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, 2004
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 May 14, 2004, 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, 2004 and June 30, 2003
Condensed Consolidated Income Statements
Three Months and Nine Months Ended March 31, 2004 and March 31, 2003
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2004 and March 31, 2003
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, 2004
(unaudited) June 30, 2003
-------------- -------------
ASSETS
CURRENT ASSETS
Cash $ 387,871 $ 709,230
Accounts receivable, trade, net 4,705,774 3,955,537
Accounts receivable, related parties 28,695 29,167
Inventories, net 4,458,018 4,014,108
Prepaid expenses 282,542 224,049
-------------- -------------
TOTAL CURRENT ASSETS 9,862,900 8,932,091
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,562,400 1,706,669
OTHER ASSETS
Primarily intangible assets, net 332,562 330,248
-------------- -------------
TOTAL ASSETS $ 11,757,862 $ 10,969,008
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,279,861 $ 2,805,776
Lines of credit 3,006,707 2,740,030
Accrued expenses 392,123 458,244
Current portion of long-term debt 822,488 819,604
-------------- -------------
TOTAL CURRENT LIABILITIES 7,501,179 6,823,654
LONG-TERM DEBT 955,310 1,161,953
-------------- -------------
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) (2,086,059) (2,391,717)
Foreign currency translation adjustment 108,559 96,245
-------------- -------------
TOTAL STOCKHOLDERS' EQUITY 3,301,373 2,983,401
-------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 11,757,862 $ 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 INCOME STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED MARCH 31, 2004 AND 2003
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
2004 2003 2004 2003
------------ ------------ ----------- -----------
NET SALES $ 5,360,544 $ 6,641,526 $14,205,370 $15,813,698
COST OF SALES 4,166,177 5,422,825 10,896,304 12,277,408
------------ ------------ ----------- -----------
GROSS PROFIT 1,194,367 1,218,701 3,309,066 3,536,290
OPERATING EXPENSES
Selling, general and administrative 915,556 971,640 2,737,746 3,007,813
------------ ------------ ----------- -----------
OPERATING INCOME 278,811 247,061 571,320 528,477
OTHER INCOME (EXPENSE)
Interest expense (90,951) (112,784) (280,058) (313,093)
Other, net 23,449 48,525 14,396 131,848
------------ ------------ ----------- -----------
TOTAL OTHER EXPENSE (67,502) (64,259) (265,662) (181,245)
------------ ------------ ----------- -----------
INCOME TAXES -- -- -- (40,393)
------------ ------------ ----------- -----------
NET INCOME $ 211,309 $ 182,802 $ 305,658 $ 306,839
============ ============ =========== ===========
COMPREHENSIVE INCOME - - Foreign
Currency Translation Adjustment (477) 891 12,314 47
------------ ------------ ----------- -----------
NET AND COMPREHENSIVE INCOME $ 210,832 $ 183,693 $ 317,972 $ 306,886
============ ============ =========== ===========
BASIC EARNINGS PER SHARE $ 0.18 $ 0.15 $ 0.26 $ 0.26
============ ============ =========== ===========
FULLY DILUTED EARNINGS PER SHARE $ 0.18 $ 0.15 $ 0.26 $ 0.26
============ ============ =========== ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the nine months For the nine months
ended ended
March 31, 2004 March 31, 2003
------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 305,658 $ 306,839
------------------- -------------------
Adjustments to reconcile net income to net cash
(used) provided by operating activities:
Depreciation and amortization 279,626 261,323
Deferred taxes -- 40,393
Gain on sale of property and equipment -- (2,285)
Changes in operating assets and liabilities:
Accounts receivable (749,765) (1,159,548)
Inventories, net (443,910) 143,811
Prepaid expenses (58,493) (76,675)
Accounts payable and accrued expenses 407,964 632,867
------------------- -------------------
Total adjustments (564,578) (160,114)
------------------- -------------------
Net cash (used) provided by operating
activities (258,920) 146,725
------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of intangibles and other assets (10,509) (25,364)
Capital additions (127,162) (183,952)
------------------- -------------------
Net cash used by investing activities (137,671) (209,316)
------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock -- (42,930)
Borrowings on line of credit 10,300,383 9,378,155
Payments on line of credit (10,033,706) (9,660,666)
Payments on long-term debt (203,759) (124,404)
------------------- -------------------
Net cash provided (used) by financing activities 62,918 (449,845)
------------------- -------------------
TRANSLATION EFFECT OF FOREIGN CURRENCIES 12,314 47
------------------- -------------------
NET DECREASE IN CASH (321,359) (512,483)
CASH AT BEGINNING OF PERIOD 709,230 821,544
------------------- -------------------
CASH AT END OF PERIOD $ 387,871 $ 309,061
=================== ===================
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 made consist of normal recurring adjustments, necessary to
present fairly in accordance with GAAP the financial position of Omni
U.S.A., Inc. and subsidiaries as of March 31, 2004, and the results of
their operations for the three months and nine months ended March 31, 2004
and 2003.
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 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, 2004 and 2003, 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
2004 2003 31, 2004 31, 2003
------------- ------------- ----------- -----------
Weighted average common shares
outstanding 1,171,812 1,171,812 1,171,812 1,188,445
Effect of dilution of securities:
conversion of stock options -- -- -- --
------------- ------------- ----------- -----------
Denominator for dilutive earnings per
share 1,171,812 1,171,812 1,171,812 1,188,445
============= ============= =========== ===========
During the three month and nine month periods ended March 31, 2004 and 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 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 $3,373,330 and
$3,604,650 to a domestic customer for a total of 24% and 23% of
consolidated sales during the nine months ended March 31, 2004 and 2003,
respectively. The Company had sales of $959,486 and $1,552,896 to a
domestic customer for a total of 18% and 23% of consolidated sales,
respectively for the quarter ended March 31, 2004.
During the nine months ended March 31, 2004 and 2003, the Company and its
subsidiaries had consolidated purchases of $5,722,455 and $5,743,695,
respectively from two vendors for a total of 63% and 61% of consolidated
purchases. During the quarter ended March 31, 2004 and 2003, the Company
and its subsidiaries had consolidated purchases of $2,295,478 and
$2,624,024, respectively from two vendors for a total of 64% and 66% of
consolidated purchases.
4. REVOLVING LINES OF CREDIT
The Company has a revolving line of credit with a financing company which
provides for maximum borrowings of $4,000,000 as determined by a formula
based on trade accounts receivable and inventory. The line of credit
matured 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. The Company was not in compliance with its
accounts payable aging requirements at March 31, 2004. The Company has
obtained a verbal waiver from the financing company. The Company has
signed a letter of intent to refinance its existing line of credit with
another bank under what it believes will be comparable terms.
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 $208,212 and
$224,569 at March 31, 2004 and June 30, 2003, respectively. The 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 March
31, 2004 and 2003 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 $100,000 during the
nine months ended March 31, 2004. The Company had approximately $530,000
domestic net operating loss carry-forwards which expire in 2022 and
approximately $1,100,000 in foreign net operating loss carry-forwards both
of which were fully reserved by a valuation allowance as of March 31,
2004. 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 lease expires
July 2005. 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, 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
==============
INCOME (LOSS)
THREE MONTHS ENDED FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2003 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------------ ----------- ------------- -------- ------------ ------------ -------------
Power Transmission $ 5,759,865 $ 300,518 $ 74,602 $ 8,174,070 $ 84,635 $ 58,639
Components
----------- ------------- -------- ------------ ------------ -------------
Trailer and Implement 881,661 (53,457) 38,182 3,084,994 6,906 22,958
Components
----------- ------------- -------- ------------ ------------ -------------
Total Omni, U.S.A., Inc. $ 6,641,526 $ 247,061 $112,784 $ 11,259,064 $ 91,541 $ 81,597
=========== ============= ======== ============ ============ =============
THREE MONTHS ENDED
MARCH 31, 2003 NET SALES
------------------------ -----------
Domestic Customers $ 5,619,328
-----------
Foreign Customers 1,022,198
-----------
Total Omni, U.S.A., Inc. $ 6,641,526
===========
PROPERTY AND
MARCH 31, 2003 EQUIPMENT, NET
---------------------- --------------
Domestic $ 538,153
--------------
Foreign 1,202,022
--------------
Total Omni, U.S.A., Inc. $ 1,740,175
==============
SEGMENT INFORMATION
(CONTINUED)
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
==============
INCOME (LOSS)
NINE MONTHS ENDED FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
MARCH 31, 2003 NET SALES OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
------------------------ ----------- ------------- -------- ------------ ------------ -------------
Power Transmission $13,192,103 $ 728,856 $222,152 $ 8,174,070 $ 146,330 $ 175,936
Components
----------- ------------- -------- ------------ ------------ -------------
Trailer and Implement 2,621,595 (200,379) 90,941 3,084,994 37,622 85,387
Components
----------- ------------- -------- ------------ ------------ -------------
Total Omni, U.S.A., Inc. $15,813,698 $ 528,477 $313,093 $ 11,259,064 $ 183,952 $ 261,323
=========== ============= ======== ============ ============ =============
NINE MONTHS ENDED
MARCH 31, 2003 NET SALES
------------------------ -----------
Domestic customers $13,882,699
-----------
Foreign customers 1,930,999
-----------
Total Omni, U.S.A., Inc. $15,813,698
===========
PROPERTY AND
MARCH 31, 2003 EQUIPMENT, NET
------------------------ --------------
Domestic $ 538,153
--------------
Foreign 1,202,022
--------------
Total Omni, U.S.A., Inc. $ 1,740,175
==============
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
$3,006,707 at March 31, 2004. The Company had working capital of $2,361,721 as
of March 31, 2004 and working capital of $2,108,437 as of June 30, 2003, an
increase of $253,284 from June 30, 2003. The increase in working capital from
June 30, 2003 was due to net income, increases in accounts receivable and lines
of credit and offset by the net decrease in accounts payable and accrued
expenses.
The Company had a cash balance of $387,871 as of March 31, 2004;
reflecting a negative cash flow of $321,359 compared to the June 30, 2003 cash
balance of $709,230. The Company's cash used by operating activities for the
nine months ended March 31, 2004 of $258,920 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, 2004 of $137,671 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, 2004 of $62,918 consisted primarily of net borrowings from the
Company's lines of credit.
The Company's current ratio was 1.31 as of March 31, 2004 and June
30, 2003.
The Company believes that it will adequately be able to refinance
its line of credit facilities. With its access to the line of credit and its
anticipated ability to generate funds internally, the Company believes 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's ability 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, 2004 compared with the Quarter ended
March 31, 2003
The Company had net sales of $5,360,544 for the three months ended
March 31, 2004. This represents a decrease of 19% compared to the three months
ended March 31, 2003 net sales of $6,641,526. Net sales of both business
segments have decreased relative to a general market decline. The following
table indicates the Company's net sales comparison and percentage of change for
the three months ended March 31, 2004 and 2003:
QUARTER QUARTER
ENDED % ENDED % DOLLAR %
NET SALES 03/31/04 OF TOTAL 03/31/03 OF TOTAL CHANGE CHANGE
-------------------------------- ----------- -------- ----------- -------- ---------- ------
Power Transmission Components $ 4,552,528 85% $ 5,759,865 87% (1,207,337) (21%)
----------- --- ----------- --- --------- ----
Trailer and Implement Components 808,016 15% 881,661 13% (73,645) (8%)
----------- --- ----------- --- --------- ----
Consolidated $ 5,360,544 100% $ 6,641,526 100% (1,280,982) (19%)
----------- --- ----------- --- --------- ----
Gross profit for the three months ended March 31, 2004 decreased
$24,334 to $1,194,367, compared to gross profit for the three months ended March
31, 2003 of $1,218,701. Gross profit as a percentage of net sales for the three
months ended March 31, 2004 increased to 22% as compared to 18% for the three
months ended March 31, 2003. This increase 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 decreased $56,084 to
$915,556 in the three months ended March 31, 2004 from $971,640 in the three
months ended March 31, 2003. Selling, general and administrative expenses
decreased due to operational support required by the decrease in sales activity
for the quarter as well as operational efficiencies gained due to consolidation
of the Butler facilities as mentioned in Note 9 of the condensed consolidated
financial statements.
Income from operations for the Company increased $31,750 to $278,811
for the three months ended March 31, 2004, compared to $247,061 for the three
months ended March 31, 2003. This increase is the result of decreased selling,
general, and administrative expenses during the period.
Interest expense decreased $21,833, to $90,951 for the three months
ended March 31, 2004 from $112,784 for the three months ended March 31, 2003.
The decrease resulted from decreased average borrowings on the Company's line of
credit as a result of utilizing cash from operations to repay the line of
credit.
Other income was $23,449 for the three months ended March 31, 2004
compared to $48,525 for the three months ended March 31, 2003. The change is
primarily the result of scrap and service fee income in the prior period.
The Company's net income increased $28,507 to $211,309 or $0.18 per
share, for the three months ended March 31, 2004 compared to $182,802, or $0.15
per share, for the three months ended March 31, 2003.
Results for the Nine months ended March 31, 2004 compared with the Nine months
ended March 31, 2003
The Company had net sales of $14,205,370 for the nine months ended
March 31, 2004. This represents a decrease of 10% compared to the nine months
ended March 31, 2003 net sales of $15,813,698. Net sales of both business
segments have decreased relative to a general market decline. The following
table indicates the Company's net sales comparison and percentage of change for
the nine months ended March 31, 2004 and 2003:
NINE MONTHS NINE MONTHS
ENDED % ENDED % DOLLAR %
NET SALES 03/31/04 OF TOTAL 03/31/03 OF TOTAL CHANGE CHANGE
-------------------------------- ------------ -------- ------------ -------- ---------- ------
Power Transmission Components $ 11,839,482 83% $ 13,192,103 83% (1,352,621) (10%)
------------ --- ------------ --- ---------- --
Trailer and Implement Components 2,365,888 17% 2,621,595 17% (255,707) (10%)
------------ --- ------------ --- ---------- --
Consolidated $ 14,205,370 100% $ 15,813,698 100% (1,608,328) (10%)
------------ --- ------------ --- ---------- --
Gross profit for the nine months ended March 31, 2004 decreased
$227,224 to $3,309,066, compared to gross profit for the nine months ended March
31, 2003 of $3,536,290. Gross profit as a percentage of net sales for the nine
months ended March 31, 2004 increased to 23% as compared to 22% for the nine
months ended March 31, 2003. This increase 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 decreased $270,067 to
$2,737,746 in the nine months ended March 31, 2004 from $3,007,813 in the nine
months ended March 31, 2003. Selling, general and administrative expenses
decreased due to operational support required by the decrease in sales activity
for the period.
Income from operations for the Company increased $42,843 to $571,320
for the nine months ended March 31, 2004, compared to $528,477 for the nine
months ended March 31, 2003. This increase is primarily the result of the
decrease in selling, general and administrative expenses.
Interest expense decreased $33,035, to $280,058 for the nine months
ended March 31, 2004 from $313,093 for the nine months ended March 31, 2003. The
decrease resulted from decreased average borrowings on the Company's lines of
credit as a result of utilizing cash from operations to repay the line of
credit.
Other income was $14,396 for the nine months ended March 31, 2004
compared to $131,848 for the nine months ended March 31, 2003. This change
primarily results from decreases in scrap metal sales and service fee income.
The Company's net income decreased $1,181 to $305,658, or $0.26 per
share, for the nine months ended March 31, 2004 compared to $306,839, or $0.26
per share, for the nine months ended March 31, 2003.
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, 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: May 14, 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