SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2009
Commission File Number 0-19047
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FOOD TECHNOLOGY SERVICE, INC.
(Exact Name of Registrant as Specified in its charter)
FLORIDA 59-2618503
(State of Incorporation or Organization) (Employer Identification Number)
502 Prairie Mine Road, Mulberry, FL 33860
(Address of Principal Executive offices)(Zip code)
Registrants telephone number, including area code (863) 425-0039
Indicate by check mark whether the Registrant: (1) has filed all by
Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes [X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer or a smaller reporting company.
See definition of "accelerated filer", "large accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [ ]
Smaller Reporting Company [X ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act.): Yes [ ] No [X ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.
Class June 30, 2009
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Common Stock $.01 Par Value 2,756,458 shares
FOOD TECHNOLOGY SERVICE, INC.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
2009 2008
ASSETS ---- ----
------ (unaudited) *
Current Assets:
Cash $ 845,335 $ 216,978
Accounts Receivable Less Allowance For
Doubtful Accounts of $2,500 in 2009
and 2008 222,580 268,305
Prepaid Expenses 60,044 33,329
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Total Current Assets 1,127,959 518,612
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Property and Equipment:
Cobalt 4,404,543 4,404,543
Furniture and Equipment 1,921,203 1,899,887
Building 3,282,029 3,282,029
Less Accumulated Depreciation (5,816,845) (5,619,783)
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Total 3,790,930 3,966,676
Land 171,654 171,654
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Total Property and Equipment 3,962,584 4,138,330
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Other Assets:
Deposits 5,000 5,000
Deferred Income Tax 1,175,000 1,175,000
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Total Other Assets 1,180,000 1,180,000
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Total Assets $ 6,270,543 $ 5,836,942
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FOOD TECHNOLOGY SERVICE, INC.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
2009 2008
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------- ------ ------
(unaudited) *
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 87,620 $ 31,295
Financing Agreement and Debenture Payable 642,107 628,629
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Total Current Liabilities 729,727 659,924
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Stockholders' Equity:
Common Stock $.01 par value, 5,000,000 shares authorized,
2,756,458 shares issued and
outstanding on June 30, 2009 and
December 31, 2008 27,564 27,564
Paid in Capital 12,163,444 12,147,444
Deficit (6,631,701) (6,979,499)
Treasury Stock, 5,155 shares at cost (18,491) (18,491)
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Total Stockholders' Equity 5,540,816 5,177,018
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Total Liabilities and Stockholders' Equity $ 6,270,543 $ 5,836,942
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* Condensed from audited financial statements
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2009 AND 2008
2009 2008
---- ----
(unaudited) (unaudited)
Net Sales $ 652,724 $ 623,061
Processing Costs 111,314 136,131
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Income from Operations 541,410 486,930
General Administrative and Development 270,483 251,321
Depreciation 98,227 88,923
Interest Expense 6,774 16,913
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Income Before Income Taxes 165,926 129,773
Income Taxes
Current 63,052 49,314
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Income (Loss) before
Benefit of Tax Loss
Carryovers 102,874 80,459
Benefit of Tax
Loss Carryovers 63,052 49,314
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Net Income $ 165,926 $129,773
========= ========
Net Income per Common Share $0.060 $0.047
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NOTE 1: BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normally
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of results for the interim period.
The results of operations for the three month period ended June 30, 2009
are not necessarily indicative of the results to be expected for the full
year.
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
2009 2008
---- ----
(unaudited) (unaudited)
Net Sales $1,327,554 $1,181,930
Processing Costs 234,258 272,118
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Income from Operations 1,093,296 909,812
General Administrative and Development 534,959 485,196
Depreciation 197,062 179,710
Interest Expense 13,477 38,579
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Income Before Income Taxes 347,798 206,327
Income Taxes
Current 132,163 78,404
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Income (Loss) before
Benefit of Tax Loss
Carryovers 215,635 127,923
Benefit of Tax
Loss Carryovers 132,163 78,404
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Net Income $ 347,798 $ 206,327
========= ========
Net Income per Common Share ** $0.126 $0.075
========= ========
NOTE 1: BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normally
recurring adjustments) which are, in the opinion of management, necessary
for a fair statement of results for the interim period.
The results of operations for the six month period ended June 30, 2009
are not necessarily indicative of the results to be expected for the full
year.
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF CASH FLOWS
Six Months Six Months
Ended Ended
June 30, June 30,
2009 2008
-------------- --------------
(unaudited) (unaudited)
Cash Flows from Operations:
Sales Income Received $ 1,373,279 $ 1,263,668
Interest Received 2,199 22
Interest Paid - (9,958)
Cash Paid for Operating Expenses (725,805) (760,381)
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649,673 493,351
Cash Flows from Investing:
Property & Equipment Purchase (21,316) (564,357)
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(21,316) (564,357)
Cash Flows from Financing Activities:
Repayment on Note Payable - (4,570)
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- (4,570)
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Net Increase (Decrease) in Cash 628,357 (75,576)
Cash at Beginning of Period 216,978 257,286
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Cash at End of Period $ 845,335 $ 181,710
========== ==========
_______________________________________________________________________________
Reconciliation of Net Income to Net Cash
Provided by Operations
Net Income $347,798 $ 206,327
Adjustments to Reconcile Net Income to
Cash Provided by Operations:
Depreciation 197,062 179,710
Amortization 2,014 1,143
Accrued Interest 13,478 28,621
(Increase) Decrease in Receivables 45,725 81,738
(Increase) Decrease in Prepaids (28,729) (44,764)
Increase (Decrease)in Payables and Accruals 72,325 40,576
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Net Cash Provided by Operating
Activities $ 649,673 $ 493,351
========== ==========
Management's Analysis of Quarterly Income Statements Operations
- ----------
Food Technology Service Inc. had revenues of $652,724 during the second quarter
of 2009 compared to revenues of $623,061 for the same period in 2008. This is
an increase of approximately 4.8 percent. The Company had net income during
the second quarter of 2009 of $165,926 compared to net income of $129,773 during
the second quarter of 2008. This is an increase of approximately 27.8 percent.
For the first half of 2009, the Company had revenues of $1,327,554 and net
income of $347,798. Revenues during the first half of 2008 were $1,181,930 and
the Company had net income of $206,327. Revenues increased by about 12.3
percent and net income increased by approximately 68 percent in the first half
of 2009 compared to the same period in 2008.
Included in revenue for the quarter and six month period ended June 30, 2009 is
a settlement fee of $85,229 relating to the termination of a warehouse lease
with a former customer. As previously reported, the customer, responsible for
approximately 25% of our revenue for the year ended December 31, 2008 and the
first quarter of 2009, was acquired by a third party and as a result, their
operations were moved to the Southwest United States. Without the settlement
fee, revenue from operations for the quarter and six months ended June 30, 2009
would have been $567,495 and $1,242,325 respectively. Cost comparisons in the
following paragraphs are presented both with and without the lease settlement
revenue.
During the second quarter of 2009, processing costs as a percentage of sales
were 17.1 percent with the lease settlement revenue and 19.4 percent without
such revenue. This compares to 21.8 percent in the second quarter of 2008.
This percentage decrease was due primarily to efficiencies in operations during
the second quarter and the fact that there was downtime during the second
quarter of 2008 due to the installation of Cobalt. General administrative and
development costs as a percentage of sales during the second quarter of 2009
were 41.4 percent with the lease settlement revenue and 47.6 percent without
such revenue. This compares to 40.3 percent in the second quarter of 2008.
These expenses are relatively fixed and the percentage increase is due to the
decrease in revenue and the cost of renovations made to the roof of the
facility beginning in the second quarter of 2009.
During the first half of 2009, processing costs as a percentage of sales were
17.6 percent with the lease settlement revenue and 18.9 percent without such
revenue. This compares to 23 percent in the first half of 2008. This decrease
was due, as previously mentioned, to the efficiencies in operations in the
second quarter of 2009 and the downtime associated with Cobalt installation
during the second quarter of 2008. General, administrative and development
costs as a percentage of sales were 40.2 percent during the first half of 2009
with the lease settlement revenue and 43.1 percent during the first half of
2009 without such revenue. This compares to 41.1 percent during the first half
of 2008. The 2009 percentages were slightly elevated by the cost of roof
renovations but generally reflect the fact that such costs are relatively fixed
over longer time periods.
Liquidity and Capital Resources
- -------------------------------
As of June 30, 2009, the Company has cash on hand of $845,335 and accounts
receivable of $222,580.
PART II
OTHER INFORMATION
Item 1 Legal Proceedings
The company is not involved in any legal proceedings.
Item 2-6 Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: Aug 14, 2009 FOOD TECHNOLOGY SERVICE, INC.
/S/ Richard Hunter
---------------------------------
Richard Hunter, Ph.D., Chief Executive
Officer and Chief Financial Officer