FMX Ventures Inc. formerly Footmaxx Holdings Inc.
TSX VENTURE : FMX

FMX Ventures Inc. formerly Footmaxx Holdings Inc.

August 30, 2005 17:25 ET

Footmaxx Holdings Inc.: Second Quarter Statements and MD&A for 2005

TORONTO, ONTARIO--(CCNMatthews - Aug. 30, 2005) - Footmaxx Holdings Inc. (TSX VENTURE:FMX)("Footmaxx"), a Canadian owned company and one of North America's leading suppliers of corrective foot orthotics and diagnostic systems announces that:

Revenue growth offset by unfavorable foreign exchange

The Company continued to experience an impact on revenues due to a strengthening Canadian dollar. Were it not for the unfavorable impact of foreign exchange, revenues would have shown a slight increase. Final revenue for the second quarter were $3,389,671, 3.7% below prior year revenues of $3,519,058. EBITDA for the second quarter decreased by $25,931, from $576,280 in 2004 to $550,249 in 2005. Net income increased from $20,059 for the Second quarter of 2004 to $43,824 in 2005.

Revenue for the first six months of 2005 decreased $432,516, from $6,607,362 in 2004 to $6,174,846 in 2005. EBITDA decreased $271,149 from $1,007,538 in 2004 to $736,389 in 2005. Net loss for the first six months of 2005 was $287,594, an increase of $181,101 from the $106,593 net loss incurred for the same period of 2004.

Non-GAAP Measures

In the Management Discussion and Analysis, and elsewhere, measures such as earnings before interest, taxes, depreciation and amortization (EBITDA) and other terms that are used are not defined by generally accepted accounting principles ("GAAP"). The use of these terms may not be consistent with the way these terms are used by others. Where possible, in particular for EBITDA, tables and other information are provided that enables readers to reconcile between such non-GAAP measures and standard GAAP measures. While these measures are not defined by or required by GAAP, this information is provided to readers to help them better understand significant measures.

Forward-looking Statements

This release may contain projections and other forward-looking statements regarding future events. Such statements are predications involving known and unknown risks, uncertainties and other factors that may cause the actual events or results to be materially different. Although the Company believes that the forward-looking statements contained herein are reasonable, it can give no assurance that the Company's expectations are correct. For information concerning factors affecting the Company's business, the reader is referred to the documents that the Company files from time to time with applicable Canadian securities and regulatory authorities.

Footmaxx produces and globally markets high quality, state-of-the-art foot orthotics. Footmaxx's proprietary software uses advanced computer techniques to produce individually prescribed and technologically superior foot orthotics which reduce foot, knee, hip and lower back pain and enhance both the comfort and performance level of the wearer. For more information on Footmaxx visit: www.footmaxx.com



FOOTMAXX HOLDINGS INC.

Consolidated Balance Sheet
As at June 30, 2005
Unaudited

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June 30, 2005 December 31, 2004
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Current assets

Cash $ 18,420 $ 27,878
Accounts receivable 1,495,048 1,419,710
Inventory
Systems 105,995 44,840
Materials 452,204 409,418
Other assets 92,937 102,015

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Total current assets 2,164,604 2,003,861

Capital assets 733,686 906,910
Deferred financing costs 178,225 224,718

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Total assets $ 3,076,515 $ 3,135,489
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Libilities and Shareholders Equity

Current liabilities

Accounts payable and accruals $ 1,044,847 $ 1,057,528
Current portion of Penfund loan
(note 6) 2,272,483 2,775,479
Demand loan - bank (note 7) 473,000 260,000

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Total current liabilities 3,790,330 4,093,007

Long term liabilities

Convertible debentures 13,713,595 13,182,298
Redeemable and retractable
preferred shares 2,103,924 2,103,924
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Total long term liabilities 15,817,519 15,286,222

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Total liabilities 19,607,849 19,379,229


Shareholders' equity

Capital stock 20,212,315 20,212,315

Closing retained earnings (36,743,649) (36,456,055)

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Total shareholders' equity (16,531,334) (16,243,740)

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Total liabilities and shareholders'
equity $ 3,076,515 $ 3,135,489
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The interim Consolidated Financial Statements for the six months
ended June 30,2005 have notbeen reviewed by an auditor.


FOOTMAXX HOLDINGS INC.

Consolidated Statement of Operations and Deficit
For Quarterly Periods ended June 30, 2005 & 2004
Unaudited

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Q2 2005 Q2 2004
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Sales $ 3,389,671 $ 3,519,058
Cost of sales 1,542,357 1,488,844
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Gross profit 1,847,314 2,030,214
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Expenses
Selling and administration (note 3) 1,077,802 1,194,604
Information technology (note 3) 223,751 237,683
Accrued interest on convertible
debentures 273,001 225,526
Interest on long term loan 107,398 158,948
Other interest 5,067 6,854
Foreign exchnage loss (gain) (4,488) 21,647
Amortization of capital assets 97,713 131,498
Amortization of deferred financing
expenses 23,246 23,246
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Total expenses 1,803,490 2,000,006
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Net income (loss) before income taxes 43,824 30,208
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Income taxes - 10,149

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Net income (loss) for the period 43,824 20,059
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Deficit, beginning of period (36,787,473) (36,120,355)

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Deficit, end of period $ (36,743,649) $ (36,100,296)
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Outstanding shares 37,554,534 37,554,534

Basic and diluted loss per common
share (nore 5) $ 0.00 $ 0.00

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The interim Consolidated Financial Statements for the six months
ended June 30,2005 have not been reviewed by an auditor.


FOOTMAXX HOLDINGS INC.

Consolidated Statement of Operations and Deficit
For Quarterly Periods ended June 30, 2005 & 2004
Unaudited

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Year-to-date Year-to-date
Q2 2005 Q2 2004
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Sales $ 6,174,846 $ 6,607,362
Cost of sales 2,844,300 2,777,144
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Gross profit 3,330,546 3,830,218
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Expenses
Selling and administration (note 3) 2,165,510 2,333,339
Information technology (note 3) 445,263 469,939
Accrued interest on convertible
debentures 531,297 440,623
Interest on long term loan 227,683 330,785
Other interest 9,785 13,589
Foreign exchnage loss (gain) (16,616) 19,402
Amortization of capital assets 202,576 262,582
Amortization of deferred financing
expenses 46,493 46,493
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Total expenses 3,611,991 3,916,752
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Net income (loss) before income taxes (281,445) (86,534)
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Income taxes 6,149 20,059

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Net income (loss) for the period (287,594) (106,593)
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Deficit, beginning of period (36,456,055) (35,993,703)

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Deficit, end of period $ (36,743,649) $ (36,100,296)
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Outstanding shares 37,554,534 37,554,534

Basic and diluted loss per common
share (nore 5) $ (0.01) $ 0.00

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The interim Consolidated Financial Statements for the six months
ended June 30,2005 have not been reviewed by an auditor.


FOOTMAXX HOLDINGS INC.

Consolidated Statement of Cash Flows
For Quarterly Periods ended June 30, 2005 & 2004
Unaudited

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Q2 2005 Q2 2004
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Cash flows from (used in) operating
activities:

Net income (loss) for the period: $ 43,824 $ 20,059

Items not involving cash:
Amortization of capital assets 97,713 131,496
Amortization of deferred financing costs 23,246 23,246
Interest on convertible debentures 273,001 225,526
Imputed interest on long term loan (107,239) (36,454)
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330,545 363,873
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Change in other non-cash working
capital:

Decrease (increase) in accounts
receivable (96,706) (127,472)
Decrease (increase) in inventory (81,745) (41,285)
Decrease (increase) in other assets 9,116 (70,996)
(Decrease) increase in accounts
payable and accrued liabilities (8,708) 146,388
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(178,043) (93,365)
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Cash flows from (used in) operations 152,502 270,508
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Cash flows from (used in) financing
activities

Increase (decrease) in bank indebtedness 90,000 -
Proceeds (repayment) of Penfund loan (222,222) (222,222)
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(132,222) (222,222)
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Cash flows used in investing activities:

Purchase of capital assets (21,107) (10,037)

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Increase (decrease) in cash (827) 38,249
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Cash, beginning of period 19,247 138,809
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Cash, end of period $ 18,420 $ 177,058
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The interim Consolidated Financial Statements for the six months
ended June 30,2005 have not been reviewed by an auditor.
See accompanying notes to Consolidated Finanical statements


FOOTMAXX HOLDINGS INC.

Consolidated Statement of Cash Flows
For Quarterly Periods ended June 30, 2005 & 2004
Unaudited

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Year-to-date Year-to-date
Q2 2005 Q2 2004
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Cash flows from (used in) operating
activities:

Net income (loss) for the period: $ (287,594) $ (106,593)

Items not involving cash:
Amortization of capital assets 202,576 262,580
Amortization of deferred financing
costs 46,493 46,493
Interest on convertible debentures 531,297 440,623
Imputed interest on long term loan (58,552) 32,246
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434,220 675,349
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Change in other non-cash working
capital:

Decrease (increase) in accounts
receivable (75,338) (331,012)
Decrease (increase) in inventory (103,941) (33,770)
Decrease (increase) in other assets 9,078 (134,605)
(Decrease) increase in accounts
payable and accrued liabilities (12,681) 509,523
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(182,882) 10,136
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Cash flows from (used in)
operations 251,338 685,485
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Cash flows from (used in) financing
activities

Increase (decrease) in bank
indebtedness 213,000 (90,615)
Proceeds (repayment) of Penfund
loan (444,444) (444,444)
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(231,444) (535,059)
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Cash flows used in investing
activities:

Purchase of capital assets (29,352) (72,703)

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Increase (decrease) in cash (9,458) 77,723
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Cash, beginning of period 27,878 99,335
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Cash, end of period 18,420 $ 177,058
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The interim Consolidated Financial Statements for the six months
ended June 30,2005 have not been reviewed by an auditor.
See accompanying notes to Consolidated Finanical statements


FOOTMAXX HOLDINGS INC.

Notes to Financial Statements

As at June 30, 2005

1. Basis of Presentation

The unaudited interim period consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles. The preparation of financial data is based on accounting policies and practices consistent with those used in the preparation of the audited annual consolidated statements. These unaudited interim period financial statements do not include all the disclosures required by generally accepted accounting principles and accordingly should be read together with the audited annual consolidated financial statements and the accompanying notes included in the Company's 2004 Annual Report.

These statements have been prepared on the basis of accounting principles applicable to a going concern. The Company's ability to continue as a going concern is dependant upon the Company being able to meet its financial covenant tests for Penfund Inc and its ability to improve the profitability of the business to permit it to realize its assets and discharge its liabilities in the normal course of operations. If the going concern assumption is not appropriate for these consolidated financial statements, adjustments would be necessary to the carrying value of assets and liabilities and the reported revenue and expenses.

2. Revenue Recognition

The Company recognizes revenues from the sales of orthotics and proprietary computer systems when shipment occurs and title transfers. Revenue is recorded at the invoice price for each product net of estimated returns and incentives provided to customers.



3. Analysis of Fixed Expenses
YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Selling and administration
Field sales force $ 603,149 $ 599,755 $ 1,239,446 $ 1,246,682
Marketing 52,700 63,253 104,687 116,263
Finance and
administration 421,953 531,696 821,377 970,494
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$ 1,077,802 $ 1,194,704 $ 2,165,510 $ 2,333,439
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YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Information
technology $ 223,751 $ 237,683 $ 445,263 $ 469,939


4. Summary of Stock Options
The following summarizes the stock options outstanding:
Weighted
average
Number exercise
of shares price
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Outstanding, January 1, 2005 1,478,121 $ 0.10
Granted 0 0.00
Exercised 0 0.00
Retired 0 0.00
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Outstanding, June 30, 2005 1,478,121 $ 0.10
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The Company grants stock options to employees, directors and members of the advisory board of the Company. The stock options vest over varying time periods from the date of grant to four years and expire approximately five years from the date of grant.



5. Loss per Common Share
YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Net Income(Loss) $ 43,824 $ 20,059 $ (287,594) $ (106,593)

Weighted average
common shares 37,554,534 37,554,534 37,554,534 37,554,534

Basic and diluted
loss per common share $ 0.00 $ 0.00 $ (0.01) $ (0.00)


The exercise of stock options which would result in the issuance of 1,478,121 shares and the conversion of debentures which would result in the issuance of 137,135,946 have not been considered in the calculation of diluted shares since they would cause the calculation of the year to date loss per share to be anti-dilutive.

6. Penfund Long Term Loan

The Company was in compliance with all of its covenants of the Penfund loan at the end of June 30, 2005.

7. Bank Indebtedness:

The Royal Bank has removed all financial covenants in the most recent renewal of our credit facility agreement dated May 16, 2005.

8. Segmented Information

The Company operates in Canada and internationally in one dominant segment, foot orthotics and associated computer systems. Revenue is attributed to geographic areas based on location of the customer. International sales are predominantly sales to the United States.


YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Revenue
Canada $ 1,617,563 $ 1,551,965 $ 2,849,598 $ 2,770,701
International 1,772,108 1,967,093 3,325,248 3,836,661
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$ 3,389,671 $ 3,519,058 $ 6,174,846 $ 6,607,362
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YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Gross profit
Canada $ 929,380 $ 896,959 $ 1,600,449 $ 1,673,705
International 917,934 1,026,261 1,730,097 2,156,513
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$ 1,847,314 $ 1,923,220 $ 3,330,546 $ 3,830,218
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June 30, 2005 June 30, 2004
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Capital assets and
deferred financing costs
Canada $ 654,587 $ 871,622
United States 257,324 286,333
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$ 911,911 $ 1,157,955
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YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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9. Supplemental Cash
flow disclosure
Cash paid for interest $ 219,704 $ 202,261 $ 286,263 $ 312,118
Cash paid for income
taxes $ - $ 11,403 $ - $ 20,059


FOOTMAXX HOLDINGS INC.

For the Six Months Ended June 30, 2005

Management Discussion and Analysis

Overall Performance

The Company continued to experience an impact on revenues due to a strengthening Canadian dollar. Were it not for the unfavorable impact of foreign exchange, revenues would have shown a slight increase. Final revenue for the second quarter were $3,389,671, 3.7% below prior year revenues of $3,519,058. EBITDA for the second quarter decreased by $25,931, from $576,280 in 2004 to $550,249 in 2005. Net income increased from $20,059 for the Second quarter of 2004 to $43,824 in 2005.

Revenue for the first six months of 2005 decreased $432,516, from $6,607,362 in 2004 to $6,174,846 in 2005. EBITDA decreased $271,149 from $1.007,538 in 2004 to $736,389 in 2005. Net loss for the first six months of 2005 was $287,594, an increase of $181,101 from the $106,593 net loss incurred for the same period of 2004.

Results of Operations

Non-GAAP Measures

In the Management Discussion and Analysis, and elsewhere, measures such as earnings before interest, taxes, depreciation and amortization (EBITDA) and other terms that are used are not defined by generally accepted accounting principles ("GAAP"). The use of these terms may not be consistent with the way these terms are used by others. Where possible, in particular for EBITDA, tables and other information are provided that enables readers to reconcile between such non-GAAP measures and standard GAAP measures. While these measures are not defined by or required by GAAP, this information is provided to readers to help them better understand significant measures.

Revenue

Revenue for the second quarter of 2005 decreased $129,387, from $3,519,058 in Q2 2004 to $3,389,671 in Q2 2005, a decrease of 3.7%. The decline in the value of the US dollar, the currency in which Footmaxx transacts a majority of its business, reduced revenues by $140,000. Increased competition continued to decrease the demand for the company's custom orthotics but this was more offset by increased footwear revenue that eliminated the impact of foreign exchange.

Year to date revenues as at the end of the second quarter of 2005 were $6,174,846 which is a $432,516 or 6.5% decrease in revenues from the same period of 2004. The stronger Canadian dollar contributed $257,700 or the majority of the decrease. The balance of the decrease was primarily due to soft demand for custom orthotic products in the USA, the majority of which occurred in Q1 2005.



Second Quarter Revenue by Geographic Area

CDN $ Q2 2005 % Total Q2 2004 % Total
Sales Sales
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Canada $ 1,617,563 47.7% $ 1,551,961 44.1%
International
(mainly USA) 1,772,108 52.3% 1,967,097 55.9%
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Total sales $ 3,389,671 100.0% $ 3,519,058 100.0%
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The revenue in Canada for Q2 2005 increased 4.2% over revenue in Canada for Q2 2004. This increase in revenue resulted equally from increased demand for orthotics and sales of the company's orthotic ordering computer systems. The decrease in international business was 9.2% of which the majority was the result of the unfavorable foreign exchange situation. The balance was caused by soft demand for custom orthotics due to increased competition in a flat market.



Year to Date Revenue by Geographic Area

CDN $ YTD Q2 % Total YTD Q2 % Total
2005 Sales 2004 Sales
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Canada $ 2,849,598 46.1% $ 2,770,701 41.9%
International
(mainly USA) 3,325,248 53.9% 3,836,661 58.1%
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Total sales $ 6,174,846 100.0% $ 6,607,362 100.0%
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Year to date revenue for Canada increased by $78,897 or 2.8% mainly due to increased demand for footwear products that are sold with a custom orthotics. International revenues decreased by $511,413 or 13.3% with unfavorable foreign exchange contributing 50% of the shortfall. Weak demand for custom orthotics in Q1 2005 contributed the majority of the balance of the decrease.

Gross Profit

Gross Profit for the second quarter of 2005 decreased $182,900 or 9.0% from $2,030,214 in Q2 2004 to $1,847,314 in Q2 of 2005. The unfavorable net impact of the strengthening Canadian dollar on gross profit was approximately $111,600. The balance of the decrease was due to the volume decrease in custom orthotics.

Year to date gross profit decreased $499,672 or 13.0% from $3,830,218 year to date at June 30,2004 to $3,330,546 at June 30,2005. Unfavorable foreign exchange impact accounted for $197,000 of the decrease. The decrease in volume of custom orthotics due to continued increased competition in a flat market contributed the balance of the decrease.



Quarterly Gross Profit by Geographic Area

CDN $ Q2 2005 % Gross Q2 2004 % Gross
Profit Profit
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Canada $ 929,380 50.3% $ 896,959 44.2%
International
(mainly USA) 917,934 49.7% 1,133,255 55.8%
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Total gross profit $ 1,847,314 100.0% $ 2,030,214 100.0%
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Canadian gross profit for the second quarter 2005 increased slightly over the level of the second quarter of 2004 due to the modest increase in revenues. Gross profit in the International business decreased equally due to the unfavorable foreign exchange and the decrease in custom orthotic volume.

Year to Date Gross Profit by Geographic Area



CDN $ YTD Q2 Q2 % Gross YTD Q2 % Gross
2005 Profit 2004 Profit
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Canada $ 1,600,449 48.0% $ 1,673,705 43.7%
International
(mainly USA) 1,730,097 52.0% 2,156,513 56.3%
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Total gross profit $ 3,330,546 100.0% $ 3,830,218 100.0%
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Year to date gross profit in Canada decreased by $73,256 or 4.4% from $1,673,705 for the first six months of 2004 to $1,600,449 for the same period in 2005. This was mainly due to the volume decrease that occurred in Q1. International gross profit decreased $426,416 or 19.8% from $2,156,513 year to date Q2 2004 to $1,730,097 for the same period of 2005. The net effect of the strengthening Canadian dollar contributed approximately $197,000 of the reduction. The balance was due to the reduced revenues in custom orthotics and orthotic ordering systems.

Operating Expenses

Selling and administrative expenses decreased $116,802 or 9.8% during the second quarter of 2005. The favorable effect of the stronger Canadian dollar reduced US sales and administration expenses by approximately $44,800. The balance of the $116,802 reduction is related to lower financial accruals as well as lower headcount in administration. In addition office rent expense decreased $30,000 for the quarter.

Year to date selling and administration expenses decreased $167,829 or 7.2% from $2,333,339 or the first six months of 2004 to $2,165,510 for the same period in 2005. The foreign exchange situation reduced operation expenses $77,700. The balance of the $167,829 decrease is related to reduced administration compensation costs and reduced office rent of $50,000.



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Operating expenses YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Field sales force $ 603,149 $ 599,752 $ 1,239,446 $ 1,246,682
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Marketing 52,700 63,253 104,687 116,263
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Finance and
administration 421,953 531,599 821,506 970,394
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Total Operating
expenses $1,077,802 $1,194,604 $ 2,165,510 $ 2,333,339
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Information technology expenses experienced a slight reduction on
both the second quarter and year to date expense level due to
improved cost control.

YTD YTD
Q2 2005 Q2 2004 Q2 2005 Q2 2004
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Information Technology $ 223,751 $ 237,683 $ 445,263 $ 469,939


Net come (Loss)

Net Income for the second quarter of 2005 was $43,824 which is an $23,765 improvement compared to the $20,059 net income for the second quarter of 2004. The $182,900 decrease in gross profit was more than offset by the $130,834 decrease in operating expenses, a $33,785 decrease in depreciation expense and a $26,135 improvement in unfavorable balance sheet foreign exchange.

Year to date Net Loss of $287,594 is a $181,001 decrease from the $106,593 loss for the first six months of 2004. The $499,672 decrease in gross profit was partially offset by the $192,505 decrease in operating expenses, the $60,006 decrease in depreciation expense and the $36,018 improvement in balance sheet foreign exchange.

EBITDA

Earnings before interest, taxes, depreciation and amortization for 2004 decreased by $26,031 from $576,280 in Q2 2004 to $550,249 in the second quarter of 2005. Year to date EBITDA for the six months ended June 30,2005 decreased $271,149 from $1,007,538 in 2004 to $736,389 in 2005. The decrease in gross profit of $499,672 has been partially offset decreases in operating expenses and depreciation. EBITDA has been used by the Company historically to measure the cash flow profit generated by operations. EBITDA is also used in calculating some of the Company's debt covenants for the Penfund long-term debt.



Q2 2005 Q2 2004 YTD Q2 2005 YTD Q2 2004
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Net Income $ 43,824 $ 20,059 $ (287,594) $ (106,593)
Add back:
Accrued interest on
debentures 273,001 225,526 531,297 440,623
Interest long term debt 107,398 158,948 227,683 330,785
Other interest 5,067 6,854 9,785 13,589
Amortization capital assets 97,713 131,498 202,576 262,582
Amortization deferred
financing 23,246 23,246 46,493 46,493
Income taxes -- 10,149 6,149 20,059
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EBITDA $ 550,249 $ 576,280 $ 736,389 $ 1,007,538
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Liquidity

Working Capital deficiency

The company has a working capital deficiency as reported by the classifications on the balance sheet. However, this includes the Penfund long term loan that has been classified as a current liability due to the fact the Company was in violation of some of its financial covenants during the first three quarters of 2004 but was in compliance with all of it's covenants at the end of 2004. In addition the company is in compliance with its covenants for the first and second quarters of 2005. The Royal Bank has removed all of the covenants it previously had as part of the bank line of credit facility. The company continues to meet all of its obligations in a timely manner.

Cash Flow

Cash flow for the second quarter of 2005 was negative $827. During the quarter, the company paid a $150,000 bonus interest payment and reduced its long term debt by $222,222 while increasing its bank debt by $90,000. Year to date cash flow as at June 30, 2005 was negative $9,458 with the company reducing its long term debt by $ 444,444 and paying the $150,000 bonus interest payment. The Company increased its bank indebtedness by $213,000. Management feels that the Company will be able to meet all of its obligations in a timely manner, as it is currently doing. Collections of account receivable remained good with average days outstanding at 40 days at the end of the second quarter.

Capital Expenditures

The Company made investments in capital assets in the amount of $21,107 during the second quarter that were related mainly to the equipment pool to meet demand from trial, loaner and rental systems customers. This brings the total investments in capital assets to $ 29,352 for the six months ended June 30, 2005. These investments will support increases in the orthotic volumes.

Debt Covenants

During the second quarter of 2005, the Company achieved all of the Penfund Inc. related covenants.



Financial Commitments and Contractual Obligations

Balance of 2005 2006 2007 2008
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Lease payments $ 203,187 $ 379,094 $ 314,461 $ 23,290
Long Term Debt- Principal 444,444 888,888 370,372 --
Long Term Debt- Interest 103,138 418,989 437,814 --
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Total commitments $ 750,769 $ 1,686,971 $ 1,122,647 $ 23,290
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2005 Financial Outlook

The cost reduction programs that the Company implemented in late 2003 and also early 2004 has been very successful as the cost savings has been able to more than offset the decrease in revenues and mitigate the unfavorable foreign exchange situation. The company has introduced new product lines that should increase the volumes of custom orthotics, which should lead to improved financial results.

Oversight Role of the Audit Committee

The Audit Committee reviews, with management, the Company's quarterly MD&A and related consolidated financial statements and approves the release to shareholders. Management also periodically presents to the Audit Committee a report of their assessment of the Company's internal controls and procedures for financial reporting.

Forward-looking statements

The foregoing may contain forward-looking statements. These statements are based on current expectations that are subject to risks and uncertainties, and the Company can give no assurance that these expectations are correct. Various factors could cause actual results to differ materially from those projected in such statements, including financial considerations and those predicting the timing and market acceptance of future products. The Company disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments or otherwise. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement.

Number of Common Shares issued to date - 37,554,535

Contact Information