Core Insights - Where Food Comes From, Inc. (WFCF) shares have decreased by 0.8% since the second quarter of 2025 results, underperforming the S&P 500's 0.7% growth during the same period [1] - The company reported a 3% year-over-year revenue increase to $6.6 million, driven by growth in verification services and product sales [2] - Net income rose 15% year-over-year to $562,000, aided by gains in digital assets, despite a decline in gross profit due to higher costs [3] Revenue and Sales Performance - Total revenues for the quarter ended June 30, 2025, increased to $6.6 million, with verification and certification revenues rising to $5.33 million and product sales increasing by 17.7% to $964,000 [2] - Professional services revenues fell to $266,000 from $324,000 [2] - Hardware sales grew by 18% to $1 million, driven by demand for premium identification tags and tissue sampling units [4] Profitability Metrics - Gross profit decreased to $2.5 million from $2.7 million, with gross margin narrowing to 38.4% from 42.3% due to higher labor and hardware costs [3][4] - The increase in net income to $562,000 was supported by a $172,000 gain in the fair market value of digital assets [3] Management Commentary - CEO John Saunders emphasized the strength of the diversified verification services portfolio and the positive momentum in programs like CARE Certified and Upcycled [5] - The expansion of the retail labeling program is expected to reach over 110 locations by year-end, with further growth anticipated in 2026 [6] Market Conditions and Challenges - Revenue growth occurred despite cyclical headwinds in the cattle industry, which has been in contraction since 2014 due to drought and reduced pasture availability [7] - Higher wages and inflationary pressures on hardware prices have negatively impacted margins [8] Strategic Initiatives - The company is confident in its growth initiatives, including retail labeling expansion, AI integration, and share repurchases [9] - WFCF sold its 10% interest in Progressive Beef for $1.8 million, generating an $800,000 gain on the sale [11] - The company has repurchased 55,826 shares in the first half of 2025, totaling over 1.24 million shares removed from the market since 2019 [12]

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) [Introduction](index=1&type=section&id=Introduction) Where Food Comes From, Inc. (WFCF) announced its financial results for the second quarter and six-month period ended June 30, 2025, highlighting revenue growth despite cattle herd size headwinds, driven by other verification services and hardware sales. The company also reported a subsequent event involving the sale of its interest in Progressive Beef - WFCF is a trusted resource for independent, third-party verification of food production practices in North America[1](index=1&type=chunk) - The company announced financial results for Q2 and six-month period ended June 30, 2025[1](index=1&type=chunk) - A subsequent event involved the sale of interest in Progressive Beef for **$1.8 million** cash and return of **12,585 shares**[1](index=1&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) In Q2 2025, WFCF reported a **3% year-over-year revenue increase to $6.6 million**, primarily due to demand for CARE Certified and UpCycled programs and hardware sales, offsetting reduced beef verification. **Net income rose 15% to $562,000**, or **$0.11 per diluted share**, boosted by a **$172,000 gain in digital asset fair market value**, despite gross margin pressure from increased compensation and hardware costs - **Q2 revenue increased 3%** year-over-year despite headwinds from smaller cattle herd sizes[2](index=2&type=chunk) - Revenue growth was driven by increasing demand for CARE Certified and UpCycled programs, and hardware sales[2](index=2&type=chunk) - Gross margins were negatively impacted by increased compensation expense and hardware costs[2](index=2&type=chunk) Second Quarter 2025 Financial Highlights (YoY) | Metric | 2025 (Q2) ($ thousands, except EPS) | 2024 (Q2) ($ thousands, except EPS) | Change (%) | | :-------------------------------- | :---------------------------------- | :---------------------------------- | :--------- | | Verification & Certification Revenue | 5330 | 5250 | 1.5% | | Product Sales | 964 | 819 | 17.7% | | Total Revenue | 6600 | 6400 | 3.1% | | Net Income | 562 | 489 | 14.9% | | Diluted EPS | $0.11 | $0.09 | 22.2% | - The company bought back **24,481 shares** of common stock in Q2 2025[3](index=3&type=chunk) [Six Month 2025 Highlights](index=1&type=section&id=Six%20Month%202025%20Highlights) For the first six months of 2025, **total revenue slightly decreased to $11.8 million from $12.0 million** year-over-year. **Net income also saw a decline to $593,000**, or **$0.11 per diluted share**, compared to **$667,000**, or **$0.12 per diluted share**, in the prior year, despite a **$96,000 net gain in digital asset fair market value**. **Cash generated from operations remained strong at $1.8 million**, and the company continued its share repurchase program Six Month 2025 Financial Highlights (YoY) | Metric | 2025 (6 Months) ($ thousands, except EPS) | 2024 (6 Months) ($ thousands, except EPS) | Change (%) | | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | :--------- | | Verification & Certification Revenue | 9500 | 9700 | -2.1% | | Product Sales | 1700 | 1600 | 6.3% | | Total Revenue | 11800 | 12000 | -1.7% | | Net Income | 593 | 667 | -11.1% | | Diluted EPS | $0.11 | $0.12 | -8.3% | | Cash from Operations | 1800 | 1900 | -5.3% | | Cash & Cash Equivalents | 3200 | 2000 (2024 YE) | 60.0% | - Year-to-date stock buybacks totaled **55,826 shares**[3](index=3&type=chunk) - Total buybacks since plan inception plus private purchases reached **1,247,462 shares**, representing approximately **$13.6 million**[3](index=3&type=chunk) - **$14.6 million in total value returned to stockholders** via buybacks, private purchases, and a special dividend since 2019[3](index=3&type=chunk) [Strategic and Operational Developments](index=1&type=section&id=Strategic%20and%20Operational%20Developments) WFCF expanded its retail labeling program, adding two major retailers featuring CARE Certified beef products across the US, with plans to reach over **110 locations** by year-end 2025. The company is also investing in Artificial Intelligence tools and technical talent to enhance efficiency, customer experience, and scale operations for improved bottom-line results - Expanded retail labeling program with two new major retailers featuring CARE Certified beef products[4](index=4&type=chunk) - Rollout expected to include over **110 retail locations** by year-end 2025, with potential for more in 2026[4](index=4&type=chunk) - Continued buildout of Artificial Intelligence tools to improve efficiency and enhance customer experiences[4](index=4&type=chunk) - Investing in technical talent to transform business operations and customer solutions, aiming for efficient scaling and stronger bottom-line results[4](index=4&type=chunk) [Financial Performance Analysis](index=2&type=section&id=Financial%20Performance%20Analysis) [Second Quarter 2025 Results](index=2&type=section&id=Second%20Quarter%202025%20Results) For the second quarter of 2025, **total revenue increased to $6.6 million**, driven by growth in verification and certification services and product sales. Gross profit, however, **declined to $2.5 million** due to higher compensation and hardware costs. **Net income improved to $562,000**, or **$0.11 per diluted share**, primarily benefiting from a **$172,000 gain in digital asset fair market value**, while SG&A expenses slightly decreased Second Quarter 2025 Key Financials (YoY) | Metric | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Total Revenue | 6,562 | 6,395 | 2.6% | | Gross Profit | 2,460 | 2,658 | -7.5% | | Selling, General & Admin Expense | 1,911 | 2,075 | -7.9% | | Net Income | 562 | 489 | 14.9% | | Diluted EPS | 0.11 | 0.09 | 22.2% | - Net income was positively impacted by a **$172,000 gain in fair market value of digital assets**[6](index=6&type=chunk) - The Company bought back **24,481 shares** of its common stock in the second quarter[7](index=7&type=chunk) [Revenue Breakdown (Q2)](index=2&type=section&id=Revenue%20Breakdown%20(Q2)) Second Quarter Revenue by Service Type (YoY) | Revenue Type | Q2 2025 ($ thousands) | Q2 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :--------- | | Verification & Certification Services | 5,332 | 5,252 | 1.5% | | Product Sales | 964 | 819 | 17.7% | | Professional Services | 266 | 324 | -17.9% | [Six Month 2025 Results](index=2&type=section&id=Six%20Month%202025%20Results) For the first six months of 2025, **total revenue decreased slightly to $11.8 million**, with a decline in verification and certification services partially offset by growth in product sales. **Gross profit also decreased to $4.7 million**. **Net income for the period was $593,000**, or **$0.11 per diluted share**, down from the prior year, despite a **$96,000 net gain from digital assets**. **Cash generated from operations was $1.8 million**, and the company continued its share repurchase activities Six Month 2025 Key Financials (YoY) | Metric | 6 Months 2025 ($ thousands) | 6 Months 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Total Revenue | 11,835 | 11,977 | -1.2% | | Gross Profit | 4,655 | 4,987 | -6.7% | | Selling, General & Admin Expense | 3,964 | 4,143 | -4.3% | | Net Income | 593 | 667 | -11.1% | | Diluted EPS | 0.11 | 0.12 | -8.3% | | Cash from Operations | 1,800 | 1,900 | -5.3% | | Cash & Cash Equivalents | 3,200 | 2,000 (2024 YE) | 60.0% | - Net income year-to-date included a **$96,000 net gain in fair market value of digital assets**[10](index=10&type=chunk) - **Cash generated from operations was $1.8 million**, slightly down from **$1.9 million** in the prior year[11](index=11&type=chunk) - Year-to-date stock buybacks totaled **55,826 shares**[12](index=12&type=chunk) [Revenue Breakdown (6 Months)](index=2&type=section&id=Revenue%20Breakdown%20(6%20Months)) Six Month Revenue by Service Type (YoY) | Revenue Type | 6 Months 2025 ($ thousands) | 6 Months 2024 ($ thousands) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Verification & Certification Services | 9,514 | 9,686 | -1.8% | | Product Sales | 1,666 | 1,552 | 7.4% | | Professional Services | 655 | 739 | -11.4% | [Subsequent Events](index=2&type=section&id=Subsequent%20Events) [Sale of Progressive Beef Interest](index=2&type=section&id=Sale%20of%20Progressive%20Beef%20Interest) On July 22, 2025, WFCF sold its **10% interest in Progressive Beef for $1.8 million** in cash and the return of **12,585 shares** of WFCF common stock. This transaction, which generated an **$0.8 million gain on sale**, strengthens WFCF's balance sheet, provides financial flexibility for growth initiatives, and supports its stock buyback program. Progressive Beef will continue to be a customer for WFCF's auditing services - On July 22, 2025, WFCF sold its **10% interest in Progressive Beef**[13](index=13&type=chunk) - Sale proceeds were **$1.8 million in cash** and the return of **12,585 shares** of WFCF common stock[13](index=13&type=chunk) - The sale resulted in an **$0.8 million gain on sale of investment** and strengthens WFCF's balance sheet, providing financial flexibility[13](index=13&type=chunk) - Progressive Beef, which paid WFCF **$1.6 million in dividends** since 2018, will remain a customer for auditing services[13](index=13&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) [About Where Food Comes From, Inc.](index=3&type=section&id=About%20Where%20Food%20Comes%20From,%20Inc.) Where Food Comes From, Inc. is a leading third-party verification resource for food production practices in America, supporting over **17,500 clients** with value-added services and a retail labeling program that connects consumers to food sources - WFCF is America's trusted resource for third-party verification of food production practices[15](index=15&type=chunk) - Supports over **17,500 farmers, ranchers, processors, retailers, and other clients** with value-added services[15](index=15&type=chunk) - Solutions verify food claims, optimize production practices, and enable food supply chains with analytics and data-driven insights[15](index=15&type=chunk) - The 'Where Food Comes From®' labeling program connects consumers to food sources, increasing engagement[15](index=15&type=chunk) [Cautionary Statement](index=3&type=section&id=Cautionary%20Statement) This news release contains forward-looking statements subject to risks and uncertainties, and readers are cautioned not to place undue reliance on them, as actual events may differ materially from predictions - The news release contains forward-looking statements subject to inherent uncertainties and risks[16](index=16&type=chunk) - Important factors that could cause actual events to vary include capital availability, competition, governmental regulation, and market conditions[16](index=16&type=chunk) - Readers should not place undue reliance on these statements, and the Company assumes no obligation to update them[16](index=16&type=chunk) [Investor Contacts](index=3&type=section&id=Investor%20Contacts) Contact information for investor relations is provided, including John Saunders (Chief Executive Officer) and Jay Pfeiffer (Director Investor Relations) - Contact information for John Saunders, CEO, and Jay Pfeiffer, Director Investor Relations, is provided for inquiries[17](index=17&type=chunk) [Unaudited Financial Statements](index=4&type=section&id=Unaudited%20Financial%20Statements) [Statements of Operations](index=4&type=section&id=Statements%20of%20Operations) The unaudited Statements of Operations detail financial performance for the three and six months ended June 30, 2025, covering revenues, costs, gross profit, expenses, income, and EPS, with comparisons to 2024 Statements of Operations (Unaudited) - Three Months Ended June 30 | (Amounts in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :--- | :--- | | **Revenues:** | | | | Verification and certification service revenue | 5,332 | 5,252 | | Product sales | 964 | 819 | | Professional services | 266 | 324 | | **Total revenues** | **6,562** | **6,395** | | **Costs of revenues:** | | | | Costs of verification and certification services | 3,282 | 3,028 | | Costs of products | 617 | 469 | | Costs of professional services | 203 | 240 | | **Total costs of revenues** | **4,102** | **3,737** | | **Gross profit** | **2,460** | **2,658** | | Selling, general and administrative expenses | 1,911 | 2,075 | | **Income from operations** | **549** | **583** | | **Other income/(expense):** | | | | Dividend income | 50 | 100 | | Interest income | 5 | 7 | | Fair market value gain on digital assets | 172 | - | | Loss on foreign currency exchange | (3) | (2) | | Interest expense | (1) | (1) | | **Income before income taxes** | **772** | **687** | | Income tax expense | 210 | 198 | | **Net income** | **562** | **489** | | **Per share - net income:** | | | | Basic | 0.11 | 0.09 | | Diluted | 0.11 | 0.09 | | Weighted average number of common shares outstanding: | | | | Basic | 5,272 | 5,371 | | Diluted | 5,283 | 5,388 | Statements of Operations (Unaudited) - Six Months Ended June 30 | (Amounts in thousands, except per share amounts) | 2025 | 2024 | | :----------------------------------------------- | :--- | :--- | | **Revenues:** | | | | Verification and certification service revenue | 9,514 | 9,686 | | Product sales | 1,666 | 1,552 | | Professional services | 655 | 739 | | **Total revenues** | **11,835** | **11,977** | | **Costs of revenues:** | | | | Costs of verification and certification services | 5,677 | 5,543 | | Costs of products | 1,045 | 903 | | Costs of professional services | 458 | 544 | | **Total costs of revenues** | **7,180** | **6,990** | | **Gross profit** | **4,655** | **4,987** | | Selling, general and administrative expenses | 3,964 | 4,143 | | **Income from operations** | **691** | **844** | | **Other income/(expense):** | | | | Dividend income | 50 | 100 | | Interest income | 9 | 14 | | Fair market value gain on digital assets | 96 | - | | Loss on foreign currency exchange | (3) | (4) | | Interest expense | (2) | (2) | | **Income before income taxes** | **841** | **952** | | Income tax expense | 248 | 285 | | **Net income** | **593** | **667** | | **Per share - net income:** | | | | Basic | 0.11 | 0.12 | | Diluted | 0.11 | 0.12 | | Weighted average number of common shares outstanding: | | | | Basic | 5,227 | 5,426 | | Diluted | 5,240 | 5,444 | [Balance Sheets](index=5&type=section&id=Balance%20Sheets) The unaudited Balance Sheets present WFCF's financial position as of June 30, 2025, detailing assets, liabilities, and equity, with **total assets increasing to $16.6 million from $15.3 million** Balance Sheets (Unaudited) | (Amounts in thousands, except per share amounts) | June 30, 2025 (Unaudited) | December 31, 2024 (Audited) | | :----------------------------------------------- | :------------------------ | :-------------------------- | | **Assets** | | | | Current assets: | | | | Cash and cash equivalents | 3,201 | 2,012 | | Accounts receivable, net of allowance | 2,060 | 1,826 | | Inventory | 1,112 | 1,002 | | Prepaid expenses and other current assets | 742 | 705 | | **Total current assets** | **7,115** | **5,545** | | Property and equipment, net | 681 | 737 | | Right-of-use assets, net | 2,017 | 2,067 | | Equity investments | 1,191 | 1,191 | | Intangible and other assets, net | 1,612 | 1,810 | | Digital assets | 750 | 654 | | Goodwill, net | 2,946 | 2,946 | | Deferred tax assets, net | 312 | 356 | | **Total assets** | **16,624** | **15,306** | | **Liabilities and Equity** | | | | Current liabilities: | | | | Accounts payable | 749 | 468 | | Accrued expenses and other current liabilities | 1,053 | 611 | | Deferred revenue | 2,371 | 1,748 | | Current portion of finance lease obligations | 14 | 15 | | Current portion of operating lease obligations | 360 | 337 | | **Total current liabilities** | **4,547** | **3,179** | | Finance lease obligations, net of current portion | 19 | 25 | | Operating lease obligation, net of current portion | 2,087 | 2,169 | | **Total liabilities** | **6,653** | **5,373** | | Commitments and contingencies | | | | **Equity:** | | | | Common stock | 5 | 7 | | Additional paid-in-capital | 60 | 11,381 | | Treasury stock | (251) | (13,462) | | Retained earnings | 10,157 | 12,007 | | **Total equity** | **9,971** | **9,933** | | **Total liabilities and stockholders' equity** | **16,624** | **15,306** | - **Total assets increased to $16.624 million** as of June 30, 2025, from **$15.306 million** at December 31, 2024[19](index=19&type=chunk) - **Cash and cash equivalents significantly increased to $3.201 million from $2.012 million**[19](index=19&type=chunk)

[Part I - Financial Information](index=2&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for periods ended June 30, 2025, and December 31, 2024, prepared under GAAP and SEC regulations [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Total Assets | $16,624 | $15,306 | +$1,318 | | Total Liabilities | $6,653 | $5,373 | +$1,280 | | Total Equity | $9,971 | $9,933 | +$38 | [Consolidated Statements of Operations (Three Months Ended June 30)](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20(Three%20months%20ended%20June%2030)) Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Total Revenues | $6,562 | $6,395 | +2.61% | | Gross Profit | $2,460 | $2,658 | -7.45% | | Income from Operations| $549 | $583 | -5.83% | | Net Income | $562 | $489 | +14.93% | | Basic EPS | $0.11 | $0.09 | +22.22% | | Diluted EPS | $0.11 | $0.09 | +22.22% | [Consolidated Statements of Operations (Six Months Ended June 30)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20(Six%20months%20ended%20June%2030)) Consolidated Statements of Operations (Six Months Ended June 30, in thousands) | Metric (in thousands) | H1 2025 | H1 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Total Revenues | $11,835 | $11,977 | -1.19% | | Gross Profit | $4,655 | $4,987 | -6.66% | | Income from Operations| $691 | $844 | -18.13% | | Net Income | $593 | $667 | -11.09% | | Basic EPS | $0.11 | $0.12 | -8.33% | | Diluted EPS | $0.11 | $0.12 | -8.33% | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | H1 2025 | H1 2024 | YoY Change | | :-------------------- | :------ | :------ | :--------- | | Net cash from Operating Activities | $1,813 | $1,868 | -3.05% | | Net cash used in Investing Activities | $(63) | $(91) | +30.67% | | Net cash used in Financing Activities | $(561) | $(1,818) | +69.14% | | Net change in cash | $1,189 | $(41) | N/A | | Cash at end of period | $3,201 | $2,600 | +23.12% | [Consolidated Statement of Equity (2025)](index=7&type=section&id=Consolidated%20Statement%20of%20Equity%20(2025)) Consolidated Statement of Equity (2025, in thousands) | Metric (in thousands) | Dec 31, 2024 | Mar 31, 2025 | Jun 30, 2025 | | :-------------------- | :----------- | :----------- | :----------- | | Common Stock Shares | 5,242 | 5,212 | 5,197 | | Total Equity | $9,933 | $9,591 | $9,971 | - In April 2025, the Company canceled **1,237,700 shares** of outstanding common stock held as treasury shares, resulting in a transfer of approximately **$13.8 million** from Treasury stock to Additional paid-in capital (**$11.4 million**) and Retained earnings (**$2.4 million**)[55](index=55&type=chunk) [Consolidated Statement of Equity (2024)](index=8&type=section&id=Consolidated%20Statement%20of%20Equity%20(2024)) Consolidated Statement of Equity (2024, in thousands) | Metric (in thousands) | Dec 31, 2023 | Mar 31, 2024 | Jun 30, 2024 | | :-------------------- | :----------- | :----------- | :----------- | | Common Stock Shares | 5,503 | 5,395 | 5,363 | | Total Equity | $10,819 | $9,576 | $9,686 | - During March 2024, the Company purchased **80,201 shares** of its common stock from one shareholder for approximately **$1.0 million**, which were immediately retired[54](index=54&type=chunk) [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Provides detailed disclosures and explanations for consolidated financial statement figures, covering business, accounting policies, assets, liabilities, equity, revenue, leases, and subsequent events [Note 1 - The Company and Basis of Presentation](index=9&type=section&id=Note%201%20-%20The%20Company%20and%20Basis%20of%20Presentation) - Where Food Comes From, Inc. is an independent, third-party food verification company conducting on-site and desk audits to verify claims about livestock, food, specialty crops, and agricultural/aquaculture products[26](index=26&type=chunk) - The company also provides professional consulting services and operates the Where Food Comes From Source Verified® retail and restaurant labeling program[27](index=27&type=chunk) - The business experiences seasonal fluctuations, with significant verification and certification service revenue typically realized from late May through early October, coinciding with peak calf marketings and growing seasons. The cattle industry is also cyclical, and the company is currently in a contraction phase[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Note 2 – Basic and Diluted Net Income per Share](index=10&type=section&id=Note%202%20%E2%80%93%20Basic%20and%20Diluted%20Net%20Income%20per%20Share) Basic and Diluted Net Income per Share (in thousands) | Shares (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :-------------------- | :------ | :------ | :------ | :------ | | Basic Weighted Average Shares Outstanding | 5,272 | 5,371 | 5,227 | 5,426 | | Diluted Weighted Average Shares Outstanding | 5,283 | 5,388 | 5,240 | 5,444 | | Antidilutive Securities | 17 | 17 | 17 | 17 | [Note 3 – Equity Investments](index=11&type=section&id=Note%203%20%E2%80%93%20Equity%20Investments) Dividend Income from Progressive Beef (in thousands) | Dividend Income (in thousands) | H1 2025 | H1 2024 | YoY Change | | :----------------------------- | :------ | :------ | :--------- | | From Progressive Beef | $50 | $100 | -50.00% | - On July 22, 2025, the Company entered into an agreement to redeem its **10% membership interests** in Progressive Beef, LLC for approximately **$1.8 million cash** and the surrender of **12,585 shares** of the Company's common stock by the buyer, effective June 30, 2025[41](index=41&type=chunk) [Note 4 – Intangible and Other Assets](index=11&type=section&id=Note%204%20%E2%80%93%20Intangible%20and%20Other%20Assets) Intangible and Other Assets (in thousands) | Asset (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Tradenames and trademarks | $818 | $818 | | Customer relationships | $3,470 | $3,470 | | Less accumulated amortization | $(2,699) | $(2,497) | | Intangible assets, net | $1,589 | $1,791 | | Other assets | $23 | $19 | | Total Intang

Financial Data and Key Metrics Changes - The company reported a 3% increase in total revenue to $6.6 million from $6.4 million year over year, driven by higher verification and tag revenue [6] - Net income in Q2 increased 15% to $562,000 or $0.11 per share from $489,000 or $0.09 per share in the same quarter last year [7] - Cash and cash equivalents rose to $3.2 million from $2 million at year-end, bolstered by the sale of a 10% interest in Progressive Beef [7][8] Business Line Data and Key Metrics Changes - Core verification and certification revenue increased nearly 2%, despite challenges in beef verifications due to smaller herd sizes [4] - Hardware sales increased by 18% year over year to $1 million from $800,000, with growing demand for higher-priced value-added tags compensating for fewer basic tag sales [5] - The company now verifies customer compliance to over 50 individual standards, enhancing its competitive advantage [4] Market Data and Key Metrics Changes - The expansion of the retail labeling program included two major retailers featuring Pear certified beef products, expected to reach over 100 retail locations by year-end [11] - The company continues to respond to consumer demand for responsibly produced food, enhancing its market presence [11] Company Strategy and Development Direction - The company is integrating artificial intelligence tools to improve efficiency and customer experiences, which is expected to yield significant time and cost savings [12] - The management is focused on monetizing investments and strengthening the balance sheet to pursue growth initiatives and support stock buyback programs [10] Management Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing pressure in the beef industry but highlighted the resilience of the business model due to a diverse range of verification services [4] - The company is optimistic about the future, citing strong demand for verification services and the successful integration of AI tools [12] Other Important Information - The company has repurchased a total of 55,826 shares year to date, contributing to a total of over 1.2 million shares taken off the market since 2019 [12] - The sale of the Progressive Beef interest was deemed a profitable investment, generating $1.6 million in dividends over the past six years [10] Q&A Session Summary Question: What initiatives are in place to attract and retain top talent? - The company collaborates with HR to reach out to universities and advertise positions, leveraging its strong brand to attract candidates [15] - Internal continuing education and an open-door policy are emphasized to foster communication and learning among employees [15]

Financial Performance - Second Quarter 2025 - Total revenue increased to $66 million from $64 million, a 3% increase year-over-year[2,4] - Verification and certification revenue increased to $533 million from $525 million[2,6] - Product sales increased to $964,000 from $819,000[2,6] - Net income increased to $562,000, or $011 per diluted share, from $489,000, or $009 per diluted share, a 15% increase[2,3,7] Financial Performance - Six Months 2025 - Total revenue decreased to $118 million from $120 million[2,8] - Verification and certification services was $95 million vs $97 million[2,12] - Product revenue was $17 million vs $16 million[2,12] - Net income decreased to $593,000, or $011 per diluted share, from $667,000, or $012 per diluted share[2,9] Strategic Actions - The company sold its 10% interest in Progressive Beef for $18 million in cash and the return of 12,585 shares of WFCF common stock[1,6] - The company bought back 24,481 shares in the second quarter and 55,826 shares in the first six months of 2025[2,6,7,10]

Core Insights - Where Food Comes From, Inc. (WFCF) reported a 3% year-over-year revenue increase in Q2 2025, reaching $6.6 million, driven by demand for verification services and hardware sales despite challenges from smaller cattle herd sizes [3][4][7] - The company achieved a net income of $562,000, or $0.11 per diluted share, reflecting a 15% increase compared to the previous year, aided by a gain in the fair market value of digital assets [3][8] - WFCF sold its 10% interest in Progressive Beef for $1.8 million, enhancing its balance sheet and providing financial flexibility for growth initiatives [5][6] Financial Performance - Q2 2025 total revenue was $6.6 million, up from $6.4 million in Q2 2024 [4][7] - Gross profit decreased to $2.5 million from $2.7 million, primarily due to increased compensation and hardware costs [8] - Year-to-date revenue for the first six months of 2025 was $11.8 million, down from $12.0 million in the same period last year [10] Revenue Breakdown - Verification and certification services revenue in Q2 2025 was $5.33 million, slightly up from $5.25 million [4][13] - Product sales increased to $964,000 from $819,000 in Q2 2024 [4][13] - Professional services revenue decreased to $266,000 from $324,000 in Q2 2024 [13] Stock Buybacks and Shareholder Returns - The company repurchased 24,481 shares in Q2 2025, contributing to a total of 1,247,462 shares bought back since 2019 [9][6] - Total value returned to shareholders through buybacks and dividends since 2019 amounts to $14.6 million [6] Strategic Initiatives - Expansion of the retail labeling program includes partnerships with two major retailers, increasing the availability of CARE Certified beef products [5] - Investment in artificial intelligence tools aims to enhance operational efficiency and customer experience [5]

Core Insights - Where Food Comes From, Inc. (WFCF) will release its 2025 second quarter financial results on August 7, 2025, before market opens and will hold a conference call at 10:00 a.m. Mountain Time [1] - The company is recognized as a trusted resource for independent, third-party verification of food production practices in North America [1][2] Company Overview - Where Food Comes From, Inc. supports over 17,500 stakeholders in the food industry, including farmers, ranchers, processors, retailers, and restaurants, through various value-added services [2] - The company utilizes proprietary technology and patented business processes to verify food claims, optimize production practices, and enhance food supply chains with analytics and data-driven insights [2] - The Where Food Comes From® labeling program connects consumers to the sources of their food purchases, fostering meaningful consumer engagement for clients [2]

Core Insights - Shares of Where Food Comes From, Inc. (WFCF) have decreased by 13.5% since the Q1 2025 earnings report, contrasting with a 0.5% rise in the S&P 500 index during the same period [1] - The stock has seen a 19.1% decline over the past month, while the S&P 500 increased by 4.4% [1] Earnings & Revenue Performance - For Q1 2025, WFCF reported total revenues of $5.27 million, a 5.5% decline from $5.58 million in Q1 2024 [2] - The revenue drop was primarily due to a $252,000 decrease in verification and certification services, which account for about half of the company's revenue mix [2] - Net income fell to $31,000 (1 cent per diluted share) from $178,000 (3 cents per diluted share) year-over-year [2] - Gross profit was $2.2 million compared to $2.3 million last year, with a stable gross margin of 41.6% [2] Other Key Business Metrics - Product sales and professional services remained relatively flat year-over-year at $702,000 and $389,000, respectively [5] - Selling, general and administrative (SG&A) expenses were unchanged at $2.05 million, reflecting tight cost controls [5] - Operating income decreased to $142,000 from $261,000 due to lower revenues and a $76,000 non-cash loss on digital assets related to Bitcoin [5] Cash Flow and Share Repurchase - Cash flow from operations totaled $632,000 for the quarter, down from $700,000 in the prior year [6] - The company repurchased 31,345 shares of common stock at a cost of $383,000, continuing a capital return strategy that has exceeded 1.2 million shares since inception [6] Management Commentary - CEO John Saunders noted that the first quarter was challenging due to cyclical herd reductions and prolonged drought conditions affecting core beef verification revenues [7] - Tariffs on U.S. beef exports to China and avian influenza outbreaks also constrained poultry and dairy verification activities [7] Factors Influencing Revenue - Revenue contraction in the beef segment was linked to industry-wide herd shrinkage and trade disruptions, particularly the halt of beef exports to China [9] - High-mortality avian flu outbreaks impacted poultry verification services, although biosecurity consulting helped mitigate some effects [9] Digital Asset Impact - The company recorded a $76,000 unrealized loss on Bitcoin holdings, significantly contributing to the year-over-year decline in net income [10] Guidance and Future Prospects - Ongoing diversification is seen as a buffer against sector-specific volatility, with strong momentum in the Upcycled Certified program, which grew certifications by 70% in 2024 and an additional 10% in Q1 2025 [11] - WFCF's fee-based labeling initiative gained traction with two major food retailers, potentially expanding to over 100 locations this year [12] Organizational Developments - The company completed an internal reorganization in January 2025, integrating professional consulting services under its core Verification and Certification segment to improve efficiency [13] - In April 2025, WFCF canceled 1,237,700 treasury shares, reallocating $13.8 million from treasury stock to additional paid-in capital and retained earnings [13]

[Q1 2025 Financial Results Overview](index=1&type=section&id=Where%20Food%20Comes%20From%2C%20Inc.%20Reports%202025%20First%20Quarter%20Financial%20Results) This section provides an overview of Where Food Comes From, Inc.'s Q1 2025 financial performance, highlighting key results, management's perspective, and detailed financial statements [Management Discussion and Business Outlook](index=1&type=section&id=Management%20Discussion%20and%20Business%20Outlook) Management discusses Q1 2025 challenges in beef and poultry markets, highlighting stable profitability, program expansion, and continued share repurchases - Core beef verification was negatively impacted by smaller herd sizes, high prices, and halted China exports, while poultry and dairy faced avian influenza disruptions[2](index=2&type=chunk) - Strategic diversification progressed with two major food retailers added to the WFCF labeling program and strong growth in the exclusive Upcycled Certified® program[3](index=3&type=chunk) - The company repurchased **31,345 shares** for **$383,000** in Q1 2025, totaling over **1.2 million shares** under the program, reflecting confidence in long-term value[4](index=4&type=chunk)[9](index=9&type=chunk) [First Quarter Financial Highlights](index=1&type=section&id=First%20Quarter%20Financial%20Highlights) Q1 2025 saw total revenue decline to **$5.3 million** and net income drop to **$31,000**, while gross margin remained stable at **41.6%** Q1 2025 vs. Q1 2024 Key Financials | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $5.3 million | $5.6 million | | Gross Profit | $2.2 million | $2.3 million | | Gross Margin | 41.6% | 41.7% | | Net Income | $31,000 | $178,000 | | Diluted EPS | $0.01 | $0.03 | Q1 2025 vs. Q1 2024 Revenue Mix | Revenue Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Verification and certification services | $4.2 million | $4.4 million | | Product revenue | $0.7 million | $0.7 million | | Professional services revenue | $0.4 million | $0.4 million | - Cash provided by operations in Q1 was **$0.6 million**, down from **$0.7 million** in the prior year period[8](index=8&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) Unaudited financial statements detail Q1 2025 performance, showing declines in total revenues and net income, alongside key balance sheet figures [Statements of Income (Unaudited)](index=3&type=section&id=Statements%20of%20Income%20%28Unaudited%29) Q1 2025 unaudited income statements show total revenues of **$5.27 million** and net income of **$31,000**, driven by a decline in verification services Condensed Income Statement (Unaudited, in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $5,273 | $5,582 | | Gross Profit | $2,195 | $2,329 | | Income from Operations | $142 | $261 | | Net Income | $31 | $178 | | Diluted EPS | $0.01 | $0.03 | - The revenue decline was primarily driven by a decrease in Verification and certification service revenue to **$4.18 million** in Q1 2025 from **$4.43 million** in Q1 2024[15](index=15&type=chunk) [Balance Sheets (Unaudited)](index=4&type=section&id=Balance%20Sheets%20%28Unaudited%29) As of March 31, 2025, total assets were **$15.21 million**, with cash increasing to **$2.24 million**, while total liabilities grew and equity decreased Key Balance Sheet Items (Unaudited, in thousands) | Line Item | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,238 | $2,012 | | Total Assets | $15,212 | $15,306 | | Total Liabilities | $5,621 | $5,373 | | Total Equity | $9,591 | $9,933 | - Treasury stock increased from **$13.46 million** to **$13.85 million**, reflecting share buyback activity during the quarter[16](index=16&type=chunk) [Supplementary Information](index=2&type=section&id=Supplementary%20Information) This section provides investor conference call details, a corporate profile, and a cautionary statement regarding forward-looking statements and associated risks - The company supports over **17,500** food supply chain participants with its verification services and proprietary technology[12](index=12&type=chunk) - The report contains forward-looking statements regarding industry trends and company performance, subject to risks detailed in SEC filings[13](index=13&type=chunk) - A conference call was scheduled to discuss these financial results, with dial-in information provided[12](index=12&type=chunk)

Part I - Financial Information [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q1 2025, including balance sheets, operations, cash flows, equity, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (Amounts in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $15,212 | $15,306 | | Total liabilities | $5,621 | $5,373 | | Total equity | $9,591 | $9,933 | | Cash and cash equivalents | $2,238 | $2,012 | | Total current assets | $5,727 | $5,545 | | Total current liabilities | $3,515 | $3,179 | - Total assets decreased slightly from **$15,306 thousand** at December 31, 2024, to **$15,212 thousand** at March 31, 2025[8](index=8&type=chunk) - Total equity decreased from **$9,933 thousand** at December 31, 2024, to **$9,591 thousand** at March 31, 2025[8](index=8&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Three months ended March 31, Amounts in thousands, except per share amounts) | Metric | 2025 | 2024 | | :---------------------------------- | :--- | :--- | | Total revenues | $5,273 | $5,582 | | Gross profit | $2,195 | $2,329 | | Income from operations | $142 | $261 | | Net income | $31 | $178 | | Basic net income per share | $0.01 | $0.03 | | Diluted net income per share | $0.01 | $0.03 | - Total revenues decreased by **$309 thousand (5.5%)** from **$5,582 thousand** in 2024 to **$5,273 thousand** in 2025[11](index=11&type=chunk) - Net income significantly decreased from **$178 thousand** in 2024 to **$31 thousand** in 2025, an **82.6% reduction**[11](index=11&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Three months ended March 31, Amounts in thousands) | Metric | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $632 | $700 | | Net cash used in investing activities | $(29) | $(24) | | Net cash used in financing activities | $(377) | $(1,435) | | Net change in cash | $226 | $(759) | | Cash at end of period | $2,238 | $1,882 | - Net cash provided by operating activities decreased from **$700 thousand** in 2024 to **$632 thousand** in 2025[13](index=13&type=chunk) - Net cash used in financing activities significantly decreased from **$1,435 thousand** in 2024 to **$377 thousand** in 2025, primarily due to lower stock repurchases[13](index=13&type=chunk) [Consolidated Statement of Equity](index=6&type=section&id=Consolidated%20Statement%20of%20Equity) Consolidated Statement of Equity Highlights (Amounts in thousands) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :-------------------------- | :------------- | :---------------- | :------------- | | Total Equity | $9,591 | $9,933 | $9,576 | | Treasury Stock | $(13,845) | $(13,462) | $(11,688) | | Retained Earnings | $12,038 | $12,007 | $9,919 | - Total equity decreased by **$342 thousand** from December 31, 2024, to March 31, 2025, primarily due to stock repurchases[16](index=16&type=chunk) - Treasury stock increased by **$383 thousand** from December 31, 2024, to March 31, 2025, reflecting common share repurchases[16](index=16&type=chunk) [Notes to the Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Note 1 - The Company and Basis of Presentation](index=7&type=section&id=Note%201%20-%20The%20Company%20and%20Basis%20of%20Presentation) - Where Food Comes From, Inc. (WFCF) is an independent, third-party food verification company conducting on-site and desk audits to verify claims about livestock, food, and agricultural products[19](index=19&type=chunk) - The company also provides professional consulting services and utilizes its Source Verified® labeling program to connect consumers to food sources[20](index=20&type=chunk) - The business experiences annual seasonal fluctuations, with significant verification and certification service revenue typically realized from late May through early October, coinciding with peak calf marketings and growing seasons[25](index=25&type=chunk)[79](index=79&type=chunk) - The cattle industry is in a contraction phase of its cycle, which began in 2014 and peaked in 2018-2019, impacting current and future supplies[26](index=26&type=chunk)[80](index=80&type=chunk) [Note 2 – Basic and Diluted Net Income per Share](index=8&type=section&id=Note%202%20%E2%80%93%20Basic%20and%20Diluted%20Net%20Income%20per%20Share) Weighted Average Common Shares Outstanding (Three months ended March 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------ | :--- | :--- | | Basic weighted average shares | 5,212 | 5,480 | | Diluted weighted average shares | 5,230 | 5,500 | | Antidilutive securities | 17 | 17 | [Note 3 – Equity Investments](index=9&type=section&id=Note%203%20%E2%80%93%20Equity%20Investments) - The Company did not receive dividend income from Progressive Beef for the three months ended March 31, 2025, or 2024[34](index=34&type=chunk)[100](index=100&type=chunk) [Note 4 – Intangible and Other Assets](index=9&type=section&id=Note%204%20%E2%80%93%20Intangible%20and%20Other%20Assets) Intangible and Other Assets (Amounts in thousands) | Asset Category | March 31, 2025 | December 31, 2024 | | :----------------------------- | :------------- | :---------------- | | Tradenames and trademarks | $818 | $818 | | Customer relationships | $3,470 | $3,470 | | Less accumulated amortization | $(2,599) | $(2,497) | | Intangible and other assets, net | $1,713 | $1,810 | - Net intangible and other assets decreased from **$1,810 thousand** at December 31, 2024, to **$1,713 thousand** at March 31, 2025, primarily due to accumulated amortization[35](index=35&type=chunk) [Note 5 – Digital Assets](index=9&type=section&id=Note%205%20%E2%80%93%20Digital%20Assets) - Effective January 1, 2024, the Company early adopted ASU 2023-08, requiring digital assets to be measured at fair value with changes recognized in the Consolidated Statements of Income[36](index=36&type=chunk) Digital Asset Holdings (Amounts in thousands, except for quantity) | Asset | Quantity | Cost Basis | Fair Value (March 31, 2025) | Fair Value (December 31, 2024) | | :------ | :------- | :--------- | :-------------------------- | :----------------------------- | | Bitcoin | 7 | $178 | $578 | $654 | - The Company recorded an unrealized loss of approximately **$76 thousand** on digital assets for the three months ended March 31, 2025[36](index=36&type=chunk)[101](index=101&type=chunk) [Note 6 – Accrued Expenses and Other Current Liabilities](index=10&type=section&id=Note%206%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued Expenses and Other Current Liabilities (Amounts in thousands) | Category | March 31, 2025 | December 31, 2024 | | :------------------------------ | :------------- | :---------------- | | Payroll related accruals | $549 | $408 | | Customer deposits | $173 | $57 | | Professional fees and other expenses | $123 | $118 | | Total | $871 | $611 | - Total accrued expenses and other current liabilities increased from **$611 thousand** at December 31, 2024, to **$871 thousand** at March 31, 2025, driven by increases in payroll related accruals and customer deposits[38](index=38&type=chunk) [Note 7 – Notes Payable](index=10&type=section&id=Note%207%20%E2%80%93%20Notes%20Payable) - The Company had a revolving line of credit (LOC) agreement which matured on April 12, 2025, providing **$75,080 thousand** in working capital[39](index=39&type=chunk)[90](index=90&type=chunk) - As of March 31, 2025, and December 31, 2024, there were no amounts outstanding under this LOC, and the effective interest rate was **9.0%**[39](index=39&type=chunk)[90](index=90&type=chunk) [Note 8 – Equity and Stock-Based Compensation](index=10&type=section&id=Note%208%20%E2%80%93%20Equity%20and%20Stock-Based%20Compensation) - Stock-based compensation expense recognized for the three months ended March 31, 2025, was **$0**, compared to **$11 thousand** for the same period in 2024[41](index=41&type=chunk) Stock Option Activity (March 31, 2025, amounts in thousands, except per share amounts) | Metric | Number of awards | Weighted avg. exercise price per share | | :---------------------- | :--------------- | :----------------------------- | | Outstanding, Dec 31, 2024 | 62,469 | $9.05 | | Exercised | (1,250) | $8.20 | | Outstanding, Mar 31, 2025 | 61,219 | $9.07 | | Exercisable, Mar 31, 2025 | 61,219 | $9.07 | - During March 2024, the Company purchased **80,201 shares** of its common stock from one shareholder for approximately **$1.0 million** in a privately negotiated transaction[46](index=46&type=chunk) [Note 9 – Income Taxes](index=11&type=section&id=Note%209%20%E2%80%93%20Income%20Taxes) - Income tax expense for the three months ended March 31, 2025, was approximately **$38 thousand**, a decrease from **$87 thousand** for the same period in 2024[48](index=48&type=chunk)[102](index=102&type=chunk) [Note 10 - Revenue Recognition](index=11&type=section&id=Note%2010%20-%20Revenue%20Recognition) Disaggregation of Revenue (Three months ended March 31, Amounts in thousands) | Revenue Category | 2025 | 2024 | | :---------------------------------- | :--- | :--- | | Verification and certification service revenue | $4,182 | $4,434 | | Product sales | $702 | $733 | | Professional services | $389 | $415 | | Total revenues | $5,273 | $5,582 | - Accounts receivable from contracts with customers, net, was approximately **$1.8 million** as of March 31, 2025, and December 31, 2024[53](index=53&type=chunk) - Deferred revenue from contracts with customers was approximately **$1.7 million** as of March 31, 2025, and December 31, 2024[53](index=53&type=chunk) [Note 11 – Leases](index=12&type=section&id=Note%2011%20%E2%80%93%20Leases) Total Net Lease Cost (Three months ended March 31, Amounts in thousands) | Lease Type | 2025 | 2024 | | :------------------------ | :--- | :--- | | Operating lease cost | $111 | $116 | | Finance lease cost | $5 | $5 | | Total net lease cost | $116 | $121 | Weighted Average Lease Terms and Discount Rates (March 31, 2025) | Lease Type | Remaining Lease Term (years) | Discount Rate | | :------------- | :--------------------------- | :------------ | | Operating leases | 6.2 | 5.8% | | Finance leases | 2.6 | 8.6% | - Maturities of operating lease liabilities total **$2,887 thousand**, with **$352 thousand** due in the remaining nine months of 2025[59](index=59&type=chunk) [Note 12 – Commitments and Contingencies](index=14&type=section&id=Note%2012%20%E2%80%93%20Commitments%20and%20Contingencies) - The Company may be involved in various legal actions in the ordinary course of business but is not aware of any significant legal actions at this time[60](index=60&type=chunk)[108](index=108&type=chunk) [Note 13 - Segments](index=14&type=section&id=Note%2013%20-%20Segments) - Effective January 2025, the Company underwent internal restructuring and consolidation, resulting in a single reportable segment: Verification and Certification[61](index=61&type=chunk) - Professional consulting services, including data analysis and other reporting metrics, now report under the Verification and Certification Segment[61](index=61&type=chunk) - The Chief Operating Decision Maker (CEO) assesses performance based on net sales, gross profit, SG&A, and operating income for this single segment[62](index=62&type=chunk) [Note 14 – Supplemental Cash Flow Information](index=15&type=section&id=Note%2014%20%E2%80%93%20Supplemental%20Cash%20Flow%20Information) Cash Paid During the Year (Three months ended March 31, Amounts in thousands) | Expense | 2025 | 2024 | | :------------ | :--- | :--- | | Interest expense | $0 | $0 | | Income taxes | $17 | $0 | [Note 15 – Subsequent Events](index=15&type=section&id=Note%2015%20%E2%80%93%20Subsequent%20Events) - In April 2025, the Company canceled **1,237,700 shares** of outstanding common stock held as treasury shares, resulting in approximately **$13.8 million** being transferred from Treasury stock to Additional paid-in capital and Retained earnings[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial condition and results, covering business overview, ESG, seasonality, liquidity, and revenue/cost analysis [General Business Overview](index=16&type=section&id=General%20Business%20Overview) - Where Food Comes From, Inc. is a leading third-party verification resource for food production practices in North America, supporting over **17,500 farmers, ranchers, and other food industry participants**[68](index=68&type=chunk) - The company's principal business involves conducting on-site and desk audits to verify claims about livestock, aquaculture, crops, and other food products[68](index=68&type=chunk) - WFCF has expanded its portfolio to include verification and professional services for most food groups and over **50 programs**, achieving growth organically and through acquisitions[71](index=71&type=chunk) [Environmental, Social and Governance ("ESG") and Human Capital Resources](index=16&type=section&id=Environmental%2C%20Social%20and%20Governance%20%28%22ESG%22%29%20and%20Human%20Capital%20Resources) - The company emphasizes environmental and social responsibility, with an internal ESG Council that regularly reports to the Executive Team[72](index=72&type=chunk)[73](index=73&type=chunk) - As of March 31, 2025, WFCF had **101 total employees**, with **90 full-time**, and approximately **85%** of the workforce comprised of female and other minority employees[74](index=74&type=chunk) - WFCF is committed to a respectful workplace, promoting fairness, and providing career development opportunities through initiatives like internships and leadership training[75](index=75&type=chunk)[77](index=77&type=chunk) [Seasonality and Industry Cycles](index=17&type=section&id=Seasonality%20and%20Industry%20Cycles) - Significant portions of verification and certification service revenue are typically realized from late May through early October, aligning with peak calf marketings and growing seasons[79](index=79&type=chunk) - The cattle industry is cyclical, and the company is currently in a contraction phase of the cycle, which began in 2014 and peaked in 2018-2019[80](index=80&type=chunk) - Quarterly results are not necessarily indicative of full fiscal year results due to business seasonality and industry cyclicality[81](index=81&type=chunk) [Liquidity and Capital Resources](index=17&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity Snapshot (Amounts in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :------------- | :------------- | :---------------- | | Cash and cash equivalents | $2,238 | $2,012 | | Working capital | $2,212 | $2,366 | Net Cash Flow Activities (Three months ended March 31, Amounts in thousands) | Activity | 2025 | 2024 | | :---------------------- | :--- | :--- | | Operating activities | $632 | $700 | | Investing activities | $(29) | $(24) | | Financing activities | $(377) | $(1,435) | - The company's growth has primarily been funded through cash flows from operations, and it continuously evaluates additional funding options[86](index=86&type=chunk) - The primary driver of operating cash flow is gross margin from third-party verification solutions, with a focus on revenue growth and long-term projects[87](index=87&type=chunk) [Results of Operations (Three months ended March 31, 2025 compared to the same period in fiscal year 2024)](index=19&type=section&id=Results%20of%20Operations%20%28Three%20months%20ended%20March%2031%2C%202025%20compared%20to%20the%20same%20period%20in%20fiscal%20year%202024%29) [Revenue Analysis](index=19&type=section&id=Revenue%20Analysis) Revenue Breakdown (Three months ended March 31, Amounts in thousands) | Revenue Category | 2025 | 2024 | Change ($) | Change (%) | | :---------------------------------- | :--- | :--- | :--------- | :--------- | | Verification and certification service revenue | $4,182 | $4,434 | $(252) | -5.7% | | Product sales | $702 | $733 | $(31) | -4.2% | | Professional services | $389 | $415 | $(26) | -6.3% | | Total revenues | $5,273 | $5,582 | $(309) | -5.5% | - Verification and certification service revenue decreased by **$0.3 million**, negatively impacted by revenue tied to price per head of cattle and delayed poultry audits due to Avian Influenza[93](index=93&type=chunk) - Product sales, primarily cattle identification ear tags, slightly decreased by **$31 thousand**[94](index=94&type=chunk) - Professional services revenue, which is predominantly project-based, decreased by less than **$26 thousand**[95](index=95&type=chunk) [Costs of Revenue Analysis](index=20&type=section&id=Costs%20of%20Revenue%20Analysis) Costs of Revenue (Three months ended March 31, Amounts in thousands) | Cost Category | 2025 | % of Revenue (2025) | 2024 | % of Revenue (2024) | | :---------------------------------- | :--- | :------------------ | :--- | :------------------ | | Costs of verification and certification services | $2,395 | 57.3% | $2,515 | 56.7% | | Costs of products | $428 | 61.0% | $434 | 59.2% | | Costs of professional services | $255 | 65.5% | $304 | 73.3% | | Total costs of revenues | $3,078 | 58.4% | $3,253 | 58.3% | - Costs of verification and certification services increased as a percentage of revenue (**57.3%** in 2025 vs. **56.7%** in 2024) primarily due to increases in compensation-related costs from a tight labor market[96](index=96&type=chunk) - Costs of products increased as a percentage of revenue (**61.0%** in 2025 vs. **59.2%** in 2024) mainly due to inflationary increases in product costs[97](index=97&type=chunk) [Selling, General and Administrative Expenses](index=20&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Other Operating Expenses (Three months ended March 31, Amounts in thousands) | Expense Category | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Salaries and benefits | $903 | $846 | | Rent and lease expense | $161 | $167 | | Software and technology | $207 | $206 | | Legal and professional expenses | $165 | $196 | | Tradeshows and marketing | $127 | $202 | | Conferences and training | $66 | $24 | | Investor relations | $37 | $41 | | Other expenses | $214 | $231 | | Total Other operating expenses | $1,880 | $1,913 | - Total other operating expenses remained relatively stable at approximately **$1.9 million** for both periods[99](index=99&type=chunk) - An increase in salaries and benefits due to a tight labor market was offset by savings in marketing and tradeshow costs[99](index=99&type=chunk) [Other Income / Expenses](index=20&type=section&id=Other%20Income%20%2F%20Expenses) - The Company recorded an unrealized loss of approximately **$76 thousand** on digital assets for the quarter ended March 31, 2025[101](index=101&type=chunk) [Income Tax Expense](index=21&type=section&id=Income%20Tax%20Expense) - Income tax expense for the three months ended March 31, 2025, was approximately **$38 thousand**, down from **$87 thousand** in the prior year[102](index=102&type=chunk) [Net Income and Per Share Information](index=21&type=section&id=Net%20Income%20and%20Per%20Share%20Information) Net Income and EPS (Three months ended March 31, Amounts in thousands, except per share amounts) | Metric | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Net income | $31 | $178 | | Basic common share | $0.01 | $0.03 | | Diluted common share | $0.01 | $0.03 | - Net income attributable to WFCF shareholders decreased significantly to **$31 thousand ($0.01 per basic and diluted common share)** for the three months ended March 31, 2025, compared to **$0.2 million ($0.03 per share)** in 2024[103](index=103&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluates disclosure controls and internal control over financial reporting, concluding on effectiveness with no material changes [Evaluation of Disclosure Controls and Procedures](index=21&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[104](index=104&type=chunk) [Internal Control Over Financial Reporting](index=21&type=section&id=Internal%20Control%20Over%20Financial%20Reporting) - There have been no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[106](index=106&type=chunk) Part II - Other Information [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The company addresses its involvement in legal actions, confirming no significant legal proceedings are currently known - The Company is not aware of any significant legal actions, administrative proceedings, or claims at this time[108](index=108&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) References detailed risk factors from the 2024 Form 10-K and highlights ongoing economic impacts from external factors - The Company's business is subject to risks identified in Item 1A of its 2024 Annual Report on Form 10-K[109](index=109&type=chunk) - As of March 31, 2025, ongoing economic impacts from tariffs, pandemics, the inflationary environment, and weather-related risks may continue to affect the Company, though the long-term financial impact is not estimable[109](index=109&type=chunk) [Item 2. Issuer Purchases of Equity Securities](index=22&type=section&id=Item%202.%20Issuer%20Purchases%20of%20Equity%20Securities) Details the company's common stock repurchase activities under its Stock Buyback Plan for the first quarter of 2025 - The Board of Directors approved a plan on September 30, 2019, to buy back up to **2.5 million additional shares** of common stock[110](index=110&type=chunk) Issuer Purchases of Equity Securities (Three months ended March 31, 2025, Amounts in thousands) | Month | Number of Shares Purchased | Cost of Shares | Average Cost per Share | | :------------------ | :------------------------- | :------------- | :--------------------- | | January 2025 | 9,590 | $123 | $12.86 | | February 2025 | 12,101 | $150 | $12.36 | | March 2025 | 9,654 | $110 | $11.42 | | Total | 31,345 | $383 | - | [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the Form 10-Q, including certifications and XBRL documents - Exhibits include CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act) and Inline XBRL documents[111](index=111&type=chunk)