Where Food es From(WFCF) - 2019 Q2 - Quarterly Report

Financial Performance - Total revenues for the three months ended June 30, 2019, were $4,888,259, an increase from $4,438,308 in the same period of 2018, representing a growth of approximately 10.1%[193] - Verification and certification service revenue reached $3,743,241 for Q2 2019, up from $3,507,757 in Q2 2018, indicating a year-over-year increase of about 6.7%[193] - Gross profit for the three months ended June 30, 2019, was $2,088,402, compared to $2,011,726 in the same period of 2018, reflecting a growth of approximately 3.8%[193] - Segment operating income for the three months ended June 30, 2019, was $403,214, an increase from $241,258 in Q2 2018, showing a significant improvement of about 67.2%[193] - Net income attributable to WFCF for the three months ended June 30, 2019, was $361,089, compared to a net loss of $80,000 in the same period of 2018, marking a substantial turnaround[193] - Net income attributable to WFCF shareholders for the six months ended June 30, 2019 was approximately $218,000, or $0.01 per basic and diluted common share[206] Cash Flow and Liquidity - As of June 30, 2019, the company had cash and cash equivalents of approximately $2,855,900, an increase from $1,981,000 at December 31, 2018, indicating improved liquidity[183] - Net cash provided by operating activities for the six months ended June 30, 2019, was approximately $1,379,100, compared to $1,118,800 during the same period in 2018, reflecting a growth of 23.3%[184] - The company reported net cash used in investing activities of approximately $1,600 for the six months ended June 30, 2019, a significant improvement from cash used of $614,200 in the same period of 2018[185] - Net cash used in financing activities for the six months ended June 30, 2019, was approximately $262,700, compared to $149,300 in 2018, primarily due to share repurchases[186] - The company has a revolving line of credit agreement providing $75,080 in working capital, with an effective interest rate of 7.0% as of June 30, 2019[191] - The company has no off-balance sheet arrangements as of June 30, 2019, indicating a straightforward financial position[192] Revenue Growth and Market Opportunities - 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, indicating a strong market opportunity for the company[181] - The company plans to continue growth through verification bundling opportunities and acquisitions in national and international markets, leveraging quality verification programs as a key differentiator[189] - Product sales for the six months ended June 30, 2019 increased by approximately $426,200, or 50.1%, compared to the same period in 2018, driven by growth in the China export market[196] Operating Expenses and Profitability - The company incurred other operating expenses of $1,400,080 for the three months ended June 30, 2019, down from $1,541,362 in the same period of 2018, indicating a reduction of about 9.2%[193] - Other operating expenses for the six months ended June 30, 2019 increased by approximately 0.9% compared to the same period in 2018[198] - The company reported a gross margin of approximately 42.7% for Q2 2019, compared to 45.2% in Q2 2018, reflecting a slight decline in profitability[193] Segment Performance - The company’s verification and certification services segment showed a strong performance, contributing significantly to overall revenue growth and profitability[193] - Verification and certification service revenue for the six months ended June 30, 2019 increased by approximately $251,000, or 4.0%, compared to the same period in 2018[195] - Costs of revenues for the verification and certification segment for the six months ended June 30, 2019 were approximately $4.6 million, compared to $3.8 million for the same period in 2018[197] - Gross margin for the verification and certification segment for the six months ended June 30, 2019 decreased to 41.7%, compared to 46.2% in 2018[197] - Software license, maintenance, and support services revenue for the six months ended June 30, 2019 increased by approximately 23.9% over 2018, primarily due to an increase in billable hours for software enhancements[199] - Software-related consulting service revenue for the six months ended June 30, 2019 increased by approximately 31.0% compared to the same period in 2018, driven by growth in customer education and training services[200] - Costs of revenues for the software sales and related consulting segment for the six months ended June 30, 2019 were approximately $588,000, compared to $469,000 for the same period in 2018[201] Stakeholder Engagement - The company supports over 15,000 stakeholders in the food production industry, enhancing its market presence and credibility through third-party verification services[173] - The company received dividend income of $60,000 from Progressive Beef for the six months ended June 30, 2019[204]