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 3 month period ended September 30, 1996.
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transaction period from to
Commission File No. 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)
Registrant's telephone number, including area code (908) 367-5700
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) Yes X No (2) Yes No
State the number of shares outstanding of each of the
Registrant's classes of common equity, as of the latest
applicable date:
12,411,934 - November 13, 1996
Beres Industries, Inc.
September 30, 1996
Form 10-QSB
Index
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1996 and
March 31, 1996
Consolidated Statements of Operations for the Three
Months Ended September 30, 1996 and 1995 and the Six
Months Ended September 30, 1996 and 1995.
Consolidated Statement of Changes in Stockholders
Equity for the Six Months Ended September 30, 1996
Consolidated Statements of Cash Flows for the Six
Months Ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements
Item 2. Managements s Discussion and Analysis, Material Changes
in Financial Condition and Results of Operations
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
9/30/96 3/31/96
(Unaudited) (Note 1)
ASSETS
Current Assets
Cash and Equivalents $ 609,000 $ 377,000
Cash - Restricted -0- 268,000
Accounts Receivable - Trade:
Less Allowance for Doubtful
Accounts of $258,000 at Each
Date 574,000 600,000
Inventories - Raw Materials 108,000 94,000
- Work in Process 51,000 183,000
- Finished Goods 153,000 17,000
Prepaid Expenses and Other
Current Assets 33,000 70,000
Total Current Assets 1,528,000 1,609,000
Property, Plant and Equipment - Less
Accumulated Depreciation of
$5,230,000 and $5,155,000
Respectively 1,685,000 1,759,000
Other Assets 54,000 57,000
Total Assets $3,267,000 $ 3,425,000
See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
9/30/96 3/31/96
(Unaudited) (Note 1)
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Current Maturities of Long-Term
Debt $ 116,000 $ 250,000
Current Maturities of Capital
Lease Obligations 61,000 61,000
Accounts Payable and Accrued
Expenses 504,000 413,000
Customer Deposits 25,000 35,000
Total Current Liabilities 706,000 759,000
Long-Term Debt - Less Current
Maturities 1,011,000 1,067,000
Total Liabilities 1,717,000 1,826,000
Stockholders Equity
Common Stock - Par Value $0.02 Per
Share:
Authorized 21,000,000 Shares
Issued and Outstanding -
12,412,000 Shares 248,000 248,000
Capital in Excess of Par Value 3,445,000 3,445,000
Retained Deficit ( 1,973,000) (1,924,000)
1,720,000 1,769,000
Less: Amounts Due on Sale of
Common Stock 170,000 170,000
Total Stockholders Equity 1,550,000 1,599,000
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY $ 3,267,000 $ 3,425,000
See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
9/30/96 9/30/95
Revenues
Contract Revenue and Net Sales $ 836,000 $ 915,000
Total Revenues 836,000 915,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 696,000 766,000
Selling, General and
Administrative 203,000 191,000
Total Operating Expenses 899,000 957,000
Operating (Loss) ( 63,000) ( 42,000)
Other Income (Expenses)
Interest and Other Income 15,000 15,000
Interest Expense ( 32,000) ( 31,000)
Total Other (Expenses) ( 17,000) ( 16,000)
Net (Loss) $( 80,000) $( 58,000)
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Net (Loss) Per Common Share
Outstanding $( 0.006) $( 0.005)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Six Months
Ended Ended
9/30/96 9/30/95
Revenues
Contract Revenue and Net Sales $ 1,861,000 $ 1,806,000
Total Revenues 1,861,000 1,806,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 1,477,000 1,512,000
Selling, General and
Administrative 398,000 388,000
Total Operating Expenses 1,875,000 1,900,000
Operating (Loss) ( 14,000) ( 94,000)
Other Income (Expenses)
Interest and Other Income 26,000 30,000
Interest Expense ( 61,000) ( 58,000)
Total Other (Expenses) ( 35,000) ( 28,000)
Net (Loss) $( 49,000) $( 122,000)
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Net (Loss) Per Common Share
Outstanding $( 0.004) $( 0.010)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
Common Stock Capital in
Excess of Retained
Shares Par Value Par Value Deficit
Balances -
April 1, 1996 12,412,000 $248,000 $3,445,000 $(1,924,000)
Net (loss)
for the Period - - - ( 49,000)
Balances -
Sept. 30, 1996 12,412,000 $ 248,000 $ 3,445,000 $(1,973,000)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
Cash Flows from Operating Activities:
Net (Loss) for the Period $( 49,000) $(122,000)
Adjustments to Reconcile Net
(Loss) to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 78,000 132,000
Changes in Operating Assets and
Liabilities:
Accounts Receivable - Trade 26,000 ( 84,000)
Inventories ( 18,000) 71,000
Prepaid Expenses and Other
Current Assets 37,000 ( 31,000)
Other Assets ( 1,000) ( 3,000)
Accounts Payable and Accrued
Expenses 91,000 ( 23,000)
Customer Deposits ( 10,000) 2,000
Net Cash Provided By (Used in)
Operating Activities 154,000 ( 58,000)
Cash Flows from Investing Activities:
Acquisitions of Property and
Equipment -0- ( 65,000)
Investment in Restricted Cash -0- ( 7,000)
Cash Released from Restriction 268,000 -0-
Net Cash Provided By (Used in)
Investing Activities $ 268,000 $( 72,000)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT D)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1996 1995
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt $(159,000) $( 51,000)
Principal Payments on Capital
Lease Obligations ( 31,000) ( 24,000)
Net Cash (Used in) Financing
Activities (190,000) ( 75,000)
Net Increase (Decrease)in Cash
and Equivalents 232,000 (205,000)
Cash and Equivalents, Beginning of Year 377,000 454,000
Cash and Equivalents, End of Period $ 609,000 $ 249,000
SUPPLEMENTAL INFORMATION:
Cash Paid for Interest $ 61,000 $ 62,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The consolidated balance sheet at the end of the
preceding fiscal year has been derived from the audited
consolidated balance sheet contained in the Company s
Form 10-KSB and is presented for comparative purposes.
All other financial statements presented are unaudited.
In the opinion of Management, all adjustments which
include only normal recurring adjustments necessary to
present fairly the financial position for all periods
presented have been made. The results of operations
for the interim periods are not necessarily indicative
of the operating results for the full year.
Footnote disclosures normally included in financial
statements prepared in accordance with generally
accepted accounting principles have been omitted in
accordance with the published rules and regulations of
the Securities and Exchange Commission. These
consolidated financial statements should be read in
conjunction with the financial statements and notes
thereto included in the Company s Form 10-KSB for the
most recent fiscal year ended.
Note 2 - Reclassifications
Certain amounts previously reported in the September
30, 1995 financial statements have been reclassified to
conform with the September 30, 1996 presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Sales for the six months ended September 30, 1996 increased
by $55,000 or 3% from 1995. However, for the three (3) months
ended September 30, 1996, Net Sales decreased approximately
$79,000 or 8.6% from the similar 1995 period. Net Sales by
segment were as follows:
Six Months Three Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Athenia $264,000 $134,000 $107,000 $65,000
Custom Molding $1,219,000 $1,181,000 $629,000 $602,000
Finished Ribbons $378,000 $491,000 $100,000 $248,000
Audio Cassettes 0 0 0 0
$1,861,000 $1,806,000 $836,000 $915,000
Athenia's sales vary from quarter to quarter depending on the
production time required to build various tools and the amount of
backlog. During the six months and three months ended September
30, 1996, Athenia's sales increased approximately $130,000 or 97%
and $42,000 or 64.6% from their respective 1995 periods. These
increases resulted primarily from two factors, namely, an
increase in orders for new tooling received and shipped during
the 1996 periods and the exceptionally low level of sales during
the 1995 periods. Management is hopeful that sales for this
segment will remain at these increased levels during the
immediate future.
Custom Molding consists of the Company's injection molding
operations, including ribbon cartridge kits sold to outside
customers in the ribbon industry, and the sale of custom molded
contract products to plastic product manufacturers. Sales for
this segment increased $38,000 or 3.2% and $27,000 or 4.5% for
the six months and three months ended September 30, 1996 as
compared to similar 1995 periods. These increases are primarily
the result of a concentrated effort by management to redirect the
company toward custom contract molding which produces the highest
percentage of profit for the company. Although certain customers
in this segment have experienced a slowdown in requirements, the
Company has recently employed an additional experienced sales
person in this area to secure additional accounts. Management is
hopeful that sales for this product segment will be maintained at
current levels for the foreseeable future.
Finished ribbons cartridge sales decreased approximately $113,000
or 23% and $148,000 or 59.7% for the six months and three months
ended September 30, 1996 as compared to 1995. These significant
decreases are due to several factors, namely, the overall
slowdown in demand for impact ribbon products caused by increased
popularity of laser and ink jet printers, the resulting price
decreases for impact ribbons due to severe competition within the
industry caused by overcapacity and certain large co-
manufacturing customers of the Company reducing purchase
requirements as they attempt to keep their own manufacturing
plants busy. Although Management is continuing its efforts to
increase sales in this segment by concentrating on certain niche
markets and key customers, it is anticipated that sales will
remain at reduced levels in the immediate future.
Audio cassettes sales were $0 for the six months and three months
ended September 30, 1996 due to the fact that production in this
segment remains suspended at this time. As discussed in prior
filings, production of audio cassettes was halted due to losses
resulting primarily from low selling prices caused by intense
foreign competition. Management is attempting to liquidate the
manufacturing equipment. It is not known at this time if a sale
of these assets will be successfully consummated.
Contract costs and costs of goods sold varies based upon sales
volume and product mix. Cost of sales decreased to 79.4% from
83.7% and 83.3% from 83.7% for the six months and three months
ended September 30, 1996 as compared to the similar periods of
1995. This improvement is primarily the result of improved
production efficiencies and the increase in custom molding sales
as an overall percentage of sales which traditionally carries the
highest profit margins for the Company.
Selling, general and administrative expenses increased
approximately $10,000 and $12,000 for the six months and three
months ended September 30, 1996 as compared to 1995. These
increases are largely the result of legal fees associated with
consummating the settlement of the lawsuit against our primary
bank lender and additional sales salaries which were added to
increase custom molding sales.
Interest and other income decreased approximately $4,000 for the
six months ended September 30, 1996 as compared to 1995, but
remained the same for the three months ended September 30, 1996
when compared to the similar 1995 period. The six month decrease
is primarily the result of lowered commission income earned on
the sale of imported plastic ribbon kits during the current year
which was partially offset during the most recent quarter by an
adjustment in the amount of interest earned on monies kept on
deposit with our primary bank.
Interest expense increased $3,000 and $1,000 for the six months
and three months ended September 30, 1996 when compared to
similar 1995 periods. These increases are the result of
increased debt from a loan taken on during January 1996 for the
purchase of a new injection molding machine.
Net (loss) incurred for the six months ended September 30, 1996
was ($49,000) as compared to ($122,000) for 1995. For the three
months ended September 30, 1996, the Company sustained a net loss
of ($80,000) as compared to a net loss of ($58,000) for the
similar 1995 period. The improvement in the six month results is
primarily the result of the increased sales level and the lower
cost of sales due to the increased percentage of custom molding
sales. The increase in loss for the most recent three month
period is primarily the result of the lower level of sales
coupled with the increase in SG&A expenses as discussed above.
Management is continuing to monitor the performance of all
segments with an emphasis on attempting to increase sales and
improve cost controls. The Company intends to continue re-
directing its focus toward custom contract molding which yields
the highest gross profit margins. Absent a further downturn in
the overall economy, Management is hopeful for improved operating
results.
MATERIAL CHANGES IN FINANCIAL POSITION
The principal change in financial position during the six months
ended September 30, 1996 was that the Company's operations
generated cash of $154,000 despite a net loss of ($49,000) for
the period. Additionally, restricted cash in the amount of
$268,000 held by our primary bank lender was released by the
bank as part of the settlement terms of our lawsuit against the
bank. The Company paid down approximately $107,000 toward the
building mortgage with the bank. The net result is that the
Company's unrestricted cash position increased to approximately
$609,000 at September 30, 1996 as compared to $249,000 at the
same date in 1995. The Bank also released all liens against the
Company's machinery and equipment and account receivables and
inventory leaving the Company in a position to borrow additional
monies if the need arises.
Although the Company is currently exploring sources of new
financing, Management, will continue operating under the
assumption that no significant new financing will be available.
Scheduled obligations are expected to be met by operating cash
flows. If necessary, additional cost cutting measures will be
implemented.
Achieving the return to growth and profitability will require the
Company to overcome uncertainties which it now faces, namely, the
weakened markets for its impact ribbon product line and the
sluggishness of the U.S. economy. It is not possible to
determine the effects of these factors on the Company's financial
condition or liquidity at this time. Management is evaluating
the possibility of raising capital to invest in new products
and/or markets and also seeking out strategic partners that could
align with the Company to utilize the Company's capabilities as
it moves forward. The success of accomplishing either of these
avenues is not determinable at this time. Management will
continue its efforts to increase sales and improve cost controls.
Absent any unanticipated operating expenses or a significant
further downturn in the economy, Management is hopeful for an
improvement in long term operating results.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
PART II OTHER INFORMATION
Item 1 Legal Proceedings:
There have been no material changes in legal proceedings
from as previously reported in the Company's 10-KSB for the
fiscal year ended March 31, 1996.
Item 2 Change in Securities:
None
Item 3 Default Upon Senior Securities:
None
Item 4 Submission of Matters to a Vote of Security
Holders:
None
Item 5 Other Information:
None
Item 6 Exhibits and Reports on Form 8-K:
None
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.
BERES INDUSTRIES, INC.
Date: November 12, 1996 (Registrant)
S/ CHARLES BERES, SR.
Charles Beres, Sr., Chairman
S/ CHARLES BERES, JR.
Charles Beres, Jr., President
S/ HAROLD E. ZUBER
Harold E. Zuber, Vice Pres.
S/ JOSEPH L. DELIKAT
Joseph L. Delikat, Vice Pres.
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<PERIOD-END> SEP-30-1996
<CASH> 609,000
<SECURITIES> 0
<RECEIVABLES> 832,000
<ALLOWANCES> 258,000
<INVENTORY> 312,000
<CURRENT-ASSETS> 1,528,000
<PP&E> 6,915,000
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<BONDS> 1,011,000
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<OTHER-SE> 1,302,000
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<SALES> 1,861,000
<TOTAL-REVENUES> 1,887,000
<CGS> 1,477,000
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