1
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, 2001
Commission File Number: 0-17493
OMNI U.S.A., INC.
-----------------
(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
------------------------------------
(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 11, 2001, there were 3,623,092 shares of common stock $.004995 par value
outstanding.
2
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
March 31, 2001 and June 30, 2000
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 2001 and March 31, 2000
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2001 and March 31, 2000
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
3
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 2001 June 30, 2000
(unaudited)
------------------------- ------------------------
CURRENT ASSETS
Cash $ 362,970 $ 587,044
Accounts receivable, trade, net 4,318,257 3,151,091
Accounts receivable, related parties 28,074 27,613
Notes receivable 266,615
Inventories 4,351,026 4,103,840
Prepaid expenses 91,767 51,964
------------------------- ------------------------
TOTAL CURRENT ASSETS 9,418,709 7,921,552
------------------------- ------------------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 2,167,272 2,103,603
------------------------- ------------------------
OTHER ASSETS
Primarily intangible assets, net 199,972 215,822
------------------------- ------------------------
TOTAL ASSETS $ 11,785,953 $ 10,240,977
========================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,464,395 $ 1,895,015
Line of credit 2,751,049 2,626,457
Accrued expenses 305,904 474,758
Current portion of long-term debt 580,187 425,369
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 7,101,535 5,421,599
------------------------- ------------------------
LONG-TERM DEBT 1,308,369 1,462,236
------------------------- ------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock 18,384 18,384
Additional paid-in capital 5,360,560 5,360,560
Treasury stock (57,141) (57,141)
Retained earnings (deficit) (2,043,556) (2,062,692)
Accumulated other comprehensive income -
foreign currency translation adjustment 97,802 98,031
------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 3,376,049 3,357,142
------------------------- ------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 11,785,953 $ 10,240,977
========================= ========================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2001 2000 2001 2000
------------------ ----------------- ----------------- ----------------
NET SALES $ 5,808,113 $ 5,489,702 $ 17,003,923 $ 14,383,670
COST OF SALES 4,504,980 4,193,852 13,492,529 10,902,346
------------------ ----------------- ----------------- ----------------
GROSS PROFIT 1,303,133 1,295,850 3,511,394 3,481,324
OPERATING EXPENSES
Selling, general and administrative 1,000,886 961,547 3,123,843 3,244,760
------------------ ----------------- ----------------- ----------------
OPERATING INCOME 302,247 334,303 387,551 236,564
OTHER INCOME (EXPENSE)
Interest expense (110,418) (109,277) (368,461) (272,109)
Other,net (33,626) 2,999 46 (61,117)
------------------ ----------------- ----------------- ----------------
TOTAL OTHER INCOME (EXPENSE) (144,044) (106,278) (368,415) (333,226)
------------------ ----------------- ----------------- ----------------
NET INCOME (LOSS) $ 158,203 $ 228,025 $ 19,136 $ (96,662)
================== ================= ================= ================
BASIC AND FULLY DILUTED EARNINGS (LOSS) PER SHARE $ 0.04 $ 0.06 $ 0.01 $ (0.03)
================== ================= ================= ================
The accompanying notes are an integral part of the consolidated financial
statements.
5
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 2001 AND 2000
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2001 2000
------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 19,136 $ (96,662)
Adjustments to reconcile net income (loss) to net
cash (provided used) by operating activities:
Depreciation and amortization 296,836 276,334
Loss on disposal of assets 52,108 -
Changes in operating assets and liabilities:
Accounts receivable (1,167,627) 446,538
Notes (266,615) -
receivable
Inventories (247,186) (1,059,259)
Prepaid expenses and other (26,231) (2,923)
Intangible assets - 38,502
Accounts payable and accrued expenses 1,400,526 (545,442)
------------------- --------------------
Total adjustments 41,811 (846,250)
------------------- --------------------
Net cash provided (used) by operating 60,947 (942,912)
activities
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Piecemaker, Inc. - (350,990)
Acquisition of other assets (9,436) -
Capital expenditures (157,969) (105,853)
------------------- --------------------
Net cash used by investing activities (167,405) (456,853)
------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds of PACCAR, Inc. loan - 1,000,000
Proceeds of Piecemaker financing loan - 200,000
Borrowings on line of credit 10,915,833 13,073,397
Payments on line of credit (10,791,241) (12,583,337)
Payments on long-term debt (242,208) (138,978)
------------------- --------------------
Net cash (used) provided by financing (117,616) 1,551,082
activities
------------------- --------------------
NET (DECREASE) INCREASE IN CASH (224,074) 151,317
CASH AT BEGINNING OF PERIOD 587,044 292,903
------------------- --------------------
CASH AT END OF PERIOD $ 362,970 $ 444,220
=================== ====================
Supplemental disclosure of non-cash investing activities
Capital expenditures financed by debt $ 243,159 $ -
=================== ====================
The accompanying notes are an integral part of the consolidated financial
statements.
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. The Company believes that the disclosures made in this
report are adequate to make the information presented not misleading. These
condensed financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual report
on Form 10-KSB. In the opinion of the Company, all adjustments, consisting of
normal recurring adjustments, necessary to present fairly the financial
position of Omni U.S.A., Inc. and subsidiaries as of March 31, 2001, and the
results of their operations and cash flows for the nine month and three month
periods ended March 31, 2001, and March 31, 2000, in accordance with generally
accepted accounting principles have been included.
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.
New accounting pronouncement - In December 1999, the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements"("SAB 101"), which clarifies certain
existing accounting principles for the timing of revenue recognition and its
classification in the financial statements. The SEC delayed the required
implementation date of SAB 101 by issuing Staff Accounting Bulletins No. 101A,
"Amendment: Revenue Recognition in Financial Statements" and 101B, "Second
Amendment: Revenue Recognition in Financial Statements" in March and June 2000,
respectively. The Company believes its current revenue recognition policies are
in accordance with SAB 101.
Notes receivable result from sales made with extended credit terms and are
payable in monthly installments over a twelve month period.
2. 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, 2001 and March 31, 2000, the Company's weighted average shares
are calculated as follows:
Nine Months Nine Months
Quarter Ended Quarter Ended Ended Ended
March 31, March 31, March 31, March 31,
2001 2000 2001 2000
--------------------------------------------------------------
Weighted average common shares outstanding 3,623,092 3,623,092 3,623,092 3,587,476
Effect of dilution of securities: conversion of
stock options - 339,567 - -
--------------------------------------------------------------
Denominator for dilutive earnings per share 3,623,092 3,962,659 3,623,092 3,587,476
==============================================================
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.
3. Interest paid on debt for the three months ended March 31, 2001 and 2000,
was $110,418 and $109,277 respectively. Interest paid on debt for the nine
months ended March 31, 2001 and 2000 was $368,461 and $272,109 respectively. No
income taxes were paid during the three months or nine months ended March 31,
2001 and 2000, respectively.
7
4. MAJOR CUSTOMERS AND VENDORS: During the nine months ended March 31, 2001 and
March 31, 2000, the Company and its subsidiaries had consolidated sales of
$3,393,989 and $2,828,487 to a domestic customer for a total of 20% and 19% of
consolidated sales. During the quarters ended March 31, 2001 and March 31,
2000, the Company and its subsidiaries had consolidated sales of $1,137,260 and
$878,302 to a domestic customer for a total of 20% and 16% of consolidated
sales. During the nine months ended March 31, 2001 and March 31, 2000, the
Company and its subsidiaries had consolidated purchases of $6,527,856 and
$6,950,428 from one vendor for a total of 48% and 64% of consolidated
purchases. During the quarters ended March 31, 2001 and March 31, 2000, the
Company and its subsidiaries had consolidated purchases of $2,052,478 and
$1,901,727 from one vendor for a total of 46% and 45% of consolidated
purchases.
5. 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 NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2001 OPERATIONS EXPENSE ASSETS ADDITIONS AMORTIZATION
- --------------------------------------------------------------------------------------------------------------
Power Transmission $4,698,008 $ 422,912 $93,185 $9,851,861 $ 28,639 $ 70,005
Components
- --------------------------------------------------------------------------------------------------------------
Trailer and Implement 1,110,105 9,176 5,659 1,934,092 6,068 34,884
Components
- --------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (129,841) 11,574
- --------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $5,808,113 $ 302,247 $110,418 $11,785,953 $ 34,707 $ 104,889
==============================================================================================================
- ------------------------------------------------ ---------------------------------------------
THREE MONTHS ENDED NET SALES THREE MONTHS ENDED PROPERTY AND
MARCH 31, 2001 MARCH 31, 2001 EQUIPMENT
- ------------------------------------------------ ---------------------------------------------
Domestic Customers $5,462,843 Domestic $ 764,795
- ------------------------------------------------ ---------------------------------------------
Foreign Customers 345,270 Foreign 1,402,477
- ------------------------------------------------ ---------------------------------------------
Total Omni, U.S.A., Inc. $5,808,113 Total Omni, U.S.A., Inc. $ 2,167,272
================================================ =============================================
- --------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2000 OPERATIONS EXPENSE ASSETS ADDITIONS AMORTIZATION
- --------------------------------------------------------------------------------------------------------------
Power Transmission $4,254,664 $352,166 $91,879 $7,372,112 $ 69,689 $ 64,434
Components
- --------------------------------------------------------------------------------------------------------------
Trailer and Implement 1,235,038 88,072 17,398 2,576,184 29,189
Components
- --------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (105,935)
- --------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $5,489,702 $334,303 $109,277 $9,948,296 $ 69,689 $ 93,623
==============================================================================================================
- ------------------------------------------------ ----------------------------------------------
THREE MONTHS ENDED NET SALES THREE MONTHS ENDED PROPERTY AND
MARCH 31, 2000 MARCH 31, 2000 EQUIPMENT
- ------------------------------------------------ ----------------------------------------------
Domestic Customers $5,281,573 Domestic $ 849,298
- ------------------------------------------------ ----------------------------------------------
Foreign Customers 208,129 Foreign 1,365,915
- ------------------------------------------------ ----------------------------------------------
Total Omni, U.S.A., Inc. $5,489,702 Total Omni, U.S.A., Inc. $ 2,215,213
================================================ ==============================================
8
SEGMENT INFORMATION
(CONTINUED)
- --------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2001 OPERATIONS EXPENSE ASSETS ADDITIONS AMORTIZATION
- --------------------------------------------------------------------------------------------------------------
Power Transmission $13,820,275 $ 756,644 $309,500 $9,851,861 $ 345,222 $ 198,210
Components
- --------------------------------------------------------------------------------------------------------------
Trailer and Implement 3,183,648 (7,169) 26,354 1,934,092 55,906 98,626
Components
- --------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (361,924) 32,607
- --------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $17,003,923 $ 387,551 $368,461 $11,785,953 $ 401,128 $ 296,836
==============================================================================================================
- ------------------------------------------------ ---------------------------------------------
NINE MONTHS ENDED NET SALES NINE MONTHS ENDED PROPERTY AND
MARCH 31, 2001 MARCH 31, 2001 EQUIPMENT
- ------------------------------------------------ ---------------------------------------------
Domestic Customers $15,725,113 Domestic $ 764,795
- ------------------------------------------------ ---------------------------------------------
Foreign Customers 1,278,810 Foreign 1,402,477
- ------------------------------------------------ ---------------------------------------------
Total Omni, U.S.A., Inc. $17,003,923 Total Omni, U.S.A., Inc. $ 2,167,272
================================================ =============================================
- --------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2000 OPERATIONS EXPENSE ASSETS ADDITIONS AMORTIZATION
- --------------------------------------------------------------------------------------------------------------
Power Transmission $11,121,692 $487,440 $227,018 $7,372,112 $ 93,762 $ 190,489
Components
- --------------------------------------------------------------------------------------------------------------
Trailer and Implement 3,261,978 108,601 45,091 2,576,184 12,101 85,845
Components
- --------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (359,477)
- --------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $14,383,670 $236,564 $272,109 $9,948,296 $ 105,863 $ 276,334
==============================================================================================================
- ------------------------------------------------ ----------------------------------------------
NINE MONTHS ENDED NET SALES NINE MONTHS ENDED PROPERTY AND
MARCH 31, 2000 MARCH 31, 2000 EQUIPMENT
- ------------------------------------------------ ----------------------------------------------
Domestic Customers $13,569,833 Domestic $ 849,298
- ------------------------------------------------ ----------------------------------------------
Foreign Customers 813,837 Foreign 1,365,915
- ------------------------------------------------ ----------------------------------------------
Total Omni, U.S.A., Inc. $14,383,670 Total Omni, U.S.A., Inc. $ 2,215,213
================================================ ==============================================
5. SUBSEQUENT EVENT: On May 9, 2001 the Company filed a definitive Proxy
requesting shareholder approval to authorize up to a three for one reverse
stock split.
9
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 working capital and
acquisitions that are generally met through a combination of internally
generated funds, a revolving line of credit facility and credit terms from
suppliers. The Company's $4,000,000 credit facility had an outstanding balance
of $2,751,049 at March 31, 2001. The Company had working capital of $2,317,174
as of March 31, 2001 and working capital of $2,499,953 as of June 30, 2000, a
decrease of $182,779 from June 30, 2000. The decrease in working capital from
June 30, 2000 was due primarily to an increase in accounts payable offset by an
increase in accounts receivable.
Accounts receivable balance of $4,346,331 as of March 31, 2001
increased $1,167,627 compared to June 30, 2000 accounts receivable balance of
$3,178,704. Inventory balance as of March 31, 2001 was $4,351,026; an increase
of $247,186 compared to June 30, 2000. Accounts receivable and inventory
increased during the period to support additional sales levels in both business
segments.
The Company had a cash balance of $362,970 as of March 31, 2001;
reflecting a negative cash flow of $224,074 compared to the June 30, 2000 cash
balance of $587,044. The Company's cash provided by operating activities for
the 9 months ended March 31, 2001 of $60,947 consisted of the net income for
the period of $19,136 plus non cash expenses, combined with an increase in
accounts receivable, accounts payable and inventories.
The Company's cash used in investing activities for the nine months
ended March 31, 2001 of $167,405 consisted of capital expenditures for the
period in both business segments.
Net cash used by financing activities for the nine months ended March
31, 2001 of $117,616 was due to repayments on long-term debt offset by net
additional borrowings on the line of credit.
The Company's current ratio was 1.33 as of March 31, 2001, compared to
the June 30, 2000 current ratio of 1.46.
The Company believes that between its access to the line of credit
facility and its ability to generate funds internally, it has adequate capital
resources to meet its working capital requirements for the foreseeable future,
given its current working capital requirements, 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.
10
Results for the Quarter ended March 31, 2001 compared with the Quarter ended
March 31, 2000
The Company had net sales of $5,808,113 for the three months ended
March 31, 2001. This represents an increase of 6% compared to the three months
ended March 31, 2000 net sales of $5,489,702. Sales have increased due to
aggressive marketing and pricing incentives to customers for larger orders for
power transmission components. The following table indicates the Company's net
sales comparison and percentage of change for the three months ended March 31,
2001 and 2000:
- ------------------------------------------------------------------------------------------------------------
QUARTER QUARTER
ENDED % ENDED % DOLLAR %
NET SALES 3/31/01 OF TOTAL 3/31/00 OF TOTAL CHANGE CHANGE
- ------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 4,698,008 81% $ 4,254,664 78% $ 443,344 10%
- ------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 1,110,105 19% 1,235,038 22% (124,933) (10%)
- ------------------------------------------------------------------------------------------------------------
Consolidated $ 5,808,113 100% $ 5,489,702 100% $ 318,411 6%
- ------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended March 31, 2001 increased
$7,283 to $1,303,133, compared to gross profit for the three months ended March
31, 2000 of $1,295,850. Gross profit as a percentage of net sales for the three
months ended March 31, 2001 decreased to 22% as compared to 24% for the three
months ended March 31, 2000. This decrease in gross profit and profit margin
was primarily due to the product mix of sales for the period and pricing
incentives offered to customers for bulk purchases.
Selling, general and administrative expenses increased $39,339 to
$1,000,886 in the three months ended March 31, 2001 from $961,547 in the three
months ended March 31, 2000. Selling, general and administrative expenses as a
percentage of sales were substantially the same at 17% and 18%, respectively
for the three months ended March 31, 2001 and March 31, 2000.
Income from operations for the Company decreased $32,056 to $302,247
for the three months ended March 31, 2001, compared to $334,303 for the three
months ended March 31, 2000. This decrease is the result of lower gross margins
and increased SG&A expenses during the period.
Interest expense increased $1,141, to $110,418 for the three months
ended March 31, 2001 from $109,277 for the three months ended March 31, 2000.
Other income (expense) was an expense of $33,626 for the three months
ended March 31, 2001 compared to income of $2,999 for the three months ended
March 31, 2000. This increased expense is principally the result of loss on
disposition of assets in the period of $52,108 offset by increases in VAT
refunds associated with increased foreign sales.
The Company's net income decreased $69,822 despite increase in sales
due to declining margins, increased SG&A and losses on disposal of assets to
$158,203, or $0.04 per share, for the three months ended March 31, 2001
compared to $228,025, or $0.06 per share, for the three months ended March 31,
2000.
11
Results for the Nine months ended March 31, 2001 compared with the Nine months
ended March 31, 2000
The Company had net sales of $17,003,923 for the nine months ended
March 31, 2001. This represents an increase of 18% compared to the nine months
ended March 31, 2000 net sales of $14,383,670. Sales have increased due to
aggressive marketing and pricing incentives to customers for larger orders for
power transmission components. The following table indicates the Company's net
sales comparison and percentage of change for the nine months ended March 31,
2001 and 2000:
- ------------------------------------------------------------------------------------------------------------
NINE MONTHS % NINE MONTHS % DOLLAR %
ENDED ENDED
NET SALES 3/31/01 OF TOTAL 3/31/00 OF TOTAL CHANGE CHANGE
- ------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 13,820,275 81% $11,121,692 77% $2,698,583 24%
- ------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 3,183,648 19% 3,261,978 23% (78,330) (2%)
- ------------------------------------------------------------------------------------------------------------
Consolidated $ 17,003,923 100% $14,383,670 100% $2,620,253 18%
- ------------------------------------------------------------------------------------------------------------
Gross profit for the nine months ended March 31, 2001 increased
$30,070 to $3,511,394, compared to gross profit for the nine months ended March
31, 2000 of $3,481,324. Gross profit as a percentage of net sales for the nine
months ended March 31, 2001 decreased to 21% as compared to 24% for the nine
months ended March 31, 2000. This decrease in gross profit and profit margin
was primarily due to the product mix of sales for the period and pricing
incentives offered to customers for bulk purchases.
Selling, general and administrative expenses decreased $120,917 to
$3,123,843 in the nine months ended March 31, 2001 from $3,244,760 in the nine
months ended March 31, 2000. Selling, general and administrative expenses as a
percentage of sales decreased to 18% for the nine months ended March 31, 2001
from 23% for the nine months ended March 31, 2000.
Income from operations for the Company increased $150,987 to $387,551
for the nine months ended March 31, 2001, compared to $236,564 for the nine
months ended March 31, 2000. This increase is the result increased sales for
the period as well as decreased selling, general and administrative expenses.
Interest expense increased $96,352, to $368,461 for the nine months
ended March 31, 2001 from $272,109 for the nine months ended March 31, 2000.
The increase resulted from an increased borrowing rate and borrowings
associated with the Company's line of credit and on other long-term debt to
meet current inventory and working capital needs.
Other income (expense) was income of $46 for the nine months ended
March 31, 2001 compared to an expense of $61,117 for the nine months ended
March 31, 2000. This change relates primarily to expensing un-amortized
organizational costs of $38,502 (relating to the implementation of Financial
Accounting Standards Board SOP 98-5 "Reporting on the Cost of Start-Up
Activities") in the first fiscal quarter ended September 30, 1999 as well as an
increase in VAT refunds associated with an increase in foreign sales, offset by
a loss on disposition of assets of $52,108 during the three months ended March
31, 2001.
The Company's net income increased $115,798 to $19,136, or $0.01 per
share, for the nine months ended March 31, 2001 compared to a net loss of
($96,662), or ($0.03) per share, for the nine months ended March 31, 2000. The
overall increase is primarily due to increased sales.
12
Other Matters
The Company filed a definitive Proxy on May 9, 2001 which seeks
shareholder approval to effect a reverse stock split of the Common Stock of the
Company at the ratio of one for three.
The Company's Common Stock is currently listed on the Nasdaq SmallCap
Market. In order for the Common Stock to continue to be eligible for listing on
the Nasdaq SmallCap Market, the Stock must have a minimum bid price of $1.00
per share. The Board believes a reverse split represents the best alternative
available to the Company to meet the Nasdaq SmallCap Market continued listing
requirement with respect to minimum bid price. If the Common Stock price does
not regain compliance with the minimum bid price requirement, and the Company
fails to implement available alternatives, the Common Stock may be de-listed
from the Nasdaq SmallCap Market and traded on an over-the-counter basis.
Cautionary Statement
The following is a "Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995:
With the exception of historical facts, the statements contained in
Item 2 of this form 10-QSB are forward looking statements. Actual results may
differ materially from those contemplated by the forward-looking statements.
These forward looking statements involve risks and uncertainties, including but
not limited to, the following risks: 1) cyclical downturns affecting the
markets for capital goods, 2) substantial increases in interest rates, 3)
availability or material increases in the costs of select raw materials, and 4)
actions taken by competitors with regard to such matters as product offerings
pricing, and delivery. Investors are directed to the Company's documents, such
as its Annual Report on Form 10-KSB, Forms 10-QSB and Forms 8-KSB filed with
the Securities and Exchange Commission.
13
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, 2000.
Item 2. Change in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
14
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, 2001 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
---------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer
By: /s/ David M. Sallean
---------------------------------
David M. Sallean
Chief Financial Officer