UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Nine Months Ended September 30, 1996
Commission File Number 0-19047
FOOD TECHNOLOGY SERVICE, INC.
INCORPORATED IN FLORIDA
IRS IDENTIFICATION NO. 59-2618503
1801 Thonotosassa Road, Suite 3, Plant City, Florida 33566
(813) 752-3364
"Indicate by check mark whether the registrant has filed all annual, quarterly
and other reports required to be filed with the Commission within the past 90
days and in addition has filed the most recent annual report required to be
filed. Yes [X] . No [ ]"
"Indicate the number of shares outstanding of each of
the issuer's classes of common stock, as of the last
practicable date."
Outstanding as of September 30,
Class 1995 1996
- ----- ------ ------
Common Stock, $.01 Par Value 3,815,544 Shares 5,306,194 Shares
FOOD TECHNOLOGY SERVICE, INC.
BALANCE SHEETS
SEPT. 30, DECEMBER 31,
1996 1995
(unaudited) *
------------ -----------
ASSETS
Current Assets:
Cash $ 31,747 $ 98,359
Accounts Receivable 44,243 59,061
Advance Payments 14,140 13,940
--------- ---------
Total Current Assets 90,130 171,360
Property and Equipment:
Cobalt 1,310,272 1,310,272
Furniture and Equipment 1,650,242 1,667,993
Building 2,883,675 2,883,675
Less Accumulated Depreciation (1,584,507) (1,110,236)
----------- -----------
Total Property and Equipment 4,259,682 4,751,704
Land 171,654 171,654
Other Assets:
Investments 67,642 69,419
Deposits 5,000 8,920
---------- ---------
72,642 78,339
TOTAL ASSETS $4,594,108 $ 5,173,057
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 28,296 $ 168,209
Payroll Taxes 262 4,733
Loans from Directors 0 388,800
---------- ---------
Total Current Liabilities 28,558 561,742
Financing Agreement and Debenture Payable 3,557,726 3,599,504
Accrued interest 0 289,923
Stockholders' Equity:
Common Stock $.01 par value,
10,000,000 shares authorized
5,306,194 shares 1996 53,062
3,110,269 shares 1995 31,103
Paid in Capital 7,190,481 5,177,708
Deficit Accumulated During Development (6,235,719) (4,486,923)
----------- -----------
1,007,824 721,888
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,594,108 $ 5,173,057
<FN>
* Condensed from audited financial statements
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30,
December 11, 1985
(Inception) Through
September 30, 1996 1996 1995
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
Net Sales $ 969,067 $46,687 $ 39,801
Operating Expenses: 1,450,652 60,836 98,515
--------- -------- --------
Loss from Operations (481,585) (14,149) (58,714)
General Administrative and Development 3,468,027 55,604 102,856
Depreciation 1,590,081 76,843 81,311
Interest Expense 1,188,062 88,595 101,368
--------- ------- -------
Net Loss Before Income Taxes (6,727,755) (235,190) (344,249)
Other Income (Expense):
Foreign Exchange Gain 325,590
Interest Income 188,893 1 272
Other (22,448) (2,877)
---------- --------- ---------
Loss Before Income Taxes (6,235,719) (235,189) (346,854)
Income Taxes 0 0 0
Net Loss $ (6,235,719) $(235,189) $ (346,854)
Net Loss per Common Share $ (1.18) $ (.04) $ (.09)
<FN>
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 periods ended September 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,
December 11, 1985
(Inception) Through
September 30, 1996 1996 1995
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
Net Sales $ 969,067 $ 146,646 $ 238,740
Operating Expenses: 1,450,652 212,202 282,259
--------- -------- --------
Loss from Operations (481,585) (65,556) (43,519)
General Administrative and Development 3,468,027 157,000 322,638
Depreciation 1,590,081 235,014 248,543
Interest Expense 1,188,062 260,648 287,057
--------- ------- -------
Net Loss Before Income Taxes (6,727,755) (718,218) (901,757)
Other Income (Expense):
Foreign Exchange Gain 325,590
Interest Income 188,893 4 278
Other (22,448) (2,877)
---------- --------- ---------
Loss Before Income Taxes (6,235,719) (718,213) (904,356)
Income Taxes 0 0 0
Net Loss $ (6,235,719) $(718,213) $ (904,356)
Net Loss per Common Share $ (1.18) $ (.14) $ (.24)
<FN>
NOTE 1: BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normally recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim period.
The results of operations for the nine month periods ended September 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF CASH FLOWS
December 11, 1985 9 Months 9 Months
(Inception) Through Ended Ended
September 30, 1996 9/30/96 9/30/95
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
Cash Flows from Operations:
Sales Income Received $ 925,084 $ 141,644 $ 265,860
Interest Received 188,892 3 278
Cash Paid for Operating Expenses (4,652,098) (449,217) (751,207)
----------- --------- ---------
(3,538,122) (307,570) (485,069)
Cash Flows from Investing:
Property & Equipment Purchase (6,024,295) 0 9,301
Deposits (5,000) 0 3,920
Collection of Notes Receivable 489,300 0 0
----------- -------- -------
(5,539,995) 0 (13,221)
Cash Flows from Financing Activities:
Proceeds from Sale of Common Stock 5,607,354 331,025 495,833
Offering Cost (483,959) 0 (11,250)
Short Term Loan (52,450) 0 54,050
Financing Agreement 4,058,918 0 0
Purchase of Common Stock (20,000) 0 0
---------- -------- -------
9,109,863 331,025 538,633
Net Increase (Decrease) in Cash 31,747 23,455 66,785
Cash at Beginning of Period 8,291 6,355
Cash at End of Period $ 31,747 $ 31,747 $ 73,140
___________________________________________________
Reconciliation of Net Loss to Net Cash
Net Loss $ (6,235,719) $(718,213) $ (904,356)
Adjustments to Reconcile Net Loss to Cash Used:
Imputed Interest on Finance Agreement 432,199 0 279,232
Depreciation 1,590,081 235,014 248,543
Foreign Exchange Gain (325,590)
(Increase) Decrease in Receivables (58,383) (5,002) 27,120
Increase (Decrease) in Payables 28,558 (73,601) (147,065)
Equity in Net Loss of Affiliate 36,848
Stock Issued for Services & Interest 991,007 254,232 8,580
Loss on Sale of Equipment 2,877 2,877
----------- --------- ---------
Cash Used by Operating Activities $(3,538,122) $(307,570) $ (485,069)
FOOD TECHNOLOGY SERVICE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,
Common Stock Paid-In Capital Deficit
------------ --------------- -------
1995 (unaudited)
Balance, January 1, 1995 $ 30,530 $5,029,593 $ (4,189,639)
Sale of 762,525 (1) Shares of Stock
for $1,169,501 7,625 1,173,127
Offering Cost to Sell Stock (11,250)
Net Loss for Period (904,356)
Balance, September 30, 1995 $ 38,155 $6,191,470 $ (5,093,995)
______________________________________________________________________________
1996 (unaudited)
Balance, January 1, 1996 $ 43,996 $6,474,289 $ (5,517,506)
Sale of 906,571 (2) Shares of Stock
for $725,258 9,066 716,192
Offering Cost to Sell Stock 0
Net Loss for Period (718,213)
Balance, September 30, 1996 $ 53,062 $7,190,481 $ (6,235,719)
<FN>
(1) 274,521 shares issued in exchange for a reduction in debt.
(2) 389,950 shares issued in exchange for a reduction in debt.
(a) Earnings per common share, assuming no dilution, are based on the number
of shares outstanding on September 30 of each year: 3,815,544 (1995) and
5,306,194 (1996).
(b) The foregoing information is unaudited, but, in the opinion of Management,
includes all adjustments, consisting of normal accruals, necessary for a fair
presentation of the results for the period reported.
FOOD TECHNOLOGY SERVICE, INC.
Management's Analysis of Quarterly Income Statements
Operations
The Company still suffers losses because of the lack of action by the Federal
Regulatory Authorities in approving the irradiation of meat to destroy E.coli
and the approval of the standard yellow polystyrene foam tray that is used at
retail levels by the poultry industry. Until these approvals are granted, we
must continue to operate as a "Development Stage" Company. Management
continues to work with some major food processors and retailers so that once
these reviews by the Food and Drug Administration (FDA) are completed, we
will be ready to process these foods so that food-borne illness can be
reduced and/or eliminated.
Revenues for the third quarter were $46,687, which is an increase of
seventeen percent over the third quarter of 1995. Expenses for the quarter
also decreased from the third quarter of last year. The Company's loss for
the quarter was $235,189, which is $111,665 less than the loss sustained in
the third quarter of 1995.
Nordion International, Inc. is giving the Company its full cooperation and
financial assistance so the Company can meet all of its obligations in a
timely manner. We should be the leader in bringing safer foods to all the
people in North America once the reviews by the FDA for meat, fish and
shellfish and the standard poultry tray are approved.
Liquidity and Capital Resources
As of September 30, 1996, the Company had cash on hand of $31,747 and
accounts receivable of $58,383. During the third quarter, Nordion converted
to restricted common stock the accrued interest in the amount due of $83,272.
Also during the third quarter, Nordion purchased, for cash, additional shares
of restricted common stock in the amount of $156,025 to enable the Company to
meet its obligations. The alliance that we have with Nordion should
guarantee the Company's survival as a going entity until government agencies
permit the Company to irradiate meat and shellfish, and approve the standard
yellow tray for poultry so it can be offered in major retail outlets. However,
if Nordion, for any reason, should cease advancing funds to the Company or
demand payment of its accrued interest, the Company would be forced to curtail
some or all of its operations.
OTHER INFORMATION
None applicable to this report and are, therefore, omitted.
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 there unto duly authorized.
Date: November 14, 1996 FOOD TECHNOLOGY SERVICE, INC.
Sam R. Whitney
------------------------------------
Chairman and Chief Executive Officer
Walter H. Harkala
------------------------------------
Corporate Secretary