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, 2003
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, 2003, there were 1,171,812 shares of common stock $.004995 par value
outstanding.
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Condensed Consolidated Balance Sheets
March 31, 2003 and June 30, 2002
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 2003 and March 31, 2002
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2003 and March 31, 2002
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31, 2003 June 30, 2002
(unaudited)
------------------------- ------------------------
CURRENT ASSETS
Cash $ 309,061 $ 821,544
Accounts receivable, trade, net 4,597,576 3,440,402
Accounts receivable, related parties 30,437 28,063
Inventories, net 4,024,715 4,168,526
Notes receivable 63,810 89,138
Prepaid expenses 191,585 114,912
Deferred tax assets 0 40,393
------------------------- ------------------------
TOTAL CURRENT ASSETS 9,217,184 8,702,978
------------------------- ------------------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,740,175 1,812,007
------------------------- ------------------------
OTHER ASSETS
Primarily intangible assets, net 301,705 204,265
------------------------- ------------------------
TOTAL ASSETS $ 11,259,064 $ 10,719,250
========================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 3,078,227 $ 3,001,120
Lines of credit 2,567,759 2,850,270
Accrued expenses 356,705 217,154
Current portion of long-term debt 1,204,465 1,001,849
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 7,207,156 7,070,393
------------------------- ------------------------
LONG-TERM DEBT 1,125,793 986,604
------------------------- ------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and 1,171,812 6,129 6,129
and 1,207,912 outstanding, respectively)
Additional paid-in capital 5,372,815 5,372,815
Treasury Stock (55,267 and 19,167 shares, respectively) (100,071) (57,141)
Retained earnings (deficit) (2,449,031) (2,755,870)
Foreign currency translation adjustment 96,273 96,320
------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 2,926,115 2,662,253
------------------------- ------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 11,259,064 $ 10,719,250
========================= ========================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) FOR THE THREE MONTHS AND
THE NINE MONTHS ENDED MARCH 31, 2003 AND 2002
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2003 2002 2003 2002
------------------ ----------------- ----------------- ----------------
NET SALES $ 6,641,526 $ 4,740,057 $ 15,813,698 $ 12,748,459
COST OF SALES 3,924,586 12,277,408 10,164,315
5,422,825
------------------ ----------------- ----------------- ----------------
GROSS PROFIT 1,218,701 815,471 3,536,290 2,584,144
OPERATING EXPENSES
Selling, general and administrative 971,640 733,076 3,007,813 2,644,536
------------------ ----------------- ----------------- ----------------
OPERATING INCOME (LOSS) 247,061 82,395 528,477 (60,392)
OTHER INCOME (EXPENSE)
Interest expense (112,784) (122,043) (313,093) (304,549)
Other, net 48,525 68,242 131,848 92,045
------------------ ----------------- ----------------- ----------------
TOTAL OTHER EXPENSE (181,245) (212,540)
(64,259) (53,801)
------------------ ----------------- ----------------- ----------------
INCOME TAXES - - -
(40,393)
------------------ ----------------- ----------------- ----------------
NET INCOME (LOSS) $ 182,802 $ 28,594 $ 306,839 $ (272,896)
================== ================= ================= ================
COMPREHENSIVE INCOME - Foreign Currency
Translation Adjustment 891 - 47 717
------------------ ----------------- ----------------- ----------------
NET AND
COMPREHENSIVE
INCOME (LOSS) $ 183,693 $ 28,594 $ 306,886 $ (272,179)
================== ================= ================= ================
BASIC EARNINGS (LOSS) PER SHARE $ 0.15 $ 0.02 $ 0.26 $ (0.23)
================== ================= ================= ================
FULLY DILUTED EARNINGS (LOSS) PER SHARE $ 0.15 $ 0.02 $ 0.26 $ (0.23)
================== ================= ================= ================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENDSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months For the nine months
ended ended
March 31, 2003 March 31, 2002
------------------------ ------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 306,839 $ (272,869)
------------------------ ------------------------
Adjustments to reconcile net income (loss) to net cash
provided (used) by operating activities:
Depreciation and amortization 261,323 290,000
Deferred taxes 40,393 -
Gain on sale of property and equipment (2,285) (5,506)
Changes in operating assets and liabilities:
Accounts receivable / Notes receivable (1,159,548) 397,317
Inventories 143,811 177,269
Prepaid expenses (76,675) (41,288)
Accounts payable and accrued expenses 632,867 (1,267,883)
------------------------ ------------------------
Total adjustments (160,114) (450,091)
------------------------ ------------------------
Net cash provided (used) by operating
activities 146,725 (722,987)
------------------------ ------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of intangibles and other assets (25,364) -
Expenditures for property and equipment (183,952) (30,543)
------------------------ ------------------------
Net cash used by investing activities (209,316) (30,543)
------------------------ ------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock (42,930) -
Borrowings on long-term debt - 250,730
Borrowings on line of credit 9,378,155 9,593,920
Payments on line of credit (9,660,666) (9,387,062)
Payments on long-term debt (124,404) (91,622)
------------------------ ------------------------
Net cash (used) provided by financing activities (449,845) 365,966
------------------------ ------------------------
TRANSLATION EFFECT OF FOREIGN CURRENCIES (47) 717
------------------------ ------------------------
NET DECREASE IN CASH (512,483) (386,847)
CASH AT BEGINNING OF PERIOD 821,544 659,101
------------------------ ------------------------
CASH AT END OF PERIOD $ 309,061 $ 272,254
======================== ========================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The consolidated financial statements have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. As permitted under those rules, certain footnotes or
other financial information that are normally required by generally
accepted accounting principles in the United States (GAAP) have been
condensed or omitted. 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.
The Company's management is responsible for the unaudited financial
statements included in this document. In the opinion of the Company, all
adjustments, consisting of normal recurring adjustments, necessary to
present fairly the financial position of Omni U.S.A., Inc. and
subsidiaries in accordance with GAAP have been made.
There are significant operations in Mainland China; however, the
functional exchange rate for those operations is the U.S. dollar. The
foreign currency translation adjustment primarily arises from the
translation of amounts from operations in Hong Kong and Japan in which the
functional currency is that of the foreign location.
2. EARNINGS PER SHARE:
Basic and diluted loss per share is based on the weighted average number
of shares of common stock outstanding. For the nine month and three month
periods ended March 31, 2003 and 2002, the Company's weighted average
shares are calculated as follows:
Nine Months Nine Months
Quarter Ended Quarter Ended Ended March Ended March
March 31, 2003 March 31, 2002 31, 2003 31, 2002
-------------------------------------------------------------
Weighted average common shares
outstanding 1,171,812 1,207,912 1,188,445 1,207,912
Effect of dilution of securities:
conversion of stock options - - - -
-------------------------------------------------------------
Denominator for dilutive earnings per share 1,171,812 1,207,912 1,188,445 1,207,912
=============================================================
When the Company is in a net loss position, all common stock equivalents
are considered anti-dilutive and are therefore not included in the
calculation of earnings per share. During the nine month period ended
March 31, 2003, the Company had positive net income; however, the exercise
price of all common stock equivalents exceeded its average fair value.
Accordingly, all common stock equivalents were considered anti-dilutive
during the period and are therefore not included in the calculation of
earnings per share.
3. MAJOR CUSTOMERS AND VENDORS:
The Company and its subsidiaries had consolidated sales of $3,604,650 and
$1,529,631 to a domestic customer for a total of 23% and 12% of
consolidated sales during the nine months ended March 31, 2003 and 2002,
respectively. During the nine months ended March 31, 2003, the Company had
sales to a foreign customer amounting to $2,171,635 representing 14% of
consolidated sales. The Company had sales of $1,552,896 to a domestic
customer for a total of 23% of consolidated sales and $923,065 to a
foreign customer for a total of 14% of sales for the quarter ended March
31, 2003. During the quarter ended March 31, 2002, the Company and its
subsidiaries had consolidated sales of $1,062,379 to a domestic customer
for a total of 22% of consolidated sales.
During the nine months ended March 31, 2003 the Company and its
subsidiaries had consolidated purchases of $5,743,695 from two vendors for
a total of 61% of consolidated purchases. During the nine months ended
March 31, 2002, the Company and its subsidiaries had consolidated
purchases of $3,526,213 from one vendor for a total of 35% of consolidated
purchases. During the quarter ended March 31, 2003, the Company and its
subsidiaries had consolidated purchases of $2,624,024 from two vendors for
a total of 66% of consolidated purchases. During the quarter ended March
31, 2002, the Company and its subsidiaries had consolidated purchases of
$1,603,013 from one vendor for a total of 41% of consolidated purchases.
4. PURCHASE OF ASSETS:
In December 2002, the Company purchased all the assets of Champion Gear,
including customer and market information and all rights under a product
distribution agreement for $75,000 due in three installments, forgiveness
of notes receivable of $25,328 and settlement of all claims made by and
counterclaims against the Company. The purchase has been recorded in other
assets. Omni has made the first payment of $25,000 in December 2002 and as
of March 31, 2003 the remaining obligation of $50,000 has been reflected
in accrued expenses.
5. REVOLVING LINES OF CREDIT AND LONG-TERM DEBT:
The Company has a revolving line of credit with a financing company which
provides for maximum borrowings of $4,000,000 as determined by a formula
based on trade accounts receivable and inventory. The line of credit
matures June 2003, bears interest at prime plus 1%-2% depending upon
certain financial ratios, requires the maintenance of certain levels of
income and tangible net worth and is secured by essentially all of the
U.S. assets of the Company. At June 30, 2002, the Company was not in
compliance with the required minimum nine months earnings requirement. At
March 31, 2003, the Company was in compliance with its minimum financial
reporting covenants.
The Company also maintains a line of credit with a foreign financial
institution which provides for maximum borrowings of $750,000 based on the
creditworthiness of the Company's customers serviced by the Company's
foreign subsidiary. Outstanding borrowings amounted to $194,278 and
$187,325 at March 31, 2003 and June 30, 2002, respectively. The line of
credit matures November 30, 2003 and bears interest at 5.625%.
In the fiscal quarter ended December 31, 2002, the Company effectively
restructured a note payable to HAAS Automation which reclassified $47,008
of the liability as long-term which was previously classified as current.
The new terms are monthly payments of $5,740 for 5 years including
interest at 8% with a balance as of March 31, 2003 of $243,422.
During the quarter ended March 31, 2003, the Company refinanced $466,209
of trade accounts payable into a note payable to the vendor. The
non-interest bearing note is payable at 10% of the value of each invoice
for subsequent purchases, with expected minimum future purchases of $2
million per year, until the note is repaid.
6. INCOME TAXES
The difference between the effective rate of income tax expense at March
31, 2003 and 2002 and the amounts which would be determined by applying
the statutory U.S. income tax rate of 34% to income before income tax
expense, are due to the utilization of net operating losses which were
fully reserved by the valuation allowance in previous periods.
7. COMMON STOCK
On June 7, 2002, June 19, 2002 and September 10, 2002, the Company
received notification from NASDAQ that the Company's stock would be
removed from the NASDAQ listing as Omni's share price had fallen below the
minimum required ask price of $1.00 per share and as the Company's Minimum
Value of Publicly Held Securities had fallen below the minimum of
$1,200,000. As of November 12, 2002 the Company is no longer listed on the
NASDAQ exchange and is currently listed and traded on the Over the Counter
(OTC) Bulletin Board.
8. PURCHASE OF TREASURY STOCK
On September 10, 2002, the Board of Directors approved a stock repurchase
plan to repurchase up to 500,000 shares of Omni common stock. From
September 19 through November 14, 2002, the Company purchased a total of
36,100 treasury shares through its stock repurchase plan for a total cost
of $42,930.
9. OPERATING LEASES
The Company leases equipment and office, warehouse and manufacturing space
in Houston, TX; Madill, OK; Shanghai, China; and Hong Kong. The Company
has extended the Houston lease for $8,500 per month through June 2005.
10. LITIGATION AND CONTINGENCIES
The Company continues to aggressively protect its trademarks. From time to
time the Company files suit to enforce its trademark and other
intellectual property. Historically, the Company has been successful in
preventing others from using Omni's trademarks or trade dress or in
seeking other relief.
SEGMENT INFORMATION:
11. 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
--------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES INCOME INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2003 (LOSS) FROM EXPENSE ASSETS EXPENDITURES AMORTIZATION
OPERATIONS
--------------------------------------------------------------------------------------------------------------
Power Transmission $5,759,865 $ 300,518 $ 74,602 $ 8,174,070 $84,635 $58,639
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 881,661 (53,457) 38,182 3,084,994 6,906 22,958
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $6,641,526 $ 247,061 $112,784 $11,259,064 $91,541 $81,597
==============================================================================================================
------------------------------------------------ ----------------------------------------------
THREE MONTHS ENDED NET SALES PROPERTY AND
MARCH 31, 2003 MARCH 31, 2003 EQUIPMENT, NET
------------------------------------------------ ----------------------------------------------
Domestic Customers $ 5,619,328 Domestic $ 538,153
------------------------------------------------ ----------------------------------------------
Foreign Customers 1,022,198 Foreign 1,202,022
------------------------------------------------ ----------------------------------------------
Total Omni, U.S.A., Inc. $ 6,641,526 Total Omni, U.S.A., Inc. $ 1,740,175
================================================ ==============================================
--------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES INCOME INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2002 (LOSS) FROM EXPENSE ASSETS EXPENDITURES AMORTIZATION
OPERATIONS
--------------------------------------------------------------------------------------------------------------
Power Transmission $3,826,249 $ 200,091 $88,609 $ 6,968,865 $ 9,317 $ 59,808
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 913,808 (117,696) 33,434 3,491,919 2,364 25,641
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $4,740,057 $ 82,395 $122,043 $10,460,784 $ 11,681 $ 85,449
==============================================================================================================
---------------------------------------------- -------------------------------------------------
THREE MONTHS ENDED NET SALES PROPERTY AND
MARCH 31, 2002 MARCH 31, 2002 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $ 4,619,266 Domestic $ 611,408
---------------------------------------------- -------------------------------------------------
Foreign customers 120,791 Foreign 1,259,846
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $ 4,740,057 Total Omni, U.S.A., Inc. $ 1,871,254
============================================== =================================================
SEGMENT INFORMATION
(CONTINUED)
--------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NET SALES INCOME INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2003 (LOSS) FROM EXPENSE ASSETS EXPENDITURES AMORTIZATION
OPERATIONS
--------------------------------------------------------------------------------------------------------------
Power Transmission $13,192,103 $ 728,856 $222,152 $8,174,070 $ 146,330 $ 175,936
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 2,621,595 (200,379) 90,941 3,084,994 37,622 85,387
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $15,813,698 $ 528,477 $313,093 $ 11,259,064 $ 183,952 $ 261,323
==============================================================================================================
---------------------------------------------- -------------------------------------------------
NINE MONTHS ENDED NET SALES PROPERTY AND
MARCH 31, 2003 MARCH 31, 2003 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $ 13,882,699 Domestic $ 538,153
---------------------------------------------- -------------------------------------------------
Foreign customers 1,930,999 Foreign 1,202,022
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $ 15,813,698 Total Omni, U.S.A., Inc. $ 1,740,175
============================================== =================================================
--------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NET SALES INCOME INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2002 (LOSS) FROM EXPENSE ASSETS EXPENDITURES AMORTIZATION
OPERATIONS
--------------------------------------------------------------------------------------------------------------
Power Transmission $10,043,553 $ 16,122 $241,657 $ 6,968,865 $ 28,179 $ 203,513
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 2,704,906 (76,514) 62,892 3,491,919 2,364 86,487
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $12,748,459 $ (60,392) $304,549 $10,460,784 $ 30,543 $ 290,000
==============================================================================================================
---------------------------------------------- -------------------------------------------------
NINE MONTHS ENDED NET SALES PROPERTY AND
MARCH 31, 2002 MARCH 31, 2002 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $11,548,381 Domestic $ 611,408
---------------------------------------------- -------------------------------------------------
Foreign customers 1,200,078 Foreign 1,259,846
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $12,748,459 Total Omni, U.S.A., Inc. $ 1,871,254
============================================== =================================================
Item 3. 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 primary capital requirements are for routine working
capital needs that are generally met through a combination of internally
generated funds, revolving line of credit facilities and credit terms from
suppliers. The Company's line of credit facilities had an outstanding balance
of $2,567,759 at March 31, 2003. The Company had working capital of $2,010,028
as of March 31, 2003 and working capital of $1,632,586 as of June 30, 2002, an
increase of $377,442 from June 30, 2002. The increase in working capital from
June 30, 2002 was due to increases in accounts receivable and decreases in
lines of credit offset by increases in accounts payable and accrued expenses.
The Company had a cash balance of $309,061 as of March 31, 2003;
reflecting a negative cash flow of $512,483 compared to the June 30, 2002 cash
balance of $821,544. The Company's cash provided by operating activities for
the nine months ended March 31, 2003 of $146,725 consisted of the net income
for the period.
The Company's cash used in investing activities for the nine months
ended March 31, 2003 of $209,316 consisted of net capital expenditures for the
period in both operating segments.
Net cash used by financing activities for the nine months ended March
31, 2003 of $449,845 consisted primarily of payments on the line of credit and
long-term debt and $42,930 spent to purchase treasury shares under the
Company's stock repurchase plan.
The Company believes that between its access to the line of credit
facilities 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, 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 and operations, if required. In
response to general declines in demand and a recent economic downturn that
occurred in fiscal year 2002, management initiated measures to minimize costs
and scale down activities to match decreases in sales until such demand
returns. The current period has shown some increases in demand and management
has been able to benefit from the cost minimization efforts. Management
believes that it will continue to be successful in this endeavor; however it is
too early to tell if the trend of increased sales will continue for the
remainder of the fiscal year.
Results for the Quarter ended March 31, 2003 compared with the Quarter ended
----------------------------------------------------------------------------
March 31, 2002
--------------
The Company had net sales of $6,641,526 for the three months ended
March 31, 2003. This represents an increase of 40% compared to the three months
ended March 31, 2002 net sales of $4,740,057. Net sales of the Power
Transmission Components segment have increased through organic growth and
relationships with new customers while the Trailer and Implement Components
segment continues to see a constriction in the market, effecting sales
negatively. The following table indicates the Company's net sales comparison
and percentage of change for the three months ended March 31, 2003 and 2002:
------------------------------------------------------------------------------------------------------------
QUARTER % QUARTER % DOLLAR %
ENDED ENDED
NET SALES 03/31/03 OF TOTAL 03/31/02 OF TOTAL CHANGE CHANGE
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 5,759,865 87% $ 3,826,249 80% $ 1,933,616 51%
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 881,661 13% 913,808 20% (32,147) (4%)
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Consolidated $ 6,641,526 100% $ 4,740,057 100% $ 1,901,469 40%
------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended March 31, 2003 increased
$403,230 to $1,218,701, compared to gross profit for the three months ended
March 31, 2002 of $815,471. Gross profit as a percentage of net sales for the
three months ended March 31, 2003 increased to 18% as compared to 17% for the
three months ended March 31, 2002. This increase in profit margin was primarily
due to the product mix of sales for the period to existing and new customers.
Selling, general and administrative expenses increased $238,564 to
$971,640 in the three months ended March 31, 2003 from $733,076 in the three
months ended March 31, 2002. Selling, general and administrative expenses
increased due to additional operational support required by the increased sales
activity for the quarter.
Income from operations for the Company increased $164,666 to $247,061
for the three months ended March 31, 2003, compared to $82,395 for the three
months ended March 31, 2002. This increase is the result of increased margins
and sales during the period.
Interest expense decreased $9,259, to $112,784 for the three months
ended March 31, 2003 from $122,043 for the three months ended March 31, 2002.
The decrease resulted from decreased borrowings on the Company's line of credit
as a result of utilizing cash from operations to repay the line of credit.
Other income was of $48,525 for the three months ended March 31, 2003
compared to $68,242 for the three months ended March 31, 2002. This change is
principally from decreased VAT refund from foreign sales.
The Company's net and comprehensive income increased $155,099 to
$183,693 or $0.15 per share, for the three months ended March 31, 2003 compared
to $28,594, or $0.02 per share, for the three months ended March 31, 2002.
Results for the Nine months ended March 31, 2003 compared with the Nine months
------------------------------------------------------------------------------
ended March 31, 2002
--------------------
The Company had net sales of $15,813,698 for the nine months ended
March 31, 2003. This represents an increase of 24% compared to the nine months
ended March 31, 2002 net sales of $12,748,459. As stated above, net sales of
the Power Transmission Components segment have increased through organic growth
and relationships with new customers while the Trailer and Implement Components
segment continues to see a constriction in the market, effecting sales
negatively. The following table indicates the Company's net sales comparison
and percentage of change for the nine months ended March 31, 2003 and 2002:
------------------------------------------------------------------------------------------------------------
NINE MONTHS % NINE MONTHS % DOLLAR %
ENDED ENDED
NET SALES 03/31/03 OF TOTAL 03/31/02 OF TOTAL CHANGE CHANGE
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 13,192,103 83% $10,043,553 79% $ 3,148,550 31%
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 2,621,595 17% 2,704,906 21% (83,311) (3%)
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Consolidated $15,813,698 100% $12,748,459 100% $ 3,065,239 24%
------------------------------------------------------------------------------------------------------------
Gross profit for the nine months ended March 31, 2003 increased
$952,146 to $3,536,290, compared to gross profit for the nine months ended
March 31, 2002 of $2,584,144. Gross profit as a percentage of net sales for the
nine months ended March 31, 2003 increased to 22% as compared to 20% for the
nine months ended March 31, 2002. This increase in gross profit was primarily
due to the product mix of sales for the period to existing and new customers.
Selling, general and administrative expenses increased $363,277 to
$3,007,813 in the nine months ended March 31, 2003 from $2,644,536 in the nine
months ended March 31, 2002. Selling, general and administrative expenses
increased due to additional operational support required by the increased sales
activity for the period.
Income from operations for the Company increased $588,869 to $528,477
for the nine months ended March 31, 2003, compared to the loss from operations
of $(60,392) for the nine months ended March 31, 2002. This increase is
primarily the result of increased sales and gross margin, offset by increased
selling, general and administrative expenses.
Interest expense increased $8,544, to $313,093 for the nine months
ended March 31, 2003 from $304,549 for the nine months ended March 31, 2002.
The increase resulted from increased average borrowings associated with the
Company's line of credit to meet current inventory and working capital needs.
Other income was $131,848 for the nine months ended March 31, 2003
compared to $92,045 for the nine months ended March 31, 2002. This change
primarily results from increased commission income and VAT refunds related to
foreign sales.
The Company's net and comprehensive income increased $579,065 to
$306,886, or $0.26 per share, for the nine months ended March 31, 2003 compared
to a loss of $(272,179), or $(0.22) per share, for the nine months ended March
31, 2002.
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. Forward-looking
statements discuss future expectations, plans, strategies, activities or
events. They often include words such as believe, expect, anticipate, intend or
plan, or words with similar meaning or with future or conditional verbs such as
will, would, should, or may. The Company does not plan to update these
forward-looking statements to reflect events or changes that occur after they
are made.
Actual results may differ materially from those contemplated by the
forward-looking statements. The Company cannot guarantee that any forward
looking statement will be realized, although the Company and its management
believe that it has been prudent in its plans and assumptions. Investors are
further directed to the Company's documents, such as its Annual Report on Form
10-KSB, Forms 10-QSB and Forms 8-KSB filed with the Securities and Exchange
Commission. Achievement of future results and these forward-looking statements
involve risks and uncertainties, including but not limited to, the following:
1) acts or threats of war or terrorism, and the effects of such acts or
threats on the Company, its employees, its debtors, customers and
vendors as well as the local and international economies in which the
Company sells its products,
2) changes in the availability of debt and equity capital resulting in
increased costs, shareholder dilution, or reduced liquidity and lack
of working capital,
3) cyclical downturns affecting the markets for our products over which
we have no control,
4) our lack of ability to generate profitable operations and positive
cash flows from those operations,
5) the effects of our failure to timely pay our outstanding debts,
6) substantial increases in interest rates,
7) availability or material increases in the costs of select raw
materials,
The Company undertakes no obligation to publicly update or otherwise
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the applicable cautionary statements.
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, 2002.
Item 2. Change in Securities.
---------------------
From September 19 through November 14, 2002, the Company purchased a
total of 36,100 treasury shares through its stock repurchase plan, as
further discussed in NOTE 8, for a total cost of $42,930.
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.
Item 7. Controls and Procedures.
------------------------
Evaluation of disclosure controls and procedures. Within 90 days prior
to the date of this report, the Company carried out an evaluation,
under the supervision and with the participation of our management,
including our Chief Executive, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on this
evaluation, the Company's Chief Executive Officer concluded that the
Company's disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the
"Exchange Act")) are effective to ensure that information required to
be disclosed by the Company in reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported to the
Company's management within the time periods specified in the
Securities and Exchange Commission's rules and forms.
Changes in internal controls. Subsequent to the date of their
evaluation, there were no significant changes in the Company's internal
controls or in other factors that could significantly affect the
Company's disclosure controls and procedures, and there were no
corrective actions required with regard to significant deficiencies and
material weaknesses based on such evaluation.
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, 2003 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
----------------------------
Jeffrey K. Daniel
President and Chief Executive Officer
CERTIFICATIONS
I, Jeffrey K. Daniel, President and Chief Executive Officer of the
registrant, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Omni U.S.A.,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fully complies with the
requirements of Exchange Act Section 13(a) and 15 (d) and fairly presents in
all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this quarterly
report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:
a) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. I have disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls;
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect the internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
/s/ JEFFREY K. DANIEL
------------------------------------
JEFFREY K. DANIEL
CHIEF EXECUTIVE OFFICER & PRESIDENT MAY 14, 2003