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, 2002
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 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
March 31, 2002 and June 30, 2001
Condensed Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 2002 and March 31, 2001
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2002 and March 31, 2001
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
March 31, 2002 June 30, 2001
(unaudited)
------------------------- ------------------------
CURRENT ASSETS
Cash $ 272,254 $ 659,101
Accounts receivable, trade, net 2,976,452 3,269,586
Accounts receivable, related parties 38,335 43,654
Inventories 4,808,641 4,985,910
Notes receivable 109,807 208,671
Prepaid expenses 149,512 108,224
Deferred tax assets 40,393 40,393
------------------------- ------------------------
TOTAL CURRENT ASSETS 8,395,394 9,315,539
------------------------- ------------------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,871,254 2,112,551
------------------------- ------------------------
OTHER ASSETS
Primarily intangible assets, net 194,136 206,790
------------------------- ------------------------
TOTAL ASSETS $ 10,460,784 $ 11,634,880
========================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,327,283 $ 3,584,118
Lines of credit 2,978,020 2,771,161
Accrued expenses 233,172 244,220
Current portion of long-term debt 1,074,106 853,889
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 6,612,581 7,453,388
------------------------- ------------------------
LONG-TERM DEBT 996,781 1,057,891
------------------------- ------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and 1,207,912 6,129 6,129
outstanding)
Additional paid-in capital 5,372,815 5,372,815
Treasury Stock (19,167 shares) (57,141) (57,141)
Retained earnings (deficit) (2,568,046) (2,295,150)
Foreign currency translation adjustment 97,665 96,948
------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 2,851,422 3,123,601
------------------------- ------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,460,784 $ 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 NINE MONTHS ENDED MARCH 31, 2002 AND 2001
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2002 2001 2002 2001
------------------ ----------------- ----------------- ----------------
NET SALES $ 4,740,057 $ 5,808,113 $ 12,748,459 $ 17,003,923
COST OF SALES 3,924,586 4,504,980 10,164,315 13,492,529
------------------ ----------------- ----------------- ----------------
GROSS PROFIT 815,471 1,303,133 2,584,144 3,511,394
OPERATING EXPENSES
Selling, general and administrative 733,076 1,000,886 2,644,536 3,123,843
------------------ ----------------- ----------------- ----------------
OPERATING INCOME (LOSS) 82,395 302,247 (60,392) 387,551
OTHER INCOME (EXPENSE)
Interest expense (122,043) (110,418) (304,549) (368,461)
Other, net 68,242 (33,626) 92,045
------------------ ----------------- ----------------- ----------------
TOTAL OTHER EXPENSE (53,801) (144,044) (212,504) (368,415)
------------------ ----------------- ----------------- ----------------
NET INCOME (LOSS) $ 28,594 $ 158,203 $ (272,896) $ 19,136
================== ================= ================= ================
COMPREHENSIVE INCOME - Foreign
CurrencyTranslation
Adjustment - - 717 -
------------------ ----------------- ----------------- ----------------
NET AND COMPREHENSIVE
INCOME (LOSS) $ 28,594 $ 158,203 $ (272,179) $ 19,136
================== ================= ================= ================
BASIC EARNINGS (LOSS) PER SHARE $ 0.02 $ 0.13 $ (0.23) $ 0.02
================== ================= ================= ================
FULLY DILUTED EARNINGS (LOSS) PER SHARE $ 0.02 $ 0.13 $ (0.23) $ 0.02
================== ================= ================= ================
The accompanying notes are an integral part of the condensed, consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 2002 AND 2001
NINE MONTHS NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2002 2001
------------------------------ -----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (272,896) $ 19,136
------------------------------ -----------------------------
Adjustments to reconcile net income (loss) to net cash
provided / (used) by operating activities:
Depreciation and amortization 290,000 296,836
(Gain)/Loss on disposal of assets (5,506) 52,108
Changes in operating assets and liabilities:
Accounts receivable/ Notes receivable 397,317 (1,434,242)
Inventories 177,269 (247,186)
Prepaid expenses (41,288) (26,231)
Accounts payable and accrued expenses (1,267,883) 1,400,526
------------------------------ -----------------------------
Total adjustments (450,091) 41,811
------------------------------ -----------------------------
Net cash provided/(used) by operating activities (722,987) 60,947
------------------------------ -----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of other assets - (9,436)
Capital expenditures (30,543) (157,969)
------------------------------ -----------------------------
Net cash used by investing activities (30,543) (167,405)
------------------------------ -----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt 250,730 -
Borrowings on line of credit 9,593,920 10,915,833
Payments on line of credit (9,387,062) (10,791,241)
Payments on long-term debt (91,622) (242,208)
------------------------------ -----------------------------
Net cash provided/(used) by financing activities 365,966 (117,616)
------------------------------ -----------------------------
Effects of foreign currency translation 717 -
NET DECREASE IN CASH (386,847) (224,074)
CASH AT BEGINNING OF PERIOD 659,101 587,044
------------------------------ -----------------------------
CASH AT END OF PERIOD $ 272,254 $ 362,970
============================== =============================
Supplemental disclosure of non-cash investing activities
Capital expenditures financed by debt $ - $ 243,159
============================== =============================
The accompanying notes are an integral part of the condensed, consolidated
financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:
The consolidated financial statements have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. As permitted under those rules, certain footnotes or other
financial information that are normally required by generally accepted
accounting principles in the United States (GAAP) have been condensed or
omitted. The Company believes that the disclosures made in this report are
adequate to make the information presented not misleading. These condensed
financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's latest annual report
on Form 10-KSB.
The Company's management is responsible for the unaudited financial statements
included in this document. In the opinion of the Company, all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
financial position of Omni U.S.A., Inc. and subsidiaries as of March 31, 2002,
and the results of their operations for the three month and nine month periods
and cash flows for the nine month periods ended March 31, 2002, and 2001, have
been made in accordance with GAAP.
There are significant operations in Mainland China; however, the functional
exchange rate for those operations is the U.S. dollar. The foreign currency
translation adjustment primarily arises from the translation of amounts from
operations in Hong Kong and Japan in which the functional currency is that of
the foreign location.
2. NEW ACCOUNTING PRONOUNCEMENTS
Accounting for Asset Retirement Obligations: In June 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 143, Accounting for Asset Retirement Obligations,
effective for fiscal years beginning after June 15, 2002. SFAS No. 143
addresses financial accounting requirements for retirement obligations for
tangible, long-lived assets. The adoption of SFAS No. 143 is not expected to
have a material impact on the Company's financial statements.
Accounting for Impairment or Disposal of Long-Lived Assets: In August 2001, the
FASB issued SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived
Assets, that replaces SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed of. The provisions of SFAS No. 144
are effective for fiscal years beginning after December 15, 2001 and,
generally, are to be applied prospectively. SFAS No. 144 requires that
long-lived assets to be disposed of by sale, including those of discontinued
operations, be measured at the lower of the carrying amount or fair value less
costs to sell, whether reported in continuing or discontinued operations.
Discontinued operations will no longer be measured at net realizable value or
include amounts from operating losses that have not yet occurred. SFAS No. 144
also broadens the definition of the criteria for reporting discontinued
operations to include all operations within an entity that can be distinguished
from the rest of the entity that will be eliminated from the ongoing operations
of the entity as a result of the disposal. The adoption of SFAS No. 144 is not
expected to have a material impact on the Company's financial statements.
3. EARNINGS PER SHARE:
Basic and diluted loss per share is based on the weighted average number of
shares of common stock outstanding. For the three month and nine month periods
ended March 31, 2002 and March 31, 2001, the Company's weighted average shares
are calculated as follows:
Nine Months Nine Months
Quarter Ended Quarter Ended Ended March Ended March
March 31, 2002 March 31, 2001 31, 2002 31, 2001
--------------------------------------------------------------
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
==============================================================
When the Company is in a net loss position all common stock equivalents are
considered anti-dilutive and are therefore not included in the calculation of
earnings per share. During the three month periods ended March 31, 2002 and
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.
4. 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.
5. MAJOR CUSTOMERS AND VENDORS:
During the nine months ended March 31, 2002 and March 31, 2001, the Company and
its subsidiaries had consolidated sales of $1,529,631 and $3,393,989 to a
domestic customer for a total of 12% and 20% of consolidated sales. During the
quarters ended March 31, 2002 and March 31, 2001, the Company and its
subsidiaries had consolidated sales of $1,062,379 and $1,137,260 to a domestic
customer for a total of 22% and 20% of consolidated sales. During the nine
months ended March 31, 2002 and March 31, 2001, the Company and its
subsidiaries had consolidated purchases of $3,526,213 and $6,527,856 from one
vendor for a total of 35% and 48% of consolidated purchases. During the
quarters ended March 31, 2002 and March 31, 2001, the Company and its
subsidiaries had consolidated purchases of $1,603,013 and $2,052,478 from one
vendor for a total of 41% and 46% of consolidated purchases.
6. REVOLVING LINES OF CREDIT AND LONG-TERM DEBT:
The Company has a revolving line of credit with a financial institution 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.
During the quarter ended March 31, 2002, the Company obtained an additional 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. The line of credit
matures September 30, 2002 and bears interest at 6.625 %. Borrowings on this
line of credit were $71,000 and $0 at March 31, 2002 and 2001, respectively.
During the quarter ended March 31, 2002, the Company obtained a short-term loan
of 2,500,000 Rmb with a foreign third party through its foreign subsidiary
Shanghai Omni Gear (SOG). Borrowings under the short term loan were 2,100,000
Rmb, or $253,730, at March 31, 2002 to finance production within SOG's Shanghai
manufacturing facility. The loan is due in one payment January 27, 2003, bears
interest at .54% per month and is secured by certain machinery and equipment of
SOG.
The Company amended the terms of the notes payable to the former owners of
Butler to extend the repayment terms. Under the amended terms, the Company paid
$30,000 in April, 2002 with an additional $20,000 due for principle and accrued
interest at June 30, 2002. After which, payments will be made based upon 40% of
Butler's net income per month within 30 days of internal monthly financial
statement issuance. Additionally, any proceeds received from the sale of Butler
assets may be paid against the note payable balance.
The Company has amended its debt terms with Paccar, Inc. to provide for monthly
payments of principle and interest of $18,500 for a period of six months
commencing April 5, 2002. After which time, Paccar and the Company will review
the Company's cash flow with the anticipation that the monthly payments will be
increased to $26,700. The new terms increase the interest rate on the note to
12% until the monthly payments reach $26,700 per month at which time the
interest rate will be reduced to 10%. Under the amended terms, the Company shall
also pay an additional $20,000 per month beginning April 5, 2002 through August
5, 2002 to fully repay the outstanding inventory portion of the note. Paccar,
Inc. continues to be a customer of the Company.
Haas Automation payments totaling $283,132 remain in default and past due at
March 31, 2002. The Company is currently repaying the balances due under 5 year
repayment terms; however, there has been no amendment to the original note
payable agreement.
7. OPERATING LEASES
The Company leases equipment and office, warehouse and manufacturing space in
Houston, TX; Madill, OK; Shanghai, China; and Osaka, Japan. The Company has
entered into a verbal agreement to extend the Houston lease which expires June
30, 2002 at $9,000 per month. The amended lease terms expire six months after
written notice from either party.
8. LITIGATION AND CONTINGENCIES
The Company is involved in certain claims and litigation arising in it's normal
course of business. Management believes that such claims and litigation will
not have an adverse affect on future results or the financial condition of the
Company.
9. 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, 2002 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission $3,826,249 $ 200,091 $88,609 $6,968,865 $ 9,317 $ 70,227
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 913,808 (117,696) 33,434 3,491,919 2,364 25,641
Components
--------------------------------------------------------------------------------------------------------------
Corporate and Eliminations
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $4,740,057 $ 82,395 $122,043 $10,460,784 $ 11,681 $ 95,868
==============================================================================================================
---------------------------------------------- -------------------------------------------------
THREE MONTHS ENDED NET SALES PROPERTY AND
MARCH 31, 2002 MARCH 31, 2002 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $4,619,266 Domestic $ 611,408
---------------------------------------------- -------------------------------------------------
Foreign customers 120,791 Foreign 1,259,846
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $4,740,057 Total Omni, U.S.A., Inc. $ 1,871,254
============================================== =================================================
--------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2001 OPERATIONS EXPENSE ASSETS EXPENDITURES 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 PROPERTY AND
MARCH 31, 2001 MARCH 31, 2001 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
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
============================================== =================================================
SEGMENT INFORMATION
(CONTINUED)
--------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2002 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission $10,043,553 $ 161,018 $241,657 $6,968,865 $ 28,179 $ 203,513
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 2,704,906 (76,514) 62,892 3,491,919 2,364 86,487
Components
--------------------------------------------------------------------------------------------------------------
Corporate and Eliminations (144,896)
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $12,748,459 $ (60,392) $304,549 $10,460,784 $ 30,543 $ 290,000
==============================================================================================================
---------------------------------------------- -------------------------------------------------
NINE MONTHS ENDED NET SALES PROPERTY AND
MARCH 31, 2002 MARCH 31, 2002 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $11,548,381 Domestic $ 611,408
---------------------------------------------- -------------------------------------------------
Foreign customers 1,200,078 Foreign 1,259,846
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $12,748,459 Total Omni, U.S.A., Inc. $ 1,871,254
============================================== =================================================
--------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2001 OPERATIONS EXPENSE ASSETS EXPENDITURES 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 PROPERTY AND
MARCH 31, 2001 MARCH 31, 2001 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
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
============================================== =================================================
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
General:
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 that have reduced cash balances, decreased working capital
and resulted in increased borrowings and debt balances that have become due but
remain unpaid as of and for the three months and nine months ended March 31,
2002. The Company has taken steps to reduce its cost of operations to address
this decline in demand to include cost minimization efforts and reductions in
workforce in an attempt to match the Company's level of activities with market
demand.
Capital Resources:
The Company had working capital of $1,782,813 as of March 31, 2002 and
working capital of $1,862,151 as of June 30, 2001, a decrease of $79,338 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 as well as increasing amounts of debt that remain past due
and classified as current. The Company's primary capital requirements are for
working capital to manufacture, sell and distribute its products. Working
capital requirements are generally met through a combination of internally
generated funds, revolving lines of credit and credit terms from suppliers. The
Company's credit facilities had a combined outstanding balance of $2,978,020
and current portions of long-term debt totaled $1,074,106 at March 31, 2002.
Accounts receivable balance of $3,014,787 as of March 31, 2002
decreased $298,453 compared to June 30, 2001 accounts receivable balance of
$3,313,240. Inventory balance as of March 31, 2002 was $4,808,641; a decrease
of $177,269 compared to June 30, 2001. Accounts receivable and inventory
decreased during the period in response to lower sales levels in both business
segments.
Cash Flow Measurements of Liquidity:
The Company had a cash balance of $272,254 as of March 31, 2002;
reflecting a negative cash flow of $386,847 compared to the June 30, 2001 cash
balance of $659,101. The Company's cash used by operating activities for the 9
months ended March 31, 2002 of $722,987 consisted of the net loss for the
period of $272,896, combined with a decrease in accounts receivable, accounts
payable and inventories.
The Company's cash used in investing activities for the nine months
ended March 31, 2002 of $30,543 consisted of capital expenditures for the
period primarily in support of the power transmission component segment.
Net cash provided by financing activities for the nine months ended
March 31, 2002 of $365,966 was due primarily to net borrowings under the
Company's lines of credit and long-term debt.
Balances due on lines of credit and current portions of long-term debt:
As of March 31, 2002, the Company has significant amounts of debt past
due. The Company has renegotiated debts with the former owners of Butler and
Paccar and is currently paying on balances due to Haas Automation as more fully
discussed in Note 6 of the footnotes to the financial statements. The Company
has also borrowed an additional $324,730 during the period under a new foreign
line of credit and foreign short term loan.
Outlook:
The Company believes that future demand for its products as well as the
general economy should improve and, between the Company's access to the line of
credit facilities and its ability to generate funds internally, it has adequate
capital resources to meet its working capital requirements for the foreseeable
future, given its current working capital requirements, known obligations, and
assuming current levels of operations. 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, as well as emphasize sales and marketing efforts to acquire additional
business from new and existing customers. Management believes that it is and
will continue to be successful in this endeavor.
RESULTS FOR THE QUARTER ENDED MARCH 31, 2002 COMPARED WITH THE QUARTER ENDED
MARCH 31, 2001
The Company had net sales of $4,740,057 for the three months ended
March 31, 2002. This represents a decrease of 18% compared to the three months
ended March 31, 2001 net sales of $5,808,113. 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 three months ended March 31,
2002 and 2001:
------------------------------------------------------------------------------------------------------------
QUARTER % QUARTER % DOLLAR %
ENDED ENDED
NET SALES 3/31/02 OF TOTAL 3/31/01 OF TOTAL CHANGE CHANGE
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 3,826,249 81% $ 4,698,008 81% $(871,759) (19%)
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 913,808 19% 1,110,105 19% (196,297) (18%)
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Consolidated $ 4,740,057 100% $ 5,808,113 100% $(1,068,056) (18%)
------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended March 31, 2002 decreased
$487,662 to $815,471, compared to gross profit for the three months ended March
31, 2001 of $1,303,133. Gross profit as a percentage of net sales for the three
months ended March 31, 2002 decreased to 17% as compared to 22% for the three
months ended March 31, 2001. This decrease in profit margin was primarily due
to reduction in sales of higher margin product for the period and costs
associated with the Company's foreign operations.
Selling, general and administrative expenses decreased $267,810 to
$733,076 in the three months ended March 31, 2002 from $1,000,886 in the three
months ended March 31, 2001. Selling, general and administrative expenses
decreased due to cost cutting initiatives put in place by management as a
response to the lower sales volume.
Income from operations for the Company decreased $219,852 to $82,395
for the three months ended March 31, 2002, compared to $302,247 for the three
months ended March 31, 2001. This decrease is the result of lower sales volume
as well as changes in sales mix during the period, offset with reductions in
sales, general and administrative expenses.
Interest expense increased $11,625, to $122,043 for the three months
ended March 31, 2002 from $110,418 for the three months ended March 31, 2001.
The increase resulted from increased debt borrowings as well as higher interest
rates from amended debt terms with Paccar.
Other income was $68,242 for the three months ended March 31, 2002
compared to $(33,626) for the three months ended March 31, 2001. This change is
principally from increased VAT refund from foreign sales.
The Company's net and comprehensive income decreased $129,609 to
$28,594, or $0.02 per share, for the three months ended March 31, 2002 compared
to $158,203, or $0.13 per share, for the three months ended March 31, 2001 due
to decreases in sales, gross profit and increased in interest which were
partially offset with reductions in SG&A costs and increases in other income.
RESULTS FOR THE NINE MONTHS ENDED MARCH 31, 2002 COMPARED WITH THE NINE MONTHS
ENDED MARCH 31, 2001
The Company had net sales of $12,748,459 for the nine months ended
March 31, 2002. This represents a decrease of 25% compared to the nine months
ended March 31, 2001 net sales of $17,003,923. 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 nine months ended March 31,
2002 and 2001:
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NINE MONTHS % NINE MONTHS % DOLLAR %
ENDED ENDED
NET SALES 3/31/02 OF TOTAL 3/31/01 OF TOTAL CHANGE CHANGE
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Power Transmission Components $ 10,043,553 79% $13,820,275 81% $(3,776,722) (27%)
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Trailer and Implement Components 2,704,906 21% 3,183,648 19% (478,742) (15%)
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Consolidated $ 12,748,459 100% $17,003,923 100% $(4,255,464) (25%)
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Gross profit for the nine months ended March 31, 2002 decreased
$927,250 to $2,584,144, compared to gross profit for the nine months ended
March 31, 2001 of $3,511,394. This decrease in gross profit was primarily the
result of reduced sales. Gross profit as a percentage of net sales for the nine
months ended March 31, 2002 and 2001 was 20%.
Selling, general and administrative expenses decreased $479,307 to
$2,644,536 in the nine months ended March 31, 2002 from $3,123,843 in the nine
months ended March 31, 2001. Selling, general and administrative expenses
decreased due to cost cutting initiatives put in place by management as a
response to the lower sales volume.
Income from operations for the Company decreased $447,943 to $(60,392)
for the nine months ended March 31, 2002, compared to $387,551 for the nine
months ended March 31, 2001. This decrease is primarily the result of decreased
sales, lower profit margins, offset by decreased selling, general and
administrative expenses.
Interest expense decreased $63,912, to $304,549 for the nine months
ended March 31, 2002 from $368,461 for the nine months ended March 31, 2001.
The decrease primarily resulted from a decrease in the average borrowing rate
associated with the Company's line of credit to meet current inventory and
working capital needs throughout the nine month period ended March 31, 2002 as
well as the timing of borrowing amounts as compared to the nine month period
ended March 31, 2001.
Other income was $92,045 for the nine months ended March 31, 2002
compared to $46 for the nine months ended March 31, 2001. 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 income decreased $291,315 to
$(272,179), or $(0.23) per share, for the nine months ended March 31, 2002
compared to $19,136, or $0.02 per share, for the nine months ended March 31,
2001 due to decreases in sales and gross profit which were partially offset
with reductions in SG&A costs, interest and increases in other income.
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 can not guarantee that any forward
looking statement will be realized, although the Company and its management
believe that it has been prudent in its plans and assumptions. Investors are
further directed to the Company's documents, such as its Annual Report on Form
10-KSB, Form 10-QSB's and Form 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 generate profitable operations and positive
cash flows from those operations,
5) the effects of our failure to timely pay our outstanding debts,
6) substantial increases in interest rates,
7) availability or material increases in the costs of select raw
materials,
The Company undertakes no obligation to publicly update or otherwise
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in 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: May 15, 2002 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
------------------------
Jeffrey K. Daniel
President and
Chief Executive Officer