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 Six Months Ended June 30, 1998 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 June 30,
Class 1997 1998
----- ---- ----
Common Stock $.01 Par Value 6,360,962 Shares 10,075,549 Shares
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
BALANCE SHEET
JUNE 30, DECEMBER 31,
1998 1997
---- ----
(unaudited) *
ASSETS
------
Current Assets:
Cash $ 31,994 $ 12,231
Accounts Receivable 98,300 30,330
Advance Payments 5,290 4,415
---------- ----------
Total Current Assets 135,584 46,976
Property and Equipment:
Cobalt 1,310,272 1,310,272
Furniture and Equipment 1,659,150 1,654,880
Building 2,883,675 2,883,675
Less Accumulated Depreciation (2,080,707) (1,942,276)
---------- ----------
3,772,390 3,906,551
Land 171,654 171,654
Other Assets:
Deposits 5,000 5,000
Total Assets $ 4,084,628 $ 4,130,181
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
Current Liabilities:
Accounts Payable $ 62,902 $ 114,504
Payroll Taxes 1,110 1,107
--------- ---------
Total Current Liabilities 64,012 115,611
Financing Agreement and Debenture Payable 835,257 585,595
Stockholders' Equity:
Common Stock $.01 par value, 20,000,000 shares
authorized
10,075,549 shares 1998 100,755
10,052,216 shares 1997 100,522
Paid in Capital 10,953,106 10,923,339
Deficit Accumulated During Development (7,868,502) (7,594,886)
---------- ----------
3,185,359 3,428,975
Total Liabilities and Stockholders' Equity $ 4,084,628 $ 4,130,181
========== ==========
* Condensed from audited financial statements
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30,
December 11, 1985
(Inception) Through
June 30, 1998 1998 1997
---------------- ---- ----
(unaudited) (unaudited) unaudited)
Net Sales $ 1,457,243 $ 185,988 $ 53,485
Processing Costs: 1,904,719 63,363 54,602
--------- ------ ------
Profit (Loss) from Operations (447,476) 122,625 (1,117)
General Administrative and Development 4,272,358 139,676 69,767
Depreciation 2,086,281 68,952 71,962
Interest Expense 1,592,197 18,501 77,003
--------- ------ ------
Profit (Loss) (8,398,312) (104,504) (219,849)
Other Income (Expense):
Foreign Exchange Gain 431,000 0 0
Interest Income 188,898 1 0
Other (90,089) 0 0
------ ------- --------
Loss Before Income Taxes (7,868,503) (104,503) (219,849)
Income Taxes 0 0 0
--------- --------- ---------
Net Loss $ (7,868,503) $ (104,503) $ (219,849)
========= ========= =========
Net Loss per Common Share $ (0.78) $ (0.01) $ (0.03)
========= ========= =========
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, 1998
are not necessarily indicative of the results to be expected for the full
year.
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30,
December 11, 1985
(Inception) Through
June 30, 1998 1998 1997
---------------- ---- ----
(unaudited) (unaudited) (unaudited)
Net Sales $ 1,457,243 $ 246,884 $ 90,228
Processing Costs: 1,904,719 128,200 109,581
--------- --------- ---------
Profit (Loss) from Operations (447,476) 118,684 (19,353)
General Administrative and Development 4,272,358 223,358 136,440
Depreciation 2,086,281 138,431 144,673
Interest Expense 1,592,197 30,513 165,261
--------- --------- ---------
Profit (Loss) (8,398,312) (273,618) (465,728)
Other Income (Expense):
Foreign Exchange Gain 431,000 0 0
Interest Income 188,898 1 1
Other (90,089) 0 0
--------- --------- ---------
Loss Before Income Taxes (7,868,503) (273,617) (465,727)
Income Taxes 0 0 0
--------- --------- ---------
Net Loss $ (7,868,503) $ (273,617) $ (465,727)
========= ========= =========
Net Loss per Common Share $ (0.78) $ (0.03) $ (0.07)
========= ========= =========
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, 1998
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 Six Months Six Months
(Inception) Through Ended Ended
June 30, 1998 June 30, 1998 June 30, 1997
------------------ -------------- --------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash Flows from Operations:
Sales Income Received $ 1,356,724 $ 178,038 $ 87,249
Interest Received 188,898 1 1
Cash Paid for Operating Expenses (5,831,102) (404,739) (230,309)
========= ========= =========
(4,285,480) (226,700) (143,059)
Cash Flows from Investing:
Property & Equipment Purchase (6,043,703) (4,270) (2,821)
Deposits (5,000) 0 0
Collection of Notes Receivable 489,300 0 0
Sale of Equipment 10,500 0 0
--------- --------- ---------
(5,548,903) (4,270) (2,821)
Cash Flows from Financing Activities:
Proceeds from Sale of Common
Stock 5,988,135 30,000 134,000
Offering Cost (483,959) 0 0
Short Term Loan (52,450) 0 0
Financing Agreement 4,434,650 220,732 0
Purchase of Common Stock (20,000) 0 0
--------- --------- ---------
9,866,376 250,732 134,000
Net Increase (Decrease) in Cash 31,994 19,763 (11,880)
Cash at Beginning of Period 0 12,231 26,104
--------- --------- ---------
Cash at End of Period $ 31,994 $ 31,994 $ 14,224
========= ========= =========
___________________________________________________________________________________
Reconciliation of Net Loss to Net Cash
Net Loss $(7,868,503) $ (273,617) $ (465,727)
Adjustments to Reconcile Net Loss to Cash Used:
Imputed Interest on Finance
Agreement 461,130 28,931 0
Depreciation 2,086,281 138,431 144,673
Foreign Exchange (Gain) Loss (431,000)
(Increase) Decrease in Receivables (103,590) (68,846) (2,979)
Increase (Decrease) in Payables 112,291 (51,599) (58,069)
Equity in Net (Gain) Loss of
Affiliate 104,489
Value of Stock Issued for
Services & Int. 1,350,545 0 239,043
(Gain) Loss on Sale of
Equipment 2,877
--------- --------- ---------
Net Cash Used by Operating
Activities $(4,285,480) $ (226,700) $ (143,059)
========= ========= =========
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30,
<CAPTION>
Common Stock Paid-In Capital Deficit
------------ --------------- ---------
<S> <C> <C> <C>
1997 (unaudited)
----
Balance, January 1, 1997 $ 57,503 $ 7,541,312 $(6,587,906)
Sale of 610,678 (1) Shares of Stock
for $493,043 6,107 486,936
Offering Cost to Sell Stock
Net Loss for Period (465,727)
--------- --------- ---------
Balance, June 30, 1997 $ 63,610 $ 8,028,248 $(7,053,633)
========= ========= =========
___________________________________________________________________
1998 (unaudited)
----
Balance, January 1, 1998 $ 100,522 $ 10,923,339 $(7,594,886)
Sale of 23,333 Shares of Stock
for $30,000 233 29,767
Offering Cost to Sell Stock
Net Loss for Period (273,617)
--------- ---------- ----------
Balance, June 30, 1998 $ 100,755 $10,953,106 $(7,868,503)
========= ========== ==========
(1) 150,000 Shares Issued in Exchange for a Reduction in Debt
</TABLE>
(a) Earnings per common share, assuming no dilution, are based on the
number of shares outstanding on June 30 of each year: 6,360,962 (1997)
and 10,075,549 (1998).
(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
The Company's revenues for the first six months of fiscal year 1998 were
$246,884 compared to $90,228 for the same period a year ago; an increase
of $156,656. The revenues for the second quarter were much improved over
the first quarter due to a new customer for irradiation services; although
the revenues may not continue at the same level during the second half of
the current fiscal year.
Packaging and labeling for the Nations Pride brand of Individually Quick Frozen
poultry is completed and a roll out of this product will take place during
the second half of fiscal 1998. The Company is looking forward to irradiated
poultry paving the way for more items for the consumer of irradiated products.
Management is looking forward to the U.S.D.A. publishing the final regulations
for red meat. If this happens during the second half of the current fiscal
year, the Company should be ready to process red meat early in 1999.
Liquidity and Capital Resources
- -------------------------------
As of June 30, 1998, the Company had cash on hand of $31,994 and accounts
receivable of $98,300.
During the first half of 1998 Nordion continued to provide for the Company's
cash requirements by advancing the Company an additional $221,000.
Although Nordion has indicated that it will continue to fund operations, there
is no assurance that it will continue to do so. In the event Nordion
discontinues funding the Company's operations or the Company is not successful
in raising additional capital, the Company will have to curtail a portion 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 thereunto duly authorized.
Date: July 20, 1998 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 31,994
<SECURITIES> 0
<RECEIVABLES> 98,300
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 135,584
<PP&E> 5,853,097
<DEPRECIATION> 2,080,707
<TOTAL-ASSETS> 4,084,628
<CURRENT-LIABILITIES> 64,012
<BONDS> 835,257
0
0
<COMMON> 100,755
<OTHER-SE> 3,084,604
<TOTAL-LIABILITY-AND-EQUITY> 4,084,628
<SALES> 246,884
<TOTAL-REVENUES> 246,884
<CGS> 0
<TOTAL-COSTS> 351,558
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,513
<INCOME-PRETAX> (273,617)
<INCOME-TAX> 0
<INCOME-CONTINUING> (273,617)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (273,617)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
