Where Food Comes From Inc
For the period ended Mar 31, 2025. Filed May 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 8, 2025
WFCF$15.32-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001493152-24-044658
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001641172-25-009212
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 54 previous paragraphs and 55 current paragraphs.
29 unchanged; 17 reworded; 9 added; 8 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Revenue
Current report
Costs of Revenue
Current report
Costs of verification and certification services for the three months ended March 31, 2025 and 2024 were approximately $2.4 million and $2.5 million, respectively or 57.3% of revenue compared to 56.7% of revenue in the comparable 2024 period. Our costs of verification and certification services are generally impacted by various costs such as salaries and benefits, insurance and taxes. The percentage increase is primarily due to increases in compensation related costs due to a tight labor market.
Current report
Costs of products for the three months ended March 31, 2025 and 2024 were approximately $0.4 million, or 61.0% of revenue compared to 59.2% of revenue in the comparable 2024 period. The percentage increase is primarily due to inflationary increases in the costs of products shipped.
Current report
Costs of our professional services revenue for the three months ended March 31, 2025 and 2024 was approximately $0.3 million.
Current report
Selling, General and Administrative Expenses
Current report
Other operating expenses for the three months ended March 31, 2025 and 2024 were approximately $1.9 million. Our most significant operating expense includes salaries and benefits. The increase in the 2025 period is due to a tight labor market, offset by savings in marketing and tradeshow costs. Some of the savings are due to timing, while some are due to a very disciplined approach in our marketing process. Depreciation and amortization expense for the three months ended March 31, 2025 and 2024 were approximately $0.2 million.
Current report
Other Income / Expenses
Current report
The Company measures the digital assets at fair value with changes recognized in the Consolidated Statements of Income for each reporting period. For the quarter ended March 31, 2025, the Company recorded an unrealized loss of approximately $76,000.
Removed paragraphs (8)
Previous report
Pandemics, the Inflationary Environment and other Weather Related Risks
Previous report
We continue to monitor risks related to pandemics, inflation and weather, as well as other risks closely and will react accordingly, while keeping the interest of our customers, employees and shareholders in mind. Please refer to our risk factors included in our Form 10-K for the fiscal year ended December 31, 2023 for additional information related to all of our risks.
Previous report
Verification and Certification Segment
Previous report
Segment costs of revenues for the three and nine months ended September 30, 2024 were approximately $4.1 million and $10.6 million, respectively, compared to approximately $3.8 million and $9.9 million, respectively for the same periods in 2023. Gross margin for the three months ended September 30, 2024 and 2023 was 39.4% and 42.2%, respectively, while the gross margin for the nine months ended September 30, 2024 and 2023 was 41.4% and 42.3%, respectively. The slight decline was primarily driven by higher cost of product sales overset by higher margin verification services. Our margins are generally impacted by various fixed costs such as cost of products, salaries and benefits, insurance and taxes.
Previous report
Other operating expenses for the three and nine months ended September 30, 2024 increased by approximately $0.3 million and $0.6 million, respectively, compared to the same three and nine month periods in 2023. Some of the increase was due to costs incurred to expand our marketing efforts both nationally and internationally. Additionally, some year-end audit and tax return preparation fees were incurred during the third quarter of 2024 versus the fourth quarter of 2023.
Previous report
Professional Services Segment
Previous report
Costs of revenues for our professional services segment for the three and nine months ended September 30, 2024 was approximately $0.2 million and $0.7 million, respectively, compared to approximately $0.3 million and $1.0 million, respectively, for the same periods in 2023. Gross margin for the three and nine months ended September 30, 2024 increased to 30.1% and 27.4%, respectively, compared to 20.9% and 22.6% for the same periods in 2023, as a result of realigning employees tasks to more profitable areas of focus.
Previous report
Dividend Income from Progressive Beef
Reworded paragraphs (17)
Previous wording
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), and Validus Verification Services (“Validus”). 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.
Current wording
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”), and Validus Verification Services (“Validus”). 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.
Previous wording
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.
Current wording
Through SureHarvest Services LLC (“SureHarvest”) and Postelsia Holdings, Ltd. (“Postelsia”), we primarily provide a wide range of professional services that support our verification activites and generate incremental revenue specific to the food and agricultural industry.
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 September 30, 2024, we had 104 total employees, of which 94 were full-time employees. Approximately 84% 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 March 31, 2025, we had 101 total employees, of which 90 were full-time employees. Approximately 85% of our workforce is comprised of female and other minority employees.
Previous wording
Additionally, the cattle industry is cyclical by nature based on factors impacting current and future supplies such as drought-induced feedlot placements, higher cow and heifer slaughter, and lower auction receipts. The production lags inherent to this industry lead to long-lasting impacts of production decisions. For example, increased liquidation implies tighter supplies for next year. Similarly, times of herd expansion are typically a multi-year period. These cycles typically last roughly 10 years. The current cycle began in 2014 and we believe we are currently in the contraction phase of the cycle after peaking in 2018-2019. How long we continue to contract will be directly impacted by drought, pasture conditions, supply and demand.
Current wording
Additionally, the cattle industry is cyclical by nature based on factors impacting current and future supplies such as drought-induced feedlot placements, higher cow and heifer slaughter, and lower auction receipts. The production lags inherent to this industry lead to long-lasting impacts of production decisions. For example, increased liquidation implies tighter supplies for next year. Similarly, times of herd expansion are typically a multi-year period. Historically, these cycles typically lasted approximately 10 years. The beginning of 2025 marks the eleventh year of the current cycle that began in 2014. We are currently in the contraction phase of the cycle after peaking in 2018-2019. How long we continue to contract will be directly impacted by drought and pasture conditions.
Previous wording
At September 30, 2024 and December 31, 2023, we had cash and cash equivalents of approximately $2.8 million and $2.6 million, respectively. Our working capital at September 30, 2024 and December 31, 2023 was approximately $2.2 million and $3.2 million, respectively.
Current wording
At March 31, 2025, we had cash and cash equivalents of approximately $2.2 million compared to approximately $2.0 million at December 31, 2024. Our working capital at March 31, 2025 and December 31, 2024 was approximately $2.2 million and $2.4 million, respectively.
Previous wording
Net cash provided by operating activities for the nine months ended September 30, 2024 was approximately $2.8 million compared to $2.6 million during the same period in 2023. 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, and deferred taxes. Fluctuations are primarily due to operating performance offset by the timing of cash receipts and cash disbursements. The increase in cash provided by operating activities for the periods ending September 30, 2024 and 2023 was primarily driven by a change in accrued expenses and other current liabilities, prepaid expenses and other assets, and deferred revenue.
Current wording
Net cash provided by operating activities for the three months ended March 31, 2025 was approximately $0.6 million compared to $0.7 million during the same period in 2024. 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, 2025 decreased compared to the same period in 2024 primarily due to a slight decrease in operating performance.
Previous wording
Net cash used in investing activities for the nine months ended September 30, 2024 was approximately $0.1 million compared to $0.3 million in the 2023 period. Net cash used in the period ending September 30, 2023 was primarily related to our equity investment in BlueTrace.
Current wording
Net cash used in investing activities for the three months ended March 31, 2025 was approximately $29,000 compared to $24,000 in the 2024 period. Net cash used in the period ending March 31, 2025 and 2024 was for purchases of equipment and software development costs.
Previous wording
Net cash used in financing activities for the nine months ended September 30, 2024 and 2023 was approximately $2.5 million and $2.9 million, respectively. Cash used for the period ending nine months ended September 30, 2024, was primarily due to a private purchase of our common shares and the repurchase of common shares under the Stock Buyback Plan. Cash used for the period ending September 30, 2023, was primarily due to the repurchase of common shares under the Stock Buyback Plan.
Current wording
Net cash used in financing activities for the three months ended March 31, 2025 and 2024 was approximately $0.3 million and $1.4 million, respectively. Cash used for the period ending March 31, 2025, was primarily due to the repurchase of common shares under the Stock Buyback Plan. Cash used for the period ending March 31, 2024, was primarily due to the retirement of stock and the repurchase of common shares under the Stock Buyback Plan.
Previous wording
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 September 30, 2024 and December 31, 2023, the effective interest rate was 10.0%. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of September 30, 2024, and December 31, 2023, there were no amounts outstanding under this LOC.
Current wording
The Company had a revolving line of credit (“LOC”) agreement which matured 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, 2025 and December 31, 2024, the effective interest rate was 9.0%. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of March 31, 2025 and December 31, 2024, there were no amounts outstanding under this LOC.
Previous wording
Three and nine months ended September 30, 2024 compared to the same period in fiscal year 2023
Current wording
Three months ended March 31, 2025 compared to the same period in fiscal year 2024
Previous wording
The following table shows information for reportable operating segments (amounts in thousands):
Current wording
The following table shows information for reportable operating segment (amounts in thousands):
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. We are recognized and utilized by numerous standard-setting bodies as an accredited verification or certification service provider. We enable food producers and brands to make certain claims on live animals or packaged food products by verifying that they are meeting the standards or guidelines associated with the claim(s) they are making. Verification and certification service revenue for the three and nine months ended September 30, 2024 increased 2.4% and 8.8%, respectively, compared with the same periods in 2023. While our verification and certification service revenue continues to improve due to new customer growth and bundling opportunities, we believe we are in a low point of a contraction phase within the cattle cycle which negatively impacts revenue tied directly to price per head of cattle.
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 programare also included in our verification and certification revenuesas it represents a value-added extension of our source verification. We are recognized and utilized by numerous standard-setting bodies as an accredited verification or certification service provider. We enable food producers and brands to make certain claims on live animals or packaged food products by verifying that they are meeting the standards or guidelines associated with the claim(s) they are making. Verification and certification service revenue for the three months ended March 31, 2025 decreased $0.3 million compared with the same period in 2024. While we continue to experience new customer growth and bundling opportunities, these increases have been negatively impacted by revenue tied directly to price per head of cattle and delayed timing of poultry audits in which facilities have been impacted by Avian Influenza. We believe we are still at a low point of a contraction phase within the cattle cycle. How long we continue to contract will be directly impacted by drought and pasture conditions.
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 September 30, 2024 slightly increased $0.1 million, compared to the same period in 2023. Product sales for the nine months ended September 30, 2024 decreased $0.3 million, compared to the same period in 2023. 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 July 2023 statistics, overall beef cow inventories have declined over 3% compared to last year. As mentioned above, we believe we are at a low point of a contraction phase within the cattle cycle which negatively impacts revenue tied directly to price per head of cattle.
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 months ended March 31, 2025 slightly decreased $31,000, compared to the same period in 2024.
Previous wording
Professional services 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. Professional services revenue for the three and nine months ended September 30, 2024 decreased approximately $0.1 million and $0.3 million, respectively, compared to the same periods in 2023.
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 profesional services revenue stream is predominantly project based and not recurring in nature. Professional services revenue for the three months ended March 31, 2025 decreased less than $26,000, compared to the same period in 2024.
Previous wording
For the three and nine months ended September 30, 2024 and 2023, the Company received dividend income from Progressive Beef of $50,000 and $150,000, respectively, representing a distribution of their earnings.
Current wording
For the three months ended March 31, 2025 and 2024, the Company did not receive any dividend income from Progressive Beef.
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 September 30, 2024 and 2023 we recorded an income tax expense of approximately $0.2 million and $0.3 million, respectively. For the nine months ended September 30, 2024 and 2023 we recorded an income tax expense of approximately $0.5 million and $0.6 million, respectively.
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 months ended March 31, 2025, we recorded income tax expense of approximately $38,000 compared to income tax expense of $87,000 for the same period in 2024.
Previous wording
As a result of the foregoing, net income attributable to WFCF shareholders for the three and nine months ended September 30, 2024 was approximately $0.5 million and $1.2 million, respectively, and $0.09 and $0.22, respectively, per basic share common share and $0.09 and $0.21 per diluted common share. Compared to net income of approximately $0.7 million and $1.4 million, respectively, and $0.13 and $0.25, respectively, per basic share and $0.13 and $0.24, respectively, per diluted common share for the three and nine months ended September 30, 2023.
Current wording
As a result of the foregoing, net income attributable to WFCF shareholders for the three months ended March 31, 2025 was approximately $31,000 and $0.01 per basic and diluted common share, respectively, compared to net income of approximately $0.2 million and $0.03 per basic and diluted common share for the same period in 2024.