UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the Quarterly period ended |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________ |
Commission
File No.
(exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer” and “accelerated filer” and “smaller reporting entity” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer: | ☐ | Accelerated filer: | ☐ | |
| ☐ | Smaller reporting company: | |||
| Emerging growth company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The
|
The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of July 30, 2021, was .
Where Food Comes From, Inc.
Table of Contents
June 30, 2021
| Part 1 - Financial Information | ||
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Item 4. | Controls and Procedures | 26 |
| Part II - Other Information | ||
| Item 1. | Legal Proceedings | 27 |
| Item 1A. | Risk Factors | 27 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27 |
| Item 6. | Exhibits | 27 |
| 2 |
Where Food Comes From, Inc.
Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (Amounts in thousands, except per share amounts) | (Unaudited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance | ||||||||
| Inventory | - | |||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Investment in Progressive Beef | ||||||||
| Intangible and other assets, net | ||||||||
| Goodwill | ||||||||
| Deferred tax assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Current portion of long term debt | - | |||||||
| Current portion of finance lease obligations | ||||||||
| Current portion of operating lease obligations | ||||||||
| Total current liabilities | ||||||||
| Long term debt, net of current portion | - | |||||||
| Finance lease obligations, net of current portion | ||||||||
| Operating lease obligation, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
| Preferred stock, $ par value; shares authorized; issued or outstanding | - | - | ||||||
| Common stock, $ par value; shares authorized; (2021) and (2020) shares issued, and (2021) and (2020) shares outstanding | ||||||||
| Additional paid-in-capital | ||||||||
| Treasury stock of (2021) and (2020) shares | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Total equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
Where Food Comes From, Inc.
Consolidated Statements of Operations
(Unaudited)
| Three months ended June 30, | ||||||||
| (Amounts in thousands, except per share amounts) | 2021 | 2020 | ||||||
| Revenues: | ||||||||
| Verification and certification service revenue | $ | $ | ||||||
| Product sales | ||||||||
| Software and related consulting revenue | ||||||||
| Total revenues | ||||||||
| Costs of revenues: | ||||||||
| Costs of verification and certification services | ||||||||
| Costs of products | ||||||||
| Costs of software and related consulting | ||||||||
| Total costs of revenues | ||||||||
| Gross profit | ||||||||
| Selling, general and administrative expenses | ||||||||
| Income from operations | ||||||||
| Other income/(expense): | ||||||||
| Dividend income from Progressive Beef | ||||||||
| Other income, net | ||||||||
| Loss on foreign currency exchange | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Per share - net income: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
Where Food Comes From, Inc.
Consolidated Statements of Operations
(Unaudited)
| Six months ended June 30, | ||||||||
| (Amounts in thousands, except per share amounts) | 2021 | 2020 | ||||||
| Revenues: | ||||||||
| Verification and certification service revenue | $ | $ | ||||||
| Product sales | ||||||||
| Software and related consulting revenue | ||||||||
| Total revenues | ||||||||
| Costs of revenues: | ||||||||
| Costs of verification and certification services | ||||||||
| Costs of products | ||||||||
| Costs of software and related consulting | ||||||||
| Total costs of revenues | ||||||||
| Gross profit | ||||||||
| Selling, general and administrative expenses | ||||||||
| Income from operations | ||||||||
| Other income/(expense): | ||||||||
| Dividend income from Progressive Beef | ||||||||
| Other income, net | ||||||||
| Loan forgiveness from Paycheck Protection Program | ||||||||
| (Loss)/gain on foreign currency exchange | ( | ) | ||||||
| Gain on sale of assets | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Per share - net income: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
Where Food Comes From, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Six months ended June 30, | ||||||||
| (Amounts in thousands) | 2021 | 2020 | ||||||
| Operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on sale of assets | ( | ) | ||||||
| Stock-based compensation expense | ||||||||
| Deferred tax expense | ||||||||
| Bad debt expense | ||||||||
| Forgiveness of note payable from Paycheck Protection Program | ( | ) | ||||||
| Changes in operating assets and liabilities, net of effect from acquisitions: | ||||||||
| Accounts receivable | ||||||||
| Short-term investments | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Right of use assets and liabilities, net | ||||||||
| Net cash provided by operating activities | ||||||||
| Investing activities: | ||||||||
| Acquisition of Postelsia Holdings, Ltd. | ( | ) | ||||||
| Purchases of property, equipment and software development costs | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Proceeds from long term debt | ||||||||
| Repayments of finance lease obligations | ( | ) | ( | ) | ||||
| Proceeds from stock option exercise | ||||||||
| Stock repurchase under Stock Buyback Plan | ( | ) | ( | ) | ||||
| Net cash (used in) / provided by financing activities | ( | ) | ||||||
| Net change in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
Where Food Comes From, Inc.
Consolidated Statement of Equity
(Unaudited)
| Additional | ||||||||||||||||||||||||
| Common Stock | Paid-in | Treasury | Retained | |||||||||||||||||||||
| (Amounts in thousands) | Shares | Amount | Capital | Stock | Earnings | Total | ||||||||||||||||||
| Balance at December 31, 2020 | $ | | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Stock options exercised | - | - | - | |||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Stock options exercised | - | - | - | |||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
Where Food Comes From, Inc.
Consolidated Statement of Equity
(Unaudited)
| Additional | ||||||||||||||||||||||||
| Common Stock | Paid-in | Treasury | Retained | |||||||||||||||||||||
| (Amounts in thousands) | Shares | Amount | Capital | Stock | Earnings | Total | ||||||||||||||||||
| Balance at December 31, 2019 (1) | $ | | $ | $ | ( | ) | $ | $ | ||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Balance at March 31, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Stock options exercised | - | - | - | |||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at June 30, 2020 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| (1) |
The accompanying notes are an integral part of these consolidated financial statements.
| 8 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 1 - The Company and Basis of Presentation
Business Overview
Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). We are an independent, third-party food verification company conducting both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural products are accurate. We care about food and other agricultural products, how it is grown and raised, the quality of what we eat, what farmers and ranchers do, and authentically telling that story to the consumer. Our team visits farms and ranches and looks at their plants, animals, and records, and compares the information we collect to specific standards or claims that farms and ranches want to make about how they are producing food. We strive to ensure that everyone involved in the food business - from growers and farmers to retailers and shoppers – can count on WFCF to provide authentic and transparent information about the food we eat and how, where, and by whom it is produced.
We also provide sustainability programs, compliance management and farming information management solutions to drive sustainable value creation. We employ a software-as-a-service (“SaaS”) revenue model that bundles annual software licenses with ongoing software enhancements and upgrades and a wide range of professional services that support our verification business and generate incremental revenue specific to the food and agricultural industry. Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the food they purchase through product labeling and web-based information sharing and education.
Most of our customers are located throughout the United States.
Basis of Presentation
Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations, financial position and cash flows of Where Food Comes From, Inc. and its subsidiaries, Where Food Comes From Organic, Inc. (“WFCFO”), Validus Verifications Services, LLC (“Validus”), Sterling Solutions (“Sterling”), SureHarvest Services, Inc. (“SureHarvest”), A Bee Organic, Sow Organic, JVF Consulting and Postelsia Holdings, Ltd. (“Postelsia”) (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. All significant intercompany transactions and amounts have been eliminated. The results of businesses acquired are included in the consolidated financial statements from the date of the acquisition. Actual results could differ from the estimates.
The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2020, included in our Form 10-K filed on February 18, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. Certain prior year amounts have been reclassified to conform to current year presentation. Net income and shareholders’ equity were not affected by these reclassifications. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. The consolidated operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for any other interim period of any future year.
| 9 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Except
as specifically indicated, all information in this Quarterly Report on Form 10-Q has been retroactively adjusted to give effect to a
Seasonality
Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue are typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU’s. ASU’s were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.
Basic net income / (loss) per share was computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and restricted stock awards are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| (in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||||||||
| Basic: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Diluted: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Weighted average effects of dilutive securities | ||||||||||||||||
| Total | ||||||||||||||||
| Antidilutive securities: | ||||||||||||||||
The effect of the inclusion of the antidilutive shares would have resulted in an increase in earnings per share. Accordingly, the weighted average shares outstanding have not been adjusted for antidilutive shares.
| 10 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 3 - Investment in Progressive Beef, LLC
For
the three months ended June 30, 2021 and 2020, the Company received dividend income from Progressive Beef of $
Note 4 – Intangible and Other Assets
The following table summarizes our intangible and other assets (amounts in thousands, except useful life):
| June 30, | December 31, | Estimated | ||||||||||
| 2021 | 2020 | Useful Life | ||||||||||
| Intangible assets subject to amortization: | ||||||||||||
| Tradenames and trademarks | $ | $ | ||||||||||
| Accreditations | ||||||||||||
| Customer relationships | ||||||||||||
| Patents | ||||||||||||
| Non-compete agreements | ||||||||||||
| Less accumulated amortization | ||||||||||||
| Tradenames/trademarks (not subject to amortization) | ||||||||||||
| Other assets | ||||||||||||
| Intangible and other assets: | $ | $ | ||||||||||
Note 5 – Accrued Expenses and Other Current Liabilities
The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Income and sales taxes payable | $ | $ | ||||||
| Payroll related accruals | ||||||||
| Customer deposits | ||||||||
| Professional fees and other expenses | ||||||||
| $ | $ | |||||||
| 11 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 6 – Notes Payable
Long Term Debt
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| (In thousands) | ||||||||
| Paycheck Protection Program Loan | $ | $ | ||||||
| Less current portion of notes payable and other long-term debt | - | ( | ) | |||||
| Notes payable and other long-term debt | $ | $ | ||||||
The
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allocated $
Unison Revolving Line of Credit
The
Company has a revolving line of credit (“LOC”) agreement which matures
In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with equity-based compensation in the form of stock options and restricted stock awards. The Company recognizes all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the grant date. For stock options, fair value is calculated at the date of grant using the Black-Scholes-Merton option pricing model. For restricted stock awards, fair value is the closing stock price for the Company’s common stock on the grant date. The expense is recognized over the vesting period of the grant. For the periods presented, all stock-based compensation expense was classified as a component within selling, general and administrative expense in the Company’s consolidated statements of operations.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Stock options | $ | $ | $ | $ | ||||||||||||
| Restricted stock awards | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
During
the three months ended June 30, 2021, the Company awarded stock options to purchase shares of the Company’s common stock
at an exercise price of $ per share to employees of the Company. other stock options were awarded during the six months ended
June 30, 2021. stock options were awarded during the three months ended June 30, 2020. During the six months ended June 30, 2020,
the Company awarded stock options to purchase shares of the Company’s common stock at an exercise price of $ per share
to employees of the Company (all share and dollar amounts have been adjusted to reflect the
| 12 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
| Six months ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Number of options awarded to purchase common shares | ||||||||
| Risk-free interest rate | % | % | ||||||
| Expected volatility | % | % | ||||||
| Assumed dividend yield | N/A | N/A | ||||||
| Expected life of options from the date of grant | years | years | ||||||
The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):
| Years ended December 31st: | Unvested stock options | Unvested restricted stock awards | Total unrecognized compensation expense | |||||||||
| 2021 (remaining six months) | $ | $ | $ | |||||||||
| 2022 | ||||||||||||
| 2023 | ||||||||||||
| 2024 | ||||||||||||
| $ | $ | $ | ||||||||||
Equity Incentive Plans
Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2006 Plan, the “Plans”) provide for the issuance of stock-based awards to employees, officers, directors and consultants. The Plans permit the granting of stock awards and stock options. The vesting of stock-based awards is generally subject to the passage of time and continued employment through the vesting period.
| 13 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Stock Option Activity
| Weighted avg. | ||||||||||||||||||||
| Weighted avg. | Weighted avg. | remaining | ||||||||||||||||||
| Number of | exercise price | grant date fair | contractual life | Aggregate | ||||||||||||||||
| awards | per share | value per share | (in years) | intrinsic value | ||||||||||||||||
| Outstanding, December 31, 2020 | $ | $ | $ | |||||||||||||||||
| Granted | $ | $ | ||||||||||||||||||
| Exercised | ( | ) | $ | $ | ||||||||||||||||
| Expired/Forfeited | ( | ) | $ | $ | ||||||||||||||||
| Outstanding, June 30, 2021 | $ | $ | $ | |||||||||||||||||
| Exercisable, June 30, 2021 | $ | $ | $ | |||||||||||||||||
| Unvested, June 30, 2021 | $ | $ | $ | |||||||||||||||||
The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on June 30, 2021 and the exercise price for the in-the-money options) that would have been received by the option holders if all the in-the-money options had been exercised on June 30, 2021.
Restricted Stock Activity
Restricted stock activity under our Equity Incentive Plans is summarized as follows (all share and dollar amounts have been adjusted to reflect the 1-for-4 reverse split that occurred in December 2020):
| Weighted avg. | ||||||||
| Number of | grant date | |||||||
| options | fair value | |||||||
| Non-vested restricted shares, December 31, 2020 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Non-vested restricted shares, June 30, 2021 | $ | |||||||
Note 8 – Income Taxes
Deferred tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The
provision or benefit for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its
effective income tax rate expected to be applicable for the full fiscal year. For the three and six months ended June 30, 2021 we recorded
an income tax expense of approximately $
| 14 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 9 - Revenue Recognition
Disaggregation of Revenue
We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, (iii) software and related consulting revenue.
Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).
| Three months ended June 30, 2021 | Three months ended June 30, 2020 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated | Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated | |||||||||||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Product sales | ||||||||||||||||||||||||||||||||
| Software and related consulting revenue | ||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Six months ended June 30, 2021 | Six months ended June 30, 2020 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated | Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated | |||||||||||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Product sales | ||||||||||||||||||||||||||||||||
| Software and related consulting revenue | ( | ) | ||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Contract Balances
As
of June 30, 2021, and December 31, 2020, accounts receivable from contracts with customers, net of allowance for doubtful accounts, were
approximately $
As
of June 30, 2021, and December 31, 2020, deferred revenue from contracts with customers was approximately $
The following table reflects the changes in our contract liabilities during the six month period ended June 30, 2021 (amounts in thousands):
| Deferred revenue: | ||||
| Unearned revenue January 1, 2021 | $ | |||
| Unearned billings | ||||
| Revenue recognized | ( | ) | ||
| Unearned revenue June 30, 2021 | $ | |||
| 15 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 10 – Leases
The components of lease expense were as follows (amounts in thousands):
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Finance lease cost | ||||||||||||||||
| Amortization of assets | ||||||||||||||||
| Interest on finance lease obligations | ||||||||||||||||
| Total net lease cost | $ | $ | $ | $ | ||||||||||||
Included
in the table above, for the three and six months ended June 30, 2021, is $
Supplemental balance sheet information related to leases was as follows (amounts in thousands):
| June 30, 2021 | December 31, 2020 | |||||||||||||||||||||||
| Related Party | Other | Total | Related Party | Other | Total | |||||||||||||||||||
| Operating leases: | ||||||||||||||||||||||||
| Operating lease ROU assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Current operating lease liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Noncurrent operating lease liabilities | ||||||||||||||||||||||||
| Total operating lease liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| June 30, 2021 | December 31, 2020 | |||||||
| Finance leases: | ||||||||
| Property and equipment, at cost | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| Current obligations of finance leases | $ | $ | ||||||
| Finance leases, net of current obligations | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term (in years): | ||||||||
| Operating leases | ||||||||
| Finance leases | ||||||||
| Weighted average discount rate: | ||||||||
| Operating leases | % | % | ||||||
| Finance leases | % | % | ||||||
Supplemental cash flow and other information related to leases was as follows (amounts in thousands):
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||
| Operating cash flows from operating leases | $ | $ | $ | $ | ||||||||||||
| Operating cash flows from finance leases | $ | $ | $ | $ | ||||||||||||
| Financing cash flows from finance leases | $ | $ | $ | $ | ||||||||||||
| ROU assets obtained in exchange for lease liabilities: | ||||||||||||||||
| Operating leases | $ | $ | $ | $ | ||||||||||||
| 16 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Maturities of lease liabilities were as follows (amounts in thousands):
| Years Ending December 31st, | Operating Leases | Finance Leases | ||||||
| 2021 (six remaining months) | $ | | $ | | ||||
| 2022 | ||||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less amount representing interest | ( | ) | ( | ) | ||||
| Total lease obligations | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term lease obligations | $ | $ | ||||||
Note 11 – Commitments and Contingencies
Legal proceedings
From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable.
Note 12 - Segments
With
each acquisition, we assess the need to disclose discrete information related to our operating segments. Because of the similarities
of certain of our acquisitions that provide certification and verification services, we aggregate operations into
The Company also determined that it has a software and related consulting reportable segment. SureHarvest, which includes Postelsia, is the sole operating segment under the software and related consulting reportable segment. This segment includes software license, maintenance, support and software-related consulting service revenues.
The Company’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its operating segments. Segment management makes decisions, measures performance, and manages the business utilizing internal reporting operating segment information. Performance of operating segments are based on net sales, gross profit, selling, general and administrative expenses and most importantly, operating income.
| 17 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (amounts in thousands):
| Three months ended June 30, 2021 | Three months ended June 30, 2020 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Goodwill | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| All other assets, net | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Product sales | ||||||||||||||||||||||||||||||||
| Software and related consulting revenue | ||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||
| Costs of verification and certification services | ||||||||||||||||||||||||||||||||
| Costs of products | ||||||||||||||||||||||||||||||||
| Costs of software and related consulting | ||||||||||||||||||||||||||||||||
| Total costs of revenues | ||||||||||||||||||||||||||||||||
| Gross profit | ||||||||||||||||||||||||||||||||
| Depreciation & amortization | ||||||||||||||||||||||||||||||||
| Other operating expenses | ||||||||||||||||||||||||||||||||
| Segment operating income/(loss) | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Other items to reconcile segment operating income (loss) to net income/(loss): | ||||||||||||||||||||||||||||||||
| Other income | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Income tax (expense)/benefit | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income/(loss) | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||
| Six months ended June 30, 2021 | Six months ended June 30, 2020 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Goodwill | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| All other assets, net | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Total assets | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Product sales | ||||||||||||||||||||||||||||||||
| Software and related consulting revenue | ( | ) | ||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||
| Costs of verification and certification services | ( | ) | ||||||||||||||||||||||||||||||
| Costs of products | ||||||||||||||||||||||||||||||||
| Costs of software and related consulting | ||||||||||||||||||||||||||||||||
| Total costs of revenues | ( | ) | ||||||||||||||||||||||||||||||
| Gross profit | ( | ) | ||||||||||||||||||||||||||||||
| Depreciation & amortization | ||||||||||||||||||||||||||||||||
| Other operating expenses | ( | ) | ||||||||||||||||||||||||||||||
| Segment operating income/(loss) | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Other items to reconcile segment operating income (loss) to net income/(loss): | ||||||||||||||||||||||||||||||||
| Other income | ( | ) | ||||||||||||||||||||||||||||||
| Income tax (expense)/benefit | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income/(loss) | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| 18 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 13 – Supplemental Cash Flow Information
| Six months ended June 30, | ||||||||
| (Amounts in thousands) | 2021 | 2020 | ||||||
| Cash paid during the year: | ||||||||
| Interest expense | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
Note 14 – Subsequent Events
Where
Food Comes From, Inc. announced on July 1, 2021, its Board of Directors declared a special cash dividend totaling $ per common share.
The Company has had no other material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements.
| 19 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
This information should be read in conjunction with the consolidated financial statements and the notes included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Form 10−K for the fiscal year ended December 31, 2020. The following discussion and analysis includes historical and certain forward−looking information that should be read together with the accompanying consolidated financial statements, related footnotes and the discussion below of certain risks and uncertainties that could cause future operating results to differ materially from historical results or from the expected results indicated by forward−looking statements.
Business Overview
Where Food Comes From, Inc. and its subsidiaries (“WFCF,” the “Company,” “our,” “we,” or “us”) is a leading trusted resource for third-party verification of food production practices in North America. The Company supports more than 15,000 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands and restaurants with a wide variety of value-added services provided through its family of verifiers, including IMI Global, WFCFO, Validus Verification Services, Sterling Solutions, and A Bee Organic. In order to have credibility, product claims such as gluten-free, non-GMO, non-hormone treated, humane handling, and others require verification by an independent third-party such as WFCF. The Company’s principal business is conducting both on-site and desk audits to verify that claims being made about livestock, crops and other food products are accurate.
Through our more recent acquisitions, including SureHarvest Services LLC; Sow Organic, LLC; and Postelsia Holdings, Ltd. (“Postelsia”), we provide sustainability programs, compliance management and farming information management solutions to drive sustainable value creation. We employ a software-as-a-service (“SaaS”) revenue model that bundles annual software licenses with ongoing software enhancements and upgrades and a wide range of professional services that support our verification business and generate incremental revenue specific to the food and agricultural industry.
Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the food they purchase through product labeling and web-based information sharing and education. With the use of Quick Response Code (“QR”) technology, consumers can instantly access information about the producers behind their food.
WFCF was founded in 1996 and incorporated in the state of Colorado as a subchapter C corporation in 2006. The Company’s shares of common stock trade on the NASDAQ Capital Market under the stock ticker symbol, “WFCF.”
The Company’s original name – Integrated Management Information, Inc. (d.b.a. IMI Global) – was changed to Where Food Comes From, Inc. in 2012 to better reflect the Company’s mission. Early growth was attributable to source and age verification services for beef producers that wanted access to markets overseas following the discovery of “mad cow” disease in the U.S. Over the years, WFCF has expanded its portfolio to include verification and software services for most food groups and over 50 programs and organizations. This growth has been achieved both organically and through the acquisition of other companies.
Coronavirus Pandemic (COVID-19)
In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”) as a pandemic. This could result in a variety of risks to our business including the inability to perform audits at our customers locations due to social distancing, supplier disruptions as a result of business closures, food systems that are in disarray resulting in global food shortages, euthanasia of animals and dumping of dairy products because farmers have no distribution channel, all of which could negatively influence our revenue and costs. The government may introduce healthcare reform measures for which we cannot predict the financial implication of on our business. A weak or declining economy could cause our customers to delay purchases or payments for our services and products. Additionally, COVID-19 may introduce additional challenges including our ability to produce sufficient cash flows from operations or to raise capital when needed at acceptable terms, if at all.
| 20 |
All of our locations have been affected. We have adjusted certain aspects of our operations to protect our employees while avoiding business interruption. As an essential business to the food and agriculture industries, we have maintained standard business operations while under stay at home (and similar) guidelines from various states, by allowing a majority of employees to work remotely until government mandates allow for normal business operations. Employees essential to operations, management and the accounting function remain on-site at our corporate headquarters. Internal controls over financial reporting have not been impacted by employees working remotely. Management is continuously monitoring to ensure controls are effective and properly maintained.
The Company generally performs onsite audits in connection with its verification and certification activity. We continue to work with standard setting bodies and identify innovative solutions to offer our customers. We believe that our transformative approach will help further differentiate us from competitors. Additionally, we believe third party verification is an essential component to the food and agricultural supply chain and ensures our future as a high quality provider of assurance services, thereby increasing the value of products in the food supply chain.
We will continue to monitor the situation closely and react accordingly to any future restrictions or limitations, while keeping the interest of our customers and business in mind. Due to the uncertainty in the severity and duration of the pandemic, the impact on our revenues, profitability and statement of financial position is uncertain at this time.
Seasonality
Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue are typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Liquidity and Capital Resources
At June 30, 2021, we had cash, cash equivalents of approximately $5.3 million compared to approximately $4.4 million at December 31, 2020. Our working capital at June 30, 2021 was approximately $4.9 million compared to $4.4 million at December 31, 2020.
Net cash provided by operating activities for the six months ended June 30, 2021 was approximately $1.6 million compared to $1.7 million during the same period in 2020. Net cash provided by operating activities is driven by our net income and adjusted by non-cash items. Non-cash adjustments primarily include depreciation, amortization of intangible assets, stock-based compensation expense, forgiveness of Paycheck Protection Program loan, and deferred taxes. Fluctuations are primarily due to operating performance offset by the timing of cash receipts and cash disbursements. The increase in cash provided by operating activities for the periods ending June 30, 2021 and 2020 was primarily driven by a change in accounts receivable, accounts payable, inventory and deferred revenue.
Net cash used in investing activities for the six months ended June 30, 2021, was approximately $0.1 million compared to $0.6 million in the 2020 period. Net cash used in the period ending June 30, 2021 was primarily for the purchase of a vehicle and equipment. Net cash used in the June 30, 2020 period was attributable to the acquisition of Postelsia Holdings, Ltd for $0.3 million and investment in software of $0.3 million.
Net cash used in financing activities for the six months ended June 30, 2021 was approximately $0.6 million compared to net cash provided by financing activities of $0.8 million in the 2020 period. Cash used for the period ending June 30, 2021, was primarily due to the repurchase of common shares under the Stock Buyback Plan. Cash provided for the period ending June 30, 2020, was primarily from proceeds from the PPP loan of $1.0 million, offset by $0.3 million for the repurchase of common shares under the Stock Buyback Plan.
| 21 |
The primary driver of our operating cash flow is our third-party verification solutions, specifically the gross margin generated from services provided. Therefore, we focus on the elements of those operations, including revenue growth and long-term projects that ensure a steady stream of operating profits to enable us to meet our cash obligations. On a weekly basis, we review the performance of each of our revenue streams focusing on third-party verification solutions compared with prior periods and our operating plan. We believe that our various sources of capital, including cash flow from operating activities, overall improvement in our performance, and our ability to obtain additional financing, are adequate to finance current operations as well as the repayment of current debt obligations. We are not aware of any other event or trend that would negatively affect our liquidity. In the event such a trend develops, we believe that there are sufficient financing avenues available to us and from our internal cash-generating capabilities to adequately manage our ongoing business.
The culmination of all our efforts has brought significant opportunities to us, including increased investor confidence and renewed interest in our company, as well as the potential to develop business relationships with long-term strategic partners. In keeping with our core business, we will continue to review our business model with a focus on profitability, long-term capital solutions and the potential impact of acquisitions or divestitures, if such an opportunity arises.
Our plan for continued growth is primarily based on diversification in our product offerings within national and international markets, as well as, potential acquisitions. We believe that there are significant growth opportunities available to us because of growing consumer awareness and demand on a national level. Internationally, a quality verification program is often the only way to overcome import or export restrictions.
Debt Facility
The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2022. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due upon maturity. As of June 30, 2021, and December 31, 2020, the effective interest rate was 4.75%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of June 30, 2021, and December 31, 2020, there were no amounts outstanding under this LOC.
On April 17, 2020, the Company received a $1.0 million loan under the PPP with a maturity date of April 17, 2022 and an annual interest rate of 1.00%. The Company received notification the loan and accrued interest amount was forgiven on March 4, 2021.
Off-Balance Sheet Arrangements
As of June 30, 2021, we had no off-balance sheet arrangements of any type.
| 22 |
RESULTS OF OPERATIONS
Three and six months ended June 30, 2021 compared to the same periods in fiscal year 2020
The following table shows information for reportable operating segments (amounts in thousands):
| Three months ended June 30, 2021 | Three months ended June 30, 2020 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Goodwill | $ | 1,947 | $ | 999 | $ | - | $ | 2,946 | $ | 1,133 | $ | 1,813 | $ | - | $ | 2,946 | ||||||||||||||||
| All other assets, net | 17,327 | 3,082 | (3,093 | ) | 17,316 | 17,463 | 3,474 | (4,604 | ) | 16,333 | ||||||||||||||||||||||
| Total assets | $ | 19,274 | $ | 4,081 | $ | (3,093 | ) | $ | 20,262 | $ | 18,596 | $ | 5,287 | $ | (4,604 | ) | $ | 19,279 | ||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | 3,695 | $ | - | $ | - | $ | 3,695 | $ | 3,108 | $ | - | $ | - | $ | 3,108 | ||||||||||||||||
| Product sales | 964 | - | - | 964 | 796 | - | - | 796 | ||||||||||||||||||||||||
| Software and related consulting revenue | - | 482 | - | 482 | - | 512 | - | 512 | ||||||||||||||||||||||||
| Total revenues | $ | 4,659 | $ | 482 | $ | - | $ | 5,141 | $ | 3,904 | $ | 512 | $ | - | $ | 4,416 | ||||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||
| Costs of verification and certification services | 2,132 | - | - | 2,132 | 1,516 | - | - | 1,516 | ||||||||||||||||||||||||
| Costs of products | 648 | - | - | 648 | 501 | - | - | 501 | ||||||||||||||||||||||||
| Costs of software and related consulting | - | 352 | - | 352 | - | 299 | - | 299 | ||||||||||||||||||||||||
| Total costs of revenues | 2,780 | 352 | - | 3,132 | 2,017 | 299 | - | 2,316 | ||||||||||||||||||||||||
| Gross profit | 1,879 | 130 | - | 2,009 | 1,887 | 213 | - | 2,100 | ||||||||||||||||||||||||
| Depreciation & amortization | 148 | 51 | - | 199 | 112 | 132 | - | 244 | ||||||||||||||||||||||||
| Other operating expenses | 1,442 | 86 | - | 1,528 | 1,266 | 121 | - | 1,387 | ||||||||||||||||||||||||
| Segment operating income/(loss) | $ | 289 | $ | (7 | ) | $ | - | $ | 282 | $ | 509 | $ | (40 | ) | $ | - | $ | 469 | ||||||||||||||
| Other items to reconcile segment operating income (loss) to net income/(loss): | ||||||||||||||||||||||||||||||||
| Other income | 29 | (5 | ) | - | 24 | 29 | (2 | ) | - | 27 | ||||||||||||||||||||||
| Income tax (expense)/benefit | - | (5 | ) | (99 | ) | (104 | ) | - | - | (145 | ) | (145 | ) | |||||||||||||||||||
| Net income/(loss) | $ | 318 | $ | (17 | ) | $ | (99 | ) | $ | 202 | $ | 538 | $ | (42 | ) | $ | (145 | ) | $ | 351 | ||||||||||||
| Six months ended June 30, 2021 | Six months ended June 30, 2020 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software and Related Consulting Segment | Eliminations and Other | Consolidated Totals | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Goodwill | $ | 1,947 | $ | 999 | $ | - | $ | 2,946 | $ | 1,133 | $ | 1,813 | $ | - | $ | 2,946 | ||||||||||||||||
| All other assets, net | 17,327 | 3,082 | (3,093 | ) | 17,316 | 17,463 | 3,474 | (4,604 | ) | 16,333 | ||||||||||||||||||||||
| Total assets | 19,274 | 4,081 | (3,093 | ) | 20,262 | 18,596 | 5,287 | (4,604 | ) | 19,279 | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | 6,958 | $ | - | $ | - | $ | 6,958 | $ | 5,911 | $ | - | $ | - | $ | 5,911 | ||||||||||||||||
| Product sales | 1,688 | - | - | 1,688 | 1,521 | - | - | 1,521 | ||||||||||||||||||||||||
| Software and related consulting revenue | - | 935 | - | 935 | - | 1,010 | (114 | ) | 896 | |||||||||||||||||||||||
| Total revenues | $ | 8,646 | $ | 935 | $ | - | $ | 9,581 | $ | 7,432 | $ | 1,010 | $ | (114 | ) | $ | 8,328 | |||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||
| Costs of verification and certification services | 3,925 | - | - | 3,925 | 3,140 | - | (90 | ) | 3,050 | |||||||||||||||||||||||
| Costs of products | 1,105 | - | - | 1,105 | 1,003 | - | - | 1,003 | ||||||||||||||||||||||||
| Costs of software and related consulting | - | 680 | - | 680 | - | 565 | - | 565 | ||||||||||||||||||||||||
| Total costs of revenues | 5,030 | 680 | - | 5,710 | 4,143 | 565 | (90 | ) | 4,618 | |||||||||||||||||||||||
| Gross profit | 3,616 | 255 | - | 3,871 | 3,289 | 445 | (24 | ) | 3,710 | |||||||||||||||||||||||
| Depreciation & amortization | 300 | 101 | - | 401 | 200 | 278 | - | 478 | ||||||||||||||||||||||||
| Other operating expenses | 2,920 | 179 | - | 3,099 | 2,803 | 338 | (24 | ) | 3,117 | |||||||||||||||||||||||
| Segment operating income/(loss) | $ | 396 | $ | (25 | ) | $ | - | $ | 371 | $ | 286 | $ | (171 | ) | $ | - | $ | 115 | ||||||||||||||
| Other items to reconcile segment operating income (loss) to net income/(loss): | ||||||||||||||||||||||||||||||||
| Other income | 66 | (7 | ) | 1,037 | 1,096 | 59 | 1 | - | 60 | |||||||||||||||||||||||
| Income tax (expense)/benefit | - | (5 | ) | (110 | ) | (115 | ) | - | - | (65 | ) | (65 | ) | |||||||||||||||||||
| Net income/(loss) | $ | 462 | $ | (37 | ) | $ | 927 | $ | 1,352 | $ | 345 | $ | (170 | ) | $ | (65 | ) | $ | 110 | |||||||||||||
| 23 |
Verification and Certification Segment
Verification and certification service revenues consist of fees charged for verification audits and other verification and certification related services that the Company performs for customers. Fees earned from our WFCF labeling program are also included in our verification and certification revenues as it represents a value-added extension of our source verification. Verification and certification service revenue for the three and six months ended June 30, 2021 increased 18.9% and 17.7%, respectively, compared to 2020, primarily due to increased customer demand for our product offerings.
Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags. Product sales for the three and six months ended June 30, 2021 increased 21.1% and 11.0%, respectively. Overall, our product sales have increased primarily in response to the requirement for source and age verification using an identification tag at birth for cattle.
Costs of revenues for our verification and certification segment for the three and six months ended June 30, 2021 were approximately $2.8 million and $5.0 million, respectively, compared to approximately $2.0 million and $4.1 million (including eliminations), respectively, for the same periods in 2020. Gross margin for the three and six months ended June 30, 2021 decreased to 40.3% and 41.9%, respectively, compared to 48.3% and 43.0% (including eliminations), respectively, in 2020 primarily due to change in product mix of our offerings which included new customers, new offerings, returned demand for audits that were delayed in 2020 due to COVID-19 social distancing measures and additional compensation expense incurred to support the increased activity. Our margins are generally impacted by various costs such as cost of products, salaries and benefits, insurance, and taxes.
Other operating expenses for the three and six months ended June 30, 2021 increased by approximately 13.9% and 5.0%, respectively, compared to the same three and six month periods in 2020 due to increased travel, discretionary compensation expense and public listing costs not incurred during the same periods in 2020. Depreciation and amortization for the three and six months ended June 30, 2021 increased 32.1% and 50.0%, respectively, compared to the same three and six month periods in 2020. The increase in depreciation and amortization is predominately from shifting certain assets and personnel from SureHarvest to WFCF in 2020 to better support the entire Company.
Software and Related Consulting Segment
Software and related consulting revenue is a revenue stream specific to our acquisitions of SureHarvest and Postelsia. We employ a SaaS revenue model that bundles annual software licenses with ongoing software enhancements and upgrades and a wide range of professional services, such as professional appearances, customer education and training, that support our verification business and generate incremental revenue specific to the food and agricultural industry. For the three and six months ended June 30, 2021, software and related consulting revenue was relatively flat compared to 2020 (including eliminations).
Costs of revenues for our software and related consulting segment for the three and six months ended June 30, 2021 and June 30, 2020 was approximately $0.4 and $0.7 million, respectively. Gross margin for the three and six months ended June 30, 2021 decreased to 27.0% and 27.3%, respectively, compared to 41.6% and 49.7% (including eliminations) for the same period in 2020. The three and six month decrease in gross margin is due primarily to increased cost of labor to support our enhancements to our customer’s technology.
Other operating expenses for the three and six months ended June 30, 2021 decreased approximately 28.9% and 47.0%, respectively, compared to the same period in 2020 (including eliminations). Depreciation and amortization for the three and six months ended June 30, 2021 decreased 61.4% and 63.7%, respectively, compared to the same three and six month periods in 2020. The decrease is predominately due to the decrease in depreciation, amortization and personnel costs from shifting certain assets and personnel from SureHarvest to WFCF in 2020 to better support the entire Company.
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As with all of our acquisitions, we continue to identify synergies and implement best practices. We focus our efforts to create value in various ways such as improving the performance of our acquired businesses, removing excess capacity, creating market access for products, acquiring skills and technologies more quickly or at a lower cost than we can build in-house, exploiting our industry-specific scalability and bundling opportunities, and picking winners early and helping them develop their businesses. Achieving any or all of these strategies take time to implement. With our more recent acquisition in the software and related consulting segment, we now believe it is far more beneficial to the long term growth of the company to maintain our own proprietary software. We are less focused on licensing the software to others and are able to use our knowledge and expertise, based on the data we own, to make us more competitive in the verification market. Accordingly, we believe that our software and related consulting segment should viewed as an ancillary activity to our overall business.
Dividend Income from Progressive Beef
For the three and six months ended June 30, 2021 and 2020, the Company received dividend income of $30,000 and $60,000, respectively, from Progressive Beef representing a distribution of their earnings.
Income Tax Expense
The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. For the three and six months ended June 30, 2021, we recorded income tax expense of approximately $104,000 and $115,000, respectively, compared to income tax expense of $145,000 and $65,000, respectively, for the same periods in 2020. The effective tax rate for the six months ended June 30, 2021 is favorably impacted by the non-taxability of the PPP loan forgiveness income.
Net Income and Per Share Information
As a result of the foregoing, net income attributable to WFCF shareholders for the three and six months ended June 30, 2021 was approximately $0.2 million and $1.4 million, respectively, and $0.03 and $0.22, respectively, per basic and diluted common share, respectively, compared to net income of approximately $0.4 million and $0.1 million, respectively, or $0.06 and $0.02 per basic and diluted common share for the same periods in 2020.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive and financial officers, have conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. We believe that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
There have not been any other changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable. We are not aware of any significant legal actions at this time.
ITEM 1A. RISK FACTORS
Our business is subject to a number of risks, including those identified in Item 1A. — “Risk Factors” of our 2020 Annual Report on Form 10−K, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of June 30, 2021, the Company recognizes the coronavirus pandemic may have an economic impact on the Company, but management does not know and cannot estimate what the financial impact may be. We may also disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
On September 30, 2019, our Board of Directors approved a new plan to buyback up to ten million additional shares of our common stock from the open market (“Stock Buyback Plan”). Activity for the three months ended June 30, 2021 is as follows:
Number of Shares (in thousands) | Cost of Shares (in thousands) | Average Cost per Share | ||||||||||
| Shares purchased - April 2021 | 6 | $ | 87 | $ | 14.56 | |||||||
| Shares purchased - May 2021 | 3 | 48 | $ | 14.27 | ||||||||
| Shares purchased - June 2021 | 4 | 60 | $ | 15.00 | ||||||||
| Total | 13 | $ | 195 | $ | 15.00 | |||||||
ITEM 6. EXHIBITS
(a) Exhibits
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SIGNATURES
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 thereunto duly authorized.
| Date: August 5, 2021 | Where Food Comes From, Inc. | |
| By: | /s/ John K. Saunders | |
| Chief Executive Officer | ||
| By: | /s/ Dannette Henning | |
| Chief Financial Officer |
| 28 |
EXHIBIT 31.1
I, John Saunders, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Where Food Comes From, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 5, 2021 | |
| /s/ John Saunders | |
| John Saunders, Chief Executive Officer |
EXHIBIT 31.2
I, Dannette Henning, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Where Food Comes From, Inc.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: August 5, 2021 | |
| /s/ Dannette Henning | |
| Dannette Henning, Chief Financial Officer |
EXHIBIT 32.1
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, John Saunders the Chief Executive Officer of Where Food Comes From, Inc. (the “Company”), hereby certifies that, to his knowledge:
| (i) | the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 5, 2021 | |
| /s/ John Saunders | |
| John Saunders, Chief Executive Officer |
EXHIBIT 32.2
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Dannette Henning, the Chief Financial Officer of Where Food Comes From, Inc. (the “Company”), hereby certifies that, to her knowledge:
| (i) | the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (ii) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: August 5, 2021 | |
| /s/ Dannette Henning | |
| Dannette Henning, Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, authorized | 5,000 | 5,000 |
| Preferred stock, issued | 0 | 0 |
| Preferred stock, outstanding | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, authorized | 95,000 | 95,000 |
| Common stock, issued | 6,475 | 6,456 |
| Common stock, outstanding | 6,095 | 6,118 |
| Treasury stock | 380 | 338 |
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Revenues: | ||||
| Total revenues | $ 5,141,000 | $ 4,416,000 | $ 9,581,000 | $ 8,328,000 |
| Costs of revenues: | ||||
| Total costs of revenues | 3,132,000 | 2,316,000 | 5,710,000 | 4,618,000 |
| Gross profit | 2,009,000 | 2,100,000 | 3,871,000 | 3,710,000 |
| Selling, general and administrative expenses | 1,727,000 | 1,631,000 | 3,500,000 | 3,595,000 |
| Income from operations | 282,000 | 469,000 | 371,000 | 115,000 |
| Other income/(expense): | ||||
| Dividend income from Progressive Beef | 30,000 | 30,000 | 60,000 | 60,000 |
| Other income, net | 2,000 | 1,000 | 4,000 | |
| Loan forgiveness from Paycheck Protection Program | 1,037,000 | |||
| Gain on sale of assets | 9,000 | |||
| (Loss)/gain on foreign currency exchange | (5,000) | (2,000) | (7,000) | 1,000 |
| Interest expense | (1,000) | (3,000) | (4,000) | (5,000) |
| Income before income taxes | 306,000 | 496,000 | 1,467,000 | 175,000 |
| Income tax expense | 104,000 | 145,000 | 115,000 | 65,000 |
| Net income | $ 202,000 | $ 351,000 | $ 1,352,000 | $ 110,000 |
| Per share - net income: | ||||
| Basic | $ 0.03 | $ 0.06 | $ 0.22 | $ 0.02 |
| Diluted | $ 0.03 | $ 0.06 | $ 0.22 | $ 0.02 |
| Weighted average number of common shares outstanding: | ||||
| Basic | 6,100 | 6,219 | 6,151 | 6,228 |
| Diluted | 6,186 | 6,258 | 6,241 | 6,271 |
| Verification and Certification Service Revenue [Member] | ||||
| Revenues: | ||||
| Total revenues | $ 3,695,000 | $ 3,108,000 | $ 6,958,000 | $ 5,911,000 |
| Costs of revenues: | ||||
| Total costs of revenues | 2,132,000 | 1,516,000 | 3,925,000 | 3,050,000 |
| Consolidated [Member] | ||||
| Revenues: | ||||
| Total revenues | 964,000 | 796,000 | 1,521,000 | 1,688,000 |
| Costs of revenues: | ||||
| Total costs of revenues | 648,000 | 501,000 | 1,003,000 | 1,105,000 |
| Software and Related Consulting Revenue [Member] | ||||
| Revenues: | ||||
| Total revenues | 482,000 | 512,000 | 935,000 | 896,000 |
| Costs of revenues: | ||||
| Total costs of revenues | $ 352,000 | $ 299,000 | $ 680,000 | $ 565,000 |
The Company and Basis of Presentation |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Accounting Policies [Abstract] | |
| The Company and Basis of Presentation | Note 1 - The Company and Basis of Presentation
Business Overview
Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). We are an independent, third-party food verification company conducting both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural products are accurate. We care about food and other agricultural products, how it is grown and raised, the quality of what we eat, what farmers and ranchers do, and authentically telling that story to the consumer. Our team visits farms and ranches and looks at their plants, animals, and records, and compares the information we collect to specific standards or claims that farms and ranches want to make about how they are producing food. We strive to ensure that everyone involved in the food business - from growers and farmers to retailers and shoppers – can count on WFCF to provide authentic and transparent information about the food we eat and how, where, and by whom it is produced.
We also provide sustainability programs, compliance management and farming information management solutions to drive sustainable value creation. We employ a software-as-a-service (“SaaS”) revenue model that bundles annual software licenses with ongoing software enhancements and upgrades and a wide range of professional services that support our verification business and generate incremental revenue specific to the food and agricultural industry. Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the food they purchase through product labeling and web-based information sharing and education.
Most of our customers are located throughout the United States.
Basis of Presentation
Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations, financial position and cash flows of Where Food Comes From, Inc. and its subsidiaries, Where Food Comes From Organic, Inc. (“WFCFO”), Validus Verifications Services, LLC (“Validus”), Sterling Solutions (“Sterling”), SureHarvest Services, Inc. (“SureHarvest”), A Bee Organic, Sow Organic, JVF Consulting and Postelsia Holdings, Ltd. (“Postelsia”) (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. All significant intercompany transactions and amounts have been eliminated. The results of businesses acquired are included in the consolidated financial statements from the date of the acquisition. Actual results could differ from the estimates.
The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2020, included in our Form 10-K filed on February 18, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. Certain prior year amounts have been reclassified to conform to current year presentation. Net income and shareholders’ equity were not affected by these reclassifications. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. The consolidated operating results for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for any other interim period of any future year.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
Except as specifically indicated, all information in this Quarterly Report on Form 10-Q has been retroactively adjusted to give effect to a 1-for-4 reverse stock split that was effective on December 1, 2020.
Seasonality
Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue are typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Recent Accounting Pronouncements
The Financial Accounting Standards Board (FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU’s. ASU’s were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.
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Basic and Diluted Net Income / (Loss) per Share |
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| Per share - net income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic and Diluted Net Income / (Loss) per Share |
Basic net income / (loss) per share was computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and restricted stock awards are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
The effect of the inclusion of the antidilutive shares would have resulted in an increase in earnings per share. Accordingly, the weighted average shares outstanding have not been adjusted for antidilutive shares.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Investment in Progressive Beef, LLC |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Investments, All Other Investments [Abstract] | |
| Investment in Progressive Beef, LLC | Note 3 - Investment in Progressive Beef, LLC
For the three months ended June 30, 2021 and 2020, the Company received dividend income from Progressive Beef of $30,000, respectively, representing a distribution of their earnings. For the six months ended June 30, 2021 and 2020, the Company received dividend income totaling $60,000, respectively. The income is reflected within the “Other income/(expense)” section of the Company’s Consolidated Statement of Income for the three and six months ended June 30, 2021 and 2020.
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Intangible and Other Assets |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Intangible and Other Assets | Note 4 – Intangible and Other Assets
The following table summarizes our intangible and other assets (amounts in thousands, except useful life):
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Accrued Expenses and Other Current Liabilities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Expenses and Other Current Liabilities | Note 5 – Accrued Expenses and Other Current Liabilities
The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Notes Payable |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Payable | Note 6 – Notes Payable
Long Term Debt
The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (“PPP”), the initiative provides federally guaranteed loans to small businesses. These loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. The Company received notification the loan and accrued interest was forgiven on March 4, 2021.
Unison Revolving Line of Credit
The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2022. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due on maturity. As of June 30, 2021 and December 31, 2020, the effective interest rate for both periods was 4.75%. The LOC is collateralized by all the business assets of ICS. As of June 30, 2021, and December 31, 2020, there were no amounts outstanding under this LOC.
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Stock-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation |
In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with equity-based compensation in the form of stock options and restricted stock awards. The Company recognizes all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the grant date. For stock options, fair value is calculated at the date of grant using the Black-Scholes-Merton option pricing model. For restricted stock awards, fair value is the closing stock price for the Company’s common stock on the grant date. The expense is recognized over the vesting period of the grant. For the periods presented, all stock-based compensation expense was classified as a component within selling, general and administrative expense in the Company’s consolidated statements of operations.
During the three months ended June 30, 2021, the Company awarded stock options to purchase shares of the Company’s common stock at an exercise price of $ per share to employees of the Company. other stock options were awarded during the six months ended June 30, 2021. stock options were awarded during the three months ended June 30, 2020. During the six months ended June 30, 2020, the Company awarded stock options to purchase shares of the Company’s common stock at an exercise price of $ per share to employees of the Company (all share and dollar amounts have been adjusted to reflect the 1-for-4 reverse split that occurred in December 2020).
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):
Equity Incentive Plans
Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2006 Plan, the “Plans”) provide for the issuance of stock-based awards to employees, officers, directors and consultants. The Plans permit the granting of stock awards and stock options. The vesting of stock-based awards is generally subject to the passage of time and continued employment through the vesting period.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
Stock Option Activity
The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on June 30, 2021 and the exercise price for the in-the-money options) that would have been received by the option holders if all the in-the-money options had been exercised on June 30, 2021.
Restricted Stock Activity
Restricted stock activity under our Equity Incentive Plans is summarized as follows (all share and dollar amounts have been adjusted to reflect the 1-for-4 reverse split that occurred in December 2020):
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Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 8 – Income Taxes
Deferred tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The provision or benefit for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. For the three and six months ended June 30, 2021 we recorded an income tax expense of approximately $104,000 and $115,000, respectively, compared to income tax expense of $145,000 and $65,000 for the same 2020 periods. The effective tax rate for the six months ended June 30, 2021 is favorably impacted by the non-taxability of the PPP loan forgiveness income.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Revenue Recognition |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue Recognition | Note 9 - Revenue Recognition
Disaggregation of Revenue
We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, (iii) software and related consulting revenue.
Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).
Contract Balances
As of June 30, 2021, and December 31, 2020, accounts receivable from contracts with customers, net of allowance for doubtful accounts, were approximately $2.0 and $2.5 million, respectively.
As of June 30, 2021, and December 31, 2020, deferred revenue from contracts with customers was approximately $1.7 and $1.1 million, respectively. The balance of the contract liabilities at June 30, 2021 and December 31, 2020 are expected to be recognized as revenue within one year or less of the invoice date.
The following table reflects the changes in our contract liabilities during the six month period ended June 30, 2021 (amounts in thousands):
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Leases |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | Note 10 – Leases
The components of lease expense were as follows (amounts in thousands):
Included in the table above, for the three and six months ended June 30, 2021, is $0.1 and $0.2 million, respectively, of operating lease cost for our corporate headquarters. This space is being leased from The Move, LLC. Our CEO and President, each a related party to WFCF, have a 24.3% jointly-held ownership interest in The Move, LLC.
Supplemental balance sheet information related to leases was as follows (amounts in thousands):
Supplemental cash flow and other information related to leases was as follows (amounts in thousands):
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
Maturities of lease liabilities were as follows (amounts in thousands):
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Commitments and Contingencies |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | Note 11 – Commitments and Contingencies
Legal proceedings
From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable.
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Segments |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segments | Note 12 - Segments
With each acquisition, we assess the need to disclose discrete information related to our operating segments. Because of the similarities of certain of our acquisitions that provide certification and verification services, we aggregate operations into one verification and certification reportable segment. The operating segments included in the aggregated verification and certification segment include IMI Global, WFCFO and Validus. The factors considered in determining this aggregated reporting segment include the economic similarity of the businesses, the nature of services provided, production processes, types of customers and distribution methods.
The Company also determined that it has a software and related consulting reportable segment. SureHarvest, which includes Postelsia, is the sole operating segment under the software and related consulting reportable segment. This segment includes software license, maintenance, support and software-related consulting service revenues.
The Company’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its operating segments. Segment management makes decisions, measures performance, and manages the business utilizing internal reporting operating segment information. Performance of operating segments are based on net sales, gross profit, selling, general and administrative expenses and most importantly, operating income.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (amounts in thousands):
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Supplemental Cash Flow Information |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Information | Note 13 – Supplemental Cash Flow Information
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Subsequent Events |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 14 – Subsequent Events
Where Food Comes From, Inc. announced on July 1, 2021, its Board of Directors declared a special cash dividend totaling $ per common share. This one-time special dividend will be paid to stockholders of record as of the close of business on July 27, 2021, with a payment date of August 16, 2021.
The Company has had no other material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements. |
Basic and Diluted Net Income / (Loss) per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Per share - net income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Reconciliation of Basic and Diluted Income Per Share Computations |
The effect of the inclusion of the antidilutive shares would have resulted in an increase in earnings per share. Accordingly, the weighted average shares outstanding have not been adjusted for antidilutive shares.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Intangible and Other Assets (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Intangible and Other Assets | The following table summarizes our intangible and other assets (amounts in thousands, except useful life):
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Accrued Expenses and Other Current Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accrued Expenses and Other Current Liabilities | The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):
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Notes Payable (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long Term Debt | Long Term Debt
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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock-based Compensation Expense |
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| Schedule of Estimated Fair Value of Stock Options |
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| Schedule of Unrecognized Compensation Cost from Unvested Awards | The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):
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| Schedule of Stock Option Activity |
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| Schedule of Restricted Stock Activity Under Equity Incentive Plan | Restricted stock activity under our Equity Incentive Plans is summarized as follows (all share and dollar amounts have been adjusted to reflect the 1-for-4 reverse split that occurred in December 2020):
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Revenue Recognition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Revenues Disaggregated by Revenue | Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).
|
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| Schedule of Changes in Contract Liabilities | The following table reflects the changes in our contract liabilities during the six month period ended June 30, 2021 (amounts in thousands):
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Lease Expense | The components of lease expense were as follows (amounts in thousands):
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| Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows (amounts in thousands):
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| Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow and other information related to leases was as follows (amounts in thousands):
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| Schedule of Maturities of Operating Lease and Finance Lease Liabilities | Maturities of lease liabilities were as follows (amounts in thousands):
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Segments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Segments | The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (amounts in thousands):
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Supplemental Cash Flow Information (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Cash Flow Information |
|
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The Company and Basis of Presentation (Details Narrative) |
6 Months Ended |
|---|---|
Jun. 30, 2021 | |
| Accounting Policies [Abstract] | |
| Reverse split stock | 1-for-4 reverse stock split |
Schedule of Reconciliation of Basic and Diluted Income Per Share Computations (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Per share - net income: | ||||
| Weighted average shares outstanding | 6,100 | 6,219 | 6,151 | 6,228 |
| Weighted average shares outstanding | 6,100 | 6,219 | 6,151 | 6,228 |
| Weighted average effects of dilutive securities | 86 | 39 | 90 | 43 |
| Total | 6,186 | 6,258 | 6,241 | 6,271 |
| Antidilutive securities: | 17 | 70 | 17 | 66 |
Investment in Progressive Beef, LLC (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Investments, All Other Investments [Abstract] | ||||
| Dividend income | $ 30,000 | $ 30,000 | $ 60,000 | $ 60,000 |
Schedule of Intangible and Other Assets (Details) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible and other assets, gross | $ 5,247 | $ 5,257 |
| Less accumulated amortization | 2,969 | 2,795 |
| Intangible and other assets, net | 2,278 | 2,462 |
| Tradenames/trademarks (not subject to amortization) | 465 | 465 |
| Intangible assets | 2,743 | 2,927 |
| Other assets | 23 | 21 |
| Intangible and other assets: | 2,766 | 2,948 |
| Trademarks and Trade Names [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible and other assets, gross | $ 417 | 417 |
| Minimum [Member] | Trademarks and Trade Names [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Estimated useful lives of intangible assets | 2 years 6 months | |
| Minimum [Member] | Customer Relationships [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Estimated useful lives of intangible assets | 3 years | |
| Maximum [Member] | Trademarks and Trade Names [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Estimated useful lives of intangible assets | 8 years | |
| Maximum [Member] | Customer Relationships [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Estimated useful lives of intangible assets | 15 years | |
| Accreditations [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible and other assets, gross | $ 75 | 85 |
| Estimated useful lives of intangible assets | 5 years | |
| Customer Relationships [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible and other assets, gross | $ 3,664 | 3,664 |
| Patents [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible and other assets, gross | $ 970 | 970 |
| Estimated useful lives of intangible assets | 4 years | |
| Noncompete Agreements [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible and other assets, gross | $ 121 | $ 121 |
| Estimated useful lives of intangible assets | 5 years |
Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Income and sales taxes payable | $ 32 | $ 168 |
| Payroll related accruals | 709 | 271 |
| Customer deposits | 28 | 31 |
| Professional fees and other expenses | 349 | 129 |
| Accrued expenses and other current liabilities | $ 1,118 | $ 599 |
Schedule of Long Term Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Paycheck Protection Program Loan | $ 1,035 | |
| Less current portion of notes payable and other long-term debt | (463) | |
| Notes payable and other long-term debt | $ 572 |
Notes Payable (Details Narrative) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Dec. 31, 2020 |
|
| Line of Credit Facility [Line Items] | ||
| Working capital | $ 75,080 | |
| Revolving Credit Facility [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Revolving line of credit maturity date | Apr. 12, 2022 | |
| Interest rate, basis spread | 1.50% | |
| Debt interest rate | 4.75% | 4.75% |
| Paycheck Protection Program [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Proceeds from loans | $ 350,000,000,000 |
Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total | $ 29 | $ 24 | $ 54 | $ 55 |
| Share-based Payment Arrangement, Option [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total | 29 | 23 | 53 | 53 |
| Restricted Stock [Member] | ||||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
| Total | $ 1 | $ 1 | $ 2 | |
Schedule of Estimated Fair Value of Stock Options (Details) - shares shares in Thousands |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Share-based Payment Arrangement [Abstract] | ||
| Number of options awarded to purchase common shares | 17,000 | 5,000 |
| Risk-free interest rate | 0.82% | 1.56% |
| Expected volatility | 70.10% | 97.30% |
| Assumed dividend yield | ||
| Expected life of options from the date of grant | 9 years 9 months 18 days | 9 years 9 months 18 days |
Schedule of Unrecognized Compensation Cost from Unvested Awards (Details) $ in Thousands |
Jun. 30, 2021
USD ($)
|
|---|---|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Unvested stock options | $ 228 |
| Unvested restricted stock awards | |
| Total unrecognized compensation expense | 228 |
| Two Thousand And Twenty Twenty One Remaining Nine Months [Member] | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Unvested stock options | 79 |
| Unvested restricted stock awards | |
| Total unrecognized compensation expense | 79 |
| 2022 [Member] | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Unvested stock options | 98 |
| Unvested restricted stock awards | |
| Total unrecognized compensation expense | 98 |
| 2023 [Member] | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Unvested stock options | 40 |
| Unvested restricted stock awards | |
| Total unrecognized compensation expense | 40 |
| 2024 [Member] | |
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
| Unvested stock options | 11 |
| Unvested restricted stock awards | |
| Total unrecognized compensation expense | $ 11 |
Schedule of Stock Option Activity (Details) $ / shares in Units, shares in Thousands |
6 Months Ended | |
|---|---|---|
|
Jun. 30, 2021
USD ($)
$ / shares
shares
|
Jun. 30, 2020
shares
|
|
| Share-based Payment Arrangement [Abstract] | ||
| Number of stock options, Beginning Balance | shares | 105,086 | |
| Weighted avg exercise price per share, Beginning Balance | $ 6.25 | |
| Weighted avg grant date fair value per share, Beginning Balance | $ 6.06 | |
| Weighted avg remaining contractual life (in years), Beginning Balance | 5 years 4 months 17 days | |
| Aggregate intrinsic value, Beginning Balance | $ | $ 814,090 | |
| Number of stock options, Granted | shares | 17,000 | 5,000 |
| Weighted avg exercise price per share, Granted | $ 14.77 | |
| Weighted avg grant date fair value per share, Granted | $ 10.90 | |
| Weighted avg remaining contractual life (in years), Granted | 10 years | |
| Number of stock options, Exercised | shares | (17,763) | |
| Weighted avg exercise price per share, Exercised | $ 2.30 | |
| Weighted avg grant date fair value per share, Exercised | $ 2.92 | |
| Weighted avg remaining contractual life (in years), Exercised | 1 year 8 months 26 days | |
| Number of stock options, Expired/Forfeited | shares | (1,988) | |
| Weighted avg exercise price per share, Expired/Forfeited | $ 7.17 | |
| Weighted avg grant date fair value per share, Expired/Forfeited | $ 6.82 | |
| Weighted avg remaining contractual life (in years), Expired/Forfeited | 7 years 3 months 10 days | |
| Number of stock options, Ending Balance | shares | 102,335 | |
| Weighted avg exercise price per share, Ending Balance | $ 8.31 | |
| Weighted avg grant date fair value per share, Ending Balance | $ 7.49 | |
| Weighted avg remaining contractual life (in years), Ending Balance | 6 years 3 months 29 days | |
| Aggregate intrinsic value, Ending Balance | $ | $ 732,909 | |
| Number of stock options, Exercisable | shares | 68,657 | |
| Weighted avg exercise price per share, Exercisable | $ 6.93 | |
| Weighted avg grant date fair value per share, Exercisable Ending | $ 6.80 | |
| Weighted avg remaining contractual life (in years), Exercisable Ending | 5 years 14 days | |
| Aggregate intrinsic value, Exercisable Ending | $ | $ 586,568 | |
| Number of stock options, Unvested | shares | 33,678 | |
| Weighted avg exercise price per share, Unvested | $ 11.12 | |
| Weighted avg grant date fair value per share, Unvested Ending | $ 8.89 | |
| Weighted avg remaining contractual life (in years), Unvested Ending | 8 years 11 months 12 days | |
| Aggregate intrinsic value, Unvested Ending | $ | $ 146,341 | |
Schedule of Restricted Stock Activity Under Equity Incentive Plan (Details) shares in Thousands |
6 Months Ended |
|---|---|
|
Jun. 30, 2021
$ / shares
shares
| |
| Share-based Payment Arrangement [Abstract] | |
| Number of restricted stock options, Beginning Balance | shares | 1,250 |
| Weighted avg grant date fair value, Beginning Balance | $ / shares | $ 10.20 |
| Number of restricted stock options, Granted | shares | |
| Weighted avg grant date fair value, Granted | $ / shares | |
| Number of restricted stock options, Vested | shares | (1,250) |
| Weighted avg grant date fair value, Vested | $ / shares | $ 10.20 |
| Number of restricted stock options, Forfeited | shares | |
| Weighted avg grant date fair value, Forfeited | $ / shares | |
| Number of restricted stock options, Ending Balance | shares | |
| Weighted avg grant date fair value, Ending Balance | $ / shares |
Stock-Based Compensation (Details Narrative) - $ / shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | ||||
| Reverse split stock | 1-for-4 reverse stock split | |||
| Employees [Member] | ||||
| Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items] | ||||
| Number of shares awards outstanding | 17,000,000 | 0 | 0 | 5,000,000 |
| Stock options exercise price per share | $ 14.77 | $ 7.24 | $ 14.77 | $ 7.24 |
| Reverse split stock | 1-for-4 reverse split | |||
Income Taxes (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Income Tax Disclosure [Abstract] | ||||
| Income tax benefit | $ 104,000 | $ 145,000 | $ 115,000 | $ 65,000 |
Schedule of Revenues Disaggregated by Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | $ 5,141 | $ 4,416 | $ 9,581 | $ 8,328 |
| Consolidated [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 964 | 796 | 1,521 | 1,688 |
| Verification and Certification Segment [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 4,659 | 3,904 | 8,646 | 7,432 |
| Verification and Certification Segment [Member] | Service [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 3,695 | 3,108 | 6,958 | 5,911 |
| Verification and Certification Segment [Member] | Consolidated [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 964 | 796 | 1,688 | 1,521 |
| Verification and Certification Segment [Member] | Software Related Consulting Service Revenue [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | ||||
| Software Sales and Related Consulting Segment [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 482 | 512 | 935 | 1,010 |
| Software Sales and Related Consulting Segment [Member] | Service [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | ||||
| Software Sales and Related Consulting Segment [Member] | Consolidated [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | ||||
| Software Sales and Related Consulting Segment [Member] | Software Related Consulting Service Revenue [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 482 | 512 | 935 | 1,010 |
| Eliminations and Other [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | (114) | |||
| Eliminations and Other [Member] | Service [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | ||||
| Eliminations and Other [Member] | Consolidated [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | ||||
| Eliminations and Other [Member] | Software Related Consulting Service Revenue [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | (114) | |||
| Consolidated 1 [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 5,141 | 4,416 | 9,581 | 8,328 |
| Consolidated 1 [Member] | Service [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 3,695 | 3,108 | 6,958 | 5,911 |
| Consolidated 1 [Member] | Consolidated [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | 964 | 796 | 1,688 | 1,521 |
| Consolidated 1 [Member] | Software Related Consulting Service Revenue [Member] | ||||
| Disaggregation of Revenue [Line Items] | ||||
| Total revenues | $ 482 | $ 512 | $ 935 | $ 896 |
Schedule of Changes in Contract Liabilities (Details) $ in Thousands |
6 Months Ended |
|---|---|
|
Jun. 30, 2021
USD ($)
| |
| Revenue from Contract with Customer [Abstract] | |
| Unearned revenue January 1, 2021 | $ 1,132 |
| Unearned billings | 2,581 |
| Revenue recognized | (2,060) |
| Unearned revenue June 30, 2021 | $ 1,653 |
Revenue Recognition (Details Narrative) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Revenue from Contract with Customer [Abstract] | ||
| Accounts receivable from contracts with customers, net of allowance for doubtful accounts | $ 2,000 | $ 2,500 |
| Deferred revenue from contracts with customers | $ 1,653 | $ 1,132 |
Schedule of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Leases [Abstract] | ||||
| Operating lease cost | $ 116 | $ 116 | $ 233 | $ 232 |
| Amortization of assets | 3 | 2 | 5 | 4 |
| Interest on finance lease obligations | 1 | 2 | 2 | 3 |
| Total net lease cost | $ 120 | $ 120 | $ 240 | $ 239 |
Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Operating lease ROU assets | $ 2,918 | $ 3,030 |
| Current operating lease liabilities | 297 | 268 |
| Noncurrent operating lease liabilities | 3,127 | 3,257 |
| Total operating lease liabilities | 3,424 | 3,525 |
| Property and equipment, net | 1,542 | 1,616 |
| Current obligations of finance leases | 11 | 13 |
| Finance leases, net of current obligations | 26 | $ 31 |
| Total finance lease liabilities | $ 37 | |
| Weighted average remaining operating lease term (in years) | 9 years 6 months | 10 years |
| Weighted average remaining finance lease term (in years) | 3 years 6 months | 3 years 8 months 12 days |
| Operating leases weighted average discount rate | 5.80% | 5.80% |
| Finance leases weighted average discount rate | 12.10% | 13.00% |
| Finance Leases [Member] | ||
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Property and equipment, at cost | $ 51 | $ 67 |
| Accumulated amortization | (21) | (30) |
| Property and equipment, net | 30 | 37 |
| Current obligations of finance leases | 11 | 13 |
| Finance leases, net of current obligations | 26 | 31 |
| Total finance lease liabilities | 37 | 44 |
| Operating Lease R O U Assets [Member] | ||
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Operating lease ROU assets | 2,888 | 2,993 |
| Related Party [Member] | ||
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Current operating lease liabilities | 190 | 179 |
| Noncurrent operating lease liabilities | 2,983 | 3,079 |
| Total operating lease liabilities | 3,173 | 3,258 |
| Related Party [Member] | Operating Lease R O U Assets [Member] | ||
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Operating lease ROU assets | 2,662 | 2,755 |
| Other [Member] | ||
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Current operating lease liabilities | 107 | 89 |
| Noncurrent operating lease liabilities | 144 | 178 |
| Total operating lease liabilities | 251 | 267 |
| Other [Member] | Operating Lease R O U Assets [Member] | ||
| Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items] | ||
| Operating lease ROU assets | $ 226 | $ 238 |
Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Leases [Abstract] | ||||
| Operating cash flows from operating leases | $ 116 | $ 111 | $ 230 | $ 222 |
| Operating cash flows from finance leases | 1 | 2 | 2 | 3 |
| Financing cash flows from finance leases | 2 | 2 | 5 | 4 |
| Operating leases | $ 3,057 | $ 3,507 | $ 3,057 | $ 3,507 |
Schedule of Maturities of Operating Lease and Finance Lease Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases [Abstract] | ||
| 2021 (six remaining months) | $ 241 | |
| 2021 (six remaining months) | 7 | |
| 2022 | 482 | |
| 2022 | 15 | |
| 2023 | 468 | |
| 2023 | 10 | |
| 2024 | 407 | |
| 2024 | 5 | |
| 2025 | 405 | |
| 2025 | 5 | |
| Thereafter | 2,496 | |
| Thereafter | ||
| Total lease payments | 4,499 | |
| Total lease payments | 42 | |
| Less amount representing interest | (1,075) | |
| Less amount representing interest | (5) | |
| Total lease obligations | 3,424 | $ 3,525 |
| Total lease obligations | 37 | |
| Less current portion | (297) | (268) |
| Less current portion | (11) | (13) |
| Long-term lease obligations | 3,127 | 3,257 |
| Long-term lease obligations | $ 26 | $ 31 |
Leases (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Lessor, Lease, Description [Line Items] | ||||
| Operating lease cost | $ 116 | $ 116 | $ 233 | $ 232 |
| Corporate Headquarters [Member] | ||||
| Lessor, Lease, Description [Line Items] | ||||
| Operating lease cost | $ 100 | $ 200 | ||
| Corporate Headquarters [Member] | The Move, LLC [Member] | ||||
| Lessor, Lease, Description [Line Items] | ||||
| Ownership interest | 24.30% | 24.30% | ||
Schedule of Operating Segments (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Jun. 30, 2021 |
Mar. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2020 |
Jun. 30, 2021 |
Jun. 30, 2020 |
Dec. 31, 2020 |
|
| Segment Reporting Information [Line Items] | |||||||
| Goodwill | $ 2,946,000 | $ 2,946,000 | $ 2,946,000 | ||||
| Total assets | 20,262,000 | 20,262,000 | $ 19,448,000 | ||||
| Total revenues | 5,141,000 | $ 4,416,000 | 9,581,000 | $ 8,328,000 | |||
| Total costs of revenues | 3,132,000 | 2,316,000 | 5,710,000 | 4,618,000 | |||
| Gross profit | 2,009,000 | 2,100,000 | 3,871,000 | 3,710,000 | |||
| Depreciation & amortization | 401,000 | 478,000 | |||||
| Segment operating income/(loss) | 282,000 | 469,000 | 371,000 | 115,000 | |||
| Income tax expense/(benefit) | 104,000 | 145,000 | 115,000 | 65,000 | |||
| Net income/(loss) | 202,000 | $ 1,150,000 | 351,000 | $ (241,000) | 1,352,000 | 110,000 | |
| Verification and Certification Segment [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Goodwill | 1,947,000 | 1,133,000 | 1,947,000 | 1,133,000 | |||
| All other assets, net | 17,327,000 | 17,463,000 | 17,327,000 | 17,463,000 | |||
| Total assets | 19,274,000 | 18,596,000 | 19,274,000 | 18,596,000 | |||
| Total revenues | 4,659,000 | 3,904,000 | 8,646,000 | 7,432,000 | |||
| Total costs of revenues | 2,780,000 | 2,017,000 | 5,030,000 | 4,143,000 | |||
| Gross profit | 1,879,000 | 1,887,000 | 3,616,000 | 3,289,000 | |||
| Depreciation & amortization | 148,000 | 112,000 | 300,000 | 200,000 | |||
| Other operating expenses | 1,442,000 | 1,266,000 | 2,920,000 | 2,803,000 | |||
| Segment operating income/(loss) | 289,000 | 509,000 | 396,000 | 286,000 | |||
| Other income | 29,000 | 29,000 | 66,000 | 59,000 | |||
| Income tax expense/(benefit) | |||||||
| Net income/(loss) | 318,000 | 538,000 | 462,000 | 345,000 | |||
| Verification and Certification Segment [Member] | Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | 3,695,000 | 3,108,000 | 6,958,000 | 5,911,000 | |||
| Total costs of revenues | 2,132,000 | 1,516,000 | 3,925,000 | 3,140,000 | |||
| Verification and Certification Segment [Member] | Product [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | 964,000 | 796,000 | 1,688,000 | 1,521,000 | |||
| Total costs of revenues | 648,000 | 501,000 | 1,105,000 | 1,003,000 | |||
| Verification and Certification Segment [Member] | License and Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | |||||||
| Total costs of revenues | |||||||
| Software Sales and Related Consulting Segment [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Goodwill | 999,000 | 1,813,000 | 999,000 | 1,813,000 | |||
| All other assets, net | 3,082,000 | 3,474,000 | 3,082,000 | 3,474,000 | |||
| Total assets | 4,081,000 | 5,287,000 | 4,081,000 | 5,287,000 | |||
| Total revenues | 482,000 | 512,000 | 935,000 | 1,010,000 | |||
| Total costs of revenues | 352,000 | 299,000 | 680,000 | 565,000 | |||
| Gross profit | 130,000 | 213,000 | 255,000 | 445,000 | |||
| Depreciation & amortization | 51,000 | 132,000 | 101,000 | 278,000 | |||
| Other operating expenses | 86,000 | 121,000 | 179,000 | 338,000 | |||
| Segment operating income/(loss) | (7,000) | (40,000) | (25,000) | (171,000) | |||
| Other income | (5,000) | (2,000) | (7,000) | 1,000 | |||
| Income tax expense/(benefit) | (5,000) | (5,000) | |||||
| Net income/(loss) | (17,000) | (42,000) | (37,000) | (170,000) | |||
| Software Sales and Related Consulting Segment [Member] | Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | |||||||
| Total costs of revenues | |||||||
| Software Sales and Related Consulting Segment [Member] | Product [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | |||||||
| Total costs of revenues | |||||||
| Software Sales and Related Consulting Segment [Member] | License and Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | 482,000 | 512,000 | 935,000 | 1,010,000 | |||
| Total costs of revenues | 352,000 | 299,000 | 680,000 | 565,000 | |||
| Eliminations and Other [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Goodwill | |||||||
| All other assets, net | (3,093,000) | (4,604,000) | (3,093,000) | (4,604,000) | |||
| Total assets | (3,093,000) | (4,604,000) | (3,093,000) | (4,604,000) | |||
| Total revenues | (114,000) | ||||||
| Total costs of revenues | (90,000) | ||||||
| Gross profit | (24,000) | ||||||
| Depreciation & amortization | |||||||
| Other operating expenses | (24,000) | ||||||
| Segment operating income/(loss) | |||||||
| Other income | 1,037,000 | ||||||
| Income tax expense/(benefit) | (99,000) | (145,000) | (110,000) | (65,000) | |||
| Net income/(loss) | (99,000) | (145,000) | 927,000 | (65,000) | |||
| Eliminations and Other [Member] | Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | |||||||
| Total costs of revenues | (90,000) | ||||||
| Eliminations and Other [Member] | Product [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | |||||||
| Total costs of revenues | |||||||
| Eliminations and Other [Member] | License and Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | (114,000) | ||||||
| Total costs of revenues | |||||||
| Consolidated 1 [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Goodwill | 2,946,000 | 2,946,000 | 2,946,000 | 2,946,000 | |||
| All other assets, net | 17,316,000 | 16,333,000 | 17,316,000 | 16,333,000 | |||
| Total assets | 20,262,000 | 19,279,000 | 20,262,000 | 19,279,000 | |||
| Total revenues | 5,141,000 | 4,416,000 | 9,581,000 | 8,328,000 | |||
| Total costs of revenues | 3,132,000 | 2,316,000 | 5,710,000 | 4,618,000 | |||
| Gross profit | 2,009,000 | 2,100,000 | 3,871,000 | 3,710,000 | |||
| Depreciation & amortization | 199,000 | 244,000 | 401,000 | 478,000 | |||
| Other operating expenses | 1,528,000 | 1,387,000 | 3,099,000 | 3,117,000 | |||
| Segment operating income/(loss) | 282,000 | 469,000 | 371,000 | 115,000 | |||
| Other income | 24,000 | 27,000 | 1,096,000 | 60,000 | |||
| Income tax expense/(benefit) | (104,000) | (145,000) | (115,000) | (65,000) | |||
| Net income/(loss) | 202,000 | 351,000 | 1,352,000 | 110,000 | |||
| Consolidated 1 [Member] | Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | 3,695,000 | 3,108,000 | 6,958,000 | 5,911,000 | |||
| Total costs of revenues | 2,132,000 | 1,516,000 | 3,925,000 | 3,050,000 | |||
| Consolidated 1 [Member] | Product [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | 964,000 | 796,000 | 1,688,000 | 1,521,000 | |||
| Total costs of revenues | 648,000 | 501,000 | 1,105,000 | 1,003,000 | |||
| Consolidated 1 [Member] | License and Service [Member] | |||||||
| Segment Reporting Information [Line Items] | |||||||
| Total revenues | 482,000 | 512,000 | 935,000 | 896,000 | |||
| Total costs of revenues | $ 352,000 | $ 299,000 | $ 680,000 | $ 565,000 | |||
Segments (Details Narrative) |
12 Months Ended |
|---|---|
|
Dec. 31, 2020
Integer
| |
| Segment Reporting [Abstract] | |
| Number of operating segment | 1 |
Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Jun. 30, 2021 |
Jun. 30, 2020 |
|
| Supplemental Cash Flow Elements [Abstract] | ||
| Interest expense | $ 1 | $ 5 |
| Income taxes | $ 345 | $ 10 |
Subsequent Events (Details Narrative) - Subsequent Event [Member] - Board of Directors [Member] |
Jul. 02, 2021
$ / shares
|
|---|---|
| Subsequent Event [Line Items] | |
| Common stock, cash dividends | $ 0.15 |
| Common stock, dividend payment terms | This one-time special dividend will be paid to stockholders of record as of the close of business on July 27, 2021, with a payment date of August 16, 2021. |