10QSB 1 form10qsb.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, 2005 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, 2005 and December 31, 2004 Class 2005 2004 ----- ---- ---- Common Stock $.01 Par Value 11,003,038 Shares 11,001,038 Shares FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS MARCH 31, DECEMBER 31, 2005 2004 ASSETS ---- ---- ------ (unaudited) * Current Assets: Cash $ 184,536 $ 231,877 Accounts Receivable 198,374 135,946 Inventory 6,820 5,557 Prepaid Expenses 37,500 - ---------- ---------- Total Current Assets 427,230 373,380 ---------- ---------- Property and Equipment: Cobalt 2,675,756 2,675,756 Furniture and Equipment 1,743,434 1,739,717 Building 2,883,675 2,883,675 Less Accumulated Depreciation (4,204,701) (4,112,815) ---------- ---------- Total Property & Equipment 3,098,164 3,186,333 Land 171,654 171,654 Other Assets: Deposits 5,000 5,000 ---------- ---------- Total Assets $ 3,702,048 $ 3,736,367 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ----------------------------------- Current Liabilities: Accounts Payable and Accrued Expense $ 48,317 $ 18,035 Financing Agreement and Debenture Payable 695,024 782,899 ---------- ---------- Total Current Liabilities 743,341 800,934 ---------- ---------- Stockholders' Equity: Common Stock $.01 par value, 20,000,000 shares authorized, 11,003,038 shares outstanding on March 31, 2005 and 11,001,038 shares outstanding on December 31, 2004 110,030 110,010 Paid in Capital 11,976,657 11,975,577 Deficit (9,099,980) (9,122,154) ---------- ---------- 2,986,707 2,963,433 Less-Common Stock Issued For Receivables (28,000) (28,000) ---------- ---------- Total Stockholders' Equity 2,958,707 2,935,433 ---------- ---------- Total Liabilities and Stockholders' Equity $ 3,702,048 $ 3,736,367 ========== ========== * Condensed from audited financial statements FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31,2005 AND 2004 2005 2004 ---- ---- (unaudited) (unaudited) Net Sales $ 392,877 $ 240,315 Processing Costs: 88,878 68,634 --------- -------- Income from Operations 303,999 171,681 General Administrative and Development 177,815 186,007 Depreciation 91,885 98,250 Interest Expense 12,125 11,726 --------- -------- Income/(Loss) Before Income Taxes 22,174 (124,302) Income Taxes Provision for Income Taxes 6,652 - Tax Benefit from Net Operating Loss (6,652) - --------- -------- Net Income/(Loss) $ 22,174 ($124,302) ========= ======== Net Income/(Loss) per Common Share $0.002 ($0.011) ========= ======== 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, 2005 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, 2005 March 31, 2004 -------------- -------------- (unaudited) (unaudited) Cash Flows from Operations: Sales Income Received $ 330,066 $ 240,117 Interest Received 383 - Interest Paid - - Cash Paid for Operating Expenses (275,174) (228,384) --------- --------- 55,275 11,733 Cash Flows from Investing: Property & Equipment Purchase (3,716) - ---------- ---------- (3,716) - Cash Flows from Financing Activities: Proceeds from Issue of Stock 1,100 - Repayment of Loans (100,000) - ---------- ---------- (98,900) - Net Increase (Decrease) in Cash (47,341) 11,733 Cash at Beginning of Period 231,877 89,410 ---------- ---------- Cash at End of Period $184,536 $101,143 ========== ========== _______________________________________________________________________________ Reconciliation of Net Income to Net Cash Provided by Operations Net Income /(Loss) $ 22,174 ($124,302) Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation 91,885 98,250 Accrued Interest 12,125 11,726 (Increase) Decrease in Inventories (1,263) 2,691 (Increase) Decrease in Receivables (62,428) (86) (Increase) Decrease in Prepaids (37,500) - Increase (Decrease)in Payables and Accruals 30,282 23,454 ---------- ---------- Net Cash Provided by Operating Activities $55,275 $11,733 ========== ========== FOOD TECHNOLOGY SERVICE, INC. STATEMENT OF STOCKHOLDERS' EQUITY 2004(unaudited) Common Stock Paid-In Capital Deficit ------------ ------------ --------------- ------- Balance, January 1, 2004 $ 110,010 $11,975,577 ($9,016,423) Net Loss for Period - - (124,302) ---------- ---------- ---------- Balance, March 31, 2004 $ 110,010 $11,975,577 ($9,140,725) ========== ========== ========== ______________________________________________________________________________ 2005 (unaudited) --------------- Balance, January 1, 2005 $ 110,010 $11,975,577 ($9,122,154) Issued 2,000 shares Common Stock 20 1,080 - Net Income for Period - - 22,174 ---------- ---------- ---------- Balance, March 31, 2005 $ 110,030 $11,976,657 ($9,099,980) ========== ========== ========== (a) Earnings per common share, assuming no dilution, are based on the number of shares outstanding on March 31, 2005 - 11,003,038 and March 31, 2004 - 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 $392,877 during the first quarter of 2005. This compares to revenues of $240,315 for the same period in 2004. This is an increase of sixty-four percent. The Company had a profit during the first quarter of 2005 of $22,174 compared to a loss of ($124,302) during the first quarter of 2004. Management attributes increased revenue to a growing customer base made up of companies that regularly require irradiation of products. Past revenues have been impacted by large intermittent customers that use the Company's services unpredictably. The Company has devoted significant effort to expanding the base of customers requiring service on a regular basis. No large intermittent customers have required services since the fourth quarter of 2003. Expenses during the first quarter of 2005 were about $6,000 higher than in the same period in 2004. These were due primarily to higher payroll costs associated with quality assurance activities and preventive maintenance on a material movement system. There was also a modest increase in insurance and security costs. Those costs were offset somewhat by decreased depreciation. The Company reduced its outstanding debt by $100,000 during the first quarter of 2005 and currently owes approximately $700,000 in total debt. Management anticipates increased revenue during the remaining quarters of 2005 based on growing demand by both food and medical customers. Operating and marketing expenses are expected to increase during the second and third quarter of 2005 due to costs associated with pursuing ISO-certification and installation of a new computer network. ISO-certification will allow the Company to compete more effectively for sterilization of medical devices. The enhanced computer network will provide greater efficiency for workers and better customer service by improving data access. The system is also needed to comply with requirements for archiving corporate email. Management believes base revenues will continue to exceed expenses during 2005. Liquidity and Capital Resources ------------------------------- As of March 31, 2005, the Company has cash on hand of $184,536 and accounts receivable of $198,374. 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, 2004. 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 10, 2005 FOOD TECHNOLOGY SERVICE, INC. /S/ Richard Hunter --------------------------------- Richard Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer