Where Food Comes From, Inc.

Transcription

1 Where Food Comes From, Inc. Where Food Comes From, Inc. D.B.A. IMI Global, Inc. Headquarters: Castle Rock, Colorado OTCQB: WFCF February 2017

2 Forward-Looking Statements and Use of Non-GAAP Measures This presentation 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 presentation about financial performance, new business development, growth potential, market leadership, and the impact and potential of the Company s products and services on the marketplace and customers 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 beef industry, the market for beef and other factors. 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 Note on non-gaap Financial Measures This presentation also includes a discussion of adjusted EBITDA, which is a non-gaap financial measure provided as a complement to the results provided in accordance with generally accepted accounting principles ("GAAP"). Adjusted EBITDA excludes stock-based compensation and, when appropriate, other items that management does not utilize in assessing the Company's operating performance. None of these non-gaap financial measures are recognized terms under GAAP and do not purport to be an alternative to net income as an indicator of operating performance or any other GAAP measure. We intend to continue to provide these non-gaap financial measures as part of our future earnings discussions because we believe they are useful to investors and other external users of our financial statements in evaluating our operating performance.

3 How Big is the Trend? I ve never seen a stronger desire for (consumers) knowing where their food is coming from -- Whole Foods CEO Walter Robb Our customers want to know more about how their food is grown and raised, and where it comes from. Walmart is committed to using our strengths to drive transparency and improvement across the supply chain.helping to put our customers in charge of their food choices by providing clear, accurate information about food ingredients. -- Kathleen McLaughlin, Walmart VP, Sustainability We are changing the way we source and serve food in our restaurants. We have an important role in helping build a more sustainable food system globally through initiatives such as the sustainable beef pilot in Canada and we re committed to continuing this important work around the world. -- Steve Easterbrook, president and CEO, McDonald s Corporation The beef industry recognizes that consumers are more interested in where their food comes from and they want to tell the story. -- Derek Schoonbaert, managing director, Cargill Canada

4 Company Overview #1 provider of independent, third-party traceability and verification of food production practices Collect and leverage information on when, where, how and by whom food was raised 12,000+ customers: farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations and restaurants Customers include top tier players in food and wine space Recurring revenue model generating strong cash flows to support profitable organic growth and fund M&A Addressable market $200M* and growing <5% of revenue *Estimate based on available industry data

5 Verification Services Commodity Group Coverage Beef Dairy Pork Wine grapes Poultry Nuts Lamb Mushrooms Bison Avocados Eggs Cut flowers Standards We audit to more than 30 standards, including Organic, Non-GMO, Gluten Free, Safe Quality Food, Protected Harvest, American Humane Certified, Sustainability, and many others

6 Competitive Advantage: Bundled Services Differential competitive advantage of bundled services made possible by M&A activity & largest portfolio of auditing standards 30% of new customer wins due to benefits of bundled services Multiple audits conducted in single visit Eliminates audit fatigue and simplifies process Lowers costs to producers and processers Improves WFCF gross margins Organic / non-gmo is most popular bundled audit

7 The WFCF Bundling Advantage NSF Food Chain Earth Claims Oregon Tilth CCOF MLA WFCF QAI

8 Where Food Comes From Source Verified 300+ grocery stores and food distributors nationally carry product displaying a Where Food Comes From Source Verified label. How it works: Package displays Where Food Comes From Source Verified label indicating product s origin has been verified by an independent third party. May include a QR code for consumer to access information on practices used by the families that raised the food. Revenue Model: Non-exclusive food distributors or retailers pay per pound royalties, license fees, service fees. Exclusive verification customers display label for no additional cost.

9 Our Customers

10 Customer Case Study Customer since 2014 McDonald s has taken a leadership role in the area of sustainable practices for beef producers In 2015 and 2016 WFCF designed and implemented the McDonald s pilot program for sustainable beef in Canada WFCF was the exclusive provider on this program Conducted 183 on-site audits of Canadian beef suppliers who are now compliant with McDonald s sustainability requirements Tracked 9,000 head of cattle = 2.4 million hamburgers Canadian Roundtable for Sustainable Beef evaluating results to determine path forward

11 Customer Case Study Customer since 2008 Whole Foods Market (WFM) is a leading advocate for food transparency WFM requires its protein suppliers to comply with Global Animal Partnership (GAP) standards around humane handling WFCF is the largest and one of only two certified providers of GAP audits nationwide for WFM suppliers of beef, chicken, pork and lamb Pine Manor Farms chicken products now bear WFCF label on packaging WFCF now bundling non-gmo and Organic certifications for WFM supply chain Sticky customer relationship

12 Customer Case Study Customer since 2005 Tyson is world s largest meatpacker with $41B in revenue Industry leader in philanthropy, food safety, animal welfare, sustainability Long-term customer relationship is constantly expanding Verifications for Tyson s Natural and Organic beef, pork, poultry NHTC source and age verifications for Europe Tyson FarmCheck is WFCF exclusive

13 Why WFCF in the Future? Market Drivers Growth strategy supported by long-term trends Consumer demand for transparency due to food safety issues Increasing consumer interest in knowing where their food comes from and who raised it Producers, packers, distributors and retailers view verification, identification and traceability as key competitive differentiators Food scandals drive QSR and retailers forward New technologies: RFID, GPS, drones USDA s Animal Disease Traceability (ADT): Mandatory ID in 5-10 years Key export markets require verification: EU, Saudi Arabia, China (anticipated)

14 Where Did Non-GMO Come From? The Non-GMO Opportunity GMO Genetically Modified Organisms Non-GMO Project is largest industry group Majority (32) of US states have GMO ballot initiatives Vermont first state to mandate non-gmo labeling in 2016 Whole Foods committed to mandatory GMO labeling by 2018 Where Food Comes From is one of only four non-gmo approved auditors nationally

15 M&A Activity Acquisition Year Commodity Groups Certifications ICS 2012 Grain, dairy, beef, pork, tobacco Organic, Gluten free, Non-GMO Validus 2013 Pork, poultry, dairy Animal welfare, sustainability Micro Technologies 2013 Beef Source & Age, NHTC Merck (Tri-Merit) 2014 Beef, dairy Source & Age Sterling Solutions 2014 Beef, dairy Source & Age, NHTC, BQA SureHarvest 2016 High value specialty crops wine grapes, almonds, hazelnuts, cut flowers, fresh produce Sustainability M&A strategy designed to add new auditing standards, food group coverage and technology to further differentiate the Company from its competition.

16 SureHarvest Acquisition December 2016 Transaction Summary WFCF acquired 60% controlling interest with right of first refusal on remaining 40% Transaction valued at approximately $2.8 million, including $1.1 million in cash and 850,852 shares of WFCF common stock SureHarvest expected to add approximately $1.5 million in annualized revenue with no long-term debt

17 SureHarvest Acquisition December 2016 Highlights Expands and diversifies WFCF s commodity reach with high value specialty crops, including wine grapes, almonds, hazelnuts, mushrooms, cut flowers, leafy greens and other fresh produce SureHarvest s patented sustainability software supports more than 2,200 agri-food operations, including growers, packers, shippers, processors, wineries and trade associations SaaS business model bundles annual software subscriptions with professional services to provide predictable, recurring revenue SureHarvest brings five issued patents, eight 2016 patent allowances and three pending applications

18 SureHarvest Acquisition December 2016 SureHarvest Solutions Overview Sustainability and farming MIS solutions, certification and compliance management, and professional services drive sustainable value creation for customers throughout the food and agriculture value chain. Flagship Sustainability Management Information System (SMIS) supports agri-food operations managing 450,000 acres of specialty crops covering multiple commodities and more than 65% of the wine produced in California. Services and Products Sustainable Sourcing Sustainability Programs Diffusion of Innovation Certification Management Verification Services Compliance Management Farming Information Management Food Chain Customers Growers Wineries Packers and Shippers Distributors Food Processors Retailers and Foodservice Trade Associations

19 Revenue Growth 26% compounded annual growth rate $12M $10M $10.4M $11.6M $8M $8.8M $6M $4M $2M $1.1M $2.4M $1.7M $2.7M $3.3M $4.2M $5.3M $5.8M Note: To more accurately illustrate results from continuing operations, the financial data presented excludes CattleNetwork and CattleStore operations that were divested in 2008.

20 Gross Profit $6M $5M $4.9M $5.4M $4M $3.8M $2.8M $3M $2.7M $2M $1M $.7M $1.2M $1.3M $1.3M $1.8M $2.3M

21 Net Income $1M $864,500 $870,400 $ $149, $153,200 $327, $33,600 $533,900 $433,200 $229, $1M $759,600 $1,533,364

22 SG&A as % of Revenue Scalable business model 200% 192% 150% 117% 100% 60% 50% 55% 44% 40% 45% 46% 39% 39% 41%

23 Adjusted EBITDA $1M $757,700 $705,900 $870,100 $1,365,200 $1,207,600 $443,000 $433,100 $ $140,000 $66, $1M $612,900 $1,116,700

24 Balance Sheet Highlights Balance sheet Working capital: $3,429,200 Cash: $3,223,100 Long term debt: Stockholders equity: $9,427,700

25 Selected Stock Data Traded OTCQB: WFCF 52 week stock price range $ $2.63 Average daily trading volume 6,765 Common shares outstanding 24,652,187 Approx. management/board ownership 14,800,000 Market Cap $50,000,000 Fiscal year December 31 Note: Certain figures are rounded. Valuation and other data is subject to change on a daily basis and is presented as a general reference as of February 2017.

26 Why Invest in WFCF? Investment Case 1 WFCF is only public player in food verification and traceability 2 Consumer demand for, and government interest in, transparency in the food chain at an all-time high 3 Company executing on strategy to be one-stop-shop for all certification standards in all food groups 4 High profile customers reliance on WFCF a testament to uniqueness and strength of our service offerings 5 Scalable recurring revenue model with large, growing customer base positions WFCF for long-term profitable growth 6 Well capitalized, tight share structure, strong management team and board that owns significant stake in Company

27 Where Food Comes From For more information, contact: Pfeiffer High Investor Relations, Inc. Jay Pfeiffer or