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)
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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
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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 29, 2022, was .
Where Food Comes From, Inc.
Table of Contents
June 30, 2022
| 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 | 27 |
| Part II - Other Information | ||
| Item 1. | Legal Proceedings | 28 |
| Item 1A. | Risk Factors | 28 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
| Item 6. | Exhibits | 28 |
| 2 |
Where Food Comes From, Inc.
Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| (Amounts in thousands, except per share amounts) | 2022 | 2021 | ||||||
| (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 | ||||||||
| Right-of-use assets, net | ||||||||
| Investment in Progressive Beef | ||||||||
| Intangible and other assets, net | ||||||||
| Goodwill, net | ||||||||
| Deferred tax assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Current portion of finance lease obligations | ||||||||
| Current portion of operating lease obligations | ||||||||
| Total current liabilities | ||||||||
| 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; (2022) and (2021) shares issued, and (2022) and (2021) shares outstanding | ||||||||
| Additional paid-in-capital | ||||||||
| Treasury stock of (2022) and (2021) 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) | 2022 | 2021 | ||||||
| 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) | 2022 | 2021 | ||||||
| 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 | ||||||||
| Gain on sale of assets | ||||||||
| 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.
| 5 |
Where Food Comes From, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| Six months ended June 30, | ||||||||
| (Amounts in thousands) | 2022 | 2021 | ||||||
| Operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on sale of assets | ( | ) | ||||||
| Stock-based compensation expense | ||||||||
| Deferred tax (benefit) / expense | ( | ) | ||||||
| Bad debt expense | ||||||||
| Forgiveness of note payable from Paycheck Protection Program | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| 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: | ||||||||
| Purchase of digital assets | ( | ) | ||||||
| Purchases of property, equipment and software development costs | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Repayments of finance lease obligations | ( | ) | ( | ) | ||||
| Proceeds from stock option exercise | ||||||||
| Stock repurchase under Stock Buyback Plan | ( | ) | ( | ) | ||||
| Net cash used in 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, 2021 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||
| Stock options exercised | ||||||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net income | - | |||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
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, agricultural and aquaculture products are accurate. We care about food, agricultural and aquaculture 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 a wide range of professional services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation. 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”), 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, 2021, included in our Form 10-K filed on February 28, 2022. 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, 2022 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)
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 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, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| 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, 2022 and 2021, 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 | ||||||||
| 2022 | 2021 | Useful Life | ||||||||
| Intangible assets subject to amortization: | ||||||||||
| Tradenames and trademarks | $ | $ | ||||||||
| Accreditations | ||||||||||
| Customer relationships | ||||||||||
| Patents | ||||||||||
| Non-compete agreements | ||||||||||
| Less accumulated amortization | ||||||||||
| Cryptocurrency (not subject to amortization) | ||||||||||
| Tradenames/trademarks (not subject to amortization) | ||||||||||
| Other assets | ||||||||||
| Intangible and other assets: | $ | $ | ||||||||
In
June 2022, we purchased an aggregate of $
We determine the fair value of our digital assets on a quarterly basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). We perform an analysis each quarter to identify whether significant events or changes in circumstances, indicate that it is more likely than not that our digital assets are permanently impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on an active exchange since acquiring the digital asset. If the current carrying value of a digital asset significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the digital assets in the amount equal to the difference between their carrying values and the price determined.
Impairment losses are recognized within the Other income / (expense) section in the consolidated statements of operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets held within Other income / (expense). In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
| 11 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
For
the three and six months ended June 30, 2022, we have not sold any digital assets and have not recognized any impairment losses. As of
June 30, 2022, the carrying value of our digital assets held was $
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, | |||||||
| 2022 | 2021 | |||||||
| Income and sales taxes payable | $ | $ | ||||||
| Payroll related accruals | ||||||||
| Customer deposits | ||||||||
| Professional fees and other expenses | ||||||||
| $ | $ | |||||||
Note 6 – Notes Payable
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, stock awards 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 stock awards and 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.
| 12 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Stock options | $ | $ | $ | $ | ||||||||||||
| Stock awards | ||||||||||||||||
| Restricted stock awards | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
During the three months ended June 30, 2022, stock options were awarded. During the six months ended June 30, 2022, the Company awarded shares of the Company’s common stock at a fair market value price of $ per share to an employee of the Company. 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 awards or options were granted during the six months ended June 30, 2021.
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 | |||||||||
| 2022 (remaining six months) | $ | $ | $ | |||||||||
| 2023 | ||||||||||||
| 2024 | ||||||||||||
| 2025 | ||||||||||||
| $ | $ | $ | ||||||||||
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, 2021 | $ | $ | $ | |||||||||||||||||
| Granted | $ | $ | ||||||||||||||||||
| Exercised | ( | ) | $ | $ | ||||||||||||||||
| Expired/Forfeited | $ | $ | ||||||||||||||||||
| Outstanding, June 30, 2022 | $ | $ | $ | |||||||||||||||||
| Exercisable, June 30, 2022 | $ | $ | $ | |||||||||||||||||
| Unvested, June 30, 2022 | $ | $ | $ | |||||||||||||||||
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, 2022 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, 2022.
Stock Activity
Non-vested stock award activity under our Equity Incentive Plans is summarized as follows:
| Weighted avg. | ||||||||
| Number of | grant date | |||||||
| options | fair value | |||||||
| Non-vested shares, December 31, 2021 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Non-vested shares, June 30, 2022 | $ | |||||||
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, 2022 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, 2022 | Three months ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Verification
and Certification Segment | Software
Sales and Related Consulting Segment | Eliminations
and Other | Consolidated
Totals | Verification
and Certification Segment | Software
Sales and Related Consulting Segment | Eliminations
and Other | Consolidated
Totals | |||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Product sales | ||||||||||||||||||||||||||||||||
| Software and related consulting revenue | ||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Six months ended June 30, 2022 | Six months ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Verification
and Certification Segment | Software
Sales and Related Consulting Segment | Eliminations
and Other | Consolidated
Totals | Verification
and Certification Segment | Software
Sales and Related Consulting Segment | Eliminations
and Other | Consolidated
Totals | |||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Product sales | ||||||||||||||||||||||||||||||||
| Software and related consulting revenue | ||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Contract Balances
As
of June 30, 2022 and December 31, 2021, accounts receivable from contracts with customers, net of allowance for doubtful accounts, was
approximately $
As
of June 30, 2022 and December 31, 2021, 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, 2022 (amounts in thousands):
| Deferred revenue: | ||||
| Unearned revenue December 31, 2021 | $ | |||
| Unearned billings | ||||
| Revenue recognized | ( | ) | ||
| Unearned revenue June 30, 2022 | $ |
| 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 June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Finance lease cost | ||||||||||||||||
| Amortization of assets | ||||||||||||||||
| Interest on finance lease obligations | ||||||||||||||||
| Variable lease cost | ||||||||||||||||
| Total net lease cost | $ | $ | $ | $ | ||||||||||||
Included
in the table above, for the three and six months ended June 30, 2022, is $
Supplemental balance sheet information related to leases was as follows (amounts in thousands):
| June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||
| 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, 2022 | December 31, 2021 | |||||||
| 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 June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| 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 | ||||||
| 2022 (six remaining months) | $ | $ | ||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 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 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 unit under the software and related consulting reportable segment. This segment includes software and 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, 2022 | Three months ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software Sales and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software Sales 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 / (expense) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income/(loss) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||
| 18 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
| Six months ended June 30, 2022 | Six months ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software Sales and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software Sales 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 / (expense) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Net income/(loss) | $ | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
Note 13 – Supplemental Cash Flow Information
| Six months ended June 30, | ||||||||
| (Amounts in thousands) | 2022 | 2021 | ||||||
| Cash paid during the year: | ||||||||
| Interest expense | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
Note 14 – Subsequent Events
The Company has had no 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, 2021. 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 estimates that is supports more than approximately 17,500 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands, chefs, and restaurants with a wide variety of value-added services provided through its family of verifiers, including IMI Global (“IMI”), Where Food Comes From Organic (“WFCFO” - previously International Certification Services and A Bee Organic), Validus Verification Services (“Validus”), and Sterling Solutions. 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, aquaculture, crops and other food products are accurate.
Through SureHarvest Services LLC (“SureHarvest”) and Postelsia Holdings, Ltd. (“Postelsia”), we primarily provide a wide range of professional services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation.
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 (“NASDAQ”), 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), the Inflationary Environment and other Weather Related Risks
The ongoing outbreaks of COVID-19 continue to impact our business. Due to safety and social distancing reasons, customers continue to request postponement of onsite visits. We work closely with our customers and standard setting bodies to identify innovative solutions and reschedule onsite visits as timely as possible.
In late 2021, we were informed by our key tag supplier that materials were becoming scarcer and the ability to meet our need was difficult. In anticipation of this risk, we worked with all our tag suppliers to build our inventory by purchasing excess supply. We believe we have reduced this risk, however, should material shortages continue to impact our tag suppliers, we may be unable to meet the needs of our customers which could materially impact our revenues. We could also experience increases in the cost of products sourced locally and from abroad.
| 20 |
The economy is facing inflationary pressures that has resulted in a few headwinds for our business, most notably in the form of a tight labor market where job candidates have considerable bargaining power which tends to drive wages up. Additionally, we are experiencing higher labor and benefit related costs to retain our existing personnel. We believe we will continue to see significant pressure in our labor and benefit related costs.
We are also concerned about the potential for weakened demand in our software and related consulting business segment due to significant customer concentration. Increased inflation could place pressure on our customers’ timing of approval for consulting projects to move forward. Currently, it is difficult to estimate the financial impact to our software and related consulting revenue, if any. We actively market our sustainability solutions and services to new types of customers. We believe the growing awareness of environmental, social and governance (“ESG”) matters creates a key opportunity for us because we have the expertise and technology needed to help companies achieve ESG objectives within the food supply chain.
The current drought conditions impacting nearly one-half of the United States predominately affects our ranch customers resulting in fewer cattle subject to verification. While this doesn’t directly impact our audit related revenue, it does impact our product sales and other related supply chain fees in the short-term. However, we believe the long-term outlook for our industry remains favorable because the demand for verified cattle is still strong, as well as the premiums on verified cattle sold at auction. Additionally, during an inflationary period, most consumers continue to consume beef, although they may trade the quality of protein cut (such as steak) for a lesser cut (such as ground beef).
We continue to monitor all of these risks closely and will react accordingly, while keeping the interest of our customers, employees and shareholders in mind. Please refer to our risk factors included in our Form 10-K for the fiscal year ended December 31, 2021 for additional information for risks specifically related to COVID-19.
Seasonality
Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue is 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, 2022, we had cash and cash equivalents of approximately $6.4 million compared to approximately $5.4 million at December 31, 2021. Our working capital at June 30, 2022 and December 31, 2021 was approximately $5.6 million and $5.7 million, respectively.
Net cash provided by operating activities for the six months ended June 30, 2022 was approximately $2.3 million compared to $1.6 million during the same period in 2021. 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 in 2021, and deferred taxes. Fluctuations are primarily due to operating performance offset by the timing of cash receipts and cash disbursements. The cash provided by operating activities for the period ending June 30, 2022 was primarily driven by a change in accrued expenses and prepaid expenses and other assets. The cash provided by operating activities for the period ending June 30, 2021 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, 2022, was approximately $0.2 million compared to $0.1 million in the 2021 period. Net cash used in the period ending June 30, 2022 was primarily for the purchase of digital assets. Net cash used in the period ending June 30, 2021 was primarily for the purchase of a vehicle and equipment.
| 21 |
Net cash used in financing activities for the six months ended June 30, 2022 and 2021 was approximately $1.1 million and $0.6 million, respectively. Cash used for the periods ending June 30, 2022 and 2021, was primarily due to the repurchase of common shares under the Stock Buyback Plan.
Over the past several years, our growth has been funded primarily through cashflows from operations. We continually evaluate all funding options, including additional offerings of our securities to private, public and institutional investors and other credit facilities as they become available.
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, gross margin 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 and bundling opportunities 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, 2025. 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, 2022, and December 31, 2021, the effective interest rate was 6.25% and 4.75%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of June 30, 2022, and December 31, 2021, there were no amounts outstanding under this LOC.
Off-Balance Sheet Arrangements
As of June 30, 2022, we had no off-balance sheet arrangements of any type.
| 22 |
RESULTS OF OPERATIONS
Three and six months ended June 30, 2022 compared to the same period in fiscal year 2021
The following table shows information for reportable operating segments (amounts in thousands):
| Three months ended June 30, 2022 | Three months ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software Sales and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software Sales and Related Consulting Segment | Eliminations and Other | Consolidated Totals | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Goodwill | $ | 1,947 | $ | 999 | $ | - | $ | 2,946 | $ | 1,947 | $ | 999 | $ | - | $ | 2,946 | ||||||||||||||||
| All other assets, net | 14,244 | 3,865 | (143 | ) | 17,966 | 17,327 | 3,082 | (3,093 | ) | 17,316 | ||||||||||||||||||||||
| Total assets | $ | 16,191 | $ | 4,864 | $ | (143 | ) | $ | 20,912 | $ | 19,274 | $ | 4,081 | $ | (3,093 | ) | $ | 20,262 | ||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | 3,964 | $ | - | $ | - | $ | 3,964 | $ | 3,695 | $ | - | $ | - | $ | 3,695 | ||||||||||||||||
| Product sales | 878 | - | - | 878 | 964 | - | - | 964 | ||||||||||||||||||||||||
| Software and related consulting revenue | - | 489 | - | 489 | - | 482 | - | 482 | ||||||||||||||||||||||||
| Total revenues | $ | 4,842 | $ | 489 | $ | - | $ | 5,331 | $ | 4,659 | $ | 482 | $ | - | $ | 5,141 | ||||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||
| Costs of verification and certification services | 2,325 | - | - | 2,325 | 2,132 | - | - | 2,132 | ||||||||||||||||||||||||
| Costs of products | 522 | - | - | 522 | 648 | - | - | 648 | ||||||||||||||||||||||||
| Costs of software and related consulting | - | 354 | - | 354 | - | 352 | - | 352 | ||||||||||||||||||||||||
| Total costs of revenues | 2,847 | 354 | - | 3,201 | 2,780 | 352 | - | 3,132 | ||||||||||||||||||||||||
| Gross profit | 1,995 | 135 | - | 2,130 | 1,879 | 130 | - | 2,009 | ||||||||||||||||||||||||
| Depreciation & amortization | 149 | 48 | - | 197 | 148 | 51 | - | 199 | ||||||||||||||||||||||||
| Other operating expenses | 1,561 | 59 | - | 1,620 | 1,442 | 86 | - | 1,528 | ||||||||||||||||||||||||
| Segment operating income/(loss) | $ | 285 | $ | 28 | $ | - | $ | 313 | $ | 289 | $ | (7 | ) | $ | - | $ | 282 | |||||||||||||||
| Other items to reconcile segment operating income (loss) to net income/(loss): | ||||||||||||||||||||||||||||||||
| Other income / (expense) | 50 | (23 | ) | - | 27 | 29 | (5 | ) | - | 24 | ||||||||||||||||||||||
| Income tax expense | - | - | (118 | ) | (118 | ) | - | (5 | ) | (99 | ) | (104 | ) | |||||||||||||||||||
| Net income/(loss) | $ | 335 | $ | 5 | $ | (118 | ) | $ | 222 | $ | 318 | $ | (17 | ) | $ | (99 | ) | $ | 202 | |||||||||||||
| 23 |
| Six months ended June 30, 2022 | Six months ended June 30, 2021 | |||||||||||||||||||||||||||||||
| Verification and Certification Segment | Software Sales and Related Consulting Segment | Eliminations and Other | Consolidated Totals | Verification and Certification Segment | Software Sales and Related Consulting Segment | Eliminations and Other | Consolidated Totals | |||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Goodwill | $ | 1,947 | $ | 999 | $ | - | $ | 2,946 | $ | 1,947 | $ | 999 | $ | - | $ | 2,946 | ||||||||||||||||
| All other assets, net | 14,244 | 3,865 | (143 | ) | 17,966 | 17,327 | 3,082 | (3,093 | ) | 17,316 | ||||||||||||||||||||||
| Total assets | $ | 16,191 | $ | 4,864 | $ | (143 | ) | $ | 20,912 | $ | 19,274 | $ | 4,081 | $ | (3,093 | ) | $ | 20,262 | ||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Verification and certification service revenue | $ | 7,748 | $ | - | $ | - | $ | 7,748 | $ | 6,958 | $ | - | $ | - | $ | 6,958 | ||||||||||||||||
| Product sales | 1,885 | - | - | 1,885 | 1,688 | - | - | 1,688 | ||||||||||||||||||||||||
| Software and related consulting revenue | - | 1,854 | - | 1,854 | - | 935 | - | 935 | ||||||||||||||||||||||||
| Total revenues | $ | 9,633 | $ | 1,854 | $ | - | $ | 11,487 | $ | 8,646 | $ | 935 | $ | - | $ | 9,581 | ||||||||||||||||
| Costs of revenues: | ||||||||||||||||||||||||||||||||
| Costs of verification and certification services | 4,361 | - | - | 4,361 | 3,925 | - | - | 3,925 | ||||||||||||||||||||||||
| Costs of products | 1,059 | - | - | 1,059 | 1,105 | - | - | 1,105 | ||||||||||||||||||||||||
| Costs of software and related consulting | - | 1,540 | - | 1,540 | - | 680 | - | 680 | ||||||||||||||||||||||||
| Total costs of revenues | 5,420 | 1,540 | - | 6,960 | 5,030 | 680 | - | 5,710 | ||||||||||||||||||||||||
| Gross profit | 4,213 | 314 | - | 4,527 | 3,616 | 255 | - | 3,871 | ||||||||||||||||||||||||
| Depreciation & amortization | 294 | 98 | - | 392 | 300 | 101 | - | 401 | ||||||||||||||||||||||||
| Other operating expenses | 3,074 | 125 | - | 3,199 | 2,920 | 179 | - | 3,099 | ||||||||||||||||||||||||
| Segment operating income/(loss) | $ | 845 | $ | 91 | $ | - | $ | 936 | $ | 396 | $ | (25 | ) | $ | - | $ | 371 | |||||||||||||||
| Other items to reconcile segment operating income (loss) to net income/(loss): | ||||||||||||||||||||||||||||||||
| Other income / (expense) | 100 | (36 | ) | - | 64 | 66 | (7 | ) | 1,037 | 1,096 | ||||||||||||||||||||||
| Income tax expense | - | - | (281 | ) | (281 | ) | - | (5 | ) | (110 | ) | (115 | ) | |||||||||||||||||||
| Net income/(loss) | $ | 945 | $ | 55 | $ | (281 | ) | $ | 719 | $ | 462 | $ | (37 | ) | $ | 927 | $ | 1,352 | ||||||||||||||
| 24 |
Verification and Certification Segment
Verification and certification service revenues consist of fees charged for verification audits and other verification 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, 2022 increased 7.3% and 11.4%, respectively, compared to the same periods in 2021, 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 months ended June 30, 2022 decreased 8.9% compared to the same period in 2021, primarily due to drought conditions experienced by nearly one-half of the United States resulting in reduced demand and fewer cattle needing ear tags. Product sales for the six months ended June 30, 2022 increased 11.7% compared to the same period in 2021, primarily due to increased pricing and limited supply elsewhere in the market.
Costs of revenues for our verification and certification segment for the three and six months ended June 30, 2022 were approximately $2.8 million and $5.4 million, respectively, compared to approximately $2.8 million and $5.0 million, respectively, for the same periods in 2021. Gross margin for the three and six months ended June 30, 2022 was 41.2% and 43.7%, respectively compared to 40.3% and 41.9%, respectively, in 2021 primarily due to a change in product mix of our offerings which included new customers and new offerings. 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, 2022 increased by approximately 8.3% and 5.3%, respectively, compared to the same three and six month periods in 2021. The increase was primarily due to increased compensation expense related to an increase in headcount. Depreciation and amortization expense for the three months ended June 30, 2022 increased 0.7% compared to the same period in 2021. Depreciation and amortization expense for the six months ended June 30, 2022 decreased 2.0% compared to the same period in 2021.
Software and Related Consulting Segment
Software and related consulting revenue primarily represents fees earned from a wide range of professional consulting services and technology solutions that support our verification business and generate incremental revenue specific to the food and agricultural industry. Software and related consulting revenue for the three and six months ended June 30, 2022 increased approximately 1.5% and 98.3%, respectively compared to the same periods in 2021. The six month increase is due to a significant short-term engagement with a Japanese party to promote Japanese seafood products into the American supply chain. While we are hopeful that the engagement will be an annual recurring source of revenue for our consulting segment, as well as a potential opportunity for our verification and certification segment, we can give no assurance that it will be an ongoing source of revenue. Additionally, because this was a short-term engagement, it is not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.
Costs of revenues for our software and related consulting segment for the three and six months ended June 30, 2022 was approximately $0.4 and $1.5 million, respectively, compared to approximately $0.4 million and $0.7 million, respectively, for the same periods in 2021. Gross margin for the three months ended June 30, 2022 increased to 27.6% compared to 27.0% for the same period in 2021. Gross margin for the six months ended June 30, 2022 decreased to 16.9% compared to 27.3% for the same period in 2021. The six month decrease in gross margin is due primarily to increased cost of contract labor to support the short-term consulting engagement mentioned above.
Other operating expenses for the three and six months ended June 30, 2022 decreased approximately 31.4% and 30.2%, respectively, compared to the same period in 2021. Depreciation and amortization for the three and six months ended June 30, 2022 decreased 5.9% and 3.0%, respectively, compared to the same periods in 2021. The decrease is predominately due to a reduction in headcount resulting in less compensation expense.
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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. We have learned that it can take two to three years after an acquisition to fully understand the complexities, at which time, we have seen solid improvements in revenues and/or costs.
Dividend Income from Progressive Beef
For the three months ended June 30, 2022 and 2021, the Company received dividend income of $50,000 and $30,000, respectively, from Progressive Beef representing a distribution of their earnings. For the six months ended June 30, 2022 and 2021, the Company received dividend income totaling $100,000 and $60,000, respectively.
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, 2022, we recorded income tax expense of approximately $118,000 and $281,000, respectively, compared to income tax expense of $104,000 and $115,000 for the same periods in 2021. The effective tax rate for the three and six months ended June 30, 2021 was 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, 2022 was approximately $0.2 million and $0.7 million, respectively, and $0.04 and $0.12, respectively, per basic and diluted common share, respectively, compared to net income of approximately $0.2 million and $1.4 million, respectively, and $0.03 and $0.22, respectively, per basic and diluted common share for the same periods in 2021.
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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 2021 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, 2022, the Company recognizes matters specific to COVID-19, the inflationary environment and weather-related risks may have a continued economic impact on the Company, but management does not know and cannot estimate what the long-term 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. For additional information on specific risks in our current filing, see “Coronavirus Pandemic (COVID-19), the Inflationary Environment and other Weather Related Risks” in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations above.
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, 2022 is as follows:
| Number
of Shares | Cost of Shares (in thousands) | Average Cost per Share | ||||||||||
| Shares purchased - April 2022 | 15,000 | $ | 156 | $ | 10.38 | |||||||
| Shares purchased - May 2022 | 17,500 | 185 | $ | 10.59 | ||||||||
| Shares purchased - June 2022 | 28,000 | 307 | $ | 10.98 | ||||||||
| Total | 60,500 | $ | 648 | $ | 10.72 | |||||||
ITEM 6. EXHIBITS
(a) Exhibits
| Number | Description | |
31.1 |
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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 11, 2022 | Where Food Comes From, Inc. | |
| By: | /s/ John K. Saunders | |
| Chief Executive Officer | ||
| By: | /s/ Dannette Henning | |
| Chief Financial Officer |
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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 11, 2022
| /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 11, 2022
| /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, 2022, 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 11, 2022
| /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, 2022, 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 11, 2022
| /s/ Dannette Henning | |
| Dannette Henning, Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| 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, shares authorized | 95,000 | 95,000 |
| Common stock, shares issued | 6,492 | 6,489 |
| Common stock, shares outstanding | 5,979 | 6,071 |
| Treasury stock | 513 | 419 |
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Revenues: | ||||
| Total revenues | $ 5,331,000 | $ 5,141,000 | $ 11,487,000 | $ 9,581,000 |
| Costs of revenues: | ||||
| Total costs of revenues | 3,201,000 | 3,132,000 | 6,960,000 | 5,710,000 |
| Gross profit | 2,130,000 | 2,009,000 | 4,527,000 | 3,871,000 |
| Selling, general and administrative expenses | 1,817,000 | 1,727,000 | 3,591,000 | 3,500,000 |
| Income from operations | 313,000 | 282,000 | 936,000 | 371,000 |
| Other income/(expense): | ||||
| Dividend income from Progressive Beef | 50,000 | 30,000 | 100,000 | 60,000 |
| Other income, net | 1,000 | 1,000 | 1,000 | |
| Loan forgiveness from Paycheck Protection Program | 1,037,000 | |||
| Gain on sale of assets | 9,000 | |||
| Loss on foreign currency exchange | (23,000) | (5,000) | (35,000) | (7,000) |
| Interest expense | (1,000) | (1,000) | (2,000) | (4,000) |
| Income before income taxes | 340,000 | 306,000 | 1,000,000 | 1,467,000 |
| Income tax expense | 118,000 | 104,000 | 281,000 | 115,000 |
| Net income | $ 222,000 | $ 202,000 | $ 719,000 | $ 1,352,000 |
| Per share - net income: | ||||
| Basic | $ 0.04 | $ 0.03 | $ 0.12 | $ 0.22 |
| Diluted | $ 0.04 | $ 0.03 | $ 0.12 | $ 0.22 |
| Weighted average number of common shares outstanding: | ||||
| Basic | 6,013 | 6,100 | 6,053 | 6,151 |
| Diluted | 6,096 | 6,186 | 6,136 | 6,241 |
| Verification And Certification Service Revenue [Member] | ||||
| Revenues: | ||||
| Total revenues | $ 3,964,000 | $ 3,695,000 | $ 7,748,000 | $ 6,958,000 |
| Costs of revenues: | ||||
| Total costs of revenues | 2,325,000 | 2,132,000 | 4,361,000 | 3,925,000 |
| Product Sales [Member] | ||||
| Revenues: | ||||
| Total revenues | 878,000 | 964,000 | 1,885,000 | 1,688,000 |
| Costs of revenues: | ||||
| Total costs of revenues | 522,000 | 648,000 | 1,059,000 | 1,105,000 |
| Software And Related Consulting Revenue [Member] | ||||
| Revenues: | ||||
| Total revenues | 489,000 | 482,000 | 1,854,000 | 935,000 |
| Costs of revenues: | ||||
| Total costs of revenues | $ 354,000 | $ 352,000 | $ 1,540,000 | $ 680,000 |
The Company and Basis of Presentation |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| 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, agricultural and aquaculture products are accurate. We care about food, agricultural and aquaculture 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 a wide range of professional services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation. 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”), 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, 2021, included in our Form 10-K filed on February 28, 2022. 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, 2022 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)
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 per Share |
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| Basic and Diluted Net Income per Share |
Basic net income 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, 2022 | |
| Investments, All Other Investments [Abstract] | |
| Investment in Progressive Beef, LLC | Note 3 - Investment in Progressive Beef, LLC
For the three months ended June 30, 2022 and 2021, the Company received dividend income from Progressive Beef of $50,000 and $30,000, respectively, representing a distribution of their earnings. For the six months ended June 30, 2022 and 2021, the Company received dividend income totaling $100,000 and $60,000, respectively. The income is reflected within the “Other income/(expense)” section of the Company’s Consolidated Statement of Operations for the three and six months ended June 30, 2022 and 2021.
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Intangible and Other Assets |
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| 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):
In June 2022, we purchased an aggregate of $178,000 in Bitcoin (a “cryptocurrency” or “digital asset”) and currently account for all digital assets held as indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other. We have ownership of and control over our digital assets and may use a third-party custodial service to secure it. The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition, if applicable.
We determine the fair value of our digital assets on a quarterly basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). We perform an analysis each quarter to identify whether significant events or changes in circumstances, indicate that it is more likely than not that our digital assets are permanently impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on an active exchange since acquiring the digital asset. If the current carrying value of a digital asset significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the digital assets in the amount equal to the difference between their carrying values and the price determined.
Impairment losses are recognized within the Other income / (expense) section in the consolidated statements of operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets held within Other income / (expense). In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
For the three and six months ended June 30, 2022, we have not sold any digital assets and have not recognized any impairment losses. As of June 30, 2022, the carrying value of our digital assets held was $178,000.
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Accrued Expenses and Other Current Liabilities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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):
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Notes Payable |
6 Months Ended |
|---|---|
Jun. 30, 2022 | |
| Debt Disclosure [Abstract] | |
| Notes Payable | Note 6 – Notes Payable
Unison Revolving Line of Credit
The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2025. 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, 2022 and December 31, 2021, the effective interest rate was 6.25% and 4.75%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of June 30, 2022, and December 31, 2021, there were no amounts outstanding under this LOC.
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Stock-Based Compensation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, stock awards 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 stock awards and 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.
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
During the three months ended June 30, 2022, stock options were awarded. During the six months ended June 30, 2022, the Company awarded shares of the Company’s common stock at a fair market value price of $ per share to an employee of the Company. 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 awards or options were granted during the six months ended June 30, 2021.
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, 2022 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, 2022.
Stock Activity
Non-vested stock award activity under our Equity Incentive Plans is summarized as follows:
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Income Taxes |
6 Months Ended |
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Jun. 30, 2022 | |
| 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, 2022 we recorded an income tax expense of approximately $118,000 and $281,000, respectively, compared to income tax expense of $104,000 and $115,000 for the same 2021 periods. The effective tax rate for the six months ended June 30, 2021 was 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 |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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, 2022 and December 31, 2021, accounts receivable from contracts with customers, net of allowance for doubtful accounts, was approximately $1.9 and $2.2 million, respectively.
As of June 30, 2022 and December 31, 2021, deferred revenue from contracts with customers was approximately $1.8 and $1.5 million, respectively. The balance of the contract liabilities at June 30, 2022 and December 31, 2021 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, 2022 (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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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 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, 2022, is $0.1 million and $0.2 million, respectively, of operating lease cost for our corporate headquarters. For the three and six months ended June 30, 2021, is $0.1 and $0.2 million, respectively, of operating lease costs 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, 2022 | |
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 unit under the software and related consulting reportable segment. This segment includes software and 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, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2022 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 14 – Subsequent Events
The Company has had no material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements. |
Basic and Diluted Net Income per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Per share - net income: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Reconciliation of Basic and Diluted Income Per Share Computations |
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Intangible and Other Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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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Stock-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock-based Compensation Expense |
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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 Non Vested Stock Award Activity Under Equity Incentive Plan |
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, 2022 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, 2022.
Stock Activity
Non-vested stock award activity under our Equity Incentive Plans is summarized as follows:
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| Schedule of Non Vested Stock Award Activity Under Equity Incentive Plan | Non-vested stock award activity under our Equity Incentive Plans is summarized as follows:
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Revenue Recognition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 with Customer Liabilities | The following table reflects the changes in our contract liabilities during the six month period ended June 30, 2022 (amounts in thousands):
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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):
Where Food Comes From, Inc. Notes to the Consolidated Financial Statements (Unaudited)
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Supplemental Cash Flow Information (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Supplemental Cash Flow Elements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Cash Flow Information |
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Schedule of Reconciliation of Basic and Diluted Income Per Share Computations (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Basic: | ||||
| Weighted average shares outstanding | 6,013 | 6,100 | 6,053 | 6,151 |
| Diluted: | ||||
| Weighted average shares outstanding | 6,013 | 6,100 | 6,053 | 6,151 |
| Weighted average effects of dilutive securities | 83 | 86 | 83 | 90 |
| Total | 6,096 | 6,186 | 6,136 | 6,241 |
| Antidilutive securities: | 17 | 17 | 17 | 17 |
Investment in Progressive Beef, LLC (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Investments, All Other Investments [Abstract] | ||||
| Dividend income | $ 50,000 | $ 30,000 | $ 100,000 | $ 60,000 |
Intangible and Other Assets (Details Narrative) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Indefinite-Lived Intangible Assets [Line Items] | |||
| Purchase of digital assets | $ 178,000 | ||
| Digital asset carrying value | 2,554,000 | $ 2,558,000 | |
| Digital Assets [Member] | |||
| Indefinite-Lived Intangible Assets [Line Items] | |||
| Digital asset carrying value | $ 178,000,000 | ||
Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Income and sales taxes payable | $ 494 | $ 185 |
| Payroll related accruals | 686 | 288 |
| Customer deposits | 92 | 76 |
| Professional fees and other expenses | 336 | 161 |
| Accrued expenses and other current liabilities | $ 1,608 | $ 710 |
Notes Payable (Details Narrative) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Line of Credit Facility [Line Items] | ||
| Line of credit, working capital | $ 75,080 | |
| Line of credit, outstanding amount | $ 0 | $ 0 |
| Revolving Credit Facility [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Revolving line of credit, maturity date | Apr. 12, 2025 | |
| Line of credit, prime interest rate | 1.50% | |
| Line of credit, interest rate | 6.25% | 4.75% |
Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Total | $ 32 | $ 29 | $ 83 | $ 54 |
| Share-Based Payment Arrangement, Option [Member] | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Total | 32 | 29 | 63 | 53 |
| Employee Stock Award [Member] | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Total | 20 | |||
| Restricted Stock [Member] | ||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
| Total | $ 1 | |||
Stock-Based Compensation (Details Narrative) - $ / shares |
3 Months Ended | 6 Months Ended | |||
|---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
| Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
| Fair market value options price | $ 8.41 | $ 8.41 | $ 8.36 | ||
| Employees [Member] | |||||
| Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
| Number of shares, awards outstanding | 0 | 17,000,000 | 1,500,000 | 0 | |
| Fair market value price | $ 13.45 | $ 13.45 | |||
| Fair market value options price | $ 14.77 | $ 14.77 | |||
Income Taxes (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Income Tax Disclosure [Abstract] | ||||
| Income Taxes | $ 118,000 | $ 104,000 | $ 281,000 | $ 115,000 |
Schedule of Changes in Contract with Customer Liabilities (Details) $ in Thousands |
6 Months Ended |
|---|---|
|
Jun. 30, 2022
USD ($)
| |
| Deferred revenue: | |
| Unearned revenue December 31, 2021 | $ 1,513 |
| Unearned billings | 3,450 |
| Revenue recognized | (3,141) |
| Unearned revenue June 30, 2022 | $ 1,822 |
Revenue Recognition (Details Narrative) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Revenue from Contract with Customer [Abstract] | ||
| Net of allowance for doubtful accounts | $ 1,900 | $ 2,200 |
| Deferred revenue | $ 1,822 | $ 1,513 |
Schedule of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Leases | ||||
| Operating lease cost | $ 123 | $ 116 | $ 246 | $ 233 |
| Amortization of assets | 3 | 3 | 5 | 5 |
| Interest on finance lease obligations | 1 | 1 | 2 | |
| Variable lease cost | ||||
| Total net lease cost | $ 126 | $ 120 | $ 252 | $ 240 |
Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Cash paid for amounts included in the measurement of lease liabilities: | ||||
| Operating cash flows from operating leases | $ 126 | $ 116 | $ 251 | $ 230 |
| Operating cash flows from finance leases | 1 | 1 | 2 | |
| Financing cash flows from finance leases | 3 | 2 | 6 | 5 |
| ROU assets obtained in exchange for lease liabilities: | ||||
| Operating leases | $ 3,111 | $ 3,057 | $ 3,111 | $ 3,057 |
Leases (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Lessee, Lease, Description [Line Items] | ||||
| Operating lease, cost | $ 123 | $ 116 | $ 246 | $ 233 |
| The Move, LLC [Member] | ||||
| Lessee, Lease, Description [Line Items] | ||||
| Ownership percentage | 24.30% | 24.30% | ||
| Corporate Headquarters [Member] | ||||
| Lessee, Lease, Description [Line Items] | ||||
| Operating lease, cost | $ 100 | $ 100 | $ 200 | $ 200 |
Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
6 Months Ended | |
|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Cash paid during the year: | ||
| Interest expense | $ 1 | |
| Income taxes | $ 452 | $ 345 |
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