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 6 month period ended September 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 (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 - September 30, 1997<PAGE>
Beres Industries, Inc.
September 30,1997
Form 10-OSB
Index
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1997 and
March 31, 1997
Consolidated Statements of Operations for the Three
Months Ended September 30, 1997 and 1996 and the Six
Months Ended September 30, 1997 and 1996.
Consolidated Statement of Changes in Stockholders Equity
for the Six Months Ended September 30, 1997
Consolidated Statements of Cash Flows for the Six Months
Ended September 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
9/30/97 3/31/97
ASSETS
Current Assets
Cash and Equivalents $ 536,000 $ 701,000
Accounts Receivable - Trade:
Less Allowance for Doubtful
Accounts of $15,000 at Each
Date 330,000 366,000
Inventories - Raw Materials 69,000 87,000
- Work in Process 102,000 14,000
- Finished Goods 121,000 151,000
Prepaid Expenses and Other
Current Assets 2,000 31,000
Net Current Assets of Discontinued
Operations -0- 21,000
Total Current Assets 1,160,000 1,371,000
Property, Plant and Equipment - Less
Accumulated Depreciation of
$4,513,000 and $4,454,000
Respectively 1,423,000 1,471,000
Other Assets 53,000 56,000
Net Long-Term Assets of Discontinued
Operations 90,000 90,000
Total Assets $ 2,726,000 $2,988,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
9/30/97 3/31/97
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Current Maturities of Long-Term
Debt $ 66,000 $ 85,000
Current Maturities of Capital
Lease Obligations 29,000 46,000
Accounts Payable and Accrued
Expenses 321,000 322,000
Customer Deposits 51,000 9,000
Total Current Liabilities 467,000 462,000
Long-Term Debt - Less Current
Maturities 843,000 880,000
Capital Lease Obligations -
Less Current Maturities 72,000 87,000
Total Liabilities 1,382,000 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 (2,179,000) (1,964,000)
1,514,000 1,729,000
Less: Amounts Due on Sale of
Common Stock 170,000 170,000
Total Stockholders Equity 1,344,000 1,559,000
LIABILITIES AND STOCKHOLDERS EQUITY $2,726,000 $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
9/30/97 9/30/96
Revenues
Contract Revenue and Net Sales $ 668,000 $ 836,000
Total Revenues 668,000 836,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 557,000 696,000
Selling, General and
Administrative 190,000 203,000
Total Operating Expenses 747,000 899,000
Operating (Loss) ( 79,000) ( 63,000)
Other Income (Expenses)
Interest and Other Income 8,000 15,000
Interest Expense ( 22,000) ( 32,000)
Total Other Income (Expenses) ( 14,000) ( 17,000)
(Loss)From Continuing Operations ( 93,000) ( 80,000)
(Loss)From Discontinued Operations ( 21,000) -0-
Net(Loss) $( 114,000) $( 80,000)
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Earnings Per Common Share Outstanding
(Loss)from Continuing Operations $( 0.007) $( 0.006)
(Loss)from Discontinued Operations ( 0.002) -0-
Net (Loss) $( 0.009) $( 0.006)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Six Months
Ended Ended
9/30/97 9/30/96
Revenues
Contract Revenue and Net Sales $ 1,304,000 $ 1,861,000
Total Revenues 1,304,000 1,861,000
Operating Expenses
Contract Costs and Cost of Goods
Sold 1,083,000 1,477,000
Selling, General and
Administrative 387,000 398,000
Total Operating Expenses 1,470,000 1,875,000
Operating (Loss) ( 166,000) (14,000)
Other Income (Expenses)
Interest and Other Income 18,000 26,000
Interest Expense ( 46,000) ( 61,000)
Total Other Income (Expenses) ( 28,000) ( 35,000)
(Loss)From Continuing Operations ( 194,000) ( 49,000)
(Loss)From Discontinued Operations ( 21,000) -0-
Net (Loss) $( 215,000) $( 49,000)
Weighted Average Number of Shares
Outstanding 12,412,000 12,412,000
Earnings Per Common Share Outstanding
(Loss)from Continuing Operations $( 0.016) $ ( 0.004)
(Loss)from Discontinued Operations( 0.001) -0-
Net (Loss) $( 0.017) $( 0.004)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 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 - - - ( 215,000)
Balances -
Sept. 30, 1997 $12,412,000 $ 248,000 $ 3,445,000 $(2,179,000)
Unaudited - See Accompanying Notes to Financial Statements<PAGE>
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
Cash Flows from Operating Activities:
Net (Loss) for the Period $(215,000) $ (49,000)
Adjustments to Reconcile Net
(Loss) to Net Cash Provided by
Operating Activities:
Increase in Bad Debt Allowance
From Discontinued Operations 21,000 -0-
Depreciation and Amortization 63,000 78,000
Changes in Operating Assets and
Liabilities:
Accounts Receivable - Trade 36,000 26,000
Inventories (40,000) (18,000)
Prepaid Expenses and Other
Current Assets 29,000 37,000
Other Assets ( 1,000) (1,000)
Accounts Payable and Accrued
Expenses ( 1,000) 91,000
Customer Deposits 42,000 (10,000)
Net Cash Provided By (Used in)
Operating Activities (66,000) 154,000
Cash Flows from Investing Activities:
Acquisitions of Property and
Equipment (11,000) -0-
Investment in Restricted Cash -0- -0-
Cash Released from Restriction -0- 268,000
Net Cash Provided By (Used in)
Investing Activities $ (11,000) $ 268,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT D)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
1997 1996
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt $ (56,000) $(159,000)
Principal Payments on Capital
Lease Obligations (32,000) (31,000)
Net Cash (Used in) Financing
Activities (88,000) (190,000)
Net Increase (Decrease)in Cash
and Equivalents (165,000) 232,000
Cash and Equivalents, Beginning of Year 701,000 377,000
Cash and Equivalents, End of Period $ 536,000 $ 609,000
SUPPLEMENTAL INFORMATION:
Cash Paid for Interest $ 46,000 $ 61,000
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 six months and three months ended September 30, 1997
decreased by $557,000 or 29.9% and $168,000 or 20.1% from the similar
periods of 1996. Net sales by segment were as follows:
Six Months Three Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Athenia $ 284,000 $ 264,000 $ 202,000 $ 107,000
Custom Molding 760,000 1,219,000 334,000 629,000
Finished Ribbons 260,000 378,000 132,000 100,000
$1,304,000 $1,861,000 $ 668,000 $ 836,000
Athenia's sales vary from quarter to quarter depending on the production
time required to build various tools and the amount of backlog. During
the six months and three months ended September 30, 1997, Athenia's
sales increased approximately $20,000 or 7.6% and $95,000 or 88.8% from
their respective 1996 periods. These increases resulted primarily from
a significant increase in orders for new tooling which was received and
began shipping during the most recent three month period. Management is
hopeful that sales for this segment will remain at these increased
levels during the immediate future.
Custom molding consists of the Company's injection molding operations,
including ribbon cartridge kits sold to outside customers in the ribbon
industry, and the sale of custom molded contract products to plastic
product manufacturers. Sales for this segment decreased $459,000 or
37.7% and $295,000 or 46.9% for the six months and three months ended
September 30, 1997, as compared to similar 1996 periods. These
decreases are primarily the result of two factors, namely, the loss of
a large custom molding customer who elected to bring his molding in
house during the first calendar quarter of 1997 and the slowdown of a
seasonal customer molding customer who is not running at last year's
levels. Management continues to make a concentrated effort to increase
sales in this product segment. Recently, the Company employed another
experienced sales representative for both tooling and customer molding
sales. Additionally, the Company has contracted to exhibit at certain
industry trade shows. Management remains hopeful that these efforts will
result in increased sales for this product segment.
Finished ribbons cartridge sales decreased approximately $118,000 or
31.2% for the six months ended September 30, 1997 when compared to the
similar 1996 period. For the three months ended September 30, 1997,
finished ribbon cartridge sales increased $32,000 or 32% as compared to
the three months ended September 30, 1996. The six month decrease is
due to several factors, namely, the overall slowdown in demand for
impact ribbon products caused by the increased popularity of laser and
ink jet printers, the resulting price decreases for impact ribbons due
to severe competition within the industry caused by over capacity and
certain large co-manufacturing customers of the Company reducing
purchase requirements as they attempt to keep their own manufacturing
plants busy. The three month increase is primarily the result of an
increase in orders from one customer and the unusually low level of
sales during the 1996 three month period. Although Management is
continuing its efforts to increase sales in this segment by
concentrating on niche markets and key customers, it is anticipated
that sales will remain at reduced levels in the immediate future.
Contract costs and costs of goods sold varies based upon sales volume
and product mix. Cost of sales increased to 83.1% from 79.4% for the
six months ended September 30, 1997 as compared to the similiar
1996 period. For the three months ended September 30, 1997, cost of
sales remained approximately the same at 83.4% as compared to the three
months ended September 30, 1996. The increase in the six month cost of
sales is primarily the result of the unusually low cost of sales
percentage experienced during the 1996 period as a result of the product
mix.
Selling, general and administrative expenses decreased approximately
$11,000 and $13,000 for the six months and three months ended September
30. 1997 as compared to 1996. These decreases are primarily the result
of a reduction in 1997 of certain fixed costs such as legal fees.<PAGE>
Interest and other income decreased approximately $8,000 and $7,000 for
the six months and three months ended September 30, 1997 as compared to
the corresponding periods for 1996. These decreases are primarily the
result of lower commission income earned on the sale of imported plastic
ribbon kits during the 1997 periods.
Interest expense decreased approximately $15,000 to $46,000 for the six
months ended September 30, 1997 as compared to 1996. Likewise, for the
three months ended September 30, 1997, interest expense decreased
approximately $10,000 to $22,000 as compared to the three months ended
September 30, 1996. These decreases are primarily the result of the
repayment of net borrowings.
Net Income (loss) for the six months ended September 30, 1997 was
($215,000) as compared to a net loss of ($49,000) for the similiar 1996
period. The net loss for the three months ended September 30, 1997 was
($114,000) as compared to a net loss of ($80,000) for 1996. Included in
both 1997 figures was a one time charge for bad debt from discontinued
operation of $21,000. The increase in net (loss) for the 1997 periods
is primarily the result of the lower level of sales, particularly in the
custom molding segment which usually carries the highest margins,
coupled with the nature of certain fixed SG&A costs.
Management is continuing to monitor the performance of all segments with
an emphasis on attempting to increase sales and improve cost controls.
Recently, due to the low sales level, Management implemented a plan of
restructuring production schedules and cutting certain salaries to
reduce costs and minimize any future losses until sales levels are
increased. The Company intends to continue redirecting its focus toward
custom contract molding which yields the highest gross profit margins.
Absent a downturn in the overall economy, Management remains hopeful for
improved operating results.
MATERIAL CHANGES IN FINANCIAL POSITION
The principal change in financial position during the six months ended
September 30, 1997 was a decrease in working capital of approximately
$216,000 to $693,000. During the same period, the Company's cash
position decreased approximately $165,000 of which $66,000 of cash was
used in operations. At September 30, 1997, however, the Company had a
respectable cash position of $536,000. Additionally, during this
period, the Company paid down principal on debt of approximately
$88,000.
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 continues to evaluate 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. 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 remains 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: November 13, 1997 (Registrant)
/S/ CHARLES BERES, JR.
Charles Beres, Jr., President
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<RECEIVABLES> 345,000
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<BONDS> 915,000
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<OTHER-SE> 1,096,000
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