10QSB 1 form10qsba.txt 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, 2007 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." Class March 31, 2007 ----- --------------- Common Stock $.01 Par Value 2,756,458 shares** ** reflects 1 for 4 reverse stock split on July 3, 2006 FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS MARCH 31, DECEMBER 31, 2007 2006 ASSETS ---- ---- ------ (unaudited) * Current Assets: Cash $ 46,984 $ 425,110 Accounts Receivable Less Allowance For Doubtful Accounts of $2,500 in 2006 and 2007 358,743 362,684 Prepaid Expenses 39,402 27,852 ---------- ---------- Total Current Assets 445,129 815,646 ---------- ---------- Property and Equipment: Cobalt 3,888,251 3,100,973 Furniture and Equipment 1,794,362 1,792,601 Building 3,277,209 3,277,209 Less Accumulated Depreciation (4,956,621) (4,868,623) ---------- ---------- Total 4,003,201 3,302,160 Land 171,654 171,654 ---------- ---------- Total Property and Equipment 4,174,855 3,473,814 --------- --------- Other Assets: Deposits 5,000 5,000 Loan Costs 10,858 11,429 Deferred Income Tax 650,000 650,000 ---------- ---------- Total Other Assets 665,858 666,429 ---------- ---------- Total Assets $ 5,285,842 $ 4,955,889 =========== ========== FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS March 31, DECEMBER 31, 2007 2006 LIABILITIES AND STOCKHOLDERS' EQUITY ----------------------------------- ------ ------ (unaudited) * Current Liabilities: Current Portion of Note Payable $ 5,497 $ 3,113 Accounts Payable and Accrued Expenses 328,764 80,855 Financing Agreement and Debenture Payable 818,818 801,576 ---------- ---------- Total Current Liabilities 1,153,079 885,544 ---------- -------- Note Payable After One Year 244,403 246,787 ---------- -------- Total Liabilities 1,397,482 1,132,331 ---------- ---------- Stockholders' Equity: Common Stock $.01 par value, 5,000,000 shares authorized, 2,756,458 shares issued on March 31, 2007 and 2,756,458 shares outstanding on December 31, 2006 ** 27,565 27,565 Paid in Capital 12,059,122 12,059,122 Deficit (8,179,836) (8,244,638) Treasury Stock, 5,155 shares at cost ( 18,491) (18,491) ---------- ---------- 3,888,360 3,823.558 ---------- ---------- Total Liabilities and Stockholders' Equity $ 5,285,842 $ 4,955,889 ========== ========== * Condensed from audited financial statements ** reflects 1 for 4 reverse stock split on July 3, 2006 FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 2007 2006 ---- ---- (unaudited) (unaudited) Net Sales $ 480,517 $ 424,095 Processing Costs 113,600 93,246 --------- -------- Income from Operations 366,917 330,849 General Administrative and Development 191,979 169,834 Depreciation 87,998 95,489 Interest Expense 22,138 15,238 --------- -------- Income Before Income Taxes 64,802 50,288 Income Taxes Current 24,625 15,674 --------- -------- Income (Loss) before Benefit of Tax Loss Carryovers 40,177 34,614 Benefit of Tax Loss Carryovers 24,625 15,674 --------- -------- Net Income $ 64,802 $ 50,288 ========= ======== Net Income per Common Share ** $0.024 $0.018 ========= ======== 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 period ended March 31, 2007 are not necessarily indicative of the results to be expected for the full year. ** reflects 1 for 4 reverse stock split on July 3, 2006 FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF CASH FLOWS Three Months Three Months Ended Ended March 31, March 31, 2007 2006 -------------- -------------- (unaudited) (unaudited) Cash Flows from Operations: Sales Income Received $ 484,458 $ 409,461 Interest Received 335 253 Interest Paid (4,896) - Cash Paid for Operating Expenses (334,219) (305,321) --------- --------- 145,678 104,393 Cash Flows from Investing: Property & Equipment Purchase (523,804) (419,592) ---------- --------- (523,804) (419,592) Cash Flows from Financing Activities: - - ---------- --------- Net Increase (Decrease) in Cash (378,126) (315,199) Cash at Beginning of Period 425,110 524,731 ---------- ---------- Cash at End of Period $ 46,984 $ 209,532 ========== ========== _______________________________________________________________________________ Reconciliation of Net Income to Net Cash Provided by Operations Net Income $ 64,802 $ 50,288 Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation 87,998 95,489 Amortization 571 - Accrued Interest 17,242 15,238 (Increase) Decrease in Inventories - - (Increase) Decrease in Receivables 3,941 (14,636) (Increase) Decrease in Prepaids (11,550) (26,189) Increase (Decrease)in Payables and Accruals (17,326) (15,797) ---------- ---------- Net Cash Provided by Operating Activities $145,678 $104,393 ========== ========== Management's Analysis of Quarterly Income Statements Operations ---------- Food Technology Service Inc., had revenue of $480,517 during the first quarter of 2007. This compares to revenues of $424,095 for the same period in 2006. This is an increase of 13.3 percent. The Company had net income during the first quarter of 2007 of $64,802 compared to net income of $50,288 during the first quarter of 2006. This is an increase of about 29 percent. Management attributes increased revenue to increased production capacity resulting from the purchase of additional Cobalt in January 2007. This increased capacity allowed the Company to meet a growing demand for sterilization of medical products. These new customers require irradiation of their products on a regular basis and will provide continuing revenues. Expenses during the first quarter of 2007 were about $42,000 higher than in the same period in 2006. This was primarily due to increased insurance costs, expensing of stock options, consumable supplies and costs associated with the loading of additional Cobalt. The Company used about $400,000 of its cash reserves to purchase and install the Cobalt and incurred no additional long-term debt for that purchase. Management anticipates increased revenue during the remaining quarters of 2007 based on growing customer demand. Operating and marketing expenses are expected to decrease slightly. This reduction will be partially off-set by some routine maintenance to be conducted during the third quarter of 2007. Liquidity and Capital Resources ------------------------------- As of March 30, 2007, the Company has cash on hand of $46,984 and accounts receivable of $358,743. PART II OTHER INFORMATION Item 1 Legal Proceedings The company is not involved in any legal proceedings. 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 11, 2007 FOOD TECHNOLOGY SERVICE, INC. /S/ Richard Hunter --------------------------------- Richard Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer