EX-99.1 2 ex99-1.htm PRESS RELEASE

 

 

 

Where Food Comes From, Inc. 8-K

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE NEWS
November 14, 2013 OTCQB: WFCF

 

Where Food Comes From®, Inc. Reports Third Quarter Results

 

Recent acquisition and strategic partnership add approximately 4,000 new customers and more than $2.0 million in projected annual revenue, positioning the Company for long-term profitable growth

 

CASTLE ROCK, Colo. – 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.

Company Contacts:

 

John Saunders

Chief Executive Officer

303-895-3002

 

Jay Pfeiffer

Pfeiffer High Investor Relations, Inc.

303-393-7044


 

 
 

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