SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended March 31, 1996 Commission File Number 0-14840
BERES INDUSTRIES, INC.
___________________________________________________________________________
(Name of Small Business Issuer in its charter)
New Jersey 22-1661772
___________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1785 Swarthmore Avenue, Lakewood, New Jersey 08701
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 367-5700
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.02 Par Value
___________________________________________________________________________
(Title of Class)
Check whether the issuer: (1) has filed all reports required to be filed
by Section 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. Yes X No __ .
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB X
The issuer's revenues for its most recent fiscal year were $3,987,000.
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $796,778 on July 23, 1996 based on the
last available bid quotation ($.09) at the close of the market on that day.
For the purposes of the foregoing sentence, the term "affiliate" includes
each director and officer of the Registrant.
The number of shares outstanding of the Registrant's common stock on July
23, 1996 was 12,411,934. Documents Incorporated By Reference - See Item
14(c) to this Form 10-KSB.
Item 1. Description of Business:
General Development of Business.
Beres Industries, Inc. ("Beres") was incorporated in the
State of New Jersey on June 23, 1960. Its two wholly-owned
subsidiaries, Athenia Plastic Mold Corp. ("Athenia") and Supply
Dynamics, Inc. ("Supply Dynamics") were incorporated in the State
of New Jersey on July 27, 1976 and October 11, 1983,
respectively. (Beres, Athenia and Supply Dynamics are
hereinafter collectively referred to as the "Registrant" or the
"Company").
Beres has been engaged in the design, manufacture and
assembly of precision engineered molds for use in the manufacture
of molded plastic products and parts from its inception in June,
1960 until July, 1976, when Beres formed Athenia. After
Athenia's formation, Athenia began conducting Beres' operations
under the name Athenia. In October 1983, Beres formed Supply
Dynamics and commenced production of a new product line
consisting primarily of the manufacture of spools and cartridges
for computer ribbon supplies as well as engaging in custom
plastic injection molding.
In July 1986, Beres acquired certain molds, equipment,
patents and inventory from Costar Corporation, (formerly Data
Packaging Corporation), in an effort to facilitate Supply
Dynamics' production of finished products relating to its ribbon
cartridge product line. In October and November 1986, Beres
exercised its option to, and acquired additional assets from
Costar Corporation.
On May 30, 1988, the Company entered into a Joint Venture
Agreement with Hitachi Powdered Metals, Co., Ltd. ("HPM"), a
member of the Hitachi Group. The Joint Venture, Advanced Imaging
Technology, Inc. ("AIT"), was based in New Jersey and
manufactured and marketed ribbon cartridges for computers and
printers for the North American, Central American and South
American markets. The Company initially owned thirty (30%)
percent of the Joint Venture. As a result of an additional
capital infusion by HPM in February, 1990, which capital
contribution was not proportionately matched by Beres, Beres'
ownership of AIT was reduced to fifteen (15%) percent, with HPM
owning eighty-five (85%) percent. On October 31, 1994 HPM and
Beres entered into an Agreement pursuant to which HPM agreed to
purchase Beres' interest in HPM for $250,000. The purchase was
consummated during the fiscal quarter ending December 31, 1994
and the funds were placed into a segregated account with First
Fidelity Bank, to be utilized by Beres in connection with
execution of a business plan to be developed by the Company. In
January, 1995, First Fidelity refused to release the funds to
Beres, claiming a security interest. As a consequence, Beres
sued First Fidelity, seeking release of the funds. In June,
1996, the litigation was settled. See Item 3, below, Legal
Proceedings.
Production of Molds by Athenia
The molds produced by Athenia are of high quality steel
which is hardened to resist distortion and wear. In the molding
process, the two halves of the mold, the cavity and the cores,
are pressed together to form a space of the shape and dimension
of the plastic product or part. As the plastic mass hardens, the
molds are separated and the finished part is removed. There
exist many different methods of producing plastic parts, all of
which require molds similar to those made by Athenia. Production
may be by such methods as compression, transfer, injection, hand,
semi-automatic and automatic molding. Within these
classifications there are numerous subclassifications and
combinations of the major technology.
Compression molding is a molding method wherein the plastic
powder is placed upon a heated two-piece mold so that the powder
becomes fluid or plastic. This mass of molding compound is
compressed to the required density by pressure while the material
is confined to the shape of the mold. Transfer molding is a
process wherein the plastic powder is preheated and the fluid
compound or mass is forced into a closed mold through a small
orifice from an external pressure cylinder. The compound is
heated in the cylinder prior to being placed in the mold. This
process is similar to injection molding with the exception that
the material is hardened in the mold as a result of the heat and
pressure which brings on the chemical reaction. Molds can be
used either by hand or with semi-automatic or automatic
machinery. Hand molds are those molds that must be removed from
the molding press in order to extract the molded piece. These
molds are usually heated by contact with the hot plates in the
press. Hand molds are principally used at the present time for
samples of extremely difficult and precision shapes. A semi-
automatic mold is one which is rigidly fastened in the press, but
the mold must be manually loaded with the raw material and the
operator must manually remove the finished pieces. An automatic
mold performs all operations including loading of raw material
and removal of finished pieces automatically.
Machinery for the above methods varies, but all require the
use of a custom mold in order to manufacture a plastic part in
the desired shape, size and density.
Production of a mold begins with the customer's parts
drawings and specifications of a new mold. Athenia quotes prices
for the design and manufacture of the mold based on the detail
and the degree of complexity of the customer's specifications.
The mold is then designed and engineered by Athenia's design
department for approval by the customer. Upon customer approval,
the design is then executed by Athenia's mold makers, who are
highly skilled tool and die makers. Each mold produced by
Athenia is made with precision machinery and requires many
separate operations involving lathe turning, milling, drilling,
jig boring, electrical discharge machinery, duplicating, heat
treating, grinding, polishing and chrome plating. If a customer
reorders a previously produced mold, Athenia must repeat all
stages of the described process, except for layout and design.
The production of molds, from design through manufacture, is
primarily performed by Athenia employees, including designers,
engineers, and tool and die makers.
The period of production of molds, from the date of
quotation to the date of shipment, ranges from 10 weeks to 6
months but averages approximately 4 months. The cost of molds
produced by Athenia ranges from $25,000 to $300,000 but generally
averages $75,000.
Injection Molding Operation
Supply Dynamics operates injection-molding equipment,
located at Beres' facility in Lakewood, New Jersey. Supply
Dynamics is capable of producing custom plastic injection-molding
for use in the manufacture of a product line consisting primarily
of cartridges and spools for ribbon supplies. The cartridges and
spools manufactured by Supply Dynamics are primarily used by the
computer printer market and are designed to accepts ribbons for
use on various computer and word processing printers, electronic
typewriters, point of sale terminals and various other printing
devices.
The Company's in-house technology provides Supply Dynamics
with complete control of the product, from the initial design
stage of the molds produced at Athenia's facility, through
construction of a precision engineered tool which will produce a
uniform quality product. Additionally, Supply Dynamics has the
technical expertise to assist its customers in the development of
new products and tools.
Beres' acquisition of certain molds, assembly equipment,
patents and inventory from Costar Corporation also strengthened
Supply Dynamics' production capabilities with respect to the
manufacture of ribbon printer cartridges and other related
products, as sell as its distribution of finished plastic
cartridges to selected original equipment manufacturers ("OEM's")
of computers and computer printers. In addition, the Company
utilized the assets purchased from Costar Corporation to
facilitate its production of finished plastic cartridges and
audio cassettes.
Sources and Availability of Raw Materials
The Company purchases raw materials for the manufacture of
its products from a variety of suppliers. Since the materials
utilized by the Company are available at competitive prices from
numerous domestic sources, the loss of any one supplier would not
have a significant impact on the Company. The Company had an
adequate supply of raw materials to meet its needs in its 1995
fiscal year, and the Company does not anticipate a shortage in
the supply of these materials in the future.
Competition
Although there are many companies engaged in the manufacture
of plastic products and molds in the United States, not all of
these companies are engaged in the manufacture of precision
engineered molds. The Company is of the opinion that its ability
to both manufacture its molds and assemble its products at its
own facilities strengthens its competitive edge despite the fact
that many of the Company's competitors possess financial, sales,
marketing and other capabilities substantially greater than the
Company's. Moreover, the Company has been engaged in various
aspects of its business for over thirty years, and has developed
a significant amount of good will with its customers.
Marketing and Sales
Athenia's sales force is presently headed by Harold Zuber,
and Supply Dynamics' sales force is presently headed by Joseph
Delikat and two other salaried employees. The Company also
employs the services of independent sales representatives on a
commission basis as part of its overall marketing and sales
efforts. The Company utilizes various techniques in marketing
its products, including but not limited to, direct customer
contact, direct mail, advertising and attendance at trade shows.
The Company believes that there is a large market for its
products and services and it intends to utilize its technical
expertise to assist its customers in developing new products and
perfecting existing products to suit customer needs.
Customers
Four of the Company's unaffiliated customers accounted for
approximately sixty-six (66%) percent of the Company's total
sales in fiscal 1995. The loss of any one of these customers
could have a material adverse effect on the Company's business.
No material portion of the Company's business is seasonal.
Backlog of Orders
The following table illustrates the Company's backlog of
orders believed to be firm as of June 1, 1996, and as of that
approximate date in the preceding fiscal year:
As of As of
June 1, 1996 June 1, 1995
Sales Backlog $413,937 $ 450,229
As of As of
June 1, 1996 June 1, 1995
% deliverable
in succeeding
fiscal year 100% 100%
The Company's backlog consists of contracts issued by the
Company to deliver a specific quantity or type of goods on
approximate dates, at a specified price. The contract term
varies in duration but generally runs from six months to one
year. Due to the fact that a substantial portion of the
Company's orders are filed within a relatively short period of
less than six months, the dollar amount of backlog at any one
time may not be indicative of future sales.
Patents and Trademarks
On July 30, 1986, Beres acquired four patents from Costar
Corporation for the following cartridges: (i) a high speed
printer cartridge; (ii) a ribbon cartridge for band printer;
(iii) a ribbon cartridge with shield; and (iv) a cartridge having
ribbon inverting means. Two of the patents expire in or about
the year 1998, and two of the patents expire in or about the year
2000.
On August 15, 1995, the Company was issued Design Patent
Number 361,266 for an ink jet refill dispensing tip with captive
enclosure. The patent will expire in 2009.
Although the Company does not have any other patent
protection with respect to the precision engineered molds,
cartridges, spools for ribbon supplies and custom plastic
injection molds, designs, manufactures or sells, the Company
intends to rely upon the proprietary nature of its products and
processes, and the confidentiality agreements that it has entered
into with all of its key technical personnel who have access to
the Company's proprietary process and trade secrets. In the
event that such persons breach this confidential relationship and
discloses such proprietary information, however, the Company
would have no protection other than those remedies provided by
law.
Employees
At June 1, 1996 the Company employed an aggregate of 57
employees. The Company has not experienced any labor problems or
work stoppages to date, and management is of the opinion that the
Company's relations with its employees is good.
Item 2. Description of Property:
The following table describes the Company's principal
facilities:
Approximate
Floor Area
Location Square Feet Use
1785 Swarthmore (1) 32,500 Executive Offices;
Lakewood, New Jersey Manufacturing Facility
(1) The Company also owns approximately 6.7 acres of land
upon which the building is situated.
Item 3. Legal Proceedings:
On or about July 12, 1994 the Company instituted litigation
against Northeast Plastic Distributors, Inc., Teresa Radecka and
Basem Allen, in the New Jersey Superior Court. The Complaint
sought recovery of an outstanding account receivable due the
Company for goods sold and delivered, in the approximate amount
of $273,000. In September, 1995, the Company settled its claim
with the individual defendants for $50,000, $5,000 of which was
paid at the time of settlement, and the balance of which is
payable over a term of thirty (30) months. On November 9, 1995,
Judgment was entered against the corporate defendant in the
amount of $222,913. Due to the unstable financial condition of
the corporate defendant, it is not likely that any substantial
recovery will be obtained from the corporate defendant.
On or about August 2, 1995, the Company instituted
litigation against Cassette Productions, Inc. for collection of
an account receivable due the Company for goods sold and
delivered, in the amount of $92,308. The Company is not able to
predict the outcome of this litigation and the amount, if any, of
the receivable that will be recovered.
On March 30, 1995, the Company instituted litigation against
First Fidelity Bank and certain of its officers in the United
States District Court. The Complaint sought compensatory and
punitive damages, lost profits and release of certain monies
belonging to the Company, which First Fidelity had arbitrarily
refused to release. The litigation arose out of $250,000 in
proceeds which the Company received from the sale of its interest
in the HPM/AIT Joint Venture and which proceeds were being held
by First Fidelity as additional collateral on indebtedness
between the Company and First Fidelity. On June 3, 1996, the
litigation was settled. First Fidelity has agreed to release its
lien on the proceeds in exchange for Beres paying down $107,000
of its indebtedness to First Fidelity. First Fidelity has also
agreed to modify the Note between Beres and First Fidelity so as
to reflect a maturity of October 1, 2006 and collateralization by
a first lien, only, on real property owned by Beres.
Item 4. Submission of Matters to a Vote of Security Holders:
None.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters:
The following table sets forth the high and low stock prices
(bid) for Beres Common Stock as reported by NASDAQ (symbol
"BERS") for the calendar years indicated. The following
quotations, as reported by NASDAQ, do not include retail mark-
ups, markdowns or commissions and represent prices between
dealers and not necessarily actual transactions.
Commencing December 12, 1994, all bid quotations are as
reported by the National Quotation Bureau, Inc. Such quotations
reflect inter-dealer quotations and do not include retail mark-
ups, mark-downs or commissions and may not represent actual
transactions.
The past performance of Beres' Common Stock is not necessary
indicative of future performance.
1993
High Low
1st Qtr $ .31 $ .09
2nd Qtr $ .31 $ .31
3rd Qtr $ .25 $ .12
4th Qtr $ .21 $ .12
1994
High Low
1st Qtr $ .27 $ .18
2nd Qtr $ .25 $ .15
3rd Qtr $ .15625 $ .09375
4th Qtr $ .09375 $ .03
1995
High Low
1st Qtr $ .09 $ .03
2nd Qtr $ .07 $ .01
3rd Qtr $ .055 $ .045
4th Qtr $ .0625 $ .055
1996
High Low
1st Qtr $ .07 $ .06
2nd Qtr $ .13 $ .07
3rd Qtr* $ .09 $ .08
* Through July 23, 1996.
As of July 23, 1996 the approximate number of Shareholders of
record of the Company was 1,932. Although the Company had paid
dividends to its shareholders prior to its initial public
offering, any future payment of dividends will be within the
discretion of the Company's Board of Directors and will depend,
among other factors, on earnings, capital requirements and the
operating and financial condition of the Company. At the present
time, the Company's anticipated financial capital requirements
are such that it intends to follow a policy of retaining earnings
in order to finance the development of its business.
In December, 1994, the Company's Common Stock was delisted
from the NASDAQ Small Cap Market, due to non-compliance with the
minimum bid price requirement. Although the Company made an
appeal to the NASDAQ Listing Qualifications Committee, the
delisting was not reversed. The Company's securities will not be
relisted on NASDAQ until such time as the Company is able to
comply with NASDAQ requirements, which will not occur for the
immediately foreseeable future. The Company's securities are,
however, quoted in the "Pink Sheets", as published by the
National Quotation Bureau, Inc. and the "OTC Bulletin Board".
Item 6. Management's Discussion & Analysis of Financial
Condition and Results of Operations:
This analysis of the Company's financial condition, capital
resources and operating results should be reviewed in conjunction
with the accompanying Financial Statements, including the notes
thereto.
The Company believes that an understanding of its operating
results requires an analysis into its business segments.
Athenia designs, manufactures and assembles precision
engineered injection molds for the manufacture of molded plastic
products and parts for both its internal operations as well as
for sale to outside customers.
Custom Molding consists of the Company's injection molding
operations, including ribbon cartridge kits or components, both
to outside customers in the ribbon industry and to the Company's
finished ribbon cartridge segment, and custom contract molded
products to plastic product manufacturers.
The Finished Ribbon cartridge segment manufactures computer
printer and electronic typewriter ribbon cartridges for sale
primarily to OEM printer manufacturers and ribbon industry co-
manufacturers.
The Audio Cassette segment manufactures pre-leadered audio
cassettes and related accessories for sale to major record
companies, custom trade duplicators and blank tape loaders.
Operations for this segment were suspended during 1994 due
primarily to intense foreign competition as well as an industry
oversupply. The Company is currently in the process of
liquidating these assets.
The following tables summarize net sales and operating
income (loss) by segment.
Year Ended March 31,
1996 1995
(Dollars in Thousands)
Sales
Athenia $ 351 $ 869
Custom Molding 2,507 2,080
Finished Ribbons 1,125 1,470
Audio Cassettes 4 267
Total Sales $3,987 $4,686
Operating Income (Loss)
Athenia $ (180) $(102)
Custom Molding 289 216
Finished Ribbons (145) (43)
Audio Cassettes (46) (237)
Total Operating Income (Loss) $ (82) $ (166)
Investment Expense $ (122) $ (134)
Interest and Other Income 53 86
Gain on Sale of Joint Venture 22 250
Gain on Sale of Equipment 26 --
Net Income (Loss) $ (103) $ 36
The Company's total net sales for the year ended March 31, 1996
decreased $699,000 or 14.9% from the year ended March 31, 1995.
The Company had a net loss of $103,000 for the year ended March
31, 1996 as compared to net income of $36,000 for the prior year.
Included in the 1995 net income figure is a one-time gain on the
sale of Beres' interest in Advanced Imaging Technology Inc. (AIT)
of $250,000. The 1996 net loss figure included one-time gains of
approximately $48,000.
Athenia's sales decreased $518,000 to $351,000 for the year
ended March 31, 1996 as compared to the 1995 fiscal year. During
the 1996 period, Athenia incurred an operating loss of $180,000
as compared to an operating loss of $102,000 for the fiscal year
ended March 31, 1995. The significant decrease in sales is
primarily the result of slow market conditions being experienced
by most competitors in the industry. The increase in operating
loss is primarily the result of the lower sales level resulting
in a lower gross profit and the nature of certain fixed selling,
general and administrative expenses. Although requests for
quotations for products manufactured by this segment have been
increasing recently, it is not possible to determine at this time
if a reversal of the sales trend will be forthcoming.
Custom Molding sales increased $427,000 or 20.5% during the
year ended March 31, 1996 as compared to the year ended March 31,
1995. This segment produced operating income of $289,000 in the
current year as compared to operating income of $216,000 during
the year ended March 31, 1995. The sales increase for this
segment is a direct result of a concentrated effort to secure
additional custom contract molding and redirect the Company to
becoming more of a custom molder, due to the fact that the
Company has discontinued audio cassette operations. When
manufacturing audio cassettes, a certain portion of the custom
molding equipment was utilized to supply molded parts to the
audio cassette segment. The increase in operating profit for
this segment is a direct result of an increase in gross profit
dollars realized from the increased sales level, despite the
fact that a customer who, in 1995, signed a five year contract
with the Company guaranteeing a minimum of $1,000,000 annually in
custom molding sales, has not reached those levels. Management
is hopeful that through a continued intense sales effort this
higher level of sales for this segment will continue. Management
is currently negotiating a settlement with the customer that
breached the contract.
Finished Ribbon cartridge sales decreased $345,000 or 23.5%
during fiscal year ended March 31, 1996 as compared to the prior
year. This segment produced an operating loss of $145,000 during
the most recent fiscal year as compared to an operating loss of
$43,000 during the year ended March 31, 1995. The decrease in
sales is primarily the result of a shrinking market for impact
printer ribbon products which are losing market share to the
newer ink jet and laser printers that do not use ribbons. The
increase in loss results from the lower gross profit caused by
increased competition. Management is now concentrating its
efforts on controlling costs in this segment to improve profit
margins and concentrating its sales efforts on certain niche
markets in the industry. It is not possible as this time to
determine if these efforts will reverse the trend of this segment
during the current fiscal year.
Audio Cassette sales were virtually non-existent during the
fiscal year ended March 31, 1996 with the exception of some
inventory that was sold off. As discussed above, Management
suspended audio cassette production during 1994 due to intense
foreign competition, a world wide oversupply and the credit
worthiness of certain customers in the industry. At the current
time Management is concentrating its efforts on selling the audio
cassette assets. Although certain companies have expressed an
interest, it is not possible to determine at this time if a
purchaser will be found.
Contract Costs and Costs of Goods Sold varies based upon
sales volume and product mix. Cost of sales decreased to 81.4%
during the year ended March 31, 1996 from 86.2% during fiscal
year 1995. This cost decrease and resultant increase in gross
profit is primarily the result of the increased sales level for
the custom molding segment which traditionally carries the
highest gross margins of the Company's products and services and
Management's efforts to control manufacturing costs and improve
efficiencies.
Selling, General and Administrative Expenses increased
$58,000 to $815,000 during fiscal year ended March 31, 1996 as
compared to 1995. This increase is primarily the result of an
increase in legal fees which was incurred during the year,
primarily caused by the litigation with the Company's bank.
Interest and Other Income decreased approximately $33,000
during fiscal year ended March 31,1996 as compared to 1995. This
decrease is primarily the result of lower commissions earned on
the sale of imported ribbon cartridge kits from an unaffiliated
company.
Interest Expense decreased approximately $12,000 during 1996
as compared to fiscal 1995. This decrease is primarily the
result of the repayments of net borrowings.
Gain on Sale of Joint Venture amounted to $22,000 during
fiscal year ended March 31, 1996. This gain resulted from
selling assets received from the joint venture (AIT) for which
the Company had no use.
Gain on Sale of Equipment was $26,000 for the fiscal year
ended March 31, 1996. This gain resulted primarily from the sale
of a molding machine which was replaced with a new machine.
LIQUIDITY AND CAPITAL RESOURCES AND MATERIAL CHANGES IN FINANCIAL
CONDITION
Operating Activities
Although the Company reported a net loss of $103,000 for fiscal
year ended March 31, 1996, the Company generated a respectable
$132,000 in net cash from operations. However, due to a
repayment of outstanding debt during the year of approximately
$174,000 and the net affect of investing in equipment of
approximately $35,000, the Company experienced a net decrease in
cash and cash equivalents of $77,000 for fiscal year ended March
31, 1996. Despite this reduction, however, the Company had cash
reserves at March 31, 1996 of $645,000 of which $268,000 is being
held as restricted cash by our primary bank lender. As of June
3, 1996, litigation related to the restricted cash was settled,
with $107,000 of the restricted cash being utilized to reduce the
Company's indebtedness to its lender, and the balance being
released to the Company. Management is of the opinion that
operations during the coming year will generate sufficient cash
flows to service scheduled debt repayments.
Financing Activities and Liquidity
The Company had a working capital default of $84,000 at March 31,
1996 as compared to a working capital deficit of $87,000 at March
31, 1995. Although the Company consummated the refinancing of
its real estate mortgage in the amount of $1,200,000 during
March, 1994 into a five year term loan, the balance of this loan,
approximately $1,099,000, is included in current liabilities due
to non-compliance with certain ratios in the mortgage agreement
as discussed in the 1995 and 1994 10-KSB's. This classification
also resulted in a term loan to another bank, in the amount of
approximately $85,000, to not be in compliance with a covenant in
its loan agreement and, therefore, is also included in current
liabilities. As a result of the Company's settlement of its
litigation with First Fidelity Bank, the Company anticipates that
its loan will be in good-standing as a long term loan, thereby
freeing up certain other collateral and the releasing of a
substantial portion of the restricted cash. This will have a
significant positive affect on the Company's balance sheet as
well as affording the Company the ability to seek additional
financing utilizing the released collateral.
At the present time, the Company intends to continue operating
under the assumption that no significant new financing will be
available. Scheduled debt repayments other than the reclassified
long term portions of the bank debt are expected to be met by
operating cash flows. If necessary, additional cost cutting
measures will also be instituted.
Achieving a return to growth and profitability will require the
Company to overcome uncertainties which it now faces, namely,
increasing sales above current levels, securing capital for
growth and the overall health of the U.S. economy. It is not
possible to determine the effects of these factors on the
Company's financial condition on liquidity at this time.
Management will continue its efforts to increase sales and
improve cost controls. Absent any unanticipated operating
expenses on a significant downturn in the economy, Management is
hopeful for an improvement in long term operating results.
Item 7. Financial Statements and Supplementary Date:
INDEX TO FINANCIAL STATEMENTS - See Page F-1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
Page
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet as of March 31, 1996 F-3
Consolidated Statements of Operations
For the Years Ended March 31, 1996 and 1995 F-4
Consolidated Statements of Changes in
Stockholders' Equity
For the Years Ended March 31, 1996 and 1995 F-5
Consolidated Statements of Cash Flows
For the Years Ended March 31, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7 to F-14
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Beres Industries, Inc.
We have audited the accompanying consolidated balance sheet of
Beres Industries, Inc. and subsidiaries as of March 31, 1996 and
the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the two years in the
period ended March 31, 1996. These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects the financial
position of Beres Industries, Inc. and subsidiaries as of March
31, 1996, and the results of their operations and their cash
flows for the two years in the period ended March 31, 1996 in
conformity with generally accepted accounting principles.
WITHUM, SMITH & BROWN
TOMS RIVER, NJ 08753
June 12, 1996, except as to
Note 13 for which the date
is June 30, 1996
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
<TABLE>
ASSETS
<S> <C>
Current Assets:
Cash and cash equivalents $ 377,000
Cash - restricted 268,000
Accounts receivable less allowance for
doubtful accounts of $258,000 600,000
Inventories:
Raw materials 94,000
Work-in-process 183,000
Finished goods 17,000
Prepaid expenses and other current assets 70,000
Total Current Assets 1,609,000
Property, Plant and Equipment - Net 1,759,000
Other Assets 57,000
TOTAL ASSETS $ 3,425,000
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current Liabilities:
Current maturities of long-term debt $ 250,000
Current maturities of capital lease obligations 61,000
Accounts payable and accrued expenses 413,000
Customer deposits 35,000
Total Current Liabilities 759,000
Long-Term Debt, Less Current Maturities 934,000
Long-Term Capital Lease obligations,
Less Current Maturities 133,000
Commitments and Contingencies -
Stockholders' Equity:
Common stock, par value $.02 per share:
Authorized - 21,000,000 shares
Issued and outstanding - 12,412,000 shares 248,000
Capital in excess of par value 3,445,000
Accumulated deficit (1,924,000)
1,769,000
Less: Amounts due on sale of common stock 170,000
Total Stockholders' Equity 1,599,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 3,425,000
</TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1996 AND 1995
<TABLE>
1996 1995
<S> <C> <C>
Revenues:
Net sales
- Unaffiliated customers $ 3,987,000 $ 4,591,000
- Advanced Imaging Technology, Inc. - 95,000
Total Revenues 3,987,000 4,686,000
Costs and Expenses:
Cost of goods sold 3,244,000 4,038,000
Selling, general and administrative
expenses 815,000 757,000
Provision for doubtful accounts 10,000 57,000
Total Costs and Expenses 4,069,000 4,852,000
Operating Loss (82,000) (166,000)
Other Income (Expense):
Interest and other income 53,000 86,000
Interest expense (122,000) (134,000)
Gain on sale of joint venture 22,000 250,000
Gain on sale of equipment 26,000 -
Total Other Income (Expense)-Net (21,000) 202,000
Net Income (Loss) $ (103,000) $ 36,000
Weighted Average Number of
Common Shares Outstanding 12,412,000 12,412,000
Net Income (Loss) Per Common Share $(.01) $ -
</TABLE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1996 AND 1995
<TABLE>
Common Stock Excess of Accumulated Common Stock
Shares Par Value Par Value Deficit Receivable
<S> <C> <C> <C> <C> <C>
Balance,
April 1, 1994 12,412,000 $ 248,000 $3,445,000 $(1,857,000) $(170,000)
Year Ended
March 31, 1995
Net Income - - - 36,000 -
Balance,
March 31, 1995 12,412,000 248,000 3,445,000 (1,821,000) (170,000)
Year ended
March 31, 1996
Net Loss - - - (103,000) -
Balance,
March 31, 1996 12,412,000 $ 248,000 $3,445,000 $(1,924,000) $(170,000)
</TABLE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1996 AND 1995
<TABLE>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (103,000) $ 36,000
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 246,000 385,000
Gain on sale of joint venture (22,000) (250,000)
Gain on sale of equipment (26,000) -
Changes in operating assets and liabilities:
Accounts receivable - trade:
Unaffiliated customers 11,000 197,000
Advanced Imaging Technology, Inc. - 26,000
Inventories 80,000 38,000
Prepaid expenses and other current assets (52,000) 3,000
Accounts payable and accrued expenses (31,000) (237,000)
Customer deposits 30,000 (36,000)
Other assets (1,000) (8,000)
Net cash provided by operating activities 132,000 154,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment 26,000 -
Proceeds from sale of joint venture 22,000 250,000
Investments in restricted cash (14,000) (254,000)
Acquisitions of property, plant and equipment (69,000) (50,000)
Net cash used in investing activities (35,000) (54,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (124,000) (152,000)
Principal payments on capital lease obligations (50,000) (51,000)
Net cash used in financing activities (174,000) (203,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS (77,000) (103,000)
CASH AND EQUIVALENTS, BEGINNING OF YEAR 454,000 557,000
CASH AND EQUIVALENTS, END OF YEAR $ 377,000 $ 454,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 123,000 $ 126,000
Income taxes paid $ - $ -
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capitalized lease obligations incurred $ 144,000 $ -
</TABLE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
Nature of Business - The Company's principal business is injection
molding plastic parts, manufacturing precision engineered molds
and assembling finished ribbons. The Company's customers range
from local to multi-national companies.
Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
intercompany transactions and balances have been eliminated in
consolidation.
Cash and Cash Equivalents - Cash and cash equivalents include cash
on hand and in the bank as well as all short term securities held
for the primary purpose of general liquidity. Such securities
normally mature within three months from the date of acquisition.
Revenue Recognition - Sales are recognized as products are
shipped.
Inventories - Inventories are stated at the lower of cost (first-
in, first-out method) or market.
Property, Plant and Equipment - Property, plant and equipment are
stated at cost. The Company provides for depreciation and
amortization using the straight-line method, based upon estimated
useful lives of 5 to 10 years for machinery, equipment, furniture
and fixtures, 5 years for automobiles, 31-1/2 years for buildings
and 10 years for building improvements.
Income Taxes - Deferred income tax assets and liabilities are
recognized for the differences between financial and income tax
reporting basis of assets and liabilities based on enacted tax
rates and laws. The deferred income tax provision or benefit
generally reflects the net change in deferred income tax assets
and liabilities during the year. The current income tax provision
reflects the tax consequences of revenues and expenses currently
taxable or deductible on the Company's various income tax returns
for the year reported.
Net Income (Loss) Per Common Share - Net income (loss) per common
share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding during each period.
Options are not included when their inclusion would be
antidilutive.
Reclassifications - Certain amounts previously reported in the
March 31, 1995 financial statements have been reclassified to
conform with the March 31, 1996 presentation.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued):
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Note 2 - Management Actions to Overcome Liquidity Problems:
At March 31, 1996 and 1995, the Company was not in compliance with
certain required ratios included in their bank loan agreements.
This situation caused approximately $1,200,000 of the Company's
long term debt to become currently due, created a working capital
ratio of under 1.0 to 1.0 and, therefore, created substantial
doubt about the Company's ability to continue as a going concern.
On June 30, 1996 the company refinanced this debt on terms and
conditions that provide for $250,000 of principal to be currently
due. See Note 13 for further information concerning the
refinance. This substantially improved the Company's liquidity.
Note 3 - Property, Plant and Equipment:
Property, plant and equipment at March 31, 1996 is summarized as
follows:
Land $ 50,000
Building or building improvements 1,719,000
Machinery and equipment 5,034,000
Furniture and fixtures 93,000
Automotive equipment 18,000
6,914,000
Less: Accumulated depreciation 5,155,000
$1,759,000
Assets under capital leases at March 31, 1996 are included in
property, plant and equipment as follows:
Machinery and equipment $ 311,000
Less: Accumulated amortization 98,000
$ 213,000
Depreciation and amortization included as a charge to operations
amounted to $238,000 for 1996 and $376,000 for 1995.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Long-Term Debt:
Long-term debt at March 31, 1996 is summarized as follows:
Mortgage payable to bank, due in monthly installments
of $11,977 including interest at 8.6%, through
May 1999 when the remaining balance of
$962,000 is due $1,099,000
Note payable to bank, due in monthly principal
installments of $5,000 plus interest at
Prime + 1-1/2% through September 1997 85,000
Total 1,184,000
Less: Current maturities as adjusted by the
refinance referred to in Note 13 250,000
Long-Term Debt, Less Current Maturities $ 934,000
Accounts receivable, inventories, equipment, land and building are
collateral for the above indebtedness.
Future maturities of long-term debt as adjusted by the refinancing
referred to in Note 13 are as follows:
Year Ending March 31,
1997 $ 250,000
1998 66,000
1999 72,000
2000 78,000
2001 85,000
2002 and subsequent 633,000
$1,184,000
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Income Taxes:
The provision for income taxes consists of the following:
Federal State Total
1996 Provision - Current $ - $ 100 $ 100
1996 Provision - Deferred - - -
Benefit of NOL Carryforwards - - -
March 31, 1996 Net Provision $ - $ 100 $ 100
1995 Provision - Current $12,600 $ 3,000 $15,600
1995 Provision - Deferred - - -
Benefit of Surtax Exemption (7,600) - (7,600)
Benefit of NOL Carryforwards (5,000) (3,000) (8,000)
March 31, 1995 Net Provision $ - $ - $ -
Temporary differences which give rise to significant deferred
income tax assets and (liabilities) at March 31, 1996 follow:
Allowance for Doubtful Accounts Receivable $ 110,000
Accrued Vacation and Bonus Pay 27,000
Net Operating Loss Carryforwards 627,000
Valuation Allowance (706,000)
Total Deferred Income Tax Assets $ 58,000
Accelerated Depreciation $ (58,000)
Total Deferred Income Tax Liabilities $ (58,000)
Net Deferred Income Tax Asset $ -
At March 31, 1996, the Company had consolidated net operating loss
carryforwards for Federal income tax purposes of approximately
$1,500,000 that expire through the year 2009,and approximately
$1,300,000 that expire through the year 2001 for state income tax
purposes.
A reconciliation of income tax at the statutory rate to the
company's effective rate is as follows:
1996 1995
U.S. Federal Statutory Rate of Tax 34.0% 34.0%
Benefit of Surtax Allocation - (19.0)
Benefit of Net Operating Loss
Carryforwards - (15.0)
Operating Losses with no Current
Tax Benefit (34.0) -
Effective Tax Rate - % - %
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Capital Leases:
Obligations under capital leases due in monthly
installments of principal plus interest at rates
ranging from 4.3% to 17.9% and maturing through
November 2000. $ 194,000
Less: Current Maturities 61,000
Long-Term Capital Leases, Less Current Maturities $ 133,000
The following is a schedule of future minimum rental payments
required for all noncancellable capital leases that have initial
or remaining lease terms in excess of one year at March 31, 1996.
Year Ended March 31,
1997 $ 75,000
1998 55,000
1999 35,000
2000 35,000
2001 27,000
Total future minimum lease payments 227,000
Less: Amount representing interest 33,000
Present value of future minimum
lease payments $194,000
Note 7 - Contingencies:
Legal Proceedings - The Company is a defendant in a number of
legal proceedings which occurred in the normal course of business.
Management of the Company, after consultation with legal counsel,
feels that the ultimate resolution of these matters will not have
a material affect on the Company's financial position.
SEC Proceedings - On August 17, 1993 the United States District
Court for the District of New Jersey entered a Final Judgment of
Permanent Injunction by Consent against Beres Industries, Inc.,
Charles Beres, Sr. and Charles Beres, Jr. enjoining future
violations under Section 17(a) which may arise out of any future
negligent conduct. The Company, Charles Beres, Sr. and Charles
Beres, Jr. consented to the entry of the injunction without
admitting or denying the allegations in the Complaint.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Common Stock and Options:
Amounts Due on Sale of Common Stock - Amounts due on the sale of
common stock relate to a sale of 1,200,000 shares of common stock
at $.25 per share to the Company's Chairman of the Board, prior to
the company's 1986 public offering. Pursuant to the terms of the
original note dated April 13, 1986, interest only was payable at
the prime rate until June 30, 1988 and principal payments at
$37,500 per calendar quarter plus interest were to commence on
September 30, 1988 and end on June 30, 1990. At March 31, 1996,
the unpaid balance includes principal and interest which was in
arrears. No subsequent payments or new arrangements have yet been
made for payment.
During 1990, counsel provided the Company with an opinion that the
1,200,000 shares issued for the promissory note did not comply
with New Jersey statutory law at the time.
Pending resolution of the matter, no interest has been recorded on
this note since 1989. In the event shares were returned at the
subscription price and unpaid principal and interest recorded were
forgiven, 589,000 shares would be returned and a charge against
earnings equal to $23,000 for accrued interest would be made. Pro
forma income (loss) per share would be $(.01) and $( - ) for March
31, 1996 and 1995, respectively.
Options - At March 31, 1996, the Company had previously granted
Incentive Stock Options for officers and other employees to
purchase 117,000 shares of the Company's common stock at $3.00 per
share. Such options expire from 1996 through 1999. As of March
31, 1996, all such options were exercisable.
The Company has also reserved an additional 1,383,000 shares of
common stock for possible future issuance under its Incentive
Stock Option Plan. Pursuant to the plan, grants entitling the
holder to purchase up to $100,000 in fair market value of shares
in any calendar year may be made to an officer or employee.
Options may be granted for a period of ten years at 100% of the
fair market value of the common stock on the date of grant, except
for grants to stockholders owning more than 10% of the outstanding
common stock (for whom the period is five years and the exercise
price is 110% of fair market value). As of March 31, 1996, no
option has been granted under this plan.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 - Major Customers and Credit Risk Concentrations:
Major Customers and Credit Risk Concentrations - Sales to
unaffiliated customers in excess of 10% of such net sales were as
follows:
Accounts Receivable Sales for the
at March 31: Year Ended March 31:
1996 1995 1996 1995
Customer A $ 21,000 $ 6,000 $691,000 $ -
Customer B $126,000 $195,000 $569,000 $474,000
Customer C $129,000 $ 90,000 $541,000 $933,000
Customer D $ 57,000 $ 2,000 $842,000 $909,000
The Company maintains its cash balances in several financial
institutions. The accounts at each institution are insured by the
Federal Deposit Insurance Corporation up to $100,000. Uninsured
balances, including outstanding checks, aggregate $500,000 at
March 31, 1996. Management reviews the banks periodically and
considers the credit risk minimal.
Note 10- Fair Value of Financial Instruments:
The amounts included in the balance sheet as of March 31, 1996 for
cash and cash equivalents, other current assets, accounts payable
and accrued expenses and other liabilities approximate fair value
because of the short-term nature of these instruments. The
carrying value of long-term debt approximates the estimated fair
value because the long-term debt is at interest rates comparable
to rates currently available to the Company for debt with similar
terms and remaining maturities.
Note 11- Segment Information:
Segment Information - The Company includes definitions of its
segments in its "Management's Discussion and Analysis" appearing
elsewhere herein. The segment descriptions are an integral part
of this footnote. Such segment information provides an
appropriate description of the nature of its credit risks.
Athenia sells molds to other segments at cost, including
materials, labor and overhead determined on the same basis as for
sales to unaffiliated parties. Such intersegment sales and
related costs which are not included in revenues or costs of
Athenia were $51,000 and $16,000 for the years ended March 31,
1996 and 1995, respectively.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11- Segment Information (Continued):
Corporate assets consist of cash and cash equivalents, prepaid
expenses, due from officers, and other assets. General corporate
expenses, interest expense, and interest income are classified as
"corporate and other". All other assets are identifiable with
specific segments.
Information about segments follows:
<TABLE>
Precision Custom Finished Audio Corporate
Molds Molding Ribbon Cassette and Other Consolidated
<S> <C> <C> <C> <C> <C> <C>
1996:
Sales 351,000 2,507,000 1,125,000 4,000 - 3,987,000
Operating Earning (180,000) 289,000 (145,000) (46,000) - (82,000)
Identifiable
Assets 291,000 1,291,000 524,000 413,000 906,000 3,425,000
Depreciation and
Amortization 20,000 162,000 22,000 25,000 17,000 246,000
Capital Expenditures - 153,000 - 56,000 4,000 213,000
1995:
Sales 869,000 2,080,000 1,470,000 267,000 - 4,686,000
Operating Earning (102,000) 216,000 (43,000) (237,000) - (166,000)
Identifiable
Assets 333,000 1,427,000 448,000 466,000 885,000 3,559,000
Depreciation and
Amortization 38,000 232,000 27,000 69,000 19,000 385,000
Capital Expenditures - 23,000 10,000 17,000 - 50,000
</TABLE>
Note 12- Joint Venture:
On May 30, 1988, the Company entered into a Joint Venture Agreement
(the "Agreement") with Hitachi Powdered Metals Co., Ltd. ("HPM"), a
member of the Hitachi Group. Pursuant to the Agreement, the
Company and HPM formed Advanced Imaging Technology, Inc. ("AIT"),
in which the company owned a 15% interest until November, 1994 at
which time the Company sold it's entire interest in AIT to Hitachi.
AIT was engaged in the manufacture and sale of finished ribbon
cartridges, other ribbon-related products and plastic kits. The
Company and AIT also had a plastic kit supply agreement that
provided for AIT to purchase substantially all of its requirements
for plastic kits from the Company.
Note 13- Subsequent Events:
On June 30, 1996, the Company refinanced it's mortgage payable over
a term of approximately eleven years, at 8.6% per year. This
refinance removes the restrictive covenants from the loan and,
allows the majority of the debt to be classified as long-term.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure:
On March 8, 1995, the Company advised its independent
accountants, Wiss & Company, that the Company did not intend to
reappoint Wiss & Company to complete its audit for the fiscal
year ending March 31, 1995. The Company's action was approved by
its Board of Directors.
Wiss & Company's report on the Company's financial
statements, for the fiscal year ended March 31, 1994, contained a
"going concern" qualification. During the two (2) preceding
fiscal years, and for the interim periods through December 31,
there were no "disagreements" (as that term is defined in Item
304 of Regulation S-K) on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the
satisfaction of Wiss & Company, would have caused it to make
reference to the subject of its disagreement in connection with
its report.
On March 9, 1995 the Company engaged its present
independent accountants, Withum, Smith & Brown, Toms River, New
Jersey.
PART III
Item 9. Directors and Executive Officers of the Registrant:
The Company's Officers and Directors are as follows:
Name Age Positions Held with the Registrant
Charles Beres, Sr. 78 Chairman of the Board
and Director
Charles Beres, Jr. 47 President, Chief Executive
Officer, Chief Financial
Officer, Treasurer and Director
Joseph Delikat 56 Vice President, Secretary
and Director
Joseph L. Ruden 75 Vice Chairman of the Board
of Directors and Director
Harold Zuber 63 Vice President and Director
Charles Beres, Sr., is Beres' founder and has been
associated with it since its inception in June, 1960. Mr. Beres,
whose term as a Director will continue until his successor is
duly elected and qualified, is a member of the Company's
Incentive Stock Option and Compensation Advisory Committee. Mr.
Beres now serves the Company as Chairman of the Board, and in an
advisory capacity only.
Charles Beres, Jr., has been President, Chief Executive
Officer and a Director of Beres since 1972, Treasurer and Chief
Financial Officer since December, 1987 and Secretary from 1979
until February, 1986. Charles Beres, Jr., is the son of Charles
Beres, Sr. Mr. Beres holds a Bachelor of Science Degree in
Mechanical Engineering from New York University and a Masters in
Business Administration from Fairleigh Dickinson University which
he received in 1970 and 1976, respectively. Mr. Beres was
employed by the Engineering Department of Beres from June, 1970
until November, 1972 when he became President and Chief Executive
Officer. Mr. Beres was also Secretary of Athenia and Supply
Dynamics from July, 1976 and October 1983, respectively, until
February, 1986. Mr. Beres is primarily responsible for managing
the day-to-day operations of the Company. Mr. Beres, whose term
as a Director will continue until his successor is duly elected
and qualified, is a member of the Company's Incentive Stock
Option and Compensation Advisory Committee.1
1 On August 17, 1993 the United States District Court for the
District of New Jersey entered a Final Judgment of Permanent
Injuction by Consent against Beres Industries, Inc., Charles
Beres, Sr. and Charles Beres, Jr., enjoining future violations
under Section 17(a) which may arise out of any future
negligent conduct. The Company, Charles Beres, Sr. and Charles
Beres, Jr. consented to the entry of the injunction without
admitting or denying the allegations in the Complaint.
Joseph Delikat has served as Vice President of Beres since
October, 1983, as Director in 1986, as Secretary since December,
1986 and was subsequently appointed as a Director in 1989. Mr.
Delikat was Vice President of Business Machine Supply, Inc., from
August, 1980 until September, 1983 where he was primarily
responsible for that company's marketing and production
activities; was Vice President/General Manager of Cellu-Pak, the
office machines supply division of Paramount Packaging, from
December, 1972 until August, 1980; and was Plant Manager for the
Burlington Plant of Olivetti Corporation of America from October,
1964 until December, 1972. Mr. Delikat holds a bachelor of
Science degree from Newark College of Engineering, and a Masters
degree in Management Engineering from Newark College of
Engineering. He is responsible for overseeing the engineering,
product development and sales aspects of Supply Dynamics'
business, and is also President, Chief Operating Officer and a
Director of Supply Dynamics. Mr. Delikat has also been Secretary
of Athenia since December, 1987. Mr. Delikat, whose terms as a
Director will continue until his successor is duly elected and
qualified, is a member of the Company's Incentive Stock Option
and Compensation Advisory Committee.
Joseph L. Ruden is Beres' Vice Chairman and has been
associated with it since January, 1986. Mr. Ruden founded Penn
Manufacturing, Inc. and Esquire Pen Corp. in 1960 and 1976,
respectively, and served as President of each of them from their
respective inceptions in 1960 and 1976, until September, 1985.
Mr. Ruden's term as Director will continue until his successor is
duly elected and qualified.
Harold Zuber has served as Vice President of Beres since
September, 1979 and was the head of its Mold Division from
November, 1960 until March 1975. Mr. Zuber also served as a
Director of Beres from 1972 until January, 1986 and was
subsequently appointed as a Director in 1989. Mr. Zuber was Vice
President of Lincoln Mold Tool & Die Company, Inc., a
manufacturer of precision engineered molds, from March, 1975
until August, 1976 when he rejoined the Company and became
President, Chief Operating Officer, and a Director of Athenia,
positions which he still maintains. Mr. Zuber is also
responsible for overseeing the engineering, product development
and sales aspects of Athenia's business. In addition, Mr. Zuber
has been Secretary of Supply Dynamics since December, 1987. Mr.
Zuber obtained a Certificate in Plastics Technology and Newark
College of Engineering in 1957 and was a graduate of the Plastic
Mold Design Course of Stevens Institute of Technology in 1954.
Mr. Zuber's term as Director will continue until his successor is
duly elected and qualified.
Item 10. Executive Compensation:
The following table sets forth the amount of all cash
compensation paid to the Company's most highly compensated
executive officers and for all executive officers as a group for
the fiscal year ended March 31, 1994.
Name of Individual
or Number of Capacities in Cash
Persons In Group Which Served Compensation Paid*
Charles Beres, Sr. Chairman of the $36,039
Board
Charles Beres, Jr. Chief Executive $91,585(1)
Officer, President,
Treasurer, Director
Harold Zuber Vice President $85,800(1)
Joseph Delikat Vice President $79,555(1)
Joseph L. Ruden Vice Chairman of -0-
the Board
Total $292,979
All Officers and
Directors as a Group
__________________________
* Includes bonuses and additional compensation paid for
vacations not taken.
(1) In addition, the Company provides vehicles to and/or pays
all related expenses on behalf of these officers.
INCENTIVE STOCK OPTION PLAN
On March 5, 1986, Beres' shareholders and directors adopted
the Beres Industries, Inc. Incentive Stock Option Plan (the
"Plan"), which Plan was amended by Beres' Board of Directors on
April 29, 1986 to increase the total number of shares reserved
for issuance pursuant to the Plan as a result of Beres' 3 to 1
stock split effective April 29, 1986. In the opinion of the
Board of Directors, the use of stock options will make an
important contribution to the Company's efforts to attract,
retain and motivate its key employees and officers, and will
promote an identity of interest between the Company's key
employees and management. The Plan is an Incentive Stock Option
Plan under the Economic Recovery Tax Act of 1981.
Participation
Any person who is a full-time employee of the Company, or
any subsidiary thereof, shall be eligible to participate in the
Plan.
Shares Subject to the Plan
Subject to adjustments authorized by the Plan, options to
purchase a maximum of One Million Five Hundred Thousand
(1,500,000) shares of Beres' Common Stock may be granted under
the Plan to officers and employees who are eligible to become
participants. The number of shares available for grant will be
reduced by the number of stock options which are granted. If
stock options under the Plan lapse because they are unexercised,
the number of shares covered by the lapsed option will be
available for grant again. Pursuant to the Plan, Beres may not
grant a single employee or officer an option to purchase more
than $100,000 of shares of its Common Stock in any one calendar
year.
In the event of adjustments in Beres' outstanding Common
Stock, the number of shares subject to options will be protected
against dilution in accordance with the terms of the Plan.
Administration
The Plan is administered by a Compensation Advisory
Committee (the "Committee") consisting of the members of Beres'
Executive Committee. The Committee has the authority, subject to
the approval of the Board of Directors, to:
(a) Determine (1) the employees and officers to who the
options under the Plan will be granted, and (ii) the number of
options to be awarded to each grantee;
(b) Interpret, construe and implement the provisions of the
various arrangements available under the Plan; and
(c) Establish, amend and rescind appropriate rules and
regulations relating to the Plan (however, the number of shares
subject to the Plan may not be increased without shareholder
approval).
The members of the Committee are appointed on an annual
basis.
Exercise of Options
Stock Options may be exercised in whole or in part and shall
be exercisable at such time following the date of grant as shall
be determined by the Committee. In the event that a grantee owns
more than ten (10%) percent of Beres' outstanding Common Stock,
however, the option must be exercised within five (5) years from
the date of grant. All other grantees have ten (10) years from
the date of grant to exercise their options.
The option price must not be less than one hundred (100%)
percent of the "Fair Market Value" (defined in the Plan as the
average bid and ask price of the Company's Common Stock on NASDAQ
or such other exchange on which the Company's Common Stock may be
listed) of the Common Stock on the date the option is granted,
or in the event that the grantee owns more than ten (10%) percent
of Beres' outstanding Common Stock, the option price shall be one
hundred ten (110%) percent of the Fair Market value on the date
of the grant. If Beres' Common Stock is not listed on NASDAQ or
any other exchange, the "Fair Market Value" will be determined by
the Committee, some or all of the members of which may be
eligible for grants under the Plan. The date of the grant shall
be the date on which the Board of Directors approves each option
authorized by the Committee.
In order to exercise an option in whole or in part, the
grantee must give written notice to Beres' Secretary accompanied
by full payment in cash, check or such other consideration as may
be approved by the Board of Directors.
The Committee and Beres' Board of Directors have the power
to amend the Plan, except that the Committee or the Board of
Directors may not, without the approval of Beres' shareholders
increase the total number of shares reserved for issuance
pursuant to the Plan (except to adjust for certain changes in
capital.)
An aggregate of 117,000 options are issued and outstanding
under the Plan to certain officers, executives, and employees of
the Registrant. See "Executive Compensation". During the fiscal
year ended March 31, 1995, no options were issued to officers,
executives and employees of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth as of July 23, 1996, certain
information regarding the beneficial ownership of all officers,
directors, nominees, and the beneficial ownership of those
persons owning five (5%) percent or more of the outstanding
shares of Beres' Common Stock, and the beneficial ownership of
all officers and directors as a group. Each of these persons
exercises sole discretion to vote and dispose of the shares
beneficially owned.
Amt. of Shares
Name and Address Beneficially Percent of
Title of Class of Beneficial Owner Owned Class
Common Stock Charles Beres, Sr. 2,467,667 (1) 19.9%
3227 Abbey Lane
Lavalette, N.J.
Common Stock Charles Beres, Jr. 468,213 (2) 3.8%
134 Stone Hedge Dr.
Toms River, N.J.
Common Stock Harold Zuber -0- 0%
5 Hayes Road
Union, N.J.
Common Stock Joseph L. Ruden 382,970 3.1%
25 Josh Court
Clifton, N.J.
Common Stock Joseph Delikat 240,000 (3) 1.9%
9 Forest Lane
Tabernacle, N.J.
Common Stock All Officers and 3,558,850 28.7%
Directors as a Group
(1) Includes 313,561 shares held as of record by Mr. Beres'
wife, Ann.
(2) Includes an aggregate of 324,000 shares held as of record by
Mr. Beres' wife, Patricia, and his three children, Charles,
III, Jacqueline and Laura, in which Mr. Beres disclaims any
beneficial ownership.
(3) Includes 105,000 shares held of record by Mr. Delikat's
wife, Rosemary.
Item 12. Certain Relationships and Related Transactions:
In or about April, 1986, the Company issued 1,200,000 shares
of the restricted, unregistered Common Stock of the Company to
its Chairman of the Board, Charles Beres, Sr., in exchange for a
Promissory Note executed by Mr. Beres to the Company in the
amount of $300,000. The Promissory Note provided for payments of
interest only until June 30, 1988 and quarterly payments of
principal in the amount of $37,500, plus interest until the note
was paid in full. There is presently outstanding on the loan
$147,000 principal, plus $23,000 of accrued interest. Although
the issuance of the shares to Charles Beres, Sr., was not in
accord with the New Jersey Business Corporation Act as in effect
at the time of the issuance, the rights and obligations of the
respective parties cannot be determined except by agreement of
the parties or a judicial finding. Pending resolution of this
issue, no further payments of principal or interest have been
made.
Item 13. Exhibits, Financial Statement Schedules and Reports on
Form 10-K and Reports on Form 8-K:
Page
(a) 1. See Index to Financial Statements.......... F-l
2. Schedules - To be supplied
3. The exhibits which are required by Item 601
of Regulations S-K that are hereby incorpor-
ated by reference pursuant to Rule 12b-23 are
as follows:
(3.) Articles of Incorporation and By-Law. (1)
(9.) Voting Trust Agreement (1)
(10.38) Note by and between the Registrant and Charles
Beres Sr., dated April 13, 1987. (1)
(10.39) Joint Venture Agreement by and between the
Registrant and Hitachi Powdered Metals, Co.,
Ltd., and Advance Imaging Technology, Inc.,
dated May 30, 1988. (2)
(10.40) Employment Agreement, dated as of January 2,
1989, by and between the Registrant and Charles
Beres, Jr., (1)
(10.41) Employment Agreement dated as of January 2,
1989, by and between the Registrant and Joseph
Delikat. (1)
(10.42) Employment Agreement dated as of January 2,
1989, by and between the Registrant and Harold
Zuber. (1)
(10.43) Employment Agreement dated as of January 2,
1989, by and between the Registrant and Paul
Rolando. (1)
(10.45) Termination of Employment Agreement, dated as
of January 2, 1989, by and between the Regis-
trant and Paul Rolando. (1)
(10.46) Incentive Stock Option Agreement dated as of
January 2, 1989, by and between the Registrant
and Charles Beres, Jr. (1)
(10.47) Incentive Stock Option Agreement dated as of
January 2, 1989, by and between the Registrant
and Joseph Delikat. (1)
(10.48) Incentive Stock Option Agreement dated as of
January 2, 1989, by and between the Registrant
and Harold Zuber. (1)
(10.49) Incentive Stock Option Agreement dated as of
January 2, 1989, by and between the Registrant
and Paul Rolando. (1)
(18.) Letter re change in accounting principles. (3)
(28.14) Term Note by and between the Registrant and
Midlantic National Bank North dated November,
1987. (3)
(28.15) Term Note by and between the Registrant and
Midlantic National Bank North dated December,
1987. (3)
(28.16) Mortgage Loan Documents by and between the
Registrant and Midlantic National Bank North
dated April 13, 1987. (3)
(28.17) Term Note with Agreement between Beres Indus-
tries, Inc. and First Fidelity Bank, N.A. dated
March 29, 1994 (the "First Fidelity Loan").
(28.18) Term Loan Agreement between Beres Industries,
Inc. and First Fidelity Bank, N.A., dated
March 29, 1994 (the "First Fidelity Loan").
(28.19) Mortgage, Assignment of Leases and Security
Agreement between Beres Industries, Inc. and
First Fidelity Bank, N.A., dated March 29,
1994 (the "First Fidelity Loan").
(28.20) Guaranty and Suretyship of Athenia Plastic Mold
Corp. as to the First Fidelity Loan.
(28.21) Guaranty and Suretyship of Supply Dynamics, Inc.
as to the First Fidelity Loan
_____________________
(1) Incorporated herein by reference to Registration Statement
No. 33-3987-NY as initially filed and Amendment Nos. 1,2,3
and 4 thereto previously filed on March 12, 1986, May 1,
1986, May 7, 1986, May 13, 1986, June 9, 1986, respectively,
and Post-Effective Amendment Nos. 1,2,3, and 4 and Amendment
No. 1 to Post-Effective Amendment No. 1 to Post-Effective
Amendment Nos. 1,2,3 and 4 and Amendment No. 1 to Post-
Effective Amendment No. 4 filed on October 27, 1987, January
28, 1988, February 12, 1988, November 30, 1988 and February
9, 1989, respectively.
(2) Incorporated herein by reference to Form 8-K as filed with
the Securities and Exchange Commission on June 8, 1988.
(3) Incorporated herein by reference to Form 10-K for the year
ended December 31, 1987, as filed with the Securities and
Exchange Commission on March 29, 1988.
(4) Incorporated herein by reference to Form 10-K for the year
ended March 31, 1995 as filed with the Securities and
Exchange Commission.
(b) Form 8-K was filed on March 9, 1995, and amended March 13,
1995 with respect to Item 4 - Changes in Registrant's
Certifying Accountant.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) 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.
BERES INDUSTRIES, INC. (Registrant)
BY: CHARLES BERES, JR. /S/
_______________________________
CHARLES BERES, JR., Chief
Executive Officer, President,
Treasurer, Chief Financial
Officer, Director
Dated: 7/25/96
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.
BY: CHARLES BERES, SR. /S/
_________________________________
CHARLES BERES, SR. Chairman of
the Board, Director
Dated: 7/25/96
BY: CHARLES BERES, JR. /S/
________________________________
CHARLES BERES, JR., Chief
Executive Officer, President,
Treasurer, Chief Financial
Officer, Director
Dated: 7/25/96
BY: JOSEPH DELIKAT /S/
________________________________
JOSEPH DELIKAT, Vice President,
Secretary, Director
Dated: 7/25/96
BY: HAROLD ZUBER /S/
_________________________________
HAROLD ZUBER, Vice President,
Director
Dated: 7/25/96
BY: JOSEPH L. RUDEN /S/
_________________________________
JOSEPH L. RUDEN, Vice Chairman
of the Board, Director
Dated: 7/25/96
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