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 December 31, 1995.
( ) 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:
12,412,000 - December 31, 1995
Beres Industries, Inc.
December 31, 1995
Form 10-QSB
Index
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1995 and
March 31, 1995
Consolidated Statements of Operations for the Three
Months Ended December 31, 1995 and 1994 and the Nine
Months Ended December 31, 1995 and 1994
Consolidated Statement of Changes in Stockholders'
Equity for the Nine Months Ended December 31, 1995
Consolidated Statements of Cash Flows for the Nine
Months Ended December 31, 1995 and 1994
Notes to Consolidated Financial Statements
Item 2. Management'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
12/31/95 3/31/95
(Unaudited) (Note 1)
ASSETS
Current Assets
Cash and Equivalents $ 317,000 $ 454,000
Cash - Restricted 264,000 254,000
Accounts Receivable - Trade:
Less Allowance for Doubtful
Accounts of $249,000 at Each
Date 668,000 611,000
Note Receivable - Trade 18,000 -0-
Costs in Excess of Billings on
Uncompleted Contracts 45,000 12,000
Inventories - Raw Materials 118,000 128,000
- Work in Process 20,000 15,000
- Finished Goods 129,000 219,000
Prepaid Expenses and Other
Current Assets 32,000 21,000
Total Current Assets 1,611,000 1,714,000
Property, Plant and Equipment - Less
Accumulated Depreciation of
$5,279,000 and $5,091,000,
Respectively 1,809,000 1,784,000
Other Assets
Note Receivable - Trade 24,000 -0-
Deposits and Other Assets 19,000 61,000
Total Other Assets 43,000 61,000
TOTAL ASSETS $ 3,463,000 $ 3,559,000
See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
12/31/95 3/31/95
(Unaudited) (Note 1)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Maturities of Long-Term
Debt $ 1,292,000 $ 1,352,000
Accounts Payable - Trade 357,000 302,000
Billings in Excess of Costs on
Uncompleted Contracts 5,000 5,000
Accrued Expenses and Other Current
Liabilities 121,000 142,000
Total Current Liabilities 1,775,000 1,801,000
Long-Term Debt - Less Current
Maturities 146,000 56,000
Stockholders' Equity
Common Stock - Par Value $.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 (1,981,000) (1,821,000)
1,712,000 1,872,000
Less: Amounts Due on Sale of
Common Stock 170,000 170,000
Total Stockholders' Equity 1,542,000 1,702,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 3,463,000 $ 3,559,000
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
12/31/95 12/31/94
Revenues
Contract Revenue and Net Sales $ 1,225,000 $ 1,243,000
Total Revenues 1,225,000 1,243,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 1,016,000 1,026,000
Selling, General and
Administrative 230,000 246,000
Total Operating Expenses 1,246,000 1,272,000
Operating Loss (21,000) (29,000)
Other Income (Expenses)
Interest and Other Income 13,000 19,000
Interest Expense (30,000) (30,000)
Gain on Sale of Equity Interest
in Advanced Imaging
Technology Inc. -0- 250,000
Total Other Income (Expenses) (17,000) 239,000
Net Income (Loss) $ (38,000) $ 210,000
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Net Income (Loss) Per Common Share
Outstanding $ (0.003) $ 0.017
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
Nine Months Nine Months
Ended Ended
12/31/95 12/31/94
Revenues
Contract Revenue and Net Sales $ 3,031,000 $ 3,545,000
Total Revenues 3,031,000 3,545,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 2,528,000 3,178,000
Selling, General and
Administrative 618,000 609,000
Total Operating Expenses 3,146,000 3,787,000
Operating Loss (115,000) (242,000)
Other Income (Expenses)
Interest and Other Income 43,000 54,000
Interest Expense (88,000) (96,000)
Gain on Sale of Equity Interest
in Advanced Imaging
Technology, Inc. -0- 250,000
Total Other Income (Expenses) (45,000) 208,000
Net Income (Loss) $ (160,000) $ (34,000)
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Net Income (Loss) Per Common Share
Outstanding $ (0.013) $ (0.003)
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 NINE MONTHS ENDED DECEMBER 31, 1995
Common Stock Capital in
Excess of Retained
Shares Par Value Par Value Deficit
Balances -
April 1, 1995 12,412,000 $248,000 $3,445,000 $(1,821,000)
Net Loss for the
Period - - - (160,000)
Balances -
December 31,
1995 12,412,000 $248,000 $3,445,000 $(1,981,000)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
Cash Flows from Operating Activities:
Net Loss for the Period $(160,000) $(34,000)
Adjustments to Reconcile
Net Loss to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 194,000 296,000
Provision for Losses on
Accounts Receivable -0- 49,000
Gain on Sale of Equity Interest
in Advanced Imaging
Technology, Inc. -0- (250,000)
Changes in Operating Assets and
Liabilities:
Accounts Receivable - Trade (57,000) (32,000)
Note Receivable - Trade (42,000) (36,000)
Costs in Excess of Billings
on Uncompleted Contracts (33,000) 51,000
Inventories 95,000 107,000
Prepaid Expenses and Other
Current Assets (11,000) 9,000
Deposits and Other Assets 36,000 -0-
Accounts Payable and Accrued
Expenses 34,000 (191,000)
Billings in Excess of Costs
on Uncompleted Contracts -0- (15,000)
Net Cash Provided By (Used in)
Operating Activities 56,000 (46,000)
Cash Flows from Investing Activities:
Acquisitions of Property and
Equipment (213,000) (14,000)
Investment in Restricted Cash (10,000) -0-
Proceeds from Sale of Equity
Interest in Advanced Imaging
Technology, Inc. -0- 250,000
Net Cash Provided By (Used)
in Investing Activities (223,000) 236,000
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 NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt $ (115,000) $ (166,000)
Long-Term Borrowings 145,000 -0-
Restricted Cash held as collateral -0- (250,000)
Net Cash Provided By (Used
in) Financing Activities 30,000 (416,000)
Net Decrease in Cash and Equivalents (137,000) (226,000)
Cash and Equivalents, Beginning of Year 454,000
557,000
Cash and Equivalents, End of Period $ 317,000 $ 331,000
SUPPLEMENTAL INFORMATION:
Cash Paid for Interest $ 92,000 $ 97,000
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 - Contingencies
The accompanying financial statements have been prepared
assuming that the Company will continue as a going
concern. As discussed in Note 3 to the Company's annual
financial statements in Form 10-KSB, the Company was not
in compliance with certain required ratios included in
their bank loan agreements, had temporarily suspended
production in its audio cassette segment in May 1994 and
had incurred significant net losses which raises
substantial doubt about its ability to continue as a
going concern. Subsequent to May 1994, the Company had
limited production in its audio cassette segment. The
Company is currently evaluating whether to formally
discontinue the cassette division. Management's plans
in regard to this matter is also described in Note 3 to
the annual financial statements and in the Management's
Discussion and Analysis of Financial Condition and
Results of Operations included herein and in the most
recent Form 10-KSB. These financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2 - Contingencies (Cont'd)
As referred to above, at March 31, 1995, June 30, 1995,
September 30, 1995 and December 31, 1995, the Company
was not in compliance with certain required ratios
included in their bank loan agreements.
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Sales for the nine months ended December 31, 1995 decreased
by $514,000 or 14.5% from the comparable 1994 period. For the
three months ended December 31, 1995, net sales decreased $18,000
or 1.4% from 1994. Net sales by segment were as follows:
Three Months Nine Months
Ended December 31, Ended December 31,
1995 1994 1995 1994
Athenia $ 126,000 $ 115,000 $ 260,000 $ 602,000
Custom Molding 702,000 757,000 1,883,000 1,546,000
Finished Ribbons 394,000 364,000 885,000 1,137,000
Audio Cassettes 3,000 7,000 3,000 260,000
$1,225,000 $1,243,000 $3,031,000 $3,545,000
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 nine months ended December 31, 1995, sales
decreased $342,000 or 56.8% from 1994. For the three months
ended December 31, 1995, sales increased $11,000 or 9.6% from the
similar period of 1994. The nine month decrease is primarily the
result of a reduced backlog due to the weak economy, whereas the
three month increase is the result of timing of shipments. It is
anticipated that sales for this segment will remain at these
reduced levels for the near term due to decreased backlog levels
and lower demand for quotation requests.
Custom molding consists of the Company's injection molding
operations, including ribbon cartridge kits molded and 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 $337,000 or 21.8% for the nine months
ended December 31, 1995 as compared to 1994. Sales for the three
month period ended December 31, 1995 decreased $55,000 or 7.3%
when compared to the similar 1994 period. The nine month
increase is primarily the result of a concentrated effort to
redirect the Company toward custom molding which produces the
highest margins for the Company. The slight decrease during the
most recent quarter was due to temporary slowdown of shipment to
one particular customer. Management is hopeful that sales for
this segment will remain strong absent any further downturn in
the overall economy.
Finished ribbons cartridge sales decreased approximately $252,000
or 22.2% for the nine months ended December 31, 1995 as compared
to 1994. For the three months ended December 31, 1995, sales for
this segment increased $30,000 or 8.2% when compared to the
similar 1994 period. The decrease in the nine month results is
primarily the result of an overall slowdown in the ribbon
industry due to several factors, namely, the general slowdown in
the overall economy and the negative effect of laser and ink jet
printers on impact printers. Additionally, sales to certain co-
manufacturers have decreased as a result of certain mergers
within the industry and certain companies relocating
manufacturing facilities to Mexico as a result of NAFTA.
Management is continuing its efforts to increase sales in this
segment; however, it is anticipated that sales will remain at
reduced levels in the immediate future.
Audio cassettes sales for the nine months and three months ended
December 31, 1995 were $3,000 which was the result of selling off
the balance of finished goods inventory of C-O audio cassettes
during 1994. As discussed in prior filings, management suspended
the production of audio cassettes during 1994. At the present
time, management is investigating the possible sale of the
cassette assets and permanently discontinuing cassette
operations. Several potential purchasers have expressed an
interest in purchasing these assets and management is now
evaluating whether or not a sale can be consummated.
Contract costs and costs of goods sold varies based upon sales
volume and product mix. Cost of sales were 83.4% and 82.9% for
the nine months and three months ended December 31, 1995 as
compared to 89.6% and 82.5% as compared to the respective 1994
periods. This improvement, particularly in the nine month
result, 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 $9,000 for the nine months ended December 31, 1995
as compared to 1994. For the three months ended December 31,
1995 these expenses decreased approximately $16,000 when compared
to 1994. The slight increase in the nine month figure is
primarily the result of increased legal fees throughout the
period due to ongoing litigation with our primary bank, whereas
the decrease during the three month period is largely due to
certain fixed costs which were lowered during the most recent
period.
Interest and other income decreased approximately $11,000 and
$6,000 for the nine months and three months ended December 31,
1995 as compared to 1994. These decreases are primarily the
result of lower commissions earned on the sales of imported
plastic ribbon kits.
Interest expense decreased approximately $8,000 for the nine
months ended December 31, 1995 as compared to 1994. For the
three months ended December 31, 1995 interest expense remained
the same as during the 1994 period, at $30,000. The decrease in
the nine month figure is primarily the result of repayment of
borrowing during the year. However, during the three month
period this trend was offset by an increase in interest expense
which was the result of additional interest which was due on a
new injection molding machine, which was purchased and financed
during the most recent quarter.
Net (loss) for the nine months ended December 31, 1995 was
($160,000) as compared to ($34,000) during the similar 1994
period. The actual loss during the 1994 period, excluding a one
time gain on the sale of our equity interest in Advanced Imaging
Technology, Inc., which occurred during the 1994 period, was
($284,000). For the three months ended December 31, 1995 the
Company sustained a net loss of ($38,000) as compared to a net
loss of ($40,000) for the similar 1994 period when adjusted for
the one time gain as mentioned above. These improvements,
despite the decrease in sales, are largely the result of an
improvement in gross profit, which is a direct result of the
higher volume of custom molding sales as an overall percentage,
improved production efficiencies and efforts to continually
control costs.
MATERIAL CHANGES IN FINANCIAL POSITION
The principal change in financial position during the nine months
ended December 31, 1995 was a decrease in cash and cash
equivalents of approximately $137,000. At the six months ended
September 30, 1995 the decrease in cash and cash equivalents was
$205,000. This improvement during the most recent three month
period is largely the result of the Company's operating
activities providing positive cash flow of $56,000.
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, as discussed in the March 31, 1995 Form 10-KSB,
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
restructuring of bank debt, the securing of 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 or liquidity at this time. Management will
concentrate its efforts on increasing sales and improving cost
controls. The Company intends to continue re-directing its focus
towards custom molding which yields the highest profit margins.
Absent any unanticipated operating expenses or a significant
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:
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 has arbitrarily
refused to release. The litigation arises out of $250,000 in
proceeds which the Company received from the sale of its interest
in the HPM/AIT Joint Venture. At the time of the Company's sale
of its interest in AIT, First Fidelity required the Company to
deposit the proceeds into a segregated account. First Fidelity
agreed to release the proceeds upon presentation to First Fidelity
of a reasonable business plan for usage of the proceeds. In January,
1995, the Company presented to First Fidelity a proposal to
purchase the machinery necessary to manufacture a newly designed
Compact Disc jewel case. Despite Beres' presentation of a
Business Plan and other documentation necessary to substantiate the
project, First Fidelity arbitrarily refused to release the funds.
On October 3, 1995, the District Court ruled that the Company had
not stated a federal cause of action under the Bank Holding Company
Act and, therefore, jurisdiction did not exist in Federal Court.
The District Court dismissed the Complaint and remanded Counts Two
through Ten, relating to various common law tort and breach of
contract claims, to the New Jersey Superior Court. The Company
has filed an appeal to the United States Court of Appeals seeking
reinstatement of the federal cause of action. In the meantime,
the Company is continuing to pursue its claim against First Fidelity
Bank in the Superior Court. However, due to various factual and
legal issues, the Company cannot make any representations
concerning the ultimate outcome of this case.
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: February 13, 1996 (Registrant)
S/ CHARLES BERES, JR.
Charles Beres, Jr., President
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<RECEIVABLES> 935,000
<ALLOWANCES> 249,000
<INVENTORY> 267,000
<CURRENT-ASSETS> 1,611,000
<PP&E> 7,088,000
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