<PAGE>
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 March 31, 1996
Commission File Number: 0-17493
OMNI U.S.A., INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0237223
- - -------------------------- ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
7502 Mesa Road, Houston, Texas 77028
----------------------------------------
(Address of principal executive offices)
(713) 635-6331
---------------
(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 May 1, 1996, there were 1,805,750 shares of common stock $.004995 par value
outstanding.
<PAGE>
OMNI U.S.A., INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Index to Consolidated Financial Statements
------------------------------------------
Consolidated Balance Sheets -
March 31, 1996 and June 30, 1995
Consolidated Statements of Operations
For the Three Months and the Nine Months Ended March 31, 1996 and March 31,
1995
Consolidated Statements of Cash Flows
For the Three Months and the Nine Months Ended March 31, 1996 and March 31,
1995
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and Results of
Operations
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
ASSETS 1996 1995
- - ------ ----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 293,475 $ 153,146
Accounts receivable, trade, net 975,337 824,082
Accounts receivable, other 30,639 23,374
Inventories 1,462,631 792,676
Tooling advance 120,000 120,000
Prepaid expenses 267,745 81,632
----------- -----------
TOTAL CURRENT ASSETS 3,149,827 1,994,910
----------- -----------
PROPERTY AND EQUIPMENT,
net of accumulated depreciation and amortization 545,195 389,580
----------- -----------
OTHER ASSETS
Organizational costs 56,020 65,298
Intangible assets, net of accumulated
amortization 134,977 170,428
Note receivable, affiliate 853,397 853,397
Prepaid royalties 199,376 199,376
TOTAL OTHER ASSETS 1,243,770 1,288,499
----------- -----------
TOTAL ASSETS $ 4,938,792 $ 3,672,989
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 900,710 685,319
Accrued expenses 377,443 147,628
Current portion of long-term debt 1,274,866 183,330
----------- -----------
TOTAL CURRENT LIABILITIES 2,553,019 1,016,277
----------- -----------
LONG-TERM DEBT 36,700 31,476
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 100 1,986
Common stock 9,020 7,781
Equity contract notes 918,304 918,304
Additional paid-in capital 4,366,169 4,327,608
Retained earnings (deficit) (3,042,551) (2,728,474)
Foreign currency translation adjustment 98,031 98,031
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 2,349,073 2,625,236
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,938,792 $ 3,672,989
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION> FOR THE FOR THE FOR THE FOR THE
THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
NET SALES $2,572,789 $3,246,914 $6,107,660 $7,965,056
---------- ---------- ---------- ----------
COST OF SALES 1,799,560 $2,552,817 4,362,619 5,887,864
---------- ---------- ---------- ----------
Gross profit 773,229 694,097 1,745,041 2,077,192
OPERATING EXPENSES
Selling, general and
administrative expenses 722,172 634,750 2,015,617 2,073,633
Operating income (loss) 51,057 59,347 (270,576) 3,559
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE)
Commission income - 9,012 3,985 13,430
Interest expense (37,397) (3,230) (46,924) (15,113)
Gain on sale of fixed
assets - - 88,269
Other, net 22,453 36,955 67,061 84,549
---------- ---------- ---------- ----------
Total other income
(expense) (14,944) 42,737 24,122 171,135
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 36,113 $ 102,084 $ (246,454) $ 174,694
========== ========== ========== ==========
NET INCOME (LOSS) PER COMMON
SHARE $ 0.01 $ 0.03 $ (0.16) $ 0.05
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,711,100 2,652,416 1,837,062 2,625,737
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION> FOR THE FOR THE FOR THE FOR THE
THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 36,113 $ 102,084 $ (246,453) $ 174,694
Depreciation and amortization 38,134 48,700 130,984 144,570
Gain on sale of fixed assets - - (88,269)
Changes in operating assets and liabilities 231,143 (16,524) 499,843 (390,155)
---------- ---------- ---------- ----------
Net Cash Provided (Used) by Operating Activities 305,390 134,260 384,374 (159,160)
========== ========== ========== ==========
Cash flows from investing activities:
Capital expenditures (53,987) (134,808) (249,269) (135,777)
Proceeds from sale of fixed assets - - - 88,269
---------- ---------- ---------- ----------
Net Cash Provided (Used) by Investing Activities) (53,987) (134,808) (249,269) (47,508)
========== ========== ========== ==========
Cash flows from financing activities:
Proceeds from equity issuances - - 200,000
Changes in long-term debt (9,491) (17,251) 5,224 (71,213)
---------- ---------- ---------- ----------
Net Cash Provided (Used) by Financing Activities (9,491) (17,251) 5,224 128,787
========== ========== ========== ==========
Net Change in Cash During the Period 241,912 (17,799) 140,329 (77,881)
Cash at Beginning of the Period 51,563 125,388 153,146 185,470
---------- ---------- ---------- ----------
Cash at End of the Period $ 293,475 $ 107,589 $ 293,475 $ 107,589
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
OMNI USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes that the disclosures made in this report are
adequate to make the information presented not misleading. It is suggested that
these condensed financial statements 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 only
of normal recurring adjustments, necessary to present fairly the financial
position of Omni U.S.A., Inc. and subsidiaries as of March 31, 1996, and the
results of their operations and cash flows for the three month periods and the
nine month periods ended March 31, 1996, and 1995, have been included. The
results of operations for such interim periods are not necessarily indicative of
the results for the full year.
2. Primary and fully diluted income (loss) per share are based on the weighted
average number of shares of common stock outstanding. In the three month period
ended March 31, 1996 and for the three month and the nine month periods ended
March 31, 1995, the Company had common stock equivalents including assumed
conversion of Series A Preferred Stock (188,600 common share equivalents),
Series B Preferred Stock (600,000 common share equivalents) and equity contract
notes (306,101 common share equivalents). For all other periods presented, the
Company's common stock equivalents were antidilutive and therefore were not
included in the computation of primary and fully diluted income (loss) per
share. Income (loss) per share is calculated after a provision for interest
(dividends) on equity contract notes.
3. Interest paid on debt for the three months ended March 31, 1996, and 1995,
was $37,397 and $3,230, respectively. Interest paid on debt for the nine months
ended March 31, 1996 and 1995, was $46,924 and $15,113, respectively. No
interest was paid on equity contract notes for the three months or the nine
months ended March 31, 1996, and 1995. No income taxes were paid during the
three months or the nine months ended March 31, 1996, and 1995.
4
<PAGE>
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. Certain information normally included in
annual reports has been condensed or omitted pursuant to such rules and
regulations. This report should be read in conjunction with the Company's
latest Form 10-KSB, a copy of which may be obtained by writing to the Public
Relations Department, Omni U.S.A., Inc., 7502 Mesa Road, Houston, Texas 77028.
Liquidity and Capital Resources
The Company's working capital was $596,807 as of March 31, 1996, a decrease
of about $381,825 from June 30, 1995. The majority of this decrease ($250,000
or 65.5%) is attributed to a customers prepayment for product which is being
developed specifically for this customer and a net loss for the nine months
ended March 31, 1996. Working capital and the current ratio of 1.2 at March 31,
1996, were approximately the same as at December 31, 1995. The current ratio
as of June 30, 1995 was 2.0.
The cash balance was $293,475 as of March 31, 1996, an increase of
approximately $140,000 compared with June 30, 1995. This increase in cash is
attributed to a working line of credit acquired by the Company in January 1996.
Accounts receivable at March 31, 1996, increased approximately $259,000
compared to December 31, 1995, and the average collection period was 34 days for
the quarter ended March 31, 1996, and 44 days for the nine months ended March
31, 1996. The average collection period was about 17 days for the quarter and
21 days for the nine months ended March 31, 1995. This increase in the average
collection period is primarily due to extended terms offered to customers.
Inventories were $1,462,631 as of March 31, 1996, which represent about 74 days
cost of sales. The Company has increased inventory levels in order to meet the
traditionally high fourth quarter demand.
Prepaid expenses increased approximately $186,000 as of March 31, 1996, as
compared to June 30, 1995. This increase is primarily due to purchases of
equipment ($52,000) and a one time land payment ($72,000) made by Shanghai Omni
Gear Co., Ltd. The land payment will be amortized over the life of the facility
lease. Other prepaid expenses include $13,500 for promotions, $5,000 for
trademark registrations, and $22,000 in connection with establishing the
Company's working capital line of credit.
In January 1996, the Company began utilizing a working capital credit
facility with a credit line of $1,500,000. At the end of March 31, 1996, the
balance drawn under this facility was approximately $1,000,000. On April 1,
1996, the Company consolidated the operations of Omni Resources, Ltd. A Hong
Kong public accounting firm was engaged to handle order processing for the
Company's foreign customers, while domestic customers will be processed by the
Company. The Company anticipates maintaining customer service while experiencing
a reduction of selling, general and administrative expenses as a result of the
consolidation.
The Company believes that it has adequate capital resources to meet its
working capital requirements for the foreseeable future.
5
<PAGE>
Results of Operations - Results for Quarter Ended March 31, 1996 Compared with
Quarter Ended March 31, 1995
During the quarter ended March 31, 1996, the Company had net income of
$36,113 ($0.01 per share) compared with net income of $102,084 ($0.03 per share)
for the quarter ended March 31, 1995. The decrease in sales was offset, in part,
by an increase of 11% in gross profits for the quarter ended March 31, 1996,
compared to the quarter ended March 31, 1995.
Consolidated net sales were about $2,573,000 for the third quarter ended
March 31, 1996, a decrease of 26% from net sales of about $3,247,000 for the
quarter ended March 31, 1995. The Company's active domestic customer base for
the quarters ending March 31, 1996, and March 31, 1995, consisted of
approximately one hundred customers. During the quarters ending March 31, 1996,
and March 31, 1995, the top six customers accounted for 58% and 59% of total
domestic sales, respectively.
Gross profit was $773,229 for the quarter ended March 31, 1996, compared
with $694,097 for the quarter ended March 31, 1995. Gross profit margin as a
percentage of sales increased from 21% for the quarter ended March 31, 1995, to
30% for the quarter ended March 31, 1996. This increase is due to price
increases on certain product lines. In addition, the quarter ending March 31,
1996, had a favorable product mix with higher margin products representing the
majority of the sales.
Selling, general and administrative expenses were $722,172 and $634,750 for
the quarters ending March 31, 1996, and March 31, 1995, respectively. This
represents an increase of $87,422 or 14%. This change is attributed to an
increase of $195,000 at the Shanghai Omni Gear facility offset by decreases of
$108,000 for the other Omni facilities. The Shanghai Omni Gear increase is
mostly attributed to salaries, rent and other operating expenses. Additionally,
much of Shanghai Omni Gear's expenses during the quarter ended March 31, 1995,
were capitalized as start up organizational costs, whereas, in the quarter ended
March 31, 1996, all operating costs were expensed.
Other income includes, primarily, interest receivable of about $17,000 on
the note receivable from Daniel Development Company dated June 30, 1994.
6
<PAGE>
Results of Operations - Results for Nine Months Ended March 31, 1996 Compared
with Nine Months Ended March 31, 1995
The Company had net loss of $246,454 ($0.16 per share) for the nine months
ended March 31, 1996, compared with net income for the nine months ended March
31, 1995 of $174,694 ($0.05 per share). The gross profit was about $332,151
lower in the nine months ended March 31, 1996, compared with the nine months
ended March 31, 1995, and selling, general and administrative expenses decreased
by about $58,000 for the same period.
Consolidated net sales were about $6,107,660 for the nine months ended March
31, 1996, a decrease of 23% from net sales of about $7,965,056 for the nine
months ended March 31, 1995. The Company had 130 active domestic customers for
the nine months ended March 31, 1996. The top six domestic customers accounted
for approximately $2,533,000 in sales, or 50% of total domestic sales of
$5,052,000. In contrast, during the nine months ended March 31, 1995, the top
six domestic customers accounted for approximately $3,938,000 in domestic sales
or 38% of total domestic sales of $6,348,000.
The gross profit as a percentage of sales was 29% for the nine months ended
March 31, 1996, compared with 26% for the nine months ended March 31, 1995. This
increase in profit margin is due to a more favorable product margin mix.
Selling, general and administrative expenses decreased by about $58,000 in
the nine months ended March 31, 1996, compared to the nine months ended March
31, 1995. This change is attributed to an increase of approximately $459,000 at
the Shanghai Omni Gear facility offset by decreases of approximately $514,000
for the other Omni facilities. The Shanghai Omni Gear increase is mostly
attributed to employee compensation, rent and other operating expenses.
Additionally, much of Shanghai Omni Gear's expenses during the nine months ended
March 31, 1995, were capitalized as start up organizational cost, whereas in the
nine months ended March 31, 1996, all operating costs were expensed. Selling,
general and administrative expenses as a percent of sales were 33% of net sales
for the nine months ended March 31, 1996, compared to 26% for the nine months
ended March 1995. The 7% increase is primarily due to lower sales in the nine
months ending March 31, 1996.
In September 1994, the Hong Kong subsidiary sold its lease rights and
leasehold improvements in its Shanghai office to a third party company for
$88,269. The leasehold improvements had been amortized to zero. The Company has
relocated its Shanghai office to the manufacturing facility in Shanghai.
Other income includes primarily interest receivable of about $51,000 on the
note receivable from Daniel Development Company dated June 30, 1994.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material changes from the disclosure in the Company's Form
10-QSB for the second quarter ended December 31, 1995.
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.
February 2, 1996 - Resignation of Mr. Edward L. Daniel as Chairman, Director
and Officer of the Company.
8
<PAGE>
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.
OMNI U.S.A., INC.
Date: May 3, 1996
By: /s/ Jeffrey Daniel
________________________
Jeffrey Daniel
Chief Executive Officer
President and Secretary
By: /s/ Ruben Lebron
_________________________
Ruben LeBron
Chief Accounting Officer
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 293,475
<SECURITIES> 0
<RECEIVABLES> 1,005,975
<ALLOWANCES> 0
<INVENTORY> 1,462,631
<CURRENT-ASSETS> 387,745
<PP&E> 1,610,303
<DEPRECIATION> 1,065,107
<TOTAL-ASSETS> 4,938,792
<CURRENT-LIABILITIES> 2,553,019
<BONDS> 0
9,020
0
<COMMON> 100
<OTHER-SE> 918,304
<TOTAL-LIABILITY-AND-EQUITY> 493,872
<SALES> 2,572,789
<TOTAL-REVENUES> 2,572,789
<CGS> 1,799,560
<TOTAL-COSTS> 1,799,560
<OTHER-EXPENSES> 699,719
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,397
<INCOME-PRETAX> 36,113
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,113
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,113
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
