FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Nine Months Ended September 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 September 30,
Class 1997 1998
- ----- ------ ------
Common Stock, $.01 Par Value 6,777,215 Shares 10,075,549 Shares
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.
(A Development Stage Company)
BALANCE SHEET
SEPTEMBER 30, DECEMBER 31,
1998 1997
(unaudited) *
------------ -----------
ASSETS
Current Assets:
Cash $ 50,982 $ 12,231
Accounts Receivable 38,411 30,330
Advance Payments 500 4,415
---------- ----------
Total Current Assets 89,893 46,976
Property and Equipment:
Cobalt 1,310,272 1,310,272
Furniture and Equipment 1,659,149 1,654,880
Building 2,883,675 2,883,675
Less Accumulated Depreciation (2,149,024) (1,942,276)
---------- ----------
Total Property and Equipment 3,704,072 3,906,551
Land 171,654 171,654
Other Assets:
Deposits 5,000 5,000
---------- ----------
TOTAL ASSETS $3,970,619 $ 4,130,181
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 69,466 $ 114,504
Payroll Taxes 1,221 1,107
---------- ----------
Total Current Liabilities 70,687 115,611
Financing Agreement and Debenture Payable 855,273 585,595
Stockholders' Equity:
Common Stock $.01 par value,
20,000,000 shares authorized
10,075,549 shares 1998 100,755
6,777,215 shares 1997 100,522
Paid in Capital 10,953,106 10,923,339
Deficit Accumulated During Development (8,009,202) (7,594,886)
---------- ----------
3,044,659 3,428,975
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,970,619 $ 4,130,181
========== ===========
* Condensed from audited financial statements
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
December 11, 1985 For the Quarter
(Inception) Through Ended September 30,
September 30, 1998 1998 1997
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
Net Sales $ 1,648,996 $ 191,753 $ 49,260
Operating Expenses: 2,006,548 101,829 58,541
--------- --------- --------
Income (Loss) from Operations (357,552) 89,924 ( 9,281)
General Administrative and Development 4,410,396 138,038 138,760
Depreciation 2,154,598 68,317 70,874
Interest Expense 1,612,348 20,151 77,003
--------- ------- -------
Net Loss Before Income Taxes (8,534,894) (136,582) (295,918)
Other Income (Expense):
Foreign Exchange Gain 431,000
Interest Income 188,898
Other (90,089)
---------- --------- --------
Loss Before Income Taxes (8,005,085) (136,582) (295,917)
Income Taxes
---------- --------- --------
Net Loss $(8,005,085) $(136,582) $(295,917)
Net Loss per Common Share $ (.79) $ (.01) $ (.04)
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, 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 OPERATIONS
<CAPTION>
For the Nine Month
December 11, 1985 Period Ended
(Inception) Through September 30,
September 30, 1998 1998 1997
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
<S> <C> <C> <C>
Net Sales $ 1,648,996 $ 438,637 $ 139,458
Operating Expenses: 2,006,548 228,730 162,507
--------- -------- --------
Income (Loss) from Operations (357,552) 209,907 (23,049)
General Administrative and Development 4,410,396 366,777 280,821
Depreciation 2,154,598 206,748 214,688
Interest Expense 1,612,348 50,664 242,264
--------- -------- --------
Net Loss Before Income Taxes (8,534,894) (414,282) (760,822)
Other Income (Expense):
Foreign Exchange Gain 431,000
Interest Income 188,898 3
Other (90,089)
---------- --------- --------
Loss Before Income Taxes (8,005,085) (414,280) (760,819)
Income Taxes
Net Loss $ (8,005,085) $(414,280) $ (760,819)
Net Loss per Common Share $ (.79) $ (.04) $ (.11)
<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, 1998
are not necessarily indicative of the results to be expected for the full year.
</TABLE>
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
December 11, 1985 Nine Months Ended
(Inception) Through September 30,
September 30, 1998 1998 1997
(unaudited) (unaudited) (unaudited)
---------------- ---------- ---------
Cash Flows from Operations:
Sales Income Received $ 1,613,157 $ 434,471 $ 134,064
Interest Received 188,898 3
Cash Paid for Operating Expenses (6,068,546) (642,183) (385,399)
----------- --------- ---------
(4,266,491) (207,711) (251,332)
Cash Flows from Investing:
Property & Equipment Purchase (6,043,703) (4,270) (4,221)
Deposits (5,000)
Collection of Notes Receivable 489,300
Sale of Equipment 10,500
----------- -------- -------
(5,548,903) (4,270) (4,221)
Cash Flows from Financing Activities:
Proceeds from Sale of Common Stock 5,988,135 30,000 234,000
Offering Cost (483,959)
Short Term Loan (52,450)
Financing Agreement 4,434,650 220,732
Purchase of Common Stock (20,000)
---------- -------- -------
9,866,376 250,732 234,000
Net Increase (Decrease) in Cash 50,982 38,751 (21,553)
Cash at Beginning of Period 12,231 26,104
--------- --------- ---------
Cash at End of Period $ 50,982 $ 50,982 $ 4,551
___________________________________________________
Reconciliation of Net Loss to Net Cash
Net Loss $(8,005,085) $(414,280) $(760,819)
Adjustments to Reconcile Net Loss to Cash Used:
Imputed Interest on Finance Agreement 481,146 48,947
Depreciation 2,154,598 206,748 214,688
Foreign Exchange Gain (431,000)
(Increase) Decrease in Receivables (38,910) (4,166) (5,394)
Increase (Decrease) in Payables 114,849 (44,960) (50,853)
Equity in Net Loss of Affiliate 104,489
Value of Stock Issued for Services & Int. 1,350,545 351,046
Loss on Sale of Equipment 2,877
----------- --------- ---------
Cash Used by Operating Activities $(4,266,491) $(207,711) $(251,332)
<PAGE>
<TABLE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 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 1,026,931 (1) Shares of Stock
for $805,046 10,269 794,777
Offering Cost to Sell Stock
Net Loss for Period (760,819)
--------- ---------- ----------
Balance, September 30, 1997 $ 67,772 $ 8,336,089 $(7,348,725)
_______________________________________________
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 (414,280)
--------- ---------- ----------
Balance, September 30, 1998 $ 100,755 $10,953,106 $(8,009,166)
<FN>
(1) 275,000 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: 6,777,215 (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.
</TABLE>
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
Management's Analysis of Quarterly Income Statements
Operations
- ----------
The Company's revenues for the first nine months of fiscal year 1998 were
$438,637 compared to $139,458 for the same period a year ago; an increase of
$299,179. The revenues for the third quarter were much improved over last
year due to new customers for irradiation services; although the revenues
may not continue at the same level.
During the last quarter of this year the Company will participate
with The Florida Department of Health in an advertising campaign to educate
the public about the benefits of irradiated food. State Public Health
Officials have stated that it is their responsibility to "advocate the use of
irradiated food products" and to educate the public about the unique health
benefits associated with irradiated meats and vegetables. The campaign will
tell people that meat irradiation and dairy pasteurization are identical in
their need and effectiveness and let the public know that irradiated meats are
SAFER for their families. Management can make no representatives as to what
affect if any the advertising campaign will have on the companies operations.
Management expects that the USDA will publish the final regulations for red
meat. At which time the Company should be ready to process these new products.
Liquidity and Capital Resources
- -------------------------------
As of September 30, 1998, the Company had cash on hand of $50,982 and accounts
receivable of $33,995.
During the first nine months of 1998, MDS Nordion continued to provide for the
Company's cash requirements by advancing the Company an additional $221,000.
Although MDS Nordion has indicated that it will continue to fund operations,
there is no assurance that it will continue to do so. In the event MDS 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 there unto duly authorized.
Date: October 22, 1998 FOOD TECHNOLOGY SERVICE, INC.
E. W. (Pete) Ellis
/S/ E. W. (Pete) Ellis
President and Chief Executive Officer
Dana S. Carpenter
/S/ Dana S. Carpenter
Asst. Corporate Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 50,982
<SECURITIES> 0
<RECEIVABLES> 38,911
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 89,893
<PP&E> 5,853,096
<DEPRECIATION> 1,872,109
<TOTAL-ASSETS> 3,970,619
<CURRENT-LIABILITIES> 70,687
<BONDS> 855,273
0
0
<COMMON> 100,755
<OTHER-SE> 2,943,940
<TOTAL-LIABILITY-AND-EQUITY> 3,970,619
<SALES> 438,637
<TOTAL-REVENUES> 438,638
<CGS> 0
<TOTAL-COSTS> 228,730
<OTHER-EXPENSES> 366,777
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,664
<INCOME-PRETAX> (414,282)
<INCOME-TAX> 0
<INCOME-CONTINUING> (414,282)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (414,282)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
