<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, 1999
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 14, 1999, there were 3,523,092 shares of common stock $.004995 par value
outstanding.
-1-
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
March 31,1999 and June 30, 1998
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 1999 and March 31, 1998
Condensed Consolidated Statements of Cash Flows
Three Months and Nine Months Ended March 31, 1999 and March 31, 1998
Notes to Condensed Consolidated Financial Statements
Management's Discussion and Analysis of Financial Condition and Results of
Operations
-2-
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND JUNE 30, 1998
ASSETS
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
-------------- -------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 503,485 $ 278,297
Accounts receivable, trade, net 2,396,324 2,585,473
Accounts receivable, related parties 105,725 92,396
Inventories 3,145,058 2,924,748
Prepaid expenses 67,832 52,918
------------ ------------
TOTAL CURRENT ASSETS 6,218,424 5,933,832
------------ ------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,917,298 2,110,538
------------ ------------
OTHER ASSETS
Primarily intangible assets, net 256,412 280,607
------------ ------------
TOTAL ASSETS $ 8,392,134 $ 8,324,977
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,157,995 $ 2,466,175
Line of credit 1,862,881 1,965,186
Accrued expenses 430,759 605,077
Current portion of long-term debt 165,787 165,787
------------ ------------
TOTAL CURRENT LIABILITIES 5,617,422 5,202,225
------------ ------------
LONG-TERM DEBT 714,122 815,130
------------ ------------
COMMITMENTS AND CONTINGENCIES
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 earnings (deficit) (3,246,745) (2,999,713)
Foreign currency translation adjustment 98,031 98,031
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,060,590 2,307,622
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 8,392,134 $ 8,324,977
============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
-3-
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED MARCH 31, 1999
AND MARCH 31, 1998
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
31-MAR-99 31-MAR-98 31-MAR-99 31-MAR-98
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 4,794,259 $ 4,450,351 $ 12,009,907 $ 10,890,516
------------ ------------ ------------ ------------
COST OF SALES *3,705,364 3,240,987 *9,001,190 8,063,841
------------ ------------ ------------ ------------
Gross Profit 1,088,895 1,209,364 3,008,717 2,826,675
------------ ------------ ------------ ------------
OPERATING EXPENSES
Selling, general and administrative 1,026,050 991,582 3,074,907 2,825,034
------------ ------------ ------------ ------------
Operating income (loss) 62,845 217,782 (66,190) 1,641
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (68,245) (79,663) (242,371) (220,560)
Other, net 21,446 18,372 61,529 23,688
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE) (46,799) (61,291) (180,842) (196,872)
------------ ------------ ------------ ------------
NET INCOME (LOSS) 16,046 $ 156,491 $ (247,032) $ (195,231)
============ ============ ============ ============
NET LOSS PER COMMON SHARE $ 0.00 $ 0.04 $ (0.07) $ (0.06)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,523,092 3,523,092 3,523,092 3,524,181
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
* Included is a one time adjustment to income for the reduction in Shanghai Omni
Gear VAT refund receivable of $110,779 due to a change in the calculation of VAT
and a reduction in Shanghai Omni Gear inventory valuation of $51,905.
-4-
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED MARCH 31, 1999
AND MARCH 31, 1998
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE NINE FOR THE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
31-MAR-99 31-MAR-98 31-MAR-99 31-MAR-98
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) 16,046 156,491 (247,032) (195,231)
--------- ---------- ---------- ----------
Adjustments to reconcile net income (loss) to net cash
(used) provided by operating activities:
Depreciation and amortization 92,073 55,416 289,546 166,014
Changes in operating assets and liabilities:
Accounts receivable 224,262 (584,062) 175,820 (33,397)
Inventories (726,965) (896,673) (220,310) (791,349)
Prepaid expenses 29,049 181,138 (14,915) 92,850
Long Term Deposits 0 60,559 0 60,559
Intangible Assets 8,064 (21,124) 8,064 103,551
Notes Receivable 0 13,332 0 53,328
Accounts payable and accrued expenses 296,784 685,242 539,077 347,325
--------- ---------- ---------- ----------
Total adjustments (76,733) (506,172) 777,282 (1,119)
--------- ---------- ---------- ----------
Net cash (used) provided by operating
Activities (60,687) (349,681) 530,250 (196,350)
--------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (39,615) (24,183) (80,174) (57,283)
--------- ---------- ---------- ----------
Net cash used by investing activities (39,615) (24,183) (80,174) (57,283)
--------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings/(Payments) on line of credit 483,470 451,001 (123,880) 150,479
Payments on long-term debt (44,619) (58,603) (101,008) (104,769)
Purchase of Treasury Stock 0 0 0 (8,500)
Proceeds from equity issues 0 0 0 0
--------- ---------- ---------- ----------
Net cash provided/(used) by financing 438,851 392,398 (224,888) 37,210
--------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 338,549 18,534 225,188 (216,423)
CASH AT BEGINNING OF PERIOD 164,936 44,799 278,297 279,756
--------- ---------- ---------- ----------
CASH AT END OF PERIOD 503,485 63,333 503,485 63,333
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part
of the consolidated financial statements.
-5-
<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. The Company believes that the disclosures made in this
report are adequate to make the information presented not misleading. These
condensed financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual report
on Form 10-KSB. In the opinion of the Company, all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the financial
position of Omni U.S.A., Inc. and subsidiaries as of March 31, 1999, and the
results of their operations and cash flows for the nine month and three month
periods ended March 31,1999, and March 31, 1998, have been included.
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 March 31,
1999 and March 31, 1998, the Company's common stock equivalents were
antidilutive and were not included in the computation of income (loss) per
share.
3. Interest paid on debt for the three months ended March 31, 1999 and 1998, was
$68,245 and $79,663 respectively. Interest paid on debt for the nine months
ended March 31, 1999 and March 31, 1998 was $242,371 and $220,560, respectively.
No income taxes were paid during the three months or nine months ended March 31,
1999 and 1998, respectively.
4. CLASS A and B WARRANTS. As of June 30, 1998, there were 946,565 Class A
Warrants and 706,372 Class B Warrants to purchase Common Stock. The Class A
Warrants may be exercised through March 15, 1999, at $4.00 per share, and the
Class B Warrants may be exercised through March 15, 2001, at $6.00 per share. On
March 15, 1999, by operation of the A Warrant Agreement, all Class A Warrants
expired unexercised.
5. MAJOR CUSTOMERS AND VENDORS: During the three months ended March 31, 1999,
the Company and its subsidiaries had consolidated sales of $609,204 and to a
domestic customer for a total of 12.7% of consolidated sales. During the nine
months ended March 31, the Company and its subsidiaries had consolidated sales
of $1,293,579 to a domestic customer for a total of 10.8% of consolidated sales.
During the three months ended March 31, 1999, the Company and its subsidiaries
had consolidated purchases of $2,319,444 to two vendors for a total of 60.8% of
consolidated sales. During the nine months ended March 31, 1999, the Company and
its subsidiaries had consolidated purchases of $5,499,631 to two vendors for a
total of 45.8% of consolidated sales.
6. SEGMENT INFORMATION: The Company and its subsidiaries are engaged in the
business of designing, developing and distributing power transmissions and
trailer and implement components used for agricultural, construction and
industrial equipment.
SEGMENT INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 1999 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
- ------------------- --------- ---------- -------- ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Power Transmission
Components $3,752,903 $ 17,536 $53,525 $6,105,205 $ 3,922 $55,002
---------- -------- ------- ---------- ------- -------
Trailer and Implement
Components 1,041,356 77,616 14,720 2,286,929 35,693 37,071
---------- -------- ------- ---------- ------- -------
Corporate and Eliminations (32,307)
---------- -------- ------- ---------- ------- -------
Total Omni, U.S.A., Inc. $4,794,259 $ 62,845 $68,245 $8,392,134 $39,615 $92,073
========== ======== ======= ========== ======= =======
NINE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 1999 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
- ------------------- --------- ---------- -------- ------------ ------------- --------------
Power Transmission
Components $ 9,125,012 $ (57,343) $181,447 $6,105,205 $44,481 $220,641
Trailer and Implement
Components 2,884,895 173,460 60,924 2,286,929 35,693 68,905
Corporate and Eliminations (182,307)
----------- ---------- -------- ---------- ------- --------
Total Omni, U.S.A., Inc. $12,009,907 $ (66,190) $242,371 $8,392,134 $80,174 $289,546
=========== ========== ======== ========== ======= ========
</TABLE>
-6-
<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. This report should be read in
conjunction with the Company's latest Form 10-KSB, a copy of which may be
obtained by visiting the Company's home page at WWW.OUSA.COM, or by writing to
the Investor Relations Department, Omni U.S.A., Inc., 7502 Mesa Road, Houston,
Texas 77028.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current ratio was 1.1 as of March 31, 1999, the same
current ratio as of December 31, 1998, September 30, 1998 and June 30, 1998. The
Company had working capital of $601,002 as of March 31, 1999 and working capital
of $731,607 as of June 30, 1998. This represents a decrease of $130,605 from
June 30, 1998. Change in working capital from June 30, 1998 was due to a
decrease in accounts receivable of $175,820 and the line of credit of $102,305,
an increase in inventory of $220,310, together with an increase in accounts
payable and accrued expenses of $517,502, and an increase in prepaid expenses of
$14,914.
The cash balance was $503,485 as of March 31, 1999; an increase of
$225,188 compared to the June 30, 1998 cash balance of $278,297. Accounts
receivable balance of $2,502,049 as of March 31, 1999 decreased $175,820
compared to June 30, 1998. The receivable collection period increased from 40
days to 47 days from June 30, 1998 to March 31, 1999, respectively.
Inventory balance as of March 31, 1999 was $3,145,058; an increase of
$220,310 compared to June 30, 1998. At March 31, 1999, inventory turnover was 96
days compared to 60 days at June 30, 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, if required.
RESULTS FOR THE QUARTER ENDED MARCH 31, 1999 COMPARED WITH THE QUARTER ENDED
MARCH 31,1998
The Company had net income of $16,046 ($0.00 per share) for the quarter
ended March 31, 1999, compared with net income of $156,491 ($0.04 per share) for
the quarter ended March 31, 1998. In the quarter ended March 31, 1999, the
Company made a one-time adjustment to income of ($162,684). Included is an
adjustment to income for the reduction in Shanghai Omni Gear VAT refund
receivable of $110,779 due to a change in the calculation of VAT and a reduction
in Shanghai Omni Gear inventory valuation of $51,905. Effective June 30, 1997,
the Company was released from any obligation on all preferred series of stock
and equity contract notes, and therefore, the Company no longer provides for
such interest or dividends in its earnings per share calculation. The Company
had an operating income of $62,845 for the quarter ended March 31, 1999 compared
to operating income of $217,782 for the quarter ended March 31, 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
QUARTER ENDED % QUARTER ENDED % DOLLAR %
NET SALES 3/31/99 OF TOTAL 3/31/98 OF TOTAL CHANGE CHANGE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Power Transmission Components $ 3,752,903 78% $3,469,402 78% $283,501 8.2%
- ---------------------------------------------------------------------------------------------------------
Trailer and Implement Components 1,041,356 22% 980,949 22% 60,407 6.2%
- ---------------------------------------------------------------------------------------------------------
Consolidated $ 4,794,259 100% $4,450,351 100% $343,908 7.7%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
Gross profit, as a percentage of sales, was approximately 23% for the
quarter ended March 31, 1999, compared to 26% for the quarter ended March 31,
1998. Selling, general and administrative expenses were $1,026,050 for the
quarter ended March 31, 1999, an increase of $34,468 or approximately 3.5% over
the quarter ended March 31, 1998 expenses of $991,582. These expenses were
approximately 21% of net sales compared to 23% for the quarter ended March 31,
1998.
-7-
<PAGE>
RESULTS FOR THE NINE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THE NINE MONTHS
ENDED MARCH 31, 1998
The Company had a net loss of $247,032 ($0.07 per share) for the nine
months ended March 31, 1999, compared with a net loss of $195,231 ($0.06 per
share) for the same period last year. The Company had an operating loss of
$66,190 for the nine months ended March 31,1999, compared to operating income of
$1,641 for the same period last year. Effective June 30, 1997, all preferred
series of stock under which dividends were being paid was tendered to the
Company and the Company was released from any obligation under Equity Contract
Notes, and therefore no longer provides for such interest and dividends in its
earnings per share calculation.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
9 MONTHS 9 MONTHS
ENDED % ENDED % DOLLAR %
NET SALES 3/31/99 OF TOTAL 3/31/98 OF TOTAL CHANGE CHANGE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Power Transmission Components $ 9,125,012 76% $ 8,331,089 76% $ 793,923 9.5%
- ------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 2,884,895 24% 2,559,427 24% 325,468 12.7%
- ------------------------------------------------------------------------------------------------------------
Consolidated $12,009,907 100% $10,890,516 100% $1,119,391 10.3%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The Company traditionally has lower sales in the first and second
quarters, with a significant portion of its sales in the third and fourth
quarters.
Gross profit, as a percentage of sales, was approximately 25% for the
nine months ended March 31, 1999, compared to 26% for the same period last year.
Selling, general and administrative expenses were $3,074,907 for the nine months
ended March 31, 1999, an increase of $249,873 or approximately 9% over expenses
of $2,825,034 for the same period last year. These expenses were approximately
26% of net sales for the nine months ended March 31, 1999, compared to 26% for
the same period last year.
The Company ended the quarter with a backlog of approximately
$6,000,000, which will contribute to fourth quarter performance.
-8-
<PAGE>
YEAR 2000
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 is in the process of testing and evaluating
its computer operated machinery and facilities equipment and has not encountered
problems which are material to the Company's operations. The Company anticipates
the completion of the identification, evaluation and verification process to be
completed within fiscal year 1999.
The Company has tested and has requested, and in some instances,
received written assurances from its software and hardware vendors and key
suppliers in its efforts to achieve Year 2000 compliance. Where such vendors or
key suppliers are unable to verify their readiness to the Company's
satisfaction, the Company plans to consider alternative or contingent vendors or
suppliers.
The Company has spent approximately $15,000 to date to assure Year 2000
compliance and expects to spend approximately $10,000 in upgrades over the
second and third quarter of the calendar year.
As a result of the Company's year 2000 assessment, the Company has not
encountered problems which have not already been addressed or that would have a
material effect on the Company's business, results of operations, or financial
condition. However, to the extent the Company, or third parties upon which it
relies, does not achieve Year 2000 readiness in a timely manner, the Company's
financial position, cash flow or results of operations may be adversely
affected.
CAUTIONARY STATEMENT
The following is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:
With the exception of historical facts, the statements contained in
Item 2 of this form 10-QSB are forward looking statements. Actual results may
differ materially from those contemplated by the forward-looking statements.
These forward looking statements involve risks and uncertainties, including but
not limited to, the following risks: 1) cyclical downturns affecting the markets
for capital goods, 2) substantial increases in interest rates, 3) availability
or material increases in the costs of select raw materials, and 4) actions taken
by competitors with regard to such matters as product offerings pricing, and
delivery. Investors are directed to the Company's documents, such as its Annual
Report on Form 10-KSB, Form 10-QSB's and Form 8-KSB filed with the Securities
and Exchange Commission.
-9-
<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 FORM 8-K.
None.
-10-
<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: May 14, 1999 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
-------------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer
-11-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 503,485
<SECURITIES> 0
<RECEIVABLES> 2,502,049
<ALLOWANCES> (106,140)
<INVENTORY> 3,145,058
<CURRENT-ASSETS> 6,218,424
<PP&E> 3,587,184
<DEPRECIATION> 1,617,429
<TOTAL-ASSETS> 8,392,134
<CURRENT-LIABILITIES> 5,617,422
<BONDS> 0
0
0
<COMMON> 17,885
<OTHER-SE> 2,060,590
<TOTAL-LIABILITY-AND-EQUITY> 8,392,134
<SALES> 4,794,259
<TOTAL-REVENUES> 4,794,259
<CGS> 3,705,364
<TOTAL-COSTS> 4,731,414
<OTHER-EXPENSES> 21,446
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 68,245
<INCOME-PRETAX> 16,046
<INCOME-TAX> 0
<INCOME-CONTINUING> 16,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,046
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
