FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the quarterly period ended March 31,June 30, 2010

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 33566

(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  ¨    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 registrationregistrant is a shell company (as defined in Rule 125-212b-2 of the Exchange Act)    Yes  ¨    No  x

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

The number of shares outstanding of each of the issuer’s classes of common stock:

PARADISE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31,JUNE 30, 2010

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

LIABILITIES AND STOCKHOLDERS’ EQUITY

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(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 CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 Basis of Presentation

The accompanying unaudited consolidated financial statements of Paradise, Inc. (the “Company”) have been prepared by the Company in accordance with generally accepted accounting principles 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 generally accepted accounting principles 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 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, 2009. The Company’s management believes that the disclosures are sufficient for interim financial reporting purposes.

Note 2 Net Loss per Share

Net loss per share, assuming no dilution, are based on the weighted average number of shares outstanding during the period: 519,350 (2010 and 2009).

Note 3 Revolving Line of Credit

On June 23, 2009, Paradise, Inc. renewed its revolving line of credit with another financial institution for a two year period. This bank has agreed to advance Paradise, Inc. 80% of the Company’s eligible receivables and up to 60% of the Company’s inventory for a maximum amount of $12,000,000. Interest is payable monthly and is computed from a daily floating rate equal to the Libor rate plus an applicable margin.

This agreement is subject to certain conditions which must be met for the Company to continue borrowing, including debt service coverage and debt to equity ratios and other financial covenants. The loan agreement is secured by all of the Company’s assets, whether tangible or intangible.

Note 34 Business Segment Data

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, 2010 and 2009, sales of frozen strawberry products totaled $145,797$192,797 and $139,031,$268,617, 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 generally accepted accounting principles.

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.

Note 4 Subsequent Event

The Company has evaluated events and transactions for potential recognition or disclosure in the financial statements through the date of issuance of these financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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–lookingforward-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 70.3% of totalconsolidated net sales during 2009. These products are sold to manufacturing bakers, institutional users, supermarkets and other retailers throughout the country. Consumer demand for glace’ fruit productproducts is traditionally strongest during the Thanksgiving and Christmas season. AlmostHistorically, over 80% of annual glace’ fruit product sales are recorded from thefor a period of eight to ten weeks beginning in mid September.September of each year.

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.demand. 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 productsegment income, results in the generationrecognition 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 analysisrequires an accounting 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,Therefore, 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 isthat are 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 QuarterSix Months

Paradise, Inc.’s fruit segment net sales for the first quartersix months of 2010 were $548,740 compareddecreased 5.8% to $549,880$809,017 from $858,891 for the similar reporting period of 2009. As reported in the above paragraph, Paradise, Inc.’s fruit segment sales are very seasonal in nature. First quarter fruit segment net sales are typically no more than 2-3% of total annual net sales. As in previous years, the currentThe primary sales activity is limitedwithin this segment for the first six months of the year relates to bulk fruit orders received and shipped to supermarkets and manufacturing bakeries forleading up and through the upcoming Easter holiday season. During the current reporting period for 2010 as well as the similar reporting period for 2009, bulk fruit products accounted for approximately 80% of fruit segment net sales. The remaining volume of sales activity is primarily related toconsists 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.over the past several years. For a negotiatedtolling fee, i.e. tolling charge, Paradise, Inc. will receive and process fresh strawberries through its facilities on behalf of this distributor.

The First Six Months (Continued)

Tolling charges accruedearned during the first quartersix months of 2010 were $145,797$192,797 compared to $139,031$268,617 for 2009.the similar reporting period of 2009 representing a decline in net sales of $75,820.

Paradise Plastics, Inc.’s net sales to unaffiliated customers, during the first quartersix months of 2010 increased 14.3% to $1,952,051$3,917,461 from $1,580,609 or 23.5%$3,427,708 compared to the similar reporting period for 2009 stopping a declining trend in net sales activity reported over2009. This represents the past year. As economic activity related to the housing market has started to show signs of improvement,second consecutive quarter that the Company has receivedreported an increase in custom molding plastics orders from its long-time home-based plastics customers.as several long term customers have begun to experience an upturn in consumer activity for their products. While the Company is pleased with this performance, management is not able to predict with any certainty the strength of this recent turnaround, managementturnaround. However, it is important to mention that Paradise Plastics, Inc. has the necessary production space,facilities, equipment, and available labor talent to facilitatemeet this upturn in business activity.revenue growth going forward.

Consolidated cost of sales, as a percentage of net sales, increased 7.1% for3.0% the first quarter forsix months of 2010 compared to the similar reporting period forof 2009. However, it should be noted thatwith only slightly more than 30% of the Company’s estimated needs for retail glace’ fruit production will not commence operations until the first week of May, 2010. Thus, without any meaningful cost information availableinventory produced as of the date of this filing, noJune 30, 2010, it is too early to forecast with any reasonable estimate regardingcertainty annual cost of sales can be determined at this time.

The First Quarter (Continued)

Inventory at March 31,until a full year’s inventory production cycle is completed. Overall consolidated inventory levels as of June 30, 2010 decreased by $3,341,237 compared to inventory at March 31,are $2.26 million less than what was on hand as of June 30, 2009 as Paradise, Inc.’s management focusedhas aggressively monitored its effortprocurement of raw materials during the previous yearpast twelve months as customers continue to reduce its glace’ fruit raw materials and plastics resins in anticipation of a lessening in sales activity caused by the slowdown in the economy. Whileremain cautious as to their own inventory levels are significantly lower as of March 31, 2010, Paradise, Inc. does have sufficient quantities of inventory in place or under contract to meet 100% of its estimated production requirements for the upcoming 2010 holiday season.levels.

Selling, general & administrative expenses for the first quartersix months of 2010 decreased $60,011 or 6.9%6.3% compared to the previous year’s reporting period. Two factors play a major roleperiod of 2009. This decrease is primarily related to the Company’s cost cutting actions implemented and disclosed during last year’s second quarter SEC filing. Paradise, Inc.’s Board of Directors reduced executive wages 15% and all selling and administrative wages 10% effective May 1, 2009. These reductions remain in this decrease. First, approximately 52% or $31,000 of this savings is due to less travel by managementeffect for 2010.

Depreciation and sales personnel duringamortization expenses decreased 7.7% for the first quarter of 2010 compared to 2009. Secondly, professional services for computer support, audit fees and payroll related expenses have been reduced by more than $20,000 during the first quarter periodsix months of 2010 compared to the similar reporting period of 2009.2009 as fixed assets that became fully depreciated during the past twelve months were greater than the amount of new assets placed into service during this period.

DepreciationInterest expense for the six months ended June 30, 2010 totaled $3,135 compared to $41,700 for the six months ended June 30, 2009. This represents a decrease in interest expense of $38,565 and amortization expensesis attributed to the following two factors. First, long term debt, as defined by financial obligations greater than 12 months, is $0. Secondly, with inventory levels being $2.26 million lower as of June 30, 2010 compared to June 30, 2009 short-term borrowing cost to finance the acquisition of raw materials has been significantly reduced.

Summary

Paradise Inc.’s consolidated net sales increased 10.3% for the first quartersix months of 2010 decreased 5% compared to the similar reporting period of 2009 as amortization related to debt service cost associated with the acquisition of Mastercraft Products Corporation in June of 2004 expired as of December 31, 2009.

Interest expense for the first quarter of 2010 totaled $208 compared to $6,396 for the first three months of 2009 as the Company retired the majority of its long term debt during 2009. In addition, the Company’s current two year revolving linecustomers of credit which provides up to $12,000,000 for working capital is $0 as of March 31, 2010 compared to $1,100,000 as of March 31, 2009.

Summary

Paradise Inc’s consolidated net sales for the three months ended March 31, 2010 increased $370,302 or 17.4% to $2,500,791 compared from $2,130,489 for the three months ended March 31, 2009 as plastics customers who werePlastics, Inc. severely impacted by the downturn in the housing market collapse during late 2008 and all of 2009 are just now beginningbegan to see an increase in their sales volumestabilize during the first quartersix months of 2010.

Whilethis year. However, due to the Company is pleased to see this increase in first quarter plastics sales, it is important to note that with less than 95%highly seasonal nature of the Company’s glaceprimary product, glace’ fruit, sales yet to be realized as of the date of this filing, no reasonable estimation or forecastwhich accounts for approximately 70% of consolidated annual revenue, no meaningful financial performance cananalysis may be determined at this time.developed from Paradise, Inc.’s interim reporting results. Only a full year’s accounting will provide the necessary information to determine the Company’s financial performance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE AND MARKET RISK – N/A

ITEM 4. CONTROLS AND PROCEDURES

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, 2010, 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. There were no 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 deficiencies or weaknesses in the Company’s internal controls over financial reporting; therefore, no corrective actions were taken.

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. Submission of Matters to a Vote of Security Holders – N/A

The annual meeting of the shareholders of Paradise, Inc. was held on June 1, 2010. The purpose of this meeting was to elect five directors to hold office until the next annual meeting of shareholders and to ratify the reappointment of Pender, Newkirk and Company, LLP as the Company’s independent certified public accountants for 2010.

The results of the election of Directors are as follows:

The results of the ratification of Pender, Newkirk & Company, LLP as the Company’s independent accountants for 2010 are as follows:

Item 5. Other Information – N/A

Item 6. Exhibits and Reports on Form 8-K

		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 the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
		32.2		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

None.

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.

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