FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended September 30, 2015March 31, 2016

or

Commission File No. 0-3026

PARADISE, INC.

INCORPORATED IN FLORIDA

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

1200 W. 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). 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.

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 November 16, 2015May 12, 2016 was 519,600 shares.

PARADISE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2015MARCH 31, 2016

INDEX

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

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 OPERATIONS

(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 allonly the adjustments and accruals of a normal recurring nature that management believes areis 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, 2014.2015. 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 ninethree months ended September 30, 2015March 31, 2016 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 three and nine monthsquarter ended September 30, 2014March 31, 2015 to conform to the classifications used for the three and nine monthsquarter ended September 30, 2015.March 31, 2016.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)ASU No. 2014-09,Revenue from Contracts with Customers, (Topic 606). The guidance in this update supersedeswhich requires an entity to recognize the amount of revenue recognition requirements in Topic 605,Revenue Recognition, and most industry-specific guidance throughout Industry topics of the Codification.Additionally, thisUpdate supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts.In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles-Goodwill and Other) are amendedto which it expects to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this Update.Under the new guidance, an entity should recognize revenue to depictentitled for the transfer of promised goods or services to customerscustomers. The ASU will replace most existing revenue recognition guidance in an amount that reflectsU.S. GAAP when it becomes effective. The new standard will be effective for the consideration toCompany on January 1, 2018, which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferredis the effective date to annual reporting periods beginning after December 15, 2017.for public companies. Early adoptionapplication is permitted as of January 1, 2017. The standard permits the original effective date inuse of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 which is for annual reporting periods beginning after December 15, 2016. We are currently evaluatingwill have on its financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the impacteffect of adopting the guidancestandard on ourits consolidated financial statements.

PARADISE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED(UNAUDITED))

In April 2015, the FASB issued ASU No. 2015-03,“Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.” ASU No. 2015-03 simplifies the presentation of debt issuance costs by requiring that the costs related to a recognized debt liability be presented in the consolidated balance sheet as a direct reduction from the carrying amount of that liability. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. ASU No. 2015-03 is required to be applied retrospectively to all periods presented beginning in the year of adoption. Early adoption is permitted. The Company does not anticipate the adoption of this ASU to have a material impact on the Company’s financial position or results of operations.

In July 2015, the FASB issued ASU No. 2015-11,Simplifying the Measurement of Inventory, which amends FASB ASU Topic 330,Inventory. This ASU requires entities to measure inventory at the lower of cost or net realizable value and eliminates the option that currently exists for measuring inventory at market value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonable predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. This ASU should be applied prospectively with earlier application permitted. The Company does not anticipate the adoption of this ASU to have a material impact on the Company’s financial position or results of operations.

In November 2015, the FASB issued ASU No. 2015-17,Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes,which simplifies the presentation of deferred income taxes. The ASU provides presentation requirements to classify deferred tax assets and liabilities as noncurrent in a classified balance sheet. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for any interim and annual financial statements that have not yet been issued. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842)(ASU 2016-02). Under ASU No. 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of these changes to the Company’s consolidated financial statements.

Except as noted above, the Company’s management does not believe that 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.

Basic and diluted income (loss)loss per common share isare 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:

PARADISE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

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, prepaid expenses, other current assets, land and income tax assets.

On July 31, 2015, Paradise, Inc. renewed its revolving line of credit with SunTrust Bank through July 31, 2017. This renewal provides for a maximum limit of $12 million and a borrowing limit 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 1 to May 31 and 60% from June 1 to December 31 of each year. Within this agreement are letters of credit with a limit of $1,750,000. The agreement is secured by all of the assets of the Company and 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 plus 1.75%.

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 65.8%68.3% of total net sales for the previous year of 2014.during 2015. 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 for a period ofduring an eight to ten weeksweek 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. producesproducing 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.

The First Nine MonthsQuarter

Paradise, Inc.’s fruit segment net sales for the first nine monthsquarter of 2015 increased 10.8% to $8,409,9472016 totaled $853,280 compared to $7,519,930net sales of $1,004,288 for the similar nine month reporting period of 2014. This increase2015 representing a decrease of $151,008 or 15.0%. The fruit segment has two primary products for sale during the first quarter of the year. The main product is primarily dueglace’ fruit sold in bulk quantities and shipped to timing differencesmanufacturing bakeries and select supermarkets for the traditional Easter holiday season. Net sales orders received and shipped for bulk glace’ fruit products during the first three months of 2016 were $482,589 compared to $508,223 for the similar reporting period of 2015, representing a decrease of $25,634 or 5.0%. The other main product for sale in the receiptfirst quarter is finished strawberry items produced exclusively for a local distributor during a short period of customers’ orderstime beginning in early March and running through mid April of each year. As in previous years, Paradise, Inc., based on a negotiated price (i.e. tolling fee) will receive and process fresh strawberries through its production facilities on behalf of this distributor. With weather conditions not as favorable as in past years, net sales for the corresponding shipping dates for delivery of the Company’s retail glace’ fruit products. Specifically, several major customers requested delivery of their opening orders during the third quarter of 2015 asthree months ending March 31, 2016 were $370,691 compared to $496,065 representing a decrease of $125,374 for the beginning of the fourth quarter of 2014. Paradise, Inc. recognizes net sales upon receipt of its products by customer. Thus, when merchandise is shipped and received by customers during different interim reporting periods, timing differences in reported net sales will be realized. Management has consistently disclosed that interim filings are not reliable financial indicators of year-end performance. Factors such as weather conditions, product placement on supermarket shelves along with customer demand will have a direct impact on the seasonal holiday sales of glace’ fruit. Only a full year’s accounting will provide the necessary financial information to determine the Company’s overall success.three months ending March 31, 2015.

Paradise Plastics, Inc., a wholly owned company of Paradise, Inc., which accounted for 34.2%31.7% of total net sales to unaffiliated customers for the previous year, generated net sales of $5,622,810$2,109,676 for the ninethree months ended September 30, 2015March 31, 2016 compared to $6,217,461$1,687,469 for the similar reporting period of 2014.2015. This decline in net sales, reported and disclosed in Paradise, Inc.’s first quarter 10Q filing, is directly relatedrepresents an increase of $422,207 or 25.0%. The primary reason for this increase relates to the decisiona greater amount of an existing long term customer to transfer production of a custom molding product to their facilities as of January 1, 2015. During the first nine months of 2015, Paradise Plastics, Inc. placed into service $387,780 in production equipment in order to process sales orders received from existing and new clients. Asshipped to a result,long term plastics customer for higher priced heavy gauge vacuum forming parts used for their customers within the Company was able to process over $200,000 in new sales orders from one existing customer during the third quarter of 2015.housing market. While encouraged with these newincreased sales orders received and shipped during the first quarter of 2016 along with higher profit margins than for the similar reporting period for the three months ending March 31, 2015, no determination can be made as to how much additional revenue, if any, will be generated in future reporting periods for the remainder of 2015 as2016. As to most plastics sales orders, commitments for new sales ordersparts are typicallyusually for a short term period of up to 90 days. Furthermore, in an effortFuture revenue can only be determined when re-orders for these plastics parts are received and shipped by Paradise Plastics, Inc. to further expand the Company’s business base into such areas as medical supplies, food processing and aerospace customers, management made a financial commitment in 2014 to become AS9100C certified. This certification, which represents a series of standards and developed by the International Organization Standardization (ISO) for manufacturing companies will continued to be emphasized as we seek new business opportunities.its customers.

Consolidated cost of sales as a percentage of consolidated net sales decreased 2.8% during12.0% for the first nine monthsquarter of 20152016 compared to the similar reporting period of 2014. This is a positive change from2015. Two reasons represent this change. First, the increase in plastics parts ordered and shipped to a long term plastics customer included higher sales prices and therefore higher gross margins. Secondly, during the first quarter of 2016, the Company’s fruit segment commenced production of its in house brining operations producing of 1.6 million lbs. of binned orange peel inventory. With more than an adequate amount of brined orange peel in the Company’s inventory as of January 1, 2015, brining operations for the first quarter of 2015 were postponed. Thus, the increase in seasonal production of brined fruit allocated over a relatively fixed amount of factory overhead (i.e.: insurance, utilities, depreciation and taxes) had an impact of reducing cost of sales as a percentage of sales of 10.3% reported during the second quarter filing of 2015. As previously reported, dueMarch 31, 2016 compared to market conditions associated with the harvesting of several brined fruit commodities, a lesser amount of brined fruit was received and processed into higher valued finish goods inventory as of June 30, 2015. This position turned around during the third quarter of 2015, as a greater percentage of brined fruit was received and processed into higher value finished goods inventory as of September 30,March 31, 2015. However, withseasonal production does not represent a trend or an estimate that can be projected for the remainder of 2016. The Company typically starts processing continuing well into the fourth quarterall of the year, it’s important to mention that only a full year’s accounting of production, allocated over twelve months of factory overhead, will be the only meaningful way to measure cost of sales.

Inventory value as of September 30, 2015 totaled $11,434,903 compared to $12,334,631 as of September 30, 2014 as a greater amount of brined fruit was received and processed into higher value finish goods inventory during the third quarter of 2015 than during the third quarter of 2014. For reference purposes, inventory value as of June 30, 2015 was $12,481,349 compared to $14,051,869 as of June 30, 2014. Correspondingly, as the Company purchases a significant amount ofits various brined fruit inventory by utilizing existing lettersinto finished inventory at the beginning of creditJune for each year. Thus, it is important to understand that until this production period, which will run from June through October is completed, the Company will not be able to determine the change cost of sales and its lender, SunTrust Bank, short term debt relatedrelationship to the purchase of brined fruit totaled $1,385,769 at September 30, 2015 compared to $1,313,411 at September 30, 2014. There were no other borrowings as of September 30, 2015.

overall sales.

Selling, general & administrative (S,G&A) expenses for the first three months of 2016 totaled $933,355 and were consistent with S,G&A expenses for the first three months of 2015 which totaled $933,060.

The First Nine Months (Continued)Other Significant Items

Accounts payable as of September 30, 2015 totaled $1,234,036 compared to $736,880 as of September 30, 2014. This increase of $497,156 is primarily related to the decision to purchase various brined fruit materials outside of the Company’s existing letter of credit agreement during the later stages of the third quarter of 2015 compared to the third quarter of 2014.

Accounts Receivable as of September 30, 2015 totaled $6,678,038 compared to $5,571,292 as of September 30, 2014. This increase in accounts receivable of $1,106,746 is related to an increase in sales to the Company’s fruit segment customers for the nine month ending September 30, 2015 compared to September 30, 2014. Fruit segment sales, as disclosed in Note 4 of this filing, increased by $890,017.

Selling expensesOther Income for the first nine monthsquarter of 2015 increased $192,5622016 totaled $1,743 compared to $18,313 for the similar reporting period of 2014. This2015. Other income is periodic sales of recycled plastics materials from time to time along with changes in the cash surrender value of two insurance policies owned by the Company on behalf of two senior executives.

Inventory as of March 31, 2016 was $10,292,846 compared to $9,028,334 as of March 31, 2015 representing an increase of $1,264,512 or 14.0% as shipments from suppliers of brined fruit commodities, which may fluctuate based upon many factors common to agricultural products, were received in greater quantities during the first quarter of 2016 than the first quarter of 2015. With several of the Company’s brined fruit commodities being shipped to its processing facility located in Plant City, Florida from as far away as Southeast Asia, timing differences regarding levels of on hand brined fruit will occur at various interim reporting periods. Management’s primary goal at the end of the first quarter of its fiscal year, is to determine if inventory levels are sufficient for the upcoming selling season. For the period in review, this goal has been met.

Short Term Debt and Accounts Payable combined balances as of March 31, 2016 totaled $1,651,185 compared to $1,007,847 for the similar reporting period for 2015. These two accounts are directly related to the decisionincreased amount of Paradise, Inc.’s management to expense to operations a total of $140,401 in outstanding receivables and inventory owed to Paradise Plastics, Inc. from a customer that ceased doing business in mid 2015. Paradise, Inc. has initiated legal action to recover this amount. Legal expenses incurredon hand at March 31, 2016 as of September 30, 2015 totaled $15,600 and are recordedreferenced in the third quarter filing.preceding paragraph.

On July 31, 2015, Paradise, Inc. renewed its revolving line of credit with SunTrust Bank through July 31, 2017. This renewal provides for a maximum limit of $12 million and a borrowing limit 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 1 to May 31 and 60% from June 1 to December 31 of each year. Within this agreement are letters of credit with a limit of $1,750,000. The agreement is secured by all of the assets of the Company and 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 plus 1.75%.

Paradise, Inc. financesWe finance our ongoing operations primarily with cash provided by our operating activities which are seasonal in nature.activities. Our principal sources of liquidity are our cash flows provided by operating activities, our existing cash, and a line of credit facility. At September 30, 2015March 31, 2016 and December 31, 2014,2015, we had $1,329,580$6.8 million and $304,858,$8.8 million, 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 up to 60%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 September 30, 2015March 31, 2016 and $0 at December 31, 2014.2015. Within this agreement, there are letters of credit with a limit of $1,750,000, of which $1,385,769$702,801 was outstanding at September 30, 2015March 31, 2016 and $112,879$582,839 at December 31, 2014.2015. The line of credit agreement expires inon July 31, 2017. Net cash decreased by $6,458,430

Summary

Paradise, Inc.’s consolidated net sales for the ninethree months ended September 30, 2015March 31, 2016 totaled $2,962,956 compared to $5,611,508$2,691,757 for the nine months ended September 30, 2014. The primary reasons for this change were related to the increased capital additionssimilar reporting period of $502,437 and2015, representing an increase of income tax payments10.1%. This increase is specifically attributable to the plastics segment as increased sales orders were received and shipped related to parts that are needed by a long term customer within the housing market. Cost of $223,750.sales as a percentage of sales decreased by 12.0% as higher gross margins were realized on these plastics parts. In addition, an increase in brined fruit production during the first quarter of 2016 also impacted a decrease in the cost of sales as a greater amount of production was allocated over a relatively fixed level of factory overhead. Overall, this activity resulted in a net loss of $207,033 for the three months ended March 31, 2016 compared to a net loss of $431,480 for the three months ended March 31, 2015. However, as mentioned in all previous quarterly filings, interim results do not represent any meaningful trends or estimates in annual performance. Only a full year’s accounting of sales and expenses will provide a complete picture of the consolidated operations of the Company.

Summary

Paradise Inc.’s consolidated net sales increased to $14,032,757 for the first nine months of 2015 compared to $13,737,391 for the first nine months of 2014. This increase as mentioned above is primarily timing in nature as several existing glace’ fruit customers requested and received their retail glace’ fruit orders in the third quarter of 2015 compared to the fourth quarter of 2014. Thus, as mentioned and disclosed in all previous interim filings, due to the highly seasonal nature of the Company’s primary product, glace’ fruit, no meaningful financial analysis should be 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, 2014.2015. There have been no material changes to our critical accounting estimates during the ninethree months ended September 30, 2015.March 31, 2016.

Impact of Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)ASU No. 2014-09,Revenue from Contracts with Customers,(Topic 606). The guidance in this update supersedeswhich requires an entity to recognize the amount of revenue recognition requirements in Topic 605,Revenue Recognition,and most industry-specific guidance throughout Industry topics of the Codification.Additionally, thisUpdate supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition - Construction-Type and Production-Type Contracts.In addition, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, assets within the scope of Topic 360, Property, Plant, and Equipment, and intangible assets within the scope of Topic 350, Intangibles-Goodwill and Other) are amendedto which it expects to be consistent with the guidance on recognition and measurement (including the constraint on revenue) in this Update.Under the new guidance, an entity should recognize revenue to depictentitled for the transfer of promised goods or services to customerscustomers. The ASU will replace most existing revenue recognition guidance in an amount that reflectsU.S. GAAP when it becomes effective. The new standard will be effective for the consideration toCompany on January 1, 2018, which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferredis the effective date to annual reporting periods beginning after December 15, 2017.for public companies. Early adoptionapplication is permitted as of January 1, 2017. The standard permits the original effective date inuse of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 which is for annual reporting periods beginning after December 15, 2016. We are currently evaluatingwill have on its financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the impacteffect of adopting the guidancestandard on ourits consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03,“Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.” ASU No. 2015-03 simplifies the presentation of debt issuance costs by requiring that these costs related to a recognized debt liability be presented in the consolidated balance sheet as a direct reduction from the carrying amount of that liability. ASU No. 2015-03 is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period. ASU No. 2015-03 is required to be applied retrospectively to all periods presented beginning in the year of adoption. Early adoption is permitted. The Company does not anticipate the adoption of this ASU to have a material impact on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements (Continued)

In July 2015, the FASB issued ASU No. 2015-11,Simplifying the Measurement of Inventory, which amends FASB ASU Topic 330,Inventory. This ASU requires entities to measure inventory at the lower of cost or net realizable value and eliminates the option that currently exists for measuring inventory at market value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonable predictable costs of completion, disposal, and transportation. This ASU is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. This ASU should be applied prospectively with earlier application permitted. The Company does not anticipate the adoption of this ASU to have a material impact on the Company’s financial position or results of operations.

In November 2015, the FASB issued ASU No. 2015-17,Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes,which simplifies the presentation of deferred income taxes. The ASU provides presentation requirements to classify deferred tax assets and liabilities as noncurrent in a classified balance sheet. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for any interim and annual financial statements that have not yet been issued. The new guidance may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company does not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.

Impact of Recently Issued Accounting Pronouncements (Continued)

In February 2016, the FASB issued ASU No. 2016-02,Leases (Topic 842)(ASU 2016-02). Under ASU No. 2016-2, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU No. 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU No. 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the impact of these changes to the Company’s consolidated financial statements.

Except as noted above, the Company’s management does not believe that 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.

As of September 30, 2015,March 31, 2016, 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 nine monthsquarter ended September 30, 2015.March 31, 2016.

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. 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.

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.