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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of ~~November 2, 2017,~~July 29, 2022, was ~~[24,703,535]~~5,953,591.

The accompanying notes are an integral part of these consolidated financial statements.

Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). ~~The Company’s principal business is~~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, agricultural and ~~agricultural~~aquaculture products are accurate. We care about food, agricultural and aquaculture 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 ~~employ a software-as-a-service (“SaaS”) revenue model that bundles annual software licenses with ongoing software enhancements and upgrades and~~provide a wide range of professional services and technology solutions that generate incremental revenue specific to the food and agricultural ~~industry.~~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.

Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) andinclude the results of operations, financial position and cash flows ofWhere Food Comes From, Inc.and its subsidiaries, ~~International Certification~~Where Food Comes From Organic, Inc. (“WFCFO”), Validus Verifications Services, LLC (“Validus”), Sterling Solutions (“Sterling”), SureHarvest Services, Inc. (“~~ICS”~~SureHarvest”), ~~Validus, Sterling Solutions, LLC~~and Postelsia Holdings, Ltd. (“~~Sterling”~~Postelsia”) ~~and SureHarvest~~ (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, ~~2016,~~2021, included in our Form 10-K filed on February 28, ~~2017.~~2022. 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 ~~period~~three and six months ended ~~September~~June 30, ~~2017~~2022 are not necessarily indicative of the results to be expected for any other interim period of any future year.

Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue isare typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

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 ~~Consolidated Financial Statements~~

~~In February 2016,~~codification. The Company considers the ~~FASB issued ASU 2016-02, “Leases,” which will require lessees~~applicability and impact of all ASU’s. ASU’s were assessed and determined to ~~recognize a right-of-use asset and a lease liability for all leases that~~be either not applicable or are not ~~short-term in nature. For~~expected to have a lessor, the accounting applied is largely unchanged from previous guidance. The new rules will be effective for the Company in the first quarter of 2019. The Company is currently in the process of evaluating thematerial impact ~~of adoption of the new rules~~ on the ~~Company’s~~consolidated financial condition, results of operations and cash flows. Although the evaluation is ongoing, the Company expects that the adoption will impact the Company’s financial statements as the standard requires the recognition on the balance sheet of a right of use asset and corresponding lease liability for all leases, including operating leases, that are not short-term, which differs from current guidance. The Company is currently analyzing its contracts to determine whether they contain a lease under the revised guidance and has not quantified the amount of the asset and liability that will be recognized on the Company’s balance sheet.statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes current revenue recognition requirements and industry-specific guidance. The codification was amended through additional ASUs and, as amended, requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company is required to adopt the new standard in the first quarter of 2018 and may adopt either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption using one of two retrospective application methods. The Company has developed an approach for the implementation of the guidance including a review of revenue streams and contracts to identify any differences in timing, measurement or presentation of revenue recognition. Currently, the Company has not completed its estimate of the quantitative impact and has engaged a third party to assist in its evaluation. While the Company is still in the process of completing its evaluation of the standard, it currently believes the most significant impact will be related to accounting for its software license, maintenance and support revenue, and the timing in which those revenues are recognized.

In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business,” which provides guidance on evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The ASU amends ASC 805 to provide a more robust framework to use in determining when a set of assets and activities is a business. In addition, the amendments provide more consistency in applying the guidance, reduce the costs of application, and make the definition of a business more operable.~~The new guidance will be effective for the Company in the first quarter of 2018.The Company is currently evaluating the provisions of this new guidance andhas not determined the impact this standard may have on its financial condition, results of operations, cash flows and related disclosures.~~

In April 2017, the FASB has issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which removes step 2 from the goodwill impairment test. As a result, under the ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.~~The Company is required to adopt the new standard in 2020.The Company is currently evaluating the provisions of this new guidance andhas not determined the impact this standard may have on its financial condition, results of operations, cash flows and related disclosures.~~

~~On December 28, 2016,~~we entered into an Asset Purchase Agreement (the “SureHarvest Purchase Agreement”), by and among the Company, SureHarvest Services LLC (the “Buyer” or “SureHarvest”); and SureHarvest, Inc., a California corporation (the “Seller” or “SureHarvest, Inc.”). We acquired substantially all the assets of the Seller. SureHarvest develops software and provides services related to sustainability measurement and benchmarking, traceability, verification and certification to the food and agriculture industries.

Pursuant to the SureHarvest Purchase Agreement, WFCF purchased the business assets of the Seller for total consideration of approximately $2.8 million, comprised of approximately $1,122,000 in cash and 850,852 shares of common stock of WFCF valued at approximately $1,710,000 based on the closing price of our stock on December 28, 2016, of $2.01 per share. Additionally, we issued the Seller a 40% membership interest in SureHarvest, with the Company holding a 60% interest.

Following the thirty-six-month anniversary of the effective date of the SureHarvest Purchase Agreement, the Company shall have the option, but not the obligation, to purchase all the units (the 40% interest) of SureHarvest held by the Seller, and the Seller shall have the option, but not the obligation, to require the Company to purchase all the units of SureHarvest held by the Seller. The purchase price for the units shall be equal to the amount the selling holders of the units would be entitled to receive upon a liquidation of SureHarvest assuming all of the assets of SureHarvest are sold for a purchase price equal to the product of eight and half times trailing twelve-month earnings before income taxes, depreciation and amortization, as defined, subject to an $8 million ceiling.

Because SureHarvest, Inc. at its option, can require the Company to purchase its 40% interest in SureHarvest, the SureHarvest non-controlling interest meets the definition of a contingently redeemable non-controlling interest. Redeemable non-controlling interests are presented at the greater of their carrying amount or redemption value at the end of each reporting period and are shown as a separate caption between liabilities and equity (mezzanine section) in the accompanying consolidated balance sheet.

The following unaudited pro forma information presents the results of operations for the three and nine months ended September 30, 2016, as if the acquisition of SureHarvest had occurred on January 1, 2016. This pro forma information does not reflect any integration activities or cost savings from operating efficiencies, synergies, asset dispositions or other restructurings that could result from the acquisition, nor does it purport to represent what the Company’s actual results would have been if the acquisition had occurred as of the date indicated or what such results would be for any future periods.

On May 30, 2017, we acquired A Bee Organic for $150,000 in cash and 45,684 shares of common stock of WFCF valued at approximately $98,000 based on the closing price of our stock on May 30, 2017, of $2.15 per share. The acquisition primarily consisted of the existing customer relationships and represents further expansion of our verification and certification solutions into hydroponics/aquaponics and apiary spaces. We believe the total consideration paid approximates the fair value of the assets acquired. We have allocated the total consideration to our identifiable intangible assets to be amortized over an estimated useful life of 8 years.

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 and restricted stock awards are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

The following is a reconciliation of the share data used in the basic and diluted income per share ~~computations:~~computations (amounts in thousands):

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.

For the three months ended June 30, 2022 and 2021, the Company received dividend income from Progressive Beef of $50,000 and $30,000, respectively, representing a distribution of their earnings. For the six months ended June 30, 2022 and 2021, the Company received dividend income totaling $100,000 and $60,000, respectively. The income is reflected within the “Other income/(expense)” section of the Company’s Consolidated Statement of Operations for the three and six months ended June 30, 2022 and 2021.

The following table summarizes our intangible and other ~~assets:~~assets (amounts in thousands, except useful life):

In June 2022, we purchased an aggregate of $178,000 in Bitcoin (a “cryptocurrency” or “digital asset”) and currently account for all digital assets held as indefinite-lived intangible assets in accordance with ASC 350, Intangibles-Goodwill and Other. We have ownership of and control over our digital assets and may use a third-party custodial service to secure it. The digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition, if applicable.

We determine the fair value of our digital assets on a quarterly basis in accordance with ASC 820, Fair Value Measurement, based on quoted prices on the active exchange(s) that we have determined is the principal market for such assets (Level 1 inputs). We perform an analysis each quarter to identify whether significant events or changes in circumstances, indicate that it is more likely than not that our digital assets are permanently impaired. In determining if an impairment has occurred, we consider the lowest market price of one unit of digital asset quoted on an active exchange since acquiring the digital asset. If the current carrying value of a digital asset significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the digital assets in the amount equal to the difference between their carrying values and the price determined.

Impairment losses are recognized within the Other income / (expense) section in the consolidated statements of operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same digital assets held within Other income / (expense). In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the digital assets sold immediately prior to sale.

For the three and six months ended June 30, 2022, we have not sold any digital assets and have not recognized any impairment losses. As of June 30, 2022, the carrying value of our digital assets held was $178,000.

The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):

The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2025. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due on maturity. As of June 30, 2022 and December 31, 2021, the effective interest rate was 6.25% and 4.75%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of June 30, 2022, and December 31, 2021, there were 0 amounts outstanding under this LOC.

In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with ~~equity based~~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 and restricted stock awards, fair value is the closing stock price for the Company’s common stock on the grant date. The expense is recognized over the vesting period of the grant. For the periods presented, all stock-based compensation expense was classified as a component within selling, general and administrative expense in the Company’s consolidated statements of ~~income.~~operations.

The amount of stock-based compensation expense is as ~~follows:~~follows (amounts in thousands):

~~Where Food Comes From, Inc.~~During the three months ended June 30, 2022, 0 stock options were awarded. During the six months ended June 30, 2022, the Company awarded 1,500 shares of the Company’s common stock at a fair market value price of $13.45 per share to an employee of the Company. During the three months ended June 30, 2021, the Company awarded stock options to purchase 17,000 shares of the Company’s common stock at an exercise price of $14.77 per share to employees of the Company. NaN other stock awards or options were granted during the six months ended June 30, 2021.

~~As of September 30, 2017, the~~The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as ~~follows:~~follows (amounts in thousands):

Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the ~~“Equity Incentive Plan”~~“2016 Plan,” and together with the 2006 Plan, the “Plans”) ~~provides~~provide for the issuance of stock-based awards to employees, officers, directors and consultants. The ~~Plan permits~~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 under our Equity Incentive ~~Plan~~Plans is summarized as follows:

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on ~~September~~June 30, ~~2017~~2022 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~~June 30, ~~2017.~~

~~Restricted~~Non-vested stock award activity under our Equity Incentive ~~Plan~~Plans is summarized as follows:

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. Our net operating loss (“NOL”) carry forwards are the most significant component of our deferred tax assets; however, the ultimate realization of our deferred tax assets is dependent upon generation of future taxable income. We consider past history, the scheduled reversal of taxable temporary differences, projected future taxable income, and tax planning strategies in making this assessment. Utilization of our NOL carry forwards reduces our federal and state income tax liability incurred.

The Company’s subsidiary, SureHarvest, is a California limited liability company (“LLC”). As an LLC, management believes SureHarvest is not subject to income taxes, and such taxes are the responsibility of the respective members.

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 and six months ended ~~September~~June 30, ~~2017 and 2016,~~2022 we recorded an income tax expense of ~~$199,000~~approximately $118,000 and ~~$135,000 respectively. For the nine months ended September 30, 2017 and 2016, we recorded~~$281,000, respectively, compared to income tax expense of ~~$150,000~~$104,000 and ~~$264,950 respectively.~~

~~Notes Payable consist~~$115,000 for the same 2021 periods. The effective tax rate for the six months ended June 30, 2021 was favorably impacted by the non-taxability of the ~~following:~~PPP loan forgiveness income.

In September 2017, we entered into a note payable of $54,165 for the purchase of a vehicle. Interest and principal payments are due in equal monthly installments of $1,087 over five years beginning October 2017. This note bears an interest rate of 7.44% per annum and is fully secured by the vehicle.

We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, (iii) software and related consulting revenue.

Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).

As of June 30, 2022 and December 31, 2021, accounts receivable from contracts with customers, net of allowance for doubtful accounts, was approximately $1.9 and $2.2 million, respectively.

As of June 30, 2022 and December 31, 2021, deferred revenue from contracts with customers was approximately $1.8 and $1.5 million, respectively. The balance of the contract liabilities at June 30, 2022 and December 31, 2021 are expected to be recognized as revenue within one year or less of the invoice date.

The following table reflects the changes in our contract liabilities during the six month period ended June 30, 2022 (amounts in thousands):

Included in the table above, for the three and six months ended June 30, 2022, is $0.1 million and $0.2 million, respectively, of operating lease cost for our corporate headquarters. For the three and six months ended June 30, 2021, is $0.1 and $0.2 million, respectively, of operating lease costs for our corporate headquarters. This space is being leased from The Move, LLC. Our CEO and President, each a related party to WFCF, have a 24.3% jointly-held ownership interest in The Move, LLC.

Supplemental balance sheet information related to leases was as follows (amounts in thousands):

Supplemental cash flow and other information related to leases was as follows (amounts in thousands):

The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2020. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due on~~maturity~~. As of September 30, 2017, the effective interest rate was 5.5%. The LOC is collateralized by all the business assets of ICS. As of September 30, 2017, there were no amounts outstanding under this LOC.

The Company relocated its headquarters within Castle Rock, Colorado, during the third quarter 2016 and entered into a new lease agreement with The Move, LLC for approximately 8,000 square feet of office space. This space is being leased from a company in which our CEO and President, each a related party to the Company, have a 27% ownership interest. The lease agreement has an initial term of five years plus two renewal periods, which the Company is more likely than not to renew. The office space lease term commenced August 1, 2016. Rental payments are approximately $19,000 per month, which includes common area charges, and provides for escalating rental payments annually over the term of the lease. The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and option renewal periods. The resulting deferred rent is included in accrued expenses and other current liabilities on the consolidated balance sheet.

The Company recorded leasehold improvements of approximately $406,400, which included approximately $163,000 in lease incentives. Leasehold improvements are included in property and equipment on the consolidated balance sheet. Lease incentives have been included in lease incentive obligation as a long-term liability on the consolidated balance sheet and will reduce rent expense on a straight-line basis over 15 years. Lease incentives are excluded from minimum lease payments in the schedule below.

In August 2017, the Company entered into the first amendment of its lease agreement with The Move, LLC to provide for an additional 7,700 square feet of office space to commence December 1, 2017. The additional space is currently not approved for occupancy. Total rental payments beginning December 1, 2017 will increase to approximately $27,000 per month, which includes common area charges, and provides for escalating rental payments annually over the term of the lease. The Company will also receive approximately $230,000 in lease incentives to build-out the new additional square footage. All other terms will remain the same.

~~As of September 30, 2017, future minimum lease payments for all operating leases are as follows:~~

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 legal actions currently pending against us.~~

Contingently redeemable non-controlling interest on our consolidated balance sheet represents the non-controlling interest related to the SureHarvest acquisition, in which the non-controlling interest holder, at its election, can require the Company to purchase its 40% investment in SureHarvest. Below is a table reflecting the activity of the contingently redeemable non-controlling interest at September 30, 2017.

~~The contingently redeemable non-controlling interest was adjusted to the greater of the carrying value or redemption value as of each period end.~~

With each acquisition, we assess the need to disclose discrete information related to our operating segments. Because of the similarities of certain of our acquisitions that provide certification and verification services, we aggregate operations into one verification and certification ~~services~~ reportable segment. The operating segments included in the aggregated verification and certification segment include IMI Global, WFCFO and Validus. The factors considered in determining this aggregated reporting segment include the economic similarity of the businesses, the nature of services provided, production processes, types of customers and distribution methods.

The Company also determined that it has a software and related consulting reportable segment. SureHarvest, which includes Postelsia, is the sole operating unit under the software and related consulting reportable segment. This segment includes software and related consulting service revenues.

The Company’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its ~~certification and verification services activities as one segment, which includes products sales.~~

With the acquisition of SureHarvest Services, the Company determined that it also has a software sales and related consulting services segment, which meet the quantitative threshold to be considered a reporting segment in the third quarter 2017. This segment includes software license, maintenance, support and consulting service revenues.

~~Management~~operating segments. Segment management makes decisions, measures performance, and manages the business utilizing internal reporting operating segment information. Performance of operating segments are based on net sales, gross profit, selling, general and administrative expenses and most importantly, operating income.

The ~~company~~Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating ~~segments:~~segments (amounts in thousands):

The Company has had no material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements.

Year to date ended September 30,
2017 2016
Cash paid for:

Interest expense $ 603 $ 876
Income taxes $ 184,440 $ —

Non-cash investing and financing activities:
Common stock issued for remaining interest in Validus Verification Services LLC $ — $ 200,100
Equipment acquired under a capital lease $ 18,033 $ 22,439
Vehicle acquired under note payable $ 54,165 $ —
Lease incentive obligation $ — $ 162,540
Common stock issued in acquisition of A Bee Organic $ 98,221 $ —
Common stock issued for acquisition-related consulting fess $ 25,000 $ —

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, ~~2016.~~2021. 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”,~~WFCF,” the “Company,” “our,” “we,” or “us”) is a leading trusted resource for third-party verification of food ~~and agricultural~~ production practices in North America. The Company estimates that is supports more than ~~15,000~~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” - previously International Certification Services ~~(“ICS”)~~and A Bee Organic), Validus Verification Services (“Validus”), and Sterling ~~Solutions, SureHarvest Services (“SureHarvest”), and our newest acquisition, A Bee Organic.~~Solutions. 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, ~~food, other high-value specialty~~aquaculture, crops and ~~agricultural~~other food products are accurate. ~~In addition,~~

Through SureHarvest Services LLC (“SureHarvest”) and Postelsia Holdings, Ltd. (“Postelsia”), we primarily provide a wide range of professional services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation.

Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the ~~product~~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 ~~2005.~~2006. The Company’s shares of common stock trade on the ~~OTCQB marketplace~~NASDAQ Capital Market (“NASDAQ”), under the stock ticker symbol, ~~“WFCF”.~~“WFCF.”

The Company’s original name – Integrated Management Information, Inc. (d.b.a. IMI ~~Global, Inc.)~~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 ~~who~~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 software services for most food groups and ~~30 standards.~~over 50 programs and organizations. This growth has been achieved both organically and through the acquisition of other companies.

Coronavirus Pandemic (COVID-19), the Inflationary Environment and other Weather Related Risks

The ongoing outbreaks of COVID-19 continue to impact our business. Due to safety and social distancing reasons, customers continue to request postponement of onsite visits. We work closely with our customers and standard setting bodies to identify innovative solutions and reschedule onsite visits as timely as possible.

In late 2021, we were informed by our key tag supplier that materials were becoming scarcer and the ability to meet our need was difficult. In anticipation of this risk, we worked with all our tag suppliers to build our inventory by purchasing excess supply. We believe we have reduced this risk, however, should material shortages continue to impact our tag suppliers, we may be unable to meet the needs of our customers which could materially impact our revenues. We could also experience increases in the cost of products sourced locally and from abroad.

~~Current Marketplace Opportunities~~The economy is facing inflationary pressures that has resulted in a few headwinds for our business, most notably in the form of a tight labor market where job candidates have considerable bargaining power which tends to drive wages up. Additionally, we are experiencing higher labor and benefit related costs to retain our existing personnel. We believe we will continue to see significant pressure in our labor and benefit related costs.

~~Because~~We are also concerned about the potential for weakened demand in our software and related consulting business segment due to significant customer concentration. Increased inflation could place pressure on our customers’ timing of approval for consulting projects to move forward. Currently, it is difficult to estimate the financial impact to our software and related consulting revenue, if any. We actively market our sustainability solutions and services to new types of customers. We believe the growing awareness of environmental, social and governance (“ESG”) matters creates a key opportunity for us because we have the expertise and technology needed to help companies achieve ESG objectives within the food supply chain.

The current drought conditions impacting nearly one-half of the United States predominately affects our ranch customers resulting in fewer cattle subject to verification. While this doesn’t directly impact our audit related revenue, it does impact our product sales and other related supply chain fees in the short-term. However, we believe the long-term outlook for our industry remains favorable because the demand for ~~increased transparency into food~~verified cattle is still strong, as well as the premiums on verified cattle sold at auction. Additionally, during an inflationary period, most consumers continue to consume beef, although they may trade the quality of protein cut (such as steak) for a lesser cut (such as ground beef).

We continue to monitor all of these risks closely and ~~agricultural production practices, we believe there are three main market drivers~~will react accordingly, while keeping the interest of our customers, employees and shareholders in mind. Please refer to ~~promote forward momentum~~our risk factors included in our Form 10-K for ~~our business:~~the fiscal year ended December 31, 2021 for additional information for risks specifically related to COVID-19.

~~Market Driver #1 - Consumer awareness and expectations~~Seasonality

●

~~The 13~~^th Edition of “The Why? Behind The Buy,” based on the annual survey conducted by Acosta, a leading full-service sales and marketing agency in the consumer packaged goods industry, was released in December 2016. The survey found that today’s shoppers are seeking positive culinary experiences, making deliberate decisions from the store to the stove, including wanting to feel good about the foods they eat, have pride in the brands they buy and share their cooking journeys online. The survey also explores the key factors contributing to this experiential evolution for grocery shoppers, including the growing natural/organics category. Shoppers’ spending on healthy products has seen steady growth in the past several years, driven by the desire of shoppers to feel good about the foods they’re eating. “From online grocery ordering and a desire to explore new foods, to natural products and socially responsible brands, consumers are at the wheel when it comes to steering the CPG industry in a new direction…there’s no doubt that this evolution will continue in the coming year, so it’s up to the industry to adapt by leaning into these trends and building trust and loyalty among all shoppers.” Colin Stewart, senior vice president at Acosta.

●

According to research dated March 2016 from Sullivan Higdon & Sink FoodThink, only one-third of consumers think the agriculture community and food companies are transparent. The research appears in “Evolving Trust in the Food Industry,” a white paper with insights into Americans’ knowledge and trust of the food industry and how those perceptions have changed from 2012 to 2016. These numbers are an improvement from 2012, when only 22% and 19% agreed that the agricultural community and food companies, respectively, are transparent. Increasing media attention and dialogue about food production, and the food industry’s willingness to be more open about its production practices, have likely caused this increase in perceived transparency. In turn, this provides consumers the knowledge to have definite opinions on the degree of industry transparency and an increased desire for more knowledge about how their food is produced.

●

According to the United States Department of Agriculture (“USDA”) website, the U.S. market for certified organic products continues to grow in double digits with 24,650 operations at the end of 2016, which reflects a 13% growth rate between the end of 2015 and 2016. Increasing consumer demand for healthy, better-for-you products produced with sustainable agricultural practices is driving growth in the organic market.

~~Market Driver #2 - Global competitiveness among retailers~~

●

Restaurant chains and retailers with dominant market shares and large buying power, like McDonald’s and Wal-Mart, are leading the way in prioritizing sustainable food supply initiatives in answer to consumer demands. With information literally at our fingertips, Google searches and smart phone apps are making it easier to expose where sustainable food supply chains are, and where they are not.

●

Producers, packers, distributors and retailers understand that verification, identification and traceability are key competitive differentiators. Oftentimes, it is necessary for export into international markets, including Korea, Russia and the European Union.

~~Market Driver #3 - Government regulation~~

●

In January 2013, the Food Safety Modernization Act (“FSMA”) issued two major proposed rules regarding preventive controls in human/animal food and produce safety. Compliance dates for some businesses began September 2016. Under the new rules, the food safety plan defined by the regulation differs from traditional hazard analysis and critical control points (“HACCP”) plans. It must include a hazard analysis, preventive controls, monitoring procedures, corrective action procedures, verification procedures, a supply chain program, and a recall program. We continue to see significant movement in companies requesting our consulting expertise to developing programs designed to assist them in maintaining compliance with the new rules.

●

The Animal Disease Traceability Rule primarily covers beef cattle 18 months of age or older. Under the final rule, unless specifically exempted, livestock moved interstate must be officially identified and accompanied by an interstate certificate of veterinary inspection or other documentation, such as owner-shipper statements or brand certificates.

●

The Saudi Arabia market closed to U.S. beef in 2012. Since that time, the beef industry has been working with the U.S. government to re-open that market, which officially happened in early August 2016. In order to be approved to meet the export requirements, a company must have or must be approved by a USDA process verified plan (“PVP”) and meet the Saudi Arabia export verification requirements. U.S. exports to Saudi Arabia in 2010 and 2011 were valued at approximately $30 million. We believe the Saudi Arabia market focuses on the highest quality middle meats, making it a valuable market for the U.S. to re-gain access.

●

On June 12, 2017, officials announced the technical requirements for beef exports to the People’s Republic of China. Export verification (“EV”) requirements include source and age verification with the use of a program compliant tag. In addition, China bans the use of synthetic growth promotants, including ractopamine. So, although there is not a formal non-hormone component to the EV requirements for the supply chain, due to China’s residue testing, packers will be seeking non-hormone treated cattle (“NHTC”) and/or Verified Natural cattle to ensure continued market access. China is the world’s second largest buyer of beef, but beef imports from the US to China have been banned since the 2003 Bovine Spongiform Encephalopathy (“BSE”) outbreak, also known as “Mad Cow Disease.”

~~Seasonality~~

Our business is subject to seasonal fluctuations. Significant portions of our verification and certification service revenue is typically realized during late May through early October when the calf marketings and the growing seasons are at their peak. Because of the seasonality of the business and our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Liquidity and Capital Resources

At ~~September~~June 30, ~~2017,~~2022, we had cash and cash equivalents ~~and short-term investments~~ of ~~$4,550,606~~approximately $6.4 million compared to ~~$3,223,089~~approximately $5.4 million at December 31, ~~2016.~~2021. Our working capital at ~~September~~June 30, ~~2017 was $3,932,738 compared to $3,429,185 at~~2022 and December 31, ~~2016.~~2021 was approximately $5.6 million and $5.7 million, respectively.

Net cash provided by operating activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2022 was ~~$1,560,157~~approximately $2.3 million compared to ~~net cash provided of $1,210,574~~$1.6 million during the same period in ~~2016.~~2021. Net cash provided by operating activities is driven by our net income ~~(loss)~~ and adjusted by non-cash items. Non-cash adjustments primarily include depreciation, amortization of intangible assets, ~~stock based~~stock-based compensation expense, forgiveness of Paycheck Protection Program loan in 2021, 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 June 30, 2022 was primarily driven by a change in accrued expenses and prepaid expenses and other assets. The cash provided by operating activities for the period ending June 30, 2021 was primarily driven by a change in accounts receivable, accounts payable, inventory and deferred revenue.

Net cash used in investing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022, was ~~$205,609~~approximately $0.2 million compared to ~~$592,040 used~~$0.1 million in the ~~2016~~2021 period. Net cash used in the ~~2017~~ period ending June 30, 2022 was primarily ~~attributable to~~for the ~~acquisition~~purchase of ~~A Bee Organic, as well as routine purchases of property and equipment.~~digital assets. Net cash used in the ~~2016~~ period ending June 30, 2021 was primarily ~~attributable to~~for the ~~acquisition~~purchase of ~~the non-controlling interest of Validus, as well as routine purchases of property~~a vehicle and equipment.

Net cash used in financing activities for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2022 and 2021 was ~~$34,666 compared to $154,882~~approximately $1.1 million and $0.6 million, respectively. Cash used infor the ~~2016 period. Net cash used in the 2017 period~~periods ending June 30, 2022 and 2021, was primarily due to ~~repayments under lease obligations of $3,038 and~~the repurchase of common shares under the Stock Buyback ~~Plan of $39,796, offset by cash received from stock option exercises of approximately $8,200. Net cash used in~~Plan.

Over the 2016 period was due to repayments of debt and lease obligations of $19,754 and repurchase of common shares under the Buyback Plan of $179,647 offset by proceeds from stock option exercises of approximately $44,519.

~~Historically,~~past several years, our growth has been funded primarily through ~~a combination of cash flow~~cashflows from ~~operations, convertible debt from private investors and private placement offerings.~~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~~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~~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, overall improvement in our performance, and our ability to obtain additional financing, are adequate to finance current operations ~~our acquisition strategy and~~as well as the repayment of current debt obligations. 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~~cash-generating capabilities to adequately manage our ongoing business.

The culmination of all our efforts ~~toward net income~~ has brought significant opportunities to us,~~including:~~including increased investor confidence and renewed interest in our company, ~~third-party interest in our expertise,~~ as well as the potential to develop business relationships with ~~long term~~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~~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 ~~upon acquisitions,~~on diversification and ~~continuing to add more accreditations to~~bundling opportunities in our ~~products~~product offerings within national and ~~services,~~international markets, as well as ~~intensifying our focus on international markets.~~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 ~~means~~way to ~~entry as imposed on international market imports/exports is via a quality verification program.~~overcome import or export restrictions.

Debt Facility

The Company has a revolving line of credit (“LOC”) agreement which matures April 12, ~~2020.~~2025. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due onupon maturity. As of ~~September~~June 30, ~~2017,~~2022, and December 31, 2021, the effective interest rate was ~~5.5%.~~6.25% and 4.75%, respectively. The LOC is collateralized by all the business assets of ~~ICS.~~Where Food Comes From Organic, Inc. (“WFCFO”). As of ~~September~~June 30, ~~2017,~~2022, and December 31, 2021, there were no amounts outstanding under this LOC.

Off-Balance Sheet Arrangements

As of ~~September~~June 30, ~~2017,~~2022, we had no off-balance sheet arrangements of any type.

RESULTS OF OPERATIONS

~~Third quarter~~Three and ~~year to date~~six months ended ~~September~~June 30, ~~2017~~2022 compared to the same ~~periods~~period in fiscal year ~~2016~~2021

The following table shows information for reportable operating ~~segments:~~segments (amounts in thousands):

	Three months ended June 30, 2022											Three months ended June 30, 2021
	Verification and Certification Segment		Software Sales and Related Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Software Sales and Related Consulting Segment			Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		14,244		3,865			(143	)		17,966			17,327		3,082			(3,093	)		17,316
Total assets	$	16,191	$	4,864		$	(143	)	$	20,912		$	19,274	$	4,081		$	(3,093	)	$	20,262

Revenues:
Verification and certification service revenue	$	3,964	$	-		$	-		$	3,964		$	3,695	$	-		$	-		$	3,695
Product sales		878		-			-			878			964		-			-			964
Software and related consulting revenue		-		489			-			489			-		482			-			482
Total revenues	$	4,842	$	489		$	-		$	5,331		$	4,659	$	482		$	-		$	5,141
Costs of revenues:
Costs of verification and certification services		2,325		-			-			2,325			2,132		-			-			2,132
Costs of products		522		-			-			522			648		-			-			648
Costs of software and related consulting		-		354			-			354			-		352			-			352
Total costs of revenues		2,847		354			-			3,201			2,780		352			-			3,132
Gross profit		1,995		135			-			2,130			1,879		130			-			2,009
Depreciation & amortization		149		48			-			197			148		51			-			199
Other operating expenses		1,561		59			-			1,620			1,442		86			-			1,528
Segment operating income/(loss)	$	285	$	28		$	-		$	313		$	289	$	(7	)	$	-		$	282
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		50		(23	)		-			27			29		(5	)		-			24
Income tax expense		-		-			(118	)		(118	)		-		(5	)		(99	)		(104	)
Net income/(loss)	$	335	$	5		$	(118	)	$	222		$	318	$	(17	)	$	(99	)	$	202

Three months ended
September 30,

Year to date ended
September 30,

2017 2016 2017 2016
Verification and Certification Segment:
Assets $ 10,409,289 $ 9,442,909 $ 10,409,289 $ 9,442,909

Verification and certification revenues $ 3,672,587 $ 2,963,853 $ 9,152,520 $ 7,733,613
Products sales 687,235 380,393 1,226,141 855,986
Total segment revenue $ 4,359,822 $ 3,344,246 $ 10,378,661 $ 8,589,599

Gross profit - verification and certification gross profit $ 1,825,680 $ 1,441,650 $ 4,474,382 $ 3,760,314
Gross profit - products 276,926 159,794 482,833 365,824
Total segment gross profit $ 2,102,606 $ 1,601,444 $ 4,957,215 $ 4,126,138

Selling, general and administrative expenses 1,558,442 1,239,834 3,920,771 3,412,211
Segment operating income $ 544,164 $ 361,610 $ 1,036,444 $ 713,927

Software Sales and Related Consulting Segment:
Assets $ 4,443,117 $ — $ 4,443,117 $ —

Software license, maintenance and support services 243,186 $ — $ 532,684 $ —
Consulting service revenue 131,427 — 399,120 —
Total segment revenue $ 374,613 $ — $ 931,804 $ —

Gross profit - software license, maintenance and support services $ 101,284 $ — $ 170,544 $ —
Gross profit - consulting service revenue 87,446 — 216,402 —
Total segment gross profit $ 188,730 $ — $ 386,946 $ —

Selling, general and administrative expenses 283,155 — 1,102,675 —
Segment operating loss $ (94,425 ) $ — $ (715,729 ) $ —

Consolidated Information:
Verification and certification segment $ 10,409,289 $ 9,442,909 $ 10,409,289 $ 9,442,909
Software and related consulting segment 4,443,117 — 4,443,117 —
Consolidated Assets $ 14,852,406 $ 9,442,909 $ 14,852,406 $ 9,442,909

Verification and certification segment $ 4,359,822 $ 3,344,246 $ 10,378,661 $ 8,589,599
Software and related consulting segment 374,613 — 931,804 —
Consolidated Revenues: $ 4,734,435 $ 3,344,246 $ 11,310,465 $ 8,589,599

Verification and certification segment $ 2,102,606 $ 1,601,444 $ 4,957,215 $ 4,126,138
Software and related consulting segment 188,730 — 386,946 —
Consolidated Gross Profit: $ 2,291,336 $ 1,601,444 $ 5,344,161 $ 4,126,138

Verification and certification segment $ 1,558,442 $ 1,239,834 $ 3,920,771 $ 3,412,211
Software and related consulting segment 283,155 — 1,102,675 —
Consolidated Selling, General and Administrative Expenses: $ 1,841,597 $ 1,239,834 $ 5,023,446 $ 3,412,211

Verification and certification segment $ 544,164 $ 361,610 $ 1,036,444 $ 713,927
Software and related consulting segment (94,425 ) — (715,729 ) —
Consolidated Income from Operations: $ 449,739 $ 361,610 $ 320,715 $ 713,927

	Six months ended June 30, 2022											Six months ended June 30, 2021
	Verification and Certification Segment		Software Sales and Related Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Software Sales and Related Consulting Segment			Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		14,244		3,865			(143	)		17,966	��		17,327		3,082			(3,093	)		17,316
Total assets	$	16,191	$	4,864		$	(143	)	$	20,912		$	19,274	$	4,081		$	(3,093	)	$	20,262

Revenues:
Verification and certification service revenue	$	7,748	$	-		$	-		$	7,748		$	6,958	$	-		$	-		$	6,958
Product sales		1,885		-			-			1,885			1,688		-			-			1,688
Software and related consulting revenue		-		1,854			-			1,854			-		935			-			935
Total revenues	$	9,633	$	1,854		$	-		$	11,487		$	8,646	$	935		$	-		$	9,581
Costs of revenues:
Costs of verification and certification services		4,361		-			-			4,361			3,925		-			-			3,925
Costs of products		1,059		-			-			1,059			1,105		-			-			1,105
Costs of software and related consulting		-		1,540			-			1,540			-		680			-			680
Total costs of revenues		5,420		1,540			-			6,960			5,030		680			-			5,710
Gross profit		4,213		314			-			4,527			3,616		255			-			3,871
Depreciation & amortization		294		98			-			392			300		101			-			401
Other operating expenses		3,074		125			-			3,199			2,920		179			-			3,099
Segment operating income/(loss)	$	845	$	91		$	-		$	936		$	396	$	(25	)	$	-		$	371
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		100		(36	)		-			64			66		(7	)		1,037			1,096
Income tax expense		-		-			(281	)		(281	)		-		(5	)		(110	)		(115	)
Net income/(loss)	$	945	$	55		$	(281	)	$	719		$	462	$	(37	)	$	927		$	1,352

Verification and Certification Segment

Verification and certification service revenuesconsist of fees charged for verification audits and other verification ~~and certification related~~ services that the Company performs for customers. ~~We have recently begun includingfees~~Fees earned from our WFCF labeling program are also included in our verification and certification revenues ~~due to the immateriality of the revenue stream and because~~as it represents a value-added extension of our source verification. Verification and certification service revenue for the three and six months ended June 30, 2022 increased 7.3% and ~~year to date period ended September 30, 2017 increased approximately $708,734, or 23.9%, and $1,418,907, or 18.3%~~11.4%, respectively, compared to the same periods in ~~2016. Overall, the increase is~~2021, primarily due to ~~an increase in new verification customers, as well as an increase in~~increased customer demand for our product offerings. ~~We are seeing increased demand from cattle producers in response to the re-opening of the export market to China as discussed above.~~

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 months ~~and year to date period~~ ended ~~September~~June 30, ~~2017 increased approximately $306,842, or 80.7%, and $370,155, or 43.2%, respectively,~~2022 decreased 8.9% compared to the same ~~periods~~period in ~~2016. Overall, our product~~2021, primarily due to drought conditions experienced by nearly one-half of the United States resulting in reduced demand and fewer cattle needing ear tags. Product sales ~~have~~for the six months ended June 30, 2022 increased ~~primarily in response~~11.7% compared to the ~~re-opening of~~same period in 2021, primarily due to increased pricing and limited supply elsewhere in the ~~China export market and the requirement for source and age verification using an identification tag at birth.~~market.

Costs of revenues for our verification and certification segment for the three and six months ~~and year to date period~~ ended ~~September~~June 30, ~~2017~~2022 were approximately ~~$2.26~~$2.8 million and ~~$5.42~~$5.4 million, respectively, compared to approximately ~~$1.74~~$2.8 million and ~~$4.46~~$5.0 million, respectively, for the same periods in ~~2016.~~2021. Gross margin for the three and six months ended June 30, 2022 was 41.2% and ~~year to date period ended September 30, 2017 improved slightly to 48.2% and 47.9%~~43.7%, respectively compared to ~~47.9%~~40.3% and ~~48.0%~~41.9%, respectively, ~~for the same periods~~ in ~~2016.~~2021 primarily due to a change in product mix of our offerings which included new customers and new offerings. Our margins are generally impacted by various costs such as cost of products, salaries and benefits, insurance and taxes. ~~Because certain elements of our cost of revenues are fixed in nature, incremental sales positively impact our margins.~~

~~Selling, general and administrative~~Other operating expenses for the three and six months ended June 30, 2022 increased by approximately 8.3% and ~~year to date period ended September 30, 2017 were approximately $1.56 million and $3.92 million,~~5.3%, respectively, compared to ~~$1.24 million and $3.41 million, respectively, for~~ the same three and six month periods in ~~2016. Overall, the~~2021. The increase was primarily due to increased compensation expense related to an increase in ~~our selling, general~~headcount. Depreciation and administrative expenses is due in part to slightly higher head count, increased sales and marketing costs, and increasing costs related to being a publicly held company and implementing new accounting standards. The year to date period ended September 30, 2017 also included $118,000 in acquisition-related (legal, accounting and consulting) expenses of SureHarvest and A Bee Organic.

~~Software Sales and Related Consulting Segment~~

~~Software license, maintenance and support services revenue~~amortization expense for the three months ~~and year to date period~~ ended ~~September~~June 30, ~~2017 of $243,186 and $532,684, respectively, represents a new revenue stream specific to our acquisition of SureHarvest, as further described in Note 2~~2022 increased 0.7% compared to the ~~consolidated financial statements above. SureHarvest employs a software-as-a-service (SaaS)~~same period in 2021. Depreciation and amortization expense for the six months ended June 30, 2022 decreased 2.0% compared to the same period in 2021.

Software and Related Consulting Segment

Software and related consulting revenue ~~model that bundles annual software licenses with ongoing software enhancements and upgrades and~~primarily represents fees earned from a wide range of professional consulting services and technology solutions that support our verification business and generate incremental revenue specific to the food and agricultural industry.

~~Consulting service~~ Software and related consulting revenue for the three and six months ended June 30, 2022 increased approximately 1.5% and ~~year to date period ended September 30, 2017 of $131,427 and $399,120,~~98.3%, respectively primarily represents fees earned from professional appearances, customer education and training related services. It is a new revenue stream specific to our acquisition of SureHarvest, as further described in Note 2compared to the ~~consolidated financial statements~~same periods in 2021. The six month increase is due to a significant short-term engagement with a Japanese party to promote Japanese seafood products into the American supply chain. While we are hopeful that the engagement will be an annual recurring source of revenue for our consulting segment, as well as a potential opportunity for our verification and certification segment, we can give no assurance that it will be an ongoing source of revenue. Additionally, because this was a short-term engagement, it is not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Costs of revenues for our software and related consulting segment for the three and six months ended June 30, 2022 was approximately $0.4 and $1.5 million, respectively, compared to approximately $0.4 million and $0.7 million, respectively, for the same periods in 2021. Gross margin for the three months ended June 30, 2022 increased to 27.6% compared to 27.0% for the same period in 2021. Gross margin for the six months ended June 30, 2022 decreased to 16.9% compared to 27.3% for the same period in 2021. The six month decrease in gross margin is due primarily to increased cost of contract labor to support the short-term consulting engagement mentioned above.

~~Selling, general and administrative~~Other operating expenses for the three and six months ended June 30, 2022 decreased approximately 31.4% and ~~year~~30.2%, respectively, compared to ~~date~~the same period in 2021. Depreciation and amortization for the three and six months ended ~~September~~June 30, ~~2017 were approximately $283,100~~2022 decreased 5.9% and ~~$1.10 million. Approximately $424,500~~3.0%, respectively, compared to the same periods in 2021. The decrease is predominately due to ~~amortization and depreciation expense related to assets acquired with the SureHarvest acquisition; and approximately $675,400~~a reduction in ~~salaries, professional services and other general and administrative costs.~~headcount resulting in less compensation expense.

As with all of our acquisitions, we continue to identify synergies and implement best practices. We focus our efforts to create value in various ways such ~~as:~~as improving the performance of our ~~acquisitions,~~acquired businesses, removing excess capacity, creating market access for products, acquiring skills and technologies more quickly or at a lower cost than we can build in-house, exploiting our industry-specific scalability and bundling opportunities, and picking winners early and helping them develop their businesses. Achieving any or all of these strategies take time to implement. We have learned that it ~~takes about 2-3~~can take two to three years after an acquisition ~~date~~ to fully understand the complexities, ~~of our larger acquisitions,~~ at which time, we have seen solid improvements in revenues and/or costs.

Dividend Income from Progressive Beef

For the three months ended June 30, 2022 and 2021, the Company received dividend income of $50,000 and $30,000, respectively, from Progressive Beef representing a distribution of their earnings. For the six months ended June 30, 2022 and 2021, the Company received dividend income totaling $100,000 and $60,000, respectively.

Income Tax Expense

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 and six months ended ~~September~~June 30, ~~2017 and 2016,~~2022, we recorded income tax expense of ~~$199,000~~approximately $118,000 and ~~$135,000 respectively. For the nine months ended September 30, 2017 and 2016, we recorded~~$281,000, respectively, compared to income tax expense of ~~$150,000~~$104,000 and ~~$264,950 respectively.~~$115,000 for the same periods in 2021. The effective tax rate for the three and six months ended June 30, 2021 was favorably impacted by the non-taxability of the PPP loan forgiveness income.

Net Income and Per Share Information

As a result of the foregoing, net income attributable to WFCF shareholders for the three and six months ended ~~September~~June 30, ~~2017~~2022 was ~~$290,192, or $0.01~~approximately $0.2 million and $0.7 million, respectively, and $0.04 and $0.12, respectively, per basic and diluted common share, respectively, compared to ~~$224,953, or $0.01~~net income of approximately $0.2 million and $1.4 million, respectively, and $0.03 and $0.22, respectively, per basic and diluted common share for the same ~~period~~periods in 2016. Net income attributable to WFCF shareholders for the year to date period ended September 30, 2017 was $467,942 or $0.02 per basic and diluted common share, compared to $481,858 or $0.02 per basic and diluted common share for the same period in 2016.2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our ~~Chief Executive Officer~~management, including our principal executive and ~~Chief Financial Officer, after evaluating~~financial officers, have conducted an evaluation of the effectiveness of the ~~Company’s~~design and operation of our “disclosure controls and ~~procedures” (as~~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 ~~Securities~~reports we file or submit under the Exchange Act ~~of 1934 (Exchange Act) Rule 13a-15(e)~~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 ~~have concluded that~~fairly present in all material respects our ~~disclosure controls~~financial condition, results of operations and ~~procedures are effective based on our evaluation of these controls and procedures as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15.~~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.

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 ~~2016~~2021 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~~June 30, ~~2017, there~~2022, the Company recognizes matters specific to COVID-19, the inflationary environment and weather-related risks may have ~~been no material changes to~~a continued economic impact on the ~~risks disclosed in our most recent Annual Report on Form 10−K.~~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. For additional information on specific risks in our current filing, see “Coronavirus Pandemic (COVID-19), the Inflationary Environment and other Weather Related Risks” in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations above.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~In connection with the A Bee Organic acquisition, we issued 45,684 shares~~Issuer Purchases of ~~common stock~~Equity Securities

On September 30, 2019, our Board of ~~Where Food Comes From, Inc. valued at approximately $98,200 based upon the closing price of our stock on May 30, 2017, of $2.15 per share.~~

For services rendered by our advisors in connection with the A Bee Organic acquisition, we issued 11,628 shares of common stock of WFCF valued at approximately $25,000 based upon the closing price of our stock on May 30, 2017, of $2.15 per share.

~~The issuance of these~~Directors approved a new plan to buyback up to ten million additional shares of our common stock ~~described above was pursuant to~~from the ~~exemption from registration provided by Section 4(2) of~~open market (“Stock Buyback Plan”). Activity for the ~~Securities Act of 1933,~~three months ended June 30, 2022 is as amended and related state private offering exemptions. All of the investors were Accredited Investors as defined in the Securities Act who took their shares for investments purposes without a view to distribution and had access to information concerning the Company and its business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for these shares. All certificates for these shares issued pursuant to Section 4(2) contain a restrictive legend. Finally, our stock transfer agent has been instructed not to transfer any of such shares, unless such shares are registered for resale or there is an exemption with respect to their transfer.follows:

	Number of Shares		Cost of Shares (in thousands)		Average Cost per Share
Shares purchased - April 2022		15,000	$	156	$	10.38
Shares purchased - May 2022		17,500		185	$	10.59
Shares purchased - June 2022		28,000		307	$	10.98
Total		60,500	$	648	$	10.72

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)

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 2, 2017~~August 11, 2022	Where Food Comes From, Inc.

	By:	/s/ John K. Saunders
		Chief Executive Officer

	By:	/s/ Dannette Henning
		Chief Financial Officer

	☐
	For the Quarterly period ended June 30, 2022

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ____________ to _____________

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		WFCF		The NASDAQ Stock Market LLC

~~Where Food Comes From, Inc.~~
~~Table of Contents~~
~~September 30, 2017~~

Part 1 - Financial Information

~~Item 1.~~			~~Financial Statements~~		3
Item 1.	Financial Statements			3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 4.	Controls and Procedures	2527

Part II - Other Information

Item 1.	Legal Proceedings	2628

Item 1A.	Risk Factors	2628

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2628

Item 6.	Exhibits	26

	September 30,			December 31,
	2017			2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,809,867		$	2,489,985
Accounts receivable, net of allowance		1,911,275			1,344,646
Short-term investments		740,739			733,104
Prepaid expenses and other current assets		381,261			203,744
Total current assets		6,843,142			4,771,479
Property and equipment, net		1,122,594			1,229,350
Intangible and other assets, net		4,076,860			4,228,228
Goodwill		2,652,250			2,652,250
Deferred tax assets, net		157,560			—
Total assets	$	14,852,406		$	12,881,307

Liabilities and Equity
Current liabilities:
Accounts payable	$	719,026		$	333,784
Accrued expenses and other current liabilities		1,326,091			480,047
Customer deposits and deferred revenue		849,285			524,396
Current portion of notes payable		8,525			—
Current portion of capital lease obligations		7,477			4,067
Total current liabilities		2,910,404			1,342,294
Capital lease obligations, net of current portion		27,320			15,735
Notes payable, net of current portion		45,640			—
Lease incentive obligation		149,898			158,025
Deferred tax liabilities, net		—			49,440
Total liabilities		3,133,262			1,565,494

Commitments and contingencies (Note 8)

Contingently redeemable non-controlling interest		1,601,294			1,888,135

Equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding		—			—
Common stock, $0.001 par value; 95,000,000 shares authorized; 24,964,684 issued and 24,703,535 outstanding at 9/30/2017 24,890,121 issued and 24,647,186 outstanding at 12/31/2016		24,964			24,890
Additional paid-in-capital		10,314,549			10,052,597
Treasury stock		(564,688	)		(524,892	)
261,149 shares at 9/30/2017
242,935 shares at 12/31/2016
Retained earnings (accumulated deficit)		343,025			(124,917	)
Total equity		10,117,850			9,427,678
Total liabilities and stockholders’ equity	$	14,852,406		$	12,881,307


	June 30,			December 31,
(Amounts in thousands, except per share amounts)	2022			2021
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	6,408		$	5,414
Accounts receivable, net of allowance		1,963			2,178
Inventory		877			767
Prepaid expenses and other current assets		797			325
Total current assets		10,045			8,684
Property and equipment, net		1,119			1,295
Right-of-use assets, net		2,736			2,823
Investment in Progressive Beef		991			991
Intangible and other assets, net		2,578			2,581
Goodwill, net		2,946			2,946
Deferred tax assets, net		497			464
Total assets	$	20,912		$	19,784

Liabilities and Equity
Current liabilities:
Accounts payable	$	721		$	447
Accrued expenses and other current liabilities		1,608			710
Deferred revenue		1,822			1,513
Current portion of finance lease obligations		11			13
Current portion of operating lease obligations		331			313
Total current liabilities		4,493			2,996
Finance lease obligations, net of current portion		15			19
Operating lease obligation, net of current portion		2,916			3,020
Total liabilities		7,424			6,035

Commitments and contingencies		-			-

Equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; NaN issued or outstanding		-			-
Common stock, $0.001 par value; 95,000 shares authorized; 6,492 (2022) and 6,489 (2021) shares issued, and 5,979 (2022) and 6,071 (2021) shares outstanding		6			6
Additional paid-in-capital		12,045			11,955
Treasury stock of 513 (2022) and 419 (2021) shares		(4,877	)		(3,807	)
Retained earnings		6,314			5,595
Total equity		13,488			13,749
Total liabilities and stockholders’ equity	$	20,912		$	19,784

Large accelerated filer:	☐	Accelerated filer:	☐
Non-accelerated ~~filer:~~filer:	☐	Smaller reporting company:	☒
Emerging growth company	☐

	Three months ended September 30,
	2017			2016
Revenues:
Verification and certification service revenue	$	3,672,587		$	2,963,853
Product sales		687,235			380,393
Software license, maintenance and support services revenue		243,186			—
Consulting service revenue		131,427			—
Total revenues		4,734,435			3,344,246
Costs of revenues:
Labor and other costs of services		1,890,888			1,522,203
Costs of products		410,309			220,599
Cost of software license, maintenance and support services		141,902			—
Total costs of revenues		2,443,099			1,742,802
Gross profit		2,291,336			1,601,444
Selling, general and administrative expenses		1,841,597			1,239,834
Income from operations		449,739			361,610
Other expense (income):
Interest expense		287			649
Other (income) expense, net		(1,691	)		1,008
Income before income taxes		451,143			359,953
Income tax expense		199,000			135,000
Net income		252,143			224,953
Net loss attributable to non-controlling interest		38,049			—
Net income attributable to Where Food Comes From, Inc.	$	290,192		$	224,953

Per share - net income attributable to Where Food Comes From, Inc.:
Basic	$	0.01		$	0.01
Diluted	$	0.01		$	0.01

Weighted average number of common shares outstanding:
Basic		24,705,934			23,772,967
Diluted		24,886,147			23,929,011
* less than $0.01 per share


	Three months ended June 30,
(Amounts in thousands, except per share amounts)	2022			2021
Revenues:
Verification and certification service revenue	$	3,964		$	3,695
Product sales		878			964
Software and related consulting revenue		489			482
Total revenues		5,331			5,141
Costs of revenues:
Costs of verification and certification services		2,325			2,132
Costs of products		522			648
Costs of software and related consulting		354			352
Total costs of revenues		3,201			3,132
Gross profit		2,130			2,009
Selling, general and administrative expenses		1,817			1,727
Income from operations		313			282
Other income/(expense):
Dividend income from Progressive Beef		50			30
Other income, net		1			-
Loan forgiveness from Paycheck Protection Program
Gain on sale of assets
Loss on foreign currency exchange		(23	)		(5	)
Interest expense		(1	)		(1	)
Income before income taxes		340			306
Income tax expense		118			104
Net income	$	222		$	202

Per share - net income:
Basic	$	0.04		$	0.03
Diluted	$	0.04		$	0.03

Weighted average number of common shares outstanding:
Basic		6,013			6,100
Diluted		6,096			6,186

	Year to date ended September 30,
	2017			2016
Revenues:
Verification and certification service revenue	$	9,152,520		$	7,733,613
Product sales		1,226,141			855,986
Software license, maintenance and support services revenue		532,684			—
Consulting service revenue		399,120			—
Total revenues		11,310,465			8,589,599
Costs of revenues:
Labor and other costs of services		4,860,857			3,973,299
Costs of products		743,308			490,162
Cost of software license, maintenance and support services		362,139			—
Total costs of revenues		5,966,304			4,463,461
Gross profit		5,344,161			4,126,138
Selling, general and administrative expenses		5,023,446			3,412,211
Income from operations		320,715			713,927
Other expense (income):
Interest expense		603			1,347
Other income, net		(10,989	)		(2,623	)
Income before income taxes		331,101			715,203
Income tax expense		150,000			264,950
Net income		181,101			450,253
Net loss attributable to non-controlling interest		286,841			31,605
Net income attributable to Where Food Comes From, Inc.	$	467,942		$	481,858

Per share - net income attributable to Where Food Comes From, Inc.:
Basic	$	0.02		$	0.02
Diluted	$	0.02		$	0.02

Weighted average number of common shares outstanding:
Basic		24,673,080			23,817,980
Diluted		24,834,931			23,969,134
* less than $0.01 per share


	Six months ended June 30,
(Amounts in thousands, except per share amounts)	2022			2021
Revenues:
Verification and certification service revenue	$	7,748		$	6,958
Product sales		1,885			1,688
Software and related consulting revenue		1,854			935
Total revenues		11,487			9,581
Costs of revenues:
Costs of verification and certification services		4,361			3,925
Costs of products		1,059			1,105
Costs of software and related consulting		1,540			680
Total costs of revenues		6,960			5,710
Gross profit		4,527			3,871
Selling, general and administrative expenses		3,591			3,500
Income from operations		936			371
Other income/(expense):
Dividend income from Progressive Beef		100			60
Other income, net		1			1
Loan forgiveness from Paycheck Protection Program		-			1,037
Gain on sale of assets		-			9
Loss on foreign currency exchange		(35	)		(7	)
Interest expense		(2	)		(4	)
Income before income taxes		1,000			1,467
Income tax expense		281			115
Net income	$	719		$	1,352

Per share - net income:
Basic	$	0.12		$	0.22
Diluted	$	0.12		$	0.22

Weighted average number of common shares outstanding:
Basic		6,053			6,151
Diluted		6,136			6,241


	Six months ended June 30,
(Amounts in thousands)	2022			2021

Operating activities:
Net income	$	719		$	1,352
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		392			401
Gain on sale of assets		-			(9	)
Stock-based compensation expense		83			54
Deferred tax (benefit) / expense		(33	)		3
Bad debt expense		17			40
Forgiveness of note payable from Paycheck Protection Program		-			(1,037	)
Changes in operating assets and liabilities:
Accounts receivable		198			477
Inventory		(110	)		(885	)
Prepaid expenses and other assets		(472	)		106
Accounts payable		274			73
Accrued expenses and other current liabilities		897			519
Deferred revenue		309			521
Right of use assets and liabilities, net		(4	)		5
Net cash provided by operating activities		2,270			1,620

Investing activities:
Purchase of digital assets		(178	)		-
Purchases of property, equipment and software development costs		(29	)		(128	)
Net cash used in investing activities		(207	)		(128	)

Financing activities:
Repayments of finance lease obligations		(6	)		(7	)
Proceeds from stock option exercise		7			44
Stock repurchase under Stock Buyback Plan		(1,070	)		(606	)
Net cash used in financing activities		(1,069	)		(569	)
Net change in cash		994			923
Cash at beginning of period		5,414			4,374
Cash at end of period	$	6,408		$	5,297

						Additional						Accumulated
	Common Stock					Paid-in			Treasury			Deficit/Retained
	Shares			Amount		Capital			Stock			Earnings			Total

Balance at December 31, 2016		24,647,186			24,890		10,052,597			(524,892	)		(124,917	)		9,427,678

Acquisition of A Bee Organic		45,684			45		98,176			—			—			98,221
Issuance of common shares for acquisition-related consulting services		11,628			12		24,988			—			—			25,000
Stock based compensation expense		—					130,637			—			—			130,637
Issuance of common shares upon exercise of options		7,001			7		8,161			—			—			8,168
Repurchase of common shares under Buyback Program		(18,214	)		—		—			(39,796	)		—			(39,796	)
Vesting of restricted stock awards		10,250			10		(10	)		—			—			—
Net income attributable to Where Food Comes From, Inc.		—			—		—			—			467,942			467,942
Balance at September 30, 2017		24,703,535		$	24,964	$	10,314,549		$	(564,688	)	$	343,025		$	10,117,850

						Additional
	Common Stock					Paid-in		Treasury			Retained
(Amounts in thousands)	Shares			Amount		Capital		Stock			Earnings		Total

Balance at December 31, 2021		6,071		$	6	$	11,955	$	(3,807	)	$	5,595	$	13,749
Stock-based compensation expense		2			-		51		-			-		51
Repurchase of common shares under Stock Buyback Plan		(34	)		-		-		(422	)		-		(422	)
Net income		-			-		-		-			497		497
Balance at March 31, 2022		6,039		$	6	$	12,006	$	(4,229	)	$	6,092	$	13,875
Beginning balance, value		6,039		$	6	$	12,006	$	(4,229	)	$	6,092	$	13,875

Stock-based compensation expense		-			-		32		-			-		32
Stock options exercised		1			-		7		-			-		7
Repurchase of common shares under Stock Buyback Plan		(61	)		-		-		(648	)		-		(648	)
Net income		-			-		-		-			222		222
Balance at June 30, 2022		5,979		$	6	$	12,045	$	(4,877	)	$	6,314	$	13,488
Ending balance, value		5,979		$	6	$	12,045	$	(4,877	)	$	6,314	$	13,488

	Three months		Year to date
	ended		ended
	September 30, 2016		September 30, 2016
Total revenue	$	3,732,770	$	9,622,988
Net income attributable to Where Food Comes From, Inc.	$	229,434	$	397,259
Basic and diluted earnings per share	$	0.01	$	0.02
* less than $0.01 per share


	September 30,		December 31,		Estimated	June 30,		December 31,		Estimated
	2017		2016		Useful life	2022		2021		Useful Life
Intangible assets subject to amortization:
Tradenames and Trademarks	$	282,307	$	282,307	2.5 - 8.0 years
Tradenames and trademarks						$	417	$	417	2.5 - 8.0 years
Accreditations		88,663		88,663	5.0 years		75		75	5.0 years
Customer Relationships		3,084,551		2,836,330	8.0 - 15.0 years
Beneficial Lease Arrangement		120,200		120,200	11.0 years
Customer relationships							3,664		3,664	3.0 - 15.0 years
Patents		970,100		970,100	4.0 years		970		970	4.0 years
		4,545,821		4,297,600
Non-compete agreements							121		121	5.0 years
Intangible and other assets, gross							5,247		5,247
Less accumulated amortization		947,506		547,917			3,336		3,154
		3,598,315		3,749,683
Intangible and other assets, net							1,911		2,093
Cryptocurrency (not subject to amortization)							178		-
Tradenames/trademarks (not subject to amortization)		465,000		465,000			465		465
		4,063,315		4,214,683
Deposit		13,545		13,545
	$	4,076,860	$	4,228,228
Intangible assets							2,554		2,558
Other assets							24		23
Intangible and other assets:						$	2,578	$	2,581

Years ended December 31st:	Unvested stock options		Unvested restricted stock awards		Total Unrecognized Compensation Expense
2017 (three months remaining)	$	14,715	$	23,781	$	38,496
2018		58,695		62,833		121,528
2019		53,552		11,426		64,978
	$	126,962	$	98,040	$	225,002

Years ended December 31st:	Unvested stock options		Unvested restricted stock awards		Total unrecognized compensation expense
2022 (remaining six months)	$	35	$	-	$	35
2023		40		-		40
2024		11		-		11
2025		-		-		-
	$	86	$	-	$	86

								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, 2021		100,235		$	8.36	$	7.53		5.88	$	620,445
Granted		-		$	-	$	-		-
Exercised		(1,500	)	$	5.07	$	5.05		0.44
Expired/Forfeited		-		$	-	$	-		-
Outstanding, June 30, 2022		98,735		$	8.41	$	7.56		5.46	$	303,084
Exercisable, June 30, 2022		83,750		$	7.59	$	7.16		4.88	$	291,379
Unvested, June 30, 2022		14,985		$	13.02	$	9.85		8.71	$	11,705

				Weighted avg.
	Number of			grant date
	options			fair value
Non-vested shares, December 31, 2021		-		$	-
Granted		1,500		$	13.45
Vested		(1,500	)	$	13.45
Forfeited		-		$	-
Non-vested shares, June 30, 2022		-		$	-


				Weighted Avg
	Number of			Grant Date
	Options			Fair Value
Non-vested restricted shares, December 31, 2016		136,000		$	2.44
Granted		—		$	—
Vested		(10,250	)	$	2.15
Forfeited		(18,750	)	$	2.18
Non-vested restricted shares, September 30, 2017		107,000		$	2.52


	Three months ended June 30, 2022								Three months ended June 30, 2021
	Verification and Certification Segment		Software Sales and Related Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Software Sales and Related Consulting Segment		Eliminations and Other		Consolidated Totals

Revenues:
Verification and certification service revenue	$	3,964	$	-	$	-	$	3,964	$	3,695	$	-	$	-	$	3,695
Product sales		878		-		-		878		964		-		-		964
Software and related consulting revenue		-		489		-		489		-		482		-		482
Total revenues	$	4,842	$	489	$	-	$	5,331	$	4,659	$	482	$	-	$	5,141


	Six months ended June 30, 2022								Six months ended June 30, 2021
	Verification and Certification Segment		Software Sales and Related Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Software Sales and Related Consulting Segment		Eliminations and Other		Consolidated Totals

Revenues:
Verification and certification service revenue	$	7,748	$	-	$	-	$	7,748	$	6,958	$	-	$	-	$	6,958
Product sales		1,885		-		-		1,885		1,688		-		-		1,688
Software and related consulting revenue		-		1,854		-		1,854		-		935		-		935
Total revenues	$	9,633	$	1,854	$	-	$	11,487	$	8,646	$	935	$	-	$	9,581


Deferred revenue:
Unearned revenue December 31, 2021	$	1,513
Unearned billings		3,450
Revenue recognized		(3,141	)
Unearned revenue June 30, 2022	$	1,822


	June 30, 2022						December 31, 2021
	Related Party		Other		Total		Related Party		Other		Total
Operating leases:
Operating lease ROU assets	$	2,469	$	247	$	2,716	$	2,568	$	230	$	2,798

Current operating lease liabilities	$	212	$	119	$	331	$	201	$	112	$	313
Noncurrent operating lease liabilities		2,771		145		2,916		2,880		140		3,020
Total operating lease liabilities	$	2,983	$	264	$	3,247	$	3,081	$	252	$	3,333

	June 30, 2022			December 31, 2021
Finance leases:
Property and equipment, at cost	$	51		$	51
Accumulated amortization		(31	)		(26	)
Property and equipment, net	$	20		$	25

Current obligations of finance leases	$	11		$	13
Finance leases, net of current obligations		15			19
Total finance lease liabilities	$	26		$	32

Weighted average remaining lease term (in years):
Operating leases		8.6			9.1
Finance leases		2.8			3.1

Weighted average discount rate:
Operating leases		5.8	%		5.7	%
Finance leases		10.6	%		11.5	%

Years Ending December 31st,	Operating Leases			Finance Leases
2022 (six remaining months)	$	252		$	9
2023		507			10
2024		446			5
2025		435			5
2026		430			-
Thereafter		2,078			-
Total lease payments		4,148			29
Less amount representing interest		(901	)		(3	)
Total lease obligations		3,247			26
Less current portion		(331	)		(11	)
Long-term lease obligations	$	2,916		$	15

Years ended December 31st:	Total
2017 (remaining three months)	$	77,611
2018		364,564
2019		362,630
2020		349,755
2021		360,287
Thereafter		4,048,955
Total lease commitments	$	5,563,802

Balance, December 31, 2016	$	1,888,135
Net loss attributable to non-controlling interest in SureHarvest for the nine months ended Sept 30, 2017		(286,841	)
Balance, September 30, 2017	$	1,601,294

	Year to date ended September 30,
	2017		2016
Cash paid for:
Interest expense	$	603	$	876
Income taxes	$	184,440	$	—

Non-cash investing and financing activities:
Common stock issued for remaining interest in Validus Verification Services LLC	$	—	$	200,100
Equipment acquired under a capital lease	$	18,033	$	22,439
Vehicle acquired under note payable	$	54,165	$	—
Lease incentive obligation	$	—	$	162,540
Common stock issued in acquisition of A Bee Organic	$	98,221	$	—
Common stock issued for acquisition-related consulting fess	$	25,000	$	—