UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	For the Quarterly period ended ~~March 31,~~June 30, 2022

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

	For the transition period from ____________ to _____________

Commission File No. 001-40314

WHERE FOOD COMES FROM, INC.

(exact name of registrant as specified in its charter)

Colorado

43-1802805

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

202 6^th6th Street, Suite 400

Castle Rock, CO 80104

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(303) 895-3002

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.

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

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

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

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

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of ~~April~~July 29, 2022, was ~~6,023,841~~5,953,591.

Where Food Comes From, Inc.

Table of Contents

~~March 31,~~June 30, 2022

Part 1 - Financial Information

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

~~Item 4.~~	~~Controls and Procedures~~	2120

Item 4.	Controls and Procedures	27

Part II - Other Information

Item 1.	Legal Proceedings	2228

Item 1A.	Risk Factors	2228

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2228

Item 6.	Exhibits	2228

Where Food Comes From, Inc.

Consolidated Balance Sheets


	March 31,			December 31,			June 30,			December 31,
(Amounts in thousands, except per share amounts)	2022			2021			2022			2021
		(Unaudited)					(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	6,093		$	5,414		$	6,408		$	5,414
Accounts receivable, net of allowance		2,200			2,178			1,963			2,178
Inventory		815			767			877			767
Prepaid expenses and other current assets		381			325			797			325
Total current assets		9,489			8,684			10,045			8,684
Property and equipment, net		1,210			1,295			1,119			1,295
Right-of-use assets, net		2,744			2,823			2,736			2,823
Investment in Progressive Beef		991			991			991			991
Intangible and other assets, net		2,491			2,581			2,578			2,581
Goodwill, net		2,946			2,946			2,946			2,946
Deferred tax assets, net		483			464			497			464
Total assets	$	20,354		$	19,784		$	20,912		$	19,784

Liabilities and Equity
Current liabilities:
Accounts payable	$	594		$	447		$	721		$	447
Accrued expenses and other current liabilities		1,324			710			1,608			710
Deferred revenue		1,277			1,513			1,822			1,513
Current portion of finance lease obligations		12			13			11			13
Current portion of operating lease obligations		314			313			331			313
Total current liabilities		3,521			2,996			4,493			2,996
Finance lease obligations, net of current portion		17			19			15			19
Operating lease obligation, net of current portion		2,941			3,020			2,916			3,020
Total liabilities		6,479			6,035			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; 6,491 (2022) and 6,489 (2021) shares issued, and 6,039 (2022) and 6,071 (2021) shares outstanding		6			6
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		12,006			11,955			12,045			11,955
Treasury stock of 452 (2022) and 419 (2021) shares		(4,229	)		(3,807	)
Treasury stock of 513 (2022) and 419 (2021) shares								(4,877	)		(3,807	)
Retained earnings		6,092			5,595			6,314			5,595
Total equity		13,875			13,749			13,488			13,749
Total liabilities and stockholders’ equity	$	20,354		$	19,784		$	20,912		$	19,784

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

Where Food Comes From, Inc.

Consolidated Statements of Operations

(Unaudited)


	Three months ended March 31,						Three months ended June 30,
(Amounts in thousands, except per share amounts)	2022			2021			2022			2021
Revenues:
Verification and certification service revenue	$	3,784		$	3,263		$	3,964		$	3,695
Product sales		1,007			724			878			964
Software and related consulting revenue		1,365			453			489			482
Total revenues		6,156			4,440			5,331			5,141
Costs of revenues:
Costs of verification and certification services		2,036			1,793			2,325			2,132
Costs of products		537			457			522			648
Costs of software and related consulting		1,186			328			354			352
Total costs of revenues		3,759			2,578			3,201			3,132
Gross profit		2,397			1,862			2,130			2,009
Selling, general and administrative expenses		1,774			1,773			1,817			1,727
Income from operations		623			89			313			282
Other income/(expense):
Dividend income from Progressive Beef		50			30			50			30
Other income, net		-			1			1			-
Loan forgiveness from Paycheck Protection Program		-			1,037
Gain on sale of assets		-			9
Loss on foreign currency exchange		(12	)		(2	)		(23	)		(5	)
Interest expense		(1	)		(3	)		(1	)		(1	)
Income before income taxes		660			1,161			340			306
Income tax expense		163			11			118			104
Net income	$	497		$	1,150		$	222		$	202

Per share - net income:
Basic	$	0.08		$	0.19		$	0.04		$	0.03
Diluted	$	0.08		$	0.19		$	0.04		$	0.03

Weighted average number of common shares outstanding:
Basic		6,067			6,136			6,013			6,100
Diluted		6,150			6,231			6,096			6,186

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

Where Food Comes From, Inc.

Consolidated Statements of ~~Cash Flows~~Operations

(Unaudited)

Three months ended March 31,
(Amounts in thousands) 2022 2021

Operating activities:
Net income $ 497 $ 1,150
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 195 202
Gain on sale of assets - (9 )
Stock-based compensation expense 51 25
Deferred tax (benefit) / expense (19 ) 34
Bad debt expense 5 28
Forgiveness of note payable from Paycheck Protection Program - (1,037 )
Changes in operating assets and liabilities:
Accounts receivable (27 ) 614
Inventory (48 ) (350 )
Prepaid expenses and other assets (56 ) (31 )
Accounts payable 147 26
Accrued expenses and other current liabilities 613 309
Deferred revenue (236 ) 203
Right of use assets and liabilities, net (2 ) 2
Net cash provided by operating activities 1,120 1,166

Investing activities:
Purchases of property, equipment and software development costs (16 ) (170 )
Net cash used in investing activities (16 ) (170 )

Financing activities:
Repayments of finance lease obligations (3 ) (3 )
Proceeds from stock option exercise - 40
Stock repurchase under Stock Buyback Plan (422 ) (411 )
Net cash used in financing activities (425 ) (374 )
Net change in cash 679 622
Cash at beginning of period 5,414 4,374
Cash at end of period $ 6,093 $ 4,996


	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

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

Where Food Comes From, Inc.

Consolidated ~~Statement~~Statements of ~~Equity~~Cash Flows

(Unaudited)

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

Balance at December 31, 2020 6,118 $ 6 $ 11,612 $ (2,702 ) $ 3,548 $ 12,464
Stock-based compensation expense - - 25 - - 25
Stock-based compensation expense, shares

Stock options exercised 18 - 40 - - 40
Repurchase of common shares under Stock Buyback Plan (29 ) - - (411 ) - (411 )
Net income - - - - 1,150 1,150
Balance at March 31, 2021 6,107 $ 6 $ 11,677 $ (3,113 ) $ 4,698 $ 13,268

Balance at December 31, 2021 6,071 $ 6 $ 11,955 $ (3,807 ) $ 5,595 $ 13,749
Beginning balance, value 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
Ending balance, value 6,039 $ 6 $ 12,006 $ (4,229 ) $ 6,092 $ 13,875


	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

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

Where Food Comes From, Inc.

Consolidated Statement of Equity

(Unaudited)


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

Balance at December 31, 2020		6,118		$	6	$	11,612	$	(2,702	)	$	3,548	$	12,464
Stock-based compensation expense		-			-		25		-			-		25
Stock-based compensation expense, shares
Stock options exercised		18			-		40		-			-		40
Repurchase of common shares under Stock Buyback Plan		(29	)		-		-		(411	)		-		(411	)
Net income		-			-		-		-			1,150		1,150
Balance at March 31, 2021		6,107		$	6	$	11,677	$	(3,113	)	$	4,698	$	13,268

Stock-based compensation expense		-			-		29		-			-		29
Stock options exercised		1			-		4		-			-		4
Repurchase of common shares under Stock Buyback Plan		(13	)		-		-		(195	)		-		(195	)
Net income		-			-		-		-			202		202
Balance at June 30, 2021		6,095		$	6	$	11,710	$	(3,308	)	$	4,900	$	13,308

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

Where Food Comes From, Inc.

Consolidated Statement of Equity

(Unaudited)

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

Balance at December 31, 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

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

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1 - The Company and Basis of Presentation

Business Overview

Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). We are an independent, third-party food verification company conducting both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops, agricultural and ~~agricultural~~aquaculture products are accurate. We care about food, agricultural and ~~other agricultural~~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 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 food they purchase through product labeling and web-based information sharing and education.

Most of our customers are located throughout the United States.

Basis of Presentation

Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations, financial position and cash flows of Where Food Comes From, Inc. and its subsidiaries, Where Food Comes From Organic, Inc. (“WFCFO”), Validus Verifications Services, LLC (“Validus”), Sterling Solutions (“Sterling”), SureHarvest Services, Inc. (“SureHarvest”), ~~A Bee Organic, Sow Organic, JVF Consulting~~ and Postelsia Holdings, Ltd. (“Postelsia”) (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. All significant intercompany transactions and amounts have been eliminated. The results of businesses acquired are included in the consolidated financial statements from the date of the acquisition. Actual results could differ from the estimates.

The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2021, included in our Form 10-K filed on February 28, 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 three and six months ended ~~March 31,~~June 30, 2022 are not necessarily indicative of the results to be expected for any other interim period of any future year.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Seasonality

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

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU’s. ASU’s were assessed and determined to be either not applicable or are not expected to have a material impact on the consolidated financial statements.

Note 2 – Basic and Diluted Net Income per Share

Basic net income per share was computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options 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 (amounts in thousands):

Schedule of Reconciliation of Basic and Diluted Income Per Share Computations


	Three months ended March 31,				Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021		2022		2021
Basic:
Weighted average shares outstanding		6,067		6,136		6,013		6,100		6,053		6,151

Diluted:
Weighted average shares outstanding		6,067		6,136		6,013		6,100		6,053		6,151
Weighted average effects of dilutive securities		83		95		83		86		83		90
Total		6,150		6,231		6,096		6,186		6,136		6,241

Antidilutive securities:		17		-		17		17		17		17

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.

810

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 3 - Investment in Progressive Beef, LLC

For the three months ended ~~March 31,~~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 ~~March 31,~~June 30, 2022 and 2021.

Note 4 – Intangible and Other Assets

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

Schedule of Intangible and Other Assets

	March 31,		December 31,		Estimated		June 30,		December 31,		Estimated
	2022		2021		Useful Life		2022		2021		Useful Life
Intangible assets subject to amortization:
Tradenames and trademarks	$	417	$	417		2.5 - 8.0 years	$	417	$	417	2.5 - 8.0 years
Accreditations		75		75		5.0 years		75		75	5.0 years
Customer relationships		3,664		3,664		3.0 - 15.0 years		3,664		3,664	3.0 - 15.0 years
Patents		970		970		4.0 years		970		970	4.0 years
Non-compete agreements		121		121		5.0 years		121		121	5.0 years
Intangible and other assets, gross		5,247		5,247				5,247		5,247
Less accumulated amortization		3,246		3,154				3,336		3,154
Intangible and other assets, net		2,001		2,093				1,911		2,093
Cryptocurrency (not subject to amortization)								178		-
Tradenames/trademarks (not subject to amortization)		465		465				465		465
Intangible assets		2,466		2,558				2,554		2,558
Other assets		25		23				24		23
Intangible and other assets:	$	2,491	$	2,581			$	2,578	$	2,581

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.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

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.

Note 5 – Accrued Expenses and Other Current Liabilities

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

Schedule of Accrued Expenses and Other Current Liabilities

March 31, December 31,
2022 2021

Income and sales taxes payable $ 376 $ 185
Payroll related accruals 412 288
Customer deposits 101 76
Professional fees and other expenses 435 161
Accrued expenses and other current liabilities $ 1,324 $ 710

~~Where Food Comes From, Inc.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

	June 30,		December 31,
	2022		2021

Income and sales taxes payable	$	494	$	185
Payroll related accruals		686		288
Customer deposits		92		76
Professional fees and other expenses		336		161
Accrued expenses and other current liabilities	$	1,608	$	710

Note 6 – Notes Payable

Unison Revolving Line of Credit

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%~~1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due on maturity. As of ~~March 31,~~June 30, 2022 and December 31, 2021, the effective interest rate was ~~5.00%~~6.25% and ~~4.75%~~4.75%, respectively. The LOC is collateralized by all the business assets of ~~ICS.~~Where Food Comes From Organic, Inc. (“WFCFO”). As of ~~March 31,~~June 30, 2022, and December 31, 2021, there were 0 amounts outstanding under this LOC.

Note 7 – Stock-Based Compensation

In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with equity-based compensation in the form of stock options, 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 operations.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

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

Schedule of Stock-based Compensation Expense


	Three months ended March 31,				Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021		2022		2021
Stock options	$	31	$	24	$	32	$	29	$	63	$	53
Stock awards		20		-		-		-		20		-
Restricted stock awards		-		1		-		-		-		1
Total	$	51	$	25	$	32	$	29	$	83	$	54

During the three months ended ~~March 31,~~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 ~~March 31,~~June 30, 2021, 0the 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 ~~awarded.~~granted during the six months ended June 30, 2021.

The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):

Schedule of Unrecognized Compensation Cost from Unvested Awards

Years ended December 31st:	Unvested stock options		Unvested restricted stock awards		Total unrecognized compensation expense		Unvested stock options		Unvested restricted stock awards		Total unrecognized compensation expense
2022 (remaining nine months)	$	67	$	-	$	67
2022 (remaining six months)							$	35	$	-	$	35
2023		40		-		40		40		-		40
2024		11		-		11		11		-		11
2025								-		-		-
	$	118	$	-	$	118	$	86	$	-	$	86

~~Where Food Comes From, Inc.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

Equity Incentive Plans

Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2006 Plan, the “Plans”) provide for the issuance of stock-based awards to employees, officers, directors and consultants. The Plans permit the granting of stock awards and stock options. The vesting of stock-based awards is generally subject to the passage of time and continued employment through the vesting period.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Stock Option Activity

Stock option activity under our Equity Incentive Plans is summarized as follows:

Schedule of Stock Option Activity

							Weighted avg.											Weighted avg.
			Weighted avg.		Weighted avg.		remaining							Weighted avg.		Weighted avg.		remaining
	Number of		exercise price		grant date fair		contractual life		Aggregate		Number of			exercise price		grant date fair		contractual life		Aggregate
	awards		per share		value per share		(in years)		intrinsic value		awards			per share		value per share		(in years)		intrinsic value

Outstanding, December 31, 2021		100,235	$	8.36	$	7.53		5.88	$	620,445		100,235		$	8.36	$	7.53		5.88	$	620,445
Granted		-	$	-	$	-		-				-		$	-	$	-		-
Exercised		-	$	-	$	-		-				(1,500	)	$	5.07	$	5.05		0.44
Expired/Forfeited		-	$	-	$	-		-				-		$	-	$	-		-
Outstanding, March 31, 2022		100,235	$	8.36	$	7.53		5.63	$	365,787
Exercisable, March 31, 2022		79,587	$	7.03	$	6.85		4.75	$	351,711
Unvested, March 31, 2022		20,648	$	13.50	$	10.14		9.04	$	14,076
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

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on ~~March 31,~~June 30, 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 ~~March 31,~~June 30, 2022.

Stock Activity

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

Schedule of ~~Restricted~~Non Vested Stock Award Activity Under Equity Incentive Plan

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, March 31, 2022 - $ -

~~Where Food Comes From, Inc.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

				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		-		$	-

Note 8 – Income Taxes

Deferred tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The provision or benefit for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. For the three and six months ended ~~March 31,~~June 30, 2022 we recorded an income tax expense of approximately $~~163,000~~118,000 and $281,000, respectively, compared to income tax expense of $~~11,000~~104,000 and $115,000 for the same 2021 ~~period.~~periods. The effective tax rate for the ~~three~~six months ended ~~March 31,~~June 30, 2021 was favorably impacted by the non-taxability of the PPP loan forgiveness income.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 9 - Revenue Recognition

Disaggregation of Revenue

We have identified 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).

Schedule of Revenues Disaggregated by Revenue


	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


	Three months ended March 31, 2022								Three months ended March 31, 2021								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	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	$	3,784	$	-	$	-	$	3,784	$	3,263	$	-	$	-	$	3,263	$	7,748	$	-	$	-	$	7,748	$	6,958	$	-	$	-	$	6,958
Product sales		1,007		-		-		1,007		724		-		-		724		1,885		-		-		1,885		1,688		-		-		1,688
Software and related consulting revenue		-		1,365		-		1,365		-		453		-		453		-		1,854		-		1,854		-		935		-		935
Total revenues	$	4,791	$	1,365	$	-	$	6,156	$	3,987	$	453	$	-	$	4,440	$	9,633	$	1,854	$	-	$	11,487	$	8,646	$	935	$	-	$	9,581

Contract Balances

As of ~~March 31,~~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.~~ million, respectively.

As of ~~March 31,~~June 30, 2022 and December 31, 2021, deferred revenue from contracts with customers was approximately $~~1.3~~1.8 and $1.5 million, respectively. The balance of the contract liabilities at ~~March 31,~~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 ~~three~~six month period ended ~~March 31,~~June 30, 2022 (amounts in thousands):

Schedule of Changes in Contract with Customer Liabilities


Deferred revenue:
Unearned revenue December 31, 2021	$	1,513		$	1,513
Unearned billings		1,771			3,450
Revenue recognized		(2,007	)		(3,141	)
Unearned revenue March 31, 2022	$	1,277
Unearned revenue June 30, 2022				$	1,822

1215

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 10 – Leases

The components of lease expense were as follows (amounts in thousands):

Schedule of Lease Expense

Three months ended March 31,
2022 2021
Operating lease cost $ 123 $ 116
Finance lease cost
Amortization of assets 2 2
Interest on finance lease obligations 1 1
Variable lease cost - -
Total net lease cost $ 126 $ 119


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Operating lease cost	$	123	$	116	$	246	$	233
Finance lease cost
Amortization of assets		3		3		5		5
Interest on finance lease obligations		-		1		1		2
Variable lease cost		-		-		-		-
Total net lease cost	$	126	$	120	$	252	$	240

Included in the table above, ~~is $0.1~~ ~~million~~ for the three and six months ended ~~March 31,~~June 30, 2022, is $0.1 million and ~~2021,~~$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%~~24.3% jointly-held ownership interest in The Move, LLC.

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

Schedule of Supplemental Balance Sheet Information Related to Leases


	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

March 31, 2022 December 31, 2021
Operating leases: Related Party Other Total Related Party Other Total
Operating lease ROU assets $ 2,518 $ 203 $ 2,721 $ 2,568 $ 230 $ 2,798

Current operating lease liabilities $ 206 $ 108 $ 314 $ 201 $ 112 $ 313
Noncurrent operating lease liabilities 2,826 115 2,941 2,880 140 3,020
Total operating lease liabilities $ 3,032 $ 223 $ 3,255 $ 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	%

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

March 31, 2022 December 31, 2021
Finance leases:
Property and equipment, at cost $ 51 $ 51
Accumulated amortization (28 ) (26 )
Property and equipment, net $ 23 $ 25

Current obligations of finance leases $ 12 $ 13
Finance leases, net of current obligations 17 19
Total finance lease liabilities $ 29 $ 32
Weighted average remaining lease term (in years):
Operating leases 8.9 9.1
Finance leases 2.9 3.1

Weighted average discount rate:
Operating leases 5.7 % 5.7 %
Finance leases 11.1 % 11.5 %

Schedule of Supplemental Cash Flow Information Related to Leases


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	126	$	116	$	251	$	230
Operating cash flows from finance leases	$	-	$	1	$	1	$	2
Financing cash flows from finance leases	$	3	$	2	$	6	$	5

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	3,111	$	3,057	$	3,111	$	3,057

1316

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

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

~~Schedule of Supplemental Cash Flow Information Related to Leases~~

Three months ended March 31,
2022 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 125 $ 114
Operating cash flows from finance leases $ 1 $ 1
Financing cash flows from finance leases $ 3 $ 3

ROU assets obtained in exchange for lease liabilities:
Operating leases $ 3,110 $ 3,531

Maturities of lease liabilities were as follows (amounts in thousands):

Schedule of Maturities of Operating Lease and Finance Lease Liabilities

Years Ending December 31st,	Operating Leases			Finance Leases			Operating Leases			Finance Leases
2022 (nine remaining months)	$	369		$	11
2022 (six remaining months)							$	252		$	9
2023		480			10			507			10
2024		419			5			446			5
2025		417			6			435			5
2026		430			-			430			-
Thereafter		2,078			-			2,078			-
Total lease payments		4,193			32			4,148			29
Less amount representing interest		(938	)		(3	)		(901	)		(3	)
Total lease obligations		3,255			29			3,247			26
Less current portion		(314	)		(12	)		(331	)		(11	)
Long-term lease obligations	$	2,941		$	17		$	2,916		$	15

Note 11 – Commitments and Contingencies

Legal proceedings

From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable.

Note 12 -– Segments

With each acquisition, we assess the need to disclose discrete information related to our operating segments. Because of the similarities of certain of our acquisitions that provide certification and verification services, we aggregate operations into 1one verification and certification reportable segment. The operating segments included in the aggregated verification and certification segment include IMI Global, WFCFO and Validus. The factors considered in determining this aggregated reporting segment include the economic similarity of the businesses, the nature of services provided, production processes, types of customers and distribution methods.

~~Where Food Comes From, Inc.~~

~~Notes to the Consolidated Financial Statements~~

~~(Unaudited)~~

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 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.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

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

Schedule of Operating Segments


	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

Where Food Comes From, Inc.

Three months ended March 31, 2022 Three months ended March 31, 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 14,860 3,815 (1,267 ) 17,408 17,545 2,891 (3,694 ) 16,742
Total assets $ 16,807 $ 4,814 $ (1,267 ) $ 20,354 $ 19,492 $ 3,890 $ (3,694 ) $ 19,688

Revenues:
Verification and certification service revenue $ 3,784 $ - $ - $ 3,784 $ 3,263 $ - $ - $ 3,263
Product sales 1,007 - - 1,007 724 - - 724
Software and related consulting revenue - 1,365 - 1,365 - 453 - 453
Total revenues $ 4,791 $ 1,365 $ - $ 6,156 $ 3,987 $ 453 $ - $ 4,440
Costs of revenues:
Costs of verification and certification services 2,036 - - 2,036 1,793 - - 1,793
Costs of products 537 - - 537 457 - - 457
Costs of software and related consulting - 1,186 - 1,186 - 328 - 328
Total costs of revenues 2,573 1,186 - 3,759 2,250 328 - 2,578
Gross profit 2,218 179 - 2,397 1,737 125 - 1,862
Depreciation & amortization 145 50 - 195 151 51 - 202
Other operating expenses 1,513 66 - 1,579 1,479 92 - 1,571
Segment operating income/(loss) $ 560 $ 63 $ - $ 623 $ 107 $ (18 ) $ - $ 89
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense) 49 (12 ) - 37 35 - 1,037 1,072
Income tax expense - - (163 ) (163 ) - - (11 ) (11 )
Net income/(loss) $ 609 $ 51 $ (163 ) $ 497 $ 142 $ (18 ) $ 1,026 $ 1,150

Notes to the Consolidated Financial Statements

(Unaudited)


	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

Note 13 – Supplemental Cash Flow Information

Schedule of Supplemental Cash Flow Information


	Three months ended March 31,				Six months ended June 30,
(Amounts in thousands)	2022		2021		2022		2021
Cash paid during the year:
Interest expense	$	-	$	1	$	-	$	1
Income taxes	$	-	$	-	$	452	$	345

Note 14 – Subsequent Events

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

1519

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, 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,” or “us”) is a leading trusted resource for third-party verification of food production practices in North America. The Company estimates that is supports more than approximately 17,500 farmers, ranchers, vineyards, wineries, processors, retailers, distributors, trade associations, consumer brands, chefs, and restaurants with a wide variety of value-added services provided through its family of verifiers, including IMI Global (“IMI”), Where Food Comes From Organic (“WFCFO” - previously International Certification Services and A Bee Organic), Validus Verification Services (“Validus”), and Sterling 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, aquaculture, crops and other food products are accurate.

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 food they purchase through product labeling and web-based information sharing and education. With the use of Quick Response Code (“QR”) technology, consumers can instantly access information about the producers behind their food.

WFCF was founded in 1996 and incorporated in the state of Colorado as a subchapter C corporation in 2006. The Company’s shares of common stock trade on the NASDAQ Capital Market (“NASDAQ”), under the stock ticker symbol, “WFCF.”

The Company’s original name – Integrated Management Information, Inc. (d.b.a. IMI Global) – was changed to Where Food Comes From, Inc. in 2012 to better reflect the Company’s mission. Early growth was attributable to source and age verification services for beef producers that wanted access to markets overseas following the discovery of “mad cow” disease in the U.S. Over the years, WFCF has expanded its portfolio to include verification and software services for most food groups and over 50 programs and organizations. This growth has been achieved both organically and through the acquisition of other companies.

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

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

~~Additionally, i~~

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.

1620

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.

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 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 ~~the COVID-19 situation~~all of these risks closely and will react accordingly, ~~to any future restrictions or limitations,~~ while keeping the interest of our customers, employees and ~~business~~shareholders in mind. Please refer to our risk factors included in our Form 10-K for the fiscal year ended December 31, 2021 for additional information for risks specifically related to COVID-19.

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 ~~March 31,~~June 30, 2022, we had cash and cash equivalents of approximately ~~$6.1~~$6.4 million compared to approximately $5.4 million at December 31, 2021. Our working capital at ~~March~~June 30, 2022 and December 31, ~~2022~~2021 was approximately ~~$6.0~~$5.6 million ~~compared to~~and $5.7 million, ~~at December 31, 2021.~~respectively.

Net cash provided by operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 was approximately ~~$1.1~~$2.3 million compared to ~~$1.2~~$1.6 million during the same period in 2021. Net cash provided by operating activities is driven by our net income and adjusted by non-cash items. Non-cash adjustments primarily include depreciation, amortization of intangible assets, 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 ~~March 31,~~June 30, 2022 was primarily driven by a change in accrued expenses and prepaid ~~expenses.~~expenses and other assets. The cash provided by operating activities for the period ending ~~March 31,~~June 30, 2021 was primarily driven by a change in accounts receivable, accounts payable, inventory and ~~accrued expenses and other current liabilities.~~deferred revenue.

Net cash used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022, was approximately ~~$16,000~~$0.2 million compared to ~~$0.2~~$0.1 million in the 2021 period. Net cash used in the period ending ~~March 31,~~June 30, 2022 ~~and~~was primarily for the purchase of digital assets. Net cash used in the period ending June 30, 2021 was primarily for the ~~further development~~purchase of ~~internal use software.~~a vehicle and equipment.

Net cash used in financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2022 and 2021 was approximately ~~$0.4 million.~~$1.1 million and $0.6 million, respectively. Cash used for the periods ending ~~March 31,~~June 30, 2022 and 2021, was primarily due to the repurchase of common shares under the Stock Buyback Plan.

Over the past several years, our growth has been funded primarily through cashflows from operations. We continually evaluate all funding options, including additional offerings of our securities to private, public and institutional investors and other credit facilities as they become available.

The primary driver of our operating cash flow is our third-party verification solutions, specifically the gross margin generated from services provided. Therefore, we focus on the elements of those operations, including revenue growth, gross margin and long-term projects that ensure a steady stream of operating profits to enable us to meet our cash obligations. On a weekly basis, we review the performance of each of our revenue streams focusing on third-party verification solutions compared with prior periods and our operating plan. We believe that our various sources of capital, including cash flow from operating activities, overall improvement in our performance, and our ability to obtain additional financing, are adequate to finance current operations 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 capabilities to adequately manage our ongoing business.

The culmination of all our efforts has brought significant opportunities to us, including increased investor confidence and renewed interest in our company, as well as the potential to develop business relationships with long-term strategic partners. In keeping with our core business, we will continue to review our business model with a focus on profitability, long-term capital solutions and the potential impact of acquisitions or divestitures, if such an opportunity arises.

Our plan for continued growth is primarily based on diversification and bundling opportunities in our product offerings within national and international markets, as well as potential acquisitions. We believe that there are significant growth opportunities available to us because of growing consumer awareness and demand on a national level. Internationally, a quality verification program is often the only way to overcome import or export restrictions.

Debt Facility

The Company 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 upon maturity. As of ~~March 31,~~June 30, 2022, and December 31, 2021, the effective interest rate was ~~5.00%~~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 ~~March 31,~~June 30, 2022, and December 31, 2021, there were no amounts outstanding under this LOC.

Off-Balance Sheet Arrangements

As of ~~March 31,~~June 30, 2022, we had no off-balance sheet arrangements of any type.

RESULTS OF OPERATIONS

Three and six months ended ~~March 31,~~June 30, 2022 compared to the same period in fiscal year 2021

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

	Three months ended March 31, 2022											Three months ended March 31, 2021											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		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		$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		14,860		3,815			(1,267	)		17,408			17,545		2,891			(3,694	)		16,742			14,244		3,865			(143	)		17,966			17,327		3,082			(3,093	)		17,316
Total assets	$	16,807	$	4,814		$	(1,267	)	$	20,354		$	19,492	$	3,890		$	(3,694	)	$	19,688		$	16,191	$	4,864		$	(143	)	$	20,912		$	19,274	$	4,081		$	(3,093	)	$	20,262

Revenues:
Verification and certification service revenue	$	3,784	$	-		$	-		$	3,784		$	3,263	$	-		$	-		$	3,263		$	3,964	$	-		$	-		$	3,964		$	3,695	$	-		$	-		$	3,695
Product sales		1,007		-			-			1,007			724		-			-			724			878		-			-			878			964		-			-			964
Software and related consulting revenue		-		1,365			-			1,365			-		453			-			453			-		489			-			489			-		482			-			482
Total revenues	$	4,791	$	1,365		$	-		$	6,156		$	3,987	$	453		$	-		$	4,440		$	4,842	$	489		$	-		$	5,331		$	4,659	$	482		$	-		$	5,141
Costs of revenues:
Costs of verification and certification services		2,036		-			-			2,036			1,793		-			-			1,793			2,325		-			-			2,325			2,132		-			-			2,132
Costs of products		537		-			-			537			457		-			-			457			522		-			-			522			648		-			-			648
Costs of software and related consulting		-		1,186			-			1,186			-		328			-			328			-		354			-			354			-		352			-			352
Total costs of revenues		2,573		1,186			-			3,759			2,250		328			-			2,578			2,847		354			-			3,201			2,780		352			-			3,132
Gross profit		2,218		179			-			2,397			1,737		125			-			1,862			1,995		135			-			2,130			1,879		130			-			2,009
Depreciation & amortization		145		50			-			195			151		51			-			202			149		48			-			197			148		51			-			199
Other operating expenses		1,513		66			-			1,579			1,479		92			-			1,571			1,561		59			-			1,620			1,442		86			-			1,528
Segment operating income/(loss)	$	560	$	63		$	-		$	623		$	107	$	(18	)	$	-		$	89		$	285	$	28		$	-		$	313		$	289	$	(7	)	$	-		$	282
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		49		(12	)		-			37			35		-			1,037			1,072			50		(23	)		-			27			29		(5	)		-			24
Income tax expense		-		-			(163	)		(163	)		-		-			(11	)		(11	)		-		-			(118	)		(118	)		-		(5	)		(99	)		(104	)
Net income/(loss)	$	609	$	51		$	(163	)	$	497		$	142	$	(18	)	$	1,026		$	1,150		$	335	$	5		$	(118	)	$	222		$	318	$	(17	)	$	(99	)	$	202

1823

	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 revenues consist of fees charged for verification audits and other verification services that the Company performs for customers. Fees earned from our WFCF labeling program are also included in our verification and certification revenues as it represents a value-added extension of our source verification. Verification and certification service revenue for the three and six months ended ~~March 31,~~June 30, 2022 increased ~~16.0%~~7.3% and 11.4%, respectively, compared to the same ~~period~~periods in 2021, primarily due to increased customer demand for our product offerings.

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 ended ~~March 31,~~June 30, 2022 decreased 8.9% compared to the same period in 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 for the six months ended June 30, 2022 increased ~~39.0%~~11.7% compared to the same period in 2021, primarily due to increased pricing ~~increased demand~~ and limited supply elsewhere in the market.

Costs of revenues for our verification and certification segment for the three and six months ended ~~March 31,~~June 30, 2022 were approximately ~~$2.0~~$2.8 million and $5.4 million, respectively, compared to approximately ~~$1.8~~$2.8 million and $5.0 million, respectively, for the same ~~period~~periods in 2021. Gross margin for the three and six months ended ~~March 31,~~June 30, 2022 was ~~46.3%~~41.2% and 43.7%, respectively compared to ~~43.6%~~40.3% and 41.9%, respectively, in 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.

Other operating expenses for the three and six months ended ~~March 31,~~June 30, 2022 ~~slightly~~ increased by approximately ~~2.3%~~8.3% and 5.3%, respectively, compared to the same three and six month ~~period~~periods in 2021. The increase was primarily due to increased compensation expense related to an increase in headcount. Depreciation and amortization expense for the three months ended ~~March 31,~~June 30, 2022 ~~decreased 4.0%~~increased 0.7% compared to the same ~~three month~~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 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. Software and related consulting revenue for the three and six months ended ~~March 31,~~June 30, 2022 increased approximately ~~201.3%~~1.5% and 98.3%, respectively compared to the same ~~period~~periods in 2021. The ~~three~~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 ~~March 31,~~June 30, 2022 ~~and 2021~~ was approximately ~~$1.2~~$0.4 and ~~$0.3~~$1.5 million, ~~respectively.~~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 ~~March 31,~~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 ~~13.1%~~16.9% compared to ~~27.6%~~27.3% for the same period in 2021. The ~~three~~six month decrease in gross margin is due primarily to increased cost of contract labor to support the short-term consulting engagement mentioned above.

Other operating expenses for the three and six months ended ~~March 31,~~June 30, 2022 decreased approximately ~~28.3%~~31.4% and 30.2%, respectively, compared to the same period in 2021. Depreciation and amortization for the three and six months ended ~~March 31,~~June 30, 2022 decreased ~~2.0%~~5.9% and 3.0%, respectively, compared to the same ~~three month period~~periods in 2021. The decrease is predominately due to a reduction in headcount resulting in less compensation expense.

1925

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 improving the performance of our 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 can take two to three years after an acquisition to fully understand the complexities, at which time, we have seen solid improvements in revenues and/or costs.

Dividend Income from Progressive Beef

For the three months ended ~~March 31,~~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 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 ~~March 31,~~June 30, 2022, we recorded income tax expense of approximately ~~$163,000~~$118,000 and $281,000, respectively, compared to income tax expense of ~~$11,000~~$104,000 and $115,000 for the same ~~period~~periods in 2021. The effective tax rate for the three and six months ended ~~March 31,~~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 ~~March 31,~~June 30, 2022 was approximately ~~$0.5~~$0.2 million and ~~$0.08~~$0.7 million, respectively, and $0.04 and $0.12, respectively, per basic and diluted common share, respectively, compared to net income of approximately ~~$1.2~~$0.2 million and ~~$0.19~~$1.4 million, respectively, and $0.03 and $0.22, respectively, per basic and diluted common share for the same ~~period~~periods in 2021.

2026

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive and financial officers, have conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. We believe that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There have not been any other changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

2127

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks, including those identified in Item 1A. — “Risk Factors” of our 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 ~~March 31,~~June 30, 2022, the Company recognizes matters specific to COVID-19, the ~~coronavirus pandemic~~inflationary environment and weather-related risks may have a continued economic impact on the Company, but management does not know and cannot estimate what the long-term financial impact may be. We may also disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. 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

Issuer Purchases of Equity Securities

On September 30, 2019, our Board of Directors approved a new plan to buyback up to ten million additional shares of our common stock from the open market (“Stock Buyback Plan”). Activity for the three months ended ~~March 31,~~June 30, 2022 is as follows:

Number of Shares Cost of Shares (in thousands) Average Cost per Share
Shares purchased - January 2022 9,550 $ 135 $ 14.17
Shares purchased - February 2022 15,000 178 $ 11.85
Shares purchased - March 2022 9,000 109 $ 12.11
Total 33,550 $ 422 $ 12.58

	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)

2228

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: ~~May 12,~~August 11, 2022	Where Food Comes From, Inc.

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

	By:	//s/ Dannette Henning
		Chief Financial Officer

2329


	March 31, 2022						December 31, 2021
Operating leases:	Related Party		Other		Total		Related Party		Other		Total
Operating lease ROU assets	$	2,518	$	203	$	2,721	$	2,568	$	230	$	2,798

Current operating lease liabilities	$	206	$	108	$	314	$	201	$	112	$	313
Noncurrent operating lease liabilities		2,826		115		2,941		2,880		140		3,020
Total operating lease liabilities	$	3,032	$	223	$	3,255	$	3,081	$	252	$	3,333

	Number of Shares		Cost of Shares (in thousands)		Average Cost per Share
Shares purchased - January 2022		9,550	$	135	$	14.17
Shares purchased - February 2022		15,000		178	$	11.85
Shares purchased - March 2022		9,000		109	$	12.11
Total		33,550	$	422	$	12.58