-----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, KbmdCu6E0VwbOCdgVMN6JWv9czgggJj5STAyPDcK4xgXteI0ycd9UiMvjHqQwFx4 ljMyk3V1q0vJwdTpbVPQEg== 0000868267-08-000016.txt : 20081112 0000868267-08-000016.hdr.sgml : 20081111 20081112093017 ACCESSION NUMBER: 0000868267-08-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20080930 FILED AS OF DATE: 20081112 DATE AS OF CHANGE: 20081112 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19047 FILM NUMBER: 081178494 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 10-Q 1 form10qsb.txt FORM 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended September 30, 2008 Commission File Number 0-19047 ------- FOOD TECHNOLOGY SERVICE, INC. (Exact Name of Registrant as Specified in its charter) FLORIDA 59-2618503 (State of Incorporation or Organization) (Employer Identification Number) 502 Prairie Mine Road, Mulberry, FL 33860 (Address of Principal Executive offices)(Zip code) Registrants telephone number, including area code (863) 425-0039 Indicate by check mark whether the Registrant: (1) has filed all by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes [X ] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "accelerated filer", "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [ ] Smaller Reporting Company [X ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes [ ] No [X ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Class September 30, 2008 ----- -------------------- Common Stock $.01 Par Value 2,756,458 shares PART I - FINANCIAL INFORMATION Item 1. Financial Statements FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS SEPTEMBER 30, DECEMBER 31, 2008 2007 ASSETS ---- ---- ------ (unaudited) * Current Assets: Cash $ 176,560 $ 257,286 Accounts Receivable Less Allowance For Doubtful Accounts of $2,500 in 2008 and 2007 275,272 337,414 Prepaid Expenses 40,656 28,269 ---------- ---------- Total Current Assets 492,488 622,969 ---------- ---------- Property and Equipment: Cobalt 4,383,833 3,900,496 Furniture and Equipment 1,896,678 1,799,621 Building 3,282,029 3,282,029 Less Accumulated Depreciation (5,519,076) (5,236,601) ---------- ---------- Total 4,043,464 3,745,545 Land 171,654 171,654 ---------- ---------- Total Property and Equipment 4,215,118 3,917,199 --------- --------- Other Assets: Deposits 5,000 5,000 Loan Costs 7,429 9,143 Deferred Income Tax 650,000 650,000 ---------- ---------- Total Other Assets 662,429 664,143 ---------- ---------- Total Assets $ 5,370,035 $ 5,204,311 =========== ========== FOOD TECHNOLOGY SERVICE, INC. BALANCE SHEETS SEPTEMBER 30, DECEMBER 31, 2008 2007 LIABILITIES AND STOCKHOLDERS' EQUITY - ----------------------------------- ------ ------ (unaudited) * Current Liabilities: Current Portion of Note Payable $ - $ 9,033 Accounts Payable and Accrued Liabilities 69,826 68,334 Financing Agreement and Debenture Payable 768,502 777,726 ---------- ---------- Total Current Liabilities 838,328 885,093 ---------- -------- Note Payable After One Year - 235,681 ---------- -------- Total Liabilities 838,328 1,090,774 ---------- ---------- Stockholders' Equity: Common Stock $.01 par value, 5,000,000 shares authorized, 2,756,458 shares issued and outstanding 27,564 27,564 Paid in Capital 12,139,333 12,114,350 Deficit (7,616,699) (8,009,886) Treasury Stock, 5,155 shares at cost (18,491) (18,491) ---------- ---------- Total Stockholders' Equity 4,531,707 4,113,537 ---------- ---------- Total Liabilities and Stockholders' Equity $ 5,370,035 $ 5,204,311 ========== ========== * Condensed from audited financial statements FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 2008 2007 ---- ---- (unaudited) (unaudited) Net Sales $ 683,409 $ 576,197 Processing Costs 128,190 101,984 --------- -------- Income from Operations 555,219 474,213 General Administrative and Development 249,950 222,076 Depreciation 102,765 93,171 Interest Expense 15,645 28,939 Loss on Currency Exchange - - --------- -------- Income Before Income Taxes 186,859 130,027 Income Taxes Current 71,006 39,008 --------- --------- Income (Loss) before Benefit of Tax Loss Carryovers 115,853 91,019 Benefit of Tax Loss Carryovers 71,006 39,008 --------- --------- Net Income $ 186,859 $ 130,027 ========= ========= Net Income per Common Share $0.068 $0.047 ========= ========= 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 September 30, 2008 are not necessarily indicative of the results to be expected for the full year. FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 2008 2007 ---- ---- (unaudited) (unaudited) Net Sales $1,865,344 $1,594,357 Processing Costs 400,309 318,372 --------- --------- Income from Operations 1,465,035 1,275,985 General Administrative and Development 735,149 671,474 Depreciation 282,475 276,285 Interest Expense 54,224 85,693 Loss on Currency Exchange - 29,985 --------- --------- Income Before Income Taxes 393,187 212,548 Income Taxes Current 149,411 63,764 --------- --------- Income (Loss) before Benefit of Tax Loss Carryovers 243,776 148,784 Benefit of Tax Loss Carryovers 149,411 63,764 --------- --------- Net Income $ 393,187 $ 212,548 ========= ========= Net Income per Common Share ** $0.143 $0.077 ========= ========= 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 nine month period ended September 30, 2008 are not necessarily indicative of the results to be expected for the full year. FOOD TECHNOLOGY SERVICE, INC. STATEMENTS OF CASH FLOWS Nine Months Nine Months Ended Ended September 30, September 30, 2008 2007 ------------- ------------ (unaudited) (unaudited) Cash Flows from Operations: Sales Income Received $ 1,927,486 $ 1,546,189 Interest Received 450 374 Interest Paid (13,448) (28,338) Cash Paid for Operating Expenses (1,120,106) (982,808) ---------- --------- 794,382 535,417 Cash Flows from Investing: Property & Equipment Purchase (580,394) (809,641) ---------- --------- (580,394) (809,641) Cash Flows from Financing Activities: Repayment on Note Payable (244,714) (2,472) Repayment on Financing Agreement and Debenture Payable (50,000) - ---------- --------- (294,714) (2,472) ---------- --------- Net Increase (Decrease) in Cash (80,726) (276,696) Cash at Beginning of Period 257,286 425,110 ---------- ---------- Cash at End of Period $ 176,560 $ 148,414 ========== ========== _______________________________________________________________________________ Reconciliation of Net Income to Net Cash Provided by Operations Net Income $ 393,187 $ 212,548 Adjustments to Reconcile Net Income to Cash Provided by Operations: Depreciation 282,475 276,285 Amortization 1,714 1,714 Accrued Interest 40,776 57,355 (Increase) Decrease in Receivables 62,142 (48,349) (Increase) Decrease in Prepaids (12,387) 11,959 Increase (Decrease)in Payables and Accruals 26,475 23,905 ---------- ---------- Net Cash Provided by Operating Activities $ 794,382 $ 535,417 ========== ========== Item 2. Management's Discussion and Analysis of Financial Condition and results of Operations Food Technology Service Inc. had record revenues of $683,409 during the third quarter of 2008 compared to revenues of $576,197 for the same period in 2007. This is an increase of 18.6 percent. The Company had net income during the third quarter of 2008 of $186,859 compared to net income of $130,027 during the third quarter of 2007. This is an increase of about 43.7 percent. For the first three quarters of 2008, the Company had record revenues of $1,865,344 and net income of $393,187. Revenues during the first three quarters of 2007 were $1,594,357 and the Company had net income of $212,548. Revenues increased by about 17 percent and net income increased by about 85 percent in the first three quarters of 2008 compared to the same period in 2007. Management attributes increased revenue to a growing customer base that requires irradiation of products on a regular basis. The majority of revenue growth is occurring in medical sterilization. During the third quarter of 2008, processing costs as a percentage of sales were 18.8 percent compared to 17.7 percent in the third quarter of 2007. This increase was primarily due to in-house costs associated with the installation of Cobalt in June, 2008. General administrative and development costs as a percentage of sales during the third quarter of 2008 were 36.6 percent compared to 38.5 percent in the third quarter of 2007. The decline in general, administrative and development expenses, as a percentage of sales, was due primarily to the increase in sales as such costs are relatively constant. During the first three quarters of 2008, processing costs as a percentage of sales were 21.5 percent compared to 20 percent during the first three quarters of 2007. As previously mentioned, this increase was primarily due to in-house costs associated with the installation of Cobalt in June, 2008. General, administrative and development costs as a percentage of sales were 39.4 percent during the first three quarters of 2008 compared to 42.1 percent during the same period in 2007. Again, the decline in general, administrative and development expenses, as a percentage of sales, was due primarily to the increase in sales as such costs are relatively constant. During the third quarter of 2008, the Company paid the remaining balance of approximately $239,000 on a loan for a new warehouse completed in November, 2006. The Company also made a payment of $50,000 for debt owed to MDS Nordion. These two actions reduced the Company's total debt at the end of the third quarter of 2008 from approximately $1,060,000 to approximately $770,000. The Company anticipates further payment of debt during the fourth quarter of 2008. As previously mentioned, the Company installed additional Cobalt during the second quarter of 2008 at a cost of approximately $530,000. The Company paid cash for this Cobalt. There were short-term increases in processing costs associated with this installation that continued into the early third quarter of 2008 Management anticipates increased revenue during the remaining quarter of 2008 based on growing demand for irradiation services. Item 3. Quantitative and Qualitative Disclosure about Market Risks Not Applicable. Item 4. Controls and Procedures As of the end of the period covered by this report, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Disclosure controls and procedures include controls and other procedures that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were effective as of the end of the period covered by this report. There have not been any changes in our internal controls over financial reporting during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is not involved in any legal proceedings. Items 2.-5. Not Applicable Item 6. Exhibits: Exhibit 31 -- Certification of Principal Executive and Financial Officer Exhibit 32 -- Certification of Principal Executive and Financial Officer 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: November 11, 2008 FOOD TECHNOLOGY SERVICE, INC. /S/ Richard Hunter --------------------------------- Richard Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer EX-31 2 ex31.txt EXHIBIT 31 Exhibit 31.1 RULE 13a-14(a)/15d-14(a) CERTIFICATION I, Richard G. Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 of Food Technology Service, Inc., (the "small business issuer"). 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects, the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15d-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f)- 15d-15(f)) for the small business issuer and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the and of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of small business issuer's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: November 11, 2008 By: /s/ Richard G. Hunter, Ph.D. ------------------------------ Richard G. Hunter, Ph.D, Chief Executive Officer and Chief Financial Officer EX-32 3 ex32.txt EXHIBIT 32 Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quaterly Report of Food Technology Service, Inc. (the "Company") on Form 10-Q for the quarter ended September 30, 2008 as filed with the Securities and Exchange Commission (the "Report"), I, Richard G. Hunter, Chief Executive and Financial Officer of the Company, hereby certify, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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 represents, in all material respects, the financial condition and result of operations of the Company at the end of, and for, this period covered by the Report. November 11, 2008 /s/ Richard G. Hunter, Ph.D. --------------------------- Richard G. Hunter, Ph.D., Chief Executive Officer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----