UNITED STATES
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 Six Months Ended June 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 June 30,
Class 1995 1996
- ----- ------ ------
Common Stock,$.01 Par Value ,384,790 Shares 5,008,323 Shares
<PAGE>
<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
BALANCE SHEETS
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
(unaudited) *
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 22,763 $ 98,359
Accounts Receivable 42,133 59,061
Advance Payments 16,582 13,940
--------- ---------
Total Current Assets 81,478 171,360
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 (1,507,664) (1,110,236)
----------- -----------
Total Property and Equipment 4,336,525 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 $4,662,299 $ 5,173,057
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $100,759 $ 168,209
Payroll Taxes 300 4,733
Loans from Directors 0 388,800
---------- ---------
Total Current Liabilities 101,059 561,742
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
5,008,323 shares 1996 50,083
3,110,269 shares 1995 31,103
Paid in Capital 6,955,162 5,177,708
Deficit Accumulated During Development (6,001,732) (4,486,923)
----------- -----------
1,003,514 721,888
----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,662,299 $ 5,173,057
<FN>
* Condensed from audited financial statements
</TABLE>
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<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
FOR THE QUARTER ENDED JUNE 30,
December 11, 1985
(Inception) Through
June 30, 1996 1996 1995
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
<S> <C> <C> <C>
Net Sales $ 921,929 $54,214 $ 101,866
Operating Expenses: 1,390,810 70,088 67,904
--------- -------- --------
Loss from Operations (468,881) (15,874) (33,962)
General Administrative and Development 3,412,182 45,733 74,681
Depreciation 1,513,238 78,658 83,123
Interest Expense 1,099,465 85,742 100,080
--------- ------- -------
Net Loss Before Income Taxes (6,493,766) (226,007) (223,922)
Other Income (Expense):
Foreign Exchange Gain 325,590
Interest Income 188,892 1 2
Other (22,448)
---------- --------- ---------
Loss Before Income Taxes (6,001,732) (226,006) (223,920)
Income Taxes 0 0 0
Net Loss $ (6,001,732) $(226,006) $ (223,920)
Net Loss per Common Share $ (1.20) $ (.05) $ (.07)
<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 June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
</TABLE>
<PAGE>
<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF OPERATIONS
<CAPTION>
FOR THE SIX MONTH PERIOD ENDED JUNE 30,
December 11, 1985
(Inception) Through
June 30, 1996 1996 1995
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
<S> <C> <C> <C>
Net Sales $ 921,929 $99,958 $ 198,939
Operating Expenses: 1,390,810 152,196 183,052
--------- -------- --------
Loss from Operations (468,881) (52,238) (15,887)
General Administrative and Development 3,412,182 101,766 184,177
Depreciation 1,513,238 158,171 167,232
Interest Expense 1,099,465 172,053 185,689
--------- ------- -------
Net Loss Before Income Taxes (6,493,766) (484,228) (521,211)
Other Income (Expense):
Foreign Exchange Gain 325,590
Interest Income 188,892 3 6
Other (22,448)
---------- --------- ---------
Loss Before Income Taxes (6,001,732) (484,225) (521,205)
Income Taxes 0 0 0
Net Loss $ (6,001,732) $(484,225) $ (521,205)
Net Loss per Common Share $ (1.20) $ (.10) $ (.15)
<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 six month periods ended June 30, 1996 are
not necessarily indicative of the results to be expected for the full year.
</TABLE>
<PAGE>
<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
STATEMENTS OF CASH FLOWS
<CAPTION>
December 11, 1985 6 Months 6 Months
(Inception) Through Ended Ended
June 30, 1996 6/30/96 6/30/95
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
<S> <C> <C> <C>
Cash Flows from Operations:
Sales Income Received $ 880,706 $ 97,266 $ 216,241
Interest Received 188,892 3 6
Cash Paid for Operating Expenses (4,456,678) (257,797) (441,597)
----------- --------- ---------
(3,387,080) (160,528) (225,350)
Cash Flows from Investing:
Property & Equipment Purchase (6,024,295) 0 1,199
Deposits (5,000) 0 0
Collection of Notes Receivable 489,300 0 0
----------- -------- -------
(5,539,995) 0 (1,199)
Cash Flows from Financing Activities:
Proceeds from Sale of Common Stock 5,451,329 175,000 142,500
Offering Cost (483,959) 0 0
Short Term Loan (52,450) 0 97,500
Financing Agreement 4,058,918 0 0
Purchase of Common Stock (20,000) 0 0
---------- -------- -------
8,953,838 175,000 240,000
Net Increase (Decrease) in Cash 22,763 14,472 13,451
Cash at Beginning of Period 8,291 6,355
Cash at End of Period $ 22,763 $ 22,763 $ 19,806
___________________________________________________
Reconciliation of Net Loss to Net Cash
Net Loss $ (6,003,275) $(484,225) $ (521,205)
Adjustments to Reconcile Net Loss to Cash Used:
Imputed Interest on Finance Agreement 437,743 0 185,519
Depreciation 1,513,238 158,171 167,232
Foreign Exchange Gain (325,590)
(Increase) Decrease in Receivables (58,715) 5,334 (17,302)
Increase (Decrease) in Payables 101,059 (1,100) (80,386)
Equity in Net Loss of Affiliate 36,848
Stock Issued for Services & Interest 908,735 171,960 6,188
Loss on Sale of Equipment 2,877
----------- --------- ---------
Cash Used by Operating Activities $(3,387,080) $(160,528) $ (225,350)
</TABLE>
<PAGE>
<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30,
<CAPTION>
Common Stock Paid-In Capital Deficit
------------ --------------- -------
<S> <C> <C> <C>
1995 (unaudited)
Balance, January 1, 1995 $ 30,530 $5,029,593 $ (4,189,639)
Sale of 331,771 (1) Shares of Stock
for $725,124 3,318 721,806
Offering Cost to Sell Stock 0
Net Loss for Period (521,205)
Balance, March 31, 1995 $ 33,848 $5,751,399 $ (4,710,844)
______________________________________________________________________________
1996 (unaudited)
Balance, January 1, 1996 $ 43,996 $6,474,289 $ (5,517,506)
Sale of 608,700 (2) Shares of Stock
for $486,960 6,087 480,873
Offering Cost to Sell Stock 0
Net Loss for Period (484,226)
Balance, June 30, 1996 $ 50,083 $6,955,162 $ (6,001,732)
<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 June 30 of each year: 3,384,790 (1995) and
5,008,323 (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.
</TABLE>
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
Management's Analysis of Quarterly Income Statements
Operations
Gaining approvals to irradiate meat and shellfish by the Food and Drug
Administration (FDA), are still delayed and forces the Company to continue in
its "Development Stage." Losses for the second quarter of 1996 are
substantial. Government regulators claim that budget reductions during the
past few months have forced them to reduce staff and they have fallen behind
in their administrative functions. Because of these delays, the Company
reduced its operating expenses and has spent less money on government
relations and promotion. Because of these cuts in expenses, the Company has
reduced its losses, although revenues are still minimal.
The Company continues to irradiate poultry for several hospitals as well as
some restaurants that are located in Florida. The Company expects this
business to increase as additional distributors are offering irradiated
poultry to their food service customers. Authority was granted by the FDA
to use the standard polystyrene foam tray, but in white only. The yellow
tray that is used for poultry is still awaiting FDA approval. All necessary
data to grant this approval has been submitted by a manufacturer of
polystyrene foam trays to the agency. Availability of fresh fruits and
vegetablesduring the second quarter was limited.
Management is still working with some major supermarkets to bring irradiated
foods to their stores, once the approvals are gained for meat, shellfish and
the standard yellow poultry tray. Trade magazines in the meat and poultry
industry are still endorsing food irradiation as the best technology to
eliminate the pathogens that cause a health threat to consumers.
Revenues for the second quarter were $54,213, which is an increase of twenty
percent over the first quarter of 1996. Expenses for the quarter also
decreased. The Company's loss for the quarter was $226,005, which is $32,215
less than that sustained in the first quarter. Operating expenses for the
quarter were also reduced. The balance of the loss is accrued interest on the
debt to Nordion International, Inc. (Nordion) and depreciation, both of which
are non-cash items.
With the cooperation of Nordion, the Company has been able to meet its
obligations and with Nordion's continued financial assistance should continue
to do so until it has completed its "Development Stage" and gain the approvals
by the FDA to offer safer poultry, meat and shellfish to American consumers.
The Company's success still depends upon approvals for meat and shellfish.
Management will continue to work with groups to urge action by the FDA that
will permit Americans to enjoy safer foods. Once these clearances are granted,
Management expects to complete its "Development Stage" and become a fully
operational company with opportunities to expand with new facilities into other
areas of the United States. With the cooperation of Nordion, the Company
hopes to gain these approvals during this year.
Liquidity and Capital Resources
As of June 30, 1996, the Company had cash on hand of $22,763 and accounts
receivable of $42,133 and negative working capital of $19,581. During the
second quarter Nordion converted the accrued interest in the amount of $85,684
and long term indebtedness owed to them by the Company in the amount of
$50,000 into 169,604 shares of restricted common stock of the Company. Also
during the quarter Nordion purchased for cash additional shares of restricted
common stock in the amount of $90,000 to enable the Company to meet its
obligations in a timely manner. The special alliance that we have with Nordion
should guarantee the Company's survival as a going entity until government
agencies permit us 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 it's 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: August 14, 1996 FOOD TECHNOLOGY SERVICE, INC.
Sam R. Whitney
------------------------------------
Chairman and Chief Executive Officer
Walter H. Harkala
------------------------------------
Corporate Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 22,763
<SECURITIES> 0
<RECEIVABLES> 58,715
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 81,478
<PP&E> 5,844,189
<DEPRECIATION> 1,507,664
<TOTAL-ASSETS> 4,662,299
<CURRENT-LIABILITIES> 101,059
<BONDS> 3,557,726
0
0
<COMMON> 50,083
<OTHER-SE> 953,430
<TOTAL-LIABILITY-AND-EQUITY> 4,662,299
<SALES> 54,214
<TOTAL-REVENUES> 54,214
<CGS> 0
<TOTAL-COSTS> 115,821
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,742
<INCOME-PRETAX> (226,006)
<INCOME-TAX> 0
<INCOME-CONTINUING> (226,006)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (226,006)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>