Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 08, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-40314 | ||
Entity Registrant Name | WHERE FOOD COMES FROM, INC. | ||
Entity Central Index Key | 0001360565 | ||
Entity Tax Identification Number | 43-1802805 | ||
Entity Incorporation, State or Country Code | CO | ||
Entity Address, Address Line One | 202 6th Street | ||
Entity Address, Address Line Two | Suite 400 | ||
Entity Address, City or Town | Castle Rock | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80104 | ||
City Area Code | (303) | ||
Local Phone Number | 895-3002 | ||
Title of 12(g) Security | Common Stock, $0.001 par value | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 32,174,942 | ||
Entity Common Stock, Shares Outstanding | 5,487,269 | ||
Documents Incorporated by Reference | Part III is incorporated by reference from the registrant’s Definitive Proxy Statement for its 2024 Annual Meeting of Shareholders to be filed, pursuant to Regulation 14A, within 120 days after the close of the registrant’s 2023 fiscal year. | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction | false | ||
Auditor Name | Causey Demgen & Moore, P.C. | ||
Auditor Firm ID | 647 | ||
Auditor Location | Denver, Colorado |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 2,641 | $ 4,368 |
Accounts receivable, net of allowance | 2,128 | 2,172 |
Inventory | 1,109 | 888 |
Prepaid expenses and other current assets | 335 | 463 |
Total current assets | 6,213 | 7,891 |
Property and equipment, net | 844 | 998 |
Right-of-use assets, net | 2,296 | 2,607 |
Equity investments | 1,191 | 991 |
Intangible and other assets, net | 2,303 | 2,340 |
Goodwill, net | 2,946 | 2,946 |
Deferred tax assets, net | 493 | 523 |
Total assets | 16,286 | 18,296 |
Current liabilities: | ||
Accounts payable | 567 | 640 |
Accrued expenses and other current liabilities | 615 | 769 |
Deferred revenue | 1,485 | 1,278 |
Current portion of finance lease obligations | 14 | 9 |
Current portion of operating lease obligations | 298 | 341 |
Total current liabilities | 2,979 | 3,037 |
Finance lease obligations, net of current portion | 41 | 37 |
Operating lease obligation, net of current portion | 2,447 | 2,745 |
Total liabilities | 5,467 | 5,819 |
Commitments and contingencies | ||
Equity: | ||
Preferred stock, $0.001 par value; 5,000 shares authorized; none issued or outstanding | ||
Common stock, $0.001 par value; 95,000 shares authorized; 6,516 (2023) and 6,501 (2022) shares issued, and 5,503 (2023) and 5,775 (2022) shares outstanding | 7 | 6 |
Additional paid-in-capital | 12,290 | 12,145 |
Treasury stock of 1,014 (2023) and 727 (2022) shares | (11,219) | (7,263) |
Retained earnings | 9,741 | 7,589 |
Total equity | 10,819 | 12,477 |
Total liabilities and stockholders’ equity | $ 16,286 | $ 18,296 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 6,516,000 | 6,501,000 |
Common stock, shares outstanding | 5,503,000 | 5,775,000 |
Treasury stock, shares | 1,014,000 | 727,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenues: | ||
Total revenues | $ 25,135 | $ 24,845 |
Costs of revenues: | ||
Total costs of revenues | 14,613 | 14,377 |
Gross profit | 10,522 | 10,468 |
Selling, general and administrative expenses | 7,825 | 7,816 |
Income from operations | 2,697 | 2,652 |
Other income/(loss): | ||
Dividend income from Progressive Beef | 320 | 250 |
Gain on sale of assets | 7 | 12 |
Other income, net | 53 | 5 |
Loss on foreign currency exchange | (7) | (38) |
Impairment of digital assets | (62) | |
Interest expense | (5) | (3) |
Income before income taxes | 3,065 | 2,816 |
Income tax expense | 913 | 822 |
Net income | $ 2,152 | $ 1,994 |
Per share - net income | ||
Basic | $ 0.39 | $ 0.34 |
Diluted | $ 0.39 | $ 0.33 |
Weighted average number of common shares outstanding: | ||
Basic | 5,485 | 5,955 |
Diluted | 5,548 | 6,035 |
Verification and Certification Service Revenue [Member] | ||
Revenues: | ||
Total revenues | $ 19,413 | $ 17,610 |
Costs of revenues: | ||
Total costs of revenues | 10,986 | 9,748 |
Product Sales [Member] | ||
Revenues: | ||
Total revenues | 4,001 | 4,364 |
Costs of revenues: | ||
Total costs of revenues | 2,272 | 2,333 |
Professional Services [Member] | ||
Revenues: | ||
Total revenues | 1,721 | 2,871 |
Costs of revenues: | ||
Total costs of revenues | $ 1,355 | $ 2,296 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating activities: | ||
Net income | $ 2,152 | $ 1,994 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 634 | 765 |
Impairment of digital assets | 62 | |
Gain on sale of assets | (7) | (12) |
Stock-based compensation expense | 78 | 154 |
Deferred tax benefit | 30 | (59) |
Bad debt expense | 44 | 26 |
Changes in operating assets and liabilities, net of effect from acquisitions: | ||
Accounts receivable | (20) | |
Inventory | (221) | (121) |
Prepaid expenses and other assets | 155 | (138) |
Accounts payable | (73) | 193 |
Accrued expenses and other current liabilities | (154) | 59 |
Deferred revenue | 207 | (235) |
Right of use assets and liabilities, net | (23) | (14) |
Net cash provided by operating activities | 2,822 | 2,654 |
Investing activities: | ||
Purchase of digital assets | (178) | |
Investment in Blue Trace | (200) | |
Acquisition of Upcycle Certification Program | (300) | |
Purchases of property, equipment and software development costs | (148) | (89) |
Net cash used in investing activities | (648) | (267) |
Financing activities: | ||
Repayments of finance lease obligations | (13) | (13) |
Proceed from stock option exercise | 68 | 36 |
Stock repurchase under Stock Buyback Plan | (3,956) | (3,456) |
Net cash used in financing activities | (3,901) | (3,433) |
Net change in cash | (1,727) | (1,046) |
Cash at beginning of period | 4,368 | 5,414 |
Cash at end of period | $ 2,641 | $ 4,368 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock, Common [Member] | Retained Earnings [Member] |
Balance at Dec. 31, 2021 | $ 13,749 | $ 6 | $ 11,955 | $ (3,807) | $ 5,595 |
Balance, shares at Dec. 31, 2021 | 6,071,000 | ||||
Stock-based compensation expense | 154 | 154 | |||
Stock-based compensation expense, shares | 4,000 | ||||
Stock options exercised | $ 36 | 36 | |||
Stock options exercised, shares | 7,750 | 8,000 | |||
Repurchase of common shares under Stock Buyback Plan | $ (3,456) | (3,456) | |||
Repurchase of common shares under Stock Buyback Plan, shares | (308,000) | ||||
Net income | 1,994 | 1,994 | |||
Balance at Dec. 31, 2022 | 12,477 | $ 6 | 12,145 | (7,263) | 7,589 |
Balance, shares at Dec. 31, 2022 | 5,775,000 | ||||
Stock-based compensation expense | 78 | 78 | |||
Stock-based compensation expense, shares | 2,000 | ||||
Stock options exercised | $ 68 | $ 1 | 67 | ||
Stock options exercised, shares | 12,628 | 13,000 | |||
Repurchase of common shares under Stock Buyback Plan | $ (3,956) | (3,956) | |||
Repurchase of common shares under Stock Buyback Plan, shares | (287,000) | ||||
Net income | 2,152 | 2,152 | |||
Balance at Dec. 31, 2023 | $ 10,819 | $ 7 | $ 12,290 | $ (11,219) | $ 9,741 |
Balance, shares at Dec. 31, 2023 | 5,503,000 |
The Company and Basis of Presen
The Company and Basis of Presentation | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
The Company and Basis of Presentation | The Company and Basis of Presentation Business Overview Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). We are an independent, third-party food verification company conducting both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural and aquaculture products are accurate. We care about food and other agricultural and aquacultural products, how it is grown and raised, the quality of what we eat, what farmers and ranchers do, and authentically telling that story to the consumer. Our team visits farms and ranches and looks at their plants, animals, and records, and compares the information we collect to specific standards or claims that farms and ranches want to make about how they are producing food. We strive to ensure that everyone involved in the food business - from growers and farmers to retailers and shoppers – can count on WFCF to provide authentic and transparent information about the food we eat and how, where, and by whom it is produced. We also provide a wide range of professional services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation. Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the food they purchase through product labeling and web-based information sharing and education. Most of our customers are located throughout the United States. Basis of Presentation Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from the estimates. Our consolidated financial statements include the accounts of all majority-owned or controlled subsidiaries, and all significant intercompany transactions and amounts have been eliminated. The results of businesses acquired are included in the consolidated financial statements from the date of the acquisition. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Cash and Cash Equivalents We place our cash with high quality financial institutions. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit; however, we have not experienced any losses related to balances that exceed such FDIC insurance limits (currently $ 250,000 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Revenue Recognition Verification and Certification Segment We offer a range of products and services to maintain identification, traceability, and verification systems. We conduct both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural products are accurate. We generate revenue primarily from the sale of our verification solutions, consulting services and hardware sales. We sell our products and services directly to customers at various levels in the livestock and agricultural supply chains. Verification and certification service revenue primarily consists of fees charged for verification audits and other verification services that the Company performs for customers. We recognize revenue utilizing an input method to measure over-time progress of each verification audit based on the number of audit days performed. For certain of our third-party crop and other processed product audits, we assess a fixed fee for the annual certification period. We recognize revenue utilizing an input method to measure progress toward satisfaction of the annual assessment based on the percentage of activities/phases or input reviews completed under the annual assessment. Product sales are primarily generated from the sale of cattle identification ear tags. Revenue for product sales is recognized upon delivery of the goods to customer, at which point title, custody and risk of loss transfer to the customer. Professional Services Segment Professional services, data analysis and other reporting fees are derived from a standard rate card by employee level, and we invoice for services monthly on a time-incurred basis. We recognize revenue over time utilizing the practical expedient that allows us to recognize revenue in the amount to which we have a right to invoice. Other Generally, we do not provide right of return or warranty on product sales or services performed. In connection with the provision of on-site audits, reimbursable expenses are incurred and billed to customers, and such amounts are recognized on a gross basis as both revenue and cost of revenue. Any amounts collected on behalf of a third-party and remitted in full to that third-party are excluded from the transaction price and, thus, revenue. Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue is typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Although this seasonality does not impact our policies for revenue recognition, it does generally impact our results of operations by potentially causing an increase in our profit margins during May through October and decreased margins during November through April. Additionally, the cattle industry is cyclical by nature based on factors impacting current and future supplies such as drought-induced feedlot placements, higher cow and heifer slaughter, and lower auction receipts. The production lags inherent to this industry lead to long-lasting impacts of production decisions. For example, increased liquidation implies tighter supplies for next year. Similarly, times of herd expansion are typically a multi-year period. These cycles typically last roughly 10 years. The beginning of 2023 marks the ninth year of the current cycle that began in 2014. We are currently in the contraction phase of the cycle after peaking in 2018-2019. How long we continue to contract will be directly impacted by drought and pasture conditions. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Disaggregation of Revenue We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, and (iii) professional service revenue. Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands). Schedule of Revenue Attributable to Each of Our Identified Revenue Categories Year ended December 31, 2023 Year ended December 31, 2022 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Revenues: Verification and certification service revenue $ 19,413 $ - $ - $ 19,413 $ 17,610 $ - $ - $ 17,610 Product sales 4,001 - - 4,001 4,364 - - 4,364 Professional services - 1,721 - 1,721 - 2,871 - 2,871 Total revenues $ 23,414 $ 1,721 $ - $ 25,135 $ 21,974 $ 2,871 $ - $ 24,845 As of December 31, 2023 and 2022, accounts receivable from contracts with customers, net of allowance for doubtful accounts, were approximately $ 2.1 2.2 As of December 31, 2023 and 2022, deferred revenue from contracts with customers were approximately $ 1.5 1.3 The following table reflects the changes in our contract liabilities during the year ended December 31, 2023 and 2022: Schedule of Changes in Contract Liabilities Deferred revenue (in thousands): 2023 2022 Deferred revenue January 1 $ 1,278 $ 1,513 Unearned billings 3,618 3,733 Revenue recognized (3,411 ) (3,968 ) Deferred revenue December 31 $ 1,485 $ 1,278 Cost of Revenues Salaries and related fringe benefits directly associated with our verification and certification service revenues are allocated to costs of verification and certification services. Costs of products primarily represents the cost of livestock EID ear tags generally used in connection with our verification programs. Costs of professional services include direct costs of salaries and related fringe benefits, and fees incurred from other service providers directly related to our professional services revenue. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Accounts Receivable and Allowance for Doubtful Accounts Our receivables are generally due from trade customers. Credit is extended based on our evaluation of the customer’s financial condition, and generally collateral is not required. Accounts receivable are generally due approximately 30 days from the invoice date and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable that are outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss and payment history, the customer’s current ability to pay its obligations to us and the condition of the general economy and the industry as a whole. We write-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The allowance for doubtful accounts was approximately $ 55,000 At December 31, 2023 and 2022, no single customer accounted for greater than 10% of our accounts receivable balance. Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosure, establishes a hierarchy for inputs used in measuring fair value for financial assets and liabilities that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows: ● Level 1: Quoted prices available in active markets for identical assets or liabilities; ● Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; ● Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash or valuation models. The financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The Company’s non-recurring fair value measurements include purchase price allocations for the fair value of assets and liabilities acquired through business combinations. The acquisition of a group of assets in a business combination transaction requires fair value estimates for assets acquired and liabilities assumed. The fair value of assets and liabilities acquired through business combinations is calculated using a discounted future cash flows method. The discounted cash flows are developed using the income approach in which a value (based on management’s expectations for the future) is determined by converting anticipated benefits. The fair value measurements are based on significant inputs not observable in the market and thus represent fair value measurements which are designated as Level 3 inputs within the fair value hierarchy. Key assumptions and considerations include: a) A discount rate range of 19 32 b) Terminal value based on long-term sustainable growth rates of 3 c) Financial data of comparable companies for market participant assumptions; and d) Consideration of the marketability that market participants would consider when measuring the fair value of a non-controlling interest in our acquisition. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Other Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair value due to their short maturities. The carrying values shown for short-term investments, long-term investments and notes payable also approximate fair value because current interest rates and terms offered to us for similar instruments are substantially the same (Level 2 inputs). Inventory Inventory consists of cattle identification ear tags and tag readers, which are recorded at the lower of cost or market value, with the cost calculated using the first-in-first-out (FIFO) method. Market value represents the estimated selling price. We do not manufacture any of the items in inventory. All items in inventory are finished goods. As of December 31, 2023, there is no indication of obsolescence or impairment of inventory. No items in inventory have been pledged as security. Property and Equipment Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful-lives of the respective assets. Leasehold improvements are depreciated over the shorter of the lease term, which generally includes reasonably assured option periods, or the estimated useful-lives of the assets, in accordance with ASC842. All other property and equipment have depreciable lives which range from two to seven years. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings. Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses at the acquisition date, after amounts allocated to other identifiable intangible assets. Factors that contribute to the recognition of goodwill include synergies that are specific to our business and not available to other market participants and are expected to increase net sales and profits; acquisition of a talented workforce; cost savings opportunities; the strategic benefit of expanding our presence in core and adjacent markets; and diversifying our product portfolio. The fair values of other identifiable intangible assets are determined using the income approach or fair value measurement. Other intangible assets include, but are not limited to, developed technology, customer relationships, accreditations, tradenames/trademarks, patents and digital assets. Intangible assets with determinable useful-lives are amortized on a straight-line basis over their estimated useful-lives of two 15 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Goodwill, Intangibles and Long-Lived Asset Impairment Tests We perform our annual impairment test for goodwill in the fourth quarter of each year. We consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill. In certain circumstances, we may also utilize a discounted cash flow analysis that requires certain assumptions and estimates be made regarding market conditions and our future profitability. Indefinite-lived intangible assets are also tested at least annually for impairment by comparing the individual carrying values to the fair value. We review long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually. The evaluation is performed at the lowest level of identifiable cash flows. Undiscounted cash flows expected to be generated by the related assets are estimated over the asset’s useful life based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique. We determine the fair value of our digital assets on a quarterly basis based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets. We perform an analysis each quarter to identify whether significant events or changes in circumstances, indicate that it is more likely than not that our digital assets are permanently impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on an active exchange since acquiring the digital asset. If the current carrying value of a digital asset significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the digital assets in the amount equal to the difference between their carrying values and the price determined. Research and Development and Software Development Costs Research and development costs are charged to operations as incurred. We did not incur any research and development expense in 2023 and 2022. Internal use software development costs represent the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Website software development costs related to certain planning and training costs incurred in the development of website software are expensed as incurred, while application development stage costs are capitalized. Advertising and Marketing Expenses Advertising and marketing costs are expensed as incurred. Total advertising and marketing expenses for the years ended December 31, 2023 and 2022, were approximately $ 0.3 0.2 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Income Taxes We record income taxes under the asset and liability method. Deferred tax assets and liabilities reflect our estimation of the future tax consequences of temporary differences between the carrying amounts of assets and liabilities for book and tax purposes. We determine deferred income taxes based on the differences in accounting methods and timing between financial statement and income tax reporting. Accordingly, we determine the deferred tax asset or liability for each temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items of income and expense. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable income and the carryforward periods available to us for tax reporting purposes, as well as assessing available tax planning strategies. We may establish a valuation allowance to reduce deferred tax assets to the amount we believe is more likely than not to be realized. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially vary from these estimates. The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. The accounting standard requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If a tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are to be recognized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. This standard also provides guidance on the presentation of tax matters and the recognition of potential Internal Revenue Service interest and penalties. As of December 31, 2023 and 2022, the Company did not have an unrecognized tax liability. The Company classifies penalty and interest expense related to income tax liabilities as an income tax expense. The Company did not incur any material interest and penalties for the years ended December 31, 2023 and 2022. The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitation for taxing authorities to audit our tax returns from 2020 through the current period. Stock-Based Compensation 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 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. Calculating stock-based compensation expense using the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate. Under this pricing model, which incorporates ranges of assumptions for inputs, our assumptions are as follows: ● Dividend yield is based on our historical policy of not paying cash dividends. ● Expected volatility assumptions were derived from our actual volatilities. ● The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected term at the grant date. ● The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Leases In accordance with ASU 2016-02: Leases (Topic 842), we determine if an arrangement is a lease at inception. Operating leases are included in the right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities in our consolidated balance sheet. Finance leases are included in property and equipment, current finance lease obligations and long-term finance lease obligations in our consolidated balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. As the discount rates in the Company’s lease are not implicit, the Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months We have operating and finance leases for corporate offices, other regional offices, and certain equipment. Our leases have remaining lease terms of 1 15 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, 2023, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The adoption of this update did not have an impact on our Consolidated Financial Statements. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Recently Issued Accounting Pronouncements In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, which will modify the disclosure or presentation requirements of a variety of Topics in the Codification. The updates align the requirements in the Codification with the SEC’s regulations. The effective date is anticipated to be June 30, 2027. At this time, management has not determined the impact on its financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 28); Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company will be required to adopt this update January 1, 2024 for annual reporting and January 1, 2025 for quarterly reporting. At this time, management is determining the extent of enhanced disclosures on its financial statements. In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60); Accounting for and Disclosure of Crypto Assets, which better reflects the economics of crypto assets, measuring those assets at fair value versus the current cost-less-impairment accounting model. An entity is required to measure crypto assets at fair value with changes recognized in net income each reporting period and report the crypto asset fair value separately from other intangible assets in the balance sheet. The Company will be required to adopt this accounting standard January 1, 2025, but may choose to early implement. As of December 31, 2023, management estimates the Company’s crypto asset fair value would have been reported at $ 0.3 0.2 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740); Improvements to Income Tax Disclosures, which enhance the transparency and decision usefulness of tax disclosures. The Company will be required to adopt this update January 1, 2025 for annual reporting. At this time, management is determining the extent of enhanced disclosures on its financial statements. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Note 3 - Property and Equipment The major categories of property and equipment are as follows as of December 31st: Schedule of Property and Equipment 2023 2022 (in thousands) Automobiles $ 137 $ 137 Furniture and office equipment 579 582 Software and tools 1,466 1,927 Website development and other enhancements 189 189 Building and leasehold improvements 812 811 Property and equipment, gross 3,183 3,646 Less accumulated depreciation 2,339 2,648 Property and equipment, net $ 844 $ 998 As of December 31, 2023, the Company disposed of software acquired during the acquisition of SHS in the amount of $ 0.6 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Total depreciation expense for the years ended December 31, 2023 and 2022 was approximately $ 0.3 million and $ 0.4 million, respectively. Depreciation expense for assets recorded under finance leases for the years ended December 31, 2023 and 2022 was approximately $ 15,000 10,000 |
Equity Investments
Equity Investments | 12 Months Ended |
Dec. 31, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Investments | Note 4 – Equity Investments On August 9, 2018, the Company purchased a ten 1.0 0.3 On March 29, 2023, the Company made an equity investment of $ 0.2 Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. |
Intangible and Other Assets
Intangible and Other Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible and Other Assets | Note 5 – Intangible and Other Assets The following table summarizes our intangible assets as of: Schedule of Intangible and Other Assets December 31, December 31, Estimated 2023 2022 Useful Life Intangible assets subject to amortization (in thousands): Tradenames and trademarks $ 417 $ 417 2.5 8.0 Accreditations 75 75 5.0 Customer relationships 3,937 3,664 3.0 15.0 Patents 970 970 4.0 Non-compete agreements 121 121 5.0 Intangible and other assets, gross 5,520 5,247 Less accumulated amortization 3,821 3,511 Intangible and other assets, Net 1,699 1,736 Cryptocurrency (not subject to amortization) 116 116 Tradenames/trademarks (not subject to amortization) 465 465 Intangible assets 2,280 2,317 Other assets 23 23 Intangible and other assets: $ 2,303 $ 2,340 In December 2023, the Company acquired the Upcycled Certified® Program from the Upcycled Food Association. Assets acquired included intellectual property, trademarks and a customer list for $ 0.3 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements We reviewed our long-lived assets for indicators of impairment no 116,000 Amortization expense for each of the years ended December 31, 2023 and 2022 was approximately $ 0.3 As of December 31, 2023, future scheduled amortization of intangible assets is as follows (in thousands): Schedule of Future Amortization of Intangible Assets 2024 $ 343 Fiscal year ending December 31: 2024 $ 343 2025 298 2026 260 2027 222 2028 178 Thereafter 398 Intangible and other assets, net $ 1,699 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 6 – Goodwill Annual Impairment Test of Goodwill We performed a qualitative assessment on each of our reporting units for our 2023 annual test and concluded that it was more-likely-than-not that the fair value of the reporting unit exceeded its carrying value and, therefore, a two-step impairment test was not necessary. The qualitative assessment compares current performance, expectations and other indicators against what was expected as part of the most recent Step 1 valuation. Consequently, the key estimates and assumptions related to the most recent Step 1 valuation pertaining to this reporting unit had not changed since our previous annual report. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Note 7 – Accrued Expenses and Other Current Liabilities The following table summarizes our accrued expenses and other current liabilities as of (in thousands): Schedule of Accrued Expenses and Other Current Liabilities December 31, December 31, 2023 2022 Income and sales taxes payable $ 62 $ 14 Payroll related accruals 341 326 Customer deposits 41 35 Professional fees and other expenses 171 394 Accrued expenses and other current liabilities $ 615 $ 769 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Notes Payable and Lease Obligat
Notes Payable and Lease Obligations | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Notes Payable and Lease Obligations | Note 8 - Notes Payable and Lease Obligations Unison Revolving Line of Credit The Company has a revolving line of credit (“LOC”) agreement which matures on April 12, 2025 75,080 1.50 maturity 10.0 9.0 no Lease Obligations We have operating and finance leases for corporate offices, other regional offices, and certain equipment. Our leases have remaining lease terms of 1 15 options to extend the leases for up to 5 years each. The components of lease expense were as follows (in thousands): Schedule of Lease Expense 2023 2022 Year Ended December 31, 2023 2022 Operating lease cost $ 483 $ 492 Finance lease cost Amortization of assets 15 10 Interest on finance lease obligations 5 3 Variable lease cost - - Total net lease cost $ 503 $ 505 Included in the table above, is approximately $ 0.4 This space is being leased from The Move, LLC. Our CEO and President, each a related party to WFCF, have a 24.3 Rent and lease expense for each of the years ended December 31, 2023 and 2022 was approximately $ 0.7 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Supplemental balance sheet information related to leases was as follows (in thousands): Schedule of Supplemental Balance Sheet Information Related to Leases Operating leases: Related Party Other Total Related Party Other Total December 31, 2023 December 31, 2022 Operating leases: Related Party Other Total Related Party Other Total Operating lease ROU assets $ 2,158 $ 87 $ 2,245 $ 2,369 $ 193 $ 2,562 Current operating lease liabilities 249 49 298 224 117 341 Noncurrent operating lease liabilities 2,407 40 2,447 2,656 89 2,745 Total operating lease liabilities $ 2,656 $ 89 $ 2,745 $ 2,880 $ 206 $ 3,086 Finance leases: December 31, 2023 December 31, 2022 Right of use asset, at cost $ 76 $ 70 Accumulated amortization (25 ) (25 ) Right of use asset, net $ 51 $ 45 Current obligations of finance leases $ 14 $ 9 Finance leases, net of current obligations 41 37 Total finance lease liabilities $ 55 $ 46 Weighted average remaining lease term (in years): Operating leases 7.4 8.2 Finance leases 3.7 4.4 Weighted average discount rate: Operating leases 5.8 % 5.8 % Finance leases 8.3 % 7.8 % Supplemental cash flow and other information related to leases was as follows (in thousands): Schedule of Supplemental Cash Flow Information Related to Leases 2023 2022 Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 507 $ 507 Operating cash flows from finance leases $ 3 $ 3 Financing cash flows from finance leases $ 12 $ 13 Right of use assets obtained in exchange for lease liabilities: Operating leases $ - $ 78 Maturities of lease liabilities were as follows (in thousands): Schedule of Maturities of Operating Lease and Finance Lease Liabilities Years Ending December 31st, Operating Leases Finance Leases 2024 446 18 2025 435 18 2026 430 14 2027 430 14 2028 443 - Thereafter 1,205 - Total lease payments 3,389 64 Less amount representing interest (644 ) (9 ) Total lease obligations 2,745 55 Less current portion (298 ) (14 ) Long-term lease obligations $ 2,447 $ 41 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9 - Income Taxes The provision for income taxes consists of the following (in thousands): Schedule of Provision for Income Taxes 2023 2022 December 31, 2023 2022 Current income tax expense: Federal $ 697 $ 708 State 186 172 Total current income tax expense 883 880 Deferred income tax expense / (benefit): Federal 26 (50 ) State 4 (8 ) Total deferred income tax expense / (benefit) 30 (58 ) Total income tax expense $ 913 $ 822 The reconciliation of income taxes calculated at the statutory rates to our effective tax rate is as follows (in thousands): Schedule of Reconciliation of Income Taxes 2023 2022 December 31, 2023 2022 Expected tax expense $ 644 $ 592 State tax provision, net 110 101 Permanent differences 9 22 Foreign 117 79 Stock options 3 (1 ) Other, net 30 29 Total income tax expense $ 913 $ 822 The income tax effects of temporary differences that give rise to significant portions of deferred tax assets (liabilities) are as follows (in thousands): Schedule of Deferred Tax Assets (Liabilities) 2023 2022 December 31, 2023 2022 Deferred tax assets (liabilities): Accruals and other $ 141 $ 133 Stock based compensation 141 160 Property and equipment 75 28 Intangibles assets 136 202 Net deferred tax assets 493 523 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Stock Buyback Plan
Stock Buyback Plan | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Stock Buyback Plan | Note 10 – Stock Buyback Plan On September 30, 2019, our Board of Directors approved a new plan to buyback up to 2.5 Schedule of Stock Buyback Plan (in thousands, except per share cost) Number of Shares Cost of Shares Average Cost per Share Balance, January 1, 2022 419 $ 3,807 $ 9.09 Shares purchased during 2022 308 3,456 11.23 Balance, December 31, 2022 727 7,263 10.00 Shares purchased during 2023 287 3,956 13.78 Balance, December 31, 2023 1,014 $ 11,219 $ 11.06 The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method. Our Stock Buyback Plan has been and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. In the future, we may consider additional share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, and planned investment and financing needs. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 11 – 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 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 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 income. The amount of stock-based compensation expense is as follows (in thousands): Schedule of Stock-based Compensation Expense 2023 2022 Year ended December 31, 2023 2022 Stock options $ 44 $ 98 Stock awards 34 56 Total $ 78 $ 154 Stock-based compensation expense $ 78 $ 154 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements As of December 31, 2023, the estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (in thousands): Schedule of Unrecognized Compensation Cost from Unvested Awards Years ended December 31st: Unvested stock options Unvested restricted stock awards Total unrecognized compensation expense 2024 $ 11 $ - $ 11 2025 - - - $ 11 $ - $ 11 Equity Incentive Plans Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2006 Plan, the “Plans”) provide for the issuance of stock-based awards to employees, officers, directors and consultants. The Plans permit 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. Our 2006 Plan provided for the issuance of a maximum of 3.0 1,750 Our 2016 Plan was ratified by our shareholders in May 2016 and provides for the issuance of a maximum of 5.0 4.9 Stock Option Activity The Company generally grants stock options to directors, eligible employees and officers as a part of its equity incentive plan. Restrictions and vesting periods for the stock option grants are set forth in the award agreements. A stock option grant represents an option to purchase a defined number of shares of the Company’s common stock to be released from restrictions upon completion of the vesting period. The awards typically vest in equal increments over one to three years. Stock option activity during 2023 and 2022 is summarized as follows: Schedule of Stock Option Activity 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, January 1, 2022 100,235 $ 8.36 $ 7.53 5.88 $ 620,445 Granted - - - - Exercised (7,750 ) 4.69 6.06 2.45 Expired/Forfeited (138 ) 7.20 7.08 - Outstanding, December 31, 2022 92,347 $ 8.67 $ 7.77 5.31 $ 502,688 Granted - - - - Exercised (12,628 ) 5.31 5.44 0.30 Expired/Forfeited (6,250 ) 10.20 10.06 - Outstanding, December 31, 2023 73,469 $ 8.84 $ 7.97 5.07 $ 346,125 Exercisable, December 31, 2023 67,796 $ 8.65 $ 7.73 4.86 346,125 Unvested, December 31, 2023 5,673 $ 14.77 $ 10.90 7.50 - Where Food Comes From, Inc. Notes to the Consolidated Financial Statements The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the aggregate difference between the closing stock price of our common stock on December 31, 2023 and the exercise price for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on December 31, 2023. During the year ended December 31, 2023, a total of 6,250 138 Stock Activity The Company grants shares of stock to directors, eligible employees and officers as a part of its equity incentive plan. Any restrictions and vesting periods for the awards are set forth in the award agreements. Each share of stock represents one share of the Company’s common stock. Shares of stock are valued at the closing price of the Company’s common stock on the grant date and are recognized as selling, general and administrative expense over the vesting period of the award. During 2023, the Company awarded 2,500 13.74 During 2022, the Company awarded 1,500 13.45 2,500 14.40 |
Basic and Diluted Net Income pe
Basic and Diluted Net Income per Share | 12 Months Ended |
Dec. 31, 2023 | |
Per share - net income | |
Basic and Diluted Net Income per Share | Note 12 - Basic and Diluted Net Income 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, restricted stock awards and 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 plus unrecognized stock-based compensation obtained thereby were used by the Company 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 income per share computations: Schedule of Reconciliation of Basic and Diluted Income Per Share Computations (in thousands) 2023 2022 Year ended December 31, (in thousands) 2023 2022 Basic: Weighted average shares outstanding 5,485 5,955 Diluted: Weighted average shares outstanding 5,485 5,955 Weighted average effects of dilutive securities 63 80 Total 5,548 6,035 Antidilutive securities: 17 17 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. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 - Related Party Transactions In 2023 and 2022, we recorded total net revenue of approximately $ 46,000 48,000 The Company leases its corporate headquarters from a company in which our CEO and President have a 24.3 nder the related party arrangement, a 0.5 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14 – Commitments and Contingencies Operating Leases & Lease Incentive Obligation The Company leases approximately 15,700 24.3 45,500 The Company has recorded leasehold improvements of approximately $ 0.8 0.4 In September 2017, the Company entered into a new lease agreement for our Urbandale, Iowa office space. The lease was for a period of two years 3 August 31, 2025 3,500 In December 2018, we entered into a new lease agreement in San Ramon, California for SureHarvest and JVF office space. The lease is for a period of sixty-six months May 1, 2024 7,000 In June 2021, the Company entered into a new lease agreement in Victoria, British Columbia, Canada for Postelsia office space. The lease is for a period of two years May 31, 2023 500 In December 2021, the Company entered into a lease agreement for the Medina, North Dakota office space. The lease is for sixty-one December 31, 2026 1,000 See Note 8 of our Consolidated Financial Statements for a detailed description of maturities of lease liabilities related to our leases. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements 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. Employee Benefit Plan The Company has established a 401(k) plan for the benefit of our employees. The plan covers substantially all of our employees who have attained age 21. We may make a discretionary matching contribution in an amount that is determined by our Board of Directors. If a matching contribution is made, the amount cannot exceed the elective deferral contributions. For each of the years ended December 31, 2023 and 2022, we made aggregate matching contributions of approximately $ 0.3 0.2 |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | Note 15 – Supplemental Cash Flow Information Schedule of Supplemental Cash Flow Information 2023 2022 Year ended December 31, 2023 2022 Cash paid during the year: Interest expense $ - $ - Income taxes $ 802 $ 1,084 Non-cash investing and financing activities: Equipment acquired under a finance lease $ - $ 32 |
Segments
Segments | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Segments | Note 16 - 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, WFCFO, 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 professional services reportable segment. SureHarvest, which includes Postelsia, is the sole operating segment. This segment includes consulting, data analysis and other reporting 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 The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (in thousands): Schedule of Operating Segments Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Year ended December 31, 2023 Year ended December 31, 2022 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Assets: Goodwill $ 1,947 $ 999 $ - $ 2,946 $ 1,947 $ 999 $ - $ 2,946 All other assets, net 3,501 2,707 7,132 13,340 9,949 3,182 2,219 15,350 Total assets $ 5,448 $ 3,706 $ 7,132 $ 16,286 $ 11,896 $ 4,181 $ 2,219 $ 18,296 Revenues: Verification and certification service revenue $ 19,413 $ - $ - $ 19,413 $ 17,610 $ - $ - $ 17,610 Product sales 4,001 - - 4,001 4,364 - - 4,364 Professional services - 1,721 - 1,721 - 2,871 - 2,871 Total revenues $ 23,414 $ 1,721 $ - $ 25,135 $ 21,974 $ 2,871 $ - $ 24,845 Costs of revenues: Costs of verification and certification services 10,986 - - 10,986 9,748 - - 9,748 Costs of products 2,272 - - 2,272 2,333 - - 2,333 Costs of professional services - 1,355 - 1,355 - 2,296 - 2,296 Total costs of revenues 13,258 1,355 - 14,613 12,081 2,296 - 14,377 Gross profit 10,156 366 - 10,522 9,893 575 - 10,468 Depreciation & amortization 466 168 - 634 582 183 - 765 Other operating expenses 6,885 306 - 7,191 6,805 246 - 7,051 Segment operating income/(loss) $ 2,805 $ (108 ) $ - $ 2,697 $ 2,506 $ 146 $ - $ 2,652 Other items to reconcile segment operating income/(loss) to net income/(loss): Other income/(loss) 374 (6 ) - 368 202 (38 ) - 164 Income tax benefit/(expense) - - (913 ) (913 ) - - (822 ) (822 ) Net income/(loss) $ 3,179 $ (114 ) $ (913 ) $ 2,152 $ 2,708 $ 108 $ (822 ) $ 1,994 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 – Subsequent Events The Company has had no material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents We place our cash with high quality financial institutions. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limit; however, we have not experienced any losses related to balances that exceed such FDIC insurance limits (currently $ 250,000 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Revenue Recognition | Revenue Recognition Verification and Certification Segment We offer a range of products and services to maintain identification, traceability, and verification systems. We conduct both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural products are accurate. We generate revenue primarily from the sale of our verification solutions, consulting services and hardware sales. We sell our products and services directly to customers at various levels in the livestock and agricultural supply chains. Verification and certification service revenue primarily consists of fees charged for verification audits and other verification services that the Company performs for customers. We recognize revenue utilizing an input method to measure over-time progress of each verification audit based on the number of audit days performed. For certain of our third-party crop and other processed product audits, we assess a fixed fee for the annual certification period. We recognize revenue utilizing an input method to measure progress toward satisfaction of the annual assessment based on the percentage of activities/phases or input reviews completed under the annual assessment. Product sales are primarily generated from the sale of cattle identification ear tags. Revenue for product sales is recognized upon delivery of the goods to customer, at which point title, custody and risk of loss transfer to the customer. Professional Services Segment Professional services, data analysis and other reporting fees are derived from a standard rate card by employee level, and we invoice for services monthly on a time-incurred basis. We recognize revenue over time utilizing the practical expedient that allows us to recognize revenue in the amount to which we have a right to invoice. Other Generally, we do not provide right of return or warranty on product sales or services performed. In connection with the provision of on-site audits, reimbursable expenses are incurred and billed to customers, and such amounts are recognized on a gross basis as both revenue and cost of revenue. Any amounts collected on behalf of a third-party and remitted in full to that third-party are excluded from the transaction price and, thus, revenue. Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue is typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Although this seasonality does not impact our policies for revenue recognition, it does generally impact our results of operations by potentially causing an increase in our profit margins during May through October and decreased margins during November through April. Additionally, the cattle industry is cyclical by nature based on factors impacting current and future supplies such as drought-induced feedlot placements, higher cow and heifer slaughter, and lower auction receipts. The production lags inherent to this industry lead to long-lasting impacts of production decisions. For example, increased liquidation implies tighter supplies for next year. Similarly, times of herd expansion are typically a multi-year period. These cycles typically last roughly 10 years. The beginning of 2023 marks the ninth year of the current cycle that began in 2014. We are currently in the contraction phase of the cycle after peaking in 2018-2019. How long we continue to contract will be directly impacted by drought and pasture conditions. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Disaggregation of Revenue We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, and (iii) professional service revenue. Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands). Schedule of Revenue Attributable to Each of Our Identified Revenue Categories Year ended December 31, 2023 Year ended December 31, 2022 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Revenues: Verification and certification service revenue $ 19,413 $ - $ - $ 19,413 $ 17,610 $ - $ - $ 17,610 Product sales 4,001 - - 4,001 4,364 - - 4,364 Professional services - 1,721 - 1,721 - 2,871 - 2,871 Total revenues $ 23,414 $ 1,721 $ - $ 25,135 $ 21,974 $ 2,871 $ - $ 24,845 As of December 31, 2023 and 2022, accounts receivable from contracts with customers, net of allowance for doubtful accounts, were approximately $ 2.1 2.2 As of December 31, 2023 and 2022, deferred revenue from contracts with customers were approximately $ 1.5 1.3 The following table reflects the changes in our contract liabilities during the year ended December 31, 2023 and 2022: Schedule of Changes in Contract Liabilities Deferred revenue (in thousands): 2023 2022 Deferred revenue January 1 $ 1,278 $ 1,513 Unearned billings 3,618 3,733 Revenue recognized (3,411 ) (3,968 ) Deferred revenue December 31 $ 1,485 $ 1,278 |
Cost of Revenues | Cost of Revenues Salaries and related fringe benefits directly associated with our verification and certification service revenues are allocated to costs of verification and certification services. Costs of products primarily represents the cost of livestock EID ear tags generally used in connection with our verification programs. Costs of professional services include direct costs of salaries and related fringe benefits, and fees incurred from other service providers directly related to our professional services revenue. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Our receivables are generally due from trade customers. Credit is extended based on our evaluation of the customer’s financial condition, and generally collateral is not required. Accounts receivable are generally due approximately 30 days from the invoice date and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable that are outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss and payment history, the customer’s current ability to pay its obligations to us and the condition of the general economy and the industry as a whole. We write-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The allowance for doubtful accounts was approximately $ 55,000 At December 31, 2023 and 2022, no single customer accounted for greater than 10% of our accounts receivable balance. |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosure, establishes a hierarchy for inputs used in measuring fair value for financial assets and liabilities that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows: ● Level 1: Quoted prices available in active markets for identical assets or liabilities; ● Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; ● Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash or valuation models. The financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The Company’s non-recurring fair value measurements include purchase price allocations for the fair value of assets and liabilities acquired through business combinations. The acquisition of a group of assets in a business combination transaction requires fair value estimates for assets acquired and liabilities assumed. The fair value of assets and liabilities acquired through business combinations is calculated using a discounted future cash flows method. The discounted cash flows are developed using the income approach in which a value (based on management’s expectations for the future) is determined by converting anticipated benefits. The fair value measurements are based on significant inputs not observable in the market and thus represent fair value measurements which are designated as Level 3 inputs within the fair value hierarchy. Key assumptions and considerations include: a) A discount rate range of 19 32 b) Terminal value based on long-term sustainable growth rates of 3 c) Financial data of comparable companies for market participant assumptions; and d) Consideration of the marketability that market participants would consider when measuring the fair value of a non-controlling interest in our acquisition. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Other Financial Instruments | Other Financial Instruments The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate their fair value due to their short maturities. The carrying values shown for short-term investments, long-term investments and notes payable also approximate fair value because current interest rates and terms offered to us for similar instruments are substantially the same (Level 2 inputs). |
Inventory | Inventory Inventory consists of cattle identification ear tags and tag readers, which are recorded at the lower of cost or market value, with the cost calculated using the first-in-first-out (FIFO) method. Market value represents the estimated selling price. We do not manufacture any of the items in inventory. All items in inventory are finished goods. As of December 31, 2023, there is no indication of obsolescence or impairment of inventory. No items in inventory have been pledged as security. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful-lives of the respective assets. Leasehold improvements are depreciated over the shorter of the lease term, which generally includes reasonably assured option periods, or the estimated useful-lives of the assets, in accordance with ASC842. All other property and equipment have depreciable lives which range from two to seven years. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciation and the related gain or loss is reflected in earnings. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over fair value of tangible net assets of acquired businesses at the acquisition date, after amounts allocated to other identifiable intangible assets. Factors that contribute to the recognition of goodwill include synergies that are specific to our business and not available to other market participants and are expected to increase net sales and profits; acquisition of a talented workforce; cost savings opportunities; the strategic benefit of expanding our presence in core and adjacent markets; and diversifying our product portfolio. The fair values of other identifiable intangible assets are determined using the income approach or fair value measurement. Other intangible assets include, but are not limited to, developed technology, customer relationships, accreditations, tradenames/trademarks, patents and digital assets. Intangible assets with determinable useful-lives are amortized on a straight-line basis over their estimated useful-lives of two 15 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Goodwill, Intangibles and Long-Lived Asset Impairment Tests | Goodwill, Intangibles and Long-Lived Asset Impairment Tests We perform our annual impairment test for goodwill in the fourth quarter of each year. We consider qualitative indicators of the fair value of a reporting unit when it is unlikely that a reporting unit has impaired goodwill. In certain circumstances, we may also utilize a discounted cash flow analysis that requires certain assumptions and estimates be made regarding market conditions and our future profitability. Indefinite-lived intangible assets are also tested at least annually for impairment by comparing the individual carrying values to the fair value. We review long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, or at least annually. The evaluation is performed at the lowest level of identifiable cash flows. Undiscounted cash flows expected to be generated by the related assets are estimated over the asset’s useful life based on updated projections. If the evaluation indicates that the carrying amount of the asset may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique. We determine the fair value of our digital assets on a quarterly basis based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets. We perform an analysis each quarter to identify whether significant events or changes in circumstances, indicate that it is more likely than not that our digital assets are permanently impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on an active exchange since acquiring the digital asset. If the current carrying value of a digital asset significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the digital assets in the amount equal to the difference between their carrying values and the price determined. |
Research and Development and Software Development Costs | Research and Development and Software Development Costs Research and development costs are charged to operations as incurred. We did not incur any research and development expense in 2023 and 2022. Internal use software development costs represent the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Website software development costs related to certain planning and training costs incurred in the development of website software are expensed as incurred, while application development stage costs are capitalized. |
Advertising and Marketing Expenses | Advertising and Marketing Expenses Advertising and marketing costs are expensed as incurred. Total advertising and marketing expenses for the years ended December 31, 2023 and 2022, were approximately $ 0.3 0.2 Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Income Taxes | Income Taxes We record income taxes under the asset and liability method. Deferred tax assets and liabilities reflect our estimation of the future tax consequences of temporary differences between the carrying amounts of assets and liabilities for book and tax purposes. We determine deferred income taxes based on the differences in accounting methods and timing between financial statement and income tax reporting. Accordingly, we determine the deferred tax asset or liability for each temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items of income and expense. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable income and the carryforward periods available to us for tax reporting purposes, as well as assessing available tax planning strategies. We may establish a valuation allowance to reduce deferred tax assets to the amount we believe is more likely than not to be realized. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially vary from these estimates. The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet in order to be recognized in the financial statements. The accounting standard requires that the tax effects of a position be recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If a tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are to be recognized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. This standard also provides guidance on the presentation of tax matters and the recognition of potential Internal Revenue Service interest and penalties. As of December 31, 2023 and 2022, the Company did not have an unrecognized tax liability. The Company classifies penalty and interest expense related to income tax liabilities as an income tax expense. The Company did not incur any material interest and penalties for the years ended December 31, 2023 and 2022. The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitation for taxing authorities to audit our tax returns from 2020 through the current period. |
Stock-Based Compensation | Stock-Based Compensation 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 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. Calculating stock-based compensation expense using the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate. Under this pricing model, which incorporates ranges of assumptions for inputs, our assumptions are as follows: ● Dividend yield is based on our historical policy of not paying cash dividends. ● Expected volatility assumptions were derived from our actual volatilities. ● The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected term at the grant date. ● The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements |
Leases | Leases In accordance with ASU 2016-02: Leases (Topic 842), we determine if an arrangement is a lease at inception. Operating leases are included in the right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities in our consolidated balance sheet. Finance leases are included in property and equipment, current finance lease obligations and long-term finance lease obligations in our consolidated balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. As the discount rates in the Company’s lease are not implicit, the Company estimated the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Our lease term includes options to extend the lease when it is reasonably certain that we will exercise that option. Leases with a term of 12 months We have operating and finance leases for corporate offices, other regional offices, and certain equipment. Our leases have remaining lease terms of 1 15 |
Recent Accounting Pronouncements | 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, 2023, we adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The adoption of this update did not have an impact on our Consolidated Financial Statements. Where Food Comes From, Inc. Notes to the Consolidated Financial Statements Recently Issued Accounting Pronouncements In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements, which will modify the disclosure or presentation requirements of a variety of Topics in the Codification. The updates align the requirements in the Codification with the SEC’s regulations. The effective date is anticipated to be June 30, 2027. At this time, management has not determined the impact on its financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 28); Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The Company will be required to adopt this update January 1, 2024 for annual reporting and January 1, 2025 for quarterly reporting. At this time, management is determining the extent of enhanced disclosures on its financial statements. In December 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60); Accounting for and Disclosure of Crypto Assets, which better reflects the economics of crypto assets, measuring those assets at fair value versus the current cost-less-impairment accounting model. An entity is required to measure crypto assets at fair value with changes recognized in net income each reporting period and report the crypto asset fair value separately from other intangible assets in the balance sheet. The Company will be required to adopt this accounting standard January 1, 2025, but may choose to early implement. As of December 31, 2023, management estimates the Company’s crypto asset fair value would have been reported at $ 0.3 0.2 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740); Improvements to Income Tax Disclosures, which enhance the transparency and decision usefulness of tax disclosures. The Company will be required to adopt this update January 1, 2025 for annual reporting. At this time, management is determining the extent of enhanced disclosures on its financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Revenue Attributable to Each of Our Identified Revenue Categories | Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands). Schedule of Revenue Attributable to Each of Our Identified Revenue Categories Year ended December 31, 2023 Year ended December 31, 2022 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Revenues: Verification and certification service revenue $ 19,413 $ - $ - $ 19,413 $ 17,610 $ - $ - $ 17,610 Product sales 4,001 - - 4,001 4,364 - - 4,364 Professional services - 1,721 - 1,721 - 2,871 - 2,871 Total revenues $ 23,414 $ 1,721 $ - $ 25,135 $ 21,974 $ 2,871 $ - $ 24,845 |
Schedule of Changes in Contract Liabilities | The following table reflects the changes in our contract liabilities during the year ended December 31, 2023 and 2022: Schedule of Changes in Contract Liabilities Deferred revenue (in thousands): 2023 2022 Deferred revenue January 1 $ 1,278 $ 1,513 Unearned billings 3,618 3,733 Revenue recognized (3,411 ) (3,968 ) Deferred revenue December 31 $ 1,485 $ 1,278 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | The major categories of property and equipment are as follows as of December 31st: Schedule of Property and Equipment 2023 2022 (in thousands) Automobiles $ 137 $ 137 Furniture and office equipment 579 582 Software and tools 1,466 1,927 Website development and other enhancements 189 189 Building and leasehold improvements 812 811 Property and equipment, gross 3,183 3,646 Less accumulated depreciation 2,339 2,648 Property and equipment, net $ 844 $ 998 |
Intangible and Other Assets (Ta
Intangible and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible and Other Assets | The following table summarizes our intangible assets as of: Schedule of Intangible and Other Assets December 31, December 31, Estimated 2023 2022 Useful Life Intangible assets subject to amortization (in thousands): Tradenames and trademarks $ 417 $ 417 2.5 8.0 Accreditations 75 75 5.0 Customer relationships 3,937 3,664 3.0 15.0 Patents 970 970 4.0 Non-compete agreements 121 121 5.0 Intangible and other assets, gross 5,520 5,247 Less accumulated amortization 3,821 3,511 Intangible and other assets, Net 1,699 1,736 Cryptocurrency (not subject to amortization) 116 116 Tradenames/trademarks (not subject to amortization) 465 465 Intangible assets 2,280 2,317 Other assets 23 23 Intangible and other assets: $ 2,303 $ 2,340 |
Schedule of Future Amortization of Intangible Assets | As of December 31, 2023, future scheduled amortization of intangible assets is as follows (in thousands): Schedule of Future Amortization of Intangible Assets 2024 $ 343 Fiscal year ending December 31: 2024 $ 343 2025 298 2026 260 2027 222 2028 178 Thereafter 398 Intangible and other assets, net $ 1,699 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | The following table summarizes our accrued expenses and other current liabilities as of (in thousands): Schedule of Accrued Expenses and Other Current Liabilities December 31, December 31, 2023 2022 Income and sales taxes payable $ 62 $ 14 Payroll related accruals 341 326 Customer deposits 41 35 Professional fees and other expenses 171 394 Accrued expenses and other current liabilities $ 615 $ 769 |
Notes Payable and Lease Oblig_2
Notes Payable and Lease Obligations (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Lease Expense | The components of lease expense were as follows (in thousands): Schedule of Lease Expense 2023 2022 Year Ended December 31, 2023 2022 Operating lease cost $ 483 $ 492 Finance lease cost Amortization of assets 15 10 Interest on finance lease obligations 5 3 Variable lease cost - - Total net lease cost $ 503 $ 505 |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows (in thousands): Schedule of Supplemental Balance Sheet Information Related to Leases Operating leases: Related Party Other Total Related Party Other Total December 31, 2023 December 31, 2022 Operating leases: Related Party Other Total Related Party Other Total Operating lease ROU assets $ 2,158 $ 87 $ 2,245 $ 2,369 $ 193 $ 2,562 Current operating lease liabilities 249 49 298 224 117 341 Noncurrent operating lease liabilities 2,407 40 2,447 2,656 89 2,745 Total operating lease liabilities $ 2,656 $ 89 $ 2,745 $ 2,880 $ 206 $ 3,086 Finance leases: December 31, 2023 December 31, 2022 Right of use asset, at cost $ 76 $ 70 Accumulated amortization (25 ) (25 ) Right of use asset, net $ 51 $ 45 Current obligations of finance leases $ 14 $ 9 Finance leases, net of current obligations 41 37 Total finance lease liabilities $ 55 $ 46 Weighted average remaining lease term (in years): Operating leases 7.4 8.2 Finance leases 3.7 4.4 Weighted average discount rate: Operating leases 5.8 % 5.8 % Finance leases 8.3 % 7.8 % |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow and other information related to leases was as follows (in thousands): Schedule of Supplemental Cash Flow Information Related to Leases 2023 2022 Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 507 $ 507 Operating cash flows from finance leases $ 3 $ 3 Financing cash flows from finance leases $ 12 $ 13 Right of use assets obtained in exchange for lease liabilities: Operating leases $ - $ 78 |
Schedule of Maturities of Operating Lease and Finance Lease Liabilities | Maturities of lease liabilities were as follows (in thousands): Schedule of Maturities of Operating Lease and Finance Lease Liabilities Years Ending December 31st, Operating Leases Finance Leases 2024 446 18 2025 435 18 2026 430 14 2027 430 14 2028 443 - Thereafter 1,205 - Total lease payments 3,389 64 Less amount representing interest (644 ) (9 ) Total lease obligations 2,745 55 Less current portion (298 ) (14 ) Long-term lease obligations $ 2,447 $ 41 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | The provision for income taxes consists of the following (in thousands): Schedule of Provision for Income Taxes 2023 2022 December 31, 2023 2022 Current income tax expense: Federal $ 697 $ 708 State 186 172 Total current income tax expense 883 880 Deferred income tax expense / (benefit): Federal 26 (50 ) State 4 (8 ) Total deferred income tax expense / (benefit) 30 (58 ) Total income tax expense $ 913 $ 822 |
Schedule of Reconciliation of Income Taxes | The reconciliation of income taxes calculated at the statutory rates to our effective tax rate is as follows (in thousands): Schedule of Reconciliation of Income Taxes 2023 2022 December 31, 2023 2022 Expected tax expense $ 644 $ 592 State tax provision, net 110 101 Permanent differences 9 22 Foreign 117 79 Stock options 3 (1 ) Other, net 30 29 Total income tax expense $ 913 $ 822 |
Schedule of Deferred Tax Assets (Liabilities) | The income tax effects of temporary differences that give rise to significant portions of deferred tax assets (liabilities) are as follows (in thousands): Schedule of Deferred Tax Assets (Liabilities) 2023 2022 December 31, 2023 2022 Deferred tax assets (liabilities): Accruals and other $ 141 $ 133 Stock based compensation 141 160 Property and equipment 75 28 Intangibles assets 136 202 Net deferred tax assets 493 523 |
Stock Buyback Plan (Tables)
Stock Buyback Plan (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Schedule of Stock Buyback Plan | Schedule of Stock Buyback Plan (in thousands, except per share cost) Number of Shares Cost of Shares Average Cost per Share Balance, January 1, 2022 419 $ 3,807 $ 9.09 Shares purchased during 2022 308 3,456 11.23 Balance, December 31, 2022 727 7,263 10.00 Shares purchased during 2023 287 3,956 13.78 Balance, December 31, 2023 1,014 $ 11,219 $ 11.06 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | The amount of stock-based compensation expense is as follows (in thousands): Schedule of Stock-based Compensation Expense 2023 2022 Year ended December 31, 2023 2022 Stock options $ 44 $ 98 Stock awards 34 56 Total $ 78 $ 154 Stock-based compensation expense $ 78 $ 154 |
Schedule of Unrecognized Compensation Cost from Unvested Awards | As of December 31, 2023, the estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (in thousands): Schedule of Unrecognized Compensation Cost from Unvested Awards Years ended December 31st: Unvested stock options Unvested restricted stock awards Total unrecognized compensation expense 2024 $ 11 $ - $ 11 2025 - - - $ 11 $ - $ 11 |
Schedule of Stock Option Activity | Schedule of Stock Option Activity 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, January 1, 2022 100,235 $ 8.36 $ 7.53 5.88 $ 620,445 Granted - - - - Exercised (7,750 ) 4.69 6.06 2.45 Expired/Forfeited (138 ) 7.20 7.08 - Outstanding, December 31, 2022 92,347 $ 8.67 $ 7.77 5.31 $ 502,688 Granted - - - - Exercised (12,628 ) 5.31 5.44 0.30 Expired/Forfeited (6,250 ) 10.20 10.06 - Outstanding, December 31, 2023 73,469 $ 8.84 $ 7.97 5.07 $ 346,125 Exercisable, December 31, 2023 67,796 $ 8.65 $ 7.73 4.86 346,125 Unvested, December 31, 2023 5,673 $ 14.77 $ 10.90 7.50 - |
Basic and Diluted Net Income _2
Basic and Diluted Net Income per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Per share - net income | |
Schedule of Reconciliation of Basic and Diluted Income Per Share Computations | The following is a reconciliation of the share data used in the basic and diluted income per share computations: Schedule of Reconciliation of Basic and Diluted Income Per Share Computations (in thousands) 2023 2022 Year ended December 31, (in thousands) 2023 2022 Basic: Weighted average shares outstanding 5,485 5,955 Diluted: Weighted average shares outstanding 5,485 5,955 Weighted average effects of dilutive securities 63 80 Total 5,548 6,035 Antidilutive securities: 17 17 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | Schedule of Supplemental Cash Flow Information 2023 2022 Year ended December 31, 2023 2022 Cash paid during the year: Interest expense $ - $ - Income taxes $ 802 $ 1,084 Non-cash investing and financing activities: Equipment acquired under a finance lease $ - $ 32 |
Segments (Tables)
Segments (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (in thousands): Schedule of Operating Segments Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Year ended December 31, 2023 Year ended December 31, 2022 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Assets: Goodwill $ 1,947 $ 999 $ - $ 2,946 $ 1,947 $ 999 $ - $ 2,946 All other assets, net 3,501 2,707 7,132 13,340 9,949 3,182 2,219 15,350 Total assets $ 5,448 $ 3,706 $ 7,132 $ 16,286 $ 11,896 $ 4,181 $ 2,219 $ 18,296 Revenues: Verification and certification service revenue $ 19,413 $ - $ - $ 19,413 $ 17,610 $ - $ - $ 17,610 Product sales 4,001 - - 4,001 4,364 - - 4,364 Professional services - 1,721 - 1,721 - 2,871 - 2,871 Total revenues $ 23,414 $ 1,721 $ - $ 25,135 $ 21,974 $ 2,871 $ - $ 24,845 Costs of revenues: Costs of verification and certification services 10,986 - - 10,986 9,748 - - 9,748 Costs of products 2,272 - - 2,272 2,333 - - 2,333 Costs of professional services - 1,355 - 1,355 - 2,296 - 2,296 Total costs of revenues 13,258 1,355 - 14,613 12,081 2,296 - 14,377 Gross profit 10,156 366 - 10,522 9,893 575 - 10,468 Depreciation & amortization 466 168 - 634 582 183 - 765 Other operating expenses 6,885 306 - 7,191 6,805 246 - 7,051 Segment operating income/(loss) $ 2,805 $ (108 ) $ - $ 2,697 $ 2,506 $ 146 $ - $ 2,652 Other items to reconcile segment operating income/(loss) to net income/(loss): Other income/(loss) 374 (6 ) - 368 202 (38 ) - 164 Income tax benefit/(expense) - - (913 ) (913 ) - - (822 ) (822 ) Net income/(loss) $ 3,179 $ (114 ) $ (913 ) $ 2,152 $ 2,708 $ 108 $ (822 ) $ 1,994 |
Schedule of Revenue Attributabl
Schedule of Revenue Attributable to Each of Our Identified Revenue Categories (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Product Information [Line Items] | ||
Total revenues | $ 25,135 | $ 24,845 |
Verification and Certification Service Revenue [Member] | ||
Product Information [Line Items] | ||
Total revenues | 19,413 | 17,610 |
Product Sales [Member] | ||
Product Information [Line Items] | ||
Total revenues | 4,001 | 4,364 |
Professional Services [Member] | ||
Product Information [Line Items] | ||
Total revenues | 1,721 | 2,871 |
Verification and Certification Segment [Member] | ||
Product Information [Line Items] | ||
Total revenues | 23,414 | 21,974 |
Verification and Certification Segment [Member] | Verification and Certification Service Revenue [Member] | ||
Product Information [Line Items] | ||
Total revenues | 19,413 | 17,610 |
Verification and Certification Segment [Member] | Product Sales [Member] | ||
Product Information [Line Items] | ||
Total revenues | 4,001 | 4,364 |
Verification and Certification Segment [Member] | Professional Services [Member] | ||
Product Information [Line Items] | ||
Total revenues | ||
Professional Services Segment [Member] | ||
Product Information [Line Items] | ||
Total revenues | 1,721 | 2,871 |
Professional Services Segment [Member] | Verification and Certification Service Revenue [Member] | ||
Product Information [Line Items] | ||
Total revenues | ||
Professional Services Segment [Member] | Product Sales [Member] | ||
Product Information [Line Items] | ||
Total revenues | ||
Professional Services Segment [Member] | Professional Services [Member] | ||
Product Information [Line Items] | ||
Total revenues | 1,721 | 2,871 |
Eliminations and Other [Member] | ||
Product Information [Line Items] | ||
Total revenues | ||
Eliminations and Other [Member] | Verification and Certification Service Revenue [Member] | ||
Product Information [Line Items] | ||
Total revenues | ||
Eliminations and Other [Member] | Product Sales [Member] | ||
Product Information [Line Items] | ||
Total revenues | ||
Eliminations and Other [Member] | Professional Services [Member] | ||
Product Information [Line Items] | ||
Total revenues |
Schedule of Changes in Contract
Schedule of Changes in Contract Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||
Deferred revenue January 1 | $ 1,278 | $ 1,513 |
Unearned billings | 3,618 | 3,733 |
RevenueRecognized | (3,411) | (3,968) |
Deferred revenue December 31 | $ 1,485 | $ 1,278 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Cash insured amount | $ 250,000 | |
Allowance for doubtful accounts, net | 2,100,000 | $ 2,200,000 |
Deferred revenue | 1,485,000 | 1,278,000 |
Allowance for doubtful accounts | 55,000 | 55,000 |
Advertising and marketing expense | $ 300,000 | $ 200,000 |
Lease term | 12 months | |
Crypto asset fair value | $ 300,000 | |
Unrealized gain | $ 200,000 | |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets estimated useful lives | 2 years | |
Remaining lease terms | 1 year | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets estimated useful lives | 15 years | |
Remaining lease terms | 15 years | |
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Discount Rate [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fair value of assets and liabilities acquired, measurement input | 19% | |
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Discount Rate [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fair value of assets and liabilities acquired, measurement input | 32% | |
Fair Value, Inputs, Level 3 [Member] | Measurement Input, Long-Term Revenue Growth Rate [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fair value of assets and liabilities acquired, measurement input | 3% |
Schedule of Property and Equipm
Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 3,183 | $ 3,646 |
Less accumulated depreciation | 2,339 | 2,648 |
Property and equipment, net | 844 | 998 |
Automobiles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 137 | 137 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 579 | 582 |
Software and Software Development Costs [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,466 | 1,927 |
Website [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 189 | 189 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 812 | $ 811 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | ||
Disposed of software acquired | $ 600,000 | |
Depreciation | 300,000 | $ 400,000 |
Depreciation expense finance leases | $ 15,000 | $ 10,000 |
Equity Investments (Details Nar
Equity Investments (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||||
Mar. 29, 2023 | Aug. 09, 2019 | Dec. 31, 2023 | Dec. 31, 2022 | Aug. 09, 2018 | |
Schedule of Equity Method Investments [Line Items] | |||||
Dividend income | $ 320 | $ 250 | |||
Progressive Beef LLC [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investment ownership percentage | 10% | ||||
Payments to acquire equity investments | $ 1,000 | ||||
Shell Fish Solutions Inc [Member] | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire equity investments | $ 200 |
Schedule of Intangible and Othe
Schedule of Intangible and Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Intangible assets subject to amortization (in thousands): | ||
Intangible and other assets, gross | $ 5,520 | $ 5,247 |
Less accumulated amortization | 3,821 | 3,511 |
Intangible and other assets, Net | 1,699 | 1,736 |
Cryptocurrency (not subject to amortization) | 116 | 116 |
Tradenames/trademarks (not subject to amortization) | 465 | 465 |
Intangible assets | 2,280 | 2,317 |
Other assets | 23 | 23 |
Intangible and other assets: | 2,303 | 2,340 |
Trademarks and Trade Names [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Intangible and other assets, gross | 417 | $ 417 |
Minimum [Member] | Trademarks and Trade Names [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Estimated useful lives of intangible assets | 2 years 6 months | |
Minimum [Member] | Customer Relationships [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Estimated useful lives of intangible assets | 3 years | |
Maximum [Member] | Trademarks and Trade Names [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Estimated useful lives of intangible assets | 8 years | |
Maximum [Member] | Customer Relationships [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Estimated useful lives of intangible assets | 15 years | |
Accreditations [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Intangible and other assets, gross | 75 | $ 75 |
Estimated useful lives of intangible assets | 5 years | |
Customer Relationships [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Intangible and other assets, gross | 3,937 | $ 3,664 |
Patents [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Intangible and other assets, gross | 970 | $ 970 |
Estimated useful lives of intangible assets | 4 years | |
Noncompete Agreements [Member] | ||
Intangible assets subject to amortization (in thousands): | ||
Intangible and other assets, gross | $ 121 | $ 121 |
Estimated useful lives of intangible assets | 5 years |
Schedule of Future Amortization
Schedule of Future Amortization of Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2024 | $ 343 | |
2025 | 298 | |
2026 | 260 | |
2027 | 222 | |
2028 | 178 | |
Thereafter | 398 | |
Intangible and other assets, Net | $ 1,699 | $ 1,736 |
Intangible and Other Assets (De
Intangible and Other Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Trademarks customer list | $ 300,000 | |
Impairment | 0 | $ 0 |
Digital assets held | 116,000 | 116,000 |
Amortization expense | $ 300,000 | $ 300,000 |
Schedule of Accrued Expenses an
Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Income and sales taxes payable | $ 62 | $ 14 |
Payroll related accruals | 341 | 326 |
Customer deposits | 41 | 35 |
Professional fees and other expenses | 171 | 394 |
Accrued expenses and other current liabilities | $ 615 | $ 769 |
Schedule of Lease Expense (Deta
Schedule of Lease Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
Operating lease cost | $ 483 | $ 492 |
Amortization of assets | 15 | 10 |
Interest on finance lease obligations | 5 | 3 |
Variable lease cost | ||
Total net lease cost | $ 503 | $ 505 |
Schedule of Supplemental Balanc
Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Defined Benefit Plan Disclosure [Line Items] | ||
Operating lease ROU assets | $ 2,245 | $ 2,562 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Right-of-use assets, net | Right-of-use assets, net |
Current operating lease liabilities | $ 298 | $ 341 |
Noncurrent operating lease liabilities | 2,447 | 2,745 |
Total operating lease liabilities | 2,745 | 3,086 |
Right of use asset, at cost | 76 | 70 |
Accumulated amortization | (25) | (25) |
Right of use asset, net | 51 | 45 |
Current obligations of finance leases | 14 | 9 |
Finance leases, net of current obligations | 41 | 37 |
Total finance lease liabilities | $ 55 | $ 46 |
Weighted average remaining operating lease term (in years) | 7 years 4 months 24 days | 8 years 2 months 12 days |
Weighted average remaining finance lease term (in years) | 3 years 8 months 12 days | 4 years 4 months 24 days |
Operating leases weighted average discount rate | 5.80% | 5.80% |
Finance leases weighted average discount rate | 8.30% | 7.80% |
Related Party [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Operating lease ROU assets | $ 2,158 | $ 2,369 |
Current operating lease liabilities | 249 | 224 |
Noncurrent operating lease liabilities | 2,407 | 2,656 |
Total operating lease liabilities | 2,656 | 2,880 |
Other [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Operating lease ROU assets | 87 | 193 |
Current operating lease liabilities | 49 | 117 |
Noncurrent operating lease liabilities | 40 | 89 |
Total operating lease liabilities | $ 89 | $ 206 |
Schedule of Supplemental Cash F
Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Disclosure [Abstract] | ||
Operating cash flows from operating leases | $ 507 | $ 507 |
Operating cash flows from finance leases | 3 | 3 |
Financing cash flows from finance leases | 12 | 13 |
Right of use assets obtained in exchange for lease liabilities: Operating leases | $ 78 |
Schedule of Maturities of Opera
Schedule of Maturities of Operating Lease and Finance Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Operating Leases, 2023 | $ 446 | |
Finance Leases, 2023 | 18 | |
Operating Leases, 2024 | 435 | |
Finance Leases, 2024 | 18 | |
Operating Leases, 2025 | 430 | |
Finance Leases, 2025 | 14 | |
Operating Leases, 2026 | 430 | |
Finance Leases, 2026 | 14 | |
Operating Leases, 2027 | 443 | |
Finance Leases, 2027 | ||
Operating Leases, Thereafter | 1,205 | |
Finance Leases, Thereafter | ||
Operating Leases, Total lease payments | 3,389 | |
Finance Leases, Total lease payments | 64 | |
Operating Leases, Less amount representing interest | (644) | |
Finance Leases, Less amount representing interest | (9) | |
Operating Leases, Total lease obligations | 2,745 | $ 3,086 |
Finance Leases, Total lease obligations | 55 | 46 |
Operating Leases, Less current portion | (298) | (341) |
Finance Leases, Less current portion | (14) | (9) |
Operating Leases, Long-term lease obligations | 2,447 | 2,745 |
Finance Leases, Long-term lease obligations | $ 41 | $ 37 |
Notes Payable and Lease Oblig_3
Notes Payable and Lease Obligations (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Line of Credit Facility [Line Items] | ||
Line of credit, working capital | $ 75,080 | |
Line of credit, outstanding amount | $ 0 | $ 0 |
Lease term | options to extend the leases for up to 5 years each. | |
Operating lease cost | $ 483,000 | 492,000 |
Rent and lease expense | $ 700,000 | 700,000 |
The Move LLC [Member] | ||
Line of Credit Facility [Line Items] | ||
Jointly held ownership interest percentage | 24.30% | |
Corporate Headquarters [Member] | ||
Line of Credit Facility [Line Items] | ||
Operating lease cost | $ 400,000 | $ 400,000 |
Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Lease term | 1 year | |
Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Lease term | 15 years | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving line of credit, maturity date | Apr. 12, 2025 | |
Line of credit, prime interest rate | 1.50% | |
Line of credit, interest rate | 10% | 9% |
Schedule of Provision for Incom
Schedule of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current income tax expense: | ||
Federal | $ 697 | $ 708 |
State | 186 | 172 |
Total current income tax expense | 883 | 880 |
Deferred income tax expense / (benefit): | ||
Federal | 26 | (50) |
State | 4 | (8) |
Total deferred income tax expense / (benefit) | 30 | (58) |
Total income tax expense | $ 913 | $ 822 |
Schedule of Reconciliation of I
Schedule of Reconciliation of Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Expected tax expense | $ 644 | $ 592 |
State tax provision, net | 110 | 101 |
Permanent differences | 9 | 22 |
Foreign | 117 | 79 |
Stock options | 3 | (1) |
Other, net | 30 | 29 |
Total income tax expense | $ 913 | $ 822 |
Schedule of Deferred Tax Assets
Schedule of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Accruals and other | $ 141 | $ 133 |
Stock based compensation | 141 | 160 |
Property and equipment | 75 | 28 |
Intangibles assets | 136 | 202 |
Net deferred tax assets | $ 493 | $ 523 |
Schedule of Stock Buyback Plan
Schedule of Stock Buyback Plan (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Number of shares, beginning | 727 | 419 |
Cost of shares, beginning | $ 7,263 | $ 3,807 |
Average cost per share, beginning | $ 10 | $ 9.09 |
Number of shares purchased | 287 | 308 |
Cost of shares purchased | $ 3,956 | $ 3,456 |
Average cost per share purchased | $ 13.78 | $ 11.23 |
Number of shares, ending | 1,014 | 727 |
Cost of shares, ending | $ 11,219 | $ 7,263 |
Average cost per share, ending | $ 11.06 | $ 10 |
Stock Buyback Plan (Details Nar
Stock Buyback Plan (Details Narrative) - shares shares in Thousands | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2019 |
Equity [Abstract] | ||||
Buyback additional shares | 1,014 | 727 | 419 | 2,500 |
Schedule of Stock-based Compens
Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 78 | $ 154 |
Share-Based Payment Arrangement, Option [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | 44 | 98 |
Employee Stock Award [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 34 | $ 56 |
Schedule of Unrecognized Compen
Schedule of Unrecognized Compensation Cost from Unvested Awards (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unvested stock options | $ 11 |
Unvested restricted stock awards | |
Total unrecognized compensation expense | 11 |
2024 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unvested stock options | 11 |
Unvested restricted stock awards | |
Total unrecognized compensation expense | 11 |
2025 [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unvested stock options | |
Unvested restricted stock awards | |
Total unrecognized compensation expense |
Schedule of Stock Option Activi
Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |||
Number of awards, beginning balance | 92,347 | 100,235 | |
Weighted avg exercise price per share, beginning balance | $ 8.67 | $ 8.36 | |
Weighted avg grant date fair value per share, beginning Balance | $ 7.77 | $ 7.53 | |
Weighted avg remaining contractual life (in years), ending Balance | 5 years 25 days | 5 years 3 months 21 days | 5 years 10 months 17 days |
Aggregate intrinsic value, beginning balance | $ 502,688 | $ 620,445 | |
Number of awards, granted | |||
Weighted avg exercise price per share, granted | |||
Weighted avg grant date fair value per share, granted | |||
Number of awards, exercised | (12,628) | (7,750) | |
Weighted avg exercise price per share, exercised | $ 5.31 | $ 4.69 | |
Weighted avg grant date fair value per share, exercised | $ 5.44 | $ 6.06 | |
Weighted avg remaining contractual life (in years), exercised | 3 months 18 days | 2 years 5 months 12 days | |
Number of awards, expired/forfeited | (6,250) | (138) | |
Weighted avg exercise price per share, expired/forfeited | $ 10.20 | $ 7.20 | |
Weighted avg grant date fair value per share, expired/forfeited | $ 10.06 | $ 7.08 | |
Number of awards, ending balance | 73,469 | 92,347 | 100,235 |
Weighted avg exercise price per share, ending balance | $ 8.84 | $ 8.67 | $ 8.36 |
Weighted avg grant date fair value per share, ending Balance | $ 7.97 | $ 7.77 | $ 7.53 |
Aggregate intrinsic value, ending balance | $ 346,125 | $ 502,688 | $ 620,445 |
Number of awards exercisable, ending balance | 67,796 | ||
Weighted avg exercise price per share exercisable, ending balance | $ 8.65 | ||
Weighted avg grant date fair value per share exercisable, ending Balance | $ 7.73 | ||
Weighted avg remaining contractual life (in years) exercisable, ending Balance | 4 years 10 months 9 days | ||
Aggregate intrinsic value, exercisable | $ 346,125 | ||
Number of awards unvested, ending balance | 5,673 | ||
Weighted avg exercise price per share unvested, ending balance | $ 14.77 | ||
Weighted avg grant date fair value per share unvested, ending Balance | $ 10.90 | ||
Weighted avg remaining contractual life (in years) unvested, ending Balance | 7 years 6 months | ||
Aggregate intrinsic value, unvested |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Numbers of options forfeited | 6,250 | 138 |
Employee [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares awards outstanding | 2,500 | 1,500 |
Stock options price per share | $ 13.74 | $ 13.45 |
Board of Director [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Number of shares awards outstanding | 2,500 | |
Stock options price per share | $ 14.40 | |
Two Thousand Six Equity Incentive Plan [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares authorized for issuance under incentive plan | 3,000,000 | |
Number of shares awards outstanding | 1,750 | |
Two Thousand Sixteen Equity Incentive Plan [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares authorized for issuance under incentive plan | 5,000,000 | |
Number of shares awards outstanding | 4,900,000 |
Schedule of Reconciliation of B
Schedule of Reconciliation of Basic and Diluted Income Per Share Computations (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Basic: | ||
Weighted average shares outstanding | 5,485 | 5,955 |
Diluted: | ||
Weighted average effects of dilutive securities | 63 | 80 |
Total | 5,548 | 6,035 |
Antidilutive securities: | 17 | 17 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
The Move LLC [Member] | Ceo And President [Member] | ||
Related Party Transaction [Line Items] | ||
Jointly-held ownership interest, rate | 24.30% | |
Related Party [Member] | ||
Related Party Transaction [Line Items] | ||
Revenue from related parties | $ 46,000 | $ 48,000 |
Related party rent expense | $ 500,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 1 Months Ended | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2021 | Jun. 30, 2021 CAD ($) | Sep. 30, 2017 USD ($) | Dec. 31, 2023 USD ($) ft² | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Lessee, Lease, Description [Line Items] | |||||||
Rental payments | $ 700,000 | $ 700,000 | |||||
Aggregate matching contributions | $ 300,000 | $ 200,000 | |||||
The Move LLC [Member] | Ceo And President [Member] | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Jointly-held ownership interest, rate | 24.30% | ||||||
Castle Rock New Lease [Member] | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Area of land | ft² | 15,700 | ||||||
Rental payments | $ 45,500 | ||||||
Leasehold improvements | 800,000 | ||||||
Lease incentives | 400,000 | ||||||
New Lease Agreement [Member] | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Rental payments | $ 500 | $ 3,500 | |||||
Term of operating lease | 66 months | 61 months | 2 years | 2 years | 61 months | ||
Extended term of operating lease | 3 years | ||||||
Lease expiration date | May 01, 2024 | Dec. 31, 2026 | May 31, 2023 | Aug. 31, 2025 | |||
New Lease Agreement [Member] | Sure Harvest And JVF Office Space [Member] | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Rental payments | $ 7,000 | ||||||
Medina North Dakota Office [Member] | North Dakota Office Space [Member] | |||||||
Lessee, Lease, Description [Line Items] | |||||||
Rental payments | $ 1,000 |
Schedule of Supplemental Cash_2
Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash paid during the year: | ||
Interest expense | ||
Income taxes | 802 | 1,084 |
Equipment acquired under a finance lease | $ 32 |
Schedule of Operating Segments
Schedule of Operating Segments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Assets: | ||
Goodwill | $ 2,946 | $ 2,946 |
All other assets, net | 13,340 | 15,350 |
Total assets | 16,286 | 18,296 |
Revenues: | ||
Total revenues | 25,135 | 24,845 |
Costs of revenues: | ||
Total costs of revenues | 14,613 | 14,377 |
Gross profit | 10,522 | 10,468 |
Depreciation & amortization | 634 | 765 |
Other operating expenses | 7,191 | 7,051 |
Segment operating income/(loss) | 2,697 | 2,652 |
Other items to reconcile segment operating income/(loss) to net income/(loss): | ||
Other income/(loss) | 368 | 164 |
Income tax benefit/(expense) | (913) | (822) |
Net income/(loss) | 2,152 | 1,994 |
Service [Member] | ||
Revenues: | ||
Total revenues | 19,413 | 17,610 |
Costs of revenues: | ||
Total costs of revenues | 10,986 | 9,748 |
Product [Member] | ||
Revenues: | ||
Total revenues | 4,001 | 4,364 |
Costs of revenues: | ||
Total costs of revenues | 2,272 | 2,333 |
Professional Services [Member] | ||
Revenues: | ||
Total revenues | 1,721 | 2,871 |
Costs of revenues: | ||
Total costs of revenues | 1,355 | 2,296 |
Costs Of Professional Services [Member] | ||
Costs of revenues: | ||
Total costs of revenues | 1,355 | 2,296 |
Verification and Certification Segment [Member] | ||
Assets: | ||
Goodwill | 1,947 | 1,947 |
All other assets, net | 3,501 | 9,949 |
Total assets | 5,448 | 11,896 |
Revenues: | ||
Total revenues | 23,414 | 21,974 |
Costs of revenues: | ||
Total costs of revenues | 13,258 | 12,081 |
Gross profit | 10,156 | 9,893 |
Depreciation & amortization | 466 | 582 |
Other operating expenses | 6,885 | 6,805 |
Segment operating income/(loss) | 2,805 | 2,506 |
Other items to reconcile segment operating income/(loss) to net income/(loss): | ||
Other income/(loss) | 374 | 202 |
Income tax benefit/(expense) | ||
Net income/(loss) | 3,179 | 2,708 |
Verification and Certification Segment [Member] | Service [Member] | ||
Revenues: | ||
Total revenues | 19,413 | 17,610 |
Costs of revenues: | ||
Total costs of revenues | 10,986 | 9,748 |
Verification and Certification Segment [Member] | Product [Member] | ||
Revenues: | ||
Total revenues | 4,001 | 4,364 |
Costs of revenues: | ||
Total costs of revenues | 2,272 | 2,333 |
Verification and Certification Segment [Member] | Professional Services [Member] | ||
Revenues: | ||
Total revenues | ||
Verification and Certification Segment [Member] | Costs Of Professional Services [Member] | ||
Costs of revenues: | ||
Total costs of revenues | ||
Professional Services Segment [Member] | ||
Assets: | ||
Goodwill | 999 | 999 |
All other assets, net | 2,707 | 3,182 |
Total assets | 3,706 | 4,181 |
Revenues: | ||
Total revenues | 1,721 | 2,871 |
Costs of revenues: | ||
Total costs of revenues | 1,355 | 2,296 |
Gross profit | 366 | 575 |
Depreciation & amortization | 168 | 183 |
Other operating expenses | 306 | 246 |
Segment operating income/(loss) | (108) | 146 |
Other items to reconcile segment operating income/(loss) to net income/(loss): | ||
Other income/(loss) | (6) | (38) |
Income tax benefit/(expense) | ||
Net income/(loss) | (114) | 108 |
Professional Services Segment [Member] | Service [Member] | ||
Revenues: | ||
Total revenues | ||
Costs of revenues: | ||
Total costs of revenues | ||
Professional Services Segment [Member] | Product [Member] | ||
Revenues: | ||
Total revenues | ||
Costs of revenues: | ||
Total costs of revenues | ||
Professional Services Segment [Member] | Professional Services [Member] | ||
Revenues: | ||
Total revenues | 1,721 | 2,871 |
Professional Services Segment [Member] | Costs Of Professional Services [Member] | ||
Costs of revenues: | ||
Total costs of revenues | 1,355 | 2,296 |
Eliminations and Other [Member] | ||
Assets: | ||
Goodwill | ||
All other assets, net | 7,132 | 2,219 |
Total assets | 7,132 | 2,219 |
Revenues: | ||
Total revenues | ||
Costs of revenues: | ||
Total costs of revenues | ||
Gross profit | ||
Depreciation & amortization | ||
Other operating expenses | ||
Segment operating income/(loss) | ||
Other items to reconcile segment operating income/(loss) to net income/(loss): | ||
Other income/(loss) | ||
Income tax benefit/(expense) | (913) | (822) |
Net income/(loss) | (913) | (822) |
Eliminations and Other [Member] | Service [Member] | ||
Revenues: | ||
Total revenues | ||
Costs of revenues: | ||
Total costs of revenues | ||
Eliminations and Other [Member] | Product [Member] | ||
Revenues: | ||
Total revenues | ||
Costs of revenues: | ||
Total costs of revenues | ||
Eliminations and Other [Member] | Professional Services [Member] | ||
Revenues: | ||
Total revenues | ||
Eliminations and Other [Member] | Costs Of Professional Services [Member] | ||
Costs of revenues: | ||
Total costs of revenues |