FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Ended March 31, 1997 Commission File Number 0-19047
INCORPORATED IN FLORIDA IRS IDENTIFICATION NO. 59-2618503
FOOD TECHNOLOGY SERVICE, INC.
502 Prairie Mine Road, Mulberry, FL 33860
(941) 425-0039
"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 March 31,
Class 1996 1997
----- ---- ----
Common Stock $.01 Par Value 4,726,219 Shares 6,194,709 Shares
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
BALANCE SHEET
MARCH 31, DECEMBER 31,
1997 1996
---- ----
(unaudited) *
ASSETS
------
Current Assets:
Cash $ 14,618 $ 26,104
Accounts Receivable 32,991 30,331
Advance Payments 10,000 10,000
------ ------
Total Current Assets 57,609 66,435
Property and Equipment:
Cobalt 1,310,272 1,310,272
Furniture and Equipment 1,653,063 1,650,242
Building 2,883,675 2,883,675
Less Accumulated Depreciation (1,730,132) (1,657,420)
---------- ----------
4,116,878 4,186,769
Land 171,654 171,654
Other Assets:
Investments 44,528 44,528
Deposits 5,000 5,000
========= ========
49,528 49,528
Total Assets $ 4,395,669 $ 4,474,386
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accounts Payable $ 30,518 $ 100,720
Payroll Taxes 2,266 527
--------- ---------
Total Current Liabilities 32,784 101,247
========= =========
Financing Agreement and Debenture Payable 3,242,229 3,362,229
Stockholders' Equity:
Common Stock $.01 par value, 10,000,000 shares
authorized
6,194,709 shares 1997 61,947
5,750,284 shares 1996 57,503
Paid in Capital 7,892,408 7,541,312
Deficit Accumulated During Development (6,833,699) (6,587,905)
----------- ---------
1,120,656 1,010,910
Total Liabilities and Stockholders' Equity $ 4,395,669 $ 4,474,386
========= =========
* Condensed from audited financial statements
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31,
December 11, 1985
(Inception) Through
March 31, 1997 1997 1996
---------------- ---- ----
(unaudited) (unaudited) (unaudited)
Net Sales $ 1,055,810 $ 36,742 $ 45,294
Processing Costs: 1,568,806 53,568 82,272
--------- ------ ------
Profit (Loss) from Operations (512,996) (16,826) (36,978)
General Administrative and Development 3,700,782 67,969 55,851
Depreciation 1,735,705 72,711 79,513
Interest Expense 1,358,607 88,259 86,309
--------- ------ ------
Profit (Loss) (7,308,090) (245,765) (258,651)
Other Income (Expense):
Foreign Exchange Gain 331,087 0 0
Interest Income 188,895 1 2
Other (22,478) (30) 0
------ ------- --------
Loss Before Income Taxes (6,810,586) (245,794) (258,649)
Income Taxes 0 0 0
--------- --------- ---------
Net Loss $ (6,810,586) $ (245,794) $ (258,649)
========= ========= =========
Net Loss per Common Share $ (1.10) $ (0.04) $ (0.05)
========= ========= =========
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 March 31, 1997
are not necessarily indicative of the results to be expected for the full
year.
<PAGE>
<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<CAPTION>
December 11, 1985 Three Months Three Months
(Inception) Through Ended Ended
March 31, 1997 March 31, 1997 March 31, 1996
------------------ -------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash Flows from Operations:
Sales Income Received $ 1,019,071 $ 34,083 $ 56,924
Interest Received 188,895 1 2
Cash Paid for Operating
Expenses (4,916,895) (116,249) (132,650)
========== ========= =========
(3,708,929) (82,165) (75,724)
Cash Flows from Investing:
Property & Equipment Purchase (6,037,616) (2,821) 0
Deposits (5,000) 0 0
Collection of Notes Receivable 489,300 0 0
Sale of Equipment 10,500 0 0
--------- -------- --------
(5,542,816) (2,821) 0
Cash Flows from Financing Activities:
Proceeds from Sale of Common
Stock 5,763,854 73,500 85,000
Offering Cost (483,959) 0 0
Short Term Loan (52,450) 0 0
Financing Agreement 4,058,918 0 0
Purchase of Common Stock (20,000) 0 0
---------- ------ ------
9,266,363 73,500 85,000
Net Increase (Decrease) in Cash 14,618 (11,486) 9,276
Cash at Beginning of Period 0 26,104 8,291
Cash at End of Period $ 14,618 $ 14,618 $ 17,567
=========== =========== ===========
___________________________________________________________________________________
Reconciliation of Net Loss to Net
Cash
Net Loss $ (6,833,700) $ (245,794) $ (258,649)
Adjustments to Reconcile Net Loss to
Cash Used:
Imputed Interest on Finance
Agreement 432,199 0 82,277
Depreciation 1,735,705 72,711 79,513
Foreign Exchange (Gain) Loss (331,087)
(Increase) Decrease in
Receivables (42,991) (2,659) 11,630
Increase (Decrease) in Payables 32,786 (68,463) 9,506
Equity in Net (Gain) Loss of
Affiliate 59,962
Value of Stock Issued for
Services & Int. 1,235,320 162,040 0
(Gain) Loss on Sale of
Equipment 2,877
----------- -------- --------
Net Cash Used by Operating
Activities $ (3,708,929) $ (82,165) $ (75,723)
============== =========== ===========
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31,
<CAPTION>
Common Stock Paid-In Capital Deficit
------------ --------------- -------
<S> <C> <C> <C>
1996 (unaudited)
Balance, January 1, 1996 $ 43,996 $6,474,289 $(5,517,506)
Sale of 326,596 Shares of Stock
for $261,277 3,266 258,011
Offering Cost to Sell Stock 0
Net Loss for Period (258,649)
----------- ---------- -----------
Balance, March 31, 1996 $ 47,262 $6,732,300 $(5,776,155)
========= ========== ============
___________________________________________________________________
1997 (unaudited)
Balance, January 1, 1997 $ 57,503 $7,541,312 $(6,587,906)
Sale of 444,425 Shares of Stock
for $355,540 4,444 351,096
Offering Cost to Sell Stock 0
Net Loss for Period (245,793)
--------- --------- -----------
Balance, March 31, 1997 $ 61,947 $7,892,408 $(6,833,699)
========== ========== ============
</TABLE>
(a) Earnings per common share, assuming no dilution, are based on the
number of shares outstanding on March 31 of each year: 4,726,219 (1996)
and 6,194,709 (1997).
(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.
<PAGE>
Management's Analysis of Quarterly Income Statements
Operations
Continued delays in gaining approvals to irradiate meat and shellfish by the
Food and Drug Administration (FDA), have forced the Company to continue in its
"Development Stage" with substantial losses for the first quarter of 1997.
Because of these delays, the Company has maintained at a low level its
operating expenses and has spent less money on government relations and
promotion. Through the cuts in expenses the Company has reduced its losses,
although revenues have also shown a decrease since the first quarter of
1996. The Company has signed a Sales and Marketing Agreement with Marcre Sales
Corporation, Forest Park, Georgia. Marcre Sales specializes in fresh and
frozen poultry distribution in the Southeastern United States. 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 to use the standard polystyrene foam tray
for retail poultry has still not been granted by the FDA. All necessary data
to grant this approval has been submitted by a manufacturer of polystyrene foam
trays to the agency. The Company's revenues for the first four months were
$65,393 reflecting a 14% increase over the same period a year ago.
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. The Company has initiated an advertising campaign
directed at poultry industry publication subscribers.
The Company's loss for the quarter was $245,794, which is $12,855 less in
losses than that sustained in the first quarter of 1996. Operating expenses
were reduced to $121,537. The balance of the loss is accrued interest on the
debt to MDS Nordion (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 and
the approval of the standard polystyrene foam tray for poultry. Management
will continue to work with groups to urge action by the FDA that will permit
Americans to enjoy safer meat and poultry. Once these clearances are granted,
Management expects to complete its "Development Stage" and become a fully
operational company with excellent 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.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1997, the Company had cash on hand of $14,618 and accounts
receivable of $32,991. During the first quarter Nordion converted the accrued
interest and reduced our long term indebtedness to their company by
$208,258.50 in exchange for restricted stock. Nordion also provided additional
cash so the Company could 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, poultry
and shellfish.
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 thereunto duly authorized.
Date: May 15, 1997 FOOD TECHNOLOGY SERVICE, INC.
/S/ E. W. (Pete) Ellis
---------------------------------
E.W. (Pete) Ellis, President and
Chief Executive Officer
/S/ Dana S. Carpenter
------------------------------------------
Dana S. Carpenter, Asst. Corporate Secretary
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,618
<SECURITIES> 0
<RECEIVABLES> 42,991
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,609
<PP&E> 5,847,010
<DEPRECIATION> 1,730,132
<TOTAL-ASSETS> 4,395,669
<CURRENT-LIABILITIES> 32,784
<BONDS> 3,242,229
0
0
<COMMON> 61,947
<OTHER-SE> 1,058,709
<TOTAL-LIABILITY-AND-EQUITY> 4,395,669
<SALES> 36,742
<TOTAL-REVENUES> 36,742
<CGS> 0
<TOTAL-COSTS> 121,537
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88,259
<INCOME-PRETAX> (245,794)
<INCOME-TAX> 0
<INCOME-CONTINUING> (245,794)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (245,794)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
