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, 2005
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)
Issuer's Internet Address: www.ousa.com
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 16, 2005, there were 1,171,812 shares of common stock $.004995 par value
outstanding.
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
March 31, 2005 and June 30, 2004
Condensed Consolidated Statements of Net and Comprehensive Income
Three Months and Nine Months Ended March 31, 2005 and March 31, 2004
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2005 and March 31, 2004
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
March 31, 2005
(unaudited) June 30, 2004
-------------- -------------
ASSETS
CURRENT ASSETS
Cash $ 362,238 $ 533,022
Accounts receivable, trade, net 3,630,222 2,042,392
Accounts receivable, related parties 30,604 24,740
Inventories, net 4,396,169 4,013,221
Prepaid expenses 332,805 200,041
-------------- -------------
TOTAL CURRENT ASSETS 8,752,038 6,813,416
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,381,871 1,522,830
OTHER ASSETS
Primarily intangible assets, net 338,915 329,756
-------------- -------------
TOTAL ASSETS $ 10,472,824 $ 8,666,002
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,341,210 $ 2,430,084
Lines of credit 1,872,597 347,040
Accrued expenses 401,564 256,031
Current portion of long-term debt 808,483 1,344,134
-------------- -------------
TOTAL CURRENT LIABILITIES 6,423,854 4,377,289
-------------- -------------
LONG-TERM DEBT 748,840 1,014,436
-------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and
1,171,812 shares outstanding) 6,129 6,129
Additional paid-in capital 5,372,815 5,372,815
Treasury Stock (55,267 shares) (100,071) (100,071)
Retained earnings (deficit) (2,094,873) (2,109,413)
Foreign currency translation adjustment 116,130 104,817
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 3,300,130 3,274,277
-------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,472,824 $ 8,666,002
============== =============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2005 2004 2005 2004
------------ ------------- ------------ ------------
NET SALES $ 6,631,543 $ 5,360,544 $ 15,940,972 $ 14,205,370
COST OF SALES 5,323,093 4,166,177 12,354,153 10,896,304
------------ ------------- ------------ ------------
GROSS PROFIT 1,308,450 1,194,367 3,586,819 3,309,066
OPERATING EXPENSES
Selling, general and administrative 1,115,629 915,556 3,232,470 2,737,746
------------ ------------- ------------ ------------
OPERATING INCOME 192,821 278,811 354,349 571,320
------------ ------------- ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (102,332) (90,951) (328,099) (280,058)
Other, net 10,867 23,449 (11,708) 14,396
------------ ------------- ------------ ------------
TOTAL OTHER EXPENSE, NET (91,465) (67,502) (339,807) (265,662)
------------ ------------- ------------ ------------
NET INCOME $ 101,356 $ 211,309 $ 14,542 $ 305,658
============ ============= ============ ============
COMPREHENSIVE INCOME - Foreign Currency
Translation Adjustment 246 (477) 11,313 12,314
------------ ------------- ------------ ------------
NET AND COMPREHENSIVE INCOME $ 101,602 $ 210,832 $ 25,855 $ 317,972
============ ============= ============ ============
BASIC EARNINGS PER SHARE $ 0.09 $ 0.18 $ 0.02 $ 0.26
============ ============= ============ ============
FULLY DILUTED EARNINGS PER SHARE $ 0.09 $ 0.18 $ 0.02 $ 0.26
============ ============= ============ ============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENDSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months For the nine months
ended ended
March 31, 2005 March 31, 2004
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 14,542 $ 305,658
------------ ------------
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation and amortization 277,782 279,626
Changes in operating assets and liabilities:
Accounts receivable / Note receivable, net (1,593,694) (749,765)
Inventories, net (382,948) (443,910)
Prepaid expenses (132,764) (58,493)
Accounts payable and accrued expenses 1,159,370 407,964
------------ ------------
Total adjustments (672,245) (564,578)
------------ ------------
Net cash used by operating
activities (657,712) (258,920)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of intangibles and other assets (20,327) (10,509)
Capital additions (125,657) (127,162)
------------ ------------
Net cash used by investing activities (145,984) (137,671)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit 16,695,291 10,300,383
Payments on line of credit (15,169,734) (10,033,706)
Payments on long-term debt (903,958) (203,759)
------------ ------------
Net cash provided by financing activities 621,599 62,918
------------ ------------
TRANSLATION EFFECT OF FOREIGN CURRENCIES 11,313 12,314
------------ ------------
NET DECREASE IN CASH (170,784) (321,359)
CASH AT BEGINNING OF PERIOD 533,022 709,230
------------ ------------
CASH AT END OF PERIOD $ 362,238 $ 387,871
============ ============
Supplemental Disclosure of Non-Cash
Financing activity:
During the quarter ended March 31, 2005, the
Company converted accounts payable totaling
$102,711 to long-term debt.
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
necessary 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, 2005, and the results of their operations
for the three months and nine months ended March 31, 2005, and 2004, and
cash flows for the nine months ended March 31, 2005, and 2004, 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 in which the
functional currency is that of the foreign location.
Certain reclassifications to the June 30, 2004 financial statements have
been made to conform with the current period presentation with no effect
on net income.
2. EARNINGS PER SHARE
Basic and diluted earnings 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, 2005 and 2004, the Company's weighted
average shares are calculated as follows:
Quarter Ended Quarter Ended Nine Months Nine Months
March 31, March 31, Ended March Ended March
2005 2004 31, 2005 31, 2004
------------- ------------- ----------- -----------
Weighted average common shares 1,171,812 1,171,812 1,171,812 1,171,812
outstanding
Effect of dilution of securities:
conversion of stock options - - - -
------------- ------------- ----------- -----------
Denominator for dilutive earnings per 1,171,812 1,171,812 1,171,812 1,171,812
share
============= ============= =========== ===========
During the three month and nine month periods ended March 31, 2005 and
2004, the Company had net income; however, the exercise price of all
common stock equivalents exceeded its average fair value. Accordingly, all
common stock equivalents were considered anti-dilutive during the periods
and are therefore not included in the calculation of earnings per share.
3. MAJOR CUSTOMERS AND VENDORS
The Company and its subsidiaries had consolidated sales of $3,582,815 and
$3,373,330 to a domestic customer for a total of 23% and 24% of
consolidated sales during the nine months ended March 31, 2005 and 2004,
respectively. The Company had sales of $1,664,794 and $959,486 to a
domestic customer for a total of 25% and 18% of consolidated sales,
for the quarter ended March 31, 2005 and 2004, respectively.
As of March 31, 2005, one customer accounted for 32% of consolidated
receivables. As of March 31, 2004, one customer accounted for 34% of
consolidated receivables.
During the nine months ended March 31, 2005 and 2004, the Company and its
subsidiaries had consolidated purchases of $5,554,780 and $5,722,455,
respectively from two vendors for a total of 56% and 63% of consolidated
purchases. During the quarter ended March 31, 2005 and 2004, the Company
and its subsidiaries had consolidated purchases of $2,147,822 and
$2,295,478, respectively from two vendors for a total of 51% and 64% of
consolidated purchases.
4. REVOLVING LINES OF CREDIT
The Company previously had a revolving line of credit with a financing
company, which provided for maximum borrowings of $4,000,000. The line of
credit bore interest at prime plus 1-2% dependent upon certain financial
ratios, required maintenance of certain levels of income and tangible net
worth and was secured by essentially all of the U.S. assets of the
Company. The line of credit matured in June 2003 and the Company was not
in compliance with its minimum financial reporting covenants at June 30,
2003. The Company continued to borrow under the line of credit under
verbal extensions and waivers from the financing company until the
financing company halted borrowings in May 2004. The line of credit was
repaid and replaced with a factoring facility and inventory term loan with
another financing company. Borrowings under the line of credit at June 30,
2004 and 2003 amounted to $0 and $2,515,461, respectively.
The Company has a revolving line of credit agreement with a financing
company which provides for maximum borrowings up to $5,000,000, dependent
upon qualifying trade accounts receivable and inventory balances. The line
of credit matures August 3, 2007, bears interest of prime at 5.75% at
March 31, 2005 plus 1.75% and incurs an unused line of credit fee of .25%.
The credit line is subject to certain financial ratio and reporting
covenants. The line of credit is secured by all of the assets of the
Company and personal guarantees by two officers of the Company of
$1,000,000 each. Outstanding borrowings amounted to $1,762,265 at March
31, 2005. At March 31, 2005, the Company was not in compliance with the
fixed charge coverage ratio covenant and no waiver for non-compliance has
been requested or obtained.
The Company also maintains a line of credit with a foreign financial
institution, which provides for maximum borrowings of $1,000,000 based on
the creditworthiness of the Company's customers serviced by the Company's
foreign subsidiary. Outstanding borrowings amounted to $110,332 and
$347,040 at March 31, 2005 and June 30, 2004, respectively. The foreign
line of credit matures November 30, 2005 and bears interest at 5.625%.
5. INCOME TAXES
The difference between the expected income tax expense at March 31, 2005
of $4,944 and $103,924 at March 31, 2004 which would be determined by
applying the statutory U.S. income tax rate of 34% to income before income
tax expense, is primarily due to the decrease in the deferred tax
valuation allowance.
6. OPERATING LEASES
The Company leases equipment and office, warehouse and manufacturing space
in Houston, TX; Butler, KY; Shanghai, China; Hong Kong, and Tatui, Brazil.
The Houston facility is a combination office/warehouse facility of
approximately 40,000 square feet, which the Company uses as its
headquarters and as an Omni Gear assembly center, inventory warehouse,
warranty repair, quality control, testing and inspection, and distribution
center. The Houston facility is leased from a real estate investment
company located in Houston, Texas, under a long-term lease expiring July
2005, an extension of which is under current consideration. The Butler
facility is a 35,000 square feet manufacturing facility. The Shanghai
facility leases buildings in a manufacturing complex containing
approximately 130,000 square feet.
7. LITIGATION AND CONTINGENCIES
The Company, from time to time, is a party to various legal proceedings
that constitute ordinary routine litigation incidental to the Company's
business. In the opinion of management, all such matters are either
adequately covered by insurance or are not expected to have a material
adverse effect on the Company.
8. 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
INCOME (LOSS)
THREE MONTHS ENDED FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2005 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------ ----------- ------------- -------- ------------ ------------ -------------
Power Transmission $ 5,870,225 $ 269,250 $ 65,116 $ 8,179,917 $ 33,720 $ 72,137
Components
Trailer and Implement 761,318 (76,429) 37,216 2,292,907 - 23,807
Components
----------- ------------- -------- ------------ ------------ -------------
Total Omni, U.S.A., Inc. $ 6,631,543 $ 192,821 $102,332 $ 10,472,824 $ 33,720 $ 95,944
=========== ============= ======== ============ ============ =============
THREE MONTHS ENDED
MARCH 31, 2005 NET SALES
------------------ -----------
Domestic Customers $ 5,923,240
Foreign Customers 708,303
-----------
Total Omni, U.S.A., Inc. $ 6,631,543
===========
PROPERTY AND
MARCH 31, 2005 EQUIPMENT, NET
-------------- --------------
Domestic $ 437,929
Foreign 943,942
--------------
Total Omni, U.S.A., Inc. $ 1,381,871
==============
INCOME (LOSS)
THREE MONTHS ENDED FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2004 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------ ----------- ------------- -------- ------------ ------------ -------------
Power Transmission $ 4,552,528 $ 254,908 $ 64,225 $ 9,132,174 $ 24,398 $ 68,843
Components
Trailer and Implement 808,016 23,903 26,726 2,625,688 8,549 25,447
Components
----------- ------------- -------- ------------ ------------ -------------
Total Omni, U.S.A., Inc. $ 5,360,544 $ 278,811 $ 90,951 $ 11,757,862 $ 32,947 $ 94,290
=========== ============= ======== ============ ============ =============
THREE MONTHS ENDED
MARCH 31, 2004 NET SALES
------------------ -----------
Domestic Customers $ 4,865,109
Foreign Customers 495,435
-----------
Total Omni, U.S.A., Inc. $ 5,360,544
===========
PROPERTY AND
MARCH 31, 2004 EQUIPMENT, NET
-------------- --------------
Domestic $ 486,404
Foreign 1,075,996
--------------
Total Omni, U.S.A., Inc. $ 1,562,400
==============
SEGMENT INFORMATION
(CONTINUED)
INCOME (LOSS)
NINE MONTHS ENDED FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2005 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------ ----------- ------------- -------- ------------ ------------ -------------
Power Transmission $13,368,280 $ 488,373 $218,137 $ 8,179,917 $ 128,211 $ 205,214
Components
Trailer and Implement 2,572,692 (134,024) 109,962 2,292,907 31,500 72,568
Components
----------- ------------- -------- ------------ ------------ -------------
Total Omni, U.S.A., Inc. $15,940,972 $ 354,349 $328,099 $ 10,472,824 $ 159,711 $ 277,782
=========== ============= ======== ============ ============ =============
NINE MONTHS ENDED
MARCH 31, 2005 NET SALES
------------------ ---------
Domestic customers $ 13,969,593
Foreign customers 1,971,379
------------
Total Omni, U.S.A., Inc. $ 15,940,972
============
PROPERTY AND
MARCH 31, 2005 EQUIPMENT, NET
-------------- --------------
Domestic $ 437,929
Foreign 943,942
--------------
Total Omni, U.S.A., Inc. $ 1,381,871
==============
INCOME (LOSS)
NINE MONTHS ENDED FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2004 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------ ----------- ------------- -------- ------------ ------------ -------------
Power Transmission $11,839,482 $ 543,652 $195,292 $ 9,132,174 $ 90,189 $ 198,204
Components
Trailer and Implement 2,365,888 27,668 84,766 2,625,688 36,973 81,422
Components
----------- ------------- -------- ------------ ------------ -------------
Total Omni, U.S.A., Inc. $14,205,370 $ 571,320 $280,058 $ 11,757,862 $ 127,162 $ 279,626
=========== ============= ======== ============ ============ =============
NINE MONTHS ENDED
MARCH 31, 2004 NET SALES
------------------ ------------
Domestic customers $ 12,724,948
Foreign customers 1,480,422
------------
Total Omni, U.S.A., Inc. $ 14,205,370
============
PROPERTY AND
MARCH 31, 2004 EQUIPMENT, NET
-------------- --------------
Domestic $ 486,404
Foreign 1,075,996
--------------
Total Omni, U.S.A., Inc. $ 1,562,400
==============
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 $1,872,597 at
March 31, 2005. The Company had working capital of $2,328,184 as of March 31,
2005 and working capital of $2,436,127 as of June 30, 2004, a decrease of
$107,943. The decrease in working capital from June 30, 2004 was due to net
income, increases in accounts receivable, lines of credit, and accrued expenses
and offset by the net decrease in accounts payable.
The Company had a cash balance of $362,238 as of March 31, 2005;
reflecting a negative cash flow of $170,784 compared to the June 30, 2004 cash
balance of $533,022. The Company's cash used by operating activities for the
nine months ended March 31, 2005 of $800,423 consisted of increases in
inventories and accounts receivable in both operating segments, offset by
increases in accounts payable and accrued expenses.
The Company's cash used in investing activities for the nine months ended
March 31, 2005 of $105,984 consisted of net capital expenditures for the period
in both operating segments.
Net cash provided by financing activities for the nine months ended March
31, 2005 of $724,310 consisted primarily of net borrowings from the Company's
lines of credit.
The Company's current ratio was 1.36 as of March 31, 2005, which is a 12%
decrease when compared to the June 30, 2004 current ratio of 1.56. This is
primarily the result of increases in inventory as well as borrowings on the
Company's lines of credit. Additionally this decrease is the result of
accounting for the Company's domestic factoring agreement it was operating under
as of June 30, 2004 and the domestic line of credit which replaced it in August
31, 2004 and was in effect as of December 31, 2004.
The Company's businesses are working capital intensive and require funding
for purchases of production, inventories and capital expenditures. The Company
has debt service requirements including payments on notes and monthly interest
payments on the Company's bank credit facilities. Management believes that cash
generated from operations, together with the Company's bank credit facilities,
provides the Company adequate liquidity to meet the Company's operating and debt
service requirements. If however, operations do not remain at current levels and
the Company is unable to access or renew its line of credit facilities or
service its long term debt facilities, the Company will be required to reduce
its operations accordingly which may have a negative impact on the Company to
meet the needs of it customers, suppliers and credit providers. In addition, the
Company believes that it has the ability to raise additional financing in the
form of debt to fund additional capital expenditures, if required.
Results for the Quarter ended March 31, 2005 compared with the Quarter ended
March 31, 2004
The Company had net sales of $6,631,543 for the three months ended March
31, 2005. This represents an increase of 24% compared to the three months ended
March 31, 2004 net sales of $5,360,544. Net sales for the power transmission
segment increased while sales for the trailer and implement components
decreased. The following table indicates the Company's net sales comparison and
percentage of change for the three months ended March 31, 2005 and 2004:
QUARTER QUARTER
ENDED % ENDED % DOLLAR %
NET SALES 03/31/05 OF TOTAL 03/31/04 OF TOTAL CHANGE CHANGE
--------- ----------- -------- ----------- -------- --------- ------
Power Transmission Components $ 5,870,225 89% $ 4,552,528 85% 1,317,697 29%
Trailer and Implement Components 761,318 11% 808,016 15% (46,698) (6%)
----------- --- ----------- --- --------- --
Consolidated $ 6,631,543 100% $ 5,360,544 100% 1,270,999 24%
----------- --- ----------- --- --------- --
Gross profit for the three months ended March 31, 2005 increased $114,083
to $1,308,450, compared to gross profit for the three months ended March 31,
2004 of $1,194,367. Gross profit as a percentage of net sales for the three
months ended March 31, 2005 decreased to 20% as compared to 22% for the three
months ended March 31, 2004. This decrease in profit margin was primarily due to
the product mix of sales for the period to existing and new customers.
Selling, general and administrative expenses increased $200,073 to
$1,115,629 in the three months ended March 31, 2005 from $915,556 in the three
months ended March 31, 2004. Selling, general and administrative expenses
increased due to operational support required by the increase in sales activity
in addition to costs incurred to increase efficiency in all operating segments
for the period.
Income from operations for the Company decreased $85,990 to $192,821 for
the three months ended March 31, 2005, compared to $278,811 for the three months
ended March 31, 2004. This decrease is the result of increased operating
expenses and lower gross profit margins during the period.
Interest expense increased $11,381 to $102,332 for the three months ended
March 31, 2005 from $90,951 for the three months ended March 31, 2004. The
increase resulted from increased borrowings and finance facility fees on the
Company's line of credit.
Other income was $10,867 for the three months ended March 31, 2005
compared to $23,449 for the three months ended March 31, 2004. Other income is
comprised of scrap and service fee income during the period.
The Company's net income decreased $109,953 to $101,356 or $0.09 per
share, for the three months ended March 31, 2005 compared to $211,309 or $0.18
per share, for the three months ended March 31, 2004.
Results for the Nine months ended March 31, 2005 compared with the Nine months
ended March 31, 2004
The Company had net sales of $15,940,972 for the nine months ended March
31, 2005. This represents an increase of 12% compared to the nine months ended
March 31, 2004 net sales of $14,205,370. Net sales have increased in both
business segments. The following table indicates the Company's net sales
comparison and percentage of change for the nine months ended March 31, 2005 and
2004:
NINE MONTHS NINE MONTHS
ENDED % ENDED % DOLLAR %
NET SALES 03/31/05 OF TOTAL 03/31/04 OF TOTAL CHANGE CHANGE
--------- ----------- -------- ----------- -------- --------- ------
Power Transmission Components $13,368,280 84% $11,839,482 83% 1,528,798 13%
Trailer and Implement Components 2,572,692 16% 2,365,888 17% 206,804 9%
----------- --- ----------- --- --------- --
Consolidated $15,940,972 100% $14,205,370 100% 1,735,602 12%
----------- --- ----------- --- --------- --
Gross profit for the nine months ended March 31, 2005 increased $277,753
to $3,586,819, compared to gross profit for the nine months ended March 31, 2004
of $3,309,066. Gross profit as a percentage of net sales for the nine months
ended March 31, 2005 and 2004 were both approximately 23%. Management strives
to maintain favorable profit margin levels in a competitive market.
Selling, general and administrative expenses increased $494,724 to
$3,232,470 in the nine months ended March 31, 2005 from $2,737,746 in the nine
months ended March 31, 2004. Selling, general and administrative expenses
increased due to operational support required by the increase in sales activity
in addition to costs incurred to increase efficiency in all operating segments
for the period.
Income from operations for the Company decreased $216,971 to $354,349 for
the nine months ended March 31, 2005, compared to $571,320 for the nine months
ended March 31, 2004. This decrease is primarily the result of the increase in
selling, general and administrative expenses in comparison to the increase sales
for the period.
Interest expense increased $48,041 to $328,099 for the nine months ended
March 31, 2005 from $280,058 for the nine months ended March 31, 2004. The
increase resulted from increased borrowings and finance facility fees on the
Company's lines of credit.
Other income/(expense) was ($11,708) for the nine months ended March 31,
2005 compared to $14,396 for the nine months ended March 31, 2004. Other income
is comprised of scrap and service fee income offset by net sales commissions
during the period.
The Company's net income decreased $291,116 to $14,542 or $0.02 per share,
for the nine months ended March 31, 2005 compared to $305,658, or $0.26 per
share, for the nine months ended March 31, 2004.
Cautionary Statement
The following is a "Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995:
With the exception of historical facts, the statements contained in Item 2
of this form 10-QSB are forward-looking statements. Forward-looking statements
discuss future expectations, plans, strategies, activities or events. They often
include words such as believe, expect, anticipate, intend or plan, or words with
similar meaning or with future or conditional verbs such as will, would, should,
or may. The Company does not plan to update these forward-looking statements to
reflect events or changes that occur after they are made.
Actual results may differ materially from those contemplated by the
forward-looking statements. The Company cannot guarantee that any forward
looking statement will be realized, although the Company and its management
believe that it has been prudent in its plans and assumptions. Investors are
further directed to the Company's documents, such as its Annual Report on Form
10-KSB, Forms 10-QSB and Forms 8-KSB filed with the Securities and Exchange
Commission. Achievement of future results and these forward-looking statements
involve risks and uncertainties, including but not limited to, the following:
1) acts or threats of war or terrorism, and the effects of such acts or
threats on the Company, its employees, its debtors, customers and
vendors as well as the local and international economies in which
the Company sells its products,
2) changes in the availability of debt and equity capital resulting in
increased costs, shareholder dilution, or reduced liquidity and lack
of working capital,
3) cyclical downturns affecting the markets for our products over which
we have no control,
4) our lack of ability to sustain profitable operations and generate
positive cash flows from those operations,
5) the effects of our failure to timely pay our outstanding debts,
6) substantial increases in interest rates,
7) availability or material increases in the costs of select raw
materials,
The Company undertakes no obligation to publicly update or otherwise
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the applicable cautionary statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material changes from the disclosure in the Company's
Form 10-KSB for the fiscal year ended June 30, 2004.
Item 6(a). Exhibits
Exhibit 31.1 and 31.2
Exhibit 32
Item 6(b). Reports on filed Form 8-K.
None
Item 7. Controls and Procedures.
Evaluation of disclosure controls and procedures. Within 90 days prior to
the date of this report, the Company carried out an evaluation, under the
supervision and with the participation of our management, including our
Chief Executive, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, the
Company's Chief Executive Officer concluded that the Company's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under
the Securities Exchange Act of 1934 (the "Exchange Act")) are effective to
ensure that information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported to the Company's management within the time
periods specified in the Securities and Exchange Commission's rules and
forms.
Changes in internal controls. Subsequent to the date of their evaluation,
there were no significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's disclosure
controls and procedures, and there were no corrective actions required
with regard to significant deficiencies and material weaknesses based on
such evaluation.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 16, 2005 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
---------------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer
INDEX TO EXHIBITS
Exhibit No. Description
31.1 and 31.2 Certification of CEO, President & CFO Pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended
32 Certification of CEO, President & CFO Pursuant
to 18 U.S.C. 1350 as Adopted Pursuant to Section
of the Sarbanes Oxley Act of 2002