**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

 
| **ý** | ** ** | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE  SECURITIES EXCHANGE ACT OF 1934**  |
|------------|------------|------------------------------------------------------------------------------------------------|
|       |       |                                                                                           |
| ** ** | ** ** | **For the  Quarterly Period Ended June 30, 2005**                                              |
|       |       |                                                                                           |
| **o**      | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |

 

**For theTransition Period From                to               **

 

**CommissionFile Number 1-12599**

 

**VITA FOOD PRODUCTS, INC.**

(Exact name of registrant asspecified in its charter)

 
| **Nevada**                                                                                                 | ** ** | **36-3171548**                         |
|------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|
| (State or other jurisdiction of  incorporation or organization)                                            |       | (I.R.S.  Employer  Identification No.) |
|                                                                                                       |       |                                   |
| **2222 West Lake Street, Chicago, Illinois      60612**                      |
| (Address of  principal executive offices)         (Zip  Code) |
|                                                                                                       |       |                                   |
| Registrant’s  telephone number, including area code:     **(312) 738-4500**  |

 

Indicate by check mark whether the registrant(1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.  Yes  ýNo  o

 

Indicate by check mark whetherthe registrant is an accelerated filer (as defined in Rule 12b-2 of theExchange Act).  Yes  o  No ý

 

The number of shares outstanding ofregistrant’s common stock as of July 29, 2005 was 3,866,062.

 

 

----

 

**VITA FOODPRODUCTS, INC.**

 

**FORM 10-Q**

 

## **For the Quarter Ended June 30, 2005**

 

## **INDEX**

## ** **

| ** **    | ** **                                                                                  | **Page**                                                                                                |
|---------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
| **PART I.**   | **FINANCIAL INFORMATION**                                                                   | ** **                                                                                              |
|          |                                                                                        |                                                                                                    |
| Item 1.       | Financial Statements                                                                        |                                                                                                    |
|          |                                                                                        |                                                                                                    |
|          | a)                                                                                          | Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004                                   | 3 |
|          |                                                                                        |                                                                                                    |   |
|          | b)                                                                                          | Consolidated Statements of Operations for the Three Months and Six  Months Ended June 30, 2005 and 2004 | 4 |
|          |                                                                                        |                                                                                                    |   |
|          | c)                                                                                          | Consolidated Statement of Shareholders’ Equity for the Six Months  Ended June 30, 2005             | 4 |
|          |                                                                                        |                                                                                                    |   |
|          | d)                                                                                          | Consolidated Statements of Cash Flows for the Six Months Ended June  30, 2005 and 2004                  | 5 |
|          |                                                                                        |                                                                                                    |   |
|          | e)                                                                                          | Notes to Financial Statements                                                                           | 6 |
|          |                                                                                        |                                                                                                    |
| Item 2.       | Management’s Discussion and  Analysis of Financial Condition and Results of Operations | 10                                                                                                      |
|          |                                                                                        |                                                                                                    |
| Item 3.       | Quantitative and Qualitative  Disclosures About Market Risk                                 | 14                                                                                                      |
|          |                                                                                        |                                                                                                    |
| Item 4.       | Controls and Procedures                                                                     | 14                                                                                                      |
|          |                                                                                        |                                                                                                    |
| **PART  II.** | **OTHER  INFORMATION**                                                                      |                                                                                                    |
|          |                                                                                        |                                                                                                    |
| Item 4.       | Submission of Matters to a  Vote of Security Holders                                        | 15                                                                                                      |
|          |                                                                                        |                                                                                                    |
| Item  6.      | Exhibits                                                                                    | 15                                                                                                      |
|          |                                                                                        |                                                                                                    |
| SIGNATURES    | 16                                                                                          |

 

2

----

 

**PART 1. FINANCIAL STATEMENTS**

 

**Item 1. Financial Statements**
| **Consolidated Balance Sheets** | ** ** | **Vita Food Products, Inc.** |
|---------------------------------|------------|------------------------------|
|                            |       | **And Subsidiary**           |

 
| ** **                                                                                                                           | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------|------------------|------------|
| ** **                                                                                                                           | ** ** | **2005**     | ** ** | **2004**         | ** ** |
|                                                                                                                                 |       |         |       |             |       |
| **ASSETS**                                                                                                                           |       |         |       |             |       |
| Current Assets                                                                                                                       |       |         |       |             |       |
| Cash                                                                                                                                 |       | $            | 43,379     |             | $          | 55,968 |   |
| Accounts receivable-trade, net of allowance  for discounts, returns, and doubtful accounts of $445,000 in 2005 and  $569,000 in 2004 |       | 3,255,057    |       | 5,118,517        |       |
| Inventories                                                                                                                          |       |         |       |             |       |
| Raw material and supplies                                                                                                            |       | 5,541,893    |       | 4,342,754        |       |
| Work in process                                                                                                                      |       | 178,581      |       | 235,504          |       |
| Finished goods                                                                                                                       |       | 3,137,450    |       | 2,390,924        |       |
| Prepaid expenses and other current assets                                                                                            |       | 403,152      |       | 447,602          |       |
| Income taxes receivable                                                                                                              |       | 39,796       |       | 35,441           |       |
| Total Current Assets                                                                                                                 |       | 12,599,308   |       | 12,626,710       |       |
|                                                                                                                                 |       |         |       |             |       |
| Property, Plant and Equipment                                                                                                        |       |         |       |             |       |
| Land                                                                                                                                 |       | 35,000       |       | 35,000           |       |
| Building and improvements                                                                                                            |       | 2,627,172    |       | 2,626,097        |       |
| Leasehold improvements                                                                                                               |       | 578,839      |       | 425,336          |       |
| Machinery and office equipment                                                                                                       |       | 10,817,797   |       | 10,636,716       |       |
|                                                                                                                                 |       | 14,058,808   |       | 13,723,149       |       |
| Less accumulated depreciation and  amortization                                                                                      |       | (8,232,777   | )          | (7,797,581       | )          |
| Net Property, Plant and Equipment                                                                                                    |       | 5,826,031    |       | 5,925,568        |       |
|                                                                                                                                 |       |         |       |             |       |
| Goodwill                                                                                                                             |       | 5,996,705    |       | 5,996,705        |       |
| Other assets                                                                                                                         |       | 429,341      |       | 373,695          |       |
| Total Assets                                                                                                                         |       | $            | 24,851,385 |             | $          | 24,922,678 |   |
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                        |       |         |       |             |       |
| Current Liabilities                                                                                                                  |       |         |       |             |       |
| Current maturities of long-term obligations                                                                                          |       | $            | 889,976    |             | $          | 1,619,430 |   |
| Accounts payable                                                                                                                     |       | 2,963,838    |       | 2,278,696        |       |
| Accrued expenses                                                                                                                     |       | 920,586      |       | 817,919          |       |
| Deferred income taxes                                                                                                                |       | 7,924        |       | 144,924          |       |
| Total Current Liabilities                                                                                                            |       | 4,782,324    |       | 4,860,969        |       |
|                                                                                                                                 |       |         |       |             |       |
| Long-term Obligations, Less Current  Maturities                                                                                      |       | 15,694,296   |       | 15,497,900       |       |
|                                                                                                                                 |       |         |       |             |       |
| Shareholders’ Equity                                                                                                            |       |         |       |             |       |
| Preferred stock, $.01 par value, authorized  1,000,000 shares; none issued                                                           |       | —       |       | —           |       |
| Common stock, $.01 par value; authorized  10,000,000 shares; issued 3,872,578 shares in 2005 and 3,865,254 in 2004                   |       | 38,726       |       | 38,652           |       |
| Treasury stock, at cost 6,516 shares                                                                                                 |       | (50,043      | )          | (50,043          | )          |
| Additional paid-in capital                                                                                                           |       | 3,802,580    |       | 3,785,596        |       |
| Retained earnings                                                                                                                    |       | 583,502      |       | 789,604          |       |
| Total Shareholders’ Equity                                                                                                      |       | 4,374,765    |       | 4,563,809        |       |
| Total Liabilities and Shareholders’ Equity                                                                                      |       | $            | 24,851,385 |             | $          | 24,922,678 |   |

 

See accompanying notes to consolidated financial statements.

 

3

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| **Consolidated Statements of Operations** | ** ** | **Vita Food Products, Inc.** |
|-------------------------------------------|------------|------------------------------|
| ** **                                | ** ** | **And Subsidiary**           |

 
| ** **                                 | ** ** | **For the three months ended** | ** ** | **For the six months ended** | ** ** |
|--------------------------------------------|------------|--------------------------------|------------|------------------------------|------------|
| ** **                                 | ** ** | **June 30,**                   | ** ** | **June 30,**                 | ** ** |
| ** **                                 | ** ** | **2005**                       | ** ** | **2004**                     | ** ** | **2005** | ** ** | **2004** | ** ** |
| ** **                                 | ** ** | ** **                     | ** ** | ** **                   | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net Sales                                  |       | $                              | 10,232,330 |                         | $          | 10,657,974 |   | $ | 21,252,245 |   | $ | 23,269,901 |   |
| Cost of Goods Sold                         |       | 6,679,457                      |       | 7,548,873                    |       | 14,375,393 |   | 16,325,484 |   |
| Gross Margin                               |       | 3,552,873                      |       | 3,109,101                    |       | 6,876,852 |   | 6,944,417 |   |
|                                       |       |                           |       |                         |       |   |   |   |   |
| Selling and Administrative Expenses        |       |                           |       |                         |       |   |   |   |   |
| Selling, Marketing and Distribution        |       | 2,156,116                      |       | 2,383,677                    |       | 4,463,529 |   | 4,912,234 |   |
| Administrative                             |       | 1,072,652                      |       | 1,115,837                    |       | 2,307,323 |   | 2,306,388 |   |
| Total Selling and Administrative Expenses  |       | 3,228,768                      |       | 3,499,514                    |       | 6,770,852 |   | 7,218,622 |   |
| Operating Profit (Loss)                    |       | 324,105                        |       | (390,413                     | )          | 106,000 |   | (274,205 | ) |
|                                       |       |                           |       |                         |       |   |   |   |   |
| Interest Expense                           |       | 238,150                        |       | 176,471                      |       | 449,102 |   | 356,081 |   |
| Income (Loss) Before Income Taxes          |       | 85,955                         |       | (566,884                     | )          | (343,102 | ) | (630,286 | ) |
| Income Tax Expense (Benefit)               |       | 35,000                         |       | (227,000                     | )          | (137,000 | ) | (252,000 | ) |
| Net Income (Loss)                          |       | $                              | 50,955     |                         | $          | (339,884 | ) | $ | (206,102 | ) | $ | (378,286 | ) |
|                                       |       |                           |       |                         |       |   |   |   |   |
| Basic Earnings (Loss) Per Share            |       | $                              | 0.01       |                         | $          | (0.09 | ) | $ | (0.05 | ) | $ | (0.10 | ) |
| Weighted Average Common Shares Outstanding |       | 3,858,738                      |       | 3,836,100                    |       | 3,858,738 |   | 3,832,741 |   |
|                                       |       |                           |       |                         |       |   |   |   |   |
| Diluted Earnings (Loss) Per Share          |       | $                              | 0.01       |                         | $          | (0.09 | ) | $ | (0.05 | ) | $ | (0.10 | ) |
| Weighted Average Common Shares Outstanding |       | 3,884,002                      |       | 3,836,100                    |       | 3,858,738 |   | 3,832,741 |   |

 

 
| **Consolidated  Statement of Shareholders’ Equity** |   | **Vita  Food Products, Inc.** |
|----------------------------------------------------------|--------|-------------------------------|
|                                                     |   | **And  Subsidiary**           |

 
| ** **                                           | ** ** | ** **       | ** ** | ** **   | ** ** | **Additional** | ** ** | ** **    | ** ** | ** **   | ** ** |
|------------------------------------------------------|------------|------------------|------------|--------------|------------|----------------|------------|---------------|------------|--------------|------------|
| ** **                                           | ** ** | **Common Stock** | ** ** | **Treasury** | ** ** | **Paid-in**    | ** ** | **Retzained** | ** ** | ** **   | ** ** |
| ** **                                           | ** ** | **Shares**       | ** ** | **Amount**   | ** ** | **Stock**      | ** ** | **Capital**   | ** ** | **Earnings** | ** ** | **Total** | ** ** |
|                                                 |       |             |       |         |       |           |       |          |       |         |       |   |   |
| Balance, at January 1, 2005                          |       | 3,865,254        |       | $            | 38,652     |           | ($50,043   | )             | $          | 3,785,596    |       | $ | 789,604 |   | $ | 4,563,809 |   |
| Proceeds from stock purchase and stock  option plans |       | 7,324            |       | 74           |       | —         |       | 16,984        |       | —       |       | 17,058 |   |
|                                                 |       |             |       |         |       |           |       |          |       |         |       |   |   |
| Net Loss                                             |       | —           |       | —       |       | —         |       | —        |       | (206,102     | )          | (206,102 | ) |
| Balance, at June 30, 2005                            |       | 3,872,578        |       | $            | 38,726     |           | ($50,043   | )             | $          | 3,802,580    |       | $ | 583,502 |   | $ | 4,374,765 |   |

 

See accompanying notes toconsolidated financial statements.

 

4

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| **Consolidated Statements of Cash Flows** | ** ** | **Vita Food Products, Inc.** |
|-------------------------------------------|------------|------------------------------|
| ** **                                | ** ** | **And Subsidiary**           |

 
| ** **                                                                      | ** ** | **For the six months ended** | ** ** |
|---------------------------------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                                      | ** ** | **June 30,**                 | ** ** |
| ** **                                                                      | ** ** | **2005**                     | ** ** | **2004** | ** ** |
| ** **                                                                      | ** ** | ** **                   | ** ** | ** ** | ** ** |
| **Cash Flows From Operating Activities**                                        |       |                         |       |   |   |
| Net loss                                                                        |       | ($206,102                    | )          | ($378,286 | ) |
| Adjustments to reconcile net loss to net  cash provided by operating activities |       |                         |       |   |   |
| Depreciation and amortization                                                   |       | 470,691                      |       | 471,742 |   |
| (Gain) loss on sale of fixed assets                                             |       | (14,066                      | )          | 3,877 |   |
| Deferred income tax benefit                                                     |       | (137,000                     | )          | (57,800 | ) |
| Changes in assets and liabilities:                                              |       |                         |       |   |   |
| Accounts receivable                                                             |       | 1,863,460                    |       | 2,465,617 |   |
| Inventories                                                                     |       | (1,888,742                   | )          | (542,651 | ) |
| Prepaid expenses and other current assets                                       |       | 44,450                       |       | 2,077 |   |
| Accounts payable                                                                |       | 685,142                      |       | 245,107 |   |
| Income taxes receivable                                                         |       | (4,355                       | )          | (222,408 | ) |
| Accrued expenses                                                                |       | 102,665                      |       | 49,461 |   |
| Net cash provided by operating activities                                       |       | 916,143                      |       | 2,036,736 |   |
|                                                                            |       |                         |       |   |   |
| **Cash Flows From Investing Activities**                                        |       |                         |       |   |   |
| Capital expenditures                                                            |       | (352,680                     | )          | (773,179 | ) |
| Proceeds from sale of fixed asset                                               |       | 15,240                       |       | 7,400 |   |
| Other assets                                                                    |       | (51,385                      | )          | (65,837 | ) |
| Net cash used in investing activities                                           |       | (388,825                     | )          | (831,616 | ) |
|                                                                            |       |                         |       |   |   |
| **Cash Flows From Financing Activities**                                        |       |                         |       |   |   |
| Proceeds from issuance of stock and  exercise of stock options                  |       | 17,058                       |       | 101,463 |   |
| Purchase of treasury stock                                                      |       | —                       |       | (50,043 | ) |
| Net borrowing (payments) under revolving  loan facility                         |       | 726,653                      |       | (943,543 | ) |
| Payments on term loan facility                                                  |       | (443,196                     | )          | (389,054 | ) |
| Payments on other debt                                                          |       | (840,422                     | )          | — |   |
| Net cash used in financing activities                                           |       | (539,907                     | )          | (1,281,177 | ) |
| Net decrease in cash                                                            |       | (12,589                      | )          | (76,057 | ) |
|                                                                            |       |                         |       |   |   |
| Cash, at beginning of period                                                    |       | 55,968                       |       | 125,457 |   |
| Cash, at end of period                                                          |       | $                            | 43,379     |   | $ | 49,400 |   |
|                                                                            |       |                         |       |   |   |
| Supplemental Disclosure of Cash Flow  Information                               |       |                         |       |   |   |
| Cash paid for interest                                                          |       | $                            | 455,000    |   | $ | 249,000 |   |
| Income taxes paid                                                               |       | $                            | 4,000      |   | $ | 28,000 |   |

 

See accompanying notes to consolidated financial statements.

 

5

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## **NOTES TO FINANCIAL STATEMENTS**

## ** **

**(Unaudited)**

 

#### **Basisof Presentation**

 

In the opinionof management, the accompanying balance sheets and related interim statementsof operations, cash flows, and shareholders’ equity include all adjustments,consisting only of normal recurring items necessary for their fair presentationin conformity with U.S. generally accepted accounting principles.  Preparing financial statements requiresmanagement to make estimates and assumptions that affect the reported amountsof assets, liabilities, revenue, and expenses. Examples include provisions for returns, deductions, bad debts, andlength of building and equipment lives. Actual results may differ from these estimates.  Interim results are not necessarilyindicative of results for a full year. The information included in this Form10-Q should be read in conjunction with Management’s Discussion and Analysis ofFinancial Condition and Results of Operations and financial statements andnotes thereto included in the Form 10-K for the fiscal year ended December 31,2004 of Vita Food Products, Inc.  (VitaFood Products, Inc. (“Vita”) together with its wholly owned subsidiary, VitaSpecialty Foods, Inc. (“Vita Specialty Foods”), hereinafter referred to as the “Company”.)

 

The second quarter and six month periods endedJune 30, 2005 and 2004 diluted earnings (loss) per share computations exclude269,400 and 265,100 shares for 2005 and 88,301 and 119,078 for 2004,respectively, issuable upon exercise of stock options because the assumedexercise of these options would be anti-dilutive.

 

**Principles of Consolidation**

 

The consolidated financial statements include the accountsof Vita and Vita Specialty Foods.  VitaSpecialty Foods includes Virginia Honey Company, Inc. (“Virginia Honey”) andThe Halifax Group, Inc. (“Halifax”).  Allsignificant intercompany transactions and balances have been eliminated.

 

##### **Revenue Recognition**

##### ** **

Revenue is recognizedupon the passing of title to the customers, which occurs upon shipment ofproduct to customers in fulfillment of customer orders.

 

### **EarnOut Provisions Under Acquisitions Agreements**

### ** **

Pursuant to the Company’s acquisitions ofVirginia Honey and Halifax in 2001 and 2002, respectively, the previous ownersof those businesses, both of whom are now employees and one of whom is adirector of the Company, were subject to earn out provisions that may result inadditional proceeds paid by the Company for the acquired businesses.  As amended, the earn out provisions for TerryHess, the previous owner of Virginia Honey, have resulted in an additionalamount due to Mr. Hess of $840,000, which was paid in April 2005.  This additional payment was based on theoperating results of Virginia Honey for the period from January 1, 2001 toDecember 31, 2002.  Potential remainingearn out payments to Mr. Hess will be based on the earnings of Vita SpecialtyFoods, as computed by a pre-defined allocation formula, for two separateperiods — January 1, 2003 to December 31, 2005 and January 1, 2006 to December31, 2007.  Should Vita Specialty Foodsmaintain its current profitability levels throughout these periods, managementestimates that additional payments with a net present value as of June 30, 2005of approximately $1,103,000 would be due to Mr. Hess.  Any future payments will be recorded asadditional goodwill when and if such payments are finally determined at the endof each of the periods described above.

 

Mr. Budd, the previousowner of Halifax, had two separate earn out periods — January 1, 2003 toDecember 31, 2005 and January 1, 2006 to December 31, 2007.  Potential earn out payments to Mr. Budd wereto be based on the earnings of Vita Specialty Foods, as computed by apre-defined allocation formula.  OnJanuary 7, 2005, the Company terminated the Employment Agreement, made as ofNovember 1, 2002, between Halifax and Mr. Budd in connection with the Company’sacquisition of Halifax.   The Companyalleged a for “cause” termination as defined in the Employment Agreement, and,in connection therewith, filed suit against Mr. Budd which was settled inaccordance with the terms and conditions of the Settlement Agreement enteredinto on March 28, 2005.  Pursuant to theSettlement Agreement, the remaining potential earn out payments to Mr. Buddhave been eliminated entirely.

 

6

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#### **Bank Loan Agreement**

#### ** **

On September 9, 2003, the Company entered into aloan agreement (the “Loan Agreement”) with a bank and paid off its existingcredit facility.  The Loan Agreementprovides for a two year $8,500,000 revolving line of credit for working capitalneeds; a five year $6,500,000 term loan that represents the Company’s long termfinancing and a six-year $3,000,000 term loan that is currently not beingutilized.  The revolving loan facilitymatures July 1, 2006 (as amended in June 2005); the term loan is payable inmonthly installments of $54,000 through July 31, 2008, with a balloon paymentof $3,368,000 due on August 30, 2008. Amounts outstanding under the revolving facility and the term facilitiesat June 30, 2005 were $8,404,000 and $5,312,000, respectively.  The interest rates on these facilities havebeen determined, subject to adjustment at certain predetermined dates, basedupon the Funded Debt to EBITDA ratio as each such term is defined in the LoanAgreement.  The Loan Agreement containscustomary representations, warranties and covenants (as most recently amendedin June 2005).  At June 30, 2005, theCompany was in compliance with these (as amended) covenants.  In April 2005, the bank provided the Companywith a temporary overdraft of $800,000 due September 2005 (as amended in June2005).  As of June 30, 2005, the interestrates on the revolving line of credit and the term loan are prime and primeplus 0.25% respectively.

 

#### **Business Segments**

#### ** **

The Company is reportingtwo operating business segments in the same format as reviewed by the Company’ssenior management. Segment one, Vita, processes and sells various herring andcured and smoked salmon products throughout the United States.  Segment two, Vita Specialty Foods, combinesthe products of Virginia Honey and Halifax and manufactures and distributeshoney, salad dressings, sauces, marinades, jams and jellies and giftbaskets.  Management uses operatingprofit as the measure of profit or loss by business segment.

 

**Business segment information isas follows ($000’s):**

 
| **Three months ended June 30,**     | ** ** | **2005**  | ** ** | **2004**   | ** ** |
|-------------------------------------|------------|-----------|------------|------------|------------|
|                                |       |      |       |       |       |
| **Net Sales**                       |       |      |       |       |       |
| Vita                                | ** ** | **$**     | **4,768**  |       | $          | 4,473 |   |
| Vita Specialty Foods                | ** ** | **5,464** |       | 6,185      |       |
|                                |       |      |       |       |       |
| Total Net Sales                     | ** ** | **$**     | **10,232** |       | $          | 10,658 |   |
|                                |       |      |       |       |       |
| **Operating Profit (Loss)**         |       |      |       |       |       |
| Vita                                | ** ** | **$**     | **(308**   | **)**      | $          | (851 | ) |
| Vita Specialty Foods                | ** ** | **632**   | ** ** | 461        |       |
|                                |       |      | ** ** |       |       |
| Total Operating Profit              | ** ** | **$**     | **324**    | ** ** | $          | (390 | ) |
|                                |       |      | ** ** |       |       |
| **Net Income (Loss)**               |       |      | ** ** |       |       |
| Vita                                | ** ** | **$**     | **(276**   | **)**      | $          | (561 | ) |
| Vita Specialty Foods                | ** ** | **327**   | ** ** | 221        |       |
|                                |       |      | ** ** |       |       |
| Total Net Income                    | ** ** | **$**     | **51**     | ** ** | $          | (340 | ) |
|                                |       |      | ** ** |       |       |
| **Depreciation and Amortization**   |       |      | ** ** |       |       |
| Vita                                | ** ** | **$**     | **126**    | ** ** | $          | 127 |   |
| Vita Specialty Foods                | ** ** | **111**   | ** ** | 114        |       |
|                                |       |      |       |       |       |
| Total Depreciation and Amortization | ** ** | **$**     | **237**    |       | $          | 241 |   |
|                                |       |      |       |       |       |
| **Capital Expenditures**            |       |      |       |       |       |
| Vita                                | ** ** | **$**     | **44**     |       | $          | 290 |   |
| Vita Specialty Foods                | ** ** | **198**   |       | 122        |       |
|                                |       |      |       |       |       |
| Total Capital Expenditures          | ** ** | **$**     | **242**    |       | $          | 412 |   |

 

7

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| **Six months ended June 30,**       | ** ** | **2005**   | ** ** | **2004**   | ** ** |
|-------------------------------------|------------|------------|------------|------------|------------|
|                                |       |       |       |       |       |
| **Goodwill**                        |       |       |       |       |       |
| Vita                                | ** ** | **$**      | **—** |       | $          | — |   |
| Vita Specialty Foods                | ** ** | **5,997**  |       | 8,311      | (a)        |
|                                |       |       |       |       |       |
| Total Goodwill                      | ** ** | **$**      | **5,997**  |       | $          | 8,311 |   |
|                                |       |       |       |       |       |
| **Total Assets**                    |       |       |       |       |       |
| Vita                                | ** ** | **$**      | **14,986** |       | $          | 18,382 |   |
| Vita Specialty Foods                | ** ** | **9,865**  |       | 9,504      |       |
|                                |       |       |       |       |       |
| Total Assets                        | ** ** | **$**      | **24,851** |       | $          | 27,886 |   |
|                                |       |       |       |       |       |
| **Net Sales**                       |       |       |       |       |       |
| Vita                                | ** ** | **$**      | **10,766** |       | $          | 11,096 |   |
| Vita Specialty Foods                | ** ** | **10,486** |       | 12,174     |       |
|                                |       |       |       |       |       |
| Total Net Sales                     | ** ** | **$**      | **21,252** |       | $          | 23,270 |   |
|                                |       |       |       |       |       |
| **Operating Profit**                |       |       |       |       |       |
| Vita                                | ** ** | **$**      | **(679**   | **)**      | $          | (951 | ) |
| Vita Specialty Foods                | ** ** | **785**    | ** ** | 677        |       |
|                                |       |       | ** ** |       |       |
| Total Operating Profit              | ** ** | **$**      | **106**    | ** ** | $          | (274 | ) |
|                                |       |       | ** ** |       |       |
| **Net Income (Loss)**               |       |       | ** ** |       |       |
| Vita                                | ** ** | **$**      | **(571**   | **)**      | $          | (668 | ) |
| Vita Specialty Foods                | ** ** | **365**    |       | 290        |       |
|                                |       |       |       |       |       |
| Total Net Income                    | ** ** | **$**      | **(206**   | )          | $          | (378 | ) |
|                                |       |       |       |       |       |
| **Depreciation and Amortization**   |       |       |       |       |       |
| Vita                                | ** ** | **$**      | **249**    |       | $          | 246 |   |
| Vita Specialty Foods                | ** ** | **222**    |       | 226        |       |
|                                |       |       |       |       |       |
| Total Depreciation and Amortization | ** ** | **$**      | **471**    |       | $          | 472 |   |
|                                |       |       |       |       |       |
| **Capital Expenditures**            |       |       |       |       |       |
| Vita                                | ** ** | **$**      | **49**     |       | $          | 511 |   |
| Vita Specialty Foods                | ** ** | **304**    |       | 262        |       |
|                                |       |       |       |       |       |
| Total Capital Expenditures          | ** ** | **$**      | **353**    |       | $          | 773 |   |

 

(a) Prior to a fourth quarter 2004 impairmentcharge.

 

8

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**Accounting for Stock BasedCompensation**

 

The Company applies the intrinsic value method under APB Opinion 25 andrelated interpretations in accounting for its plans.  No compensation cost has been recognized forits 1996 Stock Option Plan, 1996 Stock Option Plan for Non-Employee Directorsand 1996 Employee Stock Purchase Plan, as the market price of the stock did notexceed the exercise price of the options granted on the measurement date.

 

**The Company is required to provide pro forma disclosures ofnet income (loss) and earnings (loss) per share as if the Company adopted thefair value method to account for stock based compensation.  The weighted-average, grant date fair valueof stock options granted to employees during the period and theweighted-average significant assumptions used to determine those fair values,using a modified Black-Scholes option pricing model, and the pro forma effecton earnings (loss) of the fair value accounting for stock options are asfollows:**

** **

** **
| ** **                                       | ** ** | **Three Months** | ** ** | **Six Months** | ** ** |
|--------------------------------------------------|------------|------------------|------------|----------------|------------|
| **For the Period Ending June 30,**               | ** ** | **2005**         | ** ** | **2004**       | ** ** | **2005** | ** ** | **2004** | ** ** |
| Weighted average fair value per options  granted |       | $                | 1.48       |           | $          | 2.73 |   | $ | 1.77 |   | $ | 4.42 |   |
|                                             |       |             |       |           |       |   |   |   |   |
| Significant assumptions (weighted average)       |       |             |       |           |       |   |   |   |   |
| Risk-free interest rate at grant date            |       | 4.1              | %          | 4.7            | %          | 4.1 | % | 4.1 | % |
| Expected stock price volatility                  |       | 0.67             |       | 0.70           |       | 0.67 |   | 0.70 |   |
| Expected dividend payout                         |       | —           |       | —         |       | — |   | — |   |
| Expected option life (years)                     |       | 5                |       | 5              |       | 5 |   | 5 |   |
|                                             |       |             |       |           |       |   |   |   |   |
| Net Income (Loss)                                |       |             |       |           |       |   |   |   |   |
| As reported                                      |       | $                | 50,955     |           | $          | (339,884 | ) | $ | (206,102 | ) | $ | (378,286 | ) |
| Deduct total stock based compensation  expense   |       |             |       |           |       |   |   |   |   |
| determined under the fair value method           |       | (17,760          | )          | (8,190         | )          | (45,165 | ) | (132,660 | ) |
| Pro forma                                        |       | $                | 33,195     |           | $          | (348,074 | ) | $ | (251,267 | ) | $ | (510,946 | ) |
|                                             |       |             |       |           |       |   |   |   |   |
| Basic loss per share                             |       |             |       |           |       |   |   |   |   |
| As reported                                      |       | $                | 0.01       |           | $          | (0.09 | ) | $ | (0.05 | ) | $ | (0.10 | ) |
| Pro forma                                        |       | $                | 0.01       |           | $          | (0.09 | ) | $ | (0.07 | ) | $ | (0.13 | ) |
|                                             |       |             |       |           |       |   |   |   |   |
| Diluted loss per share                           |       |             |       |           |       |   |   |   |   |
| As reported                                      |       | $                | 0.01       |           | $          | (0.09 | ) | $ | (0.05 | ) | $ | (0.10 | ) |
| Pro forma                                        |       | $                | 0.01       |           | $          | (0.09 | ) | $ | (0.07 | ) | $ | (0.13 | ) |

 

9

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### **Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations**

 

***Comparison of the Three Months Ended June 30,2005 and June 30, 2004***

 

***Revenues.***  Net sales for the three months ended June 30,2005 were $10,232,000, compared to $10,658,000 for the same period in 2004, adecrease of $426,000 or 4.0%.  Thisdecrease is attributable to Vita Specialty Foods, which experienced a decreaseof $721,000 led by a decline of $413,000 in its line of salad dressingproducts; additional decreases were also reflected in the honey/molassesproduct line of $249,000, in the resale product line of $120,000 and in thesauce line of $61,000 offset partially by lower returns and allowances of$122,000.  A significant part of thissales decrease was due to a large, first time purchase of a specific saladdressing product by one customer during 2004, not repeated during 2005 anddownward market pressure on honey selling prices.  Partially offsetting the decrease in netsales from Vita Specialty Foods was an increase of $295,000, or 6.6%, for theVita Seafood business, which was primarily the result of a $302,000 or 13.4%increase in gross sales of salmon products. This increase in salmon sales was primarily due to a sales mix shifttowards higher margin manufactured products. Herring, salmon, and specialty product sales represented 44%, 51% and 5%respectively, of the Vita Seafood’s total gross sales during the current periodcompared to 48%, 47%, and 5%, during the prior year quarter.  Salad dressings/sauces, honey products andspecialty items, represented 77%, 22% and 1%, respectively, of Vita SpecialtyFoods current quarter total gross sales compared to 75%, 23% and 2% during theprior year quarter.

 

***Gross Margin.***  Gross margin for the three months ended June30, 2005 was $3,553,000, compared to $3,109,000 for the same period in 2004, anincrease of $444,000 or 14.3%.  The VitaSeafood business accounted for $479,000 of this increase and a decline of$35,000 was attributable to the Vita Specialty Foods business.  As a percent of net sales, gross margintotaled 34.7%, up from 29.2% for the same period in 2004.  Despite the lower sales, gross margin for theVita Specialty Foods business, as a percentage of net sales, increased to 41.7%from 37.5% for the same period in 2004. This improvement was largely a result of continued production spendingefficiencies, partially resulting from the high level of production activityrequired to fulfill a large customer order scheduled to be shipped in August2005, the reduction in sales deductions and discontinuance of the low marginpackaging supply business.  For the VitaSeafood business, gross margin as a percent of net sales also increased, risingsharply to 26.7% for the current quarter versus 17.7% for the same period in2004.  This improvement was attributableto the combination of several factors including a sales mix shift away from thelower margin resale salmon products in favor of the higher margin manufactureditems, a selling price increase in the herring product line, lower salesdeductions and some reductions in salmon material purchase costs.

 

***Operating Expenses****.*  Selling, marketing,distribution and administrative expenses for the three months ended June 30,2005 were $3,229,000, compared to $3,500,000 for the same period in 2004, adecrease of $271,000 or 7.7%.  Theseexpenses represented 31.6% of sales for the quarter ending June 30, 2005compared to 32.8% for the same period in 2004. The decreased dollar amount of these expenses was the result of a$228,000 decrease in selling, marketing and distribution expenses and a $43,000decrease in administrative expenses.  Theimprovement in selling, marketing and distribution expense was the result of a$179,000 improvement for Vita Specialty Foods and a $49,000 improvement forVita Seafood.  This spending reductionincluded $115,000 in marketing and promotion expenses plus another $98,000 attributableto distribution expense, primarily freight-out costs, reflecting the VitaSpecialty Foods concentration of sales in favor of larger volumecustomers.  The improvement inadministrative spending was largely a reflection of lower legal and professionalexpenses and office supplies.

 

***Interest Expense.***  Interest expense for the three months endedJune 30, 2005 was $238,000, compared to $176,000 for the same period in 2004,an increase of $62,000 or 35.2%.  Duringthis period, the average debt increased to $16,000,000 from $15,900,000 or 0.6%compared to the second quarter of the prior year, thus the increase in interestexpense was primarily attributable to higher effective interest rates under theCompany’s Loan Agreement.

 

***Income Taxes.*** The Company recognized an expense of $35,000for the quarter ending June 30, 2005 and a benefit of $227,000 for the quarterending June 30, 2004.  The expenserepresents approximately 40% of pretax profit for the period ending June 30,2005 and the benefit represents approximately 40% of the pre-tax loss for thesame period in 2004.

 

***Net Income.***  Reflecting the operating results describedabove, the net income for the three months ended June 30, 2005 totaled $51,000or $0.01 per share on both a basic and fully diluted basis.  This contrasts to a net loss of $(340,000)for the same period in 2004 or $(0.09) per share on both bases, thusrepresenting an improvement of $0.10 per share on both a basic and a fullydiluted basis.

 

10

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***Comparison of the Six Months Ended June 30, 2005and June 30, 2004***

 

***Revenues.***  Net sales for the six months ended June 30,2005 were $21,252,000, compared to $23,270,000 for the same period in 2004, adecrease of $2,018,000 or 8.7%.  Of thisdecrease, $1,688,000 is attributable to Vita Specialty Foods, representing areduction of 13.9%, and $330,000 is attributable to Vita Seafood, representinga reduction of 3.0%.  The decrease in theVita Specialty Foods business is a reflection in part, of gross sales of honeyproducts which decreased $914,000 as a result of both a market driven pricereduction and certain 2004 sales of bulk material that were not repeated in2005.  Furthermore, gross sales of saladdressings decreased by $613,000 primarily due to a large first time purchase byone customer during 2004 not recurring in 2005. Additionally, resale and other products decreased by $269,000, largelyas a result of a decision to phase out the resale packaging business.  The sales declines in the Vita SpecialtyFoods product lines were partially offset by a $150,000 sales deductionimprovement.  Added to the decrease fromVita Specialty Foods was a decline of $330,000, or 3.0%, for the Vita Seafoodbusiness, which was primarily the result of a $489,000 or 8.0% decrease ingross sales of herring products as a result of lower demand, net of a $158,000or 18.8% improvement in sales deductions. Herring, salmon, and specialty product sales represented 49%, 46% and5%, respectively, of Vita Seafood’s total gross sales during the current periodcompared to 51%, 45%, and 4%, respectively, during the previous year.  Salad dressings/sauces, honey products andspecialty items, represented 74%, 25% and 1%, respectively, of the VitaSpecialty Foods total gross sales during the current period compared to 70%,29%, and 1%, respectively, during the previous year.

 

***Gross Margin.***  Gross margin for the six months ended June30, 2005 was $6,877,000, compared to $6,944,000 for the same period in 2004, adecrease of $67,000 or 1.0%.  The VitaSpecialty Foods business accounted for a decrease of $244,000; however anincrease of $177,000 was attributable to the Vita Seafood business.  As a percent of net sales, gross marginincreased to 32.4%, from 29.8% for the same period in 2004.  Despite the sales decrease, gross margin forVita Specialty Foods business, as a percentage of net sales, increased to 39.1%from 35.7% for the same period in 2004, largely as a result of the sales mixshift in favor of the higher margin salad dressing products and away from thelower margin honey products plus the benefit of the lower salesdeductions.  For the Vita Seafoodbusiness, gross margin as a percent of net sales increased to 25.8% for thecurrent year versus 23.4% for the same period in 2004.  This improvement was attributable to the samecombination of factors which resulted in the quarterly improvement but due totiming, not to the same extent.  Thesefactors included a sales mix shift away from the lower margin resale salmonproducts in favor of the higher margin manufactured items, a selling priceincrease in the herring product line, lower sales deductions and somereductions in salmon material purchase costs.

 

***Operating Expenses****.*  Selling, marketing,distribution and administrative expenses for the six months ended June 30, 2005were $6,771,000, compared to $7,218,000 for the same period in 2004, animprovement of $447,000 or 6.2%.  As apercentage of net sales, these expenses were 31.9% compared with 31.0% in 2004.  This reduction in expenses was almostentirely the result of a decrease in the selling, marketing and distributionexpense category with total administrative expenses approximately equal to theprior year.  The improvement in selling,marketing and distribution expense was the result of a $374,000 improvement forVita Specialty Foods plus an improvement of $75,000 for Vita Seafood.  This spending reduction included $230,000attributable to distribution expenses, primarily freight-out costs; $115,000 inmarketing and promotion expenses and $104,000 in selling expenses, largelysalaries.

 

***Interest Expense.***  Interest expense for the six months endedJune 30, 2005 was $449,000, compared to $356,000 for the same period in 2004,an increase of $93,000 or 26.1%.  Duringthe current period, the average debt decreased 1.2% to $15,900,000 compared tothe total for the first half of the prior year of $16,100,000.  Thus, the increase in interest expense wasattributable to higher effective interest rates under the Company’s LoanAgreement.

 

***Income Taxes.*** The Company recognized benefits of $137,000and $252,000, respectively, for the six-month periods ending June 30, 2005 and2004.  These benefits representapproximately 40% of pretax loss for both periods.

 

***Net Loss.***  Reflecting the operating results describedabove, the net loss for the six months ended June 30, 2005 totaled $(206,000)or $(0.05) per share on both a basic and fully diluted basis.  This compares to a net loss of $(378,000) forthe same period in 2004 or $(0.10) per share on both bases, thus representingan improvement of $0.05 per share.

 

11

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**FinancialCondition**

 

At June 30, 2005, the Company had $7,817,000 in working capital, versus$7,676,000 and $7,766,000 at June 30 and December 31, 2004, respectively.  The current ratio at June 30, 2005 was 2.6 to1.0 compared to 2.5 to 1.0 at June 30, 2004 and 2.6 to 1.0 at December 31,2004.  Due to the seasonality of thebusiness, it is typical for a reduction in the Company’s current assets tooccur during the first six months of each year since this period follows thefourth quarter peak of the annual business cycle.  This year, the reduction in current assetstotaled $27,000 as the seasonal net reduction of accounts receivable totaling$1,863,000 was offset by a $1,889,000 increase in inventory as the Company madesignificant purchases of honey in advance of expected price increases.  The net decrease in current liabilities was$79,000, primarily reflecting an $840,000 second quarter payment of currentmaturities of long term obligations in accordance with terms of the VirginiaHoney earnout agreement, net of a $685,000 increase in accounts payable.

 

At June 30, 2005, the Company had $43,000 in cash, a revolving creditfacility of $8,500,000 and term facilities totaling $9,500,000, consisting of a$6,500,000 facility that represents the Company’s long term borrowing and a sixyear $3,000,000 facility that is not currently being utilized.  The revolving loan facility matures July 1,2006 (as amended in June 2005) and the term loan is payable in monthlyinstallments of $54,000 through July 31, 2008, with a balloon payment of$3,368,000 due on August 31, 2008. Amounts outstanding under the revolving facility and the term facilitiesat June 30, 2005 were $8,404,000 and $5,312,000, respectively.  The interest rates on these facilities havebeen determined, subject to adjustment at certain predetermined dates; basedupon the Funded Debt to EBITDA ratio as each such term is defined in the LoanAgreement.  The Loan Agreement containscustomary representations, warranties and covenants (as most recently amendedin June 2005).  At June 30, 2005 andDecember 31, 2004, the Company was in compliance with these (as amended)covenants.  In April 2005, the bankprovided the Company with a temporary overdraft of $800,000 due September 2005(as amended in June 2005).  At that time,the interest rates on the revolving line of credit and the term loan werechanged to prime and prime plus 0.25% respectively.

 

The ratio of long-term debt to totalcapitalization totaled 75% at June 30, 2005 up from 71% at December 31,2004.  The Company believes its financialresources are adequate to fund its needs for the next twelve months.

 

***Cash flows from operating activities.***Net cash provided by operating activities was $916,000 for the six months endedJune 30, 2005, primarily reflecting $1,863,000 contributed from net collectionsof accounts receivable; $788,000 increase in accounts payable and currentliabilities; $114,000 from the net loss adjusted for depreciation,amortization, gain on the sale of an asset and deferred income tax benefit and$44,000 from the reduction of prepaids; all largely offset by an increase ininventory of $1,889,000.  The $916,000net cash provided from operating activities for the current period is$1,121,000 or 55% less than the $2,037,000 provided during the same period in2004.  This decrease was primarilyattributable to the cash used to increase inventory balances which grew$1,346,000 more in the current period of 2005 than in 2004.

 

***Cash flows from investing activities.***Net cash used in investing activities was $389,000 for the six months endedJune 30, 2005, which was $443,000 less than the $832,000 used during the sameperiod of the prior year.  The decreasedcash usage primarily represents lower purchases of machinery and equipment thisyear compared to the prior year. However, the Company anticipates that such lower capital investing willbe only temporary, as several new product and process initiatives are currentlybeing explored by the Company’s new members of operations and marketingmanagement.

 

***Cash flows from financing activities.***Net cash used in financing activities was $540,000 for the six months endedJune 30, 2005, primarily reflecting the $726,000 additional borrowing on therevolving loan, offset by the $443,000 term loan installment payments and the$840,000 earnout payment made in April 2005 under the provisions of theVirginia Honey acquisition agreement which amount had been included in thecurrent portion of long term maturities at December 31, 2004.  The cash thus used in the current yearcontrasts to the $1,281,000 used, primarily to pay down the debt, during thesame period in 2004, a difference of $741,000. The need to borrow cash in the current year is a result of the cash usedin investing activities and scheduled debt pay-downs exceeding the cashprovided by operations as described above.

 

#### **Seasonality**

#### ** **

The Vita segment of the Company’sbusiness is seasonal in nature, primarily resulting from the effect of thetiming of certain holidays on the demand for certain products. Historically,the Company’s sales and profits have been substantially higher in the fourthquarter of each year.

 

12

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**CriticalAccounting Policies and Estimates**

 

The Company’s financial statements reflect theselection and application of accounting policies that require management tomake significant estimates and assumptions. The Company believes that the following are some of the more criticaljudgment areas in the application of its accounting policies that currentlyaffect the Company’s financial condition and results of operations.

 

Preparation of the consolidated financial statementsin accordance with accounting principles generally accepted in the UnitedStates requires management to make estimates and assumptions affecting thereported amounts of assets, liabilities, revenues and expenses and relatedcontingent liabilities.  On an on-goingbasis, the Company evaluates its estimates, including those related torevenues, returns, bad debts, income taxes, contingencies and litigation.  The Company bases its estimates on historicalexperience and on various other assumptions that are believed to be reasonableunder the circumstances.  Actual resultsmay differ from these estimates under different assumptions or conditions.

 

Revenue isrecognized upon shipment of product to customers in fulfillment of customerorders.  In accordance with industrypractices, inventory is sold to customers often with the right to return ordispose if the merchandise is not sold prior to the expiration of its shelflife.  In order to support the Company’sproducts, various marketing programs are offered to customers which reimburse them for a portion or all of theirpromotional activities related to the Company’s products.  The Company regularly reviews and revises,when it deems necessary, estimates of costs to the Company for these marketingand merchandising programs based on estimates of what has been incurred bycustomers.  Actual costs incurred by theCompany may differ significantly if factors such as the level and success ofthe customers’ programs or other conditions differ from expectations.  Sales are reduced by a provision forestimated future returns, disposals and promotional expenses.

 

The Company recognizes deferred income tax assets andliabilities for the expected future tax consequences of temporary differencesbetween the tax basis and financial reporting basis of certain assets andliabilities and certain income tax credit carryforwards.  In estimating future tax consequences, theCompany considers expected future events other than enactments of changes intax laws or rates.  A valuation reserveis recognized based on the evidence available; if it is more likely than notthat some portion or the entire deferred income tax asset will not be realized.

 

The Company assesses the impairment of itsidentifiable intangibles and goodwill whenever events or changes incircumstances indicate that the carrying value may not be recoverable and atleast annually.  Factors the Companyconsiders important, which could trigger an impairment review include thefollowing:

 

•                  Significant underperformance relativeto expected historical or projected future operating results;

 

•                  Significant changes in the manner ofthe Company’s use of the acquired assets or the strategy for the Company’soverall business;

 

•                  Significant negative industry oreconomic trends;

 

•                  Significant decline in the Company’sstock price for a sustained period; and

 

•                  The Company’s market capitalizationrelative to net book value.

 

When the Companydetermines that the carrying value of its intangible assets may not berecoverable based upon the existence of one or more of the above indicators ofimpairment, the Company will review for impairment under the provisions of SFAS142.

 

During the fourth quarters of 2003 and 2002, theCompany completed its annual assessment of impairment regarding the goodwillrecorded as a result of the Virginia Honey acquisition ($6,004,000) and theHalifax acquisition ($2,307,000).  Thoseassessments, supported by independent appraisals of the fair value of VitaSpecialty Foods, did not identify any impairment.  However, the 2004 independent appraisal –made using customary valuation methodologies including discounted cash flowsand fundamental analysis, did reveal impairment issues.  The revised appraisal reflected a decreasedfair value of Vita Specialty Foods, principally caused by the decline inoperating income during 2004.  Thatdecline was primarily a result of a substantial reduction in the sales ofHalifax products – which were down $1,600,000 or 21% in 2004.  Based on the appraised value of VitaSpecialty Foods, the resulting impairment charge of approximately $2,314,000was recorded in the fourth quarter of 2004.

 

13

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#### **Forward-LookingStatements**

 

Certain statements in this report,including statements in “Management’s Discussion and Analysis of FinancialCondition and Results of Operations,” are “forward-looking statements” asdefined by the Federal securities laws. Such statements are based on management’scurrent expectations and involve known and unknown risks and uncertaintieswhich may cause the Company’s actual results, performance or achievements todiffer materially from any results, performance or achievements expressed orimplied in this report. By way of example and not limitation and in noparticular order, known risks and uncertainties include the Company’s futuregrowth and profitability, the potential loss of large customers or accounts,downward product price movements, availability of raw materials and changes inraw material costs, the introduction and success of new products, changes ineconomic and market conditions, integration and management of acquiredbusinesses, the seasonality of Vita’s business, the Company’s ability toattract and retain key personnel, the Company’s ability to maintain itsrelationships with key vendors and retailers, consolidation of the Company’scustomer and supplier base, the potential impact of claims and litigation, theeffects of competition in the Company’s markets and the dietary habits andtrends of the general public.  In lightof these and other risks and uncertainties, the Company makes no representationthat any future results, performance or achievements expressed or implied inthis report will be attained. The Company’s actual results may differmaterially from any results expressed or implied by the forward-lookingstatements, especially when measured on a quarterly basis.

 

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

 

The Company is exposedto interest rate fluctuations, primarily as a result of its $18 million LoanAgreement with interest rates subject to market fluctuations.  The Company does not currently use derivativeinstruments to alter the interest rate characteristics of any of its debt.  The Loan Agreement includes a revolving lineof credit with a bank, which at June 30, 2005 bore interest at the prime rateresulting in a 6.25% rate.  In addition,the Loan Agreement includes two term loan facilities, one of which is active,and which at June 30, 2005 bore interest at the prime rate plus 0.25% resultingin a 6.50% rate.  Through June 2005, theLoan Agreement has been amended to, among other things, set the interest ratesas described above.  A 10% fluctuation ininterest rates would not have a material impact on the Company’s financialstatements.

 

**Item 4.  Controls and Procedures**

 

Under the supervision and with the participation ofthe Company’s management team, the principal executive officer and principalfinancial officer have evaluated the effectiveness of the design and operationof the Company’s disclosure controls and procedures as defined in Rules 13a –15(e) and 15d – 15(e) under the Securities Exchange Act of 1934, as amended(the “Exchange Act”), as of June 30, 2005 and, based on their evaluation, haveconcluded that these controls and procedures are effective.  There were no changes in the Company’sinternal control over financial reporting during the fiscal quarter ended June30, 2005 that has materially affected, or is reasonable likely to materiallyaffect, the Company’s internal control over financial reporting.

 

Disclosure controls and procedures are designed to ensure thatinformation required to be disclosed by the Company in the reports that itfiles or submits under the Exchange Act is recorded, processed, summarized andreported, within the time periods specified in the Securities and ExchangeCommission’s rules and forms.  Disclosurecontrols and procedures include, without limitation, controls and proceduresdesigned to ensure that information required to be disclosed by the Company inthe reports that it files under the Exchange Act is accumulated andcommunicated to the Company’s management, including its principal executiveofficer and principal financial officer, as appropriate to allow timelydecisions regarding required disclosure.

 

It should be noted that any system ofcontrols, however well designed and operated, can provide only reasonable, andnot absolute, assurance that the objectives of the system are met. In addition,the design of any control system is based in part upon certain assumptionsabout the likelihood of future events. Because of these and other inherentlimitations of control systems, there can be no assurance that any design willsucceed in achieving its stated goals under all potential future conditions,regardless of how remote.

 

14

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## **PARTII - OTHER INFORMATION**

## ** **

**Item 4.    Submissionof Matters to a Vote of Security Holders**

 

(a)                                  Thedate of the Company’s Annual Meeting of Stockholders was May 18, 2005.

 

(b) and (c)                 At the AnnualMeeting of Stockholders, the following matters were submitted to a vote of thestockholders with the stated results:

 

(1)                                  Theelection of the following persons as directors of the Company:

 
| **Director**        | ** ** | **Votes For** | ** ** | **Votes Withheld** | ** ** | **Abstained** | ** ** | **Broker Non-Votes** | ** ** |
|---------------------|------------|---------------|------------|--------------------|------------|---------------|------------|----------------------|------------|
|                |       |          |       |               |       |          |       |                 |       |
| Stephen D. Rubin    |       | 3,646,583     |       | 43,897             |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| Clark L. Feldman    |       | 3,680,283     |       | 10,197             |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| Neal Jansen         |       | 3,683,559     |       | 6,921              |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| Michael Horn (*)    |       | 3,683,559     |       | 6,921              |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| Steven A. Rothstein |       | 3,681,159     |       | 9,321              |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| John C. Seramur     |       | 3,683,559     |       | 6,921              |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| Terry W. Hess       |       | 3,679,259     |       | 11,221             |       | —        |       | —               |       |
|                |       |          |       |               |       |          |       |                 |       |
| Joel D. Spungin (*) |       | 3,679,259     |       | 11,221             |       | —        |       | —               |       |

 

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(*) Mr. Horn passed away on July 17, 2005 and Mr. Spungin passed awayon June 9, 2005.

 

(2)                                  Ratificationof the selection of BDO Seidman, LLP as independent accountants of the Companyfor the year ending December 31, 2004

 
| **Votes For** | ** ** | **Against** | ** ** | **Abstained** | ** ** | **Broker Non-Votes** | ** ** |
|---------------|------------|-------------|------------|---------------|------------|----------------------|------------|
|          |       |        |       |          |       |                 |       |
| 3,685,204     |       | 4,200       |       | 1,076         |       | —               |       |

#### **Item 6.  Exhibits**

 

31.1                           PrincipalExecutive Officer Certification pursuant to Section 302 of the Sarbanes-OxleyAct of 2002.

 

31.2                           PrincipalFinancial Officer Certification pursuant to Section 302 of the Sarbanes-OxleyAct of 2002.

 

32.1                           PrincipalExecutive Officer Certification pursuant to Section 906 of the Sarbanes-OxleyAct of 2002.

 

32.2                           PrincipalFinancial Officer Certification pursuant to Section 906 of the Sarbanes-OxleyAct of 2002.

 

15

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## **SIGNATURES**

## ** **

Pursuant tothe requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|   |            | **VITA  FOOD PRODUCTS, INC.**                       |                            |
|--------|-----------------|-----------------------------------------------------|---------------------------------|
|   |            |                                                |                            |   |
| Date:  | August 12, 2005 | By:                                                 | /s/ Stephen  D. Rubin           |   |
|   |            |                                                | Stephen D.  Rubin               |   |
|   |            |                                                | *President*                     |   |
|   |            |                                                | (*Principal Executive Officer*) |   |
|   |            |                                                |                            |   |
|   |            |                                                |                            |   |
| Date:  | August 12, 2005 | By:                                                 | /s/ Clifford  K. Bolen          |   |
|   |            |                                                | Clifford K.  Bolen              |   |
|   |            | *Senior**Vice President; Chief  Operating Officer;* |                            |
|   |            | *Chief  Financial Officer*                          |                            |
|   |            | (*Principal Financial and Accounting Officer*)      |                            |
|        |                 |                                                     |                                 |  |  |  |  |

 

16

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**ExhibitIndex**

 
| **Number** | ** ** | **Exhibit Title**                                                                                      |
|------------|------------|--------------------------------------------------------------------------------------------------------|
|       |       |                                                                                                   |
| 31.1       |       | Principal  Executive Officer Certification pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002. |
|       |       |                                                                                                   |
| 31.2       |       | Principal Financial Officer Certification pursuant to Section 302 of  the Sarbanes-Oxley Act of 2002.  |
|       |       |                                                                                                   |
| 32.1       |       | Principal  Executive Officer Certification pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002. |
|       |       |                                                                                                   |
| 32.2       |       | Principal Financial Officer Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.   |

 

17

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