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 not listed below
were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial
statements.
Recently
Adopted Accounting Pronouncements
On
January 1, 2020 we adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes Step 2 from the goodwill impairment
test. The adoption of this update did not have
a material impact on our Consolidated Financial Statements.
On
January 1, 2020 we adopted ASU 2018-13, Fair Value Measurement (Topic 8420): Disclosure Framework – Changes to the Disclosure
Requirements for Fair Value Measurement. ASU 2018-13 modifies the requirements associated with the hierarchy associated with Level
1, Level 2 and Level 3 fair value measurements. The
adoption of this update did not have a material impact on our Consolidated Financial Statements.
On
January 1, 2020 we adopted ASU 2018-15, Intangibles - Goodwill and Other - Internal Use Software - Customer’s Accounting
for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which amends the requirements for
capitalizing implementation costs incurred in a hosting arrangement that is a service contract to align with the requirements
for capitalizing implementation costs incurred to develop or obtain internal-use software. The
adoption of this update did not have a material impact on our Consolidated Financial Statements.
Note
2 – Business Acquisitions
On
February 21, 2020 the Company acquired all of the stock of privately held Postelsia Holdings, Ltd. (“Postelsia”) for
$250,000 in cash at the acquisition closing date, with an additional $50,000 in cash being held in escrow for six months following
the closing date. The escrowed funds are to support any claims by the Company for breaches of representation and warranties.
Postelsia,
based in Victoria, British Columbia, is a leader in the emerging field of environmental and social sustainability programs for
the seafood industry. Postelsia provides a range of programs and consulting services designed to improve and promote sustainable
practices, including environmental conservation, worker care, and food safety compliance. Postelsia will operate as a wholly owned
subsidiary of the Company.
We
believe the total consideration paid approximates the fair value of the assets acquired. We have allocated the total consideration
to our identifiable intangible assets (customer relationships) to be amortized over an estimated useful life of 8 years.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
3 – Basic and Diluted Net Loss 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
following is a reconciliation of the share data used in the basic and diluted loss per share computations (amounts in thousands):
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Basic:
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
24,947
|
|
|
|
24,957
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
24,947
|
|
|
|
24,957
|
|
Weighted average effects of dilutive securities
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
24,947
|
|
|
|
24,957
|
|
|
|
|
|
|
|
|
|
|
Antidilutive securities:
|
|
|
206
|
|
|
|
266
|
|
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.
Note
4 - Investment in Progressive Beef, LLC
For
the three months ended March 31, 2020 and March 31, 2019, the Company received dividend income from Progressive Beef of $30,000
representing a distribution of their earnings. The income is reflected within the “other (expense) income” section
of the Company’s Consolidated Statement of Income for the three months ended March 31, 2020 and March 31, 2019. The Company
completed a qualitative assessment and determined that there were no impairment indicators as of March 31, 2020.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
5 – Intangible and Other Assets
The
following table summarizes our intangible and other assets (amounts in thousands, except useful life):
|
|
March 31,
|
|
|
December 31,
|
|
|
Estimated
|
|
|
2020
|
|
|
2019
|
|
|
Useful Life
|
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
Tradenames and trademarks
|
|
$
|
417
|
|
|
$
|
417
|
|
|
2.5 - 8.0 years
|
Accreditations
|
|
|
85
|
|
|
|
85
|
|
|
5.0 years
|
Customer relationships
|
|
|
3,664
|
|
|
|
3,351
|
|
|
3.0 - 15.0 years
|
Patents
|
|
|
970
|
|
|
|
970
|
|
|
4.0 years
|
Non-compete agreements
|
|
|
121
|
|
|
|
121
|
|
|
5.0 years
|
|
|
|
5,257
|
|
|
|
4,944
|
|
|
|
Less accumulated amortization
|
|
|
2,333
|
|
|
|
2,182
|
|
|
|
|
|
|
2,924
|
|
|
|
2,762
|
|
|
|
Tradenames/trademarks (not subject to amortization)
|
|
|
465
|
|
|
|
465
|
|
|
|
|
|
|
3,389
|
|
|
|
3,227
|
|
|
|
Other assets
|
|
|
21
|
|
|
|
21
|
|
|
|
Intangible and other assets:
|
|
$
|
3,410
|
|
|
$
|
3,248
|
|
|
|
Note
6 – Accrued Expenses and Other Current Liabilities
The
following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Income and sales taxes payable
|
|
$
|
97
|
|
|
$
|
171
|
|
Payroll related accruals
|
|
|
218
|
|
|
|
201
|
|
Customer deposits
|
|
|
90
|
|
|
|
62
|
|
Professional fees and other expenses
|
|
|
178
|
|
|
|
240
|
|
|
|
$
|
583
|
|
|
$
|
674
|
|
Note
7 – Notes Payable
Unison
Revolving Line of Credit
The
Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2022. 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 March 31, 2020 and December 31, 2019, the effective interest
rate was 4.75% and 6.25%, respectively. The LOC is collateralized by all the business assets of ICS. As of March 31, 2020, and
December 31, 2019, there were no amounts outstanding under this LOC.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
8 – 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 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 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.
The
amount of stock-based compensation expense is as follows (amounts in thousands):
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Stock options
|
|
$
|
30
|
|
|
$
|
39
|
|
Restricted stock awards
|
|
|
1
|
|
|
|
6
|
|
Total
|
|
$
|
31
|
|
|
$
|
45
|
|
During
the three months ended March 31, 2020, the Company awarded stock options to purchase 20,000 shares of the Company’s common
stock at an exercise price of $1.81 per share to employees of the Company. No stock options were awarded during the three months
ended March 31, 2019.
The
Company estimated the fair value of stock options using the Black-Scholes-Merton option pricing model with the following assumptions:
|
|
Three months ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Number of options awarded to purchase common shares
|
|
|
20,000
|
|
|
|
None
|
|
Risk-free interest rate
|
|
|
1.56
|
%
|
|
|
N/A
|
|
Expected volatility
|
|
|
97.0
|
%
|
|
|
N/A
|
|
Assumed dividend yield
|
|
|
N/A
|
|
|
|
N/A
|
|
Expected life of options from the date of grant
|
|
|
9.9 years
|
|
|
|
N/A
|
|
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
|
|
2020 (remaining nine months)
|
|
$
|
94
|
|
|
$
|
3
|
|
|
$
|
97
|
|
2021
|
|
|
83
|
|
|
|
1
|
|
|
|
84
|
|
2022
|
|
|
16
|
|
|
|
-
|
|
|
|
16
|
|
2023
|
|
|
1
|
|
|
|
-
|
|
|
|
1
|
|
|
|
$
|
194
|
|
|
$
|
4
|
|
|
$
|
198
|
|
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Equity
Incentive Plans
Our
2016 Equity Incentive Plan (the “Equity Incentive Plan”) provides for the issuance of stock-based awards to employees,
officers, directors and consultants. The Plan permits 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.
Stock
Option Activity
Stock
option activity under our Equity Incentive Plan is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
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, 2019
|
|
|
437,126
|
|
|
$
|
1.46
|
|
|
$
|
1.49
|
|
|
|
5.97
|
|
|
$
|
150,417
|
|
Granted
|
|
|
20,000
|
|
|
$
|
1.81
|
|
|
$
|
2.05
|
|
|
|
9.90
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
|
Expired/Forfeited
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
|
Outstanding, March 31, 2020
|
|
|
457,126
|
|
|
$
|
1.48
|
|
|
$
|
1.52
|
|
|
|
5.82
|
|
|
$
|
178,795
|
|
Exercisable, March 31, 2020
|
|
|
318,812
|
|
|
$
|
1.34
|
|
|
$
|
1.36
|
|
|
|
4.67
|
|
|
$
|
172,704
|
|
Unvested, March 31, 2020
|
|
|
138,314
|
|
|
$
|
1.78
|
|
|
$
|
1.88
|
|
|
|
8.76
|
|
|
$
|
6,091
|
|
The
aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of
our common stock on March 31, 2020 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 March 31, 2020.
Restricted
Stock Activity
Restricted
stock activity under our Equity Incentive Plan is summarized as follows:
|
|
|
|
|
Weighted avg.
|
|
|
|
Number of
|
|
|
grant date
|
|
|
|
options
|
|
|
fair value
|
|
Non-vested restricted shares, December 31, 2019
|
|
|
5,000
|
|
|
$
|
2.55
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
Vested
|
|
|
-
|
|
|
$
|
-
|
|
Forfeited
|
|
|
-
|
|
|
$
|
-
|
|
Non-vested restricted shares, March 31, 2020
|
|
|
5,000
|
|
|
$
|
2.55
|
|
Note
9 – 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.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
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 months ended March 31, 2020
we recorded an income tax benefit of approximately $80,000, compared to income tax benefit of $83,000 for the same 2019 period.
Note
10 - Revenue Recognition
Disaggregation
of Revenue
We
have identified four material revenue categories in our business: (i) verification and certification service revenue, (ii) product
sales, (iii) software license, maintenance and support services revenue and (iv) software-related consulting service revenue.
Revenue
attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).
|
|
Three months ended
March 31, 2020
|
|
|
Three months ended
March 31, 2019
|
|
|
|
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
|
|
$
|
2,803
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,803
|
|
|
$
|
2,812
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,812
|
|
Product sales
|
|
|
725
|
|
|
|
-
|
|
|
|
-
|
|
|
|
725
|
|
|
|
641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
641
|
|
Software license, maintenance and support services revenue
|
|
|
-
|
|
|
|
233
|
|
|
|
(90
|
)
|
|
|
143
|
|
|
|
-
|
|
|
|
344
|
|
|
|
(49
|
)
|
|
|
295
|
|
Software-related consulting service revenue
|
|
|
-
|
|
|
|
265
|
|
|
|
(24
|
)
|
|
|
241
|
|
|
|
-
|
|
|
|
221
|
|
|
|
(14
|
)
|
|
|
207
|
|
Total revenues
|
|
$
|
3,528
|
|
|
$
|
498
|
|
|
$
|
(114
|
)
|
|
$
|
3,912
|
|
|
$
|
3,453
|
|
|
$
|
565
|
|
|
$
|
(63
|
)
|
|
$
|
3,955
|
|
Contract
Balances
As
of March 31, 2020, and December 31, 2019, accounts receivable from contracts with customers, net of allowance for doubtful accounts,
were approximately $2.0 and $2.5 million, respectively.
As
of March 31, 2020, and December 31, 2019, deferred revenue from contracts with customers was approximately $1.4 and $0.8 million,
respectively. The balance of the contract liabilities at March 31, 2020 and December 31, 2019 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 three month period ended March 31, 2020 (amounts in
thousands):
Deferred revenue:
|
|
|
|
|
Unearned revenue January 1, 2020
|
|
$
|
797
|
|
Unearned billings
|
|
|
1,235
|
|
Revenue recognized
|
|
|
(619
|
)
|
Unearned revenue March 31, 2020
|
|
$
|
1,413
|
|
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
11 – Leases
The
components of lease expense were as follows (amounts in thousands):
|
|
Three months ended
|
|
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Operating lease cost
|
|
$
|
116
|
|
|
$
|
120
|
|
Finance lease cost
|
|
|
|
|
|
|
|
|
Amortization of assets
|
|
|
2
|
|
|
|
2
|
|
Interest on finance lease obligations
|
|
|
1
|
|
|
|
2
|
|
Total net lease cost
|
|
$
|
119
|
|
|
$
|
124
|
|
Included
in the table above, is $92,000 for the three months ended March 31, 2020, of operating lease cost 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):
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Operating leases:
|
|
Related Party
|
|
|
Other
|
|
|
Total
|
|
|
Related Party
|
|
|
Other
|
|
|
Total
|
|
Operating lease ROU assets
|
|
$
|
2,889
|
|
|
$
|
296
|
|
|
$
|
3,185
|
|
|
$
|
2,933
|
|
|
$
|
314
|
|
|
$
|
3,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities
|
|
$
|
164
|
|
|
$
|
83
|
|
|
$
|
247
|
|
|
$
|
158
|
|
|
$
|
81
|
|
|
$
|
239
|
|
Noncurrent operating lease liabilities
|
|
|
3,216
|
|
|
|
244
|
|
|
|
3,460
|
|
|
|
3,260
|
|
|
|
266
|
|
|
|
3,526
|
|
Total operating lease liabilities
|
|
$
|
3,380
|
|
|
$
|
327
|
|
|
$
|
3,707
|
|
|
$
|
3,418
|
|
|
$
|
347
|
|
|
$
|
3,765
|
|
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Finance leases:
|
|
|
|
|
|
|
|
|
Property and equipment, at cost
|
|
$
|
43
|
|
|
$
|
43
|
|
Accumulated amortization
|
|
|
(24
|
)
|
|
|
(22
|
)
|
Property and equipment, net
|
|
$
|
19
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
Current obligations of finance leases
|
|
$
|
9
|
|
|
$
|
8
|
|
Finance leases, net of current obligations
|
|
|
19
|
|
|
|
21
|
|
Total finance lease liabilities
|
|
$
|
28
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term (in years):
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
10.7
|
|
|
|
11.0
|
|
Finance leases
|
|
|
2.8
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
|
Weighted average discount rate:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
5.8
|
%
|
|
|
5.8
|
%
|
Finance leases
|
|
|
20.9
|
%
|
|
|
20.8
|
%
|
Supplemental
cash flow and other information related to leases was as follows (amounts in thousands):
|
|
Three months ended
|
|
|
|
March 31, 2020
|
|
|
March 31, 2019
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
111
|
|
|
$
|
100
|
|
Operating cash flows from finance leases
|
|
$
|
1
|
|
|
$
|
2
|
|
Financing cash flows from finance leases
|
|
$
|
2
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
ROU assets obtained in exchange for lease liabilities:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
$
|
3,507
|
|
|
$
|
3,513
|
|
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
|
|
2020 (nine remaining months)
|
|
$
|
338
|
|
|
$
|
10
|
|
2021
|
|
|
462
|
|
|
|
12
|
|
2022
|
|
|
466
|
|
|
|
10
|
|
2023
|
|
|
461
|
|
|
|
5
|
|
2024
|
|
|
407
|
|
|
|
-
|
|
Thereafter
|
|
|
2,901
|
|
|
|
-
|
|
Total lease payments
|
|
|
5,035
|
|
|
|
37
|
|
Less amount representing interest
|
|
|
(1,328
|
)
|
|
|
(9
|
)
|
Total lease obligations
|
|
|
3,707
|
|
|
|
28
|
|
Less current portion
|
|
|
(247
|
)
|
|
|
(9
|
)
|
Long-term lease obligations
|
|
$
|
3,460
|
|
|
$
|
19
|
|
Note
12 – 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
13 - 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, ICS, 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 sales and related consulting reportable segment. SureHarvest, which includes Sow
Organic and JVF Consulting, is the sole operating segment. This segment includes software license, maintenance, support and software-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):
|
|
Three months ended March 31, 2020
|
|
|
Three months ended March 31, 2019
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible and other assets, net
|
|
$
|
1,266
|
|
|
$
|
2,144
|
|
|
$
|
-
|
|
|
$
|
3,410
|
|
|
$
|
1,425
|
|
|
$
|
2,273
|
|
|
$
|
-
|
|
|
$
|
3,698
|
|
Goodwill
|
|
|
1,133
|
|
|
|
1,813
|
|
|
|
-
|
|
|
|
2,946
|
|
|
|
1,133
|
|
|
|
2,011
|
|
|
|
-
|
|
|
|
3,144
|
|
Total assets
|
|
|
16,999
|
|
|
|
5,524
|
|
|
|
(4,530
|
)
|
|
|
17,993
|
|
|
|
13,031
|
|
|
|
5,518
|
|
|
|
-
|
|
|
|
18,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verification and certification service revenue
|
|
$
|
2,803
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,803
|
|
|
$
|
2,812
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,812
|
|
Product sales
|
|
|
725
|
|
|
|
-
|
|
|
|
-
|
|
|
|
725
|
|
|
|
641
|
|
|
|
-
|
|
|
|
-
|
|
|
|
641
|
|
Software license, maintenance and support services revenue
|
|
|
-
|
|
|
|
233
|
|
|
|
(90
|
)
|
|
|
143
|
|
|
|
-
|
|
|
|
344
|
|
|
|
(49
|
)
|
|
|
295
|
|
Software-related consulting service revenue
|
|
|
-
|
|
|
|
265
|
|
|
|
(24
|
)
|
|
|
241
|
|
|
|
-
|
|
|
|
221
|
|
|
|
(14
|
)
|
|
|
207
|
|
Total revenues
|
|
$
|
3,528
|
|
|
$
|
498
|
|
|
$
|
(114
|
)
|
|
$
|
3,912
|
|
|
$
|
3,453
|
|
|
$
|
565
|
|
|
$
|
(63
|
)
|
|
$
|
3,955
|
|
Costs of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of verification and certification services
|
|
|
1,624
|
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
1,534
|
|
|
|
1,595
|
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
1,562
|
|
Costs of products
|
|
|
502
|
|
|
|
-
|
|
|
|
-
|
|
|
|
502
|
|
|
|
443
|
|
|
|
-
|
|
|
|
-
|
|
|
|
443
|
|
Costs of software license, maintenance and support services
|
|
|
-
|
|
|
|
146
|
|
|
|
-
|
|
|
|
146
|
|
|
|
-
|
|
|
|
154
|
|
|
|
-
|
|
|
|
154
|
|
Costs of software-related consulting services
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
130
|
|
|
|
-
|
|
|
|
130
|
|
Total costs of revenues
|
|
|
2,126
|
|
|
|
266
|
|
|
|
(90
|
)
|
|
|
2,302
|
|
|
|
2,038
|
|
|
|
284
|
|
|
|
(33
|
)
|
|
|
2,289
|
|
Gross profit
|
|
|
1,402
|
|
|
|
232
|
|
|
|
(24
|
)
|
|
|
1,610
|
|
|
|
1,415
|
|
|
|
281
|
|
|
|
(30
|
)
|
|
|
1,666
|
|
Depreciation & amortization
|
|
|
88
|
|
|
|
146
|
|
|
|
-
|
|
|
|
234
|
|
|
|
82
|
|
|
|
178
|
|
|
|
-
|
|
|
|
260
|
|
Other operating expenses
|
|
|
1,537
|
|
|
|
217
|
|
|
|
(24
|
)
|
|
|
1,730
|
|
|
|
1,511
|
|
|
|
226
|
|
|
|
(30
|
)
|
|
|
1,707
|
|
Segment operating (loss)/income
|
|
$
|
(223
|
)
|
|
$
|
(131
|
)
|
|
$
|
-
|
|
|
$
|
(354
|
)
|
|
$
|
(178
|
)
|
|
$
|
(123
|
)
|
|
$
|
-
|
|
|
$
|
(301
|
)
|
Other items to reconcile segment operating income (loss) to net income attributable to WFCF:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense (income)
|
|
|
(30
|
)
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(31
|
)
|
|
|
(31
|
)
|
Income tax (benefit)/expense
|
|
|
-
|
|
|
|
-
|
|
|
|
(80
|
)
|
|
|
(80
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(83
|
)
|
|
|
(83
|
)
|
Net loss attributable to non-controlling interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
44
|
|
|
|
-
|
|
|
|
44
|
|
Net (loss)/income attributable to WFCF
|
|
$
|
(193
|
)
|
|
$
|
(128
|
)
|
|
$
|
80
|
|
|
$
|
(241
|
)
|
|
$
|
(178
|
)
|
|
$
|
(79
|
)
|
|
$
|
114
|
|
|
$
|
(143
|
)
|
Note
14 – Supplemental Cash Flow Information
|
|
Three months ended March 31,
|
|
(Amounts in thousands)
|
|
2020
|
|
|
2019
|
|
Cash paid during the year:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
2
|
|
|
$
|
3
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
15 – Subsequent Events
The
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allocated $350 billion to help small businesses keep
workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (“PPP”), the initiative
provides federally guaranteed loans to small businesses. These loans may be forgiven if borrowers maintain their payrolls during
the crisis or restore their payrolls afterward. On April 17, 2020, the Company received a $1.0 million loan under the PPP with
a maturity date of April 17, 2022 and an annual interest rate of 1.00%. The loan will be repaid in 17 monthly consecutive interest
and principal payments of approximately $57,876, commencing December 1, 2020. The Company has not received any notification
if any of the loan amount will be forgiven.