10QSB 1 form10q.txt FORM 10QSB FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Three Months Ended March 31, 2003 Commission File Number 0-19047 -------------- INCORPORATED IN FLORIDA IRS IDENTIFICATION NO. 59-2618503 FOOD TECHNOLOGY SERVICE, INC. 502 Prairie Mine Road, Mulberry, FL 33860 (863) 425-0039 "Indicate by check mark whether the registrant has filed all annual, quarterly and other reports required to be filed with the Commission within the past 90 days and in addition has filed the most recent annual report required to be filed. Yes X . No ." -- -- "Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date." Outstanding as of March 31,2003 and December 31, 2002 Class 2003 2002 ----- ---- ---- Common Stock $.01 Par Value 11,001,038 Shares 11,001,038 Shares FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS MARCH 31, DECEMBER 31, 2003 2002 ASSETS ---- ---- ------ (unaudited) * Current Assets: Cash $ 98,524 $ 73,758 Accounts Receivable 245,605 204,020 Inventory 15,860 18,761 ---------- ---------- Total Current Assets 359,989 296,539 ---------- ---------- Property and Equipment: Cobalt 2,665,408 1,825,000 Furniture and Equipment 1,725,267 1,718,417 Building 2,883,675 2,883,675 Less Accumulated Depreciation (3,423,755) (3,347,656) ---------- ---------- Total Property & Equipment 3,850,595 3,079,436 Land 171,654 171,654 Other Assets: Deposits 5,000 5,000 ---------- ---------- Total Assets $ 4,387,238 $ 3,552,629 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ----------------------------------- Current Liabilities: Accounts Payable and Accrued Expense $ 71,648 $ 77,361 Financing Agreement and Debenture Payable 1,688,419 887,584 ---------- ---------- Total Current Liabilities 1,760,067 964,945 ---------- ---------- Stockholders' Equity: Common Stock $.01 par value, 20,000,000 shares authorized, 11,001,038 shares outstanding on March 31, 2003 and December 31, 2002 110,010 110,010 Paid in Capital 11,975,577 11,975,577 Deficit (9,374,416) (9,413,903) ---------- ---------- 2,711,171 2,671,684 Less-Common Stock Issued For Receivables (84,000) (84,000) ---------- ---------- Total Stockholders' Equity 2,627,171 2,587,684 ---------- ---------- Total Liabilities and Stockholders' Equity $ 4,387,238 $ 3,552,629 ========== ========== * Condensed from audited financial statements FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31,2003 AND 2002 2003 2002 ---- ---- (unaudited) (unaudited) Net Sales $ 412,467 $ 409,106 Processing Costs: 130,014 123,589 --------- -------- Income from Operations 282,453 285,517 General Administrative and Development 155,167 140,072 Depreciation 76,099 78,384 Interest Expense 11,700 19,757 --------- -------- Income Before Income Taxes 39,487 47,304 Income Taxes Provision for Income Taxes 11,846 14,191 Tax Benefit from Net Operating Loss (11,846) (14,191) --------- -------- Net Income $39,487 $47,304 ========= ======== Net Income per Common Share $0.004 $0.005 ========= ======== NOTE 1: BASIS OF PRESENTATION The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normally recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim period. The results of operations for the three month periods ended March 31, 2003 are not necessarily indicative of the results to be expected for the full year. FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF CASH FLOWS Three Months Three Months Ended Ended March 31, 2003 March 31, 2002 -------------- -------------- (unaudited) (unaudited) Cash Flows from Operations: Sales Income Received $ 370,882 $ 326,566 Interest Paid 0 ( 3,552) Cash Paid for Operating Expenses (287,993) (137,747) --------- --------- 82,889 185,267 Cash Flows from Investing: Property & Equipment Purchase (847,258) 0 ---------- ---------- (847,258) 0 Cash Flows from Financing Activities: Collection of Subscriptions Receivable 0 93,460 Proceeds from Borrowing 839,135 0 Repayment of Loans (50,000) (250,000) ---------- ---------- 789,135 (156,540) Net Increase (Decrease) in Cash 24,765 28,727 Cash at Beginning of Period 73,758 104,946 ---------- ---------- Cash at End of Period $98,524 $133,673 ========== ========== _______________________________________________________________________________ Reconciliation of Net Income to Net Cash Provided by Operations Net Income $39,487 $47,304 Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation 76,099 78,384 Accrued Interest 11,700 16,206 (Increase) Decrease in Inventories 2,900 2,421 (Increase) Decrease in Receivables (41,585) 82,539 (Increase) Decrease in Prepaids 0 (18,750) Increase (Decrease) in Payables and Accruals (5,712) (22,837) ---------- ---------- Net Cash Provided by Operating Activities $82,889 $185,267 ========== ========== FOOD TECHNOLOGY SERVICE, INC. STATEMENT OF STOCKHOLDERS' EQUITY 2002(unaudited) Common Stock Paid-In Capital Deficit ------------ ------------ --------------- ------- Balance, January 1, 2002 $ 104,968 $11,680,619 ($9,152,129) Net Income for Period 0 0 47,304 ---------- ---------- ---------- Balance, March 31, 2002 $ 104,968 $11,680,619 ( 9,104,825) ========== ========== ========== ______________________________________________________________________________ 2003 (unaudited) --------------- Balance, January 1, 2003 $ 110,010 $11,975,577 ($9,413,903) Net Income for Period 0 0 39,487 ---------- ---------- ---------- Balance, March 31, 2003 $ 110,010 $11,975,577 ($9,374,416) ========== ========== ========== (a) Earnings per common share, assuming no dilution, are based on the number of shares outstanding on March 31, 2003 - 11,001,038 and March 31, 2002 - 10,496,837. (b) The foregoing information is unaudited, but, in the opinion of Management, includes all adjustments, consisting of normal accruals, necessary for a fair presentation of the results for the period reported. Management's Analysis of Quarterly Income Statements Operations ---------- Food Technology Service Inc., had revenue of $412,467 during the first quarter of 2003. This compares to revenues of $409,106 for the same period in 2002. This is an increase of nearly one percent compared to the same period in 2002. Profit for this quarter was $39,487 compared to a profit of $47,304 during the first quarter of 2002. Factors which decreased profits included higher personnel costs and marketing expenses. New warehouse and operating staff were added and trained during this quarter to meet increased production anticipated for the second quarter. Marketing expenses also were higher than in the first quarter of 2002 due to increased customer interest and the support of New Generation products. There was also a modest increase in insurance and security costs. These increases were tempered by decreased interest costs due to lower interest rates and reduced debt. Management anticipates increased revenue during the remaining quarters of 2003 based on the commitment of a large customer and increasing demand for New Generation products. Increased operating and marketing costs are expected to continue at levels similar to those in the first quarter of 2003. Management believes that demand for irradiated ground beef and chicken are increasing as demonstrated by the introduction of New Generation products by Publix Supermarkets during the first quarter. Additional customers for these products are anticipated during the second and third quarters. Liquidity and Capital Resources ------------------------------- As of March 31, 2003, the Company has cash on hand of $98,524 and accounts receivable of $245,605. The special alliance that the Company has with Nordion should guarantee the Company's survival as a going entity until the food irradiation industry develops. PART II OTHER INFORMATION Item 1. Legal proceedings Reference is made to the information contained under Item 3- Legal Proceedings in the Company's Form 10KSB Report Filed for year ended December 31, 2002. Item 2-6 Not applicable 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. Date: April 21, 2003 FOOD TECHNOLOGY SERVICE, INC. /S/ Richard Hunter --------------------------------- Richard Hunter, Ph.D., President and Chief Executive Officer /S/ Dana S. Carpenter ---------------------------------- Dana S. Carpenter, Asst. Corporate Secretary Certification of Periodic Report Section 906 of The Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report of Food Technology Service, Inc. (the "Company") on Form 10-QSB for the period ending March 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Richard G. Hunter, Ph.D. as Chief Executive Officer and Chief Financial Officer, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that: 1. The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /S/ Richard Hunter ------------------ Richard G. Hunter, Ph.D. Chief Executive Officer and Chief Financial Officer April 21, 2003 CERTIFICATION I Certify that: 1. I have reviewed this Quarter Report on Form 10-QSB of Food Technology Service, Inc. for the three months ended March 31, 2003. 2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report; 3. Based on my knowledge, the Financial Statements, and other financial information included in the Annual Report fairly present in all material respects, the financial condition, results of operations and cash flows of the registrant as of and for the periods presented in this Annual Report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13A-14 and 15D-14 for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidates subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report (the "Evaluation Date") and; b) Presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls, which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this Annual Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 21, 2003 FOOD TECHNOLOGY SERVICE, INC. By: / s/ Richard G. Hunter ---------------------------- Richard G. Hunter, Ph.D. Chief Executive Officer and Chief Financial Officer