**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

 
|                                                                                                                                           |       |                                                                                           |
|-------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------|
| **x**                                                                                                                                     | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE   SECURITIES EXCHANGE ACT OF 1934** |
|                                                                                                                                      |       |                                                                                           |
| **For the  Quarterly Period Ended March 31, 2007**                                                                                        |
|                                                                                                                                      |       |                                                                                           |
| **o**                                                                                                                                     | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|                                                                                                                                      |       |                                                                                           |
| **For the  Transition Period From                    to** |

 

**Commission File Number 1-12599**

**VITA FOOD PRODUCTS, INC.**

(Exact name of registrant as specified in its charter)

| **Nevada**                       |   | **36-3171548**       |
|----------------------------------|--------|----------------------|
| (State or other  jurisdiction of |   | (I.R.S. Employer     |
| incorporation or  organization)  |   | Identification  No.) |

 
| **2222 West Lake Street, Chicago, Illinois     60612**   |
|-----------------------------------------------------------------------------------|
| (Address of  principal executive offices)     (Zip Code) |

 

Registrant’s telephone number, including areacode:   **(312)738-4500**

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days.   Yes   x     No   o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. (See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act).

(Check one):

| Large accelerated filer  o |   | Accelerated  filer  o |   | Non-accelerated  filer  x |
|--------------------------------------|--------|---------------------------------|--------|-------------------------------------|

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

   Yes   o     No   x

The number of shares outstanding of registrant’s commonstock as of April 30, 2007 was 4,935,247.

 

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**VITA FOOD PRODUCTS, INC.**

**FORM 10-Q**

## **For the Quarter Ended March 31, 2007**

## **INDEX**

 
| **PART I.**   | ** ** | **FINANCIAL  INFORMATION**                                                                  | ** ** | ** **                                                                                      |   | **Page** |
|---------------|------------|---------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|--------|----------|
|          |       |                                                                                        |       |                                                                                            |   |     |
| Item  1.      |       | Financial  Statements                                                                       |       |                                                                                            |   |     |
|          |       |                                                                                        |       |                                                                                            |   |     |
|          |       | a)                                                                                          |       | Consolidated  Balance Sheets as of March 31, 2007 and December 31, 2006                         |   | 3        |
|          |       |                                                                                        |       |                                                                                            |   |     |
|          |       | b)                                                                                          |       | Consolidated Statements of Operations for the Three  Months Ended  March 31, 2007 and 2006      |   | 4        |
|          |       |                                                                                        |       |                                                                                            |   |     |
|          |       | c)                                                                                          |       | Consolidated Statement of Shareholders’ Equity for the  Three Months  Ended March 31, 2007 |   | 4        |
|          |       |                                                                                        |       |                                                                                            |   |     |
|          |       | d)                                                                                          |       | Consolidated Statements of Cash Flows for the Three  Months Ended   March 31, 2007 and 2006     |   | 5        |
|          |       |                                                                                        |       |                                                                                            |   |     |
|          |       | e)                                                                                          |       | Notes to Consolidated Financial Statements                                                      |   | 6        |
|          |       |                                                                                        |       |                                                                                            |
| Item 2.       |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations |       | 9                                                                                               |
|          |       |                                                                                        |       |                                                                                            |
| Item 3.       |       | Quantitative and Qualitative Disclosures About Market  Risk                                 |       | 13                                                                                              |
|          |       |                                                                                        |       |                                                                                            |
| Item 4.       |       | Controls and Procedures                                                                     |       | 14                                                                                              |
| ** **    | ** ** | ** **                                                                                  |       |                                                                                            |
| **PART  II.** | ** ** | **OTHER  INFORMATION**                                                                      |       |                                                                                            |
|          |       |                                                                                        |       |                                                                                            |
| Item 1A.      |       | Risk Factors                                                                                |       | 14                                                                                              |
|          |       |                                                                                        |       |                                                                                            |
| Item 6.       |       | Exhibits                                                                                    |       | 14                                                                                              |
|          |       |                                                                                        |       |                                                                                            |   |     |
| SIGNATURES    |       |                                                                                        |       |                                                                                            |   | 15       |
|               |            |                                                                                             |            |                                                                                                 |        |          |  |  |

 

2

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**PART 1. FINANCIALSTATEMENTS**

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

**And  Subsidiary** |
|---------------------------------|------------|----------------------------------------------------|

 
| ** **                                                                                                                                                                          | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                          | ** ** | **2007**           | ** ** | **2006**              | ** ** |
| **ASSETS**                                                                                                                                                                          | ** ** | ** **         | ** ** | ** **            | ** ** |
| Current Assets                                                                                                                                                                      |       |               |       |                  |       |
| Cash                                                                                                                                                                                |       | $                  | 12,655     |                  | $          | 54,194 |   |
| Accounts  receivable-trade, net of allowance for discounts, returns, and doubtful  accounts of $1,115,481 in 2007 and $947,729 in 2006                                              |       | 4,901,535          |       | 6,468,669             |       |
| Inventories                                                                                                                                                                         |       |               |       |                  |       |
| Raw material and  supplies                                                                                                                                                          |       | 4,628,599          |       | 5,562,243             |       |
| Work in process                                                                                                                                                                     |       | 187,249            |       | 170,167               |       |
| Finished goods                                                                                                                                                                      |       | 2,915,119          |       | 2,178,575             |       |
| Prepaid expenses  and other current assets                                                                                                                                          |       | 329,662            |       | 446,516               |       |
| Deferred income  taxes                                                                                                                                                              |       | 491,427            |       | 610,714               |       |
| Total Current Assets                                                                                                                                                                |       | 13,466,246         |       | 15,491,078            |       |
|                                                                                                                                                                                |       |               |       |                  |       |
| Property, Plant and  Equipment                                                                                                                                                      |       |               |       |                  |       |
| Land                                                                                                                                                                                |       | 35,000             |       | 35,000                |       |
| Building and  improvements                                                                                                                                                          |       | 3,106,839          |       | 3,105,339             |       |
| Leasehold  improvements                                                                                                                                                             |       | 582,620            |       | 582,620               |       |
| Machinery and  office equipment                                                                                                                                                     |       | 12,030,588         |       | 11,970,640            |       |
|                                                                                                                                                                                |       | 15,755,047         |       | 15,693,599            |       |
| Less accumulated  depreciation and amortization                                                                                                                                     |       | (10,173,075        | )          | (9,950,781            | )          |
| Net Property, Plant and  Equipment                                                                                                                                                  |       | 5,581,972          |       | 5,742,818             |       |
|                                                                                                                                                                                |       |               |       |                  |       |
| Goodwill                                                                                                                                                                            |       | 5,571,012          |       | 5,571,012             |       |
| Other assets                                                                                                                                                                        |       | 291,478            |       | 403,572               |       |
| Deferred income taxes                                                                                                                                                               |       | 325,304            |       | 325,304               |       |
| Total Assets                                                                                                                                                                        |       | $                  | 25,236,012 |                  | $          | 27,533,784 |   |
| **LIABILITIES AND SHAREHOLDERS'  EQUITY**                                                                                                                                           | ** ** | ** **         | ** ** | ** **            | ** ** |
| Current Liabilities                                                                                                                                                                 |       |               |       |                  |       |
| Current  maturities of long-term obligations                                                                                                                                        |       | $                  | 1,305,123  |                  | $          | 1,513,783 |   |
| Accounts payable                                                                                                                                                                    |       | 5,936,365          |       | 6,520,166             |       |
| Accrued expenses                                                                                                                                                                    |       | 1,351,392          |       | 1,260,308             |       |
| Total Current  Liabilities                                                                                                                                                          |       | 8,592,880          |       | 9,294,257             |       |
|                                                                                                                                                                                |       |               |       |                  |       |
| Long term Obligations,  Less Current Maturities                                                                                                                                     |       | 12,594,196         |       | 14,373,490            |       |
|                                                                                                                                                                                |       |               |       |                  |       |
| 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 4,941,763 shares in 2007 and 2006 |       | 49,417             |       | 49,417                |       |
| Treasury stock,  at cost 6,516 shares                                                                                                                                               |       | (50,043            | )          | (50,043               | )          |
| Additional  paid-in capital                                                                                                                                                         |       | 6,355,230          |       | 6,357,093             |       |
| Accumulated  deficit                                                                                                                                                                |       | (2,305,668         | )          | (2,490,430            | )          |
| Total Shareholders'  Equity                                                                                                                                                         |       | 4,048,936          |       | 3,866,037             |       |
| Total Liabilities and  Shareholders' Equity                                                                                                                                         |       | $                  | 25,236,012 |                  | $          | 27,533,784 |   |

 

See accompanying notes to consolidated financialstatements.

** **

3

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| **Consolidated Statements of Operations** | ** ** | **Vita  Food Products, Inc**

**And  Subsidiary.** |
|-------------------------------------------|------------|----------------------------------------------------|

 
| ** **                                  | ** ** | **For the three months  ended** | ** ** |
|---------------------------------------------|------------|---------------------------------|------------|
| ** **                                  | ** ** | **March 31,**                   | ** ** |
| ** **                                  | ** ** | **2007**                        | ** ** | **2006** | ** ** |
| Net Sales                                   |       | $                               | 12,774,021 |   | $ | 12,788,448 |   |
| Cost of Goods Sold                          |       | 8,812,710                       |       | 8,892,006 |   |
| Gross Margin                                |       | 3,961,311                       |       | 3,896,442 |   |
|                                        |       |                            |       |   |   |
| Selling and  Administrative Expenses        |       |                            |       |   |   |
| Selling,  Marketing and Distribution        |       | 2,203,395                       |       | 2,325,363 |   |
| Administrative                              |       | 1,129,078                       |       | 1,151,569 |   |
| Total Selling  and Administrative Expenses  |       | 3,332,473                       |       | 3,476,932 |   |
| Operating Profit                            |       | 628,838                         |       | 419,510 |   |
|                                        |       |                            |       |   |   |
| Interest Expense                            |       | 323,075                         |       | 325,715 |   |
| Income Before Income  Taxes                 |       | 305,763                         |       | 93,795 |   |
| Income Tax Expense                          |       | 121,000                         |       | 37,000 |   |
| Net Income                                  |       | $                               | 184,763    |   | $ | 56,795 |   |
| Basic Earnings Per  Share                   |       | $                               | 0.04       |   | $ | 0.01 |   |
| Weighted Average Common  Shares Outstanding |       | 4,935,247                       |       | 3,995,044 |   |
|                                        |       |                            |       |   |   |
| Diluted Earnings Per  Share                 |       | $                               | 0.04       |   | $ | 0.01 |   |
| Weighted Average Common Shares Outstanding  |       | 4,936,477                       |       | 4,016,193 |   |

 
| **Consolidated Statement of  Shareholders' Equity****** | ** ** | **Vita  Food Products, Inc**

**And  Subsidiary.** |
|---------------------------------------------------------|------------|----------------------------------------------------|

** **
| ** **                          | ** ** | ** **       | ** ** | ** **   | ** ** | ** **  | ** ** | **Additional** | ** ** | ** **   | ** ** | ** **  | ** ** |
|-------------------------------------|------------|------------------|------------|--------------|------------|-------------|------------|----------------|------------|--------------|------------|-------------|------------|
| ** **                          | ** ** | **Common Stock** | ** ** | **Treasury** | ** ** | **Paid-in** | ** ** | **Retained**   | ** ** | ** **   | ** ** |
| ** **                          | ** ** | **Shares**       | ** ** | **Amount**   | ** ** | **Stock**   | ** ** | **Capital**    | ** ** | **Earnings** | ** ** | **Total**   | ** ** |
| Balance, at January 1,  2007        |       | 4,941,763        |       | $            | 49,417     |        | ($50,043   | )              | $          | 6,357,093    |       | ($2,490,430 | )          | $ | 3,866,037 |   |
|                                |       |             |       |         |       |        |       |           |       |         |       |        |       |
| Stock - based  compensation benefit |       | —           |       | —       |       | —      |       | (1,864         | )          | —       |       | (1,864      | )          |
|                                |       |             |       |         |       |        |       |           |       |         |       |        |       |
| Net income                          |       | —           |       | —       |       | —      |       | —         |       | 184,763      |       | 184,763     |       |
| Balance, at March 31, 2007          |       | 4,941,763        |       | $            | 49,417     |        | ($50,043   | )              | $          | 6,355,230    |       | ($2,305,668 | )          | $ | 4,048,936 |   |

 

See accompanying notes to consolidated financial statements.

4

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

** **
| ** **                                                                      | ** ** | **For the Three months  ended** | ** ** |
|---------------------------------------------------------------------------------|------------|---------------------------------|------------|
| ** **                                                                      | ** ** | **March 31,**                   | ** ** |
| ** **                                                                      | ** ** | **2007**                        | ** ** | **2006** | ** ** |
| **Cash Flows From Operating  Activities**                                       | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Net income                                                                      |       | $                               | 184,763    |   | $ | 56,795 |   |
| Adjustments to  reconcile net loss to net cash provided by operating activities |       |                            |       |   |   |
| Depreciation and  amortization                                                  |       | 233,591                         |       | 227,376 |   |
| Deferred income  tax provision                                                  |       | 121,000                         |       | 36,998 |   |
| Non-cash  stock-based compensation expense (benefit)                            |       | (1,864                          | )          | 4,800 |   |
| Gain on sale of  asset                                                          |       | (4,000                          | )          | — |   |
| Changes in  assets and liabilities:                                             |       |                            |       |   |   |
| Accounts  receivable                                                            |       | 1,567,134                       |       | 256,018 |   |
| Inventories                                                                     |       | 180,018                         |       | 100,831 |   |
| Prepaid expenses  and other current assets                                      |       | 115,141                         |       | (43,832 | ) |
| Income taxes  receivable                                                        |       | —                          |       | 268,427 |   |
| Accounts payable                                                                |       | (583,801                        | )          | 155,570 |   |
| Accrued expenses  and other long term obligations                               |       | (133,103                        | )          | (81,998 | ) |
| Net cash  provided by operating activities                                      |       | 1,678,879                       |       | 980,985 |   |
| ** **                                                                      | ** ** | ** **                      | ** ** | ** ** | ** ** |
| **Cash Flows From Investing  Activities**                                       | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Capital  expenditures                                                           |       | (61,448                         | )          | (261,959 | ) |
| Proceeds from  sale of fixed asset                                              |       | 4,000                           |       | — |   |
| Change in other  assets                                                         |       | 100,797                         |       | (7,226 | ) |
| Net cash  provided by (used in) investing activities                            |       | 43,348                          |       | (269,185 | ) |
| ** **                                                                      | ** ** | ** **                      | ** ** | ** ** | ** ** |
| **Cash Flows From Financing  Activities**                                       | ** ** | ** **                      | ** ** | ** ** | ** ** |
| Proceeds from  issuance of stock and warrants                                   |       | —                          |       | 2,373,851 |   |
| Net payments  under revolving loan facility                                     |       | (1,448,740                      | )          | (2,765,473 | ) |
| Payments on term  loan facility                                                 |       | (315,026                        | )          | (287,221 | ) |
| Net cash used in  financing activities                                          |       | (1,763,766                      | )          | (678,843 | ) |
| Net increase (decrease)  in cash                                                |       | (41,539                         | )          | 32,957 |   |
|                                                                            |       |                            |       |   |   |
| Cash, at beginning of  period                                                   |       | 54,194                          |       | 25,133 |   |
| Cash, at end of period                                                          |       | $                               | 12,655     |   | $ | 58,090 |   |
| Supplemental Disclosure  of Cash Flow Information                               |       |                            |       |   |   |
| Cash paid for  interest                                                         |       | $                               | 292,802    |   | $ | 337,000 |   |
| Income taxes (received)  paid, net                                              |       | $                               | 1,713      |   | ($268,427 | ) |

 

 

See accompanying notes to consolidated financial statements.

5

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## **Vita Food Products, Inc. and Subsidiary**

## **Notes to Consolidated Financial Statements**

**(Unaudited)**

#### **Basis of Presentation**

Inthe opinion of management, the accompanying balance sheets and related interimstatements of operations, cash flows, and shareholders’ equity include alladjustments, consisting only of normal recurring items necessary for their fairpresentation in conformity with U.S. generally accepted accountingprinciples.  Preparing financialstatements requires management to make estimates and assumptions that affectthe reported amounts of assets, liabilities, revenue, and expenses.  Examples include provisions for returns,deductions, bad debts, and length of building and equipment lives.  Actual results may differ from theseestimates.  Interim results are notnecessarily indicative of results for a full year. The information included inthis Form 10-Q should be read in conjunction with Management’s Discussion andAnalysis of Financial Condition and Results of Operations and financialstatements and notes thereto included in the Form 10-K for the fiscal yearended December 31, 2006 of Vita Food Products, Inc.  (“Vita Seafood”) together with its whollyowned subsidiary, Vita Specialty Foods, Inc. (“Vita Specialty Foods”),hereinafter collectively referred to as the “Company”.

Forthe first quarters ended March 31, 2007 and 2006, diluted earnings per sharecomputations exclude 1,301,600 and 1,277,600 shares, respectively, issuableupon exercise of stock options and warrants because the assumed exercise ofthese options and warrants would be anti-dilutive.

**Principles of Consolidation**

The consolidatedfinancial statements include the accounts of Vita Seafood and VSF.  VSF includes the now integrated results ofVirginia Honey Company, Inc. (“Virginia Honey”) acquired in 2001 and TheHalifax Group, Inc. (“Halifax”), acquired in 2002.  All significant intercompany transactions andbalances have been eliminated.

##### **RevenueRecognition and Merchandise Returns**

# Revenue is recognized upon the passing of title to the customers, whichoccurs upon shipment of product to customers, including brokers, in fulfillmentof customer orders.  In order to supportthe Company’s products, various marketing programs are offered to customers,who reimburse them for a portion, or all, of their promotional activitiesrelated to the Company’s products.  TheCompany regularly reviews and revises, when it deems necessary, estimates ofcosts to the Company for these marketing and merchandising programs based onestimates of what has been incurred by customers.  Actual costs incurred by the Company maydiffer significantly if factors such as the level and success of the customers’programs or other conditions differ from expectations.  Sales are reduced by a provision forestimated future returns, disposals and promotional expense.

The Vita Seafood Segment guarantees the sale ofmost of its products sold in supermarket chains and wholesale clubs (“Supermarkets”),excluding warehouse clubs, which sales represent approximately 76% of thatsegment’s sales. This guarantee helps ensure that consumers receive freshproducts. Under the guarantee, the majority of customers are issued anallowance off-invoice to cover products not sold before the expiration date.Other  customers with product not sold beforethe expiration date have the right to return unsold product to the Companythrough its food brokers or dispose of the unsold product themselves or througha food distributor. A credit is then issued to the Supermarket or fooddistributor. The Company provides a reserve that is recorded concurrently withthe sale.  The Company believes, based onits historical return rates, which have been fairly consistent over the pastseveral years, that this reserve is adequate to recognize the cost of allforeseeable future product return credits associated with previously recognizedrevenues.

OnFebruary 16, 2007, the Company voluntarily recalled certain products becausethe labels did not disclose that the products contained a flavor ingredientderived from milk.  No illnesses oradverse reactions have been reported to date in connection with this labeldisclosure issue.  Existing procedureshave been reviewed and corrected where necessary.  The recall resulted in the establishment of areserve of approximately $444,000 in the fourth quarter of 2006 of whichapproximately $61,000 was paid through March 31, 2007.

6

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**Earn OutProvisions Under Acquisition Agreement**

Pursuantto the Company’s acquisitions of Virginia Honey and Halifax in 2001 and 2002,respectively, the previous owners of those businesses were subject to earn outprovisions that have resulted in additional payments by the Company for theacquired businesses.  As amended, theearn out provisions for Terry Hess, the previous owner of Virginia Honey, haveresulted in an additional amount of $840,000 paid to Mr. Hess in April 2005based on specific Vita Specialty Foods operating results from January 1, 2001to December 31, 2002.  In addition, asecond earn out payment to Mr. Hess in the amount of $700,000 was paid in April2006 based on the operating results of Vita Specialty Foods for the period fromJanuary 1, 2003 to December 31, 2005. Provisions for a third earnout payment were cancelled as describedbelow.

EffectiveDecember 2006, the Company entered into certain agreements (the “HessAgreements”) with Mr. Hess, who had resigned as Vice Chairman and a member ofthe Company’s Board of Directors effective November 20, 2006 and retired fromhis position as Chief Executive Officer of Vita Specialty Foods effectiveAugust 25, 2006.  The Hess Agreementsinclude (i) an Earnout Agreement,   (ii)a Termination Agreement and (iii) first amendments to the leases betweenVirginia Honey and an affiliate of Mr. Hess with respect to the Killer BeePackaging Plant located in Martinsburg, West Virginia and the facility locatedin Berryville, Virginia (the “Lease Amendments”).

TheEarnout Agreement provides that all earnouts under the Stock Purchase Agreementdated June 29, 2001, as amended, between the parties (the “Stock PurchaseAgreement”) pursuant to which the Company purchased the stock of Virginia Honeyfrom Mr. Hess are satisfied in full and that no further amounts are owed by theCompany to Mr. Hess.  The EarnoutAgreement also provides for the release of the shares of Virginia Honey’scapital stock from the Company’s pledge to Mr. Hess to secure the earn outpayments under the Stock Purchase Agreement. The Earnout Agreement includes mutual non-disparagement provisions andreleases between the Company and Virginia Honey, on the one hand, and Mr. Hess,on the other, except for the performance of obligations under the HessAgreements and the Stock Purchase Agreement.

TheTermination Agreement formalizes the termination of Mr. Hess’ EmploymentAgreement with the Company, including reaffirming Mr. Hess’ five-yearnon-competition agreement with the Company.  Pursuant to the Lease Amendments, the Company has given up its option topurchase the Berryville, Virginia and Martinsburg, West Virginia propertiesowned by Mr. Hess’ affiliate.  Inaddition, the Lease Amendments provide the Company with an option to terminatethe Berryville lease upon 60 days notice until December 31, 2007, which theCompany exercised on February 26, 2007 to be effective April 30, 2007, and anoption to terminate the Martinsburg lease upon 12 months notice at the end offive and nine years from the date of the applicable Amendment.  In connection with these agreements, Mr. Hessalso resigned as a director and officer of the Company and each of its subsidiaries.

#### **Bank Loan Agreement**

OnSeptember 8, 2003, the Company entered into a loan agreement with a bank (the “LoanAgreement”) and paid off its existing credit facility with initial borrowingsunder this new Loan Agreement.  The LoanAgreement was amended several times since then to, among other things, extendthe maturity dates of the revolver, change available borrowings and amendfinancial covenants.  As of the April 13,2007 amendment, the Loan Agreement provides for a $9,500,000 revolver which isscheduled to terminate April 1, 2008; a $7,750,000 Term A Loan due in monthlyinstallments of $80,000 through July 31, 2008 with a balloon payment of$3,682,000 due on August 31, 2008; a $150,000 capital expenditure Term B Loandue in monthly installments of $2,500 from August 2006 through May 31, 2010 andthe remainder due on June 30, 2010; and a $1,000,000 Term C Loan due April 1,2008.  Outstanding borrowings under theLoan Agreement are secured by substantially all assets of the Company.

Interestunder each piece of the amended Loan Agreement is at a floating rate per annumequal to the prime rate plus 0.5%, other than the $1,000,000 Term C Loan whichbears an interest rate of prime plus 2.0%. The prime rate was 8.25% as of March 31, 2007.

TheLoan Agreement imposes certain restrictions on the Company, including itsability to complete significant asset sales, merge or acquire businesses andpay dividends.  Additionally, the Companyhad been required to meet certain financial covenants at each quarter end duringthe term of the Loan Agreement, including a Minimum Tangible Net Worth, aMinimum EBITDA and a Minimum Cash Flow Coverage Leverage ratio, all as definedin the Loan Agreement.  During 2005 and2006, the Company had violated certain of these covenants and had obtainedpermanent waivers from the bank for such violations.  The March 24, 2006 amendment to the LoanAgreement retroactively amended these financial covenants, and, as amended, theCompany was in compliance with those covenants as of December 31, 2005

7

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and June 30,2006.  During the third and fourthquarter of 2006, the Company was not in compliance with certain of the revisedcovenants.  The March 30, 2007 amendmentto the Loan Agreement waived these 2006 covenant violations and the April 13,2007 amendment reset the covenants to start with the six months ending June 30,2007 and to only include a Minimum EBITDA and a Minimum Cash Flow CoverageLeverage Ratio.   Management believes theCompany will be in compliance with the new covenants.

#### **Business Segments**

The Companyreports two operating business segments in the same format as reviewed by theCompany’s senior management. Segment one, Vita Seafood, processes and sellsvarious herring, and cured and smoked salmon products throughout the UnitedStates and Mexico.  Segment two, VitaSpecialty Foods, combines the products of Virginia Honey and Halifax andmanufactures and distributes honey, salad dressings, sauces, marinades, jamsand jellies and gift baskets throughout North America.  Management predominately uses operatingprofit as the measure of profit or loss by business segment.

**Business segment information isas follows ($000’s):**
| ***Three months ended March 31,*** | ** ** | **2007**   | ** ** | **2006** | ** ** |
|--------------------------------------------------------|------------|------------|------------|----------|------------|
|                                                   |       | ** ** |       |     |       |
| **Net  Sales**                                         |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **6,691**  |     | $          | 7,401 |   |
| VSF                                                    |       | **6,083**  |       | 5,387    |       |
|                                                   |       | ** ** |       |     |       |
| Total Net Sales                                        |       | **$**      | **12,774** |     | $          | 12,788 |   |
|                                                   |       | ** ** |       |     |       |
| **Operating  Profit (Loss)**                           |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **443**    |     | $          | 202 |   |
| VSF                                                    |       | **186**    |       | 218      |       |
|                                                   |       | ** ** |       |     |       |
| Total Operating  Profit (Loss)                         |       | **$**      | **629**    |     | $          | 420 |   |
|                                                   |       | ** ** |       |     |       |
| **Net  Income (Loss)**                                 |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **143**    |     | $          | 9 |   |
| VSF                                                    |       | **42**     |       | 48       |       |
|                                                   |       | ** ** |       |     |       |
| Total Net Income  (Loss)                               |       | **$**      | **185**    |     | $          | 57 |   |
|                                                   |       | ** ** |       |     |       |
| **Depreciation  and Amortization**                     |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **125**    |     | $          | 121 |   |
| VSF                                                    |       | **109**    |       | 106      |       |
|                                                   |       | ** ** |       |     |       |
| Total  Depreciation and Amortization                   |       | **$**      | **234**    |     | $          | 227 |   |
| ** **                                             |       | ** ** |       |     |       |
| **Capital  Expenditures**                              |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **23**     |     | $          | 160 |   |
| VSF                                                    |       | **38**     |       | 102      |       |
|                                                   |       | ** ** |       |     |       |
| Total Capital  Expenditures                            |       | **$**      | **61**     |     | $          | 262 |   |
|                                                   |       | ** ** |       |     |       |
| **Goodwill**                                           |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **—** |     | $          | — |   |
| VSF                                                    |       | **5,571**  |       | 6,697    |       |
|                                                   |       | ** ** |       |     |       |
| Total Goodwill                                         |       | **$**      | **5,571**  |     | $          | 6,697 |   |
|                                                   |       | ** ** |       |     |       |
| **Total  Assets**                                      |       | ** ** |       |     |       |
| Vita Seafood                                           |       | **$**      | **17,093** |     | $          | 18,176 |   |
| VSF                                                    |       | **8,143**  |       | 8,341    |       |
|                                                   |       | ** ** |       |     |       |
| Total Assets                                           |       | **$**      | **25,236** |     | $          | 26,517 |   |

 

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**Equity Issuance**

In February 2006, theCompany entered into agreements pursuant to which five individuals or theiraffiliated entities invested a total of $2,500,000 in the Company.  Substantially all of these funds were used toreduce funded debt.  The investorsreceived units consisting of an aggregate of 1,000,000 shares of common stock;three-year warrants to purchase 500,000 shares of common stock at an exerciseprice of $5.00 per share; and five-year warrants to purchase an additional500,000 shares of common stock at an exercise price of $7.50 per share.  The investors include the following: (i)Stephen D. Rubin, then president and Chairman of the Board of Directors of theCompany, and as of August 18, 2006, Chairman of the Board of Directors,(ii)  Clifford K. Bolen, then Senior VicePresident, Chief Operating Officer and Chief Financial Officer of the Company,and, as of August 18, 2006, President and Chief Executive Officer, (iii) DelphiCasualty Co., of which Glen S. Morris, a director of the Company, owns a 44%equity interest, (iv) a trust of which John C. Seramur, a director of theCompany, serves as trustee, as well as (v) Howard Bedford, then an unrelatedthird-party investor and, as of May 18, 2006, a director of the Company.

**Financial Accounting StandardsBoard Interpretation No. 48**

The Company adopted FASBInterpretation No. 48, “Accounting for Uncertainty in Income Taxes” as ofJanuary 1, 2007.  The Company hasreviewed the status of possible tax uncertainties through the first quarter of2007.  The Company’s review did notresult in any uncertain tax positions requiring disclosure.  The last Federal Tax examination wascompleted in February 2006 for the year 2003. The result of the examination was a no change letter.  Should the Company need to record interestand/or penalties related to uncertain tax positions or other tax authorityassessments, it would classify such expenses as part of the income taxprovision.  The Company has not changedany of its tax policies nor adopted any new tax positions during the firstquarter of 2007 and believes it has filed appropriate tax returns in alljurisdictions for which it has nexus. This review included the Company’s net deferred income tax assets whichmanagement believes will be realized over future profitable years.

**Subsequent Event—Additional Equity Issuance**

The Company hasreached an agreement in principle, with Howard Bedford, a Company director,pursuant to which Mr. Bedford would invest $3,000,000 in the Company,$1,000,000 of which has been received by the Company in April, 2007 forshares to be issued in the future. Substantially all of these funds would be used for working capitalrequirements.  In consideration for hisinvestment, Mr. Bedford would receive 2,400,000 shares of Common Stock; twoyear warrants to purchase 500,000 shares of Common Stock at an exercise priceof $1.25 per share; three-year warrants to purchase 500,000 shares of CommonStock at an exercise price of $1.50 per share; four-year warrants to purchase500,000 shares of Common Stock at an exercise price of $1.50 per share; andfive-year warrants to purchase 500,000 shares of Common Stock at an exerciseprice of $1.75 per share.  The warrantswould be exercisable immediately. Subsequent to this transaction, Mr. Bedford would own approximately38.2% of the Company’s outstanding common stock and warrants to acquire another15.2%.

### **Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations**

***Comparisonof the Three Months Ended March 31, 2007 and March 31, 2006***

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***Revenues.***  Net sales for the three months ended March31, 2006 were approximately $12,774,000, compared to approximately $12,788,000for the same period in 2006, a decrease of approximately $14,000 or 0.1%.  Vita Seafood’s net sales decreasedapproximately $710,000 or 9.6%.  Thedecrease was primarily the result of the salmon category with gross salesdeclining approximately $609,000 or 15.2% as compared to the prior year’s firstquarter. The decline in salmon volume is attributable to the fact that initialsales of new products to two customers in the first quarter of 2006 includednormal volume to fill shelves in addition to warehouse inventory, while ordersof such products in the first quarter of 2007 were solely to fill shelves, aswell as the failure of one customer to renew its purchase of two salmonproducts in the first quarter of 2007. Herring gross sales increased slightly,in the amount of approximately $25,000 or 0.7% and gross sales of specialtyproducts decreased approximately $104,000 or 36.3% compared to the firstquarter of the previous year.  The salesdecline in specialty products is mainly the result of the discontinuance ofslow moving products in the first quarter of 2007.  Pricing actions helped to offset volumedeclines.  Returns and allowancesincreased approximately $21,000 or 3.7% as compared with the first quarter of2006. Offsetting the Vita Seafood sales decrease was an increase in VitaSpecialty Foods net sales of approximately $696,000 or 12.9% compared to thefirst quarter of 2006.  The increase wasled by sauces, in the approximate amount of $813,000 or 162.0% mainly as aresult of the sauces product line. Contributing to the increase was favorable honey gross sales primarilyto one customer in the approximate amount of $441,000 or 26.1% compared to thefirst quarter of 2006.  Salad dressingsales decreased approximately $266,000 or 7.7% from the previous year’s firstquarter.   The decline in salad dressingsales is attributable to slower sales at one customer.  Herring, salmon, and specialty product salesrepresented 51%, 47% and 2%, respectively, of Vita Seafood’s total gross salesduring the current period compared to 46%, 50%, and 4%, respectively, duringthe prior year quarter.  Salad dressings,sauces, honey products and specialty items, represented 48%, 20%, 32% and lessthan 1%, respectively, of Vita Specialty Foods current quarter total grosssales compared to 61%, 8%, 30% and 1%, respectively, during the prior yearquarter.

***Gross Margin.***  Gross margin for the three months ended March31, 2007 was approximately $3,961,000, compared to approximately $3,896,000 forthe same period in 2006, an increase of approximately $65,000 or 1.7%.  The gross margin for Vita Seafood declined byapproximately $79,000 or 3.7% compared to the first quarter of 2006.  The gross margin for Vita Specialty Foodsincreased by approximately $144,000 or 8.3% over the same quarter in 2006.  As a percent of net sales, gross margintotaled 31.0%, which was an increase compared with the first quarter results of30.5% for 2006.  The gross margin for theVita Seafood business, as a percentage of net sales, increased to 31.2% from29.3% for the first quarter of 2006. Product price increases contributed to theimproved gross margin percentage.  ForVita Specialty Foods, gross margin as a percent of net sales decreased to 30.8%for the current quarter versus 32.1% for the first quarter in 2006.  This decrease is attributable to firstquarter sales allowances that resulted in reduced product net sales but drovevolume increases.

***Operating Expenses****.*  Selling, marketing,distribution and administrative expenses for the three months ended March 31,2007 were approximately $3,332,000, compared to approximately $3,477,000 forthe same quarter in 2006, a decrease of approximately $145,000 or 4.2%.  These expenses represented 26.1% of sales forthe quarter ended March 31, 2007 compared to 27.2% for the comparable quarter in2006.  The decreased dollar amount ofthese expenses resulted from an approximately $122,000 decrease in selling,marketing and distribution expenses and an approximately $23,000 decrease inadministration expenses.

***Interest Expense.***  Interest expense for the three months endedMarch 31, 2007 was approximately $323,000, compared to approximately $326,000for the comparable quarter in 2006.

***Income Taxes.*** The Company provided income tax expense ofapproximately $121,000 for the first quarter ended March 31, 2007 compared toapproximately $37,000 for the comparable quarter in 2006.  Each quarter represented approximately 40% ofthe pretax results for those periods.

***NetIncome.***  Reflectingthe operating results described above, net income for the three months endedMarch 31, 2007 totaled approximately $185,000 or $0.04 per share on both abasic and diluted basis.  This comparesto net income of approximately $57,000 for the comparable quarter of 2006, or$0.01 per share on both a basic and diluted basis.

#### **Financial Condition**

In February 2006, the Companyentered into agreements pursuant to which five individuals or their affiliated 

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entities invested a total of $2,500,000 in theCompany.  Substantially all of thesefunds were used to reduce funded debt. The investors received units consisting of an aggregate of 1,000,000shares of common stock; three-year warrants to purchase 500,000 shares ofcommon stock at an exercise price of $5.00 per share; and five-year warrants topurchase an additional 500,000 shares of common stock at an exercise price of $7.50per share.  The investors included thefollowing: (i) Stephen D. Rubin, Office of the Chief Executive, President and adirector of the Company, (ii) Clifford K. Bolen, Office of the Chief Executive,Senior Vice President, Chief Operating Officer and Chief Financial Officer ofthe Company, together with certain of his affiliates, (iii) Delphi CasualtyCo., of which Glenn S. Morris, a director of the Company, owns a 44% equityinterest, (iv) a trust of which John C. Seramur, a director of the Company, servesas trustee, as well as (v) one unrelated third-party investor.

At March 31, 2007, theCompany had approximately $4,873,000 in working capital, versus approximately$6,197,000 at December 31, 2006, and approximately $7,016,000 at March 31,2006.  The current ratio at March 31,2007 was 1.6 to 1.0 compared to 1.7 to 1.0 at December 31, 2006 and 2.1 to 1.0at March 31, 2006.  Due to theseasonality of the business, it is typical for a reduction in the Company’scurrent assets to occur during the first three months of each year since thisperiod follows the fourth quarter peak of the annual business cycle.  This year, the current assets decreasedapproximately $2,025,000 of which approximately $1,567,000 was related to thecollection of trade accounts receivable, approximately $180,000 representeddecreases in inventories and approximately $236,000 is attributable toreductions in prepaids and other current assets.  Working capital further declined by areduction in current liabilities from December 31, 2006 of approximately$701,000.  This was primarily the resultof the pay down of the current portion of long term debt of approximately$209,000 and the payment of accounts payable of approximately $584,000.

OnSeptember 8, 2003, the Company entered into a loan agreement with a bank (the “LoanAgreement”) and paid off its existing credit facility with initial borrowingsunder this new Loan Agreement.  The LoanAgreement was amended several times since then to, among other things, extendthe maturity dates of the revolver, change available borrowings and amendfinancial covenants.  As of the April 13,2007 amendment, the Loan Agreement provides for a $9,500,000 revolver which isscheduled to terminate April 1, 2008; a $7,750,000 Term A Loan due in monthlyinstallments of $80,000 through July 31, 2008 with a balloon payment of$3,682,000 due on August 31, 2008; a $150,000 capital expenditure Term B Loandue in monthly installments of $2,500 from August 2006 through May 31, 2010 andthe remainder due on June 30, 2010; and a $1,000,000 Term C Loan due April 1,2008.  Outstanding borrowings under theLoan Agreement are secured by substantially all assets of the Company.

Interestunder each piece of the amended Loan Agreement is at a floating rate per annumequal to the prime rate plus 0.5%, other than the $1,000,000 Term C Loan whichbears an interest rate of prime plus 2.0%. The prime rate was 8.25% as of March 31, 2007.

TheLoan Agreement imposes certain restrictions on the Company, including itsability to complete significant asset sales, merge or acquire businesses andpay dividends.  Additionally, the Companyhad been required to meet certain financial covenants at each quarter endduring the term of the Loan Agreement, including a Minimum Tangible Net Worth,a Minimum EBITDA and a Minimum Cash Flow Coverage Leverage ratio, all asdefined in the Loan Agreement.  During2005 and 2006, the Company had violated certain of these covenants and hadobtained permanent waivers from the bank for such violations.  The March 24, 2006 amendment to the LoanAgreement retroactively amended these financial covenants, and, as amended, theCompany was in compliance with those covenants as of December 31, 2005 and June30, 2006.  During the third and fourthquarter of 2006, the Company was not in compliance with certain of the revisedcovenants.  The March 30, 2007 amendmentto the Loan Agreement waived these 2006 covenant violations and the April 13,2007 amendment reset the covenants to start with the six months ending June 30,2007 and to only include a Minimum EBITDA and a Minimum Cash Flow CoverageLeverage Ratio.   Management believes theCompany will be in compliance with the new covenants.

                The ratio of long-term debt tototal capitalization totaled 76% at March 31, 2007 down from 79% at December31, 2006.  The Company believes itsfinancial resources are adequate to fund its needs for the next 12 months.

 

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***Cashflows from operating activities.*** Net cash provided byoperating activities was approximately $1,679,000 for the three months endedMarch 31, 2007, primarily reflecting the approximately $1,983,000 reduction incurrent assets since December 31, 2006 plus the $533,000 total of net incomeplus depreciation, amortization and the other items necessary to reconcile netincome to cash provided by operating activities.  The net cash provided by operating activitiesfor the current three month period was approximately $698,000 more than theapproximately $981,000 provided during the same period in 2006.  This increase occurred as a result ofimproved net collections of accounts receivable during the period ofapproximately $1,311,000 offset by an additional accounts payable reduction ofapproximately $739,000.  The improvedcollections of accounts receivable is primarily due to the collection of highersales in the fiscal fourth quarter and an unusually low level of collectionactivity in the first quarter of 2006.

***Cashflows from investing activities.*** Net cash provided byinvesting activities was approximately $43,000 for the three months ended March31, 2007, which compares to $269,000 of cash used during the same period of theprior year.  The change between periodsis primarily due to reduced capital expenditures as the Company worked toconserve cash.

***Cash flows from financing activities.*** Net cashused in financing activities was approximately $1,764,000 for the three monthsended March 31, 2007.  This net usage isprimarily the result of scheduled pay down of loan facilities.  The cash thus used in the current yearcompares to approximately $3,053,000 used to pay down debt during the sameperiod in 2006.  In the first quarter of2006, the Company received an equity infusion of approximately $2,374,000 thatwas not repeated in the first quarter of 2007.

#### **Seasonality**

The Vita Seafood 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.

**CriticalAccounting Policies and Estimates**

The Company’sfinancial statements reflect the selection and application of accountingpolicies that require management to make significant estimates andassumptions.  The Company believes thatthe following are some of the more critical judgment areas in the applicationof its accounting policies that currently affect the Company’s financialcondition and results of operations.

Preparation of theconsolidated financial statements in accordance with accounting principlesgenerally accepted in the United States requires management to make estimatesand assumptions affecting the reported amounts of assets, liabilities, revenuesand expenses and related contingent liabilities.  On an on-going basis, the Company evaluatesits estimates, including those related to revenues, returns, bad debts, incometaxes and contingencies and litigation. The Company bases its estimates on historical experience and on variousother assumptions that are believed to be reasonable under thecircumstances.  Actual results may differfrom these estimates under different assumptions or conditions.

# Revenueis recognized upon the passing of title to the customers, which occurs uponshipment of product to customers, including brokers, 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 resold prior to the expiration of its shelflife.  In order to support the Company’sproducts, various marketing programs are offered to customers, who reimbursethem for a portion, or all of their promotional activities related to theCompany’s products.  The Companyregularly reviews and revises, when it deems necessary, estimates of costs tothe Company for these marketing and merchandising programs based on estimatesof what has been incurred by customers. Actual costs incurred by the Company may differ significantly if factorssuch as the level and success of the customers’ programs or other conditionsdiffer from expectations.  Sales arereduced by a provision for estimated future returns, disposals and promotionalexpense.

Vita Seafood guarantees the sale of most of itsproducts sold in Supermarkets, excluding warehouse clubs, which sales representapproximately 76% of that segment’s sales. This guarantee helps ensure thatconsumers receive fresh products. Under the guarantee, the majority ofcustomers are issued an allowance off-invoice to cover products not sold beforethe expiration date. Other  customerswith product not sold before the expiration date have the right to returnunsold product to the Company through its food brokers or dispose of the unsoldproduct themselves or through a food distributor. A credit is then issued tothe Supermarket or food distributor. The Company provides a reserve that isrecorded concurrently with the sale.  TheCompany believes, based on its historical return rates, which have been fairlyconsistent over the past 

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severalyears, that this reserve is adequate to recognize the cost of all foreseeablefuture product return credits associated with previously recognized revenues.

The Companyrecognizes deferred income tax assets and liabilities for the expected futuretax consequences of temporary differences between the tax basis and financialreporting basis of certain assets and liabilities and certain income tax creditcarryforwards.  In estimating future taxconsequences, the Company considers expected future events other thanenactments of changes in tax laws or rates. A valuation reserve is recognized based on the evidence available; if itis more likely than not that some portion or the entire deferred income taxasset will not be realized.

The Companyassesses the impairment of its identifiable intangibles and goodwill wheneverevents or changes in circumstances indicate that the carrying value may not berecoverable and at least annually. Factors the Company considers important, which could trigger animpairment review include the following:

·                  Significant underperformance relative to expected historical orprojected future operating results;

·                  Significant changes in the manner of the Company’s use of the acquiredassets or the strategy for the Company’s overall business;

·                  Significant negative industry or economic trends;

·                  Significant decline in the Company’s stock price for a sustainedperiod; 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.

The Company’s goodwill resulted from the acquisitions of Virginia Honeyand Halifax.  Annually, effective as ofDecember 31, the Company engages an independent appraiser to assist inmanagement’s assessment as to whether the recorded goodwill is impaired.  The independent appraisals are made usingcustomary valuation methodologies, including discounted cash flow and otherfundamental analysis and comparisons.  Inits 2004 and 2006 assessments, management determined that the Company’srecorded goodwill was in excess of its fair value and accordingly, the Companyrecorded goodwill impairment charges of $2,313,954 and $1,125,693 in 2004 and2006, respectively.  The impairments wereprincipally due to the decline in the sales volume of Halifax products in 2004and overall performance issues in 2006.

#### **Forward-LookingStatements**

Certain statements in this report, includingstatements in “Management’s Discussion and Analysis of Financial Condition andResults of Operations,” are “forward-looking statements” as defined by theFederal securities laws. Such statements are based on management’s currentexpectations and involve known and unknown risks and uncertainties which maycause the Company’s actual results, performance or achievements to differmaterially from any results, performance or achievements expressed or impliedin this report. By way of example and not limitation and in no particularorder, known risks and uncertainties include the Company’s future growth andprofitability, the potential loss of large customers or accounts, downwardproduct price movements, availability of raw materials, changes in raw materialprocurement costs, fluctuations in the market cost of major commodities such ashoney, changes in energy costs, the introduction and success of new products,changes in economic and market conditions, integration and management ofacquired businesses, the seasonality of Vita’s business, the Company’s abilityto attract 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, the success of the Company’squality control procedures, the impact of the Company’s substantialindebtedness, the adequacy of the Company’s reserves 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 DisclosuresAbout Market Risk**

The Company is exposed tointerest rate fluctuations, primarily as a result of its $17.4 million LoanAgreement with interest rates based on prime rate plus 0.5%, or 8.75% as ofMarch 31, 2007 for all loans covered by the Loan Agreement other than the new$1,000,000 term loan which bears interest at the prime rate plus 2.0%.  The Company does not currently use derivativeinstruments to alter the interest rate characteristics of any of the debt.  A 10% fluctuation in interest rates would

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not have a material impact on the Company’s financialstatements.

**Item4.  Controls and Procedures**

Under the supervision and with the participation ofthe Company’s management team, the principal executive officers 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 March 31, 2007 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 March31, 2007 that have materially affected, or are reasonable likely to materiallyaffect, the Company’s internal control over financial reporting.

Disclosure controls and procedures are designed toensure that information required to be disclosed by the Company in the reportsthat it files or submits under the Exchange Act is recorded, processed,summarized and reported, within the time periods specified in the Securitiesand Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controlsand procedures designed to ensure that information required to be disclosed bythe Company in the reports that it files under the Exchange Act is accumulatedand communicated to the Company’s management, including its principal executiveofficer and principal financial officer, as appropriate to allow timelydecisions regarding required disclosure.

Itshould be noted that any system of controls, however well designed andoperated, can provide only reasonable, and not absolute, assurance that theobjectives of the system are met. In addition, the design of any control systemis based in part upon certain assumptions about the likelihood of futureevents. Because of these and other inherent limitations of control systems,there can be no assurance that any design will succeed in achieving its statedgoals under all potential future conditions, regardless of how remote.

## **PART II - OTHER INFORMATION**

#### **Item 1A.  Risk Factors**

The risk factorsincluded in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-Kfor the fiscal year ended December 31, 2006 have not materially changed.

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

10.1                           Descriptionof Chief Financial Officer compensatory arrangement

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.

 

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## ** **

## **SIGNATURES**

Pursuant to the requirements of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized.

 
|                    |   | **VITA FOOD PRODUCTS, INC.** |   |                                                                                          |   |
|--------------------|--------|------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|
|               |   |                         |   |                                                                                          |   |
|               |   |                         |   |                                                                                          |   |
| Date: May 15, 2007 |   | By:                          |   |            /s/ Clifford  K. Bolen |   |
|               |   |                         |   | Clifford K.  Bolen                                                                            |   |
|               |   |                         |   | President and  Chief Executive Officer                                                        |   |
|               |   |                         |   | (Principal  Executive Officer)                                                                |   |
|               |   |                         |   |                                                                                          |   |
|               |   |                         |   |                                                                                          |   |
| Date: May 15, 2007 |   | By:                          |   |           /s/  R. Anthony Nelson            |   |
|               |   |                         |   | R. Anthony  Nelson                                                                            |   |
|               |   |                         |   | Chief Financial  Officer                                                                      |   |
|               |   |                         |   | (Principal Financial and Accounting Officer)                                                  |
|                    |        |                              |        |                                                                                               |        |  |  |  |  |

 

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**Exhibit Index**
|        | **Number** | **Exhibit Title**                                                                                     | ** ** | ** ** |
|--------|------------|-------------------------------------------------------------------------------------------------------|------------|------------|
|   |       |                                                                                                  |       |       |
|   | 10.1       | Description of Chief Financial Officer compensatory  arrangement.                                     |
|   |       |                                                                                                  |
|   | 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. |

 

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