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, 2000 Commission File Number 0-19047
--------------
INCORPORATED IN FLORIDA IRS IDENTIFICATION NO. 59-2618503
FOOD TECHNOLOGY SERVICE, INC.
502 Prairie Mine Road, Mulberry, FL 33860
(863) 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 1999 2000
----- ---- ----
Common Stock $.01 Par Value 10,271,601 Shares 10,331,201 Shares
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FOOD TECHNOLOGY SERVICE, INC.
(A Development Stage Company)
PART I
FINANCIAL INFORMATION
BALANCE SHEET
JUNE 30, DECEMBER 31,
2000 1999
---- ----
(unaudited) *
ASSETS
------
Current Assets:
Cash $ 7,656 $ 20,937
Accounts Receivable 179,599 51,125
Due from Employees 17,875 66,175
Inventory 3,794 3,886
---------- ----------
Total Current Assets 208,924 142,123
Property and Equipment:
Cobalt 1,310,272 1,310,272
Furniture and Equipment 1,681,631 1,659,854
Building 2,883,675 2,883,675
Less Accumulated Depreciation (2,613,510) (2,482,167)
---------- ----------
Total Property & Equipment 3,262,068 3,371,634
Land 171,654 171,654
Other Assets:
Deposits 5,000 5,000
Total Assets $ 3,647,646 $ 3,690,411
=========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
-----------------------------------
Current Liabilities:
Accounts Payable $ 47,504 $ 48,513
Revolving Credit Line 250,000 250,000
---------- ----------
Total Current Liabilities 297,504 298,513
Financing Agreement and Debenture Payable 1,001,454 954,476
Stockholders' Equity:
Common Stock $.01 par value,
200,000,000 shares authorized
10,331,201 shares 2000 103,312
10,316,201 shares 1999 103,162
Paid in Capital 11,464,191 11,438,631
Deficit Accumulated During Development (9,218,815) (9,104,371)
---------- ----------
Total Equity 2,348,688 2,437,422
Total Liabilities and Stockholders' Equity $ 3,647,646 $ 3,690,411
========== ==========
* Condensed from audited financial statements
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FOOD TECHNOLOGY SERVICE, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30,
December 11, 1985
(Inception) Through
June 30, 2000 2000 1999
---------------- ---- ----
(unaudited) (unaudited) (unaudited)
Net Sales $ 2,730,636 $ 333,893 $ 57,412
Processing Costs: 2,569,505 112,785 52,509
---------- --------- --------
Profit (Loss) from Operations 161,131 221,108 4,903
General Administrative and Development 5,500,988 177,414 142,643
Depreciation 2,619,084 65,613 66,612
Interest Expense 1,792,764 30,677 21,366
---------- --------- --------
Profit (Loss) (9,751,705) (52,596) (225,718)
Other Income (Expense):
Foreign Exchange Gain 434,719 0 0
Interest Income 188,897 0 0
Other (90,089) 0 0
---------- --------- --------
Loss Before Income Taxes (9,218,178) (52,596) (225,718)
Income Taxes 0 0 0
---------- --------- --------
Net Loss ($9,218,178) ($52,596) ($225,718)
========== ========= ========
Net Loss per Common Share ($0.89) ($0.005) ($0.02)
========== ========= ========
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, 2000
are not necessarily indicative of the results to be expected for the full
year.
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FOOD TECHNOLOGY SERVICE, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30,
December 11, 1985
(Inception) Through
June 30, 2000 2000 1999
---------------- ---- ----
(unaudited) (unaudited) (unaudited)
Net Sales $ 2,730,636 $ 569,586 $ 129,761
Processing Costs: 2,569,505 198,843 125,223
---------- --------- --------
Profit (Loss) from Operations 161,131 370,743 4,538
General Administrative and Development 5,500,988 290,956 277,540
Depreciation 2,619,084 131,343 133,801
Interest Expense 1,792,764 63,297 44,021
---------- --------- --------
Profit (Loss) (9,751,705) (114,853) (450,824)
Other Income (Expense):
Foreign Exchange Gain 434,719 0 0
Interest Income 188,897 0 0
Other (90,089) 0 0
---------- --------- --------
Loss Before Income Taxes (9,218,178) (114,853) (450,824)
Income Taxes 0 0 0
---------- --------- --------
Net Loss ($9,218,178) ($114,853) ($450,824)
========== ========= ========
Net Loss per Common Share ($0.89) ($0.01) ($0.04)
========== ========= ========
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 six month periods ended June 30, 2000
are not necessarily indicative of the results to be expected for the full
year.
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FOOD TECHNOLOGY SERVICE, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
December 11, 1985 Six Months Six Months
(Inception) Through Ended Ended
June 30, 2000 June 30, 2000 June 30, 1999
------------------ -------------- --------------
(unaudited) (unaudited) (unaudited)
Cash Flows from Operations:
Sales Income Received $ 2,591,703 $ 488,442 $ 117,980
Interest Received 188,897 0 0
Interest Paid (47,239) (16,320) (5,670)
Cash Paid for Operating
Expenses (7,664,409) (489,338) (432,435)
---------- --------- ---------
(4,931,048) (17,216) (320,125)
Cash Flows from Investing:
Property & Equipment Purchase (6,066,183) (21,776) 0
Deposits (5,000) 0 0
Collection of Notes Receivable 489,300 0 0
Sale of Equipment 10,500 0 0
---------- ---------- ----------
(5,571,383) (21,776) 0
Cash Flows from Financing Activities:
Proceeds from Sale of Common
Stock 6,381,845 25,710 338,025
Offering Cost (483,959) 0 0
Short Term Loan (52,450) 0 0
Financing Agreement 4,684,650 0 25,000
Purchase of Common Stock (20,000) 0 0
---------- ---------- ----------
10,510,086 25,710 363,025
Net Increase (Decrease) in Cash 7,655 (13,282) 42,900
Cash at Beginning of Period 0 20,937 6,045
---------- ---------- ----------
Cash at End of Period $7,655 $7,655 $48,945
========== ========== ==========
_______________________________________________________________________________
Reconciliation of Net Loss to Net Cash
Net (Loss) Gain ($9,219,224) ($114,853) ($450,824)
Adjustments to Reconcile Net Loss to
Cash Used:
Imputed Interest on Finance
Agreement 432,199 0 0
Depreciation 2,619,084 131,343 133,801
Foreign Exchange (Gain) Loss (434,719) 0 0
(Increase) Decrease in
Receivables (197,474) (79,860) (11,781)
Increase (Decrease) in Payables 235,360 915 (32,807)
Equity in Net (Gain) Loss of
Affiliate 104,489 0 0
Value of Stock Issued for
Services & Interest 1,530,154 46,977 38,352
(Gain) Loss on Sale of
Equipment 2,877 0 0
(Increase) Decrease in
Inventory (3,794) 92 3,134
---------- ---------- ----------
Net Cash (Provided)Used by
Operating Activities ($4,931,048) ($17,216) ($320,125)
========== ========== ==========
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FOOD TECHNOLOGY SERVICE, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTH PERIOD ENDED JUNE 30,
Common Stock Paid-In Capital Deficit
------------ --------------- -------
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 0
Offering Cost to Sell Stock 0 0 0
Net Loss for Period 0 0 (450,824)
---------- ----------- -----------
Balance, June 30, 1999 $ 102,716 $11,319,172 ($8,667,342)
========== ========== ==========
___________________________________________________________________
2000(unaudited)
----
Balance, January 1, 2000 $ 103,162 $11,438,631 ($9,104,371)
Sale of 15,000 Shares of Stock
for $25,710 150 25,560 0
Net Loss for Period 0 0 (114,853)
---------- ---------- ----------
Balance, June 30, 2000 $ 103,312 $11,464,191 ($9,219,224)
========== ========== ==========
(a) Earnings per common share, assuming no dilution, are based on the
number of shares outstanding on June 30 of each year: 10,271,601 (1999)
and 10,331,201 (2000).
(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.
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Management's Analysis of Quarterly Income Statements
Operations
----------
Revenues for the first two quarters were up over the same period last year;
$569,586 vs. $129,761, an increase of $439,825, or 339%. Losses for the
period were $114,835 compared to $450,824 for the first two quarters last year,
an improvement of $335,989.
It is managements belief that manufacturers, processors, foodservice operators
and retailers will soon embrace the much needed food safety tool, irradiation.
The Company has successfully introduced irradiated ground beef in independent
retail supermarkets in central Florida. Consumer education remains a
significant challenge. The Company believes a public information program,
supported by public health officials, will result in a successful launch for
this category. All major studies and surveys show that as consumer knowledge
about irradiation increases, their desire for the products increases.
Liquidity and Capital Resources-------------------------------
As of June 30, 2000, the Company has cash on hand of $7,656 and accounts
receivable of $179,599. The special alliance that the Company has with MDS
Nordion and the $250,000 remaining credit line should assure the Company's
survival as a going entity until the food irradiation industry develops.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On March 24, 2000, Pegasus Foods Canada, Inc. initiated legal action against
this Company; Harley W. Everett, Executive Vice President of the Company; MDS
Nordion, Inc., as principal stockholder of the Company; and MDS, Inc., parent
of MDS Nordion, Inc. by filing suit in the Circuit Court of the Thirteenth
Judicial Circuit in and for Hillsborough County, Florida alleging that certain
seafood products irradiated by the Company were adversely effected by the
process, resulting in damages to Pegasus. The action is for damages in excess
of two million dollars. The Company denies the allegations made by Pegasus and
intends to vigorously defend the lawsuit.
Item 2.-6. Not applicable
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, 2000 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
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