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, 1999 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 1998 1999
----- ---- ----
Common Stock $.01 Par Value 10,075,549 Shares 10,271,601 Shares
<PAGE>
FOOD TECHNOLOGY SERVICE, INC.
(Formerly Vindicator, Inc.)
(A Development Stage Company)
BALANCE SHEET
JUNE 30, DECEMBER 31,
1999 1998
---- ----
(unaudited) *
ASSETS
------
Current Assets:
Cash $ 48,945 $ 6,046
Accounts Receivable 34,429 22,824
Inventory 5,318 8,452
---------- ----------
Total Current Assets 88,692 37,322
Property and Equipment:
Cobalt 1,310,272 1,310,272
Furniture and Equipment 1,659,150 1,659,149
Building 2,883,675 2,883,675
Less Accumulated Depreciation (2,350,526) (2,216,725)
---------- ----------
3,502,571 3,636,371
Land 171,654 171,654
Other Assets:
Deposits 5,000 5,000
Total Assets $ 3,767,917 $ 3,850,347
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
Current Liabilities:
Accounts Payable $ 24,509 $ 57,625
Payroll Taxes 308
Revolving Credit Line 100,000 75,000
--------- ---------
Total Current Liabilities 124,817 132,625
Financing Agreement and Debenture Payable 888,554 850,201
Stockholders' Equity:
Common Stock $.01 par value, 20,000,000 shares
authorized
10,271,601 shares 1999 102,716
10,075,549 shares 1998 100,900
Paid in Capital 11,319,172 10,982,963
Deficit Accumulated During Development (8,667,342) (8,216,342)
---------- ----------
2,754,546 2,867,521
Total Liabilities and Stockholders' Equity $ 3,767,917 $ 3,850,347
========== ==========
* 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, 1999 1999 1998
---------------- ---- ----
(unaudited) (unaudited) (unaudited)
Net Sales $ 1,902,671 $ 57,412 $ 185,988
Processing Costs: 2,191,937 52,509 63,363
--------- ------ ------
Profit (Loss) from Operations (289,266) 4,903 122,625
General Administrative and Development 4,899,689 142,643 139,676
Depreciation 2,356,099 66,612 68,952
Interest Expense 1,681,042 21,366 18,501
--------- ------ ------
Profit (Loss) (9,226,096) (225,718) (104,504)
Other Income (Expense):
Foreign Exchange Gain 460,117
Interest Income 188,898 1
Other (90,089)
------ ------- --------
Loss Before Income Taxes (8,667,170) (225,718) (104,503)
Income Taxes 0 0 0
--------- --------- ---------
Net Loss $ (8,667,170) $ (225,718) $ (104,503)
========= ========= =========
Net Loss per Common Share $ (0.85) $ (0.02) $ (0.01)
========= ========= =========
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, 1999
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, 1999 1999 1998
---------------- ---- ----
(unaudited) (unaudited) (unaudited)
Net Sales $ 1,902,671 $ 129,761 $ 246,884
Processing Costs: 2,191,937 125,223 128,200
--------- --------- ---------
Profit (Loss) from Operations (289,266) 4,538 118,684
General Administrative and Development 4,899,689 277,540 223,358
Depreciation 2,356,099 133,801 138,431
Interest Expense 1,681,042 44,021 30,513
--------- --------- ---------
Profit (Loss) (9,226,096) (450,824) (273,618)
Other Income (Expense):
Foreign Exchange Gain 460,117
Interest Income 188,898 1
Other (90,089)
--------- --------- ---------
Loss Before Income Taxes (8,667,170) (450,824) (273,617)
Income Taxes 0 0 0
--------- --------- ---------
Net Loss $ (8,667,170) $ (450,824) $ (273,617)
========= ========= =========
Net Loss per Common Share $ (0.85) $ (0.04) $ (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 six month period ended June 30, 1999
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, 1999 June 30, 1999 June 30, 1998
------------------ -------------- -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash Flows from Operations:
Sales Income Received $ 1,862,900 $ 117,980 $ 178,038
Interest Received 188,897 1
Interest Paid (23,063) (5,670)
Cash Paid for Operating Exp. (6,735,287) (432,435) (404,739)
========== ========= =========
(4,706,553) (320,125) (226,700)
Cash Flows from Investing:
Property & Equipment Purchase (6,043,703) (4,270)
Deposits (5,000)
Collection of Notes Receivable 489,300
Sale of Equipment 10,500
---------- --------- ---------
(5,548,903) 0 (4,270)
Cash Flows from Financing Activities:
Proceeds from Sale of Common
Stock 6,326,160 338,025 30,000
Offering Cost (483,959)
Short Term Loan (52,450)
Financing Agreement 4,434,650 25,000 220,732
Purchase of Common Stock (20,000)
--------- --------- ---------
10,304,401 363,025 250,732
Net Increase (Decrease) in Cash 48,945 42,900 19,763
Cash at Beginning of Period 6,045 12,231
--------- --------- ---------
Cash at End of Period $ 48,945 $ 48,945 $ 31,994
========= ========= =========
____________________________________________________________________________
Reconciliation of Net Loss to Net Cash
Net Loss $(8,667,166) $ (450,824) $ (273,617)
Adjustments to Reconcile Net Loss to Cash Used:
Imputed Interest on Finance
Agreement 470,551 38,352 28,931
Depreciation 2,356,100 133,801 138,431
Foreign Exchange (Gain) Loss (460,117)
(Increase) Decrease in
Receivables (34,429) (11,781) (68,846)
Increase (Decrease) in Payables 145,915 (32,807) (51,599)
Equity in Net (Gain) Loss of
Affiliate 104,489
Value of Stock Issued for
Services & Int. 1,380,545
(Gain) Loss on Sale of
Equipment 2,877
(Increase)Decrease in Inventory (5,318) 3,134
--------- --------- ---------
Net Cash Used by Operating
Activities $(4,706,553) $ (320,125) $ (226,700)
========= ========= =========
</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>
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)
========= ========== =========
___________________________________________________________________
1999 (unaudited)
----
Balance, January 1, 1999 $ 100,900 $ 10,982,963 $(8,216,518)
Sale of 181,600 Shares of Stock
for $338,025 1,816 336,209
Offering Cost to Sell Stock
Net Loss for Period (450,824)
--------- ---------- ----------
Balance, June 30, 1999 $ 102,716 $11,319,172 $(8,667,342)
========= ========== ==========
</TABLE>
(a) Earnings per common share, assuming no dilution, are based on the
number of shares outstanding on June 30 of each year: 10,075,549 (1998)
and 10,271,601 (1999).
(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 poultry and red meat categories continue to be the Company's major
emphasis. Revenues in the poultry category for the current quarter are $5,051.
For the current six months they are $9,277 vs. $5,502 for the first six months
in 1998. As the Company continues to work with the food industry to develop
red meat and poultry products that are safer for the consumer, this work will
position the Company to be the first in the marketplace with irradiated
products.
The Company looks forward to final action by the USDA/FSIS to publish
regulations for the inspection of an irradiator related to the red meat
industry. The Company's relationship and agreement with Colorado Boxed Beef
Company, a Florida company specializing in manufacturing, processing, and
distributing beef products with revenues in excess of six hundred million
dollars, will allow the Company to be the first in the marketplace with
irradiated beef. Target date for release of these regulations is late 1999.
Results for the first half of the year were down over the same period last
year; sales of $129,761 vs. $246,884, a decrease of $117,123 while losses
for the period were $450,824 compared to $273,617 for the first half of last
year, an increase of $177,207.
Results for the second quarter were below that of the same period a year ago;
$57,412 vs. $185,988. This is primarily due to a decline of two non-food
accounts.
The Company believes the current mandated terms "treated by irradiation" or
"treated with radiation" produces the obligation for the Government to educate
the consumer about the meaning of the word "irradiation". To that end, the
Company is requesting that Government Officials make available funds for
consumer education under the "food safety initiative" sponsored by the Clinton
Administration.
Liquidity and Capital Resources
- -------------------------------
Although the Company has a negative working capitol of $36,125, management
believes that the special alliance that the Company has with Nordion should
assist the Company's survival as a going entity until government agencies
permit the Company 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: July 30, 1999 FOOD TECHNOLOGY SERVICE, INC.
/S/ E. W. (Pete) Ellis
---------------------------------
E.W. (Pete) Ellis, President and
Chief Executive Officer
/S/ Harley W. Everett
------------------------------------
Harley W. Everett, CFO
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 48,945
<SECURITIES> 0
<RECEIVABLES> 34,429
<ALLOWANCES> 0
<INVENTORY> 5,318
<CURRENT-ASSETS> 88,692
<PP&E> 5,853,097
<DEPRECIATION> 2,350,526
<TOTAL-ASSETS> 3,767,917
<CURRENT-LIABILITIES> 124,817
<BONDS> 888,554
0
0
<COMMON> 102,716
<OTHER-SE> 2,651,830
<TOTAL-LIABILITY-AND-EQUITY> 3,767,917
<SALES> 129,761
<TOTAL-REVENUES> 129,761
<CGS> 0
<TOTAL-COSTS> 402,763
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,021
<INCOME-PRETAX> (450,824)
<INCOME-TAX> 0
<INCOME-CONTINUING> (450,824)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (450,824)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
