CANADA
|
N/A
|
(State
or other jurisdiction of
|
(IRS
Employer Identification No.)
|
incorporation
or organization)
|
495
MARCH ROAD, SUITE 300
|
K2K
3G1
|
OTTAWA,
ONTARIO
|
(zip
code)
|
(Address
of principal executive offices)
|
|
(613)
270-0619
(Registrant's
telephone number,
including
area code)
|
TITLE
OF EACH CLASS
|
NAME
OF EACH EXCHANGE ON
WHICH REGISTERED
|
|
COMMON
SHARES, NO PAR VALUE
|
BOSTON
STOCK EXCHANGE
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer x
|
ITEM
|
PAGE
|
|
PART
I
|
||
1.
|
Business
|
4
|
1A.
|
Risk
Factors
|
16
|
1B.
|
Unresolved
Staff Comments
|
25
|
2.
|
Properties
|
25
|
3.
|
Legal
Proceedings
|
25
|
4.
|
Submission
of Matters to a Vote of Security Holders
|
26
|
4A.
|
Executive
Officers of the Registrant
|
26
|
PART
II
|
||
5.
|
Market
for Registrant's Common Equity and Related Stockholder
Matters
|
27
|
6.
|
Selected
Financial Data
|
34
|
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
35
|
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
48
|
8.
|
Consolidated
Financial Statements and Supplementary Data
|
49
|
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
77
|
9A.
|
Controls
and Procedures
|
78
|
9B.
|
Other
Information
|
79
|
PART
III
|
||
10.
|
Directors,
Executive Officers and Corporate Governance
|
80
|
11.
|
Executive
Compensation
|
80
|
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
80
|
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
80
|
14.
|
Principal
Accountant Fees and Services
|
80
|
PART
IV
|
||
15.
|
Exhibits
and Financial Statement Schedules
|
81
|
· |
expensive
and time consuming implementation;
|
· |
significant
initial capital investment;
|
· |
expensive
maintenance; and
|
· |
limited
incentives to ensure client
success.
|
· |
management
of talent compensation;
|
· |
evaluation
of talent performance and
competencies;
|
· |
talent
development and training need
identification;
|
· |
talent
succession planning;
|
· |
talent
reward, non-cash incentives and retention
services;
|
· |
talent
separation services that encompass pre-termination planning, individual
coaching, opportunity research and job marketing campaign
development;
|
· |
benefits
enrollment and administration and tools for employee
communications;
|
· |
automating
and monitoring the recruitment process and the provision of links
to
external service providers, such as companies that specialize in
skill
testing or personality profiling;
|
· |
talent
acquisition services ranging from job posting outreach to job
boards;
|
· |
hosting
a corporate career site; and
|
· |
talent
utilization services with job posting to internal company
intranets.
|
· |
Expanding
direct sales with vertical focus. We will continue to emphasize our
direct
sales efforts into targeted vertical industries, especially those
with
good current economic outlooks including financial services, retail,
education and government, healthcare, pharmaceuticals and biotech,
food
services and some manufacturing sectors;
|
· |
Building
a wider indirect sales channel for distribution of our products and
services. We will continue to pursue reseller agreements for all
of our
services with human capital solution providers such as Human Resource
Outsourcing companies, Business Processing Outsourcing companies,
and
Systems Integrators; In addition, we will continue to pursue OEM
channels
for our products and services;
|
· |
Expand
market opportunities for our products and services. We will continue
to
identify and leverage additional growth engines for our products
and
services similar to our recent entry into mid-market as well as Education
and Government markets. These markets provide new revenue opportunities
for our products and services;
|
· |
Maintaining
technological leadership. We plan to remain at the forefront of web-based
human capital solutions by developing and hosting or licensing the
latest
available technologies taking advantage of the internet and offering
our
clients a comprehensive and functionally rich human capital management
service in a hosted environment;
|
· |
Cross-selling
additional solutions to further penetrate current clients. We
believe that having a “suite” of human capital solutions that address the
entire employee life cycle combined with our strong client relationships
provides us with a meaningful opportunity to cross-sell additional
solutions to our existing clients and to achieve greater penetration
within an organization. We expect to continue to create innovative
programs designed to provide our sales and account management personnel
with strong incentives to maximize the value for each of our clients;
and
|
· |
Pursuing
strategic acquisitions. From time-to-time, we will evaluate acquisition
and investment opportunities in complementary businesses, products
and/or
technologies. Our objective is to increase our revenue growth, expand
our
customer base, add new services or new technologies for our existing
client base and penetrate new markets.
|
· |
Achievement,
for aligning individual performance with top-level business goals,
automating the process of managing, monitoring and assessing individual
employee performance and integrating performance data into the
compensation planning process.;
|
· |
Development,
for assessing, developing and mentoring specific competencies and
behaviors with self-assessments, 180 degree, 360 degree and multi-rater
assessments; and
|
· |
Employee
Surveys,
for gathering employee feedback across the entire organization, analyzing
and communicating the results.
|
· |
Focal
Planning, for
annual salary, basic variable pay and stock evaluation across the
enterprise during a pre-determined planning
window;
|
· |
Off
Cycle Planning, for
evaluating individual employees throughout the year based on “effective”
hiring dates or ad hoc needs;
|
· |
Advanced
Variable Pay, for
formulaic variable pay plans that are administered throughout the
year;
and
|
· |
Total
Rewards Statements, a
Web-based product for employees to access, view, model and manage
all of
their corporate-sponsored financial benefits.
|
· |
Individual
Development Plans (IDP) is the
creation and management of the entire employee development process.
IDP
compliance reports ensure that managers and employees are creating
and
approving the correct IDP’s;
|
· |
Workstream
Development enables “true” competency assessment of both employee
competency and behavioral levels. The product supports measurement
of
skills, knowledge and competencies requiring different scales and
tracks
employee attributes that may be important for succession planning
or
resourcing, such as additional education, certifications or licensing;
|
· |
Competency
Definitions provides
full competency definitions and assessment scale information in easy
to
use pop-up windows;
|
· |
Competency
Health and Ranking Reports
aggregate competency gaps and rank employees based against specific
competency profiles;
|
· |
Career
Development allows
employees
and their managers to graphically compare their personal portfolio
of
competencies to job requirements in their career path and identify
suitable learning for each competency gap. Employees can address
these
gaps through classes, e-learning, books, and other developmental
materials. Workstream Development includes pre-defined links to numerous
courses and development tactics;
|
· |
Workstream
Succession Planning allows incumbents and other managers to easily
designate potential successors from queries to the employee database.
Managers can indicate whether the incumbents are promotable or
transferable; to which positions; when and what development they
will need
in order to be ready;
|
· |
Successors
can easily be displayed and rank-ordered based on their competency
assessments, readiness, availability or other selected fields;
|
· |
Succession
Plan Reports
can be created for a specific position, for specific successors,
and
managing your entire succession plan;
and
|
· |
Organizational
Charting uses information customers already have to deliver
information-rich corporate directories and organizational charts
across an
intranet site.
|
· |
Candidate
Management, for
automating and streamlining the recruiting process used to attract,
manage, screen and qualify
candidates;
|
· |
Career
Site, a
custom-designed internal and external career website hosted and maintained
by Workstream at our secure data center, used for attracting, routing
and
tracking job candidates;
|
· |
Compliance,
reporting
tools for preparing Equal Employment Opportunity Commission (EEOC)
compliance reporting information and evaluating the staffing process;
and
|
· |
Document
Builder,
for automating and streamlining the creation process and management
of
candidate-facing letters, such as offer letters.
|
· |
Benefits
Enrollment and Administration is
an out-of-the-box application that automates the benefits enrollment
and
administration process. It supports customers’ full enrollment cycle,
including open, new hire and life event
processing;
|
· |
Benefits
Communicator helps
organizations personalize and communicate benefit information as
well as
human resources policies and procedures via the web to their employees,
in
turn reducing the amount of inquiries into customers’ human resources
staff supporting this process.; and
|
· |
Health
Pages is
a one-stop source for the information employees need to make educated
health care choices during benefits enrollment and year-round. Health
Pages gives employees 24/7 access to personalized information on
providers
and plans specific to customers’ benefits programs and the tools they need
to make well-informed decisions. All information comes from our
continuously maintained database of more than 500,000 physicians,
6,000
hospitals and 400 health plans.
|
· |
Total
Rewards Statements gives
employees one place to view, model and manage all of their
corporate-sponsored compensation, financial and health benefits.
Employees
are able to grasp the full value of their wealth-related benefits
programs
and the contributions employers make on their
behalf.
|
· |
Discount
Programs, for
enhancing employee satisfaction and productivity. This web-based
incentive
and employee discount platform offers employees savings on computers,
movies, entertainment, travel, insurance and professional services
from
over 200 brand name providers;
|
· |
Incentive
Programs,
for motivating performance and driving results across the organization.
This web-based incentive solution calculates and distributes non-cash
incentive awards to employees for achieving specific results based
upon
predefined metrics strategically aligned with company goals;
and
|
· |
Recognition
Programs, for
rewarding years of service or other corporate milestones and outstanding
performance achievement. This online recognition program rewards
employees
for attaining corporate milestones using online certificates with
a
selection from a non-cash awards catalog. The program also provides
a
company-wide online recognition tool for participants and managers
to
issue on-the-spot recognition certificates
and awards when exceptional performance occurs or goals are achieved.
|
· |
product
functionality and performance;
|
· |
solution
breadth and functionality;
|
· |
ease
of deployment, integration and
configuration;
|
· |
cost
of delivery;
|
· |
integration
between applications;
|
· |
domain
expertise;
|
· |
industry-specific
expertise;
|
· |
service
support, including consulting services;
|
· |
solution
price;
|
· |
scalability
and reliability;
|
· |
security
and data privacy; and
|
· |
breadth
of customer support.
|
· |
our
complete and integrated suite of HCM
applications;
|
· |
our
richness and completeness of product functionality to meet the
demanding
requirements of global 2000
customers;
|
· |
our
career transition service products;
|
· |
our
unique combination of
services;
|
· |
our
technology;
|
· |
our
competitive and innovative packet and delivery
model;
|
· |
our
performance and reliability as an application service
provider;
|
· |
our
applicant sourcing job board
website;
|
· |
our
service reputation; and
|
· |
our
experienced staff.
|
· |
difficulty
and expense of assimilating the operations and personnel of acquired
businesses;
|
· |
difficulty
integrating the acquired technologies or products with our current
products and technologies;
|
· |
potential
exposure to product liability or intellectual property liability
associated with the sale of the acquired company’s
products;
|
· |
diversion
of management time and attention and other
resources;
|
· |
loss
of key employees and customers as a result of changes in
management;
|
· |
difficulty
and expense of managing an increased number of employees
over large
geographic distances;
|
· |
our
due diligence processes may fail to identify significant issues
with
product quality, product architecture, and legal and financial
contingencies, among other things;
|
· |
potential
exposure to unknown liabilities of acquired
companies;
|
· |
the
incurrence of amortization expenses;
|
· |
possible
future goodwill impairment if the financial results
and subsequent
forecasted financial results are lower than those estimated
at the time of
the acquisition; and
|
· |
possible
dilution to our shareholders.
|
Name
|
Age
|
Officer
Since
|
Position
|
Michael
Mullarkey
|
39
|
Executive
Chairman of the Board
|
|
Deepak
Gupta
|
44
|
2007
|
President
and Chief Executive Officer
|
Stephen
Lerch
|
52
|
2005
|
Executive
Vice President, Chief Operating and Financial
Officer
|
PRICE
OF COMMON SHARES
|
|||||||
Period
|
High
|
Low
|
|||||
June
1, 2004 - August 31, 2004
|
$
|
3.09
|
$
|
2.26
|
|||
September
1, 2004 - November 30, 2004
|
$
|
3.44
|
$
|
2.56
|
|||
December
1, 2004 - February 29, 2005
|
$
|
4.75
|
$
|
2.60
|
|||
March
1, 2005 - May 31, 2005
|
$
|
5.35
|
$
|
1.68
|
|||
June
1, 2005 - August 31, 2005
|
$
|
1.80
|
$
|
1.48
|
|||
September
1, 2005 - November 30, 2005
|
$
|
1.72
|
$
|
1.20
|
|||
December
1, 2005 - February 28, 2006
|
$
|
2.17
|
$
|
1.23
|
|||
March
1, 2006 - May 31, 2006
|
$
|
2.47
|
$
|
1.30
|
|||
June
1, 2006 - May 31, 2007
|
$
|
1.82
|
$
|
.72
|
(a)
|
an
acquisition of our common shares by any person if the acquisition
were
made in the ordinary course of that person's business as a trader
or
dealer in securities;
|
(b)
|
an
acquisition of control in us in connection with the realization
of
security granted for a loan or other financial assistance and not
for any
purpose related to the provisions of the Investment Act;
and
|
(c)
|
an
acquisition of control in us by reason of an amalgamation, merger,
consolidation or corporate reorganization following which the ultimate
direct or indirect control in fact in us through the ownership
of voting
interests, remains unchanged
|
· |
through
the period during which the person owns our common shares is not
resident
in Canada and is a resident of the United
States;
|
· |
holds
our common shares as capital assets, that is generally as
investments;
|
· |
deals
at arm’s length with us within the meaning of the Income Tax Act
(Canada);
|
· |
does
not have a permanent establishment or fixed base in Canada, as defined
by
the Canada-United States Income Tax Convention, 1980; and
|
· |
does
not own and is not treated as owning, 10% or more of our outstanding
voting shares.
|
· |
broker-dealers,
including dealers in securities or
currencies;
|
· |
insurance
companies, regulated investment companies or real estate investment
trusts;
|
· |
taxpayers
that have elected mark-to-market
accounting;
|
· |
tax-exempt
organizations;
|
· |
financial
institutions or “financial services
entities”;
|
· |
taxpayers
who hold common shares as part of a straddle, “hedge” or “conversion
transaction” with other investments;
|
· |
holders
owning directly, indirectly or by attribution at least 10% of our
voting
power;
|
· |
non-resident
aliens of the United States;
|
· |
taxpayers
whose functional currency is not the U.S. dollar; and
|
· |
taxpayers
who acquire common shares as
compensation.
|
· |
if
such U.S. Holder has not held the common shares for at least 16 days
of
the 30-day period beginning on the date which is 15 days before the
ex-dividend date; or
|
· |
to
the extent such U.S. Holder is under an obligation to make related
payments on substantially similar or related
property.
|
· |
Such
item is effectively connected with the conduct by the Non-U.S. Holder
of a
trade or business in the United States and, in the case of a resident
of a
country which has a treaty with the United States, such item is
attributable to a permanent establishment or, in the case of an
individual, a fixed place of business, in the United
States;
|
· |
The
Non-U.S. Holder is an individual who holds the common shares as capital
assets and is present in the United States for 183 days or more in
the
taxable year of the disposition and does not qualify for an exemption;
or
|
· |
The
Non-U.S. Holder is subject to tax pursuant to the provisions of United
States tax law applicable to U.S.
expatriates.
|
FISCAL
YEAR ENDED MAY 31,
|
||||||||||||||||
(IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
Statement
of Operations Data
|
||||||||||||||||
Revenue,
net
|
$
|
29,309
|
$
|
28,121
|
$
|
26,819
|
$
|
17,167
|
$
|
17,837
|
||||||
Cost
of revenues
|
7,401
|
7,808
|
7,014
|
1,587
|
3,040
|
|||||||||||
Selling
and marketing
|
7,549
|
6,934
|
7,211
|
4,362
|
6,058
|
|||||||||||
General
and administrative
|
14,959
|
14,253
|
17,838
|
9,799
|
9,582
|
|||||||||||
Research
and development
|
4,013
|
5,423
|
2,147
|
453
|
1,086
|
|||||||||||
Amortization
and depreciation
|
6,503
|
6,685
|
8,535
|
5,602
|
6,097
|
|||||||||||
Impairment
write-down of goodwill
|
-
|
-
|
-
|
-
|
2,133
|
|||||||||||
Operating
loss
|
(11,116
|
)
|
(12,982
|
)
|
(15,926
|
)
|
(4,636
|
)
|
(10,159
|
)
|
||||||
Other
(expense) income, net
|
(2,518
|
)
|
60
|
(45
|
)
|
(2,635
|
)
|
(1,146
|
)
|
|||||||
Loss
before income taxes
|
(13,634
|
)
|
(12,922
|
)
|
(15,971
|
)
|
(7,271
|
)
|
(11,305
|
)
|
||||||
Recovery
of deferred income tax
|
-
|
-
|
848
|
1,789
|
1,586
|
|||||||||||
Current
income tax (expense) recovery
|
(124
|
)
|
(64
|
)
|
(36
|
)
|
(55
|
)
|
42
|
|||||||
Net
loss for the year
|
(13,758
|
)
|
$
|
(12,986
|
)
|
$
|
(15,159
|
)
|
$
|
(5,537
|
)
|
$
|
(9,677
|
)
|
||
Basic
and diluted net loss per share
|
$
|
(0.27
|
)
|
$
|
(0.26
|
)
|
$
|
(0.35
|
)
|
$
|
(0.22
|
)
|
$
|
(0.52
|
)
|
|
Weighted
average number of
|
||||||||||||||||
common
stock outstanding
|
51,134
|
49,828
|
43,462
|
25,036
|
18,608
|
MAY
31,
|
|||||||||||||||||||||
(IN
THOUSANDS)
|
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||
Balance
Sheet Data
|
|||||||||||||||
Working
capital (deficit)
|
$
|
(6,515
|
)
|
$
|
(1,087
|
)
|
$
|
6,797
|
$
|
(351
|
)
|
$
|
(3,412)
|
||
Total
assets
|
58,661
|
66,270
|
75,657
|
48,882
|
30,618
|
||||||||||
Long
term obligations
|
744
|
288
|
192
|
1,259
|
5,312
|
||||||||||
Total
liabilities
|
15,474
|
13,248
|
12,718
|
11,143
|
11,594
|
||||||||||
Stockholders'
equity
|
43,187
|
53,022
|
62,939
|
37,739
|
19,024
|
· |
Evidence
of an arrangement exists;
|
· |
Services
have been provided or goods have been
delivered;
|
· |
The
price is fixed or determinable; and
|
· |
Collection
is reasonably assured.
|
Year
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Revenues:
|
||||||||||
Software
|
35
|
%
|
39
|
%
|
35
|
%
|
||||
Professional
services
|
15
|
%
|
10
|
%
|
12
|
%
|
||||
Rewards
and discount products
|
19
|
%
|
22
|
%
|
20
|
%
|
||||
Career
services
|
31
|
%
|
29
|
%
|
33
|
%
|
||||
Revenues,
net
|
100
|
%
|
100
|
%
|
100
|
%
|
||||
Cost
of revenues:
|
||||||||||
Rewards
and discount products
|
11
|
%
|
17
|
%
|
15
|
%
|
||||
Other
|
14
|
%
|
11
|
%
|
11
|
%
|
||||
Cost
of revenues (exclusive of the amortization and depreciation expense
noted
below)
|
25
|
%
|
28
|
%
|
26
|
%
|
||||
Gross
profit
|
75
|
%
|
72
|
%
|
74
|
%
|
||||
Operating
expenses:
|
||||||||||
Selling
and marketing
|
26
|
%
|
25
|
%
|
27
|
%
|
||||
Research
and development
|
14
|
%
|
18
|
%
|
8
|
%
|
||||
General
and administrative
|
51
|
%
|
51
|
%
|
67
|
%
|
||||
Amortization
and depreciation
|
22
|
%
|
24
|
%
|
32
|
%
|
||||
Total
operating expenses
|
113
|
%
|
118
|
%
|
134
|
%
|
||||
-38
|
%
|
-46
|
%
|
-60
|
%
|
|||||
Interest
and other income
|
2
|
%
|
1
|
%
|
1
|
%
|
||||
Interest
and other expense
|
-10
|
%
|
-1
|
%
|
-1
|
%
|
||||
Other
income (expense), net
|
-8
|
%
|
0
|
%
|
0
|
%
|
||||
Loss
before income tax
|
-46
|
%
|
-46
|
%
|
-60
|
%
|
||||
Recovery
of deferred income taxes
|
0
|
%
|
0
|
%
|
3
|
%
|
||||
Current
income tax expense
|
0
|
%
|
0
|
%
|
0
|
%
|
||||
NET
LOSS FOR THE PERIOD
|
-46
|
%
|
-46
|
%
|
-57
|
%
|
Year
Ended May 31,
|
|||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
Total
|
||||||||||||||
Debt
|
$
|
4,557,395
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
4,557,395
|
|||||||
Capital
leases
|
591,764
|
471,375
|
213,240
|
7,015
|
-
|
1,283,394
|
|||||||||||||
Operating
leases
|
1,120,522
|
583,478
|
-
|
-
|
-
|
1,704,000
|
|||||||||||||
Total
|
$
|
6,269,681
|
$
|
1,095,359
|
$
|
213,240
|
$
|
7,015
|
$
|
-
|
$
|
7,544,789
|
WORKSTREAM
INC.
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
May
31, 2007
|
May
31, 2006
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
2,752,601
|
$
|
4,577,040
|
|||
Restricted
cash
|
524,497
|
3,095,348
|
|||||
Short-term
investments
|
65,851
|
302,197
|
|||||
Accounts
receivable, net
|
3,789,838
|
3,100,779
|
|||||
Prepaid
expenses and other assets
|
848,359
|
527,876
|
|||||
Total
current assets
|
7,981,146
|
11,603,240
|
|||||
Property
and equipment, net
|
2,715,494
|
1,789,739
|
|||||
Other
assets
|
85,122
|
87,468
|
|||||
Acquired
intangible assets, net
|
2,602,590
|
8,067,423
|
|||||
Goodwill
|
45,276,411
|
44,721,859
|
|||||
TOTAL
ASSETS
|
$
|
58,660,763
|
$
|
66,269,729
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,259,010
|
$
|
2,690,388
|
|||
Accrued
liabilities
|
2,961,928
|
2,132,470
|
|||||
Line
of credit
|
- |
2,537,246
|
|||||
Accrued
compensation
|
1,378,444
|
1,073,239
|
|||||
Notes
payable
|
4,557,395
|
558,776
|
|||||
Current
portion of long-term obligations
|
639,445
|
337,517
|
|||||
Deferred
revenue
|
2,699,461
|
3,360,766
|
|||||
Total
current liabilities
|
14,495,683
|
12,690,402
|
|||||
Long-term
obligations
|
742,025
|
288,269
|
|||||
Deferred
revenue
|
236,492
|
268,727
|
|||||
Total
liabilities
|
15,474,200
|
13,247,398
|
|||||
Commitments
and contingencies
|
|
||||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
stock, no par value
|
- | - | |||||
Common
stock, no par value
|
112,549,178
|
111,991,328
|
|||||
Additional
paid-in capital
|
10,907,755
|
7,547,393
|
|||||
Accumulated
other comprehensive loss
|
(867,288
|
)
|
(871,781
|
)
|
|||
Accumulated
deficit
|
(79,403,082
|
)
|
(65,644,609
|
)
|
|||
Total
stockholders’ equity
|
43,186,563
|
53,022,331
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
58,660,763
|
$
|
66,269,729
|
WORKSTREAM
INC.
|
||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Software
|
$
|
10,295,086
|
$
|
11,008,939
|
$
|
9,096,241
|
||||
Professional
services
|
4,290,960
|
2,879,942
|
3,320,556
|
|||||||
Rewards
and discount products
|
5,632,998
|
6,268,128
|
5,446,152
|
|||||||
Career
services
|
9,089,725
|
7,963,653
|
8,955,638
|
|||||||
Revenues,
net
|
29,308,769
|
28,120,662
|
26,818,587
|
|||||||
Rewards
and discount products
|
3,225,093
|
4,722,467
|
3,955,663
|
|||||||
Other
|
4,175,539
|
3,085,648
|
3,058,317
|
|||||||
Cost
of revenues (exclusive of amortization and depreciation expense noted
below)
|
7,400,632
|
7,808,115
|
7,013,980
|
|||||||
Gross
profit
|
21,908,137
|
20,312,547
|
19,804,607
|
|||||||
Operating
expenses:
|
||||||||||
Selling
and marketing
|
7,548,777
|
6,934,056
|
7,210,996
|
|||||||
Research
and development
|
4,013,158
|
5,422,309
|
2,147,251
|
|||||||
General
and administrative
|
14,959,116
|
14,253,037
|
17,837,777
|
|||||||
Amortization
and depreciation
|
6,502,977
|
6,684,880
|
8,534,715
|
|||||||
Total
operating expenses
|
33,024,028
|
33,294,282
|
35,730,739
|
|||||||
Operating
loss
|
(11,115,891
|
)
|
(12,981,735
|
)
|
(15,926,132
|
)
|
||||
Interest
and other income
|
523,531
|
223,722
|
189,851
|
|||||||
Interest
and other expense
|
(3,041,731
|
)
|
(163,504
|
)
|
(234,451
|
)
|
||||
Other
income (expense), net
|
(2,518,200
|
)
|
60,218
|
(44,600
|
)
|
|||||
Loss
before income tax
|
(13,634,091
|
)
|
(12,921,517
|
)
|
(15,970,732
|
)
|
||||
Recovery
of deferred income taxes
|
-
|
847,920
|
||||||||
Current
income tax expense
|
(124,382
|
)
|
(64,774
|
)
|
(36,163
|
)
|
||||
NET
LOSS
|
$
|
(13,758,473
|
)
|
$
|
(12,986,291
|
)
|
$
|
(15,158,975
|
)
|
|
Weighted
average number of
|
||||||||||
common
shares outstanding
|
51,134,281
|
49,827,925
|
43,461,514
|
|||||||
Basic
and diluted net loss per share
|
$
|
(0.27
|
)
|
$
|
(0.26
|
)
|
$
|
(0.35
|
)
|
WORKSTREAM
INC.
|
|||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
|||||||||||||||||||
Accumulated
|
|||||||||||||||||||
Additional
|
Other
|
Total
|
|||||||||||||||||
Common
Stock
|
Paid-In
|
Accumulated
|
Accumulated
|
Stockholders'
|
|||||||||||||||
Shares
|
Amount
|
Capital
|
Loss
|
Deficit
|
Equity
|
||||||||||||||
Balance
at May 31, 2004
|
$
|
33,574,883
|
$
|
72,705,603
|
$
|
3,605,224
|
$
|
(1,072,302
|
)
|
$
|
(37,499,343
|
)
|
$
|
37,739,182
|
|||||
Issuance
of shares and warrants,
|
|||||||||||||||||||
net
of issue costs
|
9,684,439
|
19,519,485
|
4,820,653
|
-
|
-
|
24,340,138
|
|||||||||||||
Issuance
of shares for acquisitions
|
4,700,708
|
13,491,066
|
-
|
-
|
-
|
13,491,066
|
|||||||||||||
Issuance
of shares through
|
|||||||||||||||||||
exercise
of stock options
|
331,260
|
950,390
|
-
|
-
|
-
|
950,390
|
|||||||||||||
Issuance
of shares through
|
|||||||||||||||||||
exercise
of warrants
|
891,482
|
2,352,814
|
(919,501
|
)
|
-
|
-
|
1,433,313
|
||||||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
(15,158,975
|
)
|
(15,158,975
|
)
|
|||||||||||
Cumulative
translation adjustment
|
-
|
-
|
-
|
143,999
|
-
|
143,999
|
|||||||||||||
Balance
at May 31, 2005
|
49,182,772
|
109,019,358
|
7,506,376
|
(928,303
|
)
|
(52,658,318
|
)
|
62,939,113
|
|||||||||||
Issuance
of shares for acquisition
|
1,500,000
|
2,525,000
|
-
|
-
|
-
|
2,525,000
|
|||||||||||||
Issuance
of shares through
|
|||||||||||||||||||
exercise
of stock options
|
104,740
|
104,170
|
-
|
-
|
-
|
104,170
|
|||||||||||||
Issuance
of shares through
|
|||||||||||||||||||
exercise
of warrants
|
133,333
|
290,000
|
(90,000
|
)
|
-
|
-
|
200,000
|
||||||||||||
Issuance
of shares through
|
|||||||||||||||||||
vesting
of restricted stock units
|
40,000
|
52,800
|
-
|
-
|
-
|
52,800
|
|||||||||||||
Expensing
of restricted stock unit grants
|
-
|
-
|
131,017
|
-
|
-
|
131,017
|
|||||||||||||
Net
loss for the year
|
-
|
-
|
-
|
-
|
(12,986,291
|
)
|
(12,986,291
|
)
|
|||||||||||
Cumulative
translation adjustment
|
-
|
-
|
-
|
56,522
|
-
|
56,522
|
|||||||||||||
Balance
at May 31, 2006
|
50,960,845
|
$
|
111,991,328
|
$
|
7,547,393
|
$
|
(871,781
|
)
|
$
|
(65,644,609
|
)
|
$
|
53,022,331
|
||||||
Issuance
of common shares as
|
|||||||||||||||||||
contingent
consideration
|
496,971
|
557,850
|
557,850
|
||||||||||||||||
Hilco
Warrant Discount
|
2,392,500
|
2,392,500
|
|||||||||||||||||
Stock
option expense
|
785,541
|
785,541
|
|||||||||||||||||
Issuance
of shares through
|
|||||||||||||||||||
vesting
of restricted stock units
|
73,336
|
26,250
|
26,250
|
||||||||||||||||
Expensing
of restricted stock unit
|
|||||||||||||||||||
grants
|
156,071
|
156,071
|
|||||||||||||||||
Net
loss for the year
|
(13,758,473
|
)
|
(13,758,473
|
)
|
|||||||||||||||
Cumulative
translation adjustment
|
4,493
|
4,493
|
|||||||||||||||||
Balance
at May 31, 2007
|
51,531,152
|
$
|
112,549,178
|
$
|
10,907,755
|
$
|
(867,288
|
)
|
$
|
(79,403,082
|
)
|
$
|
43,186,563
|
WORKSTREAM
INC.
|
||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Cash
provided by (used in) operating activities:
|
||||||||||
Net
loss for the year
|
$
|
(13,758,473
|
)
|
$
|
(12,986,291
|
)
|
$
|
(15,158,975
|
)
|
|
Adjustments
to reconcile net loss to net cash (used in) provided by
|
||||||||||
operating
activities:
|
||||||||||
Amortization
and depreciation
|
6,502,977
|
6,684,880
|
8,534,715
|
|||||||
Leasehold
inducement amortization
|
(54,236
|
)
|
(53,835
|
)
|
(40,100
|
)
|
||||
Non-cash
interest on convertible notes and notes payable
|
2,012,159
|
-
|
53,746
|
|||||||
Provision
for bad debts
|
85,502
|
159,704
|
577,362
|
|||||||
Recovery
of deferred income taxes
|
-
|
-
|
(847,920
|
)
|
||||||
Non-cash
compensation
|
967,862
|
226,326
|
210,296
|
|||||||
Change
in long-term portion of deferred revenue
|
(34,434
|
)
|
191,571
|
77,156
|
||||||
Net
change in operating components of working capital:
|
||||||||||
Accounts
receivable
|
(1,465,023
|
)
|
1,119,129
|
(430,955
|
)
|
|||||
Prepaid
expenses and other assets
|
(182,757
|
)
|
(13,215
|
)
|
663,145
|
|||||
Accounts
payable and accrued liabilities
|
202,320
|
661,216
|
(2,828,592
|
)
|
||||||
Deferred
revenue
|
(653,535
|
)
|
(899,111
|
)
|
250,064
|
|||||
Net
cash used in operating activities
|
(6,377,638
|
)
|
(4,909,626
|
)
|
(8,940,058
|
)
|
||||
Cash
flows from investing activities:
|
||||||||||
Purchase
of property and equipment
|
(638,549
|
)
|
(682,702
|
)
|
(333,799
|
)
|
||||
Cash
paid for business combinations
|
-
|
(500,000
|
)
|
(8,838,592
|
)
|
|||||
(Increase)/decrease
in restricted cash
|
2,716,766
|
319,856
|
(196,811
|
)
|
||||||
Sale
of short-term investments
|
16,510
|
50,293
|
98,659
|
|||||||
Net
cash provided by (used in) investing activities
|
2,094,727
|
(812,553
|
)
|
(9,270,543
|
)
|
|||||
Cash
flows from financing activities:
|
||||||||||
Proceeds
from issuance of secured notes payable, net
|
14,650,000
|
-
|
-
|
|||||||
Repayment
of secured notes payable
|
(10,000,000
|
)
|
-
|
-
|
||||||
Repayment
of other long-term obligations
|
(1,013,937
|
)
|
(1,712,286
|
)
|
(1,050,292
|
)
|
||||
Proceeds
from issuance of common stock and warrants
|
-
|
-
|
24,993,989
|
|||||||
Proceeds
from exercise of options and warrants
|
- |
304,170
|
2,383,703
|
|||||||
Costs
related to the registration and issuance of common stock
|
-
|
-
|
(904,051
|
)
|
||||||
Line
of credit, net activity
|
(1,487,351
|
)
|
(90,863
|
)
|
186,289
|
|||||
Net
cash provided by (used in) financing activities
|
2,148,712
|
(1,498,979
|
)
|
25,609,638
|
||||||
Effect
of exchange rate changes on cash and cash equivalents
|
309,760
|
(13,413
|
)
|
74,108
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
(1,824,439
|
)
|
(7,234,571
|
)
|
7,473,145
|
|||||
Cash
and cash equivalents, beginning of year
|
4,577,040
|
11,811,611
|
4,338,466
|
|||||||
Cash
and cash equivalents, end of year
|
$
|
2,752,601
|
$
|
4,577,040
|
$
|
11,811,611
|
WORKSTREAM
INC.
|
||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)
|
||||||||||
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Cash
paid during the year for:
|
||||||||||
Interest
paid
|
$
|
1,010,565
|
$
|
162,609
|
$
|
141,690
|
||||
Income
taxes paid
|
$
|
77,128
|
$
|
70,593
|
$
|
50,736
|
||||
Supplemantal schedule of home cash investing and financing activities: | ||||||||||
Equipment
acquired under capital leases
|
$
|
1,224,028
|
$
|
485,677
|
-
|
|||||
Issuance
of common shares as contingent consideration
|
$ | 557,850 |
-
|
$
|
2,532,111
|
|||||
Discount
on the Hilco warrants
|
$
|
2,392,500
|
-
|
-
|
Acquired
technologies…………
|
3
years straight line
|
|
Customer
base…………………
|
3
years straight line
|
|
Intellectual
property…………...
|
5
years straight line
|
· |
Evidence
of an arrangement exists;
|
· |
Services
have been provided or goods have been
delivered;
|
· |
The
price is fixed or determinable;
|
· |
Collection
is reasonably assured.
|
Years
Ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Weighted-average
risk free interest rates
|
4.72
|
%
|
4.30
|
%
|
3.68
|
%
|
||||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||
Weighted-average
expected volatility
|
70
|
%
|
82
|
%
|
72
|
%
|
||||
Expected
life (in years)
|
3.5
|
3.5
|
3.5
|
Years
Ended May 31,
|
|||||||
2006
|
2005
|
||||||
Net
loss, as reported
|
$
|
(12,986,291
|
)
|
$
|
(15,158,975
|
)
|
|
Add:
stock-based compensation expense included in reported net
loss
|
55,356
|
-
|
|||||
Deduct:
total stock-based compensation expense determined under fair value
based
method for all awards
|
(948,651
|
)
|
(896,621
|
)
|
|||
Net
loss, pro forma
|
$
|
(13,879,586
|
)
|
$
|
(16,055,596
|
)
|
|
Weighted
average common shares
|
|||||||
outstanding
during the year
|
49,827,925
|
43,461,514
|
|||||
Basic
and diluted loss per share:
|
|||||||
As
reported
|
$
|
(0.26
|
)
|
$
|
(0.35
|
)
|
|
Pro
forma
|
$
|
(0.28
|
)
|
$
|
(0.37
|
)
|
Share
consideration
|
$
|
3,082,850
|
||
Cash
consideration
|
500,000
|
|||
Note
payable (Note 9)
|
500,000
|
|||
Acquisition
costs
|
35,000
|
|||
Total
purchase price
|
$
|
4,117,850
|
||
Current
assets
|
$
|
945,729
|
||
Tangible
long-term assets
|
21,173
|
|||
Other
assets
|
5,562
|
|||
Current
liabilities
|
(1,003,577
|
)
|
||
Intangible
assets:
|
||||
Customer
base
|
561,752
|
|||
Acquired
technology
|
587,989
|
|||
Goodwill
|
2,999,222
|
|||
Total
net assets
|
$
|
4,117,850
|
Peoplebonus
|
Bravanta
|
HRSoft
|
ProAct
|
Total
|
||||||||||||
Share
consideration
|
$
|
200,000
|
$
|
7,107,693
|
$
|
-
|
$
|
2,822,873
|
$
|
10,130,566
|
||||||
Cash
consideration
|
105,000
|
2,051,120
|
100,000
|
5,500,000
|
7,756,120
|
|||||||||||
Payoff
of bank loans
|
-
|
-
|
550,000
|
-
|
550,000
|
|||||||||||
Payoff
of vendor payables
|
-
|
-
|
216,913
|
-
|
216,913
|
|||||||||||
Note
payable
|
95,798
|
-
|
-
|
1,530,000
|
1,625,798
|
|||||||||||
Cash
advance
|
-
|
-
|
325,000
|
-
|
325,000
|
|||||||||||
Escrow
funds
|
25,000
|
-
|
-
|
-
|
25,000
|
|||||||||||
Acquisition
costs
|
18,499
|
155,000
|
150,000
|
144,529
|
468,028
|
|||||||||||
Total
purchase price
|
$
|
444,297
|
$
|
9,313,813
|
$
|
1,341,913
|
$
|
9,997,402
|
$
|
21,097,425
|
||||||
Current
assets
|
$
|
8,450
|
$
|
643,709
|
$
|
326,561
|
$
|
1,443,098
|
$
|
2,421,818
|
||||||
Tangible
long-term assets
|
9,080
|
86,310
|
49,548
|
298,858
|
443,796
|
|||||||||||
Other
assets
|
-
|
35,005
|
57,103
|
56,686
|
148,794
|
|||||||||||
Current
liabilities
|
(644
|
)
|
(875,800
|
)
|
(644,942
|
)
|
(1,832,091
|
)
|
(3,353,477
|
)
|
||||||
Other
liabilities
|
-
|
(61,624
|
)
|
(267,823
|
)
|
-
|
(329,447
|
)
|
||||||||
Deferred
income tax asset
|
-
|
861,000
|
-
|
-
|
861,000
|
|||||||||||
Intangible
assets:
|
||||||||||||||||
Customer
base
|
-
|
837,000
|
852,098
|
1,717,000
|
3,406,098
|
|||||||||||
Intellectual
property
|
-
|
645,000
|
-
|
5,034,000
|
5,679,000
|
|||||||||||
Acquired
technology
|
427,411
|
670,000
|
969,368
|
-
|
2,066,779
|
|||||||||||
Deferred
income tax liability
|
-
|
(861,000
|
)
|
-
|
-
|
(861,000
|
)
|
|||||||||
Goodwill
|
-
|
7,334,213
|
-
|
3,279,851
|
10,614,064
|
|||||||||||
Total
net identifiable assets
|
$
|
444,297
|
$
|
9,313,813
|
$
|
1,341,913
|
$
|
9,997,402
|
$
|
21,097,425
|
2007
|
2006
|
||||||
Line
of credit (note 8)
|
$
|
-
|
$
|
2,537,246
|
|||
Term
loan (note 9)
|
-
|
33,285
|
|||||
Letters
of credit for facility leases (note 10)
|
396,367
|
434,817
|
|||||
Legal
bond
|
-
|
90,000
|
|||||
Credit
card reserves
|
128,110
|
-
|
|||||
|
$
|
524,497
|
$
|
3,095,348
|
2007
|
2006
|
||||||
Balance
at beginning of the year
|
$
|
625,361
|
$
|
495,402
|
|||
Charged
to bad debt expense
|
85,502
|
159,704
|
|||||
Write-offs
and effect of exchange rate changes
|
224
|
(29,745
|
)
|
||||
Balance
at end of the year
|
$
|
711,087
|
$
|
625,361
|
2007
|
2006
|
||||||
Furniture,
equipment
|
|||||||
and
leasehold improvements
|
$
|
1,937,072
|
$
|
1,899,690
|
|||
Office
equipment
|
498,720
|
473,274
|
|||||
Computers
and software
|
8,270,919
|
6,196,568
|
|||||
|
10,706,711
|
8,569,532
|
|||||
Less
accumulated depreciation
|
(7,991,217
|
)
|
(6,779,793
|
)
|
|||
Property
and equipment, net
|
$
|
2,715,494
|
$
|
1,789,739
|
2007
|
2006
|
||||||||||||
Accumulated
|
Accumulated
|
||||||||||||
Cost
|
Amortization
|
Cost
|
Amortization
|
||||||||||
Customer
base
|
$
|
8,132,722
|
$
|
7,348,604
|
$
|
8,132,722
|
$
|
5,815,423
|
|||||
Acquired
technologies
|
22,191,121
|
20,740,286
|
22,191,121
|
17,001,665
|
|||||||||
Intellectual
property
|
1,322,760
|
955,123
|
1,322,760
|
762,092
|
|||||||||
|
31,646,603
|
$
|
29,044,013
|
31,646,603
|
$
|
23,579,180
|
|||||||
Less
accumulated amortization
|
(29,044,013
|
)
|
(23,579,180
|
)
|
|||||||||
Net
acquired intangible assets
|
$
|
2,602,590
|
$
|
8,067,423
|
Fiscal
2008:
|
2,152,613
|
Fiscal
2009:
|
428,477
|
Fiscal
2010:
|
21,500
|
2,602,590
|
Enterprise
|
|
|||||||||
Workforce
|
Career
|
|
||||||||
Services
|
Networks
|
Total
|
||||||||
Goodwill
at May 31, 2005
|
29,825,840
|
12,457,602
|
42,283,442
|
|||||||
Acquisition
during the year
|
2,441,372
|
-
|
2,441,372
|
|||||||
Contingent
consideration
|
||||||||||
Purchase
price allocation adjustments made
|
||||||||||
within
one year of acquisition date
|
(2,955
|
)
|
-
|
(2,955
|
)
|
|||||
Goodwill
at May 31, 2006
|
$
|
32,264,257
|
$
|
12,457,602
|
$
|
44,721,859
|
||||
Contingent
consideration
|
557,850
|
557,850
|
||||||||
Purchase
price allocation adjustments made
|
||||||||||
within
one year of acquisition date
|
(3,298
|
)
|
(3,298
|
)
|
||||||
Goodwill
at May 31, 2007
|
$
|
32,818,809
|
$
|
12,457,602
|
$
|
45,276,411
|
2007
|
2006
|
||||||
Senior
Line of Credit
|
$
|
5,816,667
|
$
|
-
|
|||
Less:
Unaccreted warrant discount
|
(1,318,049
|
)
|
-
|
||||
4,498,618
|
-
|
||||||
Notes
payable - other
|
59,427
|
$
|
558,776
|
||||
Leasehold
inducements
|
97,426
|
151,890
|
|||||
Settlement
agreement payable
|
-
|
30,000
|
|||||
Term
loan
|
-
|
33,285
|
|||||
Capital
lease obligations
|
1,283,394
|
410,611
|
|||||
5,938,865
|
1,184,562
|
||||||
Less:
current portion of:
|
|||||||
Notes
Payable
|
4,557,395
|
558,776
|
|||||
Other
long-term obligations
|
639,445
|
337,517
|
|||||
$
|
742,025
|
$
|
288,269
|
Fiscal
2008:
|
$
|
5,194,621
|
Fiscal
2009:
|
521,230
|
|
Fiscal
2010:
|
215,754
|
|
Fiscal
2011:
|
7,260
|
|
Fiscal
2012:
|
-
|
|
$
|
5,938,865
|
Capital
Leases
|
Operating
Leases
|
||||||||||||
Facilities
|
Equipment
|
Total
|
|||||||||||
Year
ended May 31:
|
|||||||||||||
2008
|
$
|
643,835
|
$
|
942,456
|
$
|
178,065
|
$
|
1,764,356
|
|||||
2009
|
519,687
|
445,678
|
137,801
|
1,103,166
|
|||||||||
2010
|
215,754
|
-
|
-
|
215,754
|
|||||||||
2011
|
7,260
|
-
|
-
|
7,260
|
|||||||||
Total
minimum lease payments
|
1,386,536
|
1,388,134
|
315,866
|
3,090,536
|
|||||||||
Less
amount representing interest
|
103,142
|
||||||||||||
Total
principal payments
|
$
|
1,283,394
|
|||||||||||
Less
current maturities
|
582,006
|
||||||||||||
$
|
701,388
|
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Canadian
domestic loss
|
$
|
3,082,000
|
$
|
2,930,000
|
$
|
568,000
|
||||
United
States loss
|
10,552,000
|
10,038,000
|
15,403,000
|
|||||||
Loss
before income taxes
|
$
|
13,634,000
|
$
|
12,968,000
|
$
|
15,971,000
|
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Canadian
domestic:
|
||||||||||
Current
income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
United
States:
|
||||||||||
Current
income taxes
|
124,000
|
65,000
|
36,000
|
|||||||
Deferred
income taxes
|
-
|
-
|
(848,000
|
)
|
||||||
Income
tax expense (recovery)
|
$
|
124,000
|
$
|
65,000
|
$
|
(812,000
|
)
|
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Combined
Canadian federal and provincial tax rate
|
36.12
|
%
|
36.12
|
%
|
36.12
|
%
|
||||
Income
tax recovery based on combined Canadian and
|
||||||||||
federal
and provincial rate
|
$
|
4,925,000
|
$
|
4,684,000
|
$
|
5,768,000
|
||||
Effect
of foreign tax rate differences
|
412,000
|
389,000
|
579,000
|
|||||||
Change
in enacted tax rates
|
(600,000
|
)
|
-
|
(147,000
|
)
|
|||||
Non-deductible
amounts
|
26,000
|
197,000
|
173,000
|
|||||||
Change
in valuation allowance
|
(3,585,000
|
)
|
(5,771,000
|
)
|
(5,638,000
|
)
|
||||
Effect
of changes in carryforward amounts
|
(1,624,000
|
)
|
(728,000
|
)
|
(547,000
|
)
|
||||
Effect
of foreign exchange rate differences
|
298,000
|
1,104,000
|
661,000
|
|||||||
Other
|
24,000
|
60,000
|
(37,000
|
)
|
||||||
Income
tax (expense) recovery
|
$
|
(124,000
|
)
|
$
|
(65,000
|
)
|
$
|
812,000
|
Years
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Deferred
income tax assets:
|
||||||||||
Scientific
Research and Experimental Development ("SR&ED")
expenses
|
$
|
667,000
|
$
|
814,000
|
$
|
613,000
|
||||
Loss
carryforwards
|
28,730,000
|
26,340,000
|
23,313,000
|
|||||||
Asset
basis differences
|
3,812,000
|
2,116,000
|
2,421,000
|
|||||||
Deferred
Revenue
|
776,000
|
1,325,000
|
-
|
|||||||
Share
issue costs
|
169,000
|
309,000
|
467,000
|
|||||||
Investment
tax credits
|
580,000
|
1,009,000
|
849,000
|
|||||||
Share
Based Compensation
|
440,000
|
-
|
-
|
|||||||
Share
Based OID
|
430,000
|
-
|
-
|
|||||||
Other
|
791,000
|
897,000
|
413,000
|
|||||||
36,395,000
|
32,810,000
|
28,076,000
|
||||||||
Less:
valuation allowance
|
(36,395,000
|
)
|
(32,810,000
|
)
|
(27,039,000
|
)
|
||||
Net
deferred income tax assets
|
-
|
-
|
1,037,000
|
|||||||
Deferred
income tax liabilities:
|
||||||||||
Intangible
assets
|
-
|
-
|
(1,037,000
|
)
|
||||||
Net
deferred income tax liabilities
|
$
|
-
|
$
|
-
|
$
|
-
|
Weighted
|
Weighted
|
Aggregate
|
||||||||||||||
Number
|
Average
|
Average
|
Options
|
Intrinsic
|
||||||||||||
of
Options
|
Exercise
Price
|
Fair
Value
|
Exercisable
|
Value
|
||||||||||||
Balance
outstanding - May 31, 2004
|
1,841,503
|
2.24
|
1,144,273
|
|||||||||||||
Granted
|
1,755,770
|
2.81
|
1.49
|
|||||||||||||
Exercised
|
(331,260
|
)
|
2.87
|
|||||||||||||
Forfeited
|
(1,011,928
|
)
|
2.93
|
|||||||||||||
Balance
outstanding - May 31, 2005
|
2,254,085
|
2.29
|
552,073
|
|||||||||||||
Granted
|
818,450
|
1.57
|
0.93
|
|||||||||||||
Exercised
|
(104,740
|
)
|
0.99
|
|||||||||||||
Forfeited
|
(768,892
|
)
|
2.22
|
|||||||||||||
Balance
outstanding - May 31, 2006
|
2,198,903
|
2.11
|
871,829
|
|||||||||||||
Granted
|
2,957,970
|
1.12
|
0.60
|
|||||||||||||
Exercised
|
-
|
|||||||||||||||
Forfeited
|
(1,044,010
|
)
|
1.92
|
|||||||||||||
Balance
outstanding - May 31, 2007
|
4,112,863
|
1,066,988
|
$
|
461,356
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||
Weighted
|
||||||||||||||||
Average
|
||||||||||||||||
Remaining
|
Weighted
|
Weighted
|
||||||||||||||
Contractual
|
Average
|
Average
|
||||||||||||||
Life
|
Exercise
|
Exercise
|
||||||||||||||
Exercise
Price
|
Shares
|
(Years)
|
Price
|
Shares
|
Price
|
|||||||||||
Less
than $.99
|
1,144,800
|
3.79
|
$
|
0.85
|
103,001
|
$
|
0.98
|
|||||||||
$1.00-$1.99
|
2,343,990
|
4.01
|
1.32
|
546,107
|
1.15
|
|||||||||||
$2.00-$2.99
|
392,200
|
2.49
|
2.39
|
263,297
|
2.38
|
|||||||||||
$3.00-$3.99
|
81,873
|
2.60
|
3.24
|
54,583
|
3.24
|
|||||||||||
$4.00
and over
|
150,000
|
2.79
|
4.11
|
100,000
|
4.11
|
|||||||||||
Total
|
4,112,863
|
1,066,988
|
Exercise
Price
|
Expiration
|
Shares
|
||||||
$1.60
|
December
2008
|
|
162,500
|
|||||
$3.50
|
December
2008
|
|
2,825,000
|
|||||
$0.01
|
January
2008
|
|
2,750,000
|
|||||
5,737,500
|
May
31, 2007
|
||||
Stock
options
|
4,112,863
|
|||
Restricted
stock units
|
593,331
|
|||
Escrowed
shares
|
108,304
|
|||
Warrants
|
5,737,500
|
|||
Potential
increase in number of shares from dilutive instruments
|
10,551,998
|
Year
ended May 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Net
loss for the year
|
$
|
(13,758,473
|
)
|
$
|
(12,986,291
|
)
|
$
|
(15,158,975
|
)
|
|
Other
comprehensive loss:
|
||||||||||
Foreign
currency translation adjustments (net of tax of $0)
|
4,493
|
56,522
|
143,999
|
|||||||
Comprehensive
loss for the year
|
$
|
(13,753,980
|
)
|
$
|
(12,929,769
|
)
|
$
|
(15,014,976
|
)
|
Business
Segment
|
||||||||||
Enterprise
|
||||||||||
Workforce
|
Career
|
|||||||||
Services
|
Networks
|
Total
|
||||||||
Year
ended May 31, 2007
|
||||||||||
Software
|
$
|
10,295,086
|
$
|
-
|
$
|
10,295,086
|
||||
Rewards
and discount products
|
5,632,998
|
-
|
5,632,998
|
|||||||
Professional
services
|
4,290,960
|
-
|
4,290,960
|
|||||||
Career
services
|
9,089,725
|
9,089,725
|
||||||||
Revenue
|
20,219,044
|
9,089,725
|
29,308,769
|
|||||||
Cost
of revenues, rewards and discount products
|
4,175,539
|
4,175,539
|
||||||||
Cost
of revenues, other
|
2,670,105
|
554,988
|
3,225,093
|
|||||||
Gross
profit
|
13,373,400
|
8,534,737
|
21,908,137
|
|||||||
Expenses
|
17,775,946
|
8,745,106
|
26,521,052
|
|||||||
Amortization
and depreciation
|
6,413,871
|
89,105
|
6,502,976
|
|||||||
Business
segment loss
|
$
|
(10,816,417
|
)
|
$
|
(299,474
|
)
|
(11,115,891
|
)
|
||
Other
income/(expenses) and
|
||||||||||
impact
of income taxes
|
(2,642,582
|
)
|
||||||||
Net
loss
|
$
|
(13,758,473
|
)
|
Enterprise
|
||||||||||
Workforce
|
Career
|
|||||||||
Services
|
Networks
|
Total
|
||||||||
As
at May 31, 2007
|
||||||||||
Business
segment assets
|
$
|
6,760,179
|
$
|
678,635
|
$
|
7,438,814
|
||||
Intangible
assets
|
2,602,590
|
-
|
2,602,590
|
|||||||
Goodwill
|
32,818,809
|
12,457,602
|
45,276,411
|
|||||||
$
|
42,181,578
|
$
|
13,136,237
|
55,317,815
|
||||||
Assets
not allocated to business segments
|
3,342,948
|
|||||||||
Total
assets
|
58,660,763
|
Enterprise
|
||||||||||
Workforce
|
Career
|
|||||||||
Services
|
Networks
|
Total
|
||||||||
Year
ended May 31, 2006
|
||||||||||
Software
|
$
|
11,008,939
|
$
|
-
|
$
|
11,008,939
|
||||
Rewards
and discount products
|
6,268,128
|
-
|
6,268,128
|
|||||||
Professional
services
|
2,879,942
|
-
|
2,879,942
|
|||||||
Career
services
|
-
|
7,963,653
|
7,963,653
|
|||||||
Revenue
|
20,157,009
|
7,963,653
|
28,120,662
|
|||||||
Cost
of revenues, rewards and discount products
|
4,722,467
|
-
|
4,722,467
|
|||||||
Cost
of revenues, other
|
2,355,938
|
729,710
|
3,085,648
|
|||||||
Gross
profit
|
13,078,604
|
7,233,943
|
20,312,547
|
|||||||
Expenses
|
19,093,514
|
7,515,888
|
26,609,402
|
|||||||
Amortization
and depreciation
|
6,532,749
|
152,131
|
6,684,880
|
|||||||
Business
segment loss
|
$
|
(12,547,659
|
)
|
$
|
(434,076
|
)
|
(12,981,735
|
)
|
||
Other
income/(expenses) and
|
||||||||||
impact
of income taxes
|
(4,556
|
)
|
||||||||
Net
loss
|
$
|
(12,986,291
|
)
|
Enterprise
|
||||||||||
Workforce
|
Career
|
|||||||||
Services
|
Networks
|
Total
|
||||||||
As
at May 31, 2006
|
||||||||||
Business
segment assets
|
$
|
4,829,600
|
$
|
676,262
|
$
|
5,505,862
|
||||
Intangible
assets
|
8,052,062
|
15,361
|
8,067,423
|
|||||||
Goodwill
|
32,264,257
|
12,457,602
|
44,721,859
|
|||||||
$
|
45,145,919
|
$
|
13,149,225
|
58,295,144
|
||||||
Assets
not allocated to business segments
|
7,974,585
|
|||||||||
Total
assets
|
$
|
66,269,729
|
||||||||
Enterprise
|
||||||||||
Workforce
|
Career
|
|||||||||
Services
|
Networks
|
Total
|
||||||||
Year
ended May 31, 2005
|
||||||||||
Software
|
$
|
9,096,241
|
$
|
-
|
$
|
9,096,241
|
||||
Rewards
and discount products
|
5,446,152
|
-
|
5,446,152
|
|||||||
Professional
services
|
3,320,556
|
-
|
3,320,556
|
|||||||
Career
services
|
-
|
8,955,638
|
8,955,638
|
|||||||
Revenue
|
17,862,949
|
8,955,638
|
26,818,587
|
|||||||
Cost
of revenues, rewards and discount products
|
3,955,663
|
-
|
3,955,663
|
|||||||
Cost
of revenues, other
|
2,118,989
|
939,328
|
3,058,317
|
|||||||
Gross
profit
|
11,788,297
|
8,016,310
|
19,804,607
|
|||||||
Expenses
|
18,557,279
|
8,638,745
|
27,196,024
|
|||||||
Amortization
and depreciation
|
8,126,809
|
407,906
|
8,534,715
|
|||||||
Business
segment loss
|
$
|
(14,895,791
|
)
|
$
|
(1,030,341
|
)
|
(15,926,132
|
)
|
||
Other
income/(expenses) and
|
||||||||||
impact
of income taxes
|
767,157
|
|||||||||
Net
loss
|
$
|
(15,158,975
|
)
|
|||||||
Enterprise
|
||||||||||
Workforce
|
Career
|
|||||||||
Services
|
Networks
|
Total
|
||||||||
As
at May 31, 2005
|
||||||||||
Business
segment assets
|
$
|
4,714,196
|
$
|
737,873
|
$
|
5,452,069
|
||||
Intangible
assets
|
12,721,282
|
93,243
|
12,814,525
|
|||||||
Goodwill
|
29,825,840
|
12,457,602
|
42,283,442
|
|||||||
$
|
47,261,318
|
$
|
13,288,718
|
60,550,036
|
||||||
Assets
not allocated to business segments
|
15,107,327
|
|||||||||
Total
assets
|
$
|
75,657,363
|
||||||||
Geographic
|
||||||||||
Canada
|
United
States
|
Total
|
||||||||
Year
ended May 31, 2007
|
||||||||||
Revenue
|
$
|
1,523,451
|
$
|
27,785,318
|
$
|
29,308,769
|
||||
Expenses
|
4,587,696
|
35,836,965
|
40,424,660
|
|||||||
Geographical
loss
|
$
|
(3,064,245
|
)
|
$
|
(8,051,647
|
)
|
(11,115,891
|
)
|
||
Other
income/(expenses) and
|
(2,642,582
|
)
|
||||||||
impact
of income taxes
|
||||||||||
Net
loss
|
$
|
(13,758,473
|
)
|
Canada
|
United
States
|
Total
|
||||||||
As
at May 31, 2007
|
||||||||||
Long-lived
assets
|
$
|
2,303,676
|
$
|
48,375,941
|
$
|
50,679,617
|
||||
Current
assets
|
7,981,146
|
|||||||||
Total
assets
|
58,660,763
|
Canada
|
United
States
|
Total
|
||||||||
Year
ended May 31, 2006
|
||||||||||
Revenue
|
$
|
1,906,194
|
$
|
26,214,468
|
$
|
28,120,662
|
||||
Expenses
|
4,702,706
|
36,399,691
|
41,102,397
|
|||||||
Geographical
loss
|
$
|
(2,796,512
|
)
|
$
|
(10,185,223
|
)
|
(12,981,735
|
)
|
||
Other
income/(expenses) and
|
||||||||||
impact
of income taxes
|
(4,556
|
)
|
||||||||
Net
loss
|
$
|
(12,986,291
|
)
|
Canada
|
United
States
|
Total
|
||||||||
As
at May 31, 2006
|
||||||||||
Long-lived
assets
|
$
|
1,233,363
|
$
|
53,433,126
|
$
|
54,666,489
|
||||
Current
assets
|
11,603,240
|
|||||||||
Total
assets
|
$
|
66,269,729
|
||||||||
Canada
|
United
States
|
Total
|
||||||||
Year
ended May 31, 2005
|
||||||||||
Revenue
|
$
|
2,188,925
|
$
|
24,629,662
|
$
|
26,818,587
|
||||
Expenses
|
2,733,338
|
40,011,381
|
42,744,719
|
|||||||
Geographical
loss
|
$
|
(544,413
|
)
|
$
|
(15,381,719
|
)
|
(15,926,132
|
)
|
||
Other
income/(expenses) and
|
||||||||||
impact
of income taxes
|
767,157
|
|||||||||
Net
loss
|
$
|
(15,158,975
|
)
|
|||||||
Canada
|
United
States
|
Total
|
||||||||
As
at May 31, 2005
|
||||||||||
Long-lived
assets
|
$
|
641,040
|
$
|
55,770,829
|
$
|
56,411,869
|
||||
Current
assets
|
19,245,494
|
|||||||||
Total
assets
|
$
|
75,657,363
|
||||||||
Quarter
Ended
|
|||||||||||||
August
31,
|
November
30,
|
February
28,
|
May
31,
|
||||||||||
2006
|
2006
|
2007
|
2007
|
||||||||||
Revenues,
net
|
6,927,096
|
7,993,464
|
7,012,422
|
7,375,788
|
|||||||||
Gross
profit
|
5,134,475
|
5,994,817
|
5,113,151
|
5,665,694
|
|||||||||
Net
loss for the period
|
(2,889,769
|
)
|
(2,452,047
|
)
|
(4,380,645
|
)
|
(4,036,012
|
)
|
|||||
Weighted
average number of
|
|||||||||||||
common
shares outstanding
|
|||||||||||||
during
the period
|
50,960,845
|
50,960,845
|
51,258,672
|
51,351,152
|
|||||||||
Basic
and diluted net loss
|
|||||||||||||
per
common share
|
(0.06
|
)
|
(0.05
|
)
|
(0.09
|
)
|
(0.08
|
)
|
|||||
Revenues,
net
|
6,342,125
|
7,199,809
|
6,735,045
|
7,843,683
|
|||||||||
Gross
profit
|
4,284,843
|
4,956,286
|
4,965,249
|
6,106,169
|
|||||||||
Net
loss for the period
|
(3,838,144
|
)
|
(3,302,937
|
)
|
(3,419,325
|
)
|
(2,425,885
|
)
|
|||||
Weighted
average number of
|
|||||||||||||
common
shares outstanding
|
|||||||||||||
during
the period
|
49,193,310
|
49,194,178
|
49,994,178
|
50,938,164
|
|||||||||
Basic
and diluted net loss
|
|||||||||||||
per
common share
|
(0.08
|
)
|
(0.07
|
)
|
(0.07
|
)
|
(0.05
|
)
|
§ |
Pertain
to the maintenance of records that in reasonable detail accurately
and
fairly reflect our transactions and dispositions of our
assets:
|
§ |
Provide
reasonable assurance our transactions are recorded as necessary to
permit
preparation of our financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures
are
being made only in accordance with authorizations of our management
and
directors; and
|
§ |
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that could
have
a material effect on the financial
statement.
|
/s/ Deepak Gupta | /s/ Stephen Lerch | ||
|
|
||
Deepak Gupta
President and Chief Executive Officer
|
Stephen Lerch
Executive Vice President, Chief
Operating Officer and Chief Fnancial
Officer
|
Exhibit
|
|
Number
|
Description
|
3.1
|
Articles
of Incorporation, as amended (incorporated by reference to Exhibit
3.1 to
the Registration Statement on Form F-1 (File No.
333-87537)).
|
3.2
|
Articles
of Amendment, dated July 26, 2001 (incorporated by reference to Exhibit
1.2 of Form 20-F of Workstream Inc. for the fiscal year ended May
31,
2001).
|
3.3
|
Articles
of Amendment, dated November 6, 2001 (incorporated by reference to
Exhibit
1.3 of Form 20-F of Workstream Inc. for the fiscal year ended May
31,
2001).
|
3.4
|
Articles
of Amendment, dated November 7, 2002 (incorporated by reference to
Exhibit
4.4 to the Registration Statement on Form F-3 (File No.
333-101502).
|
3.5
|
By-law
No. 1 and No. 2 (incorporated by reference to Exhibit 3.2 to the
Registration Statement on Form F-1 (File No.
333-87537)).
|
3.6
|
By-law
No. 3 (incorporated by reference to Exhibit 1.5 of Form 20-F of Workstream
Inc. for the fiscal year ended May 31, 2001).
|
4.1
|
Form
of common share certificate (incorporated by reference to Exhibit
4.1 to
the Registration Statement on Form F-1 (File No.
333-87537)).
|
4.2
|
Warrant
Agreement dated as of March 22, 2001 between Workstream Inc. (formerly
E-Cruiter.com Inc.) and BlueStone Capital Corp. (incorporated by
reference
to Exhibit 4.11 of Form 20-F of Workstream Inc. for the fiscal year
ended
May 31, 2001).
|
4.3
|
Form
of Underwriter's Warrant Agreement (incorporated by reference to
Exhibit
1.1 to the Registration Statement on Form F-1 (File No.
333-87537)).
|
4.4
|
Form
of 8% Senior Subordinated Convertible Note (incorporated by reference
to
Exhibit 4.5 to the annual report on Form 10-K for the year ended
May 31,
2002).
|
4.5
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
4.7
to the annual report on Form 10-K for the year ended May 31,
2002).
|
4.6
|
Amended
and Restated Registration Rights Agreement dated May 14, 2002 by
and among
Workstream Inc., Sands Brothers Venture Capital III LLC, Sands Brothers
Venture Capital IV LLC and Sands Brothers & Co., Ltd. (incorporated by
reference to Exhibit 4.7 to the annual report on Form 10-K for the
year
ended May 31, 2002).
|
4.7
|
Common
Stock Purchase Warrant dated May 30, 2003 between Michael Weiss and
Workstream Inc. (incorporated by reference to Exhibit 4.7 to the
annual
report on Form 10-K for the year ended May 31, 2003).
|
4.8
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
4.8
to the annual report on Form 10-K for the year ended May 31,
2003).
|
4.9
|
Note
and Warrant Amendment Agreement dated January 12, 2004, by
and
among Workstream Inc., Sands Brothers Venture Capital III LLC, Sands
Brothers Venture Capital IV LLC and Sands Brothers & Co., LTD.
(incorporated by reference to Exhibit 4.1 to the quarterly report
on Form
10-Q for the quarter ended February 29, 2004).
|
4.10
|
Note
and Warrant Amendment Agreement dated January 12, 2004, by
and
among Workstream Inc., Crestview Capital Fund, L.P., Crestview Capital
Fund II, L.P. and Crestview Capital Offshore Fund, Inc. (incorporated
by
reference to Exhibit 4.2 to the quarterly report on Form 10-Q for
the
quarter ended February 29, 2004).
|
4.11
|
Warrant
to Acquire Common Shares from Workstream Inc. to
Standard
Securities Capital Corporation dated December 9, 2003 (incorporated
by
reference to Exhibit 4.3 to the quarterly report on Form 10-Q for
the
quarter ended February 29, 2004).
|
4.12
|
Warrant
to Acquire Common Shares from Workstream Inc. to Nathan
Low
dated December 11, 2003 (incorporated by reference to Exhibit 4.4
to the
quarterly report on Form 10-Q for the quarter ended February 29,
2004).
|
4.13
|
Warrant
to Acquire Common Shares from Workstream Inc. to Nathan
Low
dated December 31, 2003 (incorporated by reference to Exhibit 4.5
to the
quarterly report on Form 10-Q for the quarter ended February 29,
2004).
|
4.14
|
Form
of Common Stock Purchase Warrant (incorporated by reference to Exhibit
4.6
to the quarterly report on Form 10-Q for the quarter ended February
29,
2004).
|
4.15
|
Registration
Rights Agreement dated as of December 9, 2003, by and among Workstream
Inc., Standard Securities Capital Corporation and certain purchasers
(incorporated by reference to Exhibit 4.7 to the quarterly report
on Form
10-Q for the quarter ended February 29, 2004).
|
4.16
|
Registration
Rights Agreement dated as of December 11, 2003, by and among Workstream
Inc., Nathan Low and Smithfield Fiduciary LLC (incorporated by reference
to Exhibit 4.8 to the quarterly report on Form 10-Q for the quarter
ended
February 29, 2004).
|
4.17
|
Registration
Rights Agreement dated as of December 31, 2003 by
and
among Workstream Inc. and certain purchase (incorporated by reference
to
Exhibit 4.9 to the quarterly report on Form 10-Q for the quarter
ended
February 29, 2004).
|
4.18
|
Registration
Rights Agreement dated December 15, 2004 among Workstream, Rubicon
Master
Fund, Union Spring Fund Ltd., Sunrise Equity Partners, LP, Sunrise
Foundation Trust and Nathan A. Low (incorporated by reference to
Exhibit
4.1 to the current report on Form 8-K filed December 21,
2004).
|
4.19
|
Form
of Warrant issued on December 15, 2004 (incorporated by reference
to
Exhibit 4.2 to the current report on Form 8-K filed December 21,
2004).
|
4.20
|
Form
of Special Warrant issued on August 3, 2007 (incorporated by reference
to
Exhibit 4.1 of the current report on Form 8-K filed July 31,
2007).
|
4.21
|
Form
of Warrant issued on August 3, 2007 (incorporated by reference to
Exhibit
4.2 to the current report on Form 8-K filed July 31,
2007).
|
4.22
|
Registration
Rights Agreement dated as of August 3, 3007 by
and
among Workstream Inc. and certain purchase (incorporated by reference
to
Exhibit 4.3 to the current report on Form 8-K filed July 31,
2007).
|
10.1**
|
Workstream
Inc. 2002 Amended and Restated Stock Option Plan, as amended as of
November 7, 2002 (incorporated by reference to Exhibit 10.1 to the
quarterly report on Form 10-Q for the quarter ended November 30,
2002).
|
10.2
|
Lease
Agreement between Workstream Inc. (formerly E-Cruiter.com Inc.) and
RT
Twenty-Second Pension Properties Limited, dated March 21, 2000
(incorporated by reference to Exhibit 2.1 to the annual report on
Form
20-F for the period ended May 31, 2000).
|
10.3
|
Service
Agreement between Positionwatch Limited and Workstream Inc. (formerly
E-Cruiter.com Inc.), dated February 23, 1999 (incorporated by reference
to
Exhibit 10.6 to the Registration Statement on Form F-1 (File No.
333-87537)).
|
10.4
|
Security
Agreement dated April 18, 2002 between Workstream Inc. and Sands
Brothers
Venture Capital III LLC, as Security Agent for the holders of the
Senior
Secured Convertible Notes (incorporated by reference to Exhibit 10.19
to
the annual report on Form 10-K for the year ended May 31,
2002).
|
10.5
|
Guarantee
Agreement dated as of April 18, 2002 by Workstream USA, Inc. in favor
of
the holders of 8% Senior Subordinated Secured Convertible Notes
(incorporated by reference to Exhibit 10.20 to the annual report
on Form
10-K for the year ended May 31, 2002).
|
10.6
|
Joinder
Agreement dated May 14, 2002 by and among Workstream Inc., Workstream
USA,
Inc., Sands Brothers Venture Capital IV LLC, Sands Brothers Venture
Capital III LLC, Crestview Capital Fund, L.P., Crestview Capital
Fund II,
L.P. and Crestview Capital Offshore Fund, Inc. (incorporated by reference
to Exhibit 10.21 to the annual report on Form 10-K for the year ended
May
31, 2002).
|
10.7**
|
Consulting
Agreement dated March 1, 2007 between Michael Mullarkey and Workstream
Inc. (incorporated by reference to Exhibit 10.1 to the current report
on
Form 8-K filed March 7, 2007).
|
10.8**
|
Employment
Agreement dated as of April 4, 2005 between Workstream, Inc. and
Stephen
Lerch (incorporated by reference to Exhibit 10.1 to the current report
on
Form 8-K filed April 7, 2005).
|
10.9**
|
Settlement
Agreement dated as of May 9, 2003 between Paul Haggard and Workstream
Inc.
(incorporated by reference to Exhibit 10.13 to the annual report
on Form
10-K for the year ended May 31, 2003).
|
10.10
|
Merger
Agreement dated August 30, 2002, among Workstream Inc., Workstream
Acquisition II, Inc. and Xylo, Inc. (incorporated by reference to
Exhibit
2.1 to the report on Form 8-K filed September 4, 2002).
|
10.11
|
Term
Note dated January 31, 2003 by Workstream Inc., Workstream USA, Inc.,
6FigureJobs.com, Inc., Icarian, Inc., RezLogic, Inc., OMNIpartners,
Inc.
and Xylo, Inc. in favor of Michael Mullarkey (incorporated by reference
to
Exhibit 10.1 to the quarterly report on Form 10-Q for the quarter
ended
February 28, 2003).
|
10.12
|
Security
Agreement dated January 31, 2003 by and among Michael Mullarkey,
Workstream Inc., Workstream USA, Inc., 6FigureJobs.com, Inc., Icarian,
Inc., RezLogic, Inc., OMNIpartners, Inc., and Xylo, Inc. (incorporated
by
reference to Exhibit 10.2 to the quarterly report on Form 10-Q for
the
quarter ended February 28, 2003).
|
10.13
|
General
Security Agreement dated January 31, 2003 between Workstream Inc.
and
Michael Mullarkey (incorporated by reference to Exhibit 10.3 to the
quarterly report on Form 10-Q for the quarter ended February 28,
2003).
|
10.14
|
Securities
Purchase Agreement dated as of May 30, 2003 by and among Workstream
Inc.
and William J. Ritger (incorporated by reference to Exhibit 10.18
to the
annual report on Form 10-K for the year ended May 31,
2003).
|
10.15
|
Securities
Purchase Agreement dated as of May 30, 2003 by and among Workstream
Inc.
and Michael Weiss (incorporated by reference to Exhibit 10.19 to
the
annual report on Form 10-K for the year ended May 31,
2003).
|
10.16
|
Form
of Securities Purchase Agreement (incorporated by reference to Exhibit
10.20 to the annual report on Form 10-K for the year ended May 31,
2003).
|
10.17
|
Agreement
and Plan of Merger dated May 24, 2004, as amended, by and between
Kadiri,
Inc., Workstream Inc. and Workstream Acquisition III, Inc. (incorporated
by reference to Exhibits 2.1 and 2.2 to the report on Form 8-K filed
June
14, 2004).
|
10.18
|
Asset
Purchase Agreement dated as of July 14, 2003 by
and
between Perform, Inc. and Workstream
Inc.
(incorporated by reference to Exhibit 10.1 to the quarterly report
on Form
10-Q for the quarter ended November 30, 2003).
|
10.19
|
Asset
Purchase Agreement dated as of March 27, 2004, as amended, by and
between
Workstream USA, Inc., Workstream Inc. and Peopleview, Inc.
|
10.20
|
Form
of Subscription Agreement (incorporated by reference to
Exhibit
10.1 to the quarterly report on Form 10-Q for the quarter ended February
29, 2004).
|
10.21
|
Form
of Securities Purchase Agreement (incorporated by reference
to
Exhibit 10.2 to the quarterly report on Form 10-Q for the quarter
ended
February 29, 2004).
|
10.22
|
Agency
Agreement dated December 9, 2003 between Standard
Securities
Capital Corporation and Workstream Inc.(incorporated by reference
to
Exhibit 10.3 to the quarterly report on Form 10-Q for the quarter
ended
February 29, 2004).
|
10.23
|
Securities
Purchase Agreement dated as of December 11, 2003 by
and
between Workstream Inc. and Sunrise Securities Corporation (incorporated
by reference to Exhibit 10.4 to the quarterly report on Form 10-Q
for the
quarter ended February 29, 2004).
|
10.24
|
Securities
Purchase Agreement dated as of December 31, 2003 by
and
between Workstream Inc. and Sunrise Securities Corporation (incorporated
by reference to Exhibit 10.5 to the quarterly report on Form 10-Q
for the
quarter ended February 29, 2004).
|
10.25
|
Institutional
Public Relations Retainer Agreement dated December
1,
2003 between Sunrise Financial Group, Inc. and Workstream Inc.
(incorporated by reference to Exhibit 10.6 to the quarterly report
on Form
10-Q for the quarter ended February 29, 2004).
|
10.26
|
Business
Advisory Agreement dated as of December 3, 2003, by and
between
Workstream Inc. and Legend Merchant Group, Inc. (incorporated by
reference
to Exhibit 10.7 to the quarterly report on Form 10-Q for the quarter
ended
February 29, 2004).
|
10.27
|
Securities
Purchase Agreement dated December 15, 2004 among Workstream, Rubicon
Master Fund, Union Spring Fund Ltd., Sunrise Equity Partners, LP,
Sunrise
Foundation Trust and Nathan A. Low (incorporated by reference to
Exhibit
10.1 to the current report on Form 8-K filed December 21,
2004).
|
10.28
|
Agreement
and Plan of Merger dated June 29, 2004 among Workstream, Workstream
Acquisition IV, Inc. and Bravanta, Inc. (incorporated by reference
to
Exhibit 2.1 to the current report on Form 8-K filed August 11,
2004).
|
10.29
|
Asset
Purchase Agreement dated December 20, 2004 among Workstream, Workstream
USA, Inc. and ProAct Technologies Corporation (incorporated by reference
to Exhibit 10.1 to the current report on Form 8-K filed January 6,
2005).
|
10.30
|
Amendment
to Asset Purchase Agreement dated December 30, 2004 among Workstream,
Workstream USA, Inc. and ProAct Technologies Corporation (incorporated
by
reference to Exhibit 10.2 to the current report on Form 8-K filed
January
6, 2005).
|
10.31
|
Registration
Rights Agreement dated December 30, 2004 between Workstream and ProAct
Technologies Corporation (incorporated by reference to Exhibit 10.3
to the
current report on Form 8-K filed January 6, 2005).
|
10.32
|
Promissory
Note dated December 30, 2004 issued to ProAct Technologies Corporation
(incorporated by reference to Exhibit 10.4 to the current report
on Form
8-K filed January 6, 2005).
|
10.33
|
Asset
Purchase Agreement dated August 31, 2004 among Workstream, Workstream
USA,
Inc. and Peoplebonus.com, Inc. (incorporated by reference to Exhibit
10.1
to the quarterly report on Form 10-Q for the quarter ended August
31,
2004).
|
10.34
|
Employment
Agreement dated as of December 3, 2006 between Workstream, Inc. and
Deepak
Gupta (incorporated by reference to Exhibit 10.1 to the current report
on
Form 8-K filed December 7, 2006).
|
10.35
|
Employment
Agreement dated as of June 11, 2007 between Workstream, Inc. and
Phil
Oreste (incorporated by reference to Exhibit 10.1 to the current
report on
Form 8-K filed June 15, 2007).
|
10.36
|
Transaction
Agreement dated July 25, 2007 among the company and the investors
listed
therein (incorporated by reference to Exhibit 4.2 to the current
report on
Form 8-K filed July 31, 2007).
|
21.1
|
List
of Subsidiaries.*
|
23.1
|
Consent
of PricewaterhouseCoopers LLP.*
|
23.2
|
Consent
of McGladrey & Pullen, LLP*
|
31.1
|
Certifications
pursuant to Rule 13a-14(a)/15d-14(a).*
|
32.1
|
Certifications
pursuant to 18 U.S.C. Section
1350.*
|
WORKSTREAM
INC.
|
||
|
|
|
By: | /s/ Deepak Gupta | |
Deepak
Gupta,
President
and Chief
Executive
Officer
|
Signature
|
Title
|
Date
|
/s/
Deepak
Gupta
|
President
and Chief Executive Officer
|
August
15, 2007
|
Deepak
Gupta
|
(Principal
Executive Officer)
|
|
Director
|
||
/s/
Stephen
Lerch
|
Executive
Vice President
|
August
15, 2007
|
Stephen
Lerch
|
Chief
Financial Officer/Chief Operating Officer
|
|
(Principal
Financial and Accounting Officer)
|
||
/s/
Michael
Mullarkey
|
Chairman
of the Board of Directors
|
August
15, 2007
|
Michael
Mullarkey
|
||
/s/
John Oltman
|
Director
|
August
15, 2007
|
John
Oltman
|
||
/s/
Michael A. Gerrior
|
Director
|
August
15, 2007
|
Michael
A. Gerrior
|
||
/s/
Thomas Danis
|
Director |
August
15, 2007
|
Thomas
Danis
|
||
/s/
Mitch Tuchman
|
Director
|
August
15, 2007
|
Mitch
Tuchman
|