Omni U.S.A., Inc.
2236 Rutherford Road, Suite 107
Carlsbad, CA 92008
February 17, 2006
Mr. David Burton, Mail Stop 6010 United States Securities and Exchange
Commission
Washington, D.C. 20549
Re: Omni U.S.A., Inc.
Form 10-KSB for the year ended June 30, 2005 Filed October 13, 2005
Form 8-K dated December 29, 2005
File No. 0-17493
Dear Mr. Burton:
We filed yesterday Amendment No. 2 to the Form 8-K in response to your comment
letter of January 30, 2006. In order to expedite your review, we are providing
the following additional disclosure keyed to your comments as follows:
Form 8-K dated December 29, 2005
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1. It appears that as a result of your recapitalization, your fiscal year end
has changed from June 30 to December 31. Please file an amendment to your
Form 8-K that provides the disclosures required by item 5.03 of the Form
8-K Rules.
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We are changing the year end for the accounting acquirer, Brendan, a
wholly owned subsidiary of the Registrant, to a fiscal year end of June
30. Accordingly, we amended the Form 8-K/A to include the following:
SECTION 5 -- CORPORATE GOVERNANCE AND MANAGEMENT
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE N
FISCAL YEAR
On December 29, 2005, Omni completed the acquisition of substantially all
the assets of Brendan Technologies Inc. ("Brendan") pursuant to the Merger
Agreement and completed the disposition of substantially all the assets of
Omni-Washington and Butler pursuant to the Stock Purchase Agreement. As a
result of these transactions and the issuance of common stock to the
shareholders, noteholders and individuals who assisted in the merger,
Brendan, a now wholly-owned subsidiary of Omni, became the accounting
acquirer and the transaction was accounted for as a reverse merger
acquisition. Please see the disclosures regarding the Merger Agreement and
the Stock Purchase Agreement and the transactions contemplated thereby in
Item 1.01 of Current Report on Form 8K filed with the SEC on January 5,
2006, as amended by Amendment No. 1 thereto, filed with the SEC on January
23, 2006.
As a result of Brendan being the accounting acquirer and the post
acquisition financial statements being the historical statements of
Brendan, the fiscal year end of Brendan is being changed from December 31
to June 30. The report on which the transition period will be filed is the
Form10-KSB for the six months ended June 30, 2005.
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Item 9.01 Financial Statements
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2. Please amend your Form 8-K to present the most recent unaudited interim
financial statements of the accounting acquirer. Refer to Item 310(c) of
Regulation S-B.
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We have included in the Form 8-K/A filing the interim financial statements
of Brendan as follows:
SECTION 9 -- FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
In accordance with Item 9.01(a), attached hereto are the unaudited
financial statements of Brendan, the accounting acquirer, for the nine
months ended September 30, 2005 and 2004. The audited financial statements
of Brendan for the years ended December 31, 2004 and 2003 were filed with
the Current Report on Form 8-K as filed with the SEC on January 5, 2006.
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Note 3- Significant Accounting Policies
Revenue recognition, page 8
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3. We note that you generate revenue from software license sales and related
service revenues. We note that you recognize revenues in accordance with
SOP 97-2. Please tell us and revise future filings to disclose how you
meet each of the four revenue recognition criteria of SOP 97-2.
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We recognize revenue under SOP 97-2 as follows:
Persuasive evidence of an agreement exists- We ship against quoted orders
and customer purchase orders for the majority of our products. If a major
license is sold we ship against executed contracts.
Delivery has occurred- We recognize revenue only after delivery and the
satisfaction of any guarantee (normally 30 days) has expired. If services
are provided, we recognize revenue over the life of the service (normally
12 months for technical support). If modifications to software are
included in the order, then revenue is recognized only after acceptance by
the customer. A portion of our revenue can be derived from the collection
of royalties. We recognize revenue on royalties only after the cash has
been collected (typically 30 days after the end of the quarter on which
the royalty payment is based).
Vendor's price is fixed- We ship only against firm fixed price quotes and
purchase orders.
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Collectibility is probable- Our customer base is the large pharmaceutical
companies and major research laboratories who have significant resources
to meet their obligations.
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4. We note that your allowance for doubtful accounts is 67% of the gross
accounts receivable as of December 31, 2004. Please tell us how you have
considered this fact in your evaluation of the collectibility criteria for
revenue recognition. Tell us whether you offer any of your customers
extended payment terms and how these terms impact your revenue
recognition. Refer to paragraphs 26-30 of SOP 97-2.
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The percentage reflected at December 31, 2004 was skewed by the small
receivable balance at the time with one particular customer who had not
paid in a significant time frame. The customer eventually paid and the
reserve was returned to historical levels properly reflecting minimal
collection problems. We do not offer extended payment terms..
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5. Tell us and revise future filings to disclose your basis for your
conclusion that you have vendor-specific objective evidence of the fair
value for post-contract customer support, training and service calls.
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We invoice separately for customer support, training and service calls.
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Omni U.S.A., Inc. acknowledges that:
o we are responsible for the adequacy and accuracy of the disclosure
in the filing;
o staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action with
respect to the filing; and
o we may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
If you have any questions, please call me at (619) 977-1614.
Sincerely,
/s/ LOWELL W. GIFFHORN
Lowell W. Giffhorn
Chief Financial Officer
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