Where Food Comes From Inc
For the period ended Dec 31, 2024. Filed Feb 20, 2025.
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FY2024 · Filed Feb 20, 2025
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Item 8. Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Where Food Comes From, Inc.
Castle Rock, Colorado
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Where Food Comes From, Inc. (the Company) as of December 31, 2024, and the related consolidated statements of income, equity, and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Revenue Recognition – Refer to Note 2 to the financial statements
The Company recognizes revenue upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company offers customers the ability to acquire multiple licenses of software products and services, in its customer agreements through its service and licensing programs.
Significant judgment is exercised by the Company in determining revenue recognition for these customer agreements, and includes the following:
| ● | Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together, such as software licenses and related services. |
| ● | The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation. |
| ● | Identification and treatment of contract terms that may impact the timing and amount of revenue recognized (e.g., length of time for services and cancellation terms). |
| ● | Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately. |
Given these factors and due to the volume of transactions, the related audit effort in evaluating management’s judgments in determining revenue recognition for these customer agreements was extensive and required a high degree of auditor judgment.
Our principal audit procedures related to the Company’s revenue recognition for these customer agreements included the following:
| ● | We evaluated management’s significant accounting policies related to these customer agreements for reasonableness. |
| ● | We selected a sample of customer agreements and performed the following procedures: |
| - | Obtained and read contract source documents for each selection, including master agreements, and other documents that were part of the agreement. |
| - | Tested management’s identification and treatment of contract terms. |
| - | Assessed the terms in the customer agreement and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions. |
| ● | We evaluated the reasonableness of management's estimate of stand-alone selling prices for products and services that are not sold separately. |
| ● | We evaluated the appropriateness of certain accounts receivables and deferred revenue items based on the timing of the payment and the products and services provided. |
| ● | We tested the mathematical accuracy of management's calculations of revenue and the associated timing of revenue recognized in the financial statements. |
Inventory – Refer to Note 2 to the financial statements
The Company reports inventory at the lower of cost or market value, with the cost calculated using the first-in-first out (FIFO) method. Market value represents the estimated selling price.
Significant judgment is exercised by the Company in determining whether inventory is appropriately recorded at the lower of cost or market value, and includes the following:
| ● | Determination of the current market value of the inventory. |
| ● | Determination of the feasibility of future sale of the inventory, including proper consideration of obsolescence. |
Given these factors and due to the value of the inventory, the related audit effort in evaluating management's judgments in determining the valuation of inventory required a high degree of auditor judgment.
Our principal audit procedures related to the Company's valuation of inventory included the following:
| ● | We examined source documentation for the original costs of the inventory, evaluating the reasonableness of the historic cost and volume of units recorded by the Company. |
| ● | We evaluated the reasonableness of management's intent for selling and distributing the inventory, including their current use in the livestock industry and associated partners and suppliers. |
| ● | We evaluated the reasonableness of current market values of the inventory in comparison to original cost. |
Digital Assets – Refer to Note 2 to the financial statements
The Company reports its digital assets at fair value, with changes recognized in net income each reporting period. The Company does not accept or receive digital assets for transactional purposes and has ownership of and control over their digital assets using a third-party custodial service to secure it.
As the Company’s digital assets are not able to be directly confirmed between the third-party custodial service and the auditor, significant judgement on the auditor’s part is required to substantiate the existence and rights of the digital assets, including:
| ● | Determining the number of digital assets held by the Company. |
| ● | Determining the rights to the digital assets, ensuring the Company appropriately held ownership of the digital assets. |
Given these factors and due to the value of the digital assets, the related audit effort in evaluating the Company’s reported digital assets required a high degree of auditor judgment.
Our principal audit procedures related to the existence of the digital assets and the Company's rights to the assets included the following:
| ● | We examined source documentation for the original costs of the digital assets, evaluating the reasonableness of the historic cost and volume of units recorded by the Company. |
| ● | We confirmed existence of the Company’s digital wallet with the third-party custodial service. |
| ● | We performed an observation of the Company accessing the digital wallet, noting the number of digital assets held at the time of observation as well as inspection of historical activity reports provided by the third-party custodial service’s website. |
/s/Haynie & Company
We have served as the Company’s auditor since 2024
Auditor Firm ID 457
Littleton, Colorado
February 20, 2025
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Where Food Comes From, Inc.
Castle Rock, Colorado
OPINION ON THE FINANCIAL STATEMENTS
We have audited the accompanying consolidated balance sheet of Where Food Comes From, Inc. and its subsidiaries (the “Company”) as of December 31, 2023, and the related consolidated statements of income, equity, and cash flows, for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
BASIS FOR OPINION
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/s/Causey Demgen & Moore, P.C.
We served as the Company’s auditors from 2019 to 2023.
Auditor Firm ID 647
Denver, Colorado
February 15, 2024
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