Where Food es From(US:WFCF)2019-05-14 18:40Market Overview - The global organic food market was valued at $110.25 billion in 2016 and is projected to grow at a CAGR of 16.15%, reaching $262.85 billion by 2022[170]. Financial Performance - For the three months ended March 31, 2019, total revenues increased to approximately $3.95 million, up from $3.62 million in the same period in 2018, representing a growth of about 9.2%[1]. - Net cash provided by operating activities for Q1 2019 was approximately $1,251,900, compared to $1,314,700 in Q1 2018[176]. - The net loss attributable to WFCF shareholders for the three months ended March 31, 2019, was approximately $143,100, compared to a net income of $35,500 in the same period in 2018[200]. - The company recorded an income tax benefit of $83,000 for the three months ended March 31, 2019, compared to an income tax expense of $8,000 for the same period in 2018[199]. Cash and Investments - As of March 31, 2019, the company had cash and cash equivalents of approximately $2,953,200, an increase from $1,981,000 at December 31, 2018[175]. - Net cash used in investing activities for Q1 2019 was $195,400, up from $154,300 in the same period of 2018[177]. - The company has a revolving line of credit providing $75,080 in working capital, with an effective interest rate of 7.0% as of March 31, 2019[182]. Revenue Streams - Verification and certification service revenue increased by approximately $15,500, or 0.6%, due to an increase in new verification customers and product offerings[187]. - Product sales surged by approximately $287,200, or 81.1%, driven by growth in the China export market and the requirement for identification tags for cattle[188]. - Software license, maintenance, and support services revenue rose by approximately 19.5% compared to the same period in 2018, attributed to an increase in billable hours for software enhancements[192]. - Software-related consulting service revenue increased by approximately 20.7% due to growth in customer education and training services[193]. Cost and Expenses - Gross margin for the verification and certification segment decreased to 41.0% in Q1 2019 from 46.8% in Q1 2018, primarily due to competitive pricing strategies[190]. - Total costs of revenues for the software sales and related consulting segment were approximately $283,500, leading to a gross margin decrease to 49.8% from 54.8% in the prior year[194]. - Other operating expenses increased by approximately 13.4% due to heightened marketing efforts and compliance costs[191]. Strategic Initiatives - The company plans to continue growth through verification bundling opportunities and acquisitions in national and international markets[181]. - The company supports over 15,000 farmers and businesses with third-party verification services, enhancing credibility in food production practices[166]. - The company has expanded its portfolio to include verification and software services for most food groups and 40 standards through organic growth and acquisitions[169]. Regulatory Environment - The Animal Disease Traceability Rule requires livestock moved interstate to be officially identified, enhancing traceability and market access[173]. Seasonal Trends - Significant portions of verification and certification service revenue are typically realized during late May through early October due to seasonal fluctuations[174].