Where Food Comes From(R), Inc. Reports Profitable Second Quarter

Marketwired

CASTLE ROCK, CO--(Marketwired - Aug 1, 2013) - Where Food Comes From®, Inc. (d.b.a. IMI Global, Inc.) (OTCQB: WFCF), a leading provider of verification and Internet solutions for the agricultural/livestock industry, today announced financial results for its second quarter ended June 30, 2013.

"We are pleased to report a return to profitability in the second quarter," said John Saunders, Chairman and CEO. "We have now reported profitability in 13 of our last 14 quarters and are confident in our ability to continue achieving profitable operations and revenue growth on an annual basis. The lower revenue we experienced in the past two quarters directly resulted from changes in how Japan monitors age requirements on imported US beef. We believe we have absorbed most of the effect of those changes and are pleased that the majority of our source and age customers remain committed to our core verification programs as a means of gaining premiums for their cattle at auction and keeping consumers well informed.

"Moving forward, we remain focused on our strategy of expanding our product and services portfolio to cover additional food groups and verification/certification categories. Portfolio expansion will come from a combination of M&A activity and internal development. Successful execution of this strategy not only enhances our prospects for profitable growth but it advances our objective of establishing Where Food Comes From as the undisputed leader in food traceability. This, in turn, gives the Company tremendous leverage with its Where Food Comes From labeling program. The more food producers turn to us for verification/certification services, the better able we are to tell consumers where their food is coming from."

Second Quarter Results
Second quarter revenue decreased 11% to $1,240,800 from revenue of $1,397,200 in the second quarter of 2012. Verification services revenue was $1,063,600, down from $1,172,200 year-over-year, while hardware revenue, consisting primarily of cattle identification tags, decreased to $151,900 from $200,300. The lower verification and hardware revenue was attributable to an easing by the Japanese government of import requirements that enabled some US producers to avoid source and age verification activities. Increased activity around the Company's Non-Hormone Treated Cattle (NHTC) and Verified Natural Beef (VNB) programs partially offset the decline in verification and hardware revenue. Other revenue, comprised primarily of fees from the Where Food Comes From labeling program, grew slightly to $25,300 from $24,700.

Selling, general and administrative expenses in the second quarter were $564,800, a slight improvement over $581,400 in the same quarter last year.

Net income attributable to Where Food Comes From, Inc. in the second quarter was $54,900, or less than $0.01 per share, versus net income of $304,300, or $0.01 per share, in the same quarter last year. The year-ago net income figure included a tax benefit of $127,400. The Company has been profitable in 13 of its past 14 quarters.

Six-Month Results
Revenue through six months of 2013 decreased 7% to $2,266,300 from $2,426,500 in the same period a year ago. Verification revenue was down slightly to $1,917,200 from $2,018,100 year over year. Hardware revenue through six months was $280,900 versus $357,200 a year ago. Revenue from Where Food Comes From and other sources increased to $68,200 from $51,200.

Selling, general and administrative expense year-to-date was $1,190,300, up from $1,069,500, due primarily to a full six months of expense associated with the February 2012 acquisition of International Certification Services as well as to increased headcount and costs related to evaluating M&A opportunities.

The Company reported a net loss attributable to Where Food Comes From of $3,500, or less than $0.01 per basic and diluted share, compared with net income of $666,400, or $0.03 per basic and diluted share, in the first half of 2012. The year-ago net income figure included a tax benefit of $409,500.

Balance Sheet Highlights
Cash and cash equivalents at June 30, 2013, totaled $1.5 million, up from $1.4 million at 2012 year-end. Working capital increased slightly over year-end to $1.8 million from $1.7 million.

Conference Call and Webcast
The Company will conduct a conference call today at 2:05 p.m. Mountain Time.

The call-in numbers for the conference call:
Domestic Toll Free: 1-877-941-1468
International: 1-480-629-9822
Conference ID: 4633943

Phone replay:
A telephone replay of the conference call will be available through August 31, 2013, as follows:
Domestic Toll Free: 1-800-406-7325
International: 1-303-590-3030
Conference Code: 4633943#

About Where Food Comes From, Inc.
Where Food Comes From, Inc. (d.b.a. IMI Global) is America's leading provider of third-party identification, verification and traceability solutions for the livestock and agricultural industries. The Company supports more than 6,000 ranchers, farmers, feed yards, meatpackers, food retailers and restaurants with a wide range of solutions, including its USVerified™ brand -- the industry standard for USDA Process Verified (PVP) programs -- which annually verifies marketing claims for approximately one half of all U.S. beef exports; Where Food Comes From®, a unique retail and restaurant labeling program that connects consumers directly to the source of the food they purchase; and various organic and gluten free certification solutions through its International Certification Services (ICS) subsidiary. Go to www.IMIGlobal.com and www.wherefoodcomesfrom.com for additional information.

CAUTIONARY STATEMENT
This news release contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Forward-looking statements are inherently uncertain, and actual events could differ materially from the Company's predictions. Important factors that could cause actual events to vary from predictions include those discussed in our SEC filings. Specifically, statements in this news release about industry leadership; expectations to achieve profitable growth organically and through M&A; potential to gain leverage for the Where Food Comes From labeling program; the Company's belief that most of the impact of changes in Japan's import requirements has been absorbed; plans to expand the Company's product/service portfolio; positive customer retention trends; and the demand for, and impact and efficacy of, the Company's and its subsidiaries' products and services on the marketplace are forward-looking statements that are subject to a variety of factors, including availability of capital, personnel and other resources; competition; governmental regulation of the agricultural industry; the market for beef and other commodities; and other factors. Financial results for the second quarter and six month period are not necessarily indicative of future results. Readers should not place undue reliance on these forward-looking statements. The Company assumes no obligation to update its forward-looking statements to reflect new information or developments. For a more extensive discussion of the Company's business, please refer to the Company's SEC filings at www.sec.gov.

   
Where Food Comes From, Inc.  
Statements of Income  
   
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
Revenues                                
  Service revenues   $ 1,063,593     $ 1,172,224     $ 1,917,200     $ 2,018,051  
  Product sales     151,859       200,282       280,868       357,236  
  Other revenues     25,306       24,676       68,193       51,179  
    Total revenues     1,240,758       1,397,182       2,266,261       2,426,466  
Costs of revenues                                
  Labor and other costs of services     463,092       488,684       868,885       844,137  
  Costs of products     118,189       152,545       204,078       225,417  
    Total costs of revenue     581,281       641,229       1,072,963       1,099,554  
Gross profit     659,477       755,953       1,193,298       1,326,912  
Selling, general and administrative expenses     564,768       581,369       1,190,286       1,069,506  
Income from operations     94,709       174,584       3,012       257,406  
Other expense (income):                                
  Interest expense     5,307       5,821       12,082       13,693  
  Gain on sale of marketable securities     -       (2,574 )     -       (2,574 )
  Other income, net     (397 )     (691 )     (846 )     (3,353 )
Income before income taxes     89,799       172,028       (8,224 )     249,640  
Income tax expense (benefit)     33,174       (127,382 )     (1,114 )     (409,472 )
Net income (loss)     56,625       299,410       (7,110 )     659,112  
Net (income) loss attributable to non-controlling interest     (1,708 )     4,842       3,645       7,273  
Net income attributable to Where Food Comes From, Inc.   $ 54,917     $ 304,252     $ (3,465 )   $ 666,385  
Net income per share:                                
  Basic   $ -     $ 0.01     $ -     $ 0.03  
  Diluted   $ -     $ 0.01     $ -     $ 0.03  
Weighted average number of common shares outstanding:                                
Basic     21,555,835       20,854,725       21,497,916       20,732,182  
Diluted     21,867,453       21,549,014       21,497,916       21,360,420  
                                 
                                 
                                 
Where Food Comes From, Inc.  
Balance Sheets  
   
    June 30,     December 31,  
    2013     2012  
ASSETS                
Current Assets:                
  Cash and cash equivalents   $ 1,490,202     $ 1,403,489  
  Accounts receivable, net     437,643       377,072  
  Prepaid expenses and other current assets     96,447       80,189  
  Deferred tax assets     244,154       242,944  
    Total current assets     2,268,446       2,103,694  
Property and equipment, net     150,698       146,563  
Intangible and other assets, net     283,743       303,810  
Goodwill     532,997       532,997  
Long-term deferred tax assets     277,177       277,177  
Total assets   $ 3,513,061     $ 3,364,241  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 175,444     $ 134,913  
  Accrued expenses and other current liabilities     42,204       58,808  
  Customer deposits     41,313       27,478  
  Deferred revenue     201,465       139,022  
  Short-term debt and current portion of notes payable     24,004       22,873  
  Current portion of capital lease obligations     4,065       5,506  
    Total current liabilities     488,495       388,600  
Capital lease obligations, net of current portion     12,921       14,981  
Notes payable and other long-term debt, net     177,591       191,106  
Notes payable, related party     200,000       200,000  
Total liabilities     879,007       794,687  
Stockholders' equity:                
  Common stock     22,156       21,837  
  Additional paid-in capital     3,769,402       3,668,556  
  Treasury stock     (150,849 )     (121,294 )
  Accumulated deficit     (1,291,005 )     (1,287,540 )
  Total Where Food Comes From equity     2,349,704       2,281,559  
  Non-controlling interest     284,350       287,995  
Total Equity     2,634,054       2,569,554  
Total liabilities and stockholders' equity   $ 3,513,061     $ 3,364,241  
Contact:
Company

John Saunders
Chief Executive Officer
303-895-3002

Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
303-393-7044
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