SOURCE: Where Food Comes From

Where Food Comes From

November 03, 2014 09:15 ET

Where Food Comes From, Inc. Reports Third Quarter Results

CASTLE ROCK, CO--(Marketwired - Nov 3, 2014) - Where Food Comes From, Inc. (OTCQB: WFCF)

Third quarter revenue up 69% to $2.5 million from $1.5 million last year

Nine-month revenue up 53% to $5.7 million from $3.7 million last year

Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (OTCQB: WFCF), the most trusted resource for third-party verification of food production practices, today announced results for its third quarter and nine-month period ended September 30, 2014.

"Where Food Comes From delivered strong year-over-year revenue and earnings growth in the third quarter as demand for verification products and services continues to grow," said John Saunders, chairman and CEO. "In addition to achieving organic growth, our M&A strategy has strengthened our solutions portfolio, expanded our geographic footprint and added new, profitable revenue streams. We are looking forward to a solid finish to 2014 and continued profitable growth in coming years as consumers, food producers and food retailers increasingly embrace transparency in the food supply chain."

Third Quarter Results
Third quarter revenue increased 69% to $2,486,600 from revenue of $1,470,200 in the same quarter last year. Verification services revenue was up 73% to $2,046,600 from $1,181,800. Product revenue (cattle identification tags) increased 57% to $414,500 from $263,300. Other revenue, primarily associated with the Company's Where Food Comes From® labeling program, increased 2% to $25,600 from $25,000 year over year. Increased verification and hardware revenue resulted from a combination of organic growth and the effects of the Company's M&A strategy, which added more than 3,000 new verification customers over the past year.

Gross profit in the third quarter increased 65% to $1,179,600 from $714,700 year over year. Despite the significant increase in revenue in the third quarter, selling, general and administrative expenses grew by just 8% to $775,000 from $715,700, reflecting the Company's highly scalable business model. SG&A expense as a percent of revenue in the third quarter improved to 31% from 49% year over year.

Operating income in the third quarter increased to $404,600 from an operating loss of $1,000 in the same quarter last year. Net income attributable to Where Food Comes From, Inc. increased to $245,100, or $0.01 per share, compared with a net loss of $18,800, or less than one cent per share, in the same quarter a year ago.

Nine-Month Results
Revenue for the first nine months of 2014 increased 53% to $5,734,200 from $3,736,400 in the same period last year. Verification revenue increased 56% to $4,840,700 from $3,099,000 year over year. Hardware revenue increased 44% to $786,000 from $544,200 a year ago. Revenue from Where Food Comes From® labeling increased 15% to $107,500 from $93,200.

Gross profit in the first nine months increased 37% to $2,621,800 from $1,908,000 year over year. Selling, general and administrative expense increased 26% to $2,404,800 from $1,905,900 last year and improved to 42% of revenue from 51% of revenue for the comparative nine-month periods.

Operating income through nine months increased to $217,000 from $2,000. Net income attributable to Where Food Comes From, Inc. through nine months was $164,900, or $0.01 per share, versus a net loss of $22,200, or less than one cent per share, in the prior year.

The Company generated $521,000 in cash from operations through the first nine months of 2014, up from $175,000 in the same period last year.

Balance Sheet
Cash, cash equivalents and restricted cash increased to $2,888,600 at September 30, 2014, from $1,067,500 at 2013 year-end primarily as a result of an equity capital infusion during the second quarter of 2014. Working capital increased to $3,257,300 from $1,533,600 over the same period.

Conference Call
The Company will conduct a conference call today at 10:00 a.m. Mountain Time.

The call-in numbers for the conference call:
Domestic Toll Free: 1-877-407-8289
International: 1-201-689-8341
Conference ID: 13593420

Phone replay:
A telephone replay of the conference call will be available through November 17, 2014, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13593420

About Where Food Comes From, Inc.
Where Food Comes From, Inc. (d.b.a. IMI Global) is America's trusted resource for third party verification of food production practices. The Company supports more than 10,000 farmers, ranchers, processors, retailers, distributors and restaurants with a wide variety of value-added services through its IMI Global, International Certification Services, and Validus Verification Services units. In addition, the Company's Where Food Comes From® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers to the sources of the food they purchase through product labeling and web-based information sharing and education. Go to
www.wherefoodcomesfrom.com for additional information.

CAUTIONARY STATEMENT
This news release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Forward-looking statements are inherently uncertain, and actual events could differ materially from the Company's predictions. Important factors that could cause actual events to vary from predictions include those discussed in our SEC filings. Specifically, statements in this news release about industry leadership; expectations for continued profitable growth and a strong finish to 2014; and the demand for, and impact and efficacy of, the Company's and its subsidiaries' products and services on the marketplace are forward-looking statements that are subject to a variety of factors, including availability of capital, personnel and other resources; competition; governmental regulation of the agricultural industry; the market for beef and other commodities; and other factors. Financial results for the third quarter and nine-month period are not necessarily indicative of future results. Readers should not place undue reliance on these forward-looking statements. The Company assumes no obligation to update its forward-looking statements to reflect new information or developments. For a more extensive discussion of the Company's business, please refer to the Company's SEC filings at www.sec.gov.

   
   
Where Food Comes From, Inc.  
Statements of Income (Loss)  
(Unaudited)  
   
  Three Months Ended     Nine Month Ended  
  September 30,     September 30,  
  2014     2013     2014     2013  
Revenues                              
  Service revenue $ 2,046,550     $ 1,181,777     $ 4,840,703     $ 3,098,976  
  Product sales   414,515       263,344       786,009       544,212  
  Other revenue   25,580       25,041       107,487       93,234  
    Total revenue   2,486,645       1,470,162       5,734,199       3,736,422  
Costs of revenue                              
  Labor and other costs of services   1,041,263       563,392       2,584,689       1,432,278  
  Costs of products   265,740       192,086       527,702       396,164  
    Total costs of revenue   1,307,003       755,478       3,112,391       1,828,442  
Gross profit   1,179,642       714,684       2,621,808       1,907,980  
Selling, general and administrative expenses   775,020       715,652       2,404,776       1,905,933  
Income (loss) from operations   404,622       (968 )     217,032       2,047  
Other expense (income):                              
  Interest expense   3,705       17,803       9,325       29,872  
  Other income, net   (932 )     (381 )     (1,982 )     (1,115 )
Income (loss) before income taxes   401,849       (18,390 )     209,689       (26,710 )
Income tax expense (benefit)   143,940       (11,019 )     97,131       (12,229 )
Net income (loss)   257,909       (7,371 )     112,558       (14,481 )
Net income (loss) attributable to non-controlling interest   (12,823 )     (11,408 )     52,340       (7,763 )
Net income (loss) attributable to Where Food Comes From, Inc. $ 245,086     $ (18,779 )   $ 164,898     $ (22,244 )
Net income (loss) per share:                              
  Basic $ 0.01     $ *     $ 0.01     $ *  
  Diluted $ 0.01     $ *     $ 0.01     $ *  
Weighted average number of common shares outstanding:                              
Basic   23,590,662       21,879,648       22,996,399       21,626,558  
Diluted   23,813,108       21,879,648       23,224,678       21,626,558  
                               
* Less than a penny ($0.01) per share
   
   
   
Where Food Comes From, Inc.  
Balance Sheets  
   
    (Unaudited)        
    September 30,     December 31,  
    2014     2013  
ASSETS                
Current Assets:                
  Cash and cash equivalents   $ 2,638,572     $ 1,067,537  
  Restricted cash     250,000       -  
  Accounts receivable, net     955,379       683,800  
  Prepaid expenses and other current assets     169,430       143,576  
  Deferred tax assets     152,631       190,184  
    Total current assets     4,166,012       2,085,097  
Property and equipment, net     245,234       253,206  
Intangible assets, net     1,688,276       1,716,115  
Other long-term assets, net     16,000       -  
Goodwill     1,279,762       1,279,762  
Long-term deferred tax assets     420,716       480,294  
Total assets   $ 7,816,000     $ 5,814,474  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 541,125     $ 277,633  
  Accrued expenses and other current liabilities     73,921       56,091  
  Customer deposits     38,495       39,134  
  Deferred revenue     243,518       149,660  
  Short-term debt and current portion of notes payable     7,323       24,782  
  Current portion of capital lease obligations     4,340       4,173  
    Total current liabilities     908,722       551,473  
Capital lease obligations, net of current portion     7,531       10,808  
Notes payable and other long-term debt, net     18,148       165,755  
Total liabilities     934,401       728,036  
Contingently redeemable non-controlling interest     953,534       1,018,396  
Stockholders' equity:                
  Common stock     24,163       23,233  
  Additional paid-in capital     7,210,953       5,216,327  
  Treasury stock     (150,849 )     (150,849 )
  Accumulated deficit     (1,156,202 )     (1,321,100 )
  Total Where Food Comes From, Inc. equity     5,928,065       3,767,611  
  Non-controlling interest     -       300,431  
Total Equity     5,928,065       4,068,042  
Total liabilities and stockholders' equity   $ 7,816,000     $ 5,814,474  

Contact Information

  • Company Contacts:

    John Saunders
    Chief Executive Officer
    303-895-3002

    Jay Pfeiffer
    Pfeiffer High Investor Relations, Inc.
    303-393-7044