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, 2003
Commission File Number: 0-17493
OMNI U.S.A., INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0237223
------ ----------
(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 February 13, 2004, there were 1,171,812 shares of common stock $.004995 par
value outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
December 31, 2003 and June 30, 2003
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended December 31, 2003 and
December 31, 2002
Condensed Consolidated Statements of Cash Flows
Six Months Ended December 31, 2003 and December 31, 2002
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, 2003 June 30, 2003
(unaudited)
----------------- -------------
CURRENT ASSETS
Cash $ 269,017 $ 709,230
Accounts receivable, trade, net 4,146,839 3,955,537
Accounts receivable, related parties 16,416 29,167
Inventories, net 4,321,785 4,014,108
Prepaid expenses 280,352 224,049
------------ ------------
TOTAL CURRENT ASSETS 9,034,409 8,932,091
------------ ------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,620,963 1,706,669
------------ ------------
OTHER ASSETS
Primarily intangible assets, net 335,341 330,248
------------ ------------
TOTAL ASSETS $ 10,990,713 $ 10,969,008
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,645,868 $ 2,805,776
Line of credit 2,091,346 2,740,030
Accrued expenses 334,703 458,244
Current portion of long-term debt 985,770 819,604
------------ ------------
TOTAL CURRENT LIABILITIES 7,057,687 6,823,654
------------ ------------
LONG-TERM DEBT 842,485 1,161,953
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock (1,227,079 shares issued and 1,171,812 6,129 6,129
Outstanding,)
Additional paid-in capital 5,372,815 5,372,815
Treasury Stock (55,267 shares) (100,071) (100,071)
Retained earnings (deficit) (2,297,368) (2,391,717)
Foreign currency translation adjustment 109,036 96,245
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 3,090,541 2,983,401
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,990,713 $ 10,969,008
============ ============
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, 2003 AND 2002
THREE MONTHS ENDED THREE MONTHS SIX MONTHS ENDED SIX MONTHS
DECEMBER 31, 2003 ENDED DECEMBER DECEMBER 31, 2003 ENDED DECEMBER
31, 2002 31, 2002
-----------------------------------------------------------------------
NET SALES $ 5,301,593 $ 4,710,079 $ 8,844,826 $ 9,172,172
COST OF SALES 3,937,653 3,595,778 6,730,127 6,827,090
------------ ------------ ------------ ------------
GROSS PROFIT 1,363,940 1,114,301 2,114,699 2,345,082
OPERATING EXPENSES
Selling, general and administrative 983,370 1,065,453 1,822,190 2,036,173
------------ ------------ ------------ ------------
OPERATING INCOME 380,570 48,848 292,509 308,909
OTHER INCOME (EXPENSE)
Interest expense (106,529) (98,810) (201,934) (200,309)
Other, net 263 36,912 3,774 55,830
------------ ------------ ------------ ------------
TOTAL OTHER EXPENSE (106,266) (61,898) (198,160) (144,479)
------------ ------------ ------------ ------------
INCOME TAXES - - - (40,393)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 274,304 $ (13,050) $ 94,349 $ 124,037
============ ============ ============ ============
COMPREHENSIVE INCOME - Foreign
Currency
Translation
Adjustment 5,919 478 12,791 844
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME (LOSS) $ 280,223 $ (12,572) $ 107,140 $ 124,881
============ ============ ============ ============
BASIC EARNINGS (LOSS) PER SHARE $ 0.23 $ (0.01) $ 0.08 $ 0.10
============ ============ ============ ============
FULLY DILUTED EARNINGS (LOSS) PER SHARE $ 0.23 $ (0.01) $ 0.08 $ 0.10
============ ============ ============ ============
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 six months ended For the six months ended
December 31, 2003 December 31, 2002
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 94,349 $ 124,037
---------- -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 185,337 179,726
Deferred taxes - 40,393
Loss on sale of assets - (2,285)
Changes in operating assets and liabilities:
Accounts receivable / Notes receivable (178,551) (27,379)
Inventories (307,677) (438,252)
Prepaid expenses (56,303) (84,529)
Accounts payable and accrued expenses 716,551 380,148
---------- -----------
Total adjustments 359,357 47,822
---------- -----------
Net cash provided by operating
activities 453,706 171,859
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of other assets - (25,000)
Intangible assets (10,509) 1,373
Capital expenditures (94,215) (92,411)
---------- -----------
Net cash used by investing activities (104,724) (116,038)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock - (42,930)
Borrowings on line of credit 6,329,822 6,128,580
Payments on line of credit (6,978,506) (6,454,276)
Payments on long-term debt (153,302) (61,817)
---------- -----------
Net cash used by financing activities (801,986) (430,443)
---------- -----------
TRANSLATION EFFECT OF FOREIGN CURRENCIES 12,791 844
NET DECREASE IN CASH (440,213) (373,778)
CASH AT BEGINNING OF PERIOD 709,230 821,544
---------- -----------
CASH AT END OF PERIOD $ 269,017 $ 447,766
========== ===========
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
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, 2003, and the results of their operations for the three
months and six months ended December 31, 2003, and 2002, and cash flows for
the six months ended December 31, 2003, and 2002, 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, 2003 and December 31, 2002
financial statements have been made to conform to the current period
presentation with no effect on net income.
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, 2003 and 2002, the Company's weighted average
shares are calculated as follows:
Six Months Six Months
Quarter Ended Quarter Ended Ended Ended
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
-------------------------------------------------------------
Weighted average common shares
outstanding 1,171,812 1,185,612 1,171,812 1,196,762
Effect of dilution of securities:
conversion of stock options - - - -
-------------------------------------------------------------
Denominator for dilutive earnings per
share 1,171,812 1,185,612 1,171,812 1,196,762
=============================================================
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 six month period ended
December 31, 2002, and the three month and six month period ended December
31, 2003 the Company had positive 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 period 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 $2,413,844 and
$1,757,845 to a domestic customer, which accounted for 27% and 19% of
consolidated sales for the six months ended December 31, 2003 and 2002,
respectively. The Company had sales of $2,134,770 and $1,045,863 to a
domestic customer for a total of 40% and 10% of consolidated sales, for the
quarters ended December 31, 2003 and 2002, respectively.
During the six months ended December 31, 2003 and December 31, 2002, the
Company and its subsidiaries had consolidated purchases of $1,826,026 and
$3,225,657 from one vendor for a total of 34% and 45% of consolidated
purchases. During the quarters ended December 31, 2003 and December 31,
2002, the Company and its subsidiaries had consolidated purchases of
$1,217,027 and $1,851,724 from one vendor for a total of 36% and 48% of
consolidated purchases.
4. REVOLVING LINE OF CREDIT AND LONG-TERM DEBT:
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 January 31, 2004, 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. Management is currently in negotiations to
renegotiate the terms and due dates of this line of credit under what it
believes will be comparable terms. The Company was not in compliance with
its accounts payable aging requirements at December 31, 2003. The Company
has obtained a verbal waiver from the financing company.
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 $150,755 and
$224,569 at December 31, 2003 and June 30, 2003, respectively. The foreign
line of credit matures November 30, 2004 and bears interest at 5.625%.
5. INCOME TAXES
The difference between the effective rate of income tax expense at December
31, 2003 and 2002 and the amounts which would be determined by applying the
statutory U.S. income tax rate of 34% to income before income tax expense,
are due to the utilization of net operating losses which were fully
reserved by the valuation allowance in previous periods.
The valuation allowance decreased by approximately $32,000 during the six
months ended December 31, 2003. The Company had approximately $530,000 in
domestic net operating loss carryforwards which expire in 2022 and
approximately $1,300,000 in foreign net operating loss carryforwards which
were fully reserved by a valuation allowance as of December 31, 2003.
Management does not believe that it is more likely than not that the
Company will realize the benefits of its deferred tax assets net of the
existing valuation allowance.
6. OPERATING LEASES
The Company leases equipment and office, warehouse and manufacturing space
in Houston, TX; Shanghai, China; and Hong Kong. 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. 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
-------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES OPERATING INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2003 INCOME EXPENSE ASSETS EXPENDITURES AMORTIZATION
-------------------------------------------------------------------------------------------------------------
Power Transmission $ 4,546,818 $ 303,905 $ 77,784 $ 8,329,481 $ 14,169 $ 66,004
Components
-------------------------------------------------------------------------------------------------------------
Trailer and Implement 754,775 76,665 28,745 2,661,232 30,769 26,562
Components
-------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $ 5,301,593 $ 380,570 $106,529 $10,990,713 $ 44,938 $ 92,566
=============================================================================================================
------------------------------------------------ ---------------------------------------------
THREE MONTHS ENDED NET SALES DECEMBER 31, 2003 PROPERTY AND
DECEMBER 31, 2003 EQUIPMENT, NET
------------------------------------------------ ---------------------------------------------
Domestic Customers $ 4,765,842 Domestic $ 505,027
------------------------------------------------ ---------------------------------------------
Foreign Customers 535,751 Foreign 1,115,936
------------------------------------------------ ---------------------------------------------
Total Omni, U.S.A., Inc. $ 5,301,593 Total Omni, U.S.A., Inc. $1,620,963
================================================ =============================================
-------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES OPERATING INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2002 INCOME EXPENSE ASSETS EXPENDITURES AMORTIZATION
-------------------------------------------------------------------------------------------------------------
Power Transmission $ 3,941,900 $ 218,887 $ 71,356 $ 7,745,140 $ 33,510 $ 58,067
Components
-------------------------------------------------------------------------------------------------------------
Trailer and Implement 768,179 (170,039) 27,454 3,098,696 30,716 52,326
Components
-------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $ 4,710,079 $ 48,848 $ 98,810 $10,843,836 $ 64,226 $ 110,393
=============================================================================================================
------------------------------------------------ ---------------------------------------------
THREE MONTHS ENDED NET SALES DECEMBER 31, 2002 PROPERTY AND
DECEMBER 31, 2002 EQUIPMENT, NET
------------------------------------------------ ---------------------------------------------
Domestic Customers $ 4,379,617 Domestic $ 554,355
------------------------------------------------ ---------------------------------------------
Foreign Customers 330,462 Foreign 1,173,315
------------------------------------------------ ---------------------------------------------
Total Omni, U.S.A., Inc. $ 4,710,079 Total Omni, U.S.A., Inc. $1,727,670
================================================ =============================================
SEGMENT INFORMATION
(CONTINUED)
--------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2003 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission $7,286,954 $ 288,744 $143,894 $8,329,481 $ 62,702 $ 129,362
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 1,557,872 3,765 58,040 2,661,232 31,513 55,975
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $8,844,826 $ 292,509 $201,934 $ 10,990,713 $ 94,215 $ 185,337
==============================================================================================================
---------------------------------------------- -------------------------------------------------
SIX MONTHS ENDED NET SALES PROPERTY AND
DECEMBER 31, 2003 DECEMBER 31, 2003 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $7,859,839 Domestic $ 505,027
---------------------------------------------- -------------------------------------------------
Foreign customers 984,987 Foreign 1,115,936
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $8,844,826 Total Omni, U.S.A., Inc. $ 1,620,963
============================================== =================================================
--------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2002 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission $7,432,238 $ 455,829 $147,552 $7,745,140 $ 61,695 $ 117,505
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 1,739,934 (146,920) 52,757 3,098,696 30,716 62,221
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. $9,172,172 $ 308,909 $200,309 $ 10,843,836 $ 92,411 $ 179,726
==============================================================================================================
---------------------------------------------- -------------------------------------------------
SIX MONTHS ENDED NET SALES PROPERTY AND
DECEMBER 31, 2002 DECEMBER 31, 2002 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers $8,282,816 Domestic $ 554,355
---------------------------------------------- -------------------------------------------------
Foreign customers 889,356 Foreign 1,173,315
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. $9,172,172 Total Omni, U.S.A., Inc. $ 1,727,670
============================================== =================================================
9. RESTRUCTURING:
In October 2003, the Company committed to a plan to consolidate the
operations of its Trailer and Implement Components business segment into
one manufacturing facility. The Madill, Oklahoma facility was closed and
its employees terminated or relocated to Butler, Kentucky. The inventory,
machinery and equipment were moved to Butler, Kentucky to fill excess
capacity and space. The Company believes that the consolidation of
manufacturing operations will reduce costs with little or no adverse impact
to future sales levels. The Company incurred costs of approximately $90,000
in moving and severance expenses relating to this restructuring.
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
$2,091,346 at December 31, 2003. The Company had working capital of $1,976,722
as of December 31, 2003 and working capital of $2,108,437 as of June 30, 2003, a
decrease of $131,715 from June 30, 2003. The decrease in working capital from
June 30, 2003 was due to increases in accounts payable and decrease in accrued
expenses, offset by increases in inventories and accounts receivable.
The Company had a cash balance of $269,017 as of December 31, 2003;
reflecting a negative cash flow of $440,213 compared to the June 30, 2003 cash
balance of $709,230. The Company's cash provided by operating activities for the
six months ended December 31, 2003 of $453,706 consisted of the net income for
the period, increases in accounts payable and accrued expenses and depreciation
offset by increases in accounts receivable and inventories.
The Company's cash used in investing activities for the six months
ended December 31, 2003 of $104,724 consisted of net capital expenditures for
the period in both operating segments.
Net cash used by financing activities for the six months ended December
31, 2003 of $801,986 consisted primarily of payments on the line of credit and
long-term debt.
The Company's current ratio was 1.28 as of December 31, 2003, which is
a 2% decrease when compared to the June 30, 2003 current ratio of 1.31
The Company believes that between its access to the line of credit
facilities and its anticipated ability to generate funds internally, it has
adequate capital resources to meet its working capital requirements for the next
fiscal year, given its current working capital requirements, known obligations,
and assuming current levels of operations. 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 December 31, 2003 compared with the Quarter ended
December 31, 2002
The Company had net sales of $5,301,593 for the three months ended
December 31, 2003. This represents an 13% increase compared to the three months
ended December 31, 2002 net sales of $4,710,079. This increase is partly due to
an improved economic outlook as well as increased sales to a large domestic
customer The following table indicates the Company's net sales comparison and
percentage of change for the three months ended December 31, 2003 and 2002:
------------------------------------------------------------------------------------------------------------
NET SALES QUARTER % QUARTER % DOLLAR %
ENDED OF TOTAL ENDED OF TOTAL CHANGE CHANGE
12/31/03 12/31/02
------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 4,546,818 86% $ 3,941,900 84% $ 604,918 15%
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 754,775 14% 768,179 16% (13,404) (2%)
------------------------------------------------------------------------------------------------------------
Consolidated $ 5,301,593 100% $ 4,710,079 100% $ 591,514 13%
------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended December 31, 2003 increased
$249,639 to $1,363,940, compared to gross profit for the three months ended
December 31, 2002 of $1,114,301. Gross profit as a percentage of net sales for
the three months ended December 31, 2003 increased to 26% as compared to 24% for
the three months ended December 31, 2002. This increase in profit margin was
primarily due to the sales of higher margin product in the period.
Selling, general and administrative expenses decreased $82,083 to
$983,370 in the three months ended December 31, 2003 from $1,065,453 in the
three months ended December 31, 2002. Selling, general and administrative
expenses decreased due to cost cutting initiatives undertaken, including the
consolidation of the Madill, OK facility, and efficiencies gained in relation to
those initiatives.
Income from operations for the Company increased $331,722 to $380,570
for the three months ended December 31, 2003, compared to $48,848 for the three
months ended December 31, 2002. This increase is the result of lower operating
expenses during the period and increased revenues and gross profit.
Interest expense increased $6,617 to $105,427 for the three months
ended December 31, 2003 from $98,810 for the three months ended December 31,
2002. The increase resulted from increased interest rates associated with the
Company's line of credit.
Other income was $263 for the three months ended December 31, 2003
compared to $36,912 for the three months ended December 31, 2002. This change is
primarily the result of scrap and service fee income in the prior period.
The Company's net income increased $287,354 to $274,304 or $0.23 per
share, for the three months ended December 31, 2003 compared to ($13,050), or
($0.01) per share, for the three months ended December 31, 2002.
Results for the Six months ended December 31, 2003 compared with the Six months
ended December 31, 2002
The Company had net sales of $8,844,826 for the six months ended
December 31, 2003. This represents a decrease of 4% compared to the six months
ended December 31, 2002 net sales of $9,172,172. Sales have decreased overall
due to a poor first fiscal quarter, but increases in sales in the second fiscal
quarter have offset much of the first quarter decline. The following table
indicates the Company's net sales comparison and percentage of change for the
six months ended December 31, 2003 and 2002:
------------------------------------------------------------------------------------------------------------
NET SALES QUARTER % QUARTER ENDED % DOLLAR %
ENDED OF TOTAL 12/31/02 OF TOTAL CHANGE CHANGE
12/31/03
------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 7,286,954 82% $ 7,432,238 81% ($145,284) (2%)
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 1,557,872 18% 1,739,934 19% (182,062) (10%)
------------------------------------------------------------------------------------------------------------
Consolidated $ 8,844,826 100% $ 9,172,172 100% ($327,346) (4%)
------------------------------------------------------------------------------------------------------------
Gross profit for the six months ended December 31, 2003 decreased
$230,383 to $2,114,699, compared to gross profit for the six months ended
December 31, 2002 of $2,345,082. Gross profit as a percentage of net sales for
the six months ended December 31, 2003 decreased to 24% as compared to the six
months ended December 31, 2002 gross profit of 26%.
Selling, general and administrative expenses decreased $213,983 in the
six months ended December 31, 2003 from $2,036,173 in the six months ended
December 31, 2002. Selling, general and administrative expenses decreased due to
cost cutting initiatives undertaken, including the consolidation of the Madill,
OK facility, and reduced sales activity in the second quarter.
Income from operations for the Company decreased $16,400 to $292,509
for the six months ended December 31, 2003, compared to $308,909 for the six
months ended December 31, 2002. This decrease is the result of lower operating
expenses during the period.
Interest expense increased $1,625, to $201,934 for the six months ended
December 31, 2003 from $200,309 for the six months ended December 31, 2002.
Other income was $3,774 for the six months ended December 31, 2003
compared to $55,830 for the six months ended December 31, 2002. This change is
primarily the result of scrap and service fee income in the prior period.
The Company's net income decreased $29,688 to $94,349, or $0.08 per
share, for the six months ended December 31, 2003 compared to $124,037, or $0.10
per share, for the six months ended December 31, 2002.
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's 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 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 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, 2003.
Item 6(a). Exhibits
Exhibit 31.1
Exhibit 32.1
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: February 17, 2004 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
-------------------------------------
Jeffrey K. Daniel
President and Chief Executive Officer
INDEX TO EXHIBIT
EXHIBIT NO. DESCRIPTION
----------- -----------
31.1 Certification of CEO, President & CFO Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of CEO, President & CFO Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002