Where Food Comes From(R), Inc. Reports Third Quarter Results

CASTLE ROCK, CO--(Marketwired - Nov 14, 2013) - 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 results for its third quarter and nine month period ended September 30, 2013.

"Growth in demand for our Non-Hormone Treated Cattle (NHTC) and Verified Natural Beef (VNB) programs partially offset age and source revenue that was lower due to Japan's easing of beef import requirements earlier this year," said John Saunders, chairman and CEO. "We are pleased that the majority of our ranch source and age customers remain committed to continuing their annual audit activities. Additionally, we added 3,000 new producer customers at the end of the third quarter through our acquisition of the auditing business of Validus Ventures -- a transaction that expanded our food group coverage and added new auditing standards to our services portfolio. Early in the fourth quarter, we added an additional 1,000 new producer customers by assuming management of Micro Technologies' process verification program. We now perform audits for more than 10,000 customers, an approximate 66% increase over 2012 year-end.

"We were solidly profitable in the third quarter prior to incurring significant legal and advisory costs associated with the Validus acquisition. We believe the Validus and Micro transactions, which we project will bring us an additional $2.0 million in annual revenue, put us in a strong position to achieve profitable growth in 2014 and beyond. In the meantime, we continue to evaluate M&A opportunities that can expand our solutions portfolio and consolidate our leadership position in this growing industry. We now audit to more than 20 standards in all major food groups."

Third Quarter Results
Third quarter revenue decreased slightly to $1,470,200 from revenue of $1,545,200 in the third quarter last year. Verification services revenue was $1,181,800 versus $1,237,200 year-over-year, while hardware revenue, consisting primarily of cattle identification tags, was down slightly to $263,300 from $268,800. The lower verification and hardware revenue was attributable to Japan's easing of import requirements resulting in lower source and age verification revenue. The Company expects these reductions to be more than offset over time by growth in other verification categories in combination with new revenue streams resulting from M&A activities. Labeling revenue in the third quarter was $25,000 versus $39,200 in the same quarter last year. In November the Company announced that Heinen's fine foods has expanded its labeling program to include all lamb products in its meat case.

Selling, general and administrative expenses in the third quarter were $715,700, a slight increase over $686,500 in the same quarter last year.

During the third quarter the Company incurred significant transaction costs in the acquisition of Validus. As a result, the Company reported a net loss attributable to Where Food Comes From, Inc. of $18,800, or less than $0.01 per share, versus net income of $63,600, or less than $0.01 per share, in the same quarter last year.

Nine-Month Results
Revenue through nine months of 2013 was $3,736,400 versus $3,971,600 in the same period a year ago. Verification revenue decreased to $3,099,000 from $3,255,300 year over year. Hardware revenue was $544,200 versus $626,000 a year ago. Revenue from Where Food Comes From and other sources increased to $93,200 from $90,400.

Selling, general and administrative expense year-to-date increased to $1,905,900 from $1,755,900. This increase reflected legal and advisory costs associated with the Validus acquisition, partially offset by general cost reduction measures undertaken by the Company.

Inclusive of $219,000 in transaction costs associated with the Validus acquisition, the Company reported a net loss attributable to Where Food Comes From, Inc. of $22,200, or less than $0.01 per basic and diluted share, in the first nine months versus net income of $730,200, or $0.04 per basic and $0.03 per diluted share, in the same period last year. The 2012 period included an income tax benefit of $363,000.

Balance Sheet Highlights
During the third quarter the Company paid $565,000 in cash as part of the acquisition of Validus Ventures. Cash and cash equivalents at September 30, 2013, totaled $1.0 million versus $1.4 million at 2012 year-end. Working capital was $1.5 million versus $1.7 million.

Conference Call and Webcast
The Company will conduct a conference call today at 8:00 a.m. Mountain Time.

The call-in numbers for the conference call:
Domestic Toll Free: 1-877-941-8609
International: 1-480-629-9692
Conference ID: 4649684

Phone replay:
A telephone replay of the conference call will be available through November 28, 2013, as follows:
Domestic Toll Free: 1-800-406-7325
International: 1-303-590-3030
Conference Code: 4649684

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; expectations to achieve profitable growth; the Company's belief that most of the impact of changes in Japan's import requirements has been absorbed; plans to expand the Company's product/service portfolio; positive customer retention trends; expectations for annual revenue to increase by $2.0 million due to acquisitions and partnerships; 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 Months Ended
				September 30,								September 30,
				2013				2012				2013				2012
Revenues
	Service revenue			$	1,181,777			$	1,237,215			$	3,098,976			$	3,255,266
	Product sales				263,344				268,750				544,212				625,986
	Other revenue				25,041				39,196				93,234				90,375
		Total revenue			1,470,162				1,545,161				3,736,422				3,971,627
Costs of revenue
	Labor and other costs of services				563,392				543,362				1,432,278				1,387,499
	Costs of products				192,086				198,862				396,164				454,279
		Total costs of revenue			755,478				742,224				1,828,442				1,841,778
Gross profit					714,684				802,937				1,907,980				2,129,849
Selling, general and administrative expenses					715,652				686,538				1,905,933				1,755,873
Income (loss) from operations					(968	)			116,399				2,047				373,976
Other expense (income):
	Interest expense				17,803				6,068				29,872				19,761
	Gain on sale of marketable securities				-				(9,581	)			-				(12,155	)
	Other income, net				(381	)			(556	)			(1,115	)			(3,909	)
Income (loss) before income taxes					(18,390	)			120,468				(26,710	)			370,279
Income tax expense (benefit)					(11,019	)			46,500				(12,229	)			(362,972	)
Net income (loss)					(7,371	)			73,968				(14,481	)			733,251
Net income attributable to non-controlling interest					(11,408	)			(10,336	)			(7,763	)			(3,063	)
Net income (loss) attributable to Where Food Comes From, Inc.				$	(18,779	)		$	63,632			$	(22,244	)		$	730,188
Net income (loss) per share:
	Basic			$	*			$	*			$	*			$	0.04
	Diluted			$	*			$	*			$	*			$	0.03
Weighted average number of common shares outstanding:
	Basic				21,879,648				21,063,153				21,626,558				20,843,311
	Diluted				21,879,648				21,798,484				21,626,558				21,571,396

Where Food Comes From, Inc.
Balance Sheets
				September 30,				December 31,
				2013				2012
ASSETS				(unaudited)
Current Assets:
	Cash and cash equivalents			$	1,037,584			$	1,403,489
	Accounts receivable, net				620,984				377,072
	Prepaid expenses and other current assets				107,516				80,189
	Deferred tax assets				255,173				242,944
		Total current assets			2,021,257				2,103,694
Property and equipment, net					142,419				146,563
Intangible and other assets, net					1,874,792				303,810
Goodwill					1,279,762				532,997
Long-term deferred tax assets					277,177				277,177
Total assets				$	5,595,407			$	3,364,241
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	249,415			$	134,913
	Accrued expenses and other current liabilities				53,981				58,808
	Customer deposits				18,859				27,478
	Deferred revenue				155,882				139,022
	Short-term debt and current portion of notes payable				24,397				22,873
	Current portion of capital lease obligations				4,119				5,506
		Total current liabilities			506,653				388,600
Capital lease obligations, net of current portion					11,871				14,981
Notes payable and other long-term debt, net					171,363				191,106
Notes payable, related party					-				200,000
Total liabilities					689,887				794,687
Contingently redeemable non-controlling interest					1,004,974				-
Stockholders' equity:
	Common stock				23,233				21,837
	Additional paid-in capital				5,046,856				3,668,556
	Treasury stock				(150,849	)			(121,294	)
	Accumulated deficit				(1,309,784	)			(1,287,540	)
	Total Where Food Comes From, Inc. equity				3,609,456				2,281,559
	Non-controlling interest				291,090				287,995
Total Equity					3,900,546				2,569,554
Total liabilities and stockholders' equity				$	5,595,407			$	3,364,241