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)

 

Colorado43-1802805

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

 

202 6th6th 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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueWFCFThe NASDAQ Stock Market LLC

 

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of AprilJuly 29, 2022, was 6,023,8415,953,591.


 

 

 

 

 

Where Food Comes From, Inc.

Table of Contents

March 31,June 30, 2022

 

Part 1 - Financial Information
 
Item 1.Financial Statements3
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations16
Item 4.Controls and Procedures2120
   
Item 4.Controls and Procedures27
Part II - Other Information
   
Item 1.Legal Proceedings2228
   
Item 1A.Risk Factors2228
   
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds2228
   
Item 6.Exhibits2228

 

2

 

 

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.

 

3

 

 

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.

 

4

 

 

Where Food Comes From, Inc.

Consolidated Statements of Cash FlowsOperations

(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.

 

5

 

 

Where Food Comes From, Inc.

Consolidated StatementStatements of EquityCash 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.

6

 

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.

7

Where Food Comes From, Inc.

Consolidated Statement of Equity

(Unaudited)

       Additional          
  Common Stock  Paid-in  Treasury  Retained    
(Amounts in thousands) Shares  Amount  Capital  Stock  Earnings  Total 
                   
Balance at December 31, 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.

8

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1 - The Company and Basis of Presentation

 

Business Overview

 

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

 

79

 

 

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.

11

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 

 

9

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.

 

12

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 

 

10

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.

 

13

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 RestrictedNon 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  -  $- 

11

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 $163,000118,000 and $281,000, respectively, compared to income tax expense of $11,000104,000 and $115,000 for the same 2021 period.periods. The effective tax rate for the threesix months ended March 31,June 30, 2021 was favorably impacted by the non-taxability of the PPP loan forgiveness income.

14

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 $1.31.8 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 threesix 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.

 

14

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.

 

17

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 

18

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 inongoing outbreaks of COVID-19 outbreaks has continuedcontinue to impact our business. Due to safety and social distancing reasons, some customers have requestedcontinue 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 situationall of these risks closely and will react accordingly, to any future restrictions or limitations, while keeping the interest of our customers, employees and businessshareholders 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 MarchJune 30, 2022 and December 31, 20222021 was approximately $6.0$5.6 million compared toand $5.7 million, at December 31, 2021.respectively.

 

Net cash provided by operating activities for the threesix 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 threesix 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 andwas primarily for the purchase of digital assets. Net cash used in the period ending June 30, 2021 was primarily for the further developmentpurchase of internal use software.a vehicle and equipment.

21

 

Net cash used in financing activities for the threesix 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.

 

17

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.

 

22

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 

24

 

 

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 periodperiods 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 periodperiods 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 periodperiods 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 monthperiod 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 periodperiods in 2021. The threesix 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 threesix 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 periodperiods 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 periodperiods 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 periodperiods 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.

 

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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 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 pandemicinflationary 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)

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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, 2022Where Food Comes From, Inc.
 By:/s/ John K. Saunders
 Chief Executive Officer

 

 By://s/ Dannette Henning
 Chief Financial Officer

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