-----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, CNYtpBEU/VxOifrYXfOw8K8SqoZHmQwkDXuLTsOUPFCjGc8RvC1sRRvMh9aIRH2F nloGQK+EReEDZdRtnLkeDA== 0000868267-07-000011.txt : 20070814 0000868267-07-000011.hdr.sgml : 20070814 20070814150648 ACCESSION NUMBER: 0000868267-07-000011 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070814 DATE AS OF CHANGE: 20070814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOOD TECHNOLOGY SERVICE INC CENTRAL INDEX KEY: 0000868267 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 592618503 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-19047 FILM NUMBER: 071054348 BUSINESS ADDRESS: STREET 1: 502 PRARIE MINE RD CITY: MULBERRY STATE: FL ZIP: 33860 BUSINESS PHONE: 8634250039 MAIL ADDRESS: STREET 1: 502 PRARIE MINE RD CITY: MULBERRY STATE: FL ZIP: 33860 FORMER COMPANY: FORMER CONFORMED NAME: VINDICATOR INC /FL/ DATE OF NAME CHANGE: 19930328 FORMER COMPANY: FORMER CONFORMED NAME: VINDICATOR OF FLORIDA INC /FL/ DATE OF NAME CHANGE: 19600201 10QSB 1 form10qsb.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 June 30, 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 June 30, 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 JUNE 30, DECEMBER 31, 2007 2006 ASSETS ---- ---- ------ (unaudited) * Current Assets: Cash $ 72,653 $ 425,110 Accounts Receivable Less Allowance For Doubtful Accounts of $2,500 in 2006 and 2007 428,171 362,684 Prepaid Expenses 21,866 27,852 ---------- ---------- Total Current Assets 522,690 815,646 ---------- ---------- Property and Equipment: Cobalt 3,900,496 3,100,973 Furniture and Equipment 1,795,429 1,792,601 Building 3,277,209 3,277,209 Less Accumulated Depreciation (5,051,737) (4,868,623) ---------- ---------- Total 3,921,397 3,302,160 Land 171,654 171,654 ---------- ---------- Total Property and Equipment 4,093,051 3,473,814 --------- --------- Other Assets: Deposits 5,000 5,000 Loan Costs 10,286 11,429 Deferred Income Tax 650,000 650,000 ---------- ---------- Total Other Assets 665,286 666,429 ---------- ---------- Total Assets $ 5,281,027 $ 4,955,889 =========== ========== FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS JUNE 30, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 2007 2006 - ----------------------------------- ------ ------ (unaudited) * Current Liabilities: Current Portion of Note Payable $ 5,497 $ 3,113 Accounts Payable and Accrued Expenses 248,292 80,855 Financing Agreement and Debenture Payable 839,370 801,576 ---------- ---------- Total Current Liabilities 1,093,159 885,544 ---------- -------- Note Payable After One Year 244,403 246,787 ---------- -------- Total Liabilities 1,337,562 1,132,331 ---------- ---------- Stockholders' Equity: Common Stock $.01 par value, 5,000,000 shares authorized, 2,756,458 shares issued on June 30, 2007 and 2,756,458 shares outstanding on December 31, 2006 ** 27,565 27,565 Paid in Capital 12,096,508 12,059,122 Deficit (8,162,117) (8,244,638) Treasury Stock, 5,155 shares at cost (18,491) (18,491) ---------- ---------- 3,943,465 3,823,558 ---------- ---------- Total Liabilities and Stockholders' Equity $ 5,281,027 $ 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 JUNE 30, 2007 AND 2006 2007 2006 ---- ---- (unaudited) (unaudited) Net Sales $ 537,643 $ 437,607 Processing Costs 102,788 92,795 --------- -------- Income from Operations 434,855 344,812 General Administrative and Development 257,419 210,573 Depreciation 95,116 99,008 Interest Expense 34,616 16,503 Loss on Currency Exchange 29,985 - --------- -------- Income Before Income Taxes 17,719 18,728 Income Taxes Provision for Income Taxes 5,316 5,618 Tax Benefit from Net Operating Loss (5,316) (5,618) --------- -------- Net Income $ 17,719 $ 18,728 ========= ======== Net Income per Common Share ** $0.006 $0.007 ========= ======== 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 June 30, 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 OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006 2007 2006 ---- ---- (unaudited) (unaudited) Net Sales $1,018,160 $ 861,702 Processing Costs 216,388 186,041 --------- -------- Income from Operations 801,772 675,661 General Administrative and Development 449,398 380,407 Depreciation 183,114 194,497 Interest Expense 56,754 31,741 Loss on Currency Exchange 29,985 - --------- -------- Income Before Income Taxes 82,521 69,016 Income Taxes Provision for income taxes 24,756 20,705 Tax Benefit from Net Operating loss (24,756) (20,705) --------- -------- Net Income $ 82,521 $ 69,016 ========= ======== Net Income per Common Share ** $0.030 $0.025 ========= ======== 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 six month period ended June 30, 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 Six Months Six Months Ended Ended June 30, 2007 June 30, 2006 -------------- -------------- (unaudited) (unaudited) Cash Flows from Operations: Sales Income Received $ 1,017,505 $ 810,130 Interest Received 354 915 Interest Paid (18,960) - Cash Paid for Operating Expenses (714,429) (605,070) --------- --------- 284,470 205,975 Cash Flows from Investing: Property & Equipment Purchase (636,927) (442,643) ---------- --------- (636,927) (442,643) Cash Flows from Financing Activities: Proceeds from Issue of Stock - - Purchase of Treasury Stock - (18,491) Repayment of Loans - - ---------- --------- - (18,491) Net Increase (Decrease) in Cash (352,457) (255,159) Cash at Beginning of Period 425,110 524,731 ---------- ---------- Cash at End of Period $ 72,653 $ 269,572 ========== ========== _______________________________________________________________________________ Reconciliation of Net Income to Net Cash Provided by Operations Net Income /(Loss) $ 82,521 $ 69,016 Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation and Amortization 184,257 194,497 Accrued Interest 37,794 31,741 Non-Cash Exchange Loss 29,985 - (Increase) Decrease in Receivables (65,487) (51,572) (Increase) Decrease in Prepaids 5,986 (42,714) Increase (Decrease)in Payables and Accruals 9,414 5,007 ---------- ---------- Net Cash Provided by Operating Activities $284,470 $205,975 ========== ========== Management's Analysis of Quarterly Income Statements Operations - ---------- Food Technology Service Inc., had revenues of $537,643 during the second quarter of 2007 compared to revenues of $437,607 for the same period in 2006. This is an increase of 22.8 percent. The Company had a profit during the second quarter of 2007 of $17,719 compared to a profit of $18,728 during the second quarter of 2006. This is a decrease of about 5 percent. For the first half of 2007, the Company had record revenues of $1,018,160 and a profit of $82,521. Revenues during the first half of 2006 were $861,702 and the Company had a profit of $69,016. Revenues increased by 18 percent and profits increased by about 20 percent in the first half of 2007 compared to the same period in 2006. Management attributes increased revenue to a growing customer base that requires irradiation of products on a regular basis. Although revenue from irradiation of all product categories has increased, the majority of growth is occurring in medical sterilization. During the second quarter of 2007, processing costs as a percentage of sales were 19.1 percent. This compares to 21.2 percent in the second quarter of 2006. Although processing costs as a percentage of sales are relatively fixed, they are exhibiting some decline with increasing sales. General administrative and development costs as a percentage of sales during the second quarter of 2007 were 48 percent. This compares to 48 percent in the second quarter of 2006 which reflected the costs associated with the reverse stock split at that time. Profits during the second quarter were reduced by about $48,000 due to two expense categories, interest and currency exchange rates. Interest expense more than doubled from the second quarter of 2006 to the second quarter of 2007, increasing by $18,113. This was due to increased short-term debt for Cobalt purchased in January 2007, the loan for the new warehouse completed in December 2006 and rising interest rates. Management anticipates that approximately 25 percent of the current debt will be retired by the end of 2007. The loss on currency exchange resulted from approximately $300,000 owed for the purchase of Cobalt. In January 2007, the Company entered into an agreement with the Canadian-based supplier to make three payments each of approximately CN$105,000 for the Cobalt. The first of these payments was made in June 2007 but the extraordinary rise in the value of the Canadian dollar against the US dollar recently increased the cost of each payment by about US$10,000. Although the second and third payments are due in September and December of this year, Generally-Accepted Accounting Principles require that the known or anticipated increase in all three payments be applied as an expense during this quarter. This increased expenses by $29,985. During the first half of 2007, processing costs as a percentage of sales remained relatively constant when compared to the first half of 2006. Similarly, general, administrative and development costs as a percentage of sales were 44.1 percent during the first half of 2007 compared to 44.1 percent during the first half of 2006. Overall, expenses during the first half of 2007 were about $142,953 higher than in the same period in 2006, an increase of about 16 percent. This increase was largely due to the previously described costs for interest and currency exchange and also reflects the fact that the company is treating the calculated value of stock options as an expense in 2007 quarterly reports. Management anticipates increased revenue during the remaining quarters of 2007 based on growing demand for irradiation services. Management believes base revenues will continue to exceed expenses during the remainder of 2007. Liquidity and Capital Resources - ------------------------------- As of June 30, 2007, the Company has cash on hand of $72,653 and accounts receivable of $428,171. 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: August 14, 2007 FOOD TECHNOLOGY SERVICE, INC. /S/ Richard Hunter --------------------------------- Richard Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer EX-31 2 ex32.txt EXHIBIT 32 Certification of Periodic Report EXHIBIT 32 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 June 30, 2007 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 August 14, 2007 EX-32 3 ex31.txt EXHIBIT 31 CERTIFICATION EXHIBIT 31 I Certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of Food Technology Service, Inc. for the three months ended June 30, 2007. 2. Based on my knowledge, this Quarterly 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 Quarterly Report; 3. Based on my knowledge, the Financial Statements, and other financial information included in the Quarterly 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 Quarterly 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 consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly 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 Quarterly Report (the "Evaluation Date") and; c) Presented in this Quarterly 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 Quarterly 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: August 14, 2007 FOOD TECHNOLOGY SERVICE, INC. By: / s/ Richard G. Hunter ---------------------------- Richard G. Hunter, Ph.D. Chief Executive Officer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----