U.S.SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
______________
 
U.S. SECURITIES AND EXCHANGE COMMISSIONFORM 10-Q
Washington, D.C. 20549
______________
 
x          Quarterly report pursuant to section 13 or 15(d) of the Securities Act of 1934.Quarterly report pursuant to section 13 or 15(d) of the Securities Act of 1934.
 
For the quarterly period ended March 31,June 30, 2013
 
or
 
¨           Transition report pursuant to section 13 or 15(d) of the Securities Act of 1934.Transition report pursuant to section 13 or 15(d) of the Securities Act of 1934.
 
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
PLANT CITY, FLORIDA 33563(813) 752-1155
__________________
 
(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.        Yes  x     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).     Yes  x   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.
 
 Large accelerated filer
¨
Accelerated filer
¨
     
 Non-accelerated filer
¨
Smaller reporting company
x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)       Yes  ¨     No  x
 
The number of shares outstanding of each of the issuer’s classes of common stock as of May 15,August 14, 2013 was 519,600 shares.
 
 
PARADISE, INC.
 
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 2013
INDEX
PAGE
PART I.
FINANCIAL INFORMATION
ITEM 1.
CONSOLIDATED BALANCE SHEETS:
Assets
 As of June 30, 2013 (Unaudited), December 31, 2012 and June 30, 2012 (Unaudited)PAGE
PART I.FINANCIAL INFORMATION2
   
ITEM 1.Liabilities and Stockholders’ Equity
CONSOLIDATED BALANCE SHEETS:
Assets
   
 As of March 31,June 30, 2013 (Unaudited), December 31, 2012 and March 31, 2012 (Unaudited)2
Liabilities and Stockholders’ Equity
As of March 31, 2013 (Unaudited), December 31, 2012 and March 31,June 30, 2012 (Unaudited)3
   
CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS (UNAUDITED):
 For the three-month periods ended March 31,June 30, 2013 and 20124
   
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED):
For the three-monthsix-month periods ended March 31,June 30, 2013 and 20125
   
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED):
For the six-month periods ended June 30, 2013 and 20126
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
67 – 89
   
ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
910 – 1213
   
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK – N/A
12
ITEM 4.
CONTROLS AND PROCEDURES12
PART II.OTHER INFORMATION
ITEMS 1 – 6.13
   
SIGNATURESITEM 4.
CONTROLS AND PROCEDURES
13
PART II.
OTHER INFORMATION
ITEMS 1 – 6.
14
SIGNATURES
15
 
 

PARADISE, INC.COMMISSION FILE NO. 0-3026
PART I.FINANCIAL INFORMATION
Item 1.Financial Statements
  
PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements
PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
AS OF
 
 
 
AS OF
 
 
MARCH 31,
 
AS OF
 
MARCH 31,
 
 AS OF    AS OF 
 
2013
 
DECEMBER 31,
 
2012
 
 JUNE 30,  AS OF JUNE 30, 
 
(UNAUDITED)
 
2012
 
(UNAUDITED)
 
 2013 DECEMBER 31, 2012 
 
 
 
 
 
 
 
 
 
 
 (UNAUDITED) 2012 (UNAUDITED) 
ASSETS
 
 
 
 
 
 
 
 
 
 
          
 
 
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
          
 
 
 
 
 
 
 
Cash
 
$
4,816,706
 
$
6,384,087
 
$
5,532,943
 
 $963,849 $6,384,087 $1,053,707 
Accounts Receivable, Less, Allowances of $0
(03/31/13),$1,562,556 (12/31/12) and $0 (03/31/12)
 
 
1,742,535
 
 
1,893,160
 
 
1,926,687
 
Accounts Receivable,          
Less, Allowances of $0 (06/30/13), $1,562,556 (12/31/12) and $0 (06/30/12)  1,053,791  1,893,160  1,500,421 
Inventories:
 
 
 
 
 
 
 
 
 
 
          
Raw Materials and supplies
 
 
4,304,019
 
 
2,499,430
 
 
3,766,404
 
Raw Materials and Supplies  4,657,655  2,499,430  4,465,783 
Work in Process
 
 
108,946
 
 
561,043
 
 
7,449
 
  463,835  561,043  417,867 
Finished Goods
 
 
6,978,282
 
 
5,795,906
 
 
4,951,215
 
  9,331,047  5,795,906  8,624,074 
Income Tax Receivable
 
 
150,219
 
 
225,794
 
 
-
 
  307,794  225,794  - 
Deferred Income Tax Asset
 
 
152,250
 
 
152,250
 
 
234,912
 
  316,067  152,250  260,325 
Prepaid Expenses and Other Current Assets
 
 
150,948
 
 
296,728
 
 
195,868
 
  566,129  296,728  585,437 
 
 
 
 
 
 
 
 
 
 
Total Current Assets
 
 
18,403,905
 
 
17,808,398
 
 
16,615,478
 
  17,660,167  17,808,398  16,907,614 
 
 
 
 
 
 
 
Property, Plant and Equipment, Less, Accumulated Depreciation
of $18,569,676 (03/31/13), $18,454,410 (12/31/12)and
$18,628,310 (03/31/12)
 
 
3,984,192
 
 
3,946,124
 
 
4,072,874
 
Property, Plant and Equipment,          
Less, Accumulated Depreciation of $18,685,992 (06/30/13), $18,454,410 (12/31/12) and $18,744,791 (06/30/12)  3,939,420  3,946,124  4,046,628 
Goodwill
 
 
413,280
 
 
413,280
 
 
413,280
 
  413,280  413,280  413,280 
Customer Base and Non-Compete Agreement
 
 
408,276
 
 
439,747
 
 
534,161
 
  376,805  439,747  502,690 
Other Assets
 
 
253,477
 
 
281,935
 
 
269,622
 
  322,471  281,935  236,269 
 
 
 
 
 
 
 
 
 
 
TOTAL ASSETS
 
$
23,463,130
 
$
22,889,484
 
$
21,905,415
 
 $22,712,143 $22,889,484 $22,106,481 
 
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
2
  AS OF    AS OF 
  JUNE 30, AS OF JUNE 30, 
  2013 DECEMBER 31, 2012 
  (UNAUDITED) 2012 (UNAUDITED) 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Short Term Debt $561,826 $515,866 $731,698 
Accounts Payable  1,207,128  375,067  1,353,224 
Accrued Liabilities  383,556  1,093,698  268,075 
Total Current Liabilities  2,152,510  1,984,631  2,352,997 
DEFERRED INCOME TAX LIABILITY  272,063  272,063  165,891 
Total Liabilities  2,424,573  2,256,694  2,518,888 
STOCKHOLDERS’ EQUITY:          
Common Stock: $0.30 Par Value, 2,000,000 Shares Authorized, 583,094 Shares Issued, 519,600 Shares Outstanding  174,928  174,928  174,928 
Capital in Excess of Par Value  1,288,793  1,288,793  1,288,793 
Retained Earnings  19,097,068  19,442,288  18,397,091 
Treasury Stock, at Cost, 63,494 Shares  (273,219)  (273,219)  (273,219) 
Total Stockholders’ Equity  20,287,570  20,632,790  19,587,593 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $22,712,143 $22,889,484 $22,106,481 
 
 
2
 
 
AS OF
 
 
 
AS OF
 
 
 
MARCH 31,
 
AS OF
 
MARCH 31,
 
 
 
2013
 
DECEMBER 31,
 
2012
 
 
 
(UNAUDITED)
 
2012
 
(UNAUDITED)
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short term debt
 
$
799,786
 
$
515,866
 
$
631,230
 
Accounts Payable
 
 
1,324,236
 
 
375,067
 
 
769,648
 
Accrued Liabilities
 
 
385,953
 
 
1,093,698
 
 
531,387
 
Income Taxes Payable
 
 
-
 
 
-
 
 
47,366
 
 
 
 
 
 
 
 
 
 
 
 
Total Current Liabilities
 
 
2,509,975
 
 
1,984,631
 
 
1,979,631
 
 
 
 
 
 
 
 
 
 
 
 
DEFERRED INCOME TAX LIABILITY
 
 
272,063
 
 
272,063
 
 
165,891
 
 
 
 
 
 
 
 
 
 
 
 
Total Liabilities
 
 
2,782,038
 
 
2,256,694
 
 
2,145,522
 
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
Common Stock: $0.30 Par Value,2,000,000 Shares
   Authorized,583,094 Shares Issued,519,600 Shares
   Outstanding
 
 
174,928
 
 
174,928
 
 
174,928
 
Capital in Excess of Par Value
 
 
1,288,793
 
 
1,288,793
 
 
1,288,793
 
Retained Earnings
 
 
19,490,590
 
 
19,442,288
 
 
18,569,391
 
Treasury Stock, at Cost, 63,494 Shares
 
 
(273,219)
 
 
(273,219)
 
 
(273,219)
 
 
 
 
 
 
 
 
 
 
 
 
Total Stockholders’ Equity
 
 
20,681,092
 
 
20,632,790
 
 
19,759,893
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
23,463,130
 
$
22,889,484
 
$
21,905,415
 
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
3

PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(UNAUDITED)
 
 
FOR THE THREE MONTHS ENDED
 
 
MARCH 31,
 
 FOR THE THREE MONTHS ENDED 
 
2013
 
2012
 
 JUNE 30, 
 
 
 
 
 
 
 
 2013 2012 
Net Sales
 
$
3,061,604
 
$
3,268,870
 
 $2,715,210 $2,584,521 
 
 
 
 
 
 
 
Costs and Expenses:
 
 
 
 
 
 
 
       
Cost of Goods Sold
 
 
2,040,555
 
 
2,287,495
 
  1,874,839  2,014,406 
Selling, General and Administrative Expense
 
 
884,858
 
 
805,525
 
  813,700  811,562 
Amortization Expense
 
 
35,971
 
 
35,971
 
  35,972  35,972 
 
 
 
 
 
 
 
Total Costs and Expenses
 
 
2,961,384
 
 
3,128,991
 
  2,724,511  2,861,940 
 
 
 
 
 
 
 
Income from Operations
 
 
100,220
 
 
139,879
 
 
 
 
 
 
 
 
Other Income
 
 
101,600
 
 
76,844
 
 
 
 
 
 
 
 
Income Before Income Taxes
 
 
201,820
 
 
216,723
 
 
 
 
 
 
 
 
Income Tax Expense
 
 
75,575
 
 
86,688
 
 
 
 
 
 
 
 
Net Income
 
$
126,245
 
$
130,035
 
 
 
 
 
 
 
 
Income per Common Share (Basic and Diluted)
 
$
0.24
 
$
0.25
 
 
 
 
 
 
 
 
Loss from Operations  (9,301)  (277,419) 
Other Loss  (62,789)  (6,179) 
Loss Before Income Taxes  (72,090)  (283,598) 
Income Tax Benefit  29,363  112,101 
Net Loss $(42,727) $(171,497) 
Loss per Common Share (Basic and Diluted) $(0.08) $(0.33) 
Dividend per Common Share
 
$
0.15
 
$
0.20
 
 $0.15 $0.20 
 
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
 
 
4

PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWSOPERATIONS
(UNAUDITED)
 
 
 
FOR THE THREE MONTHS ENDED
 
 
 
MARCH 31,
 
 
 
2013
 
2012
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
Net Income
 
$
126,245
 
$
130,035
 
Adjustments to Reconcile Net Income to Net Cash Used in Operating Activities:
 
 
 
 
 
 
 
Depreciation and Amortization
 
 
151,237
 
 
158,315
 
Decrease (Increase) in:
 
 
 
 
 
 
 
Accounts Receivable
 
 
150,625
 
 
652,675
 
Inventories
 
 
(2,534,868)
 
 
(2,528,551)
 
Prepaid Expenses and Other Current Assets
 
 
145,778
 
 
99,545
 
Income Tax Receivable
 
 
75,575
 
 
-
 
Other Assets
 
 
23,958
 
 
(51,459)
 
Increase (Decrease) in:
 
 
 
 
 
 
 
Accounts Payable
 
 
949,169
 
 
410,798
 
Accrued Liabilities
 
 
(785,685)
 
 
(790,822)
 
Income Taxes Payable
 
 
-
 
 
(323,312)
 
 
 
 
 
 
 
 
 
Net Cash Used in Operating Activities
 
 
(1,697,966)
 
 
(2,242,776)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
Purchase of Property and Equipment
 
 
(153,335)
 
 
(11,173)
 
 
 
 
 
 
 
 
 
Net Cash Used in Investing Activities
 
 
(153,335)
 
 
(11,173)
 
 
 
 
 
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
Net Proceeds from Short term Debt
 
 
283,920
 
 
317,984
 
 
 
 
 
 
 
 
 
Net Cash Provided by Financing Activities
 
 
283,920
 
 
317,984
 
 
 
 
 
 
 
 
 
NET DECREASE IN CASH
 
 
(1,567,381)
 
 
(1,935,965)
 
 
 
 
 
 
 
 
 
CASH, AT BEGINNING OF PERIOD
 
 
6,384,087
 
 
7,468,908
 
 
 
 
 
 
 
 
 
CASH, AT END OF PERIOD
 
$
4,816,706
 
$
5,532,943
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
 
 
 
 
Cash paid for:
 
 
 
 
 
 
 
Income Tax
 
$
-
 
$
410,000
 
 
 
 
 
 
 
 
 
Noncash financing activity:
 
 
 
 
 
 
 
Dividends Declared
 
$
77,940
 
$
103,920
 
  FOR THE SIX MONTHS ENDED 
  JUNE 30, 
  2013 2012 
Net Sales $5,776,814 $5,853,391 
Costs and Expenses:       
Cost of Goods Sold  4,476,218  4,301,901 
Selling, General and Administrative Expense  1,698,558  1,617,087 
Amortization Expense  71,943  71,943 
Total Costs and Expenses  6,246,719  5,990,931 
Loss from Operations  (469,905)  (137,540) 
Other Income  38,811  70,665 
Loss Before Income Taxes  (431,094)  (66,875) 
Income Tax Benefit  163,817  25,413 
Net Loss $(267,277) $(41,462) 
Loss per Common Share (Basic and Diluted) $(0.51) $(0.08) 
Dividend per Common Share $0.15 $0.20 
 
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
 
 
5

PARADISE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
  FOR THE SIX MONTHS ENDED 
  JUNE 30, 
  2013 2012 
CASH FLOWS FROM OPERATING ACTIVITIES:       
Net Loss $(267,277) $(41,462) 
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:       
Depreciation and Amortization  303,524  310,771 
Provision for Deferred Income Taxes  (163,817)  (25,413) 
Decrease (Increase) in:       
Accounts Receivable  839,369  1,078,941 
Inventories  (5,596,158)  (7,311,207) 
Prepaid Expenses and Other Current Assets  (269,401)  (290,024) 
Income Tax Receivable  (82,000)  - 
Other Assets  (49,536)  (22,606) 
Increase (Decrease) in:       
Accounts Payable  832,061  993,571 
Accrued Expense  (710,142)  (950,214) 
Income Taxes Payable  -  (370,678) 
Net Cash Used in Operating Activities  (5,163,377)  (6,628,321) 
CASH FLOWS FROM INVESTING ACTIVITIES:       
Purchase of Property and Equipment  (224,881)  (101,412) 
Net Cash Used in Investing Activities  (224,881)  (101,412) 
CASH FLOWS FROM FINANCING ACTIVITIES:       
Net Proceeds from Short Term Debt  45,960  418,452 
Dividends Paid  (77,940)  (103,920) 
Net Cash (Used in) Provided by Financing Activities  (31,980)  314,532 
NET DECREASE IN CASH  (5,420,238)  (6,415,201) 
CASH, AT BEGINNING OF PERIOD  6,384,087  7,468,908 
CASH, AT END OF PERIOD $963,849 $1,053,707 
SUPPLEMENTAL CASH FLOW INFORMATION:       
Cash paid for:       
Income Taxes $82,000 $410,000 
See Accompanying Notes to these Consolidated Financial Statements (Unaudited)
6

PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
NOTE 1           BASIS OF PRESENTATION
BASIS OF PRESENTATION
 
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 only theall adjustments and accruals of a normal recurring nature that management believes isare 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, 2012. 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, 2013 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 financial statements for the quarter ended March 31,June 30, 2012 to conform to the classifications used for the quarter ended March 31,June 30, 2013.

NOTE 2           RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
The Company’s management does not believe that any recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) (including its EITF), the AICPA or the Securities and Exchange Commission will have a material impact on the Company’s current or future consolidated financial statements.

NOTE 3           LOSS PER COMMON SHARE
INCOME PER COMMON SHARE
 
Basic and diluted earningsloss per common share areis based on the weighted average number of shares outstanding and assumed to be outstanding of 519,600.519,600. There are no dilutive securities outstanding.
 
 
67

PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 
NOTE 4           BUSINESS SEGMENT DATA
BUSINESS SEGMENT DATA
 
The Company’s operations are conducted through two business segments. These segments, and the primary operations of each, are as follows:
 
Business Segment
Operation
Fruit
Production of candied fruit, a basic fruitcake ingredient, sold to manufacturing bakers, institutional users, and retailers for use in home baking. Also, based on market conditions, the processing of frozen strawberry products, for sale to commercial and institutional users such as preservers, dairies, drink manufacturers, etc.
Molded Plastics
Production of plastics containers and other molded plastics for sale to various food processors and others.
  Three months ended Three months ended 
  June 30, June 30, 
  2013 2012 
Net Sales in Each Segment       
        
Fruit:       
Sales to Unaffiliated Customers $390,766 $357,713 
        
Molded Plastics:       
Sales to Unaffiliated Customers  2,324,444  2,226,808 
        
Net Sales $2,715,210 $2,584,521 
 
 
March 31,
 
March 31,
 
 Six months ended Six months ended 
 
2013
 
2012
 
 June 30, June 30, 
 
 
 
 
 
 
 
 2013 2012 
Net Sales in Each Segment
 
 
 
 
 
 
 
       
 
 
 
 
 
       
Fruit:
 
 
 
 
 
 
 
       
Sales to Unaffiliated Customers
 
$
824,737
 
$
876,809
 
 $1,215,503 $1,234,522 
 
 
 
 
 
       
Molded Plastics:
 
 
 
 
 
 
 
       
Sales to Unaffiliated Customers
 
 
2,236,867
 
 
2,392,061
 
  4,561,311  4,618,869 
 
 
 
 
 
 
 
       
Net Sales
 
$
3,061,604
 
$
3,268,870
 
 $5,776,814 $5,853,391 
 
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.
 
 
78
 
PARADISE, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
 
NOTE 4
BUSINESS SEGMENT DATA (CONTINUED)
 
 
March 31,
 
March 31,
 
 
 
2013
 
2012
 
 
 
 
 
 
 
 
 
Identifiable Assets of Each Segment are Listed Below:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fruit
 
$
11,667,364
 
$
9,739,581
 
 
 
 
 
 
 
 
 
Molded Plastics
 
 
5,605,977
 
 
5,182,183
 
 
 
 
 
 
 
 
 
Identifiable Assets
 
 
17,273,341
 
 
14,921,764
 
 
 
 
 
 
 
 
 
General Corporate Assets
 
 
6,189,789
 
 
6,983,651
 
 
 
 
 
 
 
 
 
Total Assets
 
$
23,463,130
 
$
21,905,415
 
NOTE 4           BUSINESS SEGMENT DATA (CONTINUED)
 
  June 30, June 30, 
  2013 2012 
Identifiable Assets of Each Segment are Listed Below:       
        
Fruit $14,696,781 $14,092,137 
        
Molded Plastics  4,936,802  5,141,204 
        
Identifiable Assets  19,633,583  19,233,341 
        
General Corporate Assets  3,078,560  2,873,140 
        
Total Assets $22,712,143 $22,106,481 
Identifiable assets by segment are those assets that are principally used in the operations of each segment. General corporate assets are principally cash, and land and buildings.
buildings, and income tax assets.

NOTE 5OTHER ISSUES
OTHER ISSUES
 
On June 20, 2013, Paradise, Inc. renewed its revolving line of credit with a financial institution for a two year period maturing on June 23, 2015. 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 the lessor of $6,000,000 or 50% of the Company’s eligible inventory from January through May of each year and 60% of eligible inventory from June to December of each year. This agreement is secured by all the assets of the Company and the agreement requires that certain conditions are met for the Company to continue borrowing, including debt service coverage and debt to equity ratios and other financial covenants including an agreement not to encumber a mortgage on the property without bank approval. Interest is payable monthly at the bank’s LIBOR rate plus 1.75%.
During 2012, the Company filed a settlement claim against BP Exploration & Production, Inc. and BP America Production Company (“BP”). The claim is subject to review by a claims board as well as a protest period by BP. An amount has not been recorded in the Company’s consolidated financial statements due to the inherent uncertainty in the claims process.
 
 
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PARADISE, INC.COMMISSION FILE NO. 0-3026
PART I.FINANCIAL INFORMATION
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward–Looking Statements
 
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
Overview
Paradise, Inc.’s main business segment, glace’ fruit, a prime ingredient of fruitcakes and other holiday confections, represented 67.7% of total net sales during 2012. 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 an eight to ten week period 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. producing 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.
 
 
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PARADISE, INC.COMMISSION FILE NO. 0-3026
 
PART I.FINANCIAL INFORMATION
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
 
The First QuarterSix Months
 
Paradise, Inc.’s fruit segment net sales were $824,737 for the first quartersix months of 2013 compareddecreased 1.5% to $876,809$1,215,503 from $1,234,522 for the similar reporting period of 2012, representing a 5.9% decrease. The primary reason for this decrease was a shortage of labor with regard to gathering strawberries from a local distributor for delivery to Paradise, Inc.’s facilities. For a negotiated fee, i.e. tolling charge, Paradise, Inc. will receive and process fresh strawberries through its facilities on behalf of this distributor. With the shortage in available labor during the first quarter of 2013, tolling charges earned as of March 31, 2013 were $195,763 compared to $465,887 as of March 31, 2012. Paradise, Inc.’s other fruit segment sales duringare very seasonal in nature as net sales for the first quartersix months of 2013 primarily comprisedthe year have historically represented less than 5% of annual net sales. The primary sales activity within this segment for the first six months of the year relates to bulk fruit orders received and shipped to supermarkets and manufacturing bakeries leading up tobakeries. The remaining volume of sales activity consists of the sale of finished strawberry products produced exclusively for a local Plant City, Florida distributor during late March and through the traditional Easter holiday season. Gross salesearly April of bulk fruit orders receivedeach year. For a tolling fee, Paradise, Inc. will receive and shipped asprocess fresh strawberries on behalf of March 31, 2013 increased to $619,739 compared to $543,773 as of March 31, 2012.
Paradise Plastics, Inc.’s sales to unaffiliated customers forthis distributor. Tolling charges earned during the first quartersix months of 2013 were $2,236,867$280,950 compared to $2,392,061$521,952 for the similar reporting period of 2012, representing2012. The reduction in tolling income of $241,002 was caused by a 6.5% decrease.labor shortage in gathering strawberries on behalf of this local distributor for delivery to Paradise, Inc.’s facility.
Paradise Plastics, Inc.’s net sales to existing long-termunaffiliated customers within the commercial and home construction industry continued to increase offsetting a slight decline in injection molding customer orders received and shipped during the first six months of 2013 decreased 1.2% to $4,561,311 from $4,618,869 compared to the similar reporting period of 2012. This decrease is primarily related to the transitioning away from the production and shipment of a custom molding product for a long term customer whose own product line changed during the second quarter of 2013. However,Paradise Plastics, Inc. is in the process of developing a new prototype custom mold for this existing customer. The Company is continuing its development and testing of this new custom plastics mold in order to comply with recent first quarter 2013 capital improvements to various production assets within the Plastics operations,customer’s requirements.  Paradise, Inc.’s management is confident these enhancementsthat once approval for this mold is received that production and subsequent shipment of this product will provide increased capabilities to handle more efficiently existing customer orders as well as new orders moving forward.begin in the second half of 2013.
 
Consolidated cost of sales, as a percentage of net sales, decreased 3.4% forincreased 4.1% during the first quartersix months of 2013 compared to the similar reporting period of 2012. This decreaseincrease is relatedprimarily contributable to the needfollowing two reasons. First, with the shortage of available labor to fulfill several new customer ordersgather strawberries from various farms within the local area, Paradise, Inc. received and processed approximately 2,800,000 less pounds of strawberries through its facilities during the first quartersix months of 2013. Increased production2013 compared to the similar period of glace’2012. Secondly, certain raw fruit overmaterial received from one of the Company’s suppliers, which is subject to specific size and quality requirements before being processed and placed into inventory, had a relatively fixed levelhigher rejection rate than in the previous year. Thus, the reduction in the amount of overheadraw fruit materials processed through the plant during the first quarternon-traditional production period of 2013January through May, will yieldresult in a lowerhigher percentage of cost of sales.sales as the Company must maintain a certain level of fixed expenses throughout the year. However, it is important to note that with moreless than ninety percent (90%)30% of the Company’sParadise, Inc.’s retail glace’ annualfruit production cycle yet to commence as of June 30, 2013, it is still too early to project or forecast with any realistic changes inreasonable certainty cost of sales for 2013. Only after factoring in such items as fluctuations in energy cost over the next six months and possible changesit relates to labor cost associated with the implementationa percentage of the Affordable Heath Care Act, will management be able to report any meaningful information related to cost of sales.consolidated sales until a full year’s inventory production cycle is completed.
 
Selling, general &and administrative expenses totaled $884,858 for the first quartersix months of 2013 increased 5.0 % compared to $805,525 for the similar reporting period of 2012 primary as the Company’s sales force increased its commitments to attend various plastics and food trade shows during the first quarter of 2013.
Other Significant Items
Other Income for the first quarter of 2013 totaled $101,600 compared to $76,844 for the similar reporting period of 2012. Other income is periodic salesThis increase was related to management 's decision to attend additional food and trade shows to promote the sale of recycled plastics materials along with increases in the cash surrender value of two insurance policies owned by the company on behalf of two senior executives.company's glace' fruit and dried fruit snack products.
 
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PARADISE, INC.COMMISSION FILE NO. 0-3026
PART I.FINANCIAL INFORMATION
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Other Significant Items
On June 20, 2013, Paradise, Inc. renewed its revolving line of credit with a financial institution for a two year period maturing on June 23, 2015. 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 the lessor of $6,000,000 or 50% of the Company’s eligible inventory from January through May of each year and 60% of eligible inventory from June to December of each year. This agreement is secured by all the assets of the Company and the agreement requires that certain conditions are met for the Company to continue borrowing, including debt service coverage and debt to equity ratios and other financial covenants including an agreement not to encumber a mortgage on the property without bank approval. Interest is payable monthly at the bank’s LIBOR rate plus 1.75%.
Inventory as of March 31,June 30, 2013 was $11,391,247totaled $14,452,537 compared to $8,725,068$13,507,724 as of June 30, 2012, representing an increase of $2,666,179.$944,813. This increase is twofold; first, as previously reported in the Company’s December 31, 2012 annual filing Paradise, Inc. experiencedwas caused by an increase in returns of retail glace’ fruit from a long-term customer. Management provided an estimated impact for products returned by applying an allowance against accounts receivables for the invoiced price of these returns and a provision to recognize a related estimate of finished goods returns was added to inventory at December 31, 2012. Secondly, shipments from suppliers of raw fruit commodities, which may fluctuate based upon many factors common to agricultural products, were received in greater quantity during the first quarter of 2013 compared to the similar period of 2012.
 
Short term debt and Accounts Payable combined balances as of March 31, 2013 totaled $2,124,022 compared to $1,262,460 for the similar reporting period for 2012. This increase is directly related to the earlier receipt of various raw fruit inventory mentioned in the above paragraph.
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PARADISE, INC.COMMISSION FILE NO. 0-3026
PART I.FINANCIAL INFORMATION
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
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, 2013 and December 31, 2012, we had $4.8 million$963,849 and $6.4 million,$6,384,087, 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 from January 1 to May 31 and 60% from June 1 to December 31 of each year, of which $0 was outstanding at March 31,June 30, 2013 and $0 at December 31, 2012. Within this agreement, there are letters of credit with a limit of $1,200,000, of which $799,786$561,826 was outstanding at March 31,June 30, 2013 and $515,866 at December 31, 2012. The line of credit agreement expires in June 2013.2015. Net cash used in operating activities decreased from $2,242,776$6,628,321 for the quartersix months ended March 31,June 30, 2012 to $1,697,964$5,163,377 for the quartersix months ended March 31,June 30, 2013. The primary reasons for this decrease are as follows; income tax payments made during the first quarter ofsix months ended June 30, 2013 were $410,000$328,000 less than the first quarter ofsix months ended June 30, 2012; Accounts Receivable net payments received from Paradise, Inc.’s customers during the first quarter ofsix months ended June 30, 2013 were $502,050$239,572 less than the similar reporting period of 2012. Lastly, net cash provided by financing activities decreased from $317,984$314,532 for the quartersix months ended March 31,June 30, 2012 to $283,920$(31,980) for the quartersix months ended March 31,June 30, 2013 due to timing of payments on letters of credit.
 
Summary
 
Paradise Inc.’s consolidated net sales decreased 1.3% for the threefirst six months ended March 31,of 2013 totaled $3,061,604 compared to $3,268,870 for the similar reporting period of 2012 representing a decrease of 6.3%.from $5,853,391 to $5,776,814. 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.
 
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PARADISE, INC.COMMISSION FILE NO. 0-3026
PART I.FINANCIAL INFORMATION
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
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, 2012. There have been no material changes to our critical accounting estimates during the threesix months ended March 31,June 30, 2013.
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PARADISE, INC.COMMISSION FILE NO. 0-3026
PART I.FINANCIAL INFORMATION
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Recently Issued Accounting Pronouncements
 
The Company’s management does not believe that any recent codified pronouncements by the Financial Accounting Standards Board (“FASB”) (including its EITF), the AICPA or the Securities and Exchange Commission will have a material impact on the Company’s current or future consolidated financial statements.
 
Item 3.Quantitative and Qualitative Disclosure and Market Risk – N/A
Item 3.          Quantitative and Qualitative Disclosure and Market Risk – N/A
 
Item 4.Controls and Procedures
Item 4.          Controls and Procedures
 
As of March 31,June 30, 2013, our Chief Executive Officer and Chief Financial Officer have evaluated the Company’s disclosure controls and procedures, and they have concluded that we maintain effective disclosure controls and procedures. There were no changes in our internal control over financial reporting during the quarter ended March 31,June 30, 2013.
 
Disclosure controls and procedures mean the methods designed to ensure that information that the Company is required to disclose in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods required. Our controls and procedures are designed to ensure that all information required to be disclosed is accumulated and communicated to our management to allow timely decisions regarding disclosure. During June 2013, we identified a material weakness in our internal controls over the interim period review of data input into the Company’s inventory system. Effective immediately after this discovery, additional procedures were established, which strengthened internal control and remediated the material weakness. Our controls and procedures are also designed to provide reasonable assurance of the reliability of our financial reporting and accurate recording of our financial transactions.
 
A control system, however well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. There are inherent limitations in all control systems, and no evaluation of controls can provide absolute assurance that all control gaps or instances of fraud have been detected. These inherent limitations include the realities that the judgments in decision-making can be faulty, and that simple errors or mistakes can occur.
 
 
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PARADISE, INC.COMMISSION FILE NO. 0-3026
PART II.       OTHER INFORMATION
Item 1.          Legal Proceedings – N/A
Item 1A.       Risk Factors – N/A
Item 2.          Unregistered Sales of Equity Securities and Use of Proceeds – N/A
Item 3.          Defaults Upon Senior Securities – N/A
Item 4.          Mine Safety Disclosures – N/A
Item 5.          Other Information – N/A
Item 6.          Exhibits and Reports on Form 8-K
(a)    Exhibits
 
PART II.
OTHER INFORMATION
Exhibit
Item 1.
Legal Proceedings – N/A
Item 1A.Risk Factors – N/A
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds – N/A
Item 3.Defaults Upon Senior Securities – N/A
Item 4.Mine Safety Disclosures – N/A
Item 5.Other Information – N/A
Item 6.Exhibits and Reports on Form 8-K
(a)Exhibits
Exhibit
Number
Description
    
 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(b)    Reports on Form 8-K.
 
(b)Reports on Form 8-K.
None.
 
 
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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.
 
 PARADISE, INC. 
 A Florida Corporation 
   
/s/ Melvin S. Gordon
Date:
May 15,   August 14, 2013
 Melvin S. Gordon 
 Chief Executive Officer and Chairman 
   
/s/ Jack M. Laskowitz
Date:
May 15,    August 14, 2013
 Jack M. Laskowitz 
 Chief Financial Officer and Treasurer 
 
 
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