U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 000-26177
OMNI MEDICAL HOLDINGS, INC.
---------------------------
(Name of Small Business Issuer in its Charter)
UTAH 87-0425275
---- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
1257 Lake Plaza Drive, Suite 219
Colorado Springs, Colorado 80906
--------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number: (719) 884-2131
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.
(1) Yes X No (2) Yes X No
--- --- --- ---
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
September 30, 2005
49,944,445
----------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
-------------------------------
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
Omni Medical Holdings, Inc.
Condensed Consolidated Financial Statements
September 30, 2005
Omni Medical Holdings, Inc.
Unaudited Condensed Consolidated Balance Sheet
September 30, 2005
ASSETS
Current assets:
Cash and cash equivalents $ -
Accounts receivable, net 2,284,446
Short-term investments, at fair value 133,921
Employee advances 5,317
Prepaid expenses 71,987
-----------
Total current assets 2,495,671
Property & equipment, net 1,510,628
Other assets:
Deposits 350
Deferred financing costs 25,000
Goodwill 3,456,945
Intangible assets, net 1,792,861
-----------
Total other assets 5,275,156
-----------
TOTAL ASSETS $ 9,281,455
===========
See notes to condensed consolidated financial statements
F-2
Omni Medical Holdings, Inc.
Unaudited Condensed Consolidated Balance Sheet [continued]
September 30, 2005
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 677,465
Bank overdraft 138,465
Accrued expenses 2,545,375
Line of credit 343,976
Notes payable, current portion 2,991,475
-----------
Total current liabilities 6,696,756
Convertible debt 1,825,357
Notes payable 2,013,870
Notes payable, net of current portion (2,991,475)
-----------
Total long-term liabilities 847,752
Total liabilities 7,544,508
Minority interest (201,044)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized,
no shares issued and outstanding -
Common stock, par value $0.001 per share; 50,000,000
shares authorized; 49,944,445 issued and outstanding 49,944
Common stock to be issued under reorganization agreement
474,659 shares 475
Capital in excess of par value 6,004,900
Unrealized loss on investment (145,052)
Accumulated deficit (3,972,276)
-----------
Total stockholders' equity 1,937,991
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,281,455
===========
See notes to condensed consolidated financial statements
F-3
Omni Medical Holdings, Inc.
Unaudited Condensed Consolidated Statements of Operations
For the three and six month periods ended September 30, 2005 and 2004
For the three months ended For the Six months ended
September 30, September 30,
2005 2004 2005 2004
Revenue $1,634,639 $ 273,384 $ 2,981,303 $ 520,703
Cost of sales 783,777 127,641 1,544,569 280,063
--------- ---------- ----------- ----------
Gross operating profit 850,862 145,743 1,436,734 240,640
General and administrative
expenses 986,856 209,228 2,042,469 403,314
--------- ---------- ----------- ----------
Income (loss) from
operations (135,994) (63,485) (605,735) (162,674)
Other income (expense):
Interest expense (164,492) (9,249) (289,496) (17,653)
Loss on sale of assets - (5,605) - (5,605)
--------- ---------- ----------- ----------
Total other income
(expense) (164,492) (14,854) (289,496) (23,258)
--------- ---------- ----------- ----------
Loss from continuing
operations before
minority interest (300,486) (78,339) (895,231) (185,932)
Minority interest 21,997 - 50,801 -
--------- ---------- ----------- ----------
Loss from continuing
operations before income
taxes (278,489) (78,339) (844,430) (185,932)
Provision for income taxes - - - -
--------- ---------- ----------- ----------
Loss from continuing
operations (278,489) (78,339) (844,430) (185,932)
Discontinued operations:
Loss from discontinued
operations, net of tax (43,405) (50,544) (94,233) (84,816)
Loss on disposal of
discontinued operations,
net of tax (6,520) - (6,520) -
--------- ---------- ----------- ----------
Net loss from discontinued
operations (49,925) (50,544) (100,753) (84,816)
--------- ---------- ----------- ----------
Net loss $(328,414) $ (128,883) $ (945,183) $ (270,748)
========= ========== =========== ==========
Other comprehensive income:
Unrealized gain (loss) on
investments 22,830 - (6,624) -
--------- ---------- ----------- ----------
Total comprehensive income
(loss) $(305,584) $ (128,883) $ (951,807) $ (270,748)
========= ========== =========== ==========
Loss per share basic and diluted:
Continuing operations $ (0.01) $ (0.01) $ (0.02) $ (0.01)
========= ========== =========== ==========
Discontinued operations $ 0.00 $ 0.00 $ 0.00 $ (0.01)
========= ========== =========== ==========
Net loss per share-basic
and diluted $ (0.01) $ (0.01) $ (0.02) $ (0.02)
========= ========== =========== ==========
Weighted average number of
common shares outstanding
-basic and diluted 49,944,445 16,562,509 49,559,830 16,380,172
========== ========== =========== ==========
See notes to condensed consolidated financial statements
F-4
Omni Medical Holdings, Inc.
Unaudited Consolidated Statements of Cash Flows
For the six month periods ended September 30, 2005 and 2004
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (945,183) $ (270,748)
Adjustments to reconcile net loss to net
cash used in continuing operations:
Depreciation and amortization 336,669 102,007
Stock-based compensation expense - 6,731
Stock issued for services - 50,221
Minority interest (50,801) -
Loss on disposal of discontinued
operations 6,520
Loss on sale of assets - 5,605
Changes in operating assets and
liabilities, net of effect of business
acquisition and disposition:
Accounts receivable (588,656) (52,384)
Prepaid expenses 5,339 1,252
Deposits 7,413 -
Accounts payable 340,134 95,847
Bank overdraft 138,465 -
Accrued expenses 678,537 (17,127)
------------- -----------
Net cash used in operating
activities (71,563) (78,596)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (110,884) (519)
Proceeds from sale of assets - 720
Software development (92,884) -
------------- -----------
Net cash used in
investing activities (203,768) 201
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowing (payments) on line of credit 180,523 52,493
Proceeds from issuance of debt 351,145 78,000
Net payments of notes payable (271,186) (72,957)
Proceeds from the issuance of common stock - 15,650
------------- -----------
Net cash provided by financing
activities 260,482 73,186
------------- -----------
NET INCREASE (DECREASE) IN CASH (14,849) (5,209)
CASH AT BEGINNING OF PERIOD 14,849 6,140
------------- -----------
CASH AT END OF PERIOD $ 0 $ 931
============= ===========
See accompanying notes to financial statements
F-5
Omni Medical Holdings, Inc.
Consolidated Statements of Cash Flows [continued]
For the six month periods ended September 30, 2005 and 2004
2005 2004
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 125,182 $ 23,818
Cash paid for income taxes - -
NON-CASH OPERATING ACTIVITIES:
Stock issued for services $ - $ 72,379
NON-CASH INVESTING ACTIVITIES:
Stock issued for short-term investments $ - $507,454
NON-CASH FINANCING ACTIVITIES:
Stock issued to relinquish debt $ - $137,500
BUSINESS ACQUISITIONS:
Fair value of assets acquired $ 1,357,006 $ -
Issuance of debt/assumption of liabilities (357,006) -
Common stock issued at acquisition (1,000,000)
----------- --------
Cash paid $ 0 $ 0
=========== ========
See accompanying notes to financial statements
F-6
Omni Medical Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2005
Note 1 BUSINESS, ORGANIZATION AND INTERIM FINANCIAL STATEMENTS
Business - Omni Medical Holdings, Inc. ("Omni"), a Utah
corporation, provides medical billing and transcription services,
and electronic medical record solutions to medical practitioners.
Organization- The company was previously organized as Piezo
Instruments, Inc. ("Piezo"), a Utah corporation. Effective
September 5, 2003, Piezo and Omni Medical of Nevada, Inc., a
Nevada Corporation ("Omni Nevada") executed an Agreement and Plan
of Reorganization (the "Reorganization Agreement"), whereby Piezo
agreed to acquire 100% of the issued and outstanding shares of
common stock of Omni Nevada in exchange for up to 16,000,000 newly
issued shares of common stock of Piezo, (of which 12,913,815 were
issued as of March 31, 2004, 480,753 shares were issued in July
2004 and 474,659 shares are to be issued as of September 30, 2005
for a total of 13,869,227 shares,) or approximately 86% of the
post-Reorganization Agreement outstanding securities of Piezo.
The transaction was accounted for as a reverse acquisition of
Piezo by Omni Nevada. Shares of common stock authorized and
issued have been retroactively restated to present the capital
structure of Piezo. Concurrent with the merger, Piezo changed its
name to Omni Medical Holdings, Inc.
Interim financial statements-The accompanying unaudited condensed
consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim
financial information and with the instructions to Form 10QSB and
Item 310 (b) of Regulation S-B. Accordingly, they do not include
all of the information and footnotes required by accounting
principles for complete financial statements generally accepted in
the United States of America. In the opinion of management, the
accompanying consolidated financial statements contain all
adjustments, consisting of normal recurring accruals, necessary
for a fair presentation of the Company's financial position as of
September 30, 2005. There has not been any change in the
significant accounting policies of Omni Medical Holdings, Inc. for
the periods presented. It is suggested that these unaudited
condensed consolidated financial statements be read in conjunction
with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2005.
Note 2 BUSINESS ACQUISITIONS
Effective March 1, 2005, Omni, entered into a share exchange
agreement ("the agreement") with DataFuzion, Inc. a Colorado
corporation and provider of practice management, billing and
collection services, and electronic medical records solutions to
medical practitioners. The agreement calls for Omni to offer a
shareholder exchange to the DataFuzion shareholders in which they
may transfer to Omni at closing 100% of the outstanding common
stock of DataFuzion in exchange for 23,019,215 shares of common
stock of Omni. The exchange will constitute a 50% ownership of
Omni for the shareholders of DataFuzion in the event all
shareholders of DataFuzion agree to exchange their respective
common shares. As of November 1, 2005 approximately 90% of the
DataFuzion shareholders had exchanged their shares for shares of
Omni and Omni had issued 21,772,966 shares of its common stock,
with an additional 352,339 to be issued for a total issuance of
22,125,305 shares of common stock.
The following table summarizes the estimated fair values of the
DataFuzion assets acquired and liabilities assumed as of March 1,
2005, the date of acquisition:
F-7
Omni Medical Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2005
Note 2 BUSINESS ACQUISITIONS-[continued]
Cash $ 4,208
Accounts receivable, net 170,300
Property and equipment 1,545,547
Intangible assets 1,462,640
Other assets 26,470
Accounts payable (138,158)
Accrued expenses (1,206,843)
Notes payable (1,941,264)
Convertible debt (1,265,582)
Minority interest 134,268
Goodwill 3,420,945
-----------
Net assets acquired $ 2,212,531
===========
Effective April 15, 2005, the Company entered into an Stock
Purchase Agreement ("the Plum Creek agreement") whereby the
Company acquired 100% of the outstanding shares of Plum Creek
Outpatient, Inc.,("Plum Creek") an Illinois corporation and
provider of medical supplies in exchange for 1,000,000 shares of
the Company's common stock that are "restricted securities" as
defined in Rule 144 of the Securities and Exchange Commission. The
Plum Creek agreement calls for a Revenue Bonus to be paid to the
sellers based on annual calculations of the combined revenue of
the Company and its affiliates relating to medical supplies during
two revenue bonus periods ending April 15, 2006 and 2007. The
Company also entered into a Put Option agreement whereby anytime
during the two year period from the date of acquisition the
Company, at the request of the seller, may be required to purchase
some or all of the 1,000,000 issued shares at a price of $0.20 per
share or issue additional shares of the Company's common stock
equal in number to the shortfall in payment of the Put Price plus
ten percent divided by the closing price per share at the close of
business on the last day of the payment period.
The following table summarizes the estimated fair values of the
Plum Creek assets acquired and liabilities assumed as of April 15,
2005, the date of acquisition:
Accounts receivable, net $ 426,960
Equipment 40,000
Accounts payable (5,000)
Accrued expenses (261,960)
------------
Net assets acquired $ 200,000
============
F-8
Omni Medical Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2005
Note 2 BUSINESS ACQUISITIONS-[continued]
On April 15, 2005 the Company also entered into an Asset Purchase
Agreement ("the Stat agreement") whereby the Company acquired the
assets of Stat Anesthesia, P.C., ("Stat") an Illinois corporation
and medical provider, in exchange for 4,000,000 shares of the
Company's common stock that were also "restricted securities" as
defined in Rule 144 of the Securities and Exchange Commission.
Additionally, Stat signed an Administrative Services Agreement
with the Company in which the Company will provide financial and
administrative services for all of Stat's operations. While the
Company will have complete control over the administrative and
financial affairs of Stat, the Company will not be involved in any
way in the practice of medicine. The Stat agreement also calls for
a Revenue Bonus to be paid to the sellers based on annual
calculations of the combined revenue of the Company and its
affiliates relating to medical services during two revenue bonus
periods ending April 15, 2006 and 2007. The Company also entered
into a Put Option agreement whereby anytime during the two year
period from the date of acquisition the Company, at the request of
the seller, may be required to purchase some or all of the
4,000,000 issued shares at a price of $0.20 per share or issue
additional shares of the Company's common stock equal in number to
the shortfall in payment of the Put Price plus ten percent divided
by the closing price per share at the close of business on the
last day of the payment period.
The following table summarizes the estimated fair values of the Stat
assets acquired and liabilities assumed as of April 15, 2005, the
date of acquisition:
Accounts receivable, net $ 850,046
Equipment 40,000
Accrued expenses (90,046)
------------
Net assets acquired $ 800,000
============
The DataFuzion, Plum Creek and Stat acquisitions were accounted
for as purchases and their results of operations are included in
the Company's financial statements from the date of acquisition.
The following proforma financial information presents results as
if the DataFuzion Plum Creek and Stat acquisitions had occurred at
the beginning of the six month periods ended September 30, 2005
and 2004:
2005 2004
Revenues $3,114,299 $1,820,528
Net loss (904,406) (183,027)
Basic and diluted loss per share $(0.02) $ (0.01)
F-9
Omni Medical Holdings, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2004
Note 3 GOING CONCERN
The Company's financial statements for the periods ended September
30, 2005 and 2004 show incurred net losses of $945,183 and
$270,748, respectively, and has a working capital deficiency of
$4,201,085, as of September 30, 2005, raising substantial doubt
about the company's ability to continue as a going concern.
Management's plans to address concerns raised by this issue
include:
a. Through the acquisition of Plum Creek Outpatient and
administrative services agreement with Stat Anesthesia, P.C., the
Company believes it has already acquired significant asset and
adequate liquid assets for operation. Furthermore, management
believes these companies will provide significant cash flow to
provide for all corporate needs.
b. The Company also plans to raise additional capital and is working
with a number of financial sources to achieve this.
There is no assurance that these or any efforts will be successful.
However, management believes that these measures will enable the
Company to have adequate funds to support operations for the next
twelve months.
Note 4 DISCONTINUED OPERATIONS
Effective September 1, 2005, Omni entered into a settlement
agreement with McCoy Financial Services, Inc.("MFS") whereby Omni
agreed to sell, transfer, and assign to MFS all of the Company's
right, title and interest in and to the transcription services
segment net assets for $10,000. As of September 1, 2005, the
assets of the transcription services segment was approximately
$221,000 (primarily property and equipment of approximately
$37,000 and intangible assets of $184,000) and transcription
services segment obligations and liabilities had a carrying value
of approximately $205,000 (primarily accounts payable and accrued
expenses of approximately $30,000 and debt of approximately
$175,000). A loss on the disposal of the assets was recognized in
the amount of $6,520 The results of operations from the
transcription services segment have been retroactively restated as
discontinued operations.
Note 5 SUBSEQUENT EVENTS
On October 26, 2005 the Company entered into a Note Purchase
Agreement with Sigma Opportunity Fund, LLC. Under the Note
Purchase Agreement, Sigma purchased from Omni a Senior Note Due
2006 for $400,000. In connection with the purchase, the Company
issued Warrants to purchase 15,000 pre-split shares of Omni common
stock for each $1,000 principal amount of the note for an
aggregate of 6,000,000 pre-split shares.
On November 4, 2005 the Company announced it has executed a 1 for
4 reverse split of its Common shares effective November 4, 2005.
F-10
Item 2. Management's Discussion and Analysis
"SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
This Form 10-QSB contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Omni Medical Holdings, Inc. is referred to herein as
"we" or "our". The words or phrases "would be," "will allow," "intends to,"
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from
those projected in the forward looking statements as a result of a number of
risks and uncertainties. Statements made herein are as of the date of the
filing of this Form 10-QSB with the Securities and Exchange Commission and
should not be relied upon as of any subsequent date. Except as may otherwise
be required by applicable law, we do not undertake, and specifically disclaim,
any obligation to update any forward-looking statements contained in this Form
10-QSB to reflect occurrences, developments, unanticipated events or
circumstances after the date of such statement.
Overview:
Omni Medical Holdings (ONMH:OTCBB)provides a turn key back office suite
of products and services to doctors, clinics and hospitals throughout the
country. Omni continues to grow through its acquisition strategy and unique
combination of product offerings.
Omni Medical has positioned itself to offer a complete back office
solution of products and services for all medical practitioners.
Omni's DataFuzion subsidiary provides a complete line of integrated back-
office products including GE Centricity and Misys practice management and
electronic medical records solutions, and a proprietary web based decision
support reporting tools for physicians and hospitals (InfoBridgeTM. Our ASP
hosted products are designed to maximize practice performance by identifying
revenue enhancement and cost savings opportunities, while eliminating the
up front costs and ongoing expense of owning, upgrading, staffing and
maintaining multiple in-house operations and reporting systems.
When practitioners provide patient care, those actions must be
documented, usually by electronic dictation. Government and insurance
regulations are such that these important medical records, which affect
patient health, must be in readable form. Through our transcription division,
this service can be delivered to any practitioner in the world through our
proprietary digital web based system. All of our services are performed in
the United States.
Medical billing and collections are the lifeblood of any healthcare
facility, with accurate and timely collections insuring an effective practice
and high standard of care. The billing process is automated through either of
Omni's Centricity or Misys based hubs. Our nearly twenty years of experience
extends to most medical areas, especially anesthesiology.
Omni's complete back office solution gives:
* New revenue opportunities to our customers;
* More streamlined workflow;
* Executive managers the ability to use disease management benchmarking data,
increasing revenue and providing better patient outcomes;
* Elimination of costly data errors;
* Ability to integrate hardware and software with other systems; and
* "Drill down" from multiple servers, and provides greater analytical
solutions.
The opportunities in the healthcare services market are enormous and the
next 10 years will bring dramatic changes in how healthcare practitioners
manage and operate their practices. Omni Medical Holdings, along with its
DataFuzion subsidiary, is currently positioned to take advantage of those
opportunities now.
RESULTS OF OPERATIONS
Three months ended September 30, 2005.
--------------------------------------
During the quarterly period ended September 30, 2005, we recorded revenue from
continuing operations of $1,634,639, an increase from revenue from continuing
operations of $273,384 in the quarter ended September 30, 2004.
Cost of sales from continuing operations totaled $783,777, versus $127,641 in
the second fiscal quarter of 2005.
During the second fiscal quarter of 2005, we recorded general and
administrative expenses of $986,856. These expenses totaled $209,228 in the
year-ago period.
Interest expense was $164,492 and $9,249 for the three-month period ended
September 30, 2005, and September 30, 2004, respectively.
For the three-month period ended September 30, 2005, we incurred a loss of
$328,414, as compared to a loss of $128,883 for the three-month period ended
September 30, 2004.
Revenue increased 497% during the three months ended September 30, 2005,
compared to the three month period ended September 30, 2004, due to the
acquisitions of DataFuzion, Stat Anesthesia and Plum Creek Outpatient.
Cost of sales increase 514% and general expenses increased 371% versus the
prior year due to higher operating costs associated with DataFuzion and Stat
Anesthesia. This included a 230% increase in depreciation expense and an 16
fold increase in interest expense over the previous year. Net loss increased
154% for the previously stated reason. We expect continued high levels of
depreciation as DataFuzion takes a conservative accounting approach to its
equipment and intangible assets. Interest expense will continue to remain high
until such time as the convertible bondholders exchange their debt for equity.
Six months ended September 30, 2005.
------------------------------------
During the six months ended September 30, 2005, we recorded revenue from
continuing operations of $2,981,303 an increase from revenue from continuing
operations of $520,703 in the six months ended September 30, 2004.
Cost of sales from continuing operations totaled $1,544,569, versus $280,063
in the six months ended of 2005.
During the six months ended September 2005, we recorded general and
administrative expenses of $2,042,469. These expenses totaled $403,314 in the
year-ago six month period.
Interest expense was $289,496 and $17,653 for the six-month period ended
September 30, 2005, and September 30, 2004, respectively.
For the six-month period ended September 30, 2005, we incurred a loss of
$945,183, as compared to a loss of $270,748 for the six-month period ended
September 30, 2004.
CAPITAL RESOURCE REQUIREMENTS
LIQUIDITY
As of September 30, 2005, Omni's working capital deficit was $4,201,085.
Our cash and cash equivalents at September 30, 2005, was $0, and we had a bank
overdraft of $138,465.
We currently lease office space under an operating lease for $6,000 per month,
which terminates July 31, 2006.
Effective March 1, 2005, Omni entered into an Employment Agreement with
Arthur D. Lyons, its chief executive officer and Douglas Davis, President
through March 1, 2010. The agreement provides compensation at an annual base
salary of $180,000, a $1,000 a month auto allowance, fully paid health
insurance and a bonus of 1% of gross revenue, paid quarterly to each.
During December 2003, Omni entered into a Loan Agreement and Security
Agreement with Presidential Financial Corporation allowing Omni to borrow up
to 80% against certain of its accounts receivable or $300,000, whichever is
less. The loan is secured by accounts receivable and other tangible assets of
Omni and accrues interest at prime plus 2%. As of September 30, 2005,
approximately $62,000 was owed on the line of credit.
During August 2005, Omni entered into a Loan Agreement and Security Agreement
with Alamo Capital Corporation allowing Omni to borrow 80% against the value
of certain specified accounts receivable up to $500,000. The loan is secured
by certain accounts receivable and accrues interest at prime plus 2%. As of
September 30, 2005, approximately $281,000 was owed on this line of credit.
Item 3. Controls and Procedures.
--------------------------------
As of the end of the period covered by this Quarterly Report, we carried
out an evaluation, under the supervision and with the participation of our
President and Treasurer, of the effectiveness of our disclosure controls and
procedures. Based on this evaluation, our President and Treasurer concluded
that our disclosure controls and procedures are effectively designed to ensure
that information required to be disclosed or filed by us is recorded,
processed or summarized, within the time periods specified in the rules and
regulations of the Securities and Exchange Commission. It should be noted
that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. In addition, we
reviewed our internal controls over financial reporting, and there have been
no changes in our internal controls or in other factors in the last fiscal
quarter that has materially affected or is reasonably likely to materially
affect our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
----------------------------
None; not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
----------------------------------------------------------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
------------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
--------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
----------------------------
(i) Effective September 1, 2005, Omni entered into a settlement
agreement with McCoy Financial Services, Inc.("MFS") whereby Omni agreed to
sell, transfer, and assign to MFS all of the Company's right, title and
interest in and to the transcription services segment net assets for $10,000.
As of September 1, 2005, the assets of the transcription services segment was
approximately $221,000 (primarily property and equipment of approximately
$37,000 and intangible assets of $184,000) and transcription services segment
obligations and liabilities had a carrying value of approximately $527,000
(primarily accounts payable of approximately $226,000 and debt of
approximately $205,000). A loss on the disposal of the assets was recognized
in the amount of $6,520. The results of operations from the transcription
services segment have been retroactively restated as discontinued operations.
We have attached the Settlement Agreement and Mutual Release as Exhibit 10 to
this Quarterly Report; see Item 6, below.
(ii) On October 26, 2005, the Company entered into a Note Purchase
Agreement with Sigma Opportunity Fund, LLC. Under the Note Purchase Agreement,
Sigma purchased from Omni a Senior Note Due 2006 for $400,000. In connection
with the purchase, the Company issued Warrants to purchase 15,000 pre-split
shares of Omni common stock for each $1,000 principal amount of the note for
an aggregate of 6,000,000 pre-split shares.
(iii) On November 4, 2005 the Company announced it has executed a 1 for
4 reverse split of its outstanding common shares effective November 4, 2005.
Item 6. Exhibits.
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(a) Exhibits.
10 Settlement Agreement and Mutual Release.
31.1 302 Certification of Douglas Davis.
31.2 302 Certification of Arthur Lyons.
32 906 Certification.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
OMNI MEDICAL HOLDINGS, INC.
Date: 11/10/05 By: /s/ Arthur D. Lyons
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Arthur D. Lyons, CEO, Secretary
and Chairman of the Board
Date: 11/10/05 By: /s/ Douglas Davis
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Douglas Davis, President,
Treasurer and Director