10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [            ] to [            ]

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)

(863) 425-0039

(Registrant’s telephone number, including area code)

Indicate by check mark if the registrant is not required to file reports pursuant to section 13 or 15(d) of the Exchange Act.    Yes  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    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

There were 2,830,297 shares of the Registrant’s common stock, $.01 par value per share, issued and outstanding as of October 25, 2012.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1	Financial Statements:
	Balance Sheets – As of September 30, 2012 and December 31, 2011		3
	Statements of Operations – For the Three Months Ended September 30, 2012 and 2011		5
	Statements of Operations – For the Nine Months Ended September 30, 2012 and 2011		6
	Statements of Cash Flows – For the Nine Months Ended September 30, 2012 and 2011		7
	Notes to Financial Statements		8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 3	Quantitative and Qualitative Disclosures About Market Risk		16
Item 4T	Controls and Procedures		16
PART II. OTHER INFORMATION
Item 1	Legal Proceedings		18
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		18
Item 3	Defaults Upon Senior Securities		18
Item 4	Submission of Matters to a Vote of Security Holders		18
Item 5	Other Information		18
Item 6	Exhibits		18
SIGNATURES

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

FOOD TECHNOLOGY SERVICE, INC.

BALANCE SHEETS

	As of September 30,			As of December 31,
	2012			2011
	(Unaudited)			(Audited)
ASSETS
Current Assets:
Cash	$	2,201,706		$	2,000,367
Certificate of Deposit, Restricted		150,112			—
Accounts Receivable, Less Allowance for Doubtful Accounts of $5,000		461,544			511,448
Prepaid Expenses		39,936			28,467
Deferred Tax Asset		377,100			651,000
Total Current Assets		3,230,398			3,191,282
Property, Plant and Equipment:
Buildings		3,488,668			3,443,723
Cobalt		6,799,382			5,900,977
Furniture and Equipment		2,096,487			2,076,481
Land		171,654			171,654
Less: Accumulated Depreciation		(7,230,634	)		(6,830,734	)
Total Property, Plant and Equipment		5,325,557			4,762,101
Other Assets:
Equipment Deposit		393,968			—
Deferred Tax Asset		51,700			185,400
Utility Deposits		5,000			5,000
Loan Fees – Net		7,463			7,046
Total Other Assets		458,131			197,446
Total Assets	$	9,014,086		$	8,150,829

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

3

FOOD TECHNOLOGY SERVICE, INC.

BALANCE SHEETS

	As of September 30,			As of December 31,
	2012			2011
	(Unaudited)			(Audited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	24,058		$	32,002
Accrued Liabilities		127,006			68,242
Total Current Liabilities		151,064			100,244
Stockholders’ Equity:
Common Stock $.01 Par Value, Authorized 5,000,000 Shares, Issued 2,827,980 and 2,805,172, respectively		28,279			28,051
Paid-In Capital		12,347,756			12,275,218
Deficit		(3,494,522	)		(4,234,193	)
Less, 5,154 Treasury Shares at Cost		(18,491	)		(18,491	)
Total Stockholders’ Equity		8,863,022			8,050,585
Total Liabilities and Stockholders’ Equity	$	9,014,086		$	8,150,829

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

4

FOOD TECHNOLOGY SERVICE, INC.

STATEMENTS OF OPERATIONS

	Three Months Ended September 30,
	2012			2011
	(Unaudited)			(Unaudited)
Net Revenues	$	925,654		$	1,011,650
Costs and Operating Expenses
Processing Costs		148,413			167,918
Selling, General and Administrative		292,442			294,703
Depreciation and Amortization		153,332			132,419
Total Costs and Operating Expenses		594,187			595,040
Income from Operations		331,467			416,610
Interest Income		220			215
Income before Income Taxes		331,687			416,825
Income Tax (Expense) Benefit - Deferred		(125,200	)		(157,200	)
Net Income	$	206,487		$	259,625
Net Income Per Common Share
-Basic	$	0.073		$	0.093
-Diluted	$	0.070		$	0.089
Weighted Average Number of Common Shares
Used in Computation
-Basic		2,827,042			2,787,182
-Diluted		2,937,542			2,926,682

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

5

FOOD TECHNOLOGY SERVICE, INC.

STATEMENTS OF OPERATIONS

	Nine Months Ended September 30,
	2012			2011
	(Unaudited)			(Unaudited)
Net Revenues	$	2,996,094		$	2,782,249
Costs and Operating Expenses
Processing Costs		480,263			457,790
Selling, General and Administrative		916,719			885,271
Depreciation and Amortization		411,751			354,467
Total Costs and Operating Expenses		1,808,733			1,697,528
Income from Operations		1,187,361			1,084,721
Interest Income		610			792
Income before Income Taxes		1,187,971			1,085,513
Income Tax (Expense) Benefit - Deferred		(448,300	)		(385,500	)
Net Income	$	739,671		$	700,013
Net Income Per Common Share
-Basic	$	0.263		$	0.253
-Diluted	$	0.253		$	0.241
Weighted Average Number of Common Shares
Used in Computation
-Basic		2,817,790			2,766,812
-Diluted		2,928,290			2,906,312

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

6

FOOD TECHNOLOGY SERVICE, INC.

STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2012			2011
	(Unaudited)			(Unaudited)
Cash Flows from Operations:
Cash Received from Customers	$	3,045,998		$	2,689,710
Interest Received		610			792
Interest Paid		(482	)		(253	)
Cash Paid for Operating Expenses		(1,367,082	)		(1,235,486	)
Net Cash Provided by Operations		1,679,044			1,454,763
Cash Flows from Investing Activities:
Certificate of Deposit		(150,112	)		—
Letter of Credit Costs		(12,269	)		(12,218	)
Purchase of Cobalt, Delivery & Installation		(898,405	)		(901,717	)
Purchase of Equipment		(20,006	)		(64,008	)
Equipment Deposit		(393,968	)		—
Warehouse Renovation		(44,945	)		(73,814	)
Net Cash (Used) by Investing		(1,519,705	)		(1,051,757	)
Cash Flows from Financing Activities:
Excess Tax Benefit From Share Based Compensation		42,000			—
Net Increase in Cash		201,339			403,006
Cash at Beginning of Period		2,000,367			1,294,540
Cash at End of Period	$	2,201,706		$	1,697,546
Reconciliation of Net Income to Net Cash Provided by Operations:
Net Income	$	739,671		$	700,013
Adjustments to Reconcile Net Income to Cash Provided or Used:
Amortization		11,851			16,867
Deferred Income Tax		448,300			385,500
Excess Tax Benefit From Share Based Compensation		(42,000	)		—
Depreciation		399,900			337,601
Share-Based Compensation		32,067			38,572
(Increase)/Decrease in Receivables		49,904			(92,539	)
(Increase)/Decrease in Other Receivables		—			(7,428	)
(Increase)/Decrease in Prepaid Expenses		(11,469	)		(31,230	)
Increase/(Decrease) in Payables		(7,944	)		18,893
Increase/(Decrease) in Accruals		58,764			88,514
Net Cash Provided by Operations	$	1,679,044		$	1,454,763
Non-cash Financing Transactions:
Fair Value of Common Stock Issued Pursuant to Exercised Stock Options	$	153,315		$	308,956

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

7

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

Note A - Basis of Presentation

The accompanying financial statements of Food Technology Service, Inc. (the Company,” “we” or “our”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and the instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles. These interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

In the opinion of management, these financial statements reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial position as of September 30, 2012, and the results of operations and cash flows for the interim periods presented. Operating results for the period ended September 30, 2012, are not necessarily indicative of the results that may be expected for the full year. We have evaluated subsequent events for recognition or disclosure through the date this Form 10-Q is filed with the Securities and Exchange Commission.

Note B - Business Description and Summary of Significant Accounting Policies

The Company was organized in December 1985 and is engaged in the business of operating a gamma irradiation facility using Cobalt 60 for the sterilization of medical, surgical, pharmaceutical and packaging materials. It also disinfects fruits, vegetables, oysters and meat products to enhance safety or eliminate insect pests.

1. Use of Estimates

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.

2. Revenue Recognition

The primary source of revenue is from treating products with gamma radiation from Cobalt 60. Net Revenue is the gross income from such processing less allowances, if any. Revenues are recorded after the Company’s performance obligation is completed and product has been processed in accordance with the customer’s specifications and collection of the resulting receivable is probable.

3. Accounts Receivable and Allowances for Doubtful Accounts

Accounts receivable are customer obligations arising from the sale of services and are due under normal trade terms requiring payment within 30 days from the invoice date. Accounts over ninety days are monitored closely by Management and delinquencies are determined based on payment history, aging analysis and any specific known troubled assets. Receivables are charged off to the allowance for doubtful accounts once Management determines that they are uncollectible.

4. Property, Plant and Equipment

Property, plant and equipment are stated at cost. Assets other than Cobalt have been depreciated using the straight-line method over the following lives for both financial statement and tax purposes:

Building	31.5-40 Years
Furniture and Equipment	5-15 Years

The total cost basis of Cobalt has been depreciated using engineering estimates from published tables under which one-half of the remaining value is written off over 5.26 year periods.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

8

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

Estimated useful lives are periodically reviewed and if warranted, changes will be made accordingly.

Nordion is the Company’s supplier of Cobalt 60. When Cobalt is purchased, Nordion agrees to accept the return of all Cobalt 60 that has reached the end of its useful life for a fee. The Company’s facility has the capacity to store the Cobalt 60 and there is no regulatory or industry requirement stating when the Cobalt needs to be returned. Management periodically reviews the value of the Cobalt 60 and has determined an environmental remediation liability is not necessary since the value of the Cobalt 60 exceeds the disposal costs.

5. Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less are considered to be cash and cash equivalents.

6. Concentration of Credit Risk

The Company maintains its cash in three financial institutions. The Federal Deposit Insurance Corporation insures up to $250,000 per legal entity per financial institution and all funds in noninterest-bearing transaction accounts until December 31, 2012. The Company’s uninsured balances totaled approximately $144,653 as of September 30, 2012 and none as of December 31, 2011.

7. Earnings Per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding. Diluted earnings per share are computed by the weighted average number of common shares outstanding, plus the effect of common stock equivalents that are dilutive.

8. Fair Value of Financial Instruments

The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities approximate fair value.

9. Stock Option Plans

The Company has various stock option plans for employees and other individuals providing services to or serving as Directors of the Company. (See Note I - Stock Options) Compensation cost under the plans is recognized using the fair value recognition provisions of FASB ASC 718. Such cost is recognized for shares expected to vest on a straight-line basis over the requisite service period of the award using the Black-Scholes option-pricing model. FASB ASC 718 requires the benefits of tax deductions in excess of the compensation cost recognized for those options to be classified as financing cash inflows rather than operating cash inflows. This amount is shown as excess tax benefit from share based compensation on the statements of cash flows. The excess tax benefits from the expired options are recorded in additional paid-in capital and any tax benefits from stock options expired unexercised are offset to the extent of any remaining balance.

10. Advertising

The Company expenses all advertising costs when incurred. Advertising expense recognized for the three months ended September 30, 2012 and 2011 were $2,675 and $799, respectively and for the nine months ended September 30, 2012 and 2011 were $5,327 and $4,363 respectively.

11. Reclassification

Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

9

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

Note C - Certificate of Deposit

Certificate of deposit totaling $150,112 bears interest of .15% that compounds quarterly and matures on June 23, 2013 with penalties for early withdrawal. Any penalties for early withdrawal would not have a material effect on the financial statements.

Note D – Equipment Deposit

As of September 30, 2012 the company has paid $393,968 towards the replacement of the Programmable Logic Control (PLC) system expected to be placed in service by the end of the year. See Note L - Commitments and Contingencies for further details.

Note E - Loan Fees

During the first quarter of 2012, renewal fees in the amount of $12,269 were incurred in connection with the Regions letter of credit (See Note F - Letter and Line of Credit). As of September 30, 2012 and December 31, 2011, total loan fees were $20,856 and $34,972, respectively. These fees were amortized based on the life of the loans and written off upon completion. Amortization expense for the three months ended September 30, 2012 and 2011 were $3,272 and $3,261, respectively and for the nine months ended September 30, 2012 and 2011 were $11,851 and $16,867, respectively.

Note F - Letter and Line of Credit

The State of Florida requires as a condition of the Company’s Radioactive Materials License a $600,000 irrevocable standby letter of credit. On February 24, 2012, the Company renewed the $600,000 letter of credit with Regions Bank to satisfy the State of Florida requirements. The letter of credit expires on February 24, 2013, has an annual fee of $12,269 and is collateralized by the Company’s real estate and a $150,112 certificate of deposit.

The Company has a separate $400,000 line of credit with Regions Bank that is available for the short term capital needs of the Company. The line of credit is secured by the Company’s real estate and incurs interest at prime plus 1.35%. As of September 30, 2012, the Company has not used the line of credit.

Note G - Income Taxes and Available Tax Loss Carryforwards

The components of income tax / (benefit) are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Current
Federal	$	—	$	—	$	—	$	—
State		—		—		—		—
		—		—		—		—
Deferred-Benefit
Federal		106,900		134,200		382,800		329,200
State		18,300		23,000		65,500		56,300
		125,200		157,200		448,300		385,500
Total Income Tax Expense /(Benefit)	$	125,200	$	157,200	$	448,300	$	385,500

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

10

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

Income taxes differ from the amounts computed by applying the effective income tax rates of 37.63% to income before income taxes as a result of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Expected Provision at US Statutory Rate	$	112,800	$	141,700	$	403,900	$	369,100
State Income Tax Net of Federal Benefit		12,000		15,100		43,200		39,400
Nondeductible Expenses		400		400		1,200		1,500
Change in Estimates and Available NOL Carryforwards		—		—		—		1,000
Change in Valuation Allowance		—		—		—		(25,500	)
Income Tax Expense / (Benefit)	$	125,200	$	157,200	$	448,300	$	385,500

The Company had income tax net operating loss (“NOL”) carryforwards for federal income tax purposes. The NOL will expire in various years ending through the year 2030.

The Company’s NOL carryforward is as follows:

	September 30, 2012			December 31, 2011
NOL Carryforward - Beginning of Period	$	2,071,925		$	3,672,530
Less Used		(1,069,871	)		(1,600,605	)
Less Expired		—			—
NOL Carryfoward - End of Period	$	1,002,054		$	2,071,925

The components of the Company’s deferred tax assets are as follows:

	September 30, 2012		December 31, 2011
NOL Carryforward	$	377,100	$	779,700
Accrued Liabilities		17,700		17,700
Stock Options		34,000		39,000
Net Deferred Tax Asset	$	428,800	$	836,400
Current Portion	$	377,100	$	651,000
Noncurrent Portion		51,700		185,400
Total Net Deferred Tax Asset	$	428,800	$	836,400

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

During 2011, as a result of the continuing diversification and growth in customer base, ongoing profits from operations and the Company’s revised estimate of future taxable income, it was concluded that it is more likely than not that future taxable income will be sufficient to realize all of the Company’s deferred asset. As of September 30, 2012, no further changes to the valuation allowance have been made.

The Company believes that its estimate of future operations is conservative and reasonable, but inherently uncertain. If the Company realizes unforeseen material losses in the future and its future projections of income decrease, the allowance could be increased resulting in a charge to income.

The Company’s tax years 2009 through 2011 remain open to examination by taxing jurisdictions.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

11

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

Note H - Accrued Liabilities

Effective January 1, 2011, the Board of Directors modified the President’s employment contract to include a resignation clause. This clause provides two weeks base pay for every full year worked for the company, if a six month notice is received before the President leaves. As of September 30, 2012, an accrual of $47,000 is recorded in relation to the resignation clause.

Note I - Stock Options

On February 9, 1999, the Board of Directors approved an option program for non-employee Directors.

The program was amended in 2001 and 2005 to provide for the annual granting to each non-employee Director of five year options to purchase 1,500 shares of common stock, exercisable at the end of one year at the market value of the shares of common stock on the date of grant. Also, the Chairman of the Board is awarded annually five year options to purchase an additional 2,500 shares. Options outstanding under this plan as of September 30, 2012 and 2011 are 8,500 and 21,500, respectively.

No further options are being issued under the 1999 Plan.

On September 23, 2000, the Stockholders approved the 2000 Incentive and Non-Statutory Stock Option Plan (the “2000 Plan”).

The 2000 Plan was administered by the Board of Directors who was authorized to grant incentive stock options (“ISO’s”) to Officers and employees of the Company and non-qualified options (“NQO’s”) for certain other individuals providing services to or serving as Directors of the Company.

The maximum number of shares of the Company’s Stock that may be issued under the 2000 Plan is 125,000 shares. Options outstanding under this plan as of September 30, 2012 and 2011 are none and 20,000, respectively.

The ISO’s are exercisable 20% of the authorized amount immediately and 20% in each of the following four years. ISO’s granted to an optionee terminate 30 to 90 days after termination of employment or other relationship, except that ISO’s terminate the earlier of the expiration date of the option, or 90 to 180 days in the event of death and 180 days to one year in the event of disability.

No further options are being issued under the 2000 Plan.

On May 14, 2009, the Stockholders approved the 2009 Incentive and Non-Statutory Stock Option Plan (the “2009 Plan”).

The 2009 Plan is administered by the Board of Directors who is authorized to grant incentive stock options (“ISO’s”) to Officers and employees of the Company and non-qualified options (“NQO’s”) for certain other individuals providing services to or serving as Directors of the Company

The maximum number of shares of the Company’s Stock that may be issued under the 2009 Plan is 125,000 shares. Options granted and outstanding under this plan are as follows:

Year	Granted		Outstanding
Before 2011		23,000		17,000
2011		10,000		10,000
2012		10,000		10,000
		43,000		37,000

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

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FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

The aggregate fair market value (determined at the time an ISO is granted) of the Common Stock with respect to which ISO’s are exercisable for the first time by any person during any calendar year under the Plans shall not exceed $100,000.

The ISO’s are exercisable 20% of the authorized amount immediately and 20% in each of the following four years. ISO’s granted to an optionee terminate 30 to 90 days after termination of employment or other relationship, except that ISO’s terminate the earlier of the expiration date of the option, or 90 to 180 days in the event of death and 180 days to one year in the event of disability.

In 2003 and 2008 the company reached the maximum number of stock options allowed to be issued under the respective current stock option plan. The company therefore issued 65,000 stock options outside of aforementioned plans. Options outstanding outside a specific plan as of September 30, 2012 and 2011 are 65,000 and 65,000, respectively.

A summary of the status of the Company’s stock options is as follows:

	Number of Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life (Yrs)
Outstanding At December 31, 2011		139,500		$	1.95		4.02
Granted		10,000		$	6.26
Exercised		(36,000	)	$	2.43
Expired/Forfeited		(3,000	)	$	2.52
Outstanding At September 30, 2012		110,500		$	2.17		4.13
Vested/Exercisable At September 30, 2012		86,500		$	2.50		3.54

A summary of the status of the Company’s nonvested stock options is as follows:

	Number of Shares			Wtd. Avg. Grant Date Fair Value
Nonvested, At December 31, 2011		28,000		$	0.41
Granted		10,000		$	4.36
Vested		(14,000	)	$	3.45
Nonvested, At September 30, 2012		24,000		$	0.28
Expired/Forfeited During Period		3,000		$	1.16

The Company estimated the fair value at the date of grant using the Black Scholes option valuation model with the following assumptions:

	Nine Months Ended September 30,
	2012	2011
Risk Free Interest Rate	0.62-1.04%	1.85-2.24%
Expected Volatility	80.06-80.25%	84.49-84.66%
Expected Life	5 years	5 years
Dividend Yield	0%	0%

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

13

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

Option valuation models require the input of highly subjective assumptions including the expected option life. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For the three months ended September 30, 2012, 1,500 stock options were exercised under a cashless program resulting in the issuance of 938 shares and an excess tax benefit of $1,700. For the nine months ended September 30, 2012, 36,000 stock options were exercised under a cashless program resulting in the issuance of 22,808 shares and an excess tax benefit of $42,000.

For the three months ended September 30, 2012 there were no expired stock options. For the nine months ended September 30, 2012, 3,000 unexercised expired stock options created a $1,300 tax benefit that has been charged against paid-in capital from excess tax benefits.

The Company recognized $11,821 and $14,106 stock-based compensation expense for the three months ended September 30, 2012 and 2011, respectively and $32,067 and $38,572 for the nine months ended September 30, 2012 and 2011, respectively.

As of September 30, 2012, there was $31,626 of unrecognized compensation costs related to non-vested stock options, which will be amortized to expense over future periods. The Company expects to recognize that cost over the weighted average vesting period 1.25 years.

Note J - Related Party Transactions

The Company’s supplier of Cobalt, Nordion (Canada) Inc., formerly MDS Nordion, owned approximately 16.8% of the Company’s outstanding common stock. By agreement entered into February 10, 2011, Nordion (Canada) Inc., formerly MDS Nordion, sold 463,317 shares of common stock to Fort Ashford Holdings, LLC for $3.60 per share. As of February 25, 2011, the closing date for the sale, Nordion (Canada) ceased to be a shareholder and no longer has any direct or indirect interest in the outstanding shares of common stock of the Company.

The Company has recently purchased the following Cobalt from Nordion:

Year	Curies		Amount
2010		105,757	$	81,740
2011		499,998	$	1,414,694
2012		299,996	$	898,405

Note K - Earnings Per Share

Earnings per share are calculated in accordance with ASC 260-10, “Earnings Per Share”. Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the years. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. Common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.

ASC 260-10 requires the presentation of both Basic EPS and Diluted EPS on the face of the Company’s Statements of Operations.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

14

FOOD TECHNOLOGY SERVICE, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

The following table sets forth the computation of basic and diluted per share information:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Numerator:
Net Income	$	206,487	$	259,625	$	739,671	$	700,013
Denominator:
Wtd. Avg. Common Shares Outstanding		2,827,042		2,787,182		2,817,790		2,766,812
Dilutive Effect Of Stock Options		110,500		139,500		110,500		139,500
Wtd. Avg. Common Shares Outstanding, Assuming Dilution		2,937,542		2,926,682		2,928,290		2,906,312

For the three months and nine months ended September 30, 2012 and 2011, there were no out of the money options to exclude from the computation of diluted EPS.

Note L – Commitments and Contingencies

In March 2012, the Company entered into an agreement with Nordion for the replacement of the Programmable Logic Control (PLC) system at an estimated cost of $800,000. This is the last part of a multi-year project intended to maintain the facility in good and reliable condition. The PLC replacement will take place in two phases and is expected to be substantially completed by the end of 2012. As of September 30, 2012, the company has paid $393,968 toward the completion of this project.

Note M - Concentration and Credit Risk

Although the Company continues to diversify its customer base it does a significant amount of its total business with the following customers.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Customer 1		30			29			31			39
Customer 2		24			31			29			21
Total		54	%		60	%		60	%		60	%

The Company’s cash and accounts receivable are subject to potential credit risk. Management continuously monitors the credit standing of the financial institutions and customers with which the Company deals. A provision has been made for doubtful accounts which historically have not been significant.

The Company’s supplier of Cobalt 60 is Nordion (Canada) Inc. In the event it is unavailable from Nordion the Company can obtain Cobalt 60 from one other source.

Note N - Subsequent Events

We have evaluated subsequent events for recognition or disclosure in these financial statements through the date of issuance, and determined there are no material transactions to recognize or disclose.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

15

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Food Technology Service, Inc. had revenues of $925,654 during the third quarter of 2012 compared to revenues of $1,011,650 for the same period in 2011. This is a decrease of approximately 8.5 percent. The Company had income before taxes during the third quarter of 2012 of $331,687 compared to income before taxes of $416,825 during the third quarter of 2011. This is a decrease of approximately 20.4 percent. For the first nine months of 2012, the Company had revenues of $2,996,094 and income before taxes of $1,187,971. Revenues during the first nine months of 2011 were $2,782,249 and the Company had income before taxes of $1,085,513. Revenues increased by about 7.7 percent and income before taxes increased by approximately 9.4 percent in the nine months of 2012 compared to the same period in 2011.

The Company’s statement of operations reflects non-cash deferred income tax expense for the third quarter of 2012 in the amount of $125,200. This resulted in net income during the third quarter of 2012 of $206,487 versus net income of $259,625 during the same period in 2011, a decrease of 20.5 percent. Similarly, the Company’s statement of operations reflects non-cash deferred income tax expense for the first nine months of 2012 in the amount of $448,300. This resulted in net income of $739,671 during the first nine months of 2012 versus $700,013 during the same period of 2011. This is an increase of approximately 5.7 percent. Management attributes the decrease in revenue experienced in the third quarter to a lessened demand by a medical customer. Management believes this issue was largely confined to one month in the third quarter and does not represent a longer term decrease in their demand.

During the third quarter of 2012, processing costs as a percentage of sales were 16 percent compared to 16.6 percent during the third quarter of 2011. These costs are relatively fixed and the slight decrease in 2012 is not significant. General, administrative and development costs as a percentage of sales during the third quarter of 2012 were 31.6 percent. This compares to 29.1 percent in the third quarter of 2011. These costs are also relatively fixed and the increase in general, administrative and development expenses, as a percentage of sales, is due to the decrease in revenue in 2012.

During the first nine months of 2012, processing costs as a percentage of sales were 16 percent compared to 16.5 percent in the first nine months of 2011. Again, these costs are relatively fixed and the variation is not significant. General, administrative and development costs as a percentage of sales were 30.6 percent during the first none months of 2012. This compares to 31.8 percent during the first nine months of 2011. As previously mentioned, these costs are relatively fixed and the decline in general, administrative and development expenses, as a percentage of sales, is primarily due to increased revenue in 2012.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4T. Controls and Procedures

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

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 by our Chief Executive Officer who also acts as the Company’s Chief Financial Officer. Based upon that evaluation, our Chief Executive/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.

16

In accordance with Rule 13a-15 of the General Rules and Regulations promulgated under the Securities Exchange Act of 1934 (the “Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2012, by using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework. Based on this assessment, management believes that as of September 30, 2012, the Company’s internal controls over financial reporting is effective.

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

17

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

The company is not involved in any legal proceedings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

Number	Description
31	Certifications of Officers pursuant to Rule 13a-14(a)/15d-14(a)
32	Certifications of Officers pursuant to Section 1350, of the Sarbanes - Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

18

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

FOOD TECHNOLOGY SERVICE, INC.
By:	/s/ Richard G. Hunter, Ph.D.
	Richard G. Hunter, Ph.D.
	Chief Executive Officer and Chief Financial Officer

Date: November 12, 2012

19

EX-31

EXHIBIT 31

CERTIFICATIONS OF OFFICERS PURSUANT

TO RULE 13A-14(A)/15D-14(A)

I, Richard G. Hunter, Ph.D., certify that:

1) I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2012 of Food Technology Service, Inc.;

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 registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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 registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’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 registrant’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 registrant’s internal control over financial reporting.

FOOD TECHNOLOGY SERVICE, INC.
By:	/s/ Richard G. Hunter, Ph.D.
	Richard G. Hunter, Ph.D.
	Chief Executive Officer and
	Chief Financial Officer

Date: November 12, 2012

EX-32

EXHIBIT 32

CERTIFICATIONS OF OFFICERS PURSUANT TO SECTION 1350,

OF THE SARBANES - OXLEY ACT OF 2002

In connection with the quarterly report of Food Technology Service, Inc. (the “Company”) on Form 10-Q for the quarter ending September 30, 2012 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) and 15(d) 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 results of operations of the Company at the end of, and for, this period covered by the Report.

FOOD TECHNOLOGY SERVICE, INC.
By:	/s/ Richard G. Hunter, Ph.D.
	Richard G. Hunter, Ph.D.
	Chief Executive Officer and
	Chief Financial Officer

Date: November 12, 2012

XML

Stock Options (Details)	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2012	Sep. 30, 2012	Dec. 31, 2011	Dec. 31, 2009
Stock options granted and outstanding
Stock options granted		10,000
Total stock option outstanding		110,500	139,500
2009 Plan [Member]
Stock options granted and outstanding
Stock options granted	10,000	43,000	10,000	23,000
Total stock option outstanding	10,000	37,000	10,000	17,000

XML

Commitments and Contingencies (Details) (USD $)		1 Months Ended
	Sep. 30, 2012	Mar. 31, 2012 Nordion [Member] Programmable Logic Control PLC System [Member]
Commitments and Contingencies (Textual) [Abstract]
Agreement with Nordion for the replacement		$ 800,000
Cost incurred for the completion of project	$ 393,968

XML

Earnings Per Share (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Computation of basic and diluted per share
Net Income	$ 206,487	$ 259,625	$ 739,671	$ 700,013
Wtd. Avg.Common Shares Outstanding	2,827,042	2,787,182	2,817,790	2,766,812
Dilutive Effect Of Stock Options	110,500	139,500	110,500	139,500
Wtd. Avg. Common Shares Outstanding, Assuming Dilution	2,937,542	2,926,682	2,928,290	2,906,312

XML

Income Taxes and Available Tax Loss Carryforwards (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Current
Federal
State
Total
Deferred-Benefit
Federal	106,900	134,200	382,800	329,200
State	18,300	23,000	65,500	56,300
Total	125,200	157,200	448,300	385,500
Income Tax Expense / (Benefit)	$ 125,200	$ 157,200	$ 448,300	$ 385,500

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Computation of basic and diluted per share

The following table sets forth the computation of basic and diluted per share information:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Numerator:
Net Income	$	206,487	$	259,625	$	739,671	$	700,013
Denominator:
Wtd. Avg. Common Shares Outstanding		2,827,042		2,787,182		2,817,790		2,766,812
Dilutive Effect Of Stock Options		110,500		139,500		110,500		139,500
Wtd. Avg. Common Shares Outstanding, Assuming Dilution		2,937,542		2,926,682		2,928,290		2,906,312

XML

Stock Options (Details 3)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Estimated fair value using the Black Scholes option valuation model
Risk Free Interest Rate, Minimum	0.62%	1.85%
Risk Free Interest Rate, Maximum	1.04%	2.24%
Expected Volatility, Minimum	80.06%	84.49%
Expected Volatility, Maximum	80.25%	84.66%
Expected Life	5 years	5 years
Dividend Yield	0.00%	0.00%

XML

Income Taxes and Available Tax Loss Carryforwards (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012
Effective Income Tax Rate (Textual) [Abstract]
Effective income tax rate	37.63%
Change in valuation allowance	$ 0

XML

Earnings Per Share (Details Textual) (Money Options [Member])	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Money Options [Member]
Earnings Per Share (Textual) [Abstract]
Out of Money Options	0	0	0	0

XML

Equipment Deposit

9 Months Ended

Sep. 30, 2012

Equipment Deposit [Abstract]

Equipment Deposit

Note D – Equipment Deposit

As of September 30, 2012 the company has paid $393,968 towards the replacement of the Programmable Logic Control (PLC) system expected to be placed in service by the end of the year. See Note L – Commitments and Contingencies for further details.

XML

Stock Options (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Stock Options (Textual) [Abstract]
Options to purchase	65,000	65,000	65,000	65,000
Stock options exercised	1,500		36,000
Cashless program resulting in the issuance of Shares	938		22,808
Excess tax benefit	$ 1,700		$ 42,000
Unexercised expired stock options			3,000
Excess tax benefit from paid-in capital			1,300
Company recognized stock-based compensation expense	11,821	14,106	32,067	38,572
Stock option expired	0
Unrecognized compensation costs related to non-vested stock options	31,626		31,626
Amortized expense of non-vested stock options over future weighted average vesting period			1 year 3 months
Chairman [Member]
Stock Options (Textual) [Abstract]
Granting to each non-employee Director			5 years
Options to purchase additional shares			2,500
Director [Member]
Stock Options (Textual) [Abstract]
Granting to each non-employee Director			5 years
Non employee director options to purchase exercisable period			1 year
1999 Plan [Member]
Stock Options (Textual) [Abstract]
Further options issued under the plans			0
Options outstanding under plan	8,500	21,500
2009 Plan [Member]
Stock Options (Textual) [Abstract]
Options to purchase	125,000		125,000
Aggregate fair market value of common stock with respect to ISO			$ 100,000
ISO's are Exercisable on the Authorized Percentage			20.00%
ISO's exercisable in following years			4 years
ISO's granted to an option for termination of employment, Minimum			30 days
ISO's granted to an option for termination of employment, Maximum			90 days
ISO's terminate the expiration date of the option, in the event of death, Maximum			90 days
ISO's terminate the expiration date of the option, in the event of death, Minimum			180 days
ISO's terminate the expiration date of the option in the event of disability, Minimum			180 days
ISO's terminate the expiration date of the option in the event of disability, Maximum			1 year
Stock options issued			65,000
2009 Plan [Member] | Director [Member]
Stock Options (Textual) [Abstract]
Options to purchase	1,500		1,500
2000 Plan [Member]
Stock Options (Textual) [Abstract]
Options to purchase	125,000		125,000
Further options issued under the plans	0		2,000
Options outstanding under plan	0	20,000
ISO's are Exercisable on the Authorized Percentage			20.00%
ISO's exercisable in following years			4 years
ISO's granted to an option for termination of employment, Minimum			30 days
ISO's granted to an option for termination of employment, Maximum			90 days
ISO's terminate the expiration date of the option, in the event of death, Maximum			90 days
ISO's terminate the expiration date of the option, in the event of death, Minimum			180 days
ISO's terminate the expiration date of the option in the event of disability, Minimum			180 days
ISO's terminate the expiration date of the option in the event of disability, Maximum			1 year

XML

Certificate of Deposit (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012
Certificate of Deposit (Textual) [Abstract]
Certificate of deposit totaling	$ 150,112
Deposit interest	0.15%
Maturity of certificate of deposit	Jun. 23, 2013

XML

Business Description and Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2012	Dec. 31, 2011
Summary of Significant Accounting Policies (Textual) [Abstract]
Accounts receivable arising from the sale of services requires payment within			30 days
Accounts receivable monitored closely by management and delinquencies			90 days
Written off Period of remaining value of Cobalt			5 years 3 months 4 days
Funds in noninterest-bearing transaction accounts for Federal Deposit Insurance Corporation					$ 250,000
Uninsured cash balances	144,653		144,653			0
Advertising expense	$ 2,675	$ 799	$ 5,327	$ 4,363

XML

Related Party Transactions (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012 Curies	Dec. 31, 2011 Curies	Dec. 31, 2010 Curies
Purchase of Cobalt from Nordion
Quantity of element purchased from supplier	299,996	499,998	105,757
Amount paid to purchase element from supplier	$ 898,405	$ 1,414,694	$ 81,740

XML

Equipment Deposit (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012
Equipment Deposit [Abstract]
Replacement of Programmable Logic Control (PLC)	$ 393,968

XML

Loan Fees (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011	Mar. 31, 2012 Line of Credit [Member]
Loan Fees (Textual) [Abstract]
Renewal fees in connection for letter of credit						$ 12,269
Loan Fees (Additional Textual) [Abstract]
Amortization expense of Loan	3,272	3,261	11,851	16,867
Total loan fees	$ 20,856		$ 20,856		$ 34,972

XML

Certificate of Deposit

9 Months Ended

Sep. 30, 2012

Certificate of Deposit [Abstract]

Certificate of Deposit

Note C – Certificate of Deposit

Certificate of deposit totaling $150,112 bears interest of .15% that compounds quarterly and matures on June 23, 2013 with penalties for early withdrawal. Any penalties for early withdrawal would not have a material effect on the financial statements.

XML

Letter and Line of Credit (Details Textual) (USD $)	9 Months Ended
	Sep. 30, 2012	Feb. 24, 2012
Line of Credit Facility [Line Items]
Letter of credit	$ 600,000
Letter and Line of Credit (Textual) [Abstract]
Expiry of letter of credit	Feb. 24, 2013
Annual fee on letter of credit collateralized by real property	12,269
Letter of credit is collateralized for certificate of deposit		150,112
Separate line of credit for the short term capital needs of the Company	400,000
Line of credit secured by the Company's real property on interest at prime plus	1.35%
Standby Letters of Credit [Member]
Line of Credit Facility [Line Items]
Letter of credit		$ 600,000

XML

Stock Options (Details 1) (USD $)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Sep. 30, 2012	Dec. 31, 2011
Company's stock options
Outstanding At December 31, 2011, Shares		139,500
Granted, Number of Shares		10,000
Exercised, Number of Shares	(1,500)	(36,000)
Expired/forfeited, Number of Shares		3,000
Outstanding At September 30, 2012, Shares	110,500	110,500	139,500
Vested/Exercisable At September 30, 2012, Number of shares	86,500	86,500
Outstanding At December 31, 2011, Wtd. Avg. Exercise Price		$ 1.95
Weighted Average Exercise Price Granted		$ 6.26
Exercised, Wtd. Avg. Exercise Price		$ 2.43
Expired/forfeited, Avg. Exercise Price		$ 2.52
Outstanding At September 30, 2012, Wtd. Avg. Exercise Price	$ 2.17	$ 2.17	$ 1.95
Vested/Exercisable At September 30, 2012, Wtd. Avg. Exercise Price	$ 2.50	$ 2.50
Outstanding At December 31, 2011, Wtd. Avg. Remaining contractual Life (Yrs)		4 years 1 month 17 days	4 years 7 days
Outstanding At September 30, 2012, Wtd. Avg. Remaining contractual Life (Yrs)		4 years 1 month 17 days	4 years 7 days
Vested/exercisable, Wtd. Avg. Remaining Contractual Life (Yrs)		3 years 6 months 15 days

XML

Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current Assets:
Cash	$ 2,201,706	$ 2,000,367
Certificate of Deposit, Restricted	150,112
Accounts Receivable, Less Allowance for Doubtful Accounts of $5,000	461,544	511,448
Prepaid Expenses	39,936	28,467
Deferred Tax Asset	377,100	651,000
Total Current Assets	3,230,398	3,191,282
Property, Plant and Equipment:
Buildings	3,488,668	3,443,723
Cobalt	6,799,382	5,900,977
Furniture and Equipment	2,096,487	2,076,481
Land	171,654	171,654
Less: Accumulated Depreciation	(7,230,634)	(6,830,734)
Total Property, Plant and Equipment	5,325,557	4,762,101
Other Assets:
Equipment Deposit	393,968
Deferred Tax Asset	51,700	185,400
Utility Deposits	5,000	5,000
Loan Fees - Net	7,463	7,046
Total Other Assets	458,131	197,446
Total Assets	9,014,086	8,150,829
Current Liabilities :
Accounts Payable	24,058	32,002
Accrued Liabilities	127,006	68,242
Total Current Liabilities	151,064	100,244
Stockholders' Equity:
Common Stock $.01 Par Value, Authorized 5,000,000 Shares, Issued 2,827,980 and 2,805,172 respectively	28,279	28,051
Paid-In Capital	12,347,756	12,275,218
Deficit	(3,494,522)	(4,234,193)
Less, 5,154 Treasury Shares at Cost	(18,491)	(18,491)
Total Stockholders' Equity	8,863,022	8,050,585
Total Liabilities and Stockholders' Equity	$ 9,014,086	$ 8,150,829

XML

Related Party Transactions (Details Textual) (Nordion [Member], USD $)	9 Months Ended
	Sep. 30, 2012
Nordion [Member]
Related Party Transactions (Textual) [Abstract]
Percentage of common stock owned by supplier	16.80%
Sale of common stock to Fort Ashford Holdings	463,317
Exercise price	$ 3.60

XML

Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Note A – Basis of Presentation

The accompanying financial statements of Food Technology Service, Inc. (the Company,” “we” or “our”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and the instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles. These interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

In the opinion of management, these financial statements reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the financial position as of September 30, 2012, and the results of operations and cash flows for the interim periods presented. Operating results for the period ended September 30, 2012, are not necessarily indicative of the results that may be expected for the full year. We have evaluated subsequent events for recognition or disclosure through the date this Form 10-Q is filed with the Securities and Exchange Commission.

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Income Taxes and Available Tax Loss Carryforwards (Details 2) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
NOL carryforward
NOL Carryforward - Beginning of period	$ 2,071,925	$ 3,672,530
Less Used	(1,069,871)	(1,600,605)
Less Expired
NOL Carryforward - End of period	$ 1,002,054	$ 2,071,925

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Income Taxes and Available Tax Loss Carryforwards (Tables)

9 Months Ended

Sep. 30, 2012

Income Taxes and Available Tax Loss Carryforwards [Abstract]

Components of income tax / (benefit)

The components of income tax / (benefit) are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Current
Federal	$	—	$	—	$	—	$	—
State		—		—		—		—
		—		—		—		—
Deferred-Benefit
Federal		106,900		134,200		382,800		329,200
State		18,300		23,000		65,500		56,300
		125,200		157,200		448,300		385,500
Total Income Tax Expense /(Benefit)	$	125,200	$	157,200	$	448,300	$	385,500

Difference in Income taxes computed by applying the effective income tax rates

Income taxes differ from the amounts computed by applying the effective income tax rates of 37.63% to income before income taxes as a result of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Expected Provision at US Statutory Rate	$	112,800	$	141,700	$	403,900	$	369,100
State Income Tax Net of Federal Benefit		12,000		15,100		43,200		39,400
Nondeductible Expenses		400		400		1,200		1,500
Change in Estimates and Available NOL Carryforwards		—		—		—		1,000
Change in Valuation Allowance		—		—		—		(25,500	)
Income Tax Expense / (Benefit)	$	125,200	$	157,200	$	448,300	$	385,500

NOL carryforward

The Company’s NOL carryforward is as follows:

	September 30, 2012			December 31, 2011
NOL Carryforward - Beginning of Period	$	2,071,925		$	3,672,530
Less Used		(1,069,871	)		(1,600,605	)
Less Expired		—			—
NOL Carryfoward - End of Period	$	1,002,054		$	2,071,925

Deferred tax assets

The components of the Company’s deferred tax assets are as follows:

	September 30, 2012		December 31, 2011
NOL Carryforward	$	377,100	$	779,700
Accrued Liabilities		17,700		17,700
Stock Options		34,000		39,000
Net Deferred Tax Asset	$	428,800	$	836,400
Current Portion	$	377,100	$	651,000
Noncurrent Portion		51,700		185,400
Total Net Deferred Tax Asset	$	428,800	$	836,400

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Income Taxes and Available Tax Loss Carryforwards (Details 3) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Deferred tax assets
NOL Carryforward	$ 377,100	$ 779,700
Accrued Liabilities	17,700	17,700
Stock Options	34,000	39,000
Net Deferred Tax Asset	428,800	836,400
Current Portion	377,100	651,000
Noncurrent Portion	51,700	185,400
Total Net Deferred Tax Asset	$ 428,800	$ 836,400

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Purchase of cobalt

The Company has recently purchased the following Cobalt from Nordion:

Year	Curies		Amount
2010		105,757	$	81,740
2011		499,998	$	1,414,694
2012		299,996	$	898,405

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Business Description and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Business Description and Summary of Significant Accounting Policies [Abstract]

Business Description and Summary of Significant Accounting Policies

Note B – Business Description and Summary of Significant Accounting Policies

The Company was organized in December 1985 and is engaged in the business of operating a gamma irradiation facility using Cobalt 60 for the sterilization of medical, surgical, pharmaceutical and packaging materials. It also disinfects fruits, vegetables, oysters and meat products to enhance safety or eliminate insect pests.

1. Use of Estimates

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.

2. Revenue Recognition

The primary source of revenue is from treating products with gamma radiation from Cobalt 60. Net Revenue is the gross income from such processing less allowances, if any. Revenues are recorded after the Company’s performance obligation is completed and product has been processed in accordance with the customer’s specifications and collection of the resulting receivable is probable.

3. Accounts Receivable and Allowances for Doubtful Accounts

Accounts receivable are customer obligations arising from the sale of services and are due under normal trade terms requiring payment within 30 days from the invoice date. Accounts over ninety days are monitored closely by Management and delinquencies are determined based on payment history, aging analysis and any specific known troubled assets. Receivables are charged off to the allowance for doubtful accounts once Management determines that they are uncollectible.

4. Property, Plant and Equipment

Property, plant and equipment are stated at cost. Assets other than Cobalt have been depreciated using the straight-line method over the following lives for both financial statement and tax purposes:

Building	31.5-40 Years
Furniture and Equipment	5-15 Years

The total cost basis of Cobalt has been depreciated using engineering estimates from published tables under which one-half of the remaining value is written off over 5.26 year periods.

Estimated useful lives are periodically reviewed and if warranted, changes will be made accordingly.

Nordion is the Company’s supplier of Cobalt 60. When Cobalt is purchased, Nordion agrees to accept the return of all Cobalt 60 that has reached the end of its useful life for a fee. The Company’s facility has the capacity to store the Cobalt 60 and there is no regulatory or industry requirement stating when the Cobalt needs to be returned. Management periodically reviews the value of the Cobalt 60 and has determined an environmental remediation liability is not necessary since the value of the Cobalt 60 exceeds the disposal costs.

5. Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less are considered to be cash and cash equivalents.

6. Concentration of Credit Risk

The Company maintains its cash in three financial institutions. The Federal Deposit Insurance Corporation insures up to $250,000 per legal entity per financial institution and all funds in noninterest-bearing transaction accounts until December 31, 2012. The Company’s uninsured balances totaled approximately $144,653 as of September 30, 2012 and none as of December 31, 2011.

7. Earnings Per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding. Diluted earnings per share are computed by the weighted average number of common shares outstanding, plus the effect of common stock equivalents that are dilutive.

8. Fair Value of Financial Instruments

The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities approximate fair value.

9. Stock Option Plans

The Company has various stock option plans for employees and other individuals providing services to or serving as Directors of the Company. (See Note I – Stock Options) Compensation cost under the plans is recognized using the fair value recognition provisions of FASB ASC 718. Such cost is recognized for shares expected to vest on a straight-line basis over the requisite service period of the award using the Black-Scholes option-pricing model. FASB ASC 718 requires the benefits of tax deductions in excess of the compensation cost recognized for those options to be classified as financing cash inflows rather than operating cash inflows. This amount is shown as excess tax benefit from share based compensation on the statements of cash flows. The excess tax benefits from the expired options are recorded in additional paid-in capital and any tax benefits from stock options expired unexercised are offset to the extent of any remaining balance.

10. Advertising

The Company expenses all advertising costs when incurred. Advertising expense recognized for the three months ended September 30, 2012 and 2011 were $2,675 and $799, respectively and for the nine months ended September 30, 2012 and 2011 were $5,327 and $4,363 respectively.

11. Reclassification

Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

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Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 5,000	$ 5,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	5,000,000	5,000,000
Common stock, shares issued	2,827,980	2,805,172
Treasury stock, shares	5,154	5,154

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note L – Commitments and Contingencies

In March 2012, the Company entered into an agreement with Nordion for the replacement of the Programmable Logic Control (PLC) system at an estimated cost of $800,000. This is the last part of a multi-year project intended to maintain the facility in good and reliable condition. The PLC replacement will take place in two phases and is expected to be substantially completed by the end of 2012. As of September 30, 2012, the company has paid $393,968 toward the completion of this project.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 25, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	FOOD TECHNOLOGY SERVICE INC
Entity Central Index Key	0000868267
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		2,830,297

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Concentration and Credit Risk

9 Months Ended

Sep. 30, 2012

Concentration and Credit Risk [Abstract]

Concentration and Credit Risk

Note M – Concentration and Credit Risk

Although the Company continues to diversify its customer base it does a significant amount of its total business with the following customers.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Customer 1		30			29			31			39
Customer 2		24			31			29			21
Total		54	%		60	%		60	%		60	%

The Company’s cash and accounts receivable are subject to potential credit risk. Management continuously monitors the credit standing of the financial institutions and customers with which the Company deals. A provision has been made for doubtful accounts which historically have not been significant.

The Company’s supplier of Cobalt 60 is Nordion (Canada) Inc. In the event it is unavailable from Nordion the Company can obtain Cobalt 60 from one other source.

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Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Statements of Operations [Abstract]
Net Revenues	$ 925,654	$ 1,011,650	$ 2,996,094	$ 2,782,249
Costs and Operating Expenses
Processing Costs	148,413	167,918	480,263	457,790
Selling, General and Administrative	292,442	294,703	916,719	885,271
Depreciation and Amortization	153,332	132,419	411,751	354,467
Total Costs and Operating Expenses	594,187	595,040	1,808,733	1,697,528
Income from Operations	331,467	416,610	1,187,361	1,084,721
Interest Income	220	215	610	792
Income before Income Taxes	331,687	416,825	1,187,971	1,085,513
Income Tax (Expense) Benefit - Deferred	(125,200)	(157,200)	(448,300)	(385,500)
Net Income	$ 206,487	$ 259,625	$ 739,671	$ 700,013
Net Income Per Common Share
-Basic	$ 0.073	$ 0.093	$ 0.263	$ 0.253
-Diluted	$ 0.070	$ 0.089	$ 0.253	$ 0.241
Weighted Average Number of Common Shares Used in Computation
-Basic	2,827,042	2,787,182	2,817,790	2,766,812
-Diluted	2,937,542	2,926,682	2,928,290	2,906,312

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Income Taxes and Available Tax Loss Carryforwards

9 Months Ended

Sep. 30, 2012

Income Taxes and Available Tax Loss Carryforwards [Abstract]

Income Taxes and Available Tax Loss Carryforwards

Note G – Income Taxes and Available Tax Loss Carryforwards

The components of income tax / (benefit) are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Current
Federal	$	—	$	—	$	—	$	—
State		—		—		—		—
		—		—		—		—
Deferred-Benefit
Federal		106,900		134,200		382,800		329,200
State		18,300		23,000		65,500		56,300
		125,200		157,200		448,300		385,500
Total Income Tax Expense /(Benefit)	$	125,200	$	157,200	$	448,300	$	385,500

Income taxes differ from the amounts computed by applying the effective income tax rates of 37.63% to income before income taxes as a result of the following:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Expected Provision at US Statutory Rate	$	112,800	$	141,700	$	403,900	$	369,100
State Income Tax Net of Federal Benefit		12,000		15,100		43,200		39,400
Nondeductible Expenses		400		400		1,200		1,500
Change in Estimates and Available NOL Carryforwards		—		—		—		1,000
Change in Valuation Allowance		—		—		—		(25,500	)
Income Tax Expense / (Benefit)	$	125,200	$	157,200	$	448,300	$	385,500

The Company had income tax net operating loss (“NOL”) carryforwards for federal income tax purposes. The NOL will expire in various years ending through the year 2030.

The Company’s NOL carryforward is as follows:

	September 30, 2012			December 31, 2011
NOL Carryforward - Beginning of Period	$	2,071,925		$	3,672,530
Less Used		(1,069,871	)		(1,600,605	)
Less Expired		—			—
NOL Carryfoward - End of Period	$	1,002,054		$	2,071,925

The components of the Company’s deferred tax assets are as follows:

	September 30, 2012		December 31, 2011
NOL Carryforward	$	377,100	$	779,700
Accrued Liabilities		17,700		17,700
Stock Options		34,000		39,000
Net Deferred Tax Asset	$	428,800	$	836,400
Current Portion	$	377,100	$	651,000
Noncurrent Portion		51,700		185,400
Total Net Deferred Tax Asset	$	428,800	$	836,400

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

During 2011, as a result of the continuing diversification and growth in customer base, ongoing profits from operations and the Company’s revised estimate of future taxable income, it was concluded that it is more likely than not that future taxable income will be sufficient to realize all of the Company’s deferred asset. As of September 30, 2012, no further changes to the valuation allowance have been made.

The Company believes that its estimate of future operations is conservative and reasonable, but inherently uncertain. If the Company realizes unforeseen material losses in the future and its future projections of income decrease, the allowance could be increased resulting in a charge to income.

The Company’s tax years 2009 through 2011 remain open to examination by taxing jurisdictions.

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Letter and Line of Credit

9 Months Ended

Sep. 30, 2012

Letter And Line of Credit [Abstract]

Letter and Line of Credit

Note F – Letter and Line of Credit

The State of Florida requires as a condition of the Company’s Radioactive Materials License a $600,000 irrevocable standby letter of credit. On February 24, 2012, the Company renewed the $600,000 letter of credit with Regions Bank to satisfy the State of Florida requirements. The letter of credit expires on February 24, 2013, has an annual fee of $12,269 and is collateralized by the Company’s real estate and a $150,112 certificate of deposit.

The Company has a separate $400,000 line of credit with Regions Bank that is available for the short term capital needs of the Company. The line of credit is secured by the Company’s real estate and incurs interest at prime plus 1.35%. As of September 30, 2012, the Company has not used the line of credit.

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Stock Options (Tables)

9 Months Ended

Sep. 30, 2012

Stock Options [Abstract]

Stock options granted and outstanding

The maximum number of shares of the Company’s Stock that may be issued under the 2009 Plan is 125,000 shares. Options granted and outstanding under this plan are as follows:

Year	Granted		Outstanding
Before 2011		23,000		17,000
2011		10,000		10,000
2012		10,000		10,000
		43,000		37,000

Company's stock options

A summary of the status of the Company’s stock options is as follows:

	Number of Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life (Yrs)
Outstanding At December 31, 2011		139,500		$	1.95		4.02
Granted		10,000		$	6.26
Exercised		(36,000	)	$	2.43
Expired/Forfeited		(3,000	)	$	2.52
Outstanding At September 30, 2012		110,500		$	2.17		4.13
Vested/Exercisable At September 30, 2012		86,500		$	2.50		3.54

Company's nonvested stock options

A summary of the status of the Company’s nonvested stock options is as follows:

	Number of Shares			Wtd. Avg. Grant Date Fair Value
Nonvested, At December 31, 2011		28,000		$	0.41
Granted		10,000		$	4.36
Vested		(14,000	)	$	3.45
Nonvested, At September 30, 2012		24,000		$	0.28
Expired/Forfeited During Period		3,000		$	1.16

Estimated fair value using the Black Scholes option valuation model

The Company estimated the fair value at the date of grant using the Black Scholes option valuation model with the following assumptions:

	Nine Months Ended September 30,
	2012	2011
Risk Free Interest Rate	0.62-1.04%	1.85-2.24%
Expected Volatility	80.06-80.25%	84.49-84.66%
Expected Life	5 years	5 years
Dividend Yield	0%	0%

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Note N – Subsequent Events

We have evaluated subsequent events for recognition or disclosure in these financial statements through the date of issuance, and determined there are no material transactions to recognize or disclose.

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Related Party Transactions

9 Months Ended

Sep. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

Note J – Related Party Transactions

The Company’s supplier of Cobalt, Nordion (Canada) Inc., formerly MDS Nordion, owned approximately 16.8% of the Company’s outstanding common stock. By agreement entered into February 10, 2011, Nordion (Canada) Inc., formerly MDS Nordion, sold 463,317 shares of common stock to Fort Ashford Holdings, LLC for $3.60 per share. As of February 25, 2011, the closing date for the sale, Nordion (Canada) ceased to be a shareholder and no longer has any direct or indirect interest in the outstanding shares of common stock of the Company.

The Company has recently purchased the following Cobalt from Nordion:

Year	Curies		Amount
2010		105,757	$	81,740
2011		499,998	$	1,414,694
2012		299,996	$	898,405

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Accrued Liabilities

9 Months Ended

Sep. 30, 2012

Accrued Liabilities [Abstract]

Accrued Liabilities

Note H – Accrued Liabilities

Effective January 1, 2011, the Board of Directors modified the President’s employment contract to include a resignation clause. This clause provides two weeks base pay for every full year worked for the company, if a six month notice is received before the President leaves. As of September 30, 2012, an accrual of $47,000 is recorded in relation to the resignation clause.

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Stock Options

9 Months Ended

Sep. 30, 2012

Stock Options [Abstract]

Stock Options

Note I – Stock Options

On February 9, 1999, the Board of Directors approved an option program for non-employee Directors.

The program was amended in 2001 and 2005 to provide for the annual granting to each non-employee Director of five year options to purchase 1,500 shares of common stock, exercisable at the end of one year at the market value of the shares of common stock on the date of grant. Also, the Chairman of the Board is awarded annually five year options to purchase an additional 2,500 shares. Options outstanding under this plan as of September 30, 2012 and 2011 are 8,500 and 21,500, respectively.

No further options are being issued under the 1999 Plan.

On September 23, 2000, the Stockholders approved the 2000 Incentive and Non-Statutory Stock Option Plan (the “2000 Plan”).

The 2000 Plan was administered by the Board of Directors who was authorized to grant incentive stock options (“ISO’s”) to Officers and employees of the Company and non-qualified options (“NQO’s”) for certain other individuals providing services to or serving as Directors of the Company.

The maximum number of shares of the Company’s Stock that may be issued under the 2000 Plan is 125,000 shares. Options outstanding under this plan as of September 30, 2012 and 2011 are none and 20,000, respectively.

The ISO’s are exercisable 20% of the authorized amount immediately and 20% in each of the following four years. ISO’s granted to an optionee terminate 30 to 90 days after termination of employment or other relationship, except that ISO’s terminate the earlier of the expiration date of the option, or 90 to 180 days in the event of death and 180 days to one year in the event of disability.

No further options are being issued under the 2000 Plan.

On May 14, 2009, the Stockholders approved the 2009 Incentive and Non-Statutory Stock Option Plan (the “2009 Plan”).

The 2009 Plan is administered by the Board of Directors who is authorized to grant incentive stock options (“ISO’s”) to Officers and employees of the Company and non-qualified options (“NQO’s”) for certain other individuals providing services to or serving as Directors of the Company

The maximum number of shares of the Company’s Stock that may be issued under the 2009 Plan is 125,000 shares. Options granted and outstanding under this plan are as follows:

Year	Granted		Outstanding
Before 2011		23,000		17,000
2011		10,000		10,000
2012		10,000		10,000
		43,000		37,000

The aggregate fair market value (determined at the time an ISO is granted) of the Common Stock with respect to which ISO’s are exercisable for the first time by any person during any calendar year under the Plans shall not exceed $100,000.

The ISO’s are exercisable 20% of the authorized amount immediately and 20% in each of the following four years. ISO’s granted to an optionee terminate 30 to 90 days after termination of employment or other relationship, except that ISO’s terminate the earlier of the expiration date of the option, or 90 to 180 days in the event of death and 180 days to one year in the event of disability.

In 2003 and 2008 the company reached the maximum number of stock options allowed to be issued under the respective current stock option plan. The company therefore issued 65,000 stock options outside of aforementioned plans. Options outstanding outside a specific plan as of September 30, 2012 and 2011 are 65,000 and 65,000, respectively.

A summary of the status of the Company’s stock options is as follows:

	Number of Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Life (Yrs)
Outstanding At December 31, 2011		139,500		$	1.95		4.02
Granted		10,000		$	6.26
Exercised		(36,000	)	$	2.43
Expired/Forfeited		(3,000	)	$	2.52
Outstanding At September 30, 2012		110,500		$	2.17		4.13
Vested/Exercisable At September 30, 2012		86,500		$	2.50		3.54

A summary of the status of the Company’s nonvested stock options is as follows:

	Number of Shares			Wtd. Avg. Grant Date Fair Value
Nonvested, At December 31, 2011		28,000		$	0.41
Granted		10,000		$	4.36
Vested		(14,000	)	$	3.45
Nonvested, At September 30, 2012		24,000		$	0.28
Expired/Forfeited During Period		3,000		$	1.16

The Company estimated the fair value at the date of grant using the Black Scholes option valuation model with the following assumptions:

	Nine Months Ended September 30,
	2012	2011
Risk Free Interest Rate	0.62-1.04%	1.85-2.24%
Expected Volatility	80.06-80.25%	84.49-84.66%
Expected Life	5 years	5 years
Dividend Yield	0%	0%

Option valuation models require the input of highly subjective assumptions including the expected option life. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For the three months ended September 30, 2012, 1,500 stock options were exercised under a cashless program resulting in the issuance of 938 shares and an excess tax benefit of $1,700. For the nine months ended September 30, 2012, 36,000 stock options were exercised under a cashless program resulting in the issuance of 22,808 shares and an excess tax benefit of $42,000.

For the three months ended September 30, 2012 there were no expired stock options. For the nine months ended September 30, 2012, 3,000 unexercised expired stock options created a $1,300 tax benefit that has been charged against paid-in capital from excess tax benefits.

The Company recognized $11,821 and $14,106 stock-based compensation expense for the three months ended September 30, 2012 and 2011, respectively and $32,067 and $38,572 for the nine months ended September 30, 2012 and 2011, respectively.

As of September 30, 2012, there was $31,626 of unrecognized compensation costs related to non-vested stock options, which will be amortized to expense over future periods. The Company expects to recognize that cost over the weighted average vesting period 1.25 years.

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Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

Note K – Earnings Per Share

Earnings per share are calculated in accordance with ASC 260-10, “Earnings Per Share”. Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during the years. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. Common share equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.

ASC 260-10 requires the presentation of both Basic EPS and Diluted EPS on the face of the Company’s Statements of Operations.

The following table sets forth the computation of basic and diluted per share information:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Numerator:
Net Income	$	206,487	$	259,625	$	739,671	$	700,013
Denominator:
Wtd. Avg. Common Shares Outstanding		2,827,042		2,787,182		2,817,790		2,766,812
Dilutive Effect Of Stock Options		110,500		139,500		110,500		139,500
Wtd. Avg. Common Shares Outstanding, Assuming Dilution		2,937,542		2,926,682		2,928,290		2,906,312

For the three months and nine months ended September 30, 2012 and 2011, there were no out of the money options to exclude from the computation of diluted EPS.

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Income Taxes and Available Tax Loss Carryforwards (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Difference in Income taxes computed by applying the effective income tax rates
Expected Provision at US Statutory Rate	$ 112,800	$ 141,700	$ 403,900	$ 369,100
State Income Tax Net of Federal Benefit	12,000	15,100	43,200	39,400
Nondeductible Expenses	400	400	1,200	1,500
Change in Estimates and Available NOL Carryforwards				1,000
Change in Valuation Allowance				(25,500)
Income Tax Expense / (Benefit)	$ 125,200	$ 157,200	$ 448,300	$ 385,500

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Business Description and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Business Description and Summary of Significant Accounting Policies [Abstract]

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Assets other than Cobalt have been depreciated using the straight-line method over the following lives for both financial statement and tax purposes:

Building	31.5-40 Years
Furniture and Equipment	5-15 Years

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Concentration and Credit Risk (Tables)

9 Months Ended

Sep. 30, 2012

Concentration and Credit Risk [Abstract]

Company's customer base

Although the Company continues to diversify its customer base it does a significant amount of its total business with the following customers.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Customer 1		30			29			31			39
Customer 2		24			31			29			21
Total		54	%		60	%		60	%		60	%

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Concentration and Credit Risk (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2012 Person	Sep. 30, 2011 Person	Sep. 30, 2012 Person	Sep. 30, 2011 Person
Concentration and Credit Risk (Textual) [Abstract]
Customer 1	30	29	31	39
Customer 2	24	31	29	21
Total	54.00%	60.00%	60.00%	60.00%

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Stock Options (Details 2) (USD $)	9 Months Ended
	Sep. 30, 2012
Company's nonvested stock options
Nonvested At December 31, 2011, Shares	28,000
Granted, Shares	10,000
Vested, Shares	(14,000)
Nonvested At September 30, 2012, Shares	24,000
Expired/Forfeited during the period, Shares	3,000
Nonvested at December 31, Wtd. Avg.Grant Date Fair Value	$ 0.41
Granted, Wtd.Avg.Grant Date Fair Value	$ 4.36
Vested, Wtd.Avg.Grant Date Fair Value	$ 3.45
Nonvested at September 30, 2012, Wtd.Avg. Grant Date Fair Value	$ 0.28
Expired/Forfeited During period, Wtd.Avg.Grant Date Fair Value	$ 1.16

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Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows from Operations:
Cash Received from Customers	$ 3,045,998	$ 2,689,710
Interest Received	610	792
Interest Paid	(482)	(253)
Cash Paid for Operating Expenses	(1,367,082)	(1,235,486)
Net Cash Provided by Operations	1,679,044	1,454,763
Cash Flows from Investing Activities:
Certificate of Deposit	(150,112)
Letter of Credit Costs	(12,269)	(12,218)
Purchase of Cobalt, Delivery & Installation	(898,405)	(901,717)
Purchase of Equipment	(20,006)	(64,008)
Equipment Deposit	(393,968)
Warehouse Renovation	(44,945)	(73,814)
Net Cash (Used) by Investing	(1,519,705)	(1,051,757)
Cash Flows from Financing Activities:
Excess Tax Benefit From Share Based Compensation	42,000
Net Increase in Cash	201,339	403,006
Cash at Beginning of Period	2,000,367	1,294,540
Cash at End of Period	2,201,706	1,697,546
Reconciliation of Net Income to Net Cash Provided by Operations:
Net Income	739,671	700,013
Adjustments to Reconcile Net Income to Cash Provided or Used:
Amortization	11,851	16,867
Deferred Income Tax	448,300	385,500
Excess Tax Benefit From Share Based Compensation	(42,000)
Depreciation	399,900	337,601
Share-Based Compensation	32,067	38,572
(Increase)/Decrease in Receivables	49,904	(92,539)
(Increase)/Decrease in Other Receivables		(7,428)
(Increase)/Decrease in Prepaid Expenses	(11,469)	(31,230)
Increase/(Decrease) in Payables	(7,944)	18,893
Increase/(Decrease) in Accruals	58,764	88,514
Net Cash Provided by Operations	1,679,044	1,454,763
Non-cash Financing Transactions:
Fair Value of Common Stock Issued Pursuant to Exercised Stock Options	$ 153,315	$ 308,956

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Loan Fees

9 Months Ended

Sep. 30, 2012

Loan Fees [Abstract]

Loan Fees

Note E – Loan Fees

During the first quarter of 2012, renewal fees in the amount of $12,269 were incurred in connection with the Regions letter of credit (See Note F – Letter and Line of Credit). As of September 30, 2012 and December 31, 2011, total loan fees were $20,856 and $34,972, respectively. These fees were amortized based on the life of the loans and written off upon completion. Amortization expense for the three months ended September 30, 2012 and 2011 were $3,272 and $3,261, respectively and for the nine months ended September 30, 2012 and 2011 were $11,851 and $16,867, respectively.

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Business Description and Summary of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2012
Building [Member] | Minimum Life [Member]
Property, Plant and Equipment
Property, Plant and Equipment	31 years 6 months
Building [Member] | Maximum Life [Member]
Property, Plant and Equipment
Property, Plant and Equipment	40 years
Furniture and Equipment [Member] | Minimum Life [Member]
Property, Plant and Equipment
Property, Plant and Equipment	5 years
Furniture and Equipment [Member] | Maximum Life [Member]
Property, Plant and Equipment
Property, Plant and Equipment	15 years

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Accrued Liabilities (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Accrued Liabilities (Textual) [Abstract]
Change Other Employee Related Liabilities	$ 47,000
Employee termination clause	Two weeks base pay for every full year worked for the company, if a six month notice is received before the President leaves

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Business Description and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Business Description and Summary of Significant Accounting Policies [Abstract]

Use of Estimates

1. Use of Estimates

Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing the financial statements.

Revenue Recognition

2. Revenue Recognition

The primary source of revenue is from treating products with gamma radiation from Cobalt 60. Net Revenue is the gross income from such processing less allowances, if any. Revenues are recorded after the Company’s performance obligation is completed and product has been processed in accordance with the customer’s specifications and collection of the resulting receivable is probable.

Accounts Receivable and Allowances for Doubtful Accounts

3. Accounts Receivable and Allowances for Doubtful Accounts

Accounts receivable are customer obligations arising from the sale of services and are due under normal trade terms requiring payment within 30 days from the invoice date. Accounts over ninety days are monitored closely by Management and delinquencies are determined based on payment history, aging analysis and any specific known troubled assets. Receivables are charged off to the allowance for doubtful accounts once Management determines that they are uncollectible.

Property, Plant and Equipment

4. Property, Plant and Equipment

Property, plant and equipment are stated at cost. Assets other than Cobalt have been depreciated using the straight-line method over the following lives for both financial statement and tax purposes:

Building	31.5-40 Years
Furniture and Equipment	5-15 Years

The total cost basis of Cobalt has been depreciated using engineering estimates from published tables under which one-half of the remaining value is written off over 5.26 year periods.

Estimated useful lives are periodically reviewed and if warranted, changes will be made accordingly.

Nordion is the Company’s supplier of Cobalt 60. When Cobalt is purchased, Nordion agrees to accept the return of all Cobalt 60 that has reached the end of its useful life for a fee. The Company’s facility has the capacity to store the Cobalt 60 and there is no regulatory or industry requirement stating when the Cobalt needs to be returned. Management periodically reviews the value of the Cobalt 60 and has determined an environmental remediation liability is not necessary since the value of the Cobalt 60 exceeds the disposal costs.

Cash and Cash Equivalents

5. Cash and Cash Equivalents

All highly liquid investments with original maturities of three months or less are considered to be cash and cash equivalents.

Concentration of Credit Risk

6. Concentration of Credit Risk

The Company maintains its cash in three financial institutions. The Federal Deposit Insurance Corporation insures up to $250,000 per legal entity per financial institution and all funds in noninterest-bearing transaction accounts until December 31, 2012. The Company’s uninsured balances totaled approximately $144,653 as of September 30, 2012 and none as of December 31, 2011.

Earnings Per Share

7. Earnings Per Share

Basic earnings per share are computed using the weighted average number of common shares outstanding. Diluted earnings per share are computed by the weighted average number of common shares outstanding, plus the effect of common stock equivalents that are dilutive.

Fair Value of Financial Instruments

8. Fair Value of Financial Instruments

The carrying value of cash, accounts receivable, prepaid expenses, deposits, accounts payable and accrued liabilities approximate fair value.

Stock Option Plans

9. Stock Option Plans

The Company has various stock option plans for employees and other individuals providing services to or serving as Directors of the Company. (See Note I – Stock Options) Compensation cost under the plans is recognized using the fair value recognition provisions of FASB ASC 718. Such cost is recognized for shares expected to vest on a straight-line basis over the requisite service period of the award using the Black-Scholes option-pricing model. FASB ASC 718 requires the benefits of tax deductions in excess of the compensation cost recognized for those options to be classified as financing cash inflows rather than operating cash inflows. This amount is shown as excess tax benefit from share based compensation on the statements of cash flows. The excess tax benefits from the expired options are recorded in additional paid-in capital and any tax benefits from stock options expired unexercised are offset to the extent of any remaining balance.

Advertising

10. Advertising

The Company expenses all advertising costs when incurred. Advertising expense recognized for the three months ended September 30, 2012 and 2011 were $2,675 and $799, respectively and for the nine months ended September 30, 2012 and 2011 were $5,327 and $4,363 respectively.

Reclassification

11. Reclassification

Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.