-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WBgt894Luj7/6G4YwP21RFLBoQGf7ORqW4FOofJ2s1iVogL5Fnta0JUey3ejeeaS Vw4LrsHWHnAEScgIWsUtgQ== 0000909012-01-000161.txt : 20010312 0000909012-01-000161.hdr.sgml : 20010312 ACCESSION NUMBER: 0000909012-01-000161 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERES INDUSTRIES INC CENTRAL INDEX KEY: 0000790710 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 221661772 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-14840 FILM NUMBER: 1564154 BUSINESS ADDRESS: STREET 1: 1785 SWARTHMORE AVE CITY: LAKEWOOD STATE: NJ ZIP: 08701 BUSINESS PHONE: 9083675700 MAIL ADDRESS: STREET 1: 1785 SWARTHMORE AVE CITY: LAKEWOOD STATE: NJ ZIP: 08701 10QSB/A 1 0001.txt AMENDED QUARTERLY REPORT 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 9 month period ended December 31, 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_ No ___ (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 - February 15, 2001 BERES INDUSTRIES, INC. FORM 10-QSB DECEMBER 31, 2000 PAGE Part I: Financial Information Item 1: Financial Statements: Balance Sheets as of December 31, 2000 and March 31, 2000 F-2 Statements of Operations For the Three Months Ended December 31, 2000 and 1999 F-3 Statements of Operations For the Nine Months Ended December 31, 2000 and 1999 F-4 Statement of Changes in Stockholders' Equity For the Nine Months Ended December 31, 2000 F-5 Statements of Comprehensive Income (Loss) For the Three Months Ended December 31, 2000 and 1999 F-6 Statements of Comprehensive Income (Loss) For the Nine Months Ended December 31, 2000 and 1999 F-7 Statements of Cash Flows For the Nine Months Ended December 31, 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
BERES INDUSTRIES, INC. BALANCE SHEETS ASSETS 12/31/00 3/31/00 ------ -------- ------- Current Assets: Cash and cash equivalents $ 200,000 $ 259,000 Marketable securities -- 4,000 Accounts receivable, less allowance for doubtful accounts of $25,000 179,000 265,000 Inventories: Raw materials 30,000 48,000 Work-in-process 23,000 43,000 Finished goods 37,000 63,000 Prepaid expenses and other current assets -- 12,000 ----------- ----------- Total Current Assets 469,000 694,000 Property, Plant and Equipment - Net 1,119,000 1,176,000 Other Assets: Deposits on equipment 592,000 -- Debt issuance costs - net 97,000 -- Other assets 36,000 36,000 ----------- ----------- Total Other Assets 725,000 36,000 TOTAL ASSETS $ 2,313,000 $ 1,906,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt $ 1,518,000 $ 83,000 Current maturities of capital lease obligations -- 23,000 Accounts payable and accrued expenses 209,000 233,000 Customer deposits -- 131,000 ----------- ----------- Total Current Liabilities 1,727,000 470,000 Long-Term Debt, Less Current Maturities -- 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 12/31/00 Outstanding - 18,073,000 shares at 12/31/00 373,000 248,000 Capital in excess of par value 3,481,000 3,445,000 Accumulated other comprehensive income (loss) -- 4,000 Accumulated deficit (3,121,000) (2,741,000) ----------- ----------- 733,000 956,000 Treasury Stock - 589,000 shares (147,000) Common stock receivable -- (170,000) ----------- ----------- Total Stockholders' Equity 586,000 786,000 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS'EQUITY $ 2,313,000 $ 1,906,000 =========== ===========
Unaudited - See accompanying notes to financial statements. F-2
BERES INDUSTRIES, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 Net Sales $ 426,000 $ 524,000 Costs and Expenses: Cost of goods sold 275,000 357,000 Selling, general and administrative expenses 217,000 162,000 Consultant Compensation (101,000) -- ------------ ------------ Total Costs and Expenses 391,000 519,000 ------------ ------------ Operating Income 35,000 5,000 Other Income (Expense): Interest and other income 2,000 3,000 Interest expense (34,000) (18,000) ------------ ------------ Total Other Income (Expense)-Net (32,000) (15,000) ------------ ------------ Income (Loss) From Operations $ 3,000 $ (10,000) ============ ============ Net Income (Loss) Per Common Share - Basic and Diluted -- (.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
BERES INDUSTRIES, INC. STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 ---- ---- Net Sales $ 1,467,000 $ 1,370,000 Costs and Expenses: Cost of goods sold 1,038,000 1,008,000 Selling, general and administrative expenses 597,000 486,000 Consultant Compensation 105,000 -- ------------ ------------ Total Costs and Expenses 1,740,000 1,494,000 Operating Loss (273,000) (124,000) Other Income (Expense): Interest and other income 9,000 10,000 Interest expense (116,000) (55,000) ------------ ------------ Total Other Income (Expense)-Net (107,000) (45,000) ------------ ------------ Loss From Operations $ (380,000) $ (169,000) ============ ============ 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
BERES INDUSTRIES, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 ACCUMULATED CAPITAL IN OTHER COMMON STOCK EXCESS OF COMPREHENSIVE ACCUMULATED COMMON STOCK TREASURY STOCK SHARES PAR VALUE PAR VALUE INCOME DEFICIT RECEIVABLE SHARES AMOUNT ------ --------- ---------- -------------- ----------- ------------- -------- --------- Balance, March 31, 2000 12,412,000 $ 248,000 $ 3,445,000 $ 4,000 $(2,741,000) $ (170,000) -- $ -- Nine Months Ended December 31,2000 - Net Loss -- -- -- -- (380,000) -- -- -- Acquisition of Treasury Stock -- -- -- -- -- 170,000 589,000 147,000 Issuance of Common Stock 6,250,000 125,000 36,000 -- -- -- -- -- Other Comprehensive Income -- -- -- (4,000) -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Balance, December 31,2000 18,662,000 $ 373,000 $ 3,481,000 $ -- $(3,121,000) $ -- 589,000 $ 147,000 =========== =========== =========== =========== =========== =========== =========== ===========
Unaudited - See accompanying notes to financial statements. F-5
BERES INDUSTRIES, INC. STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 ---- ---- Net Income (loss) $ 3,000 $(10,000) Other Comprehensive Income (Loss): Unrealized loss on available for sale securities arising during period -- 2,000 -------- -------- Comprehensive Income (Loss) $ 3,000 $ (8,000) ======== ========
Unaudited - See accompanying notes to financial statements. F-6
BERES INDUSTRIES, INC. STATEMENTS OF COMPREHENSIVE INCOME (LOSS) FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 ---- ---- Net loss $(380,000) $(169,000) Other Comprehensive Income (Loss): Unrealized loss on available for sale securities arising during period (4,000) 3,000 --------- --------- Comprehensive Loss $(384,000) $(166,000) ========= =========
Unaudited - See accompanying notes to financial statements. F-7
BERES INDUSTRIES, INC. STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999 2000 1999 ---- ---- Net loss $(380,000) $(169,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 72,000 66,000 Noncash compensation expense 105,000 -- Noncash interest expense on treasury stock 23,000 -- Changes in operating assets and liabilities: Accounts receivable - trade 86,000 10,000 Inventories 64,000 (102,000) Prepaid expenses & other current assets 12,000 9,000 Accounts payable and accrued expenses (24,000) (23,000) Customer deposits (131,000) 116,000 --------- --------- Net cash used in operating activities (173,000) (93,000) Cash Flows Used In Investing Activities: Deposits on machinery and equipment (592,000) -- Cash Flows Used In Financing Activities: Principal payments on long-term debt (65,000) (59,000) Principal payments on capital lease obligations (23,000) (24,000) Proceeds from long-term debt, net 794,000 -- --------- --------- Net cash provided by (used in) financing activities 706,000 (83,000) --------- --------- Net Decrease In Cash And Cash Equivalents (59,000) (176,000) Cash And Cash Equivalents, Beginning Of Period 259,000 458,000 --------- --------- Cash And Cash Equivalents, End Of Period $ 200,000 $ 282,000 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 49,000 $ 55,000 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 154,000 --
See accompanying notes to financial statements. F-8 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 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 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 December 31, 2000 is summarized as follows: Mortgage payable to bank, interest at 8.6%, due November 2006. The loan is secured by a first mortgage Lien on the building and improvements and all fixtures, machinery and systems servicing the building therein. $ 668,000 Convertible subordinated notes, interest at 9% payable semi-annually on June 30 and December 31, due December 2004, which are secured by a second mortgage on the Company's building and improvements. 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 1,518,000 Less: Current maturities 1,518,000 ---------- Long-Term Debt, Less Current Maturities $ -- ========== F-9 BERES INDUSTRIES, INC. NOTES TO FINANCIAL STATEMENTS NOTE 2 - LONG-TERM DEBT(CONTINUED): The Company is subject to a number of covenants under these debt agreements. One of the covenants associated with the Convertible Subordinated Notes requires a reverse stock split by December 31, 2000. Due to a technical default this did not occur, therefore, the debt is classified as current. The Company is also not in compliance with certain requirements of the first mortgage lien, thereby also resulting in the classification of this debt as current. 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 $0 for the three months ended December 31, 2000 as compared to $2,000 for the three months ended December 31, 1999 and were $9,000 for the nine months ended December 31, 2000 as compared to $16,000 for the nine months ended December 31, 1999. Information about the Company's segments is as follows for the three months ended December 31, 2000 and 1999 and for the nine months ended December 31, 2000 and 1999: Three Months Ended Three Months Ended December 31, 2000 December 31, 1999 OPERATING OPERATING SEGMENT SALES INCOME (LOSS) SALES INCOME (LOSS) ------- ----- ------------- ----- ------------- Precision Molds $ 98,000 $(24,000) $252,000 $ 1,000 Custom Molding 270,000 73,000 220,000 32,000 Finished Ribbons 58,000 (14,000) 52,000 (28,000) -------- -------- -------- -------- Totals $426,000 $ 35,000 $524,000 $ 5,000 ======== ======== ======== ======== Nine Months Ended Nine Months Ended December 31, 2000 December 31, 1999 OPERATING OPERATING SEGMENT SALES INCOME (LOSS) SALES INCOME (LOSS) ------- ----- ------------- ----- ------------- Precision Molds $ 484,000 $ (175,000) $ 493,000 $ (80,000) Custom Molding 809,000 96,000 693,000 49,000 Finished Ribbons 174,000 (194,000) 184,000 (93,000) ---------- ---------- ---------- ---------- Totals $1,467,000 $ (273,000) $1,370,000 $ (124,000) ========== ========== ========== ========== F-10 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 December 31, 2000 and 1999 and for the nine months ended December 31, 2000 and 1999:. THREE MONTHS ENDED THREE MONTHS ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 ------------------ ----------------- Total Segment Operating Income (Losses) $ 35,000 $ 5,000 Interest Expense (34,000) (18,000) Interest and Other Income 2,000 3,000 -------- -------- Net Income (Loss) $ 3,000 $(10,000) ======== ======== NINE MONTHS ENDED NINE MONTHS ENDED DECEMBER 31, 2000 DECEMBER 31, 1999 ----------------- ----------------- Total Segment Operating Income (Losses) $(273,000) $(124,000) Interest Expense (116,000) (55,000) Interest and Other Income 9,000 10,000 --------- --------- Net Loss $(380,000) $(169,000) ========= ========= 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 nine months ended December 31, 2000 and there have been no material changes in the basis of measurement of segment accounting during the nine months ended December 31, 2000. F-11 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 and obtaining the balance of the necessary financing commitments. Subsequent to the period end, an additional $125,000 was raised from the private placement. NOTE 5 - SUBSEQENT EVENTS: - -------------------------- On January 10, 2001, the Company auctioned all machinery and equipment related to the Custom Molding and Finished Ribbon segments in connection with the Company's plan to phase out of its existing operations other than Precision Molds and enter into the manufacturing of a proprietary product line of five gallon plastic pails for the paint, chemical and food service markets. The proceeds from the auction exceeded the net book value of the assets by approximately $200,000. F-12 Item 2: Management's Discussion and Analysis, Material Changes in Financial Condition and Results of Operations RESULTS OF OPERATIONS NET SALES for the nine months ended December 31, 2000 increased by $97,000 or 7.1 % from the respective 1999 period. Net Sales decreased $98,000 or 18.7 % to $426,000 for the three months ended December 31, 2000, as compared to the three months ended December 31, 1999. Net Sales by segment were as follows: Nine Months Three Months Ended December 31, Ended December 31, 2000 1999 2000 1999 Precision Molds $ 484,000 $ 493,000 98,000 $ 252,000 Custom Molding 809,000 693,000 270,000 220,000 Finished Ribbons 174,000 184,000 58,000 52,000 $1,467,000 $1,370,000 $ 426,000 $ 524,000 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 nine months and three months ended December 31, 2000, Precision Molds sales decreased $9,000 or 2% and $154,000 or 61.1% from the similar periods of 1999. These decreases are primarily the result of a severe decrease in backlog and orders for this product segment as evidenced by the significant decrease in the most recent quarter. It is anticipated that this trend will continue during 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, as well as the sale of custom molded contract products to plastic product manufacturers. Sales for this segment increased approximately $116,000 or 16.7%, and $50,000 or 22.7% for the nine months and three months ended December 31, 2000 when compared to the nine months and three months ended December 31, 1999. These increases are primarily the result of transition orders place by customers prior to the shutdown of this product segment for conversion to plastic pail manufacturing. 2 Finished ribbon cartridge sales decreased approximately $10,000 or 5.4% for the nine months ended December 31, 2000 as compared to the respective 1999 period. For the three months ended December 31, 2000, sales for this product segment increased $6,000 or 11.5% when compared to the three months ended December 31, 1999. The decrease is the continued trend in the market for impact ribbon cartridges which was partially offset by transition orders placed by customers when notified that this product segment was being shutdown for conversion to plastic pail manufacturing. CONTRACT COSTS AND COSTS OF GOODS SOLD vary based upon sales volume and product mix. Cost of sales was 70.8% and 64.6% for the nine months and three months ended December 31, 2000 as compared to 73.6% and 68.1% for the respective periods in 1999. The improvement in costs of sales is primarily the result of a more favorable product mix, namely the higher percentage of total sales attributed to custom molding which produced a higher gross margin than usual. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES increased approximately $111,000 to $597,000 and $55,000 to $217,000 for the nine months and three months ended December 31, 2000 as compared to the respective 1999 periods. These increases are primarily the result of increased costs regarding the transition to plastic pail manufacturing, which transition is now under way. CONSULTANT COMPENSATION decreased $101,000 during the three months ended December 31, 2000 to a total of $105,000 for the nine months ended December 31, 2000. The consultant compensation is the value placed on the shares which were issued to certain individual members of Beres Acquisition Partners (BAP) for services rendered as specified in the Stock Purchase Agreement between the Company and BAP. The decrease resulted from a recalculation of the share value as of the date of authorization for the share issuance. INTEREST AND OTHER INCOME decreased approximately $1,000 for both the nine months and three months ended December 31, 2000 from the similar 1999 periods. The decrease in interest is primarily the result of lower interest earned on lower cash balances invested. INTEREST EXPENSE increased approximately $61,000 and $16,000 for the nine months and three months ended December 31, 2000 as compared to December 31, 1999. These increases are primarily the result of the additional debt incurred as a result of the transition to plastic pail manufacturing. NET INCOME (LOSS) for the nine months ended December 31, 2000 was ($380,000) as compared to ($169,000) for the similar period of 1999. This increase is primarily the result of the consultant compensation discussed above as well as uncapitalized costs resulting from the transition to plastic pail manufacturing. For the three months ended December 31, 2000, the Company had net income of $3,000 as compared to a net loss of ($10,000) for the comparable period in 1999. This improvement resulted from the adjustment to consultant compensation discussed above. 3 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 of 9% convertible subordinated promissory notes (the "Notes"), 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 31, 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 and funding 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. Subsequent to the period end, an additional $125,000 was raised from the private placement. In anticipation of the receipt of the balance of the Company's financing requirements, the Company notified customers that manufacturing operations of existing molded product would cease on December 28, 2000. A transition to the new product line has been taking place since 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. Pursuant to the terms of the Notes issued in the private placement, interest is to accrue at a rate of nine (9%) percent per annum, payable on a semi-annual basis. The Company has not paid any interest as of December 31, 2000. The Company has not received any notice of default from the holders, which declaration of default would require fifteen days written notice to the Company. The Notes further provide that if the shareholder approval required to authorize the issuance of the additional shares necessary for conversion of the Notes is not obtained by December 31, 2000, the holders may, upon thirty days written notice to the Company, accelerate maturity of the notes. Although the Company is presently working on completion of the proxy statement for this approval, and anticipates filing the proxy statement shortly, the Company did not receive the requisite shareholder approval by December 31, 2000. The Company has not, however, received any notice of acceleration from the holders. 4 MATERIAL CHANGES IN FINANCIAL POSITION The Company had no working capital at December 31, 2000 as compared to working capital of $224,000 at March 31, 2000. At December 31, 2000, the Company had cash and cash equivalents of approximately $200,000 as compared to $259,000 at March 31, 2000. During the nine months ended December 31, 2000, the Company received net proceeds from the private placement of the Notes in the amount 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 approximately $60,000 resulting in a net decrease in cash of approximately $59,000. As of December 31, 2000, the Company's current liabilities ($1,727,000) exceeded the Company's current assets ($469,000) by $1,258,000, for a current ratio of 1:3.7. 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 as required to be reported on Form 10QSB from as previously reported in the Company's 10-KSB for the fiscal year ended March 31, 2000. Item 2 Change in Securities: None 5 Item 3 Default Upon Senior Securities: The Company is not in compliance with its senior mortgage financing, which is secured by the Company's building, improvements and real estate. The non-compliance follows the Company's non-payment of interest on its junior indebtedness and the Company's technical default in failing to complete a reverse split of its outstanding shares by December 31, 2000. See Part I, Item 2, above, "Management's Discussion and Analysis." Item 4 Submission of Matters to a Vote of Security Holders: None Item 5 Other Information: On February 13, 2001 Joseph Delikat resigned as a Director of the Company. 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. (Registrant) Date: By:/s/ JOEL SCHONFELD ------------------------- Joel Schonfeld, Chairman of the Board -----END PRIVACY-ENHANCED MESSAGE-----