Where Food Comes From, Inc. (NASDAQ:WFCF) Q3 2020 Results Conference Call November 5, 2020 12:00 PM ET Company Participants Jay Pfeiffer - IR John Saunders - CEO Leann Saunders - President Dannette Henning - CFO Conference Call Participants Raphi Savitz - RYS Advisors Operator Greetings, and welcome to Where Food Comes From Third Quarter Earnings Conference Call. At this time all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions ...

[Part 1 - Financial Information](index=3&type=section&id=Part%201%20-%20Financial%20Information) This section provides a comprehensive overview of the company's financial performance and position for the period ended September 30, 2020 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for the period ended September 30, 2020, indicate growth in total assets and equity, alongside improved net income and positive operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2020, the balance sheet shows an increase in total assets and equity, primarily driven by higher cash and long-term debt Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2020 (Unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $4,625 | $2,638 | | Total current assets | $8,127 | $5,861 | | Total assets | $20,261 | $18,237 | | **Liabilities & Equity** | | | | Total current liabilities | $4,190 | $2,741 | | Long term debt, net | $391 | $ - | | Total liabilities | $7,923 | $6,288 | | Total equity | $12,338 | $11,949 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) The statements of operations for Q3 and nine months ended September 30, 2020, reflect increased income from operations and net income despite slight revenue declines Q3 2020 vs Q3 2019 Performance (in thousands, except per share) | Metric | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Total revenues | $6,197 | $6,232 | | Gross profit | $2,762 | $2,587 | | Income from operations | $956 | $614 | | Net income attributable to WFCF | $730 | $541 | | Diluted EPS | $0.03 | $0.02 | Nine Months 2020 vs 2019 Performance (in thousands, except per share) | Metric | Nine Months 2020 | Nine Months 2019 | | :--- | :--- | :--- | | Total revenues | $14,525 | $15,075 | | Gross profit | $6,472 | $6,341 | | Income from operations | $1,071 | $717 | | Net income attributable to WFCF | $840 | $759 | | Diluted EPS | $0.03 | $0.03 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2020, cash flows show positive operating activities, significant investing outflows for acquisitions, and financing inflows from debt partially offset by stock repurchases Cash Flow Summary (Nine months ended Sep 30, in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,176 | $2,335 | | Net cash used in investing activities | $(682) | $(14) | | Net cash provided by (used in) financing activities | $493 | $(383) | | **Net change in cash** | **$1,987** | **$1,938** | | **Cash at end of period** | **$4,625** | **$3,420** | [Consolidated Statement of Equity](index=7&type=section&id=Consolidated%20Statement%20of%20Equity) Total equity increased as of September 30, 2020, primarily due to net income, partially offset by stock repurchases - Total equity increased by approximately **$389,000** in the first nine months of 2020, reaching **$12.338 million**[21](index=21&type=chunk) - Key changes to equity included net income of **$730,000** and stock repurchases of **$265,000** in Q3 2020[21](index=21&type=chunk) [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes provide details on the company's SaaS-based food verification business, significant events like the Postelsia acquisition and PPP loan, and its seasonal revenue patterns - The company is an independent, third-party food verification company that also provides sustainability programs and management solutions through a **SaaS model**[24](index=24&type=chunk)[25](index=25&type=chunk) - On February 21, 2020, the company acquired Postelsia Holdings, Ltd., a leader in sustainability programs for the seafood industry, for **$300,000 in cash**[36](index=36&type=chunk)[37](index=37&type=chunk) - The company received a **$1.0 million** loan under the Paycheck Protection Program (PPP) on April 17, 2020, with a **1.00% interest rate**; payment start date was modified to May 1, 2021[50](index=50&type=chunk)[85](index=85&type=chunk) - The business is seasonal, with a significant portion of verification and certification revenue realized from late May through early October[31](index=31&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the COVID-19 impact on operations, highlighting strong liquidity, segment-specific revenue trends, and overall net income improvement due to margin and expense management - The COVID-19 pandemic has led to some customers postponing onsite audits, but the company has maintained operations as an essential business, with many employees working remotely[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - As of September 30, 2020, the company had approximately **$4.9 million** in cash, cash equivalents, and certificates of deposit, with working capital of **$3.9 million**[98](index=98&type=chunk) - The company received a **$1.0 million** PPP loan and repurchased **$0.5 million** of common stock in the first nine months of 2020[101](index=101&type=chunk)[106](index=106&type=chunk) Q3 2020 vs Q3 2019 Net Income (in thousands) | Metric | Q3 2020 | Q3 2019 | | :--- | :--- | :--- | | Net income attributable to WFCF | $730 | $541 | [Results of Operations by Segment](index=27&type=section&id=RESULTS%20OF%20OPERATIONS) Q3 2020 segment performance shows a revenue decrease in Verification and Certification due to COVID-19, offset by improved gross margin, while Software Sales saw mixed revenue trends and a gross margin decline - **Verification and Certification Segment:** - Q3 2020 service revenue decreased **9.5% YoY** due to COVID-19 audit delays[111](index=111&type=chunk) - Q3 2020 product (ear tag) sales increased **25.4% YoY**[112](index=112&type=chunk) - Gross margin for this segment increased to **45.3%** in Q3 2020 from **41.3%** in Q3 2019, partly due to a shift to desk audits[113](index=113&type=chunk) - **Software Sales and Related Consulting Segment:** - Q3 2020 software license revenue decreased **14.6% YoY** due to customer budget delays[115](index=115&type=chunk) - Q3 2020 software consulting revenue increased **43.7% YoY** due to fluctuations in customer demand[116](index=116&type=chunk) - Gross margin for this segment declined to **36.4%** in Q3 2020 from **43.2%** in Q3 2019[117](index=117&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of September 30, 2020[124](index=124&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[126](index=126&type=chunk) [Part II - Other Information](index=32&type=section&id=Part%20II%20-%20Other%20Information) This section covers legal matters, risk factors, equity transactions, and required certifications [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently aware of any significant legal actions, though it may be involved in ordinary course business litigation - The company is not aware of any significant legal actions at this time[129](index=129&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) The company's business is subject to risks outlined in its 2019 Form 10-K, with the coronavirus pandemic's full financial impact currently unestimable - The company recognizes the coronavirus pandemic as a risk factor but cannot estimate the potential financial impact[130](index=130&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2020, the company repurchased common stock from the open market under its approved buyback plan Q3 2020 Stock Repurchases | Month | Number of Shares | Cost of Shares | Average Cost per Share | | :--- | :--- | :--- | :--- | | July 2020 | 55,665 | $85,778 | $1.54 | | August 2020 | 74,742 | $119,840 | $1.60 | | September 2020 | 31,112 | $59,699 | $1.92 | | **Total** | **161,519** | **$265,317** | **$1.64** | [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) The report includes required CEO and CFO certifications under the Sarbanes-Oxley Act - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906[132](index=132&type=chunk)

Where Food Comes From, Inc. (NASDAQ:WFCF) Q2 2020 Earnings Conference Call August 13, 2020 12:00 PM ET Company Participants Jay Pfeiffer - IR John Saunders - CEO Leann Saunders - President Dannette Henning - CFO Conference Call Participants Terry Thompson - Private Investor Chris Brown - Private Investor Alex Team - First Ballantyne Operator Greetings, and welcome to Where Food Comes From Second Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer ...

Washington, D.C. 20549 UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended June 30, 2020 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ Commission File No. 333-133624 WHERE FOOD COMES FROM, INC. (exact name of registrant as specified in its charter) (State or other jurisdiction of incor ...

Financial Data and Key Metrics Changes - Q1 revenue decreased slightly to $3.9 million from $4 million year-over-year [11] - Net loss attributable to the company increased to $241,000 from $143,000 year-over-year [13] - Generated $900,000 in net cash from operations in Q1, down from $1.3 million in the same quarter last year [13] - Cash and cash equivalents and short-term investments increased to $3.2 million, up 11% from $2.9 million at year-end [13] Business Line Data and Key Metrics Changes - Verification and certification services revenue remained flat at $2.8 million, impacted by social distancing and processing plant closures [11] - Product sales increased by 13% to $725,000 from $641,000 [11] - Software business revenue declined overall due to supply chain disruptions, with licensed maintenance and support down to $143,000 from $295,000, partially offset by an increase in software consulting services to $241,000 from $207,000 [12] Market Data and Key Metrics Changes - The beef demand remained strong, including from China, despite the pandemic's impact on the food supply chain [8] - The company noted a trend of consumers buying directly from producers, which could present new opportunities [20][21] Company Strategy and Development Direction - The company expanded its service portfolio by entering the seafood space through the acquisition of Postelsia Holdings, enhancing its geographical reach and customer base [16] - Launched the Where Food Comes From CARE program, focusing on sustainability solutions to meet consumer demand for sustainably produced products [17] - Management believes that the focus on sustainability, traceability, and animal welfare will be increasingly important in the post-COVID-19 world [41][42] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty about the timeline for returning to normal operations due to ongoing government responses to the pandemic [10] - The company is optimistic about future growth opportunities, particularly as the economy reopens and food service sectors resume operations [57] - Management is monitoring potential bankruptcy risks among customers but remains confident in the diversified customer base [52] Other Important Information - The company maintains a strong balance sheet with no long-term debt and a working capital of $2.6 million [13][14] - The management is pursuing government programs available for small businesses, although they feel confident in their financial position without needing them [59][61] Q&A Session Summary Question: Can the company capitalize on the trend of consumers buying directly from producers? - Management acknowledged the trend and is working to offer producers access to online sales systems [21] Question: What is the status of the verification business amid delays? - Management indicated that some verifications are being rescheduled, while others are moving to remote virtual auditing [33][34] Question: How is the company addressing potential credit exposure and bankruptcies? - Management expressed confidence in their diversified customer base, although they are monitoring the situation closely [52] Question: Has the company taken advantage of any government programs? - Management confirmed they are pursuing available programs but feel strong enough not to rely on them [59][61]

Financial Position - As of March 31, 2020, the company had cash and cash equivalents of approximately $3.2 million, an increase from $2.9 million at December 31, 2019[87]. - The company has a revolving line of credit providing $75,080 in working capital, with an effective interest rate of 4.75% as of March 31, 2020[93]. - On April 17, 2020, the company received a $1.0 million loan under the PPP with an annual interest rate of 1.00%[94]. Cash Flow - Net cash provided by operating activities for the three months ended March 31, 2020, was approximately $0.9 million, down from $1.3 million during the same period in 2019[88]. - Net cash used in investing activities for the three months ended March 31, 2020, was approximately $0.4 million, primarily due to the acquisition of Postelsia Holdings, Ltd for $0.3 million[89]. Revenue Performance - For the three months ended March 31, 2020, total revenues were approximately $3.9 million, a slight decrease from $3.95 million in the same period in 2019[96]. - Verification and certification service revenue decreased less than 0.4% compared to the same period in 2019[97]. - Product sales increased by approximately $0.1 million, or 13.1%, compared to the same period in 2019, driven by the requirement for source and age verification for cattle[98]. - Software license, maintenance, and support services revenue decreased approximately 32.3% compared to the same period in 2019, mainly due to a reduction in billable hours[101]. - Software-related consulting service revenue increased approximately 19.9% compared to the same period in 2019, reflecting fluctuations in customer demand[102]. - The company recorded a net loss attributable to shareholders of approximately $0.2 million for the three months ended March 31, 2020, compared to a net loss of approximately $0.1 million in the same period in 2019[109]. - The company received dividend income of $30,000 from Progressive Beef for the three months ended March 31, 2020, consistent with the previous year[107]. Operational Insights - The company supports over 15,000 farmers and food producers through third-party verification services, enhancing credibility for product claims[76]. - The company employs a SaaS revenue model, bundling software licenses with ongoing enhancements and professional services[77]. - The business is subject to seasonal fluctuations, with significant revenue typically realized from late May through early October[86]. - The company has evaluated customer receivables in light of the COVID-19 pandemic and does not currently feel any are impaired[88]. - Gross margin for the verification and certification segment decreased to 39.7% in Q1 2020 from 41.0% in Q1 2019, primarily due to competitive pricing[99]. - Gross margin for the software sales and related consulting segment declined to 46.6% in Q1 2020 from 49.7% in Q1 2019[103]. - Other operating expenses for the verification and certification segment increased approximately 1.7% compared to the same period in 2019[100]. Future Outlook - The company plans to continue growth through verification bundling opportunities and acquisitions in national and international markets[92].

Where Food Comes From, Inc. (NASDAQ:WFCF) Q4 2019 Earnings Conference Call March 5, 2020 12:00 PM ET Corporate Participants Jay Pfeiffer - Investor Relations John Saunders - Chief Executive Officer Dannette Henning - Chief Financial Officer Conference Call participants Alex Team - First Ballantyne Operator Greetings. Welcome to the Where Food Comes From 2019 Year-End Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presen ...

Revenue Growth - Verification and certification service revenue for the year ended December 31, 2019 increased approximately $1.82 million, or 13.3% compared to 2018, driven by new verification customers and increased product offerings [129] - Product sales for the year ended December 31, 2019 increased approximately $1.0 million, or 45.6% compared to 2018, primarily due to the re-opening of the China export market [129] - Total revenues for the year ended December 31, 2019 were $20,774,416, an increase from $17,803,559 in 2018 [126] - Software license, maintenance and support services revenue increased approximately 7.4% over 2018, due to an increase in billable hours for software enhancements [132] - Software-related consulting service revenue increased approximately 5.3% over 2018, driven by growth in customer education and training services [133] Profitability - Gross profit for the year ended December 31, 2019 was $9,079,415, compared to $7,743,751 in 2018 [126] - Gross margin for the software sales and related consulting segment increased to 58.6% in 2019, compared to 41.1% in 2018 [134] - For the year ended December 31, 2019, net income attributable to WFCF shareholders was approximately $1,345,200, or $0.05 per share, compared to $800,700, or $0.03 per share in 2018, representing a 68% increase in net income [140] Expenses and Costs - Selling, general and administrative expenses for the year ended December 31, 2019 increased 5.5% compared to 2018, attributed to increased headcount and compliance costs [131] - Costs of revenues for the verification and certification segment were approximately $10.6 million in 2019, compared to $9.0 million in 2018 [130] Cash Flow and Liquidity - Cash, cash equivalents, and certificates of deposits totaled approximately $2.9 million as of December 31, 2019, up from approximately $2.0 million in 2018, indicating a 45% increase in liquidity [141] - Net cash provided by operating activities during 2019 was approximately $2.9 million, compared to $1.2 million in 2018, reflecting a 142% increase in cash flow from operations [142] - Net cash used in investing activities decreased to approximately $1.1 million in 2019 from approximately $2.0 million in 2018, primarily due to the acquisition of non-controlling interest in SureHarvest [143] - Net cash used in financing activities was approximately $0.6 million in 2019, compared to $0.4 million in 2018, primarily due to share repurchases [145] Deferred Revenue and Future Outlook - The company had deferred revenue of approximately $0.6 million at December 31, 2019, compared to $0.5 million in 2018, indicating a 20% increase in future revenue recognition [158] - The company plans to focus on diversification in product offerings and potential acquisitions to capitalize on growing consumer awareness and demand [149] Goodwill and Intangible Assets - As of December 31, 2019, the company had approximately $2.9 million of goodwill, with no impairment losses recognized during the year [178] - As of December 31, 2019, the fair value of SureHarvest did not exceed the carrying value of net assets by approximately 4.0%, resulting in a goodwill impairment of $0.2 million for the year [179] - Definite-lived intangible assets are amortized over useful lives ranging from two to fifteen years, based on the nature of the assets and historical experience [180] - The company evaluates the remaining useful life of indefinite-lived intangible assets each reporting period, concluding that no changes were necessary as of December 31, 2019 [188] Accounting Policies - The company adopted ASU 2016-02: Leases (Topic 842) as of January 1, 2019, impacting the accounting for operating and finance leases [183] - ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term [185] - Business combinations are accounted for by allocating the purchase price to tangible and intangible assets based on their estimated fair values at the acquisition date [189] - The company uses various recognized valuation methods, including present value modeling, to determine the fair values of assets acquired in business combinations [190] - Deferred revenue is re-measured at the acquisition date to reflect the cost related to the associated legal performance obligation assumed during the acquisition [191] - Recent accounting pronouncements are detailed in Note 2 of the consolidated financial statements [193]

Where Food Comes From, Inc. (NASDAQ:WFCF) Q3 2019 Earnings Conference Call November 14, 2019 12:00 PM ET Company Participants Jay Pfeiffer - IR John Saunders - CEO Leann Saunders - President Dannette Henning - CFO Conference Call Participants Raphi Savitz - RYS Advisors Operator Greetings, welcome to the Where Food Comes From 2019 Third Quarter Earnings Call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File No. 333-133624 | Large accelerated filer: | ☐ | Accelerated filer: | ☐ | | --- | --- | --- | --- | | Non-accelerated filer: | ☐ | Smaller reporting company: | ☒ | | Emerging growth company | ☐ | | | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to ...