<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, 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 November 14, 1999, there were 3,623,092 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 30,1999 and June 30, 1999
Consolidated Statements of Operations
Three Months Ended September 30, 1999 and September 30, 1998
Consolidated Statements of Cash Flows
Three Months Ended September 30, 1999 and September 30, 1998
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, 1999 AND JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS
September 30, 1999 June 30, 1999
------------------------- ------------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,069,365 $ 292,903
Accounts receivable, trade, net 2,314,972 2,920,896
Accounts receivable, related parties 21,213 12,069
Inventories 3,810,152 3,207,542
Prepaid expenses 117,857 69,693
------------------------- ------------------------
TOTAL CURRENT ASSETS 7,333,559 6,503,103
------------------------- ------------------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 2,308,083 2,158,715
------------------------- ------------------------
OTHER ASSETS
Primarily intangible assets, net 218,769 265,103
------------------------- ------------------------
TOTAL ASSETS $ 9,860,411 $ 8,926,921
========================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,664,459 $ 2,672,455
Line of credit 2,306,898 2,088,917
Accrued expenses 333,296 486,205
Current portion of long-term debt 245,818 230,502
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 5,550,471 5,478,079
------------------------- ------------------------
LONG-TERM DEBT 1,782,276 646,776
------------------------- ------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 22,880 17,885
Additional paid-in capital 5,356,065 5,248,560
Treasury Stock (57,141) (57,141)
Retained earnings (deficit) (2,892,171) (2,505,269)
Foreign currency translation adjustment 98,031 98,031
------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 2,527,664 2,802,066
------------------------- ------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 9,860,411 $ 8,926,921
========================= ========================
</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 ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
For the three months For the three months
ended ended
September 30, 1999 September 30, 1998
------------------------- ------------------------
<S> <C> <C>
NET SALES $3,840,448 $3,805,990
------------------------- ------------------------
COST OF SALES 2,988,712 2,791,275
------------------------- ------------------------
Gross Profit 851,736 1,014,715
------------------------- ------------------------
OPERATING EXPENSES
Selling, general and administrative 1,105,141 964,248
------------------------- ------------------------
Operating income (loss) (253,405) 50,467
------------------------- ------------------------
OTHER INCOME (EXPENSE)
Interest expense (74,866) (82,957)
Other, net (58,631) 26,261
------------------------- ------------------------
OTHER INCOME (EXPENSE) (133,497) (56,696)
------------------------- ------------------------
NET AND COMPREHENSIVE (LOSS) $(386,902) $ (6,229)
========================= ========================
BASIC AND COMPREHENSIVE LOSS PER SHARE $(0.11) $(0.00)
========================= ========================
DILUTED LOSS PER SHARE $(0.09) $(0.00)
========================= ========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
For the three months For the three months
ended ended
September 30, 1999 September 30, 1998
------------------------- ------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (386,902) $ (6,229)
------------------------- ------------------------
Adjustments to reconcile net income (loss) to net cash
(used) provided by operating activities:
Depreciation and amortization 100,042 55,194
Changes in operating assets and liabilities:
Accounts receivable 596,780 482,293
Inventories (351,620) (264,292)
Prepaid expenses (48,164) 762
Intangible Assets 38,502 -
Accounts payable and accrued expenses (160,905) (56,521)
------------------------- ------------------------
Total adjustments 174,635 217,436
------------------------- ------------------------
Net cash (used) provided by operating
Activities (212,267) 211,207
------------------------- ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Piecemaker, Inc. (350,990)
Capital Expenditures (29,078) -
------------------------- ------------------------
Net cash used by investing activities (380,068) -
------------------------- ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of PACCAR, Inc. loan 1,000,000
Proceeds of Piecemaker financing loan 200,000
Net Borrowings/(Payments) on line of credit 217,981 (320,448)
Net Borrowings/(Payments) on long-term debt (49,184) (16,593)
------------------------- ------------------------
Net cash provided/(used) by financing activities 1,368,797 (337,046)
------------------------- ------------------------
NET INCREASE(DECREASE) IN CASH 776,462 (125,839)
CASH AT BEGINNING OF PERIOD 292,903 278,297
------------------------- ------------------------
CASH AT END OF PERIOD $ 1,069,365 $ 152,458
========================= ========================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<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 September
30, 1999, and the results of their operations and cash flows for the three
month periods ended September 30,1999, and September 30, 1998, have been
included.
2. During the fiscal quarter ended September 30, 1999, the Company acquired
$212,000 of fixed assets and $250,000 of inventory from Piecemaker, Inc., a
Madill, Oklahoma manufacturer of horse, livestock and utility trailer
component parts, in exchange for 100,000 shares of Omni USA, Inc. common
stock and $350,990 in cash.
3. During the fiscal quarter ended September 30, 1999, the Company entered
into a loan agreement with PACCAR Inc. of $1,000,000 in support of Shanghai
Omni Gear's manufacturing of planetary geardrives under the distribution
agreement with PACCAR Inc., dated September 9, 1999. The note term is 5 years
with quarterly payments of principle plus accrued interest of 8% commencing
December 2000. Under the terms of the loan, PACCAR, Inc. will be issued
between 350,000 and 500,000 warrants to purchase common stock. The warrants
may be exercised through September 2009, at $2.00 per share.
4. 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, 1999 and September 30, 1998, the Company's weighted average shares are
calculated as follows:
<TABLE>
<CAPTION>
September 30, 1999 September 30, 1998
--------------------- ---------------------
<S> <C> <C>
Weighted average common shares outstanding 3,606,425 3,523,903
Conversion of dilutive stock options 530,848 367,258
--------------------- ---------------------
Dilutive weighted average common shares outstanding 4,137,273 3,891,161
===================== =====================
</TABLE>
5. Interest paid on debt for the three months ended September 30, 1999 and
1998, was $74,866 and $82,957 respectively. No income taxes were paid during
the three months ended September 30, 1999 and 1998, respectively.
6. During the fiscal quarter ended September 30, 1999, the Company expensed
$38,502 of unamortized organizational cost relating to the implementation of
Financial Accounting Standards Board SOP 98-5, "Reporting on the Costs of
Start-Up Activities."
7. MAJOR CUSTOMERS AND VENDORS: During the fiscal quarter ended September 30,
1999, the Company and its subsidiaries had consolidated sales of $389,088 and
to a domestic customer for a total of 10% of consolidated sales. During the
three months ended September 30, 1999, the Company and its subsidiaries had
consolidated purchases of $2,069,888 to two vendors for a total of 54% of
consolidated sales.
8. 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.
<PAGE>
SEGMENT INFORMATION
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
SEPTEMBER 30, 1999 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
- --------------------------------------------------------------------------------------------------------------
Power Transmission $2,848,437 $(158,351) $ 64,266 $6,898,042 $ 16,477 $ 89,902
Components
- --------------------------------------------------------------------------------------------------------------
Trailer and Implement 991,318 24,582 10,640 2,962,369 12,601 10,140
Components
- --------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (120,287)
- --------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $3,839,755 $(254,056) $ 74,866 $9,860,411 $ 29,078 $ 100,042
==============================================================================================================
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
SEPTEMBER 30, 1998 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
- --------------------------------------------------------------------------------------------------------------
Power Transmission $2,766,905 $ 35,251 $57,074 $5,718,721 $ - $ 40,431
Components
- --------------------------------------------------------------------------------------------------------------
Trailer and Implement 1,039,085 90,216 25,883 2,206,460 - 14,763
Components
- --------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (75,000)
- --------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $3,805,990 $ 50,467 $82,957 $7,925,181 $ - $ 55,194
- --------------------------------------------------------------------------------------------------------------
</TABLE>
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 1.3 as of September 30, 1999,
compared with a current ratio of 1.2 as of June 30, 1999. The Company had
working capital of $1,782,438 as of September 30, 1999 and working capital of
$1,025,024 as of June 30, 1999. This represents an increase of $757,414 from
June 30, 1999. The change in working capital from June 30, 1999 was due
primarily to the funding of the PACCAR, Inc. loan (see Note 3) and increase
in inventory, partly due to the acquisition of Piecemaker, Inc. inventory
(see Note 2), in addition to an increase in accounts receivable, the line of
credit and prepaid expenses, together with a decrease in accounts payable and
accrued expenses.
The cash balance was $1,069,365 as of September 30, 1999; an
increase of $776,462 compared to the June 30, 1999 cash balance of $292,903.
Accounts receivable balance of $2,314,972 as of September 30, 1999 decreased
$605,924 compared to June 30, 1998 accounts receivable balance of $2,920,896.
The receivable collection period decreased from 59 days to 55 days from June
30, 1999 to September 30, 1999, respectively.
Inventory balance as of September 30, 1999 was $3,810,152; an
increase of $602,610 compared to June 30, 1999. At September 30, 1999,
inventory turnover was 115 days compared to 89 days at June 30, 1999.
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.
<PAGE>
RESULTS FOR THE QUARTER ENDED SEPTEMBER 30, 1999 COMPARED WITH THE QUARTER ENDED
SEPTEMBER 30, 1998
The Company had a net loss of $387,553 ($0.11 per share) for the
quarter ended September 30, 1999, compared with a net loss of $6,229 ($0.00
per share) for the quarter ended September 30, 1998. The Company had an
operating loss of $254,056 for the quarter ended September 30, 1999 compared
to operating income of $50,467 for the quarter ended September 30, 1998.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
QUARTER ENDED % QUARTER ENDED % DOLLAR %
NET SALES 9/30/99 OF TOTAL 9/30/98 OF TOTAL CHANGE CHANGE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Power Transmission Components $ 2,848,437 74% $2,766,905 73% $81,532 2.9%
- ------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 991,318 26% 1,039,085 27% (47,767) (4.6)%
- ------------------------------------------------------------------------------------------------------------
Consolidated $ 3,839,755 100% $3,805,990 100% $33,765 0.9%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Selling, general and administrative expenses were $1,044,396 for the
quarter ended September 30, 1999, an increase of $80,148 or approximately
8.3% over the quarter ended September 30, 1998 expenses of $964,248. These
expenses were approximately 27% of net sales compared to 25% for the quarter
ended September 30, 1998.
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 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 will consider alternative or contingent vendors or
suppliers.
The Company has spent approximately $25,000 to date to assure Year
2000 compliance and expects to spend approximately $5,000 in upgrades over
the remainder 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.
<PAGE>
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.
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.
<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 5, 1999 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
--------------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer
By: /s/ David M. Sallean
-------------------------------------
David M. Sallean
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,069,365
<SECURITIES> 0
<RECEIVABLES> 2,452,453
<ALLOWANCES> 116,268
<INVENTORY> 3,880,152
<CURRENT-ASSETS> 7,333,559
<PP&E> 4,110,551
<DEPRECIATION> 1,802,468
<TOTAL-ASSETS> 9,860,411
<CURRENT-LIABILITIES> 5,550,471
<BONDS> 0
0
0
<COMMON> 22,880
<OTHER-SE> 2,504,784
<TOTAL-LIABILITY-AND-EQUITY> 9,860,411
<SALES> 3,840,448
<TOTAL-REVENUES> 3,840,448
<CGS> 2,988,712
<TOTAL-COSTS> 4,093,853
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,866
<INCOME-PRETAX> (386,902)
<INCOME-TAX> 0
<INCOME-CONTINUING> (386,902)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (386,902)
<EPS-BASIC> (0.11)
<EPS-DILUTED> (0.09)
</TABLE>
