OPTION-NFA INC.
TSX VENTURE : OPN

OPTION-NFA INC.

August 09, 2005 14:07 ET

Option-NFA Inc. Reports Second Quarter and First Half Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 9, 2005) - Option-NFA Inc. (TSX VENTURE:OPN) first half and second quarter ending June 30, 2005 saw continued improvement in net earnings (loss) versus the 2004 period.

Sales for the second quarter were down 6% due mostly to orders being shifted from June to July. However a small number of orders have been cancelled as a result of the extended strike at the Port of Vancouver.

Our successful program of overhead cost reduction produced a savings of $73,000 for the quarter and $184,000 for the first half compared to the 2004 period.

Net loss for the quarter was $190,000 compared to $250,000 for Q2 2004. This is the third consecutive quarter to show year-over-year bottom line improvement Year-to-date loss was $897,000 versus $977,000 for the first half of 2004.

Year-to-date fully diluted loss per share was $0.08 for both the 2005 and 2004 periods.

About Option-NFA Inc.

Option-NFA is a Vancouver based manufacturer and designer of hard goods and clothing for the snowboard, freeski and skateboard markets. The Company has sales offices in Europe, Asia, Australia and North America and its products are endorsed by an elite team of high profile professional athletes from around the world. The Company went public in 1999 and trades on the TSX Venture Exchange (TSX-V) under the symbol OPN.



OPTION-NFA INC.
BALANCE SHEET
AS AT JUNE 30, 2005 and DECEMBER 31, 2004

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Jun-05 Dec-04
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ASSETS

Current Assets
A/R $ 1,997,312 $ 4,399,266
Inventory $ 4,200,551 $ 3,629,344
Prepaid expenses $ 353,420 $ 422,632
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Total Current Assets $ 6,551,283 $ 8,451,242

Long-Term Receivable $ 52,602 $ 53,602

Equipment and Leasehold Improvements
Leasehold Improvements $ 305,860 $ 300,143
Shop Equipment $ 804,436 $ 788,992
Office Furniture & Equipment $ 101,995 $ 99,438
Computer Equipment $ 221,148 $ 215,891
Computer Software $ 55,718 $ 51,227
Trade Show Equipment $ 60,161 $ 60,161
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$ 1,549,318 $ 1,515,852
LESS: Accumulated Depreciation &
Amortization $(1,147,197) $(1,096,274)
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$ 402,121 $ 419,578
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$ 7,006,006 $ 8,924,422

Deferred Development Costs $ 218,634 $ 256,063

Goodwill & Other Intangibles $ 144,335 $ 144,335

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TOTAL ASSETS $ 7,368,975 $ 9,324,820
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LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities
Bank Indebtedness $ 4,150,323 $ 4,769,507
Accounts Payable and Accrued Liabilities $ 940,554 $ 1,380,105
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$ 5,090,877 $ 6,149,612

Payable to Shareholders $ 200,000 $ 200,000

Shareholders' Equity
Share Capital $ 2,598,939 $ 2,598,939
Retained earnings $ 362,619 $ 331,217
Profit(loss) for the period $ (897,110) $ 31,402
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TOTAL LIABILITIES & EQUITY $ 7,368,975 $ 9,324,820
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These financial statements have not been reviewed by the
company's auditor.
Approved by Directors:

"Blair Murdoch" "Geoff Power"
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Blair Murdoch Geoff Power


OPTION-NFA INC.
CONSOLIDATED INCOME STATEMENTS
For The Fiscal Quarter and Year-to-Date Ended: June 30

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2005 2004 2005 2004
2nd Quarter 2nd Quarter YTD YTD
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SALES $ 1,377,694 $ 1,459,057 $ 2,545,105 $ 2,828,404
COST OF SALES $ 1,022,812 $ 1,088,050 $ 2,103,455 $ 2,277,003
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$ 354,882 $ 371,007 $ 441,650 $ 551,401

OVERHEAD
Advertising &
promotion $ 212,974 $ 269,283 $ 449,978 $ 595,396
Bad debt $ 15,931 $ 12,349 $ 37,232 $ 38,841
Bank charges $ 15,936 $ 14,617 $ 36,761 $ 30,165
Commissions $ (1,970) $ (9,892) $ 58,149 $ 62,795
Insurance $ 16,671 $ 17,691 $ 34,175 $ 37,057
Office Expense $ 20,700 $ 20,694 $ 53,670 $ 43,438
Professional
fees $ 13,949 $ 27,061 $ 39,006 $ 43,036
Salaries $ 240,467 $ 258,096 $ 515,693 $ 556,324
Telephone $ 12,034 $ 10,207 $ 19,342 $ 21,860
Travel &
entertainment $ 931 $ 936 $ 3,831 $ 3,047
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Total Overhead $ 547,623 $ 621,042 $ 1,247,837 $ 1,431,959

EARNINGS (LOSS)
BEFORE
UNDERNOTED $ (192,741) $ (250,035) $ (806,187) $ (880,558)

Interest $ 73,849 $ 69,377 $ 145,027 $ 133,080
Other (income)
loss $ - $ 3,153 $ - $ 8,512
Depreciation and
amortization $ 23,142 $ 28,250 $ 45,896 $ 54,727
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EARNINGS (LOSS)
BEFORE INCOME
TAXES $ (289,732) $ (350,815) $ (997,110) $(1,076,877)

PROVISION FOR
INCOME TAX $ 100,000 $ 100,000 $ 100,000 $ 100,000
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NET EARNINGS
(LOSS) $ (189,732) $ (250,815) $ (897,110) $ (976,877)


OPTION-NFA INC.
Consolidated Statements of Cash flows

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For the 6 months For the 6 months
ended ended
June 30, 2005 June 30, 2004
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Cash provided by (used in)

Operations:
Net earnings $ (897,110) $ (976,877)
Items not involving cash:
Depreciation and
amortization $ 50,923 $ 62,249
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$ (846,187) $ (914,628)
Changes in non-cash
operating working
capital:
Accounts receivable $ 2,402,954 $ 2,110,566
Inventories $ (571,207) $ (580,468)
Prepaid expenses and
deposits $ 69,212 $ 538
Deferred development
costs $ 37,429 $ 3,988
Income taxes payable $ - $ -
Accounts payable and
accrued liabilities $ (439,551) $(1,046,584)
Interest payable on
convertible debentures $ - $ (7,521)
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$ 652,650 $ (434,109)
Investments:
Expenditures on equipment $ (27,749) $ (89,117)
Expenditures on
leasehold improvements $ (5,717) $ (6,371)
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$ (33,466) $ (95,488)
Financing:
Long-term debt $ - $ -
Loans from shareholders $ - $ -
Convertible debenture $ - $ -
Increase in Common Shares $ - $ -
Bank indebtedness $ (619,184) $ 529,597
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$ (619,184) $ 529,597
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Cash, beginning and end
of period $ - $ -
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