SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
Commission File Number: 0-17493
OMNI U.S.A., INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0237223
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(State of Incorporation) (IRS Employer Identification No.)
7502 Mesa Road, Houston, Texas 77028
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(Address of principal executive offices)
(713) 635-633
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(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes X No ____
At November 14, 2001, there were 1,207,912 shares of common stock $.004995 par
value outstanding.
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
September 30, 2001 and June 30, 2001
Condensed Consolidated Statements of Operations
Three Months Ended September 30, 2001 and September 30, 2000
Condensed Consolidated Statements of Cash Flows
Three Months Ended September 30, 2001 and September 30, 2000
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, 2001
(unaudited) June 30, 2001
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CURRENT ASSETS
Cash $ 153,501 $ 659,101
Accounts receivable, trade, net 2,309,591 3,269,586
Accounts receivable, related parties 34,150 43,654
Inventories 4,651,881 4,985,910
Notes receivable 161,116 208,671
Prepaid expenses 271,693 108,224
Deferred tax assets 40,393 40,393
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TOTAL CURRENT ASSETS 7,622,325 9,315,539
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PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 2,023,052 2,112,551
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OTHER ASSETS
Primarily intangible assets, net 194,717 206,790
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TOTAL ASSETS $ 9,840,094 $ 11,634,880
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LIABILITIES AND STOCKHOLDERS' EQUI
CURRENT LIABILITIES
Accounts payable $ 3,140,442 $ 3,584,118
Line of credit 1,862,224 2,771,161
Accrued expenses 274,059 244,220
Current portion of long-term debt 842,746 853,889
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TOTAL CURRENT LIABILITIES 6,119,471 7,453,388
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LONG-TERM DEBT 1,019,871 1,057,891
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and 1,207,912
outstanding) 6,129 6,129
Additional paid-in capital 5,372,815 5,372,815
Treasury Stock (19,167 shares) (57,141) (57,141)
Retained earnings (deficit) (2,718,853) (2,295,150)
Foreign currency translation adjustment 97,802 96,948
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TOTAL STOCKHOLDERS' EQUITY 2,700,752 3,123,601
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 9,840,094 $ 11,634,880
============ ============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the three months For the three months
ended ended
September 30, 2001 September 30, 2000
------------------- --------------------
NET SALES $ 3,626,337 $ 4,905,641
COST OF SALES 2,950,527 3,934,882
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Gross Profit 675,810 970,759
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OPERATING EXPENSES
Selling, general and administrative 988,285 989,109
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Operating loss (312,475) (18,350)
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OTHER INCOME (EXPENSE)
Interest expense (89,360) (119,352)
Other, net (21,868) 14,642
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OTHER INCOME (EXPENSE) (111,228) (104,710)
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NET LOSS $ (423,703) $ (123,060)
=========== ===========
COMPREHENSIVE INCOME - Foreign Currency
Translation Adjustment $ 230 --
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NET AND COMPREHENSIVE LOSS $ (423,500) $ (123,060)
=========== ===========
BASIC AND COMPREHENSIVE LOSS PER SHARE $ (0.35) $ (0.10)
=========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENDSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
For the three months For the three months
ended ended
September 30, 2001 September 30, 2000
------------------------- ------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (423,500) $ (123,060)
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Adjustments to reconcile net loss to net cash
provided by operating
activities:
Depreciation and amortization 99,928 101,090
Changes in operating assets and liabilities:
Accounts receivable / Notes receivable 885,831 422,857
Inventories 334,029 (190,047)
Prepaid expenses (163,469) (166,549)
Accounts payable and accrued expenses (271,544) 43,865
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Total adjustments 884,775 212,216
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Net cash provided by operating
Activities 461,275 88,156
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of other assets -- (5,975)
Capital Expenditures (8,775) (57,447)
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Net cash used by investing activities (8,775) (63,422)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings on line of credit 1,906,560 3,721,730
Net Payments on line of credit (2,815,497) (3,912,392)
Payments on long-term debt (49,163) (41,303)
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Net cash used by financing activities (958,100) (231,965)
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NET DECREASE IN CASH (505,600) (207,231)
CASH AT BEGINNING OF PERIOD 659,101 587,044
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CASH AT END OF PERIOD $ 153,501 $ 379,813
=========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES: The consolidated financial statements have
been prepared by the Company, without audit, pursuant to the rules and
regulations adopted by the Securities and Exchange Commission. The Company
believes that the disclosures made in this report are adequate to make the
information presented not misleading. These condensed financial statements
should be read in conjunction with the financial statements and the notes
thereto included in the Company's latest annual report on Form 10-KSB. In
the opinion of the Company, all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of Omni
U.S.A., Inc. and subsidiaries as of September 30, 2001, and the results of
their operations and cash flows for the three month periods ended September
30, 2001, and September 30, 2000, in accordance with generally accepted
accounting principles have been included.
There are significant operations in Mainland China; however, the functional
exchange rate for those operations is the U.S. dollar. The foreign currency
translation adjustment primarily arises from the translation of amounts
from operations in Hong Kong and Japan in which the functional currency is
that of the foreign location.
2. EARNINGS PER SHARE: Basic and diluted loss per share is based on the
weighted average number of shares of common stock outstanding. For the
periods ended September 30, 2001 and September 30, 2000, the Company's
weighted average shares are calculated as follows:
September 30, 2001 September 30, 2000
------------------ ------------------
Weighted average common shares outstanding 1,207,912 1,207,912
As the Company is in a net loss position, all common stock equivalents are
considered anti-dilutive and are therefore not included in the calculation
of earnings per share.
3. SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid on debt for the three
months ended September 30, 2001 and 2000, was $89,360 and $119,352
respectively. No income taxes were paid during the three months ended
September 30, 2001 and 2000, respectively.
4. REVERSE SPLIT: At a special meeting on June 14, 2001, the Company's Board
of Directors approved a reduction in the number of authorized shares of
common stock of the Company and a corresponding three for one reverse stock
split of its common stock. In addition, all holders of options or warrants
to purchase future shares of the Company's common stock were also reduced
on an equal basis of three to one. The effect of the reverse split was to
reduce the Company's common shares from 3,680,592 shares to 1,227,079
shares issued and 3,623,094 shares to 1,207,912 outstanding. The par value
of the common stock is unchanged. Accordingly, the Company has presented
all equity and earnings per share information as if the reverse stock split
had occurred effective July 1, 2000.
5. MAJOR CUSTOMERS AND VENDORS: During the fiscal quarters ended September 30,
2001 and September 30, 2000, the Company and its subsidiaries had
consolidated sales of $287,957 and $809,883 and to a domestic customer for
a total of 7% and 17% of consolidated sales. During the three months ended
September 30, 2001 and September 30, 2000, the Company and its subsidiaries
had consolidated purchases of $1,168,938 and $2,130,148 from two vendors
for a total of 40% and 55% of consolidated purchases.
6. REVOLVING LINE OF CREDIT AND LONG-TERM DEBT: The Company has a revolving
line of credit with a financing company which provides for maximum
borrowings of $4,000,000 as determined by a formula based on trade accounts
receivable and inventory. The line of credit matures June 2002, bears
interest at prime plus 1%-2%, depending upon certain financial ratios,
requires the maintenance of certain levels of income and tangible net worth
and is secured by essentially all of the U.S. assets of the Company. As of
September 30, 2001, the Company was not in compliance with its debt service
coverage ratio covenant. The Company is in current discussions with the
financing company to modify this covenant.
The Company has a note payable to equipment manufacturer, due in monthly
installments of $11,333 including interest at 11% through 2003, secured by
equipment. As of September 30, 2001, the Company was delinquent on $165,000
in payments. The Company believes that it has a good relationship with the
debt holder and will be able to work out a payment plan to pay off the
debt.
7. SEGMENT INFORMATION: The Company and its subsidiaries are engaged in the
business of designing, developing and distributing power transmissions and
trailer and implement components used for agricultural, construction and
industrial equipment.
SEGMENT INFORMATION
THREE MONTHS ENDED OPERATING INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
SEPTEMBER 30, 2001 NET SALES LOSS EXPENSE ASSETS EXPENDITURES AMORTIZATION
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Power Transmission $2,707,711 $ (181,114) (69,786) $ 6,653,982 $ 8,775 $ 72,964
Components
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Trailer and Implement 918,626 (63,451) (9,575) 3,186,112 - 26,964
Components
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Corporate and Eliminations (67,910) (9,999)
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Total Omni, U.S.A., Inc. $3,626,337 $ (312,475) $(89,360) $9,840,094 $ 8,775 $99,928
==============================================================================================================
THREE MONTHS ENDED PROPERTY AND
SEPTEMBER 30, 2001 NET SALES SEPTEMBER 30, 2001 EQUIPMENT, NET
------------------------------------------------ ----------------------------------------------
Domestic Customers $3,436,363 Domestic $ 684,238
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Foreign Customers 189,974 Foreign 1,338,814
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Total Omni, U.S.A., Inc. $3,626,337 Total Omni, U.S.A., Inc. $ 2,023,052
================================================ ==============================================
THREE MONTHS ENDED OPERATING INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
SEPTEMBER 30, 2000 NET SALES LOSS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission $3,772,227 $ 25,211 $ (87,470) $7,553,254 $ 13,609 $ 68,001
Components
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Trailer and Implement 1,133,414 54,744 (20,250) 2,376,563 43,838 33,089
Components
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Corporate and Eliminations (98,305) (11,632)
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Total Omni, U.S.A., Inc. $4,905,641 $(18,350) $(119,352) $9,929,817 $ 57,447 $101,090
==============================================================================================================
THREE MONTHS ENDED PROPERTY AND
SEPTEMBER 30, 2000 NET SALES SEPTEMBER 30, 2000 EQUIPMENT, NET
------------------------------------------------ ----------------------------------------------
Domestic Customers $4,280,573 Domestic $ 830,983
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Foreign Customers 625,068 Foreign 1,233,257
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Total Omni, U.S.A., Inc. $4,905,641 Total Omni, U.S.A., Inc. $ 2,064,240
================================================ ==============================================
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report has been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. This report should be read in
conjunction with the Company's latest Form 10-KSB, a copy of which may be
obtained by visiting the Company's home page at www.ousa.com, or by writing to
the Investor Relations Department, Omni U.S.A., Inc., 7502 Mesa Road, Houston,
Texas 77028.
Liquidity and Capital Resources
The Company's primary capital requirements are for working capital
which is generally met through a combination of internally generated funds, a
revolving line of credit facility and credit terms from suppliers. The Company's
$4,000,000 credit facility had an outstanding balance of $1,862,224 at September
30, 2001. The Company had working capital of $1,502,854 as of September 30, 2001
and working capital of $1,862,151 as of June 30, 2001, a decrease of $359,297
from June 30, 2001. The decrease in working capital from June 30, 2001 was due
to a significant decrease in sales volume and corresponding decreases in
production and purchases in both business segments, which resulted in decreases
in receivables, inventory, and other nominal changes in working capital.
The Company had a cash balance of $153,501 as of September 30, 2001;
reflecting a negative cash flow of $505,600 compared to the June 30, 2001 cash
balance of $659,101. The Company's cash provided by operating activities for the
3 months ended September 30, 2001 of $461,275 consisted of the net loss for the
period of $423,500 offset by, combined decreases in accounts receivable and
inventories.
The Company's cash used in investing activities for the three months
ended September 30, 2001 of $8,775 consisted of net capital expenditures for the
period.
Net cash used by financing activities for the three months ended
September 30, 2001 of $958,100 consisted primarily of payments on the line of
credit and long-term debt.
The Company believes that between its access to the line of credit
facility and its ability to generate funds internally, it has adequate capital
resources to meet its working capital requirements for the foreseeable future,
given its current working capital requirements, known obligations, and assuming
current levels of operations. In addition, the Company believes that it has the
ability to raise additional financing in the form of debt or equity to fund
additional capital expenditures and operations, if required. In response to
general declines in demand and a recent economic downturn, management has
initiated measures to minimize costs and scale down activities to match
decreases in sales until such demand returns. Management believes that it will
be successful in this endeavor.
Results for the Quarter ended September 30, 2001 compared with the Quarter ended
September 30, 2000
The Company had net sales of $3,626,337 for the three months ended
September 30, 2001. This represents a decrease of 26% compared to the three
months ended September 30, 2000 net sales of $4,905,641. The following table
indicates the Company's net sales comparison and percentage of change for the
three months ended September 30, 2001 and 2000:
QUARTER QUARTER
ENDED % ENDED % DOLLAR %
NET SALES 9/30/01 OF TOTAL 9/30/00 OF TOTAL CHANGE CHANGE
------------------------------------------------------------------------------------------------------------
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Power Transmission Components $ 2,707,711 75% $ 3,772,227 77% (1,064,516) (28%)
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Trailer and Implement Components 918,626 25% 1,133,414 23% (214,788) (19%)
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Consolidated $ 3,626,337 100% $ 4,905,641 100% $ (1,279,304) (26%)
------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended September 30, 2001 decreased
$294,949 to $675,810, compared to gross profit for the three months ended
September 30, 2000 of $970,759. The decrease in sales and gross profit was
primarily attributable to a decline in general economic conditions and an
associated decline in demand for products in both business segments. Gross
profit as a percentage of net sales for the three months ended September 30,
2001 decreased to 19% as compared to 20% for the three months ended September
30, 2000. This decrease was primarily due to the product mix of sales for the
period as well as general declines in demand resulting in decreased margins.
Selling, general and administrative remained consistent with $988,285
in the three months September 30, 2001 compared to $989,109 in the three months
ended September 30, 2000. Selling, general and administrative expenses increased
as a percentage of sales compared to the three months ended September 30, 2000
due to the decrease in sales.
Loss from operations for the Company increased $294,125 to $312,475 for
the three months ended September 30, 2001, compared to a loss from operations of
$18,350 for the three months ended September 30, 2000. Loss from operations as a
percentage of sales increased to (8%) in the three months ended September 30,
2001 compared to (0.3%) in the three months ended September 30, 2000. This
increase is principally the result of decreases in sales to comparable periods.
Interest expense decreased $29,992, to $89,360 for the three months
ended September 30, 2001 from $119,352 for the three months ended September 30,
2000. The decrease resulted from a decreased interest rates, reduced borrowings
and debt payments, associated with the Company's line of credit.
Other income (expense) was expense of ($21,868) for the three months
ended September 30, 2001 compared to income of $14,642 for the three months
ended September 30, 2000. This change primarily relates to reduced commission
income and increased banking fees.
The Company's net loss increased $300,643 to $423,703, or $0.35 per
share, for the three months ended September 30, 2001 compared to $123,060, or
$0.10 per share, for the three months ended September 30, 2000.
Cautionary Statement
The following is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:
With the exception of historical facts, the statements contained in
Item 2 of this form 10-QSB are forward-looking statements. Forward-looking
statements discuss future expectations, plans, strategies, activities or events.
They often include words such as believe, expect, anticipate, intend or plan, or
words with similar meaning or with future or conditional verbs such as will,
would, should, or may. The Company does not plan to update these forward-looking
statements to reflect events or changes that occur after they are made.
Actual results may differ materially from those contemplated by the
forward-looking statements. Investors are further directed to the Company's
documents, such as its Annual Report on Form 10-KSB, Form 10-QSB's and Form
8-KSB filed with the Securities and Exchange Commission. These forward-looking
statements involve risks and uncertainties, including but not limited to, the
following:
1) acts or threats of war or terrorism, and the effects of such acts or
threats on the Company, its employees, its debtors, customers and
vendors as well as the local economy,
2) changes in the availability of funds resulting in increased costs or
reduced liquidity,
3) cyclical downturns affecting the markets for capital goods,
4) substantial increases in interest rates,
5) availability or material increases in the costs of select raw
materials,
The Company undertakes no obligation to publicly update or otherwise
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in the their entirety by the applicable cautionary
statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material changes from the disclosure in the
Company's Form 10-KSB for the fiscal year ended June 30, 2001.
Item 2. Change in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: November 14, 2001 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
--------------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer