and, accordingly, adoption is not expected to
     have a material effect on the Company.

     In April 2003, FASB issued Statement No. 149, "Amendment of Statement 133
     on Derivative Instruments and Hedging Activities". The Statement amends and
     clarifies accounting for derivative instruments, including certain
     derivative instruments embedded in other contracts, and for hedging
     activities under Statement 133. The amendments set forth in Statement 149
     improve financial reporting by requiring that contracts with comparable
     characteristics be accounted for similarly. In particular, this Statement
     clarifies under what circumstances a contract with an initial net
     investment meets the characteristic of a derivative as discussed in
     Statement 133. In addition, it clarifies when a derivative contains a
     financing component that warrants special reporting in the statement of
     cash flows. This Statement is effective for contracts entered into or
     modified after June 30, 2003 with certain exceptions. The Company does not
     believe that the adoption of Statement No. 149 will have a material effect
     on the Company.


<PAGE>


     In May 2003, FASB issued Statement No. 150, "Accounting for Certain
     Financial Instruments with Characteristics of Both Liabilities and Equity".
     The Statement specifies that certain instruments within its scope embody
     obligations of the issuer and that, therefore, the issuer must classify
     them as liabilities. This Statement is effective immediately for all
     financial instruments entered into or modified after May 31, 2003. For all
     other instruments, the Statement goes into effect at the beginning of the
     first interim period beginning after June 15, 2003. For contracts that were
     created or modified before May 31, 2003 and still exist at the beginning of
     the first interim period beginning after June 30, 2003, entities should
     record the transition to Statement No. 150 by reporting the cumulative
     effect of a change in an accounting principle. Statement No. 150 prohibits
     entities from restating financial statements for earlier years presented.
     The Company does not believe that the adoption of Statement No. 150 will
     have a material effect on the Company.

     u) Advertising Costs

     Advertising costs are expensed as incurred.


3.   STOCK OPTION PLANS

                                                              OPTIONS  WEIGHTED
                                                                        AVERAGE
                                                                       EXERCISE
                                                                          PRICE

     a) Options outstanding at December 31, 2002            1,110,492

        Options forfeited during the year                     (13,000)     3.19
                                                          -----------
        Options outstanding at December 31, 2003            1,097,492

        Options forfeited during the period                    (6,000)     3.19
        Options expired during the period                    (181,492)     2.10
                                                          -----------
        Options outstanding at June 30, 2004                  910,000
                                                          ===========

        Options exercisable December 31, 2003               1,097,492      1.90
        Options available for future grant
          December 31, 2003                                20,013,000
        Options exercisable June 30, 2004                     910,000      1.90
        Options available for future grant
          June 30, 2004                                    20,200,492


      b) Range of Exercise Prices at June 30, 2004
<TABLE>
<CAPTION>
                    Outstanding       Weighted           Options    Options          Weighted
                        Options        Average       Outstanding    exercisable       Average
                                     Remaining           Average                     Exercise
                                          Life    Exercise Price                        Price
                   -----------------------------------------------------------------------------
     <S>                <C>          <C>               <C>           <C>                 <C>
     $2.10 - $3.25      365,000      0.75 year         $2.81         365,000             $2.79
     $1 and under       545,000      1.66 years        $0.75         545,000             $0.75

</TABLE>

     c) Pro-forma net income

     At June 30, 2004, the Company has five stock-based employee compensation
     plans, which are described more fully in Note 13(d). The Company accounts
     for those plans under the recognition and measurement principles of APB
     Opinion No.25, Accounting for Stock Issued to Employees, and related
     Interpretations. No stock-based employee compensation cost is reflected in
     net income, as all options granted under those plans had an exercise price
     equal to the market value of the underlying common stock on the date of
     grant. The following table illustrates the effect on net income and
     earnings per share if the Company had applied the fair value recognition
     provisions of FASB Statement No. 123 Accounting for Stock-Based
     Compensation, to stock-based employee compensation. SFAS No.123 was amended
     by SFAS No. 148 which requires more prominent disclosure of stock based
     compensation.


<PAGE>

<TABLE>
<CAPTION>
                                          Three Months Ended June 30,        Six Months Ended June 30,
                                               2004         2003                 2004         2003
                                             --------    ----------          ----------    ----------
     <S>                                     <C>         <C>                 <C>           <C>
     Net loss as reported                    (835,388)     (645,275)         (1,627,618)   (5,300,858)
     Deduct:  Total stock-based
     employee compensation expense
     determined under fair value
     based method for all awards net
     of related tax effects                      --         (41,202)             (1,895)      (82,404)
                                             --------    ----------          ----------    ----------
     Pro forma net loss                      (835,388)     (686,477)         (1,629,513)   (5,383,262)
                                             ========    ==========          ==========    ==========
     Loss per share:
     Basic and diluted loss per
     share, as reported                         (0.00)        (0.00)              (0.00)        (0.04)
                                             ========    ==========          ==========    ==========

     Pro forma loss per share                   (0.00)        (0.00)              (0.00)        (0.04)
                                             ========    ==========          ==========    ==========

</TABLE>

     d) Black Scholes Assumptions

     The fair value of each option grant used for purposes of estimating the
     pro forma amounts summarized above is estimated on the date of grant using
     the Black-Scholes option price model with the weighted average assumptions
     shown in the following table:

                                                    2001 GRANTS
                                                    -----------
     Risk free interest rates                           4.76%
     Volatility factors                                  100%
     Weighted average expected life                 4.90 years
     Weighted average fair value per share               .74
     Expected dividends                                   --

     There were no option grants in the six months ended June 30, 2004. There
     were no option grants in the year ended December 31, 2003.


4.   ACCOUNTS RECEIVABLE
                                              JUNE 30, 2004  DECEMBER 31, 2003
                                                ----------    -----------
                                                         $              $

       Accounts receivable                       2,431,360      1,952,908
       Less:  Allowance for doubtful accounts     (188,217)      (186,847)
                                                ----------     ----------
                                                 2,243,143      1,766,061
                                                ==========     ==========
       Allowance for doubtful accounts
       Balance, beginning of period                186,847        236,793
       Provision                                    22,738         44,359
       Recoveries                                  (21,368)       (94,305)
                                                ----------     ----------
       Balance, end of period                      188,217        186,847
                                                 ==========     ==========



5.   PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
                                                    June 30, 2004                   December 31, 2003
                                          --------------------------------------   ------------------
                                                         Accumulated
                                              Cost      Amortization         Net                  Net
                                                 $                 $           $                    $
                                         ---------------------------------------   ------------------
     <S>                                 <C>               <C>         <C>         <C>
     Furniture and equipment               507,425           363,148     144,277              162,544
     Computer equipment and software     5,343,092         4,526,617     816,475            1,014,540
     Leasehold improvements                 92,516            87,524       4,992                5,667
                                         ---------         ---------     ------
                                         5,943,033         4,977,289     965,744            1,182,751
                                         =========         =========     =======            =========

     Assets under capital lease            450,922           447,393       3,529               25,464
                                           =======           =======       =====               ======
</TABLE>


<PAGE>

     Amortization of property and equipment for the six months ended June 30,
     2004 amounted to $215,231including amortization of assets under capital
     lease of $16,607.

     Amortization of property and equipment for the year ended December 31, 2003
     amounted to $541,309 including amortization of assets under capital lease
     of $67,875.




<PAGE>


6.   INVESTMENT IN NON-RELATED COMPANIES

       Investment in non-related companies are represented by the following:

                             JUNE 30, 2004       DECEMBER 31, 2003
                             -------------       -----------------
                                         $                       $
     Conexys                             1                       1
     Digital Cement                 45,668                  45,668
                                    ------                  ------

     Total                          45,669                  45,669
                                    ======                  ======


     i) Conexys
     During the year ended December 31, 1999, $383,146 of the Conexys investment
     was included as a short-term investment as the Company had intended to sell
     these shares on the open market. During fiscal 2000, the Company acquired
     additional shares of Conexys at a cost of approximately $284,365 in
     consideration of services rendered and reclassified the total investment as
     available for sale.

     Effective February 26, 2003, the common shares of Conexys were temporarily
     suspended from trading on the Bermuda Stock Exchange as it does not have
     adequate sources of funding for its immediate operating requirements and is
     currently investigating various options to retain and maximize shareholder
     value including the restructuring of its debt and refinancing of the
     Company.

     At December 31, 2002, the Company wrote down its investment by $667,510 to
     a carrying value of $1. The write down was considered a permanent decline
     in value and as such was recorded as a charge to operations.

     ii) Digital Cement
     During fiscal 2000, the Company acquired 1,125,000 shares of Digital
     Cement, representing approximately 4% of that Company's shares in
     consideration of the co-licensing of SecondWave, software developed by
     TidalBeach Inc., a wholly-owned subsidiary of Thinkpath Inc. The value of
     these shares was determined to be approximately $507,865 based on a offer
     to a third party to purchase shares in the Company at a price of $0.50 per
     share. During 2001, the fair value was adjusted to $346,415 with a charge
     of $161,450 to comprehensive income. During 2002, the fair value was
     adjusted to $45,668 with a charge of $300,747 to comprehensive income.

     During 2003, the Company collected a long-term receivable in the amount of
    $53,924, owed by Digital Cement.


7.   GOODWILL

     Goodwill is the excess of cost over the value of assets acquired over
     liabilities assumed in the purchase of the subsidiaries. Goodwill has been
     allocated to reporting units as follows:

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                      June 30, 2004                               2003
                                 -------------------------------------------------------    -----------------
                                                                 Accumulated
                                                Accumulated       Impairment
                                     Cost      Amortization           Losses        Net                  Net
                                        $                 $                $                               $
                                 -------------------------------------------------------    -----------------
     <S>                         <C>           <C>             <C>               <C>              <C>
     IT Recruitment
     (Systemsearch Consulting
     Services)                     448,634           303,337         145,297        --                   --

      Technical Publications &
     Engineering (CadCam Inc.)   5,518,858          535,164        1,234,962  3,748,732            3,748,732
                                 ---------          -------        ---------  ---------            ---------

                                 5,967,492          838,501        1,380,259  3,748,732            3,748,732
                                 =========          =======        =========  =========            =========
</TABLE>


<PAGE>


     Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and
     Other Intangible Assets. This statement requires the Company to evaluate
     the carrying value of goodwill and intangible assets based on assumptions
     and estimates of fair value and future cash flow information. These
     assumptions reflect management's best estimates and may differ from actual
     results. If different assumptions and estimates are used, carrying values
     could be adversely impacted, resulting in write downs that could adversely
     affect the Company's earnings.

     At December 31, 2003, the Company performed its annual impairment test for
     goodwill and determined that no adjustment to the carrying value of
     goodwill was needed.

     On an ongoing basis, absent any impairment indicators, the Company expects
     to perform a goodwill impairment test as of the end of the fourth quarter
     of every year.



8.  OTHER ASSET
<TABLE>
<CAPTION>
                                                  JUNE 30, 2004          DECEMBER 31, 2003
                                                  -------------          -----------------
                                                              $                          $
     <S>                                          <C>                    <C>
     Cash surrender value of life insurance              57,425                     53,321
                                                         ------                     ------

     Total                                               57,425                     53,321
                                                         ======                     ======
</TABLE>

     Amortization of other assets amounted to nil for the six months ended June
     30, 2004 and the year ended December 31, 2003.


9.   RECEIVABLE DISCOUNT FACILITY

     i) June 30, 2004

     At June 30, 2004, the Company had a receivable discount facility in the
     amount of $935,605 with Morrison Financial Services Limited which allowed
     the Company to borrow up to 75% of the value of qualified accounts
     receivables to a maximum of $1,500,000, bearing interest at 30% per annum.

     ii) December 31, 2003

     At December 31, 2003, the Company had a receivable discount facility in the
     amount of $1,130,000 with Morrison Financial Services Limited which allowed
     the Company to borrow up to 75% of the value of qualified accounts
     receivables to a maximum of $3,000,000, bearing interest at 30% per annum.



10.   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.

<PAGE>

     The proceeds of $900,000 received by the Company in 2002 were allocated
     between the warrants and the debenture without warrants on a pro rata
     basis. Paid in capital has been credited by the value of the warrants in
     the amount of $707,050. The value of the beneficial conversion feature was
     determined to be $2,898,328 which was credited to paid in capital and
     charged to earnings as interest expense in 2002.

     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.

     The proceeds of $2,075,000 received by the Company in 2003 were allocated
     between the warrants and the debenture without warrants on a pro rata
     basis. Paid in capital has been credited by the value of the warrants in
     the amount of $1,150,625.

     At December 31, 2003, the value of the beneficial conversion feature on all
     issued convertible debentures was determined to be $6,865,928 which was
     credited to paid in capital and charged to earnings as interest expense.

     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.

<PAGE>


     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.

     The proceeds of $1,175,000 received by the Company in the six months ended
     June 30, 2004 were allocated between the warrants and the debenture without
     warrants on a pro rata basis. Paid in capital has been credited by the
     value of the warrants in the amount of $871,104.

     At June 30, 2004, the value of the beneficial conversion feature on all
     issued convertible debentures was determined to be $1,488,421 which was
     credited to paid in capital and charged to earnings as interest expense.


11.  LONG-TERM DEBT

     i) June 30, 2004

     Effective March 25, 2004, the Company amended its loan agreement with Terry
     Lyons. The balance of accrued interest was added to the original principal
     amount of $259,356 for a new principal balance of $299,768. Monthly
     payments of $10,000 began April 5, 2004 until the full amount of the note,
     including interest is paid in full. The interest rate was reduced from 30%
     per annum to US prime plus 14%.

     ii) December 31, 2003

     At December 31, 2003, the Company had a loan balance of $259,356 with Terry
     Lyons and no principal payments had been made.

<TABLE>
<CAPTION>
                                                                  JUNE 30, 2004          DECEMBER 31, 2003
                                                                  -------------          -----------------
                                                                              $                          $
     <S>                                                          <C>                    <C>
     a) Included therein:

     A loan with T. Lyons payable in monthly payments
     of $10,000 beginning April 5, 2004 and bearing
     interest at US prime plus 14% per annum.  This loan
     is subordinated to Morrison Financial Services Limited             282,825                    259,356

     Various capital leases with various payment
     terms and interest rates                                            12,565                     33,620
                                                                         ------                     ------
                                                                        295,390                    292,976
     Less:  current portion                                             123,430                    279,800
                                                                        -------                    -------

     Total                                                             $171,960                    $13,176
                                                                       ========                    =======
</TABLE>


     b) Future principal payments obligations as at June 30, 2004, were as
        follows:

                     2004                          65,040
                     2005                         127,524
                     2006                         102,826
                     2007                             --
                     2008                             --
                                                ---------
                                                $ 295,390
                                                =========

     c) Interest expense related to long-term debt was $50,001 for the six
     months ended June 30, 2004. Interest expense related to long-term debt was
     $119,339 for the year ended December 31, 2003.



<PAGE>


12.   NOTES PAYABLE

     a) On August 1, 2002, the Company 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. Principal payments
     of $4,000 were to be made monthly starting September 1, 2002 until August
     1, 2007. This loan is non-interest bearing.

     Also as part of the restructuring, 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.

     The Company has accounted for its modification in the terms of its notes
     payable as troubled debt restructuring. Accordingly, the Company has
     recognized a gain on the restructuring of the old debt based upon the
     difference between the total carrying value of the original debt (with any
     accrued interest) and the total future cash flows of the restructured debt.
     The gain on the restructured debt, included in expenses in the consolidated
     statement of operations is as follows:

          Old debt
            Principal balance                                        $ 675,000
            Accrued interest                                              --
                                                                   ----------
            Carrying value                                            675,000

            Common stock issued (2,631,185 shares at $0.0942)        (247,858)
            Principle balance of new debt                            (240,000)
            Interest (payable through maturity)                           --
                                                                   ----------
            Gain on restructured debt                               $ 187,142
                                                                   ==========

     All future cash payments under the modified terms will be accounted for as
     reductions of note payable and no interest expense will be recognized for
     any period between the closing date and the maturity date.

     The note is subordinated to Morrison Financial Services Limited and to the
     12% Senior Secured Convertible Debenture holders. The Company has not made
     any principal payments to Mr. Walters since December 2002 and is currently
     in default of the loan agreement. As a result of the default, the principal
     balance bears interest at 12% per annum until payment is made and the note
     is due on demand. The entire note payable has been reclassified as current.
     The Company intends to make payments as cash becomes available.

     b) 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. Principal payments of $10,000 per month were to begin
     November 1, 2002 bearing 5% interest until October 1, 2007. In addition,
     the Company agreed to cover the monthly expense associated with Ms.
     Dunne-Fushi's family health benefits until May 2004 and vehicle lease until
     August 2004.

     The Company has accounted for its modification in the terms of its notes
     payable as troubled debt restructuring. Accordingly, the Company has
     recognized a gain on the restructuring of the old debt based upon the
     difference between the total carrying value of the original debt (with any
     accrued interest) and the total future cash flows of the restructured debt.
     The gain on the restructured debt, included in expenses in the consolidated
     statement of operations is as follows:

         Old debt
            Principal balance                                      $1,740,536
            Accrued interest                                              --
            Capital stock payable                                     225,000
                                                                   ----------
            Carrying value                                          1,965,536

            Common stock issued (4,000,000 shares at $0.0942)        (376,800)
            Principle balance of new debt                            (600,000)
            Interest, insurance and vehicle lease costs               (98,987)
                                                                   ----------
            Gain on restructured debt                              $  889,749
                                                                   ==========

<PAGE>


     All future cash payments under the modified terms will be accounted for as
     reductions of note payable and no interest, insurance or vehicle expense
     will be recognized for any period between the closing date and the maturity
     date.

     The note is secured under a general security agreement but is subordinated
     to Morrison Financial Services Limited and to the 12% Senior Secured
     Convertible Debenture holders. The Company has not made any principal
     payments to Ms. Dunne-Fushi since December 2002 and is currently in default
     of the loan agreement. As a result of the default, Ms. Dunne-Fushi has the
     option of enforcing the security she holds and therefore the entire note
     payable has been reclassified as current. The Company intends to make
     further payments as cash becomes available.

                                       JUNE 30, 2004          DECEMBER 31, 2003
                                       -------------          -----------------
                                                   $                          $
     Note Payable to Roger Walters           224,000                    224,000
     Note Payable to Denise Dunne            629,491                    635,936
                                             -------                    -------
                                             853,491                    859,936
     Less:  current portion                  853,491                    859,936
                                             -------                    -------

     Total                                        --                         --
                                             =======                    =======

13. CAPITAL STOCK

       a)  Authorized

         Unlimited   Common stock, no par value
         1,000,000   Preferred stock, issuable in series, rights to be
                     determined by the Board of Directors

     b)  Issued

     On January 24, 2003, the Company amended its Articles of Incorporation to
     increase its authorized common stock from 100,000,000 to 800,000,000.

     On October 2, 2003, the Company amended its Articles of Incorporation to
     increase its authorized common stock from 800,000,000 to an unlimited
     number of shares.

     During the year ended December 31, 2003, the Company issued 16,997,854
     shares of its common stock in settlement of various accounts payable and
     liabilities in the amount of $449,333. This amount includes 12,427,535
     shares of common stock, no par value per share, issued and registered on
     January 28, 2003 to Declan A. French, the Company's Chief Executive
     Officer, pursuant to an amendment to his employment agreement. Also
     included are 2,423,744 shares of common stock, no par value per share,
     issued to an employee as a signing bonus pursuant to his employment
     agreement. The Company also issued 2,146,575 shares to Vantage Point
     Capital, an investor relations firm, in settlement of accounts payable.

     During the year ended December 31, 2003, the Company issued 10,980,000
     shares of its common stock and warrants as payment for a variety of
     services in the amount of $226,500. This includes 4,000,000 shares of
     common stock, no par value per share, issued to Rainery Barba pursuant to a
     consulting agreement with the Company dated February 7, 2003 for provision
     of legal and advisory services for a period of one year. Also included, are
     4,200,000 shares of common stock, no par value per share issued to
     Dailyfinancial.com Inc. pursuant to a consulting agreement with the Company
     dated February 7, 2003 for the provision of corporate consulting services
     in connection with mergers and acquisitions, corporate finance and other
     financial services. The Company also issued 2,780,000 shares and warrants
     to various parties in consideration of financial services rendered.

     During the year ended December 31, 2003 the Company issued 121,184,669
     shares of its common stock to the 12% Senior Secured Convertible Debenture
     Holders on the exercise of warrants.

     During the year ended December 31, 2003, the Company issued 2,521,818,621
     shares of its common stock upon the conversion of 12% Senior Secured
     Convertible Debentures in the amount of $2,309,712.

     During the six months ended June 30, 2004, the Company issued 250,197,488
     shares of common stock, no par value per share, in consideration of
     consulting services in the amount of $175,336. This includes 250,000,000
     shares of common stock, no par value per share, issued to Jeffrey Flannery
     pursuant to a consulting agreement with the Company dated May 26, 2004 for
     the provision of marketing and business development consulting services for
     a period of one year.

     During the six months ended June 30, 2004, the Company issued 1,335,919,289
     shares of its common stock upon the conversion of 12% Senior Secured
     Convertible Debentures in the amount of $552,000.


<PAGE>



     c) Warrants

     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. These warrants have been valued at $1,091,606 based on the
     Black Scholes model utilizing a volatility rate of 100% and a risk-less
     interest rate of 6.33%. This amount has been treated as a cumulative effect
     adjustment to retained earnings. For purposes of earnings per share, this
     amount has been included with preferred share dividend in the 2000
     financial statements.

     In connection with the Initial Public Offering, the underwriters received
     110,000 warrants. They are exercisable at a purchase price of $8.25 per
     share until June 1, 2004.

     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. These warrants have been valued at $939,981 based on
     the Black Scholes model utilizing a volatility rate of 100% and a risk-less
     interest rate of 6.18%. This amount has been treated as a preferred share
     dividend in the 2000 financial statements.

     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. These warrants have been valued at $533,537 based on the Black
     Scholes model utilizing a volatility rate of 100% and a risk-less interest
     rate of 6.13%. This amount has been treated as a preferred share dividend
     in the 2000 financial statements.

     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. These warrants have been valued at
     $1,458,700 based on the Black Scholes model utilizing a volatility rate of
     100% and a risk-less interest rate of 6.50%. This amount has been treated
     as part of the cost of the E-Wink investment.

     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. These warrants have been valued at
     $1,295,049 based on the Black Scholes model utilizing a volatility rate of
     100% and a risk-less interest rate of 6.13%. This amount has been treated
     as an allocation of the proceeds on the common stock issuance.

     On January 26, 2001, the Company: (a) repriced warrants to purchase up to
     100,000 shares of its common stock, which warrants weres issued to a
     certain investor in the April 2000 private placement offering of Series B
     8% Cumulative Preferred Stock, so that such warrants are exercisable at any
     time until April 16, 2005 at a new purchase price of $1.00 per share; (b)
     repriced warrants to purchase an aggregate of up to 280,693 shares of its
     common stock, which warrants were issued to the placement agent, certain
     financial advisors, and the placement agent's counsel in our August 2000
     private placement offering of units, so that such warrants are exercisable
     at any time until August 22, 2005 at a new purchase price of $1.00 per
     share; and (c) 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. The exercise
     prices of the revised and newly issued warrants are equal to, or in excess
     of, the market price of our common stock on the date of such revision or
     issuance.

     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 a non-refundable retainer of 400,000
     shares to Del Mar and is required to pay $4,000 per month for on-going
     consulting services. In addition, Del Mar has a warrant to purchase 400,000
     shares of common stock at $1.00 per share and 100,000 shares at $2.00 which
     expires January 24, 2005 and which are exercisable commencing August 1,
     2001. As the agreement to issue the non-refundable retainer was reached in
     December 2000, the 400,000 shares with a value of $268,000 has been
     included in the shares issued for services rendered and has been included
     in financing expenses for December 31, 2000. The commitment to issue the
     non-refundable deposit was effected in December 2000. The value of the
     warrants of $216,348 has been included in paid in capital in January 2001
     and the expense was reflected over the six month period ending August 1,
     2001. In April 2001, the warrants were cancelled and new warrants were
     issued which are exercisable at $0.55. 200,000 of the warrants are
     exercisable commencing April 2001 and the balance are exercisable
     commencing August 1, 2001. The value of the change in the warrants of
     $29,702 has been included in the paid in capital in April 2001 and the
     additional expense was amortized in the period ending August 1, 2001.

     During the year ended December 31, 2001, the Company issued 22,122 shares
     to the Business Development Bank of Canada on the exercise of warrants at
     $1.00.

     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. As of December 31,
     2003, all 723,436 warrants issued in connection with the purchase of the
     Series C Preferred Stock remain outstanding and none have been exercised.



<PAGE>




     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 31, 2003, 7,200,000 warrants had been
     exercised with net proceeds of $192,500.

     On December 5, 2002, the Company issued 50,285,714 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.

     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.

     During the year ended December 31, 2003, the Company issued 770,033,457
     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.

     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

     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 and June 18, 2004, the Company issued 1,157,142,857
     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 $.00025 per share.


     d) Stock Options

     In June 2001, the directors approved the adoption of the 2001 Stock Option
     Plan. Each of the plans provides for the issuance of 435,000 options. In
     October 2002, the directors of the Company adopted and the stockholders
     approved the adoption of the Company's 2002 Stock Option Plan which
     provides for the issuance of 6,500,000 options. In October 2003, the
     directors of the Company adopted and the stockholders approved the adoption
     of the Company's 2003 Stock Option Plan which provides for the issuance of
     20,000,000 options.

     The plans are administrated by the Compensation Committee or the Board of
     Directors, which determine among other things, those individuals who shall
     receive options, the time period during which the options may be partially
     or fully exercised, the number of common stock to be issued upon the
     exercise of the options and the option exercise price.

     The plans are effective for a period of ten years and options may be
     granted to officers, directors, consultants, key employees, advisors and
     similar parties who provide their skills and expertise to the Company.


<PAGE>




     Options granted under the plans generally require a three-year vesting
     period, and shall be at an exercise price that may not be less than the
     fair market value of the common stock on the date of the grant. Options are
     non-transferable and if a participant ceases affiliation with the Company
     by reason of death, permanent disability or retirement at or after age 65,
     the option remains exercisable for one year from such occurrence but not
     beyond the option's expiration date. Other types of termination allow the
     participant 90 days to exercise the option, except for termination for
     cause, which results in immediate termination of the option.

     Any unexercised options that expire or that terminate upon an employee's
     ceasing to be employed by the Company become available again for issuance
     under the plans, subject to applicable securities regulation.

     The plans may be terminated or amended at any time by the Board of
     Directors, except that the number of common stock reserved for issuance
     upon the exercise of options granted under the plans may not be increased
     without the consent of the stockholders of the Company.

14.  DEFERRED INCOME TAXES AND INCOME TAXES

a)   Deferred Income Taxes

     The components of the future tax liability classified by source of
     temporary differences that gave rise to the benefitare as follows:
<TABLE>
<CAPTION>
                                                                  JUNE 30, 2004          DECEMBER 31, 2003
                                                                  -------------          -----------------
                                                                              $                          $
     <S>                                                          <C>                    <C>
     Tax values of depreciable assets in excess of                      295,550                         --
     accounting values
     Losses available to offset future income taxes                   4,128,955                  4,046,200
     Share issue costs                                                  115,154                    115,154
                                                                        -------                    -------
                                                                      4,539,659                  4,161,354
     Less:  Valuation allowance                                     (4,539,659)                (4,161,354)
                                                                    -----------               ------------
                                                                            --                         --
                                                                    ===========               ============
</TABLE>

     As part of the acquisitions of Cad Cam Inc. and MicroTech Professionals
     Inc., there was a change of control which resulted in the subsidiaries
     being required to change from the cash method to the accrual method of
     accounting for income tax purposes.

     b) Current Income Taxes

    Current income taxes consist of:
                                         June 30, 2004      December 31, 2003
                                         -------------      -----------------
                                                     $                      $
     Amount calculated at Federal
      and Provincial                          (638,448)            (3,704,770)
                                             ---------            -----------
     statutory rates

     Increase (decrease) resulting from:
     Permanent and other differences           264,619              2,978,164
     Valuation allowance                       378,305                756,326
                                               -------                -------
                                               642,924              3,734,490
                                               -------              ---------
     Current income taxes                        4,476                 29,720
                                                 =====                 ======

     Issue expenses totaling approximately $1,300,000 may be claimed at the rate
     of 20% per year until 2005. To the extent that these expenses create a
     loss, the loss is available to be carried forward for seven years from the
     year the loss is incurred. The Company has not reflected the benefit of
     utilizing non-capital losses totaling approximately $10,300,000 or a
     capital loss totaling $750,000 in the future as a deferred tax asset as at
     June 30, 2004. As at the completion of the June 30, 2004 financial
     statements, management believed it was more likely than not that the
     results of future operations would not generate sufficient taxable income
     to realize the deferred tax assets.



<PAGE>




15.  COMPREHENSIVE LOSS

<TABLE>
<CAPTION>
                                                                Six Months Ended
                                                                  June 30, 2004          December 31, 2003
                                                                  -------------          -----------------
                                                                              $                          $
     <S>                                                          <C>                    <C>
     Net loss                                                       (1,627,618)                (9,033,628)
     Other comprehensive loss
        Foreign currency translation adjustments                        (5,040)                  (238,168)
                                                                        -------                  ---------

     Comprehensive loss                                             (1,632,658)                (9,271,796)
                                                                    ===========                ===========
</TABLE>


     The foreign currency translation adjustments are not currently adjusted for
     income taxes since the Company is situated in Canada and the adjustments
     relate to the translation of the financial statements from Canadian dollars
     into United States dollars done only for the convenience of the reader.


16.  DISCONTINUED OPERATIONS

     Effective March 8, 2002, the Company sold its technology division, Njoyn
     Software Incorporated to Cognicase Inc., a Canadian company. As part of the
     transaction, Cognicase assumed all of the staff in the Company's technology
     division, including the employees of TidalBeach Inc. The Company will not
     have future revenues from either its Njoyn or Secondwave products and
     therefore the technology operations have been reported as discontinued.
     There was no technology revenue for the three months ended June 30, 2004
     and 2003. The net loss for the three months ended June 30, was $1,300 in
     2004 and $9,300 in 2003. There was no technology revenue for the six months
     ended June 30, 2004 and 2003. The net loss for the six months ended June
     30, was $2,700 in 2004 and $12,100 in 2003.

     Effective May 1, 2002, the Company signed an agreement with triOS Training
     Centres Limited, an Ontario company, for the purchase of certain assets of
     the Toronto training division, Thinkpath Training for a nominal amount of
     cash and the assumption of all prepaid training liabilities. As part of the
     transaction, triOS assumed the Toronto training staff and is subletting the
     classroom facilities.

     On November 1, 2002, the Company entered into a series of agreements with
     Thinkpath Training LLC, a New York company, for the purchase of certain
     assets of the New York training division, Thinkpath Training 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.

     As a result of these two transactions, the Company will not have future
     revenues from its training division and therefore the operations have been
     reported as discontinued.

     There was no training revenue for the three months ended June 30, 2004 and
     $94,000 in 2003. The net loss from the training division for the three
     months ended June 30, 2004 was $13,000 compared to net income of $66,000 in
     2003. There was no training revenue for the six months ended June 30, 2004
     and $162,000 in 2003. The net loss from the training division for the six
     months ended June 30, 2004 was $24,000 compared to net income of $94,000 in
     2003.

     Effective June 27, 2003, the Company signed an agreement with
     Brainhunter.com Ltd., an Ontario company, for the purchase of certain
     assets of the Toronto IT recruitment division for a nominal amount of cash
     and the assumption of all employee liabilities. As a result of this
     transaction, the Company will not have future revenues from its IT
     recruitment division and therefore the operations have been reported as
     discontinued.

     There was no IT recruitment revenue for the three months ended June 30,
     2004 and $625,000 in 2003. Net income from the IT recruitment division for
     the three months ended June 30, 2004 was nil and $32,000 in 2003. There was
     no IT recruitment revenue for the six months ended June 30, 2004 and
     $1,430,000 in 2003. Net income from the IT recruitment division for the six
     months ended June 30, 2004 was nil and $11,000 in 2003.


<PAGE>




     The following table presents the revenues, loss from operations and other
     components attributable to the discontinued operations of Njoyn Software
     Incorporated, TidalBeach Inc., Thinkpath Training Inc. and Thinkpath
     Training US Inc. and the IT recruitment division for the three months and
     six months ended June 30:

<TABLE>
<CAPTION>
                                                  Three Months Ended June 30,     Six Months Ended June 30,
                                                      2004           2003           2004            2003
                                                      ----           ----           ----            ----
                                                         $              $              $               $

     <S>                                          <C>                          <C>
     Revenues                                           --        719,443             --       1,588,867
                                                        --                            --       ---------

     Income (loss) from operations
     before income taxes                          (14,319)         89,525       (26,723)          93,353

     Provision for Income Taxes                         --             --            300             625

     Gain on disposal of IT Recruitment
     Division                                           --        190,627             --         190,627
                                                        --        -------             --         -------

     Income (loss) from discontinued
     operations                                   (14,319)        280,152       (27,023)         283,355
                                                  ========        =======       ========         =======




17.  SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

     The Company issued common shares and warrants for the following:

                                                     Six Months Ended
                                                        June 30, 2004             December 31, 2003
                                                        -------------             -----------------
                                                                    $                             $
     Services rendered                                        175,336                       226,500
     Accounts payable                                              --                       449,333
                                                                   --                       -------
                                                              175,336                       675,833
                                                              =======                       =======

18.     SEGMENTED INFORMATION

     a) Sales by Geographic Area
                                          Three Months Ended June 30,     Six Months Ended June 30,
                                               2004              2003           2004           2003
                                               ----              ----           ----           ----
                                                  $                 $              $              $

     Canada                                 122,339           130,774        345,177        163,520
     United States of America             3,202,845         2,340,932      6,036,708      4,798,473
                                          ---------         ---------  --  ---------      ---------

                                          3,325,184         2,471,706      6,381,885      4,961,993
                                          =========         =========      =========      =========


     b) Net Income (Loss) by Geographic Area
                                          Three Months Ended June 30,     Six Months Ended June 30,
                                               2004              2003           2004           2003
                                               ----              ----           ----           ----
                                                  $                 $              $              $

     Canada                             (1,404,561)         (932,729)    (2,392,768)    (5,596,248)
     United States of America               569,173           287,454        765,150        295,390
                                            -------           -------        -------        -------

                                          (835,388)         (645,275)    (1,627,618)    (5,300,858)
                                          =========         =========    ===========    ===========



     c)   Identifiable Assets by Geographic Area
                                                        June 30, 2004             December 31, 2003
                                                        -------------             -----------------
                                                                    $                             $

     Canada                                                 1,678,676                     1,369,904
     United States of America                               6,457,174                     6,038,685
                                                            ---------                     ---------

                                                            8,135,850                     7,408,589
                                                            =========                     =========

<PAGE>


      d) Revenue and Gross Profit by Operating Segment

                                          Three Months Ended June 30,     Six Months Ended June 30,
                                               2004              2003           2004           2003
                                               ----              ----           ----           ----
                                                  $                 $              $              $
     Revenue
       Tech Pubs and Engineering          3,275,178         2,371,806      6,248,100      4,726,995
       IT Documentation                      50,006            99,900        133,785        234,998
                                             ------            ------        -------        -------

                                          3,325,184         2,471,706      6,381,885      4,961,993
                                          =========         =========      =========      =========

     Gross Profit
       Tech Pubs and Engineering          1,261,296           835,399      2,246,624      1,531,152
       IT Documentation                      13,700            20,653         27,645         47,235
                                             ------            ------         ------         ------

                                          1,274,996           856,052      2,274,269      1,578,387
                                          =========           =======      =========      =========
</TABLE>

     e) Revenues from Major Customers

     The consolidated entity had the following revenues from major customers:

     For the three and six months ended June 30, 2004, once customer had sales
     of $1,247,344 and $1,957,452 representing approximately 38% and 31% of
     total revenue.

     For the year ended December 31, 2003, one customer had sales of $1,568,232,
     representing approximately 15% of total revenue.

     f)  Purchases from Major Suppliers

     There were no significant purchases from major suppliers.


19.     EARNINGS PER SHARE


     The Company has adopted Statement No. 128, Earnings Per Share, which
     requires presentation, in the consolidated statement of income, of both
     basic and diluted earnings per share.
<TABLE>
<CAPTION>
                                                     Three Months Ended June 30,          Six Months Ended June 30,
                                                        2004            2003                2004            2003
                                                  --------------    --------------     --------------    --------------
                                                           $              $              $               $
          <S>                                    <C>                <C>                <C>               <C>
           NUMERATOR
           Net loss from continuing operations         (821,069)         (925,427)         (1,600,595)       (5,584,213)

           Income (loss) from discontinued
           operations                                   (14,319)          280,152             (27,023)          283,355

           Net loss                                    (835,388)         (645,275)         (1,627,618)       (5,300,858)
                                                 ==============    ==============      ==============    ==============

           DENOMINATOR
           Weighted Average common stock          3,563,071,348       201,863,253       3,492,747,948       148,567,552
                                                 ==============    ==============      ==============    ==============
           outstanding

           Basic and diluted loss per common
           share from continuing operations               (0.00)            (0.00)              (0.00)            (0.04)
                                                 ==============    ==============      ==============    ==============

           Basic and diluted loss per common
           share after discontinued operations            (0.00)            (0.00)              (0.00)            (0.04)
                                                 ==============    ==============      ==============    ==============


           Average common stock outstanding       3,563,071,348       201,863,253       3,492,747,948       148,567,552
           Average common stock issuable                   --                --                  --                --
                                                 --------------    --------------      --------------    --------------

           Average common stock outstanding
           assuming dilution                      3,563,071,348       201,863,253       3,492,747,948       148,567,552
                                                 ==============    ==============      ==============    ==============
</TABLE>



<PAGE>


     The outstanding options and warrants as detailed in note 13 were not
     included in the computation of the diluted earnings per common share as the
     effect would be anti-dilutive.

     The earnings per share calculation (basic and diluted) does not include any
     common stock for common stock payable, as the effect would be
     anti-dilutive.

     As of August 20, 2004, the Company has issued a total of 4,719,624,155
     shares of its common stock to the convertible debenture holders upon the
     conversion of $3,186,500 of debentures and accrued interest.


20. COMMITMENTS AND CONTINGENCIES

     a)     Lease Commitments

      Minimum payments under operating leases for premises occupied by the
     Company and its subsidiaries offices, located throughout
      Ontario, Canada and the United States, exclusive of most operating costs
     and realty taxes, as at June 30, 2004, for the next five years are as
     follows:

                     2004        $217,848
                     2005         338,315
                     2006         112,343
                     2007         112,343
                     2008          37,448
               Thereafter              --
                                       --
                                 --------
                                 $818,297
                                 ========

     The lease commitments do not include two operating leases for premises that
     the Company is currently sub leasing to the purchasers of the Canadian and
     United States training divisions. If the purchasers were to default on
     payment or abandon the premises, the Company would be liable for annual
     payments of$282,096 expiring August 31, 2006 and $150,534 expiring
     September 30, 2010.

     The lease commitments do not include an operating lease for premises
     located in the United States that was closed in the fourth quarter of 2002.
     The Company has not made any payments on this lease since the premises were
     abandoned. The Company does not intend to make any further payments and the
     lessor has not tried to enforce payment. The Company may be liable for a
     lease balance of $44,597which expires November 30, 2004.

     b) On October 1, 2003, SITQ National Inc. ("SITQ'), a former landlord,
     filed a statement against the Company and its Directors, with the Superior
     Court of Justice of Ontario, Canada, Court File No. 03-CV-256327CM3,
     demanding payment of rent arrears of approximately $760,000 and alleging
     damages for breach of lease for future rent in the sum of $3,250,000. The
     lease covered premises located in Ontario, Canada that were abandoned by
     the Company in April 2003. The term of the lease does not expire until
     December 31, 2010. The rent arrears of $760,000 has been accrued but
     management believes there is no merit for the breach of lease for future
     rent of $3,250,000 and accordingly has made no provision in the accounts or
     in these financial statements with respect to this matter. The Company
     intends to defend this claim vigorously.

     On October 6, 2003, the Company entered into a settlement agreement with
     the Canadian Imperial Bank of Commerce ("CIBC") in the sum of $150,000.
     This settlement was pursuant to a claim filed against Thinkpath Training
     Inc., a subsidiary of the Company, with the Superior Court of Justice of
     Ontario, Canada, Court File No. 41967, demanding payment of damages in the
     sum of $150,000 pursuant to an operating account overdraft balance. The
     settlement includes payment of the overdraft, accrued interest and legal
     fees and will be paid in monthly installments over fifteen months beginning
     October 25, 2003. At June 30, 2004, an amount of $64,000 related to the
     above settlement is included in accounts payable.

     On March 17, 2004, Johnston & Associates, LLC, a South Carolina
     corporation, filed a statement against the Company with the Superior Court
     of Justice of Ontario, Canada, Court File No. C-294-04, demanding payment
     of $60,000 pursuant to a consulting agreement entered into April 2002. The
     Company intends to defend this claim vigorously.

     c) The Company is party to various lawsuits arising from the normal course
     of business and its restructuring activities. No material provision has
     been recorded in the accounts for possible losses or gains. Should any
     expenditure be incurred by the Company for the resolution of these
     lawsuits, they will be charged to the operations of the year in which such
     expenditures are incurred.



<PAGE>

21.  SUBSEQUENT EVENTS

     Subsequent to June 30, 2004, the Company has issued an additional
     861,886,245 shares of its common stock to the convertible debenture holders
     upon the conversion of $119,500 of debentures and accrued interest.

22.  FINANCIAL INSTRUMENTS

     a) Credit Risk Management

     The Company is exposed to credit risk on the accounts receivable from its
     customers. In order to reduce its credit risk, the Company has adopted
     credit policies, which include the analysis of the financial position of
     its customers and the regular review of their credit limits. In some cases,
     the Company requires bank letters of credit or subscribes to credit
     insurance.

     b) Concentration of Credit Risk

     The Company does not believe it is subject to any significant concentration
     of credit risk. Cash and short-term investments are in place with major
     financial institutions and corporations.

     c) Interest Risk

     The long-term debt bears interest rates that approximate the interest rates
     of similar loans. Consequently, the long-term debt risk exposure is
     minimal.


     d) Fair Value of Financial Instruments

     The carrying value of the accounts receivable, bank indebtedness, and
     accounts payable on acquisition of subsidiary company approximates the fair
     value because of the short-term maturities on these items.

     The carrying amount of the long-term assets approximates the fair value of
     these assets.

     The fair value of the Company's long-term debt is estimated on the quoted
     market prices for the same or similar debt instruments. The fair value of
     the long-term debt approximates the carrying value.



23.  COMPARATIVE FIGURES

     Certain figures in the June 30, 2003 financial statements have been
     reclassified to conform with the basis of presentation used at June 30,
     2004.

<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS


         The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto and the other historical
financial information of Thinkpath Inc. contained elsewhere in this Form 10-Q.
The statements contained in this Form 10-Q that are not historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended
including statements regarding Thinkpath Inc.'s expectations, intentions,
beliefs or strategies regarding the future. Forward-looking statements include
Thinkpath Inc.'s statements regarding liquidity, anticipated cash needs and
availability and anticipated expense levels. All forward-looking statements
included in this Form 10-Q are based on information available to Thinkpath Inc.
on the date hereof, and Thinkpath Inc. assumes no obligation to update any such
forward-looking statement. It is important to note that Thinkpath Inc.'s actual
results could differ materially from those in such forward-looking statements.
All dollar amounts stated throughout this Form 10-Q are in United States dollars
unless otherwise indicated. Unless otherwise indicated, all reference to
"Thinkpath," "us," "our," and "we," refer to Thinkpath Inc. and its
subsidiaries.

OVERVIEW

         We are a global provider of engineering services including design,
build, drafting, technical publishing and documentation, and on-site engineering
support. Our customers include defense contractors, aerospace, automotive,
health care and manufacturing companies, including Lockheed Martin, General
Dynamics, General Electric, General Motors, Ford Motors, Magna, ABB and Hill-Rom
Company.

         On December 12, 2001, the Securities and Exchange Commission issued
FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting
Policies, which encourages additional disclosure with respect to a company's
critical accounting policies, the judgments and uncertainties that affect a
company's application of those policies, and the likelihood that materially
different amounts would be reported under different conditions and using
different assumptions.

         Management is required to make certain estimates and assumptions during
the preparation of the consolidated financial statements in accordance with
GAAP. These estimates and assumptions impact the reported amount of assets and
liabilities and disclosures of contingent assets and liabilities as of the date
of the consolidated financial statements. They also impact the reported amount
of net earnings during any period. Actual results could differ from those
estimates. Certain of our accounting policies and estimates have a more
significant impact on our financial statements than others, due to the magnitude
of the underlying financial statement elements.

CONSOLIDATION

         Our determination of the appropriate accounting method with respect to
our investments in subsidiaries is based on the amount of control we have,
combined with our ownership level, in the underlying entity. Our consolidated
financial statements include the accounts of our parent company and our
wholly-owned subsidiaries. All of our investments are accounted for on the cost
method. If we had the ability to exercise significant influence over operating
and financial policies of a company, but did not control such company, we would
account for these investments on the equity method.

         Accounting for an investment as either consolidated or by the equity
method would have no impact on our net income (loss) or stockholders' equity in
any accounting period, but would impact individual income statement and balance
sheet items, as consolidation would effectively "gross up" our income statement
and balance sheet. However, if control aspects of an investment accounted for by
the cost method were different, it could result in us being required to account


<PAGE>


for an investment by consolidation or the equity method. Under the cost method,
the investor only records its share of the investee's earnings to the extent
that it receives dividends from the investee; when the dividends received exceed
the investee's earnings subsequent to the date of the investor's investment, the
investor records a reduction in the basis of its investment. Under the cost
method, the investor does not record its share of losses of the investee.
Conversely, under either consolidation or equity method accounting, the investor
effectively records its share of the investee's net income or loss, to the
extent of its investment or its guarantees of the investee's debt.

         At June 30, 2004, all of our investments in non-related companies
totaling $45,669 were accounted for using the cost method. Accounting for an
investment under either the equity or cost method has no impact on evaluation of
impairment of the underlying investment; under either method, impairment losses
are recognized upon evidence of permanent losses of value.

REVENUE RECOGNITION

         We recognize revenue in accordance with Staff Accounting Bulletin No.
101, Revenue Recognition in Financial Statements, which has four basic criteria
that must be met before revenue is recognized:

- Existence of persuasive evidence that an arrangement exists; - Delivery has
occurred or services have been rendered; - The seller's price to the buyer is
fixed and determinable; and, - Collectibility is reasonably assured.

         Our various revenue recognition policies are consistent with these
criteria. We provide the services of engineering staff on a project basis. The
services provided are defined by guidelines to be accomplished by clearly
defined milestones and revenue is recognized upon the accomplishment of the
relevant milestone. As services are rendered, the costs incurred are reflected
as Work in Progress. Revenue is recognized upon the persuasive evidence of an
agreement, delivery has occurred, the fee is fixed or determinable and
collection reasonably assured.

        Prior to the sale of our IT recruitment division, we provided the
services of information technology consultants on a contract basis and revenue
was recognized as services were performed. We also placed information technology
professionals on a permanent basis and revenue was recognized upon candidates'
acceptance of employment. If we received non-refundable upfront fees for
"retained searches", the revenue was recognized upon the candidates' acceptance
of employment.

       Prior to the sale of our training division, we provided advanced training
and certification in a variety of technologies and revenue was recognized on
delivery.

       Prior to the sale of our technology division, we licensed software in the
form of a Human Capital Management System called Njoyn. The revenue associated
with providing this software consisted of an initial set up fee, customization
and training as agreed and an ongoing monthly per user fee. The allocation of
revenue to the various elements was based on our determination of the fair value
of the elements if they had been sold separately. The customers had the right to
choose a provider to host the software which was unrelated to us. The set-up fee
and customization revenue was recognized upon delivery of access to the software
with customization completed in accordance with milestones determined by the
contract. Revenue was recognized on a percentage of completion basis for



<PAGE>



contracts with significant amounts of customization and clearly defined
milestones agreed to by the customer and an enforceable right to invoice and
collect on a partial completion basis. For contracts that required significant
customization, without clearly defined milestones, and an inability to estimate
costs, revenue was reflected on a completed contract basis. Substantial
completion was determined based on customer acceptance of the software.

       Prior to the sale of our technology division, we also signed contracts
for the customization or development of SecondWave, an internet development
software in accordance with specifications of our clients. The project plan
defined milestones to be accomplished and the costs associated. These amounts
were billed as they were accomplished and revenue was recognized as the
milestones were reached. The work in progress for costs incurred beyond the last
accomplished milestone was reflected at the period end. The contracts did not
include any post-contract customer support. Additional customer support services
were provided at standard daily rates, as services were required.


CARRYING VALUE GOODWILL AND INTANGIBLE ASSETS

         Prior to January 1, 2002, our goodwill and intangible assets were
accounted for in accordance with Statement of Financial Accounting Standards No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. This statement required us to evaluate the carrying
value of our goodwill and intangible assets upon the presence of indicators of
impairment. Impairment losses were recorded when estimates of undiscounted
future cash flows were less than the value of the underlying asset. The
determination of future cash flows or fair value was based upon assumptions and
estimates of forecasted financial information that may differ from actual
results. If different assumptions and estimates were used, carrying values could
be adversely impacted, resulting in write-downs that would adversely affect our
earnings. In addition, we amortized our goodwill balances on a straight-line
basis over 30 years. The evaluation of the useful life of goodwill required our
judgment, and had we chosen a shorter time period over which to amortize
goodwill, amortization expense would have increased, adversely impacting our
operations.

         Effective January 1, 2002, we adopted Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. This statement requires
us to evaluate the carrying value of goodwill and intangible assets based on
assumptions and estimates of fair value and future cash flow information. These
assumptions and estimates may differ from actual results. If different
assumptions and estimates are used, carrying values could be adversely impacted,
resulting in write-downs that could adversely affect our earnings.

         At December 31, 2003, we performed our annual impairment test for
goodwill and determined that no adjustment to the carrying value of goodwill was
needed.

         The IT recruitment unit was tested for impairment in the third quarter
of 2002, after the annual forecasting process. Due to a decrease in margins and
the loss of key sales personnel, operating profits and cash flows were lower
than expected in the first nine months of 2002. Based on that trend, the
earnings forecast for the next two years was revised. At September 30, 2002, we
recognized a goodwill impairment loss of $57,808 in the IT recruitment unit. The
fair value of that reporting unit was estimated using the expected present value
of future cash flows.

         During the fourth quarter of 2002, the IT recruitment unit experienced
further decline, indicating impairment. The fair value of the unit was estimated
using the expected present value of future cash flows. At December 31, 2002, a
further goodwill impairment loss of $87,489 was recognized.



<PAGE>



          The Technical Publications and Engineering unit was also tested for
impairment in the fourth quarter of 2002, as operating profits, cash flows and
forecasts were lower than expected. At December 31, 2002, a goodwill impairment
loss of $1,234,962 was recognized. The fair value of that reporting unit was
estimated using the expected present value of future cash flows.

          On an ongoing basis, absent any impairment indicators, we expect to
perform a goodwill impairment test as of the end of the fourth quarter of each
year.


FOREIGN CURRENCY TRANSLATION

         The books and records of our Canadian operations are recorded in
Canadian dollars. The financial statements are converted to US dollars as we
have elected to report in US dollars consistent with Regulation S-X, Rule 3-20.
The translation method used is the current rate method which is the method
mandated by FAS 52 where the functional currency is the foreign currency. Under
the current method all assets and liabilities are translated at the current
rate, stockholders' equity accounts are translated at historical rates and
revenues and expenses are translated at average rates for the year.

         Due to the fact that items in the financial statements are being
translated at different rates according to their nature, a translation
adjustment is created. This translation adjustment has been included in
accumulated other comprehensive income.

         There can be no assurance that we would have been able to exchange
currency on the rates used in these calculations. We do not engage in exchange
rate-hedging transactions. A material change in exchange rates between United
States and Canadian dollars could have a material effect on our reported
results.


THE THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 2003

REVENUE

          For the three months ended June 30, 2004, we derived 96% of our
revenue in the United States compared to 95% for the three months ended June 30,
2003. The slight increase in total revenue derived from the United States is a
result of the decrease in engineering sales in Canada to $120,000 for the three
months ended June 30, 2004 from $130,000 for the same period last year.

         For the three months ended June 30, 2004, our primary source of revenue
was engineering services including engineering design and build, technical
publications and documentation and on-site engineering support. Engineering
services represented 98% of total revenue compared to 96% for the three months
ended June 30, 2003. Revenue from engineering services for the three months
ended June 30, 2004 increased by $910,000 or 38% to $3,280,000 compared to
$2,370,000 for the three months ended June 30, 2003. The increase in revenue
from engineering services is largely attributable to the significant increase in
sales to a major defense customer located in the United States pursuant to
contracts won in the fourth quarter 2003 and the first quarter 2004. This
customer represented approximately 38% of total revenue for the three months
ended June 30, 2004 compared to 17% for the same period last year.

         Our engineering services include the complete planning, staffing,
development, design, implementation and testing of a project. It can also
involve enterprise-level planning and project anticipation. Our specialized
engineering services include: design, build and drafting, technical publications
and documentation. We outsource our technical publications and engineering
services on both a time and materials and project basis. For project work, the
services provided are defined by guidelines to be accomplished by milestone and
revenue is recognized upon the accomplishment of the relevant milestone. As
services are rendered, the costs incurred are reflected as Work in Progress.
Revenue is recognized upon the persuasive evidence of an agreement, delivery of
the service, and when the fee is fixed or determinable and collection is
probable. Customers we provide engineering services to include General Dynamics,
General Electric, General Motors, Lockheed Martin, Boeing, Caterpillar, Cummins
Engines, Magna and ABB.



<PAGE>



         For the three months ended June 30, 2004, information technology
documentation services represented approximately 2% of our revenue compared to
4% for the three months ended June 30, 2003. Revenue from information technology
documentation services for the three months ended June 30, 2004 decreased by
$50,000 or 50% to $50,000 compared to $100,000 for the three months ended June
30, 2003.

         The substantial decrease in revenue from information technology
documentation services is primarily due to the loss of sales personnel and the
general economic slowdown in this industry. This division offers a very
specialized service, and relied on several key customers in a very localized
market. Many of these customers have either cancelled projects or have put a
number of their projects on hold. In response to these conditions, we terminated
the staff in this division in 2002 and transferred the existing contracts to
another office.

         We provide outsourced information technology documentation services in
two ways: complete project management and the provision of skilled project
resources to supplement a customer's internal capabilities. Revenue is
recognized on the same basis as technical publications and engineering
outsourcing services. Selected information technology documentation services
customers include Fidelity Investments, SMD Tech Aid Corporation, CDI
Corporation, and the Gillette Company.


GROSS PROFIT

         Gross profit is calculated by subtracting all direct costs from net
revenue. The direct costs of engineering services include wages, benefits,
software training and project expenses. The average gross profit for the
engineering division was 39% for the three months ended June 30, 2004 compared
to 35% for the three months ended June 30, 2003. Gross profit for the three
months ended June 30, 2004 increased by $420,000 or 50% to $1,260,000 compared
to $840,000 for the three months ended June 30, 2003. The increase in gross
profit for technical publications and engineering services is a result of the
increase in higher margin contracts in engineering design, technical
publications and documentation compared to the lower margins earned on
traditional on-site engineering support. In addition, we are engaging in more
time-and-materials based contracts versus fixed-cost contracts which prevents
against project and costs overruns.

         The direct costs of information technology documentation services
include contractor wages, benefits, and project expenses. The average gross
profit for the information technology division for the three months ended June
30, 2004 was 27% compared to 21% for the three months ended June 30, 2003. The
increase in gross profit in the current period is a result of the loss of a
lower margin contract which expired in the second quarter.

THE SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED
JUNE 30, 2003

REVENUE

          For the six months ended June 30, 2004, we derived 95% of our revenue
in the United States compared to 97% for the six months ended June 30, 2003. The
decrease in total revenue derived from the United States is a result of the
slight increase in engineering sales in Canada. At the beginning of 2003, a
division was created to focus on building engineering services in Ontario in
lieu of IT recruitment services, which had traditionally dominated our sales in
Canada. During the six months ended June 30, 2004, this division closed several
small contracts that resulted in revenues of $350,000 compared to $160,000 for
the same period last year.



<PAGE>



         For the six months ended June 30, 2004, our primary source of revenue
was engineering services including engineering design and build, technical
publications and documentation and on-site engineering support. Engineering
services represented 98% of total revenue compared to 95% for the six months
ended June 30, 2003. Revenue from engineering services for the six months ended
June 30, 2004 increased by $1,520,000 or 32% to $6,250,000 compared to
$4,730,000 for the six months ended June 30, 2003. The increase in revenue from
engineering services is largely attributable to the significant increase in
sales to a major defense customer located in the United States pursuant to
contracts won in the fourth quarter 2003 and the first quarter 2004. This
customer represented approximately 31% of total revenue for the six months ended
June 30, 2004 compared to 11% for the same period last year.

         Our engineering services include the complete planning, staffing,
development, design, implementation and testing of a project. It can also
involve enterprise-level planning and project anticipation. Our specialized
engineering services include: design, build and drafting, technical publications
and documentation. We outsource our technical publications and engineering
services on both a time and materials and project basis. For project work, the
services provided are defined by guidelines to be accomplished by milestone and
revenue is recognized upon the accomplishment of the relevant milestone. As
services are rendered, the costs incurred are reflected as Work in Progress.
Revenue is recognized upon the persuasive evidence of an agreement, delivery of
the service, and when the fee is fixed or determinable and collection is
probable. Customers we provide engineering services to include General Dynamics,
General Electric, General Motors, Lockheed Martin, Boeing, Caterpillar, Cummins
Engines, Magna and ABB.

         For the six months ended June 30, 2004, information technology
documentation services represented approximately 2% of our revenue compared to
5% for the six months ended June 30, 2003. Revenue from information technology
documentation services for the six months ended June 30, 2004 decreased by
$100,000 or 43% to $130,000 compared to $230,000 for the six months ended June
30, 2003.

         The decrease in revenue from information technology documentation
services is primarily due to the loss of sales personnel and the general
economic slowdown in this industry. This division offers a very specialized
service, and relied on several key customers in a very localized market. Many of
these customers have either cancelled projects or have put a number of their
projects on hold. In response to these conditions, we terminated the staff in
this division in 2002 and transferred the existing contracts to another office.

         We provide outsourced information technology documentation services in
two ways: complete project management and the provision of skilled project
resources to supplement a customer's internal capabilities. Revenue is
recognized on the same basis as technical publications and engineering
outsourcing services. Selected information technology documentation services
customers include Fidelity Investments, SMD Tech Aid Corporation, CDI
Corporation, and the Gillette Company.


GROSS PROFIT

         Gross profit is calculated by subtracting all direct costs from net
revenue. The direct costs of engineering services include wages, benefits,
software training and project expenses. The average gross profit for the
engineering division was 36% for the six months ended June 30, 2004 compared to
32% for the six months ended June 30, 2003. Gross profit for the six months
ended June 30, 2004 increased by $720,000 or 47% to $2,250,000 compared to
$1,530,000 for the six months ended June 30, 2003. The increase in gross profit
for technical publications and engineering services is a result of the increase
in higher margin contracts in engineering design, technical publications and
documentation compared to the lower margins earned on traditional on-site
engineering support. In addition, we are engaging in more time-and-materials
based contracts versus fixed-cost contracts which prevents against project and
costs overruns.


<PAGE>




         The direct costs of information technology documentation services
include contractor wages, benefits, and project expenses. The average gross
profit for the information technology division for the six months ended June 30,
2004 was 21% compared to 20% for the six months ended June 30, 2003.

























<PAGE>


RESULTS OF OPERATIONS




                      STATEMENTS OF OPERATIONS--PERCENTAGES
                                   (UNAUDITED)

                                           THREE MONTHS          SIX MONTHS
                                          ENDED JUNE 30,       ENDED JUNE 30,
                                          --------------      ---------------

                                          2004      2003      2004       2003
                                          ----      ----      ----       ----


REVENUE                                   100 %      100 %     100 %      100 %
                                         ----       ----      ----       ----

COST OF SERVICES                           62 %       65 %      64 %       68 %
                                         ----       ----      ----       ----
GROSS PROFIT                               38 %       35 %      36 %       32 %
                                         ----       ----      ----       ----
EXPENSES
   Administrative                          18 %       22 %      18 %       24 %
   Selling                                 10 %       10 %      10 %       10 %
   Depreciation and amortization            4 %        8 %       4 %        8 %
                                         ----       ----      ----       ----

Income (loss) from continuing
operations before interest charges          6%        (5)%       4%      (10)%

  Interest charges                         31 %       32 %      28 %      102 %
                                         ----       ----      ----       ----
Loss from continuing operations
before income taxes                       (25)%      (37)%     (24)%     (112)%

   Income taxes                            -- %       -- %      -- %       -- %
                                         ----       ----      ----       ----
Loss from continuing operations           (25)%      (37)%     (24)%     (112)%

Income (loss) from discontinued
operations                                 -- %       11 %      -- %        6 %

Net Loss                                  (25)%      (26)%     (24)%     (106)%
                                         ----       ----      ----       ----



<PAGE>


THE THREE MONTHS ENDED JUNE 30, 2004 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 2003

          Revenue. Revenue for the three months ended June 30, 2004 increased by
$860,000 or 35%, to $3,330,000, as compared to $2,470,000 for the three months
ended June 30, 2003. The increase is primarily attributable to new contracts
with existing defense, automotive, and aerospace customers that were awarded in
the fourth quarter of 2003.

         Cost of Services. The cost of services for the three months ended June
30, 2004 increased by $430,000, or 27%, to $2,050,000, as compared to $1,620,000
for the three months ended June 30, 2003. The increase in cost of services is
consistent with the increase in revenue. However, the cost of services as a
percentage of revenue decreased from 65% for the three months ended June 30,
2003 to 62% for the three months ended June 30, 2004.

         Gross Profit. Gross profit for the three months ended June 30, 2004
increased by $410,000, or 48%, to $1,270,000 compared to $860,000 for the three
months ended June 30, 2003. The increase in gross profit is consistent with the
increase in revenue. As a percentage of revenue, gross profit increased from 35%
for the three months ended June 30, 2003 to 38% for the three months ended June
30, 2004. The increase in gross profit is a result of the increase in higher
margin contracts in engineering design, technical publications and documentation
compared to the lower margins earned on traditional on-site engineering support.
In addition, we are engaging in more time-and-materials based contracts versus
fixed-cost contracts which prevents against project and costs overruns.

         Expenses. Expenses for the three months ended June 30, 2004 increased
by $80,000, or 8%, to $1,060,000 compared to $980,000 for the three months ended
June 30, 2003.

         Administrative expenses increased by $40,000 or 7% to $580,000 for the
three months ended June 30, 2004 compared to $540,000 for the three months ended
June 30, 2003. The increase reflects the additional rent and general office
costs associated with the increased project work in the engineering services
division in the second quarter of 2004.

         Selling expenses for the three months ended June 30, 2004 increased by
$100,000, or 40%, to $350,000 from $250,000 for the three months ended June 30,
2003. The increase in selling expenses is consistent with the increase in sales
as the sales team's compensation is commissioned based. In addition, new sales
staff were hired in the second quarter of 2004.

        For the three months ended June 30, 2004, depreciation and amortization
expenses decreased by $40,000, or 22%, to $140,000 from $180,000 for the three
months ended June 30, 2003.

        0perating Income (Loss) from Continuing Operations. For the three months
ended June 30, 2004, income from continuing operations increased by $330,000 or
275% to income of $210,0000 as compared to a loss of $120,000 for the three
months ended June 30, 2003.

         Interest Charges. For the three months ended June 30, 2004, interest
charges increased by $230,000, or 29%, to $1,030,000 from $800,000 for the three
months ended June 30, 2003. This increase is attributable to the higher value of
the beneficial conversion feature on all issued convertible debentures which was
determined to be $872,845 for the three months ended June 30, 2004 compared to
$539,142 for the three months ended June 30, 2003.

         Loss from Continuing Operations before Income Taxes. Loss from
continuing operations before income taxes for the three months ended June 30,
2004 decreased by $100,000 or 11% to a loss of $820,000 as compared to a loss of
$920,000 for the three months ended June 30, 2003.


<PAGE>



         Income Taxes. Income taxes for the three months ended June 30, 2004
decreased by $5,000 to $3,000 as compared to $8,000 for the three months ended
June 30, 2003.

         Loss from Continuing Operations. Loss from continuing operations for
the three months ended June 30, 2004 decreased by $110,000 or 12% to a loss of
$820,000 compared to a loss of $930,000 for the three months ended June 30,
2003.

         Income (Loss) from Discontinued Operations. Operations of the
technology, training and IT recruitment divisions have been reported as
discontinued for the three months ended June 30, 2004 and 2003.

          Effective March 8, 2002, we sold our technology division, Njoyn
Software Incorporated to Cognicase Inc., a Canadian company. As part of the
transaction, Cognicase assumed all of the staff in our technology division,
including the employees of TidalBeach Inc. We will not have future revenues from
either the Njoyn or SecondWave products.

         There was no technology revenue for the three months ended June 30,
2004 and 2003. The operating loss from the technology division for the three
months ended June 30, 2004 was $1,000 and $9,000 for the same period in 2003.

         Effective May 1, 2002, we signed an agreement with triOS Training
Centres Limited, an Ontario company, for the sale of certain assets of the
Toronto training division, Thinkpath Training for a nominal amount of cash and
the assumption of all prepaid training liabilities. As part of the transaction,
triOS assumed the Toronto training staff and is subletting the classroom
facilities.

         On November 1, 2002, we entered into a series of agreements with
Thinkpath Training LLC, a New York company, for the sale of certain assets of
the New York training division, Thinkpath Training 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.

          As a result of these two transactions, we will not have future
revenues from either training division. There was no training revenue for the
three months ended June 30, 2004 and $94,000 for the same period in 2003. The
operating loss from the training division for the three months ended June 30,
2004 was $13,000 compared to net income of $66,000 for the same period in 2003.

         Effective June 27, 2003, we signed an agreement with Brainhunter.com
Ltd., an Ontario company, for the purchase of certain assets of the Toronto IT
recruitment division for a nominal amount of cash and the assumption of all
employee liabilities. The gain on disposal of $190,627 has been reflected in the
Income (loss) from discontinued operations in 2003. As a result of this
transaction, we will not have future revenues from the IT recruitment division
and therefore the operations have been reported as discontinued.

         There was no IT recruitment revenue for the three months ended June 30,
2004 and $625,000 for the same period in 2003. Net income from the IT
recruitment division for the three months ended June 30, 2004 was nil and
$32,000 in 2003.

         Net Loss. Net loss increased by $190,000 or 29% to $840,000 for the
three months ended June 30, 2004 compared to $650,000 for the three months ended
June 30, 2003.




<PAGE>



THE SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO THE SIX MONTHS ENDED
JUNE 30, 2003

          Revenue. Revenue for the six months ended June 30, 2004 increased by
$1,420,000 or 29%, to $6,380,000, as compared to $4,960,000 for the six months
ended June 30, 2003. The increase is primarily attributable to new contracts
with existing defense, automotive, and aerospace customers that were awarded in
the fourth quarter of 2003.

         Cost of Services. The cost of services for the six months ended June
30, 2004 increased by $730,000, or 22%, to $4,110,000, as compared to $3,380,000
for the six months ended June 30, 2003. The increase in cost of services is
consistent with the increase in revenue. However, the cost of services as a
percentage of revenue decreased from 68% for the six months ended June 30, 2003
to 64% for the six months ended June 30, 2004.

         Gross Profit. Gross profit for the six months ended June 30, 2004
increased by $690,000, or 44%, to $2,270,000 compared to $1,580,000 for the six
months ended June 30, 2003. The increase in gross profit is consistent with the
increase in revenue. As a percentage of revenue, gross profit increased from 32%
for the six months ended June 30, 2003 to 36% for the six months ended June 30,
2004. The increase in gross profit is a result of the increase in higher margin
contracts in engineering design, technical publications and documentation
compared to the lower margins earned on traditional on-site engineering support.
In addition, we are engaging in more time-and-materials based contracts versus
fixed-cost contracts which prevents against project and costs overruns.

         Expenses. Expenses for the six months ended June 30, 2004 increased by
$20,000, or 1%, to $2,090,000 compared to $2,070,000 for the six months ended
June 30, 2003.

         Administrative expenses decreased by $40,000 or 3% to $1,150,000 for
the six months ended June 30, 2004 compared to $1,190,000 for the six months
ended June 30, 2003. The decrease reflects the reduction in administrative
expenses as a result of cost cutting in the first quarter of 2004 specifically
in the areas of salaries and general office expenses.

         Selling expenses for the six months ended June 30, 2004 increased by
$160,000, or 32%, to $660,000 from $500,000 for the six months ended June 30,
2003. The increase in selling expenses is consistent with the increase in sales
as the sales team's compensation is commissioned based. In addition, new sales
staff were hired in the second quarter of 2004.

        For the six months ended June 30, 2004, depreciation and amortization
expenses decreased by $100,000, or 26%, to $280,000 from $380,000 for the six
months ended June 30, 2003.

        0perating Income (Loss) from Continuing Operations. For the six months
ended June 30, 2004, income from continuing operations increased by $680,000 or
136% to income of $180,000 as compared to a loss of $500,000 for the six months
ended June 30, 2003.

         Interest Charges. For the six months ended June 30, 2004, interest
charges decreased by $3,300,000, or 65%, to $1,780,000 from $5,080,000 for the
six months ended June 30, 2003. This decrease is attributable to the higher
value of the beneficial conversion feature on all issued convertible debentures
at June 30, 2003, which was determined to be $4,474,826 compared to $1,488,421
for the six months ended June 30, 2004.

         Loss from Continuing Operations before Income Taxes. Loss from
continuing operations before income taxes for the six months ended June 30, 2004
decreased by $3,970,000 or 71% to a loss of $1,600,000 as compared to a loss of
$5,570,000 for the six months ended June 30, 2003.



<PAGE>



         Income Taxes. Income taxes for the six months ended June 30, 2004
decreased by $8,000 to $4,000 as compared to $12,000 for the six months ended
June 30, 2003.

         Loss from Continuing Operations. Loss from continuing operations for
the six months ended June 30, 2004 decreased by $3,980,000 or 71% to a loss of
$1,600,000 compared to a loss of $5,580,000 for the six months ended June 30,
2003.

         Income (Loss) from Discontinued Operations. Operations of the
technology, training and IT recruitment divisions have been reported as
discontinued for the six months ended June 30, 2004 and 2003.

         There was no technology revenue for the six months ended June 30, 2004
and 2003. The operating loss from the technology division for the six months
ended June 30, 2004 was $3,000 and $12,000 for the same period in 2003.

           There was no training revenue for the six months ended June 30, 2004
and $162,000 for the same period in 2003. The operating loss from the training
division for the six months ended June 30, 2004 was $24,000 compared to net
income of $94,000 for the same period in 2003.

         There was no IT recruitment revenue for the six months ended June 30,
2004 and $1,430,000 for the same period in 2003. Net income from the IT
recruitment division for the six months ended June 30, 2004 was nil and $11,000
in 2003. The gain on disposal of the IT recruitment division of $190,627 has
been reflected in the Income (loss) from discontinued operations in 2003.

         Net Loss. Net loss decreased by $3,670,000 or 69% to $1,630,000 for the
six months ended June 30, 2004 compared to $5,300,000 for the six months ended
June 30, 2003.















<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         With insufficient working capital from operations, our primary sources
of cash are a receivable discount facility with Morrison Financial Services
Limited and proceeds from the sale of convertible debentures. Our primary
capital requirements include debt service and working capital needs.

         Our facility with Morrison Financial Services Limited is a receivable
discount facility whereby we are able to borrow up to 75% of qualifying
receivables at 30% interest per annum. At June 30, 2004, the balance on the
receivable discount facility was $935,000 based on 75% of qualifying accounts
receivable.

           On January 8, 2004, we sold $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 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 for a
period of seven years from closing at a purchase price of $.0175 per share. We
are 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, we entered into a new share purchase agreement
with Bristol Investment Fund, Ltd. for the issuance and sale 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 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 March 25, 2011 at a purchase price of $.000417 per share. We
are 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, we entered into a new share purchase agreement with
Tazbaz Holdings Limited for the issuance and sale of a $100,000 Convertible
Debenture and 250,000,000 warrants. 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 March 29, 2011 at a purchase
price of $.0004 per share. We are 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, we 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 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 for a
period of seven years from closing at a purchase price of $.00025 per share. We
are 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.



<PAGE>



           On May 24, 2004 and June 18, 2004, we entered into new share purchase
agreements with Tazbaz Holdings Limited for the issuance and sale of $300,000
principal amount Convertible Debentures and 1,157,142,857 warrants. 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 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
for a period of seven years from closing at a purchase price of $.00025 per
share. We are 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.

           The proceeds of $1,175,000 received by us in the six months ended
June 30, 2004 were allocated between the warrants and the debenture without
warrants on a pro rata basis. Paid in capital has been credited by the value of
the warrants in the amount of $871,104.

           At June 30, 2004, the value of the beneficial conversion feature on
all issued convertible debentures was determined to be $1,488,421 which was
credited to paid in capital and charged to earnings as interest expense.

         At June 30, 2004, we had cash of $770,000 and a working capital
deficiency of $960,000. At June 30, 2004, we had a cash flow deficiency from
operations of $840,000, largely attributable to the increase in accounts
receivable of $470,000 and the decrease in accounts payable of $600,000. At June
30, 2003, we had cash of $580,000 and a working capital deficiency of
$2,470,000. At June 30, 2003, we had cash flow from operations of $120,000.

         At June 30, 2004, we had a cash flow deficiency from investing
activities of $80,000 related to the purchase of capital assets. At June 30,
2003, we had cash flow from investing activities of $80,000 largely attributable
to the proceeds received on the disposal of our IT Recruitment division of
$150,000.

         At June 30, 2004 we had cash flow from financing activities of
$1,160,000 attributable primarily to proceeds of $1,175,000 from the sale of
convertible debentures and proceeds of $230,000 from the exercise of warrants.
At June 30, 2003, we had a cash flow from financing activities of $200,000
attributable primarily to proceeds of $1,450,000 from the sale of convertible
debentures, which was offset by the reduction in the receivable discount
facility of $1,240,000.

        At June 30, 2004 we had a loan balance of $280,000 with an individual,
Terry Lyons. Effective March 25, 2004, we amended our loan agreement with Terry
Lyons. The balance of accrued interest was added to the original principal
amount of $259,356 for a new principal balance of $299,768. Monthly payments of
$10,000 began April 5, 2004 and will continue until the full amount of the note,
including interest is paid in full. The interest rate was reduced from 30% per
annum to US prime plus 14%. This loan is subordinated to Morrison Financial
Services Limited.

         At June 30, 2004, we had approximately $12,000 outstanding on various
capital leases with various payment terms and interest rates. The average
balance on the terms of leases are 12 months and cover primarily the hardware
and various software applications required to support our engineering division.

         At June 30, 2004, we had a note payable of $224,000 owed to Roger
Walters, the former shareholder of CadCam Inc. Principal payments of $4,000 per
month were to begin September 1, 2002 until August 1, 2007. This note is
non-interest bearing and is subordinated to Morrison Financial Services Limited
and the 12% Senior Secured Convertible Debenture holders. We have not made any
principal payments to Mr. Walters since December 2002 and we are currently in
default of the loan agreement. As a result of the default, the principal balance
bears interest at 12% per annum until payment is made.


<PAGE>


         At June 30, 2004, we had a note payable of $630,000 owed to Denise
Dunne-Fushi, the vendor of MicroTech Professionals Inc. Principal payments of
$10,000 per month were to begin November 1, 2002 bearing 5% interest until
October 1, 2007. In addition, we were obligated to cover the monthly expense
associated with Ms. Dunne-Fushi's family health benefits and a vehicle lease
until May 2004.

         The note is secured under a general security agreement but is
subordinated to Morrison Financial Services Limited and the 12% Senior Secured
Convertible Debenture holders. We have not made scheduled principal payments to
Ms. Dunne-Fushi since December 2002 and are currently in default of the loan
agreement. As a result of the default, Ms. Dunne-Fushi has the option of
enforcing the security she holds.

         Although we believe that our current working capital and cash flows
from restructured operations will be adequate to meet our anticipated cash
requirements going forward, we have accrued liabilities and potential
settlements of outstanding claims that may require additional funds. We will
have to raise these funds through equity or debt financing. There can be no
assurance that additional financing will be available at all or that if
available, such financing will be obtainable on terms favorable to us and would
not be dilutive.

         Despite our recurring losses and negative working capital, we believe
that we have developed a business plan that, if successfully implemented, could
substantially improve our operational results and financial condition. However,
we can give no assurances that our current cash flows from operations, if any,
borrowings available under our receivable discount facility, and proceeds from
the sale of securities, will be adequate to fund our expected operating and
capital needs for the next twelve months. The adequacy of our cash resources
over the next twelve months is primarily dependent on our operating results and
our ability to raise additional financing, which are subject to substantial
uncertainties. Cash flow from operations for the next twelve months will depend,
among other things, upon the effect of the current economic slowdown on our
sales and management's ability to implement our business plan. The failure to
return to profitability and optimize operating cash flow in the short term, and
to successfully raise additional financing, could have a material adverse effect
on our liquidity position and capital resources, which may force us to curtail
our operations.


RECENT ACCOUNTING PRONOUNCEMENTS

         In April 2002, the FASB issued SFAS No. 145, which, among other
factors, changed the presentation of gains and losses on the extinguishments of
debt. Any gain or loss on extinguishments of debt that does not meet the
criteria in APB Opinion 30, "Reporting the Results of Operations - Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions", shall be included in operating
earnings and not presented separately as an extraordinary item. We will adopt
SFAS No. 145 at the beginning of fiscal year 2003 and do not expect the
provisions of SFAS No. 145 to have any impact on our financial position, results
of operations or cash flows.

       In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses accounting for
restructuring and similar costs. SFAS No.146 supersedes previous accounting
guidance, principally Emerging Issues Task Force Issue, or EITF, No. 94-3
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit on Activity (including Certain Costs Incurred in a Restructuring)". We
will adopt the provisions of SFAS No. 146 for restructuring activities initiated
after December 31, 2002. SFAS No. 146 may affect the timing of recognizing
future restructuring costs as well as the amounts recognized.



<PAGE>



        In January 2003, the FASB issued SFAS No. 148, Accounting for Stock
-Based Compensation - Transition and Disclosures. This statement provides
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
statement also amends the disclosure requirements of SFAS No. 123 to require
more prominent and frequent disclosures in the financial statements about the
effects of stock-based compensation. The transitional guidance and annual
disclosure provisions of this Statement is effective for the December 31, 2002
financial statements. The interim reporting disclosure requirements is effective
for our March 31, 2003 financial statements.

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("Interpretation"). This Interpretation
elaborates on the existing disclosure requirement for most guarantees including
loan guarantees, and clarifies that at the time a company issues a guarantee,
the company must recognize an initial liability for the fair market value of the
obligations it assumes under that guarantee and must disclose that information
in its interim and annual financial statements. The initial recognition and
measurement provisions of the Interpretation apply on a prospective basis to
guarantees issued or modified after December 31, 2002.

        In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities," which
addresses consolidation by business enterprises of variable interest entities.
In general, a variable interest entity is a corporation, partnership, trust, or
any other legal structure used for business purposes that either (a) does not
have equity investors with voting rights or (b) has equity investors that do not
provide sufficient financial resources for the entity to support its activities.
A variable interest entity often holds financial assets, including loans or
receivables, real estate or other property. A variable interest entity may be
essentially passive or it may engage in research and development or other
activities on behalf of another company. The objective of Interpretation No. 46
is not to restrict the use of variable interest entities but to improve
financial reporting by companies involved with variable interest entities. Until
now, a company generally has included another entity in its consolidated
financial statements only if it controlled the entity through voting interests.
Interpretation No. 46 changes that by requiring a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. The consolidation
requirements of Interpretation No. 46 apply immediately to variable interest
entities created after January 31, 2003. The consolidation requirements apply to
entities created before January 31, 2003, in the first fiscal year or interim
period beginning after June 15, 2003. Certain of the disclosure requirements
apply in all financial statements issued after January 31, 2003, regardless of
when the variable interest entity was established. We do not have any variable
interest entities, and, accordingly, adoption is not expected to have a material
effect on our financial position, results of operations or cash flows.

        In April 2003, the Financial Accounting Standards Board issued Statement
No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities". The Statement amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under Statement 133. The amendments set
forth in Statement 149 improve financial reporting by requiring that contracts
with comparable characteristics be accounted for similarly. In particular, this
Statement clarifies under what circumstances a contract with an initial net
investment meets the characteristic of a derivative as discussed in Statement
133. In addition, it clarifies when a derivative contains a financing component
that warrants special reporting in the statement of cash flows. This Statement
is effective for contracts entered into or modified after June 30, 2003 with
certain exceptions. We do not believe that the adoption of Statement No. 149
will have a material effect on our financial position, results of operations or
cash flows.


<PAGE>




         In May 2003, the Financial Accounting Standards Board issued Statement
No. 150, "Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity". The Statement specifies that certain instruments
within its scope embody obligations of the issuer and that, therefore, the
issuer must classify them as liabilities. This Statement is effective
immediately for all financial instruments entered into or modified after May 31,
2003. For all other instruments, the Statement goes into effect at the beginning
of the first interim period beginning after June 15, 2003. For contracts that
were created or modified before May 31, 2003 and still exist at the beginning of
the first interim period beginning after June 30, 2003, entities should record
the transition to Statement No. 150 by reporting the cumulative effect of a
change in an accounting principle. Statement No. 150 prohibits entities from
restating financial statements for earlier years presented. We do not believe
that the adoption of Statement No. 150 will have a material effect on our
financial position, results of operations or cash flows.


RECENT EVENTS


         Subsequent to June 30, 2004, we have issued an additional 861,886,245
shares of our common stock to the convertible debenture holders upon the
conversion of $119,500 of debentures and accrued interest.













<PAGE>


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        See heading "Foreign Currency Translation" in Management's Discussion
and Analysis of Financial Condition and Results Of Operations.


ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-14(c) and 15d-14(c) under the Securities and Exchange Act of 1934,
as amended (the "Exchange Act")) as of a date within 45 days prior to the filing
date of this Form 10-Q filed for the three months ended June 30, 2004 (the
"Evaluation Date"). Based on such evaluation, such officers have concluded that,
as of the Evaluation Date, our disclosure controls and procedures are effective
in alerting the officers on a timely basis to material information relating to
us (including our wholly owned subsidiaries) required to be included in our
reports filed or submitted under the Exchange Act.

(b) Changes in Internal Controls.

Since the Evaluation Date, there have not been any significant changes in our
internal controls or in other factors that could significantly affect such
controls.



                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         We are party to the following pending legal proceedings:

         On October 1, 2003, SITQ National Inc. ("SITQ'), a former landlord,
filed a statement against us and our Directors, with the Superior Court of
Justice of Ontario, Canada, Court File No. 03-CV-256327CM3, demanding payment of
rent arrears of approximately $760,000 and alleging damages for breach of lease
for future rent in the sum of $3,250,000. The lease covered premises located in
Ontario, Canada that we abandoned in April 2003. The term of the lease does not
expire until December 31, 2010. The rent arrears of $760,000 has been accrued
but we believe there is no merit for the breach of lease for future rent of
$3,250,000 and accordingly have made no provision in the accounts with respect
to this matter. We intend to defend this claim vigorously.

         On March 17, 2004, Johnston & Associates, LLC, a South Carolina
corporation, filed a statement against us with the Superior Court of Justice of
Ontario, Canada, Court File No. C-294-04, demanding payment of $60,000 pursuant
to a consulting agreement entered into April 2002. We intend to defend this
claim vigorously.


         We are not party to any other material litigation, pending or
otherwise.



ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

                 During the second quarter 2004, we sold convertible debentures
and warrants for an aggregate of $700,000 pursuant to a share purchase agreement
dated March 25, 2004. The debt is convertible into common stock at a discount to
the market. In connection with the offering, we issued an aggregate of


<PAGE>




2,839,495,799 warrants to purchase common stock. Pursuant to the terms of the
initial offering as reported in the Form 8-K that we filed with the SEC on March
30, 2004, investors in that offering were granted the right to purchase
$1,000,000 of convertible debt. As a result of the sales made during the second
quarter 2004, there remain no convertible debentures and warrants available for
purchase by the investors as at June 30, 2004.


        The proceeds from the sale of convertible debentures and warrants were
used to repay debt obligations and for working capital. The offering, which was
made to non-U.S. residents only, was exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act") pursuant to
Regulation S promulgated thereunder.


                  During the second quarter 2004, we issued 250,000,000 shares
of common stock, no par value per share, to Jeffrey W. Flannery pursuant to an
Advisory and Consulting Agreement dated May 26, 2004. Under the terms of the
agreement, Mr. Flannery will provide marketing and business development
consulting services to the company for a period of one year. The shares were
registered under Form S-8 as filed with the SEC on June 1, 2004




ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5. OTHER INFORMATION

         None.







<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

Exhibit 31. Rule 13a-14(a)/15d-14(a) Certifications.
Exhibit 32.1 Certification by the Chief Executive Officer Relating to a Periodic
Report Containing Financial Statements.* Exhibit 32.2 Certification by the Chief
Financial Officer Relating to a Periodic Report Containing Financial
Statements.*

(b) Reports on Form 8-K.



* The Exhibit attached to this Form 10-Q shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange
Act") or otherwise subject to liability under that section, nor shall it be
deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, or the Exchange Act, except as expressly set forth by specific
reference in such filing.
















<PAGE>


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                 THINKPATH INC.


      Dated: August 23, 2004 By: /s/ Declan French By: /s/ Kelly Hankinson
                             ---------------------       -----------------------
                             Declan French               Kelly L. Hankinson
                             Chief Executive Officer     Chief Financial Officer