UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 3, 2017
WHERE FOOD COMES FROM, INC.
(Exact Name of Registrant as Specified in its Charter)
| Colorado (State or Other Jurisdiction of Incorporation) |
333-133634 (Commission File Number) |
43-1802805 (I.R.S. Employer Identification No.) | ||
| 202 6th Street, Suite 400 | ||||
| Castle Rock, Colorado | 80104 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
(303) 895-3002
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition |
Reference is made to the Where Food Comes From, Inc. (the “Company”) press release on August 3, 2017, and conference call transcript, attached hereto as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein (including, without limitation, the information set forth in the cautionary statement contained in the press release and conference call transcript), relating to the Company’s financial results for the second quarter and year to date period ended June 30, 2017.
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits |
| Exhibit No. | Description | |
| 99.1 | Press Release issued and dated August 3, 2017 | |
| 99.2 | Transcript for August 3, 2017 conference call |
SIGNATURE
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 hereunto duly authorized.
| WHERE FOOD COMES FROM, INC. (Registrant) | ||
| Date: August 8, 2017 | By: | /s/ Dannette Henning |
| Dannette Henning | ||
| Chief Financial Officer | ||
Where Food Comes From, Inc. 8-K
Exhibit 99.1
Where Food Comes From, Inc. Reports 2017 Second Quarter Financial Results
Second quarter revenue up 25% year over year to $3.5 million from $2.8 million
Six-month revenue up 25% year over year to $6.6 million from $5.2 million
Net income of $62,400 in Q2, $177,800 YTD
Adjusted EBITDA of $320,500 in Q2, $757,400 YTD
YTD cash generated from operations of $789,500
$3.8 million in cash, cash equivalents and short-term investments; 2.7:1 current ratio; no long-term debt
Re-opening of Chinese beef market triggers increased demand for source and age verification from cattle producers
CASTLE ROCK, Colo. – August 3, 2017 – Where Food Comes From, Inc. (WFCF) (d.b.a. IMI Global, Inc.) (OTCQB: WFCF), the most trusted resource for independent, third-party verification of food production practices in North America, today announced its 2017 second quarter and six-month financial results.
“We’re pleased with our second quarter and year-to-date results, which are highlighted by continued profitability and a combination of organic and M&A growth,” said John Saunders, Chairman and CEO. “On the organic side, we continue to drive growth in our verification business through our expanded solutions portfolio and unique ability to bundle multiple audits. In addition, China’s recent decision to re-open its markets to U.S. beef imports has resulted in an increase in beef producers contracting for our source and age verification and Non-Hormone Treated Cattle (NHTC) programs. We expect this trend to gain momentum as China is the world’s second largest but fastest growing consumer of beef, and U.S. producers are eager to fill that growing demand.
“On the M&A side, our highly strategic year-end acquisition of SureHarvest resulted in a further diversification of our service mix and opportunities for cross selling that are now beginning to pay off in terms of new customer acquisition,” Saunders added. “More recently we closed on the purchase of A Bee Organic, which added more than 100 customers and strengthened our organic certification capabilities in the areas of in-ground organic crops, livestock, and eggs, and added new expertise in the areas of hydroponic and aquaponic crops and honey bee farms. We continue to evaluate strategic acquisition opportunities that can add new customers, strengthen our capabilities and create additional value for our stockholders.”
Second Quarter Results
Second quarter revenue increased 25% to $3.5 million from $2.8 million in the same quarter last year. Verification and certification services revenue increased 13% to $2.9 million from $2.6 million, reflecting the addition of new customers and the positive impact of services bundling. Product revenue, consisting of cattle RFID tags, increased 45% to $295,600 from $204,500 due to the addition of new cattle verification customers and the impact of China opening its markets to US beef. Software license, maintenance and support revenue and consulting service revenue – new revenue segments for the Company following the December 2016 acquisition of SureHarvest – contributed $130,200 and $150,900, respectively, versus no revenue in those segments in the year-ago second quarter.
Gross profit in the second quarter increased 21% year over year to $1.6 million from $1.3 million. Gross margin declined to 45.4% from 47.1% year over year as a result of the acquisition of the SureHarvest business, which contributes lower margins than the Company’s core verification solutions. Selling, general and administrative expense increased 60% to $1.7 million from $1.1 million year over year due to expansion activities, including the impact of M&A and the move into a larger corporate headquarters capable of accommodating anticipated growth.
The Company reported second quarter net income attributable to Where Food Comes From, Inc. of $62,400, or less than one cent per share, compared with net income of $169,600, or $0.01 per share, a year ago. Adjusted EBITDA declined slightly year over year to $320,500 from $346,200.
Six Month Results
Revenue for the first six months of 2017 increased 25% to $6.6 million from $5.2 million in the same period last year. Verification and certification services revenue increased 15% to $5.5 million from $4.8 million year over year. Product revenue increased 13% to $539,000. Software license, maintenance and support and consulting services contributed $289,500 and $267,700, respectively.
Gross profit in the first half of 2017 increased 21% to $3.1 million from $2.5 million a year ago. Gross margin was 46.4%, down from 48.1% the same period last year. Selling, general and administrative expense increased 46% to $3.2 million from $2.2 million year.
Net income attributable to Where Food Comes From, Inc. in the first half was $177,800, or $0.01 per share, compared with $256,900, or $0.01 per share, in 2016. Adjusted EBITDA was $757,400, up 31% from $578,000 in the first half of 2016.
The Company generated $789,500 in net cash from operations through the first six months of 2017, up slightly year over year from $765,800.
Balance Sheet
The Company’s cash, cash equivalents and short-term investments balance at June 30, 2017, increased 19% to $3.8 million from $3.2 million at 2016 year-end. Working capital was $3.6 million and the current ratio was 2.7:1.
Conference Call
The Company will conduct a conference call today at 10:00 a.m. Mountain Time.
Dial in:
Domestic Toll Free: 1-877-407-8289
International: 1-201-689-8341
Conference ID: 13667587
Phone replay:
A telephone replay of the conference call will be available through August 17, 2017, as follows:
Domestic Toll Free: 1-877-660-6853
International: 1-201-612-7415
Conference Code: 13667587
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 12,000 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations and restaurants with a wide variety of value-added services through its IMI Global, International Certification Services, Validus Verification Services, SureHarvest, A Bee Organic and Sterling Solutions 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. Visit www.wherefoodcomesfrom.com for additional information.
*Note on non-GAAP Financial Measures
This press release and the accompanying tables include a discussion of EBITDA and Adjusted EBITDA, which are non-GAAP financial measures provided as a complement to the results provided in accordance with generally accepted accounting principles ("GAAP"). The term "EBITDA" refers to a financial measure that we define as earnings (net income or loss) plus or minus net interest plus taxes, depreciation and amortization. Adjusted EBITDA excludes from EBITDA stock-based compensation and, when appropriate, other items that management does not utilize in assessing WFCF’s operating performance (as further described in the attached financial schedules). None of these non-GAAP financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure. We have reconciled Adjusted EBITDA to GAAP net income in the Consolidated Statements of Operations table at the end of this release. We intend to continue to provide these non-GAAP financial measures as part of our future earnings discussions and, therefore, the inclusion of these non-GAAP financial measures will provide consistency in our financial reporting.
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 the Company’s ability to continue producing financial results similar to those described in this press release; the Company’s ability to capitalize on organic and M&A expansion opportunities; build shareholder value; continue momentum in verifications for beef exports to China; continue to expand its capabilities; and demand for, and impact and efficacy of, the Company’s 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 second quarter 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
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | ||||||||||||||||
| Verification and certification services | $ | 2,925,298 | $ | 2,595,085 | $ | 5,479,933 | $ | 4,769,802 | ||||||||
| Product sales | 295,640 | 204,517 | 538,906 | 475,592 | ||||||||||||
| Software license, maintenance and support | 130,234 | — | 289,498 | — | ||||||||||||
| Consulting service | 150,910 | — | 267,693 | — | ||||||||||||
| Total revenue | 3,502,082 | 2,799,602 | 6,576,030 | 5,245,394 | ||||||||||||
| Costs of revenue | ||||||||||||||||
| Labor and other costs of services | 1,639,986 | 1,341,959 | 2,969,969 | 2,451,096 | ||||||||||||
| Cost of Products | 179,133 | 140,064 | 332,999 | 269,563 | ||||||||||||
| Costs of software license, maintenance and support services | 92,775 | — | 220,237 | — | ||||||||||||
| Total costs of revenue | 1,911,894 | 1,482,023 | 3,523,205 | 2,720,659 | ||||||||||||
| Gross profit | 1,590,188 | 1,317,579 | 3,052,825 | 2,524,735 | ||||||||||||
| Selling, general and administrative expenses | 1,711,020 | 1,069,216 | 3,181,849 | 2,172,378 | ||||||||||||
| Income (loss) from operations | (120,832 | ) | 248,363 | (129,024 | ) | 352,357 | ||||||||||
| Other expense (income): | ||||||||||||||||
| Interest expense | 154 | 402 | 316 | 697 | ||||||||||||
| Other income, net | (7,970 | ) | (1,683 | ) | (9,298 | ) | (3,614 | ) | ||||||||
| Income (loss) before income taxes | (113,016 | ) | 249,644 | (120,042 | ) | 355,274 | ||||||||||
| Income tax expense (benefit) | (52,000 | ) | 80,000 | (49,000 | ) | 129,950 | ||||||||||
| Net income (loss) | (61,016 | ) | 169,644 | (71,042 | ) | 225,324 | ||||||||||
| Net loss attributable to non-controlling interest | 123,387 | — | 248,792 | 31,605 | ||||||||||||
| Net income attributable to Where Food Comes From, Inc. | $ | 62,371 | $ | 169,644 | $ | 177,750 | $ | 256,929 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | * | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||
| Diluted | $ | * | $ | 0.01 | $ | 0.01 | $ | 0.01 | ||||||||
| Weighted average number of commonshares outstanding: | ||||||||||||||||
| Basic | 24,664,882 | 23,854,451 | 24,656,398 | 23,803,657 | ||||||||||||
| Diluted | 24,822,563 | 24,006,266 | 24,802,564 | 23,952,935 | ||||||||||||
* Less than $0.01 per share
Where Food Comes From, Inc.
Calculation of Adjusted EBITDA*
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net Income | $ | 62,371 | $ | 169,644 | $ | 177,750 | $ | 256,929 | ||||||||
| Adjustments to EBITDA: | ||||||||||||||||
| Interest expense | 154 | 402 | 316 | 697 | ||||||||||||
| Income tax expense (benefit) | (52,000 | ) | 80,000 | (49,000 | ) | 129,950 | ||||||||||
| Depreciation and amortization | 210,994 | 68,931 | 420,915 | 133,556 | ||||||||||||
| EBITDA* | 221,519 | 318,977 | 549,981 | 521,132 | ||||||||||||
| Adjustments: | ||||||||||||||||
| Stock-based compensation | 44,413 | 27,215 | 89,470 | 56,827 | ||||||||||||
| Cost of acquisition | 54,600 | — | 117,944 | — | ||||||||||||
| Adjusted EBITDA* | $ | 320,532 | $ | 346,192 | $ | 757,395 | $ | 577,959 | ||||||||
*Use of Non-GAAP Financial Measures: Non-GAAP results are presented only as a supplement to the financial statements and for use within management's discussion and analysis based on U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information is provided to enhance the reader's understanding of the Company's financial performance, but non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of the most directly comparable GAAP measures to non-GAAP measures are provided herein.
All of the items included in the reconciliation from net income to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business.
We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.
Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company's performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures.
Where Food Comes From, Inc.
Balance Sheets
| June 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 3,088,397 | $ | 2,489,985 | ||||
| Accounts receivable, net | 1,472,967 | 1,344,646 | ||||||
| Short-term investments | 740,388 | 733,104 | ||||||
| Prepaid expenses and other current assets | 393,112 | 203,744 | ||||||
| Total current assets | 5,694,864 | 4,771,479 | ||||||
| Property and equipment, net | 1,091,386 | 1,229,350 | ||||||
| Intangible and other assets, net | 4,214,061 | 4,228,228 | ||||||
| Goodwill | 2,652,250 | 2,652,250 | ||||||
| Deferred tax assets | 32,560 | — | ||||||
| Total assets | $ | 13,685,121 | $ | 12,881,307 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 428,598 | $ | 333,784 | ||||
| Accrued expenses and other current liabilities | 580,852 | 480,047 | ||||||
| Customer deposits and deferred revenue | 1,066,372 | 524,396 | ||||||
| Current portion of capital lease obligations | 4,135 | 4,067 | ||||||
| Total current liabilities | 2,079,957 | 1,342,294 | ||||||
| Capital lease obligations, net of current portion | 13,650 | 15,735 | ||||||
| Lease incentive obligation | 152,607 | 158,025 | ||||||
| Deferred tax liabilities | — | 49,440 | ||||||
| Total liabilities | 2,246,214 | 1,565,494 | ||||||
| Contingently redeemable non-controlling interest | 1,639,343 | 1,888,135 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 24,958 | 24,890 | ||||||
| Additional paid-in capital | 10,273,388 | 10,052,597 | ||||||
| Treasury stock | (551,615 | ) | (524,892 | ) | ||||
| Retained earnings (accumulated deficit) | 52,833 | (124,917 | ) | |||||
| Total Equity | 9,799,564 | 9,427,678 | ||||||
| Total liabilities and stockholders’ equity | $ | 13,685,121 | $ | 12,881,307 | ||||
Where Food Comes From, Inc. 8-K
Exhibit 99.2
WHERE FOOD COMES FROM, INC.
2017 Second Quarter Conference Call Script
Call date: Thursday, August 3, 2017
Call time: 10:00 a.m. Mountain Time
Executives
Jay Pfeiffer – Investor Relations
John Saunders – Chairman and Chief Executive Officer
Analysts
Ian Cassel – MicroCap Club
Terry Thompson – Private Investor
Operator
Good morning and welcome to the Where Food Comes From 2017 second quarter earnings call.
During the course of this call we will be making forward-looking statements based on current expectations, estimates and projections that are subject to risk. Statements about future revenue, expenses, profitability, cash, growth strategy, new customer wins, business opportunities, market acceptance of our products and services, and potential acquisitions are forward looking statements. Listeners should not place undue reliance on these statements as there are many factors that could cause actual results to differ materially from our forward-looking statements. We encourage you to review our publicly filed documents as well as our news releases and website for more information about the Company. Today we will also be discussing EBITDA and Adjusted EBITDA, which are non-GAAP financial measures provided as a complement to the results provided in accordance with generally accepted accounting principles. We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. It is the Company’s policy not to provide specific guidance with respect to future revenue and earnings expectations or new customer wins.
I will now turn the call over to John Saunders, chairman and chief executive officer.
John Saunders
Good morning and thanks for joining us.
Today we were pleased to announce another quarter of profitable growth.
The organic growth we’re achieving is attributable to a few things: First and foremost is the relentless consumer demand for more information on how and by whom food is produced. As I’ve said before, this is truly a consumer mega-trend that shows no signs of slowing. Second, the breadth of our solutions portfolio gives us the ability to bundle verifications to save producers time and money and minimize the hassles associated with on-site audits. Our unique bundling capability represents a distinct competitive advantage that enables us to win new customers and improve gross margins in our verification business. The third contributor to organic growth has been the recent re-opening of China to U.S. beef exports. In the second quarter U.S. beef producers resumed shipments to China that had been banned since 2003.
Our business opportunity as it relates to the China re-opening is very large, and we are just beginning to scratch the surface. China is the world’s second largest and fastest growing consumer of beef. Their growing middle class – which is now estimated to be the size of the entire U.S. population – is where the demand for beef is and that’s what our beef industry is targeting. To date, other countries have been filling that demand, but U.S. beef is widely regarded as the highest quality and most desirable in the world, and we think Chinese demand for our beef products will only grow.
The buzz about China at cattle auctions in recent months has been incredible, and it’s been a great advertisement for our IMI Global verification business. You’ll recall that when Japan relaxed their beef import requirements back in 2013, many cattle producers stopped investing in source verifications. Interestingly, those producers who continued to use us for source and age verifications were rewarded by being first in line for exporting their beef to China and capturing those price premiums. Those producers who canceled source and age audits after Japan’s action and did not prepare for the China re-opening will now have to wait until next year to commence shipments. And remember, source and age verifications require RFID tags, which is a nice, high-margin business for us that should grow in line with verification revenue.
An interesting nuance of the China’s import regulations is that while they are only requiring source and age, they will also test for hormones and block the import of any beef containing banned substances. What that means for us is that producers planning on exporting to China will be inclined to contract for our Non-hormone Treated Cattle and/or Natural verifications to guard against having their shipments rejected. And once again this is where our bundling advantage comes in.
On the M&A front, we closed on a small but very interesting acquisition in the second quarter – A Bee Organic, a USDA Accredited Certification Agency that specializes in National Organic Program verifications and has approximately 125 active customers ranging from the U.S. to Europe, the Middle East and Asia. A Bee’s varied solutions capabilities illustrate just how wide-ranging and diversified the verification industry has become and why we’re so excited about our prospects for sustainable, long-term growth. A Bee provides traditional verification services for in-ground crops such as avocados, greens and fruits, and for livestock such as cattle and poultry. But they also provide organic verifications for more exotic applications such as beekeepers in Eastern Europe and Asia who want to qualify for NOP labeling in Western markets; for emerging hydroponic and aquaponic crop applications; and for various handlers of commodities ranging from coffee and herbal blends to like to makers of organic body products such as hand creams, lotions and bug repellents. All these new areas are additive to our industry-leading solutions portfolio and further differentiate us from our competition.
Meanwhile, the SureHarvest acquisition continues to integrate nicely into our business and is everything we thought it would be. We’re starting to see some results from our cross-selling activities and hope to have something to share with you along those lines in coming quarters. If you haven’t already done so, you might take a look at SureHarvest’s website at sureharvest.com. They’re adding new customers and really raising the bar in the area of sustainability and farming MIS, where they’ve become a recognized industry leader. Next week SureHarvest’s CEO Jeff Dlott will be a featured panelist at the 2017 Global Sustainability Summit in Nashville, which is the year’s premier event for the food retail and consumer packaged goods sectors.
In closing, we’re pleased with our year-to-date financial performance and looking forward to a good second have of 2017.
And with that I’ll open the call to questions….operator, please go ahead.
Question-and-Answer Session
Operator
[Operator Instructions]. Our first question comes from David Morgan, a private investor. Please proceed with your question.
David Morgan
I've a question -- what impact if any of the Amazon purchasing Whole Foods as far as your business is concerned?
John Saunders
Good question. We have spent quite a bit of time of looking at that acquisition and as you all know we've had a long term very, very productive and mutually beneficial relationship with the Whole Foods and every indication that we've got thus far is that their intentions are to expand what footprint Whole Foods currently has and whether that's going to be in a physical retail location or I think what would be obvious, and hopefully I'm not saying anything that nobody on this call hasn’t thought but move into the home delivery market and to utilize the supplier system that Whole Foods has built and quite honestly from our perspective is one of the most valuable assets that Whole Foods has and it's key to our relationship with them. So we're at this point very positive and bullish on the relationship. We haven't got a great amount of detail but we're looking forward to that.
David Morgan
Okay. And as far as the main management, you got with that Whole Foods, are they still going to be there as a part of the relationship with Amazon or do they replace them as far as the upper management goes with Whole Foods?
John Saunders
Yes, we have no indication that there's been any transition or any people leaving that we've been dealing with so again we're positive in that way.
David Morgan
Really tight relationship, really positive relationship with upper management with key people there. So as far as we know that still hasn’t changed.
John Saunders
Correct.
Operator
Our next question comes from Galileo Russell with HyperChange TV. Please proceed with your question.
Galileo Russell
I recall at the time of the SureHarvest acquisition you guys mentioned it would add about 1.7 million in recurring revenue and it looks like it's trending a little bit under that through the first half of the year. So I was wondering if you could just give a little more color on what you expect from SureHarvest in the second half of the year?
Dannette Henning
You know we were looking through -- when we do our due diligence of SureHarvest and kind of looking at the historical trending, SureHarvest tends to have a very solid third and fourth quarter. So we're still on track right now to achieve those revenue goals, they got a lot working positively towards slowdown [ph] and we often had [indiscernible] lot of their contracts -- they are done with the growers association and so a lot of them are renewing in the third quarter and fourth quarter and so we're seeing those renew as well.
There is also some unearned revenue that was on the SureHarvest audited financial statements for 2016 that any acquisition was part of those liabilities that were assumed, so you're not seeing that in the 2017 numbers and that number was about 200,000 for the year.
Operator
[Operator Instructions]. Our next question comes from Ian Cassel with MicroCapClub. Please proceed with your question.
Ian Cassel
My question is on SureHarvest, I think you mentioned previously in the last call about how you're focusing on integrating there MIS platform across your other kind of companies or subsidiaries and food groups. I was wondering how that is going?
Leann Saunders
There is a lot of activity on that front, a lot of cross selling going on. Takes a long time obviously for those sales channels to become fruitful but we're very positive making at this point making a lot of introduction and SureHarvest has few individuals that are very focused on and just a lot is very focused on the cross selling as it is a business development individual [indiscernible] and they've been putting a lot of time into really cross selling or getting ready to go to the sustainability summit which where it comes from is a I'm sponsor and we're right in front of kind of the retail food service group there together. So it's going to be a good opportunity for us in the next couple weeks.
Ian Cassel
Okay, just kind of sticking with us Leann on sustainability, is there any update on McDonald's in the sustainable beef project?
Leann Saunders
Yes. So McDonald continues to be a huge supporter of the regional round tables around the world and so what happening right now is just development of those infrastructures. So where it comes from continues to be a member of the Canadian roundtable for sustainable beef and participating in kind of building out that structure with them and McDonald fits on all those committee and it's very supportive of that and it's same with the U.S. round table for sustainable beef McDonald's is very engaged and very supportive of all those efforts but it is supporting kind of the greater industries in building regional structures for sustainability. So movement, it's slow but there's movement on all fronts regarding sustainability.
Ian Cassel
Okay. One last question maybe for you John, when you look at the M&A opportunities for the company I think we focus mostly and obviously on domestic opportunities and attacking other food groups and bringing them into the Where Food Comes From family. I'm just curious if you have looked or are you looking at potential acquisitions that are more international in scope since I know verification is not only used in the U.S. but other places around the world.
John Saunders
Yes. Good question Ian and then I'm going to have a question for you after I'm done with my answer. The international aspects of what we're doing I think have become even more prevalent with some of the issues that you probably have seen going on with a major beef supplier in both the U.S. and in Brazil and as a result of that I think it continues to highlight an opportunity for Where Food Comes From to expand internationally but as I've said in the past I think we're getting to the point where we're ready for it, have we evaluated those opportunities? Yes we evaluate then all the time and there is several that at any time we're looking at that are both here obviously but also international.
So we're doing that on an ongoing basis. Are we closer than we were a couple years ago to being to explore international opportunities? Most definitely.
Ian Cassel
Okay. And when you look at the domestic opportunity in the United States I mean how many opportunities are there to kind of continue to do what you're doing on the M&A side?
John Saunders
Hard to quantify and it's regions specific and obviously species in commodity specific. I think just if you were to think of my bandwidth and we've got a relatively small M&A team that works on these deals for us to really evaluate probably more than a half dozen at any time is difficult. So if you want to use that as a gauge that's probably a good way to look at what we're ongoing and those half dozen or 10 are always changing obviously as we complete acquisitions and maybe there's other reasons that opportunities don't come to fruition but you know it's definitely a good use of our time and it's something that keeps us pretty busy.
Ian Cassel
Okay. And this is the third time I said last question, but this will be my last question. It seems like over the last five years you've kind of build a company and you've integrated all these other companies into yours to form kind of a platform and in a lot of ways you're doing a lot of the hard work and I think a lot of people like the fact that obviously things are third party verified and it's not just by a piece of technology but it's by human being, I think that's something that the people actually like even though obviously the everything is technology driven but I'm curious like in the future are you looking at today, you kind of have the hard work behind the scenes that you are doing and how often do you evaluate? I guess what I'm trying to say is I feel like there's a piece here then that is kind of more consumer facing like how do you bring all this data that you're capturing and then bring it more front facing to the consumer either through an interactive portal or something like that and I was just wondering where you kind of see it heading over the next five years?
John Saunders
Well I think great question, and Leann sitting here I think as you talked about the work that's going on behind the scenes what's important to understand for you guys is that we've completed seven acquisitions now I think over the last five years and we've ramped up significantly here with our preparations for China and what we see going on with the non-GMO project and with organic that I would say since we started having these calls, I'm trying to think of our current head count or full time headcount but it's pushing to 80 or 90 full time employees that we've got and that number requires that we've got a very diverse five group, they're scattered across the country for a lot of different reasons and we continue to have daily interactions with our divisions mostly Leann and looking at how we can continue to optimize our efficiencies, but that is very, very difficult work.
As we've looked at keeping our options open and looking at consumers and how we're going to get out in front of them. My question just to give you a little time to think about it was you all have hopefully seen our -- first edition of the Where Food Comes From magazine that is a bucket [ph] or the representation of what I see the forward facing version of Where Food Comes From being. Now however we decide to deliver that through partnerships or through new technology or other ways that we're able to get in front of the consumer. I think what's important for this group to understand and you guys listening is that hopefully you've all got the magazine and if you haven't I apologize, we will send you some. The stories and the people in there and really that integration of not only the stories that how those people work with Where Food Comes From and it's very -- the one thing you can that’s important about the magazine that is that from cover to cover every single story, every single producer, every single product in there is something that Where Food Comes From touches and that is the bread and that's the real special part of Where Food Comes From that has been very difficult for us to articulate and what's so exciting for me is that we finally have it and how we deliver that, we're I think you know again we're going to look at new technology whatever we can do new opportunities, new relationships with our retail and our food service partners but that is the message that we're trying to get out in front of people, all the while continuing to do the busy work that is what's so critical here.
I'll also tell you that since we have been a public company I don't think we've ever had a more efficient more positive, more fully functioning team that we've got right now at all levels, at all divisions and we've got the last five people that we brought into the company are the shining stars where they came from and come with these glowing references.
So we're becoming a juggernaut here of a really good positive energy so it's pretty exciting time.
Ian Cassel
Okay. Thank you.
John Saunders
Yes, so the question is what you think of the magazine?
Ian Cassel
No, I enjoyed it I thought it made a lot of sense for you to do it and I think you explained it better than I can on why it's important, that everything that you showcase is something that you touch. So I think it's good.
Operator
Our next question comes from Terry Thompson, a Private Investor.
Terry Thompson
Congratulations on another great quarter and the magazine, I'm very, very impressed with it, really well put together. I think that's a great idea for marketing.
Quite an initiative maybe premature but I'm curious has there been any direct contact between Amazon and Where Food Comes From since the announcement of them acquiring Whole Foods?
Leann Saunders
Yes, we're actually scheduled to meet with the team that's coming out to one of our customer locations here in the very near term.
Terry Thompson
Okay. Will there be updates on that meeting for us stockholders' by any chance?
Leann Saunders
I doubt we will be able to make much of that meeting public at this point, Terry.
Terry Thompson
Sure. That's understandable. Well I was very, very excited every quarter since I've got involved with Where Food Comes From has been exciting but this last quarter especially. Thank you very much and onward and upward.
John Saunders
Thanks, Terry.
Operator
Ladies and gentlemen we have reached the end of the question and answer session. I would like to turn the call back to John Saunders for closing comments.
John Saunders
Well I guess it all comes [ph] my closing comments a minute ago. I really appreciate you all joining the call again today and we will talk to you soon.
Operator
This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.