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, 1998 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 (732) 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 the Registrant 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 $2,588,000.
<PAGE>
The aggregate market value of the voting stock held by non-affiliates of
the Registrant was approximately $638,538 on July 13, 1998 based on the
last available bid quotation ($.07) 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
13, 1998 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. As of Beres'
March 31, 1998 fiscal year end, Athenia was merged into Beres. It
is anticipated that Supply Dynamics will be merged into Beres in
the near future, thereby eliminating Beres' subsidiaries and
combining all operations in the parent company. (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.
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.
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.
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
Three of the Company's unaffiliated customers accounted for
approximately thirty-six (36%) percent of the Company's total sales
for the fiscal year ended March 31, 1998. 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, 1998, and as of that
approximate date in the preceding fiscal year:
As of As of
June 1, 1998 June 1, 1997
Sales Backlog $376,180 $ 642,458
As of As of
June 1, 1998 June 1, 1997
% 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 July 1, 1998 the Company employed an aggregate of
42 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:
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:
During the fiscal year ended March 31, 1998, there were no
material legal proceedings which the Company is required to report.
<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.
1995
High (Bid) Low (Bid)
1st Qtr $ .09 $ .03
2nd Qtr $ .07 $ .01
3rd Qtr $ .055 $ .045
4th Qtr $ .0625 $ .055
1996
High (Bid) Low (Bid)
1st Qtr $ .07 $ .06
2nd Qtr $ .13 $ .07
3rd Qtr $ .09 $ .07
4th Qtr $ .075 $ .03125
<PAGE>
1997
High (Bid) Low (Bid)
1st Qtr $ .075 $ .07
2nd Qtr $ .10 $ .04
3rd Qtr $ .10 $ .10
4th Qtr $ .08 $ .04
1998
High (Bid) Low (Bid)
1st Qtr $ .06 $ .04
2nd Qtr $ .125 $ .045
3rd Qtr* $ .075 $ .0525
* Through July 13, 1998.
As of July 13, 1998 the approximate number of Shareholders of
record of the Company was 1895. 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. The Company's securities
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. The
business segments are as follows:
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,
1998 1997
(Dollars in Thousands)
Sales
Athenia $ 610 $ 519
Custom Molding 1,471 2,433
Finished Ribbons 507 729
Total Sales $2,588 $3,681
Operating Income (Loss)
Athenia $ (100) $ (135)
Custom Molding 72 342
Finished Ribbons (124) (161)
Discontinued Segment ( 21) ( 79)
Total Operating Income (Loss) $ (173) $ (33)
Investment Expense $ ( 89) $ (111)
Interest and Other Income 34 101
Gain (Loss) on Sale of Equipment 4 ( 5)
Gain (Loss)from Discontinued Segment 1 8
Net Income (Loss) $ (223) $ 40
The Company's total net sales for the fiscal year ended March 31,
1998 were $2,588,000, a decrease of $1,093,000 or 29.7% from the
year ended March 31, 1997. For the 1998 fiscal year, the Company
posted a net loss of $(223,000), as compared to net loss of
$(40,000) for the fiscal year ended March 31, 1997.
Athenia's sales increased $91,000 to $610,000 or approximately
17.5% for the fiscal year ended March 31, 1998, as compared to the
1997 fiscal year. During the 1998 period, Athenia incurred an
operating loss of $(100,000) as compared to an operating loss of
$(135,000) for the fiscal year ended March 31, 1997. The increase
in sales is the result of an increase in demand and orders realized
for the Company's tooling services during 1998. The decrease in
operating loss for Athenia is primarily the result of the increase
in gross profit dollars realized as a result of the sales increase.
As mentioned in recent prior filings, the Company employed two
independent commissioned sales representatives in this area
approximately twelve months ago. This has resulted in an increase
in quotations, orders received, and gaining certain new customers.
Management remains hopeful that sales for this segment will remain
at current levels and result lowering the operating loss during the
current fiscal year.
Custom Molding sales decreased $962,000 or 39.5% to $1,471,000
during the fiscal year ended March 31, 1998, as compared to the
year ended March 31, 1997. This segment produced operating income
of $72,000 for the 1998 fiscal year as compared to operating income
of $342,000 for the fiscal year ended March 31, 1997. The
significant reduction in sales for the custom molding segment is
primarily the result of the continuing slowdown in the ribbon
industry and the sharp curtailment of shipment of ribbon kits to
ribbon manufacturers as well as the loss of one custom molding
customer who sold a product line to another manufacturer who did
not require the Company's molding services. The decrease in
operating income for this segment is strictly the result of the
lower sales volume which generated less gross profit dollars to
cover certain fixed overhead expenses. 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 continues to control
costs in order to minimize any affect the decrease in sales is
having on operating income.
Finished Ribbon cartridge sales decreased $222,000 or 30.5% to
$507,000 during the fiscal year ended March 31, 1998 as compared to
the year ended March 31, 1997. This segment produced an operating
loss of $(124,000) during the 1998 fiscal year as compared to an
operating loss of $(161,000) during the fiscal year ended March 31,
1997. 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 decrease in operating loss for this segment despite
the reduced sales level is primarily the result of controlling
costs and selectively seeking out the highest margin business.
Management will continue its efforts to control costs, improve
efficiencies and selectively seek out niche orders in this segment.
It is not possible at this time to determine if these efforts will
reverse the trend of this product segment during the current fiscal
year.
Contract Costs and Costs of Goods Sold varies based upon sales
volume and product mix. Cost of sales increased to approximately
78.2% during the fiscal year ended March 31, 1998 from 77% for the
1997 fiscal year. This cost increase and resulting decrease in
gross margin despite being small is primarily the result of the
significant decrease in sales experienced during the 1998 fiscal
year when compared to 1997 and the nature of certain fixed
manufacturing overhead expenses. Management expects to continue
efforts to control manufacturing costs and improve production
efficiencies while operating at the reduced sales levels.
Selling, General and Administrative Expenses decreased $85,000
to $715,000 during fiscal year ended March 31, 1998 as compared to
1997. This decrease is primarily the result of lower salaries
which resulted from temporary voluntary pay reductions from
salaried personnel to minimize the loss and conserve cash while
sales are being rebuilt.
Interest and Other Income decreased approximately $67,000 to
$34,000 during fiscal year ended March 31, 1998 as compared to
1997. This decrease is primarily the result of insurance proceeds
in the amount of $66,000 which were collected as payment for assets
damaged in a minor fire during the 1997 fiscal year.
Interest Expense decreased approximately $22,000 to $89,000
during the 1998 fiscal year as compared to fiscal 1997. This
decrease is primarily the result of the repayment of net
borrowings.
Gain (Loss) on Sale of Equipment for fiscal 1998 was a gain of
$4,000 as compared to a loss of $(5,000) for fiscal 1997. These
were the net effect of selling certain assets relative to their net
book values.
Net Income (Loss) for the fiscal year ended March 31, 1998 was
$(223,000) as compared to a net loss of $(40,000) for the fiscal
year ended March 31, 1997. This increase in loss is primarily the
result of the significantly lower sales volume and the nature of
certain fixed costs. Management has taken steps to reduce costs
until higher sales levels can be attained. These efforts have
resulted in a decrease in the loss in the most recent quarters.
Managment will continue its efforts to increase sales and control
costs and is hopeful for an improvement in operating results.
MATERIAL CHANGES IN FINANCIAL CONDITION
The Company had working capital of approximately $715,000 at March
31, 1998, as compared to working capital of $909,000 at March 31,
1997. At March 31, 1998, the Company had cash and cash equivalents
of approximately $518,000, a decrease of $183,000 from its cash
position at March 31, 1997. Of this decrease, approximately
$41,000 was used in operations and $136,000 was used to paydown
principal on long term debt and capital leases. The Company's
current ratio was approximately 2.77 at March 31, 1998 and the
Company is within term on all its obligations. Additionally, the
Company has significant free assets on which to borrow if the need
should arise.
Management intends to make every effort to improve operating cash
flows includig whatever cost cutting measures are necessary until
higher sales levels can be attained. Scheduled debt repayments
are expected to be met by cash flow.
Achieving a return to growth and profitablity will require the
Company to overcome uncertainties which it now faces, namely, the
weakening market for the Company's proprietary impact ribbon
product line and the strengthening of its sales and marketing
efforts in the custom molding industry. To that end, the Company
has continued to increase its sales personnel by employing
additional direct employees as well as independent representatives
and begun a program of exhibiting in a number of trade shows.
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 Company 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 opearting expenses or a
significant downtown in the overall 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, 1998
Page
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet as of March 31, 1998 F-3
Consolidated Statements of Operations
For the Years Ended March 31, 1998 and 1997 F-4
Consolidated Statements of Changes in
Stockholders' Equity
For the Years Ended March 31, 1998 and 1997 F-5
Consolidated Statements of Cash Flows
For the Years Ended March 31, 1998 and 1997 F-6
Notes to Consolidated Financial Statements F-8 to F-19
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Beres Industries, Inc.
We have audited the accompanying consolidated balance sheet of Beres
Industries, Inc. and subsidiaries as of March 31, 1998, 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, 1998. 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 consolidated 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, 1998, and the consolidated results of their operations and
their cash flows for each of the two years in the period ended
March 31, 1998, in conformity with generally accepted accounting
principles.
WITHUM, SMITH & BROWN
TOMS RIVER, NJ
June 9, 1998<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
ASSETS
Current Assets:
Cash and cash equivalents $ 518,000
Marketable securities 24,000
Accounts receivable, less allowance for
doubtful accounts of $15,000 356,000
Inventories:
Raw materials 69,000
Work-in-process 27,000
Finished goods 114,000
Prepaid expenses and other current assets 12,000
Total Current Assets 1,120,000
Property, Plant and Equipment - Net 1,361,000
Other Assets 54,000
Net Assets of Discontinued Operations 90,000
TOTAL ASSETS $2,625,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 72,000
Current maturities of capital lease obligations 30,000
Accounts payable and accrued expenses 272,000
Customer deposits 31,000
Total Current Liabilities 405,000
Long-Term Debt, Less Current Maturities 803,000
Capital Lease Obligations,
Less Current Maturities 57,000
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
Unrealized gain on marketable securities available for sale 24,000
Accumulated deficit (2,187,000)
1,530,000
Less: Common stock receivable 170,000
Total Stockholders' Equity 1,360,000
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $2,625,000
See accompanying notes to consolidated financial statements.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
1998 1997
Net Sales $ 2,588,000 $ 3,681,000
Costs and Expenses:
Cost of goods sold 2,025,000 2,835,000
Selling, general and administrative
expenses 715,000 800,000
Total Costs and Expenses 2,740,000 3,635,000
Operating Income (Loss) (152,000) 46,000
Other Income (Expense):
Interest and other income 34,000 101,000
Interest expense (89,000) (111,000)
Gain (loss) on sale of equipment 4,000 (5,000)
Total Other Income (Expense)-Net (51,000) (15,000)
Income (Loss) From Continuing
Operations (203,000) 31,000
Loss From Discontinued Operations (20,000) (71,000)
Net Loss Applicable to Common
Shareholders $ (223,000) $ (40,000)
Net Income (Loss) From Continuing Operations
Applicable Per Common Share -
Basic and Diluted $ (.02) $ -
Net Loss From Discontinued Operations
Applicable Per Common Share -
Basic and Diluted - -
Net Loss Applicable Per Common Share -
Basic and Diluted $ (.02 ) $ -
Shares Used in Per Share Calculation:
Basic and Diluted 12,412,000 12,412,000
See accompanying notes to consolidated financial statements.<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
<TABLE>
Capital in Unrealized Gain
Common Stock Excess of on Marketable Accumulated Common Stock
Shares Par Value Par Value Securities Deficit Receivable
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 1996 12,412,000$ 248,000 $3,445,000 $ - $(1,924,000) $(170,000)
Year Ended
March 31,1997
Net Loss - - - - (40,000) -
Balance,
March 31,1997 12,412,000 248,000 3,445,000 - (1,964,000) (170,000)
Year ended
March 31, 1998-
Net Loss - - - - (223,000) -
Net change in
marketable
securities - - - 24,000 - -
Balance,
March 31,1998 12,412,000$ 248,000 $3,445,000$ 24,000 $(2,187,000)$(170,000)
</TABLE>
See accompanying notes to consolidated financial statements.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $(203,000) $ 31,000
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 127,000 148,000
(Gain) loss on sale of equipment (4,000) 5,000
Changes in operating assets and liabilities:
Accounts receivable - trade 10,000 172,000
Inventories 42,000 22,000
Prepaid expenses and other current assets 19,000 9,000
Accounts payable and accrued expenses (50,000) (91,000)
Customer deposits 22,000 (26,000)
Other assets (4,000) (5,000)
Net cash provided by (used in) continuing
operations (41,000) 265,000
Net cash provided by discontinued operations 1,000 72,000
Net cash provided by (used in) operating
activities (40,000) 337,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment 5,000 -
Proceeds from restricted cash - 268,000
Acquisitions of property, plant and equipment (12,000) (1,000)
Net cash provided by (used in) investing
activities (7,000) 267,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (90,000) (219,000)
Principal payments on capital lease obligations (46,000) (61,000)
Net cash used in financing activities (136,000) (280,000)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (183,000) 324,000
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 701,000 377,000
CASH AND CASH EQUIVALENTS, END OF YEAR $ 518,000 $ 701,000
<PAGE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 89,000 $ 110,000
Income taxes $ - $ -
See accompanying notes to consolidated financial statements.
<PAGE>
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.
Marketable Securities - All marketable securities are classified as
available for sale under Statement of Financial Accounting Standard
No. 115 "Accounting for Certain Investments in Debt & Equity
Securities" and are stated at fair value based upon market quotes.
Unrealized holding gains and losses are reported as a separate
component of stockholders' equity until realized. Realized gains and
losses are determined using the specific identification method.
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.<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued):
Reclassifications - Certain amounts previously reported in the March
31, 1997 financial statements have been reclassified to conform with
the March 31, 1998 presentation.
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 - The Company intends to
adopt SFAS No. 130, "Reporting Comprehensive Income"and SFAS No.
131,"Disclosures about Segments of an Enterprise and Related
Information," in fiscal 1999. Both will require additional
disclosure but will not have a material effect on the Company's
financial position or results of operations. SFAS No. 130 will first
be reflected in the Company's first quarter of 1999 interim financial
statements. Components of comprehensive income for the Company
include items such as net income and changes in the value of
available-for-sale securities. SFAS No. 131 requires segments to be
determined based on how management measures performance and makes
decisions about allocating resources. SFAS No. 131 will first be
reflected in the Company's 1999 Financial Statements.
Net Loss Per Common Share - In February 1997, the Financial
Accounting Standard Board issued Statement of Financial Accounting
Standard No. 128 (SFAS No. 128), "Earnings Per Share". SFAS No. 128
supersedes Accounting Principles Board Opinion No. 15 (APB 15),
"Earnings Per Share", and other related interpretations and is
effective for the periods ending after December 15, 1997. Under SFAS
No. 128, all prior-period earnings per share amounts have been
restated. Basic earnings per share is based upon weighted-average
common shares outstanding. Dilutive earnings per share is computed
using the weighted-average common shares outstanding plus any
potentially dilutive securities.
The following tables set forth the computations of basic and diluted
net loss per common share for continuing operations and discontinued
operations:
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies (continued):
1998 1997
Continuing Operations:
Numerator for basic and
diluted net loss per
common share for continuing
operations $ (203,000) $ 31,000
Denominator for basic and
diluted net loss per common
share adjusted weighted -
average shares for
continuing operations 12,412,000 12,412,000
Basic and diluted net loss
per common share for
continuing operations $ (.02) $ -
Discontinued Operations:
Numerator for basic and
diluted net loss per common
share for discontinued
operations $ (20,000) $ (71,000)
Denominator for basic and
diluted net loss per common
share adjusted weighted-
average shares for
discontinued operations 12,412,000 12,412,000
Basic and diluted net loss
per common share for
discontinued operations $ - $ -
Options were outstanding during 1998 and 1997 but were not included
in the computation of diluted net loss per common share because the
effect in years with a net loss would be antidilutive. Therefore,
basic and diluted computations are the same in both 1998 and 1997.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Discontinued Segment
On August 1, 1997, 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 1998 and 1997 from discontinued operations consisted of
the following:
1998 1997
Operating losses $ (21,000) $ (79,000)
SFAS 121 charges - (55,000)
Fire insurance recovery - 50,000
Gain on sale of equipment 1,000 13,000
$ (20,000) $ (71,000)
The SFAS 121 charge is described further in Note 5. The income
statement shows operating results of the Audio Cassette division
separately. The net sales of the segment were $-0- in 1998 and 1997.
Net assets of discontinued operations shown in the March 31, 1998
balance sheet have been reclassed at their expected net realizable
values. The assets consist of equipment. There were no liabilities
of this segment.
Note 3 - Marketable Securities:
The Company currently invests in common stock which it classifies as
available for sale. The carrying amounts of the securities and their
estimated fair values at March 31, 1998 are as follows:
Cost $ -
Gross unrealized gains 24,000
Gross unrealized losses -
Estimated fair value $ 24,000
The above security consists of 3,736 shares of Smith Corona common
stock which the Company received in lieu of accounts receivable
pursuant to a bankruptcy settlement. The Company originally assigned
a zero cost to this asset. The change in the unrealized gain
amounted to $24,000 for the year ended March 31,1998.<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 - Property, Plant and Equipment:
Property, plant and equipment at March 31, 1998 is summarized as
follows:
Land $ 50,000
Building or building improvements 1,719,000
Machinery and equipment 4,069,000
Furniture and fixtures 91,000
5,929,000
Less: Accumulated depreciation 4,568,000
$1,361,000
Assets held under capital lease obligations at March 31, 1998 are
included in property, plant and equipment as follows:
Machinery and equipment $ 147,000
Less: Accumulated amortization 49,000
$ 98,000
Depreciation and amortization of property, plant and equipment
included as a charge to continuing operations amounted to $121,000
for 1998 and $140,000 for 1997.
Note 5 - 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, 1997. 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 6 - Long-Term Debt:
Long-term debt at March 31, 1998 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 therein. $ 875,000
Less: Current maturities 72,000
Long-Term Debt, Less Current Maturities $ 803,000
Future maturities of long-term debt are as follows:
Year Ending March 31
1999 $ 72,000
2000 78,000
2001 85,000
2002 93,000
2003 101,000
2004 and subsequent 446,000
$875,000
Note 7 - Other Income:
Interest and other income consists of the following for the years
ended March 31,
1998 1997
Interest $ 26,000 $ 30,000
Gain from legal settlement - 50,000
Miscellaneous 8,000 21,000
$ 34,000 $101,000
Gain from legal settlement represents payments received from a
customer due to the termination of a production contract.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Income Taxes:
Due to losses generated in both years, there is no provision for
income taxes for the years ended March 31, 1998 and 1997.
Temporary differences which give rise to significant deferred income
tax assets and (liabilities) at March 31, 1998 follow:
Allowance for Doubtful Accounts
Receivable $ 5,000
Accrued Vacation and Bonus Pay 17,000
Net Operating Loss Carryforwards 748,000
Valuation Allowance (727,000)
Total Deferred Income Tax Assets 43,000
Accumulated Depreciation (35,000)
Unrealized gain on Marketable
Securities (8,000)
Total Deferred Income Tax Liabilities (43,000)
Net Deferred Income Tax Asset $ -
During the year ended March 31, 1998, the valuation allowance
increased $45,000 due primarily to an increase in a deferred tax
asset for net operating loss carryforwards.
At March 31, 1998, the Company had consolidated net operating loss
carryforwards for federal income tax purposes of approximately
$2,200,000 that expire through the year 2013, and approximately
$940,000 for state income tax purposes that expire through the year
2005.
A reconciliation of the Company's expected income tax benefit at the
federal statutory rate to the Company's effective rate is as follows:
1998 1997
U.S. Federal Statutory Tax Benefit Rate (34.0)% (34.0)%
Change in Valuation Allowance 34.0 34.0
Effective Tax Rate - -
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 - 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. $ 87,000
Less: Current Maturities 30,000
Capital Leases, Less Current Maturities $ 57,000
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, 1998.
Year Ended March 31
1999 $ 35,000
2000 35,000
2001 27,000
Total future minimum lease payments 97,000
Less: Amount representing interest 10,000
Present value of future minimum
lease payments $ 87,000
Note 10 - Commitments and Contingencies:
Commitments:
The Company is a lessee under noncancellable operating equipment
leases which expire at varying dates through 2001. Future minimum
lease payments are tabulated as follows:
Years Ending March 31, Amount
1999 $23,000
2000 $11,000
2001 $ 1,000
The rent expense incurred under the leases amounted to $23,000 and
$24,000 for the years ended March 31, 1998 and 1997, respectively.
Contingencies:
Legal Proceedings - At this time, there are no pending legal
proceedings that require disclosure in these financial statements or
which Company Management anticipates having a material affect on the
Company's financial position.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENT
Note 11 - 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, 1998, 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, 1998, 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 in 1999. As of March 31, 1998, 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, 1998, no options have been
granted under this plan.
<PAGE>
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11 - Common Stock and Options (continued):
Statement of Financial Accounting Standard (SFAS) No. 123,
"Accounting for Stock-Based Compensation" requires that the Company
disclose additional information about employee stock-based
compensation plans. The objective of SFAS No. 123 is to estimate
the fair value, based on the stock price at the grant date, of the
Company's stock options to which employees become entitled when they
have rendered their requisite service and satisfied any other
conditions necessary to earn the right to benefit from the stock
options. The fair market value of a stock option is to be estimated
using an option-pricing model that takes into account, as of the
grant date, the exercise price and expected life of the option, the
current price of the underlying stock and its expected volatility,
expected dividends on the stock, and the risk-free interest rate for
the expected term of the options.
As permitted under SFAS No. 123, the Company has elected to follow
APB 25 and related interpretations in accounting for stock based
awards to employees. In addition, the Company has calculated the
pro forma financial results as required under SFAS No. 123, and
noted that the impact on the net loss for the years ended March 31,
1998 and 1997 was immaterial.
Note 12 - 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:
1998 1997 1998 1997
Customer A $ - $ 3,000 $ 17,000 $493,000
Customer B $33,000 $ 73,000 $270,000 $541,000
Customer C $ - $ 6,000 $ - $454,000
Customer D $13,000 $ 26,000 $292,000 $336,000
Customer E $78,000 $ - $384,000 $ -
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 $30,000 at March
31, 1998. Management reviews the financial status of the banks
periodically and considers its credit risk minimal.
BERES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13- Fair Value of Financial Instruments:
The amounts included in the balance sheet as of March 31, 1998 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 14- 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 $25,000
and $27,000 for the years ended March 31, 1998 and 1997,
respectively.
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.
<PAGE>
Information about segments follows:
<TABLE>
Operating
Earnings Identifiable Depreciation & Capital
Sales (Losses) Assets Amortization Expenditures
1998:
<S> <C> <C> <C> <C> <C>
Precision Molds $ 610,000 $(100,000) $ 329,000 $ 10,000 $ -
Custom Molding 1,471,000 72,000 1,039,000 82,000 -
Finished Ribbon 507,000 (124,000) 397,000 20,000 12,000
Discontinued
Operation - (21,000) 90,000 - -
Corporate & Other - - 770,000 15,000 -
Consolidated $2,588,000 173,000) $2,625,000 $127,000 $ 12,000
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
</TABLE>
<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. 80 Chairman of the Board
and Director
Charles Beres, Jr. 49 President, Chief Executive
Officer, Chief Financial
Officer, Treasurer and Director
Joseph Delikat 58 Vice President, Secretary
and Director
Harold Zuber 65 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.
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. [See Footnote 1 prior page]
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.
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.
Note: During the fiscal year ended March 31, 1998, a Director of
the Company, Joseph L. Ruden, died. At this time, a replacement
for Mr. Ruden has not been designated.
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, 1998.
Name of Individual
or Number of Capacities in Cash
Persons In Group Which Served Compensation Paid*
Charles Beres, Sr. Chairman of the $32,438
Board
Charles Beres, Jr. Chief Executive $86,050 (1)
Officer, President,
Treasurer, Director
Harold Zuber Vice President $86,313 (1)
Joseph Delikat Vice President $74,344 (1)
All Officers and Directors
as a Group Total $279,145
__________________________
* 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 13, 1998, 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.<PAGE>
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 114,076 1.0%
5 Hayes Road
Union, N.J.
Common Stock Joseph Delikat 240,000 (3) 1.9%
9 Forest Lane
Tabernacle, N.J.
Common Stock All Officers and 3,289,956 26.5%
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)
(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)
<PAGE>
(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 13, 1998
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 13, 1998
BY: /s/ Charles Beres, Jr.
CHARLES BERES, JR., Chief
Executive Officer, President,
Treasurer, Chief Financial
Officer, Director
Dated: July 13,1998
<PAGE>
BY: /s/ Joseph Delikat
JOSEPH DELIKAT, Vice President,
Secretary, Director
Dated: July 13, 1998
BY: /s/ Harold Zuber
HAROLD ZUBER, Vice President,
Director
Dated: July 13, 1998
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<PP&E> 5929
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