FORM 10-Q

______________

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________

For the quarterly period ended March 31,June 30, 2012

or

Commission File No. 0-3026

__________________

PARADISE, INC.

________________

INCORPORATED IN FLORIDA

I.R.S. EMPLOYER IDENTIFICATION NO. 59-1007583

1200 DR. MARTIN LUTHER KING, JR. BLVD.,

PLANT CITY, FLORIDA 33563

(813) 752-1155

__________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes¨Nox

The number of shares outstanding of each of the issuer’s classes of common stock as of May 15,August 13, 2012 was 519,600 shares.

PARADISE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 2012

INDEX

PARADISE, INC.

PARADISE, INC.

COMMISSION FILE NO. 0-3026

PART I.FINANCIAL INFORMATION

Item 1. Financial Statements

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS

(UNAUDITED)

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

PARADISE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The accompanying unaudited consolidated financial statements of Paradise, Inc. (the “Company”) have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

The information furnished herein reflects all adjustments and accruals that management believes is necessary to fairly state the operating results for the respective periods. The notes to the unaudited consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, 2011. The Company’s management believes that the disclosures are sufficient for interim financial reporting purposes.

Consumer demand for glace’ fruit product is traditionally strongest during the Thanksgiving and Christmas season. Almost 80% of glace’ fruit product sales are recorded during an eight to ten week period beginning in mid September. Therefore, the operating results for the threesix months ended March 31,June 30, 2012 are not necessarily indicative of the results that may be expected for the current year.

Certain minor reclassifications have been made to the consolidated unaudited statements of operations for the quarter ended March 31,June 30, 2011 to conform to the classifications used for the quarter ended March 31,June 30, 2012.

In May 2011, the FASB issued ASU 2011-04Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.The ASU expands ASC Topic 820’s existing disclosure requirements for fair value measurements and makes other amendments that could change how the fair value measurement guidance in ASC Topic 820 is applied. The ASU is effective for the Company for the interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements or disclosures.

In June 2011, the FASB issued ASU 2011-05Presentation of Comprehensive Income,which revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU is effective for the Company for the interim and annual periods beginning after December 15, 2011. The adoption of this ASU did not have an impact on the Company’s consolidated financial statements or disclosures.

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

Basic and diluted earnings (loss)loss per common share are based on the weighted average number of shares outstanding and assumed to be outstanding of 519,600. There are no dilutive securities outstanding.

PARADISE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The Company’s operations are conducted through two business segments. These segments, and the primary operations of each, are as follows:

For the threesix month period ended March 31,June 30, 2012 and 2011, sales of frozen strawberry products totaled $465,887$521,952 and $293,421,$322,533, respectively.

The Company does not account for intersegment transfers as if the transfers were to third parties.

The Company does not prepare operating profit or loss information on a segment basis for internal use, until the end of each year. Due to the seasonal nature of the fruit segment, management believes that it is not practical to prepare this information for interim reporting purposes. Therefore, reporting is not required by accounting principles generally accepted in the United States of America.

PARADISE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Identifiable assets by segment are those assets that are principally used in the operations of each segment. General corporate assets are principally cash, land and buildings, and investments.buildings.

PARADISE, INC.

COMMISSION FILE NO. 0-3026

Forward–Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact should be considered “forward-looking statements” for the purpose of these provisions, including statements that include projections of, or expectations about, earnings, revenues or other financial items, statements about our plans and objectives for future operations, statements concerning proposed new products or services  , statements regarding future economic conditions or performance, statements concerning our expectations regarding the attraction and retention of customers, statements about market risk and statements underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of such terminology as “may”, “will”, “expects”, “potential”, or “continue”, or the negative thereof or other similar words. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Actual results and developments are likely to be different from, and may be materially different from, those expressed or implied by our forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties.

Overview

Paradise, Inc.’s main business segment, glace’ fruit, a prime ingredient of fruitcakes and other holiday confections, represented 68.9% of total net sales duringfor the previous year of 2011. These products are sold to manufacturing bakers, institutional users, supermarkets and other retailers throughout the country. Consumer demand for glace’ fruit product is traditionally strongest during the Thanksgiving and Christmas season. Almost 80% of glace’ fruit product sales are recorded during anfrom the eight to ten week periodweeks beginning in mid September.

Since the majority of the Company’s customers require delivery of glace’ candied fruit products during this relatively short period of time, Paradise, Inc. must operate at consistent levels of production from as early as January through the middle of November of each year in order to meet peak demands. Furthermore, the Company must make substantial borrowings of short-term working capital to cover the cost of raw materials, factory overhead and labor expense associated with production for inventory. This combination of building and financing inventories during the year, without the opportunity to record any significant fruit product income, results in the generation of operating losses well into the third quarter of each year. Therefore, it is the opinion of management that meaningful forecasts of annual net sales or profit levels require analysis of a full year’s operations.

In addition, comparison of current quarterly results to the preceding quarter produces an incomplete picture on the Company’s performance due to year-to-year changes in production schedules, seasonal harvests and availability of raw materials, and in the timing of customer orders and shipments. Thus, the discussion of information presented within this report is focused on the review of the Company’s current year-to-date results as compared to the similar period last year.

Paradise, Inc.’s other business segment, Paradise Plastics, Inc., a wholly owned subsidiary of Paradise, Inc. producingproduces custom molding products, is not subject to the seasonality of the glace’ fruit business. This segment represents all injection molding and thermoforming operations, including the packaging for the Company’s fruit products. Only sales to unaffiliated customers are reported.

PARADISE, INC.

The First QuarterSix Months

Paradise, Inc.’s fruit segment net sales were $876,809 for the first quartersix months of 2012 comparedincreased 32.5% to $557,403$1,234,522 from $931,841 for the similar reporting period of 2011, representing a 57.3% increase.2011. Paradise, Inc.’s fruit segment sales are very seasonal in nature as net sales for the first six months of the year have historically represented less than 10% of annual net sales. The primary reasonsales activity within this segment for this increase was duethe first six months of the year relates to bulk fruit orders received and shipped to supermarkets and manufacturing bakeries. The remaining volume of sales activity consists of the sale of finished strawberry products produced exclusively for a local Plant City, Florida distributor during a short window of time in late March and early April of each year. For a negotiatedtolling fee, i.e. tolling charge, Paradise, Inc. will receive and process fresh strawberries through its facilities on behalf of this distributor. Tolling charges as of March 31, 2012 increased by 58.8% to $465,887 compared to $293,421 as of March 31, 2011. Paradise, Inc.’s other fruit segment salesearned during the first quartersix months of 2012 are primarily comprised of bulk fruit orders received and shipped to supermarkets and manufacturing bakeries leading up to and through the traditional Easter holiday season.

Paradise Plastics, Inc.’s sales to unaffiliated customers for the first quarter of 2012 increased to $2,392,061were $521,952 compared to $2,061,536$322,533 for the similar reporting period of 2011, representing a 16.0% increase.2011.

Paradise Plastics, sales continued to improve as orders received and shipped to existing long-term customers within the commercial and home construction industry have increased over the past several quarters. In addition, as previously reported, management’s effort to expand plasticsInc.’s net sales to other markets, suchunaffiliated customers during the first six months of 2012 increased 20.3% to $4,618,869 from $3,838,795 compared to the similar reporting period of 2011. This increase is related to two long term customers who have received a greater demand for their products during the first two quarters of 2012. This increase in Paradise Plastics, Inc.’s net sales as electronics, militaryof June 30, 2012 is also directly responsible for the $303,843 increase in Accounts Receivable as of June 30, 2012 compared to the similar reporting period of June 30, 2011. Management has reviewed all receivable balances as of the date of this filing and medical technologies have been successful in offsetting the slowdown in the industry over the past several years.considers all accounts to be fully collectible.

Consolidated cost of sales, as a percentage of net sales, decreased 10.7% for2.0% during the first quartersix months of 2012 compared to the similar reporting period of 2011 as the Company has benefited from the stabilization of utilities cost for natural gas and other fuels during the first six months of 2012 compared to 2011. However, it is important to note that with moreless than 95%30% of the Company’sParadise, Inc.’s retail glace’ fruit production yet to commenceinventory produced as of March 31,June 30, 2012, noit still too early to forecast with any reasonable estimate or trend incertainty cost of sales may be developed for the current quarterly filing.as it relates to a percentage of consolidated sales until a full year’s inventory production cycle is completed.

Selling, general &and administrative expenses totaled $805,525 for the first quartersix months of 2012 increased 7.0% compared to $805,860 for the similarprevious year’s reporting period of 2011 as increases in cost to attend various trade shows were offset by decreases2011. The increase in expenses relatedsuch as advertising, brokerage and freight out expenses can be directly attributable to professional feesthe growth reflected above in net sales for legalParadise, Inc.’s fruit and audit services.plastics segment during the first six months of 2012.

Paradise, Inc.’s interest expense for the six months ended June 30, 2012 was $0. This was the same as of June 30, 2011. As reported in previous filings, Paradise, Inc. renewed its revolving line of credit on June 30, 2011 for a two year period. Terms of the renewal are similar to the previous agreement. Paradise, Inc.’s revolving line of credit has a maximum limit of $12,000,000 with a borrowing base of 80% of the Company’s eligible receivables plus up to 50% of the Company’s eligible inventory. Interest is payable monthly at the bank’s LIBOR rate plus 1.9% or a floor rate of 3%, whichever is greater.

Other Significant Items

Other Income for the first quarter ofsix months ended June 30, 2012 totaled $76,844 and was primarily related$70,665 compared to sales of recycled plastics materials. In comparison,$198,601 for the similar reporting period ofsix months ended June 30, 2011. As mentioned in previous filings, on February 22, 2011, Other Income totaled $154,069. This amount, as previously filed in the Company’s first quarter filing for 2011, was related to the receipt ofParadise, Inc. received $150,000 from a former supplier to settle a disagreementdispute dating back to September, 2004. This amount is reflected as part of Other Income on the Company’s income statement. All legal expenses incurred by Paradise, Inc. to settleas a result of this matter were paid during the first quarter of 2011.settlement have been paid.

Inventory as of March 31,June 30, 2012 was $8,725,068totaled $13,507,724 compared to $8,274,839 representing an$12,204,152 as of June 30, 2011. This increase of $450,229 or 5.4% and is primarily due to a timing differencedifferences as the receipt of various raw fruit materials were received in Marchduring the first six months of 2012 compared to Apriloutpaced deliveries of raw fruit materials received during the comparable period of 2011.

COMMISSION FILE NO. 0-3026

Other Significant Items (Continued)

We finance our ongoing operations primarily with cash provided by our operating activities.activities which are seasonal in nature. Our principal sources of liquidity are our cash flows provided by operating activities, our existing cash, and a line of credit facility. At March 31,June 30, 2012 and December 31, 2011, we had $5.5 million$1,053,707 and $7.5 million,$7,468,908, respectively, in cash. Additionally, we have a revolving line of credit with a maximum limit of $12 million and a borrowing limit of 80% of the Company’s eligible receivables plus 50% of the Company’s eligible inventory, of which $631,230 and $313,246$0 was outstanding at March 31,June 30, 2012 and December 31, 2011, respectively. The line2011. Within this agreement there are letters of credit agreement expires inwith a limit of $1,200,000, of which $731,698 was outstanding at June 2013.30, 2012 and $313,246 at December 31, 2011. Net cash used in operating activities decreasedincreased from $848,091$4,009,812 for the quartersix months ended March 31,June 30, 2011 compared to $2,242,776$6,628,321 for the quartersix months ended March 31,June 30, 2012. The primary reasons for this decreaseincrease are as follows; income tax payments made during the first quarter ofsix months for 2012 were $280,000$150,100 greater than the first quartersix months of 2011; payments for the purchase of inventory increased $300,296$1,153,639 and the timing of Accounts Receivable payments received from Paradise, Inc.’s customers during the first quartersix months of 2012 were $925,365$1,344,216 less than the similar reporting period of 2011. Net cash provided by financing activities decreased from $614,017 for the quarter ended March 31, 2011 to $317,984 for the quarter ended March 31, 2012. This change is primarily due to timing of pineapple purchases.

Summary

Paradise Inc.’s consolidated net sales increased $1,082,755 representing an increase of 22.7% for the threefirst six months ended March 31,of 2012 totaled $3,268,870 compared to $2,618,939 for the similar reporting period of 2011, representing2011. The primary reason for this positive change has been an increase of $649,931. This increase isin demand from several long term customers within the result of the following three factors. First, tolling fees earned for the processing of various strawberry products on behalf of a local Florida distributor increased $172,466. Secondly, gross bulk fruit sales to manufacturing bakeries and supermarkets increased $81,135 and thirdly, plastics sales continued to rebound from the recent downturn in the housing market increased $330,525.Plastics segment. However, as mentioned and disclosed in all previous first quarterinterim filings, with less than 5%due to the highly seasonal nature of anticipated annualthe Company’s primary product, glace’ fruit, net sales yet to be realized as of the date of this filing, no reasonable estimate or forecastwhich accounts for approximately 70% of consolidated annual revenue, no meaningful financial performanceanalysis may be determined at this time.developed from Paradise, Inc.’s interim reporting results. Only a full year’s accounting of revenue and expenses will provide the necessary information to determine the Company’s financial performance.

Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assessments, estimates and assumptions that affect the amounts reported in the consolidated financial statements. We evaluate the accounting policies and estimates used to prepare the consolidated financial statements on an ongoing basis. Critical accounting estimates are those that require management’s most difficult, complex, or subjective judgments and have the most potential to impact our financial position and operating results. For a detailed discussion of our critical accounting estimates, see our Annual Report on Form 10-K for the year ended December 31, 2011. There have been no material changes to our critical accounting estimates during the threesix months ended March 31,June 30, 2012.

PARADISE, INC.

PARADISE, INC.

COMMISSION FILE NO. 0-3026

Recently Issued Accounting Pronouncements

In May 2011, the FASB issued new guidance that expands existing disclosure requirements for fair value measurements and makes other amendments that could change how the fair value measurement guidance is applied. The guidance is effective for us for the interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have an impact on us.

In June 2011, the FASB issued new guidance that revises the manner in which entities present comprehensive income in their financial statements. The new guidance requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The guidance is effective for us for the interim and annual periods beginning after December 15, 2011. The adoption of this guidance did not have an impact on us.

We do not believe that other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the Securities and Exchange Commission will have a material impact on the Company’s present or future consolidated financial statements.

The Company’s Chief Executive Officer and Chief Financial Officer have, within 90 days of the filing date of this quarterly report, evaluated the Company’s disclosure controls and procedures. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded, as of March 31,June 30, 2012, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms. During the year ended December 31, 2010, the Company identified a weakness in internal control over the timing of issuing credit memos for products returned into inventory. Procedures were established during the quartersix months ended March 31,June 30, 2011 to ensure the timeliness of issuing credit memos when products are returned. There were no other changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The most recent evaluation of these controls by the Company’s Chief Executive Officer and Chief Financial Officer did not identify any additional deficiencies or weaknesses in the Company’s internal controls over financial reporting; therefore, no corrective actions were taken.

PARADISE, INC.

PARADISE, INC.

COMMISSION FILE NO. 0-3026

None.

PARADISE, INC.

COMMISSION FILE NO. 0-3026

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.