[10-Q] Where Food Comes From, Inc. Quarterly Earnings Report
Where Food Comes From, Inc. (WFCF) reported Q3 2025 results. Revenue was $7.015 million versus $7.107 million a year ago as verification and certification services edged up while product and professional services softened. Gross profit was $2.686 million and operating income was $0.575 million.
Net income rose to $1.146 million ($0.22 per diluted share) from $0.492 million ($0.09), driven by $0.946 million gain on the sale of the Progressive Beef equity stake and a $48,000 fair value gain on digital assets. For the nine months, revenue was $18.850 million and net income was $1.739 million ($0.34 per diluted share).
Cash increased to $4.759 million from $2.012 million at year-end, supported by $2.314 million operating cash flow and $1.716 million from investing, mainly the Progressive Beef sale. The company repurchased 60,721 shares for $718,000 in Q3. Digital assets totaled $798,000 (7 Bitcoin) at fair value as of September 30, 2025. Shares outstanding were 5,111,945 as of November 3, 2025.
- None.
- None.
Insights
EPS up on asset sale; core revenue slightly softer.
WFCF delivered stronger EPS in Q3 primarily from a
Operating income of
The buyback remained active with
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For
the Quarterly period ended |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _____________ |
Commission
File No.
(exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer” and “accelerated filer” and “smaller reporting entity” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer: | ☐ | Accelerated filer: | ☐ | ||
| ☐ | Smaller reporting company: | ||||
| Emerging growth company |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐ No
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
The
number of shares of the registrant’s common stock, $
Where Food Comes From, Inc.
Table of Contents
September 30, 2025
| Part 1 - Financial Information | ||
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
| Item 4. | Controls and Procedures | 23 |
| Part II - Other Information | ||
| Item 1. | Legal Proceedings | 24 |
| Item 1A. | Risk Factors | 24 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 24 |
| Item 6. | Exhibits | 25 |
| 2 |
Where Food Comes From, Inc.
Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| (Amounts in thousands, except per share amounts) | 2025 | 2024 | ||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance | ||||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets, net | ||||||||
| Equity investments | ||||||||
| Intangible and other assets, net | ||||||||
| Digital assets | ||||||||
| Goodwill, net | ||||||||
| Deferred tax assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Current portion of finance lease obligations | ||||||||
| Current portion of operating lease obligations | ||||||||
| Total current liabilities | ||||||||
| Finance lease obligations, net of current portion | ||||||||
| Operating lease obligation, net of current portion | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | - | - | ||||||
| Equity: | ||||||||
| Preferred stock, $ | - | - | ||||||
| Common stock, $ | ||||||||
| Additional paid-in-capital | - | |||||||
| Treasury stock of | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Total equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
Where Food Comes From, Inc.
Consolidated Statements of Operations
(Unaudited)
| (Amounts in thousands, except per share amounts) | 2025 | 2024 | ||||||
| Three months ended September 30, | ||||||||
| (Amounts in thousands, except per share amounts) | 2025 | 2024 | ||||||
| Revenues: | ||||||||
| Verification and certification service revenue | $ | $ | ||||||
| Product sales | ||||||||
| Professional services | ||||||||
| Total revenues | ||||||||
| Costs of revenues: | ||||||||
| Costs of verification and certification services | ||||||||
| Costs of products | ||||||||
| Costs of professional services | ||||||||
| Total costs of revenues | ||||||||
| Gross profit | ||||||||
| Selling, general and administrative expenses | ||||||||
| Income from operations | ||||||||
| Other income/(expense): | ||||||||
| Dividend income | ||||||||
| Interest income | ||||||||
| Gain on sale of assets | ||||||||
| Fair market value gain on digital assets | - | |||||||
| Loss on foreign currency exchange | - | - | ||||||
| Interest expense | - | ( | ) | |||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Per share - net income: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
Where Food Comes From, Inc.
Consolidated Statements of Operations
(Unaudited)
| (Amounts in thousands, except per share amounts) | 2025 | 2024 | ||||||
| Nine months ended September 30, | ||||||||
| (Amounts in thousands, except per share amounts) | 2025 | 2024 | ||||||
| Revenues: | ||||||||
| Verification and certification service revenue | $ | $ | ||||||
| Product sales | ||||||||
| Professional services | ||||||||
| Total revenues | ||||||||
| Costs of revenues: | ||||||||
| Costs of verification and certification services | ||||||||
| Costs of products | ||||||||
| Costs of professional services | ||||||||
| Total costs of revenues | ||||||||
| Gross profit | ||||||||
| Selling, general and administrative expenses | ||||||||
| Income from operations | ||||||||
| Other income/(expense): | ||||||||
| Dividend income | ||||||||
| Interest income | ||||||||
| Gain on sale of assets | ||||||||
| Fair market value gain on digital assets | - | |||||||
| Loss on foreign currency exchange | ( | ) | ( | ) | ||||
| Interest expense | ( | ) | ( | ) | ||||
| Income before income taxes | ||||||||
| Income tax expense | ||||||||
| Net income | $ | $ | ||||||
| Per share - net income: | ||||||||
| Basic | $ | $ | ||||||
| Diluted | $ | $ | ||||||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
Where Food Comes From, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| (Amounts in thousands) | 2025 | 2024 | ||||||
| Nine months ended September 30, | ||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||
| Operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Fair market value gain on digital assets | ( | ) | - | |||||
| Rounding adjustment on treasury stock | ( | ) | - | |||||
| Gain on sale of assets | ( | ) | ( | ) | ||||
| Stock-based compensation expense | - | |||||||
| Deferred tax benefit | ||||||||
| Bad debt expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventory | ||||||||
| Prepaid expenses and other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenue | ||||||||
| Right of use assets and liabilities, net | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Investing activities: | ||||||||
| Proceeds from sale of intangible assets | - | |||||||
| Proceeds from sale of equity investment in Progressive Beef | - | |||||||
| Purchases of property, equipment and software development costs | ( | ) | ( | ) | ||||
| Net cash provided by / (used in) investing activities | ( | ) | ||||||
| Financing activities: | ||||||||
| Repayments of finance lease obligations | ( | ) | ( | ) | ||||
| Proceeds from stock option exercise | ||||||||
| Private purchase of common shares | - | ( | ) | |||||
| Stock repurchase under Stock Buyback Plan | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net change in cash | ||||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
Where Food Comes From, Inc.
Consolidated Statement of Equity
(Unaudited)
| (Amounts in thousands) | Shares | Amount | Capital | Stock | Earnings | Total | ||||||||||||||||||
| Additional | ||||||||||||||||||||||||
| Common Stock | Paid-in | Treasury | Retained | |||||||||||||||||||||
| (Amounts in thousands) | Shares | Amount | Capital | Stock | Earnings | Total | ||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||
| Stock option exercised | - | - | - | |||||||||||||||||||||
| Private purchase of common shares | ||||||||||||||||||||||||
| Private purchase of common shares, shares | ||||||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock option exercised | - | - | - | |||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Retirement of Treasury Shares | - | ( | ) | ( | ) | ( | ) | - | ||||||||||||||||
| Rounding adjustment | ( | ) | ( | ) | ||||||||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Retirement of Shares from Progressive Beef Agreement | ( | ) | - | ( | ) | - | ( | ) | ( | ) | ||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at September 30, 2025 | $ | $ | - | $ | ( | ) | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 7 |
Where Food Comes From, Inc.
Consolidated Statement of Equity
(Unaudited)
| Additional | ||||||||||||||||||||||||
| Common Stock | Paid-in | Treasury | Retained | |||||||||||||||||||||
| (Amounts in thousands) | Shares | Amount | Capital | Stock | Earnings | Total | ||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock-based compensation expense | - | - | - | - | ||||||||||||||||||||
| Stock option exercised | - | - | - | |||||||||||||||||||||
| Private purchase of common shares | ( | ) | - | ( | ) | - | - | ( | ) | |||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock option exercised | - | - | - | |||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Stock option exercised | - | - | - | |||||||||||||||||||||
| Repurchase of common shares under Stock Buyback Plan | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||
| Net income | - | - | - | - | ||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 8 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 1 - 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 consulting services 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 unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations, financial position and cash flows of Where Food Comes From, Inc. and its subsidiaries, Where Food Comes From Organic, Inc. (“WFCFO”), Validus Verifications Services, LLC (“Validus”), SureHarvest Services, LLC (“SureHarvest”), and Postelsia Holdings, Ltd. (“Postelsia”) (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). 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. 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. Actual results could differ from the estimates.
The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2024, included in our Form 10-K filed on February 20, 2025. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. Certain prior year amounts have been reclassified to conform to current year presentation. Net income and shareholders’ equity were not affected by these reclassifications. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. The consolidated operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for any other interim period of any future year.
| 9 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Seasonality
Our business is subject to seasonal fluctuations annually. 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.
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. Historically, these cycles typically lasted approximately 10 years. The beginning of 2025 marked the eleventh 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 will continue to contract will be directly impacted by drought and pasture conditions.
Because of the seasonality of the business and cyclical nature of 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.
In January 2025, the FASB issued ASU 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), to clarify the initial effective date. The Company will be required to adopt this update January 1, 2027 for annual reporting and January 1, 2028 for interim reporting. At this time, management is determining the extent of enhanced disclosures on its financial statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Targeted Improvements to the Accounting for Internal-Use Software, to modernize the accounting for software costs that are accounting for under Subtopic 350-40, Intangibles – Goodwill and Other – Internal-Use Software. The Company will be required to adopt this update January 1, 2028 for annual and interim reporting, with early adoption permitted. At this time, management is determining the impact on its financial statements.
Note 2 – 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 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.
| 10 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
The following is a reconciliation of the share data used in the basic and diluted income per share computations (amounts in thousands):
Schedule of Reconciliation of Basic and Diluted Income Per Share Computations
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Basic: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Diluted: | ||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||
| Weighted average effects of dilutive securities | ||||||||||||||||
| Total | ||||||||||||||||
| Antidilutive securities: | ||||||||||||||||
The effect of the inclusion of the antidilutive shares would have resulted in an increase in earnings per share. Accordingly, the weighted average shares outstanding have not been adjusted for antidilutive shares.
Note 3 – Equity Investments
For
each of the three months ended September 30, 2025 and 2024, the Company received dividend income from Progressive Beef of $
On
July 22, 2025, the Company entered into a Redemption and Purchase Agreement (the “Agreement”) with Progressive Beef, LLC
and BHS, LLC (the “Buyer”). Pursuant to the Agreement, the Buyer redeemed the
Note 4 – Intangible and Other Assets
The following table summarizes our intangible and other assets (amounts in thousands, except useful life):
Schedule of Intangible and Other Assets
| September 30, | December 31, | Estimated | ||||||||
| 2025 | 2024 | Useful Life | ||||||||
| Intangible assets subject to amortization: | ||||||||||
| Tradenames and trademarks | $ | $ | ||||||||
| Customer relationships | ||||||||||
| Intangible assets subject to amortization, gross | ||||||||||
| Less accumulated amortization | ||||||||||
| Intangible assets subject to amortization, net | ||||||||||
| Other assets | ||||||||||
| Intangible and other assets: | $ | $ | ||||||||
| 11 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 5 – Digital Assets
Effective January 1, 2024, the Company early adopted ASU 2023-08, which required entities to measure digital assets or “cryptocurrencies” at fair value with changes recognized in the Consolidated Statements of Income each reporting period.
The following table presents the Company’s digital asset holdings as of September 30, 2025:
Schedule of Digital Asset Holdings
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||
| (in thousands, except for quantity) | Quantity | Cost Basis | Fair Value | Quantity | Cost Basis | Fair Value | ||||||||||||||||||
| Bitcoin | | $ | $ | | $ | $ | ||||||||||||||||||
| Total digital assets held | $ | $ | $ | $ | ||||||||||||||||||||
The following table presents a roll-forward of total digital assets for the nine months ended September 30, 2025:
Schedule of Total Digital Assets Based on the Fair Value Model
| (in thousands) | Fair Value | |||
| Digital assets December 31, 2024 | $ | |||
| Unrealized gain on digital assets | ||||
| Digital assets September 30, 2025 | $ | |||
Note 6 – Accrued Expenses and Other Current Liabilities
The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):
Schedule of Accrued Expenses and Other Current Liabilities
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Income and sales taxes payable | $ | $ | ||||||
| Payroll related accruals | ||||||||
| Customer deposits | ||||||||
| Professional fees and other expenses | ||||||||
| Accrued expenses and other current liabilities | $ | $ | ||||||
Note 7 – Notes Payable
Unison Revolving Line of Credit
The
Company had a revolving line of credit (“LOC”) agreement which matured on
| 12 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Note 8 – Equity and 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, stock awards 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 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 recognized for the three and nine month period ended September 30, 2024 was $0 and
$
During
the three and nine months ended September 30, 2025 and 2024,
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.
Stock Option Activity
Stock option activity under our Equity Incentive Plans 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, December 31, 2024 | $ | $ | $ | |||||||||||||||||
| Granted | - | $ | - | $ | - | - | ||||||||||||||
| Exercised | ( | ) | $ | $ | ||||||||||||||||
| Expired/Forfeited | - | $ | - | $ | - | - | ||||||||||||||
| Outstanding, September 30, 2025 | $ | $ | $ | |||||||||||||||||
| Exercisable, September 30, 2025 | $ | $ | $ | |||||||||||||||||
| Unvested, September 30, 2025 | - | $ | - | $ | - | - | $ | - | ||||||||||||
The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on September 30, 2025 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 September 30, 2025.
| 13 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
Private Purchase of Common Shares
During
March 2024, the Company purchased
Cancellation of Treasury Shares
In
April 2025, the Company canceled
Note 9 – Income Taxes
Deferred tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
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 September 30, 2025 and 2024
we recorded an income tax expense of approximately $
Note 10 - Revenue Recognition
Disaggregation of Revenue
We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, (iii) professional services 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
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Three
months ended September 30, | Nine
months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues: | ||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | ||||||||||||
| Product sales | ||||||||||||||||
| Professional services | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
Contract Balances
As
of September 30, 2025 and December 31, 2024, accounts receivable from contracts with customers, net of allowance for doubtful accounts,
was approximately $
As
of September 30, 2025 and December 31, 2024, deferred revenue from contracts with customers was approximately $
| 14 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
The following table reflects the changes in our contract liabilities during the nine month period ended September 30, 2025 (amounts in thousands):
Schedule of Changes in Contract Liabilities
| Deferred revenue: | ||||
| Unearned revenue December 31, 2024 | $ | |||
| Unearned billings | ||||
| Revenue recognized | ( | ) | ||
| Unearned revenue September 30, 2025 | $ |
Note 11 – Leases
The components of lease expense were as follows (amounts in thousands):
Schedule of Lease Expense
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Finance lease cost | ||||||||||||||||
| Amortization of assets | ||||||||||||||||
| Interest on finance lease obligations | - | |||||||||||||||
| Variable lease cost | - | - | - | - | ||||||||||||
| Total net lease cost | $ | $ | $ | $ | ||||||||||||
Included
in the table above, for the three and nine months ended September 30, 2025 and 2024, is $
Supplemental balance sheet information related to leases was as follows (amounts in thousands):
Schedule of Supplemental Balance Sheet Information Related to Leases
| Related Party | Other | Total | Related Party | Other | Total | |||||||||||||||||||
| September 30, 2025 | December 31, 2024 | |||||||||||||||||||||||
| Related Party | Other | Total | Related Party | Other | Total | |||||||||||||||||||
| Operating leases: | ||||||||||||||||||||||||
| Operating lease ROU assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Current operating lease liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Noncurrent operating lease liabilities | ||||||||||||||||||||||||
| Total operating lease liabilities | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| September 30, 2025 | December 31, 2024 | |||||||
| Finance leases: | ||||||||
| Right of use asset, at cost | $ | $ | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
| Current obligations of finance leases | $ | $ | ||||||
| Finance leases, net of current obligations | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term (in years): | ||||||||
| Operating leases | ||||||||
| Finance leases | ||||||||
| Weighted average discount rate: | ||||||||
| Operating leases | % | % | ||||||
| Finance leases | % | % | ||||||
| 15 |
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):
Schedule of Supplemental Cash Flow Information Related to Leases
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||||
| Operating cash flows from operating leases | $ | $ | $ | $ | ||||||||||||
| Operating cash flows from finance leases | $ | - | $ | $ | $ | |||||||||||
| Financing cash flows from finance leases | $ | $ | $ | $ | ||||||||||||
| ROU assets obtained in exchange for lease liabilities: | ||||||||||||||||
| Operating leases | $ | - | $ | - | $ | $ | ||||||||||
Maturities of lease liabilities were as follows (amounts in thousands):
Schedule of Maturities of Operating Lease and Finance Lease Liabilities
| Years Ending December 31st, | Operating Leases | Finance Leases | ||||||
| 2025 (remaining three months) | $ | $ | ||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | - | |||||||
| 2029 | - | |||||||
| Thereafter | - | |||||||
| Total lease payments | ||||||||
| Less amount representing interest | ( | ) | ( | ) | ||||
| Total lease obligations | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term lease obligations | $ | $ | ||||||
Note 12 – Commitments and Contingencies
Legal proceedings
From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable.
Note 13 - Segments
Effective January 2025, our operations team implemented some internal restructuring and consolidation throughout the Company to better align business functions and improve efficiency, as well as promote stronger unity in our brand identity because of our many past acquisitions. With this reorganization, we also needed to reassess segment reporting, our new structure and what type of discrete information was reviewed by our middle managers and our Chief Operating Decision Maker (“CODM”). One aspect of our restructuring specifically addressed the activities and personnel, which were previously reported under our Professional Services Segment. All professional consulting services, which also includes data analysis and other reporting metrics, provide support to our primary activities of verification and certification. This segment now reports to the same management team under the Verification and Certification Segment. With our restructuring, we now only have one reportable segment. 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’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its operating segment. Management makes decisions, measures performance, and manages the business utilizing internal reporting operating information. Performance of the operating segment is based on net sales, gross profit, selling, general and administrative expenses and most importantly, operating income.
| 16 |
Where Food Comes From, Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
The following table shows information for the reportable operating segment (amounts in thousands):
Schedule of Operating Segments
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Assets: | ||||||||||||||||
| Goodwill | $ | $ | $ | $ | ||||||||||||
| All other assets, net | ||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||
| Revenues: | ||||||||||||||||
| Verification and certification service revenue | $ | $ | $ | $ | ||||||||||||
| Product sales | ||||||||||||||||
| Professional services | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
| Costs of revenues: | ||||||||||||||||
| Costs of verification and certification services | ||||||||||||||||
| Costs of products | ||||||||||||||||
| Costs of professional services | ||||||||||||||||
| Total costs of revenues | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Depreciation & amortization | ||||||||||||||||
| Other operating expenses: | ||||||||||||||||
| Salaries and benefits | ||||||||||||||||
| Rent and lease expense | ||||||||||||||||
| Software and technology | ||||||||||||||||
| Legal and professional expenses | ||||||||||||||||
| Tradeshows and marketing | ||||||||||||||||
| Conferences and training | ||||||||||||||||
| Investor relations | ||||||||||||||||
| Other expenses | ||||||||||||||||
| Total other operating expenses | ||||||||||||||||
| Operating income/(loss) | $ | $ | $ | $ | ||||||||||||
| Other items to reconcile operating income/(loss) to net income/(loss): | ||||||||||||||||
| Other income/(loss) | ||||||||||||||||
| Income tax benefit/(expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income/(loss) | $ | $ | $ | $ | ||||||||||||
Note 14 – Supplemental Cash Flow Information
Schedule of Supplemental Cash Flow Information
| (Amounts in thousands) | 2025 | 2024 | ||||||
| Nine months ended September 30, | ||||||||
| (Amounts in thousands) | 2025 | 2024 | ||||||
| Cash paid during the year: | ||||||||
| Interest expense | $ | - | $ | - | ||||
| Income taxes | $ | $ | ||||||
Note 15 – 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.
| 17 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
This information should be read in conjunction with the consolidated financial statements and the notes included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Form 10−K for the fiscal year ended December 31, 2024. The following discussion and analysis includes historical and certain forward−looking information that should be read together with the accompanying consolidated financial statements, related footnotes and the discussion below of certain risks and uncertainties that could cause future operating results to differ materially from historical results or from the expected results indicated by forward−looking statements.
Business Overview
Where Food Comes From, Inc. and its subsidiaries (“WFCF,” the “Company,” “our,” “we,” or “us”) is a leading trusted resource for third-party verification of food production practices in North America. The Company estimates that is supports more than approximately 17,500 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands, chefs and restaurants with a wide variety of value-added services provided through its family of verifiers, including IMI Global (“IMI”), Where Food Comes From Organic (“WFCFO”), and Validus Verification Services (“Validus”). In order to have credibility, product claims such as gluten-free, non-GMO, non-hormone treated, humane handling, and others require verification by an independent third-party such as WFCF. The Company’s principal business is conducting both on-site and desk audits to verify that claims being made about livestock, aquaculture, crops and other food products are accurate.
We also primarily provide a wide range of professional services that support our verification activities and generate incremental revenue specific to the food and agricultural industry.
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. With the use of Quick Response Code (“QR”) technology, consumers can instantly access information about the producers behind their food.
WFCF was founded in 1996 and incorporated in the state of Colorado as a subchapter C corporation in 2006. The Company’s shares of common stock trade on the NASDAQ Capital Market (“NASDAQ”), under the stock ticker symbol, “WFCF.”
The Company’s original name – Integrated Management Information, Inc. (d.b.a. IMI Global) – was changed to Where Food Comes From, Inc. in 2012 to better reflect the Company’s mission. Early growth was attributable to source and age verification services for beef producers that wanted access to markets overseas following the discovery of “mad cow” disease in the U.S. Over the years, WFCF has expanded its portfolio to include verification and professional services for most food groups and over 50 programs and organizations. This growth has been achieved both organically and through the acquisition of other companies.
Environmental, Social and Governance (“ESG”) and Human Capital Resources
ESG
We take environmental and social responsibility very seriously. It’s the entire reason we spend day in and day out helping farmers, ranchers and brands around the world provide transparency to their consumers. Communicating authentic, sustainable, and traceable stories directly impacts our future.
| 18 |
We believe that sound corporate governance is critical to helping us achieve our goals, including with respect to ESG. We continue to evolve a governance framework that exercises appropriate oversight of responsibilities at all levels throughout the company and manages its affairs consistent with high principles of business ethics. Our internal ESG Council is made up of leaders from across our company, and regularly works with our Executive Team, which oversees our ESG impacts, initiatives, and priorities.
Human Capital Resources
Our greatest asset is our people, and we continue to attract the best and brightest with our competitive pay and benefits package. As of September 30, 2025, we had 101 total employees, of which 91 were full-time employees. Approximately 84% of our workforce is comprised of female and other minority employees.
We are committed to providing a workplace where our employees feel respected and appreciated. Our Human Resource department (“HR”) conducts a new hire orientation, so employees know whom to contact with questions or concerns. HR has an open door policy and is actively involved in driving culture and engagement alongside business leaders.
Our policies are designed to promote fairness and respect for everyone. We hire, evaluate, and promote employees based on their skills and performance. Everyone is expected to be trustworthy, demonstrate excellence in their performance, and collaborate with others. With this in mind, we will not tolerate certain behaviors. These include harassment, retaliation, violence, intimidation, and discrimination of any kind on the basis of race, color, religion, national origin, gender, sexual orientation, gender identity, gender expression, age, disability or veteran status.
To continue innovating, we must ensure we have a talented and engaged workforce with ample opportunity to contribute to our mission and grow professionally. We are focused on intentionally creating pathways to career opportunities across WFCF through strategic initiatives such as internships and leadership training.
At WFCF, our employees show up passionate about making a difference in the world and for each other. With a majority-minority workforce, empowering our employee resource groups to take charge in driving initiatives that attract, develop, and retain our passionate workforce is vital to our continued success.
Seasonality
Our business is subject to seasonal fluctuations annually. 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.
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. Historically, these cycles typically lasted approximately 10 years. The beginning of 2025 marks the eleventh 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 will continue to contract will be directly impacted by drought and pasture conditions.
Because of the seasonality of the business and cyclical nature of 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.
Liquidity and Capital Resources
At September 30, 2025, we had cash and cash equivalents of approximately $4.8 million compared to approximately $2.0 million at December 31, 2024. Our working capital at September 30, 2025 and December 31, 2024 was approximately $4.0 million and $2.4 million, respectively.
| 19 |
Net cash provided by operating activities for the nine months ended September 30, 2025 was approximately $2.3 million compared to $2.8 million during the same period in 2024. Net cash provided by operating activities is driven by our net income and adjusted by non-cash items. Non-cash adjustments primarily include depreciation, amortization of intangible assets, fair market value gains and losses on digital assets, stock-based compensation expense, and deferred taxes. Fluctuations are primarily due to operating performance offset by the timing of cash receipts and cash disbursements. The cash provided by operating activities for the period ending September 30, 2025 decreased compared to the same period in 2024 primarily due to absorption of increasing costs of services over a slight reduction in revenue.
Net cash provided by investing activities for the nine months ended September 30, 2025 was approximately $1.7 million compared to cash used in investing activities of $0.1 million in the 2024 period. Net cash provided in the period ending September 30, 2025 was primarily from sale of the Company’s equity investment in Progressive Beef.
Net cash used in financing activities for the nine months ended September 30, 2025 and 2024 was approximately $1.3 million and $2.5 million, respectively. Cash used for the period ending September 30, 2025, was primarily due to the repurchase of common shares under the Stock Buyback Plan. Cash used for the period ending September 30, 2024, was primarily due to the private purchase of stock and the repurchase of common shares under the Stock Buyback Plan.
Over the past several years, our growth has been funded primarily through cash flows from operations. We continually evaluate all funding options, including additional offerings of our securities to private, public and institutional investors and other credit facilities as they become available.
The primary driver of our operating cash flow is our third-party verification solutions, specifically the gross margin generated from services provided. Therefore, we focus on the elements of those operations, including revenue growth, gross margin and long-term projects that ensure a steady stream of operating profits to enable us to meet our cash obligations. On a weekly basis, we review the performance of each of our revenue streams focusing on third-party verification solutions compared with prior periods and our operating plan. We believe that our various sources of capital, including cash flow from operating activities, and our ability to obtain additional financing, are adequate to finance current operations. We are not aware of any other event or trend that would negatively affect our liquidity. In the event such a trend develops, we believe that there are sufficient financing avenues available to us and from our internal cash-generating capabilities to adequately manage our ongoing business.
The culmination of all our efforts has brought significant opportunities to us, including increased investor confidence and renewed interest in our company, as well as the potential to develop business relationships with long-term strategic partners. In keeping with our core business, we will continue to review our business model with a focus on profitability, long-term capital solutions and the potential impact of acquisitions or divestitures, if such an opportunity arises.
Our plan for continued growth is primarily based on diversification and bundling opportunities in our product offerings within national and international markets, as well as, potential acquisitions. We believe that there are significant growth opportunities available to us because of growing consumer awareness and demand on a national level. Internationally, a quality verification program is often the only way to overcome import or export restrictions.
Debt Facility
The Company had a revolving line of credit (“LOC”) agreement which matured on April 12, 2025. The LOC provided for $75,080 in working capital. The interest rate was at the Wall Street Journal prime rate plus 1.50% and was adjusted daily. Principal and interest were payable upon demand, but if demand is not made, then annual payments of accrued interest only were due, with the principal balance due on maturity. As of December 31, 2024, the effective interest rate was 9.0%. The LOC was collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of December 31, 2024, there were no amounts outstanding under this LOC. The Company decided not to renew the LOC at April 12, 2025.
| 20 |
Off-Balance Sheet Arrangements
As of September 30, 2025, we had no off-balance sheet arrangements of any type.
RESULTS OF OPERATIONS
Three and nine months ended September 30, 2025 compared to the same period in fiscal year 2024
The following table shows information for reportable operating segment (amounts in thousands):
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Assets: | ||||||||||||||||
| Goodwill | $ | 2,946 | $ | 2,946 | $ | 2,946 | $ | 2,946 | ||||||||
| All other assets, net | 13,908 | 14,000 | 13,908 | 14,000 | ||||||||||||
| Total assets | $ | 16,854 | $ | 16,946 | $ | 16,854 | $ | 16,946 | ||||||||
| Revenues: | ||||||||||||||||
| Verification and certification service revenue | $ | 5,556 | $ | 5,486 | $ | 15,070 | $ | 15,172 | ||||||||
| Product sales | 1,202 | 1,329 | 2,868 | 2,881 | ||||||||||||
| Professional services | 257 | 292 | 912 | 1,031 | ||||||||||||
| Total revenues | $ | 7,015 | $ | 7,107 | $ | 18,850 | $ | 19,084 | ||||||||
| Costs of revenues: | ||||||||||||||||
| Costs of verification and certification services | 3,348 | 3,288 | 9,025 | 8,831 | ||||||||||||
| Costs of products | 781 | 841 | 1,826 | 1,744 | ||||||||||||
| Costs of professional services | 200 | 204 | 658 | 748 | ||||||||||||
| Total costs of revenues | 4,329 | 4,333 | 11,509 | 11,323 | ||||||||||||
| Gross profit | 2,686 | 2,774 | 7,341 | 7,761 | ||||||||||||
| Depreciation & amortization | 149 | 156 | 481 | 467 | ||||||||||||
| Other operating expenses: | ||||||||||||||||
| Salaries and benefits | 942 | 914 | 2,774 | 2,688 | ||||||||||||
| Rent and lease expense | 152 | 158 | 480 | 483 | ||||||||||||
| Software and technology | 226 | 231 | 634 | 636 | ||||||||||||
| Legal and professional expenses | 125 | 193 | 390 | 482 | ||||||||||||
| Tradeshows and marketing | 169 | 195 | 401 | 605 | ||||||||||||
| Conferences and training | 15 | 20 | 111 | 74 | ||||||||||||
| Investor relations | 27 | 27 | 98 | 101 | ||||||||||||
| Other expenses | 306 | 272 | 706 | 773 | ||||||||||||
| Total other operating expenses | 1,962 | 2,010 | 5,594 | 5,842 | ||||||||||||
| Operating income/(loss) | $ | 575 | $ | 608 | $ | 1,266 | $ | 1,452 | ||||||||
| Other items to reconcile operating income/(loss) to net income/(loss): | ||||||||||||||||
| Other income/(loss) | 1,051 | 65 | 1,201 | 173 | ||||||||||||
| Income tax benefit/(expense) | (480 | ) | (181 | ) | (728 | ) | (466 | ) | ||||||||
| Net income/(loss) | $ | 1,146 | $ | 492 | $ | 1,739 | $ | 1,159 | ||||||||
| 21 |
Revenue
Verification and certification service revenues consist of fees charged for verification audits and other verification and certification related services that the Company performs for customers. Fees earned from our WFCF labeling program are also included in our verification and certification revenues as it represents a value-added extension of our source verification. We are recognized and utilized by numerous standard-setting bodies as an accredited verification or certification service provider. We enable food producers and brands to make certain claims on live animals or packaged food products by verifying that they are meeting the standards or guidelines associated with the claim(s) they are making. Verification and certification service revenue for the three months ended September 30, 2025 increased $0.1 million compared with the same period in 2024, while the nine month period decreased $0.1 million compared to the same period in 2024. We continue to experience new customer growth and bundling opportunities, while also seeing the negative impacts of revenue tied directly to price per head of cattle. We believe we are a low point of a contraction phase within the cattle cycle. However, rebuilding of the herd is impacted by many factors including drought conditions in different regions, the price of inputs and interest rates. The premiums for verified cattle remain strong in the marketplace above commodity cattle prices in spite of significant pressure on beef packer margins. Verified product attributes like animal care, sustainability and natural continued to be demanded and our programs allow supply chains to meet this growing customer demand.
Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags. Product sales for the three and nine months ended September 30, 2025 decreased 9.6% and 0.5%, respectively, compared to the same periods in 2024.
Professional services revenue includes a wide range of professional consulting, data analysis, reporting and technology solutions that support our verification business and generate incremental revenue specific to the food and agricultural industry. Our professional services revenue stream is predominantly project based and not recurring in nature. Professional services revenue for the three and nine months ended September 30, 2025 decreased $35,000 and $0.1 million, respectively, compared to the same periods in 2024.
Costs of Revenue
Costs of verification and certification services for the three and nine months ended September 30, 2025 were approximately $3.3 million and $9.0 million, respectively, compared to $3.3 million and $8.8 million, respectively, for the same periods in 2024. Gross margin for the three months ended September 30, 2025 and 2024 was 39.7% and 40.1%, respectively, while the gross margin for the nine months ended September 30, 2025 and 2024 was 40.1% and 41.8%, respectively. Our costs of verification and certification services have increased due to increases in salaries and benefits, insurance and taxes.
Costs of products for each of the three months ended September 30, 2025 and 2024 were approximately $0.8 million, respectively. Costs of products for the nine months ended September 30, 2025 and 2024 were approximately $1.8 million and $1.7 million, respectively. We continue to experience inflationary price increases passed on to us by our manufacturers, while simultaneously, dealing with market conditions that foster a competitive environment for selling cattle ear tags.
Costs of our professional services revenue for each the three months and nine months ended September 30, 2025 and 2024 were approximately $0.2 million and $0.7 million, respectively.
Selling, General and Administrative Expenses
Other operating expenses for each of the three months ended September 30, 2025 and 2024 were approximately $2.0 million, respectively. Other operating expenses for the nine months ended September 30, 2025 and 2024 were approximately $5.6 million and $5.8 million, respectively. Our most significant operating expense includes salaries and benefits. The decrease in the 2025 period is due to savings in marketing and tradeshow costs, offset by increases in salaries and benefits. Some of the savings are due to timing, while some are due to a very disciplined approach in our marketing process. Depreciation and amortization expense for the three and nine months ended September 30, 2025 and 2024 were approximately $0.1 million and $0.5 million, respectively.
| 22 |
Other Income / Expenses
For the three months ended September 30, 2025 and 2024, the Company received dividend income from Progressive Beef of $50,000, representing a distribution of their earnings. For the nine months ended September 30, 2025 and 2024, the Company received dividend income from Progressive Beef of $100,000 and $150,000, respectively, representing a distribution of their earnings.
On July 22, 2025, the Company entered into a Redemption and Purchase Agreement (the “Agreement”) with Progressive Beef, LLC and BHS, LLC (the “Buyer”). Pursuant to the Agreement, the Buyer redeemed the 10% membership interests in Progressive Beef owned by the Company effective as of June 30, 2025, in exchange for approximately $1.8 million cash and the Buyer’s surrender of 12,585 shares of the Company’s common stock. The transaction resulted in approximately $0.9 million gain on the sale of our investment recorded in the Other Income/Expense section of the Consolidated Statement of Operations for the three months ended September 30, 2025.
The Company measures the digital assets at fair value with changes recognized in the Consolidated Statements of Income for each reporting period. For the three and nine months ended September 30, 2025, the Company recorded an unrealized gain of approximately $48,000 and $144,000, respectively.
Income Tax Expense
The provision 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 September 30, 2025 and 2024 we recorded an income tax expense of approximately $0.5 million and $0.2 million, respectively. For the nine months ended September 30, 2025 and 2024 we recorded an income tax expense of approximately $0.7 million and $0.5 million, respectively.
Net Income and Per Share Information
As a result of the foregoing, net income attributable to WFCF shareholders for the three months ended September 30, 2025 was approximately $1.1 million and $0.22 per basic and diluted common share, compared to net income of approximately $0.5 million and $0.09 per basic and diluted common share for the same period in 2024. Net income attributable to WFCF shareholders for the nine months ended September 30, 2025 was approximately $1.7 million and $0.34 per basic and diluted common share, compared to net income of approximately $1.2 million and $0.22 per basic share and $0.21 per diluted common share for the same period in 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, including our principal executive and financial officers, have conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. We believe that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
There have not been any other changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 23 |
PART II – OTHER INFORMATION
ITEM 1. 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. We are not aware of any significant legal actions at this time.
ITEM 1A. RISK FACTORS
Our business is subject to a number of risks, including those identified in Item 1A. — “Risk Factors” of our 2024 Annual Report on Form 10−K, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of September 30, 2025, the Company recognizes matters specific to tariffs, pandemics, the inflationary environment and weather-related risks may have a continued economic impact on the Company, but management does not know and cannot estimate what the long-term financial impact may be. We may also disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES
Issuer Purchases of Equity Securities
On September 30, 2019, our Board of Directors approved a new plan to buyback up to 2.5 million additional shares of our common stock from the open market (“Stock Buyback Plan”). Activity for the three months ended September 30, 2025 is as follows:
Number of Shares | Cost
of Shares (in thousands) | Average
Cost per Share | ||||||||||
| Shares purchased - July 2025 | 15,169 | $ | 165 | $ | 10.89 | |||||||
| Shares purchased - August 2025 | 11,389 | $ | 128 | $ | 11.27 | |||||||
| Shares purchased - September 2025 | 34,163 | $ | 425 | $ | 12.43 | |||||||
| Total | 60,721 | $ | 718 | |||||||||
| 24 |
ITEM 6. EXHIBITS
(a) Exhibits
| Number | Description | |
31.1 |
Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 25 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 13, 2025 | Where Food Comes From, Inc. | |
| By: | /s/ John K. Saunders | |
| Chief Executive Officer | ||
| By: | /s/ Dannette Henning | |
| Chief Financial Officer |
| 26 |
FAQ
How did WFCF’s Q3 2025 revenue and earnings compare year over year (WFCF)?
What drove WFCF’s higher net income in Q3 2025?
What were WFCF’s year-to-date results through Q3 2025?
How did WFCF’s cash position change in 2025?
Did WFCF repurchase shares in Q3 2025?
What digital assets does WFCF hold?
How many WFCF shares were outstanding as of November 3, 2025?
