What changed in Where Food Comes From, Inc.'s 2024 10-K compared to 2023?

Across the narrative sections we track, Where Food Comes From, Inc. (WFCF) added 135 paragraphs, removed 128, and edited 106 between the 2023 and 2024 10-K filings. The biggest movers are Item 7. Management's Discussion & Analysis (+65/−59), Item 1. Business (+36/−39), Item 1A. Risk Factors (+24/−22).

Did Where Food Comes From, Inc. add new Risk Factors in the 2024 10-K?

Yes — Item 1A Risk Factors shows 24 new/edited paragraphs and 22 removed paragraphs versus the 2023 10-K.

What changed in Where Food Comes From, Inc.'s MD&A (Item 7) in 2024?

Item 7 Management's Discussion & Analysis shows 65 new/edited paragraphs and 59 removed paragraphs year-over-year. Read the side-by-side diff to see exactly which revenue, margin, and outlook commentary was rewritten.

Did Where Food Comes From, Inc. update its Cybersecurity disclosure (Item 1C) in 2024?

Item 1C Cybersecurity has 1 paragraph-level changes between the 2023 and 2024 filings.

Where does this WFCF 10-K diff come from?

The source filings are Where Food Comes From, Inc.'s official 2023 and 2024 Form 10-K annual reports from SEC EDGAR. 10q10k.net parses each filing, aligns paragraphs by section (Item 1, 1A, 1C, 2, 3, 7, 7A), and highlights every added, removed and edited sentence side-by-side.

What changed in Where Food Comes From, Inc.'s 10-K — 2023 vs 2024

Paragraph-level year-over-year comparison of Where Food Comes From, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+135 added−128 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-15)

Top changes in Where Food Comes From, Inc.'s 2024 10-K

135 paragraphs added · 128 removed · 106 edited across 6 sections

Item 7. Management's Discussion & Analysis+65 / −59 · 52 edited
Item 1. Business+36 / −39 · 26 edited
Item 1A. Risk Factors+24 / −22 · 21 edited
Item 2. Properties+5 / −4 · 4 edited
Item 5. Market for Registrant's Common Equity+4 / −3 · 2 edited

Item 1. Business

Business — how the company describes what it does

26 edited+10 added−13 removed49 unchanged

2023 filing

2024 filing

Biggest changeOur customers include some of the largest U.S. beef and pork packers, organic producers and processors, and specialty retail chains. No single customer generated more than 10% of the Company’s consolidated revenue in 2023 or 2022. With each acquisition, we assess the need to disclose discrete information related to our operating segments.

Biggest changeNo single customer generated more than 10% of the Company’s consolidated revenue in 2024 or 2023. 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 one verification and certification reportable segment.

Verification and Certification Segment Our 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 Segment Our verification and certification service revenues consist of fees charged for verification audits and other verification and certification related services 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.

Saunders currently sits on the Colorado State University Agriculture Dean’s Advisory Board, the University of Nebraska’s Engler Agribusiness Entrepreneurship Program Advisory Board, the Board of Directors for the International Stockmen’s Education Foundation and was the Chair for the United States Meat Export Federation for the 2015-2016 year. 9 Dannette Henning , 54, has been the Chief Financial Officer of the Company since January 2008.

Saunders currently sits on the Colorado State University Agriculture Dean’s Advisory Board, the University of Nebraska’s Engler Agribusiness Entrepreneurship Program Advisory Board, the Board of Directors for the International Stockmen’s Education Foundation and was the Chair for the United States Meat Export Federation for the 2015-2016 year. 9 Dannette Henning , 55, has been the Chief Financial Officer of the Company since January 2008.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding our filings at http://www.sec.gov . INFORMATION ABOUT OUR EXECUTIVE OFFICERS John Saunders , 52, founded the Company in 1998 and has served as the Chief Executive Officer since then. Mr.

The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding our filings at http://www.sec.gov . INFORMATION ABOUT OUR EXECUTIVE OFFICERS John Saunders , 53, founded the Company in 1998 and has served as the Chief Executive Officer since then. Mr.

Jason Franco , 47, has been the Chief Technology Officer of the Company since August 2021. Previously, Mr. Franco served as Senior Vice President of Technology since September 2018 when WFCF acquired JVF Consulting, LLC, the consulting firm Mr. Franco founded in 2004 serving as President. From 2000 to 2004, Mr.

Jason Franco , 48, has been the Chief Technology Officer of the Company since August 2021. Previously, Mr. Franco served as Senior Vice President of Technology since September 2018 when WFCF acquired JVF Consulting, LLC, the consulting firm Mr. Franco founded in 2004 serving as President. From 2000 to 2004, Mr.

Leann Saunders , 53, began working for the Company in 2003 and has been the President of the Company since 2008. Mrs. Saunders is also a Director on our Board of Directors and has served in this position since January 2012. Prior to 2003, Mrs.

Leann Saunders , 54, began working for the Company in 2003 and has been the President of the Company since 2008. Mrs. Saunders is also a Director on our Board of Directors and has served in this position since January 2012. Prior to 2003, Mrs.

We also use social media sites such as Facebook and Twitter to help promote our business, market our product offerings, and connect consumers with current topics in the agriculture, livestock and food industries. COMPETITION The competition for third-party verification services in the food and agriculture industry is growing more intense, especially within the organic market.

We also use social media sites such as Facebook and X.com to help promote our business, market our product offerings, and connect consumers with current topics in the agriculture, livestock and food industries. COMPETITION The competition for third-party verification services in the food and agriculture industry is growing more intense, especially within the organic market.

As of December 31, 2023, we estimate that there are approximately eight key competitors serving the food and agricultural industry, including Quality Assurance International, California Certified Organic Farmers, Oregon Tilth, Organic Crop Improvement Association, Earth Claims, FoodChain ID, NSF International, SGS and SCS Global Services.

As of December 31, 2024, we estimate there are approximately eight key competitors serving the food and agricultural industry, including Quality Assurance International, California Certified Organic Farmers, Oregon Tilth, Organic Crop Improvement Association, Earth Claims, FoodChain ID, NSF International, SGS and SCS Global Services.

Our intellectual property assets include patents and patent applications related to our innovations, products and services, trademarks related to our brands, products and services, and other property rights. We also have licensing arrangements when features from our programs are desirable to incorporate into either a new or an existing technology we offer.

Our intellectual property assets include our internally developed software, patents and patent applications related to our innovations, tradenames and trademarks related to our brands, products and services, and other property rights. We also have licensing arrangements when features from our programs are desirable to incorporate into either a new or an existing technology we offer.

Growth Strategy Due to organic growth in our portfolio of auditing standards, consumer demand and acquisitions, our sales have grown rapidly from $1.1 million in 2006 to $25.1 million in 2023, an 18-year compounded annual growth rate (“CAGR”) of approximately 19%. Our growth strategy is as follows: ● To cover more food groups than any other verification provider.

Growth Strategy Due to organic growth in our portfolio of auditing standards, consumer demand and acquisitions, our sales have grown rapidly from $1.1 million in 2006 to $25.7 million in 2024, a 19-year compounded annual growth rate (“CAGR”) of approximately 18%. Our growth strategy is as follows: ● To cover more food groups than any other verification provider.

Currently we verify beef, lamb, pork, poultry, seafood, dairy, eggs, fresh produce, nuts and grains, wine and finished products.

Currently we verify beef, lamb, pork, poultry, fish, dairy, eggs, fresh produce, nuts and grains, wine and finished products.

EMPLOYEES As of December 31, 2023, we had 102 total employees, of which 89 were full-time employees. Approximately 78% of our workforce is comprised of female and other minority employees. Our future success is substantially dependent upon the performance of our key senior management personnel, as well as our ability to attract and retain highly qualified technical personnel.

EMPLOYEES As of December 31, 2024, we had 103 total employees, of which 93 were full-time employees. Approximately 87% of our workforce is comprised of female and other minority employees. Our future success is substantially dependent upon the performance of our key senior management personnel, as well as our ability to attract and retain highly qualified technical personnel.

Similarly, times of herd expansion are typically a multi-year period. These cycles typically last roughly 10 years. The beginning of 2023 marks the ninth year of the current cycle that began in 2014. We are currently in the contraction phase of the cycle after peaking in 2018-2019.

Similarly, times of herd expansion are typically a multi-year period. Historically, these cycles typically lasted approximately 10 years. The beginning of 2024 marks the tenth year of the current cycle that began in 2014. We are currently in the contraction phase of the cycle after peaking in 2018-2019.

Segment management makes decisions, measures performance, and manages the business utilizing internal operating segment information. Performance of operating segments are based on net sales, gross profit, selling, general and administrative expenses and most importantly, operating income.

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 operating segment information. Performance of operating segments are based on net sales, gross profit, selling, general and administrative expenses and most importantly, operating income.

Our traceability solutions and EID tags can track animals from birth to slaughter using technology that offers a comprehensive solution that meets and/or exceeds the USDA’s ADT Rule. ● Pressure from financial markets has also been growing. Investment managers such as BlackRock, as well as financial regulators including the Securities and Exchange Commissions and the U.S.

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. The Company also determined that it has a segment offering professional services. SureHarvest, which includes Postelsia, is the sole operating unit under this 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. The Company also determined that it has a segment offering professional services.

To support these shifts, companies are building or expanding facilities with state-of-the-art technologies and systems for development, testing, processing, and packaging.” We can assist companies by providing third party verification and other technology solutions to help companies compete on brand innovation. 5 ● Per various experts in the LinkedIn article dated December 18, 2023, “Using third-party certification programs for suppliers can offer several benefits for your business, such as enhancing your reputation and credibility, reducing risks and liabilities, improving efficiency and quality, and supporting innovation and differentiation.

Businesses foresee these areas as key for growth, with 53% seeing them as major opportunities over the next two years.” We can assist companies by providing third party verification and other technology solutions to help companies minimize risk and compete with brand innovation. ● Per various experts in the LinkedIn article dated December 18, 2023, “Using third-party certification programs for suppliers can offer several benefits for your business, such as enhancing your reputation and credibility, reducing risks and liabilities, improving efficiency and quality, and supporting innovation and differentiation.

This segment includes a wide range of professional consulting, data analysis, reporting and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation. The Company’s chief operating decision maker (the Company’s CEO) allocates resources and assesses the performance of its operating segments.

SureHarvest, which includes Postelsia, is the sole operating unit under this reportable segment. This segment includes a wide range of professional consulting, data analysis, reporting and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation.

We believe our solutions and expertise within the agrifood supply chain can assist companies in pursuing and reporting their sustainability strategies. 6 REVENUES We offer a wide array of services, including verification, certification, consulting and other professional services, to help food producers, brands and consumers differentiate certain attributes and production methods in the marketplace.

REVENUES We offer a wide array of services, including verification, certification, consulting and other professional services, to help food producers, brands and consumers differentiate certain attributes and production methods in the marketplace. We sell our services directly to customers at various levels in the agriculture, food and livestock supply chain.

Federal Reserve, are pushing companies to disclose sustainability metrics such as emissions across their supply chains and draw up plans to decarbonize their operations.

Investment managers such as BlackRock, as well as state and financial regulators including the State of California, the Securities and Exchange Commission and the U.S. Federal Reserve, are pushing companies to disclose sustainability metrics such as emissions across their supply chains and draw up plans to decarbonize their operations.

We sell our services directly to customers at various levels in the agriculture, food and livestock supply chain. Most of our service offerings can be bundled to provide a “one-stop shop” for customers that have multiple levels of verification and certification needs, such as source verification and food safety certification.

Most of our service offerings can be bundled to provide a “one-stop shop” for customers that have multiple levels of verification and certification needs, such as source verification and food safety certification. Our customers include some of the largest U.S. beef and pork packers, organic producers and processors, and specialty retail chains.

With information literally at our fingertips, Google searches and smart phone apps are making it easier to expose where sustainable food supply chains are, and where they are not.

With information literally at our fingertips, Google searches and smart phone apps are making it easier to expose where sustainable food supply chains are, and where they are not. We believe our technology will play a key role in capturing data to improve processes, yields and communicate our customer’s values, practices and other initiatives to consumers.

Our goal is to work with ranchers to verify (via a third-party) and, when possible, improve those practices so that we can be transparent with our customers and consumers about how cattle in our supply chain are raised.” ● Per Priya Khan, Founder and CEO of Nutrigold, “concerned consumers often wonder if the claims on product labels are actually true.

Our goal is to work with ranchers to verify (via a third-party) and, when possible, improve those practices so that we can be transparent with our customers and consumers about how cattle in our supply chain are raised.” The March 9, 2023 blog page titled “Creating a Pathway to a More Sustainable Beef Industry” written by Dr.

For the years ended December 31, 2023 and 2022, our third-party verification programs provided 77.2% and 70.9% of our total revenue, respectively.

For the years ended December 31, 2024 and 2023, our third-party verification programs provided 79.8% and 77.2% of our total revenue, respectively. 7 Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags. Our product sales allow us to offer our customers a comprehensive solution.

Our work as a Technical Administrator for the Non-GMO Project enables brands to have confidence that their products will align with the Standard. ● The Animal Disease Traceability (“ADT”) Rule promulgated by the USDA primarily covers beef cattle 18 months of age or older.

We believe the EU quota will continue to fuel demand for non-hormone treated cattle (“NHTC”). ● Effective on November 5, 2024, the Animal Disease Traceability (“ADT”) Rule promulgated by the USDA primarily covers beef cattle 18 months of age or older.

We believe we are at a low point of a contraction phase within the cattle cycle which is negatively impacting revenue tied directly to price per head of cattle. 7 Professional Services Segment 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.

Approximately 14.8% and 15.9% of our total revenue was generated by the sale of product during the years ended December 31, 2024 and 2023, respectively. Professional Services Segment Professional services include 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.

Removed

They want to buy healthy, environmentally-friendly products and often pay a premium to do so. It is difficult to know what companies you can trust, and hard to tell what you are really getting when you buy.

Added

Justin Ransom and Chad Martin continues to repeat this idea, “Through the Climate-Smart Beef Program, we (Tyson) can now track beef emissions at the individual animal level and work with our feedlot partners to share the data with producers so they can continue to build on their sustainable agriculture practices.

Removed

Something an increasing number of companies do to add transparency is use third-party verification, so consumers can buy with confidence.” ● A 2023 report from The Business Research Company projected the global organic food market grew from $259.06 billion in 2022 to $294.54 billion in 2023 at a CAGR of 13.7%.

Added

To model these emissions, data – for example, farm management data and operational information – is collected and verified through third-party auditors such as Where Food Comes From, Inc. …At Tyson Foods, we believe the future of beef can be both climate-friendly and consumer-friendly.” ● The JanahCyle.org September 11, 2024 blog page titled “Building Trust in Food and Beverage Brands through Purpose-Driven Marketing” states “…As consumer expectations continue to shift, food and beverage brands must adapt.

Removed

Major players in the market include General Mills Inc., Nestle, Cargill, Inc., Danone, United Natural Foods Inc. and Amy’s Kitchen. Increasing health concerns due to the growing number of chemical poisoning cases globally is acting as a driver in the organic food market. This is causing consumers to shift their focus towards organic food products.

Added

Purpose-driven marketing isn’t just a trend - it’s a necessity. Brands that commit to transparency, sustainability, and ethical practices will be the ones that thrive… In the end, consumers want to trust that the brands they support are doing their part to make the world a better place.

Removed

Market Driver #2 - Global competitiveness and risk mitigation among producers, restaurants, and retailers ● Per “Managing Business Risk in the Food and Beverage Industry,” prepared by Cambashi, Inc., “To compete, midsize companies across the industry have stepped up research and development (R&D) to improve on and leverage existing brands and product lines for new applications, markets, and regions.

Added

By staying true to their purpose, food and beverage brands can rebuild and maintain the trust that is essential to long-term success. ● Per the Organic Food Global Market Report 2025 by The Business Research Company, “The organic food market size has grown rapidly in recent years.

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The way people eat and what they eat around the globe continually changes, and this is driving co-ops and processors to research and develop new types of packaging, a wider variety of flavors, partially prepared options, and facilities dedicated to organic, allergy-free, or kosher foods.

Added

It will grow from $279.19 billion in 2024 to $318.37 billion in 2025 at a compound annual growth rate (CAGR) of 14.0%.” Furthermore, “The organic food market size is expected to …grow to $568.82 billion in 2029 at a compound annual growth rate (CAGR) of 15.6%.

Removed

We believe our technology will play a key role in capturing data to improve processes, yields and communicate our customer’s values, practices and other initiatives to consumers. ● Producers, packers, distributors and retailers understand that verification, identification and traceability are key competitive differentiators. Oftentimes, it is necessary for export into international markets, including Korea, Russia, China and the European Union.

Added

The growth in the forecast period can be attributed to the growing number of health-conscious consumers, demographic shifts in emerging markets, rising penetration of organized retail and growth in specialist organic food retailers in developed economies.

Removed

We believe the EU quota will continue to fuel demand for non-hormone treated cattle (“NHTC”). ● Effective February 19, 2019, the USDA released a rule establishing the new national mandatory bioengineered (“BE”) food disclosure standard (“NBFDS” or “Standard”).

Added

Major trends in the forecast period include focusing on improving labelling and packaging, exploring opportunities to invest in new product launches, leveraging artificial intelligence (ai) for organic farming, developing zero-calorie soft drinks, focusing on expanding product portfolio and focusing on upcycled food.” Major companies operating in the organic food market include Danone S.A, The Kroger Co, General Mills Inc, The Hain Celestial Group Inc, Organic Valley, United Natural Foods, Inc., Dole Food Company, and Amy’s Kitchen, Inc. 5 Market Driver #2 - Global competitiveness and risk mitigation among producers, restaurants, and retailers ● Global Food, Beverage and Agriculture Risk Report 2024 included a survey conducted by Coleman Parks in January 2024.

Removed

The Standard requires food manufacturers, importers, and other entities that label foods for retail sale to disclose information about BE food and BE food ingredients. As of January 1, 2022, all food manufacturers must comply with the Standard.

Added

One key finding stated, “The primary focus of the sector (food, beverage and agriculture) lies in mitigating disruptions, with business interruption and supply chain issues being the top internal risks, and global instability exacerbating concerns about potential disruptions.” The survey also noted that “Embracing sustainability, health and wellness presents significant opportunities, reflecting consumer priorities.

Removed

Because of the similarities of certain of our acquisitions that provide certification and verification services, we aggregate operations into one verification and certification reportable segment. The operating segments included in the aggregated verification and certification segment include IMI Global, WFCFO and Validus.

Added

We believe our solutions and expertise within the agrifood supply chain can assist companies in pursuing and reporting their sustainability strategies. 6 ● Producers, packers, distributors and retailers understand that verification, identification and traceability are key competitive differentiators.

Removed

While our verification and certification service revenue continues to improve due to new customer growth and bundling opportunities, 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.

Added

The January 2024 survey conducted by Coleman Parks for the Global Food, Beverage and Agriculture Risk Report 2024 stated, “External economic factors, geopolitical tensions, and regulatory burdens pose significant challenges to risk management strategies. Oftentimes, our 3 rd party verification and certification expertise is necessary for export into international markets, including Korea, Russia, China and the European Union.

Removed

We also believe inflationary pressure on packers, producers, growers, brands, and retailers is putting downward pressure on verified and certified foods as consumers have switched to lower priced food products. Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags.

Removed

Our product sales allow us to offer our customers a comprehensive solution. Approximately 15.9% and 17.6% of our total revenue was generated by the sale of product during the years ended December 31, 2023 and 2022, respectively. We continue to see some new customer growth, but our customers are ordering less tags due to smaller beef cow herd size.

Removed

According to the USDA July 2023 statistics, overall beef cow inventories have declined over 3% compared to last year.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

21 edited+3 added−1 removed75 unchanged

2023 filing

2024 filing

Biggest changeWe 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 by specifically focusing on climate, land stewardship and sustainability metrics. 10 Unfavorable global economic conditions, including any adverse macroeconomic conditions or geopolitical events, including the conflict between Ukraine and Russia, and the conflict between Israel and Hamas could adversely affect our business, financial condition, results of operations or liquidity.

We have created innovative solutions that mitigate the risk of transferring disease but due to uncertainty in the severity and duration of various diseases and viral outbreaks, we can give no assurance that we will be successful in overcoming the impact to our business operations, employees, customers, and suppliers which could negatively impact our business revenues, profitability and financial condition.

We have created innovative solutions that mitigate the risk of transferring disease but due to uncertainty in the severity and duration of various diseases and viral outbreaks, we can give no assurance that we will be successful in overcoming the impact on our business operations, employees, customers, and suppliers which could negatively impact our business revenues, profitability and financial condition.

While we attempt to mitigate these risks, we can give no assurance that we will be successful in overcoming the potential negative impact to the results of our operations. Increased scrutiny and changing expectations from stakeholders with respect to the Company’s ESG practices may result in additional costs or risks.

While we attempt to mitigate these risks, we can give no assurance that we will be successful in overcoming the potential negative impact on the results of our operations. Increased scrutiny and changing expectations from stakeholders with respect to the Company’s ESG practices may result in additional costs or risks.

RISK FACTORS In addition to the other information included in this report and our other public filings and releases, the following factors should be considered when evaluating our business, financial condition, results of operations and prospects: We are in a period of increasing inflation and economic uncertainty The economy is facing inflationary pressures which has resulted in a few challenges for our business, most notably in the form of a tight labor market where job candidates have considerable bargaining power which has driven wages up.

RISK FACTORS In addition to the other information included in this report and our other public filings and releases, the following factors should be considered when evaluating our business, financial condition, results of operations and prospects: We are in a period of increasing inflation and economic uncertainty For approximately 4 years, the economy is facing inflationary pressures which has resulted in a few challenges for our business, most notably in the form of a tight labor market where job candidates have considerable bargaining power which has driven wages up.

Although we believe that our products, if adopted on a wide-scale basis, would have a significant impact on improving the safety, quality and confidence in the world’s food supply, our customers for these products historically have been very slow to change and reluctant to adopt new technologies and business practices.

Although we believe that our products, if adopted on a wide-scale basis, would have a significant impact on diverting food waste, and improving the safety, quality and confidence in the world’s food supply, our customers for these products historically have been very slow to change and reluctant to adopt new technologies and business practices.

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 this revenue stream, if any. We actively market our sustainability solutions and services to new types of customers.

Increased inflation could continue to put pressure on our customers’ timing of approval for consulting projects to move forward. Currently, it is difficult to estimate the financial impact to this revenue stream, if any. We actively market our sustainability solutions and services to new types of customers.

Additionally, new technology may render our products and services obsolete. 11 The success of our business model depends on the broad acceptance of our technologies into markets that are continuing to develop as a result of the increasing focus on food safety and assurance.

Today, infectious disease and viral outbreaks appear to be emerging more quickly than ever. For example, Porcine Epidemic Diarrhea Virus (“PEDv”) negatively impacted the pork/sow industry in 2014 and Highly Pathogenic Avian Influenza, more commonly known as Bird Flu, impacted poultry operations in 2016 and continues to impact poultry operations today in 2022/2023.

Today, infectious disease and viral outbreaks appear to be emerging more quickly than ever, in both human and animals. For example, Porcine Epidemic Diarrhea Virus (“PEDv”) negatively impacted the pork/sow industry in 2014 and Highly Pathogenic Avian Influenza, more commonly known as Bird Flu, impacted poultry operations in 2016 and continues to impact poultry operations today.

In addition to uncertainty about our ability to expand into international markets, there are certain risks inherent in doing business internationally, including, but not limited to: ● trade barriers and changes in trade regulations; ● difficulties in developing, staffing and simultaneously managing varying foreign operations as a result of distance, language and cultural differences; ● differing local labor laws and regulations; ● longer payment cycles; ● currency exchange rate fluctuations; ● political or social unrest or economic instability; ● import or export restrictions; ● seasonal volatility in business activity; ● risks related to government regulation or required compliance with local laws in certain jurisdictions, including those more fully described above; and ● potentially adverse tax consequences.

We are currently benefiting from a slow but growing movement among the agriculture, livestock and food industries to source and/or age verify products, and bundle with other marketing claims such as non-genetically modified foods and beverages. This emerging trend is fueled in part by consumers’ focus on food safety and assurance.

We are currently benefiting from a slow but growing movement among the agriculture, livestock and food industries to source and/or age verify products, and bundle with other marketing claims such as upcycling food ingredients to avoid food waste. This emerging trend is fueled in part by consumers’ focus on food safety and assurance.

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. If the operating results of our customers are impaired, the financial resources of our customers may limit purchases of our verification solutions and consulting services.

How long we will continue to contract will be directly impacted by drought and pasture conditions. If the operating results of our customers are impaired, the financial resources of our customers may limit purchases of our verification solutions and consulting services.

Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn. 10 We face risks due to changing weather patterns and other environmental factors Over the past several years, changing weather patterns and climatic conditions have added to the unpredictability and frequency of natural disasters, such as drought, hailstorms, wildfires and wind, snow and ice storms.

We face risks due to changing weather patterns and other environmental factors Over the past several years, changing weather patterns and climatic conditions have added to the unpredictability and frequency of natural disasters, such as drought, hailstorms, wildfires and wind, snow and ice storms.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.

As of February 9, 2024, John Saunders, our Chairman and CEO, and Leann Saunders, our President, beneficially owned in the aggregate approximately 31.7% of our common stock. The Saunders, together with the rest of our Board, beneficially own approximately 60.4% of our common stock.

As of February 13, 2025, John Saunders, our Chairman and CEO, and Leann Saunders, our President, beneficially owned in the aggregate approximately 33.2% of our common stock. The Saunders, together with the rest of our Board, beneficially own approximately 51.6% of our common stock.

We work closely with our customers and standard setting bodies to identify innovative solutions and reschedule onsite visits as timely as possible. We also closely monitor the situation and react accordingly to any future restrictions or limitations, while keeping the interests of our customers, employees, and business operations in mind.

We also closely monitor the situation and react accordingly to any future restrictions or limitations, while keeping the interests of our customers, employees, and business operations in mind.

We have acquired and invested in a number of companies, and we may acquire or invest in or enter into joint ventures with additional companies.

Our business could suffer if we are unsuccessful in making, integrating, and maintaining our acquisitions and investments. We have acquired and invested in a number of companies, and we may acquire or invest in or enter into joint ventures with additional companies.

For example, the drought conditions that impacted nearly one-half of the United States in the first half of 2022 predominately affected our ranch customers resulting in fewer cattle subject to verification. While this example doesn’t directly affect our audit related revenue, it does impact our product sales and other related supply chain fees due to smaller herd sizes.

In March 2020, the Global Health Organization declared the outbreak of the Corona Virus as a pandemic in human populations. Contagious diseases or viral outbreaks create increased bio-exclusion and social distancing considerations in our business. 12 These diseases and viral outbreaks frequently impact our business resulting in some customers requesting postponement of onsite visits.

Contagious diseases or viral outbreaks create increased bio-exclusion and social distancing considerations in our business. 12 These diseases and viral outbreaks frequently impact our business resulting in some customers requesting postponement of onsite visits. We work closely with our customers and standard setting bodies to identify innovative solutions and reschedule onsite visits as timely as possible.

Unfavorable global economic conditions, including any adverse macroeconomic conditions or geopolitical events, including the conflict between Ukraine and Russia, and the conflict between Israel and Hamas could adversely affect our business, financial condition, results of operations or liquidity. Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.

We cannot anticipate changes in weather patterns/conditions, and we cannot predict their impact on our customer’s operations if they were to occur. 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.

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.

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 beginning of 2023 marks the ninth year of the current cycle that began in 2014.

Removed

One or more of these factors could harm our future international operations and consequently could harm our brand, business, operating results and financial condition. 13 Our business could suffer if we are unsuccessful in making, integrating, and maintaining our acquisitions and investments.

Added

In the nation’s top 10 beef-producing states — responsible for nearly 60% of the country’s beef production — half of the states reported the lowest number of cattle since 1995 as of the beginning of 2024, according to an Investigate Midwest analysis of the USDA’s data.

Added

While this example doesn’t directly affect our audit-related revenue, it does impact our product sales and other related supply chain fees due to smaller herd sizes. We cannot anticipate changes in weather patterns/conditions, and we cannot predict their impact on our customer’s operations if they were to occur.

Added

In 2024, other species such as dairy cattle were infected with an adaptation of the Bird Flu virus. In March 2020, the Global Health Organization declared the outbreak of the Corona Virus as a pandemic in human populations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

1 edited+0 added−0 removed14 unchanged

2023 filing

2024 filing

Biggest changeFor more information about the cybersecurity risks we face, see the risk factor entitled “A significant data breach or information technology system disruption could adversely affect our business, financial results, or reputation, and we may be required to increase our spending on data and system security” in Item 1A- Risk Factors. 19

Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed3 unchanged

2023 filing

2024 filing

Biggest changeRental payments are approximately $7,000 per month as of December 31, 2023, which includes common area charges, and are subject to annual increases over the term of the lease. Management is actively reviewing its options for renewal or relocation. In June 2021, the Company entered into a new lease agreement in Victoria, British Columbia, Canada for Postelsia office space.

Biggest changeRental payments are approximately $2,904 per month as of December 31, 2024, which includes common area charges, and are subject to annual increases over the term of the lease. In June 2021, the Company entered into a new lease agreement in Victoria, British Columbia, Canada for Postelsia office space.

The lease is for a period of two years and expired on May 31, 2023. Currently, the office space is leased on a month-to-month basis and payments are approximately Canadian dollar 500 per month, which includes common area charges. In December 2021, the Company entered into a lease agreement for the Medina, North Dakota office space.

The lease was for a period of two years and expired on May 31, 2023. Currently, the office space is leased on a month-to-month basis and payments are approximately Canadian dollar 527 per month, which includes common area charges. In December 2021, the Company entered into a lease agreement for the Medina, North Dakota office space.

ITEM 2. PROPERTIES The Company leases approximately 15,700 square feet of office space for its corporate headquarters. Total rental payments are approximately $45,500 per month as of December 31, 2023, which includes common area charges, and are subject to annual increases over the term of the lease.

ITEM 2. PROPERTIES The Company leases approximately 15,700 square feet of office space for its corporate headquarters. Total rental payments are approximately $47,034 per month as of December 31, 2024, which includes common area charges, and are subject to annual increases over the term of the lease.

Rental payments are approximately $3,500 per month, which includes common area charges, and are not subject to annual increases over the term of the lease. In December 2018, the Company entered into a new lease agreement in San Ramon, California for SureHarvest office space. The lease is for a period of sixty-six months and expires on March 1, 2024.

Rental payments are approximately $3,723 per month, which includes common area charges, and are not subject to annual increases over the term of the lease. In December 2018, the Company entered into a lease agreement in San Ramon, California for SureHarvest office space. The lease was for a period of sixty-six months and expired on March 1, 2024.

Added

On February 2024, the Company entered into a new lease agreement in Danville, CA for a period of thirty-one months, expiring September 30, 2026, with one option to extend the lease for another twenty-four months.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+2 added−1 removed4 unchanged

2023 filing

2024 filing

Biggest changeDividends For the years ended December 31, 2023 and 2022, there have been no cash dividends declared or paid. Recent Sales of Unregistered Securities There have been no unregistered sales of securities for the years ended December 31, 2023 and 2022.

Biggest changeDividends For the years ended December 31, 2024 and 2023, there have been no cash dividends declared or paid. Recent Sales of Unregistered Securities There have been no unregistered sales of securities for the years ended December 31, 2024 and 2023.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock The Company’s common stock is traded on the NASDAQ Stock Market LLC under the symbol “WFCF.” Stockholders As of February 8, 2024, we estimate that there were 63 record holders of our common stock.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock The Company’s common stock is traded on the NASDAQ Stock Market LLC under the symbol “WFCF.” Stockholders As of February 13, 2025, we estimate that there were 63 record holders of our common stock.

Removed

Activity for the quarter ended December 31, 2023 is as follows: Number of Shares Cost of Shares (in thousands) Average Cost per Share Shares purchased - October 2023 25,530 $ 351 $ 13.73 Shares purchased - November 2023 22,643 307 $ 13.57 Shares purchased - December 2023 27,936 377 $ 13.51 Total 76,109 $ 1,035 21

Added

Activity for the quarter ended December 31, 2024 is as follows: Number of Shares Cost of Shares (in thousands) Average Cost per Share Shares purchased - October 2024 18,064 $ 200 $ 11.09 Shares purchased - November 2024 31,370 356 $ 11.33 Shares purchased - December 2024 7,584 95 $ 12.53 Total 57,018 $ 651 Private Purchase of Common Shares During March 2024, the Company purchased 80,201 shares of its common stock from one shareholder for approximately $1.0 million.

Added

The purchase was limited to this single shareholder who approached the company; it was privately negotiated and involved no solicitation or advertising. No fees were paid in connection with the transaction, as it was a non-brokered placement. The shares were immediately retired upon purchase. 20

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

52 edited+13 added−7 removed43 unchanged

2023 filing

2024 filing

Biggest changeWe undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. 22 RESULTS OF OPERATIONS Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table shows information for reportable operating business segments: Year ended December 31, 2023 Year ended December 31, 2022 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Assets: Goodwill $ 1,947 $ 999 $ - $ 2,946 $ 1,947 $ 999 $ - $ 2,946 All other assets, net 3,501 2,707 7,132 13,340 9,949 3,182 2,219 15,350 Total assets $ 5,448 $ 3,706 $ 7,132 $ 16,286 $ 11,896 $ 4,181 $ 2,219 $ 18,296 Revenues: Verification and certification service revenue $ 19,413 $ - $ - $ 19,413 $ 17,610 $ - $ - $ 17,610 Product sales 4,001 - - 4,001 4,364 - - 4,364 Professional services - 1,721 - 1,721 - 2,871 - 2,871 Total revenues $ 23,414 $ 1,721 $ - $ 25,135 $ 21,974 $ 2,871 $ - $ 24,845 Costs of revenues: Costs of verification and certification services 10,986 - - 10,986 9,748 - - 9,748 Costs of products 2,272 - - 2,272 2,333 - - 2,333 Costs of professional services - 1,355 - 1,355 - 2,296 - 2,296 Total costs of revenues 13,258 1,355 - 14,613 12,081 2,296 - 14,377 Gross profit 10,156 366 - 10,522 9,893 575 - 10,468 Depreciation & amortization 466 168 - 634 582 183 - 765 Other operating expenses 6,885 306 - 7,191 6,805 246 - 7,051 Segment operating income/(loss) $ 2,805 $ (108 ) $ - $ 2,697 $ 2,506 $ 146 $ - $ 2,652 Other items to reconcile segment operating income/(loss) to net income/(loss): Other income/(loss) 374 (6 ) - 368 202 (38 ) - 164 Income tax benefit/(expense) - - (913 ) (913 ) - - (822 ) (822 ) Net income/(loss) $ 3,179 $ (114 ) $ (913 ) $ 2,152 $ 2,708 $ 108 $ (822 ) $ 1,994 Verification and Certification Segment 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.

Biggest changeRESULTS OF OPERATIONS Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 The following table shows information for reportable operating business segments: Year ended December 31, 2024 Year ended December 31, 2023 Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Verification and Certification Segment Professional Services Segment Eliminations and Other Consolidated Totals Assets: Goodwill $ 1,947 $ 999 $ - $ 2,946 $ 1,947 $ 999 $ - $ 2,946 All other assets, net (2,675 ) 2,705 12,330 12,360 3,501 2,707 7,132 13,340 Total assets $ (728 ) $ 3,704 $ 12,330 $ 15,306 $ 5,448 $ 3,706 $ 7,132 $ 16,286 Revenues: Verification and certification service revenue $ 20,552 $ - $ - $ 20,552 $ 19,413 $ - $ - $ 19,413 Product sales 3,803 - - 3,803 4,001 - - 4,001 Professional services - 1,391 - 1,391 - 1,721 - 1,721 Total revenues $ 24,355 $ 1,391 $ - $ 25,746 $ 23,414 $ 1,721 $ - $ 25,135 Costs of revenues: Costs of verification and certification services 11,849 - - 11,849 10,986 - - 10,986 Costs of products 2,313 - - 2,313 2,272 - - 2,272 Costs of professional services - 1,022 - 1,022 - 1,355 - 1,355 Total costs of revenues 14,162 1,022 - 15,184 13,258 1,355 - 14,613 Gross profit 10,193 369 - 10,562 10,156 366 - 10,522 Depreciation & amortization 481 166 - 647 466 168 - 634 Other operating expenses: Salaries and benefits 3,643 9 3,652 3,480 9 - 3,489 Rent and lease expense 595 46 - 641 586 82 - 668 Software and technology 792 38 - 830 742 34 - 776 Legal and professional expenses 144 7 398 549 145 9 403 557 Tradeshows and marketing 755 22 - 777 308 35 - 343 Conferences and training 91 23 - 114 149 45 - 194 Investor relations - - 128 128 - - 194 194 Other expenses 969 48 - 1,017 879 91 - 970 Total Other operating expenses 6,989 193 526 7,708 6,289 305 597 7,191 Segment operating income/(loss) $ 2,723 $ 10 $ (526 ) $ 2,207 $ 3,401 $ (107 ) $ (597 ) $ 2,697 Other items to reconcile segment operating income/(loss) to net income/(loss): Other income/(loss) 776 (4 ) - 772 374 (6 ) - 368 Income tax benefit/(expense) - - (859 ) (859 ) - - (913 ) (913 ) Net income/(loss) $ 3,499 $ 6 $ (1,385 ) $ 2,120 $ 3,775 $ (113 ) $ (1,510 ) $ 2,152 Verification and Certification Segment 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.

How long we continue to contract will be directly impacted by drought and pasture conditions. Stock-Based Compensation 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 using the Black-Scholes-Merton option-pricing model.

How long we will continue to contract will be directly impacted by drought and pasture conditions. Stock-Based Compensation 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 using the Black-Scholes-Merton option-pricing model.

Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: ● changing technology and evolving standards in the livestock and food industry; ● consumer focus on social responsibility, sustainability, food safety and assurance; ● competition from other providers serving the food and agriculture industry; ● economic and financial conditions in the livestock and food industry; ● international export market activities, including trade barriers to certain beef and other livestock exports; ● market demand for beef and other livestock products; ● seasonal volatility in business activity; ● developments and changes in laws and regulations, including increased regulation of the livestock and food industry through legislative action and revised rules and standards; ● strategic actions, including acquisitions and our success in integrating acquired businesses; ● enforceability of our patents, trademarks and other intellectual property rights; ● continued service of key senior management personnel; ● the impact of government regulation on our business, customers, suppliers and employees; ● disruptions of inefficiencies in the supply chain, including any impact of inflation and/or regulation; and ● such other factors as discussed throughout Part II, “Item 7.

Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: ● changing technology and evolving standards in the livestock and food industry; ● consumer focus on social responsibility, sustainability, food safety and assurance; ● competition from other providers serving the food and agriculture industry; ● economic and financial conditions in the livestock and food industry; ● international export market activities, including trade barriers to certain beef and other livestock exports; ● market demand for beef and other livestock products; ● seasonal volatility in business activity; ● developments and changes in laws and regulations, including increased regulation of the livestock and food industry through legislative action and revised rules and standards; ● strategic actions, including acquisitions and our success in integrating acquired businesses; ● enforceability of our patents, trademarks and other intellectual property rights; ● continued service of key senior management personnel; ● the impact of government regulation on our business, customers, suppliers and employees; ● disruptions of inefficiencies in the supply chain, including any impact of inflation and/or regulation; and 21 ● such other factors as discussed throughout Part II, “Item 7.

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. 25 Debt Facility The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2025.

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.

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 in our product offerings within national and international markets, as well as, potential acquisitions.

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. 24 Our plan for continued growth is primarily based on diversification in our product offerings within national and international markets, as well as, potential acquisitions.

We also believe inflationary pressure on packers, producers, growers, brands, and retailers is putting downward pressure on verified and certified foods as consumers have switched to lower priced food products. 22 Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags.

Changes in these estimates and assumptions could materially affect the tax provision as recorded. Goodwill We perform an impairment test of our goodwill annually or when events and circumstances indicate goodwill might be impaired. Impairment testing of goodwill is required at the reporting unit level and involves a two-step process.

Changes in these estimates and assumptions could materially affect the tax provision as recorded. 27 Goodwill We perform an impairment test of our goodwill annually or when events and circumstances indicate goodwill might be impaired. Impairment testing of goodwill is required at the reporting unit level and involves a two-step process.

We recognize revenue utilizing an input method to measure over-time progress of each verification audit based on the number of audit days performed. For certain of our third-party crop and other processed product audits, we assess a fixed fee for the annual certification period.

We recognize revenue utilizing an input method to measure over-time progress of each verification audit based on the number of audit days performed. 25 For certain of our third-party crop and other processed product audits, we assess a fixed fee for the annual certification period.

If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess. 28 We evaluate our reporting units on an annual basis or when events or circumstances indicate our reporting units might change.

If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess. We evaluate our reporting units on an annual basis or when events or circumstances indicate our reporting units might change.

We determine the fair value of our digital assets on a quarterly basis in accordance with ASC Topic 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 determined the fair value of our digital assets on a quarterly basis in accordance with ASC Topic 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).

Our effective income tax rate is also affected by changes in tax law, our level of earnings and the results of tax audits. As of December 31, 2023, we concluded that a valuation allowance against our deferred tax assets was not considered necessary. As of December 31, 2023 and 2022, the Company did not have an unrecognized tax liability.

Our effective income tax rate is also affected by changes in tax law, our level of earnings and the results of tax audits. As of December 31, 2024, we concluded that a valuation allowance against our deferred tax assets was not considered necessary. As of December 31, 2024 and 2023, the Company did not have an unrecognized tax liability.

As of December 31, 2023 and 2022, the effective interest rate was 10.0% and 9.0%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”), a subsidiary of WFCF. As of December 31, 2023 and 2022, there were no amounts outstanding under this LOC.

As of December 31, 2024 and 2023, the effective interest rate was 9.0% and 10.0%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”), a subsidiary of WFCF. As of December 31, 2024 and 2023, there were no amounts outstanding under this LOC.

As of December 31, 2023 and 2022, we had approximately $2.9 million of goodwill. During the fourth quarter of 2023 and 2022, we performed a qualitative assessment on our WFCF, WFCFO, Validus and SureHarvest units and concluded that the fair value of the reporting units exceeded their carrying value.

As of December 31, 2024 and 2023, we had approximately $2.9 million of goodwill. During the fourth quarter of 2024 and 2023, we performed a qualitative assessment on our WFCF, WFCFO, Validus and SureHarvest units and concluded that the fair value of the reporting units exceeded their carrying value.

The effective tax rate for the year ended December 31, 2023 and 2022 was 29.7% and 28.8%, respectively, compared to a federal corporate rate of 21.0%.

The effective tax rate for the year ended December 31, 2024 and 2023 was 28.8% and 29.7%, respectively, compared to a federal corporate rate of 21.0%.

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.

The culmination of all our efforts has brought significant opportunities to us, including increased investor confidence in our company, as well as the potential to develop business relationships with long-term strategic partners.

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.

We believe that our various sources of capital, including cash flow from operating activities, focused improvements 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 significant trend that would negatively affect our liquidity.

Selling, general and administrative expenses for the professional services segment for the year ended December 31, 2023 increased approximately $45,000 compared to 2022. Dividend Income from Progressive Beef, LLC On August 9, 2018, the Company purchased a ten percent membership interest in Progressive Beef, LLC (“Progressive Beef”) for an aggregate purchase price of approximately $1.0 million.

Selling, general and administrative expenses for the professional services segment for the year ended December 31, 2024 decreased approximately $112,000 compared to 2023. Dividend Income from Progressive Beef, LLC On August 9, 2018, the Company purchased a ten percent membership interest in Progressive Beef, LLC (“Progressive Beef”) for an aggregate purchase price of approximately $1.0 million.

These definite-lived assets are subject to amortization using the straight-line method over the estimated useful-lives of the respective assets, which range from two to fifteen years. Estimates of useful-lives are based on the nature of the underlying assets as well as our experience with similar assets and intended use. We periodically review estimated useful-lives for reasonableness.

Off Balance Sheet Arrangements As of December 31, 2023, we had no off-balance sheet arrangements of any type.

Off Balance Sheet Arrangements As of December 31, 2024, we had no off-balance sheet arrangements of any type.

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.

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.

The Company received dividend income of $320,000 and $250,000 for the years ended December 31, 2023 and 2022, respectively, from Progressive Beef representing a distribution of their earnings. Income Tax Expense For the years ended December 31, 2023 and 2022, we recorded income tax expense of approximately $0.9 million and $0.8 million, respectively.

The Company received dividend income of $400,000 and $320,000 for the years ended December 31, 2024 and 2023, respectively, from Progressive Beef representing a distribution of their earnings. 23 Income Tax Expense For the years ended December 31, 2024 and 2023, we recorded income tax expense of approximately $0.9 million.

It is possible that employee stock options may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements.

There is a risk that our estimates of the fair values may differ from the actual values. It is possible that employee stock options may expire worthless or otherwise result in zero intrinsic value as compared to the fair values originally estimated on the grant date and reported in our financial statements.

F ees 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 year ended December 31, 2023 increased approximately $1.8 million, or 10.2% compared to 2022.

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 year ended December 31, 2024 increased approximately $1.1 million, or 5.9% compared to 2023.

We evaluate recoverability of long-lived assets, including property and equipment and definite-lived intangible assets, when events or changes in circumstances indicate that the carrying amount may not be recoverable.

We periodically review estimated useful-lives for reasonableness. 28 We evaluate recoverability of long-lived assets, including property and equipment and definite-lived intangible assets, when events or changes in circumstances indicate that the carrying amount may not be recoverable.

Net cash used in the 2023 period was $0.2 million for the acquisition of Blue Trace, $0.3 million for the acquisition of Upcycled Foods and $0.1 million for the purchase of equipment and internal use software development.

Net cash used in investing activities during 2024 was approximately $0.2 million compared to $0.6 million during 2023. Net cash used in the 2023 period was $0.2 million for the acquisition of Blue Trace, $0.3 million for the acquisition of Upcycled Foods and $0.1 million for the purchase of equipment and internal use software development.

Operating leases are included in the right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities in our consolidated balance sheet.

Operating leases are included in the right-of-use (ROU) assets, current operating lease liabilities and noncurrent operating lease liabilities in our consolidated balance sheet. Finance leases are included in property and equipment, current finance lease obligations and long-term finance lease obligations in our consolidated balance sheet.

Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected term at the grant date. ● The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior. 27 There is a risk that our estimates of the fair values may differ from the actual values.

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.

The digital assets were initially recorded at cost and subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition as of December 31, 2023.

Costs of revenues for our professional services segment for the years ended December 31, 2023 and 2022 were approximately $1.4 and $2.3 million, respectively. For the year ended December 31, 2023, gross margin increased to 21.3% from 20.0% in 2022.

For the year ended December 31, 2024, professional service revenue decreased approximately $0.3 million over 2023. Costs of revenues for our professional services segment for the years ended December 31, 2024 and 2023 were approximately $1.0 and $1.4 million, respectively. For the year ended December 31, 2024, gross margin improved to 26.5% from 21.3% in 2023.

For 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 stock awards, fair value is the closing stock price for the Company’s common stock on the grant date.

Product sales for the year ended December 31, 2023 decreased approximately $0.4 million or 8.3% compared to 2022. 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.

Product sales for the year ended December 31, 2024 decreased approximately $0.2 million or 5.0% compared to 2023. We continue to see some new customer growth, but our customers are ordering less tags due to smaller beef cow herd size.

As of December 31, 2023 and 2022, the carrying value of our digital assets held was $0.1 million. 30 Business Combinations A component of our growth strategy has been to acquire businesses that complement our existing operations. We account for business combinations in accordance with the guidance for business combinations and related literature.

Business Combinations A component of our growth strategy has been to acquire businesses that complement our existing operations. We account for business combinations in accordance with the guidance for business combinations and related literature.

Net Income and Per Share Information As a result of the foregoing, net income for the year ended December 31, 2023 was approximately $2.2 million or $0.39 per basic and per diluted common share, compared to approximately $2.0 million or $0.34 per basic and $0.33 per diluted common share in 2022. 24 Liquidity and Capital Resources At December 31, 2023, we had cash and cash equivalents of approximately $2.6 million compared to approximately $4.4 million at December 31, 2022.

Net Income and Per Share Information As a result of the foregoing, net income for the year ended December 31, 2024 was approximately $2.1 million or $0.40 per basic and per diluted common share, compared to approximately $2.2 million or $0.39 per basic and diluted common share in 2023.

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.

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.

ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Indefinite-Lived Assets Our non-amortizable intangible assets which have an indefinite life relate to the trademarks/tradenames and digital assets. Trademarks/tradenames were acquired in the Validus acquisition.

Indefinite-Lived Assets Our non-amortizable intangible assets which have an indefinite life relate to the trademarks/tradenames and digital assets. Trademarks/tradenames were acquired in the Validus acquisition.

Revenue for product sales is recognized upon delivery of the goods to customer, at which point title, custody and risk of loss transfer to the customer. 26 We had deferred revenue of approximately $1.4 million and $1.2 million at December 31, 2023 and 2022, respectively, primarily related to the annual certification period for certain of our third-party crop and other processed product audits.

We had deferred revenue of approximately $1.7 million and $1.4 million at December 31, 2024 and 2023, respectively, primarily related to the annual certification period for certain of our third-party crop and other processed product audits. The balance of these contract liabilities at the beginning of the period is expected to be recognized as revenue during 2025.

Calculating stock-based compensation expense using the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate.

The expense is recognized over the vesting period of the grant. 26 Calculating stock-based compensation expense using the Black-Scholes-Merton option-pricing model requires the input of highly subjective assumptions, including the expected term of the stock-based awards, stock price volatility, and the pre-vesting option forfeiture rate.

Net cash used in the 2022 period was $0.2 million for the purchase of digital assets and $0.1 million for the purchase of a vehicle, equipment and software development. Net cash used in financing activities during 2023 was approximately $3.9 million compared to net cash used of $3.4 million in the 2022 period.

Net cash used in financing activities during 2024 was approximately $3.2 million compared to net cash used of $3.9 million in the 2023 period. Net cash used in the 2023 period was primarily for the repurchase of common shares under the Stock Buyback Plan and a private purchase of common shares.

Selling, general and administrative expenses for the verification and certification segment for the year ended December 31, 2023 decreased approximately $36,000 compared to 2022. Professional Services Segment Professional services revenue include 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 Segment Professional services revenue include 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 consulting revenue stream is predominantly project based and not recurring in nature.

The balance of these contract liabilities at the beginning of the period is expected to be recognized as revenue during 2024. Professional Services Segment Professional services fees are derived from a standard rate card by employee level, and we invoice for consulting, data analysis and other reporting services, monthly, on a time-incurred basis.

Professional Services Segment Professional services fees are derived from a standard rate card by employee level, and we invoice for consulting, data analysis and other reporting services, monthly, on a time-incurred basis. We recognize revenue over time utilizing the practical expedient that allows us to recognize revenue in the amount to which we have a right to invoice.

The decline is primarily due to inflationary increases in the costs of products shipped and increases in compensation related costs due to a tight labor market impacting our margins. New customer growth helps offset to some extent the inflationary impacts on our margins.

Our margins are generally impacted by various costs such as cost of products, salaries and benefits, insurance and taxes. The decline is primarily due to inflationary increases in the costs of products shipped and increases in compensation related costs due to a tight labor market impacting our margins.

Our working capital at December 31, 2023 was approximately $3.2 million compared to approximately $4.9 million at December 31, 2022. Net cash provided by operating activities during 2023 was approximately $2.8 million compared to $2.7 million during the same period in 2022.

Net cash provided by operating activities during 2024 was approximately $2.7 million compared to $2.8 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 and changes in current assets and liabilities.

In connection with the provision of on-site audits, reimbursable expenses are incurred and billed to customers, and such amounts are recognized on a gross basis as both revenue and cost of revenue. Any amounts collected on behalf of a third-party and remitted in full to that third-party are excluded from the transaction price and, thus, revenue.

Other Generally, we do not provide right of return or warranty on product sales or services performed. In connection with the provision of on-site audits, reimbursable expenses are incurred and billed to customers, and such amounts are recognized on a gross basis as both revenue and cost of revenue.

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.

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.

We believe we are at a low point of a contraction phase within the cattle cycle which is negatively impacting revenue tied directly to price per head of cattle. 23 Costs of revenues (for services and product sales) for the verification and certification segment for the year ended December 31, 2023 were approximately $13.3 million compared to approximately $12.1 million in 2022.

We believe we are at a low point of a contraction phase within the cattle cycle which is negatively impacting revenue tied directly to price per head of cattle.

Because our consulting revenue is predominately project based, margins are greatly impacted by the timing of the project work and the fixed and/or variable labor necessary to complete the project. The 2022 margins were negatively impacted by an increased use of contract labor to support the short-term consulting engagement mentioned above.

During 2024, because of a reduction in consulting projects, we reallocated staff to other internal departments, as needed. As our consulting revenue is predominately project based, margins are greatly impacted by the timing of the project work and the fixed and/or variable labor necessary to complete the project.

Finance leases are included in property and equipment, current finance lease obligations and long-term finance lease obligations in our consolidated balance sheet. 29 ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

Net cash provided by operating activities is driven by an increase in our net income and adjusted by non-cash items and changes in current assets and liabilities. Non-cash adjustments primarily include depreciation, amortization of intangible assets, stock-based compensation expense, bad debt expense, and deferred taxes.

Non-cash adjustments primarily include depreciation, amortization of intangible assets, fair market value gains / losses on digital assets, stock-based compensation expense, bad debt 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 2023 was primarily driven by a decrease in prepaid expenses and other assets, accounts payable, accrued expenses and other current liabilities and cash used for inventory, offset by an increase in deferred revenue.

The decline in cash provided by operating activities for 2024 was primarily due to a decline in the gross margins of our Verification and Certification Segment and increased spending for marketing related activities, offset by the timing of cash receipts and cash disbursements.

Digital assets or “cryptocurrency” are held as indefinite-lived intangible assets in accordance with ASC Topic 350. We have ownership of and control over our digital assets and may use a third-party custodial service to secure it.

We have ownership of and control over our digital assets and use a third-party custodial service to secure it. 29 Effective January 1, 2024, the Company implemented Accounting Standards Update (“ASU”) 2023-08 – Intangibles – Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets.

Gross margin for the year ended December 31, 2023 decreased slightly to 43.4% compared to 45.0% in 2022. Our margins are generally impacted by various costs such as cost of products, salaries and benefits, insurance and taxes.

Costs of revenues (for services and product sales) for the verification and certification segment for the year ended December 31, 2024 were approximately $14.2 million compared to approximately $13.3 million in 2023. Gross margin for the year ended December 31, 2024 decreased slightly to 41.9% compared to 43.4% in 2023.

Removed

Our consulting revenue stream is predominantly project based and not recurring in nature. For the year ended December 31, 2023, professional service revenue decreased approximately $1.2 million over 2022. The 2022 period included a significant short-term engagement with a Japanese party to promote Japanese seafood products into the American supply chain during 2022.

Added

We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Removed

The cash provided by operating activities for 2022 was primarily driven by a decrease in deferred revenue and cash used for inventory, offset by an increase in prepaid expenses and accounts payable. Net cash used in investing activities during 2023 was approximately $0.6 million compared to $0.3 million during 2022.

Added

According to the USDA statistics, overall beef cow inventories have declined from 28.9 million head on January 1, 2023 to 28.2 million head on January 1, 2024 and is now estimated at less than 28 million head.

Removed

Net cash used in the 2023 period was primarily for the repurchase of common shares under the Stock Buyback Plan. Net cash used in the 2022 period was primarily for 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.

Added

Additionally, some customers are receiving free tags under the USDA’s program to jumpstart efforts to enable the fastest possible response to a foreign animal disease in connection with its definitive traceability regulation, mandating the use of electronic ID tags for specific interstate movements of cattle and bison.

Removed

We recognize revenue over time utilizing the practical expedient that allows us to recognize revenue in the amount to which we have a right to invoice. Other Generally, we do not provide right of return or warranty on product sales or services performed.

Added

New customer growth helps offset the inflationary impacts on our margins, to some extent. Selling, general and administrative expenses for the verification and certification segment for the year ended December 31, 2024 increased approximately $0.7 million compared to 2023, due to more participation in tradeshows and increasing marketing activities.

Removed

As of December 31, 2023, there have been no changes to the indefinite life determination pertaining to the trademarks/tradenames intangible assets. Based on the qualitative assessment on Validus reporting unit, we concluded that the likelihood of the indefinite lived asset being impaired was below a “more-likely-than-not” threshold.

Added

Liquidity and Capital Resources At December 31, 2024, we had cash and cash equivalents of approximately $2.0 million compared to approximately $2.6 million at December 31, 2023. Our working capital at December 31, 2024 was approximately $2.4 million compared to approximately $3.2 million at December 31, 2023.

Removed

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.

Added

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.

Removed

As of December 31, 2023, we have not sold any digital assets and have not recognized an impairment loss for the year ended December 31, 2023. An impairment loss of $62,000 was recognized for the year ended December 31, 2022.

Added

Revenue for product sales is recognized upon delivery of the goods to customer, at which point title, custody and risk of loss transfer to the customer.

Added

Any amounts collected on behalf of a third-party and remitted in full to that third-party are excluded from the transaction price and, thus, revenue. Our business is subject to seasonal fluctuations.

Added

We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate.

Added

During 2024, management reviewed our tradenames / trademarks (not subject to amortization) and determined the tradename no longer had an infinite life and as such, needed to be reclassified to tradename / trademarks subject to amortization and amortized over the remaining useful life.

Added

Digital Assets Digital assets or “cryptocurrency” are included in non-current assets in the Consolidated Balance Sheets due to the Company’s investment in digital assets. The Company does not accept or receive digital assets for transactional purposes.

Added

Under ASU 2023-08, the Company is required to measure the digital assets at fair value with changes recognized in net income each reporting period. The amendments in this ASU require a cumulative-effect adjustment to the opening balance of retained earnings.

Added

The digital assets are separately reported from other intangible assets on the balance sheet and changes from remeasurement of the digital assets are separately reported on the statement of operations. Prior to the adoption of ASU 2023-08, digital assets or “cryptocurrency” were held as indefinite-lived intangible assets in accordance with ASC Topic 350 – Intangibles-Goodwill and Other .

Top changes in Where Food Comes From, Inc.'s 2024 10-K

Item 1. Business

Item 1A. Risk Factors

Item 1C. Cybersecurity

Item 2. Properties

Item 5. Market for Registrant's Common Equity

Item 7. Management's Discussion & Analysis

Other WFCF 10-K year-over-year comparisons