SOURCE: Where Food Comes From

Where Food Comes From

May 05, 2014 07:00 ET

Where Food Comes From®, Inc. Reports 34% Revenue Increase in First Quarter of 2014

CASTLE ROCK, CO--(Marketwired - May 5, 2014) - Where Food Comes From, Inc. (d.b.a. IMI Global, Inc.) (OTCQB: WFCF), the trusted resource for third-party verification of food production practices, today announced financial results for its first quarter ended March 31, 2014.

Revenue in the first quarter was $1,376,400, up 34% from $1,025,500 in the first quarter last year. The growth was due to an increase in the number of customers using the Company's verification services, which more than offset lower-than-expected revenue associated with pork audits resulting from the Porcine Epidemic Diarrhea Virus (PEDV). Verification services revenue increased 41% to $1,205,200 in the first quarter from $853,600 in the same quarter last year. Hardware revenue consisting of cattle ear tags increased 5% to $135,400 from $129,000 year over year. Labeling revenue declined 16% year-over-year to $35,800 from $42,900.

Gross profit in the first quarter was $557,500, or 41% of revenue, up slightly from gross profit of $533,800, or 52% or revenue, in the first quarter last year. Selling, general and administrative expenses in the first quarter increased to $831,200 from $625,500 in the same quarter last year due primarily to absorption of a full quarter of overhead from the Validus subsidiary, which was acquired in the third quarter of 2013.

Net loss attributable to Where Food Comes From, Inc. in the first quarter was $133,600, or $0.01 per share, compared with net loss of $58,400, or less than $0.01 cent per share, in the same quarter a year ago. The 2014 net loss was substantially attributable to lower-than-expected revenue due to the aforementioned PEDV issue.

"We followed a strong fourth quarter with continued revenue growth momentum in the first quarter of 2014," said John Saunders, chairman and CEO. "This growth reflects the successful execution of an M&A strategy designed to increase the size and scope of our solutions portfolio while mitigating risk associated with changing market dynamics such as Japan's easing of import regulations in 2013, which resulted in a significant decline in Japanese age and source verification revenue in 2013. It is also worth noting that first quarter revenue growth -- as well as profitability -- was adversely impacted by the USDA's decision to discourage on-farm pork audits until the Porcine Epidemic Diarrhea Virus subsides in order to reduce the risk of spread. We believe we will eventually resume on-farm pork audits once the PEDV situation resolves."

Conference Call
The Company will conduct a conference call on Monday, May 5, 2014, at 10:00 a.m. Mountain Time.

Call-in numbers for the conference call:
Domestic Toll Free: 1-877-941-6009
International: 1-480-629-9819
Conference ID: 4681760

Phone replay:
A telephone replay of the conference call will be available through June 5, 2014, as follows:
Domestic Toll Free: 1-800-406-7325
International: 1-303-590-3030
Conference Code: 4681760

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 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; the ability of the Company's M&A strategy to mitigate market risks, expectations to resume pork audits, 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 first quarter and twelve-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 Loss  
(unaudited)  
    Three Months Ended  
    March 31,  
    2014     2013  
                 
Revenues                
  Service revenues   $ 1,205,173     $ 853,606  
  Product sales     135,420       129,009  
  Other revenues     35,833       42,888  
    Total revenues     1,376,426       1,025,503  
Costs of revenues                
  Labor and other costs of services     717,171       405,792  
  Costs of products     101,709       85,889  
    Total costs of revenues     818,880       491,681  
Gross profit     557,546       533,822  
Selling, general and administrative expenses     831,154       625,515  
Loss from operations     (273,608 )     (91,693 )
Other expense (income):                
  Interest expense     2,823       6,779  
  Other income, net     (778 )     (447 )
Loss before income taxes     (275,653 )     (98,025 )
Income tax benefit     (78,368 )     (34,288 )
Net loss     (197,285 )     (63,737 )
Net loss attributable to non-controlling interest     63,657       5,354  
Net loss attributable to Where Food Comes From, Inc.   $ (133,628 )   $ (58,383 )
Net loss per share:                
  Basic   $ (0.01 )   $ *  
  Diluted   $ (0.01 )   $ *  
Weighted average number of common shares outstanding:                
  Basic     22,692,859       21,439,355  
  Diluted     22,692,859       21,439,355  
 
* less than a penny ($0.01) per share
 
             
Where Food Comes From, Inc.            
Balance Sheets            
             
    March 31,     December 31,  
    2014     2013  
ASSETS   (Unaudited)        
Current Assets:                
  Cash and cash equivalents   $ 876,601     $ 1,067,537  
  Accounts receivable, net     570,680       683,800  
  Prepaid expenses and other current assets     123,108       143,576  
  Deferred tax assets     190,184       190,184  
    Total current assets     1,760,573       2,085,097  
Property and equipment, net     244,671       253,206  
Intangible and other assets, net     1,751,074       1,716,115  
Goodwill     1,279,762       1,279,762  
Long-term deferred tax assets     558,662       480,294  
Total assets   $ 5,594,742     $ 5,814,474  
                 
LIABILITIES AND EQUITY                
Current liabilities:                
  Accounts payable   $ 285,399     $ 277,633  
  Accrued expenses and other current liabilities     47,385       56,091  
  Customer deposits     53,686       39,134  
  Deferred revenue     290,280       149,660  
  Short-term debt and current portion of notes payable     25,132       24,782  
  Current portion of capital lease obligations     4,228       4,173  
    Total current liabilities     706,110       551,473  
Capital lease obligations, net of current portion     9,730       10,808  
Notes payable and other long-term debt, net of current portion     159,302       165,755  
Total liabilities     875,142       728,036  
Contingently redeemable non-controlling interest     942,222       1,018,396  
Equity:                
  Common stock     23,240       23,233  
  Additional paid-in capital     5,359,715       5,216,327  
  Treasury stock     (150,849 )     (150,849 )
  Accumulated deficit     (1,454,728 )     (1,321,100 )
    Total Where Food Comes From, Inc. equity     3,777,378       3,767,611  
    Non-controlling interest     -       300,431  
Total equity     3,777,378       4,068,042  
Total liabilities and equity   $ 5,594,742     $ 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