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, 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)
Issuer's internet address: www.ousa.com
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___
At February 10, 2005, there were 1,171,812 shares of common stock $.004995 par
value outstanding.
OMNI U.S.A., INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Condensed Consolidated Balance Sheets
December 31, 2004 and June 30, 2004
Condensed Consolidated Statements of Operations
Three Months and Six Months Ended December 31, 2004 and December 31, 2003
Condensed Consolidated Statements of Cash Flows
Six Months Ended December 31, 2004 and December 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
ASSETS
------
December 31, 2004 June 30, 2004
(unaudited)
------------------------- ------------------------
CURRENT ASSETS
Cash $ 465,416 $ 533,022
Accounts receivable, trade, net 3,289,753 2,042,392
Accounts receivable, related parties 21,225 24,740
Inventories, net 4,704,090 4,013,221
Prepaid expenses 393,383 200,041
------------------------- ------------------------
TOTAL CURRENT ASSETS 8,873,867 6,813,416
------------------------- ------------------------
PROPERTY AND EQUIPMENT, net of
Accumulated depreciation and amortization 1,444,720 1,522,830
------------------------- ------------------------
OTHER ASSETS
Primarily intangible assets, net 338,872 329,756
------------------------- ------------------------
TOTAL ASSETS $ 10,657,459 $ 8,666,002
========================= ========================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 2,722,226 $ 2,430,084
Line of credit 2,733,045 347,040
Accrued expenses 456,786 256,031
Current portion of long-term debt 703,844 1,344,134
------------------------- ------------------------
TOTAL CURRENT LIABILITIES 6,615,901 4,377,289
------------------------- ------------------------
LONG-TERM DEBT 843,030 1,014,436
------------------------- ------------------------
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) (2,196,229) (2,109,413)
Foreign currency translation adjustment 115,884 104,817
------------------------- ------------------------
TOTAL STOCKHOLDERS' EQUITY 3,198,528 3,274,277
------------------------- ------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 10,657,459 $ 8,666,002
========================= ========================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
OMNI U.S.A., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) FOR THE THREE MONTHS AND THE
SIX MONTHS ENDED DECEMBER 31, 2004 AND 2003
THREE MONTHS ENDED THREE MONTHS SIX MONTHS ENDED SIX MONTHS
DECEMBER 31, ENDED DECEMBER 31, DECEMBER 31, NDED DECEMBER 31,
2004 2003 2004 2003
--------------------------------------------------------------------------
NET SALES $ 4,937,628 $ 5,301,593 $ 9,309,429 $ 8,844,826
COST OF SALES 3,831,082 3,937,653 7,031,060 6,730,127
------------------ ----------------- ----------------- ----------------
GROSS PROFIT 1,106,546 1,363,940 2,278,369 2,114,699
OPERATING EXPENSES
Selling, general and administrative 1,083,553 983,370 2,116,841 1,822,190
------------------ ----------------- ----------------- ----------------
OPERATING INCOME 22,993 380,570 161,528 292,509
OTHER INCOME (EXPENSE)
Interest expense (140,375) (106,529) (225,767) (201,934)
Other, net (28,286) 263 (22,575) 3,774
------------------ ----------------- ----------------- ----------------
TOTAL OTHER EXPENSE, NET (168,661) (106,266) (248,342) (198,160)
------------------ ----------------- ----------------- ----------------
NET (LOSS) / INCOME ($145,668) $ 274,304 ($ 86,814) $ 94,349
================== ================= ================= ================
COMPREHENSIVE INCOME - Foreign
Currency Translation Adjustment 4,757 5,919 11,067 12,791
------------------ ----------------- ----------------- ----------------
NET AND COMPREHENSIVE (LOSS) / INCOME ($ 140,911) $ 280,223 ($ 75,747) $ 107,140
================== ================= ================= ================
BASIC (LOSS) / EARNINGS PER SHARE ($ 0.12) $ 0.23 ($ 0.06) $ 0.08
================== ================= ================= ================
FULLY DILUTED (LOSS) / EARNINGS PER SHARE ($ 0.12) $ 0.23 ($ 0.06) $ 0.08
================== ================= ================= ================
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, 2004 December 31, 2003
------------------------- --------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) / Income ($ 86,814) $ 94,349
------------------------- --------------------------
Adjustments to reconcile net (loss) income to net cash
(used) provided by operating activities:
Depreciation and amortization 181,837 185,337
Changes in operating assets and liabilities:
Accounts receivable / Notes receivable (1,243,846) (178,551)
Inventories (690,869) (307,677)
Prepaid expenses (193,342) (56,303)
Accounts payable and accrued expenses 492,897 716,551
------------------------- --------------------------
Total adjustments (1,453,323) 359,357
------------------------- --------------------------
Net cash (used) provided by operating
activities (1,540,137) 453,706
------------------------- --------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Intangible assets (16,460) (10,509)
Capital expenditures (96,384) (94,215)
------------------------- --------------------------
Net cash used by investing activities (112,844) (104,724)
------------------------- --------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on line of credit 12,119,646 6,329,822
Payments on line of credit (9,733,642) (6,978,506)
Payments on long-term debt (811,696) (153,302)
------------------------- --------------------------
Net cash provided (used) by financing activities 1,574,308 (801,986)
------------------------- --------------------------
TRANSLATION EFFECT OF FOREIGN CURRENCIES 11,067 12,791
NET DECREASE IN CASH (67,606) (440,213)
CASH AT BEGINNING OF PERIOD 533,022 709,230
------------------------- --------------------------
CASH AT END OF PERIOD $ 465,416 $ 269,017
========================= ==========================
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, 2004, and the results of their operations
for the three months and six months ended December 31, 2004, and 2003, and
cash flows for the six months ended December 31, 2004, and 2003, have been
made in accordance with GAAP.
There are significant operations in Mainland China; however, the
functional exchange rate for those operations is the U.S. dollar. The
foreign currency translation adjustment primarily arises from the
translation of amounts from operations in Hong Kong in which the
functional currency is that of the foreign location.
Certain reclassifications to the June 30, 2004 and December 31, 2003
statements of operations have been made to conform to the current period
presentation with no effect on net income.
2. EARNINGS PER SHARE:
Basic and diluted (loss) / earnings 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, 2004 and 2003, 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,
2004 2003 2004 2003
-------------------------------------------------------------
Weighted average common shares 1,171,812 1,171,812 1,171,812 1,171,812
outstanding
Effect of dilution of securities:
conversion of stock options - - - -
-------------------------------------------------------------
Denominator for dilutive earnings per 1,171,812 1,171,812 1,171,812 1,171,812
share
=============================================================
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 and six month
period ended December 31, 2004, the Company had a net loss. During the
three month and six month period ended December 31, 2003, the Company had
a net income; however, the per share exercise price of all stock options
exceeded its average per share market value of common stock. 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 $1,918,021 and
$2,413,844 to a domestic customer, which accounted for 21% and 27% of
consolidated sales for the six months ended December 31, 2004 and 2003,
respectively. The Company had sales of $1,321,225 and $2,134,770 to a
domestic customer for a total of 27% and 40% of consolidated sales, for
the quarters ended December 31, 2004 and 2003, respectively.
During the six months ended December 31, 2004 and December 31, 2003, the
Company and its subsidiaries had consolidated purchases of $2,573,351 and
$1,826,026 from one vendor for a total of 44% and 34% of consolidated
purchases. During the quarters ended December 31, 2004 and December 31,
2003, the Company and its subsidiaries had consolidated purchases of
$1,532,057 and $1,217,027 from one vendor for a total of 50% and 36% of
consolidated purchases.
4. REVOLVING LINE OF CREDIT AND LONG-TERM DEBT:
The Company previously had a revolving line of credit with a financing
company, which provided for maximum borrowings of $4,000,000. The line of
credit bore interest at prime plus 1-2% dependent upon certain financial
ratios, required maintenance of certain levels of income and tangible net
worth and was secured by essentially all of the U.S. assets of the
Company. The line of credit matured in June 2003 and the Company was not
in compliance with its minimum financial reporting covenants at June 30,
2003. The Company continued to borrow under the line of credit under
verbal extensions and waivers from the financing company until the
financing company halted borrowings in May 2004. The line of credit was
repaid and replaced with a factoring facility and inventory term loan with
another financing company. Borrowings under the line of credit at June 30,
2004 and 2003 amounted to $0 and $2,515,461, respectively.
On August 4, 2004, the Company entered into a revolving line of credit
agreement with a new financing company with maximum borrowings up to
$5,000,000, dependent upon qualifying trade accounts receivable and
inventory balances. The line of credit matures August 3, 2007, bears
interest a prime plus 1.75% and incurs an unused line of credit fee of
.25%. The credit line is subject to certain financial ratio and reporting
covenants. The line of credit is secured by all of the assets of the
Company and personal guarantees by two officers of the Company of
$1,000,000 each. Proceeds received under the line of credit agreement were
used to repay any amounts owed under the inventory note payable.
Outstanding borrowings amounted to $2,610,691 at December 31, 2004.
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 $122,354 and
$347,040 at December 31, 2004 and June 30, 2004, respectively. The foreign
line of credit matures November 30, 2005 and bears interest at 5.625%.
5. INCOME TAXES
The difference between the expected income tax benefit/(expense) at
December 31, 2004 of $29,517 and ($32,079) at December 31, 2003 which
would be determined by applying the statutory U.S. income tax rate of 34%
to income/(loss) before income tax expense, is primarily due to the
decrease/increase in the deferred tax valuation allowance.
6. OPERATING LEASES
The Company leases equipment and office, warehouse and manufacturing space
in Houston, TX; Butler, KY; Shanghai, China; Hong Kong, and Tatui, Brazil.
The Houston facility is a combination office/warehouse facility of
approximately 40,000 square feet, which the Company uses as its
headquarters and as an Omni Gear assembly center, inventory warehouse,
warranty repair, quality control, testing and inspection, and distribution
center. The Houston facility is leased from a real estate investment
company located in Houston, Texas, under a long-term lease expiring July
2005, an extension of which is under current consideration. The Butler
facility is a 35,000 square feet manufacturing facility. The Shanghai
facility leases buildings in a manufacturing complex containing
approximately 130,000 square feet.
7. LITIGATION AND CONTINGENCIES
The Company, from time to time, is a party to various legal proceedings
that constitute ordinary routine litigation incidental to the Company's
business. In the opinion of management, all such matters are either
adequately covered by insurance or are not expected to have a material
adverse effect on the Company.
8. SEGMENT INFORMATION
The Company and its subsidiaries are engaged in the business of designing,
developing and distributing power transmissions and trailer and implement
components used for agricultural, construction and industrial equipment.
SEGMENT INFORMATION
--------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NET SALES OPERATING INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2004 INCOME EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission 4,054,689 78,056 81,893 8,093,626 42,637 71,895
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 882,939 (55,063) 58,482 2,563,833 12,243 16,639
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. 4,937,628 22,993 140,375 10,657,459 54,880 88,534
==============================================================================================================
------------------------------------------------ ----------------------------------------------
THREE MONTHS ENDED NET SALES DECEMBER 31, 2004 PROPERTY AND
DECEMBER 31, 2004 EQUIPMENT, NET
------------------------------------------------ ----------------------------------------------
Domestic Customers 4,451,136 Domestic 456,221
------------------------------------------------ ----------------------------------------------
Foreign Customers 486,492 Foreign 988,499
------------------------------------------------ ----------------------------------------------
Total Omni, U.S.A., Inc. 4,937,628 Total Omni, U.S.A., Inc. 1,444,720
================================================ ==============================================
--------------------------------------------------------------------------------------------------------------
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
================================================ ==============================================
SEGMENT INFORMATION
(CONTINUED)
--------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED NET SALES INCOME FROM INTEREST IDENTIFIABLE CAPITAL DEPRECIATION/
DECEMBER 31, 2004 OPERATIONS EXPENSE ASSETS EXPENDITURES AMORTIZATION
--------------------------------------------------------------------------------------------------------------
Power Transmission 7,498,055 219,123 153,021 8,093,626 94,490 140,577
Components
--------------------------------------------------------------------------------------------------------------
Trailer and Implement 1,811,374 (57,595) 72,746 2,563,833 43,743 41,260
Components
--------------------------------------------------------------------------------------------------------------
Total Omni, U.S.A., Inc. 9,309,429 161,528 225,767 10,657,459 138,233 181,837
==============================================================================================================
---------------------------------------------- -------------------------------------------------
SIX MONTHS ENDED NET SALES PROPERTY AND
DECEMBER 31, 2004 DECEMBER 31, 2004 EQUIPMENT, NET
---------------------------------------------- -------------------------------------------------
Domestic customers 1,263,077 Domestic 456,221
---------------------------------------------- -------------------------------------------------
Foreign customers 8,046,352 Foreign 988,499
---------------------------------------------- -------------------------------------------------
Total Omni, U.S.A., Inc. 9,309,429 Total Omni, U.S.A., Inc. 1,444,720
============================================== =================================================
--------------------------------------------------------------------------------------------------------------
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
============================================== =================================================
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 $2,733,045 at December 31, 2004. The Company had working capital of
$2,257,966 as of December 31, 2004 and working capital of $2,436,127 as of June
30, 2004, a decrease of $178,161 from June 30, 2004. The decrease in working
capital from June 30, 2004 was due to increases in accounts payable and accrued
expenses, offset by increases in inventories and accounts receivable.
The Company had a cash balance of $465,416 as of December 31, 2004;
reflecting a negative cash flow of $67,606 compared to the June 30, 2004 cash
balance of $533,022. The Company's cash used by operating activities for the
six months ended December 31, 2004 of ($1,540,137) 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, 2004 of ($112,844) consisted of net capital and intangible
asset expenditures for the period in both operating segments.
Net cash provided by financing activities for the six months ended
December 31, 2004 of $1,574,308 consisted primarily of borrowings on the line
of credit.
The Company's current ratio was 1.34 as of December 31, 2004, which is
a 14% decrease when compared to the June 30, 2004 current ratio of 1.56. This
is primarily the result of increases in inventory as well as borrowings on the
Company's lines of credit. Additionally this decrease is the result of
accounting for the Company's domestic factoring agreement it was operating
under as of June 30, 2004 and the domestic line of credit which replaced it in
August 31, 2004 and was in effect as of December 31, 2004.
The Company's businesses are working capital intensive and require
funding for purchases of production, inventories and capital expenditures. The
Company has debt service requirements including payments on notes and monthly
interest payments on the Company's bank credit facilities. Management believes
that cash generated from operations, together with the Company's bank credit
facilities, provides the Company adequate liquidity to meet the Company's
operating and debt service requirements. If however, operations do not remain
at current levels and the Company is unable to access or renew its line of
credit facilities or service its long term debt facilities, the Company will be
required to reduce its operations accordingly which may have a negative impact
on the Company to meet the needs of it customers, suppliers and credit
providers. In addition, the Company believes that it has the ability to raise
additional financing in the form of debt to fund additional capital
expenditures, if required.
Results for the Quarter ended December 31, 2004 compared with the Quarter ended
-------------------------------------------------------------------------------
December 31, 2003
-----------------
The Company had net sales of $4,937,628 for the three months ended
December 31, 2004. This represents a 7% decrease compared to the three months
ended December 31, 2003 net sales of $5,301,593. This decrease is partly due
product mix and a decrease in 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, 2004 and 2003:
-------------------------------------------------------------------------------------------------------------
NET SALES QUARTER % QUARTER % DOLLAR %
ENDED OF TOTAL ENDED OF TOTAL CHANGE CHANGE
12/31/04 12/31/03
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Power Transmission Components $ 4,054,689 82% $ 4,546,818 86% $ (492,129) (11%)
-------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 882,939 18% 754,775 14% 128,164 17%
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Consolidated $ 4,937,628 100% $ 5,301,593 100% $ (363,965) (7%)
-------------------------------------------------------------------------------------------------------------
Gross profit for the three months ended December 31, 2004 decreased
$257,394 to $1,106,546, compared to gross profit for the three months ended
December 31, 2003 of $1,363,940. Gross profit as a percentage of net sales for
the three months ended December 31, 2004 decreased to 22% as compared to 26%
for the three months ended December 31, 2003. This decrease in profit margin
was primarily due to the product mix in the period.
Selling, general and administrative expenses increased $100,183 to
$1,083,553 in the three months ended December 31, 2004 from $983,370 in the
three months ended December 31, 2003. Selling, general and administrative
expenses increased due to increases in costs incurred in efficiency and
quality initiatives undertaken at the Shanghai and Brazil facilities.
Income from operations for the Company decreased $357,577 to $22,993
for the three months ended December 31, 2004, compared to $380,570 for the
three months ended December 31, 2003. This decrease is the result of higher
operating expenses during the period and decreased revenues and gross profit.
Interest expense increased $33,846 to $140,375 for the three months
ended December 31, 2004 from $106,529 for the three months ended December 31,
2003. The increase resulted from increased borrowings and new financing
facility fees associated with the Company's domestic line of credit.
Other expense was $28,286 for the three months ended December 31, 2004
compared to other income of $263 for the three months ended December 31, 2003.
This change is primarily the result of increases in net commission expenses in
the current period.
The Company's net income decreased $419,972 to a loss of ($145,668) or
($0.12) per share, for the three months ended December 31, 2004 compared to
income of $274,304 or $0.23 per share, for the three months ended December 31,
2003.
Results for the Six months ended December 31, 2004 compared with the Six months
-------------------------------------------------------------------------------
ended December 31, 2003
-----------------------
The Company had net sales of $9,309,429 for the six months ended
December 31, 2004. This represents an increase of 5% compared to the six months
ended December 31, 2003 net sales of $8,844,826. Sales have increased overall
due to a strong first fiscal quarter. The following table indicates the
Company's net sales comparison and percentage of change for the six months
ended December 31, 2004 and 2003:
------------------------------------------------------------------------------------------------------------
NET SALES SIX MONTHS % SIX MONTHS % DOLLAR %
ENDED OF TOTAL ENDED OF TOTAL CHANGE CHANGE
12/31/04 12/31/03
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Power Transmission Components $7,498,055 81% $ 7,286,954 82% $211,101 3%
------------------------------------------------------------------------------------------------------------
Trailer and Implement Components 1,811,374 19% 1,557,872 18% 253,502 16%
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
Consolidated $9,309,429 100% $ 8,844,826 100% $464,603 5%
------------------------------------------------------------------------------------------------------------
Gross profit for the six months ended December 31, 2004 increased
$163,670 to $2,278,369, compared to gross profit for the six months ended
December 31, 2003 of $2,114,699. Gross profit as a percentage of net sales for
the six months ended December 31, 2004 remained at 24% as compared to the six
months ended December 31, 2003.
Selling, general and administrative expenses increased $294,651 to
$2,116,841 in the six months ended December 31, 2004 from $1,822,190 in the six
months ended December 31, 2003. Selling, general and administrative expenses
increased due to increases in costs incurred in efficiency and quality
initiatives undertaken at the Shanghai and Brazil facilities.
Income from operations for the Company decreased $130,981 to $161,528
for the six months ended December 31, 2004, compared to $292,509 for the six
months ended December 31, 2003. This decrease is the result of increased
operating expenses during the period as described above.
Interest expense increased $23,833, to $225,767 for the six months
ended December 31, 2004 from $201,934 for the six months ended December 31,
2003. The increase resulted from increased borrowings and new financing
facility fees associated with the Company's domestic line of credit.
Other expense was $22,575 for the six months ended December 31, 2004
compared to other income of $3,774 for the six months ended December 31, 2003.
This change is primarily the result of increases in net commission expenses in
the current period.
The Company's net income decreased $181,163 to a net loss of
($86,814), or ($0.06) per share, for the six months ended December 31, 2004
compared to net income of $94,349, or $0.08 per share, for the six months ended
December 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'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.
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There have been no material changes from the disclosure in the
Company's Form 10-KSB for the fiscal year ended June 30, 2004.
Item 6(a). Exhibits
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Exhibit 31.1
Exhibit 32.1
Item 6(b). Reports on filed Form 8-K.
--------------------------
None
Item 7. Controls and Procedures.
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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 11, 2005 OMNI U.S.A., INC.
By: /s/ Jeffrey K. Daniel
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Jeffrey K. Daniel
President and Chief Executive Officer
INDEX TO EXHIBIT
Exhibit No. Description
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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