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, 1997 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 theRegistrant 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
$3,681,000.
The aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $873,908 on
July 14, 1997 based on the last available bid quotation ($.10) 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 14, 1997 was 12,411,934. Documents Incorporated By
Reference - See Item 14(c) to this Form 10-KSB.
<PAGE>
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.
<PAGE>
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 one other salaried employee as well as three
commissioned sales people. 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
Five of the Company's unaffiliated customers accounted for
approximately fifty-eight (58%) percent of the Company's total
sales for the fiscal ended March 31, 1997. 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, 1997 June 1, 1996
Sales Backlog $652,458 $ 413,937
<PAGE>
As of As of
June 1, 1997 June 1, 1996
% 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, 1997 the Company employed an aggregate of 45
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:
<PAGE>
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, of which $19,450 has
been received. 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, and the
individual defendants, it is questionable whether any further
substantial recovery will be obtained.
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. Judgment
was entered against Cassette Productions, Inc. on September 27,
1996, in the amount of $83,308.96. Cassette Productions, Inc. is
no longer in operation and has liquidated its assets. It is not
likely that any substantial recovery will be obtained.
On March 30, 1995, the Company instituted litigation against
First Union Bank f/k/a 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 released 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.
<PAGE>
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.
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 $ .07
4th Qtr $ .075 $ .03125
<PAGE>
1997
High Low
1st Qtr $ .075 $ .07
2nd Qtr $ .10 $ .04
3rd Qtr* $ .10 $ .10
* Through July 3, 1997.
As of July 14, 1997 the approximate number of Shareholders of
record of the Company was 1,916. 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 following tables summarize net sales and operating
income (loss) by segment.
Year Ended March 31,
1997 1996
(Dollars in Thousands)
Sales
Athenia $ 519 $ 351
Custom Molding 2,433 2,507
Finished Ribbons 729 1,125
Discontinued Segment
(Audio Cassettes) 0 4
Total Sales $3,681 $3,987
Operating Income (Loss)
Athenia $ (135) $(179)
Custom Molding 342 290
Finished Ribbons (161) (146)
Discontinued Segment (Audio
Cassettes) (79) (47)
Total Operating Income (Loss) $ (33) $ (82)
Investment Expense $ (111) $ (122)
Interest and Other Income 101 53
Gain on Sale of Joint Venture 0 22
Gain on Sale of Equipment ( 5) 26
Discontinued Segment (Audio
Cassettes) 8 0
Net Income (Loss) $ 40 $ (103)
The Company's total net sales for the fiscal year ended March 31,
1997 were $3,681,000, a decrease of $306,000 or 7.7% from the
year ended March 31, 1996. For the 1997 fiscal year, the Company
posted a net loss of $(40,000), as compared to net loss of
$(103,000) for the fiscal year ended March 31, 1996.
Athenia's sales increased $168,000 to $519,000 for the
fiscal year ended March 31, 1997, as compared to the 1996 fiscal
year. During the 1997 period, Athenia incurred an operating loss
of $(135,000) as compared to an operating loss of $(179,000) for
the fiscal year ended March 31, 1996. The increase in sales is
the result of an increase in demand and orders realized for the
Company's tooling services during 1997. The decrease in
operating loss for this segment is primarily the result of the
increase in gross profit dollars realized as a result of the
sales increase. The Company has recently employed additional
commissioned sales representatives in this area, resulting in an
increase in quotation requests and firm orders received for
tooling from new customers. Management is hopeful that sales for
Athenia will remain at current levels or higher and result in a
lowering of the operating loss during the current fiscal year.
Custom Molding sales decreased $74,000 or 3.0% to $2,433,000
during the fiscal year ended March 31, 1997, as compared to the
year ended March 31, 1996. This segment produced operating
income of $342,000 for the 1997 period, as increase of $52,000 or
17.9% over that for the fiscal year ended March 31, 1996. The
decease in sales is primarily the result of a key customer
electing to bring its molding work in-house. The increase in
operating income is the result of both product mix and improved
manufacturing efficiencies in this area. During the current
quarter, the Company is experiencing a further slowdown in sales
for custom molding services due to a decrease in demand from
certain customers. Management is intensifying its efforts to
secure additional customers and increase sales and remains
hopeful that higher sales levels for custom molded products will
be attained. In the interim, Management is attempting to control
costs in order to minimize any affect a decrease in sales may
have on opeating income.
Finished Ribbon cartridge sales decreased $396,000 or 35.2%
during fiscal year ended March 31, 1997 as compared to the prior
year. This segment produced an operating loss of $(161,000)
during the most recent fiscal year as compared to an operating
loss of $(146,000) during the year ended March 31, 1996. 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 is the result of the lower sales level and
lower selling prices 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 at this time to determine if these efforts will reverse
the trend of this segment during the current fiscal year.
Discontinued Segment - Audio Cassette sales were $0 during
the fiscal year ended March 31, 1997. As discussed in previous
filings, Audio Cassette production was suspended during 1994 due
to losses resulting from low selling prices caused by an industry
over supply situation and intense foreign competition. On August
1, 1996, the Company adopted a plan to withdraw from the
production of Audio Cassettes and discontinue operations. This
resulted in a net loss from discontinued operations of $(71,000)
for the fiscal year ended March 31, 1997. See Notes 2 and 4 to
the Consolidated Financial Statements for further explanation.
Contract Costs and Costs of Goods Sold varies based upon
sales volume and product mix. Cost of sales decreased to 77%
during the year ended March 31, 1997 from 80.2% during fiscal
year 1996. This cost decrease and resultant increase in gross
profit is primarily the result of better margins in the custom
molding segment and the decrease in the depreciation expense
during fiscal year 1997 as well as Management's continued efforts
to control manufacturing costs and improve production
efficiencies.
Selling, General and Administrative Expenses decreased
$23,000 to $800,000 during fiscal year ended March 31, 1997 as
compared to 1996. This decrease is primarily the result of an
decrease in legal fees associated with the bank litigation which
was settled last year, lower freight changes as a result of the
lower sales level and a decrease in insurance premiums during
1997.
Interest and Other Income increased approximately $30,000 to
$101,000 during fiscal year ended March 31, 1997 as compared to
1996. This increase is primarily the result of a settlement of
$50,000 which was received in January 1997 from a customer who
breached a custom molding contract.
Interest Expense decreased approximately $11,000 to $111,000
during 1997 fiscal year as compared to fiscal 1996. This
decrease is primarily the result of the repayments of net
borrowings.
Gain on Sale of Equipment for fiscal 1997 was a loss of
approximately $(5,000) which was the net effect of selling
certain assets relative to their net book value.
Net Income (Loss) for the fiscal year ended March 31, 1997
was $(40,000) as compared to $(103,000) during the similar 1996
period. Operationally, the Company provided income of $46,000
for the fiscal year ended March 31, 1997 as compared to an
operating loss of $(36,000) for fiscal 1996. This improvement in
both the operating income and net income results for fiscal 1997
despite the 7.7% decrease in sales is due primarily to the
improvement in gross margin in the custom molding segment and
Management's continued efforts to control costs and improve
production efficiencies.
LIQUIDITY AND CAPITAL RESOURCES AND MATERIAL CHANGES IN FINANCIAL
CONDITION
Operating Activities
For the fiscal year ended March 31, 1997 the Company
generated/income from continuing operations of $31,000.
Additionally, the Company provided net cash from operating
activities of $337,000 which more than covered the principal
payments on long term debt of $(219,000) and capital leases of
$(61,000). Included in the long term debt payments was a one
time lump sum payment of $107,000 on the building mortgage which
was made in July 1996 as part of the settlement of the lawsuit
against the Company's lender. 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 of approximately $909,000 at
March 31, 1997 as compared to a working capital of $850,000 at
March 31, 1996. The Company's cash and cash equivalents
increased to $701,000 at March 31, 1997 from $377,000 at March
31, 1996. Approximately $268,000 of this improvement is the
result of the freeing up of restricted cash as part of the bank
lawsuit settlement with the Company's lender. The balance was
the result of the improvement in operations for fiscal 1997 as
compared to 1996. The Company's current ratio is approximately
2.97 and the Company is within term on all of its obligations.
Additionally, the Company has significant free assets on which to
borrow if the need should arise.
Scheduled debt repayments 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, the
weakening markets for the Company's proprietary impact ribbon
product line and the strenghthening of its sales and marketing
clout in the custom molding industry. Management is continuing
to evaluate the possibility of raising capital to invest in new
products and/or markets and also seeking out strategic partners
that could align with the Conpany and utilize the Company's
capabilities. 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
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
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
Page
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet
as of March 31, 1997 F-3
Consolidated Statements of Operations
For the Years Ended March 31, 1997
and 1996 F-4
Consolidated Statements of Changes in
Stockholders' Equity
For the Years Ended March 31, 1997
and 1996 F-5
Consolidated Statements of Cash Flows
For the Years Ended March 31, 1997
and 1996 F-6
Notes to Consolidated Financial Statements F-7 to F-15
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Beres Industries, Inc.
We have audited the accompanying consolidated balance sheet of
Beres Industries, Inc. and subsidiaries as of March 31, 1997, and
the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the two years in
the period ended March 31, 1997. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 financial statements referred to above
present fairly,in all material respects, the consolidated
financial position of Beres Industries, Inc. and subsidiaries as
of March 31, 1997, and the results of their operations and their
cash flows for each of the two years in the period ended March
31, 1997, in conformity with generally accepted accounting
principles.
/s/ Withum, Smith & Brown
WITHUM, SMITH & BROWN
TOMS RIVER, NJ
June 5, 1997
F-2
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
<TABLE>
ASSETS
<S> <C>
Current Assets:
Cash and cash equivalents $ 701,000
Accounts receivable, less allowance for
doubtful accounts of $15,000 366,000
Inventories:
Raw materials 87,000
Work-in-process 14,000
Finished goods 151,000
Prepaid expenses and other current assets 31,000
Net current assets of discontinued
operations 21,000
Total Current Assets 1,371,000
Property, Plant and Equipment - Net 1,471,000
Other Assets 56,000
Net Long-Term Assets of Discontinued
Operations 90,000
TOTAL ASSETS $2,988,000
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Current Liabilities:
Current maturities of long-term debt $ 85,000
Current maturities of capital lease
obligations 46,000
Accounts payable and accrued expenses 322,000
Customer deposits 9,000
Total Current Liabilities 462,000
Long-Term Debt, Less Current Maturities 880,000
Capital Lease Obligations,
Less Current Maturities 87,000
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 (1,964,000)
1,729,000
Less: Common stock receivable 170,000
Total Stockholders' Equity 1,559,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,988,000
See accompanying Notes to Consolidated Financial Statements
F-3 <PAGE>
</TABLE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
1996 1997
<TABLE>
<S> <C> <C>
Net Sales $ 3,681,000 $ 3,983,000
Costs and Expenses:
Cost of goods sold 2,835,000 3,196,000
Selling, general and administrative
expenses 800,000 823,000
Total Costs and Expenses 3,635,000 4,019,000
Operating Income (Loss) 46,000 (36,000)
Other Income (Expense):
Interest and other income 101,000 71,000
Interest expense (111,000) (122,000)
Gain (loss) on sale of equipment (5,000) 26,000
Total Other Income (Expense)-Net (15,000) (25,000)
Income (Loss) From Continuing
Operations 31,000 (61,000)
Loss From Discontinued Operations (71,000) (42,000)
Net Income (Loss) $ (40,000) $ (103,000)
Earnings per share
Income (loss) from continuing
operations $ - $ (.01)
Loss from discontinued
operations $ - $ -
Net Income (Loss) $ - $ (.01)
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-4
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
Capital in
Common Stock Excess of Accumulated Common Stock
Shares Par Value Par Value Deficit Receivable
<S> <C> <C> <C> <C> <C>
Balance,
April 1, 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)
Year ended
March 31,1997-
Net Loss - - - (40,000) -
Balance,
March 31,1997 12,412,000 $ 248,000 $3,445,000$(1,964,000) $(170,000)
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-5
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<TABLE>
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ 31,000 $(61,000)
Adjustments to reconcile net income (loss)from
continuing operations to net cash provided by
operating activities:
Depreciation and amortization 148,000 230,000
Gain on sale of joint venture - (22,000)
(Gain) loss on sale of equipment 5,000 (26,000)
Changes in operating assets and liabilities:
Accounts receivable - trade 172,000 (54,000)
Inventories 22,000 56,000
Prepaid expenses and other current assets 9,000 (52,000)
Accounts payable and accrued expenses (91,000) (31,000)
Customer deposits (26,000) 30,000
Other assets (5,000) (1,000)
Net cash provided by continuing operations 265,000 69,000
Net cash provided by discontinued operations 72,000 6,000
Net cash provided by operating activities 337,000 75,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment - 26,000
Proceeds from sale of joint venture - 22,000
Proceeds from (investments in) restricted cash 268,000 (14,000)
Acquisitions of property, plant and equipment (1,000) (12,000)
Net cash provided by investing
activities 267,000 22,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (219,000) (124,000)
Principal payments on capital lease obligations (61,000) (50,000)
Net cash used in financing activities (280,000) (174,000)
NET INCREASE DECREASE IN CASH AND CASH EQUIVALENTS 324,000 (77,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 377,000 454,000
CASH AND CASH EQUIVALENTS, END OF YEAR $ 701,000 $ 377,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 110,000 $ 123,000
Income taxes $ - $ -
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capitalized lease obligations incurred $ - $ 144,000<PAGE>
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-6
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 the
manufacturing and sale of injection molded plastic parts,
precision engineered molds and finished ribbons. The
Company's customers range from local to multi-national
companies and are located primarily in the United States.
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, 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.
<PAGE>
Reclassifications - Certain amounts previously reported in
the March 31, 1996 financial statements have been
reclassified to conform with the March 31, 1997 presentation.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued):
Use of Estimates - 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.
Effect of New Accounting Pronouncements - In June, 1996
the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No.
125 "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" and in
December, 1996, issued No. 127 "Deferral of the
Effective Date of Certain Provisions of FASB Statement
No. 125 - and amendment to FASB Statement No. 125". The
Company believes that this pronouncement will not have a
material impact on the Company's results of operations
and financial condition. In February, 1997 the FASB
issued SFAS No. 128 "Earnings Per Share". The Company
plans to adopt SFAS No. 128 but it is not expected to
have a material impact on the Company's results of
operations and financial condition.
Note 2 - Discontinued Segment
On August 1, 1996, the Company adopted a plan to
withdraw from its Audio Cassette segment due to
declining sales and limited prospects for increased
revenues.
The loss for 1997 from discontinued operations consisted
of the following:
Operating losses $ (79,000)
SFAS 121 charges (55,000)
Fire insurance recovery 50,000
Gain on sale of equipment 13,000
$ (71,000)
<PAGE>
The SFAS 121 charge is described further in Note 4. The
income statement for 1996 has been restated and
operating results of the Audio Cassette division are
also shown separately. The net sales of the segment
were $-0- in 1997 and $4,000 in 1996. These amounts are
not included in net sales in the Company's statement of
operations.
Net assets of discontinued operations shown in the March
31, 1997 balance sheet have been reclassed at their
expected net realizable values. The assets include
accounts receivable and equipment. There were no
liabilities at this segment.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Property, Plant and Equipment:
Property, plant and equipment at March 31, 1997 is
summarized as follows:
<TABLE>
<S> <C>
Land $ 50,000
Building or building improvements 1,719,000
Machinery and equipment 4,063,000
Furniture and fixtures 93,000
5,925,000
Less: Accumulated depreciation 4,454,000
$1,471,000
</TABLE>
Assets held under capital lease obligations at March 31,
1997 are included in property, plant and equipment as
follows:
Machinery and equipment $ 293,000
Less: Accumulated amortization 128,000
$ 165,000
Depreciation and amortization of property, plant and
equipment included as a charge to continuing operations
amounted to $140,000 for 1997 and $222,000 for 1996.
Note 4 - Asset Impairment Charges:
The Company adopted Financial Accounting Standard No.
121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" ("FAS 121")
on April 1, 1996. This statement requires companies to
record impairments of long-lived assets, certain
identifiable intangibles, and associated goodwill on an
exception basis, when there is evidence that events or
changes in circumstances have made recovery of an
asset's carrying value unlikely. In conducting its
review, management considered, among other things, its
current and expected operating cash flows together with a
judgement as to the fair value the Company could receive
upon sale of fixed assets.
Based on this review, the Company recognized a non-cash
charge of $55,000 for the adoption of Statement No. 121 in
fiscal year 1997. This charge was primarily for the
write-down of certain discontinued fixed assets to their
estimated fair market value. Impairment indicators
included a lack of recent sales. Fair value was based on
available information related to market value.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 5 - Long-Term Debt:
Long-term debt at March 31, 1997 is summarized as
follows:
Mortgage payable to bank, due in monthly installments
of $11,975 including interest at 8.6%, through
November 2006. The loan is secured by a first lien on
the building and improvements and all fixtures,
machinery and systems servicing the building herein. $ 940,000
Note payable to bank, due in monthly principal
installments of $5,000 plus interest at
prime plus 1-1/2% through September 1997. The note is
secured by equipment, accounts receivable, inventory,
and all intangible property. 25,000
Total
965,000
Less: Current maturities 85,000
Long-Term Debt, Less Current Maturities
$ 880,000
Future maturities of long-term debt as follows:
Year Ending March 31
1998 $ 85,000
1999 72,000
2000 78,000
2001 85,000
2002 93,000
2003 and subsequent 552,000
$965,000
The prime rate of interest at March 31, 1997 was 8.5%
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 - Income Taxes:
Due to losses generated in both years, there is no provision for
income taxes for the years ended March 31, 1997 and 1996.
Temporary differences which give rise to significant deferred income
tax assets and (liabilities) at March 31, 1997 follow:
Allowance for Doubtful Accounts
Receivable $ 27,000
Accrued Vacation and Bonus Pay 23,000
Net Operating Loss Carryforwards 687,000
Valuation Allowance (682,000)
Total Deferred Income Tax Assets $ 55,000
Accumulated Depreciation $ (55,000)
Net Deferred Income Tax Asset $ -
During the year ended March 31, 1997, the valuation allowance
decreased $24,000 due primarily to a reduction in a deferred tax asset
for allowance for doubtful accounts receivable.
At March 31, 1997, the Company had consolidated net operating loss
carry forwards for Federal Income Tax purposes of approximately
2,022,000 that expire through the year 2012, and approximately
$843,000 that expire through the year 2004 for State Income Tax
purposes.
A reconciliation of income tax (benefit) at the statutory rate to the
Company's effective rate is as follows:
1997 1996
U.S. Federal Statutory Rate of Tax (34.0)% (34.0)%
Operating Losses with no Current
Tax Benefit 34.0 34.0
Effective Tax Rate - -
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7 - 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. $ 133,000
Less: Current Maturities 46,000
Capital Leases, Less Current Maturities $ 87,000
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, 1997.
Year Ended March 31
1998 $ 55,000
1999 35,000
2000 35,000
2001 27,000
Total future minimum lease payments 152,000
Less: Amount representing interest 19,000
Present value of future minimum
lease payments $133,000
Note 8 - Commitments and Contingencies:
Commitments:
The Company is a lessee under noncancellable operating equipment
leases which expire at varying dates through 1999. Future
minimum lease payments are tabulated as follows:
Years Ending March 31, Amount
1998 $20,000
1999 9,000
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.
The rent expense incurred under the leases amounted to $24,000
and $21,000 for the years ended March 31, 1997 and 1996,
respectively.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 - 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, 1997,
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 any new further developments, 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 previously
accrued interest would be made.
Options - At March 31, 1997, 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 the fair
market value on the date of the grant of $3.00 per share. Such
options expire from through 1999. As of March 31, 1997, 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, 1997, no
options have been granted under this plan.
On April l, 1996, the Company adopted SFAS 123, "Accounting for
Stock-Based Compensation". Pursuant to this statement, the
Company has elected the option of charging against operating
income the estimated fair value of stock-based compensation. This
election had no effect on the net income or earnings per share of
the Company for the year ended March 31, 1997.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Major Customers and Credit Risk Concentrations:
Major Customers and Credit Risk Concentrations - Accounts
receivable from and 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:
1997 1996 1997 1996
<TABLE>
<S> <C> <C> <C> <C>
Customer A $26,000 $ 21,000 $336,000 $691,000
Customer B $ 32,000 $ 57,000 $327,000 $443,000
Customer C $73,000 $129,000 $541,000 $541,000
Customer D $ 3,000 $126,000 $493,000 $842,000
Customer E $ 6,000 $ - $454,000 $ -
</TABLE>
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 $600,000 at
March 31, 1997. Management reviews the financial status of the
banks periodically and considers its credit risk minimal.
Note 11- Fair Value of Financial Instruments:
The amounts included in the balance sheet as of March 31, 1997 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 12- 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.
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 $27,000 and $51,000 for the years ended March 31,
1997 and 1996, respectively.<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12- 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>
Operating
Earnings Identifiable Depreciation & Capital
Sales (Losses) Assets Amortization
<S> <C> <C> <C> <C> <C>
Expenditures
1997:
Precision
Molds $ 519,000 $ 135,000) $ 305,000 $ 10,000 $ -
Custom Molding 2,433,000 342,000 1,226,000 103,000 1,000
Finished Ribbon 729,000 (161,000) 449,000 20,000 -
Discontinued
Operation - (79,000) 111,000 - -
Corporate & Other - - 897,000 15,000 -
Consolidated $ 3,681,000$ (33,000)$ 2,988,000 148,000 $ 1,000
1996:
Precision
Molds $ 351,000 $(179,000) $ 329,000 $ 21,000 $ -
Custom Molding 2,507,000 290,000 1,381,000 164,000 153,000
Finished Ribbon 1,125,000 (146,000) 550,000 27,000 -
Discontinued
Operation 4,000 (47,000) 227,000 16,000 56,000
Corporate & Other - - 938,000 18,000 4,000
Consolidated $ 3,987,000$ (82,000) $3,425,000 $ 246,000 $213,000
</TABLE>
Note 13 - Other Income:
Interest and other income consists of the following for the years ended
March 31,
1997 1996
Interest $ 30,000 $ 28,000
Gain on sale of joint venture - 22,000
Gain from legal settlement 50,000 -
Miscellaneous 21,000 21,000
$101,000 $ 71,000
Gain from legal settlement represents payments received from a customer
due to the termination of a production contract.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure:
NONE
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. 79 Chairman of the Board
and Director
Charles Beres, Jr. 48 President, Chief Executive
Officer, Chief Financial
Officer, Treasurer and Director
Joseph Delikat 57 Vice President, Secretary
and Director
Joseph L. Ruden 76 Vice Chairman of the Board
of Directors and Director
Harold Zuber 64 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.(1)
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)
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.
Footnote 1-On August 17, 1993 the United States 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.
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 $36,676
Board
Charles Beres, Jr. Chief Executive $97,140(1)
Officer, President,
Treasurer, Director
Harold Zuber Vice President $90,250(1)
Joseph Delikat Vice President $83,800(1)
Joseph L. Ruden Vice Chairman of -0-
the Board
Total $307,866
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, 1997, 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 14, 1997, 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 114,000 1.0%
5 Hayes Road
Union, N.J.
Common Stock Joseph L. Ruden 382,970 3.1%
25 Josh Court
Clifton, N.J.
<PAGE>
Common Stock Joseph Delikat 240,000 (3) 1.9%
9 Forest Lane
Tabernacle, N.J.
Common Stock All Officers and 3,672,850 29.7%
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)
<PAGE>
(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.
<PAGE>
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: /s/ Charles Beres, Jr.
CHARLES BERES, JR., Chief
Executive Officer, President,
Treasurer, Chief Financial
Officer, Director
Date: July 1, 1997
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: /s/ Charles Beres, Sr.
CHARLES BERES, SR. Chairman of
the Board, Director
Dated: July 2, 1997
BY: /s/ Charles Beres, Jr.
CHARLES BERES, JR., Chief
Executive Officer, President,
Treasurer, Chief Financial
Officer, Director
Dated: July 1, 1997
BY: /s/ Joseph Delikat
JOSEPH DELIKAT, Vice President,
Secretary, Director
Dated: July 1, 1997
BY: /s/ Harold Zuber
HAROLD ZUBER, Vice President,
Director
Dated: July 1, 1997
BY:_________________________________
JOSEPH L. RUDEN, Vice Chairman
of the Board, Director
Dated:______________________________
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<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
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