<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
AMENDMENT NO 1
to
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACI OF 1934
For the Quarterly Period Ended September 27, 1997
Commission file number 1-13656
OMNI MULTIMEDIA GROUP, INC.
---------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 04-2729490
-------- ----------
(State of Organization) (I.R.S. Employer
Identification Number)
50 Howe Avenue
--------------
Millbury, Massachusetts 01527
(508) 581-1000
(Address, including zip code, and telephone number, including area code,
of issuers principal executive offices)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Number of Shares Outstanding
as of December 11, 1997
Common Stock, S.01 par value 10,119,211
<PAGE> 2
OMNI MULTIMEDIA GROUP, INC.
INDEX
Part I. Financial Information.
<TABLE>
<CAPTION>
Item 1. Financial Statements Page
<S> <C>
Condensed Consolidated Balance Sheet -
as of March 29, 1997 (Audited) and September 27, 1997 (Unaudited) 2-3
Condensed Consolidated Statements of Operations (Unaudited)
for the three month and six month periods ended
September 27, 1997 and September 28, 1996 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the six months ended September 77, 1997 and September 28, 1996 5
Notes to Condensed Consolidated Financial Statements 6-8
Basis of Presentation
Significant Events
Recently Enacted Accounting Pronouncements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
Three Months Ended September ~7, 1997 ("Second Quarter 1998") compared to
the Three Months Ended September 98.1996 ("Second Quarter 1997"). 7-8
Part II. Other Information. 9
Item 1. Legal Proceedings
[Not applicable.]
Item 2. Changes in Securities
[Not applicable.]
Item 3. Defaults Upon Senior Securities
[See Management Discussion and Analysis.]
Item 4. Submission of Matters to a Vote of Security-Holders
[No matters have been submitted to a vote of security-holders
during the period covered by this report.]
Item 5. Other Information [Not applicable.]
Signatures 10
Computation of Per Share Earnings 11
Financial Data Schedule 12
</TABLE>
<PAGE> 3
OMNI MULTIMEDIA GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
------
September 27, March 29,
1997 1997
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ -- $ 1,039,664
Accounts receivable, net of
allowance for doubtful accounts
$ 700,000 for September 27,1997
and $550,000 at March 29,1997 3,928,036 3,232,047
Inventories 846,843 1,310,970
Prepaid expenses and other
current assets 332,161 710,477
------------ ------------
5,107,040 6,293,158
------------ ------------
Property and equipment, net 18,657,250 20,102,698
Due from related parties 574,109 482,807
Other assets, net 1,057,224 1,376,395
------------ ------------
$25,395,623 $28,255,058
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 4
OMNI MULTIMEDIA GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 27, March 29,
1997 1997
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
Current liabilities
Bank overdraft $ 36,524 $ --
Accounts payable 4,109,865 3,697,552
Line of credit 2,958,597 1,797,321
Current portion of long-term debt
and capital lease obligations 15,841,093 14,797,900
Accrued expenses 2,576,395 1,611,855
----------- -----------
25,522,474 21,904,628
----------- -----------
Long-term debt -- 497,901
Capital lease obligations -- 267,685
----------- -----------
Stockholders' Equity
Convertible Preferred stock; $.01 par value;
1,000,000 shares authorized; 1050 shares of Series A
Preferred shares issued and 0 shares outstanding
Common Stock; $.01 par value;
14,000,000 shares authorized; 10,192,348
shares issued and outstanLiing at
September 27, 1997 and 10,119,211 shares issued
and outstanding at March 29, 1997 101,191 101,191
Additional paid-in-capital 20,821,691 20,821,691
Retained earnings (accumulated deficit) (21,049,733) (15,338,038)
------------ -----------
(126,851) 5,584,844
------------ -----------
$25,395,623 $28,255,058
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 5
OMNI MULTIMEDIA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Sept. 27, 1997 Sept. 28, 1996 Sept. 27, 1997 Sept. 28, 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 5,185,060 $ 2,183,289 $ 10,693,709 $ 4,615,478
Cost of goods sold 5,245,065 2,959,807 11,398,242 5,871,124
----------- ----------- ------------ -----------
Gross profit(loss) (60,005) (776,518) (704,533) (1,255,646)
----------- ----------- ------------ -----------
Operating expenses
Selling 2,009,406 974,773 3,232,229 1,615,633
General and administrative 782,201 842,992 2,537,209 1,522,597
----------- ----------- ------------ -----------
9,791,607 1,817,765 (5,769,438) (3,138,230)
Loss from operations (2,851,612) (2,594,283) (6,473,971) (4,393,876)
Other income 436,888 147,223 1,780,440 243,366
----------- ----------- ------------ -----------
(2,411,724) (2,447,060) (4,693,531) (4,150,510)
Other expenses, net
Interest expense 512,685 343,583 1,014,351 425,713
Other expense, net 34,350 3,813 68,774
----------- ----------- ------------ -----------
512,685 377,933 1,018,164 494,487
Loss before income taxes $(2,927,409) $(2,824,993) $ (5,711,695) $(4,644,997)
Income tax provision -- -- -- --
----------- ----------- ------------ -----------
Net loss $(2,927,409) $(2,824,993) $ (5,711,695) $(4,644,997)
Net loss per common shares and equivalents
Primary $ (.29) $ (.70) $ (.56) $ (1.17)
Fully diluted $ (.29) $ (.64) $ (.56) $ (1.05)
Weighted average common shares
and equivalents outstanding
Primary 10,154,574 4,033,232 10,154,574 3,961,591
Fully diluted 10,192,348 4,433,449 10,192,348 4,433,449
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 6
OMNI MULTIMEDIA GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
Sept. 27, 1997 Sept. 28, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Netloss $ (5,711,695) $ (4,644,997)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 2,419,835 1,010,186
Provision for losses on accounts receivable 445,315 219,468
Gain on disposal of fixed assets (83,470) (590)
(Increase) in accounts receivable (1,141,304) (427,443)
(Increase) decrease ininventories 464,127 (69,030)
Decrease in prepaid expenses and other
current assets 378,316 51,177
Increase in refundable income taxes -- (15,850)
(Increase) decrease in other assets 236,721 (112,517)
Increase (decrease) in accounts payable 412,313 (487,673)
Increase in accrued expenses 964,540 16,244
Decrease in income taxes payable -- (190,063)
----------- -----------
Net cash used in operating activities (1,615,302) (4,651,088)
Cash flows from investing activities:
Expenditures for property and equipment (372,400) (4,246,004)
Proceeds from sale of fixed assets 124,549 18,100
----------- -----------
Net cash used in investing activities (247,851) (4,227,904)
Cash flows from financing activities:
Repayments on long-term borrowing
and capitallease obligations (358,597) (706,387)
Proceeds from long term borrowing 75,588 1,952,900
Advance (repayments) on revolving line
of credit, net 1,161,276 81,090
Decrease in subscription receivable -- 1,790,374
Proceeds from issuance of Convertible
Preferred Stock -- 9,352,982
Increase in due from related parties (91,302) (10,219)
Increase in debt issue costs -- (80,219)
----------- -----------
Net cash provided by financing activities 786,965 12,380,521
Increase (decrease) in cash and cash equivalents (1,076,188) 3,501,529
Cash and cash equivalents, beginning of period 1,039,664 5,706,822
----------- -----------
Cash and cash equivalents, end of period ($36,524) $ 9,208,351
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 7
OMNI MULTIMEDIA GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of OMNI
MultiMedia Group, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete consolidated financial
statements.
In the opinion of management, all adjustments (consisting solely of normal
recurnug adjustments) considered necessary for a fair state ment of the interim
financial data have been included. Results of operations for the three month
periods ended September 27, 1997 are not necessarily indicative of the results
that may be expected for the fiscal year ending March 28, 1998.
For further information, refer to the consolidated financial statements and
the footnotes thereto for the year ended March 28, 1997, contained in the
Company's Annual Report on Form 10-KSB.
Net loss per share is computed based upon the weighted average number of common
and dilutive common equivalent shares outstanding during the period.
Note 2. Significant Events
On November 14, 1997, OMNI MultiMedia and its OMNI Resources Corporation, 4CD's
Corporation, Campbell Products Corporation and Mezzoman Productions Inc. filed
for court protection under Chapter 11 of the Federal Bankruptcy Statutes.
In August of 1997 OMNI formed a subsidiary, Mezzoman Productions Inc. for the
purpose of brokering CD Manufacturing services to non-affiliated music groups.
Recently Enacted Accounting Pronouncements
In February 1997, the Financial Accounting Stanclards Board ("FASB") issued
statement of Financial Accounting Standards ("SFAS") No.128, "Earnings Per
Share." In June l997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No.131, "Disclosures about Segments of an Enterprise and
Related Information." The Company will implement SFAS No. 128 as required in
its next fiscal year and, at this time, the future adoption is not expected to
have a material effect on earnings per share. The Company will implement SFAS
No. 130 and No. 131 as required in fiscal Ici99 which require the Company to
report and display certain information related to comprehensive income end
operating segments.
6
<PAGE> 8
Item 1. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements of the Company (including the Notes
thereto) appearing elsewhere in this Report. This report contains
"forward-looking statements" regarding current and future financial projections
for the Quarter within the meaning of the Private Securities Litigation Reform
Act of 1995, which statements can be identified by the use of forward-looking
terminology such as "may," "will," "would," "can," "could," "intend," "plan,"
"expect," "anticipate," "estimate," or "continue" or the negative thereof or
other variations thereon or comparable terminology. The following
forward-looking statements include certainrisks and uncertainties that could
cause actual results to differ materially from thoseinsuchforwardlooking
statements. Potential investors are urged to carefully consider the risks
associated with an investment in the Company's securities, including continuing
losses, working capital deficit, significant debt service and competition.
Three Months Ended September 27, 1997 ("Second Quarter 1998") compared to the
Three Months Ended September 28, 1996 ("Second Quarter 1997").
Net sales for the second quarter 1998 amounted to $5,185,060, an increase of
$3,001,771 above 1997's second quarter sales of $2,183,289. The sales
differential reflects the start up and construction period in 1997 compared to
full operations of OMNI Resources and 4CD's in 1998.
Net sales for OMNI's East Coast facility including 4CD's amounted to
approximately $5,000,000, a 35% improvement over the 1998 first quarter. West
and Mid-West sales were $217,000 representing final shipments from these
facilities before closing which took place on July 5, 1997.
Gross profit at ($60,000) for the second quarter of 1998 was an improvement of
$716,000 over 1997 levels. Cost of sales for the second quarter include final
close out costs of $190,000 for the West and Mid-West facilities and $87,000
for cost of material shipped from these facilities the first week in July. The
remaining OMNI facility including OMNI Resources and 4CD's operated at a
breakeven manufacturing level in the second quarter.
Selling expenses of $2,009,406 contain $371,000 of Royalty adjustments covering
the period May 1996 thru September 1997 and $269,000 of sales cost associated
with the closing of the West and Mid-West facilities. Selling expenses after
these adjustments amount to $1,369,406 which is $394,633 over last year.
Selling expenses exceeded first quarter levels by $146,000 reflecting
commissions on increased sales primarily in the "Try Before You Buy" program in
the 4CD's operation.
7
<PAGE> 9
General and administrative expenses of $782,201 are $60,791 or 7% below the
second quarter 1997 expenses of $842,992. General and administrative expenses
are approximately $1,000,000 below the first quarter 1998 levels. The second
quarter general and administrative expenses includes a $100,000 extra charge
for auditing associated with the West and Mid-West closing. There is also
$50,000 in fees associated with modifying the Coast Business Credit loan due
to the Company's "Out of formula" condition.
Other income of $436,880 contains $311,000 of write down of unsecured debt at
the West and Mid-West facility reflecting funds available after the
liquidation of assets and payment of secured creditors.
The net loss for the second quarter amounts to $2,927,409 and is $103,000
greater than the same period in FY 1997. Losses for the second quarter
operations adjusted for West and Mid-West close down costs of $335,000, the
royalty adjustments of $371,000 and bank fees of $50,000 amounts to
$2,171,409. This adjusted second quarter loss is an improvement over the FY
1998 first quarter of $612,877 or 22%.
Liquidity and Capital Resources
It is Management's opinion that the CompanWs financial weakness reduced sales
in the second quarter by approximately $1,000,000. Sales for the third
quarter should remain at approximately $5,000,000 despite the bankruptcy
situation. Management is optimistic about the prospect of locating additional
funding to emerge from Chapter 11 as an ongoing entity.
8
<PAGE> 10
Part II. Other Information.
Item 1. Legal Proceedings.
[Not applicable.]
Item 2. Changes in Securities.
[Not applicable.]
Item 3. Defaults upon Senior Securities.
[See Management Discussion and Analysis]
Item 4. Submission of Matters to a Vote of Security-Holders.
[No matters have been submitted to a vote of security-holders
during the period covered by this report.]
Item 5. Other Information.
[Not applicable.]
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Me
Registrant has duly caused this report to be signed on its behalf by the
undersigned "hereunto duly authorized.
OMNI MULTIMEDIA GROUP, INC.
Date: January 27, 1998 By: /s/ Paul F. Johnson
----------------------------------
Paul F. Johnson, President and
Chief Executive Officer
Date: January 27, 1998 By: /s/ Robert E. Lee
----------------------------------
Robert E. Lee, Executive Vice President,
Treasurer, and Chief Financial Officer
10
<PAGE> 1
COMPUTATION OF PER SHARE EARNINGS
EXHIBIT 11
OMNI MULTIMEDIA GROUP, INC.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 27, 1997 September 28, 1996 September 27, 1997 September 28, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net income(loss) ($2,927,409) ($2,824,993) ($5,711,695) ($4,644,997)
============ ============ ============ ============
Primary weighted common
shares outstanding
Common Stock 10,154,574 4,033,232 10,154,574 3,961,591
Stock options -- -- -- --
Stock warrants -- -- -- --
------------ ------------ ------------ ------------
10,154,574 4,033,232 10,154,574 3,961,591
============ ============ ============ ============
Primary net income (loss)
per share ($0.29) ($0.70) (0.56) (1.17)
Fully diluted weighted
common shares outstanding:
Common Stock 10,154,574 4,033,232 10,154,574 3,961,591
Stock Options -- -- -- --
Stock Warrants -- -- -- --
Shares attributable
to Preferred Stock
converted using the
if converted method 37,774 400,217 37,774 471,858
------------ ------------ ------------ ------------
Fully diluted weighted
average shares 10,192,348 4,433,449 10,192,348 4,433,449
============ ============ ============ ============
Fully diluted net income
(loss) per share ($0.29) ($0.64) (0.56) (1.05)
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Balance Sheet at September 27, 1997 and the Company's Statement of
Operations for the six month's ended September 27, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-28-1998
<PERIOD-END> SEP-27-1997
<CASH> (36,524)
<SECURITIES> 0
<RECEIVABLES> 4,628,036
<ALLOWANCES> 700,000
<INVENTORY> 846,843
<CURRENT-ASSETS> 5,107,040
<PP&E> 25,384,652
<DEPRECIATION> 6,727,402
<TOTAL-ASSETS> 25,395,623
<CURRENT-LIABILITIES> 25,522,747
<BONDS> 0
0
0
<COMMON> 101,197
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,395,623
<SALES> 10,693,709
<TOTAL-REVENUES> 10,693,709
<CGS> 11,398,242
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,813
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,014,351
<INCOME-PRETAX> (5,711,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,711,695)
<EPS-PRIMARY> (0.29)
<EPS-DILUTED> (0.29)
</TABLE>
