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, 1999.
( ) 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 - July 19, 1999
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
Beres Industries, Inc.
June 30, 1999
Form 10-QSB
Index
Part I: Financial Information
Item 1. Financial Statements
Balance Sheets at June 30, 1999 and March 31, 1999
Statements of Operations for the Three Months Ended
June 30, 1999 and 1998
Statements of Comprehensive Income (Loss) for the Three
Months Ended June 30, 1999 and 1998
Statement of Changes in Stockholders Equity for the
Three Months Ended June 30, 1999
Statements of Cash Flows for the Three Months Ended
June 30, 1999 and 1998
Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
BALANCE SHEETS
6/30/99 3/31/99
ASSETS
Current Assets
Cash and Cash Equivalents $ 367,000 $ 458,000
Marketable Securities 4,000 3,000
Accounts Receivable - Trade:
Less Allowance for Doubtful
Accounts of $23,000 and $23,000
Respectively 165,000 181,000
Inventories - Raw Materials 44,000 47,000
- Work in Process 45,000 37,000
- Finished Goods 78,000 85,000
Prepaid Expenses and Other
Current Assets 13,000 17,000
Total Current Assets 716,000 828,000
Property, Plant and Equipment - Less
Accumulated Depreciation of
$4,696,000 and $4,674,000
Respectively 1,242,000 1,264,000
Other Assets 48,000 48,000
Net Assets of Discontinued Operations 45,000 45,000
Total Assets $2,051,000 $2,185,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
BALANCE SHEETS (Continued)
6/30/99 3/31/99
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Current Maturities of Long-Term
Debt $ 84,000 $ 83,000
Current Maturities of Capital
Lease Obligations 34,000 34,000
Accounts Payable and Accrued
Expenses 232,000 251,000
Customer Deposits 36,000 23,000
Total Current Liabilities 386,000 391,000
Long-Term Debt - Less Current
Maturities 711,000 731,000
Capital Lease Obligations -
Less Current Maturities 15,000 23,000
Total Liabilities 1,112,000 1,145,000
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
Accumulated Other Comprehensive
Income (Loss) 4,000 3,000
Accumulated Deficit (2,588,000) (2,486,000)
1,109,000 1,210,000
Less:Common Stock Receivable 170,000 170,000
Total Stockholders Equity 939,000 1,040,000
Total Liabilities and Stockholders
Equity $ 2,051,000 $ 2,185,000
Unaudited -See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
6/30/99 6/30/98
Net Sales $ 419,000 $ 618,000
Costs and Expenses
Cost of Goods Sold 337,000 426,000
Selling, General and
Administrative Expenses 170,000 185,000
Total Costs and Expenses 507,000 611,000
Operating Income (Loss) (88,000) 7,000
Other Income (Expenses):
Interest and Other Income 4,000 6,000
Interest Expense (18,000) (22,000)
Total Other Income (Expenses)- Net (14,000) (16,000)
Loss From Continuing
Operations (102,000) (9,000)
Income (Loss) From Discontinued
Operations -0- -0-
Net Loss Applicable
To Common Shareholders $ (102,000) $ (9,000)
Number of Shares Outstanding Per Common
Share-Basic and Diluted Used in Per
Share Calculation 12,412,000 12,412,000
Loss Per Common Share Outstanding
Loss From Continuing Operations
Applicable Per Common Share-
Basic and Diluted $ (0.008) $ (0.001)
Income (Loss) From Discontinued
Operations Applicable Per Common
Share - Basic and Diluted -0- -0-
Net Loss Applicable Per Common Share-
Basic and Diluted $ (0.008) $ (0.001)
Unaudited - See Accompanying Notes to Financial Statements
PART I - ITEM 1
BERES INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Three Months Three Months
Ended Ended
6/30/99 6/30/98
Net Loss Applicable To Common Shareholders $ (102,000) $ (9,000)
Other Comprehensive Income (Loss), Net Of Tax:
Unrealized Holding Gain (Loss) Arising During
The Period 1,000 (3,000)
Net Comprehensive Loss $ (101,000) $ (12,000)
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE THREE MONTHS ENDED June 30, 1999
<TABLE>
Accumulated
Common Stock Capital in Other Common
Excess of Comprehensive Accumulated Stock
Shares Par Value Par Value Income Deficit Receivable
Balances -
<S> <C> <C> <C> <C> <C> <C>
April 1, 1999 12,412,000 $ 248,000 $3,445,000 $ 3,000 $ (2,486,000) $ (170,000)
Net Loss
for the Period - - - - (102,000) -
Other Comprehensive
Income, Net Of Tax,
Unrealized Holding
Gain Arising During
The Period - - - 1,000 - -
Balances -
June 30,1999 12,412,000 $ 248,000 $3,445,000 $ 4,000 $(2,588,000) $ (170,000)
</TABLE>
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
1999 1998
Cash Flows from Operating Activities:
Net Loss for the Period $(102,000) $ (9,000)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Depreciation and Amortization 22,000 27,000
Changes in Operating Assets and
Liabilities:
Accounts Receivable - Trade 16,000 122,000
Inventories 2,000 (36,000)
Prepaid Expenses and Other
Current Assets 4,000 3,000
Other Assets -0- 2,000
Accounts Payable and Accrued
Expenses (19,000) (42,000)
Customer Deposits 13,000 18,000
Net Cash Provided By (Used In)
Operating Activities (64,000) 85,000
Cash Flows from Investing Activities:
Equipment Basis Adjustment -0- 3,000
Net Cash Provided By
Investing Activities $ -0- $ 3,000
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS (Continued)
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
1999 1998
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt $ (19,000) $ (16,000)
Principal Payments on Capital
Lease Obligations (8,000) (10,000)
Net Cash Used in Financing
Activities (27,000) (26,000)
Net Increase (Decrease) in Cash and Cash
Equivalents (91,000) 62,000
Cash and Cash Equivalents,
Beginning of Year 458,000 518,000
Cash and Cash Equivalents,
End of Period $ 367,000 $ 580,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash Paid for Interest $ 18,000 $ 22,000
Cash Paid for Income Taxes $ 200 $ 250
Unaudited - See Accompanying Notes to Financial Statements
Part I - Item 1
BERES INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30,1999
Note 1 - Basis of Presentation
The March 31, 1999 balance sheet at the end of the preceding
fiscal year has been derived from the audited balance sheet
contained in the Company s Form 10-KSB and is presented for
comparative purposes. All other financial statements and
financial information 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.
However, the footnote below was added to disclose required
segment information in this reporting quarter. These 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 March 31, 1999.
Note 2 - Interim Segment Information Reporting
Segment Information - In 1997, the Financial Accounting Standards
Board issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information, which has been adopted by
the Company. SFAS No. 131 requires companies to report financial
and descriptive information about its reportable operating
segments on an interim basis. The Company discusses its segments
in its Management s Discussion and Analysis appearing elsewhere
herein. The segment descriptions are an integral part of this
footnote.
Unaudited
Part I - Item 1
BERES INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
Note 2 - Segment Information (Cont d)
The Athenia Plastics Segment provides materials, labor and
overhead at cost determined on the same basis as for sales to
unaffiliated parties. Such intersegment costs which are not
included in revenues or costs of Athenia were $10,000 for the
three months ended June 30, 1999 as compared to $4,000 for the
three months ended June 30, 1998.
Information about the Company s segments is as follows for the
three months ended June 30, 1999 and 1998:
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
Operating Operating
Segment Sales Income(Losses) Sales Income(Losses)
Precision Molds $ 104,000 $ (46,000) $ 139,000 $ (6,000)
Custom Molding 238,000 (6,000) 356,000 35,000
Finished Ribbons 77,000 (36,000) 123,000 (22,000)
Discontinued Operation - - - -
Totals $ 419,000 $ (88,000) $ 618,000 $ 7,000
Reconciliation of Segment Operating Income (Losses) to Total
Company Net Loss for the Three Months Ended June 30, 1999 and
1998:
Three Months Ended Three Months Ended
June 30, 1999 June 30, 1998
Total Segment Operating Income (Losses) $ (88,000) $ 7,000
Interest Expense (18,000) (22,000)
Interest and Other Income 4,000 6,000
Net Loss $(102,000) $ (9,000)
As of the last annual report (Form 10-KSB) as of March 31, 1999,
there have been no material changes in total assets during the
three months ended June 30, 1999 and there have been no material
changes in the basis of measurement of segment accounting during
the three months ended June 30, 1999.
Unaudited
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Sales for the three months ended June 30, 1999 decreased by $199,000 to
$419,000 or 32.2% from net sales of $618,000 for the quarter ended June 30,
1998. Net Sales by segment were as follows:
Three Months
Ended June 30,
1999 1998
Precision Molds $ 104,000 $ 139,000
Custom Molding 238,000 356,000
Finished Ribbons 77,000 123,000
$ 419,000 $ 618,000
Precision Molds 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, 1999, sales decreased approximately $35,000 or
25.2% from the comparable 1998 period. This decrease in sales is primary
the result of the timing of shipments. The current sales backlog for
Athenia is exceptionally strong and Management anticipates that sales for
this segment for the 2000 fiscal year will be equal to or greater than
those for fiscal 1998.
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 approximately
$118,000 or 33.2%, for the three months ended June 30, 1999 when compared
to the similar 1998 period. This decrease is primarily the result of the
lower number of cartridge kits molded and sold to outside customers in the
ribbon industry which is experiencing a continued and permanent slowdown.
Management is making a concentrated effort to increase custom molding
contract sales to offset the decreases in cartridge kit sales. Management
has stepped up its efforts in direct selling, advertising and trade show
exhibits in order to accomplish this and remains hopeful that higher sales
levels for custom molded products can be attained.
Finished ribbon cartridge sales decreased approximately $46,000 or 37.4%,
to $77,000 for the three months ended June 30, 1999 as compared to the
three months ended June 30, 1998. This decrease in sales for this product
segment is primarily the result of a continued shrinking market for impact
printer ribbon products which continue to lose market share to the ink jet
and laser printers that do not use ribbons. Although increasing sales and
attaining true profitability is doubtful for this segment, Management is
confident that the ribbons that are produced and sold contribute positively
to covering certain fixed overhead, which costs would remain if ribbon
manufacturing were discontinued. Therefore, it is Management's intention
at this time to continue manufacturing impact printer ribbons.
Contract costs and costs of goods sold varies based upon sales volume and
product mix. Cost of sales increased to 80.4% from 68.8% for the three
months ended June 30, 1999 as compared to the similar period of 1998. This
increase is primarily the result of the overall lower sales volume but more
importantly a less favorable product mix, namely, the lower sales of custom
molding which generally carried the highest gross margin, as compared to
the total sales volume. Management intends to continue its efforts to
increase sales, particularly in custom molding, and to control expenses so
as to improve the overall gross margin.
Selling, general and administrative expenses decreased approximately
$15,000 to $170,000 for the three months ended June 30, 1999 as compared to
the three months ended June 30, 1998. This decrease is primarily the
result of lower commissions paid on sales and lower accounting fees
resulting from a renegotiation with our accountants and auditors.
Interest and other income decreased approximately $2,000 to $4,000 for the
three months ended June 30, 1999 when compared to the equivalent 1998
period. This decrease is primarily the result of lower interest and
dividends earned on the lower invested cash balances.
Interest expense decreased approximately $4,000 to $18,000 for the three
months ended June 30, 1999 as compared to the three months ended June 30,
1998. 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, 1999 was a loss of
($102,000) as compared to a loss of ($9,000) for the three months ended
June 30, 1998. This increase in net loss is primarily the result of the
lower sales volume in all product segments but particularly in custom
molding where the 1999 period provided a loss of ($6,000) as compared to a
profit of $35,000 during the similar 1998 period.
COST CUTTING MEASURES THAT WERE IMPLEMENTED
Management will continue its efforts to monitor the performance of all
segments with an emphasis on attempting to increase sales and improve cost
controls. A particular emphasis is being placed on increasing custom
molding sales 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 working capital of $330,000 at June 30, 1999 as compared to
working capital of $437,000 at March 31, 1999. Operations generated a cash
loss of approximately ($64,000) for the three months ended June 30, 1999.
Additionally, payments of principal on long term debt and capital leases
resulted in utilizing cash of ($27,000) netting a total decrease in cash
and cash equivalents for the three months ended June 30, 1999 of ($91,000).
The Company's cash and cash equivalent position at the end of the period
was $367,000.
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. Considering the recent
results, Management is evaluating implementing additional cost cutting
measures and salary reductions to assist in conserving cash while sales are
at this reduced level. A decision is expected to be made shortly.
Management is also evaluating the possibility of raising capital to invest
in new products on attempting to align the Company with a strategic partner
who 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 remains hopeful for an improvement in long term
operating results.
Year 2000 Issue
The term "Year 2000 ('Y2K') Issue" is a general term used to
describe the various problems that may result from the improper
processing of dates and date-sensitive calculations by computers
and other machinery as the year 2000 is approached and reached.
These problems generally arise from the fact that most of the
world's computer hardware and software have historically used only two
digits to identify the year in a date, often meaning that the computer will
fail to distinguish dates in the "2000's" from the date in the "1900's."
These problems may also arise from other sources as well, such as the use
of special codes and conventions in software that make use of the date
field. The Y2K computer software compliance issues may affect the Company
and most companies in the world.
The Company does not believe that its information technology
(IT) systems used for financial accounting record keeping and other
administrative systems, will be materially affected by the Y2K issue. The
Company further believes that various Non-IT micro-controllers utilized
in conjunction with the Company's production equipment are not date
sensitive and will not be materially affected by the Y2K issue. To
the extent that production equipment is date sensitive and is not Y2K
compliant, the Company believes that such equipment may be modified quickly
and at a minimum expense, to achieve Y2K compliance.
As of the date of this disclosure, the Company has consulted
with its chief suppliers of raw materials (primarily plastic
resins) and has received what the Company considers to be adequate
assurances as to Y2K readiness. In the event of any interruption of the
Company's raw material supplies, the Company believes that alternate
suppliers would be available. However, the Company is unable to predict
the effects upon raw material costs, as may result from reduced supply. A
catastrophic breakdown of supply availability, or a catastrophic breakdown
of other services or utilities required to operate the Company's business
would, of course, have a materially adverse effect upon the Company's
operations. Likewise, interruption of customer demand, resulting from Y2K
failures, could have a materially adverse affect upon the Company's
financial condition.
As of the date of this disclosure, the Company's expenditures relative
to Y2K compliance, have been nominal. Based upon information presently
available to the Company, Company Management believes that costs associated
with Y2K compliance, should not be material.
The failure to correct a material Y2K problem could result in an
interruption in, or failure of,certain normal business
activities or operations. Such failures could materially and
adversely affect the Company's results of operations, liquidity and
financial condition. Due to the general uncertainty inherent in the Y2K
problem, resulting in part from the uncertainty of the Y2K readiness of the
Company's customers and suppliers, the Company is unable to determine at
this time whether the consequences of any Y2K failures will have a material
impact on the Company's results of operations, liquidity or financial
condition.
FORWARD LOOKING STATEMENTS
The preceding Management's Discussion and Analysis contains
various forward-looking statements which represent the Company's
beliefs or expectations regarding future events. The words
"believes," "expects," "estimates" and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements include, without limitation, discussions as to sales
outlooks, outlooks for operating results, the estimated cost of
becoming Y2K compliant,the Company's belief that its equipment
will be Y2K compliant in a timely manner and that the readiness
of its customers and suppliers to be Y2K compliant will not have
a material impact on the Company. All forward-looking statements
involve a number of risks and uncertainties that could cause the
actual results to differ materially from the projected results,
including problems that may arise on the part of third parties
over whom the Company has little or no control. The impact of
the foregoing could, in turn, have a material adverse effect on
the Company's results of operations and financial condition.
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, 1999.
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
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 20, 1999 (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-30-1999
<CASH> 367,000
<SECURITIES> 4,000
<RECEIVABLES> 188,000
<ALLOWANCES> 23,000
<INVENTORY> 167,000
<CURRENT-ASSETS> 716,000
<PP&E> 5,938,000
<DEPRECIATION> 4,696,000
<TOTAL-ASSETS> 2,051,000
<CURRENT-LIABILITIES> 386,000
<BONDS> 726,000
<COMMON> 248,000
0
0
<OTHER-SE> 691,000
<TOTAL-LIABILITY-AND-EQUITY> 2,051,000
<SALES> 419,000
<TOTAL-REVENUES> 419,000
<CGS> 337,000
<TOTAL-COSTS> 507,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,000
<INCOME-PRETAX> (102,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (102,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (102,000)
<EPS-BASIC> (0.008)
<EPS-DILUTED> (0.008)
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