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, 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
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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, 2002, there were 1,207,912 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 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
December 31, 2001 and June 30, 2001
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended December 31, 2001 and December 31,
2000
Condensed Consolidated Statements of Cash Flows
Six Months Ended December 31, 2001 and December 31, 2000
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
December 31, 2001
(unaudited) June 30, 2001
----------------- -------------
CURRENT ASSETS
Cash $ 308,753 $ 659,101
Accounts receivable, trade, net 2,265,294 3,269,586
Accounts receivable, related parties 26,413 43,654
Inventories 4,865,204 4,985,910
Notes receivable 123,387 208,671
Prepaid expenses 117,034 108,224
Deferred tax assets 40,393 40,393
----------------- ---------------
TOTAL CURRENT ASSETS 7,746,478 9,315,539
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PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,949,645 2,112,551
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OTHER ASSETS
Primarily intangible assets, net 194,426 206,790
----------------- ---------------
TOTAL ASSETS $ 9,890,549 $ 11,634,880
================= ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,111,663 $ 3,584,118
Line of credit 1,796,945 2,771,161
Accrued expenses 303,547 244,220
Current portion of long-term debt 993,603 853,889
----------------- ---------------
TOTAL CURRENT LIABILITIES 6,205,758 7,453,388
----------------- ---------------
LONG-TERM DEBT 861,963 1,057,891
----------------- ---------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and 1,207,912
outstanding) 6,129 6,129
Additional paid-in capital 5,372,815 5,372,815
Treasury Stock (19,167 shares) (57,141) (57,141)
Retained earnings (deficit) (2,596,640) (2,295,150)
Foreign currency translation adjustment 97,665 96,948
----------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 2,822,828 3,123,601
----------------- ---------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 9,890,549 $ 11,634,880
================= ===============
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, 2001 AND 2000
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2001 2000 2001 2000
------------- -------------- -------------- ------------
NET SALES $ 4,382,065 $ 6,290,169 $ 8,008,402 $ 11,195,810
COST OF SALES 3,289,202 5,052,667 6,239,729 8,987,549
------------ ------------ ----------------- ----------
GROSS PROFIT 1,092,863 1,237,502 1,768,673 2,208,261
OPERATING EXPENSES
Selling, general and administrative 923,175 1,133,848 1,911,460 2,122,957
------------ ------------ ----------------- ----------
OPERATING INCOME (LOSS) 169,688 103,654 (142,787) 85,304
OTHER INCOME (EXPENSE)
Interest expense (93,146) (138,691) (182,506) (258,043)
Other,net 45,671 19,030 23,803 33,672
------------ ------------ ----------------- ----------
TOTAL OTHER EXPENSE
(47,475) (119,661) (158,703) (224,371)
------------ ------------ ----------------- ----------
NET INCOME (LOSS) $ 122,213 $ (16,007) $ (301,490) $ (139,067)
============ ============ ================= ============
COMPREHENSIVE INCOME - Foreign
Currency Translation
Adjustment (137) - 717 -
------------ ------------ ----------------- ----------
NET AND COMPREHENSIVE
INCOME (LOSS) $ 122,076 $ (16,007) $ (300,773) $ (139,067)
============ ============ ================= ============
BASIC EARNINGS (LOSS) PER SHARE $ 0.10 $ (0.01) $ (0.25) $ (0.12)
============ ============ ================= ============
FULLY DILUTED EARNINGS (LOSS) PER SHARE $ 0.10 $ (0.01) $ (0.25) $ (0.12)
============ ============ ================= ============
The accompanying notes are an integral part of the consolidated financial
statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2001 AND 2000
SIX MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
2001 2000
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (301,490) $ (139,067)
Adjustments to reconcile net income (loss) to net cash
provided / (used) by operating activities:
Depreciation and amortization 194,132 191,947
Changes in operating assets and liabilities:
Accounts receivable/ Notes receivable 1,106,817 (381,360)
Inventories 120,706 (76,663)
Prepaid expenses (8,810) (65,762)
Accounts payable and accrued expenses (413,128) 455,122
-------------- ---------------
Total adjustments 999,717 123,284
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Net cash provided/(used) by operating activities 698,227 (15,783)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of other assets - (5,975)
Capital expenditures (18,862) (123,262)
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Net cash used by investing activities (18,862) (129,237)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Borrowings on line of credit 5,033,205 7,244,193
Payments on line of credit (6,007,421) (7,176,508)
Payments on long-term debt (56,214) (151,517)
-------------- ---------------
Net cash used by financing activities (1,030,430) (83,832)
-------------- ---------------
Effects of foreign currency translation 717 -
NET DECREASE IN CASH (350,348) (228,852)
CASH AT BEGINNING OF PERIOD 659,101 587,044
============== ===============
CASH AT END OF PERIOD $ 308,753 $ 358,192
============== ===============
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.
NOTES TO 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. 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 December 31, 2001, and the results of their operations and cash flows for the
six month and three month periods ended December 31, 2001, and December 31,
2000, in accordance with generally accepted accounting principles in the United
States have been included.
At December 31, 2001 the Company is not in compliance with its revolving line
of credit with a finance company and has defaulted on two of its two long-term
debt agreements. The Company is currently delinquent on $175,396 in monthly
principle and interest payments to an equipment manufacturer and $159,442 in
quarterly principle and interest payments to Paccar. Total outstanding
principal on these notes amounts to approximately $2,985,000 at December 31,
2001. The Company is in contact with the creditors and attempting to resolve
these matters. During 2001, the Company was successful in renegotiating the
payment terms on its junior subordinated notes to Butler Products Corporation
former owners to extend the due date of this debt one year.
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, 2001 and December 31, 2000, the Company's
weighted average shares are calculated as follows:
Six Months
Quarter Ended Quarter Ended Ended Six Months
December 31, December 31, December 31, Ended December
2001 2000 2001 31, 2000
--------------------------------------------------------------
Weighted average common shares outstanding 1,207,912 1,207,912 1,207,912 1,207,912
Effect of dilution of securities: conversion
of stock options - - - -
--------------------------------------------------------------
Denominator for dilutive earnings per share 1,207,912 1,207,912 1,207,912 1,207,912
==============================================================
The Company is in a net loss position for the six month period ended December
31, 2001 and for the three and six month periods ended December 31, 2000.
Accordingly, all common stock equivalents during these periods are considered
anti-dilutive and are therefore not included in the calculation of earnings per
share. During the three month period ended December 31, 2001, 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. REVERSE SPLIT: At a special meeting on June 14, 2001, the Company's Board of
Directors approved a reduction in the number of authorized shares of common
stock of the Company and a corresponding three for one reverse stock split of
its common stock. In addition, all holders of options or warrants to purchase
future shares of the Company's common stock were also reduced on an equal basis
of three to one. The effect of the reverse split was to reduce the Company's
common shares from 3,680,592 shares to 1,227,079 shares issued and 3,623,094
shares to 1,207,912 outstanding. The par value of the common stock is unchanged.
Accordingly, the Company has presented all equity and earnings per share
information as if the reverse stock split had occurred effective July 1, 2000.
4. MAJOR CUSTOMERS AND VENDORS: No single customer accounted for more than 10%
of consolidated sales during the six months ended December 31, 2001. The Company
and its subsidiaries had consolidated sales of $1,898,426 to a domestic customer
for a total of 17% of consolidated sales during the six months ended December
31, 2000. The Company had sales of $503,695 to a foreign customer for a total of
11% of sales for the quarter ended December 31, 2001 and $1,088,543 to a
domestic customer for a total of 17% of consolidated sales during the quarter
ended December 31, 2000. During the six months ended December 31, 2001 and
December 31, 2000, the Company and its subsidiaries had consolidated purchases
of $2,569,610 from two vendors and $4,084,128 from one vendor for a total of 41%
and 45% of consolidated purchases. During the quarters ended December 31, 2001
and December 31, 2000, the Company and its subsidiaries had consolidated
purchases of $1,400,672 from two vendors and $1,953,980 from one vendor for a
total of 42% and 39% of consolidated purchases.
5. REVOLVING LINE OF CREDIT: 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 2002, 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. As of December 31, 2001, the Company was not in
compliance with its debt service coverage ratio covenant.
6. 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 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 PROPERTY AND
DECEMBER 31, 2001 NET SALES DECEMBER 31, 2001 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $3,492,752 Domestic $ 643,095
---------------------------------------------- -------------------------------------------------
Foreign customers 889,313 Foreign 1,306,550
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $4,382,065 Total Omni, U.S.A., Inc. $ 1,949,645
============================================== =================================================
THREE MONTHS ENDED INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2000 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission $5,350,040 $ 308,521 $122,692 $ 8,630,201 $ 302,974 $ 60,204
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement
Components 940,129 (71,089) 6,598 2,086,158 6,000 30,653
--------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (133,778) 9,401
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $6,290,169 $ 103,654 $138,691 $10,716,359 $ 308,974 $ 90,857
==============================================================================================================
THREE MONTHS ENDED PROPERTY AND
DECEMBER 31, 2000 NET SALES DECEMBER 31, 2000 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $5,981,697 Domestic $ 804,518
---------------------------------------------- -------------------------------------------------
Foreign customers 308,472 Foreign 1,480,717
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $6,290,169 Total Omni, U.S.A., Inc. $ 2,285,235
============================================== =================================================
SEGMENT INFORMATION
(CONTINUED)
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 PROPERTY AND
DECEMBER 31, 2001 NET SALES DECEMBER 31, 2001 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $6,929,115 Domestic $ 643,095
---------------------------------------------- -------------------------------------------------
Foreign customers 1,079,287 Foreign 1,306,550
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $8,008,402 Total Omni, U.S.A., Inc. $ 1,949,645
---------------------------------------------- -------------------------------------------------
============================================== =================================================
SIX MONTHS ENDED INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2000 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission
Components $9,122,267 $ 333,732 $210,162 $ 8,630,201 $ 316,583 $ 128,205
--------------------------------------------------------------------------------------------------------------
Trailer and Implement
Components 2,073,543 (16,345) 26,848 2,086,158 49,838 63,742
--------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (232,083) 21,033
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $11,195,810 $ 85,304 $258,043 $10,716,359 $366,421 191,947
==============================================================================================================
SIX MONTHS ENDED PROPERTY AND
DECEMBER 31, 2000 NET SALES DECEMBER 31, 2000 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $10,262,270 Domestic $ 804,518
---------------------------------------------- -------------------------------------------------
Foreign customers 933,540 Foreign 1,480,717
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $11,195,810 Total Omni, U.S.A., Inc. $ 2,285,235
============================================== =================================================
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 $1,796,945 at December 31, 2001. At December 31, 2001, the Company was not
in compliance with this agreement. The Company had working capital of
$1,540,720 as of December 31, 2001 and working capital of $1,862,151 as of June
30, 2001, a decrease of $321,431 from June 30, 2001. The decrease in working
capital from June 30, 2001 was due primarily to lower sales, collection of
accounts receivable offset by payments of accounts payable and the line of
credit as well as increasing amounts of debt that remain past due and classified
as current.
Accounts receivable balance of $2,291,707 as of December 31, 2001
decreased $1,021,533 compared to June 30, 2001 accounts receivable balance of
$3,313,240. Inventory balance as of December 31, 2001 was $4,865,204; a decrease
of $120,706 compared to June 30, 2001. Accounts receivable and inventory
decreased during the period in response to lower sales levels in both business
segments.
The Company had a cash balance of $308,753 as of December 31, 2001;
reflecting a negative cash flow of $350,348 compared to the June 30, 2001 cash
balance of $659,101. The Company's cash provided by operating activities for the
6 months ended December 31, 2001 of $698,227 consisted of the net loss for the
period of $301,490 plus non cash expenses, combined with a decrease in accounts
receivable, accounts payable and inventories.
The Company's cash used in investing activities for the six months
ended December 31, 2001 of $18,862 consisted of capital expenditures for the
period primarily in support of the power transmission component segment.
Net cash used by financing activities for the six months ended December
31, 2001 of $1,030,430 was due primarily to net repayments on the line of
credit.
The Company has continued to experience a decline in the market demand
for the Company's products since the fourth quarter of the year ended June 30,
2001 as compared to previous years. As a result, the Company has experienced
negative cash flows which have reduced cash balances, working capital and
resulted in debt balances that have become due but remain unpaid as of and for
the three months and six months ended December 31, 2001. During the quarter
ended December 31, 2001, the Company amended the terms of the note payable to
the former owners of Butler to extend the repayment terms an additional twelve
months.
As of December 31, 2001, the Company is not in compliance with its debt
service coverage ratio related to its line of credit facility and has
significant amounts of debt past due. The Company believes that its relationship
with the line of credit holder is good and that access to the lines of credit
will continue to be granted. Debt balances that are currently past due are:
o Paccar, Inc. quarterly payments totaling $159,442. The Company has been
granted temporary forbearance on payment of the balance until the Company
has such ability to pay and is currently making interest payments on the
balances owed as well as formally working with Paccar to restructure and
amend the repayment terms;
o Haas Automation payments totaling $175,396. The Company is diligently
working to repay the balances to bring the payments current in a mutually
beneficial manner.
The Company believes that future demand is improving and, 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, which may or may not be favorable to the Company.
In response to general declines in demand and a recent economic downturn,
management has initiated measures to minimize costs and scale down activities to
match decreases in sales until such demand returns. Management believes that it
is and will continue to be successful in this endeavor.
Results for the Quarter ended December 31, 2001 compared with the Quarter ended
December 31, 2000
The Company had net sales of $4,382,065 for the three months ended
December 31, 2001. This represents a decrease of 30% compared to the three
months ended December 31, 2000 net sales of $6,290,169. Sales have decreased due
an overall economic slowdown. The following table indicates the Company's net
sales comparison and percentage of change for the three months ended December
31, 2001 and 2000:
QUARTER QUARTER
ENDED % ENDED % DOLLAR %
NET SALES 12/31/01 OF TOTAL 12/31/00 OF TOTAL CHANGE CHANGE
------------------------------------------------------------------------------------------------------------
Power Transmission
Components $ 3,509,593 80% $ 5,350,040 85% $(1,840,447) (34%)
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 872,472 20% 940,129 15% (67,657) (7%)
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Consolidated $ 4,382,065 100% $ 6,290,169 100% $(1,908,104) (30%)
------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended December 31, 2001 decreased
$144,639 to $1,092,863, compared to gross profit for the three months ended
December 31, 2000 of $1,237,502. Gross profit as a percentage of net sales for
the three months ended December 31, 2001 increased to 25% as compared to 20% for
the three months ended December 31, 2000. This increase in profit margin was
primarily due to the product mix of sales for the period and cost savings
initiatives.
Selling, general and administrative expenses decreased $210,673 to
$923,175 in the three months ended December 31, 2001 from $1,133,848 in the
three months ended December 31, 2000. Selling, general and administrative
expenses decreased due to cost cutting initiatives put in place by management as
a response to the lower sales volume for the quarter.
Income from operations for the Company increased $66,034 to $169,688
for the three months ended December 31, 2001, compared to $103,654 for the three
months ended December 31, 2000. This increase is the result of cost savings
initiatives taken by management as well as changes in sales mix during the
period.
Interest expense decreased $45,545, to $93,146 for the three months
ended December 31, 2001 from $138,691 for the three months ended December 31,
2000. The decrease resulted from a decreased borrowing rate and borrowings
associated with the Company's line of credit to meet current inventory and
working capital needs.
Other income was of $45,671 for the three months ended December 31,
2001 compared to $19,030 for the three months ended December 31, 2000. This
change is principally from increased VAT refund from foreign sales.
The Company's net and comprehensive income increased $138,083 to
$122,076, or $0.10 per share, for the three months ended December 31, 2001
compared to $(16,007), or $(0.01) per share, for the three months ended December
31, 2000 despite decreased sales due to cost savings initiatives.
Results for the Six months ended December 31, 2001 compared with the Six months
ended December 31, 2000
The Company had net sales of $8,008,402 for the six months ended
December 31, 2001. This represents a decrease of 28% compared to the six months
ended December 31, 2000 net sales of $11,195,810. Sales have decreased due to an
overall economic slowdown. The following table indicates the Company's net sales
comparison and percentage of change for the six months ended December 31, 2000
and 1999:
SIX MONTHS SIX MONTHS
ENDED % ENDED % DOLLAR %
NET SALES 12/31/01 OF TOTAL 12/31/00 OF TOTAL CHANGE CHANGE
------------------------------------------------------------------------------------------------------------
Power Transmission
Components $ 6,217,304 78% $9,122,267 81% $(2,904,963) (32%)
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 1,791,098 22% 2,073,543 19% (282,445) (14%)
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Consolidated $ 8,008,402 100% $11,195,810 100% $(3,187,408) (28%)
------------------------------------------------------------------------------------------------------------
Gross profit for the six months ended December 31, 2001 decreased
$439,588 to $1,768,673, compared to gross profit for the six months ended
December 31, 2000 of $2,208,261. Gross profit as a percentage of net sales for
the six months ended December 31, 2001 decreased to 20% as compared to 22% for
the six months ended December 31, 2000. This increase in gross profit was
primarily due to the product mix of sales for the period and cost savings
initiatives taken in the second quarter.
Selling, general and administrative expenses decreased $211,497 to
$1,911,460 in the six months ended December 31, 2001 from $2,122,957 in the six
months ended December 31, 2000. Selling, general and administrative expenses
decreased due to cost cutting initiatives put in place by management as a
response to the lower sales volume for the period.
Income from operations for the Company decreased $228,091 to $(142,787)
for the six months ended December 31, 2001, compared to $85,304 for the six
months ended December 31, 2000. This decrease is primarily the result decreased
sales, especially in the first quarter of the period, offset by decreased
selling, general and administrative expenses.
Interest expense decreased $75,537, to $182,506 for the six months
ended December 31, 2001 from $258,043 for the six months ended December 31,
2000. The decrease resulted from a decreased borrowing rate and borrowings
associated with the Company's line of credit to meet current inventory and
working capital needs.
Other income was $23,803 for the six months ended December 31, 2001
compared to $33,672 for the six months ended December 31, 2000. This change
primarily results from lower commission income for the period offset by an
increase in VAT refunds related to foreign sales.
The Company's net and comprehensive loss decreased $161,706 to
$300,773, or $0.25 per share, for the six months ended December 31, 2001
compared to $139,067, or $0.12 per share, for the six months ended December 31,
2000.
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. Investors are further directed to the Company's
documents, such as its Annual Report on Form 10-KSB, Form 10-QSB's and Form
8-KSB filed with the Securities and Exchange Commission. 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
and resulting default on our credit agreements in addition to
our noncompliance with our primary lender's financial covenants
and possible impact resulting from our inability to renegotiate
acceptable terms with the Company's creditors,
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 the 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, 2001.
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.
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, 2002 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
-----------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer