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, 1997
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 2, 1997, there were 2,163,674 shares of common stock $.004995 par value
outstanding.
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets -
March 31, 1997 and June 30, 1996
Consolidated Statements of Operations
For the Three Months and the Nine Months Ended March 31, 1997 and March
31, 1996
Consolidated Statements of Cash Flows
For the Three Months and the Nine Months Ended March 31, 1997 and March
31, 1996
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
MARCH 31, 1997 AND JUNE 30, 1996
<TABLE>
<CAPTION>
ASSETS
March 31, 1997 June 30, 1996
----------- -----------
CURRENT ASSETS
<S> <C> <C>
Cash ......................................................... $ 362,590 $ 494,681
Accounts receivable, trade, net .............................. 2,094,229 1,700,753
Accounts receivable, related parties ......................... 109,185 86,808
Inventories .................................................. 2,134,458 1,760,643
Tooling advance .............................................. 115,000 120,000
Prepaid expenses ............................................. 146,623 198,360
----------- -----------
TOTAL CURRENT ASSETS ............................. 4,962,085 4,361,245
----------- -----------
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization .................... 1,845,873 762,541
----------- -----------
OTHER ASSETS
Organizational cost .......................................... 46,370 51,195
Intangible assets ............................................ 345,240 132,600
Note receivable, affiliate ................................... 853,397 853,397
Prepaid royalties ............................................ 199,376 199,376
Long term deposits ........................................... 60,559 60,559
----------- -----------
TOTAL OTHER ASSETS ................................ 1,504,942 1,297,127
----------- -----------
TOTAL ASSETS .................................................... $ 8,312,900 $ 6,420,913
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ............................................. $ 1,788,675 $ 1,746,005
Line of credit ............................................... 1,582,203 1,505,635
Accrued expenses ............................................. 664,588 452,724
Current portion of long-term debt ............................ 556,186 215,868
----------- -----------
TOTAL CURRENT LIABILITIES ........................ 4,591,652 3,920,232
----------- -----------
DEFERRED CREDITS ................................................ -0- -0-
LONG-TERM DEBT .................................................. 581,842 26,230
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock .............................................. 102 101
Common stock ................................................. 10,827 9,020
Treasury stock ............................................... (14,813) -0-
Equity contract notes ........................................ 918,304 918,304
Subordinated convertible debentures .......................... 334,005 -0-
Additional paid-in capital ................................... 4,879,148 4,391,171
Retained earnings (deficit) .................................. (3,086,198) (2,942,176)
Foreign currency translation adjustment ...................... 98,031 98,031
----------- -----------
TOTAL STOCKHOLDERS' EQUITY ....................... 3,139,406 2,474,451
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ....................... $ 8,312,900 $ 6,420,913
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
MARCH 31, 1997 AND MARCH 31, 1996
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE
THREE THREE NINE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES ............................ $ 4,219,926 $ 2,572,789 $ 9,973,345 $ 6,107,660
COST OF SALES ........................ 3,220,749 1,799,560 7,500,120 4,362,619
----------- ----------- ----------- -----------
Gross Profit ................... 999,177 773,229 2,473,225 1,745,041
OPERATING EXPENSES
Selling, general and administrative 892,257 722,172 2,433,097 2,015,617
----------- ----------- ----------- -----------
Operating income (loss) ........ 106,920 51,057 40,128 (270,576)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Interest expense .................. (67,883) (37,397) (157,122) (46,924)
Other, net ........................ 20,478 22,453 64,156 71,046
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE) ............... (47,405) (14,944) (92,966) 24,122
----------- ----------- ----------- -----------
NET INCOME (LOSS) .................... $ 59,515 $ 36,113 $ (52,838) $ (246,454)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE ............ $ 0.01 $ 0.01 ($ 0.08) $ (0.16)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING ............ 3,020,319 2,711,100 1,967,320 1,837,062
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED MARCH 31, 1997 AND 1996
<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,
1997 1996 1997 1996
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 59,519 $ 36,113 $ (52,836) $ (246,453)
Depreciation and amortization 44,234 38,134 159,512 130,984
Changes in operating assets and liabilities 315,279 231,143 (401,829) 499,843
--------------- -------------- -------------- --------------
Net Cash Provided (Used) by Operating Activities 419,032 305,390 (295,153) 384,374
--------------- -------------- -------------- --------------
Net Cash Provided (Used) by Investing Activities:
Capital expenditures (71,683) (53,987) (1,450,659) (249,269)
--------------- -------------- -------------- --------------
Cash flows from financing activities:
Purchase of Treasury Stock (11,813) - (14,813) -
Proceeds from equity issuances - - 732,604 -
Changes in long-term debt (67,360) (9,491) 895,930 5,224
--------------- -------------- -------------- --------------
Net Cash Provided (Used) by Financing Activities (79,173) (9,491) 1,613,721 5,224
--------------- -------------- -------------- --------------
Net Change in Cash During the Period 268,176 241,912 (132,091) 140,329
Cash at Beginning of the Period 94,414 51,563 494,681 153,146
--------------- -------------- -------------- --------------
Cash at End of the Period $ 362,590 $ 293,475 $ 362,590 $ 293,475
=============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<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, 1997 and the
results of their operations and cash flows for the three month periods and the
nine month periods ended March 31, 1997 and 1996, 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. For the periods ended
March 31, 1997 and March 31, 1996, 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, 1997 and 1996, was
$67,883 and $37,397, respectively. Interest paid on debt for the nine months
ended March 31, 1997 and 1996, was $157,122 and $15,113, respectively. No
interest was paid on equity contract notes for the three months or the nine
months ended March 31, 1997 or March 31, 1996. No income taxes were paid during
the three months or the nine months ended March 31, 1997 and 1996, respectively.
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.
SALE OF DEBENTURES
Omni sold Subordinated Convertible Debentures ("Debentures") in the amount
of $500,000 to an individual ("Holder") in July 1996. The Debentures have an
interest rate of 8% per year, payable semi-annually in common stock of Omni, at
the Company's option and are due June 30, 1999, payable in common stock of Omni,
at Omni's option. The obligations under these Debentures are subordinate to all
senior indebtedness.
The Debentures are convertible into common stock of Omni at the option of
Holder at any time. The number of shares into which the Debentures are
convertible, whether converted by Holder prior to maturity, or by the Company at
maturity, including any issuances for payment of interest, are calculated based
on a conversion price. The conversion price is defined as 75% of the average
closing bid price of the common stock for the five consecutive trading days
preceding the conversion date; however, the maximum conversion price is $2.50
per common share.
The Company recorded the Debentures as equity in the amount of $477,150,
which is net after $22,850 of costs related to the issuance.
Since issuance of the Debentures in July 1996 through March 31, 1997,
Holder has converted a total of $150,000 of Debentures into 166,924 common
shares at an average conversion price of $.99 per share. All conversions include
payments of related interest in the form of common shares.
PURCHASE OF TREASURY SHARES
The Company purchased 12,000 of its common shares on the open market for
$14,812.50 (average of $1.23 per share) from November, 1996 through March 31,
1997 pursuant to a repurchase program announced in November 1996 which
authorized the repurchase of up to 100,000 common shares. The Company also
purchased 4,000 of its common shares for $3,750 (average of $0.94 per share) in
April 1997. The Company intends to purchase additional shares for the treasury,
which will be used in connection with acquisitions or for employee awards.
5
<PAGE>
ACQUISITION OF BUTLER PRODUCTS CORP.
On October 4, 1996, the Company acquired 100% of the common stock of
Butler Products Corp. ("Butler"), a Kentucky corporation located in Butler,
Kentucky for $937,400. Butler is a manufacturer of stabilizer and landing gear
jacks and trailer products sold to manufacturers and distributors of heavy duty
trailers. The stock was purchased from the sole shareholders of Butler, Messrs.
Frank E. Jakubec and Dennis W. Swim, who were unaffiliated with the Company at
the time of acquisition. Terms of the transaction included payments to the
shareholders of Butler of $225,000 in cash, $500,000 in junior subordinated
notes due in 2003, and 150,000 shares of common stock of the Company valued at
$212,400. Butler has been engaged in the business of manufacturing jack and
trailer products for over 40 years. The Company intends to utilize the assets of
Butler to continue in that business.
In connection with the Butler acquisition, the Company acquired trade
receivables, inventories and other current assets of about $730,000, property
valued at about $810,000 for financial statement purposes, and assumed trade
payables, accrued expenses and debt of about $850,000. In connection with the
acquisition, the Company recognized about $250,000 of goodwill, which it intends
to amortize over 40 years.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $370,433 as of March 31, 1997, a
decrease of $70,580 from June 30, 1996 and a decrease of $254,718 from December
30, 1996. The decreases in working capital are due to the sale of debentures of
about $477,000 (net of costs of issuance), reduced by cash payments of $225,000
in connection with the Butler acquisition and increases in receivables and
inventory. The current ratio was 1.1 at March 31, 1997, and 1.1 at June 30,
1996.
The cash balance was $362,590 as of March 31, 1997, a decrease of $132,091
compared with June 30, 1996. Contributing to the decrease is the cash expended
by the Company to fund business expansion in its China manufacturing facility.
Accounts receivable collection period was about 45 days for the quarter and 58
days for the nine months ended March 31, 1997. Inventories were $2,134,458 as of
March 31, 1997 which represents about 60 days cost of sales. The Company
believes that the current level of inventories is appropriate.
6
<PAGE>
LINE OF CREDIT
In December, 1996, the Company renewed and increased to $1.9 million its
revolving line of credit, secured by substantially all of the Company's assets.
The Company believes that the increased working capital requirements to fund
anticipated and normal increase in sales activity for the last quarter of fiscal
year ending June 30, 1997, can be adequately provided through operations and the
revolving line of credit.
7
<PAGE>
RESULTS OF OPERATIONS - RESULTS FOR QUARTER ENDED MARCH 31, 1997 COMPARED WITH
QUARTER ENDED MARCH 31, 1996
During the quarter ended March 31, 1997, the Company had net income of
$59,515 ($0.01 per share) compared with a net income of $36,113 ($0.01 per
share) for the quarter ended March 31, 1996. Sales increased by $1,647,137 in
the quarter ended March 31, 1997 compared with the quarter ended March 31, 1996.
Decreased profit margin of about 6% resulted from increased sales by Butler,
increased sales of irrigation products and decreased sales of higher margin
planetary gear boxes. Selling, general and administrative expenses increased
approximately $170,000 primarily related to increased payroll and related costs,
some in connection with the China manufacturing facility. Interest expense
increased about $30,000 as a result of higher level of debt related to the
Butler acquisition and increased sales.
Consolidated net sales were about $4,220,000 for the quarter ended March
31, 1997, an increase of about 64% from net sales of about $2,573,000 for the
quarter ended March 31, 1996. The approximate $1,647,000 increase in net sales
resulted from an increase in both major product lines. Sales of towing products
by Butler, the new-acquired subsidiary, for the quarter were about $656,897
representing 85% of the increase in sales of towing products. Sales of gear
boxes increased about $900,280 compared with the same quarter in the previous
year, with increases occurring, mainly, in two products. Sales of gear boxes
represented 76% of sales for the quarter ended March 31, 1997, compared with 91%
of sales for the same quarter one year ago. Towing products represented 24% of
sales for the quarter ended March 31, 1997, and the Company expects continued
increases in sales of towing products as a result of the acquisition of Butler.
Geographically, sales through the Houston distribution facility were 82%
of sales; an increase of about $1,081,000 compared with the same quarter last
year. Sales by the Hong Kong subsidiary decreased about $90,800, and sales by
Butler were $656,897 (16% of sales) in the quarter ended March 31, 1997, which
was the second quarter after the acquisition of Butler. Production from the
Shanghai manufacturing facility was about $65,942 for the quarter ended March
31, 1997.
The Company traditionally has higher sales in the third and fourth fiscal
quarters, and believes that fiscal 1997 will continue that sales pattern. In
addition, the Butler acquisition will continue to contribute to sales.
During the quarter ended March 31, 1997, two customers represented
approximately 21% of consolidated net sales.
Gross profit was $999,177 for quarter ended March 31, 1997 compared with
$773,229 in 1996, however, the gross profit margin decreased from 30% to 24%.
Generally, the gross profit margin ranges from 25% to 30% for different products
the Company sells. The decrease in profit margin results primarily from a
different product mix. The Company expects gross margins to improve as more
complex gear products are designed, developed, and added to the products
distributed to market.
8
<PAGE>
Selling, general and administrative expenses were about $170,000 greater
in the quarter ended March 31, 1997 compared with the quarter ended March 31,
1996. Such expenses were about 21% of net sales compared to 28% for the quarters
ended March 1997 and 1996, respectively. The increase in selling, general and
administrative expenses is primarily personnel attributed to expansion of the
Company's China manufacturing facility, and professional fee costs.
Other income is primarily attributed to interest receivable of about
$16,890 on the note receivable from Daniel Development Company dated June 30,
1994. Interest expense increased about $30,000 as a result of increased lines of
credit and long-term debt.
9
<PAGE>
RESULTS OF OPERATIONS - RESULTS FOR NINE MONTHS ENDED MARCH 31, 1997 COMPARED
WITH NINE MONTHS ENDED MARCH 31, 1996
The Company had a net loss of $52,838 ($0.08 per share) for the nine
months ended March 31, 1997, compared with a net loss of $246,454 ($0.16 per
share) for the nine months ended March 31, 1996. The reduction in net loss
resulted from an increase in net sales, offset by a reduction in gross profit as
a percent of sales of about 4%, and increases in selling, general and
administrative and interest expenses related primarily to the expansion of the
Company's China manufacturing facility.
Consolidated net sales were $9,973,345 for the first nine months ended
March 31, 1997, an increase of about 63% from net sales of $6,107,660 for the
nine months ended March 31, 1996. The increase in net sales for the nine months
ended March 31, 1997 compared with the nine months ended March 31, 1996 resulted
from an increase mainly in two product lines. Sales of gear boxes increased
about $2.5 million and sales of towing products, resulting from the Butler
acquisition on October 4, 1996, provided increases in sales of towing products
of about $1.3 million. Sales of gear boxes represented 81% of sales for the nine
months ended March 31, 1997, compared with 91% of sales for the same period one
year ago. The Company expects to continue the trend of increased percentage of
its sales coming from the towing products category.
Geographically, sales through the Houston distribution facility accounted
for 82% of sales and increased by about $3 million compared with the same period
last year, but sales by the Hong Kong subsidiary decreased about $555,600. Sales
by Butler represented 13% of sales in the nine months ended March 31, 1997.
Production from the Shanghai manufacturing facility was about $208,700 for the
nine months ended March 31, 1997.
The Company traditionally has higher sales in the third and fourth fiscal
quarters, and believes that fiscal 1997 will continue that sales pattern. In
addition, the Butler acquisition will continue to contribute sales.
Two customers represented 31% of net sales for the nine months ended March
31, 1997; no other customer represented more than 10% of net sales.
Gross profit margin decreased 4% during the nine months ended March 31,
1997 versus the nine months ended March 31, 1996, primarily as a result of
different product mix. The gross profit margin ranges from 25% to 30% for
different products the Company sells.
10
<PAGE>
Selling, general and administrative expenses increased by about $417,480
in the nine months ended March 31, 1997 compared to the nine months ended March
31, 1996. Such expenses were 24% of net sales compared to 33% for the nine
months ended March 31, 1997 and 1996, respectively. Significant changes in
selling, general and administrative expenses for the nine months ended March 31,
1997 were personnel and professional fee costs (increase of about $240,760), and
rent (increase of about $52,400) related to the Company's expansion of its China
manufacturing facility.
Other income is primarily attributed to interest receivable of about
$50,670 on the note receivable from Daniel Development Company dated June 30,
1994. Interest expense increased about $110,000 as a result of increased lines
of credit and long-term debt.
11
<PAGE>
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, 1996.
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.
12
<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 12, 1997
By: /s/ JEFFREY DANIEL
Jeffrey Daniel
Chief Executive Officer
President
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 363
<SECURITIES> 0
<RECEIVABLES> 2,094
<ALLOWANCES> 0
<INVENTORY> 2,134
<CURRENT-ASSETS> 4,962
<PP&E> 1,845
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,313
<CURRENT-LIABILITIES> 4,591
<BONDS> 0
0
0
<COMMON> 10
<OTHER-SE> 3,129
<TOTAL-LIABILITY-AND-EQUITY> 8,313
<SALES> 9,973
<TOTAL-REVENUES> 9,973
<CGS> 7,500
<TOTAL-COSTS> 9,933
<OTHER-EXPENSES> 93
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 157
<INCOME-PRETAX> (52)
<INCOME-TAX> 0
<INCOME-CONTINUING> (52)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
