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VIFL > SEC Filings for VIFL > Form 10-K on 29-Mar-2013All Recent SEC Filings

Show all filings for FOOD TECHNOLOGY SERVICE INC | Request a Trial to NEW EDGAR Online Pro



Annual Report

Item 7 Management's Discussion and Analysis

Plan of Operations

Food Technology Service, Inc. had revenue of $3,958,629 in 2012 which is a 5.7 percent increase over 2011 revenue of $3,744,546. Management attributes revenue growth in 2012 primarily to seasonal volume increases by a large customer during the first half of the year. Net income increased 1.8 percent $925,943 in 2012 compared to $909,502 in 2011.

Revenue for the fourth quarter was relatively constant at approximately $962,000 in 2012 and 2011.

During 2012, processing costs as a percentage of revenue were 17.0 percent compared to 17.7 percent in 2011. This decrease was not significant and reflects the fact that such costs are relatively fixed. General administrative and development costs as a percentage of revenue during 2012 were 32.1 percent compared to 31.2 percent in 2011. Again, this change reflects the relatively fixed nature of these costs.

In order to comply with FASB ASC 718, the Company continues to report the value of stock-options granted as an item of expense. These options have been issued to Company employees and Board members and are valued using the Black-Scholes pricing method. This action increased expenses in 2012 by $43,889.

Table of Contents

Liquidity and Capital Resources

At December 31, 2012, the Company had cash on hand of $2,336,814.

On July 7, 2010, the Company entered into an agreement with a Regions Bank to establish an irrevocable standby letter of credit of $600,000, to satisfy State of Florida requirements for a Radioactive Materials License. The letter of credit will be automatically extended for an additional year or any further expiration date unless the bank provides a 120 day written notice to the Company. The letter of credit is collateralized by the Company's real property and a $150,000 CD with Regions Bank to continue securing the Letter of Credit.

Additionally, On October 8, 2010, the Company entered into an agreement with a Regions Bank to provide for a line of credit of $400,000, bearing an interest rate of prime plus 1.35%, repayable in full on or before October 8, 2013. As of December 31, 2012 the Company did not draw on this line of credit.

Management will continue to closely monitor cash balances to ensure that the Company has sufficient cash on hand to meet its operating needs. Management believes that the Company has sufficient liquidity to meet our working capital and capital expenditure requirements for the next twelve months.

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