Where Food Comes From, Inc.

Previous wording

Our greatest asset is our people, and we continue to attract the best and brightest with our competitive pay and benefits package. As of March 31, 2026, we had 96 total employees, of which 87 were full-time employees. Approximately 83% of our workforce is comprised of female and other minority employees.

Current wording

Our greatest asset is our people, and we continue to attract the best and brightest with our competitive pay and benefits package. As of June 30, 2026, we had 94 total employees, of which 86 were full-time employees. Approximately 83% of our workforce is comprised of female and other minority employees.

Previous wording

At March 31, 2026, we had cash and cash equivalents of approximately $3.3 million compared to approximately $3.2 million at December 31, 2025. Our working capital at March 31, 2026 and December 31, 2025 was approximately $3.2 million.

Current wording

At June 30, 2026, we had cash and cash equivalents of approximately $3.4 million compared to approximately $3.2 million at December 31, 2025. Our working capital at June 30, 2026 and December 31, 2025 was approximately $3.0 million and $3.2 million, respectively.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 was approximately $0.5 million compared to $0.6 million during the same period in 2025. 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, fair market value gains and losses on digital assets, stock-based compensation expense, 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, 2026 decreased compared to the same period in 2025 primarily due to absorption of certain fixed costs of services over a reduction in our professional services revenue.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026 was approximately $1.5 million compared to $1.8 million during the same period in 2025. 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, fair market value gains and losses on digital assets, stock-based compensation expense, and deferred taxes. Fluctuations are primarily due to operating performance offset by the timing of cash receipts and cash disbursements.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 was approximately $148,000 compared to $29,000 in the 2025 period. Net cash used in the period ending March 31, 2026 and 2025 was for purchases of equipment and increased expenditures towards capitalized software development costs.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was approximately $155,000 compared to $63,000 in the 2025 period. Net cash used in the period ending June 30, 2026 and 2025 was for purchases of equipment and increased expenditures towards capitalized software development costs.

Previous wording

Net cash used in financing activities for the three months ended March 31, 2026 and 2025 was approximately $0.3 million and $0.4 million, respectively. Cash used for the periods ending March 31, 2026 and 2025, was primarily due to the repurchase of common shares under the Stock Buyback Plan.

Current wording

Net cash used in financing activities for the six months ended June 30, 2026 and 2025 was approximately $1.1 million and $0.6 million, respectively. Cash used for the periods ending June 30, 2026 and 2025, was primarily due to the repurchase of common shares under the Stock Buyback Plan.

Previous wording

Three months ended March 31, 2026 compared to the same period in fiscal year 2025

Current wording

Three and six months ended June 30, 2026 compared to the same period in fiscal year 2025

Previous wording

Verification and certification service revenues consist of fees charged for verification audits and other verification and certification related 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 months ended March 31, 2026 increased $0.2 million compared with the same period in 2025. We continue to experience new customer growth and bundling opportunities, but offsetting some of this growth are supply-side dynamics within the cattle industry. The beef side of our business has been impacted the most significantly. We know the cattle industry is cyclical in nature and based on the data from the USDA, we appear to be at the bottom of a contraction phase within the cattle cycle, however, we are still seeing signs of further contraction in the cattle industry in early 2026. We are also facing rapidly changing trade and tariff uncertainties. Because of the tight cattle supply, ranchers are receiving the highest cattle prices per head in a decade without verification; and beef packers are reluctant to incur additional costs of verification to their supply chain because of the high costs of acquiring cattle for slaughter. To expand supply, herds must be rebuilt within the United States and via imports. But rebuilding of the herd takes time and is impacted by many factors including drought conditions in different regions, the price of inputs and interest rates. We are encouraged because premiums for verified cattle remain strong in the marketplace above commodity cattle prices in spite of significant pressure on beef packer margins. Verified product attributes like animal care, sustainability and natural continued to be demanded and our programs allow supply chains to meet this growing customer demand. We are also optimistic about the recent launch of our Raisewell Certified Standard, which was developed to meet growing consumer and retailer demand for responsibly raised proteins.

Current wording

Verification and certification service revenues consist of fees charged for verification audits and other verification and certification related 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 June 30, 2026 increased, $57,000 and $0.3 million, compared with the same periods in 2025. We continue to experience new customer growth and bundling opportunities, but offsetting some of this growth are supply-side dynamics within the cattle industry. The beef side of our business has been impacted the most significantly. We know the cattle industry is cyclical in nature and based on the data from the USDA, we appear to be at the bottom of a contraction phase within the cattle cycle, however, we are still seeing signs of further contraction in the cattle industry in early 2026. We are also facing rapidly changing trade and tariff uncertainties. Because of the tight cattle supply, ranchers are receiving the highest cattle prices per head in a decade without verification; and beef packers are reluctant to incur additional costs of verification to their supply chain because of the high costs of acquiring cattle for slaughter. To expand supply, herds must be rebuilt within the United States and via imports. But rebuilding of the herd takes time and is impacted by many factors including drought conditions in different regions, the price of inputs and interest rates. We are encouraged because premiums for verified cattle remain strong in the marketplace above commodity cattle prices in spite of significant pressure on beef packer margins. Verified product attributes like animal care, sustainability and natural continued to be demanded and our programs allow supply chains to meet this growing customer demand. We are also optimistic about the recent launch of our Raisewell Certified Standard, which was developed to meet growing consumer and retailer demand for responsibly raised proteins.

Previous wording

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, 2026 increased slightly by $11,000, compared to the same period in 2025. We continue to see some new customer growth, but our customers are ordering less tags due to smaller beef cow herd size. According to the USDA statistics, overall beef cow inventories have declined from 28.9 million head on January 1, 2023 to 27.6 million head on January 1, 2026.

Current wording

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 and six months ended June 30, 2026 decreased slightly by $27,000 and $16,000, compared to the same periods in 2025. We continue to see some new customer growth, but our customers are ordering less tags due to smaller beef cow herd size. According to the USDA statistics, overall beef cow inventories have declined from 28.9 million head on January 1, 2023 to 27.6 million head on January 1, 2026.

Previous wording

Professional services revenue includes a wide range of professional consulting, data analysis, reporting and technology solutions that support our verification business and generate incremental revenue specific to the food and agricultural industry. Our professional services revenue stream is predominantly project based and not recurring in nature. Professional services revenue for the three months ended March 31, 2026 decreased less than $0.2 million, compared to the same period in 2025.

Current wording

Professional services revenue includes a wide range of professional consulting, data analysis, reporting and technology solutions that support our verification business and generate incremental revenue specific to the food and agricultural industry. Our professional services revenue stream is predominantly project based and not recurring in nature. Professional services revenue for the three months ended June 30, 2026 increased marginally by $19,000 while the six months ended June 30, 2026 decreased $0.1 million, compared to the same periods in 2025.

Previous wording

Costs of verification and certification services for the three months ended March 31, 2026 and 2025 were approximately $2.7 million and $2.4 million, respectively or 61.5% of revenue compared to 57.3% of revenue in the comparable 2025 period. Our costs of verification and certification services are generally impacted by various costs such as salaries and benefits, insurance and taxes. The increase in the percentage of our costs of verification and certification services is primarily due to absorption of certain fixed costs of services over a reduction in revenue related to the beef side of our business. New customer growth helps offset the inflationary impacts on our margins, to some extent.

Current wording

Costs of verification and certification services for the three and six months ended June 30, 2026 were approximately $3.2 million and $5.9 million, respectively, compared to $3.3 million and $5.7 million, respectively, for the same periods in 2025. Gross margin for the three months ended June 30, 2026 and 2025 was 40.6% and 38.4%, respectively, while the gross margin for the six months ended June 30, 2026 and 2025 was 39.7% and 40.3%, respectively. Our costs of verification and certification services are generally impacted by various costs such as salaries and benefits, insurance and taxes. The increase in the percentage of our costs of verification and certification services is primarily due to absorption of certain fixed costs of services over a reduction in revenue related to the beef side of our business. New customer growth helps offset the inflationary impacts on our margins, to some extent.

Previous wording

Costs of our professional services revenue for the three months ended March 31, 2026 and 2025 was approximately $0.2 million and $0.3 million, respectively.

Current wording

Costs of our professional services revenue for the three months ended June 30, 2026 and 2025 was approximately $0.2 million. The costs for the six months ended June 30, 2026 was approximately $0.3 million compared to $0.5 million for the same period in 2025.

Previous wording

Other operating expenses for the three months ended March 31, 2026 and 2025 were approximately $1.6 million and $1.9 million, respectively. Our most significant operating expense includes salaries and benefits. The decrease in the 2026 period is primarily due to a decision by the executive management team to return the bonus amounts paid in late December 2025 which were based on previous internal projections that indicated strong fourth quarter revenue. These projections were made prior to the unexpected announcement that a large midwestern packing plant would cease operations, resulting in a negative impact to the Company’s fourth quarter 2025 revenue. Depreciation and amortization expense for the three months ended March 31, 2026 and 2025 were approximately $0.2 million.

Current wording

Other operating expenses for the three months ended June 30, 2026 and 2025 were approximately $1.8 million. Expenses for the six months ended June 30, 2026 were approximately $3.4 million compared to $3.6 for the same period in 2025. Our most significant operating expense includes salaries and benefits. The decrease in the 2026 period is primarily due to a decision by the executive management team to return the bonus amounts paid in late December 2025 which were based on previous internal projections that indicated strong fourth quarter revenue. These projections were made prior to the unexpected announcement that a large midwestern packing plant would cease operations, resulting in a negative impact to the Company’s fourth quarter 2025 revenue. Depreciation and amortization expense for the three and six months ended June 30, 2026 and 2025 were approximately $0.2 million and $0.3 million, respectively.

Previous wording

The Company measures the digital assets at fair value with changes recognized in the Consolidated Statements of Income for each reporting period. For the three months ended March 31, 2026 and 2025, the Company recorded an unrealized loss of approximately $0.1 million.

Current wording

The Company measures the digital assets at fair value with changes recognized in the Consolidated Statements of Income for each reporting period. For the three and six months ended June 30, 2026, the Company recorded an unrealized loss of approximately $0.1 million and $0.2 million, respectively, compared to an unrealized gain of approximately $0.2 million and $0.1 million, respectively, for the same periods in 2025.

Previous wording

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 months ended March 31, 2026, we recorded income tax expense of approximately $93,000 compared to income tax expense of $38,000 for the same period in 2025.

Current wording

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 June 30, 2026, we recorded income tax expense of approximately $0.2 million and $0.3 million, respectively, compared to income tax expense of $0.2 million for both periods in 2025.

Previous wording

As a result of the foregoing, net income attributable to WFCF shareholders for the three months ended March 31, 2026 was approximately $0.1 million and $0.02 per basic and diluted common share, respectively, compared to net income of approximately $31,000 and $0.01 per basic and diluted common share for the same period in 2025.

Current wording

As a result of the foregoing, net income attributable to WFCF shareholders for the three and six months ended June 30, 2026 was approximately $0.4 million and $0.5 million, respectively, and $0.08 and $0.10 per basic and diluted common share, respectively, compared to net income of approximately $0.6 million and $0.11 per basic and diluted common share for both periods in 2025.