U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the 6 month period ended September 30, 2000.
( ) 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:
18,072,934 - December 5, 2000
BERES INDUSTRIES, INC.
FORM 10-QSB
SEPTEMBER 30, 2000
Part I: Financial Information
Item 1: Financial Statements: Page
Balance Sheets as of September 30, 2000 and
March 31, 2000 F-2
Statements of Operations
For the Three Months Ended
September 30, 2000 and 1999 F-3
Statements of Operations
For the Six Months Ended
September 30, 2000 and 1999 F-4
Statement of Changes in Stockholders' Equity
For the Three Months Ended September 30, 2000 F-5
Statements of Comprehensive Income (Loss)
For the Three Months Ended
September 30, 2000 and 1999 F-6
Statements of Comprehensive Income (Loss)
For the Six Months Ended
September 30, 2000 and 1999 F-7
Statements of Cash Flows
For the Six Months Ended
September 30, 2000 and 1999 F-8
Notes to Financial Statements F-9 to F-12
Item 2: Management's Discussion and Analysis, Material
Changes in Financial Condition and Results of Operations
<PAGE>
BERES INDUSTRIES, INC.
BALANCE SHEETS
ASSETS 9/30/00 3/31/00
Current Assets:
Cash and cash equivalents $ 217,000 $ 259,000
Marketable securities - 4,000
Accounts receivable, less allowance for
doubtful accounts of $25,000 295,000 265,000
Inventories:
Raw materials 52,000 48,000
Work-in-process 16,000 43,000
Finished goods 74,000 63,000
Prepaid expenses and other current assets 12,000 12,000
Total Current Assets 666,000 694,000
Property, Plant and Equipment - Net 1,139,000 1,176,000
Other Assets:
Deposits on equipment 538,000 -
Debt issuance costs - net 108,000 -
Other assets 38,000 36,000
Total Other Assets 681,000 36,000
TOTAL ASSETS $2,486,000 $1,906,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 84,000 $ 83,000
Current maturities of capital lease
obligations 6,000 23,000
Accounts payable and accrued expenses 237,000 233,000
Customer deposits 14,000 131,000
Total Current Liabilities 341,000 470,000
Long-Term Debt, Less Current Maturities $1,456,000 $ 650,000
Commitments and Contingencies - -
Stockholders' Equity:
Common stock, par value $.02 per share:
Authorized - 21,000,000 shares
Issued - 18,662,000 shares at 9/30/00
Outstanding - 18,073,000 shares at 9/30/00 373,000 248,000
Capital in excess of par value 3,587,000 3,445,000
Accumulated other comprehensive income (loss) - 4,000
Accumulated deficit (3,124,000) (2,741,000)
836,000 956,000
Treasury Stock - 589,000 shares (147,000) -
Common stock receivable - (170,000)
Total Stockholders' Equity 689,000 786,000
TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $2,486,000 $ 1,906,000
Unaudited - See accompanying notes to financial statements
F-2
<PAGE>
BERES INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
Net Sales $ 599,000 $ 427,000
Costs and Expenses:
Cost of goods sold 418,000 314,000
Selling, general and administrative
expenses 192,000 154,000
Consultant Compensation - -
Total Costs and Expenses 610,000 468,000
Operating Loss (11,000) (41,000)
Other Income (Expense):
Interest and other income 4,000 3,000
Interest expense (34,000) (19,000)
Total Other Income (Expense)-Net (30,000) (16,000)
Loss From Operations $ (41,000) $ (57,000)
Net Loss Per Common Share -
Basic and Diluted $ (.01) $ (.01)
Shares Used in Per Share Calculation:
Basic and Diluted 16,186,000 12,412,000
Unaudited - See accompanying notes to financial statements
F-3
<PAGE>
BERES INDUSTRIES, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
Net Sales $ 1,041,000 $ 846,000
Costs and Expenses:
Cost of goods sold 763,000 651,000
Selling, general and administrative
expenses 380,000 324,000
Consultant Compensation 206,000 -
Total Costs and Expenses 1,349,000 975,000
Operating Loss (308,000) (129,000)
Other Income (Expense):
Interest and other income 7,000 7,000
Interest expense (82,000) (37,000)
Total Other Income (Expense)-Net (75,000) (30,000)
Loss From Operations $ (383,000) $ (159,000)
Net Loss Per Common Share -
Basic and Diluted $ (.02) $ (.01)
Shares Used in Per Share Calculation:
Basic and Diluted 16,186,000 12,412,000
Unaudited - See accompanying notes to financial statements
F-4
<PAGE>
BERES INDUSTRIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
<TABLE>
Accumulated
Capital in Other
Common Stock Excess of Comprehensive Accumulated Common Stock Treasury Stock
Shares Par Value Par Value Income Deficit Receivable Shares Amount
<S> <C> <C> <C> <C> <C> <C>
Balance,
March 31, 2000 12,412,000 248,000 3,445,000 4,000 (2,741,000) (170,000) - -
Six Months Ended
September 30,2000
Net Loss - - - - (383,000) - - -
Acquisition of
Treasury Stock - - - - - 170,000 589,000 (147,000)
Issuance of
Common Stock 6,250,000 125,000 142,000 - - - - -
Other
Comprehensive
Income - - - (4,000) - - - -
Balance,
September 30,
2000 18,662,000 $ 373,000 $3,587,000 $ - $(3,124,000) $ - 589,000 $(147,000)
</TABLE>
Unaudited - See accompanying notes to financial statements
F-5
<PAGE>
BERES INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
Net loss $ (41,000) $ (57,000)
Other Comprehensive Income (Loss):
Unrealized loss on available for
sale securities arising during period - -
Comprehensive Loss $ (41,000) $ (57,000)
Unaudited - See accompanying notes to financial statements
F-6
<PAGE>
BERES INDUSTRIES, INC.
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
Net loss $ (383,000) $ (159,000)
Other Comprehensive Income (Loss):
Unrealized loss on available for
sale securities arising during period (4,000) 1,000
Comprehensive Loss $ (387,000) $ (158,000)
Unaudited - See accompanying notes to financial statements
F-7
<PAGE>
BERES INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
2000 1999
Net loss $ (383,000) $ (159,000)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 45,000 44,000
Noncash compensation expense 206,000 -
Noncash interest expense on treasury stock 23,000 -
Changes in operating assets and liabilities:
Accounts receivable - trade (30,000) (39,000)
Inventories 12,000 (119,000)
Prepaid expenses & other current assets - 8,000
Accounts payable and accrued expenses 4,000 (3,000)
Customer deposits (117,000) 199,000
Net cash used in operating activities (240,000) (69,000)
Cash Flows Used In investing Activities:
Deposits on machinery and equipment (537,000) -
Cash Flows Used In Financing Activities:
Principal payments on long-term debt (43,000) (40,000)
Principal payments on capital lease
obligations (17,000) (14,000)
Proceeds from long-term debt, net 795,000 -
Net cash provided by (used in) financing
activities 735,000 (54,000)
Net Decrease In Cash And Cash Equivalents (42,000) (123,000)
Cash And Cash Equivalents, Beginning Of Period 259,000 458,000
Cash And Cash Equivalents, End Of Period $ 217,000 $ 335,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 34,000 $ 37,000
Income taxes $ 200 $ 250
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Conversion of note receivable into
treasury stock 170,000 -
Stock issued as compensation 267,000 -
Unaudited - See accompanying notes to financial statements
F-8
<PAGE>
BERES INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Basis of Presentation:
The March 31, 2000 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 pre-
pared in accordance with generally accepted accounting principles
have been omitted in accordance with the published rules and regu-
lations of the Securities and Exchange Commission. However, the
footnotes below were added to disclose additional information for 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, 2000.
Note 2 - Long-Term Debt:
Long-term debt at September 30, 2000 is summarized as follows:
Mortgage payable to bank, interest at 8.6%, due
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. $ 688,000
Note payable, interest at 6.8%, due January 2001.
The loan is secured by an automobile. 2,000
Convertible subordinated notes, interest at 9%
payable semi-annually on September 30 and December 31,
due December 2004. The notes are convertible
anytime at the rate of one share of common stock
for each $.50 principal amount of the note. 850,000
Total long-term debt 1,540,000
Less: Current maturities 84,000
Long-Term Debt, Less Current Maturities $1,456,000
F-9
<PAGE>
BERES INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 2 - Long-Term Debt(Continued):
Future maturities of long-term debt are as follows:
Period Ending September 30
2001 $ 84,000
2002 89,000
2003 99,000
2004 108,000
2005 968,000
2006 and subsequent 192,000
Total $1,540,000
Note 3 - 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.
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 $5,000 for the three months ended September
30, 2000 as compared to $4,000 for the three months ended September
30, 1999 and were $9,000 for the six months ended September 30, 2000
as compared to $13,000 for the six months ended September 30, 1999.
Information about the Company's segments is as follows for the three
months ended September 30, 2000 and 1999 and for the six months
ended September 30, 2000 and 1999:
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
Operating Operating
Segment Sales Income (Loss) Sales Income (Loss)
Precision Molds $ 252,000 $ (3,000) $ 137,000 $ (33,000)
Custom Molding 289,000 (55,000) 236,000 (21,000)
Finished Ribbons 58,000 (63,000) 54,000 (29,000)
Totals $ 599,000 $ (11,000) $ 427,000 $ (41,000)
Six Months Ended Six Months Ended
September 30, 2000 September 30, 1999
Operating Operating
Segment Sales Income (Loss) Sales Income (Loss)
Precision Molds $ 386,000 $ (152,000) $ 241,000 $ (77,000)
Custom Molding 539,000 23,000 474,000 14,000
Finished Ribbons 116,000 (179,000) 131,000 (66,000)
Totals $1,041,000 $ (308,000) $ 846,000 $ (129,000)
F-10
<PAGE>
BERES INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 3 - Interim Segment Information Reporting (Continued):
Reconciliation of segment operating income (loss) to total company
net loss for the three months ended September 30, 2000 and 1999 and
for the six months ended September 30, 2000 and 1999:
Three Months Ended Three Months Ended
September 30, 2000 September 30, 1999
Total Segment Operating Income (Losses) $ (11,000) $ (41,000)
Interest Expense (34,000) (19,000)
Interest and Other Income 4,000 3,000
Net Loss $ (41,000) $ (57,000)
Six Months Ended Six Months Ended
September 30, 2000 September 30, 1999
Total Segment Operating Income (Losses) $ (308,000) $ (129,000)
Interest Expense (82,000) (37,000)
Interest and Other Income 7,000 7,000
Net Loss $ (383,000) $ (159,000)
As of the last annual report (Form 10-KSB) as of March 31, 2000,
there have been no material changes in total assets during the six
months ended September 30, 2000 and there have been no material
changes in the basis of measurement of segment accounting during the
six months ended September 30, 2000.
F-11
<PAGE>
BERES INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 4 - Issuance of Common Stock and Options:
Pursuant to an announced stock purchase agreement with
a New York Investor Group (Beres Acquisition Partnership
or BAP) signed last October, $850,000 of its planned
$1,000,000 private placement of 9% Convertible
Subordinated Promissory Notes had been sold by BAP,
resulting in a change of control. Meanwhile BAP will
seek to complete the $150,000 balance of the offering.
As set forth in the stock purchase agreement, the
partners of BAP have been issued six million shares of
restricted Beres Industries' common stock. An
additional 250,000 shares were issued to outside
consultants for services related to this transaction.
Consideration paid for the shares consisted of services
in connection with the financing and technical
assistance relative to the expansion of the Company's
product line and the origination of new product sales.
Based upon completion of the minimum amount of the
Private Placement, the Registrant has placed deposits
for equipment and molds and is obtaining equipment
financing. However, the Registrant's ability to
successfully commence manufacture of its new product
line, will be dependent upon BAP raising the balance of
the Private Placement.
F-12
<PAGE>
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Net Sales for the six months and three months ended September 30, 2000
increased by $195,000 or 23% and $172,000 or 40.3% from the respective 1999
periods. Net Sales by segment were as follows:
Six Months Three Months
Ended September 30, Ended June 30,
2000 1999 2000 1999
Precision Molds $ 386,000 $ 241,000 $ 252,000 $ 137,000
Custom Molding 539,000 474,000 281,000 236,000
Finished Ribbons 116,000 131,000 58,000 54,000
$1,041,000 $ 846,000 $ 599,000 $ 427,000
Precision Mold's sales vary from quarter to quarter depending on the
production time required to build various tools and the amount of backlog.
During the six months and three months ended September 30, 2000, sales for
this product segment increased $145,000 or 60.2% and $115,000 or 83.9% from
the respective 1999 periods. These increases are primarily the result of a
strong backlog. The current backlog for precision molds has weakened
considerably resulting in Management's expectation that sales for the segment
will be at reduced levels in the immediate future.
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 increased approximately
$65,000 or 13.7%, and $53,000 or 22.5% for the six months and three months
ended September 30, 2000 when compared to their respective 1999 periods.
These increases are primarily the result an increase in ribbon cartridge kits
molded for customers in the ribbon industry during the current year. Despite
these increases, the product segment will be discontinued during the current
quarter as the Company begins to implement its plan to begin the manufacture
of a new product line (See Private Placement and Proposed New Product Line).
Finished ribbon cartridge sales decreased approximately $15,000 or 11.5%, for
the six months ended September 30, 2000 as compared to the six months ended
September 30, 1999. For the three months ended September 30, 2000, finished
ribbon cartridge sales increased $4,000 or 7.4% when compared to the similar
1999 period. The overall decrease in sales is primarily the result of a
continued shrinking market for impact printer ribbon cartridges. The short
term increased is the result of the timing of shipments. As mentioned, in
the Custom Molding segment above, this product segment will also be
discontinued during the current quarter as the Company begins to implement
its plan to begin the manufacture of a new product line. (See Private
Placement and Proposed New Product Line).
Contract costs and costs of goods sold varies based upon sales volume and
product mix. Cost of sales decreased to 73.3% from 77.0% and to 69.8% from
73.% for the six months and three months ended September 30, 2000 as compared
to the six months and three months ended September 30,1999. These decreases
are primarily the result of the increased volume in the 2000 periods.
Selling, general and administrative expenses increased approximately $56,000
amd $38,000 for the six months and three months periods ended September 30,
2000 as compared to the similar 1999 periods. These increases are primarily
the result of certain salaries during the current year as well as increases
in legal and accounting fees primarily resulting from costs associated with
the ongoing private placement.
Consultant compensation during the six months ended September 30, 2000 was
$206,000 as compared to $0.00 for the six months ended September 30, 1999.
This compensation is the value of stock issued to Beres Acquisition Partners
for services rendered pursuant to the ongoing private placement and
assistance in entering the manufacture of a new product line as discussed in
past filings.
Interest and other income remained at $7,000 for the six months ended
September 30, 2000 and September 30, 1999. For the three months ended
September 30, 2000, interest and other income increased $1,000 from the
similar 1999 period. This increase is the result of higher interest earned
during the most recent quarter on higher invested cash balance.
Interest expense increased approximately $45,000 amd $15,000 for the six
months and three months ended September 30, 2000 as compared to the similar
1999 periods. These increases are primarily the result of interest due on
the Notes Payable relative to the private placement.
Net Income (loss) for the six months ended September 30, 2000 increased to
($383,000) from a net loss of($159,000) for the comparable 1999 period.
Included in the 2000 number is a one time non cash consultant compensation
expense of $206,000 as explained above. For the three months ended September
30, 2000, the Company posted a net loss was of($41,000) as compared to a net
loss of ($57,000) for the three months ended September 30, 1999. The
decrease in loss for both periods, exclusive of the consultant compensation,
is primarily attributable to the increse in sales which resulted in a higher
gross margin.
PRIVATE PLACEMENT AND PROPOSED NEW PRODUCT LINE
As disclosed in previous filings, on October 8, 1999, the Company entered
into a Stock Purchase Agreement with Beres Acquisition Partnership, a New
York General Partnership (BAP). It is the Company's and BAP's intention to
raise $1,000,000 through a private placement, secure additional debt
financing and enter into the manufacturing of a proprietary product line of
five gallon plastic pails for the paint, chemical and food service markets,
and to phase out of its existing operations other than precision molds and
certain limited custom injection molding contracts.
As of December 1, 2000, $850,000 of the private placement has been closed on.
The Company has received commitments for most of the additional debt
financing and has placed deposits on most of the equipment and molds required
for manufacturing. However, the Company's ability to successfully commence
manufacture of its new product line, is dependent upon BAP raising the
balance of the private placement and receiving the balance of commitments for
the debt financing necessary to complete the acquisition of the new
manufacturing equipment. The outlook for BAP's ability to raise the balance
of the private placement and receive the balance of commitments for
financing, is not clear at this time.
In anticipation of the receipt of the balance of the Company's financing
requuirements, the Board of Directors instructed the Company to notify
customers that manufacturing operations of existing molded product would
cease on December 28, 2000. A transition to the new product line is
scheduled to take place during January 2001. Any failure to raise the
balance of the funds and financing required to implement the new
manufacturing program will have a direct affect on the Company's ability to
continue as a going concern.
<PAGE>
MATERIAL CHANGES IN FINANCIAL POSITION
The Company had working capital of approximately $325,000 at September 30,
2000 as compared to working capital of $224,000 at March 31, 2000. At
September 30, 2000, the Company had cash and cash equivalents of
approximately $217,000 as compared to $259,000 at March 31, 2000. Operations
used cash of approximately $240,000., During the six months ended September
30, 2000, the Company received net proceeds from the private placement of
approximately $795,000, placed deposits on machinery and equipment of
approximately $537,000 and paid principal on long-term debt and capital
leases of $60,000 resulting in a net decrease in cash of approximately
$42,000. The Company's current ratio at September 30, 2000 was 1.95 and the
Company is within terms on all its obligations except for the convertible
notes relating to the private placement.
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 and outlooks for operating results. 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, 2000.
Item 2 Change in Securities:
None
<PAGE>
Item 3 Default Upon Senior Securities:
None
Item 4 Submission of Matters to a Vote of Security Holders:
None
Item 5 Other Information:
None
Item 6 Exhibits and Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BERES INDUSTRIES, INC.
Date: December 7, 2000 (Registrant)
______________________________
Charles Beres, Jr., President
______________________________
Joel Schonfeld, Chairman
of the Board
