##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K





ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended
December 31, 2009

Commission File No. 0-3026





PARADISE, INC.





INCORPORATED IN
FLORIDA

IRS IDENTIFICATION NO. 59-1007583

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

PLANT CITY,
FLORIDA 33563

TELEPHONE NO. (813) 752-1155





Securities Registered Under Section 12 (b) of the Exchange Act:

None

Securities Registered Under Section 12 (g) of the
Exchange Act:



| |  |                              |  | 
| |  | ---------------------------- |  | 
| |  | Title of Each Class          |  | 
| |  | Common Stock, $.30 Par Value |  | 





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file pursuant to Section 13 or Section 15(d) of the Act.    Yes   ̈    No  x

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 Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.    Yes  x    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    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, as defined in rule 12b-2 of the Exchange act.

Large accelerated filer   ̈        Accelerated filer   ̈        Non-accelerated filer   ̈        Smaller reporting
company  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   ̈

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter. $3,921,489 (as of June 30, 2009, bid price $13.00)



|                             |  |                                 
|---------------------------- |  | --------------------------------
|Class                        |  | Outstanding at December 31,
2009
|Common Stock, $.30 Par Value |  | 519,350 Shares                  

Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x



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##### Table of Contents

PARADISE, INC.

2009 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS



|         |  |                                                                                                      |  |   
|-------- |  | ---------------------------------------------------------------------------------------------------- |  | --
|         |  | PART I                                                                                               |  |   
|         |  |                                                                                                     
|Item 1.  |  | Description of Business                                                                              |  | 1 
|         |  |                                                                                                     
|Item 2.  |  | Description of Property                                                                              |  | 5 
|         |  |                                                                                                     
|Item 3.  |  | Legal Proceedings                                                                                    |  | 6 
|         |  |                                                                                                     
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                  |  | 6 
|         |  |                                                                                                     
|         |  | PART II                                                                                              |  |   
|         |  |                                                                                                     
|Item 5.  |  | Market for Common Equity and Related Stockholder Matters and Registrant Purchases of Equity Security |  | 7 
|         |  |                                                                                                     
|Item 6.  |  | Selected Financial Data                                                                              |  | 8 
|         |  |                                                                                                     
|Item 7.  |  | Managements Discussion and Analysis or Plan of Operation                                            |  | 8 
|         |  |                                                                                                     
|Item 8.  |  | Consolidated Financial Statements                                                                    |  | 17
|         |  |                                                                                                     
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                 |  | 44
|         |  |                                                                                                     
|Item 9A. |  | Controls and Procedures                                                                              |  | 44
|         |  |                                                                                                     
|Item 9B. |  | Other Information                                                                                    |  | 46
|         |  |                                                                                                     
|         |  | PART III                                                                                             |  |   
|         |  |                                                                                                     
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                               |  | 47
|         |  |                                                                                                     
|Item 11. |  | Executive Compensation                                                                               |  | 49
|         |  |                                                                                                     
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters       |  | 50
|         |  |                                                                                                     
|Item 13. |  | Certain Relationships and Related Transactions                                                       |  | 51
|         |  |                                                                                                     
|Item 14. |  | Principal Accountant Fees and Services                                                               |  | 51
|         |  |                                                                                                     
|Item 15. |  | Exhibits and Financial Statement Schedules                                                           |  | 51
|         |  |                                                                                                     
|         |  | SIGNATURES                                                                                           |  | 52



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##### Table of Contents

PART I



|Item 1. | Description of Business
|------- | -----------------------

Forward-Looking Statements

This Annual Report on Form 10-K 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 purposes 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, plans, anticipates, intends, believes, estimates,
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.



|(a) | Business Development
|--- | --------------------

Paradise, Inc. was incorporated under the laws of the State of Florida in September, 1961 as Canaveral Utilities and Development Corporation. After the acquisition and merger of several other assets, the Corporation was renamed Paradise
Fruit Company, Inc. in February, 1964, and the corporate name was changed again to Paradise, Inc. during July, 1993. There have been no bankruptcies, receiverships, or similar proceedings during the corporations history. There have been no
material reclassifications, mergers, consolidations, purchases or sales of a significant amount of assets not in the ordinary course of business during the past three years.



1



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##### Table of Contents

|Item 1. | Description of Business (Continued)
|------- | -----------------------------------



|(b) | The Companys operations are conducted through two business segments. These segments, and the primary operations of each, are as follows:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------



|                 |  |                                                                                                                                                                                                                                                                                                                                   
|---------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|BUSINESS SEGMENT |  | OPERATION                                                                                                                                                                                                                                                                                                                         
|Candied 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 such as preservers, dairies, drink manufacturers, etc.
|                 | 
|Molded Plastics  |  | Production of plastic containers for the Companys products and other molded plastics for sale to unaffiliated customers.                                                                                                                                                                                                         

For further segment information, refer to Note 11 in Part II, Item 8 of this Annual Report.

The Company knows of no other manufacturer in the Western Hemisphere whose sales of glace (candied) fruit is equal to those of
Paradise, Inc. While there are no industry statistics published, from the generally reliable sources available, management believes that Company brands account for a large majority of all candied fruit sold in supermarkets and other grocery outlets
in the USA.

In terms of candied fruit dollar sales, during 2009, approximately 20% were shipped to manufacturing bakers and
other institutional users, with the balance being sold through supermarkets and other retail outlets for ultimate use in the home.

Sales to retail outlets are usually generated through registered food brokers operating in exclusively franchised territories. This method of distribution is widely accepted in the food industry because of its efficiency and economy.

The principal raw materials used by the Company are fruits, fruit peels, corn syrups and plastic resins. Most of these
materials are readily accessible from a number of competitive suppliers. The supply and prices may fluctuate with growing and crop conditions, factors common to all agricultural products. Feed stocks for some plastic resins are petroleum related and
may be subject to supply and demand fluctuations in this market.



2



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##### Table of Contents

|Item 1. | Description of Business (Continued)
|------- | -----------------------------------

The trademarks Paradise, Dixie, Mor-Fruit and Sun-Ripe are registered with the appropriate Federal and State authorities for use on the Companys
candied fruit. These registrations are kept current, as required, and have a value in terms of customer recognition. The Company is also licensed to use the trademarks White Swan, Queen Anne, Palm Beach,
Golden Crown, and Pennant in the sale of candied fruit.

The demand for fruit cake materials is highly
seasonal, with over 85% of sales in these items occurring during the months of September, October and November. However, in order to meet delivery requirements during this relatively short period, the Company must process candied fruit and peels for
approximately ten months during the year. Also, the Company must acquire the fruits used as raw materials during their seasonal growing periods. These factors result in large inventories, which require financing to meet relatively large short-term
working capital needs.

During 1993, and through another wholly owned subsidiary, the Company launched an enterprise for the
growing and selling of strawberries, both fresh and frozen. Plant City, Florida, the location of the Companys manufacturing facilities and main office, styles itself as the The Winter Strawberry Capital because of the relatively
large volume of fruit that is grown and harvested locally, mostly from December through April of each season. However, once competing fresh berries from the West Coast of the USA begin finding their way to market, the price of Florida fruit begins
to diminish, and local growers had no other market for their product.

While there are significant freight cost advantages in
the sale and marketing of local strawberries to customers in the eastern U.S., growers and producers on the West Coast, from southern California to Washington state, still dominate pricing and marketing conditions. The Company estimates more than
90% of total U.S. strawberry production is located in that area.

Therefore, Paradise, Inc. limits its activities in this
market to years in which basic supply and demand statistics, such as West Coast harvest predictions and frozen strawberry prior year inventory carryovers, lead to a reasonable anticipation of profitability.

In the plastics molding segment of business, sales to unaffiliated customers continue to strengthen. This trend began several years ago when
management shifted its focus from the sale of high volume, low profit generics to higher technology value added custom applications.

Some molded plastics container demand is seasonal, by virtue of the fact that a substantial portion of sales are made to packers of food items and horticultural interests, with well defined growing and/or
harvest seasons.

In the opinion of management, the seasonal nature of some plastics sales does not have a significant impact
upon the working capital requirements of the Company.



3



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##### Table of Contents

|Item 1. | Description of Business (Continued)
|------- | -----------------------------------

During the first several months of the year, the Company contracts with certain commercial bakers for future delivery of quantities representing a substantial portion of the sales of fruit cake materials
to institutional users. Deliveries against these contracts are completed prior to the close of the fiscal year ending December 31.

Many of the commercial bakers and other institutional accounts face the same seasonal demands as the Company, and must contend with similar short-term working capital needs. The Company accommodates some of these customers with extended
payment terms of up to ninety days.

By the same token, many suppliers offer similar extended payment terms to the Company.

It is a trade practice to allow some supermarket chains to return unopened cases of candied fruit products that remain unsold
at year-end, an option for which they normally pay a premium. A provision for the estimated losses on retail returns is included in the Companys financial statements, for the year during which the sales are made.

With the continuing acquisitions, mergers and other consolidations in the supermarket industry, there is increasing concentration of candied
fruit buying activity. During 2009, the Company derived approximately 17% of its consolidated net sales from Wal-Mart Stores, Inc. This customer is not affiliated with Paradise, Inc. in any way, and has exclusive use of a Paradise-owned controlled
brand. The loss of this customer would have a material adverse effect on operating earnings.

While there is no industry-wide
data available, management estimates that the Company sold approximately 80% of all candied fruits and peels consumed in the U.S. during 2009. The Company knows of two major competitors; however, it estimates that neither of these has as large a
share of the market as the Companys.

The molded plastics industry is very large and diverse, and management has no
reasonable estimate of its total size. Many products produced by the Company are materials for its own use in the packaging of candied fruits for sale at the retail level. Outside sales represent approximately 85% of the Companys total
plastics production at cost, and, in terms of the overall market, are insignificant.

In the above business segments, it is the
opinion of management that price, which is to include the cost of delivery, is the largest single competitive factor, followed by product quality and customer service.

Given the above competitive criteria, it is the opinion of management, that the Company is in a favorable position.



4



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##### Table of Contents

|Item 1. | Description of Business (Continued)
|------- | -----------------------------------

During recent years, the Company has made capital investments of over $1 million in order to comply with the growing body of environmental regulations. These have included the building of screening and
pretreatment facilities for water effluent, the redesign and rebuilding of one processing department in order to improve the control of the quality of air emissions, and removing underground fuel storage tanks to approved above ground locations. All
of these facilities are permitted by governmental authorities at various levels, and are subjected to periodic testing as a condition of permit maintenance and renewal. All required permitting is currently in effect, and the Company is in full
compliance with all terms and conditions stated therein.

By local ordinance, it is required that all water effluent is
metered, tested and discharged into a municipal industrial waste treatment plant. During 2009, costs for this discharge approximated $220,000, and management estimates that all expenses directly related to compliance with environmental regulations
total well over $300,000 annually, which includes costs for permits, third party inspections and depreciation of installations.

The Company employs between 140 and 275 people, depending upon the season.

The Company conducts operations
principally within the United States. Foreign activities are not material.



|Item 2. | Description of Property
|------- | -----------------------



|(a) | Built in 1961, the plant is located in a modern industrial subdivision at Plant City, Florida, approximately 20 miles east of the City of Tampa. It is served by three
railroad sidings, and has paved road access to three major state and national highways. It has production and warehouse facilities of nearly 350,000 sq. ft.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During 1985, the Company acquired approximately 5.2 acres immediately adjacent to, and to the west of, its main plant building. Several buildings and a truck weight scale existed on the property. Some of
these facilities have been significantly updated, remodeled, and/or rebuilt and are used for the strawberry processing and some plastics molding operations. In 2006, Paradise, Inc. built a new 10,000 square foot building on this land. The building
is primarily used for the production of custom vacuum forming products for its Plastics customers.

The Company owns its plant
facilities and other properties free and clear of any mortgage obligations as of June, 2009.

Because of the unique processing
methods employed for candied fruit, much of the equipment used by the Company is designed, built and assembled by the Companys employees. The Company considers its plant one of the most modern, automated plants in the industry. The equipment
consists of vats, dehydrators, tanks, giant evaporators, carbon filter presses, syrup pumps and other scientifically designed processing equipment. Finished retail packages are stored in air-conditioned warehouses, if required.



5



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##### Table of Contents

|Item 2. | Description of Property (Continued)
|------- | -----------------------------------

Regarding molded plastic manufacturing, most equipment is normally available from a number of competitive sources. The molds used for specialized plastic products must be individually designed and
manufactured, requiring substantial investment, and are considered proprietary.



|Item 3. | Legal Proceedings
|------- | -----------------

None



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None



6



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##### Table of Contents

PART II



|Item 5. | Market for Common Equity and Related Stockholder Matters and Registrant Purchases of Equity Securities
|------- | ------------------------------------------------------------------------------------------------------

On August 22, 1997, the Securities and Exchange Commission issued new listing requirements for companies listed on the NASDAQ Small Cap
Market. The requirements became effective on February 23, 1998. As of December 2009, the Company had not met the listing criteria.



| | (a) | The following table shows the range of closing bid prices for the Companys Common Stock in the over-the-counter market for the calendar quarters indicated. The
quotations represent prices in the over-the-counter market between dealers in securities, do not include retail mark-up, mark-down, or commissions and do not necessarily represent actual transactions.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|               |  |            |  |      
|-------------- |  | ---------- |  | -----
|               |  | BID PRICES
|               |  | High       |  | Low  
|2009           |  |            |  |      
|First Quarter  |  | 20.00      |  | 9.50 
|Second Quarter |  | 20.00      |  | 12.00
|Third Quarter  |  | 18.97      |  | 13.00
|Fourth Quarter |  | 18.00      |  | 14.00
|               |  |           
|2008           |  |            |  |      
|First Quarter  |  | 21.90      |  | 19.05
|Second Quarter |  | 19.60      |  | 19.05
|Third Quarter  |  | 19.75      |  | 19.01
|Fourth Quarter |  | 19.01      |  | 15.50



| | (b) | Approximate Number of Equity Security Holders
| | --- | ---------------------------------------------

As of December 31, 2009, the approximate number of holders of record of each class of equity securities of the Registrant were:



|                             |  |                           
|---------------------------- |  | --------------------------
|TITLE OF CLASS               |  | NUMBER OFHOLDERS OF RECORD
|Common Stock, $.30 Par Value |  | 134                       



| | (c) | Dividend History and Policy
| | --- | ---------------------------

Dividends have been declared and paid annually when warranted by profitability. On February 11, 2010, the Board of Directors declared dividends of $.05 per share to stockholders of record on April 23, 2010. Dividends paid to
stockholders for 2008 were $.05 and for 2007 were $.10.



7



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##### Table of Contents

|Item 5. | Market for Common Equity and Related Stockholder Matters and Registrant Purchases of Equity Securities (Continued)
|------- | ------------------------------------------------------------------------------------------------------------------

The Company does not have a standard policy in regards to the declaration and payment of dividends. Each year dividend payments, if any, are
determined upon consideration of the current profitability, cash flow requirements, investment outlook and other pertinent factors.



|Item 6. | Selected Financial Data  not applicable
|------- | ----------------------------------------



|Item 7. | Managements Discussion and Analysis or Plan of Operation
|------- | ---------------------------------------------------------

Summary

The following tables set forth for the periods indicated
(i) percentages which certain items in the financial data bear to net sales of the Company and (ii) percentage increase of such item as compared to the indicated prior period.



|                                            |  |                                                     |   |  |                                                |   |  |           |   |  |           |  
|------------------------------------------- |  | --------------------------------------------------- | - |  | ---------------------------------------------- | - |  | --------- | - |  | --------- | -
|                                            |  | RELATIONSHIP TOTOTAL REVENUEYEAR ENDED DECEMBER 31, |   |  | PERIOD TO PERIODINCREASE (DECREASE)YEARS ENDED |  
|                                            |  | 2009                                                |   |  | 2008                                           |   |  | 2009-2008 |   |  | 2008-2007 |  
|NET SALES:                                  |  |                                                     |   |  |                                                |   |  |           |   |  |           |  
|Candied Fruit                               |  | 70.3                                                | % |  | 68.3                                           | % |  | - 6.9     | % |  | - 2.6     | %
|Molded Plastics                             |  | 29.7                                                |   |  | 31.7                                           |   |  | -15.4     |   |  | 8.0       |  
|                                            |  |                                                     |   |  |                                                |   |  |           |   |  |           |  
|                                            |  |                                                     |   | 
|                                            |  | 100.0                                               |   |  | 100.0                                          |   |  | - 9.6     |   |  | 0.5       |  
|Cost of Sales                               |  | 75.1                                                |   |  | 73.4                                           |   |  | 7.7       |   |  | 3.6       |  
|Selling, General and Administrative Expense |  | 18.0                                                |   |  | 18.0                                           |   |  | - 9.7     |   |  | - 7.5     |  
|Depreciation and Amortization               |  | 3.4                                                 |   |  | 3.1                                            |   |  | - 2.8     |   |  | - 7.3     |  
|Interest Expense                            |  | 0.6                                                 |   |  | 0.9                                            |   |  | -43.1     |   |  | - 9.1     |  
|                                            |  |                                                     |   |  |                                                |   |  |           |   |  |           |  
|                                            |  |                                                     |   |  |                                                |   |  | - 8.2     |   |  | 0.8       |  
|Income from Operations                      |  | 3.2                                                 |   |  | 4.6                                            |   |  | -38.6     |   |  | - 5.3     |  
|Other Expense, Net                          |  |                                                    |   |  |                                               |   |  | -61.8     |   |  | -102.3    |  
|                                            |  |                                                     |   |  |                                                |   |  |           |   |  |           |  
|Income Before Provision for Income Taxes    |  | 3.2                                                 |   |  | 4.6                                            |   |  | -26.3     |   |  | -12.8     |  
|Provision for Income Taxes                  |  | 1.4                                                 |   |  | 1.7                                            |   |  | -38.6     |   |  | -17.1     |  
|                                            |  |                                                     |   |  |                                                |   |  |           |   |  |           |  
|Net Income                                  |  | 1.8                                                 | % |  | 2.9                                            | % |  | -45.5     | % |  | -10.2     | %
|                                            |  |                                                     |   |  |                                                |   |  |           |   |  |           |  



8



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

(1) Liquidity

Management is not aware of any demands, commitments, events or uncertainties that
will result in, or are reasonably likely to result in, a material increase or decrease in the Companys liquidity. As discussed in footnote 5 of the Companys financial statements, a line of credit is available to the Company to finance
short-term working capital needs.

(2) Capital Resources

The Company does not have any material outstanding commitments for capital expenditures. Management is not aware of any material trends either favorable or unfavorable in the Companys capital
resources.

(3) Critical Accounting Policies and Estimates

The following discussion and analysis is based upon our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of
America. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses, and assets and liabilities during the periods reported. Estimates are used when
accounting for certain items such as revenues, allowances for returns, early payment discounts, customer discounts, doubtful accounts, employee compensation programs, depreciation and amortization periods, taxes, inventory values, insurance
programs, and valuations of investments, goodwill, other intangible assets and long-lived assets. We base our estimates on historical experience, where applicable and other assumptions that we believe are reasonable under the circumstances. Actual
results may differ from our estimates under different assumptions or conditions. We believe that the following critical accounting policies affect our more significant judgments and estimates used in preparation of our consolidated financial
statements.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, after elimination of all material intercompany transactions and profits.



9



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

Fair Value of Financial Instruments

The aggregated net fair value estimates discussed
herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include
cash and cash equivalents, receivables, payables, accrued expenses and short-term borrowings. Fair values were assumed to approximate carrying values for these financial instruments since they are short-term in nature and their carrying amounts
approximate fair values or they are receivable or payable on demand. The fair value of marketable securities are based on active market prices. The fair value of the Companys debt, which approximates carrying value, is estimated based upon the
quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

Accounts Receivable and Revenue Recognition

Management considers subsequent collection results and writes off all year- end
balances that are not deemed collectible by the time the financial statements are issued. Additionally, management has provided for estimated product returns by applying an allowance against Accounts Receivable for the invoiced price of the returns.
A provision to recognize a related estimate of finished goods returns has been added to inventories (Note 2). Management considers the remaining accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts has been
established as of December 31, 2009. If accounts become uncollectible, they will be charged to operations when that determination is made. The Company does not have policy to charge interest on past due amounts. Accounts Receivable are
considered past due based on invoice terms. The Company recognizes revenue upon the shipment of goods to its customers.

Marketable Equity
Securities and Deferred Compensation

The Company holds marketable securities as a trustee under the terms of a trust agreement to provide
compensation benefits to two key executives upon retirement. The investments in the trusts are subject to the claims of the Companys general creditors; therefore, the Company is treated as the owner of the trusts. Included in accrued expenses
at December 31, 2009 and 2008 is $111,354 and $160,408 of deferred compensation related to these agreements.

The Company records
unrealized gains and losses on marketable equity securities available for sale in the stockholders equity section of its balance sheet as a component of Accumulated Other Comprehensive Income (Loss).

When securities are sold, the cost of securities sold is based on weighted average cost in order to determine gross realized gains and losses.



10



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

Marketable Equity Securities and Deferred Compensation (Continued)

Realized gains and
losses, and declines in value judged to be other-than- temporary on available-for-sale securities, if any, are included in the consolidated statement of operations.

Goodwill

Goodwill totaling $413,280 represents the excess purchase price over the fair
value of the net assets acquired in the acquisition of Mastercraft Products, Corporation. These costs are reviewed for impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that goodwill may
be impaired. During the years ended, December 31, 2009 and 2008, the Company determined that its goodwill was not impaired.

Identifiable Intangible Assets

Customer Base and Non-Compete Agreement

The customer base and non-compete agreement represents $1,258,000 of the fair value of these assets pursuant to the Companys purchase
during 2006 of an unrelated entitys inventories, their customer list and a non-compete agreement for a period of ten years. The customer base and non-compete agreement are being amortized over ten years.

Other Identifiable Intangible Assets

Identifiable intangible assets included in Other Assets consist of a covenant not to compete and debt issue costs. In connection with the acquisition of Mastercraft Products Corporation in 2004, the
Company entered into a covenant not to compete agreement with the former owner in the amount of $123,000. It was amortized over a period of 36 months and is fully amortized as of December 31, 2008.

Debt issue costs incurred of $34,555 and $78,971 as of December 31, 2009 and 2008, respectively, are amortized over the term of the
agreement ranging from 24 to 84 months.

The Companys identifiable intangible assets are reviewed for potential
impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. During the years ended, December 31, 2009 and 2008, the Company determined that its identifiable intangible assets were not impaired.



11



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

(4) Results of Operations

2009 Compared to 2008

Paradise, Inc. is the leading producer of glace fruit, a primary ingredient of fruit cakes sold to manufacturing bakers, institutional users and
supermarkets for sale during the holiday seasons of Thanksgiving and Christmas. Paradise, Inc. consists of two business segments, fruit and plastics. Fruit segment net sales represents 70.3% of consolidated net sales during the current twelve month
reporting period ending December 31, 2009 or $16,283,967 compared to $17,498,939 for the similar reporting period of 2008. This resulted in a decrease of $1,214,972 or 6.9% in net sales. With the downturn in economic activity beginning in the
fourth quarter of 2008 and continuing through the entire year of 2009, Paradise, Inc.s glace fruit customers remained conservative in placing glace fruit orders during the summer and fall for the upcoming 2009 holiday selling
season.

Paradise Plastics, Inc., a wholly owned subsidiary of Paradise, Inc. represents 29.7% of consolidated net sales during 2009. Total
plastics segment net sales were $6,869,827 for the twelve months ended December 31, 2009 compared to $8,116,506 for the similar reporting period of 2008. The decrease in net sales to unaffiliated customers totaled $1,246,679 or 15.4%. This
decrease is primarily caused by the downturn in the housing industry as existing customers directly related to the home building and home improvement market have scaled back their level of custom plastics molding orders over the past year.
Furthermore, Paradise Plastics, Inc.s customers in other industries have also reduced their level of orders as demand for all types of plastics products has slowed during the past twelve months of 2009 compared to the similar reporting period
of 2008.

As a result of the decrease in net sales activity for the fruit and plastics segments mentioned above, Paradise, Inc.s Board
of Directors implemented the following cost cutting actions, effective May of 2009. Executive salaries were reduced 15%. Salary employees weekly paychecks were reduced 10% and the 4% merit increase awarded to all hourly paid employees as of January
1, 2009 was rescinded. In addition, management terminated and or eliminated 15 full-time positions across the Companys two business segments during the month of May, 2009. As a result of these actions along with limiting levels of overtime by
all existing employees the Company reduced total payroll and related taxes in excess of $550,000 for the remainder of 2009.

Consolidated cost
of goods sold, expressed as a percentage of net sales, increased 1.6% for the twelve months ending December 31, 2009 compared to the similar reporting period for 2008. This increase occurred despite the Companys reduction of manufacturing
payroll along with keeping in check various costs for commodities such as natural gas and plastics resins. However, these savings were slightly offset by the allocation of the Companys fixed factory overhead over a lesser number of plastics
and glace fruit products.



12



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

(4) Results of Operations (Continued)

2009 Compared to 2008 (Continued)

Accounts Receivable as of December 31, 2009 increased by $960,133 compared to the previous reporting year as scheduled shipments for
glace fruit orders to Wal-Mart Stores, Inc. commenced in mid-September of 2009 versus August of 2008.

Inventory levels at
December 31, 2009 decreased $1,837,817 to $8,206,244 from December 31, 2008s inventory level of $10,044,061 as Paradise, Inc.s management anticipating the uncertainty in the economy towards the end of 2008 reduced its
purchasing requirements for 2009.

Selling, general and administrative expenses for 2009 decreased $448,334 or 9.7% primarily as selling
expenses for brokerage fees, freight out, advertising, travel and entertainment and sales payroll expenses all were directly affected by the related 9.6% decline in Paradise, Inc.s consolidated net sales during 2009.

Depreciation and amortization expenses for 2009 decreased 2.8% as fixed assets that became fully depreciated during the past twelve months exceeded the
amount of new assets placed into service.

Interest expense for the twelve months ending December 31, 2009 decreased $93,585 or 43.1%
based on the following two reasons. First, Paradise, Inc.s short-term borrowing needs in regard to financing the Companys inventory level declined during 2009. Secondly, interest payments pertaining to a secured note for a mortgage
obligation was retired 11 months ahead of schedule in June of 2009. As of December 31, 2009, Paradise, Inc.s revolving line of credit balance was $0 and all loan covenants required by the Companys primary lender were in compliance.
The existing revolving loan agreement remains in effect through June, 2011.

The Consolidated Statement of Cash Flow for the year ended
December 31, 2009 resulted in positive cash flow of $969,267 as management anticipating a continued slowdown in consumer demand through out 2009 reduced its purchasing of raw materials accordingly.

In summary, based upon the information above, Paradise, Inc.s consolidated net sales decreased 9.6% to $23,153,794 for 2009 compared to $25,615,445
for 2008. Net income after provision for income taxes was $409,804 or $.79 earnings per share for 2009 compared to $752,141 or $1.45 earnings per share for 2008.



13



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

(4) Results of Operations (Continued)

2008 Compared to 2007

Paradise, Inc. is the leading producer of glace fruit, a primary ingredient of fruit cakes sold to manufacturing bakers, institutional users and
supermarkets for sale during the holiday seasons of Thanksgiving and Christmas. Paradise, Inc. consists of two business segments, fruit and plastics. Fruit segment net sales represents 68.3% of consolidated net sales during the current twelve month
reporting period ending December 31, 2008 or $17,498,939 compared to $17,966,624 for the similar reporting period of 2007. This represents a decrease in net fruit segment sales of $467,685 or 2.6%. The primary reason for this decease, is with
more than 80% of fruit segment sales occurring during an eight to ten week period beginning in mid-September, Paradise, Inc.s glace fruit customers were hesitant to commit to increasing or in certain cases maintaining previous
years inventory levels, as economic indicators began to exhibit signs of a decline in consumer confidence during the fourth quarter of 2008.

Paradise Plastics, Inc., a wholly owned subsidiary of Paradise, Inc. represents 31.7% of consolidated net sales during 2008. Total plastics segment net sales were $8,116,506 for the twelve months ended December 31, 2008 compared to
$7,513,715 for the similar reporting period of 2007. This represents an increase in net sales to unaffiliated customers of $602,791 or 8.0%. This positive growth more than offsets the recent decline in unaffiliated net sales to existing customers
within the housing market during the past 12-18 months. Based on the continued weakness in the housing industry, management focused on diversifying its plastics business outside of this sector. As a result, sales to newly identified customers within
the aerospace and food processing industries has lead to an increase in plastics sales during 2008.

Consolidated cost of goods sold,
expressed as a percentage of net sales, increased 3.6% for the twelve months ending December 31, 2008 compared to the similar reporting period for 2007. Fruit segment cost of goods sold, which represents 67.6 % of the Companys overall
production cost during 2008 increased 5.2% as price increases absorbed from the Companys suppliers of raw fruit materials including corn syrup lowered the Companys gross margins on fruit segment net sales during 2008. The plastics
segments cost of goods sold, expressed as a percentage of net sales, decreased 5.1% as an increase in sales volume and units produced during 2008 allowed this segment to allocate its fixed production cost over an increased amount of plastics
finished goods inventory.



14



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

(4) Results of Operations (Continued)

2008 Compared to 2007 (Continued)

Inventory levels at December 31, 2008 increased by $2,466,055 to $10,044,061 from $7,578,006 at December 31, 2007. Of this
increase, $1,870,159 relates to Paradises Inc.s glace fruit inventory as management found it necessary to procure a sufficient supply of raw fruit materials during 2008 in order to insure timely product shipment for the upcoming
2009 selling season. With the need to begin glace fruit production as much as ten months in advance of fulfilling customer orders, management must react quickly to factors such as climate change, harvest results and economic conditions of the
Companys Asian, European and Central American suppliers. Shortages in commodities such as pineapple, papaya and various fruit peels will have a detrimental impact on the Companys ability to ship its glace retail products to the
marketplace in a timely manner. Management is confident inventory levels are sufficient to meet glace fruit production needs for the upcoming 2009 selling season along with providing adequate reserves and flexibility to begin developing
purchasing requirements for 2010.

Selling, general and administrative expenses for 2008 decreased 7.5% as professional, legal and audit fees
associated with the termination of the Companys defined benefit pension plan and establishment of the Companys 401(k) plan were incurred during 2007. As disclosed in previous filings, Paradise, Inc. elected to terminate the
Companys defined benefit pension plan and offer all eligible employees the opportunity to transfer their vested pension funds into the Companys newly sponsored 401(k) retirement plan. On March 25, 2008, Paradise, Inc. received final
regulatory approval to terminate the defined benefit pension plan. The liability associated with this event totaled $446,717 and was accrued for at December 31, 2007 and 2006. On May 15, 2008 this amount was transferred to the
Companys pension plan administrator, Principal Financial Group, in order to complete the planned termination of this pension plan.

Depreciation and amortization expenses for 2008 decreased 7.3% compared to 2007 as fixed asset retirements during the past twelve months exceeded the amount of new assets placed into service.

Interest expense for the twelve months ending December 31, 2008 decreased $21,697 or 9.1% compared to the similar reporting period for 2007 as the rate of
interest charged by the Companys primary lender declined steadily during 2008. The Companys revolving line of credit balance as of December 31, 2008 was $0. All covenants required by Paradise, Inc.s lender on this revolving line
credit have been achieved.

The Consolidated Statement of Cash Flow reflects a decrease in cash of $1,147,411 for the twelve months ended
December 31, 2008 primarily as management elected to procure sufficient amounts of raw fruit materials for the upcoming 2009 selling season as well as securing adequate reserves for 2010.



15



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis or Plan of Operation (Continued)
|------- | ---------------------------------------------------------------------

(4) Results of Operations (Continued)

2008 Compared to 2007 (Continued)

In summary, based upon the information above, Paradise, Inc. generated consolidated net sales of $25,615,445 for 2008 compared to $25,480,339
for 2007. Net income after provision for income taxes was $752,141 or $1.45 earnings per share for 2008 compared to $837,515 and $1.61 earnings per share for 2007.



16



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##### Table of Contents

|Item 8. | Consolidated Financial Statements
|------- | ---------------------------------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

and Shareholders of

Paradise, Inc.

Plant City, FL 33563

We have audited the accompanying consolidated balance sheets of Paradise, Inc., and subsidiaries (the Company) as of December 31, 2009 and 2008 and the related consolidated statements of
income and comprehensive income, changes in stockholders equity and cash flows for each of the years in the two-year period ended December 31, 2009. These consolidated financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our
audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the financial position of Paradise, Inc. and subsidiaries as of December 31, 2009 and 2008 and the results of its operations and its cash flows for each of the
years in the two-year period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States.

Respectfully submitted,



|                                 
|---------------------------------
|/s/ Pender Newkirk & Company, LLP
|PENDER NEWKIRK & COMPANY, LLP    

Certified Public Accountants

Tampa, Florida

March 26, 2010



17



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS



|                                                                                                                                          |  |              |            |      |   |           
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | ---- | - | ----------
|                                                                                                                                          |  | DECEMBER 31,
|                                                                                                                                          |  | 2009         |            | 2008
|CURRENT ASSETS:                                                                                                                           |  |              |            |      |   |           
|Cash and Cash Equivalents                                                                                                                 |  | $            | 3,015,063  |      | $ | 2,045,796 
|Accounts Receivable, Net of Allowance for Doubtful Accounts of $ -0- and Allowance for Returns of $1,284,611 (2009) and
$1,094,000 (2008) |  |              | 1,789,906  |      |   | 829,773   
|Inventories                                                                                                                               |  |              | 8,206,244  |      |   | 10,044,061
|Prepaid Expenses and Other Current Assets                                                                                                 |  |              | 363,194    |      |   | 440,636   
|Deferred Income Tax Asset                                                                                                                 |  |              | 279,545    |      |   | 325,584   
|                                                                                                                                          |  |              |            |      |   |           
|                                                                                                                                          |  |             
|Total Current Assets                                                                                                                      |  |              | 13,653,952 |      |   | 13,685,850
|                                                                                                                                          |  |             
|PROPERTY, PLANT AND EQUIPMENT:                                                                                                            |  |              |            |      |   |           
|Net of Accumulated Depreciation of $17,433,040 (2009) and $16,820,680 (2008)                                                              |  |              | 4,749,033  |      |   | 5,191,773 
|                                                                                                                                          |  |             
|GOODWILL                                                                                                                                  |  |              | 413,280    |      |   | 413,280   
|                                                                                                                                          |  |             
|CUSTOMER BASE AND NON-COMPETE AGREEMENT                                                                                                   |  |              | 817,402    |      |   | 943,287   
|                                                                                                                                          |  |             
|OTHER ASSETS                                                                                                                              |  |              | 312,378    |      |   | 319,661   
|                                                                                                                                          |  |              |            |      |   |           
|                                                                                                                                          |  |             
|TOTAL ASSETS                                                                                                                              |  | $            | 19,946,045 |      | $ | 20,553,851
|                                                                                                                                          |  |              |            |      |   |           

The Accompanying Notes are an Integral Part of These Consolidated
Financial Statements



18



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##### Table of Contents

LIABILITIES AND STOCKHOLDERS EQUITY



|                                                                                                             |  |              |            |   |      |   |            |  
|------------------------------------------------------------------------------------------------------------ |  | ------------ | ---------- | - | ---- | - | ---------- | -
|                                                                                                             |  | DECEMBER 31, |           
|                                                                                                             |  | 2009         |            |   | 2008 |  
|CURRENT LIABILITIES:                                                                                         |  |              |            |   |      |   |            |  
|Short-Term Debt                                                                                              |  | $            | 186,919    |   |      | $ | 373,538    |  
|Accounts Payable                                                                                             |  |              | 786,253    |   |      |   | 689,673    |  
|Accrued Expenses                                                                                             |  |              | 872,272    |   |      |   | 1,153,395  |  
|Income Taxes Payable                                                                                         |  |              | 37,030     |   |      |   | 124,321    |  
|Current Portion of Long-Term Debt                                                                            |  |              | 8,831      |   |      |   | 435,953    |  
|                                                                                                             |  |              |            |   |      |   |            |  
|                                                                                                             |  |             
|Total Current Liabilities                                                                                    |  |              | 1,891,305  |   |      |   | 2,776,880  |  
|                                                                                                             |  |             
|LONG-TERM DEBT, NET OF CURRENT PORTION                                                                       |  |              | 2,885      |   |      |   | 93,236     |  
|                                                                                                             |  |             
|DEFERRED INCOME TAX LIABILITY                                                                                |  |              | 209,478    |   |      |   | 284,253    |  
|                                                                                                             |  |              |            |   |      |   |            |  
|                                                                                                             |  |             
|Total Liabilities                                                                                            |  |              | 2,103,668  |   |      |   | 3,154,369  |  
|                                                                                                             |  |              |            |   |      |   |            |  
|STOCKHOLDERS EQUITY:                                                                                        |  |              |            |   |      |   |            |  
|Common Stock, $.30 Par Value, 2,000,000 Shares Authorized, 583,094 Shares Issued, 519,350 Shares Outstanding |  |              | 174,928    |   |      |   | 174,928    |  
|Capital in Excess of Par Value                                                                               |  |              | 1,288,793  |   |      |   | 1,288,793  |  
|Retained Earnings                                                                                            |  |              | 16,971,041 |   |      |   | 16,587,204 |  
|Accumulated Other Comprehensive Loss                                                                         |  |              | (315,466   | ) |      |   | (374,524   | )
|                                                                                                             |  |              |            |   |      |   |            |  
|                                                                                                             |  |              | 18,119,296 |   |      |   | 17,676,401 |  
|                                                                                                             |  |             
|Less: Common Stock in Treasury, at Cost, 63,744 Shares                                                       |  |              | 276,919    |   |      |   | 276,919    |  
|                                                                                                             |  |              |            |   |      |   |            |  
|                                                                                                             |  |             
|Total Stockholders Equity                                                                                   |  |              | 17,842,377 |   |      |   | 17,399,482 |  
|                                                                                                             |  |              |            |   |      |   |            |  
|                                                                                                             |  |             
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                   |  | $            | 19,946,045 |   |      | $ | 20,553,851 |  
|                                                                                                             |  |              |            |   |      |   |            |  



19



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



|                                                                                         |  |                                  |            |   |      |   |            |  
|---------------------------------------------------------------------------------------- |  | -------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                         |  | FOR THE YEARS ENDED DECEMBER 31, |           
|                                                                                         |  | 2009                             |            |   | 2008 |  
|NET SALES                                                                                |  | $                                | 23,153,794 |   |      | $ | 25,615,445 |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|COSTS AND EXPENSES:                                                                      |  |                                  |            |   |      |   |            |  
|Cost of Goods Sold (Excluding Depreciation)                                              |  |                                  | 17,370,522 |   |      |   | 18,812,049 |  
|Selling, General and Administrative Expenses                                             |  |                                  | 4,164,392  |   |      |   | 4,612,726  |  
|Depreciation and Amortization                                                            |  |                                  | 770,188    |   |      |   | 792,384    |  
|Interest Expense                                                                         |  |                                  | 123,727    |   |      |   | 217,312    |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|Total Costs and Expenses                                                                 |  |                                  | 22,428,829 |   |      |   | 24,434,471 |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|                                                                                         |  |                                 
|INCOME FROM OPERATIONS                                                                   |  |                                  | 724,965    |   |      |   | 1,180,974  |  
|                                                                                         |  |                                 
|OTHER EXPENSE  NET                                                                      |  |                                  | (913       | ) |      |   | (2,391     | )
|                                                                                         |  |                                  |            |   |      |   |            |  
|                                                                                         |  |                                 
|INCOME BEFORE PROVISION FOR INCOME TAXES                                                 |  |                                  | 724,052    |   |      |   | 1,178,583  |  
|                                                                                         |  |                                 
|PROVISION FOR INCOME TAXES                                                               |  |                                  | 314,248    |   |      |   | 426,442    |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|                                                                                         |  |                                 
|NET INCOME                                                                               |  |                                  | 409,804    |   |      |   | 752,141    |  
|OTHER COMPREHENSIVE INCOME:                                                              |  |                                  |            |   |      |   |            |  
|Unrealized Gain (Loss) on Available for Sale Securities                                  |  |                                  | 34,724     |   |      |   | (103,077   | )
|Reclassification adjustment for losses realized on Sale of Available for Sale Securities |  |                                  | 24,334     |   |      |   |            |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|                                                                                         |  |                                 
|COMPREHENSIVE INCOME                                                                     |  | $                                | 468,862    |   |      | $ | 649,064    |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|EARNINGS PER SHARE:                                                                      |  |                                  |            |   |      |   |            |  
|Basic                                                                                    |  | $                                | 0.79       |   |      | $ | 1.45       |  
|                                                                                         |  |                                  |            |   |      |   |            |  
|Diluted                                                                                  |  | $                                | 0.79       |   |      | $ | 1.45       |  
|                                                                                         |  |                                  |            |   |      |   |            |  

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements



20



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008



|                                                                                        |  |             |         |                              |   |                  |  |   |                                   |   |  |               |          |   |       |   |          |   |  |   |            |  
|--------------------------------------------------------------------------------------- |  | ----------- | ------- | ---------------------------- | - | ---------------- |  | - | --------------------------------- | - |  | ------------- | -------- | - | ----- | - | -------- | - |  | - | ---------- | -
|                                                                                        |  | COMMONSTOCK |         | CAPITAL INEXCESS OFPAR VALUE |   | RETAINEDEARNINGS |  |   | ACCUMULATEDOTHERCOMPREHENSIVELOSS |   |  | TREASURYSTOCK |          |   | TOTAL |  
|Balance, December 31, 2007                                                              |  | $           | 174,928 |                              | $ | 1,288,793        |  | $ | 15,886,998                        |   |  | $             | (271,447 | ) |       | $ | (276,919 | ) |  | $ | 16,802,353 |  
|                                                                                        |  |             |         |                              |   |                 
|Cash Dividends Declared, $.10 per Share                                                 |  |             |         |                              |   |                  |  |   | (51,935                           | ) |  |               |          |   |       |   |          |   |  |   | (51,935    | )
|Unrealized Loss on Marketable Equity Securities                                         |  |             |         |                              |   |                  |  |   |                                   |   |  |               | (103,077 | ) |       |   |          |   |  |   | (103,077   | )
|Net Income                                                                              |  |             |         |                              |   |                  |  |   | 752,141                           |   |  |               |          |   |       |   |          |   |  |   | 752,141    |  
|                                                                                        |  |             |         |                              |   |                  |  |   |                                   |   |  |               |          |   |       |   |          |   |  |   |            |  
|Balance, December 31, 2008                                                              |  |             | 174,928 |                              |   | 1,288,793        |  |   | 16,587,204                        |   |  |               | (374,524 | ) |       |   | (276,919 | ) |  |   | 17,399,482 |  
|                                                                                        |  |             |         |                              |   |                 
|Cash Dividends Declared, $.05 per Share                                                 |  |             |         |                              |   |                  |  |   | (25,967                           | ) |  |               |          |   |       |   |          |   |  |   | (25,967    | )
|Unrealized Gain on Marketable Equity Securities                                         |  |             |         |                              |   |                  |  |   |                                   |   |  |               | 34,724   |   |       |   |          |   |  |   | 34,724     |  
|Reclassification adjustment for losses realized on Sale of Marketable Equity Securities |  |             |         |                              |   |                  |  |   |                                   |   |  |               | 24,334   |   |       |   |          |   |  |   | 24,334     |  
|Net Income                                                                              |  |             |         |                              |   |                  |  |   | 409,804                           |   |  |               |          |   |       |   |          |   |  |   | 409,804    |  
|                                                                                        |  |             |         |                              |   |                  |  |   |                                   |   |  |               |          |   |       |   |          |   |  |   |            |  
|Balance, December 31, 2009                                                              |  | $           | 174,928 |                              | $ | 1,288,793        |  | $ | 16,971,041                        |   |  | $             | (315,466 | ) |       | $ | (276,919 | ) |  | $ | 17,842,377 |  
|                                                                                        |  |             |         |                              |   |                  |  |   |                                   |   |  |               |          |   |       |   |          |   |  |   |            |  

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements



21



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                            |  |                                  |            |   |      |   |            |  
|------------------------------------------------------------------------------------------- |  | -------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                            |  | FOR THE YEARS ENDED DECEMBER 31, |           
|                                                                                            |  | 2009                             |            |   | 2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                       |  |                                  |            |   |      |   |            |  
|Net Income                                                                                  |  | $                                | 409,804    |   |      | $ | 752,141    |  
|Adjustments to Reconcile Net Income to Net Cash Provided by (Used in) Operating Activities: |  |                                  |            |   |      |   |            |  
|Provision for Sales Returns                                                                 |  |                                  | 190,239    |   |      |   | (57,439    | )
|Provision for Estimated Inventory Returns                                                   |  |                                  | (165,203   | ) |      |   | 50,156     |  
|Provision for Deferred Income Taxes                                                         |  |                                  | (28,736    | ) |      |   | 132,225    |  
|Depreciation and Amortization                                                               |  |                                  | 770,188    |   |      |   | 792,384    |  
|Loss on Sale of Marketable Securities                                                       |  |                                  | 24,334     |   |      |   |            |  
|Changes in Assets and Liabilities:                                                          |  |                                  |            |   |      |   |            |  
|Accounts Receivable                                                                         |  |                                  | (1,150,371 | ) |      |   | 1,003,460  |  
|Inventories                                                                                 |  |                                  | 2,003,020  |   |      |   | (2,516,213 | )
|Prepaid Expenses and Other Current Assets                                                   |  |                                  | 77,442     |   |      |   | 32,240     |  
|Other Assets                                                                                |  |                                  | (33,373    | ) |      |   | (4,375     | )
|Accounts Payable                                                                            |  |                                  | 96,580     |   |      |   | (57,225    | )
|Accrued Expenses                                                                            |  |                                  | (281,123   | ) |      |   | (600,999   | )
|Income Taxes Payable                                                                        |  |                                  | (87,291    | ) |      |   | (122,791   | )
|                                                                                            |  |                                  |            |   |      |   |            |  
|Net Cash Provided by (Used in) Operating Activities                                         |  |                                  | 1,825,510  |   |      |   | (596,436   | )
|                                                                                            |  |                                  |            |   |      |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                       |  |                                  |            |   |      |   |            |  
|Purchase of Property, Plant and Equipment                                                   |  |                                  | (169,617   | ) |      |   | (308,975   | )
|Proceeds from Sale of Marketable Equity Securities                                          |  |                                  | 83,778     |   |      |   |            |  
|Increase in Cash Surrender Value of Life Insurance                                          |  |                                  | (40,344    | ) |      |   |            |  
|                                                                                            |  |                                  |            |   |      |   |            |  
|Net Cash Used in Investing Activities                                                       |  |                                  | (126,183   | ) |      |   | (308,975   | )
|                                                                                            |  |                                  |            |   |      |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                       |  |                                  |            |   |      |   |            |  
|Net Proceeds (Payments) of Short-Term Debt                                                  |  |                                  | (186,619   | ) |      |   | 219,049    |  
|Principal Payments on Long-Term Debt                                                        |  |                                  | (517,473   | ) |      |   | (409,114   | )
|Dividends Paid                                                                              |  |                                  | (25,968    | ) |      |   | (51,935    | )
|                                                                                            |  |                                  |            |   |      |   |            |  
|Net Cash Used in Financing Activities                                                       |  |                                  | (730,060   | ) |      |   | (242,000   | )
|                                                                                            |  |                                  |            |   |      |   |            |  



|                                                                     |  |                                  |           |      |   |            |  
|-------------------------------------------------------------------- |  | -------------------------------- | --------- | ---- | - | ---------- | -
|                                                                     |  | FOR THE YEARS ENDED DECEMBER 31, |          
|                                                                     |  | 2009                             |           | 2008 |  
|Net Increase (Decrease) in Cash and Cash Equivalents                 |  |                                  | 969,267   |      |   | (1,147,411 | )
|CASH AND CASH EQUIVALENTS, at Beginning of Year                      |  |                                  | 2,045,796 |      |   | 3,193,207  |  
|                                                                     |  |                                  |           |      |   |            |  
|                                                                     |  |                                 
|CASH AND CASH EQUIVALENTS, at End of Year                            |  | $                                | 3,015,063 |      | $ | 2,045,796  |  
|                                                                     |  |                                  |           |      |   |            |  
|                                                                     |  |                                 
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                   |  |                                  |           |      |   |            |  
|                                                                     |  |                                 
|Cash Paid During the Year for:                                       |  |                                  |           |      |   |            |  
|Interest                                                             |  | $                                | 123,727   |      | $ | 217,312    |  
|                                                                     |  |                                  |           |      |   |            |  
|Income Taxes                                                         |  | $                                | 430,581   |      | $ | 418,226    |  
|                                                                     |  |                                  |           |      |   |            |  
|                                                                     |  |                                 
|SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES: |  |                                  |           |      |   |            |  
|Net unrealized Holding Gain (Loss) on Securities                     |  | $                                | 34,724    |      | $ | (103,077   | )
|                                                                     |  |                                  |           |      |   |            |  

DISCLOSURE OF ACCOUNTING POLICY:

For purposes of the Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.

The Accompanying Notes are an Integral Part of These Consolidated Financial Statements



22



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES



Paradise, Inc. operations are conducted through two business segments, candied fruit and molded plastics. The primary
operations of the fruit segment is 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 preserves, dairies, drink manufacturers, etc. The molding plastics segment provides production of plastic containers for the Companys products and other molded
plastics for sale to unaffiliated customers. Substantially all of the Companys customers are located in the United States of America.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries, after elimination of all material intercompany transactions and profits.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Fair Value of Financial Instruments

The aggregated net fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain
on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash and cash equivalents, receivables, payables, accrued expenses and short-term borrowings. Fair values were assumed to approximate carrying
values for these financial instruments since they are short-term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand. The fair value of marketable securities are based on active market prices. The
fair value of the Companys debt, which approximates carrying value, is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.



23



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Accounts Receivable and Revenue Recognition

Management considers subsequent collection results and writes off all year- end balances that are not deemed collectible by the time the financial statements
are issued. Additionally, management has provided for estimated product returns by applying an allowance against Accounts Receivable for the invoiced price of the returns. A provision to recognize a related estimate of finished goods returns has
been added to inventories (Note 2). Management considers the remaining accounts receivable to be fully collectible; accordingly, no allowance for doubtful accounts has been established as of December 31, 2009. If accounts become uncollectible,
they will be charged to operations when that determination is made. The Company does not have policy to charge interest on past due amounts. Accounts Receivable are considered past due based on invoice terms. The Company recognizes revenue upon the
shipment of goods to its customers.

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market. Cost includes material, labor, factory overhead and depreciation.

Property, Plant and Equipment

Property,
plant and equipment are stated at cost. Generally, the straight- line method is used in computing depreciation. Estimated useful lives of plant and equipment are:



|                           |  |        
|-------------------------- |  | -------
|                           |  | Years  
|Buildings and Improvements |  | 10  30
|Machinery and Equipment    |  | 3  10 

Expenditures which
significantly increase values or extend useful lives are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Upon sale or retirement of property, plant and equipment, the cost and related accumulated
depreciation are eliminated from the respective accounts and the resulting gain or loss is included in the current earnings. Amortization is also computed using the straight-line method over the estimated life of the asset.



24



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Marketable Equity Securities and Deferred Compensation

The Company holds marketable securities as a trustee under the terms of a trust agreement to provide compensation benefits to two key executives upon
retirement. The investments in the trusts are subject to the claims of the Companys general creditors; therefore, the Company is treated as the owner of the trusts. Included in accrued expenses at December 31, 2009 and 2008 is $111,354
and $160,408 of deferred compensation related to these agreements.

The Company records unrealized gains and losses on marketable equity
securities available for sale in the stockholders equity section of its balance sheet as a component of Accumulated Other Comprehensive Income (Loss).

When securities are sold, the cost of securities sold is based on weighted average cost in order to determine gross realized gains and losses.

Realized gains and losses, and declines in value judged to be other-than- temporary on available-for-sale securities, if any, are included in the
consolidated statement of operations.

Goodwill

Goodwill totaling $413,280 represents the excess purchase price over the fair value of the net assets acquired in the acquisition of Mastercraft Products, Corporation. These costs are reviewed for
impairment at least annually or more frequently upon the occurrence of an event or when circumstances indicate that goodwill may be impaired. During the years ended, December 31, 2009 and 2008, the Company determined that its goodwill was not
impaired.

Identifiable Intangible Assets

Customer Base and Non-Compete Agreement

The customer base and non-compete
agreement represents $1,258,000 of the fair value of these assets pursuant to the Companys purchase during 2006 of an unrelated entitys inventories, their customer list and a non-compete agreement for a period of ten years. The customer
base and non-compete agreement are being amortized over ten years.



25



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Identifiable Intangible Assets (Continued)

Other Identifiable Intangible Assets

Identifiable intangible assets included in Other Assets consist of a covenant not to compete and debt issue costs. In connection with the acquisition of Mastercraft Products Corporation in 2004, the
Company entered into a covenant not to compete agreement with the former owner in the amount of $123,000. It was amortized over a period of 36 months and is fully amortized as of December 31, 2008.

Debt issue costs incurred of $34,555 and $78,971 as of December 31, 2009 and 2008, respectively, are amortized over the term of the
agreement ranging from 24 to 84 months.

The Companys identifiable intangible assets are reviewed for potential
impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. During the years ended, December 31, 2009 and 2008, the Company determined that its identifiable intangible assets were not impaired.

Amortization expense of intangible assets subject to amortization for the years ended December 31, 2009 and 2008 was $157,831 and
$154,930, respectively.

Accumulated amortization for the same periods totaled $449,237 (2009) and $337,722 (2008).

Future amortization expense is anticipated to be as follows:



|           |  |   |        
|---------- |  | - | -------
|2010       |  | $ | 143,162
|2011       |  | $ | 134,524
|2012       |  | $ | 125,885
|2013       |  | $ | 125,885
|2014       |  | $ | 125,885
|Thereafter |  | $ | 187,977

Selling Expenses

The Company considers freight delivery costs to be selling expenses and has included $410,007 (2009) and $540,141 (2008) in selling, general and
administrative expenses in the income statements.



26



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Advertising Expenses

The Company expenses advertising costs in the year they are incurred. Advertising expenses totaled $119,188 (2009) and $180,185 (2008) and are
included in selling, general and administrative expenses in the income statement.

Employee Benefit Plan

The Company established a 401(k) retirement plan on January 1, 2007 to replace the Companys defined benefit pension plan. All active employees
whom were in the defined benefit pension plan may elect to transfer their vested pension balance directly into the 401(k) plan. Eligibility requirements for new employees are based on completing 1,000 hours of service by the end of the first twelve
months of consecutive employment and being at least 21 years old. Employee contributions are voluntary and subject to Internal Revenue Service limitations. The Company provides a matching contribution subject to annual review of the Companys
financial performance. For the years ended December 31, 2009 and 2008, the Company incurred $24,745 and $55,178 in 401(k) expense.

Earnings Per Share

Basic and diluted earnings per common share are based on the weighted average number of shares outstanding
and assumed to be outstanding during the year (519,350 shares in 2009 and 2008). There are no dilutive securities outstanding at December 31, 2009 and 2008.

Reclassifications

Certain prior period amounts have been reclassified to conform with the
current period presentation.



27



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Impact of Recently Issued Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 168,
The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162(SFAS 168). The FASB Accounting Standards Codification,
(Codification or ASC) became the source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. On the effective date of SFAS 168, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in
the Codification became non-authoritative.

Following SFAS 168, the FASB will no longer issue new standards in the form of Statements, FASB
Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates (ASUs). The FASB will not consider ASCs as authoritative in their own right; rather, these updates will serve only to update the
Codification, provide background information about the guidance, and provide the basis for conclusions on the change(s) in the Codification. SFAS No. 168 is incorporated in ASC Topic 105, Generally Accepted Accounting Principles. The
Company adopted SFAS No. 168 for the quarter ended September 30, 2009. The ASC is not intended to change or alter existing GAAP and did not change our accounting practices.

In May 2009, the FASB issued ASC Topic 855, Subsequent Events(formerly SFAS No. 165, Subsequent Events) which establishes general standards for the evaluation, recognition and disclosure of
events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as those that currently exist in the auditing standards. The standard, which includes a new required
disclosure of the date through which management has evaluated subsequent events, is effective for interim and annual periods ending after June 15, 2009. We adopted the provisions of this guidance during the quarter ended June 30, 2009.

Effective October 1, 2008, the Company adopted certain aspects of ASC Topic 825. Financial Instruments (formerly SFAS 159, The
Fair Value Option for Financial Assets & Financial Liabilities  including an amendment of SFAS No. 115). The accounting guidance created a fair value option under which an entity may irrevocably elect fair value as the initial and
subsequent measurement attribute for certain financial assets and liabilities on a contract by contract basis, with changes in fair values recognized in earnings as these changes occur. The adoption of ASC Topic 825 did not have a significant impact
on the Companys financial condition or results of operations.



28



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Impact of Recently Issued Accounting Pronouncements (Continued)

In December 2007, the FASB issued ASC Topic 805, Business Combinations(formerly SFAS 141R, Business Combinations). ASC
Topic 805 changes how a reporting enterprise will account for the acquisition of a business. ASC 805 will apply prospectively to business combinations with an acquisition date on or after December 15, 2008. The adoption of ASC Topic 805 did not
have a significant impact on the Companys financial condition or results of operations.

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

NOTE 2: INVENTORIES



|                 |  |      |           |      |   |           
|---------------- |  | ---- | --------- | ---- | - | ----------
|                 |  | 2009 |           | 2008
|Supplies         |  | $    | 178,129   |      | $ | 161,678   
|Raw Materials    |  |      | 1,750,467 |      |   | 1,788,808 
|Work in Progress |  |      | 1,255,909 |      |   | 956,745   
|Finished Goods   |  |      | 5,021,739 |      |   | 7,136,830 
|                 |  |      |           |      |   |           
|TOTAL            |  | $    | 8,206,244 |      | $ | 10,044,061
|                 |  |      |           |      |   |           

Included in Finished Goods inventory are estimated returns related to
the Provision for Sales Returns totaling $1,109,615 (2009) and $944,412 (2008).

Substantially all inventories are pledged as collateral
for certain short-term obligations as well as long-term obligations.



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 3: PROPERTY, PLANT AND EQUIPMENT



Property, plant and equipment consisted of the following:



|                               |  |      |            |      |   |           
|------------------------------ |  | ---- | ---------- | ---- | - | ----------
|                               |  | 2009 |            | 2008
|Land and Improvements          |  | $    | 656,040    |      | $ | 656,040   
|Buildings and Improvements     |  |      | 7,040,572  |      |   | 7,004,932 
|Machinery and Equipment        |  |      | 14,485,461 |      |   | 14,351,481
|                               |  |      |            |      |   |           
|                               |  |     
|Total                          |  |      | 22,182,073 |      |   | 22,012,453
|Less: Accumulated Depreciation |  |      | 17,433,040 |      |   | 16,820,680
|                               |  |      |            |      |   |           
|NET                            |  | $    | 4,749,033  |      | $ | 5,191,773 
|                               |  |      |            |      |   |           

Tax depreciations are calculated using rates and lives prescribed by
the Internal Revenue Code. Differences in amounts of depreciation for tax and financial statement purposes are recognized through the computation of net income for financial statement purposes and that for income tax purposes in determining current
and deferred income tax expense.

All of the real property and machinery and equipment are pledged as collateral for certain short-term and
long-term obligations.

Depreciation expense for the years ended December 31, 2009 and 2008 was $612,357 and $637,454, respectively.

NOTE 4: INVESTMENT IN MARKETABLE EQUITY SECURITIES

Available-for-sale securities, which are included in other assets in the balance sheet, consist of the following:



|                                                  |  |      |         |   |      |   |          |  
|------------------------------------------------- |  | ---- | ------- | - | ---- | - | -------- | -
|                                                  |  | 2009 |         |   | 2008 |  
|Equity Mutual Funds, at cost                      |  | $    | 140,921 |   |      | $ | 281,837  |  
|Gross Unrealized Losses, Before Tax               |  |      | (29,567 | ) |      |   | (121,429 | )
|                                                  |  |      |         |   |      |   |          |  
|Total Marketable Equity Securities, at Fair Value |  | $    | 111,354 |   |      | $ | 160,408  |  
|                                                  |  |      |         |   |      |   |          |  



30



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 4: INVESTMENT IN MARKETABLE EQUITY SECURITIES (CONTINUED)



Available for sale securities are carried in the financial statements at fair
value. In accordance with Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (ASC Topic 820), fair value is based on quoted market prices in active markets (Level 1). Net unrealized holding
gains(losses) on available-for-sale securities amounted to $34,724 and $(103,077) for the years ended, December 31, 2009 and 2008, respectively, and have been included in accumulated other comprehensive loss in the accompanying consolidated
financial statements.

During the year ended, December 31, 2009, the Company sold available-for-sale securities for total proceeds of
approximately $84,000, resulting in gross realized losses of approximately $24,000. There were no security sales during the year ended December 31, 2008.

Information pertaining to equity mutual securities with gross unrealized losses at December 31, 2009, aggregated by length of time that individual securities have been in continuous loss position, is
as follows:



|                        |  |   |        
|----------------------- |  | - | -------
|Less than 12 months:    |  |   |        
|Fair Value              |  | $ | 0      
|Unrealized Losses       |  | $ | 0      
|                        | 
|Greater than 12 months: |  |   |        
|Fair Value              |  | $ | 111,354
|Unrealized Losses       |  | $ | 29,567 
|                        | 
|Total Fair Value        |  | $ | 111,354
|Total Unrealized Losses |  | $ | 29,567 

Management evaluates securities for
other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to 1) the length of time and the extent to which the fair value has been less than
cost, 2) the financial condition and near-term prospects of the issuer, and 3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

The gross unrealized losses on the Companys investments are in mutual funds and were caused primarily by the current downturn of the
economy. The Company intends and is able to hold these investments for a reasonable period of time sufficient for a recovery of fair value; therefore, the Company does not consider these investments to be other-than-temporarily impaired at December
31, 2009.



31



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PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 5: SHORT-TERM DEBT



|                                                                                           |  |      |         |      |   |        
|------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | - | -------
|                                                                                           |  | 2009 |         | 2008
|Letters of credit and other short- term debt under a revolving line of credit with a bank. |  | $    | 186,919 |      | $ | 373,538
|                                                                                           |  |      |         |      |   |        
|                                                                                           |  |     
|TOTAL                                                                                      |  | $    | 186,919 |      | $ | 373,538
|                                                                                           |  |      |         |      |   |        

The average monthly borrowings and weighted average interest rates
were determined by month-end balances. Non-interest bearing letters of credit were included in the aggregate figures.



|                                                           |  |        |           |                               |       |  
|---------------------------------------------------------- |  | ------ | --------- | ----------------------------- | ----- | -
|2009                                                       |  | AMOUNT |           | WEIGHTED AVERAGEINTEREST RATE |      
|Average bank short-term borrowings (monthly)               |  | $      | 2,854,634 |                               | 2.80  | %
|                                                           |  |       
|Average aggregate short-term borrowings (monthly)          |  | $      | 3,186,492 |                               | 6.25  | %
|                                                           |  |       
|Maximum aggregate short-term borrowings (at any month-end) |  | $      | 7,457,594 |                               |       |  
|                                                           |  |       
|2008                                                       |  | AMOUNT |           | WEIGHTED AVERAGEINTEREST RATE |      
|Average bank short-term borrowings (monthly)               |  | $      | 2,037,000 |                               | 7.32  | %
|                                                           |  |       
|Average aggregate short-term borrowings (monthly)          |  | $      | 2,390,602 |                               | 12.08 | %
|                                                           |  |       
|Maximum aggregate short-term borrowings (at any month-end) |  | $      | 8,411,255 |                               |       |  



32



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 5: SHORT-TERM DEBT (CONTINUED)



During June 2009, the Company entered into a revolving loan agreement with a financial institution that has a maximum limit of
$12,000,000 and a borrowing limit of 80% of the Companys eligible receivables plus 50% of the Companys eligible inventory. This agreement is secured by all of the assets of the Company and matures on June 23, 2011. Interest is
payable monthly at the banks LIBOR rate plus 1.9% or a floor rate of 3%, whichever is greater.

Prior to June 2009, the Company had a
revolving loan agreement with a different financial institution that had a maximum limit of $12,000,000 and a borrowing limit of 80% of the Companys eligible receivables plus either 50% or 70% of the Companys eligible inventory. This
agreement was secured by all of the assets of the Company and was repaid during 2009. Interest was payable monthly at the banks LIBOR rate plus an applicable margin as defined in the agreement.

These agreements require 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 and improvement without bank approval. The Company was in compliance with these covenants at December 31, 2009 and 2008.

The amount available to be drawn down under these loans based on the available collateral at December 31, 2009 and December 31, 2008 was
$6,421,768 and $6,138,761, respectively.



33



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 6: LONG-TERM DEBT



|                                                                                                                                                                       |  |      |        |      |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- | - | -------
|                                                                                                                                                                       |  | 2009 |        | 2008
|Note Payable, Libor rate plus applicable margin, collateralized by accounts receivable and inventories. Monthly payments of
$13,967 plus interest, repaid during 2009. |  | $    | 0      |      | $ | 249,164
|                                                                                                                                                                       |  |     
|Note Payable, 0% stated interest, 6% imputed interest, final payment of $275,000 paid December 2009.                                                                   |  |      | 0      |      |   | 257,650
|                                                                                                                                                                       |  |     
|Obligations under capital leases.                                                                                                                                      |  |      | 11,716 |      |   | 22,375 
|                                                                                                                                                                       |  |      |        |      |   |        
|                                                                                                                                                                       |  |     
|Total Debt                                                                                                                                                             |  |      | 11,716 |      |   | 529,189
|Less, Current Portion                                                                                                                                                  |  |      | 8,831  |      |   | 435,953
|                                                                                                                                                                       |  |      |        |      |   |        
|                                                                                                                                                                       |  |     
|LONG-TERM DEBT                                                                                                                                                         |  | $    | 2,885  |      | $ | 93,236 
|                                                                                                                                                                       |  |      |        |      |   |        

The aggregate principal amounts maturing in each of the subsequent
years are:



|      |  |   |       
|----- |  | - | ------
|2010  |  | $ | 8,831 
|2011  |  |   | 2,885 
|      |  |   |       
|      | 
|Total |  | $ | 11,716
|      |  |   |       

NOTE 7: LEASES

The Company has certain equipment leases which are classified as capital leases. At December 31, 2009 and 2008, the cost of equipment financed under
capital lease agreements and included in machinery and equipment amounted to $50,550, and the accumulated depreciation associated with these assets was approximately $20,000 (2009) and $10,000 (2008), respectively. The amount recognized as an
obligation was $11,716 (2009) and $22,375 (2008), respectively, which has been included in long- term debt shown in Note 6.

The Company
leases certain automobiles and office equipment under operating leases ranging in length from thirty-six to sixty months. Lease payments charged to operations amounted to $72,004 (2009) and $65,631 (2008), respectively.



34



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 7: LEASES (CONTINUED)



At December 31, 2009, future minimum payments required under leases with terms greater than one year, and the present value of minimum
capital lease payments, were as follows:



|                                                       |  |                |        |   |                 |   |       
|------------------------------------------------------ |  | -------------- | ------ | - | --------------- | - | ------
|YEARS ENDING DECEMBER 31,                              |  | CAPITAL LEASES |        |   | OPERATINGLEASES
|2010                                                   |  | $              | 9,474  |   |                 | $ | 54,282
|2011                                                   |  |                | 2,943  |   |                 |   | 23,917
|2012                                                   |  |                |        |   |                 |   | 6,138 
|                                                       |  |                |        |   |                 |   |       
|                                                       |  |               
|Total Minimum Lease Payments                           |  |                | 12,417 |   |                 | $ | 84,337
|                                                       |  |                |        |   |                 |   |       
|Less, Amount Representing Interest                     |  |                | (701   | ) |                 |   |       
|                                                       |  |                |        |   |                 |   |       
|                                                       |  |               
|PRESENT VALUE OF FUTURE MINIMUM CAPITAL LEASE PAYMENTS |  | $              | 11,716 |   |                 |   |       
|                                                       |  |                |        |   |                 |   |       

NOTE 8: ACCRUED EXPENSES



|                                |  |      |         |      |   |          
|------------------------------- |  | ---- | ------- | ---- | - | ---------
|                                |  | 2009 |         | 2008
|Accrued Payroll and Bonuses     |  | $    | 146,978 |      | $ | 239,164  
|Accrued Brokerage Payable       |  |      | 330,297 |      |   | 293,322  
|Other Accrued Expenses          |  |      | 12,283  |      |   | 17,958   
|Coupon Reimbursement            |  |      | 58,379  |      |   | 65,000   
|Accrued Credit Due to Customers |  |      | 168,748 |      |   | 281,760  
|Accrued Insurance Payable       |  |      | 44,233  |      |   | 95,783   
|Accrued Deferred Compensation   |  |      | 111,354 |      |   | 160,408  
|                                |  |      |         |      |   |          
|TOTAL                           |  | $    | 872,272 |      | $ | 1,153,395
|                                |  |      |         |      |   |          

NOTE 9: RETIREMENT PLAN

The Company and its subsidiaries had a defined benefit pension plan covering all employees who become eligible for participation in the plan on the
semiannual date following one year of service (1,000 hours worked) and the attainment of age 21. The Company elected to freeze the pension plan benefit accruals effective November 30, 2006, provide 100% vesting for all active participants as of
November 30, 2006 and terminate the pension plan effective December 31, 2006.



35



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 9: RETIREMENT PLAN (CONTINUED)



The Company filed with the appropriate regulators and terminated the plan in 2008 once approvals were received. The Company has
treated the action as a curtailment as no further benefits accrued after November 30, 2006.

On March 25, 2008, Paradise, Inc.
received final approval from the Internal Revenue Service to terminate the Companys defined benefit pension plan. On May 16, 2008, Paradise, Inc. transferred $446,717 to the pension plan administrator, Principal Financial Group in order to
complete the termination process.

The following table sets forth the changes in benefit obligations, changes in plan assets and the
reconciliation of funded status for 2008:



|                                               |  |   |            |  
|---------------------------------------------- |  | - | ---------- | -
|Change in Benefit Obligation:                  |  |   |            |  
|Benefit Obligation at Beginning of Year        |  | $ | 3,590,367  |  
|Benefits Paid                                  |  |   | (3,590,367 | )
|                                               |  |   |            |  
|                                               | 
|Benefit Obligation at End of Year              |  |   |           |  
|                                               |  |   |            |  
|Change in Plan Assets:                         |  |   |            |  
|Fair Value of Plan Assets at Beginning of Year |  |   | 3,143,650  |  
|Employer Contributions                         |  |   | 446,717    |  
|Benefits Paid                                  |  |   | (3,590,367 | )
|                                               |  |   |            |  
|Fair Value of Plan Assets at End of Year       |  |   |           |  
|                                               |  |   |            |  
|                                               | 
|Funded Status at End of Year (Underfunded)     |  |   |           |  
|                                               |  |   |            |  



36



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 10: PROVISION FOR FEDERAL AND STATE INCOME TAXES



The provisions for income taxes are comprised of the following amounts:



|                                 |  |      |         |   |      |   |        
|-------------------------------- |  | ---- | ------- | - | ---- | - | -------
|                                 |  | 2009 |         |   | 2008
|CURRENT:                         |  |      |         |   |      |   |        
|Federal                          |  | $    | 260,700 |   |      | $ | 251,216
|State                            |  |      | 82,284  |   |      |   | 43,001 
|                                 |  |      |         |   |      |   |        
|                                 |  |      | 342,984 |   |      |   | 294,217
|                                 |  |      |         |   |      |   |        
|                                 |  |     
|DEFERRED:                        |  |      |         |   |      |   |        
|Federal                          |  |      | (25,965 | ) |      |   | 112,899
|State                            |  |      | (2,772  | ) |      |   | 19,326 
|                                 |  |      |         |   |      |   |        
|                                 |  |      | (28,737 | ) |      |   | 132,225
|                                 |  |      |         |   |      |   |        
|                                 |  |     
|TOTAL PROVISION FOR INCOME TAXES |  | $    | 314,248 |   |      | $ | 426,442
|                                 |  |      |         |   |      |   |        

A reconciliation of the differences between the tax provisions
attributable to income from continuing operations and the tax provision at statutory Federal income tax rate follows:



|                                                    |  |      |         |      |   |         |  
|--------------------------------------------------- |  | ---- | ------- | ---- | - | ------- | -
|                                                    |  | 2009 |         | 2008 |  
|Income Taxes Computed at Statutory Rate             |  | $    | 246,178 |      | $ | 400,718 |  
|State Income Tax, Net of Federal Income Tax Benefit |  |      | 26,283  |      |   | 42,782  |  
|Other, Net                                          |  |      | 41,787  |      |   | (17,058 | )
|                                                    |  |      |         |      |   |         |  
|                                                    |  |     
|PROVISION FOR INCOME TAXES                          |  | $    | 314,248 |      | $ | 426,442 |  
|                                                    |  |      |         |      |   |         |  

The Company recognizes deferred tax assets and liabilities for future tax consequences of events that have been previously
recognized in the Companys financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated.



37



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 10: PROVISION FOR FEDERAL AND STATE INCOME TAXES (CONTINUED)



Significant components of the Companys deferred tax assets and liabilities
at December 31, 2009 and 2008 were:



|                                                                                   |  |      |          |   |      |   |          |  
|---------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | -
|                                                                                   |  | 2009 |          |   | 2008 |  
|Deferred Tax Assets resulting from:                                                |  |      |          |   |      |   |          |  
|Inventory Valuation                                                                |  | $    | 171,580  |   |      | $ | 208,792  |  
|Allowance for Sales Returns and Related Provision for Return of Finished Goods     |  |      | 66,064   |   |      |   | 56,431   |  
|Deferred Compensation Trust Expense                                                |  |      | 41,901   |   |      |   | 60,361   |  
|                                                                                   |  |      |          |   |      |   |          |  
|                                                                                   |  |     
|Total Deferred Tax Assets                                                          |  |      | 279,545  |   |      |   | 325,584  |  
|                                                                                   |  |     
|Deferred Tax Liabilities resulting from:                                           |  |      |          |   |      |   |          |  
|Tax over Book Depreciation                                                         |  |      | (209,478 | ) |      |   | (284,253 | )
|                                                                                   |  |      |          |   |      |   |          |  
|                                                                                   |  |     
|Net Deferred Tax Asset                                                             |  | $    | 70,067   |   |      | $ | 41,331   |  
|                                                                                   |  |      |          |   |      |   |          |  
|The Net Deferred Tax Asset is reflected in the Balance Sheet under these captions: |  |      |          |   |      |   |          |  
|Current Deferred Income Tax Asset                                                  |  | $    | 279,545  |   |      | $ | 325,584  |  
|Long-Term Deferred Income Tax Liability                                            |  |      | (209,478 | ) |      |   | (284,253 | )
|                                                                                   |  |      |          |   |      |   |          |  
|                                                                                   |  | $    | 70,067   |   |      | $ | 41,331   |  
|                                                                                   |  |      |          |   |      |   |          |  

The Company follows Accounting Standards Codification Topic 740, Income Taxes (ASC Topic 740). This
standard provides interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be
sustained upon examination by taxing authorities.



38



---

##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 10: PROVISION FOR FEDERAL AND STATE INCOME TAXES (CONTINUED)



Significant judgment is required in evaluating our tax positions and determining
our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the determination of the ultimate tax effects is uncertain. We record our tax provision based on current and future income
taxes that will be due. In the determination of our provision, we have taken certain tax positions in the consideration of the effects of income and expenses that have been recognized and included in the accompanying financial statements that may or
may not be recognized in the determination of current or future income taxes. We record a liability for these unrecognized tax benefits when we believe that certain positions might be challenged despite our belief that our tax return positions are
fully supportable. We review our liability for unrecognized tax benefits quarterly and adjust it in light of changing facts and circumstances, such as the outcome of tax audit. We are subject to income tax audits by the Internal Revenue Service and
the State of Florida for the years 2006  2008.

As of December 31, 2009 and 2008, we do not expect that any of the tax positions
taken by the Company for the tax periods open to audit, if challenged, would result in a significant tax liability.

NOTE 11: 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                                                                                                                                                                                                                                                                                                                                
|Candied 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.                                                                                                                                                                                                                              



39



---

##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 11: BUSINESS SEGMENT DATA (CONTINUED)



|                                                        |  |               |            |   |               |   |            |  
|------------------------------------------------------- |  | ------------- | ---------- | - | ------------- | - | ---------- | -
|                                                        |  | YEARENDED2009 |            |   | YEARENDED2008 |  
|NET SALES IN EACH SEGMENT                               |  |               |            |   |               |   |            |  
|Candied Fruit:                                          |  |               |            |   |               |   |            |  
|Sales to Unaffiliated Customers                         |  | $             | 16,283,967 |   |               | $ | 17,498,939 |  
|                                                        |  |              
|Molded Plastics:                                        |  |               |            |   |               |   |            |  
|Sales to Unaffiliated Customers                         |  |               | 6,869,827  |   |               |   | 8,116,506  |  
|                                                        |  |               |            |   |               |   |            |  
|                                                        |  |              
|NET SALES                                               |  | $             | 23,153,794 |   |               | $ | 25,615,445 |  
|                                                        |  |               |            |   |               |   |            |  
|                                                        |  |              
|                                                        |  | YEARENDED2009 |            |   | YEARENDED2008 |  
|THE OPERATING PROFIT OF EACH SEGMENT IS LISTED BELOW    |  |               |            |   |               |   |            |  
|                                                        |  |              
|Candied Fruit                                           |  | $             | 3,737,863  |   |               | $ | 4,262,153  |  
|Molded Plastics                                         |  |               | 1,337,581  |   |               |   | 1,816,523  |  
|                                                        |  |               |            |   |               |   |            |  
|                                                        |  |              
|OPERATING PROFIT OF SEGMENTS                            |  |               | 5,075,445  |   |               |   | 6,078,676  |  
|                                                        |  |              
|General Corporate Expenses, Net                         |  |               | (4,164,392 | ) |               |   | (4,612,726 | )
|General Corporate Depreciation and Amortization Expense |  |               | (62,361    | ) |               |   | (67,664    | )
|Interest Expense                                        |  |               | (123,727   | ) |               |   | (217,312   | )
|Other Expense                                           |  |               | (913       | ) |               |   | (2,391     | )
|                                                        |  |               |            |   |               |   |            |  
|INCOME BEFORE PROVISION FOR                             |  |               |            |   |               |   |            |  
|INCOME TAXES                                            |  | $             | 724,052    |   |               | $ | 1,178,583  |  
|                                                        |  |               |            |   |               |   |            |  



40



---

##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 11: BUSINESS SEGMENT DATA (CONTINUED)



Operating profit is composed of net sales, less direct costs and overhead costs associated with each segment. The candied fruit
segment purchases items from the molded plastics segment at cost. These transactions are then eliminated during consolidation. Due to the high degree of integration between the segments of the Company, it is not practical to allocate general
corporate expenses, interest, and other income between the various segments.



|                                                     |  |               |            |               |   |           
|---------------------------------------------------- |  | ------------- | ---------- | ------------- | - | ----------
|                                                     |  | YEARENDED2009 |            | YEARENDED2008
|IDENTIFIABLE ASSETS OF EACH SEGMENT ARE LISTED BELOW |  |               |            |               |   |           
|                                                     |  |              
|Candied Fruit                                        |  | $             | 10,299,983 |               | $ | 10,776,684
|Molded Plastics                                      |  |               | 4,957,557  |               |   | 5,734,874 
|                                                     |  |               |            |               |   |           
|                                                     |  |              
|Identifiable Assets                                  |  |               | 15,257,540 |               |   | 16,511,558
|General Corporate Assets                             |  |               | 4,688,505  |               |   | 4,042,293 
|                                                     |  |               |            |               |   |           
|                                                     |  |              
|TOTAL ASSETS                                         |  | $             | 19,946,045 |               | $ | 20,553,851
|                                                     |  |               |            |               |   |           

Included in the Identifiable Assets of the Molded Plastics Segment is
goodwill totaling $413,280 at December 31, 2009 and 2008.

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.



41



---

##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 11: BUSINESS SEGMENT DATA (CONTINUED)



|                                                                       |  |               |         |               |   |        
|---------------------------------------------------------------------- |  | ------------- | ------- | ------------- | - | -------
|                                                                       |  | YEARENDED2009 |         | YEARENDED2008
|DEPRECIATION AND AMORTIZATION EXPENSE OF EACH SEGMENT ARE LISTED BELOW |  |               |         |               |   |        
|                                                                       |  |              
|Candied Fruit                                                          |  | $             | 459,655 |               | $ | 469,122
|Molded Plastics                                                        |  |               | 248,172 |               |   | 255,598
|                                                                       |  |               |         |               |   |        
|                                                                       |  |              
|Segment Depreciation and Amortization Expense                          |  |               | 707,827 |               |   | 724,720
|General Corporate Depreciation and Amortization Expense                |  |               | 62,361  |               |   | 67,664 
|                                                                       |  |               |         |               |   |        
|TOTAL DEPRECIATION AND AMORTIZATION EXPENSE                            |  | $             | 770,188 |               | $ | 792,384
|                                                                       |  |               |         |               |   |        
|                                                                       |  |              
|                                                                       |  | YEARENDED2009 |         | YEARENDED2008
|CAPITAL EXPENDITURES OF EACH SEGMENT ARE LISTED BELOW                  |  |               |         |               |   |        
|                                                                       |  |              
|Candied Fruit                                                          |  | $             | 88,970  |               | $ | 167,829
|Molded Plastics                                                        |  |               | 40,250  |               |   | 131,601
|                                                                       |  |               |         |               |   |        
|                                                                       |  |              
|Segment Capital Expenditures                                           |  |               | 129,220 |               |   | 299,430
|General Corporate Capital Expenditures                                 |  |               | 40,397  |               |   | 9,545  
|                                                                       |  |               |         |               |   |        
|                                                                       |  |              
|TOTAL CAPITAL EXPENDITURES                                             |  | $             | 169,617 |               | $ | 308,975
|                                                                       |  |               |         |               |   |        

The Company conducts operations only within the United States. Foreign
sales are insignificant; primarily all sales are to domestic companies.



42



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##### Table of Contents

PARADISE, INC.

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS

DECEMBER 31, 2009 AND 2008



NOTE 12: MAJOR CUSTOMERS



With the continuing acquisitions, mergers and other consolidations in the supermarket industry, there is increasing concentration of candied
fruit buying activity. During 2009, the Company derived 17% of its consolidated revenue from Wal-Mart Stores, Inc. This customer is not affiliated with Paradise, Inc. in any way, and has exclusive use of a Paradise-owned controlled brand. During
2008, the Company derived 15% of its consolidated revenue from Wal-Mart Stores, Inc. As of December 31, 2009 and 2008, Wal-Mart Stores, Inc.s accounts receivable balance represents 77% and 30% of total accounts receivable, respectively.

NOTE 13: CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of cash equivalents and unsecured trade receivables. The Companys cash equivalents are maintained at one financial
institution located in Florida. Accounts at this institution are secured by the Federal Deposit Insurance Corporation up to $250,000. Uninsured balances aggregate to $2,765,063 at December 31, 2009. The Company grants credit to customers,
substantially all of whom are located in the United States. The Companys ability to collect these receivables is dependent upon economic conditions in the United States and the financial condition of its customers.

NOTE 14: SUBSEQUENT EVENT

On February 11, 2010,
Paradise, Inc. declared a regular dividend of $.05 per share to stockholders of record at April 23, 2010.



43



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##### Table of Contents

|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------

None



|Item 9A. | Controls and Procedures
|-------- | -----------------------

Evaluation of
Disclosure Controls and Procedures

Our management carried out an evaluation, under the supervision and with the participation of our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of our year ended December 31, 2009 pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, our Chief
Executive Officer and our Chief Financial Officer concluded that, as of the end of our year ended December 31, 2009, our disclosure controls and procedures were effective.

The term disclosure controls and procedures, as defined under the Exchange Act, means controls and other procedures of an issuer that are designed to ensure that information required to be
disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commissions rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the issuers management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the year ended December 31, 2009 that have materially affected, or are reasonable likely to materially
affect, our internal control over financial reporting.



44



---

##### Table of Contents

|Item 9A. | Controls and Procedures (Continued)
|-------- | -----------------------------------

Managements Annual Report on Internal Control over Financial Reporting

Our management, under the supervision and with
the participation of our President and Chief Executive Officer and our Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule
13a-15(f). Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. Managements evaluation was based on criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework.Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:



| | (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and board of directors; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect
on our financial statements.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal control over financial reporting determined to be
effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Managements Annual Report on Internal Control Over Financial Reporting does not include an attestation report from the Companys registered public accounting firm Pender Newkirk & Co., LLP.

Based on the COSO criteria and our managements evaluation, our management believes our internal control over financial reporting as of
December 31, 2009 was effective.



45



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##### Table of Contents

|Item 9A. | Controls and Procedures (Continued)
|-------- | -----------------------------------

Managements Annual Report on Internal Control over Financial Reporting (Continued)

Important Considerations

The effectiveness of our disclosure and procedures and our internal control over financial reporting is subject to various inherent
limitations, include cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may become inadequate because of changes in
conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over
financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.



|Item 9B. | Other Information
|-------- | -----------------

None



46



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##### Table of Contents

PART III



|Item 10. | Directors, Executive Officers and Corporate Governance
|-------- | ------------------------------------------------------

Directors of the Registrant



|                                     |  |                                                                                                                                                                                
|------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Melvin S. Gordon -                   |  | CEO and Chairman of the Registrant, 76 years old. Term of office will expire at next stockholders meeting. Officer with Registrant past 45 years.                             
|                                     | 
|Eugene L. Weiner -                   |  | Vice-President of the Registrant, 78 years old. Term of office will expire at next stockholders meeting. Officer with Registrant past 44 years. (See note on page
III-2)      
|                                     | 
|Randy S. Gordon -                    |  | President of the Registrant, 54 years old. Term of office will expire at next stockholders meeting. Employee or officer of Registrant past 31 years.                          
|                                     | 
|Tracy W. Schulis -                   |  | Senior Vice-President and Secretary of the Registrant, 52 years old. Term of office will expire at next stockholders meeting. Employee or officer of Registrant past 30 years.
|                                     | 
|Mark H. Gordon -                     |  | Executive Vice-President of the Registrant, 47 years old. Term of office will expire at next stockholders meeting. Employee or Officer of Registrant past 24
years.           
|                                    
|Executive Officers of the Registrant
|                                     | 
|Melvin S. Gordon -                   |  | CEO and Chairman, 76 years old. Term of office will expire at next annual directors meeting. Officer with Registrant past 45 years.                                           
|                                     | 
|Eugene L. Weiner -                   |  | Vice-President, 78 years old. Term of office will expire at next annual directors meeting. Officer with Registrant past 44 years.                                             
|                                     | 
|Randy S. Gordon -                    |  | President, 54 years old. Term of office will expire at next annual directors meeting. Employee or officer of Registrant past 31 years.                                        
|                                     | 
|Tracy W. Schulis -                   |  | Senior Vice-President and Secretary, 52 years old. Term of office will expire at next annual directors meeting. Employee or officer of Registrant past 30
years.              
|                                     | 
|Mark H. Gordon -                     |  | Executive Vice-President, 47 years old. Term of office will expire at next annual directors meeting. Employee or Officer of Registrant past 24 years.                         



47



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##### Table of Contents

|Item 10. | Directors, Executive Officers and Corporate Governance (Continued)
|-------- | ------------------------------------------------------------------



|                    |  |                                                                                                                                            
|------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|Jack M. Laskowitz - |  | CFO and Treasurer, 53 years old. Term of office will expire at annual directors meeting. Employee or officer with Registrant past 9 years.

Mr. Weiner relinquished his duties as COO, CFO, Treasurer and Secretary of the corporation as of June 30, 2002. Mr. Weiner remains a Director
and Vice President, concentrating on corporate development.

Family Relationships

Melvin S. Gordon is first cousin by marriage to Eugene L. Weiner.

Melvin S. Gordon is the father of Randy S. Gordon and Mark H. Gordon and the father-in-law of Tracy W. Schulis.

Audit Committee Financial Expert

Rules recently adopted by the Securities and Exchange
Commission (the SEC) to implement sections of the Sarbanes-Oxley Act of 2002 (the Act) require disclosure of whether the Company has an audit committee financial expert on its audit committee. The Company has not formally
designated an audit committee; however, the Act stipulates that if no such committee exists, then the audit committee is the entire board of directors.

The Companys Board of Directors has determined that Eugene L. Weiner, is an audit committee financial expert. Eugene L. Weiner is a Director and also a Vice-President of the Company and
therefore is not independent of management.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all executive officers, directors and employees of the Company. The Code of
Business Conduct and Ethics is attached as an exhibit to this Annual Report on Form 10-K.



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##### Table of Contents

|Item 11. | Executive Compensation
|-------- | ----------------------



|(a) | and (b) The following summary compensation table sets forth all remuneration paid or accrued by the Company and its subsidiaries for the years ended
December 31, 2009 and 2008 to its Chief Executive Officer and the four other highest paid executive officers whose total remuneration exceeded $100,000.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

COMPENSATION



|                                    |  |      |  |            |         |       |   |                          |  |   |       
|----------------------------------- |  | ---- |  | ---------- | ------- | ----- | - | ------------------------ |  | - | ------
|NAME AND PRINCIPAL POSITION         |  | YEAR |  | SALARY (1) |         | BONUS |   | ALL OTHERCOMPENSATION(2)
|                                    |  |      |  |           
|Melvin S. Gordon,                   |  | 2009 |  | $          | 336,510 |       | $ | 21,094                   |  | $ | 2,725 
|Chief Exec. Officer                 |  | 2008 |  |            | 366,457 |       |   | 61,750                   |  |   | 2,726 
|                                    |  |      |  |           
|Randy S. Gordon,                    |  | 2009 |  |            | 214,508 |       |   | 21,495                   |  |   | 14,305
|President                           |  | 2008 |  |            | 229,966 |       |   | 64,494                   |  |   | 15,828
|                                    |  |      |  |           
|Tracy W. Schulis,                   |  | 2009 |  |            | 214,808 |       |   | 22,956                   |  |   | 18,589
|Senior Vice-President and Secretary |  | 2008 |  |            | 229,665 |       |   | 69,948                   |  |   | 19,840
|                                    |  |      |  |           
|Mark H. Gordon,                     |  | 2009 |  |            | 214,308 |       |   | 19,408                   |  |   | 8,428 
|Executive Vice-President            |  | 2008 |  |            | 230,166 |       |   | 56,600                   |  |   | 12,256
|                                    |  |      |  |           
|Jack M. Laskowitz,                  |  | 2009 |  |            | 117,274 |       |   | 9,232                    |  |   | 10,420
|Chief Financial Officer             |  | 2008 |  |            | 120,867 |       |   | 26,917                   |  |   | 11,396

NOTES TO THE ABOVE TABLE



|1. | Includes personal use of Company automobiles and PS-58 costs.
|-- | -------------------------------------------------------------



|2. | All Other Compensation includes life insurance premiums paid on behalf of the officers in accordance with the Companys 162 bonus plan along with matching
contributions provided for by the Companys 401(k) Retirement Savings Plan.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|-------- | ----------------------------------------------------------------------------------------------



|(a) | The following table sets forth as of December 31, 2009, information concerning the beneficial ownership of the common stock of the Company by the persons who own,
are known by the company to own, or who the Company has been advised have filed with the S.E.C. declarations of beneficial ownership, of more than 5% of the outstanding common stock.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                    |  |               |  |                                           |     |  |                 |  
|--------------------------------------------------- |  | ------------- |  | ----------------------------------------- | --- |  | --------------- | -
|NAME AND ADDRESS OF BENEFICIAL OWNER                |  | TITLE OFCLASS |  | AMOUNT & NATUREOF BENEFICIALOWNERSHIP (1) |     |  | PERCENTOF CLASS |  
|Melvin S. Gordon 2611 Bayshore Blvd. Tampa, Florida |  | Common        |  | 192,742                                   | (1) |  | 37.1            | %
|                                                    |  |               |  |                                           |     |  |                 |  
|                                                    |  |               | 
|TOTAL                                               |  |               |  | 192,742                                   |     |  | 37.1            | %
|                                                    |  |               |  |                                           |     |  |                 |  



|(1) | Includes 141,760 shares owned by the Helen A. Weaner Family Partnership, Ltd., control of which Mr. Gordon shares with his wife as Trustees.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Beneficial ownership of common stock held by all directors and officers of the Company as a group:
|--- | --------------------------------------------------------------------------------------------------



|                                  |  |                |  |                                             |     |  |                 |  
|--------------------------------- |  | -------------- |  | ------------------------------------------- | --- |  | --------------- | -
|                                  |  | TITLE OF CLASS |  | AMOUNT AND NATUREOF BENEFICIALOWNERSHIP (1) |     |  | PERCENTOF CLASS |  
|Directors and Officers As a Group |  | Common         |  | 217,697                                     |     |  | 41.9            | %
|                                  |  |                |  |                                             |     |  |                 |  
|                                  |  |                | 
|Melvin S. Gordon                  |  | Common         |  | 192,742                                     | (2) |  | 37.1            | %
|                                  |  |                | 
|Eugene L. Weiner                  |  | Common         |  | 307                                         |     |  | 0               |  
|                                  |  |                | 
|Randy S. Gordon                   |  | Common         |  | 7,400                                       |     |  | 1.4             |  
|                                  |  |                | 
|Tracy W. Schulis                  |  | Common         |  | 8,648                                       |     |  | 1.7             |  
|                                  |  |                | 
|Mark H. Gordon                    |  | Common         |  | 8,600                                       |     |  | 1.7             |  



|(1) | The nature of the beneficial ownership for all shares is sole voting and investment power.
|--- | ------------------------------------------------------------------------------------------

|(2) | Includes 141,760 shares owned by the Helen A. Weaner Family Partnership, Ltd., control of which Mr. Gordon shares with his wife as Trustees.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

|(c) | The Company knows of no contractual arrangements which may at a subsequent date result in a change in control of the Company.
|--- | -----------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 13. | Certain Relationships, Related Transactions and Director Independence
|-------- | ---------------------------------------------------------------------

None



|Item 14. | Principal Accountant Fees and Services
|-------- | --------------------------------------

Audit Fees

The aggregate fees billed for professional services rendered by Pender Newkirk & Company, LLP for the
audit of the Companys annual financial statements and review of financial statements included in the Companys Forms 10-Q for fiscal years 2009 and 2008 were $130,196 and $150,057, respectively. At the time of this filing, not all audit
fees had been billed for the 2009 fiscal year. No other fees were paid to Pender Newkirk & Company, LLP

The Company has not formally
designated an audit committee and as a result, the entire board of directors performs the duties of an audit committee. Its the Boards policy to pre-approve all services provided by Pender Newkirk & Company, LLP.



|Item 15. | Exhibits and Financial Statement Schedules
|-------- | ------------------------------------------



|    |  |                  |  |                                                                                                                                                                                              
|--- |  | ---------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibit (3) -    |  | Articles of Incorporation and By-Laws (Incorporated by reference from Exhibits to Paradise, Inc.s AnnualReport on Form 10-KSB for the year ended December 31, 1993,
filed on March 31, 1994)
|    |  |                 
|    |  | Exhibit (11) -   |  | Statement Re: Computation of Per Share Earnings (Incorporated by reference from Exhibits to page II-24 of this Form 10-K)                                                                    
|    |  |                 
|    |  | Exhibit (31.1) - |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) (filed herewith)                                                                                                         
|    |  |                 
|    |  | Exhibit (31.2) - |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) (filed herewith)                                                                                                         
|    |  |                 
|    |  | Exhibit (32.1) - |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (filed herewith)                                                                                                 
|    |  |                 
|    |  | Exhibit (32.2) - |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (filed herewith)                                                                                                 



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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.



|               |  |                     
|-------------- |  | --------------------
|March 26, 2010 |  | PARADISE, INC.      
|Date           |  |                     
|               |  | /s/ Melvin S. Gordon
|               |  | Melvin S. Gordon    
|               |  | CEO and Chairman    

In accordance with the Exchange Act this
report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.



|                      |  |                                               |  |                    
|--------------------- |  | --------------------------------------------- |  | -------------------
|/s/ Melvin S. Gordon  |  | CEO, Chairman and Director                    |  | March 26, 2010 Date
|Melvin S. Gordon      |  |                                              
|                      |  |                                              
|/s/ Eugene L. Weiner  |  | Vice-President and Director                   |  | March 26, 2010 Date
|Eugene L. Weiner      |  |                                              
|                      |  |                                              
|/s/ Randy S. Gordon   |  | President and Director                        |  | March 26, 2010 Date
|Randy S. Gordon       |  |                                              
|                      |  |                                              
|/s/ Tracy W. Schulis  |  | Senior Vice-President, Secretary and Director |  | March 26, 2010 Date
|Tracy W. Schulis      |  |                                              
|                      |  |                                              
|/s/ Mark H. Gordon    |  | Executive Vice-President and Director         |  | March 26, 2010 Date
|Mark H. Gordon        |  |                                              
|                      |  |                                              
|/s/ Jack M. Laskowitz |  | CFO and Treasurer                             |  | March 26, 2010 Date
|Jack M. Laskowitz     |  |                                              



52