where food comes from, inc.wherefoodcomesfrom.com/.../2017/10/wfcf-october-2017.pdf · practices...

WhereFoodComesFrom,Inc.

WhereFoodComesFrom,Inc.

D.B.A.IMIGlobal,Inc.

Headquarters:CastleRock,Colorado

OTCQB:WFCF

October2017

Forward-LookingStatementsandUseofNon-GAAPMeasures

Thispresentationcontains"forward-lookingstatements"withinthemeaningoftheU.S.PrivateSecuritiesLitigationReformActof1995,basedoncurrentexpectations,estimatesandprojectionsthataresubjecttorisk.Forward-lookingstatementsareinherentlyuncertain,andactualeventscoulddiffermateriallyfromtheCompany’spredictions.ImportantfactorsthatcouldcauseactualeventstovaryfrompredictionsincludethosediscussedinourSECfilings.Specifically,statementsinthispresentationaboutfinancialperformance,newbusinessdevelopment,growthpotential,marketleadership,andtheimpactandpotentialoftheCompany’sproductsandservicesonthemarketplaceandcustomersareforward-lookingstatementsthataresubjecttoavarietyoffactors,includingavailabilityofcapital,personnelandotherresources;competition,governmentalregulationofthebeefindustry,themarketforbeefandotherfactors.Readersshouldnotplaceunduerelianceontheseforward-lookingstatements.TheCompanyassumesnoobligationtoupdateitsforward-lookingstatementstoreflectnewinformationordevelopments.ForamoreextensivediscussionoftheCompany’sbusiness,pleaserefertotheCompany’sSECfilingsatwww.sec.gov.Noteonnon-GAAPFinancialMeasuresThis presentation also includes a discussion of adjusted EBITDA, which is a non-GAAP financial measureprovided as a complement to the results provided in accordance with generally accepted accounting principles("GAAP"). Adjusted EBITDA excludes stock-based compensation and, when appropriate, other items thatmanagement does not utilize in assessing the Company's operating performance. None of these non-GAAPfinancial measures are recognized terms under GAAP and do not purport to be an alternative to net income asan indicator of operating performance or any other GAAP measure. We intend to continue to provide thesenon-GAAP financial measures as part of our future earnings discussions because we believe they are useful toinvestors and other external users of our financial statements in evaluating our operating performance.

HowBigistheTrend?

“I’veneverseenastrongerdesirefor(consumers)knowingwheretheirfoodiscomingfrom…” -- WholeFoodsCEOWalterRobb

“Ourcustomerswanttoknowmoreabouthowtheirfoodisgrownandraised,andwhereitcomesfrom. Walmart iscommittedtousingourstrengthstodrivetransparencyandimprovementacrossthesupplychain….helpingtoputourcustomersinchargeoftheirfoodchoicesbyprovidingclear,accurateinformationaboutfoodingredients.-- KathleenMcLaughlin,Walmart VP,Sustainability

“Wearechangingthewaywesourceandservefoodinourrestaurants.WehaveanimportantroleinhelpingbuildamoresustainablefoodsystemgloballythroughinitiativessuchasthesustainablebeefpilotinCanadaandwe’recommittedtocontinuingthisimportantworkaroundtheworld.”-- SteveEasterbrook,presidentandCEO,McDonald’sCorporation

“Thebeefindustryrecognizesthatconsumersaremoreinterestedinwheretheirfoodcomesfromandtheywanttotellthestory.”-- DerekSchoonbaert,managingdirector,CargillCanada

CompanyOverview• #1providerofindependent,third-partytraceabilityand

verificationoffoodproductionpractices• Collectandleverageinformationonwhen,where,how

andbywhomfoodwasraised• 12,000+customers:farmers,ranchers,vineyards,

wineries,processors,handlers,retailers,distributors,tradeassociationsandrestaurants

• Customersincludetoptierplayersinfoodandwinespace• Recurringrevenuemodelgeneratingstrongcashflowsto

supportprofitableorganicgrowthandfundM&A• Addressablemarket$200M*andgrowing<5%ofrevenue

*Estimate based on available industry data

VerificationServices

CommodityGroupCoverage StandardsWeaudittomorethan30standards,includingOrganic,Non-GMO,GlutenFree,SafeQualityFood,ProtectedHarvest,AmericanHumaneCertified™,Sustainability,andmanyothers

Beef Dairy BeesPork Winegrapes HoneyPoultry Nuts SeaweedLamb Mushrooms EggsBison Avocados CutflowersCoffee CitrusFruit StoneFruit

CompetitiveAdvantage:BundledServices

DifferentialcompetitiveadvantageofbundledservicesmadepossiblebyM&Aactivity&largestportfolioofauditingstandards

• 30%ofnewcustomerwinsduetobenefitsofbundledservices

• Multipleauditsconductedinsinglevisit• Eliminatesauditfatigueandsimplifiesprocess• Lowerscoststoproducersandprocessers• ImprovesWFCFgrossmargins

• Organic/non-GMOismostpopularbundledaudit

TheWFCFBundlingAdvantage

NSF

Food Chain

CCOF

QAI

Oregon TilthEarth Claims

MLA

WFCF

WhereFoodComesFromSourceVerified®

Howitworks:PackagedisplaysWhereFoodComesFromSourceVerified®labelindicatingproduct’soriginhasbeenverifiedbyanindependentthirdparty.MayincludeaQRcodeforconsumertoaccessinformationonpracticesusedbythefamiliesthatraisedthefood.

RevenueModel:• Non-exclusivefooddistributorsorretailerspay

perpoundroyalties,licensefees,servicefees.• Exclusiveverificationcustomersdisplaylabelfor

noadditionalcost.

300+ grocery stores and food distributors nationally carry product displaying aWhere Food Comes From Source Verified® label.

OurCustomers

CustomerCaseStudy

Customersince2014

McDonald’shastakenaleadershiproleintheareaofsustainablepracticesforbeefproducers

• In2015and2016WFCFdesignedandimplementedtheMcDonald’spilotprogramforsustainablebeefinCanada

• WFCFwastheexclusiveprovideronthisprogram• Conducted183on-siteauditsofCanadianbeefsupplierswhoarenow

compliantwithMcDonald’ssustainabilityrequirements• Tracked9,000headofcattle=2.4millionhamburgers• CanadianRoundtableforSustainableBeefevaluatingresultstodetermine

pathforward

CustomerCaseStudy

Customersince2008WholeFoodsMarket(WFM)isaleadingadvocateforfoodtransparency• WFMrequiresitsproteinsupplierstocomplywithGlobalAnimalPartnership

(GAP)standardsaroundhumanehandling• WFCFisthelargestandoneofonlytwocertifiedprovidersofGAPaudits

nationwideforWFMsuppliersofbeef,chicken,porkandlamb• PineManorFarms®chickenproductsnowbearWFCFlabelonpackaging• WFCFnowbundlingnon-GMOandOrganiccertificationsforWFMsupply

chain• Stickycustomerrelationship

CustomerCaseStudy

Customersince2005Tysonisworld’slargestmeatpackerwith$41Binrevenue

• Industryleaderinphilanthropy,foodsafety,animalwelfare,sustainability

• Long-termcustomerrelationshipisconstantlyexpanding• VerificationsforTyson’sNaturalandOrganicbeef,pork,

poultry• NHTCsourceandageverificationsforEurope• TysonFarmCheck™isWFCFexclusive

WhyWFCFintheFuture?MarketDrivers

Growthstrategysupportedbylong-termtrends• Consumerdemandfortransparencyduetofoodsafetyissues• Increasingconsumerinterestinknowingwheretheirfoodcomesfromand

whoraisedit• Producers,packers,distributorsandretailersviewverification,

identificationandtraceabilityaskeycompetitivedifferentiators• FoodscandalsdriveQSRandretailersforward• Newtechnologies:RFID,GPS,drones• USDA’sAnimalDiseaseTraceability(ADT):MandatoryIDin5-10years• Keyexportmarketsrequireverification:EU,SaudiArabia,China

AbilitytoQuicklyRespondtoNewMarketOpportunities

BeefExportstothePeople’sRepublicofChinabeginning2017

ChinapublisheditsofficialExportVerification(EV)ProgramrequirementsonJune12,2017

• IMIGlobalisanapprovedProcessVerifiedProgramwiththeUSDAallowingallIMIGlobalUSDAcertifiedcustomerstheoptiontoexporttoChina

• CattlemustbetraceablefrombirthusingaProgramComplianceTag(PCT)suchasourIMIEIDsorSterlingSolutionstags

• AllbeefexportstothePeople’sRepublicofChinawillbetestedforgrowthhormonesandbeta-agnosticsuponarrival– WFCFprovidesNHTCandVNBprogramswhichensurescomplianceandcontinuedmarketaccessinthistypeofdestinationtestingenvironment

WhereDidNon-GMOComeFrom?TheNon-GMOOpportunity

GMO– GeneticallyModifiedOrganisms• Non-GMOProjectislargestindustrygroup• Majority(32)ofUSstateshaveGMOballotinitiatives• Vermontfirststatetomandatenon-GMOlabelingin2016• WholeFoodscommittedtomandatoryGMOlabelingby2018• WhereFoodComesFromisoneofonlyfournon-GMO

approvedauditorsnationally

M&AActivityAcquisition Year CommodityGroups Certifications

ICS 2012 Grain,dairy,beef, pork,tobacco Organic,Glutenfree,Non-GMO

Validus 2013 Pork, poultry,dairy Animalwelfare,sustainability

MicroTechnologies 2013 Beef Source &Age,NHTC

Merck(Tri-Merit) 2014 Beef,dairy Source&Age

SterlingSolutions 2014 Beef,dairy Source&Age,NHTC,BQA

SureHarvest 2016 Highvaluespecialtycrops– winegrapes,almonds,hazelnuts,cutflowers,freshproduce

Sustainability

ABeeOrganic 2017 Crops,bees,chickens,honey,eggs,coffee,herbalblends

National OrganicProgram

M&A strategy designed to add new auditing standards, food group coverage and technology to further differentiate the Company from its competition.

SureHarvest AcquisitionDecember2016

Highlights• ExpandsanddiversifiesWFCF’scommodityreachwithhighvaluespecialty

crops,includingwinegrapes,almonds,hazelnuts,mushrooms,cutflowers,leafygreensandotherfreshproduce

• SureHarvest’s patentedsustainabilitysoftwaresupportsmorethan2,200agri-foodoperations,includinggrowers,packers,shippers,processors,wineriesandtradeassociations

• SaaS businessmodelbundlesannualsoftwaresubscriptionswithprofessionalservicestoprovidepredictable,recurringrevenue

• SureHarvest bringsfiveissuedpatents,eight2016patentallowancesandthreependingapplications

SureHarvest AcquisitionDecember2016

SureHarvest SolutionsOverview

ServicesandProductsSustainableSourcing

SustainabilityProgramsDiffusionofInnovation

CertificationManagementVerificationServices

ComplianceManagementFarmingInformationManagement

FoodChainCustomersGrowersWineries

PackersandShippersDistributors

FoodProcessorsRetailersandFoodservice

TradeAssociations

SustainabilityandfarmingMISsolutions,certificationandcompliancemanagement,andprofessionalservicesdrivesustainablevaluecreationforcustomersthroughoutthefoodandagriculturevaluechain.

FlagshipSustainabilityManagementInformationSystem(SMIS)supportsagri-foodoperationsmanaging450,000acresofspecialtycropscoveringmultiplecommoditiesandmorethan65%ofthewineproducedinCalifornia.

ABeeOrganicAcquisitionMay2017

TransactionSummary• WhereFoodComesFromacquired100%ofABeeOrganic,

adding125newcustomers• ThetransactionhasintroducedWFCFtotheemergingniche

industryofhydroponicandaquaponic farming• ABeehydroponic/aquaponic certificationcustomersrangefrom

theU.S.totheUnitedArabEmirates.• TheNOPcertificationtobeekeepersandprocessorsinEastern

EuropeandIndonesiafacilitatestheirexportofhoneytotheWest

• ThetransactionalsobringsWFCFintothemarketforpersonalorganicproductssuchasbodylotionsandbugsprays

RevenueGrowth

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$4M

$6M$5.8M

$8.8M

$10.4M

$12M

$1.1M$1.7M

$2.4M$2.7M

$3.3M $4.2M

$2M

Note: To more accurately illustrate results from continuing operations, the financial data presented excludes CattleNetwork and CattleStore operations that were divested in 2008.

$5.3M

$8M

$10M

26% compounded annual growth rate

$11.6M

GrossProfit

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$2M

$4M

$5.4M

$.7M$1.2M $1.3M $1.3M

$1.8M$2.3M

$1M

$2.8M$3M $2.7M

$3.8M

$4.9M$5M

$6M

NetIncome

$1M

‘06 ‘07

‘08

‘09

‘10 ‘11

‘13

$33,600

$229,100

‘14 ‘15

$533,900

’16

$433,200

$1,533,364

$759,600

$149,700

$153,200

$327,800

$864,500

$0

$1M

$870,400

‘12

SG&Aas%ofRevenue

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

200%

46%

192%

117%

60% 55% 44% 40%

150%

100%

50% 45% 39% 39%

Scalable business model

41%

AdjustedEBITDA

$1M

‘06 ‘07 ‘08

‘09 ‘10 ‘11 ‘13

$433,100

$870,100

‘14 ‘15

$1,207,600

’16

$1,365,200

$1,116,700

$612,900

$66,300

$140,000

$443,000

$757,700

$0

$1M

$705,900

‘12

Year-to-DateFinancialHighlights

IncomeStatement• 6-monthrevenueup25%yearoveryear• 6-monthnetincomedown31%yearoveryear• 6-monthadjustedEBITDAup31%yearoveryearBalancesheet• Workingcapital:$3,614,900• Cash:$3,828,800• Longtermdebt:- 0-• Stockholders’equity:$9,799,600

SelectedStockData• Traded– OTCQB:WFCF• 52weekstockpricerange– $1.83- $2.69• Averagedailytradingvolume– 14,050• Commonsharesoutstanding– 24,958,434• Approx.management/boardownership– 14,800,000• MarketCap– $62,000,000• Fiscalyear– December31

Note: Certain figures are rounded. Valuation and other data is subject to change on a daily basis and is presented as a general reference as of October 2017.

WhyInvestinWFCF?InvestmentCase

① WFCFisonlypublicplayerinfoodverificationandtraceability② Consumerdemandfor,andgovernmentinterestin,

transparencyinthefoodchainatanall-timehigh③ Companyexecutingonstrategytobeone-stop-shopforall

certificationstandardsinallfoodgroups④ Highprofilecustomers’relianceonWFCFatestamentto

uniquenessandstrengthofourserviceofferings⑤ Scalablerecurringrevenuemodelwithlarge,growingcustomer

basepositionsWFCFforlong-termprofitablegrowth⑥ Wellcapitalized,tightsharestructure,strongmanagementteam

andboardthatownssignificantstakeinCompany

WhereFoodComesFrom

For more information, contact:

Pfeiffer High Investor Relations, Inc.Jay Pfeiffer

303-880-9000 or jay@pfeifferhigh.com