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FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

For the quarterly period ended March 31, 2010

or

Commission File No. 0-3026

PARADISE, INC.

INCORPORATED IN FLORIDA

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

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

PLANT CITY, FLORIDA 33566

(813) 752-1155

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Indicate by check mark whether the registration is a shell company (as defined in Rule 125-2 of the Exchange Act)    Yes  ¨    No  x

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

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PARADISE, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2010

INDEX

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

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LIABILITIES AND STOCKHOLDERS’ EQUITY

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

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PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

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PARADISE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

See Accompanying Notes to these Consolidated Financial Statements (Unaudited)

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PARADISE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 Basis of Presentation

The accompanying unaudited consolidated financial statements of Paradise, Inc. (the “Company”) have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for annual financial statements.

The information furnished herein reflects all adjustments and accruals that management believes is necessary to fairly state the operating results for the respective periods. The notes to the financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company’s Form 10-K for the year ended December 31, 2009. The Company’s management believes that the disclosures are sufficient for interim financial reporting purposes.

Note 2 Net Loss per Share

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

Note 3 Business Segment Data

The Company’s operations are conducted through two business segments. These segments, and the primary operations of each, are as follows:

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For the three month period ended March 31, 2010 and 2009, sales of frozen strawberry products totaled $145,797 and $139,031, respectively.

The Company does not account for intersegment transfers as if the transfers were to third parties.

The Company does not prepare operating profit or loss information on a segment basis for internal use, until the end of each year. Due to the seasonal nature of the fruit segment management believes that it is not practical to prepare this information for interim reporting purposes. Therefore, reporting is not required by generally accepted accounting principles.

Identifiable assets by segment are those assets that are principally used in the operations of each segment. General corporate assets are principally cash, land and buildings, and investments.

Note 4 Subsequent Event

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

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact should be considered “forward-looking statements” for purpose of these provisions, including statements that include projections of, or expectations about, earnings, revenues or other financial items, statements about our plans and objectives for future operations, statements concerning proposed new products or services, statements regarding future economic conditions or performance, statements concerning our expectations regarding the attraction and retention of customers, statements about market risk and statements underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of such terminology as “may”, “will”, “expects”, “potential”, or “continue”, or the negative thereof or other similar words. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we can give no assurance that such expectations or any of our forward-looking statements will prove to be correct. Actual results and developments are likely to be different from, and may be materially different from, those expressed or implied by our forward–looking statements. Forward-looking statements are subject to inherent risks and uncertainties.

Overview

Paradise, Inc.’s main business segment, glace’ fruit, a prime ingredient of fruitcakes and other holiday confections, represented 70.3% of total net sales during 2009. These products are sold to manufacturing bakers, institutional users, supermarkets and other retailers throughout the country. Consumer demand for glace’ fruit product is traditionally strongest during the Thanksgiving and Christmas season. Almost 80% of glace’ fruit product sales are recorded from the eight to ten weeks beginning in mid September.

Since the majority of the Company’s customers require delivery of glace’ candied fruit products during this relatively short period of time, Paradise, Inc. must operate at consistent levels of production from as early as January through the middle of November of each year in order to meet peak demands. Furthermore, the Company must make substantial borrowings of short-term working capital to cover the cost of raw materials, factory overhead and labor expense associated with production for inventory. This combination of building and financing inventories during the year, without the opportunity to record any significant fruit product income, results in the generation of operating losses well into the third quarter of each year. Therefore, it is the opinion of management that meaningful forecasts of annual net sales or profit levels require analysis of a full year’s operations.

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In addition, comparison of current quarterly results to the preceding quarter produces an incomplete picture on the Company’s performance due to year-to-year changes in production schedules, seasonal harvests and availability of raw materials, and in the timing of customer orders and shipments. Thus, the discussion of information presented within this report is focused on the review of the Company’s current year-to-date results as compared to the similar period last year.

Paradise, Inc.’s other business segment, Paradise Plastics, Inc., a wholly owned subsidiary of Paradise, Inc. producing custom molding products, is not subject to the seasonality of the glace’ fruit business. This segment represents all injection molding and thermoforming operations, including the packaging for the Company’s fruit products. Only sales to unaffiliated customers are reported.

The First Quarter

Paradise, Inc.’s fruit segment net sales for the first quarter of 2010 were $548,740 compared to $549,880 for the similar reporting period of 2009. As reported in the above paragraph, Paradise, Inc.’s fruit segment sales are very seasonal in nature. First quarter fruit segment net sales are typically no more than 2-3% of total annual net sales. As in previous years, the current sales activity is limited to bulk fruit orders received and shipped to supermarkets and manufacturing bakeries for the upcoming Easter holiday season. During the current reporting period for 2010 as well as the similar reporting period for 2009, bulk fruit products accounted for approximately 80% of fruit segment net sales. The remaining volume of sales activity is primarily related to the sale of finished strawberry products produced exclusively for a local Plant City, Florida distributor during a short window of time in late March and early April of each year. For a negotiated fee, i.e. tolling charge, Paradise, Inc. will receive and process fresh strawberries through its facilities on behalf of this distributor. Tolling charges accrued during the first quarter of 2010 were $145,797 compared to $139,031 for 2009.

Paradise Plastics, Inc.’s net sales to unaffiliated customers, during the first quarter of 2010 increased to $1,952,051 from $1,580,609 or 23.5% compared to the similar reporting period for 2009 stopping a declining trend in net sales activity reported over the past year. As economic activity related to the housing market has started to show signs of improvement, the Company has received an increase in orders from its long-time home-based plastics customers. While the Company is not able to predict with any certainty the strength of this recent turnaround, management has the necessary production space, equipment and available labor talent to facilitate this upturn in business activity.

Consolidated cost of sales as a percentage of net sales increased 7.1% for the first quarter for 2010 compared to the similar reporting period for 2009. However, it should be noted that glace’ fruit production will not commence operations until the first week of May, 2010. Thus, without any meaningful cost information available as of the date of this filing, no reasonable estimate regarding cost of sales can be determined at this time.

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The First Quarter (Continued)

Inventory at March 31, 2010 decreased by $3,341,237 compared to inventory at March 31, 2009 as Paradise, Inc.’s management focused its effort during the previous year to reduce its glace’ fruit raw materials and plastics resins in anticipation of a lessening in sales activity caused by the slowdown in the economy. While inventory levels are significantly lower as of March 31, 2010, Paradise, Inc. does have sufficient quantities of inventory in place or under contract to meet 100% of its estimated production requirements for the upcoming 2010 holiday season.

Selling, general & administrative expenses for the first quarter of 2010 decreased $60,011 or 6.9% compared to the previous year’s reporting period. Two factors play a major role in this decrease. First, approximately 52% or $31,000 of this savings is due to less travel by management and sales personnel during the first quarter of 2010 compared to 2009. Secondly, professional services for computer support, audit fees and payroll related expenses have been reduced by more than $20,000 during the first quarter period of 2010 compared to the similar reporting period of 2009.

Depreciation and amortization expenses for the first quarter of 2010 decreased 5% compared to the similar reporting period of 2009 as amortization related to debt service cost associated with the acquisition of Mastercraft Products Corporation in June of 2004 expired as of December 31, 2009.

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

Summary

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

While the Company is pleased to see this increase in first quarter plastics sales, it is important to note that with less than 95% of the Company’s glace fruit sales yet to be realized as of the date of this filing, no reasonable estimation or forecast of consolidated financial performance can be determined at this time.

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

ITEM 4. CONTROLS AND PROCEDURES

The Company’s Chief Executive Officer and Chief Financial Officer have, within 90 days of the filing date of this quarterly report, evaluated the Company’s disclosure controls and procedures. Based on their evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded, as of March 31, 2010, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the applicable Securities and Exchange Commission rules and forms. There were no changes in the Company’s internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The most recent evaluation of these controls by the Company’s Chief Executive Officer and Chief Financial Officer did not identify any deficiencies or weaknesses in the Company’s internal controls over financial reporting; therefore, no corrective actions were taken.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings – N/A

Item 1A. Risk Factors – N/A

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds – N/A

Item 3. Defaults Upon Senior Securities – N/A

Item 4. Submission of Matters to a Vote of Security Holders – N/A

Item 5. Other Information – N/A

Item 6. Exhibits and Reports on Form 8-K

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None.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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