<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 September 30, 1998
Commission File Number: 0-17493
OMNI U.S.A., INC.
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(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) 635-6331
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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
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At November 13, 1998, there were 3,523,092 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
September 30, 1998 and June 30, 1998
Consolidated Statements of Operations
Three Months Ended September 30, 1998 and September 30, 1997
Consolidated Statements of Cash Flows
Three Months Ended September 30, 1998 and September 30, 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND JUNE 30, 1998
<TABLE>
<CAPTION>
ASSETS (Unaudited) (Audited)
September 30, June 30,
1998 1998
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<S> <C> <C>
CURRENT ASSETS
Cash $ 152,458 $ 278,297
Accounts receivable, trade net 2,104,515 2,585,473
Accounts receivable, related parties 91,061 92,396
Inventories 3,189,040 2,924,748
Prepaid expenses 52,156 52,918
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TOTAL CURRENT ASSETS 5,589,230 5,933,832
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization 2,061,003 2,110,538
OTHER ASSETS-primarily intangible assets, net 274,948 280,607
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TOTAL ASSETS $7,925,181 $8,324,977
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $2,575,362 $2,466,175
Line of credit 1,644,738 1,965,186
Accrued expenses 439,369 605,077
Current portion of long-term debt 165,787 165,787
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TOTAL CURRENT LIABILITIES 4,825,256 5,202,225
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LONG-TERM DEBT 798,532 815,130
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STOCKHOLDERS' EQUITY
Common stock 17,885 17,885
Additional paid-in capital 5,248,560 5,248,560
Treasury stock (57,141) (57,141)
Retained deficit (3,005,942) (2,999,713)
Foreign currency translation adjustment 98,031 98,031
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TOTAL STOCKHOLDERS' EQUITY 2,301,393 2,307,622
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $7,925,181 $8,324,977
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</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 (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
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<S> <C> <C>
NET SALES $3,805,990 $3,203,817
COST OF SALES 2,791,275 2,437,913
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GROSS PROFIT 1,014,715 765,904
OPERATING EXPENSES
Selling, general and administrative 964,248 821,727
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OPERATING INCOME (LOSS) 50,467 (55,823)
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OTHER INCOME (EXPENSE)
Commission income 29,616 27,122
Interest expense (82,957) (70,954)
Other, net (3,355) (793)
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TOTAL OTHER INCOME (EXPENSE) (56,696) (44,625)
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NET INCOME (LOSS) $ (6,229) $ (100,448)
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BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.03)
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,523,092 3,527,119
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</TABLE>
2
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OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
September 30, September 30,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (6,229) $ (100,448)
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Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation and amortization 55,194 45,509
Changes in operating assets and liabilities:
Accounts receivable 482,293 332,752
Inventories (264,292) (295,350)
Prepaid expenses 762 (5,092)
Notes receivable - 13,332
Accounts payable and accrued expenses (56,521) 74,120
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Total adjustments 217,436 165,271
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Net cash provided by operating activities 211,207 64,823
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - -
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Net cash used by investing activities - -
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CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit 3,778,953 3,224,000
Payments on line of credit (4,099,401) (2,999,844)
Payments on long-term debt (16,598) (25,490)
Purchase of Treasury Stock - (6,375)
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Net cash (used) provided by financing activities (337,046) 192,291
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NET INCREASE(DECREASE) IN CASH (125,839) 257,114
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CASH AT BEGINNING OF PERIOD 278,297 279,756
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CASH AT END OF PERIOD $ 152,458 $ 536,870
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</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
3
<PAGE>
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 September 30, 1998, and the results of their operations and cash flows
for the three month periods ended September 30, 1998, and September 30, 1997,
have been included. The results of operations for such interim periods are
not necessarily indicative of the results for the full year.
2. Basic and diluted income (loss) per share is based on the weighted
average number of shares of common stock outstanding. For the periods ended
September 30, 1998, and September 30, 1997, the Company's common stock
equivalents were antidilutive and therefore were not included in the
computation of basic and diluted income (loss) per share.
3. Interest paid on debt for the three months ended September 30, 1998 and
1997, was $82,957 and $60,591, respectively. No income taxes were paid during
the three months ended September 30, 1998 and 1997, respectively.
4. 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, industrial and other
purposes. Selected financial information by business segment with respect to
these activities for the periods indicated are as follows:
<TABLE>
<CAPTION>
Corporate
Omni Butler Omni and
Domestic Domestic Foreign Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Quarter ended September 30, 1998:
Sales 2,763,308 1,039,085 3,597 - 3,805,990
Sales-inter-segment - - 450,782 (450,782) -
Income from operations 158,809 90,216 (123,558) (75,000) 50,467
Interest expense 53,267 25,833 3,857 - 82,957
Identifiable assets 3,361,371 2,206,460 2,357,350 - 7,925,181
Depreciation and amortization 13,324 14,763 27,107 - 55,194
Capital expenditures - - - - -
Quarter ended September 30, 1997:
Sales 2,399,808 739,203 64,806 - 3,203,817
Income from operations 250,394 12,301 (243,518) (75,000) (55,823)
Interest expense 50,591 20,363 - - 70,954
Identifiable assets 3,463,036 1,900,265 1,909,235 7,272,536
Depreciation and amortization 16,713 13,650 15,146 45,509
Capital expenditures - - - -
</TABLE>
4
<PAGE>
5. MAJOR CUSTOMERS: During the three months ended September 30, 1998 and
1997, the Company and its subsidiaries had consolidated sales of $690,167 and
$379,381 to a domestic customer for a total of 18% and 12% of consolidated
sales, respectively.
6. RECLASSIFICATION: Certain amounts in the quarter ended September 30, 1997
have been reclassified to match the classifications in the quarter ended
September 30, 1998.
5
<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 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 had a current ratio of 1.2 at September 30, 1998 compared
with a current ratio of 1.1 as of June 30, 1998. The Company had working
capital of $763,974 as of September 30, 1998. This balance represents an
increase of $32,367 from working capital of $731,607 at June 30, 1998. The
increase in working capital was due primarily to a decrease in the line of
credit of $320,448, which is consistent with decreases in receivables of
$480,958, and an increase in inventories of $264,292.
The cash balance was $152,458 as of September 30, 1998, a decrease of
$125,839 compared to June 30, 1998. Accounts receivable were $480,958 lower
than June 30, 1998, and the receivable collection period increased from 40
days to 51 days from June 30, 1998 to September 30, 1998, respectively.
Historically, sales in the June quarter are larger than other quarters and
include shipments with short collection periods.
Inventories increased $264,292, primarily consisting of spare parts,
during the quarter. The Company increased inventories of spare parts
primarily for retrofitting power transmissions existing in inventory to meet
current market demand. At September 30, 1998, the Company's inventory
turnover was 105 days compared to 60 days at June 30, 1998. The lower
inventory turnover partially resulted from inventory received in the first
quarter of fiscal year 1999 to meet sales backlog from the fourth quarter of
fiscal year 1998.
The Company believes that between its access to the revolving 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 and 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.
6
<PAGE>
Results of Operations - First Quarter Results
The Company had a net loss of $(6,229) ($0.00 loss per share) for the
quarter ended September 30, 1998, compared with net loss of ($100,448) ($0.03
loss per share) for the quarter ended September 30, 1997. The Company had
operating income of $50,467 for the quarter ended September 30, 1998 compared
to an operating loss of $(55,823) for the first quarter ended September 30,
1997.
Consolidated net sales were $3,805,990 in the first quarter of fiscal
year 1999; a 19% increase over net sales of $3,203,817 in the first quarter
of fiscal year 1998. This increase is a direct result of increased demand for
the Company's products and continued new product introductions. OMNI GEAR-R-
product sales continue to be strong during the first quarter representing 73%
(including SHANGHAI OMNI GEAR-TM-) of total sales compared to 72% of total
sales for the same period last year, with BUTLER-TM- sales representing 27%
of total sales compared to 22% of total sales for the same period last year.
Gross profit, as a percentage of sales, was approximately 26.7% for the
quarter ended September 30, 1998. This represents an approximate 2.8%
increase from the quarter ended September 30, 1997. The gross profit increase
primarily results from a more favorable product mix.
Selling, general and administrative expenses were $964,248 for the
quarter ended September 30, 1998, an increase of $142,521 or approximately
17% over the quarter ended September 30, 1997. Selling, general and
administrative expenses of OMNI GEAR-R-, SHANGHAI OMNI GEAR-TM-, and
BUTLER-TM- represent 52%, 32% and 16%, respectively, of consolidated selling,
general and administrative expense. The increase in selling, general and
administrative expenses were primarily as a result of increased production
requirements at SHANGHAI OMNI GEAR-TM-, and additional professional services
and increased provision for potential bad debts.
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- KSB for the fiscal year ended June 30, 1998.
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 FORM8-K.
None
8
<PAGE>
SIGNAURES
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 13, 1998 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
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Jeffrey K. Daniel
President and Chief Executive
Officer
9
<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.
Date: November 13, 1998 OMNI U.S.A., INC.
By:
----------------------
Jeffrey K. Daniel
President and Chief Executive
Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
DATED NOVEMBER 13, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 152,458
<SECURITIES> 0
<RECEIVABLES> 2,104,515
<ALLOWANCES> (73,619)
<INVENTORY> 3,189,040
<CURRENT-ASSETS> 5,589,230
<PP&E> 3,547,569
<DEPRECIATION> (1,486,566)
<TOTAL-ASSETS> 7,925,181
<CURRENT-LIABILITIES> 4,825,256
<BONDS> 0
0
0
<COMMON> 17,885
<OTHER-SE> 2,301,393
<TOTAL-LIABILITY-AND-EQUITY> 7,925,181
<SALES> 3,805,990
<TOTAL-REVENUES> 3,805,990
<CGS> 2,791,275
<TOTAL-COSTS> 3,755,523
<OTHER-EXPENSES> (26,261)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (82,957)
<INCOME-PRETAX> (6,229)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,229)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,229)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
