UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

                                       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 |_|

INDICATE BY CHECK MARK WHETHER THE REGISTRANT IS A SHELL COMPANY (AS DEFINED IN
                 RULE 12B-2 OF THE EXCHANGE ACT) YES | | NO |X|

           AS OF AUGUST 21, 2006 THERE WERE 9,988,082 SHARES OF COMMON
                   STOCK, NO PAR VALUE PER SHARE, OUTSTANDING.

    TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES | | NO |X|
<PAGE>

                                 THINKPATH INC.
                  JUNE 30, 2006 QUARTERLY REPORT ON FORM 10-QSB
                                TABLE OF CONTENTS

                         PART I - FINANCIAL INFORMATION

                                                                     Page Number

Item 1.  Financial Statements

          Interim Consolidated Balance Sheets as of June 30, 2006 and
          December 31, 2005................................................  4-5
          Interim Consolidated Statements of Operations for the three and six
          months ended June 30, 2006 and 2005..............................    6
          Interim Consolidated Statements of Changes in Stockholders' Equity
          for the six months ended June 30, 2006 and the year ended
          December 31, 2005................................................    7
          Interim Consolidated Statements of Cash Flows for the six months
          ended June 30, 2006 and 2005.....................................    8
          Notes to Interim Consolidated Financial Statements............... 9-32

Item 2.  Management's Discussion and Analysis or Plan of Operation.........33-48

Item 3.  Controls and Procedures...........................................   49

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings ................................................   49

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.......   50

Item 3.  Defaults Upon Senior Securities ..................................   50

Item 4.  Submission of Matters to a Vote of Security Holders ..............   50

Item 5.  Other Information ................................................   50

Item 6.  Exhibits and Reports on Form 8-K .................................   51



                                      -2-
<PAGE>


ITEM 1.  FINANCIAL STATEMENTS


                                 THINKPATH INC.

                    INTERIM CONSOLIDATED FINANCIAL STATEMENTS

                               AS OF JUNE 30, 2006

                        (AMOUNTS EXPRESSED IN US DOLLARS)


                                      -3-
<PAGE>

THINKPATH INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2006 (UNAUDITED) AND DECEMBER 31, 2005
(AMOUNTS EXPRESSED IN US DOLLARS)

                                                         6/30/2006   12/31/2005
                                                        ----------   ----------
                                                                 $            $

                                     ASSETS

CURRENT ASSETS
    Cash                                                   602,824      123,056
    Accounts receivable (note 5)                         2,087,565    1,841,338
    Prepaid expenses                                       105,222      143,273
                                                        ----------   ----------
                                                         2,795,611    2,107,667

PROPERTY AND EQUIPMENT (note 6)                            859,571      577,689

GOODWILL (note 7)                                        4,402,814    2,507,552

OTHER ASSETS (note 8)                                      830,588      259,344
                                                        ----------   ----------
                                                         8,888,584    5,452,252
                                                        ==========   ==========

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

                                      -4-
<PAGE>

THINKPATH INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2006 (UNAUDITED) AND DECEMBER 31, 2005
(AMOUNTS EXPRESSED IN US DOLLARS)

                                                      6/30/2006     12/31/2005
                                                    ------------   ------------
                                                               $              $

                                   LIABILITIES

CURRENT LIABILITIES
    Laurus revolving note (note 12)                    2,351,271             --
    Convertible financing -  Laurus  (note 12)                --      1,169,156
    Convertible financing - derivatives (note 12)             --        424,241
    Accounts payable (note 13)                         1,543,328      1,166,152
    Current portion of long-term debt (note 14)          687,903        124,326
                                                    ------------   ------------
                                                       4,582,502      2,883,875

    LONG-TERM DEBT (note 14)                           1,002,237         69,826
    CONVERTIBLE FINANCING - DERIVATIVES (note 12)        787,371        480,948
    DEFERRED TAX LIABILITY (note 16)                     107,711             --
                                                    ------------   ------------
                                                       6,479,821      3,434,649
                                                    ============   ============

COMMITMENTS AND CONTINGENCIES (note 22)

                              STOCKHOLDERS' EQUITY

CAPITAL STOCK (note 15)                               42,198,530     40,486,219

DEFICIT                                              (38,854,872)   (37,518,943)

ACCUMULATED OTHER COMPREHENSIVE LOSS (note 17)          (934,895)      (949,673)
                                                    ------------   ------------
                                                       2,408,763      2,017,603
                                                    ------------   ------------
                                                       8,888,584      5,452,252
                                                    ============   ============

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


                                      -5-
<PAGE>


THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (RESTATED)
(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                      3 months ended June 30,     6 months ended June 30,
                                                                    Restated                    Restated
                                                                      2005                        2005
                                                        2006        (note 25)       2006        (note 25)
                                                     ----------    ----------    ----------    ----------
                                                          $             $             $             $
<S>                                                  <C>           <C>           <C>           <C>
REVENUE                                               3,793,823     3,603,870     6,704,137     7,206,809
COST OF SERVICES                                      2,558,950     2,535,022     4,660,079     4,865,792
                                                     ----------    ----------    ----------    ----------
GROSS PROFIT                                          1,234,873     1,068,848     2,044,058     2,341,017
                                                     ----------    ----------    ----------    ----------
EXPENSES
    Administrative                                      885,860       655,119     1,479,085     1,244,153
    Selling                                             464,660       325,085       938,476       693,119
    Depreciation and amortization                       175,775        85,731       263,707       167,269
    Write down of property and equipment                     --            --            --         3,851
    Debt forgiveness                                    (78,062)      (66,150)      (78,062)      (66,150)
    Financing costs and mark-to-market adjustments      577,756         4,523       453,549         4,523
                                                     ----------    ----------    ----------    ----------
                                                      2,025,989     1,004,308     3,056,755     2,046,765
                                                     ----------    ----------    ----------    ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS
    BEFORE INTEREST CHARGES AND INCOME TAXES           (791,116)       64,540    (1,012,697)      294,252

    Interest Charges                                    161,964       822,877       304,195     1,181,371
                                                     ----------    ----------    ----------    ----------
LOSS FROM CONTINUING OPERATIONS BEFORE
    INCOME TAXES                                       (953,080)     (758,337)   (1,316,892)     (887,119)

    Income Taxes (note 16)                               11,194        63,502        19,037        70,942
                                                     ----------    ----------    ----------    ----------
LOSS FROM CONTINUING OPERATIONS                        (964,274)     (821,839)   (1,335,929)     (958,061)

INCOME FROM DISCONTINUED OPERATIONS (note 18)                --        23,693            --        19,096
                                                     ----------    ----------    ----------    ----------
NET LOSS                                               (964,274)     (798,146)   (1,335,929)     (938,965)
                                                     ==========    ==========    ==========    ==========
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
    OUTSTANDING BASIC AND DILUTED*                    4,369,147     4,000,971     4,369,147     3,665,040
                                                     ==========    ==========    ==========    ==========
LOSS FROM CONTINUING OPERATIONS PER WEIGHTED
    AVERAGE COMMON STOCK BASIC AND DILUTED                (0.22)        (0.21)        (0.31)        (0.26)
                                                     ==========    ==========    ==========    ==========
LOSS FROM DISCONTINUED OPERATIONS PER WEIGHTED
    AVERAGE COMMON STOCK BASIC AND DILUTED                   --          0.01            --          0.01
                                                     ==========    ==========    ==========    ==========
NET LOSS PER WEIGHTED AVERAGE COMMON STOCK
    BASIC AND DILUTED                                     (0.22)        (0.20)        (0.31)        (0.26)
                                                     ==========    ==========    ==========    ==========
</TABLE>

* Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

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

                                      -6-
<PAGE>

THINKPATH INC.

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND THE YEAR ENDED DECEMBER 31, 2005
(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                         PREFERRED                                                      ACCUMULATED
                                       COMMON STOCK          STOCK       CAPITAL                                             OTHER
                                          NUMBER OF      NUMBER OF         STOCK                    COMPREHENSIVE    COMPREHENSIVE
                                            SHARES*         SHARES       AMOUNTS        DEFICIT              LOSS             LOSS
----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>          <C>           <C>             <C>              <C>
Balance as of December 31, 2004           2,720,493                   39,686,047    (34,683,637)                          (940,764)
                                       ========================================================                      =============
Net loss for the period                          --                           --     (2,835,306)       (2,835,306)

Other comprehensive loss, net of tax:

  Foreign currency translation
  adjustments                                                                                              (8,909)          (8,909)
                                                                                                    -------------
Comprehensive loss                                                                                     (2,844,215)
                                                                                                    =============
Common stock repurchased for
cancellation (note 11)                     (626,384)                    (123,110)            --

Conversion of 12% senior secured
convertible debentures                    1,235,100                      317,168             --

Interest on 12% senior secured
convertible debentures                      131,395                       21,448             --

Common stock issued for investment          246,450                      246,609             --

Common stock and warrants issued
for services                                100,787                       98,057             --

Accrued liabilities settled through
the issuance of common stock                930,481                      240,000             --
                                       --------------------------------------------------------                      -------------
Balance as of December 31, 2005           4,738,322                   40,486,219    (37,518,943)                          (949,673)
                                       ========================================================                      =============
Net loss for the period                          --                           --     (1,335,929)       (1,335,929)

Other comprehensive loss, net of tax:

  Foreign currency translation
  adjustments                                                                                              14,778           14,778
                                                                                                    -------------
Comprehensive loss                                                                                     (1,321,151)
                                                                                                    =============
Common stock issued for investment        3,685,751                      763,000             --

Preferred stock issued for
investment                                                     700       699,687             --

Accrued liabilities settled through
the issuance of common stock              1,202,009                      249,624             --
                                       --------------------------------------------------------                      -------------
Balance as of June 30, 2006               9,626,082            700    42,198,530    (38,854,872)                          (934,895)
                                       ========================================================                      =============
</TABLE>

* Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

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

                                      -7-
<PAGE>

THINKPATH INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (RESTATED)
(AMOUNTS EXPRESSED IN US DOLLARS)

<TABLE>
<CAPTION>
                                                                                      Six Months Ended June 30,
                                                                                                      Restated
                                                                                        2006     2005 (note 25)
                                                                                        ----     --------------
                                                                                           $                  $
<S>                                                                               <C>                <C>
Cash flows from operating activities
    Net loss                                                                      (1,335,929)          (938,965)
    Adjustments to reconcile net loss to net cash used in operating activities:
    Income (loss) from discontinued operations                                            --             19,096
    Depreciation and amortization                                                    263,707            167,269
    Beneficial conversion on issuance of convertible debt                                 --            474,302
    Interest on 12% senior secured convertible debentures                                 --             21,448
    Write off unamortized debt discount                                                   --            505,340
    Amortization of deferred financing costs                                         287,610              4,523
    Mark-to-market of derivatives                                                   (135,656)                --
    Loss on extinguishment of debt                                                   689,858                 --
    Gain on reversal of embedded derivative                                         (388,263)
    Write down of property and equipment                                                  --              3,851
    Decrease (increase) in accounts receivable                                       322,105           (468,688)
    Decrease (increase) in prepaid expenses                                           62,126            (92,468)
    Increase in accounts payable                                                     151,404            283,742
    Debt forgiveness                                                                 (78,062)           (66,150)
                                                                                  ----------         ----------
    Net cash provided by (used in) operating activities                             (161,100)           (86,700)
                                                                                  ----------         ----------
Cash flows from investing activities
    Purchase of property and equipment                                                (8,023)          (193,016)
    Cash received on disposal of other asset                                          66,920                 --
    Cash payment for acquisition net of cash acquired and related costs           (1,252,091)                --
                                                                                  ----------         ----------
    Net cash used in investing activities                                         (1,193,194)          (193,016)
                                                                                  ----------         ----------
Cash flows from financing activities
    Repayment of receivable discount facility                                             --           (728,416)
    Proceeds from revolving (convertible) financing facility                         303,234          3,100,000
    Deferred financing costs incurred                                               (121,696)          (230,792)
    Repayment of convertible debt                                                         --         (1,162,700)
    Repurchase of shares for cancellation                                                 --           (123,110)
    Proceeds from long-term debt                                                   1,959,750                 --
    Repayment of long-term debt                                                     (306,574)           (69,396)
                                                                                  ----------         ----------
    Net cash provided by financing activities                                      1,834,714            785,586
                                                                                  ----------         ----------
Cash flow from used by discontinued operations                                            --            (19,096)

Effect of foreign currency exchange rate changes                                        (652)           (59,458)
                                                                                  ----------         ----------
Net increase (decrease) in cash                                                      479,768            427,316
Cash
    Beginning of period                                                              123,056            180,121
                                                                                  ----------         ----------
    End of period                                                                    602,824            607,437
                                                                                  ==========         ==========
SUPPLEMENTAL CASH ITEMS:
    Interest paid                                                                    161,964            179,579
                                                                                  ==========         ==========
    Income taxes paid                                                                 11,194             70,942
                                                                                  ==========         ==========
SUPPLEMENTAL NON-CASH ITEMS:
    Common stock issued for liabilities                                              249,624                 --
                                                                                  ==========         ==========
    Common stock issued for investment                                               763,000                 --
                                                                                  ==========         ==========
    Preferred stock issued for investment                                            699,687                 --
                                                                                  ==========         ==========
</TABLE>

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

                                      -8-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(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 recurring operating losses and working capital
      deficiencies. At June 30, 2006, the Company had a deficit of $38,854,872
      and has suffered recurring losses from operations.

      With insufficient working capital from operations, the Company's primary
      source of cash is a $3,500,000 financing facility with Laurus Master Fund,
      Ltd. ("Laurus"). At June 30, 2006, the balance on the facility was
      $2,825,453 (note 12) . The facility consists of a revolving line of credit
      based on 90% of eligible accounts receivable which matures on June 27,
      2008 and bears interest at an annual rate equal to The Wall Street Journal
      prime rate plus 3%.

      As at August 21, 2006, management's plans to mitigate and alleviate its
      operating losses and working capital deficiencies include:

      a)    Registration of the shares underlying the Laurus warrants and
            options to provide additional working capital;

      b)    Continued focus on securing customers with high growth potential,
            such as those in the aerospace and defense industries;

      c)    Compliment organic growth with the acquisition of profitable
            engineering companies in the current year and following two years;
            and

      d)    Continued 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 financing facility with Laurus Master Fund, Ltd., 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) 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.) and The
      Multitech Group Inc. provides engineering, design, technical publications
      and staffing, services to enhance the resource performance of clients. In
      addition, the Company owns 100% (unless otherwise noted) of 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.), TidalBeach Inc.
      and TBM Technologies Inc.

                                      -9-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      c) 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 acquired prior to June 30, 2001 and
      accounted for by the pooling of interest method, earnings have been
      included for all periods reported. All significant inter-company accounts
      and transactions have been eliminated.

      d) 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 amounts approximate fair values because of
      the short maturity of those instruments.

      e) 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.

      f) 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.

      g) 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.

      h) 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 (loss) 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 15 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.

      i) Revenue

      The Company recognizes revenue under engineering service contracts when a
      contract has been executed, the contract price is fixed and determinable,
      delivery of services or products has occurred, and collection of the
      contract price is considered probable and can be reasonably estimated.
      Revenue is earned under time-and-materials, fixed-price and cost-plus
      contracts.

      The Company recognizes revenue on time-and-materials contracts to the
      extent of billable rates times hours delivered, plus expenses incurred.
      For fixed price contracts within the scope of Statement of Position 81-1,
      Accounting for Performance of Construction-Type and Certain
      Production-Type Contracts (SOP 81-1), revenue is recognized on the
      percentage of completion method using costs incurred in relation to total
      estimated costs or upon delivery of specific products or services, as
      appropriate. For fixed price-completion contracts that are not within the
      scope of SOP 81-1, revenue is generally recognized as earned according to
      contract terms as the service is provided. The Company provides its
      customers with a number of different services that are generally
      documented through separate negotiated task orders that detail the
      services to be provided and the compensation for these services. Services
      rendered under each task order represent an independent earnings process
      and are not dependent on any other service or product sold. The Company
      recognizes revenue on cost-plus contracts to the extent of allowable costs
      incurred plus a proportionate amount of the fee earned, which may be fixed
      or performance-based. The Company considers fixed fees under cost-plus
      contracts to be earned in proportion to the allowable costs incurred in
      performance of the contract, which generally corresponds to the timing of
      contractual billings. The Company records provisions for estimated losses
      on uncompleted contracts in the period in which those losses are
      identified. The Company considers performance-based fees under any
      contract type to be earned only when it can demonstrate satisfaction of a
      specific performance goal or it receive contractual notification from a
      customer that the fee has been earned. In all cases, the Company
      recognizes revenue only when pervasive evidence of an arrangement exists
      services have been rendered, the contract price is fixed or determinable,
      and collection is reasonably assured.

                                      -10-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      Contract revenue recognition inherently involves estimation. From time to
      time, facts develop that requires the Company to revise the total
      estimated costs or revenues expected. In most cases, these changes relate
      to changes in the contractual scope of the work, and do not significantly
      impact the expected profit rate on a contract. The Company records the
      cumulative effects of any revisions to the estimated total costs and
      revenues in the period in which the facts become known.

      j) 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.

      At December 31, 2005, the Company recorded a charge of $1,459,691 for the
      impaired goodwill of the Technical Publications and Engineering unit based
      on reduced cash flow estimates.

      As at December 31, 2004, the Company 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.

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

      k) 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.

      l) Foreign Currency

      The Company is a foreign private issuer and maintains its books and
      records of its Canadian companies in Canadian dollars (their functional
      currency). The financial statements of the Canadian companies 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 SFAS No. 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. Gains and losses on foreign
      currency transactions are included in financial expenses.

      m) 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 and
      these differences could be material. These estimates are reviewed
      periodically and as adjustments become necessary, they are reported in
      earnings in the period in which they become known.

                                      -11-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      n) 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 No. 144 addresses financial
      accounting and reporting for the impairment or disposal of long-lived
      assets. The Company adopted SFAS No. 144, effective January 1, 2002. The
      adoption of SFAS No. 144 did not have a material impact on the Company's
      results of operations or financial condition.

      o) 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.

      p) Accounting for Stock-Based Compensation

      Effective January 1, 2006, the Company's stock based employee compensation
      plans are accounted for in accordance with the recognition and measurement
      provisions of Statement of Financial Accounting Standards ("FAS") No. 123
      (revised 2004), Share-Based Payment ("FAS 123(R)"). See Note 3 (c) for
      further details.

      q) Leases

      Leases are classified as either capital or operating. Those leases that
      transfer substantially all the benefits and risks of ownership of property
      to the Company are accounted for as capital leases. All other leases are
      accounted for as operating leases. Capital leases are accounted for as
      assets and are fully amortized on a straight-line basis over the lesser of
      the period of expected use of the assets or the lease term. Commitments to
      repay the principal amounts arising under capital lease obligations are
      included in current liabilities to the extent that the amount is repayable
      within one year, otherwise the principal is included in long term debt
      obligations. The capitalized lease obligation reflects the present value
      of future lease payments. The financing element of the lease payments is
      charged to interest expense in the consolidated statement of operations
      over the term of the lease. Operating lease costs are charged to
      administrative expense in the consolidated statement of operations on a
      straight-line basis.

      r) 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.

      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.

      s) Recent Pronouncements

      In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an
      amendment of ARB No. 43". This statement clarifies the accounting for
      abnormal amounts of idle facility expense, freight, handling costs, and
      wasted material (spoilage). This statement is effective for inventory
      costs incurred during fiscal years beginning after June 15, 2005. The
      Company does not believe that the adoption of SFAS No. 151 will have a
      material impact, if any, on its results of operations or financial
      position as it does not have inventory.

      In December 2004, the FASB issued SFAS No. 152, "Accounting for Real
      Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66
      and 67", which references the financial accounting and reporting guidance
      for real estate time-sharing transactions in AICPA Statement of Position
      (SOP) 04-2, "Accounting for Real Estate Time-Sharing Transactions". SFAS
      No. 152 is effective for years beginning after June 15, 2005, with
      restatements of previously issued financial statements prohibited. The
      Company does not believe that the adoption of SFAS No. 152 will have a
      material impact, if any, on its results of operations or financial
      position.

                                      -12-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
      Assets, an amendment of APB Opinion No. 29", effective for non-monetary
      asset exchanges occurring in the fiscal year beginning January 1, 2006.
      This statement requires that exchanges of productive assets be accounted
      for at fair value unless fair value cannot be reasonably determined or the
      transaction lacks commercial substance. The Company does not believe that
      the adoption of SFAS No. 153 will have an impact, if any, on its results
      of operations or financial position.

      In December 2004, the FASB issued SFAS No. 123 (Revised), "Share-based
      Payment". This statement requires employers to expense costs related to
      share-based payment transactions with employees. With limited exceptions,
      SFAS No. 123 (Revised) requires that the fair value of share-based
      payments to employees be expensed over the period service is received.
      SFAS No. 123 (Revised) becomes effective for annual reporting periods that
      begin after December 15, 2005. Effective January 1, 2006, the Company
      adopted this standard using the modified prospective method of transition.
      This method requires that issued financial statements be restated based on
      the amounts previously calculated and reported in the pro forma footnote
      disclosures required by SFAS No. 123. SFAS No. 123 (Revised) allows the
      use of both closed form models (e.g., Black-Scholes Model) and open form
      models (e.g., lattice models) to measure the fair value of the share-based
      payment as long as that model is capable of incorporating all of the
      substantive characteristics unique to share-based awards. In accordance
      with the transition provisions of SFAS No. 123 (Revised), the expense
      attributable to an award will be measured in accordance with the company's
      measurement model at that award's date of grant. The total expense of
      stock based employee compensation recorded in future periods will depend
      on several variables, including the number of shared-based awards that
      vest and the fair value of those vested awards.

      In May 2005, the FASB issued Statement No. 154, "Accounting Changes and
      Error Corrections", applying to all voluntary accounting principle changes
      as well as the accounting for and reporting of such changes. SFAS No. 154
      requires voluntary changes in accounting principle be retrospectively
      applied to financial statements from previous periods unless such
      application is impracticable. SFAS No. 154 requires that changes in
      depreciation, amortization, or depletion methods for long-lived,
      non-financial assets must be accounted for as a change in accounting
      estimate due to a change in accounting principle. By enhancing the
      consistency of financial information between periods, the requirements of
      FASB 154 improves financial reporting. FASB 154 replaces APB Opinion No.
      20 and FASB 3. FASB 154 carries forward many provisions of Opinion 20 and
      FASB 3 without change including those provisions related to reporting a
      change in accounting estimate, a change in reporting entity, correction of
      an error and reporting accounting changes in interim financial statements.
      FASB 154 is effective for accounting changes and corrections of errors
      made in fiscal years beginning after December 15, 2005.

      In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain
      Hybrid Financial Instruments" ("SFAS 155"). SFAS 155 allows any hybrid
      financial instrument that contains an embedded derivatives that otherwise
      would require bifurcation under SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities" to be carried at fair value in its
      entirety, with changes in fair value recognized in earnings. In addition,
      SFAS 155 requires that beneficial interests in securitized financial
      assets be analyzed to determine whether they are freestanding derivatives
      or contain an embedded derivative. SFAS 155 also eliminates a prior
      restriction on the types of passive derivatives that a qualifying special
      purpose entity is permitted to hold. SFAS 155 is applicable to new or
      modified financial instruments in fiscal years beginning after September
      15, 2006, though the provisions related to fair value accounting for
      hybrid financial instruments can also be applied to existing instruments.
      Early adoption, as of the beginning of an entity's fiscal year, is also
      permitted, provided interim financial statements have not yet been issued.
      The company is currently evaluating the potential impact, if any, that the
      adoption of SFAS 155 will have on its consolidated financial statements.

      In March 2006, the FASB issued SFAS 156, "Accounting for Servicing of
      Financial Assets-an amendment of FASB Statement No. 140". This statement
      amends FASB Statement No. 140, "Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities", with respect to the
      accounting for separately recognized servicing assets and servicing
      liabilities. This statement: (1) requires an entity to recognize a
      servicing asset or servicing liability each time it undertakes an
      obligation to service a financial asset by entering into a servicing
      contract in any of the following situations: (a) a transfer of the
      servicer's financial assets that meets the requirements for sale
      accounting, (b) a transfer of the servicer's financial assets to a
      qualifying special-purpose entity in a guaranteed mortgage securitization
      in which the transferor retains all of the resulting securities and
      classifies them as either available-for-sale securities or trading
      securities in accordance with FASB Statement No. 115, "Accounting for
      Certain Investments in Debt and Equity Securities", (c) an acquisition or
      assumption of an obligation to service a financial asset that does not
      relate to financial assets of the servicer or its consolidated affiliates;
      (2) requires all separately recognized servicing assets and servicing
      liabilities to be initially measured at fair value, if practicable; (3)
      permits an entity to choose either of the following subsequent measurement
      methods for each class of separately recognized servicing assets and
      servicing liabilities: (a) Amortization method-Amortize servicing assets
      or servicing liabilities in proportion to and over the period of estimated
      net servicing income or net servicing loss and assess servicing assets or
      servicing liabilities for impairment or increased obligation based on fair
      value at each reporting date, or (b) Fair value measurement method-Measure
      servicing assets or servicing liabilities at fair value at each reporting
      date and report changes in fair value in earnings in the period in which
      the changes occur; (3) at its initial adoption, permits a one-time
      reclassification of available-for-sale securities to trading securities by
      entities with recognized servicing rights, without calling into question
      the treatment of other available-for-sale securities under Statement 115,
      provided that the available-for-sale securities are identified in some
      manner as offsetting the entity's exposure to changes in fair value of
      servicing assets or servicing liabilities that a servicer elects to
      subsequently measure at fair value; and (5) requires separate presentation
      of servicing assets and servicing liabilities subsequently measured at
      fair value in the statement of financial position and additional
      disclosures for all separately recognized servicing assets and servicing
      liabilities. An entity should adopt this statement as of the beginning of
      its first fiscal year that begins after September 15, 2006.

                                      -13-
<PAGE>

      Earlier adoption is permitted as of the beginning of an entity's fiscal
      year, provided the entity has not yet issued financial statements,
      including interim financial statements, for any period of that fiscal
      year. The effective date of this Statement is the date an entity adopts
      the requirements of this statement.

      t) Advertising Costs

      Advertising costs are expensed as incurred.

3.    STOCK OPTION PLANS

                                                                        WEIGHTED
                                                                         AVERAGE
                                                        OPTIONS*  EXERCISE PRICE
                                                       ---------  --------------

      a) Options outstanding at December 31, 2004            112
                                                       =========
         Options forfeited during the period                  --
         Options expired during the period                   (25)       $15,688
         Options granted during the period             1,864,572           $.19
                                                       ---------
         Options outstanding at December 31, 2005      1,864,659
                                                       =========
         Options forfeited during the period                  --
         Options expired during the period                   (87)        $3,475
         Options granted during the period                    --
                                                              --
         Options outstanding at June 30, 2006          1,864,572
                                                       =========

         Options exercisable December 31, 2005         1,864,659           $.19
         Options exercisable June 30, 2006             1,864,572           $.19
         Options available for future grant December     137,015
         31, 2005
         Options available for future grant June 30,     137,102
         2006

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

      b) Range of Exercise Prices at June 30, 2006

                                     Weighted                    Weighted
                                      Average                     Average
                     Outstanding    Remaining       Options      Exercise
                         Options*        Life   Exercisable*        Price
                         -------         ----   -----------         -----

      $0.0001          1,864,572         9.32     1,864,572         $0.19

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

      c) Change in Accounting Policy and Pro-forma net income

            At June 30, 2006, the Company has five stock-based employee
            compensation plans, which are described more fully in Note 15(d).
            Effective January 1, 2006, the Company's plans are accounted for in
            accordance with the recognition and measurement provisions of
            Statement of Financial Accounting Standards ("FAS") No. 123 (revised
            2004), Share-Based Payment ("FAS 123(R)"), which replaces FAS No.
            123, Accounting for Stock-Based Compensation, and supersedes
            Accounting Principles Board Opinion ("APB") No. 25, Accounting for
            Stock Issued to Employees, and related interpretations. FAS 123 (R)
            requires compensation costs related to share-based payment
            transactions, including employee stock options, to be recognized in
            the financial statements. In addition, the Company adheres to the
            guidance set forth within Securities and Exchange Commission ("SEC")
            Staff Accounting Bulletin ("SAB") No. 107, which provides the
            Staff's views regarding the interaction between SFAS No. 123(R) and
            certain SEC rules and regulations and provides interpretations with
            respect to the valuation of share-based payments for public
            companies.

                                      -14-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

            Prior to January 1, 2006, the Company accounted for similar
            transactions in accordance with APB No. 25 which employed the
            intrinsic value method of measuring compensation cost. Accordingly,
            compensation expense was not recognized for fixed stock options if
            the exercise price of the option equaled or exceeded the fair value
            of the underlying stock at the grant date.

            While FAS No. 123 encouraged recognition of the fair value of all
            stock-based awards on the date of grant as expense over the vesting
            period, companies were permitted to continue to apply the intrinsic
            value-based method of accounting prescribed by APB No. 25 and
            disclose certain pro-forma amounts as if the fair value approach of
            SFAS No. 123 had been applied. In December 2002, FAS No. 148,
            Accounting for Stock-Based Compensation-Transition and Disclosure,
            an amendment of SFAS No. 123, was issued, which, in addition to
            providing alternative methods of transition for a voluntary change
            to the fair value method of accounting for stock-based employee
            compensation, required more prominent pro-forma disclosures in both
            the annual and interim financial statements. The Company complied
            with these disclosure requirements for all applicable periods prior
            to January 1, 2006.

            In adopting FAS 123(R), the Company applied the modified prospective
            approach to transition. Under the modified prospective approach, the
            provisions of FAS 123 (R) are to be applied to new awards and to
            awards modified, repurchased, or cancelled after the required
            effective date. Additionally, compensation cost for the portion of
            awards for which the requisite service has not been rendered that
            are outstanding as of the required effective date shall be
            recognized as the requisite service is rendered on or after the
            required effective date. The compensation cost for that portion of
            awards shall be based on the grant-date fair value of those awards
            as calculated for either recognition or pro-forma disclosures under
            FAS 123.

            There was no stock compensation expense for employee options
            recorded under FAS 123 (R) in the Consolidated Statement of
            Operations for the three and six months ended June 30, 2006. There
            was no stock compensation expense for employee options recorded
            under APB No. 25 in the Consolidated Statements of Operations for
            the three and six months ended March 31, 2006.

            The Company previously accounted for options granted to its
            non-employee consultants using the fair value cost in accordance
            with FAS 123 and EITF No. 96-18. The adoption of FAS 123(R ) and SAB
            107 as of January 1, 2006, had no material impact on the accounting
            for non-employee awards. The Company continues to consider the
            additional guidance set forth in EITF Issue No. 96-18, "Accounting
            for Equity Instruments That Are Issued to Other Than Employees"
            ("EITF 96-18").

            There was no stock compensation expense related to non-employee
            options for the three and six month periods ended June 30, 2006 or
            2005.

            Pro Forma Information under SFAS No. 123 for Periods Prior to
            Adoption of FAS 123 ( R):

            The following table illustrates the effect on net income and
            earnings per share as if the fair value recognition provisions of
            FAS No. 123 had been applied to all outstanding and unvested awards
            in the prior year comparable period.

                                        Three months ended     Six months ended
                                                   June 30,             June 30,
                                                  Restated             Restated
                                             2005 (note 25)       2005 (note 25)
                                            --------------       --------------
                                                                              $
Net loss as reported                              (798,146)            (938,965)
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for                       --                   --
all awards net of related tax effects

Pro forma net loss                                (798,146)            (938,965)

Loss per share:
Basic and diluted loss per share,                    (0.20)               (0.26)
as reported

Pro forma loss per share                             (0.20)               (0.26)

                                      -15-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      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:

                                                2005 Grants       2001 Grants
                                                -----------       -----------
      Risk free interest rates                  4.43 - 4.56%         4.76%
      Volatility factors                         116 - 137%           100%
      Weighted average expected life              10 years         4.90 years
      Weighted average fair value per share         $0.25          $3,700.00
      Expected dividends                              --                --

      On June 27, 2005, the Company granted Laurus Master Fund, Ltd. an option
      to purchase up to 379,572* shares of its common stock, no par value per
      share, at an exercise price of $.0001 per share. The options are
      exercisable at any time and in any amount for a period of ten years from
      the date of issuance.

      On November 22, 2005, the Company issued a total of 1,460,000 options at
      an exercise price of $.24 per share to its Management and Directors under
      the 2005 Stock Option Plan which was approved by the Company's
      shareholders at its Annual General Meeting on April 22, 2005, and
      subsequently approved by its Board of Directors. The options vest
      immediately and expire in 2015.

      On December 12, 2005, the Company issued 25,000 options at an exercise
      price of $.27 per share to Mr. Tom Luther, Vice President Sales, under the
      2005 Stock Option Plan. The options vest immediately and expire in 2015.

      There have been no other options granted since 2001.

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

4.    ACQUISITIONS

      On January 17, 2005, the Company acquired TBM Technologies Inc., an
      Ontario Corporation which provides design engineering services. Pursuant
      to the Share Purchase Agreement, the Company purchased TBM for $246,609
      payable in shares of the Company's common stock, no par value. The Share
      Purchase Agreement also provided for price protection for the vendors for
      a period of two years from closing. In the event that the vendors seek to
      sell their shares in an open market transaction within the two years
      following closing and the bid price is less than the price of the shares
      on issuance, the Company will be obligated to issue additional shares of
      unregistered common stock with a value equal to the difference up to a
      maximum of $246,609. The acquisition was accounted for by the purchase
      method and the operations have been included in the consolidated
      operations from January 17, 2005.

      The net acquired assets were valued as follows:

      Current assets                                    $23,616
      Property and equipment                             11,240
      Other assets                                      100,909
      Liabilities assumed                              (107,667)
                                                       --------
      Less: consideration                               246,609
                                                       --------
      Goodwill                                         $218,511
                                                       ========

      At December 31, 2005, the Company wrote off the goodwill from the
      acquisition of TBM Technologies Inc., for impairment based on reduced cash
      flow estimates.

      On June 30, 2006, the Company completed the acquisition of The Multitech
      Group Inc. (TMG), an engineering services firm located in New Jersey
      effective April 1, 2006. The purchase price of $2,798,750 was based on
      five times the audited 2005 EBIT of TMG and was payable as follows: thirty
      percent in cash for a total of $839,625; twenty per cent in a two year
      subordinated note of $559,750 bearing annual interest at US prime, payable
      quarterly and guaranteed by the Company; twenty-five per cent in the
      Company's common shares for a total consideration of $699,688 or 3,369,188
      common shares; and, twenty-five per cent in the Company's preferred shares
      for a total consideration of $669,688 or 700 preferred share which will be
      convertible into common shares after June 30, 2007. The acquisition was
      accounted for by the purchase method and the operations have been included
      in the consolidated operations from April 1, 2006.

                                      -16-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      The net acquired assets were valued as follows:

      Current assets                                      $965,977
      Property and equipment                               378,715
      Other assets                                         626,519
      Liabilities assumed                                 (762,933)
                                                        ----------
      Less: consideration including acquisition costs    3,103,540
                                                        ----------
      Goodwill                                          $1,895,262

5.    ACCOUNTS RECEIVABLE

                                                           6/30/06     12/31/05
                                                         ---------    ---------
                                                                 $            $
      Accounts receivable                                2,345,074    2,043,214
      Less: Allowance for doubtful accounts               (257,509)    (201,876)
                                                         ---------    ---------
                                                         2,087,565    1,841,338
                                                         =========    =========
      Allowance for doubtful accounts
      Balance, beginning of period                         201,876      179,648
      Provision                                             80,063       42,051
      Recoveries                                           (24,430)     (19,823)
                                                         ---------    ---------
      Balance, end of period                               257,509      201,876
                                                         =========    =========

6.    PROPERTY AND EQUIPMENT

                                                6/30/06                12/31/05
                                  ----------------------------------   --------
                                              ACCUMULATED
                                       COST  AMORTIZATION        NET        NET
                                          $             $          $          $

Furniture and equipment             221,051       184,228     36,823     31,734
Computer equipment and software   3,833,651     3,387,492    446,159    524,474
Leasehold improvements               57,422        39,139     18,283     21,481
Automobile                           61,817        44,381     17,436         --
Fair Market Increment on
  Acquired Assets                   358,810        17,940    340,870         --
                                  ---------     ---------    -------    -------
                                  4,532,751     3,673,180    859,571    577,689
                                  =========     =========    =======    =======
Property and equipment
  under capital lease               267,263       174,760     92,503     99,408
                                  =========     =========    =======    =======

      Amortization of property and equipment for the three and six months ended
      June 30, 2006 amounted to $85,143 and $153,751 respectively. These amounts
      include amortization of property and equipment under capital lease of
      $4,909 and $9,842 respectively for the three and six months ended June 30,
      2006.

      Amortization of property and equipment for the year ended December 31,
      2005 amounted to $280,837 including amortization of property and equipment
      under capital lease of $44,275.

                                      -17-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

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:

                                                             6/30/06    12/31/05
                                                             -------    --------
                                             ACCUMULATED
                                ACCUMULATED   IMPAIRMENT
                        COST   AMORTIZATION       LOSSES         NET         NET
                           $              $            $           $           $
                   -------------------------------------------------------------
Technical
Publications &
Engineering
(CadCam Inc., TBM
Technologies Inc.
and The Multitech
Group Inc.)        7,851,142        535,164    2,913,164   4,402,814   2,507,552

      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, 2005, the Company performed its annual impairment test for
      goodwill by first comparing the carrying value of the net assets to the
      fair value of the Technical Publications and Engineering unit. The fair
      value was determined to be less than the carrying value, and therefore a
      second step was performed to compute the amount of the impairment. In this
      process, a fair value for goodwill was estimated, based in part on the
      fair value of the operations, and was compared to its carrying value. The
      shortfall of the fair value below carrying value was $1,241,180 which
      represents the amount of goodwill impairment.

      During the fourth quarter 2005, conditions were present that clearly
      indicated an impairment of the goodwill of TBM Technology Inc., including
      adverse changes in legal factors (see note 22) and business climate as
      well as the projection of continued cash flow losses. As a result of these
      conditions, the full amount of goodwill of $218,511 was written off.

      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.

      Effective April 1, 2006, the Company acquired goodwill in the amount of
      1,895,262 in connection to its acquisition of TMG (note 4) which has been
      allocated to the Technical Publications and Engineering reporting unit.

8.    OTHER ASSETS

                                                       6/30/06         12/31/05
                                                       -------         --------
                                                             $                $
      Cash surrender value of life insurance            13,291           66,920
      Deferred Financing Costs                         275,557          192,424
      Contracts                                        428,132               --
      Customer Lists                                   113,608               --
                                                       =======          =======
      Total                                            830,588          259,344
                                                       =======          =======

      Included in Other Assets are deferred financing costs related to the
      Laurus Convertible Financing Facility to be amortized over the three-year
      term of the debt, beginning July 1, 2005. Also included in Other Assets
      are contracts and customer lists related to the acquisition of The
      Multitech Group Inc. (note 4) to be amortized over two and three years
      respectively, beginning April 1, 2006. Amortization of other assets for
      the three and six months ended June 30, 2006 amounted to $90,632 and
      $109,956 respectively.

      Amortization of other assets for the year ended December 31, 2005 amounted
      to $89,919 including amortization of $51,551 on customer lists acquired on
      January 17, 2005 (Note 4) the balance of which $53,799 was written off for
      impairment at year-end.

9.    RECEIVABLE DISCOUNT FACILITY

      On June 27, 2005, the Company paid down its receivable discount facility
      with Morrison Financial Services Limited in the amount of $1,073,468. The
      facility allowed the Company to borrow up to 75% of the value of qualified
      accounts receivables to a maximum of $1,500,000, and was subject to
      interest at 24% per annum.

                                      -18-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

10.   BANK INDEBTEDNESS

      On April 19, 2005, the Company paid down its revolving line of credit with
      the Royal Bank of Canada in the amount of $52,480. This liability was
      assumed by the Company on January 17, 2005 as a result of the acquisition
      of TBM Technologies Inc. The line was subject to interest at 6.75% per
      annum.

11.   12% CONVERTIBLE DEBENTURE

      At December 31, 2005, the amortization of the beneficial conversion
      feature on all issued convertible debentures was determined to be $474,302
      which was charged to earnings as interest expense.

      On June 27, 2005, the Company paid off the principal balance of the 12%
      Senior Secured Convertible Debentures in the amount of $1,162,700. The
      accrued interest of $66,150 was forgiven and a total of 626,384* common
      shares held by the debenture holders were repurchased for cancellation for
      $123,110. In addition a total of 1,671,189 warrants held by the debenture
      holders were cancelled. The unamortized debt discount remaining on the
      convertible debentures of $505,340 was expensed as interest.

12.   LAURUS REVOLVING NOTE (CONVERTIBILE FINANCING) FACILITY

      On June 27, 2005, the Company closed a $3,500,000 convertible financing
      facility with Laurus Master Fund, Ltd. ("Laurus"). The facility consists
      of a secured convertible note ("Minimum Borrowing Note") based on 90% of
      eligible accounts receivable which matures on June 27, 2008 and bears
      interest at an annual rate equal to The Wall Street Journal prime rate
      plus 3% ("contract rate") but never less than 8%. At closing, the Company
      received $2,100,000 in proceeds from the facility based on its eligible
      accounts receivable ("formula amount") and an additional $1,000,000
      ("overadvance") granted in excess of the formula amount. The overadvance
      bears interest at the prime rate as published by the Wall Street Journal
      plus 2% and held an expiration date of December 27, 2005. In the event
      that the overadvance was not repaid in full by this date, the interest
      rate was to increase by an additional 1% per month.

      Laurus has the option to convert into common stock at anytime all or any
      portion of the principal and interest and fees payable at a fixed
      conversion price as follows:

            -     first $1,000,000 in principal convertible at a fixed price of
                  $0.40 (80% of the average price for 10 days prior to closing
                  of debt);

            -     next $1,000,000 in principal convertible at a fixed price of
                  $0.50 (100% of the average price for 10 days prior to closing
                  of debt);

            -     and, any remaining principal convertible at a fixed price of
                  $0.53 (105% of the average price for 10 days prior to closing
                  of debt).

      Should the Company complete a subsequent financing at a lower price than
      the original issue, the conversion prices of the three tranches above will
      be adjusted to 80%, 100% and 105% of the new lower price. This feature
      would modify the number of shares that the Company will issue on
      conversion of the notes.

      The Company has the option of prepaying the note at any time by paying to
      the holder a sum of money equal to 130% of the principal amount of the
      note.

      In connection with the financing, the Company issued warrants to purchase
      up to 2,100,000* shares of its common stock with 1,050,000* at an exercise
      price of $0.55 per share and 1,050,000 at an exercise price of $0.60 per
      share. The warrants vest immediately and expire on June 27, 2011. The
      Company also issued options to purchase up to 379,572* shares of its
      common stock, no par value per share, at an exercise price of $.0001 per
      share. The options vest immediately and expire on June 27, 2015.

      The financing included a Registration Rights Agreement which prescribes
      that the Company shall have caused a registration statement to be filed
      with the SEC, in respect of the securities covered by the Minimum
      Borrowing Note, Warrants and Options within 30 days of closing and to
      cause the registrations to become effective within 90 days of closing. In
      the event that the Company fails to file such registration statement, the
      agreement also provides that the Company shall pay to Laurus, as partial
      damages, for each day that an Event has occurred and is continuing, an
      amount in cash equal to one-thirtieth (1/30th) of the product of: (A) the
      original principal amount of each Minimum Borrowing Note outstanding at
      such time multiplied by (B) 0.02. In the event the Company fails to make
      any such payments in a timely manner, Section 1 of the Registration Rights
      Agreement also provides that such payments shall bear interest at the rate
      of 1.5% per month (prorated for partial months) until paid in full.

      Assuming a successful registration of the shares and warrants, if the
      market price of the Company's common stock exceeds the then applicable
      fixed conversion price by at least 25%, the contract rate for the
      succeeding calendar month shall automatically be reduced by 100 basis
      points (1%) for each incremental 25% increase in the market price of the
      common stock above the then applicable fixed conversion price.

                                      -19-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      The Company determined that the conversion option embedded in the note and
      the warrants and options attached to the note qualify as embedded
      derivatives under the guidance of SFAS No. 133, "Accounting for Derivative
      Instruments and Hedging Activities" and EITF Issue No. 00-19, "Accounting
      for Derivative Financial Instruments Indexed to, and Potentially Settled
      in, a Company's Own Stock" and as such should be accounted for separately
      at inception at their fair value and subsequently marked to market. The
      total of the embedded derivatives was separated from the debt based on the
      initial amount of $3,100,000. The initial value of the derivatives and
      "embedded derivatives" is offset against the Laurus financing and will be
      amortized over a 3-year period subject to the expected availability. The
      conversion right and interest adjustment clause found in the note were
      considered one embedded derivative and the warrants and options were each
      considered separate derivatives.

      As the embedded derivatives are not standard and are not publicly quoted,
      a combination of Black-Scholes methodologies and Monte Carlo simulations
      were used. Valuations were performed at each quarter end and the
      conversion option, warrants and options were each valued separately. As
      the Company has no public rating or no public debt, it is very difficult
      to estimate the potential change of the credit spread between the issue
      date and valuation dates. Moreover, there is no evidence of any material
      event that could change significantly the credit spread of the issue. A
      constant credit spread equal to 300 basis points as per the issue date was
      therefore assumed in the valuation. For the valuation as of December 31,
      2005 an assumption of 158% volatility was used and for the valuation at
      June 30, 2006, an assumption of 142% volatility was used.

      Conversion Option

      As the issue is a floating rate note, it is inferred that it will
      substantially be always equal to par ($3,100,000 USD). The implied number
      of conversion options will be derived by dividing the notional by the
      average conversion price. As showed in the table below, the conversion
      price was calculated using the weighted average conversion price for each
      tranche. This option was valued using a standard Black-Scholes model.

                                              Conversion       Weighted
                 Tranche        Notional         Price          Average
                Tranche 1       1,000,000         0.4           0.1290
                Tranche 2       1,000,000         0.5           0.1613
                Tranche 3       1,100,000        0.53           0.1881
                                =========                      =======
                  Total         3,100,000                       0.4784

      The interest rate adjustment clause contained in the conversion option
      sets that if the stock price exceeds the prevailing conversion price by a
      certain level, interest payments on the floating rate note will be
      reduced. This clause diminishes the conversion options fair value as the
      holder will be penalized when the conversion option will be in the money.
      The fair value for this clause is dependant on the expected behaviour of
      the prime rate and the Company's stock price. This clause was valued using
      a Monte Carlo simulation model using a mean reversion process to simulate
      the prime rate and a standard Geometric Brownian motion process for the
      Company's stock price.

      The 8% floor on interest rate clause contained in the conversion option
      was valued using a Monte Carlo simulation model with a mean reversion
      process to simulate the prime rate. As the value of the floor option was
      determined to be relatively insignificant ($29,000 liability as of
      December 31, 2005 and $500 liability as of June 30, 2006 representing an
      impact on the fair value of 0.2% and .015% respectively for the
      valuations), it was ignored in the valuation of the conversion option. The
      impact of this analysis will be performed at each valuation date. If the
      model shows that the floor option would have a significant impact on the
      market value, the conversion option will have to be valued using a
      different model that will implicitly account for the floor option such as
      the binomial model.

      The 5% limitation upon issuance of shares was ignored in this valuation
      based on the assumption that it is a liquidity feature that would not
      significantly impact the valuation.

      Warrants and Options

      Valuation of the warrants and options were performed separately using
      standard Black-Scholes methodology. As the Company would be required to
      issue new shares for these instruments it used a valuation with a dilution
      effect.

      Valuation Results

            Derivative                       6/30/06       12/31/05
            ----------                       -------       --------
            Conversion Options              $403,552       $452,928
            Interest Adjustment Clause      ($15,269)      ($28,687)
            Warrants                        $409,585       $393,100
            New Warrants (note 14)           304,763             --
            Options                          $73,023        $87,848
                                          ----------       --------
                                          $1,175,654       $905,189
                                          ==========       ========

                                      -20-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      During the six months ended June 30, 2006, the Company amortized $287,610
      of the initial value of the derivatives and embedded derivatives which are
      included in financing costs. The mark to market of the derivatives
      including the embedded derivatives at the end of each period was credited
      to financing costs in the amount of $135,656.

      During the year ended December 31, 2005 the Company amortized $275,135 of
      the initial value of the derivatives and embedded derivatives which is
      included in financing costs. The mark to market of the derivatives
      including the embedded derivatives at the end of each period was credited
      to financing costs in the amount of $723,008.

      On December 8, 2005, the Company and Laurus entered into an amendment of
      the Security Agreement pursuant to which Laurus agreed to waive (i) any
      event of default by the Company relating to the Company's non-payment of
      any liquidated damages associated with its non-filing of its Registration
      Statement and (ii) any liquidated damages associated with its non-filing
      of its Registration Statement that had accrued and were due and payable as
      of the date of December 8, 2005. In addition, the filing and effective
      dates for the Registration Statement were extended to January 31, 2006 and
      March 30, 2006, respectively.

      Due to its ongoing discussion with the SEC, the Company failed to file and
      cause to be effective a registration statement by March 30, 2006. Laurus
      agreed to waive the event of default and associated liquidated damages and
      to extend the filing deadline until July 1, 2006.

      On January 26, 2006, the Company and Laurus executed an Overadvance Side
      Letter whereby Laurus increased the overadvance amount on the revolving
      note to $1,200,000 ("Second Overadvance"). The second overadvance bears
      interest at the prime rate as published by the Wall Street Journal plus
      2%. The second overadvance expires on July 27, 2006. In the event that the
      overadvance is not repaid in full by this date, the interest rate will be
      increased by an additional 1% per month. In consideration of the Second
      Overadvance, the Company issued 500,000 additional common stock purchase
      warrants with an exercise price of $0.01 per share which expire on January
      26, 2012. Using the standard Black-Scholes methodology, these warrants
      were valued to be $98,588 which is being offset against the Laurus
      financing and will be amortized over the remaining term of the debt.

      On June 30, 2006, Laurus modified the terms of the convertible financing
      facility and removed the convertibility option, the interest adjustment
      clause and the conversion adjustment clause. In addition, the Registration
      Rights Agreement was modified so that the liquidated damages that may be
      charged for failure to file a registration statement at 2% per day shall
      no longer exceed 20% of the total debt owed to Laurus. Further, the
      Registration Rights Agreement was modified such that there must be an
      effective registration statement for the common stock issued upon the
      exercise of options and warrants since the convertibility option has been
      removed.

      The Company evaluated the modifications to the convertible financing
      facility under EITF Issue No. 96-19, "Debtor's Accounting for a
      Modification or Exchange of Debt Instruments" and EITF Issue No. 05-07,
      "Accounting for Modifications to Conversion Options Embedded in Debt
      Instruments and Related Issues". ETIF Issue No. 96-19 requires the debtor
      to determine whether the present value of the cash flows, including
      changes in the fair value of an embedded conversion option upon
      modification of a convertible debt instrument, under the terms of the new
      debt instrument is at least 10% different from the present value of the
      remaining cash flows under the terms of the original instrument. Moreover,
      this EITF specifies that changes in the fair value of embedded conversion
      options should be incorporated in this analysis. This is reiterated in
      EITF Issue No. 05-7. Using the methodology proposed in EITF Issue No.
      96-19, the fair value as of June 30, 2006 of the embedded conversion
      option was $388,264 (value of the embedded conversion option less value of
      the interest adjustment clause) and the present value of the "old" and
      "new" financing was $1,726,425 and $1,451,862 respectively. The Company
      concluded that the difference in cash flows was 16% and therefore that the
      "old" financing was extinguished.

      EITF Issue No. 96-19 requires that the new debt be recorded at fair value
      and that amount should be used to determine the debt extinguishment gain
      or loss to be recognized and effective rate of the new debt. Using an
      effective rate of 20%, the fair value of the new facility was determined
      to be $2,351,271 which results in a loss of $689,858 on extinguishment of
      debt based on the book value of the old facility of $1,661,413. This loss
      is included in financing costs at June 30, 2006 in the consolidated
      statement of operations.

      As the conversion right of the convertible financing facility was
      eliminated, the entire embedded derivative pertaining to the conversion
      option was reversed, resulting in a gain of $388,264. This gain is
      included in financing costs at June 30, 2006 in the consolidated statement
      of operations.

      The Company also evaluated the modifications to the Registration Rights
      Agreement, specifically the 2% liquidated damages clause under EITF Issue
      No. 00-19 to determine whether the warrants and options issued with the
      debt should be reclassed into equity from liabilities. According to EITF
      Issue No. 00-19, paragraph 16 "If a settlement alternative includes a
      penalty that would be avoided by a company under other settlement
      alternatives, the uneconomic settlement alternative should be disregarded
      in classifying the contract. In the case of delivery of unregistered
      shares, a discount from the value of the corresponding registered shares
      that is a reasonable estimate of the difference in fair values between
      registered and unregistered shares (that is, the discount reflects the
      fair value of the restricted shares determined using commercially
      reasonable means) is not considered a penalty."

      The Company concluded that the 20% cap added to the liquidated damages
      clause, does not represent an economically reasonable difference between
      registered and unregistered shares as the cap is based on the notional
      amount of financing outstanding which no longer has a convertibility
      feature and therefore has not relation to the shares that could be issued
      upon the exercise of options and warrants. Moreover, the maximum potential
      penalty that could arise under this clause based on the total debt
      outstanding to Laurus at June 30, 2006 was approximately $845,000 which is
      significant as compared to the total value of the shares that could be
      issued under the outstanding warrants and options at June 30, 2006 of
      approximately $960,000.

                                      -21-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      Under the Security Agreement, the Company is also subject to a 2% penalty
      (with no cap) if its stock would stop trading for failure of failure to
      make timely filings with the SEC. In consideration of this penalty, which
      could be interpreted as a form of net cash settlement, and the assessment
      of the liquidated damages clause, the Company concluded that the criteria
      for reclassification to equity in EITF 00-19 was not met and therefore the
      warrants and options would remain embedded derivatives.

      At the end of each period, the balance on the Laurus facility was as
      follows:

                                                   6/30/06      12/31/05
                                                   -------      --------
                                                         $             $
      Principal balance revolving note           2,825,453            --
      Principal balance convertible facility            --     2,522,219
      Deferred Financing Costs                    (474,182)   (1,353,063)
                                                ----------    ----------
      Total                                      2,351,271     1,169,156
                                                ----------    ==========

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

13.   ACCOUNTS PAYABLE

      Included in accounts payable at the end of each period are the following:

                                                  6/30/06      12/31/05
                                                  -------      --------
                                                        $             $
      Trade payables                              499,022       276,486
      Accrued payroll and payroll liabilities     427,483       266,343
      Accrued bonuses                              90,500       130,866
      Accrued professional fees                   160,670       245,368
      Other                                       365,653       247,189
                                                ---------     ---------
                                                1,543,328     1,166,152
                                                =========     =========

14.   LONG-TERM DEBT

      i) June 30, 2006

      On June 30, 2006, the Company reached a settlement with W. Terry Lyons
      with respect to the secured loan outstanding to him in the amount of
      $178,062 including accrued interest. In consideration of a monetary
      payment by the Company of $100,000 and execution of a Full and Final
      Release, Lyons released the Company of all rights and debt held by him and
      forgave the balance of the loan of $78,062 which is included in debt
      forgiveness in the consolidated statement of operations.

      On June 30, 2006, the Company repaid the balance owing on an SBA loan held
      by TMG in the amount of $84,083. This loan was personally guaranteed by
      the principal shareholders of TMG and collateralized by their personal
      residence and TMG's accounts receivables.

      On June 30, 2006, the Company repaid an Officer's Loan to the vendors of
      TMG in the amount of $349,624 with a cash payment of $100,000 and
      1,202,009* shares of the Company's common stock, no par value per share,
      for consideration of $249,624.

      On June 30, 2006, Laurus Master Fund Ltd. issued the Company a secured
      term loan in the amount of $1,400,000 of which the proceeds were used to
      fund the acquisition of TMG. The loan is payable monthly starting October
      1, 2006 in the amount of $42,424 per month. The loan bears interest at an
      annual rate equal to the Wall Street Journal prime rate plus 2%. The loan
      matures June 30, 2009. In connection with the financing, the Company
      issued Laurus a warrant to purchase up to 1,810,674 shares of the
      Company's common stock at $.0001 per share. Laurus is prohibited from
      selling any of the warrants until June 30, 2007 and thereafter is
      prohibited from selling an amount of shares in excess of 15% of the daily
      volume of trading of the Company's common stock on any day.

      The warrants issued with the term loan are subject to the modified
      Registration Rights Agreement (Note 12) including the 2% liquidated
      damages clause and therefore are classified as embedded derivatives under
      EITF 00-19. The warrants have been valued as of June 30, 2006 using
      standard Black-Scholes methodology with a dilution effect. (Risk free
      interest rate of 5.38%; volatility of 142%; weighted average expected life
      of 10 years; weighted average fair value per share of $0.17). In
      accordance with APB 14, the value of these warrants should be extracted
      from the total cash received and the difference ascribed to the secured
      debt as follows:

      Cash received         1,400,000

      Warrants                304,763
                            ---------
      Secured Loan          1,095,237
                            ---------

                                      -22-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      Beginning July 1, 2006, the Company will amortize the initial value of the
      embedded derivative over the three year term of the loan.

      On June 30, 2006, the Company issued five unsecured promissory notes to
      the shareholders of TMG totaling $559,750 with quarterly payments of
      $69,969 starting September 30, 2006. The notes bear interest at an annual
      rate equal to the Wall Street Journal prime rate and mature on June 30,
      2008.

      On June 30, 2006, the Company assumed a motor vehicle loan as a result of
      the acquisition of TMG in the amount of $11,160 with monthly payments of
      $372 for 36 months starting January 14, 2006. The loan is secured by the
      motor vehicle and bears interest at 7.5% per annum. The loan matures on
      January 14, 2009.

      At June 30, 2006, the Company held various capital leases in the amount of
      $23,993 secured by property and equipment with various payment terms and
      interest rates ranging from 10-22%. These leases mature between July 2006
      and July 2007.

      ii) December 31, 2005

      At December 31, 2005, the Company had a loan balance of $163,987 with
      Terry Lyons with monthly payments of $10,000. The loan bears interest at
      US prime plus 14%. The loan was secured by the Company's assets and
      subordinated to Laurus Master Fund, Ltd. The loan matured July 2007.

      At December 31, 2005, the Company held various capital leases in the
      amount of $30,165 secured by property and equipment with various payment
      terms and interest rates ranging from 10-22%. These leases mature between
      March 2006 and July 2007.

                                                    6/30/06    12/31/05
                                                    -------    --------
                                                          $           $
      a) Included therein:

      Laurus Term Loan                           $1,095,237          --
      Promissory Notes - TMG                        559,750          --
      Loan - Motor Vehicle                           11,160          --
      Terry Lyons                                        --     163,987
      Capital Leases                                 23,993      30,165
                                                 ----------     -------
                                                  1,690,140     194,152

      Less: current portion                         687,903     124,326
                                                 ----------     -------

                                                  1,002,237      69,826
                                                 ==========     =======

      b) Future principal payments obligations as at June 30, 2006, were as
      follows:

                    2006                    280,314
                    2007                    806,555
                    2008                    649,026
                    2009                    259,008
                    2010                         --
                                         ----------
                                         $1,994,903
                                         ==========

      c) Interest expense related to long-term debt for the three and six months
      ended June 30, 2006 was $15,064 and $34,649 respectively. Interest expense
      related to long-term debt was $53,132 for the year ended December 31,
      2005.

                                      -23-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

15.   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

      Effective June 29, 2005, the Company implemented a one-for-five thousand
      reverse split of its common stock. At the time of the reverse stock split,
      each five thousand shares of the Company's issued and outstanding common
      stock were combined into one share of its common stock. The reverse stock
      split did not change the number of authorized shares of the Company's
      common stock. The one-for-five thousand reverse split was approved by the
      Company's shareholders at its Annual General Meeting on April 22, 2005,
      and subsequently approved by its Board of Directors. All common share and
      per share amounts throughout these financial statements have been adjusted
      to give effect to this reverse stock split.

      b) Issued

      On January 17, 2005, the Company issued 246,450* shares of its common
      stock, no par value per share, to the Vendors of TBM Technologies Inc. for
      a total consideration of $246,609.

      During the year ended December 31, 2005, the Company issued 1,366,495*
      shares of its common stock to the 12% Senior Secured Convertible Debenture
      holders upon the conversion of $338,616 principal balance and accrued
      interest.

      On June 27, 2005, the Company repurchased for cancellation 626,384* common
      shares held by the debenture holders for $123,110, representing
      approximately a sixty per cent discount to market value.

      On July 1, 2005 the Company issued 294,118* shares of its common stock, no
      par value per share, to Declan French in consideration of $100,000 extra
      compensation as approved by the shareholders at the Annual General Meeting
      on April 22, 2005. The shares were issued based on the closing price of
      $0.34 on July 1, 2005. The extra compensation was awarded in consideration
      of Mr. French's personal guarantees and indemnification of certain of the
      Company's debts as well as his acceptance of shares in lieu of cash for
      prior bonuses and debt payments.

      Also, on July 1, 2005, the Company issued 636,363* shares of its common
      stock, no par value per share, to Declan French in consideration of
      $140,000 in accrued bonuses from the years 2003 and 2004 as per his
      employment agreement. The shares were issued based on the lowest intraday
      price of $0.22 on July 1, 2005.

      On July 7, 2005, the Company entered into an agreement with Financial
      Media Relations, LLC, a California company, for the purpose of developing
      and implementing a marketing and investor relations program and the
      provision of business development and strategic advisory services. The
      term of the agreement is twelve months at a cost of $20,500 on execution
      and $12,500 per month thereafter. In addition, the Company issued 100,000*
      shares of common stock, no par value per share, and warrants to purchase
      500,000* shares of common stock exercisable at $0.41 per share and
      100,000* shares of common stock exercisable at $1.20 per share. The
      warrants shall be exercisable for a period of two years, shall vest
      immediately and be deemed earned upon issuance, and all warrants shall
      have "piggyback" registration rights. Using the Black-Scholes pricing
      model, the fair value of the warrants was determined to be $57,057 and is
      included in selling expenses at December 31, 2005.

      On June 30, 2006, the Company issued 3,369,188* shares of its common
      stock, no par value per share, to the Vendors of TMG for a total
      consideration of $669,689. The Company also issued 1,202,009* shares of
      its common stock, no par value per share, to the Vendors of TMG as
      repayment of an Officer's Loan in the amount $249,624.

      On June 30, 2006, the Company issued 316,563* shares of its common stock,
      no par value per share, to Leventis Investments for a total consideration
      of $63,313 as partial payment of a buyer's fee for the TMG acquisition.

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

                                      -24-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      c) Warrants

      For each of the periods presented, the following warrants for the purchase
      of one common share per warrant (as adjusted for 1:5,000 reverse stock
      split on June 29, 2005) at the following prices per common share and
      expiry dates were outstanding:

Number of warrants*
      6/30/06           12/31/05       Exercise price per share      Expiry date
--------------------------------------------------------------------------------
           --                 --                     $16,200.00             2004
           --                 --       $16,250.00 to $18,550.00             2005
           --                 --                     $12,300.00             2005
           --                 --         $3,150.00 to $5,000.00             2005
           --                 20                      $7,500.00             2006
           --                213                      $2,750.00             2006
           --                 --                        $400.00             2007
      500,000            500,000                          $0.41             2007
      100,000            100,000                          $1.20             2007
          124                124                        $200.00             2009
        2,400              2,400                         $87.50             2009
           --                 --                          $3.75             2009
           --                 --                          $2.00             2009
          229                229                          $1.25             2009
        1,714              1,714                         $87.50             2010
        2,857              2,857                         $43.75             2010
       13,333             13,333                          $3.75             2010
           --                 --                          $2.00             2010
        9,083              9,083                          $1.25             2010
           --                 --                          $1.00             2010
           --                 --                          $2.00             2011
           --                 --                          $1.40             2011
       47,388             47,388                          $1.25             2011
       62,500             62,500                          $1.00             2011
    1,050,000          1,050,000                          $0.55             2011
    1,050,000          1,050,000                          $0.60             2011
      500,000                 --                          $0.01             2012
    1,810,674                 --                         $.0001             2016
--------------------------------------------------------------------------------
    5,150,302          2,839,861
--------------------------------------------------------------------------------

      A summary of changes to number of issued warrants is as follows:

      Outstanding at December 31, 2004          1,811,389*
                                               ----------
      Issued                                    2,700,000
      Cancelled                                (1,671,189)
      Exercised                                        --
      Expired                                        (339)
                                                ---------
      Outstanding at December 31, 2005          2,839,861*
                                                ---------
      Issued                                    2,310,674
      Cancelled                                        --
      Exercised                                        --
      Expired                                        (233)
                                                ---------
      Outstanding at June 30, 2006              5,150,302*
                                                =========

      On June 27, 2005, a total of 1,671,189* warrants held by the debenture
      holders were cancelled in consideration of payment in full of the
      principal balance owing of $1,162,700.

      On June 27, 2005 the Company issued Laurus Master Fund, Ltd. warrants to
      purchase up to 2,100,000* shares of its common stock with 1,050,000* at an
      exercise price of $0.55 per share and 1,050,000* at an exercise price of
      $0.60 per share. The warrants are exercisable at any time and in any
      amount for six years from the date of closing.

      As disclosed in Note 15(b), on July 7, 2005, the Company issued warrants
      to purchase 500,000* shares of common stock exercisable at $0.41 per share
      and 100,000* shares of common stock exercisable at $1.20 per share to
      Financial Media Relations LLC. The warrants shall be exercisable for a
      period of two years, shall vest immediately and be deemed earned upon
      issuance, and all warrants shall have "piggyback" registration rights.
      Using the Black-Scholes pricing model, the fair value of the warrants was
      determined to be $57,057 and is included in selling expenses.

                                      -25-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      As disclosed in Note 12, on January 26, 2006, the Company issued 500,000*
      additional common stock purchase warrants to Laurus Master Fund, Ltd. with
      an exercise price of $0.01 per share and expire on January 26, 2012.

      As disclosed in Note 14, on June 30, 2006, the Company issued 1,810,674*
      common stock purchase warrants to Laurus Master Fund, Ltd. with an
      exercise price of $.0001 per share and which expire on June 30, 2016.
      Laurus is prohibited from selling any of the warrants until June 30, 2007
      and thereafter is prohibited from selling an amount of shares in excess of
      15% of the daily volume of trading of the Company's common stock on any
      day.

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

      d) Stock Options

      The Company's Board of Directors and shareholders have approved the
      adoption of the 1998 Stock Option Plan, 2000 Stock Option Plan, 2001 Stock
      Option Plan, 2002 Stock Option Plan and 2005 Stock Option Plan. Under the
      plans, a total of 2,001,674 options were authorized to be granted to
      officers, directors, consultants, key employees, advisors and similar
      parties who provide their skills and expertise to the Company. At June 30,
      2006, 1,864,572 options remain outstanding and 137,102 options are
      available for future grant. At December 31, 2005, 1,864,659 options remain
      outstanding and 137,015 options are available for future grant.

      The plans are administrated by the Compensation Committee of 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.

      Options granted to employees 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.

      On June 27, 2005, the Company issued Laurus Master Fund, Ltd. an option to
      purchase up to 379,572* shares of its common stock, no par value per
      share, at an exercise price of $.0001 per share. The options are
      exercisable at any time and in any amount for a period of ten years from
      the date of issuance.

      On November 22, 2005, the Company issued a total of 1,460,000 options at
      an exercise price of $.24 per share to its Management and Directors under
      the 2005 Stock Option Plan which was approved by the Company's
      shareholders at its Annual General Meeting on April 22, 2005, and
      subsequently approved by its Board of Directors. The options vest
      immediately and expire in 2015.

      On December 12, 2005, the Company issued 25,000 options at an exercise
      price of $.27 per share to Mr. Tom Luther, Vice President Sales, under the
      2005 Stock Option Plan. The options vest immediately and expire in 2015.

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

      e) Preferred Stock

      On June 30, 2006, the Company issued 700 shares of Series D preferred
      stock to the Vendors of TMG for a total consideration of $669,689. The
      Series D preferred stock is convertible into common stock at the option of
      the holder, one year from issuance by dividing $669,689 by the market
      price of the Company's common stock prior to conversion.

                                      -26-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

16.   DEFERRED INCOME TAXES AND INCOME TAXES

      a) Deferred Income Taxes

      The components of the future tax liability benefit by source of temporary
      differences that gave rise to the benefit are as follows:

                                                      6/30/06         12/31/05
                                                      -------         --------
                                                            $                $
      Losses available to offset future
        income taxes                                5,804,223        5,221,000
      Deferred costs and customer lists                33,000           33,000
      Share and debt issue costs                       68,000          126,000
      Property and equipment                        1,015,000          949,000
                                                    ---------        ---------
                                                    6,920,223        6,329,000

      Less: valuation allowance                     7,027,934        6,329,000
                                                    ---------        ---------
                                                     (107,711)              --
                                                    =========        =========

      b) Current Income Taxes

      Current income taxes consist of:

                                                      6/30/06         12/31/05
                                                      -------         --------
                                                            $                $
      Amounts calculated at statutory rates          (534,371)        (581,881)
                                                    ---------        ---------
      Permanent differences                          (145,562)         304,304
      Valuation allowance                             698,970          417,000
                                                    ---------        ---------
                                                      553,408          721,304
                                                    ---------        ---------
      Current income taxes                             19,037          139,423
                                                    =========        =========

      Issue expenses totaling approximately $446,000 may be claimed at the rate
      of 20% per year with $210,000 until 2006, and $236,000 until 2010. To the
      extent that these expenses create a loss, which are available to be
      carried forward for seven years for losses up to and including 2003 and
      for ten years commencing in 2004 from the year the loss is incurred. The
      Company has not reflected the benefit of utilizing non-capital losses
      totaling approximately $14,500,000, nor a capital loss totaling $750,000
      in the future as a deferred tax asset as at June 30, 2006. As at the
      completion of the June 30, 2006 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.

17.   COMPREHENSIVE LOSS

                                                      6/30/06         12/31/05
                                                      -------         --------
                                                            $                $
      Net loss                                     (1,335,929)      (2,835,306)
      Other comprehensive loss
         Cumulative adjustment to market value             --               --
         Foreign currency translation
            adjustments                                14,778           (8,909)
                                                   ----------       ----------
      Comprehensive loss                           (1,321,151)      (2,844,215)
                                                   ==========       ==========

      The foreign currency translation adjustments are not currently adjusted
      for income taxes since the Company is located 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.

                                      -27-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

18.   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 and six
      months ended June 30, 2006 and 2005. There was no income or losses from
      the technology division for the three and six months ended June 30, 2006.
      The net loss for the technology operations for the three and six months
      ended June 30, 2005 was nil and $5,000 respectively.

      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.

      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 and six months ended June 30,
      2006 and 2005. There was no income or losses for the training division for
      the three and six months ended June 30, 2006 and 2005.

      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. The gain on disposal of
      $190,627 has been reflected in the Income (loss) from discontinued
      operations in 2003. Of the $190,627, $146,627 was received in cash on
      closing with the balance of $44,000 due in a promissory note payable by
      June 27, 2004. On June 8, 2005, the Company collected approximately
      $40,000 on the promissory note and forgave the balance. 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 revenue attributable to the IT recruitment division for the
      three and six months ended June 30, 2006 and 2005. There was no income or
      losses for the IT recruitment division for the three and six months ended
      June 30, 2006. The net income for the IT division for the three and six
      months ended June 30, 2005, was $24,000 and $24,000 respectively.

      The following table presents the revenues, income (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:

                                      Three months ended      Six months ended
                                                 June 30,              June 30,
                                                Restated              Restated
                                                    2005                  2005
                                        2006    (note 25)     2006    (note 25)
                                        ----    ---------     ----    ---------
                                                                 $           $
      Revenues                            --          --        --          --
      Loss from operations before
        income taxes                      --         (86)       --         (86)
      Provision for Income Taxes          --     (23,779)       --     (19,182)
      Income from discontinued
        operations                        --      23,693        --      19,096

                                      -28-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

19.   SCHEDULE OF NON-CASH ITEMS PER STATEMENT OF CASH FLOW

      The Company issued common shares and warrants for the following:

                                                Six Months ended June 30, 2006
                                                                    Restated
                                                        2006     2005 (note 25)
                                                        ----     --------------
                                                           $                  $
      Common stock issued for liabilities            249,624                 --
      Common stock issued for investment             763,000                 --
      Preferred stock issued for investment          699,687                 --
                                                   ---------                 --
                                                   1,712,311                 --
                                                   =========                 ==

20.   SEGMENTED INFORMATION

      a) Revenue and Gross Profit by Geographic Area

                                  Three months ended         Six months ended
                                             June 30,                 June 30,
                                            Restated                 Restated
                                                2005                     2005
                                    2006    (note 25)        2006    (note 25)
                                    ----    ---------        ----    ---------
                                       $            $           $           $
Revenue
  Canada                         406,321      677,360     839,230     974,004
  United States of America     3,387,502    2,926,510   5,864,907   6,232,805
                               ---------    ---------   ---------   ---------
                               3,793,823    3,603,870   6,704,137   7,206,809
                               =========    =========   =========   =========
Gross Profit
  Canada                         128,189       87,228     280,923     187,471
  United States of America     1,106,684      981,620   1,763,135   2,153,546
                               ---------      -------   ---------   ---------
                               1,234,873    1,068,848   2,044,058   2,341,017
                               =========    =========   =========   =========

      b) Net Income (Loss) by Geographic Area

                              Three months ended              Six months ended
                                         June 30,                      June 30,
                                        Restated                      Restated
                                            2005                          2005
                               2006     (note 25)          2006       (note 25)
                               ----     ---------          ----       ---------
                                  $             $             $              $

Canada                     (939,721)   (1,017,641)   (1,092,730)    (1,691,469)
United States of America    (24,553)      219,495      (243,199)       752,504
                           --------    ----------    ----------     ----------

                           (964,274)     (798,146)   (1,335,929)      (938,965)
                           =========   ==========    ==========     ==========

      c) Identifiable Assets by Geographic Area

                                          6/30/06                     12/31/05
                                          -------                     --------
                                                $                            $

Canada                                    804,246                      811,119
United States of America                8,084,338                    4,641,133
                                        ---------                    ---------
                                        8,888,584                    5,452,252
                                        =========                    =========

      d) Revenues from Major Customers and Concentration of Credit Risk

      The consolidated entity had the following revenues from major customers:

      For the three and six months ended June 30, 2006, one customer had sales
      of $306,080 and $718,694, respectively, representing approximately 8% and
      11%, respectively, of total revenue.

      For the three and six months ended June 30, 2005, one customer had sales
      of $905,070 and $2,290,288, respectively, representing approximately 25%
      and 32%, respectively, of total revenue.

      e) Purchases from Major Suppliers

      There were no significant purchases from major suppliers.

                                      -29-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

21.   EARNINGS PER SHARE

      The Company has adopted Statement No. 128, Earnings Per Share, which
      requires presentation, in the consolidated statement of operations, of
      both basic and diluted earnings per share.

                                 Three months ended            Six months ended
                                            June 30,                    June 30,
                                           Restated                    Restated
                                               2005                        2005
                                  2006     (note 25)          2006     (note 25)
                                  ----     ---------          ----     ---------
                                     $             $             $            $
Numerator

Loss from continuing
operations                    (964,274)     (821,839)   (1,335,929)    (958,061)

Income from discontinued
operations                          --        23,693            --       19,096
                            ----------    ----------    ----------   ----------
Net loss                      (964,274)     (798,146)   (1,335,929)    (938,965)
                            ==========    ==========    ==========   ==========
Denominator

Weighted Average common
stock outstanding*           4,369,147     4,000,971     4,369,147    3,665,040
                            ==========    ==========    ==========   ==========
Basic and diluted loss per
common share from
continuing operations            (0.22)        (0.21)        (0.31)       (0.26)
                            ==========    ==========    ==========   ==========
Basic and diluted loss per
common share after
discontinued operations          (0.22)        (0.20)        (0.31)       (0.26)
                            ==========    ==========    ==========   ==========
Average common stock
outstanding*                 4,369,147     4,000,971     4,369,147    3,665,040

Average common stock
issuable                            --            --            --           --
                            ----------    ----------    ----------   ----------
Average common stock
outstanding assuming
dilution*                    4,369,147     4,000,971     4,369,147    3,665,040
                            ==========    ==========    ==========   ==========

      The outstanding options and warrants as detailed in note 15 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.

      * Adjusted for reverse split of Company's stock (1:5,000) on June 29, 2005

22.   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, 2006, for the next five years are as follows:

                2006     $230,912
                2007      462,835
                2008      260,861
                2009      140,477
                2010      140,477
          Thereafter           --
                               --
                       ----------
                       $1,235,561
                       ==========

      The lease commitments do not include an operating lease for premises that
      the Company is currently sub leasing to the purchaser of the United States
      training division. Subsequent to the year end, the Company was notified by
      the purchaser that they had failed to meet their rent obligations and
      currently had rent arrears of approximately $80,000. The lessor filed a
      claim against Thinkpath Training LLC and the Company demanding that the
      rent arrears be paid and the premises vacated immediately. On June 1,
      2006, a default judgement was awarded to the lessor and entered against
      the Companys. On July 7, 2006, a motion to vacate the default judgement
      was denied. On July 27, 2006, the court agreed to the Company's motion to
      renew and reargue our prior motion seeking to vacate the default judgement
      on August 23, 2006. Although the Company intends to continue to defend
      this claim vigorously, it may be held liable for the rent arrears plus the
      balance of the lease which expires August 31, 2006 for a total of
      $300,000.

                                      -30-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

      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 $44,597 which expired November 30, 2004.

      b) On November 3, 2005, the Company terminated the service agreement of
      the vendors of TBM Technologies Inc., acquired on January 17, 2005, for
      what it believes is a material breach of the agreement by the vendors. The
      vendors are seeking termination pay from the Company in the amount of
      approximately $40,000. The Company intends to defend this claim vigorously
      and counterclaim for losses suffered as well as jeopardy to its reputation
      by the actions of the vendors.

      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.

23.   SUBSEQUENT EVENTS

      Subsequent to June 30, 2006, the Company entered into an agreement with
      Financial Media Relations, LLC, a California company, for the purpose of
      developing and implementing a marketing and investor relations program and
      the provision of business development and strategic advisory services. The
      term of the agreement is six months beginning July 1, 2006 at a cost of
      $5,000 per month. In addition, the Company issued 162,000* shares of its
      common stock, no par value, with "piggyback" registration rights.

24.   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's revenue is derived from customers of various industries and
      geographic locations reducing its credit risk. Where exposed to credit
      risk, the Company mitigates this risk by routinely assessing the financial
      strength of its customers, establishing billing arrangements and
      monitoring the collectibility of the account on an ongoing basis.

      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 values of the accounts receivable and of the accounts payable
      on acquisition of subsidiary company approximates their fair values
      because of the short-term maturities of 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 based on the estimated
      quoted market prices for the same or similar debt instruments. The fair
      value of the long-term debt approximates the carrying value.

      The fair value of the Company's debt instruments with embedded derivatives
      are measured separately at the end of each period using a combination of
      Black-Scholes methodologies and Monte Carlo simulations. As the Company
      has no public rating or no public debt, it is very difficult to estimate
      the potential change of the credit spread between the issue date and
      valuation dates. Moreover, there is no evidence of any material event that
      could change significantly the credit spread of the issue. A constant
      credit spread equal to 300 basis points as per the issue date was
      therefore assumed in the valuation and current volatility rates were used.
      Changes in the fair value of derivates are charged to current earnings.

                                      -31-
<PAGE>

THINKPATH INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS AT JUNE 30, 2006
(AMOUNTS EXPRESSED IN US DOLLARS)

25.   RESTATEMENTS

      The accompanying financial statements for the three months and six months
      ended June 30, 2005 have been restated to correct accounting errors for
      the beneficial conversion feature on convertible debentures.

      During the period December 2002 until November 2004, the Company issued
      12% Senior Secured Convertible Debentures in the aggregate principal
      amount of $5,025,000, which debentures were subsequently converted or
      repaid by June 27, 2005. The value assigned to the beneficial conversion
      feature on the debentures was credited to paid in capital and charged to
      earnings as interest expense on the date of issuance. The Company has
      determined, in accordance with Issue 6 of Emerging Task Force No. 00-27
      "Application of Issue No. 98-5 to Certain Convertible Instruments" ("EITF
      00-27"), that the value of the beneficial conversion feature should be
      accreted to interest expense from the date of issuance to the stated
      redemption date.

      The Company recorded the value of the beneficial conversion feature in
      excess of the amount of proceeds allocated to the convertible instruments.
      The Company has determined, in accordance with Paragraph 6 of Emerging
      Task Force No. 98-5 "Accounting for Convertible Securities with Beneficial
      conversion Features or Contingently Adjustable Conversion Ratios"
      ("EITF98-5"), that the calculated amount of the beneficial conversion
      feature should be limited to the amount of proceeds allocated to the
      convertible instrument.

      The Company has amended its financial statements for the three and six
      months ended June 30, 2005 to limit the value of the beneficial conversion
      feature to the amount of proceeds allocated to the convertible debenture
      and to amortize the beneficial conversion feature from the date of
      issuance to the stated redemption date.

      The effect of this restatement was to decrease the Company's net loss by
      $22,383 and $26,652 respectively for the three and six month periods ended
      June 30, 2005. This restatement concerns a non-cash item.

      The following table quantifies the EPS impact of this restatement:

                                                                      Operating
                                                                       Earnings
                                                                          (Loss)
                                                             Amount   per Share
--------------------------------------------------------------------------------
Net loss for the three months ended June 30, 2005 as
reported in June 30, 2005 Form 10Q-SB                     $(820,529)      (0.04)
   to correct accounting error for recording beneficial
   conversion feature on convertible debentures              22,383       (0.00)
Revised net loss                                          $(798,146)      (0.04)

      The following table quantifies the EPS impact of this restatement:

                                                                      Operating
                                                                       Earnings
                                                                          (Loss)
                                                             Amount   per Share
--------------------------------------------------------------------------------
Net loss for the six months ended June 30, 2005 as
reported in June 30, 2005 Form 10Q-SB                     $(965,617)      (0.04)
   to correct accounting error for recording beneficial
   conversion feature on convertible debentures              26,652       (0.00)
Revised net loss                                          $(938,965)      (0.04)

26.   COMPARATIVE FIGURES

      Certain figures in the June 30, 2005 financial statements have been
      reclassified to conform with the basis of presentation used at June 30,
      2006.

                                      -32-
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

      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-QSB. The
statements contained in this Form 10-QSB 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-QSB 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-QSB 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

      Thinkpath provides engineering services including design, build, drafting,
technical publishing and documentation, and on-site engineering support to
customers in the defense, aerospace, automotive, health care and manufacturing
industries.

      We were incorporated under the laws of the Province of Ontario, Canada in
1994. In September 1999, we acquired an engineering services company CadCam Inc.
and its two subsidiaries, CadCam Michigan Inc. and CadCam Technical Services
Inc. CadCam Inc. was founded in 1977.

      Our principal executive offices are located at 201 Westcreek Boulevard,
Brampton, Ontario, Canada and our website is www.thinkpath.com.

PLAN OF OPERATION

      We are focused on building relationships with customers in high growth
industries such as defense and aerospace. We believe we are poised to benefit
from the increased demand generated by aerospace and defense-related customers
who we expect will increasingly rely on our project engineering design,
expertise and technical staffing services. This year we will continue to
solidify our relationships to actively increase new business opportunities with
existing customers including General Dynamics, Lockheed Martin, Boeing, General
Electric, United Defense and TACOM. We intend to continue to grow organically as
well as through acquisitions over the next year. Acquisitions will be limited to
profitable engineering companies, which must have an immediate accretive impact.

      On June 30, 2006, we completed the acquisition of The Multitech Group Inc.
(TMG), an engineering services firm located in New Jersey. The purchase price of
$2,798,750 was based on five times the audited 2005 EBIT of TMG and was payable
as follows: thirty percent in cash for a total of $839,625; twenty per cent in a
two year subordinated note of $559,750 bearing annual interest at US prime,
payable quarterly; twenty-five per cent in common stock for a total
consideration of $699,688 or 3,369,188 common shares; and, twenty-five per cent
in preferred stock for a total consideration of $669,688 or 700 preferred share
which will be convertible into common shares after June 30, 2007. The
acquisition was accounted for by the purchase method and the operations have
been included in the consolidated operations from April 1, 2006.

      TMG has been providing reliable engineering design services in Material
Handling, Pollution Control, Port Security, Government/Military, and
Manufacturing since 1976. It also develops and implements Technical
Documentation and Training programs.

                                      -33-
<PAGE>

      TMG's annual revenues are approximately $3.3 million with an EBIT of
approximately $500,000 The acquisition adds some long-term, high profile clients
including Fedex, U.S Postal Service, Siemens, Boeing, Smiths Detection, Sandvik,
Port Authority of New York and New Jersey. The five TMG officers accepted
employment agreements with Thinkpath in various capacities, including John W.
Kennedy as Vice President of Business Development, James J. McLafferty as
General Manager (New Jersey Office), Scott A. Nilssen as National Director of
Marketing and Cecelia Kennedy as Contracts Staffing Manager (New Jersey Office).









                                      -34-
<PAGE>

                      STATEMENTS OF OPERATIONS--PERCENTAGES
                   FOR THE THREE AND SIX MONTHS ENDED JUNE 30,

<TABLE>
<CAPTION>
                                                      Three Months Ended      Six Months Ended
                                                                 June 30,              June 30,
                                                         2006       2005       2006       2005
                                                         ----       ----       ----       ----
                                                            %          %          %          %
<S>                                                      <C>        <C>        <C>        <C>
REVENUE                                                   100        100        100        100

COST OF SERVICES                                           67         70         70         68
                                                         ----       ----       ----       ----
GROSS PROFIT                                               33         30         30         32

EXPENSES
  ADMINISTRATIVE                                           23         18         22         17
  SELLING                                                  12          9         14         10
  DEPRECIATION AND AMORTIZATION                             5          2          4          2
  WRITE DOWN OF PROPERTY AND EQUIPMENT                     --         --         --         --
  DEBT FORGIVENESS                                         (2)        (2)        (1)        (1)
  FINANCING COSTS                                          15         --          7         --
                                                         ----       ----       ----       ----

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE           (21)         2        (15)         4
INTEREST CHARGES AND INCOME TAXES

  INTEREST CHARGES                                          4         23          5         16
                                                         ----       ----       ----       ----

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES       (25)       (21)       (20)       (12)

INCOME TAXES                                               --          2         --          1
                                                         ----       ----       ----       ----

LOSS FROM CONTINUING OPERATIONS                           (25)       (23)       (20)       (13)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS                 --          1         --         --
                                                         ----       ====       ----       ====

NET LOSS                                                  (25)       (22)       (20)       (13)
                                                         ====       ====       ====       ====
</TABLE>

                                      -35-
<PAGE>

RESULTS OF OPERATIONS

THE THREE MONTHS ENDED JUNE 30, 2006 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2005

REVENUE

Our revenue is comprised of engineering services including 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. Customers we provide engineering services to include General Dynamics,
General Electric, General Motors, Lockheed Martin, Cummins Engines, ABB, Eaton
Aerospace, Remy, America Inc., Toyota, Atlas Copco and Comdev Space Group.

For the three months ended June 30, 2006, we derived 89% of our revenue in the
United States compared to 81% for the three months ended June 30, 2005. This
increase is largely attributable to the acquisition of TMG which contributed
$750,000 in revenue since April 1, 2006. Consolidated revenues for the three
months ended June 30, 2006 increased by $190,000 or 5% to $3,790,000 as compared
to $3,600,000 for the three months ended June 30, 2005. Without the $750,000
contribution from TMG, the revenue from organic operations is down $560,000.
This decrease is largely attributable to the decline in sales of approximately
$600,000 from one major customer located in the United States who represented
only 8% of our consolidated revenue for the three months ended June 30, 2006
compared to 25% for the three months ended June 30, 2005.

COSTS OF SERVICES

The direct costs of engineering services include wages, benefits, software
training and project expenses. Costs of services for the three months ended June
30, 2006 increased by $20,000 or 1% to $2,560,000 as compared to $2,540,000 for
the three months ended June 30, 2005. This increase is related to the increase
in revenue. As a percentage of revenue, however, the cost of services for the
three months ended June 30, 2006 decreased from 70% in 2005 to 67% in 2006.

GROSS PROFIT

Gross profit is calculated by subtracting all direct costs from net revenue.
Gross profit for the three months ended June 30, 2006 increased by $160,000 or
15% to $1,230,000 compared to $1,070,000 for the three months ended June 30,
2005. As a percentage of revenue, gross profit for the three months ended June
30, 2006 was 33% compared to 30% in 2005. The increase is directly attributable
to the increase in gross profit in Canada from 13% in 2005 to 32% in 2006 as
result of the addition of several higher margin engineering service projects as
well as contract placements.

EXPENSES

Total expenses for the three months ended June 30, 2006 increased by 103% or
$1,021,000 to $2,030,000 compared to $1,000,000 for the three months ended June
30, 2005

ADMINISTRATIVE EXPENSES

Administrative expenses increased by $230,000 or 33% to $890,000 for the three
months ended June 30, 2006 compared to $660,000 for the three months ended June
30, 2005. This increase is largely attributable to the acquisition of TMG
including the salaries of the five officers and two support staff. As a
percentage of revenue, administrative expenses for the three months ended June
30, 2006 was 23% compared to 18% in 2005.

SELLING EXPENSES

Selling expenses increased by $130,000, or 39%, to $460,000 for the three months
ended June 30, 2006 compared to $330,000 for the three months ended June 30,
2005. This increase is attributable to the additional salaries of new sales
staff hired during the later part of 2005 and early 2006 plus additional sales
expenses from the acquisition of TMG. As a percentage of revenue, selling
expenses for the three months ended June 30, 2006 was 12% compared to 9% in
2005.

                                      -36-
<PAGE>

DEPRECIATION AND AMORTIZATION

For the three months ended June 30, 2006, depreciation and amortization expenses
increased by $90,000, or 100%, to $180,000 compared to $90,000 for the three
months ended June 30, 2005. The 2006 increase is attributable to amortization of
approximately $90,000 of additional capital assets and other assets including
contracts and customer lists acquired with the TMG acquisition. As a percentage
of revenue, depreciation and amortization expenses increased to 5% for the three
months ended June 30, 2006 compared to 2% in 2005.

DEBT FORGIVENESS

On June 30, 2006 we reached a settlement with W. Terry Lyons with respect to the
secured loan outstanding to him in the amount of $178,000 including accrued
interest. In consideration of a monetary payment of $100,000 and execution of a
Full and Final Release, Lyons released all rights and debt held by him and
forgave the balance of the loan of $78,000 which is included in debt
forgiveness. Debt forgiveness for the three months ended June 30, 2005 includes
$66,000 of accrued interest on the 12% Senior Secured Convertible Debentures
which was forgiven when the principal balance was repaid on June 27, 2005.

FINANCING COSTS AND MARK-TO-MARKET ADJUSTMENTS

During the three months ended June 30, 2006, we amortized $145,000 of the
initial value of the derivatives and embedded derivatives attached to the Laurus
Master Fund, Ltd. convertible debt financing closed on June 27, 2005. At June
30, 2006, the fair value of the derivates and embedded derivatives were
marked-to-market with a total of $130,000 charged to financing costs.

On June 30, 2006, Laurus modified the terms of the convertible financing
facility and removed the convertibility option, the interest adjustment clause
and the conversion adjustment clause. In addition, the Registration Rights
Agreement was modified so that the liquidated damages that may be charged for
failure to file a registration statement at 2% per day shall no longer exceed
20% of the total debt owed to Laurus. Further, the Registration Rights Agreement
was modified such that there must be an effective registration statement for the
common stock issued upon the exercise of options and warrants since the
convertibility option has been removed.

We accounted for the modifications under EITF Issue No. 96-19, "Debtor's
Accounting for a Modification or Exchange of Debt Instruments" and EITF Issue
No. 05-07, "Accounting for Modifications to Conversion Options Embedded in Debt
Instruments and Related Issues". We concluded that the modifications had a
material impact on future cash flows and therefore resulted in extinguishment of
the old debt facility and creation of a new debt facility. Using an effective
rate of 20% the new debt facility was recorded at fair value of $2,350,000
resulting in a loss of $690,000 on extinguishment of debt based on the book
value of the old facility of $1,660,000.

Also, as the conversion right of the convertible financing facility was
eliminated, the entire embedded derivative pertaining to the conversion option
was reversed, resulting in a gain of $390,000.

During the three months ended June 30, 2006, we amortized $5,000 of the initial
value of the derivatives and embedded derivatives attached to the Laurus Master
Fund, Ltd. convertible debt financing closed on June 27, 2005.

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST CHARGES AND INCOME
TAXES For the three months ended June 30, 2006, loss from continuing operations
before interest charges and income taxes increased by 1216% to a loss of
$790,000 compared to income of $60,000 for the three months ended June 30, 2005.

                                      -37-
<PAGE>

INTEREST CHARGES

For the three months ended June 30, 2006, interest charges decreased by
$660,000, or 80%, to $160,000 from $820,000 for the three months ended June 30,
2005. This decrease is largely attributable to the reduced interest expense on
the beneficial conversion feature recognized on convertible debt which was
repaid in June 2005. Included in the interest charges for the three months ended
June 30, 2006 is $135,000 paid on the revolving facility and overadvance with
Laurus Master Fund, Ltd., $25,000 on long-term debt and bank charges. Included
in the interest charges for the three months ended June 30, 2005 is $720,000
related to the 12% senior secured convertible debentures, $60,000 paid on the
receivable discount facility with Morrison Financial Services Limited and
$40,000 paid on long-term debt and bank charges.

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

For the three months ended June 30, 2006, loss from continuing operations before
income taxes increased by $190,000 or 25% to a loss of $950,000 compared to a
loss of $760,000 in 2005.

INCOME TAXES

Income tax expense for the three months ended June 30, 2006 was $10,000 compared
to $60,000 in 2005.

LOSS FROM CONTINUING OPERATIONS

Loss from continuing operations for the three months ended June 30, 2006
increased by $140,000 or 17% to a loss of $960,000 compared to a loss of
$820,000 for the three months ended June 30, 2005.

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, 2006 and 2005.

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. As we will not have future revenues from either its
Njoyn or Secondwave products, the technology operations have been reported as
discontinued. There was no technology revenue for the three months ended June
30, 2006 and 2005. The net loss for the technology operations for the three
months ended June 30, was nil in 2006 and $5,000 in 2005.

Effective May 1, 2002, we 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.

On November 1, 2002, we 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, we will not have future revenues from our
training division and therefore the operations have been reported as
discontinued. There was no revenue or losses attributable to the training
division for the three months ended June 30, 2006 and 2005.

                                      -38-
<PAGE>

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 was $190,627 of which we received
$146,627 on closing with the balance of $44,000 due in a promissory note payable
by June 27, 2004. On June 8, 2005, we collected approximately $40,000 on the
promissory note and forgave the balance. As a result of this transaction, we
will not have future revenues from its IT recruitment division and therefore the
operations have been reported as discontinued.

There was no revenue to the IT recruitment division for the three months ended
June 30, 2006 and 2005. There was no losses or income attributable to the IT
recruitment division for the three months ended June 30, 2006 and there was a
gain of $24,000 for the three months ended June 30, 2005.

NET LOSS

For the three months ended June 30, 2006, net loss increased by $160,000 or 20%
to a net loss of $960,000 compared to a net loss of $800,000 for the three
months ended June 30, 2005.

THE SIX MONTHS ENDED JUNE 30, 2006 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2005

REVENUE

For the six months ended June 30, 2006, we derived 87% of our revenue in the
United States compared to 86% for the six months ended June 30, 2005.
Consolidated revenues for the six months ended June 30, 2006 decreased by
$500,000 or 7% to $6,700,000 as compared to $7,200,000 for the six months ended
June 30, 2005. This decrease is largely attributable to the aforementioned
decline in sales of approximately $1,570,000 from one major customer who only
represented 11% of our total revenue for the six months ended June 30, 2006
compared to 32% for the six months ended June 30, 2005.

COSTS OF SERVICES

Costs of services for the six months ended June 30, 2006 decreased by $210,000
or 4% to $4,660,000 as compared to $4,870,000 for the six months ended June 30,
2005. However, as a percentage of revenue, the cost of services for the six
months ended June 30, 2006 increased from 68% in 2005 to 70% in 2006.

GROSS PROFIT

Gross profit for the six months ended June 30, 2006 decreased by $300,000 or 13%
to $2,040,000 compared to $2,340,000 for the six months ended June 30, 2005. As
a percentage of revenue, gross profit for the six months ended June 30, 2006 was
30% compared to 32% in 2005. The decrease in gross profit can be attributed to
the aforementioned decrease in revenue.

EXPENSES

Total expenses for the six months ended June 30, 2006 increased by 49% or
$1,010,000 to $3,060,000 compared to $2,050,000 for the six months ended June
30, 2005

ADMINISTRATIVE EXPENSES

Administrative expenses increased by $240,000 or 19% to $1,480,000 for the six
months ended June 30, 2006 compared to $1,240,000 for the six months ended June
30, 2005. This increase is largely attributable to the acquisition of TMG
including the salaries of the five officers and two support staff effective
April 1, 2006. As a percentage of revenue, administrative expenses for the six
months ended June 30, 2006 was 22% compared to 17% in 2005.

                                      -39-
<PAGE>

SELLING EXPENSES

Selling expenses increased by $250,000, or 36%, to $940,000 for the six months
ended June 30, 2006 compared to $690,000 for the six months ended June 30, 2005.
This increase is attributable to the additional salaries of new sales staff
hired during the later part of 2005 and early 2006 plus additional sales expense
from the acquisition of TMG. As a percentage of revenue, selling expenses for
the six months ended June 30, 2006 was 14% compared to 10% in 2005.

DEPRECIATION AND AMORTIZATION

For the six months ended June 30, 2006, depreciation and amortization expenses
increased by $90,000, or 53%, to $260,000 compared to $170,000 for the six
months ended June 30, 2005. The 2006 increase is attributable to amortization of
approximately $90,000 of additional capital assets and other assets including
contracts and customer lists acquired with the TMG acquisition. As a percentage
of revenue, depreciation and amortization expenses increased to 4% for the six
months ended June 30, 2006 compared to 2% in 2005.

WRITE DOWN OF PROPERTY AND EQUIPMENT

During the six months ended June 30, 2005, we wrote down property and equipment
in the amount of $5,000. The fair value of the impaired asset was generally
estimated by discounting the expected future cash flows of the individual
assets. Impairment was indicated by adverse change in market prices, current
period cash flow losses combined with a history of losses, or a significant
change in the manner in which the asset is to be used.

DEBT FORGIVENESS

Debt forgiveness for the six months ended June 30, 2006 includes $78,000 from
the settlement of the W. Terry Lyons Loan on June 30, 2006. Debt forgiveness for
the six months ended June 30, 2005 includes $66,000 of accrued interest on the
12% Senior Secured Convertible Debentures which was forgiven when the principal
balance was repaid on June 27, 2005.

FINANCING COSTS AND MARK-TO-MARKET ADJUSTMENTS

During the six months ended June 30, 2006, we amortized $290,000 of the initial
value of the derivatives and embedded derivatives attached to the Laurus Master
Fund, Ltd. convertible debt financing closed on June 27, 2005. At June 30, 2006,
the fair value of the derivates and embedded derivatives were marked-to-market
with a total of $135,000 credited to financing costs. As a result of the
modifications to the Laurus revolving facility on June 30, 2006, we recognized a
loss on extinguishment of debt of $690,000 and a gain on the reversal of the
embedded derivative of $390,000.

During the six months ended June 30, 2006, we amortized $5,000 of the initial
value of the derivatives and embedded derivatives attached to the Laurus Master
Fund, Ltd. convertible debt financing closed on June 27, 2005.

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INTEREST CHARGES AND INCOME
TAXES For the six months ended June 30, 2006, loss from continuing operations
before interest charges and income taxes increased by $1,300,000 or 448% to a
loss of $1,010,000 compared to income of $290,000 for the six months ended June
30, 2005.

INTEREST CHARGES

For the six months ended June 30, 2006, interest charges decreased by $880,000,
or 75%, to $300,000 from $1,180,000 for the six months ended June 30, 2005. This
decrease is largely attributable to the reduced interest expense on the
beneficial conversion feature recognized on convertible debt which was repaid in
June 2005. Included in the interest charges for the six months ended June 30,
2006 is $245,000 paid on the revolving facility and overadvance with Laurus
Master Fund, Ltd., and $55,000 on long-term debt and bank charges. Included in
the interest charges for the six months ended June 30, 2005 is $1,000,000
related to the 12% senior secured convertible debentures, $110,000 paid on the
receivable discount facility with Morrison Financial Services Limited, $70,000
paid on long-term debt and bank charges.

                                      -40-
<PAGE>

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

For the six months ended June 30, 2006, loss from continuing operations before
income taxes increased by $430,000 or 48% to a loss of $1,320,000 compared to a
loss of $890,000 in 2005.

INCOME TAXES

Income tax expense for the six months ended June 30, 2006 was $20,000 compared
to $70,000 in 2005.

LOSS FROM CONTINUING OPERATIONS

Loss from continuing operations for the six months ended June 30, 2006 increased
by $380,000 or 40% to a loss of $1,340,000 compared to a loss of $960,000 for
the six months ended June 30, 2005.

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, 2006 and 2005.

There was no technology revenue for the six months ended June 30, 2006 and 2005.
The net loss for the technology operations for the six months ended June 30, was
nil in 2006 and $5,000 in 2005.

There was no revenue or loss attributable to the training division for the six
months ended June 30, 2006 and 2005.

There was no revenue to the IT recruitment division for the six months ended
June 30, 2006 and 2005. There was no loss or income attributable to the IT
recruitment division for the six months ended June 30, 2006 and there was a gain
of $24,000 for the six months ended June 30, 2005.

NET LOSS

For the six months ended June 30, 2006, net loss increased by $400,000 or 43% to
a net loss of $1,340,000 compared to a net loss of $940,000 for the six months
ended June 30, 2005.

LIQUIDITY AND CAPITAL RESOURCES

With insufficient working capital from operations, our primary source of cash is
a financing facility with Laurus Master Fund, Ltd. At June 30, 2006, the
principal balance on the loan facility was $2,825,000.

At June 30, 2006, we had cash of $600,000 and a working capital deficiency of
$1,790,000. At June 30, 2006, we had a cash flow deficiency from operations of
$160,000. At June 30, 2005, we had cash of $610,000 and a working capital
deficiency of $320,000. At June 30, 2005, we had a cash flow deficiency from
operations of $90,000.

At June 30, 2006, we had a cash flow deficiency from investing activities of
$1,190,000 related to cash paid for the acquisition of TMG net of cash acquired
and related costs. At June 30, 2005, we had a cash flow deficiency from
investing activities of $190,000 related to the purchase of property and
equipment.

At June 30, 2006 we had cash flow from financing activities of $1,830,000
largely attributable to proceeds from the revolving facility with Laurus of
$300,000, a term note with Laurus of $1,400,000 and the issuance of promissory
notes to the TMG vendors of $560,000 less deferred costs of $120,000 and
long-term debt repayment of $310,000. At June 30, 2005, we had cash flow from
financing activities of $790,000 attributable primarily to proceeds from the
convertible financing facility with Laurus of $3,100,000 less deferred financing
costs of $230,000 and long-term debt repayment of $2,080,000.

On June 30, 2006, we reached a settlement with W. Terry Lyons with respect to
the secured loan outstanding to him in the amount of $178,062 including accrued
interest. In consideration of a monetary payment of $100,000 and execution of a
Full and Final Release, Lyons released Thinkpath of all rights and debt held by
him and forgave the balance of the loan of $78,062 which is included in debt
forgiveness in the consolidated statement of operations.

                                      -41-
<PAGE>

On June 30, 2006, we repaid the balance owing on an SBA loan held by TMG in the
amount of $84,083. This loan was personally guaranteed by the principal
shareholders of TMG and collateralized by their personal residence and TMG's
accounts receivables.

On June 30, 2006, we repaid an Officer's Loan to the vendors of TMG in the
amount of $349,624 with a cash payment of $100,000 and 1,202,009* shares of our
common stock, no par value per share, for consideration of $249,624.

On June 30, 2006, we received a secured term loan in the amount of $1,400,000
from Laurus Master Fund, Ltd. of which the proceeds were used to fund the
acquisition of TMG. The loan is payable monthly starting October 1, 2006 in the
amount of $42,424 per month. The loan bears interest at an annual rate equal to
the Wall Street Journal prime rate plus 2%. The loan matures June 30, 2009. In
connection with the financing, we issued Laurus a warrant to purchase up to
1,810,674 shares of our common stock at $.0001 per share. Laurus is prohibited
from selling any of the warrants until June 30, 2007 and thereafter is
prohibited from selling an amount of shares in excess of 15% of the daily volume
of trading of our common stock on any day.

On June 30, 2006, we issued five unsecured promissory notes to the shareholders
of TMG totaling $559,750 with quarterly payments of $69,969 starting September
30, 2006. The notes bear interest at an annual rate equal to the Wall Street
Journal prime rate and mature on June 30, 2008.

On June 30, 2006, we assumed a motor vehicle loan as a result of the acquisition
of TMG in the amount of $11,160 with monthly payments of $372 for 36 months
starting January 14, 2006. The loan is secured by the motor vehicle and bears
interest at 7.5% per annum. The loan matures on January 14, 2009.

At June 30, 2006, we held various capital leases in the amount of $23,993
secured by property and equipment with various payment terms and interest rates
ranging from 10-22%. These leases mature between July 2006 and July 2007.

Although we believe that our current working capital and cash flows from
continuing 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 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 the
effectiveness of a registration statement registering the shares underlying the
Laurus warrants 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.

                                      -42-
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment
of ARB No. 43". This statement clarifies the accounting for abnormal amounts of
idle facility expense, freight, handling costs, and wasted material (spoilage).
This statement is effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. We do not believe that the adoption of SFAS No.
151 will have a material impact, if any, on our results of operations or
financial position as we do not hold inventory.

In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67",
which references the financial accounting and reporting guidance for real estate
time-sharing transactions in AICPA Statement of Position (SOP) 04-2, "Accounting
for Real Estate Time-Sharing Transactions". SFAS No. 152 is effective for years
beginning after June 15, 2005, with restatements of previously issued financial
statements prohibited. We do not believe that the adoption of SFAS No. 152 will
have a material impact, if any, on our results of operations or financial
position.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29", effective for nonmonetary asset
exchanges occurring in the fiscal year beginning January 1, 2006. This statement
requires that exchanges of productive assets be accounted for at fair value
unless fair value cannot be reasonably determined or the transaction lacks
commercial substance. We do not believe that the adoption of SFAS No. 153 will
have an impact, if any, on our results of operations or financial position.

In December 2004, the FASB issued SFAS No. 123 (Revised), "Share-based Payment".
This statement requires employers to expense costs related to share-based
payment transactions with employees. With limited exceptions, SFAS No. 123
(Revised) requires that the fair value of share-based payments to employees be
expensed over the period service is received. SFAS No. 123 (Revised) becomes
effective for annual reporting periods that begin after December 15, 2005.
Effective January 1, 2006, we adopted this standard using the modified
prospective method of transition. This method requires that issued financial
statements be restated based on the amounts previously calculated and reported
in the pro forma footnote disclosures required by SFAS No. 123. SFAS No. 123
(Revised) allows the use of both closed form models (e.g., Black-Scholes Model)
and open form models (e.g., lattice models) to measure the fair value of the
share-based payment as long as that model is capable of incorporating all of the
substantive characteristics unique to share-based awards. In accordance with the
transition provisions of SFAS No. 123 (Revised), the expense attributable to an
award will be measured in accordance with the company's measurement model at
that award's date of grant. The total expense recorded in future periods will
depend on several variables, including the number of shared-based awards that
vest and the fair value of those vested awards.

In May 2005, the FASB issued Statement No. 154, "Accounting Changes and Error
Corrections", applying to all voluntary accounting principle changes as well as
the accounting for and reporting of such changes. SFAS No. 154 requires
voluntary changes in accounting principle be retrospectively applied to
financial statements from previous periods unless such application is
impracticable. SFAS No. 154 requires that changes in depreciation, amortization,
or depletion methods for long-lived, non-financial assets must be accounted for
as a change in accounting estimate due to a change in accounting principle. By
enhancing the consistency of financial information between periods, the
requirements of FASB 154 improves financial reporting. FASB 154 replaces APB
Opinion No. 20 and FASB 3. FASB 154 carries forward many provisions of Opinion
20 and FASB 3 without change including those provisions related to reporting a
change in accounting estimate, a change in reporting entity, correction of an
error and reporting accounting changes in interim financial statements. FASB 154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005.

                                      -43-
<PAGE>

In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid
Financial Instruments" ("SFAS 155"). SFAS 155 allows any hybrid financial
instrument that contains an embedded derivatives that otherwise would require
bifurcation under SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" to be carried at fair value in its entirety, with changes in
fair value recognized in earnings. In addition, SFAS 155 requires that
beneficial interests in securitized financial assets be analyzed to determine
whether they are freestanding derivatives or contain an embedded derivative.
SFAS 155 also eliminates a prior restriction on the types of passive derivatives
that a qualifying special purpose entity is permitted to hold. SFAS 155 is
applicable to new or modified financial instruments in fiscal years beginning
after September 15, 2006, though the provisions related to fair value accounting
for hybrid financial instruments can also be applied to existing instruments.
Early adoption, as of the beginning of an entity's fiscal year, is also
permitted, provided interim financial statements have not yet been issued. We
are currently evaluating the potential impact, if any, that the adoption of SFAS
155 will have on our results of operations or financial position.

In March 2006, the FASB issued SFAS 156, "Accounting for Servicing of Financial
Assets-an amendment of FASB Statement No. 140". This statement amends FASB
Statement No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", with respect to the accounting for
separately recognized servicing assets and servicing liabilities. This
statement: (1) requires an entity to recognize a servicing asset or servicing
liability each time it undertakes an obligation to service a financial asset by
entering into a servicing contract in any of the following situations: (a) a
transfer of the servicer's financial assets that meets the requirements for sale
accounting, (b) a transfer of the servicer's financial assets to a qualifying
special-purpose entity in a guaranteed mortgage securitization in which the
transferor retains all of the resulting securities and classifies them as either
available-for-sale securities or trading securities in accordance with FASB
Statement No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", (c) an acquisition or assumption of an obligation to service a
financial asset that does not relate to financial assets of the servicer or its
consolidated affiliates; (2) requires all separately recognized servicing assets
and servicing liabilities to be initially measured at fair value, if
practicable; (3) permits an entity to choose either of the following subsequent
measurement methods for each class of separately recognized servicing assets and
servicing liabilities: (a) Amortization method-Amortize servicing assets or
servicing liabilities in proportion to and over the period of estimated net
servicing income or net servicing loss and assess servicing assets or servicing
liabilities for impairment or increased obligation based on fair value at each
reporting date, or (b) Fair value measurement method-Measure servicing assets or
servicing liabilities at fair value at each reporting date and report changes in
fair value in earnings in the period in which the changes occur; (3) at its
initial adoption, permits a one-time reclassification of available-for-sale
securities to trading securities by entities with recognized servicing rights,
without calling into question the treatment of other available-for-sale
securities under Statement 115, provided that the available-for-sale securities
are identified in some manner as offsetting the entity's exposure to changes in
fair value of servicing assets or servicing liabilities that a servicer elects
to subsequently measure at fair value; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the statement of financial position and additional disclosures for all
separately recognized servicing assets and servicing liabilities. An entity
should adopt this statement as of the beginning of its first fiscal year that
begins after September 15, 2006. Earlier adoption is permitted as of the
beginning of an entity's fiscal year, provided the entity has not yet issued
financial statements, including interim financial statements, for any period of
that fiscal year. The effective date of this Statement is the date an entity
adopts the requirements of this statement.

                                      -44-
<PAGE>

CRITICAL ACCOUNTING ESTIMATES AND POLICIES

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 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
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 December 31, 2004, we wrote down our investments in non-related companies to
nil.

REVENUE RECOGNITION

We recognize revenue under engineering service contracts when a contract has
been executed, the contract price is fixed and determinable, delivery of
services or products has occurred, and collection of the contract price is
considered probable and can be reasonably estimated. Revenue is earned under
time-and-materials, fixed-price and cost-plus contracts.

                                      -45-
<PAGE>

We recognize revenue on time-and-materials contracts to the extent of billable
rates times hours delivered, plus expenses incurred. For fixed price contracts
within the scope of Statement of Position 81-1, Accounting for Performance of
Construction-Type and Certain Production-Type Contracts (SOP 81-1), revenue is
recognized on the percentage of completion method using costs incurred in
relation to total estimated costs or upon delivery of specific products or
services, as appropriate. For fixed price-completion contracts that are not
within the scope of SOP 81-1, revenue is generally recognized as earned
according to contract terms as the service is provided. We provide our customers
with a number of different services that are generally documented through
separate negotiated task orders that detail the services to be provided and the
compensation for these services. Services rendered under each task order
represent an independent earnings process and are not dependent on any other
service or product sold. We recognize revenue on cost-plus contracts to the
extent of allowable costs incurred plus a proportionate amount of the fee
earned, which may be fixed or performance-based. We consider fixed fees under
cost-plus contracts to be earned in proportion to the allowable costs incurred
in performance of the contract, which generally corresponds to the timing of
contractual billings. We record provisions for estimated losses on uncompleted
contracts in the period in which those losses are identified. We consider
performance-based fees under any contract type to be earned only when it can
demonstrate satisfaction of a specific performance goal or it receive
contractual notification from a customer that the fee has been earned. In all
cases, we recognize revenue only when pervasive evidence of an arrangement
exists services have been rendered, the contract price is fixed or determinable,
and collection is reasonably assured.


Contract revenue recognition inherently involves estimation. From time to time,
facts develop that requires us to revise the total estimated costs or revenues
expected. In most cases, these changes relate to changes in the contractual
scope of the work, and do not significantly impact the expected profit rate on a
contract. We record the cumulative effects of any revisions to the estimated
total costs and revenues in the period in which the facts become known.

CARRYING VALUE OF 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.

                                      -46-
<PAGE>

At December 31, 2005, we performed our annual impairment test for goodwill by
first comparing the carrying value of the net assets to the fair value of the
Technical Publications and Engineering unit. The fair value was determined to be
less than the carrying value, and therefore a second step was performed to
compute the amount of the impairment. In this process, a fair value for goodwill
was estimated, based in part on the fair value of the operations, and was
compared to its carrying value. The shortfall of the fair value below carrying
value was $1,241,180 which represents the amount of goodwill impairment.

During the fourth quarter 2005, conditions were present that clearly indicated
an impairment of goodwill of TBM Technologies Inc., including adverse changes in
legal factors and business climate as well as the projection of continued cash
flow losses. As a result of these conditions, the full amount of the goodwill of
$218,511 was written off.

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.

Effective April 1, 2006, the Company acquired goodwill in the amount of
1,895,262 in connection to its acquisition of The Multitech Group Inc. which has
been allocated to the Technical Publications and Engineering reporting unit.

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 SFAS No. 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.

RISK FACTORS

Investors should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing the Company. Additional risks not presently known to us or that
we currently believe are immaterial may also impair our business operations. If
any of the following risks actually occurs, our business, financial condition or
operating results could be seriously impaired. This section should be read in
conjunction with the Financial Statements and Notes thereto, and Management's
Discussion and Analysis or Plan of Operation contained in this report.

If we are unable to compete effectively with existing or new competitors, the
loss of our competitive position could result in price reductions, fewer
customer orders, reduced revenues, reduced margins, reduced levels of
profitability, and loss of market share. If we are unable to manage our
inventory, we will not be able to satisfy customer demand. Our reliance on one
or a few suppliers for inventory components could delay shipments and increase
our costs. Our future operating results depend on our ability to purchase a
sufficient amount of components to meet the demands of our customers. Since we
may order components from suppliers in advance of receipt of customer orders for
our products that include these components, we could face a material inventory
risk. Our products may have quality issues that could adversely affect our sales
and reputation. We are dependent on significant customers, as noted in
Management's Discussion and Analysis.

                                      -47-
<PAGE>

We depend on key employees and face competition in hiring and retaining
qualified employees. Recent and proposed regulations related to equity
compensation could adversely affect our ability to attract and retain key
personnel.

We expect our quarterly revenues, cash flows and operating results to fluctuate
due to the large size and timing of some orders that can materially affect our
financial statements from quarter to quarter, either obscuring or presenting
trends that do or do not exist. This makes prediction of revenues, earnings and
working capital for each financial period especially difficult and uncertain and
increases the risk of unanticipated variations in quarterly results and
financial condition.

Our stock price can be volatile. Our stock price can be affected by many factors
such as quarterly increases or decreases in our earnings, speculation in the
investment community about our financial condition or results of operations,
technological developments, or the loss of key management or technical
personnel.

RECENT EVENTS

Subsequent to June 30, 2006, we entered into an agreement with Financial Media
Relations, LLC, a California company, for the purpose of developing and
implementing a marketing and investor relations program and the provision of
business development and strategic advisory services. The term of the agreement
is six months beginning July 1, 2006 at a cost of $5,000 per month. In addition,
we issued 162,000 shares of our common stock, no par value, with "piggyback"
registration rights.

                                      -48-
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

As of the end of the period covered by this report, the Company carried out an
evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation
was done under the supervision and with the participation of the Company's
Principal Executive Officer and Principal Financial Officer. Based upon that
evaluation, the Principal Executive Officer and Principal Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
gathering, analyzing and disclosing information needed to satisfy the Company's
disclosure obligations under the Exchange Act.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.

(b) Changes in Internal Controls.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls since the most recent
evaluation of such controls.

                          PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm the Company's business. Except
for the following, the Company is currently not aware of nor has any knowledge
of any such legal proceedings or claims that we believe will have, individually
or in the aggregate, a material adverse affect on our business, financial
condition or operating results:

On November 3, 2005, the Company terminated the service agreement of the vendors
of TBM Technologies Inc., acquired on January 17, 2005, for what it believes is
a material breach of the agreement by the vendors. The vendors are seeking
termination pay from the Company in the amount of approximately $40,000. The
Company intends to defend this claim vigorously and counterclaim for losses
suffered as well as jeopardy to its reputation by the actions of the vendors.

In November 2002, we sold certain assets of our training division to Thinkpath
Training LLC. Pursuant to this agreement, Thinkpath Training LLC assumed certain
liabilities including the property lease for this division which expires August
31, 2006. In April 2006, we were notified by Thinkpath Training LLC that they
had failed to meet their rent obligations and currently had rent arrears of
approximately $80,000.

The lessor filed a claim against us and Thinkpath Training LLC demanding that
the rent arrears be paid and the premises vacated immediately. On June 1, 2006,
a default judgment was awarded to the lessor and entered against us. On July 7,
2006, our motion to vacate the default judgment was denied. On July 27, 2006,
the court agreed to our motion to renew and reargue our prior motion seeking to
vacate the default judgment on August 23, 2006. Although we intend to continue
to defend this claim vigorously, we may be held liable for the rent arrears plus
the balance of the lease which expires August 31, 2006 for a total of $300,000.

                                      -49-
<PAGE>

ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2006, we sold unregistered securities as
described below. There were no underwriters involved in the transactions and
there were no underwriting discounts or commissions paid in connection
therewith, except as disclosed below. The purchasers of the securities in such
transactions represented their intention to acquire the securities for
investment purposes only and not with a view to or for sales in connection with
any distribution thereof and appropriate legends were affixed to the
certificates for the securities issued in such transactions. The purchasers of
the securities in the transactions below were each sophisticated investors who
were provided information about us and were able to bear the risk of loss of
their entire investment.

On June 30, 2006, we issued 3,369,188 shares of our common stock, no par value
per share, to the vendors of The Multitech Group Inc., for a total consideration
of $669,689 as part of the acquisition price. We also issued 1,202,009 shares of
our common stock, no par value per share, to the principal vendors as repayment
of an Officer's Loan in the amount of $249,624.

On June 30, 2006, we issued 316,563 shares of our common stock, no par value per
share, to Leventis Investments for a total consideration of $63,313 as partial
payment of a buyer's fee for the TMG acquisition.

In connection with a financing, on June 30, 2006, we issued 1,810,674 common
stock purchase warrants to Laurus Master Fund, Ltd. with an exercise price of
$.0001 per share and which expire on June 30, 2016. Laurus is prohibited from
selling any of the warrants until June 30, 2007 and thereafter is prohibited
from selling an amount of shares in excess of 15% of the daily volume of trading
of our common stock on any day.

We believe all of the above issuances were exempt from registration pursuant to
the exemption provided by Section 4(2) of the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

      None.

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

      None.

ITEM 5. OTHER INFORMATION

      None.

                                      -50-
<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.

      On July 10, 2006, the Company filed a report on Form 8-K to disclose its
financing transaction with Laurus Master Fund, Ltd.

      On July 11, 2006, the Company filed a report on Form 8-K to disclose its
acquisition of The Multitech Group Inc.

** The Exhibit attached to this Form 10-QSB 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.

                                      -51-
<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 21, 2006       By: /s/ Declan French       By: /s/ Kelly Hankinson
                             ---------------------       -----------------------
                             Declan French               Kelly L. Hankinson
                             Chief Executive Officer     Chief Financial Officer















                                      -52-