Notes
to the Consolidated Financial Statements
(Unaudited)
Except
as specifically indicated, all information in this Quarterly Report on Form 10-Q has been retroactively adjusted to give effect
to a 1-for-4 reverse stock split that was effective on December 1, 2020.
Seasonality
Our
business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue are typically
realized during late May through early October when the calf marketings and the growing seasons are at their peak. Because of
the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may
be achieved for any other quarter or for the full fiscal year.
Recent
Accounting Pronouncements
The
Financial Accounting Standards Board (FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than
SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate
changes to the codification. The Company considers the applicability and impact of all ASU’s. ASU’s not listed below
were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial
statements.
Note
2 – Basic and Diluted Net Income / (Loss) per Share
Basic
net income / (loss) per share was computed by dividing income available to common shareholders by the weighted average number
of common shares outstanding during the period. Diluted net income per share is based on the assumption that all dilutive convertible
shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method,
options and restricted stock awards are assumed to be exercised at the beginning of the period (or at the time of issuance, if
later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
The
following is a reconciliation of the share data used in the basic and diluted income / (loss) per share computations (amounts
in thousands):
|
|
Three
months ended March 31,
|
|
(in thousands)
|
|
2021
|
|
|
2020
|
|
Basic:
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
|
|
6,136
|
|
|
|
6,237
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
6,136
|
|
|
|
6,237
|
|
Weighted average effects of dilutive
securities
|
|
|
95
|
|
|
|
-
|
|
Total
|
|
|
6,231
|
|
|
|
6,237
|
|
|
|
|
|
|
|
|
|
|
Antidilutive
securities:
|
|
|
-
|
|
|
|
52
|
|
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
(Unaudited)
Note
3 - Investment in Progressive Beef, LLC
For
the three months ended March 31, 2021 and March 31, 2020, the Company received dividend income from Progressive Beef of $30,000
representing a distribution of their earnings. The income is reflected within the “Other income/(expense)” section
of the Company’s Consolidated Statement of Income for the three months ended March 31, 2021 and March 31, 2020.
Note
4 – Intangible and Other Assets
The
following table summarizes our intangible and other assets (amounts in thousands, except useful life):
|
|
March 31,
|
|
|
December 31,
|
|
|
Estimated
|
|
|
|
2021
|
|
|
2020
|
|
|
Useful
Life
|
|
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
Tradenames
and trademarks
|
|
$
|
417
|
|
|
$
|
417
|
|
|
2.5
- 8.0 years
|
|
Accreditations
|
|
|
85
|
|
|
|
85
|
|
|
5.0
years
|
|
Customer relationships
|
|
|
3,664
|
|
|
|
3,664
|
|
|
3.0
- 15.0 years
|
|
Patents
|
|
|
970
|
|
|
|
970
|
|
|
4.0
years
|
|
Non-compete
agreements
|
|
|
121
|
|
|
|
121
|
|
|
5.0
years
|
|
|
|
|
5,257
|
|
|
|
5,257
|
|
|
|
|
Less
accumulated amortization
|
|
|
2,877
|
|
|
|
2,795
|
|
|
|
|
|
|
|
2,380
|
|
|
|
2,462
|
|
|
|
|
Tradenames/trademarks
(not subject to amortization)
|
|
|
465
|
|
|
|
465
|
|
|
|
|
|
|
|
2,845
|
|
|
|
2,927
|
|
|
|
|
Other
assets
|
|
|
13
|
|
|
|
21
|
|
|
|
|
Intangible
and other assets:
|
|
$
|
2,858
|
|
|
$
|
2,948
|
|
|
|
|
Note
5 – Accrued Expenses and Other Current Liabilities
The
following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Income and sales taxes payable
|
|
$
|
136
|
|
|
$
|
168
|
|
Payroll related accruals
|
|
|
416
|
|
|
|
271
|
|
Customer deposits
|
|
|
68
|
|
|
|
31
|
|
Professional
fees and other expenses
|
|
|
288
|
|
|
|
129
|
|
|
|
$
|
908
|
|
|
$
|
599
|
|
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
6 – Notes Payable
Long
Term Debt
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2021
|
|
|
2020
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Paycheck Protection Program
Loan
|
|
$
|
-
|
|
|
$
|
1,035
|
|
Less current
portion of notes payable and other long-term debt
|
|
|
-
|
|
|
|
(463
|
)
|
Notes payable
and other long-term debt
|
|
$
|
-
|
|
|
$
|
572
|
|
The
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act allocated $350 billion to help small businesses keep
workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program (“PPP”), the initiative
provides federally guaranteed loans to small businesses. These loans may be forgiven if borrowers maintain their payrolls during
the crisis or restore their payrolls afterward. The Company received notification the loan and accrued interest was forgiven on
March 4, 2021.
Unison
Revolving Line of Credit
The
Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2022. The LOC provides for $75,080
in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and
interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal
balance due on maturity. As of March 31, 2021 and December 31, 2020, the effective interest
rate for both periods was 4.75%. The LOC is collateralized by all the business assets of ICS. As of March 31, 2021, and December
31, 2020, there were no amounts outstanding under this LOC.
Note
7 – Stock-Based Compensation
In
addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants,
and other advisors, with equity-based compensation in the form of stock options and restricted stock awards. The Company recognizes
all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the
grant date. For stock options, fair value is calculated at the date of grant using the Black-Scholes-Merton option pricing model.
For restricted stock awards, fair value is the closing stock price for the Company’s common stock on the grant date. The
expense is recognized over the vesting period of the grant. For the periods presented, all stock-based compensation expense was
classified as a component within selling, general and administrative expense in the Company’s consolidated statements of
operations.
The
amount of stock-based compensation expense is as follows (amounts in thousands):
|
|
Three months ended March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Stock options
|
|
$
|
24
|
|
|
$
|
30
|
|
Restricted stock
awards
|
|
|
1
|
|
|
|
1
|
|
Total
|
|
$
|
25
|
|
|
$
|
31
|
|
During
the three months ended March 31, 2021, no stock options were awarded. During the three months ended March 31, 2020, the Company
awarded stock options to purchase 5,000 shares of the Company’s common stock at an exercise price of $7.24 per share to
employees of the Company (all share and dollar amounts have been adjusted to reflect the 1-for-4 reverse split that occurred in
December 2020).
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
The
Company estimated the fair value of stock options using the Black-Scholes-Merton option pricing model with the following assumptions
(all share amounts have been adjusted to reflect the 1-for-4 reverse split that occurred in December 2020):
|
|
Three months ended March
31,
|
|
|
|
2021
|
|
|
2020
|
|
Number of options awarded
to purchase common shares
|
|
|
0
|
|
|
|
5,000
|
|
Risk-free interest rate
|
|
|
N/A
|
|
|
|
1.56
|
%
|
Expected volatility
|
|
|
N/A
|
|
|
|
97.0
|
%
|
Assumed dividend yield
|
|
|
N/A
|
|
|
|
N/A
|
|
Expected life of options from the date
of grant
|
|
|
N/A
|
|
|
|
9.9
years
|
|
The
estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase
is as follows (amounts in thousands):
Years ended December
31st:
|
|
Unvested
stock options
|
|
|
Unvested
restricted stock awards
|
|
|
Total
unrecognized compensation expense
|
|
2021 (remaining nine months)
|
|
|
49
|
|
|
|
-
|
|
|
|
49
|
|
2022
|
|
|
20
|
|
|
|
-
|
|
|
|
20
|
|
2023
|
|
|
4
|
|
|
|
-
|
|
|
|
4
|
|
2024
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
73
|
|
|
$
|
-
|
|
|
$
|
73
|
|
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.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Stock
Option Activity
Stock
option activity under our Equity Incentive Plans is summarized as follows (all share and dollar amounts have been adjusted to
reflect the 1-for-4 reverse split that occurred in December 2020):
|
|
|
|
|
|
|
|
|
|
|
Weighted avg.
|
|
|
|
|
|
|
|
|
|
Weighted avg.
|
|
|
Weighted avg.
|
|
|
remaining
|
|
|
|
|
|
|
Number of
|
|
|
exercise price
|
|
|
grant date fair
|
|
|
contractual life
|
|
|
Aggregate
|
|
|
|
awards
|
|
|
per
share
|
|
|
value
per share
|
|
|
(in
years)
|
|
|
intrinsic
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, December
31, 2020
|
|
|
105,086
|
|
|
$
|
6.25
|
|
|
$
|
6.06
|
|
|
|
5.38
|
|
|
$
|
814,090
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
|
|
Exercised
|
|
|
(17,195
|
)
|
|
$
|
2.31
|
|
|
$
|
2.25
|
|
|
|
1.27
|
|
|
|
|
|
Expired/Forfeited
|
|
|
(1,343
|
)
|
|
$
|
7.11
|
|
|
$
|
6.65
|
|
|
|
-
|
|
|
|
|
|
Outstanding, March 31, 2021
|
|
|
86,548
|
|
|
$
|
7.02
|
|
|
$
|
6.81
|
|
|
|
5.86
|
|
|
$
|
560,478
|
|
Exercisable, March 31, 2021
|
|
|
69,526
|
|
|
$
|
6.93
|
|
|
$
|
6.80
|
|
|
|
5.30
|
|
|
$
|
456,726
|
|
Unvested, March 31, 2021
|
|
|
17,022
|
|
|
$
|
7.40
|
|
|
$
|
7.16
|
|
|
|
8.11
|
|
|
$
|
103,752
|
|
The
aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of
our common stock on March 31, 2021 and the exercise price for the in-the-money options) that would have been received by the option
holders if all the in-the-money options had been exercised on March 31, 2021.
Restricted
Stock Activity
Restricted
stock activity under our Equity Incentive Plans is summarized as follows (all share and dollar amounts have been adjusted to reflect
the 1-for-4 reverse split that occurred in December 2020):
|
|
|
|
|
Weighted avg.
|
|
|
|
Number of
|
|
|
grant date
|
|
|
|
options
|
|
|
fair
value
|
|
Non-vested restricted shares, December 31,
2020
|
|
|
1,250
|
|
|
$
|
10.20
|
|
Granted
|
|
|
-
|
|
|
$
|
-
|
|
Vested
|
|
|
(1,250
|
)
|
|
$
|
10.20
|
|
Forfeited
|
|
|
-
|
|
|
$
|
-
|
|
Non-vested restricted shares, March
31, 2021
|
|
|
-
|
|
|
$
|
-
|
|
Note
8 – Income Taxes
Deferred
tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax
bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected
to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that
some portion or all of the deferred tax assets will not be realized.
The
provision or benefit for income taxes is recorded at the end of each interim period based on the Company’s best estimate
of its effective income tax rate expected to be applicable for the full fiscal year. For the three months ended March 31, 2021
we recorded an income tax expense of approximately $11,000, compared to income tax benefit of $80,000 for the same 2020 period.
The effective tax rate for the three months ended March 31, 2021 is favorably impacted by the non-taxability of the PPP loan forgiveness
income.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
9 - Revenue Recognition
Disaggregation
of Revenue
We
have identified four material revenue categories in our business: (i) verification and certification service revenue, (ii) product
sales, (iii) software license, maintenance and support services revenue and (iv) software-related consulting service revenue.
Revenue
attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).
|
|
Three
months ended March 31, 2021
|
|
|
Three
months ended March 31, 2020
|
|
|
|
Verification
and Certification Segment
|
|
|
Software
Sales and Related Consulting Segment
|
|
|
Eliminations
and Other
|
|
|
Consolidated
Totals
|
|
|
Verification
and Certification Segment
|
|
|
Software
Sales and Related Consulting Segment
|
|
|
Eliminations
and Other
|
|
|
Consolidated
Totals
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verification and certification
service revenue
|
|
$
|
3,263
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,263
|
|
|
$
|
2,803
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,803
|
|
Product sales
|
|
|
724
|
|
|
|
-
|
|
|
|
-
|
|
|
|
724
|
|
|
|
725
|
|
|
|
-
|
|
|
|
-
|
|
|
|
725
|
|
Software license, maintenance and support
services revenue
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
233
|
|
|
|
(90
|
)
|
|
|
143
|
|
Software-related
consulting service revenue
|
|
|
-
|
|
|
|
312
|
|
|
|
-
|
|
|
|
312
|
|
|
|
-
|
|
|
|
265
|
|
|
|
(24
|
)
|
|
|
241
|
|
Total revenues
|
|
$
|
3,987
|
|
|
$
|
453
|
|
|
$
|
-
|
|
|
$
|
4,440
|
|
|
$
|
3,528
|
|
|
$
|
498
|
|
|
$
|
(114
|
)
|
|
$
|
3,912
|
|
Contract
Balances
As
of March 31, 2021, and December 31, 2020, accounts receivable from contracts with customers, net of allowance for doubtful accounts,
were approximately $1.9 and $2.5 million, respectively.
As
of March 31, 2021, and December 31, 2020, deferred revenue from contracts with customers was approximately $1.3 and $1.1 million,
respectively. The balance of the contract liabilities at March 31, 2021 and December 31, 2020 are expected to be recognized as
revenue within one year or less of the invoice date.
The
following table reflects the changes in our contract liabilities during the three month period ended March 31, 2021 (amounts in
thousands):
Deferred revenue:
|
|
|
|
Unearned revenue January 1, 2021
|
|
$
|
1,132
|
|
Unearned billings
|
|
|
1,604
|
|
Revenue recognized
|
|
|
(1,401
|
)
|
Unearned revenue March 31, 2021
|
|
$
|
1,335
|
|
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Note
10 – Leases
The
components of lease expense were as follows (amounts in thousands):
|
|
Three months ended
|
|
|
|
March
31, 2021
|
|
|
March
31, 2020
|
|
Operating lease cost
|
|
$
|
116
|
|
|
$
|
116
|
|
Finance lease cost
|
|
|
|
|
|
|
|
|
Amortization of assets
|
|
|
2
|
|
|
|
2
|
|
Interest
on finance lease obligations
|
|
|
1
|
|
|
|
1
|
|
Total net lease
cost
|
|
$
|
119
|
|
|
$
|
119
|
|
Included
in the table above, is $0.1 million for the three months ended March 31, 2021, of operating lease cost for our corporate headquarters.
This space is being leased from The Move, LLC.
Our CEO and President, each a related party to WFCF, have a 24.3% jointly-held ownership interest in The Move, LLC.
Supplemental
balance sheet information related to leases was as follows (amounts in thousands):
|
|
March
31, 2021
|
|
|
December
31, 2020
|
|
Operating leases:
|
|
Related
Party
|
|
|
Other
|
|
|
Total
|
|
|
Related
Party
|
|
|
Other
|
|
|
Total
|
|
Operating lease ROU assets
|
|
$
|
2,709
|
|
|
$
|
217
|
|
|
$
|
2,926
|
|
|
$
|
2,755
|
|
|
$
|
238
|
|
|
$
|
2,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current operating lease liabilities
|
|
$
|
184
|
|
|
$
|
91
|
|
|
$
|
275
|
|
|
$
|
179
|
|
|
$
|
89
|
|
|
$
|
268
|
|
Noncurrent operating
lease liabilities
|
|
|
3,032
|
|
|
|
154
|
|
|
|
3,186
|
|
|
|
3,079
|
|
|
|
178
|
|
|
|
3,257
|
|
Total
operating lease liabilities
|
|
$
|
3,216
|
|
|
$
|
245
|
|
|
$
|
3,461
|
|
|
$
|
3,258
|
|
|
$
|
267
|
|
|
$
|
3,525
|
|
Finance leases:
|
|
March 31,
2021
|
|
|
December
31, 2020
|
|
Property and equipment,
at cost
|
|
$
|
67
|
|
|
$
|
67
|
|
Accumulated amortization
|
|
|
(33
|
)
|
|
|
(30
|
)
|
Property and
equipment, net
|
|
$
|
34
|
|
|
$
|
37
|
|
|
|
|
|
|
|
|
|
|
Current obligations of finance leases
|
|
$
|
12
|
|
|
$
|
13
|
|
Finance leases,
net of current obligations
|
|
|
29
|
|
|
|
31
|
|
Total finance
lease liabilities
|
|
$
|
41
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term
(in years):
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
9.8
|
|
|
|
10.0
|
|
Finance leases
|
|
|
3.6
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
Weighted average discount rate:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
5.8
|
%
|
|
|
5.8
|
%
|
Finance leases
|
|
|
12.6
|
%
|
|
|
13.0
|
%
|
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
Supplemental
cash flow and other information related to leases was as follows (amounts in thousands):
|
|
Three months ended
|
|
|
|
March
31, 2021
|
|
|
March
31, 2020
|
|
Cash paid for amounts included in the
measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
Operating
cash flows from operating leases
|
|
$
|
114
|
|
|
$
|
111
|
|
Operating cash flows
from finance leases
|
|
$
|
1
|
|
|
$
|
1
|
|
Financing cash flows
from finance leases
|
|
$
|
3
|
|
|
$
|
2
|
|
|
|
|
|
|
|
|
|
|
ROU assets obtained in exchange for
lease liabilities:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
$
|
3,531
|
|
|
$
|
3,507
|
|
Maturities
of lease liabilities were as follows (amounts in thousands):
Years Ending December
31st,
|
|
Operating
Leases
|
|
|
Finance
Leases
|
|
2021 (nine remaining months)
|
|
$
|
347
|
|
|
$
|
13
|
|
2022
|
|
|
466
|
|
|
|
15
|
|
2023
|
|
|
461
|
|
|
|
10
|
|
2024
|
|
|
407
|
|
|
|
5
|
|
2025
|
|
|
405
|
|
|
|
5
|
|
Thereafter
|
|
|
2,497
|
|
|
|
-
|
|
Total lease payments
|
|
|
4,583
|
|
|
|
48
|
|
Less amount representing
interest
|
|
|
(1,122
|
)
|
|
|
(7
|
)
|
Total lease obligations
|
|
|
3,461
|
|
|
|
41
|
|
Less current
portion
|
|
|
(275
|
)
|
|
|
(12
|
)
|
Long-term lease
obligations
|
|
$
|
3,186
|
|
|
$
|
29
|
|
Note
11 – Commitments and Contingencies
Legal
proceedings
From
time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of
business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to
the extent they are probable and estimable.
Note
12 - 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 software sales and related consulting reportable segment. SureHarvest, which includes Postelsia,
is the sole operating segment under the software sales and related consulting reportable segment. This segment includes software
license, maintenance, support and software-related consulting service revenues.
Where
Food Comes From, Inc.
Notes
to the Consolidated Financial Statements
(Unaudited)
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.
The
Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information
for reportable operating segments (amounts in thousands):
|
|
Three months ended March 31, 2021
|
|
|
Three months ended March 31, 2020
|
|
|
|
Verification and Certification Segment
|
|
|
Software Sales and Related Consulting Segment
|
|
|
Eliminations and Other
|
|
|
Consolidated Totals
|
|
|
Verification and Certification Segment
|
|
|
Software Sales and Related Consulting Segment
|
|
|
Eliminations and Other
|
|
|
Consolidated Totals
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
$
|
1,947
|
|
|
$
|
999
|
|
|
$
|
-
|
|
|
$
|
2,946
|
|
|
$
|
1,133
|
|
|
$
|
1,813
|
|
|
$
|
-
|
|
|
$
|
2,946
|
|
All other assets, net
|
|
|
17,545
|
|
|
|
2,891
|
|
|
|
(3,694
|
)
|
|
|
16,742
|
|
|
|
15,866
|
|
|
|
3,711
|
|
|
|
(4,530
|
)
|
|
|
15,047
|
|
Total assets
|
|
$
|
19,492
|
|
|
$
|
3,890
|
|
|
$
|
(3,694
|
)
|
|
$
|
19,688
|
|
|
$
|
16,999
|
|
|
$
|
5,524
|
|
|
$
|
(4,530
|
)
|
|
$
|
17,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verification and certification service revenue
|
|
$
|
3,263
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,263
|
|
|
$
|
2,803
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,803
|
|
Product sales
|
|
|
724
|
|
|
|
-
|
|
|
|
-
|
|
|
|
724
|
|
|
|
725
|
|
|
|
-
|
|
|
|
-
|
|
|
|
725
|
|
Software license, maintenance and support services revenue
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
233
|
|
|
|
(90
|
)
|
|
|
143
|
|
Software-related consulting service revenue
|
|
|
-
|
|
|
|
312
|
|
|
|
-
|
|
|
|
312
|
|
|
|
-
|
|
|
|
265
|
|
|
|
(24
|
)
|
|
|
241
|
|
Total revenues
|
|
$
|
3,987
|
|
|
$
|
453
|
|
|
$
|
-
|
|
|
$
|
4,440
|
|
|
$
|
3,528
|
|
|
$
|
498
|
|
|
$
|
(114
|
)
|
|
$
|
3,912
|
|
Costs of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of verification and certification services
|
|
|
1,793
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,793
|
|
|
|
1,624
|
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
1,534
|
|
Costs of products
|
|
|
457
|
|
|
|
-
|
|
|
|
-
|
|
|
|
457
|
|
|
|
502
|
|
|
|
-
|
|
|
|
-
|
|
|
|
502
|
|
Costs of software license, maintenance and support services
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
146
|
|
|
|
-
|
|
|
|
146
|
|
Costs of software-related consulting services
|
|
|
-
|
|
|
|
228
|
|
|
|
-
|
|
|
|
228
|
|
|
|
-
|
|
|
|
120
|
|
|
|
-
|
|
|
|
120
|
|
Total costs of revenues
|
|
|
2,250
|
|
|
|
328
|
|
|
|
-
|
|
|
|
2,578
|
|
|
|
2,126
|
|
|
|
266
|
|
|
|
(90
|
)
|
|
|
2,302
|
|
Gross profit
|
|
|
1,737
|
|
|
|
125
|
|
|
|
-
|
|
|
|
1,862
|
|
|
|
1,402
|
|
|
|
232
|
|
|
|
(24
|
)
|
|
|
1,610
|
|
Depreciation & amortization
|
|
|
151
|
|
|
|
51
|
|
|
|
-
|
|
|
|
202
|
|
|
|
88
|
|
|
|
146
|
|
|
|
-
|
|
|
|
234
|
|
Other operating expenses
|
|
|
1,479
|
|
|
|
92
|
|
|
|
-
|
|
|
|
1,571
|
|
|
|
1,537
|
|
|
|
217
|
|
|
|
(24
|
)
|
|
|
1,730
|
|
Segment operating income/(loss)
|
|
$
|
107
|
|
|
$
|
(18
|
)
|
|
$
|
-
|
|
|
$
|
89
|
|
|
$
|
(223
|
)
|
|
$
|
(131
|
)
|
|
$
|
-
|
|
|
$
|
(354
|
)
|
Other items to reconcile segment operating income (loss) to net income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
|
|
|
35
|
|
|
|
-
|
|
|
|
1,037
|
|
|
|
1,072
|
|
|
|
30
|
|
|
|
3
|
|
|
|
-
|
|
|
|
33
|
|
Income tax (expense)/benefit
|
|
|
-
|
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
80
|
|
|
|
80
|
|
Net income/(loss)
|
|
$
|
142
|
|
|
$
|
(18
|
)
|
|
$
|
1,026
|
|
|
$
|
1,150
|
|
|
$
|
(193
|
)
|
|
$
|
(128
|
)
|
|
$
|
80
|
|
|
$
|
(241
|
)
|
Note
13 – Supplemental Cash Flow Information
|
|
Three
months ended March 31,
|
|
(Amounts in thousands)
|
|
2021
|
|
|
2020
|
|
Cash paid during the year:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$
|
1
|
|
|
$
|
2
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Note
14 – 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.