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 June 30, 1997.
( ) 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 X 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 - July 31, 1997
<PAGE>
Beres Industries, Inc.
June 30,1997
Form 10-QSB
Index
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997 and
March 31, 1997
Consolidated Statements of Operations for the Three
Months Ended June 30, 1997 and 1996
Consolidated Statement of Changes in Stockholders Equity
for the Three Months Ended June 30, 1997
Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 1997 and 1996
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
6/30/97 3/31/97
ASSETS
Current Assets
Cash and Equivalents $ 679,000 $ 701,000
Accounts Receivable - Trade:
Less Allowance for Doubtful
Accounts of $15,000 at Each
Date 361,000 366,000
Inventories - Raw Materials 69,000 87,000
- Work in Process 45,000 14,000
- Finished Goods 123,000 151,000
Prepaid Expenses and Other
Current Assets 9,000 31,000
Net Current Assets of Discontinued
Operations 21,000 21,000
Total Current Assets 1,307,000 1,371,000
Property, Plant and Equipment - Less
Accumulated Depreciation of
$4,485,000 and $4,454,000
Respectively 1,451,000 1,471,000
Other Assets 55,000 56,000
Net Long-Term Assets of Discontinued
Operations 90,000 90,000
Total Assets $ 2,903,000 $2,988,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
6/30/97 3/31/97
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Current Maturities of Long-Term
Debt $ 74,000 $ 85,000
Current Maturities of Capital
Lease Obligations 38,000 46,000
Accounts Payable and Accrued
Expenses 317,000 322,000
Customer Deposits 76,000 9,000
Total Current Liabilities 505,000 462,000
Long-Term Debt - Less Current
Maturities 861,000 880,000
Capital Lease Obligations -
Less Current Maturities 79,000 87,000
Total Liabilities 1,445,000 1,429,000
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 (2,065,000) (1,964,000)
1,628,000 1,729,000
Less: Amounts Due on Sale of
Common Stock 170,000 170,000
Total Stockholders Equity 1,458,000 1,559,000
LIABILITIES AND STOCKHOLDERS
EQUITY $2,903,000 $2,988,000
Unaudited - 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
6/30/97 6/30/96
Revenues
Contract Revenue and Net Sales $ 636,000 $ 1,025,000
Total Revenues 636,000 1,025,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 526,000 781,000
Selling, General and
Administrative 197,000 195,000
Total Operating Expenses 723,000 976,000
Operating Income (Loss) ( 87,000) 49,000
Other Income (Expenses)
Interest and Other Income 10,000 11,000
Interest Expense ( 24,000) ( 29,000)
Total Other Income (Expenses) ( 14,000) ( 18,000)
Net Income (Loss) $( 101,000) $ 31,000
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Net Income(Loss) Per Common Share
Outstanding $( 0.008) $ 0.002
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 THREE MONTHS ENDED JUNE 30, 1997
Common Stock Capital in
Excess of Retained
Shares Par Value Par Value Deficit
Balances -
April 1, 1997 12,412,000 $ 248,000 $ 3,445,000 $(1,964,000)
Net Loss
for the Period - - - ( 101,000)
Balances -
June 30, 1997 12,412,000 $ 248,000 $ 3,445,000 $(2,065,000)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Cash Flows from Operating Activities:
Net Income (Loss) for the Period $(101,000) $ 31,000
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 31,000 39,000
Changes in Operating Assets and
Liabilities:
Accounts Receivable - Trade 5,000 (3,000)
Inventories 15,000 33,000
Prepaid Expenses and Other
Current Assets 22,000 16,000
Other Assets -0- -0-
Accounts Payable and Accrued
Expenses (5,000) (63,000)
Customer Deposits 67,000 (12,000)
Net Cash Provided By
Operating Activities 34,000 41,000
Cash Flows from Investing Activities:
Acquisitions of Property and
Equipment (11,000) -0-
Investment in Restricted Cash -0- (3,000)
Net Cash Used in
Investing Activities $ (11,000) $ (3,000)
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 THREE MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt $ (30,000) $ (28,000)
Principal Payments on Capital
Lease Obligations (15,000) (16,000)
Net Cash Used in Financing
Activities (45,000) (44,000)
Net Decrease in Cash and Equivalents (22,000) (6,000)
Cash and Equivalents, Beginning of Year 701,000 377,000
Cash and Equivalents, End of Period $ 679,000 $ 371,000
SUPPLEMENTAL INFORMATION:
Cash Paid for Interest $ 24,000 $ 29,000
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.
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Sales for the three months ended June 310 1997 decreased by $389,000
or 38% from those in the quarter ended June 30, 1996. Net sales by
segment were as follows:
Three Months
Ended June 30,
1997 1996
Athenia $ 83,000 $ 156,000
Custom Molding 425,000 591,000
Finished Ribbons 128,000 278,000
$ 636,000 $1,025,000
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 three months ended June 30, 1997, Athenia's sales decreased
approximately $73,000 or 46.8% from the comparable 1996 period. This
decrease is primarily the result of the timing of shipments as opposed
to a decrease in backlog as Athenia's backlog remains at a high level.
Management is hopeful that with a continued effort to obtain new orders,
not only will the amount of backlog remain high but sales will increase
throughout the current year.
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 decreased
$166,000 or 28.1% from the quarter ending June 30, 1997. This decrease
is primarily the result of an overall slowdown in the custom molding
industry which is having a direct affect on the Company. A recently
published survey of the industry has concluded that the industry is only
running at approximately 61% of capacity as compared to 72% of capacity
a year ago. This slowdown is also affecting prices which have become
more competitive which has further reduced sales. Management has
increased its efforts to secure additional customers in this segment and
is hopeful that a higher sales level for custom molded product will be
attained.
Finished ribbons cartridge sales decreased approximately $150,000 or 54%
during the quarter ended June 30, 1997 as compared to the quarter ended
June 30, 1996. As mentioned in previous filing, a decrease in demand
for impact ribbon products is being experienced in the industry due to
the popularity of laser and ink jet printers. Management anticipates
that sales for finished ribbons will continue to suffer in the immediate
future. In an attempt to offset this, efforts are being made to secure
business in certain niche markets for impact ribbons, i.e., point of
sale products where it is predicted that growth will continue. It
cannot be determined with certainty at this time if the Company will be
successsful in securing this business to offset the anticipated general
decline.
Contract costs and costs of goods sold varies based upon sales volume
and product mix. Cost of sales increased to 82.7% from 76.2% for the
quarter ended June 30, 1997 as compared to the similiar 1996 period.
This increase is primarily the result of the decreased sales level and
the nature of certain fixed manufacturing overhead expenses. Management
will continue to increase its efforts to improve sales and control
expenses so as to improve the gross margin.
Selling, general and administrative expenses remained approximately the
same at $197,000 for the quarter ended June 30, 1997 as compared to
$195,000 for the similar 1996 period.
Interest and other income decreased $1,000 to $10,000 for the three
months ended June 30, 1997 as compared to the three months ended June
30, 1996. This decrease is primarily the result of lower commission
income earned on the sale of imported plastic ribbon kits.
Interest expense decreased approximately $5,000 to $24,000 for the three
months ended June 30, 1997 as compared to the similar 1996 period. This
decrease is the result of the repayment of net borrowings which occurred
throughout the year.
Net Income (loss) for the quarter ended June 30, 1997 was a loss of
($101,000) as compared to net income of $31,000 for the three months
ended June 30, 1996. This loss is primarily the result of the decrease
in gross profit due to the lower level of sales as discussed above.
Management will continue to monitor the performance of all segments with
an emphasis on attempting to increase sales and improve cost controls.
A particular emphasis is being placed on increasing sales in the custom
molding segment which results in the highest gross profit margins.
Absent a further weakening in the molding industry, Management is
hopeful for improved operating results.
MATERIAL CHANGES IN FINANCIAL POSITION
The principal change in financial position during the three months ended
June 30, 1997 was a decrease in working capital of $107,000 to $802,000
as compared to March 31, 1997. On a more positive note, operations
generated net cash flow of $34,000 despite the loss of $(101,000) for
the three months ended June 30, 1997. For this three month period, the
Company's cash position decreased approximately $22,000 due to the
acquisition of certain assets for approximately $11,000 and the
repayment of debt and capital lease obligations of $45,000. At the end
of the period, however, the Company had a cash position of $679,000.
The Company intends to 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 market for its impact ribbon product line and the slowdown in
the custom molding industry. It is not possible to determine the future
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 or attempting to align the
Company with a strategic partner that could utilize the Company's
capabilities as it moves forward. The potential 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
downturn in the overall economy, Management is hopeful for an
improvement in long term operating results.
<PAGE>
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, 1997.
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
<PAGE>
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: August 12, 1997 (Registrant)
/S/ CHARLES BERES, JR.
Charles Beres, Jr., President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 679,000
<SECURITIES> 0
<RECEIVABLES> 376,000
<ALLOWANCES> 15,000
<INVENTORY> 237,000
<CURRENT-ASSETS> 1,307,000
<PP&E> 5,936,000
<DEPRECIATION> 4,485,000
<TOTAL-ASSETS> 2,903,000
<CURRENT-LIABILITIES> 505,000
<BONDS> 940,000
<COMMON> 248,000
0
0
<OTHER-SE> 1,210,000
<TOTAL-LIABILITY-AND-EQUITY> 2,903,000
<SALES> 636,000
<TOTAL-REVENUES> 646,000
<CGS> 526,000
<TOTAL-COSTS> 526,000
<OTHER-EXPENSES> 197,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,000
<INCOME-PRETAX> (101,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (101,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (101,000)
<EPS-PRIMARY> (.008)
<EPS-DILUTED> (.008)
</TABLE>
