<PAGE>
OMNI U.S.A., INC.
7502 MESA ROAD
HOUSTON, TEXAS 77028
(713) 635-6331
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 24, 1998
To Our Shareholders:
The Board of Directors cordially invites you to attend the 1998
Annual Meeting of Shareholders (the "Annual Meeting") of Omni U.S.A., Inc.
(the "Company"), to be held on Tuesday, November 24, 1998, at the offices of
Omni USA, Inc., 7502 Mesa Road, Houston Texas 77028, at 10:00 a.m., Central
Standard Time, or at such time and place to which the Annual Meeting may be
adjourned or recessed, for the following purposes:
1. To elect five directors to the Board of Directors of the Company
to hold office until the 1998 Annual Meeting of Shareholders or until their
successors have been duly elected and qualified;
2. To ratify the appointment of Harper & Pearson Company as the
Company's independent auditors for the 1999 fiscal year; and
3. To act upon such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 1,
1998, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Annual Meeting. Therefore, the Board of
Directors sincerely hopes you can attend the meeting in person. It is
important that your shares be represented at the Annual Meeting regardless of
whether you plan to attend. Please mark, date and sign the enclosed proxy and
return it promptly in the enclosed envelope, which requires no postage if
mailed in the United States. If you are present at the meeting, and you wish
to do so, you may revoke the proxy and vote your shares in person.
By Order of the Board of Directors,
/s/ Jeffrey K. Daniel, President
Houston, Texas
Dated: October 15, 1998
<PAGE>
OMNI U.S.A., INC.
7502 MESA ROAD
HOUSTON, TEXAS 77028
(713) 635-6331
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 24, 1998
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Omni U.S.A., Inc., a Nevada
corporation (the "Company" or "Omni"), of the enclosed proxy (the "Proxy") to
be voted at the Company's 1998 Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Tuesday, November 24, 1998, at the offices of Omni
USA, Inc., 7502 Mesa Road, Houston Texas 77028, at 10:00 a.m., Eastern
Standard Time, or at such time and place to which the Annual Meeting may be
adjourned or recessed, for the purposes set forth in the accompanying Notice.
This Proxy Statement and the enclosed Proxy were first sent or given to the
Company's shareholders on or about October 15, 1998.
Shares can be voted at the Annual Meeting only if the holder is
present or represented by proxy. The Proxy, if properly executed on its face
and returned, will be voted (or withheld or abstained from voting) according
to the choices specified thereon. The Proxy will be voted in favor of (i) the
election of each nominee named therein, unless a choice is indicated to
withhold authority to vote for such nominee, and (ii) each proposal described
therein unless a choice is indicated to vote against or to abstain from
voting on any specific proposal. In addition, the proxy confers discretion in
the persons named in the proxy authorizing those persons to vote, in their
discretion, on any matters properly presented at the meeting. The presence,
in person or by proxy, of at least a majority of the outstanding shares of
Common Stock is required for a quorum. The election of directors and the
approval of any other matters will require the affirmative vote of the
holders of a majority of the shares of Common Stock entitled to vote and
present in person or by proxy at the Annual Meeting. In the case of shares
that are present at the Annual Meeting for quorum purposes, an abstention or
not voting such shares for a particular nominee for director (including by
withholding authority on the proxy) or an abstention on any other proposal
will have the same effect as a vote against such director or proposal; and a
broker non-vote will have no effect on the outcome of any proposals.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business.
GENERAL INFORMATION
Every stockholder of the Company is entitled to cast, in person or
by proxy, one vote for each share of the Company's Common Stock held by such
stockholder at the close of business on October 1, 1998, the record date for
the Annual Meeting. At that date, the Company had outstanding 3,523,092
shares of such Common Stock.
The proxy hereby solicited is revocable at any time prior to its
exercise. The proxy may be revoked in any manner permitted by law, including,
without limitation, delivery of written notice of revocation to the Secretary
of the Company, submission to the Secretary of a proxy dated later than a
previously submitted proxy, or attendance at the meeting and voting by ballot.
1
<PAGE>
The cost of preparing, assembling and mailing the proxy statement
and related material will be borne by the Company. In addition to soliciting
proxies by mail, the Company may make requests for proxies by telephone,
telegraph or messenger or by personal solicitation by officers, directors, or
employees of the Company at nominal cost to the Company. The Company will
reimburse third parties for the cost of forwarding proxy material to
beneficial owners of Omni stock.
PROPOSAL 1
ELECTION OF DIRECTORS
CURRENT DIRECTORS AND NOMINEES
The Company's Articles provide for up to seven directors who serve
until the next annual meeting of the shareholders and until their successors
are elected and shall qualify. The Board of Directors has nominated and urges
you to vote for the election of the four nominees identified below who have
been nominated to serve as directors until the next annual meeting of
shareholders of until their successors are duly elected and qualified. Each
of the nominees listed below is a member of the Company's present Board of
Directors. For personal information on each nominee director, SEE
"MANAGEMENT," below.
If, at the time of or prior to the Annual Meeting, any of the
nominees should be unable or decline to serve, the discretionary authority
provided in the proxy may be used to vote for a substitute or substitutes
designed by the Board of Directors. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be required.
The following are Omni's Nominees for Board of Directors:
<TABLE>
<CAPTION>
Name Age Position Director Since
- ---- --- -------- --------------
<S> <C> <C> <C>
Jeffrey K. Daniel 37 Director, President and
Chief Executive Officer January 1988
Craig L. Daniel 38 Director and
Vice President-Manufacturing December 1993
James L. Davis 50 Director November 1996
John F. Lillicrop 63 Director November 1996
W. Wayne Patterson 55 Director January 1997
</TABLE>
The Board of Directors recommends that shareholders vote "For" the
election of each of the above named nominees, and proxies executed and
returned will be so voted unless contrary instructions are indicated thereon.
BOARD OF DIRECTORS
The business and affairs of the Company are managed under the
direction of the Board of Directors (the "Board"). The Board has the
responsibility for establishing broad corporate policies and for the overall
performance of the Company, rather than day-to-day operating details. Outside
members of the Board are kept informed of the Company's business by various
reports and information provided to them throughout the year and information
presented at meetings of the Board by the Company's officers and employees.
2
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has established two standing committees: an Audit Committee and
a Compensation Committee. Actions taken by a committee of the Board are
reported to the Board of Directors at its next meeting. The Company does not
have a Nominating Committee. The following is a brief description of the
committees of the Board of Directors and their respective principal
responsibilities.
The AUDIT COMMITTEE consists of two outside directors. This committee
recommends the appointment of a firm of independent certified public
accountants to audit the accounting records of the Company each year. It
reviews with representatives of the independent public accountants the
auditing arrangements and scope of the independent public accountants'
examination of the accounting records, results of those audits, their fees,
and any other problems identified by the independent public accountants
regarding internal accounting controls. The current members of the Audit
Committee are Messrs. Davis and Lillicrop. The Audit Committee met two times
in fiscal year 1998.
The COMPENSATION COMMITTEE consists of two outside directors. This
committee makes recommendations to the Board of Directors as to the salaries
and annual bonuses of the elected officers, and reviews the salaries of other
senior executives. This committee makes recommendations to the Board of
Directors regarding grants of stock options to elected and other senior
executive officers and other eligible employees. The current members of the
Compensation Committee are Messrs. Davis and Lillicrop. The Compensation
Committee met two times in fiscal year 1998.
BOARD MATTERS
During the fiscal year ended June 30, 1998, the Board of Directors held
ten meetings. The Board has regularly scheduled meetings during the year and
meets at other times during the year as necessary to review significant
developments affecting the Company and to act on matters requiring Board
approval. With the exception of one meeting, all Board members attended all
meetings of the Board of Directors and of the committees on which such
director served during the fiscal year, either in person or by telephone.
DIRECTORS COMPENSATION
Messrs. Davis, Lillicrop and Patterson are nominees as outside directors
for the Company. Each director of the Company who is not an employee of the
Company or any subsidiary is compensated through the issuance of 20,000
options to purchase Common Stock for the initial year of service and 10,000
options to purchase Common Stock for every year of service thereafter. The
outside directors are reimbursed for their expenses up to a maximum of $1,000
for attendance at each board meeting. Jeffrey K. Daniel and Craig L. Daniel
are not compensated for their service as directors. During fiscal year 1998,
the Company issued to each Messrs. Davis and Lillicrop options to purchase
10,000 shares of Company Common Stock at $1.00 and issued to Mr. Patterson
options to purchase 20,000 shares of Company Common Stock at $1.00.
None of the Directors have been a participant in any proxy contest
involving any publicly traded Company within the past ten years. Each of them
has agreed to serve as a director of the Company if elected. There are no
other nominees for director.
3
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
It is anticipated after the election of directors at the Annual Meeting
that the following persons will be named Executive Officers of the Company:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jeffrey K. Daniel 37 President and Chief Executive Officer
Michael A. Zahorik 35 Executive Vice President, Chief Operating Officer,
General Counsel and Secretary
Craig L. Daniel 38 Vice President-Manufacturing
</TABLE>
- ---------------
JEFFREY K. DANIEL has been an employee of Omni since 1985 and is currently
the Chief Executive Officer and President of the Company. He has a Bachelors
degree in business administration from the University of Colorado. He was
Vice President from 1987 until May 1994, when he was elected Chief Executive
Officer and President. Jeffrey K. Daniel is the brother of Craig L. Daniel.
Jeffrey K. Daniel has served as a director of the Company since January 1988
and is a nominee for director of the Company.
MICHAEL A. ZAHORIK joined the Company as its General Counsel in November
1994. In June 1995, Mr. Zahorik became Vice President of the Company, and in
July 1996, became Executive Vice President and Secretary of the Company, and
in January 1998, became Chief Operating Officer of the Company. Mr. Zahorik
has a Bachelors Degree from the University of Colorado and a Juris Doctorate
from the University of Denver. Prior to his employment with the Company, Mr.
Zahorik was senior litigation and corporate counsel for McGeady Sisneros &
Wollins, P.C., in Denver, Colorado. Mr. Zahorik is admitted to practice law
in Colorado, Texas, and other Federal districts and circuits.
CRAIG L. DANIEL has been a full time employee of Omni since April, 1989, and
is currently Vice President-Manufacturing for the Company, Managing Director
of Omni Resources, Limited and General Manager of Shanghai Omni Gear Company,
Limited. Craig L. Daniel is the brother of Jeffrey K. Daniel. Craig L. Daniel
has served as a director of the Company since December 1993 and is a nominee
for director of the Company.
JAMES L. DAVIS provides financial advice to mid-sized companies through
Waterford Capital, Inc., a financial services firm he has owned since 1988.
Before founding Waterford Capital, Inc., Mr. Davis was a partner at the
accounting firm of Deloitte & Touche. From September 1991 through December
1995, Mr. Davis was a director of Entourage International, Inc., a skin care
products company. Mr. Davis has a Bachelor of Business Administration degree
from Texas Tech University and is a Certified Public Accountant. Mr. Davis
has served as a director of the Company since December 1996 and is a nominee
for director of the Company.
JOHN F. LILLICROP is President and Chief Executive Officer of OECO
Corporation ("OECO"), a defense and aerospace electronics manufacturer in
Portland, Oregon. From April 1994 through March 1996, Mr. Lillicrop was
Senior Vice President of investment banking at Black and Company, Inc. in
Portland, Oregon. From December 1990 through April 1994, Mr. Lillicrop was
Chairman of Springtime, Inc. I, a wholesale grower of nursery products in
Hillsboro, Oregon. Mr. Lillicrop is a director of OECO, Black and Company,
Inc., Tycom Corporation, and Springtime, Inc. I. He is a graduate of the
University of Colorado and received his EMBA from the Peter Drucker Graduate
Management Center of the Claremont Graduate School. Mr. Lillicrop has served
as a director of the Company since December 1996 and is a nominee for
director of the Company.
4
<PAGE>
W. WAYNE PATTERSON is President of HWG Capital, L.L.C. and a principal
shareholder of Harris Webb & Garrison, Inc. Mr. Patterson also serves as
Chairman of the Board of Integrated Service and Industrial Supply, a
consolidator of industrial distribution companies and of U.S Graphics
Industries. Mr. Patterson was formerly the Chairman, CEO and founder of Texas
Micro Systems, a manufacturer of computers primarily for the
telecommunications industry. Mr. Patterson also served as Chairman and CEO of
BriskHeat Corporation, a manufacturer of thermal management products to the
laboratory, aerospace and semiconductor industries. Prior to founding Texas
Micro and BriskHeat in 1989, Mr. Patterson served as Executive Vice President
of Keystone International, Inc., a NYSE listed manufacturer of flow control
products. In this position, he led Keystone's merger and acquisition
activities in addition to his operational responsibilities. Mr. Patterson
continued to serve as Director and Chairman of the Audit Committee of
Keystone until its merger with TYCO in August of 1997. Mr. Patterson holds
BBA and LLD degrees from the University of Texas, is a CPA and a member of
the Texas State Bar. Mr. Patterson has served as a director of the Company
since January 1998 and is a nominee for director of the Company.
5
<PAGE>
COMPENSATION OF MANAGEMENT
Neither Jeffrey K. Daniel, Craig L. Daniel, nor Michael A. Zahorik are
parties to any employment contract that is not terminable at will or which
entitles them to bonuses or payments upon change of control, termination of
employment or the like.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
----------------------------- ----------------------------------
Awards Payouts
------------------------ -------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation Awards Options/SARs Payouts Compensation
- -------- ---- ------ ----- ------------ ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeffrey K. Daniel
President & CEO 1996 76,500 --- --- --- --- --- ---
1997 76,500 --- --- --- 160,000* --- ---
1998 76,500 --- --- --- 136,000** --- ---
Craig L. Daniel
Vice President- 1996 76,500 --- --- --- --- --- ---
Manufacturing 1997 76,500 --- --- --- 160,000* --- ---
1998 76,500 --- --- --- 136,000** --- ---
Michael A. Zahorik
Executive Vice
President & 1996 --- --- --- --- --- --- ---
Gen. Counsel 1997 68,500 --- --- --- 70,000* --- ---
1998 68,500 --- --- --- 68,000** --- ---
</TABLE>
No other executive officer's annual salary or bonus exceeded $100,000 for any of
the three most recent fiscal years ended June 30, 1998.
- --------------------
* On January 31, 1996, under the 1996 ISOP, Jeffrey K. Daniel and Craig L.
Daniel were granted replacement options to purchase 160,000 shares of Common
Stock and Michael A. Zahorik was granted options to purchase 70,000 shares of
Common Stock. These grants were at an exercise price of $4.00 and were fully
vested. On June 6, 1997, under the 1996 ISOP, the option price on these grants
was reduced to $1.00 and the vesting schedule for these grants was changed to
vest 50% in twelve (12) months and 50% in twenty-four (24) months. SEE "STOCK
OPTION PLANS" below.
** On June 6, 1997, under the 1996 ISOP, Jeffrey K. Daniel and Craig L.
Daniel were granted additional options to purchase 136,000 shares of Common
Stock and Michael A. Zahorik was granted additional options to purchase
68,000 shares of Common Stock. These grants are at an exercise price of $1.00
and vest 100% three (3) years from date of grant. SEE "STOCK OPTION PLANS"
below.
6
<PAGE>
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Securities Percent of Total Options/ Exercise
Underlying Options/ SARs Granted to Employees or Base Expiration
Name SARs Granted in Fiscal Year Price Date
- ---- -------------------- ------------------------- -------- ----------
<S> <C> <C> <C> <C>
Jeffrey K. Daniel
President & CEO -0-* N/A N/A N/A
Craig L. Daniel
Vice President-
Manufacturing -0-* N/A N/A N/A
Michael A. Zahorik
Exec. Vice President, Chief
Operating Officer & General
Counsel -0-* N/A N/A N/A
</TABLE>
- -----------------
* No stock options were granted Management in fiscal year 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-money Options/
Shares Acquired Value Options/SARs at FY-End (1) SARs at FY-End (2)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- -------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
Jeffrey K. Daniel
President & CEO N/A N/A 296,000 $943,648
------- --------
80,000/216,000 $255,040/$688,608
Craig L. Daniel
Vice President-
Manufacturing N/A N/A 296,000 $943,648
------- --------
80,000/216,000 $255,040/$688,608
Michael A. Zahorik
Exec. Vice President &
General Counsel N/A N/A 138,000 $443,944
------- --------
35,000/103,000 $115,580/$328,364
</TABLE>
- ------------------------
N/A Not applicable; No options were exercised during the fiscal year ended
June 30, 1998.
(1) Indicates number of options exercisable and unexercisable as of
June 30, 1998.
(2) Based upon closing price of Common stock at June 30, 1998 of $3.188.
STOCK OPTION PLANS
The Company maintains a Non-Qualified Stock Option Plan (the
"NQSOP") and a 1996 Incentive Stock Option Plan (the "1996 ISOP"). The NQSOP
covers 600,000 shares of Common Stock and the 1996 ISOP covers 900,000 shares
of Common Stock. The purpose of the NQSOP and 1996 ISOP is to offer eligible
employees of
7
<PAGE>
the Company and its subsidiaries an opportunity to acquire or increase their
proprietary interests in the Company and provide additional incentive to
contribute to its performance and growth.
On June 6, 1997, the Board, upon recommendation from the
Compensation Committee, repriced all options granted and existing to current
Company employees under the 1996 ISOP and NQSOP from $4.00 per share to $1.00
per share. The repriced options vest 50% twelve (12) months from June 6, 1997
and 50% twenty-four (24) months from June 6, 1997.
In addition, the Board, upon recommendation of the Compensation
Committee, granted options to purchase 136,000 shares of Common Stock at
$1.00 per share to each Jeffrey K. Daniel and Craig L Daniel, and granted
options to purchase 68,000 shares of Common Stock at $1.00 per share to
Michael A. Zahorik, all such options to vest three years from June 6, 1997.
On January 1, 1998, the Board granted options to purchase 10,000 shares of
Common Stock at $1.00 per share to each outside director James L. Davis and
John F. Lillicrop and granted options to purchase 20,000 shares of Common
Stock at $1.00 per share to outside director W. Wayne Patterson. Messrs.
Davis, Lillicrop and Patterson's options were immediately vested.
TEN-YEAR OPTIONS/SAR REPRICINGS
<TABLE>
<CAPTION>
Number of Length
Securities Market Exercise of Original
Underlying Price of Stock Price of Stock Option Term
Options/SARs at Time of at Time of New Remaining at
Repriced or Repricing or Repricing or Exercise Date of
Name Date Amended Amendment Amendment Price Repricing
- ---- ---- --------- ---------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey K. Daniel 6/6/97 160,000 $0.75 $4.00 $1.00 8 years
Craig L. Daniel 6/6/97 160,000 $0.75 $4.00 $1.00 8 years
Michael A. Zahorik 6/6/97 70,000 $0.75 $4.00 $1.00 8 years
</TABLE>
COMPENSATION COMMITTEE REPORT ON REPRICING OF OPTIONS
The repricing reflected in the above table was implemented in 1996 on the
recommendation of the Compensation Committee in place at that time to conform
the options to prevailing market prices and provide an incentive for which
the options were designed.
OTHER COMPENSATION
The Company has paid no bonuses to its executive officers. The Company
has a group medical plan which provides medical and hospital benefits and
term life insurance to its employees, including its officers, at no cost to
the employee. Jeffrey K. Daniel and Craig L. Daniel are not compensated as
directors.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
EDWARD L DANIEL AND AFFILIATES
The Company and Edward L. Daniel, former Chairman of the Board and
principal shareholder of the Company, had the following arrangements during
the year ended June 30, 1998: (i) lease of the Houston facility from Daniel
Development Corporation ("DDC"), a Washington partnership controlled by
Edward L. and Joan J. Daniel in the amount $8,000 monthly through March 31,
1998; and (ii) the Company paid Edward L. Daniel $20,000 per month, through
July 31, 1998, in consideration of terminating all previous agreements to
provide
8
<PAGE>
services to the Company. On March 6, 1998, effective April 1, 1998, the
building was sold to Phenix Investment Company, a real estate investment
company located in Houston Texas. Phenix Investment Company is not affiliated
with Daniel Development Corporation, Edward L. Daniel or Joan J. Daniel. The
terms of the lease were not changed as a result of the sale.
From time to time, the Company has been a party to various
transactions with Edward L. Daniel ("Edward Daniel"), Joan J. Daniel ("Joan
Daniel") and certain affiliates ("Affiliates")(collectively, Edward Daniel,
Joan Daniel and Affiliates will be referred to as "Daniel"). The Company and
Daniel have had a series of disputes regarding the validity of certain
agreements between the parties. As a result of such disputes, the Company and
Daniel have entered into a Mutual Release and Settlement Agreement, effective
June 30, 1997 (the "Agreement") which supersedes and replaces all prior
negotiations, statements and agreements of the parties.
The Agreement has the effect of simplifying the Company's capital
structure, resolving outstanding contractual disputes and reducing Company
costs in the future. Under the terms of the Agreement, (1) the Company was
released from any obligation under the Equity Contract Note ("ECN") in the
principle amount of $918,304, together with accrued interest in the amount of
$222,516; (2) Edward Daniel and Joan Daniel transferred to the Company all
10,180 Series B Convertible Preferred shares held by them; (3) Edward Daniel
and Joan Daniel released the Company from any accrued dividends under the
Series B Convertible Preferred shares; (4) Edward Daniel and Joan Daniel
transferred all warrant holdings consisting of 656,101 Class A Warrants and
656,101 Class B Warrants held by them; and (5) the Company was released from
its obligation under previous consulting agreements which provided for the
payment of consulting fees through December 1999 in the amount of $20,000 per
month.
Upon execution of the Agreement, the Company (a) paid Edward Daniel
and Joan Daniel $35,000; (b) released a note receivable from an affiliate of
Edward Daniel, Daniel Development Corporation (the "DDC Receivable") in the
principle amount of $853,397, together with accrued interest thereon in the
amount of $208,310; (c) cancelled an account receivable in the amount of
$63,199 from LaPlante Compressor Company ("LaPlante"), an affiliate of Edward
Daniel; and (d) in exchange for the release of the ECN and the transfer of
all Preferred Stock, all of which had rights to convert into Common Stock,
the Company issued each Edward Daniel and Joan Daniel 375,000 shares of
Common Stock, which shares cannot be voted by them or their affiliates until
August 1999. The Company granted Edward Daniel and Joan Daniel demand
registration and piggyback rights through 2001 subject to certain conditions
and limitations set forth in the Registration Rights Agreement executed in
connection with the Agreement. Under the Agreement, the Company paid Daniel
$20,000 per month through July 1998 as severance and will pay health care
coverage for Edward Daniel through the same period.
In connection with the Agreement, the Company executed an Amended
Lease Agreement as set forth below.
Pursuant to the terms of the ECN, the Company recorded accrued
interest in the aggregate amount of $73,464 in fiscal 1996 and $73,464 in
fiscal 1997, and treated all ECN interest as dividends. The Company also paid
Edward Daniel consulting fees equal to $132,274 in fiscal 1997.
The Company offset the obligation under the ECN against all Daniel
receivables, including the DDC Receivable and LaPlante Receivable. In
addition, the Company accrued in the fiscal year ended June 30, 1997, all
amounts due under the Agreement, including severance payments due Edward
Daniel through August 1998. As a result of the offset and accrual, the
Company expensed $246,317 for the fiscal year ended June 30, 1997. No amount
or charges related to the Agreement or Daniel will be recorded after June 30,
1997.
As a result of the Agreement, Edward Daniel and Joan Daniel own
1,054,136 shares of Company Common Stock (including 750,000 shares of Common
Stock delivered under the Agreement).
Subsequent to the execution of the Agreement, on or about September
6, 1997, the Company cancelled the Series A Preferred Stock, the Series B
Convertible Preferred Stock and the Series C Convertible Preferred Stock.
9
<PAGE>
LEASE OF REAL PROPERTY. The Company leased its Houston facility from
Daniel Development Corporation ("DDC"), a Washington partnership controlled
by Edward L. Daniel and Joan J. Daniel through March 31, 1998. The lease was
amended pursuant to the Agreement to provide for a five-year term at $8,000
per month through March 31, 1998; provided, however, that the lease may be
terminated by DDC upon six months notice. On March 6, 1998, effective April
1, 1998, the building was sold to Phenix Investment Company, a real estate
investment company located in Houston Texas. Phenix Investment Company is not
affiliated with Daniel Development Corporation, Edward L. Daniel or Joan J.
Daniel. The terms of the lease were not changed as a result of the sale. The
Company made aggregate lease payments to DDC of $90,000 in 1997 and $72,000
in 1998.
ESTATE OF MRS. JANE DANIEL
In November 1993, The Company borrowed $200,000 from Mrs. Jane
Daniel (now deceased), Edward Daniel's mother and a shareholder. The loan was
an unsecured note that was fully paid during the fiscal year ended June 30,
1998.
SECURITY OWNERSHIP
CAPITALIZATION
The Company's currently authorized equity securities are as follows:
(i) 150,000,000 shares of Common Stock, par value $.004995 per share, (ii)
2,312,773 Class A Common Stock Purchase Warrants ("Class A Warrants"); and
(iii) 1,362,473 Class B Common Stock Purchase Warrants ("Class B Warrants").
As of October 1, 1998, the Company had outstanding 3,523,092 shares of Common
Stock, Class A Warrants to purchase 946,565 shares of Common Stock and Class
B Warrants to purchase 706,372 shares of Common Stock.
On or about September 6, 1997, the Company cancelled all previously
authorized and outstanding Series A Preferred Stock, the Series B Convertible
Preferred Stock and the Series C Convertible Preferred Stock.
CLASS A AND B WARRANTS. There are 945,565 Class A Warrants and
706,372 Class B Warrants to purchase Common Stock. The Class A Warrants may
be exercised by the holder thereof at any time between 90 days after issuance
and March 15, 1999, at $4.00 per share, and the Class B Warrants may be
exercised at any time between 90 days after issuance and March 15, 2001, at
$6.00 per share.
EQUITY CONTRACT NOTES. On or about June 30, 1997, pursuant to the
Agreement, the Company was released from any future obligation under the ECN.
10
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of the close of business on June 30,
1998, by each person who is known to the Company to be a beneficial owner of
5% or more of the Common Stock, by each current and Nominee director, and by
all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature
Of Beneficial
Name and Address of Beneficial Owner Ownership Percent of Class(1)
- ------------------------------------ --------- -------------------
<S> <C> <C>
Edward L. Daniel (3)(6) ............................ 527,068 15.0%
Joan J. Daniel (4)(6) .............................. 527,068 15.0%
Jeffrey K. Daniel (2)(8) ........................... 125,355 3.5%
Craig L. Daniel (2)(9) ............................. 143,416 4.0%
Michael A. Zahorik (2)(10) ......................... 71,900 2.0%
Websters Publishing, Ltd. (5) ...................... 735,018 18.3%
James L. Davis (7) ................................. 90,000 2.5%
John F. Lillicrop (11) ............................. 45,000 1.3%
W. Wayne Patterson (12) ............................ 20,000 *
Executive Officers and
Directors as a Group .............................. 495,671 12.8%
</TABLE>
* less than 1% of the total number of shares outstanding
- ----------------
(1) Based upon 3,523,092 shares of Common Stock outstanding as of June 30,
1998.
(2) The address for all officers is 7502 Mesa Road, Houston, Texas 77028.
(3) Includes 375,000 shares of Common Stock issued to Edward Daniel under
the Agreement which shares cannot be voted by him until August 1999.
(4) Includes 375,000 shares of Common Stock issued to Joan Daniel under the
Agreement which shares cannot be voted by her until August 1999.
(5) Includes 245,006 shares purchasable under A Warrants exercisable within
60 days at $4.00 per share and 245,006 shares purchasable under B
Warrants exercisable within 60 days at $6.00 per share. The address of
such beneficial owner is Caroline Center, 10th Floor, 28 Yun Ping Road,
Causeway Bay, Hong Kong.
(6) The address for such beneficial owner is 2476 Bolsover, #626, Houston,
Texas 77005.
(7) Includes 50,000 shares purchasable under A Warrants exercisable within
60 days at $4.00 per share and 40,000 shares purchasable under options
exercisable within 60 days at $1.00 per share. The address of such
beneficial owner is One Park Ten Place, Suite 340, Houston, Texas
77084.
(8) Includes 80,000 shares purchasable under options exercisable within 60
days at $1.00 per share and 3,763 shares held in street name and 770
shares held of record by the Jeffrey K. Daniel IRA, a self-directed IRA
and 7,489 shares purchased through the Company's 401(k) plan..
(9) Includes 80,000 shares purchasable under options exercisable within
60 days at $1.00 per share and 6,800 shares held of record by the
Craig L. Daniel IRA, a self-directed IRA.
(10) Includes 35,000 shares purchasable under options exercisable within 60
days at $1.00 per share and 19,300 shares held of record by the Michael
A. Zahorik IRA, a self-directed IRA and 2,100 shares purchased through
the Company's 401(k) plan.
(11) Includes 40,000 shares purchasable under options exercisable within 60
days at $1.00 per share. Owned jointly with Stella J. Lillicrop. The
address of such beneficial owners is 1220 Skyland Drive, Lake Oswego,
Oregon 97034.
(12) Includes 20,000 shares purchasable under options exercisable within 60
days at $1.00 per share. The address of such beneficial owner is 5599
San Felipe, Suite 301, Houston, Texas 77056.
11
<PAGE>
Except as set forth above, none of the Nominees was, during the past
year, a party to any contract, arrangement or understanding with any person
with respect to any securities of Omni, including but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss
or guarantees of profit, division of losses or profits, or the giving or
withholding of proxies. For a description of certain transactions between Mr.
Edward L. Daniel and the Company, SEE "CERTAIN RELATIONSHIPS AND
TRANSACTIONS" above.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file
reports with the Securities and Exchange Commission relating to transactions
and holdings in the Company Common Stock. Based solely on a review of Forms
3, 4 and 5 and amendments thereto furnished to the Company during the most
recent fiscal year, the Company is not aware of any failure to file such
forms on a timely basis.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF PRINCIPAL AUDITORS
The Board of Directors has appointed Harper & Pearson Company ("Harper &
Pearson") as the Company's independent auditors to examine the Company's
financial statements for the fiscal year ending June 30, 1998, subject to the
ratification of such selection by the shareholders at the Annual Meeting.
Harper & Pearson has acted as the Company's independent auditors since
November 1993 and audited the Company's financial statements for the year
ended June 30, 1998, which are included as part of the Company's Annual
Report on Form 10-KSB delivered with this Proxy Statement.
The Board of Directors recommends that the shareholders vote the
ratification of the selection of Harper & Pearson as the independent auditors
of the Company for the fiscal year ending June 30, 1999. The affirmative vote
of a majority of the shares of Common Stock present in person or by proxy is
necessary for ratification. Ratification is not required nor does it prevent
the Board from selecting different auditors; however, the Board is submitting
this matter to the shareholders in order to enhance their participation in
this aspect of the Company's affairs. If the shareholders do not ratify the
selection of Harper & Pearson as the Company's independent auditors, the
Board will reconsider the selection.
Representatives of Harper & Pearson are not expected to attend the Annual
Meeting.
12
<PAGE>
STOCKHOLDER PROPOSALS AND OTHER MATTERS
YEAR 2000
The Company recognizes the need to ensure that its operations will
not be adversely impacted by the Year 2000 software issues. Processing errors
potentially arising from calculations using the Year 2000 date are a known
risk. The Company is actively addressing these software issues to minimize
these risks. The Company is in the process of identifying internal software
and imbedded technology Year 2000 risks. The Company has performed internal
test operations using dates subsequent to Year 2000 (specifically, the
Company's financial and inventory systems) and has not encountered problems
which are material to the Company's operations. The Company is inquiring of
its customers and vendors and contractors with whom the Company has a
material relationship, to provide the Company with updates of their efforts
to be Year 2000 compliant and, if compliant, written assurances to that
effect. The Company anticipates the completion of the identification and
verification process to be completed within fiscal year 1999. The Company has
not accelerated computer replacement or software upgrades as a result of Year
2000 issues. At this point, the Company has not identified any internal Year
2000 issue that will not otherwise be resolved through computer and software
upgrades. The cost of achieving Year 2000 compliance over the cost of normal
software upgrades is estimated to be approximately $10,000-$20,000. At this
point, the Company has not developed a contingency plan in the event a
material issue arises.
SHAREHOLDER PROPOSALS
Shareholder proposals intended for inclusion in the proxy statement
for the next Annual Meeting must be received by the Company by March 31,
1999, and should be sent to Michael A. Zahorik, Secretary of the Company, at
the address stated on the first page of this proxy statement.
As of the date of this proxy statement, the Board of Directors of
Omni knows of no matter, other than the election of directors, and the
ratification of the selection of independent public accountants, to come
before the meeting. If any other matter should properly come before the
meeting, it is the intention of the persons named on the accompanying form of
proxy to vote such proxy in accordance with their judgment in such matter.
By order of the Board of Directors,
/s/ JEFFREY K. DANIEL
President and Chief Executive Officer
Dated: October 15, 1998
A COPY OF THE OMNI U.S.A., INC. ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL
STATEMENTS SCHEDULES, IS AVAILABLE WITHOUT CHARGE TO INTERESTED SECURITY
HOLDERS UPON WRITTEN REQUEST. THE COMPANY WILL FURNISH ANY EXHIBIT DESCRIBED
IN THE LIST ACCOMPANYING SUCH REPORT TO ANY SUCH PERSON ON REQUEST UPON
PAYMENT OF REASONABLE FEES RELATING TO THE COMPANY'S FURNISHING SUCH
EXHIBITS. PLEASE DIRECT INQUIRIES TO INVESTOR RELATIONS, OMNI U.S.A., INC.,
7502 MESA ROAD, HOUSTON, TEXAS 77028.
- -------------------------------------------------------------------------------
YOUR PROXY IS IMPORTANT, PLEASE SIGN AND MAIL IT TODAY.
- -------------------------------------------------------------------------------
13
<PAGE>
Proxy Omni USA, Inc.
7502 Mesa Road
Houston, Texas 77028
This Proxy Is Solicited By The Board Of Directors
The undersigned hereby appoints Jeffrey K. Daniel and Craig L.
Daniel, or either of them, as Proxies, each with the full power of
substitution, to vote at the Annual Meeting of Shareholders to be held on
November 24, 1998, or any adjournment thereof, all the shares of stock of
Omni USA, Inc. ("Omni") held of record by the undersigned on October 1, 1998,
upon the matters described on the reverse side of this card, all in
accordance with and as more fully described in the accompanying Notice and
Proxy Statement for the Annual Meeting. By signing and returning this Proxy,
the undersigned hereby revokes all proxies previously given with respect to
the Annual Meeting.
This Proxy when properly executed will be voted in the manner
directed by the undersigned shareholder. If no direction is made on the
reverse side hereof, this Proxy will be voted FOR the Proposals described on
the reverse side hereof. In addition, this Proxy will be exercised, if
either of the Proxies named above so elects in his discretion, to vote (i)
for the election of any person to replace a nominee named above who is unable
to serve or will not serve, (ii) on any other matter as may properly come
before the shareholders at the Annual Meeting, and (iii) on matters incident
to the conduct of the Annual Meeting. As of October 1, 1998, the Proxies are
not aware of any other matters to be presented to the shareholders at the
Annual Meeting.
The Board of Directors recommends a vote FOR the Proposals set forth on the
reverse side.
<PAGE>
<TABLE>
<CAPTION>
NOMINEES FOR BOARD OF DIRECTORS. / / For all Nominees / / Against all Nominees / / Withhold Authority
<S> <C>
Mr. Jeffrey K. Daniel
Mr. Craig L. Daniel To vote against a particular Nominee, strike through his name; to withhold
Mr. James L. Davis authority to vote with respect to a particular Nominee, write his name in
Mr. John F. Lillicrop space below.
Mr. W. Wayne Patterson
RATIFY HARPER & PEARSON AS AUDITORS. / / For / / Against / / Abstain
Please sign this Proxy as your name appears below, date it and promptly return it whether or not you plan to attend
the Meeting. If signing for a corporation or partnership or as an agent, attorney or fiduciary, indicate the capacity in which
you are signing.
-----------------------------------------------------------
Signature
-----------------------------------------------------------
Capacity
Dated:
----------------------------------------------------
</TABLE>
