Management's Analysis of Quarterly Income Statements Operations

Food Technology Service Inc. had revenues of $674,830 during the first quarter of 2009 compared to revenues of $558,869 for the same period in 2008. This is an increase of 20.7 percent. The Company had net income during the first quarter of 2009 of $181,872 compared to net income of $76,554 during the first quarter of 2008. This is an increase of about 137.5 percent. Earnings per share for the first quarter of 2009 were approximately $0.07. Management attributes increased revenue to growth of customers requiring irradiation of medical products.

During the first quarter of 2009, processing costs as a percentage of sales were 18.2 percent compared to 24.3 percent in the first quarter of 2008. This decrease is primarily due to the increased revenue and the fact that processing costs are relatively fixed. General administrative and development costs as a percentage of sales during the first quarter of 2009 were 39.1 percent compared to 41.8 percent in the first quarter of 2008. The decline in general, administrative and development expenses, as a percentage of sales, was due primarily to the increase in sales as such costs are also relatively constant.

During the first quarter of 2009, one customer was acquired by a third-party. We have recently been notified that their operations will be moved to the Southwest U.S. during the second quarter. This customer accounted for approximately 25% of revenues during fiscal year 2008 and the first quarter of 2009. However, the Company is in the process of replacing revenue from this customer and believes a decrease in revenues or earnings will be relatively short term.

Liquidity and Capital Resources

As of March 31, 2009, the Company has cash on hand of $525,822 and accounts receivable of $268,017.