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, 2004 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 31,2004 and December 31, 2003 Class 2004 2003 ----- ---- ---- Common Stock $.01 Par Value 11,001,038 Shares 11,001,038 Shares FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS MARCH 31, DECEMBER 31, 2004 2003 ASSETS ---- ---- ------ (unaudited) * Current Assets: Cash $ 101,145 $ 89,410 Accounts Receivable 152,706 152,620 Inventory - 2,691 ---------- ---------- Total Current Assets 253,851 244,721 ---------- ---------- Property and Equipment: Cobalt 2,675,756 2,675,756 Furniture and Equipment 1,728,817 1,728,817 Building 2,883,675 2,883,675 Less Accumulated Depreciation (3,826,354) (3,728,103) ---------- ---------- Total Property & Equipment 3,461,894 3,560,145 Land 171,654 171,654 Other Assets: Deposits 5,000 5,000 ---------- ---------- Total Assets $ 3,892,399 $ 3,981,520 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ----------------------------------- Current Liabilities: Accounts Payable and Accrued Expense $ 57,654 $ 34,199 Financing Agreement and Debenture Payable 945,883 934,157 ---------- ---------- Total Current Liabilities 1,003,537 968,356 ---------- ---------- Stockholders' Equity: Common Stock $.01 par value, 20,000,000 shares authorized, 11,001,038 shares outstanding on March 31, 2004 and December 31, 2003 110,010 110,010 Paid in Capital 11,975,577 11,975,577 Deficit (9,140,725) (9,016,423) ---------- ---------- 2,944,862 3,069,164 Less-Common Stock Issued For Receivables (56,000) (56,000) ---------- ---------- Total Stockholders' Equity 2,888,862 3,013,164 ---------- ---------- Total Liabilities and Stockholders' Equity $ 3,892,399 $ 3,981,520 ========== ========== * Condensed from audited financial statements FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31,2004 AND 2003 2004 2003 ---- ---- (unaudited) (unaudited) Net Sales $ 240,315 $ 412,467 Processing Costs: 68,634 130,014 --------- -------- Income from Operations 171,681 282,453 General Administrative and Development 186,007 155,167 Depreciation 98,250 76,099 Interest Expense 11,726 11,700 --------- -------- Income/(Loss) Before Income Taxes (124,302) 39,487 Income Taxes Provision for Income Taxes - 11,846 Tax Benefit from Net Operating Loss - (11,846) --------- -------- Net Income/(Loss) ($124,302) $39,487 ========= ======== Net Income/(Loss) per Common Share ($0.011) $0.004 ========= ======== 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, 2004 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, 2004 March 31, 2003 -------------- -------------- (unaudited) (unaudited) Cash Flows from Operations: Sales Income Received $ 240,117 $ 370,882 Interest Paid 0 - Cash Paid for Operating Expenses (228,384) (287,993) --------- --------- 11,733 82,889 Cash Flows from Investing: Property & Equipment Purchase - (847,258) ---------- ---------- - (846,258) Cash Flows from Financing Activities: Proceeds from Borrowing - 839,135 Repayment of Loans - (50,000) ---------- ---------- - 789,135 Net Increase (Decrease) in Cash 11,733 24,766 Cash at Beginning of Period 89,410 73,758 ---------- ---------- Cash at End of Period $101,143 $98,524 ========== ========== _______________________________________________________________________________ Reconciliation of Net Income to Net Cash Provided by Operations Net Income /(Loss) ($124,302) $39,487 Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation 98,250 76,099 Accrued Interest 11,726 11,700 (Increase) Decrease in Inventories 2,691 2,900 (Increase) Decrease in Receivables (86) (41,585) Increase (Decrease) in Payables and Accruals 23,454 (5,712) ---------- ---------- Net Cash Provided by Operating Activities $11,733 $82,889 ========== ========== FOOD TECHNOLOGY SERVICE, INC. STATEMENT OF STOCKHOLDERS' EQUITY 2003(unaudited) Common Stock Paid-In Capital Deficit ------------ ------------ --------------- ------- Balance, January 1, 2003 $ 110,010 $11,975,577 ($9,413,903) Net Income for Period - - 39,487 ---------- ---------- ---------- Balance, March 31, 2003 $ 110,010 $11,975,577 ($9,374,416) ========== ========== ========== ______________________________________________________________________________ 2004 (unaudited) --------------- Balance, January 1, 2004 $ 110,010 $11,975,577 ($9,016,423) Net Loss for Period - - (124,302) ---------- ---------- ---------- Balance, March 31, 2003 $ 110,010 $11,975,577 ($9,140,725) ========== ========== ========== (a) Earnings per common share, assuming no dilution, are based on the number of shares outstanding on March 31, 2004 - 11,001,038 and March 31, 2003 - 11,001,038. (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 $240,315 during the first quarter of 2004. This compares to revenues of $412,467 for the same period in 2003. This is a decrease of forty-two percent compared to the same period in 2003. Revenues declined due to discontinuation of service to a large intermittent customer. The company has some customers that require irradiation intermittently rather than incorporating irradiation into their production process. These customers make it difficult to forecast revenues. Losses for this quarter were $124,302 compared to a profit of $39,487 during the first quarter of 2003. Management attributes these losses to the decline in revenue plus an increase in general administrative and development expenses. Increased expenses were caused by higher marketing expenses, increased labor and increased depreciation. Labor costs increased as the Company hired and trained workers to meet increased workload scheduled for the second quarter. Marketing expenses were higher than in the first quarter of 2004 due to increased customer interest in ground beef irradiation. Increased depreciation reflected Cobalt purchased late in the first quarter of 2003. There was also a modest increase in insurance and security costs. Management anticipates increased revenue during the remaining quarters of 2004 based on increased demand by a large non-food customer and an increase in ground beef irradiation. The volume of ground beef being irradiated by the Company increased significantly towards the end of the first quarter due to the bankruptcy of a competitor. Operating and marketing costs are expected to continue at levels similar to those in the first quarter of 2004. Management believes that demand for irradiation of ground beef and non-food items will continue to increase during 2004. Liquidity and Capital Resources ------------------------------- As of March 31, 2004, the Company has cash on hand of $101,145 and accounts receivable of $152,706. 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, 2003. 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: May 14, 2004 FOOD TECHNOLOGY SERVICE, INC. /S/ Richard Hunter --------------------------------- Richard Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer