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 December 31, 2002
Commission File Number: 0-17493
OMNI U.S.A., INC.
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(Exact name of registrant as specified in its charter)
Nevada 88-0237223
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(State of Incorporation) (IRS Employer Identification No.)
7502 Mesa Road, Houston, Texas 77028
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(Address of principal executive offices)
(713) 635-6331
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(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 February 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
December 31, 2002 and June 30, 2002
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended December 31, 2002 and December 31,
2001
Condensed Consolidated Statements of Cash Flows
Six Months Ended December 31, 2002 and December 31, 2001
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Item 3. Controls and Procedures
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, 2002
(unaudited) June 30, 2002
----------------- -------------
CURRENT ASSETS
Cash $ 447,766 $ 821,544
Accounts receivable, trade, net 3,459,794 3,440,402
Accounts receivable, related parties 36,050 28,063
Inventories, net 4,606,778 4,168,526
Notes receivable 25,328 89,138
Prepaid expenses 199,439 114,912
Deferred tax assets -- 40,393
------------ ------------
TOTAL CURRENT ASSETS 8,775,155 8,702,978
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PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,727,670 1,812,007
------------ ------------
OTHER ASSETS
Primarily intangible assets, net 341,011 204,265
------------ ------------
TOTAL ASSETS $ 10,843,836 $ 10,719,250
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,261,557 $ 3,001,120
Line of credit 2,524,574 2,850,270
Accrued expenses 386,865 217,154
Current portion of long-term debt 1,031,717 1,001,849
------------ ------------
TOTAL CURRENT LIABILITIES 7,204,713 7,070,393
------------ ------------
LONG-TERM DEBT 894,919 986,604
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and 1,171,812
and 1,207,912 Outstanding, respectively) 6,129 6,129
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) (2,631,833) (2,755,870)
Foreign currency translation adjustment 97,164 96,320
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,744,204 2,662,253
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,843,836 $ 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 SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2002 2001 2002 2001
------------ ------------ ------------ ------------
NET SALES $ 4,710,079 $ 4,382,065 $ 9,172,172 $ 8,008,402
COST OF SALES 3,611,923 3,289,202 6,854,583 6,239,729
------------ ------------ ------------ ------------
GROSS PROFIT 1,098,156 1,092,863 2,317,589 1,768,673
OPERATING EXPENSES
Selling, general and administrative 1,065,453 923,175 2,036,173 1,911,460
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) 32,703 169,688 281,416 (142,787)
OTHER INCOME (EXPENSE)
Interest expense (98,810) (93,146) (200,309) (182,506)
Other, net 53,057 45,671 83,323 23,803
------------ ------------ ------------ ------------
TOTAL OTHER EXPENSE (45,753) (47,475) (116,986) (158,703)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE (13,050) 122,213 164,430 (301,490)
------------ ------------ ------------ ------------
INCOME TAXES -- -- (40,393) --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (13,050) $ 122,213 $ 124,037 $ (301,490)
============ ============ ============ ============
COMPREHENSIVE INCOME - Foreign
Currency Translation
Adjustment 478 (137) 844 717
------------ ------------ ------------ ------------
NET AND COMPREHENSIVE
INCOME (LOSS) $ (12,572) $ 122,076 $ 124,881 $ (300,773)
============ ============ ============ ============
BASIC EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.10 $ 0.10 $ (0.25)
============ ============ ============ ============
FULLY DILUTED EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.10 $ 0.10 $ (0.25)
============ ============ ============ ============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001
(UNAUDITED)
For the six months ended For the six months ended
December 31, 2002 December 31, 2001
------------------------ ------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income/(loss) $ 124,037 $ (301,490)
------------ ------------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 179,726 194,132
Deferred taxes 40,393 --
Loss on sale of assets (2,285) --
Changes in operating assets and liabilities:
Accounts receivable / Notes receivable (27,379) 1,106,817
Inventories (438,252) 120,706
Prepaid expenses (84,529) (8,810)
Intangible and other assets 1,373 --
Accounts payable and accrued expenses 380,148 (413,128)
------------ ------------
Total adjustments 49,195 999,717
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Net cash provided by operating
activities 173,232 698,227
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of other assets (25,000) --
Capital expenditures (92,411) (18,862)
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Net cash used by investing activities (117,411) (18,862)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock (42,930) --
Net Borrowings on line of credit 6,128,580 5,033,205
Net Payments on line of credit (6,454,276) (6,007,421)
Payments on long-term debt (61,817) (56,214)
------------ ------------
Net cash used by financing activities (430,443) (1,030,430)
------------ ------------
TRANSLATION EFFECT OF FOREIGN CURRENCIES 844 717
NET DECREASE IN CASH (373,778) (350,348)
CASH AT BEGINNING OF PERIOD 821,544 659,101
------------ ------------
CASH AT END OF PERIOD $ 447,766 $ 308,753
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Purchase of assets in exchange for note receivable $ 63,810 --
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
as of December 31, 2002, and the results of their operations for the three
months and six months ended December 31, 2002, and 2001, and cash flows for
the six months ended December 31, 2002, and 2001, have been made in
accordance with GAAP.
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 six month and three month
periods ended December 31, 2002 and 2001, the Company's weighted average
shares are calculated as follows:
Six Months Six Months
Quarter Ended Quarter Ended Ended Ended
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------ ------------ ------------ ------------
Weighted average common shares
outstanding 1,185,612 1,207,912 1,196,762 1,207,912
Conversion of stock options: -- -- -- --
------------ ------------ ------------ ------------
Denominator for dilutive earnings per
share 1,185,612 1,207,912 1,196,762 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 six month period ended
December 31, 2002, and the three month period ending December 31, 2001
the Company had positive net income; however, the exercise price of all
common stock equivalents exceeded their average fair values. 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 $1,757,845 to a
domestic customer for a total of 19% of consolidated sales during the six
months ended December 31, 2002. No single customer accounted for more than
10% of consolidated sales during the six months ended December 31, 2001.
The Company had sales of $1,045,863 to a domestic customer for a total of
22% of consolidated sales during the quarter ended December 31, 2002 and
$503,695 to a foreign customer for a total of 11% of sales for the quarter
ended December 31, 2001. During the six months ended December 31, 2002 and
December 31, 2001, the Company and its subsidiaries had consolidated
purchases of $3,225,657 and $2,569,610 from one vendor for a total of 47%
and 41% of consolidated purchases, respectively. During the quarters ended
December 31, 2002 and December 31, 2001, the Company and its subsidiaries
had consolidated purchases of $1,851,724 and $1,400,672 from one vendor for
a total of 51% and 42% of consolidated purchases, respectively.
4. PURCHASE OF ASSETS:
In December 2002, the Company purchased all the assets of Champion Gear,
including the customer and market information and all rights under a
product distribution agreement for $75,000 due in three installments,
forgiveness of notes receivable of $63,810 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 as of
December 31, 2002 and the remaining obligation of $50,000 has been
reflected in accrued expenses.
5. REVOLVING LINE 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 six months earnings requirement. At December 31,
2002, 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 $270,752 and
$187,325 at December 31, 2002 and June 30, 2002, respectively. The line of
credit matures November 30, 2003 and bears interest at 5.625%.
The Company has effectively restructured a note payable to HAAS Automation
which has reclassified $47,008 of the liability as long-term which was
previously classified as current. The new terms are for 5 years at 8% with
a balance as of December 31, 2002 of $251,576.
6. INCOME TAXES
The difference between the effective rate of income tax expense at December
31, 2002 and 2001 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
entered into a verbal agreement to extend the Houston lease, which expired
June 30, 2002 at $9,000 per month. The amended lease terms expire six
months after written notice from either party.
10. LITIGATION AND CONTINGENCIES
From time to time, the Company is engaged in litigation to protect its
property and intellectual rights. The Company has been successful in
protecting these rights over the years and intends to continue to protect
its rights. Management does not believe these lawsuits will have a negative
impact on the Company or its operations.
11. 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
THREE MONTHS ENDED OPERATING INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2002 NET SALES INCOME EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------ ------------ ------------ ------------ ------------ ------------ ------------
Power Transmission
Components $ 3,941,900 $ 202,742 $ 71,356 $ 7,745,140 $ 33,510 $ 58,067
Trailer and Implement
Components 768,179 (170,039) 27,454 3,098,696 30,716 52,326
Corporate and Eliminations
------------ ------------ ------------ ------------ ------------ ------------
Total Omni, U.S.A., Inc. $ 4,710,079 $ 32,703 $ 98,810 $ 10,843,836 $ 64,226 $ 110,393
============ ============ ============ ============ ============ ============
THREE MONTHS ENDED
DECEMBER 31, 2002 NET SALES
------------------ ------------
Domestic Customers $ 4,379,617
Foreign Customers 330,462
------------
Total Omni, U.S.A., Inc. $ 4,710,079
============
PROPERTY AND
DECEMBER 31, 2002 EQUIPMENT, NET
----------------- --------------
Domestic $ 554,355
Foreign 1,173,315
------------
Total Omni, U.S.A., Inc. $ 1,727,670
============
THREE MONTHS ENDED INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2001 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------ ------------ ------------ ------------ ------------ ------------ ------------
Power Transmission
Components $ 3,509,593 $ 142,141 $ 83,262 $ 6,759,065 $ 10,087 $ 60,322
Trailer and Implement
Components 872,472 104,533 9,884 3,131,484 33,882
Corporate and Eliminations (76,986)
------------ ------------ ------------ ------------ ------------ ------------
Total Omni, U.S.A., Inc. $ 4,382,065 $ 169,688 $ 93,146 $ 9,890,549 $ 10,087 $ 94,204
============ ============ ============ ============ ============ ============
THREE MONTHS ENDED
DECEMBER 31, 2001 NET SALES
------------------ ------------
Domestic customers $ 3,492,752
Foreign customers 889,313
------------
Total Omni, U.S.A., Inc. $ 4,382,065
============
PROPERTY AND
DECEMBER 31, 2001 EQUIPMENT, NET
--------------
Domestic $ 643,095
Foreign 1,306,550
------------
Total Omni, U.S.A., Inc. $ 1,949,645
============
SEGMENT INFORMATION
(CONTINUED)
SIX MONTHS ENDED INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2002 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
----------------- ------------ ------------ ------------ ------------ ------------ ------------
Power Transmission
Components $ 7,432,238 $ 428,336 $ 147,552 $ 7,745,140 $ 61,695 $ 117,505
Trailer and Implement
Components 1,739,934 (146,920) 52,757 3,098,696 30,716 62,221
Corporate and Eliminations
------------ ------------ ------------ ------------ ------------ ------------
Total Omni, U.S.A., Inc. $ 9,172,172 $ 281,416 $ 200,309 $ 10,843,836 $ 92,411 $ 179,726
============ ============ ============ ============ ============ ============
SIX MONTHS ENDED
DECEMBER 31, 2002 NET SALES
----------------- ------------
Domestic customers $ 8,282,816
Foreign customers 889,356
------------
Total Omni, U.S.A., Inc. $ 9,172,172
============
PROPERTY AND
DECEMBER 31, 2002 EQUIPMENT, NET
----------------- --------------
Domestic $ 554,355
Foreign 1,173,315
------------
Total Omni, U.S.A., Inc. $ 1,727,670
============
SIX MONTHS ENDED INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2001 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
----------------- ------------ ------------ ------------ ------------ ------------ ------------
Power Transmission
Components $ 6,217,304 $ (39,073) $ 153,048 $ 6,759,065 $ 18,862 $ 133,286
Trailer and Implement
Components 1,791,098 41,182 29,458 3,131,484 60,846
Corporate and Eliminations (144,896)
------------ ------------ ------------ ------------ ------------ ------------
Total Omni, U.S.A., Inc. $ 8,008,402 $ (142,787) $ 182,506 $ 9,890,549 $ 18,862 $ 194,132
============ ============ ============ ============ ============ ============
SIX MONTHS ENDED
DECEMBER 31, 2001 NET SALES
----------------- ------------
Domestic customers $ 6,929,115
Foreign customers 1,079,287
------------
Total Omni, U.S.A., Inc. $ 8,008,402
============
PROPERTY AND
DECEMBER 31, 2001 EQUIPMENT, NET
----------------- --------------
Domestic $ 643,095
Foreign 1,306,550
------------
Total Omni, U.S.A., Inc. $ 1,949,645
============
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 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
$2,524,574 at December 31, 2002. The Company had working capital of $1,570,442
as of December 31, 2002 and working capital of $1,632,585 as of June 30, 2002, a
decrease of $62,143 from June 30, 2002. The decrease in working capital from
June 30, 2002 was due to increases in accounts payable and accrued expenses and
decreases in cash, offset by increases in inventories and accounts receivable.
The Company had a cash balance of $447,766 as of December 31, 2002;
reflecting a negative cash flow of $373,778 compared to the June 30, 2002 cash
balance of $821,544. The Company's cash provided by operating activities for the
six months ended December 31, 2002 of $173,232 consisted of the net income for
the period, increases in accounts payable and accrued expenses offset by
increases in inventories.
The Company's cash used in investing activities for the six months
ended December 31, 2002 of $117,411 consisted of net capital expenditures for
the period in both operating segments.
Net cash used by financing activities for the six months ended December
31, 2002 of $430,443 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 and current economic conditions. 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 and
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 December 31, 2002 compared with the Quarter ended
December 31, 2001
The Company had net sales of $4,710,079 for the three months ended
December 31, 2002. This represents an increase of 7% compared to the three
months ended December 31, 2001 net sales of $4,382,065. Sales have increased due
to the acquisition of new customers as well as increases in demand within the
power transmission segment. The following table indicates the Company's net
sales comparison and percentage of change for the three months ended December
31, 2002 and 2001:
QUARTER QUARTER
ENDED % ENDED % DOLLAR %
NET SALES 12/31/02 OF TOTAL 12/31/01 OF TOTAL CHANGE CHANGE
--------- ------------ ------------ ------------ ------------ ------------ ------------
Power Transmission Components $ 3,941,900 84% $ 3,509,593 80% $ 432,307 12%
Trailer and Implement Components 768,179 16% 872,472 20% (104,293) (12)%
------------ ------------ ------------ ------------ ------------ ------------
Consolidated $ 4,710,079 100% $ 4,382,065 100% $ 328,014 7%
============ ============ ============ ============ ============ ============
Gross profit for the three months ended December 31, 2002 increased
$5,293 to $1,098,156, compared to gross profit for the three months ended
December 31, 2001 of $1,092,863. Gross profit as a percentage of net sales for
the three months ended December 31, 2002 decreased to 23% as compared to 25% for
the three months ended December 31, 2001. This decrease in profit margin was
primarily due to the product mix of sales for the period and pricing
incentives.
Selling, general and administrative expenses increased $142,278 to
$1,065,453 in the three months ended December 31, 2002 from $923,175 in the
three months ended December 31, 2001. 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 decreased $136,985 to $32,703
for the three months ended December 31, 2002, compared to $169,688 for the three
months ended December 31, 2001. This decrease is the result of reduced margins
and increased operating expenses during the period.
Interest expense increased $5,664, to $98,810 for the three months
ended December 31, 2002 from $93,146 for the three months ended December 31,
2001. The increase resulted from increased borrowings associated with the
Company's line of credit to meet current inventory and working capital needs.
Other income was of $53,057 for the three months ended December 31,
2002 compared to $45,671 for the three months ended December 31, 2001. This
change is principally from increased VAT refund from foreign sales.
The Company's net income decreased $135,263 to ($13,050) or ($0.01) per
share, for the three months ended December 31, 2002 compared to $122,213, or
$0.10 per share, for the three months ended December 31, 2001.
Results for the Six months ended December 31, 2001 compared with the Six months
ended December 31, 2000
The Company had net sales of $9,172,172 for the six months ended
December 31, 2002. This represents an increase of 15% compared to the six months
ended December 31, 2001 net sales of $8,008,402. Sales have increased due to
improved demand in the power transmission component segment and carryover of
deliveries from the fourth quarter of fiscal year 2002. The following table
indicates the Company's net sales comparison and percentage of change for the
six months ended December 31, 2002 and 2001:
SIX MONTHS SIX MONTHS
ENDED % ENDED % DOLLAR %
NET SALES 12/31/02 OF TOTAL 12/31/01 OF TOTAL CHANGE CHANGE
--------- ------------ ------------ ------------ ------------ ------------ ------------
Power Transmission Components $ 7,432,238 81% $ 6,217,304 78% $ 1,214,934 20%
Trailer and Implement Components 1,739,934 19% 1,791,098 22% (51,164) (3)%
------------ ------------ ------------ ------------ ------------ ------------
Consolidated $ 9,172,172 100% $ 8,008,402 100% $ 1,163,770 15%
============ ============ ============ ============ ============ ============
Gross profit for the six months ended December 31, 2002 increased
$548,916 to $2,317,589, compared to gross profit for the six months ended
December 31, 2001 of $1,768,673. Gross profit as a percentage of net sales for
the six months ended December 31, 2002 increased to 25% as compared to 22% for
the six months ended December 31, 2001. This increase in gross profit was
primarily due to the product mix of sales for the period and a full period of
cost saving initiatives taken in the first quarter of fiscal year 2002.
Selling, general and administrative expenses increased $124,713 to
$2,036,173 in the six months ended December 31, 2002 from $1,911,460 in the six
months ended December 31, 2001. 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 $424,203 to $281,416
for the six months ended December 31, 2002, compared to $(142,787) for the six
months ended December 31, 2001. This increase is primarily the result of
increased sales and gross margin, offset by increased selling, general and
administrative expenses.
Interest expense increased $17,803, to $200,309 for the six months
ended December 31, 2002 from $182,506 for the six months ended December 31,
2001. The increase resulted from increased borrowings associated with the
Company's line of credit to meet current inventory and working capital needs.
Other income was $83,323 for the six months ended December 31, 2002
compared to $23,803 for the six months ended December 31, 2001. This change
primarily results from increased commission income and VAT refunds related to
foreign sales.
The Company's net income increased $425,527 to $124,037, or $0.10 per
share, for the six months ended December 31, 2002 compared to a loss of
$301,490, or $0.25 loss per share, for the six months ended December 31, 2001.
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, Form 10-QSB and Form 8-K 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.
Item 3. 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material changes from the disclosure in the
Company's Form 10-QSB 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.
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: February 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, fairly present 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 FEBRUARY 14, 2003