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, 1998.
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition 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 (732) 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 - August 12, 1998
<PAGE>
Beres Industries, Inc.
June 30, 1998
Form 10-QSB
Index
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1998 and
March 31, 1998
Consolidated Statements of Operations for the Three
Months Ended June 30, 1998 and 1997
Consolidated Statement of Changes in Stockholders Equity
for the Three Months Ended June 30, 1998
Consolidated Statements of Cash Flows for the Three
Months Ended June 30, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management s Discussion and Analysis, Material Changes in
Financial Condition and Results of Operations
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
6/30/98 3/31/98
ASSETS
Current Assets
Cash and Equivalents $ 580,000 $ 518,000
Marketable Securities 21,000 24,000
Accounts Receivable - Trade:
Less Allowance for Doubtful
Accounts of $15,000 at Each
Date 234,000 356,000
Inventories - Raw Materials 60,000 69,000
- Work in Process 76,000 27,000
- Finished Goods 110,000 114,000
Prepaid Expenses and Other
Current Assets 9,000 12,000
Total Current Assets 1,090,000 1,120,000
Property, Plant and Equipment - Less
Accumulated Depreciation of
$4,594,000 and $4,568,000
Respectively 1,332,000 1,361,000
Other Assets 51,000 54,000
Net Long-Term Assets of Discontinued
Operations 90,000 90,000
Total Assets $2,563,000 $2,625,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
6/30/98 3/31/98
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Current Maturities of Long-Term
Debt $ 73,000 $ 72,000
Current Maturities of Capital
Lease Obligations 30,000 30,000
Accounts Payable and Accrued
Expenses 230,000 272,000
Customer Deposits 49,000 31,000
Total Current Liabilities 382,000 405,000
Long-Term Debt - Less Current
Maturities 786,000 803,000
Capital Lease Obligations -
Less Current Maturities 47,000 57,000
Total Liabilities 1,215,000 1,265,000
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
Unrealized Gain on Marketable
Securities Available for Sale 21,000 24,000
Accumulated Deficit (2,196,000) (2,187,000)
1,518,000 1,530,000
Less:Common Stock Receivable 170,000 170,000
Total Stockholders Equity 1,348,000 1,360,000
Total Liabilities and Stockholders
Equity $ 2,563,000 $ 2,625,000
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
6/30/98 6/30/97
Net Sales $ 618,000 $ 636,000
Costs and Expenses
Cost of Goods Sold 426,000 526,000
Selling, General and
Administrative Expenses 185,000 197,000
Total Costs and Expenses 611,000 723,000
Operating Income(Loss) 7,000 (87,000)
Other Income (Expenses):
Interest and Other Income 6,000 10,000
Interest Expense (22,000) (24,000)
Total Other Income (Expenses) (16,000) (14,000)
Loss From Continuing
Operations (9,000) (101,000)
Income (Loss) From Discontinued
Operations -0- -0-
Net Loss Applicable
To Common Shareholders $ (9,000) $(101,000)
Weighted Average Number of Shares
Outstanding Per Common Share-
Basic and Diluted 12,412,000 12,412,000
Earnings Per Common Share Outstanding
Loss From Continuing Operations
Applicable Per Common Share-
Basic and Diluted $ (0.001) $ (0.008)
Income (Loss) From Discontinued
Operations Applicable Per Common
Share - Basic and Diluted -0- -0-
Net Loss Applicable Per Common Share-
Basic and Diluted $ (0.001) $ (0.008)
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, 1998
<TABLE>
Unrealized
Common Stock Capital in Gain on Common
Excess of Marketable Accumulated Stock
Shares Par Value Par Value Securities Deficit Receivable
<S> <C> <C> <C> <C> <C> <C>
Balances -
April 1, 1998 12,412,000 $ 248,000 $ 3,445,000 $ 24,000 $ (2,187,000) $(170,000)
Net Loss
for the Period - - - (9,000) -
Net Change in
Marketable
Securities - - - (3,000) - -
Balances -
June 30, 1998 12,412,000 $ 248,000 $ 3,445,000 $ 21,000 $( 2,196,000) $(170,000)
</TABLE>
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, 1998 AND 1997
1998 1997
Cash Flows from Operating Activities:
Net Loss for the Period $ (9,000) $ (101,000)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
Operating Activities:
Depreciation and Amortization 27,000 31,000
Changes in Operating Assets and
Liabilities:
Accounts Receivable - Trade 122,000 5,000
Inventories (36,000) 15,000
Prepaid Expenses and Other
Current Assets 3,000 22,000
Other Assets 2,000 -0-
Accounts Payable and Accrued
Expenses (42,000) (5,000)
Customer Deposits 18,000 67,000
Net Cash Provided By
Operating Activities 85,000 34,000
Cash Flows from Investing Activities:
Acquisitions of Property and
Equipment -0- (11,000)
Equipment Basis Adjustment 3,000 -0-
Net Cash Provided By (Used in)
Investing Activities $ 3,000 $ (11,000)
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, 1998 AND 1997
1998 1997
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt $ (16,000) $ (30,000)
Principal Payments on Capital
Lease Obligations (10,000) (15,000)
Net Cash (Used in) Financing
Activities (26,000) (45,000)
Net Increase (Decrease)in Cash
and Equivalents 62,000 (22,000)
Cash and Equivalents, Beginning of Year 518,000 701,000
Cash and Equivalents, End of Period $ 580,000 $ 679,000
SUPPLEMENTAL INFORMATION:
Cash Paid for Interest $ 22,000 $ 24,000
Income Taxes $ 250 $ 150
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.
Unaudited
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Sales for the nine months ended June 30, 1998 decreased by $18,000
to $618,000 or 2.8% from net sales of $636,000 for the quarter ended
June 30, 1997. Net Sales by segment were as follows:
Three Months
Ended June 30,
1998 1997
Athenia $ 139,000 $ 83,000
Custom Molding 356,000 425,000
Finished Ribbons 123,000 128,000
$ 618,000 $ 636,000
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, 1998, Athenia's sales
increased approximately $56,000 or 67.5% from the comparable 1997
period. This increase is primarily the result of the exceptionally low
level of sales during the 1997 quarter. Although the 1998 level is
more typical of what sales for this segment should be, a decrease in
quote requests is being noticed at this time which may result in lower
sales in the immediate future. Management will continue its efforts to
secure additional customers for this segment and remains hopeful that
if this sales level cannot be maintained, any decrease will be
minimized.
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
$69,000 or 16.2% for the three months ended June 30, 1998 when compared
to the similar 1997 period. This decrease is primarily the result of
the lower number of cartridge kits molded and sold to outside customers<PAGE>
in the ribbon industry which is experiencing a continued and permanent
slowdown. This decrease has been partially offset by an increase in
custom molding sales. Management is contin- ing its efforts to
increase custom molding sales by employing additional sales
representatives for these products and exhibiting in various trade
shows. Management remains hopeful that higher sales levels for custom
molded product will be attained.
Finished ribbons cartridge sales decreased approximately $5,000 or 3.9%
during the three months ended June 30, 1998 as compared to the three
months ended June 30, 1997. As mentioned in previous filings, a
decrease in demand for impact ribbon products is being experienced in
the industry due to the popularity of laser and ink jet printers.
Although the decrease in sales in this product segment is minimal,
Management does not expect sales for this segment to increase.
Management remains hopeful that with a continued effort of securing
certain niche sales in this industry, current levels can be maintained.
Contract costs and costs of goods sold varies based upon sales volume
and product mix. Cost of sales decreased to 68.9% from 82.7% for the
three months ended June 30, 1998 as compared to the similar period of
1997. This decrease is primarily the result of a more favorable
product mix during the 1998 period with more profitable jobs in the
custom molding segment as well as an improvement in the operating
results of the Athenia tool manufacturing segment. Management intends
to continue its efforts to increase sales and to control expenses so as
to improve the overall gross margin.
Selling, general and administrative expenses decreased approximately
$12,000 to $185,000 for the three months ended June 30, 1998 as
compared to the three months ended June 30, 1997. This decrease is
primarily the result of a voluntary reduction in salaries by certain
salaried personnel in order to reduce the operating losses which
resulted from the reduced sales volume.
Interest and other income decreased $4,000 to $6,000 for the three
months ended June 30, 1998 as compared to the similar 1997 period.
This decrease is primarily the result of lower commission income earned
on the sale of imported plastic ribbon kits as well as less interest
earned on approximately $100,000 lower cash reserves as of 1998 when
compared to the similar 1997 period.
<PAGE>
Interest expense decreased approximately $2,000 to $22,000 for the
three months ended June 30, 1998 as compared to the three months ended
June 30, 1997. This decrease is primarily the result of
the repayment of net borrowings which occurred throughout the year.
Net Income (loss) for the quarter ended June 30, 1998 was a loss of
($9,000) as compared to a net loss of ($101,000) for the three months
ended June 30, 1997. The reduction in loss is primarily the result of
the improvement in gross profit as discussed above.
Management will continue to monitor the performance of all segments
with an emphasis on attempting to increase sales and improving 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 weakening in the overall economy or molding
industry, Management is hopeful for improved operating results.
MATERIAL CHANGES IN FINANCIAL POSITION
The Company had a working capital position of $708,000 at June 30, 1998
as compared to working capital of $715,000 at March 31, 1998. Opera-
tions generated net cash of approximately $85,000 for the three months
ended June 30, 1998 which was more than sufficient to make the required
principal payments on long-term debt and capital lease obligations of
$26,000 during the quarter. The Company's cash and cash equivalents
increased $62,000 to a respectable cash position of $580,000 at June
30, 1998.
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.
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, 1998.
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, 1998 (Registrant)
/s/ Charles Beres, Jr.
Charles Beres, Jr., President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 580,000
<SECURITIES> 21,000
<RECEIVABLES> 249,000
<ALLOWANCES> 15,000
<INVENTORY> 246,000
<CURRENT-ASSETS> 1,090,000
<PP&E> 5,926,000
<DEPRECIATION> 4,594,000
<TOTAL-ASSETS> 2,563,000
<CURRENT-LIABILITIES> 382,000
<BONDS> 833,000
<COMMON> 248,000
0
0
<OTHER-SE> 1,100,000
<TOTAL-LIABILITY-AND-EQUITY> 2,563,000
<SALES> 618,000
<TOTAL-REVENUES> 618,000
<CGS> 426,000
<TOTAL-COSTS> 611,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,000
<INCOME-PRETAX> (9,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,000)
<EPS-PRIMARY> ($.001)
<EPS-DILUTED> ($.001)
</TABLE>
