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What changed in Where Food Comes From, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Where Food Comes From, Inc.'s 2024 and 2025 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 2025 report.

+152 added−149 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-20)

Top changes in Where Food Comes From, Inc.'s 2025 10-K

152 paragraphs added · 149 removed · 128 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeFor 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.
Biggest changeProduct Sales 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. Approximately 14.5% and 14.8% of our total revenue was generated by the sale of product during the years ended December 31, 2025 and 2024, respectively.
Henning’s previous experience includes financial management positions with KPMG Peat Marwick, DF&R Restaurant Company, and CSI/CDC Company. Mrs. Henning is a Certified Public Accountant with more than 30 years of professional experience. She received a B.B.A. degree in Accounting from the University of Texas at Arlington.
Mrs. Henning’s previous experience includes financial management positions with KPMG Peat Marwick, DF&R Restaurant Company, and CSI/CDC Company. Mrs. Henning is a Certified Public Accountant with more than 30 years of professional experience. She received a B.B.A. degree in Accounting from the University of Texas at Arlington.
Additional information regarding certain risks related to our employees is included in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K. AVAILABLE INFORMATION Our corporate website is located at www.wherefoodcomesfrom.com.
Additional information regarding certain risks related to our employees is included in Part I, Item 1A “Risk Factors” of this Annual Report on Form 10-K. 8 AVAILABLE INFORMATION Our corporate website is located at www.wherefoodcomesfrom.com.
How long we continue to contract will be directly impacted by drought and pasture conditions. 8 INTELLECTUAL PROPERTY We create, own and maintain a variety of intellectual property assets that we believe are among our most valuable assets.
How long we continue to contract will be directly impacted by drought and pasture conditions. INTELLECTUAL PROPERTY We create, own and maintain a variety of intellectual property assets that we believe are among our most valuable assets.
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.
As of December 31, 2025, 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.
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.
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 , 54, founded the Company in 1998 and has served as the Chief Executive Officer since then. 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.
Jason Franco , 49, 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 , 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.
Leann Saunders , 55, 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.
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.
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.
Differentiation hinges upon understanding all facets of food verification and the complex compliance challenges to make product verifications efficient, cost-effective, and seamless. Our core business and expertise focus on the “on farm” verifications to a variety of standards, guidelines and criteria, including source verification, natural, animal care and well-being, and sustainability verification. SEASONALITY Our business is subject to seasonal fluctuations.
Differentiation hinges upon understanding all facets of food verification and the complex compliance challenges to make product verifications efficient, cost-effective, and seamless. Our core business and expertise focus on the “on farm” verifications to a variety of standards, guidelines and criteria, including source verification, natural, animal care and well-being, and sustainability verification.
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.
EMPLOYEES As of December 31, 2025, we had 100 total employees, of which 89 were full-time employees. Approximately 84% 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.
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.
SEASONALITY Our business is subject to seasonal fluctuations annually. 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.
Our team visits farms and ranches and looks at their plants, animals, and records, and compares the information we collect to specific standards or claims that farms and ranches want to make about how they are producing food.
Our team visits farms and ranches and looks at their plants, animals, and records, and compares the information we collect to specific standards or claims that farms and ranches want to make about how they are producing food. Our customers include top-tier players in the food and wine space.
Prior to her appointment, she was engaged by the Company as a consultant beginning in November 2007. From 2004 to 2007, Mrs. Henning was the Corporate Controller for Einstein Noah Restaurant Group. From 2001 to 2003, she served as the Controller for Vari-L Company. Mrs.
Dannette Henning , 56, has been the Chief Financial Officer of the Company since January 2008. Prior to her appointment, she was engaged by the Company as a consultant beginning in November 2007. From 2004 to 2007, Mrs. Henning was the Corporate Controller for Einstein Noah Restaurant Group. From 2001 to 2003, she served as the Controller for Vari-L Company.
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.
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.
Franco worked as a technical application consultant and integration specialist with Peoplesoft / Oracle. He began his career in 1998 as a software developer with John Deere Special Technologies Group, where he specialized in traceability applications. He received his B.S. degree in Computer Science from the University of the Pacific in Stockton, CA.
Franco worked as a technical application consultant and integration specialist with Peoplesoft / Oracle. He began his career in 1998 as a software developer with John Deere Special Technologies Group, where he specialized in traceability applications.
Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the food they purchase through product labeling and web-based information sharing and education.
Finally, the Company’s Where Food Comes From Source Verified® retail and restaurant labeling program utilizes the verification of product attributes to connect consumers directly to the source of the food they purchase through product labeling and web-based information sharing and education. WFCF was founded in 1996 and incorporated in the state of Colorado as a subchapter C corporation in 2006.
We continue to see a growing interest from consumers regarding how their food is produced. We are in an increasingly global food market with food products traveling around the world, and brands differentiating themselves in the market. These key drivers are increasing the number of food labeling claims made on food products.
We are in an increasingly global food market with food products traveling around the world, and brands differentiating themselves in the market. These key drivers are increasing the number of food labeling claims made on food products.
Retailers: Responding to consumer demands for increased transparency as well as to the negative impact food scandals have on their bottom lines, retailers are requiring their suppliers to adhere to more stringent traceability and verification of product claims. Government Regulation: Regulations including the U.S.
Retailers: Responding to consumer demands for increased transparency as well as to the negative impact food scandals have on their bottom lines, retailers are requiring their suppliers to adhere to more stringent traceability and verification of product claims. Verification and certification provide retailers and food service a way to differentiate themselves from their competitors.
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”).
The Company estimates that it 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.
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.
We also provide a wide range of professional consulting services that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation.
MARKETING Our marketing strategy includes direct marketing, advertising, event sponsorship, and trade show participation. From a public relations perspective, members of our staff are frequently quoted in industry trade journals and requested as speakers at various industry events as subject matter experts on the topics of animal identification, traceability, branding, third-party verification and certification, and the USDA verification programs.
From a public relations perspective, members of our staff are frequently quoted in industry trade journals and requested as speakers at various industry events as subject matter experts on the topics of animal identification, traceability, branding, third-party verification and certification, and the USDA verification programs. 7 In order to reach additional customers, we continually develop strategic marketing partnerships with leading companies in the industry with complementary abilities and products.
Family Relationships John Saunders, our CEO and Chairman of the Board, is married to Leann Saunders, our President. Both Mr. and Mrs. Saunders serve on our Board of Directors.
He received his B.S. degree in Computer Science from the University of the Pacific in Stockton, CA. 9 Family Relationships John Saunders, our CEO and Chairman of the Board, is married to Leann Saunders, our President. Both Mr. and Mrs. Saunders serve on our Board of Directors.
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.
We do not currently rely on any third-party contracts with distributors, licensors or manufacturers in conducting our business. 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 agriculture, livestock and food industries.
In the future, we hope to further expand our scope within beverages, seafood and other produce. ● To offer solutions for all participants in the food supply chain, including feed and input ingredient providers, farmers, producers, packers, auction barns, processors, handlers, distributors, restaurants, retailers and consumers. ● To expand on the industry’s largest solutions portfolio.
We believe we offer the most comprehensive verification solutions in the industry. ● To offer solutions for all participants in the food supply chain, including feed and input ingredient providers, farmers, producers, integrators, packers, auction barns, processors, handlers, distributors, restaurants, retailers and consumers. ● To continue organic growth.
Through selective acquisitions, we can expand our footprint by adding new customers, services, food groups and revenue streams. INDUSTRY BACKGROUND The value-added food industry has been growing rapidly for the past several years in response to increased consumer interest about social responsibility, sustainability and food safety production practices.
INDUSTRY BACKGROUND The value-added food industry has been growing rapidly for the past several years in response to increased consumer interest about social responsibility, sustainability and food safety production practices. We continue to see a growing interest from consumers regarding how their food is produced.
Our customers include top-tier players in the food and wine space. 3 The Company also provides a wide range of professional consulting services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation.
The Company also provides a wide range of professional consulting services and technology solutions that generate incremental revenue specific to the food and agricultural industry and drive sustainable value creation. 3 The Company’s business benefits from growing demand by consumers, retailers and government for increased transparency into food production practices.
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.
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 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.
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. For the years ended December 31, 2025 and 2024, our third-party verification programs provided 80.8% and 79.8% of our total revenue, respectively.
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.
Professional Services Revenue 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. MARKETING Our marketing strategy includes direct marketing, advertising, event sponsorship, and trade show participation.
Department of Agriculture’s (“USDA”) Animal Disease Traceability program, international export requirements, non-GMO and gluten-free testing requirements, and ingredient labeling regulations are all impacting product verification.
Ultimately, verification helps build trust while communicating how much a retailer cares about the authenticity of the claims on their products. Government Regulation: Regulations including the U.S. Department of Agriculture’s (“USDA”) Animal Disease Traceability program, international export requirements, non-GMO and gluten-free testing requirements, and ingredient labeling regulations are all impacting product verification. Verification programs add value to products.
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.
In addition to adding value, they also enable access to new market opportunities, which include international exports. 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 $24.9 million in 2025, a 19-year compounded annual growth rate (“CAGR”) of approximately 17.87%.
The Company’s business benefits from growing demand by consumers, retailers and government for increased transparency into food production practices. Consumers: Due to concerns about social responsibility and sustainability, food safety, and an overall increase in health consciousness, consumers are demanding more information about the food they purchase.
Consumers: Due to concerns about social responsibility and sustainability, food safety, and an overall increase in health consciousness, consumers are demanding more information about the food they purchase. Third-party verification means highly trained verification specialists reviewed documentation and have sent independent auditors onsite to where the food came from to confirm if a claim is true.
Currently we verify beef, lamb, pork, poultry, fish, dairy, eggs, fresh produce, nuts and grains, wine and finished products.
Our growth strategy is as follows: ● To cover more food groups than any other verification provider. Currently we verify to hundreds of claims, programs and markets focusing on beef, lamb, pork, poultry, fish, dairy, eggs, fresh produce, nuts and grains, wine and finished products. We continue to expand our scope within beverages, seafood and other produce.
We currently are verifying or certifying to more than 50 certification standards or guidelines. To our knowledge, that is the most in the industry. ● To continue organic growth. We leverage our bundling capability to aggressively pursue new customers, while sustaining our recurring revenue model and high retention rates. ● To continue growth through merger and acquisition opportunities.
We leverage our bundling capability to aggressively pursue new customers, while sustaining our recurring revenue model and high retention rates. We help new and existing customers create a program specific to their brand.
No 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.
No single customer generated more than 10% of the Company’s consolidated revenue in 2025 or 2024. Verification and Certification Revenue 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.
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With the use of Quick Response Code (“QR”) technology, consumers can instantly access information about the producers behind their food. WFCF was founded in 1996 and incorporated in the state of Colorado as a subchapter C corporation in 2006.
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As long as their process or claim can be standardized, we can create an audit platform to measure it accurately and authentically. ● To continue growth through merger and acquisition opportunities. Through selective acquisitions, we can expand our footprint by adding new customers, services, food groups and revenue streams.
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For 2024, American ranchers have a TRQ of 30,200 metric tons annually, compared to 14,800 metric tons annually for all other eligible countries.
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COMPETITION The competition for third-party verification services in the food and agriculture industry is growing more intense, especially within the organic market.
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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.
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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.
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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.
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In order to reach additional customers, we continually develop strategic marketing partnerships with leading companies in the industry with complementary abilities and products. We do not currently rely on any third-party contracts with distributors, licensors or manufacturers in conducting our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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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.
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.
We cannot assure you that we will be able to comply with all of these requirements or that the cost of such compliance will not prove to be a substantial competitive disadvantage as compared with privately held and larger public competitors.
We cannot assure you that we will be able to comply with all these requirements or that the cost of such compliance will not prove to be a substantial competitive disadvantage as compared with privately held and larger public competitors.
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.
Today, parasites, 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.
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.
Parasites, 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.
Additionally, we are experiencing higher labor and benefit related costs to retain our existing personnel. We believe we will continue to see significant pressure in our labor and benefit related costs which impacts both our gross margins and net income. We also continue to monitor for weakened demand in our professional services business segment due to significant customer concentration.
Additionally, we are experiencing higher labor and benefit related costs to retain our existing personnel. We believe we will continue to see significant pressure on our labor and benefit related costs which impacts both our gross margins and net income. We also continue to monitor for weakened demand in our professional services business segment due to significant customer concentration.
Any changes to the foregoing laws or regulations or any new laws or regulations that are passed or go into effect may make it more difficult for us to operate our business and in turn adversely affect our operating results. 14 We may also be subject to audits by various taxing authorities.
Any changes to the foregoing laws or regulations or any new laws or regulations that are passed or go into effect may make it more difficult for us to operate our business and in turn adversely affect our operating results. We may also be subject to audits by various taxing authorities.
Also, our brand, ability to attract and retain qualified employees and business may be harmed. We face risks that highly contagious diseases or viral outbreaks may negatively impact the source of product we are able to verify and/or impact the efficiency in which we conduct ongoing business operations.
Also, our brand, ability to attract and retain qualified employees and business may be harmed. We face risks that parasites, highly contagious diseases or viral outbreaks may negatively impact the source of product we are able to verify and/or impact the efficiency in which we conduct ongoing business operations.
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 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 sustainable practices, food safety and assurance.
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.
Economic uncertainty 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.
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.
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 have been in a multi-year period of managing inflation and economic uncertainty For approximately 4 years, the economy has been facing inflationary pressures which 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.
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.
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.
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. 13 One or more of these factors could harm our future international operations and consequently could harm our brand, business, operating results and financial condition.
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.
Our competitors may offer broader service offerings or technologies that are more commercially attractive and gain greater market acceptance than our current or future products.
Our competitors may offer broader service offerings or technologies that are more commercially attractive and gain greater market acceptance than our current or future products. Additionally, new technology may render our products and services obsolete.
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 sustainably produced foods, food safety and assurance.
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 sustainably produced foods, food safety and assurance.
Because the change enabled a significant increase in the amount of product qualifying for export to Japan, it negatively impacted the premiums typically seen in the marketplace for source and age verified cattle. ● In March 2020, the World Health Organization declared a pandemic which negatively impacted certain aspects of our business due to government-mandated closures and social distancing measures.
Because the change enabled a significant increase in the amount of product qualifying for export to Japan, it negatively impacted the premiums typically seen in the marketplace for source and age verified cattle. ● In March 2020, the World Health Organization declared a pandemic which negatively impacted certain aspects of our business due to government-mandated closures and social distancing measures. ● In 2025, regulatory and market conditions in the U.S. beef sector created strong headwinds for third-party verification and certification programs.
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.
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 sensitive to costs and reluctant to adopt new technologies and business practices. 11 We face risks of rapidly changing regulations which may negatively impact our programs.
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.
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.
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.
Tight cattle supply affect s our audit-related revenue, product sales and other related supply chain fees due to smaller herd sizes and weakened demand for verified cattle. We cannot anticipate changes in weather patterns/conditions, and we cannot predict their impact on our customer’s operations if they were to occur.
We face risks of rapidly changing regulations which may negatively impact our programs. Regulations and standards are continually evolving and present a challenging risk. For example: ● In January 2013, the Japanese government announced a change to its import requirements on U.S. beef.
Regulations and standards are continually evolving and present a challenging risk. For example: ● In January 2013, the Japanese government announced a change to its import requirements on U.S. beef.
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.
Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.
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.
As of February 18, 2026, John Saunders, our Chairman and CEO, and Leann Saunders, our President, beneficially owned in the aggregate approximately 34.5% of our common stock. The Saunders, together with the rest of our Board, beneficially own approximately 53.5% of our common stock.
Similarly, changes in tax laws in any of the multiple jurisdictions in which we operate, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which we operate, could result in an unfavorable change in our effective tax rate, which could adversely affect our business, financial condition and operating results.
Similarly, changes in tax laws in any of the multiple jurisdictions in which we operate, or adverse outcomes from tax audits that we may be subject to in any of the jurisdictions in which we operate, could result in an unfavorable change in our effective tax rate, which could adversely affect our business, financial condition and operating results. 14 Our future success depends upon our ability to obtain and enforce patents; prevent others from infringing on our patents, trademarks and other intellectual property rights; and operate without infringing upon the patents and proprietary rights of others.
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.
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. More recently, the New World Screwworm has been detected in Mexico near the Texas border, raising concerns for US livestock.
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.
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 results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.
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.
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Our future success depends upon our ability to obtain and enforce patents; prevent others from infringing on our patents, trademarks and other intellectual property rights; and operate without infringing upon the patents and proprietary rights of others.
Added
Trade and tariff uncertainty in key export markets like China impacted demand. While at the same time, this administration has been faced with serious animal health disruptions such as the New World Screwworm detection in Mexico.
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As a result, it closed our border with Mexico, where we import a significant number of cattle, resulting in the further tightening of an already constrained cattle supply based on our low head counts in the US. The restricted supply resulted in record cattle prices and reducing incentives for producers, feeders, and packers to enroll in third-party programs.
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At the same time, evolving and uncertain export requirements and demand—including the EU Deforestation Regulation—introduced ambiguity around future documentation and traceability expectations without providing clear near-term market signals to prompt supply chain engagement.
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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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement also updates the Board on the Company’s Cyber Attack Recovery Plan, which covers, among other things, our approach to material cybersecurity incidents, data privacy and our compliance programs. To aid the Board with its cybersecurity and data privacy oversight responsibilities, the Board periodically attends presentations on these topics.
Biggest changeManagement also updates the Board, as needed, on the Company’s Cyber Attack Recovery Plan, which covers, among other things, our approach to material cybersecurity incidents, data privacy and our compliance programs. To aid the Board with its cybersecurity and data privacy oversight responsibilities, the Board periodically attends presentations on these topics.
We face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.
We face a number of cybersecurity risks in connection with our business. Although such risks have no t materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe lease agreement has an initial term of five years plus two renewal periods. The Company has exercised the first renewal period and is likely to renew for the second renewal period. This space is being leased from a company in which our CEO and President, each a related party to the Company, have a 24.3% jointly held ownership interest.
Biggest changeThis space was being leased from The Move, LLC, a company in which our CEO and President, each a related party to the Company, had a 24.3% jointly held ownership interest. In December 2025, The Move, LLC closed on the sale of 100% of its interest in the office space to an unrelated party.
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.
In 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 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.
ITEM 2. PROPERTIES The Company leases approximately 15,700 square feet of office space for its corporate headquarters. Total rental payments are approximately $48,746 per month as of December 31, 2025, which includes common area charges, and are subject to annual increases over the term of the lease.
In September 2017, the Company entered into a lease agreement for our Urbandale, Iowa office space. The lease is for a period of two years and expired on August 31, 2019. This lease was extended twice (2) for additional 3 year terms, with the current extension terminating on August 31, 2025.
In September 2017, the Company entered into a lease agreement for our Urbandale, Iowa office space. The lease was for a period of two years and expired on August 31, 2019. This lease was amended for a five (5) year renewal period, with the current extension terminating on August 31, 2030.
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.
Rental payments are approximately $3,721 per month as of December 31, 2025, 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 is for sixty-one months and expires on December 31, 2026. Rental payments are approximately $1,000 per month, which includes common area charges, and are not subject to annual increases over the term of the lease.
Rental payments are approximately $1,000 per month, which includes common area charges, and are not subject to annual increases over the term of the lease.
Rental 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.
Rental payments are approximately $2,904 per month as of December 31, 2025, which includes common area charges, and are subject to annual increases over the term of the lease. The Company had office space in Victoria, British Columbia, Canada which was leased on a month-to-month basis and payments were approximately Canadian dollar 527 per month.
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.
The Company cancelled the lease in May 2025. In December 2021, the Company entered into a lease agreement for the Medina, North Dakota office space. The lease is for sixty-one months and expires on December 31, 2026.
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The original lease agreement had an initial term of five years plus two renewal periods. The Company renegotiated the lease in November 2025 for an additional seventeen (17) month period, with the lease terminating December 31, 2027.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThere are currently no material pending proceedings against the Company.
Biggest changeThere are currently no material pending proceedings against the Company. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 19 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeActivity 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.
Biggest changeActivity for the quarter ended December 31, 2025 is as follows: Number of Shares Cost of Shares (in thousands) Average Cost per Share Shares purchased - October 2025 11,952 $ 153 $ 12.83 Shares purchased - November 2025 26,486 323 $ 12.21 Shares purchased - December 2025 28,031 337 $ 12.02 Total 66,469 $ 813 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.
Dividends 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.
Dividends For the years ended December 31, 2025 and 2024, 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, 2025 and 2024.
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.
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 11, 2026, we estimate that there were 57 record holders of our common stock.
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
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.
Added
The shares were immediately retired upon purchase. 20 Cancellation of Treasury Shares During April 2025, the Company canceled 1,237,700 shares of outstanding common stock held as treasury shares on the Consolidated Balance Sheet. The cancellation of these shares resulted in approximately $13.8 million being transferred from Treasury stock to Additional paid-in capital ($11.4 million) and Retained earnings ($2.4 million).

Item 7. Management's Discussion & Analysis

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

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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.
Biggest changeRESULTS OF OPERATIONS Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 The following table shows information for the reportable operating business segment: Year ended December 31, 2025 2024 Assets: Goodwill $ 2,946 $ 2,946 All other assets, net 9,953 12,360 Total assets $ 12,899 $ 15,306 Revenues: Verification and certification service revenue $ 20,102 $ 20,552 Product sales 3,616 3,803 Professional services 1,174 1,391 Total revenues $ 24,892 $ 25,746 Costs of revenues: Costs of verification and certification services 12,214 11,849 Costs of products 2,301 2,313 Costs of professional services 869 1,022 Total costs of revenues 15,384 15,184 Gross profit 9,508 10,562 Depreciation & amortization 650 647 Other operating expenses: Salaries and benefits 3,843 3,652 Rent and lease expense 644 641 Software and technology 848 830 Legal and professional expenses 659 549 Tradeshows and marketing 459 777 Conferences and training 144 114 Investor relations 126 128 Other expenses 929 1,017 Total Other operating expenses 7,652 7,708 Segment operating income/(loss) $ 1,206 $ 2,207 Other items to reconcile segment operating income/(loss) to net income/(loss): Other income/(loss) 1,023 772 Income tax benefit/(expense) (693 ) (859 ) Net income/(loss) $ 1,536 $ 2,120 22 Revenue 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.
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.
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; 21 ● 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.
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.
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.
Accordingly, we determine the deferred tax asset or liability for each temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items of income and expense. We consider the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance.
Accordingly, we determine the deferred tax asset or liability for each temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items of income and expense. 27 We consider the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance.
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.
Professional Services Revenue 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.
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.
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.
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.
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. 26 Our business is subject to seasonal fluctuations.
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.
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 matured on April 12, 2025.
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.
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, 2025, we concluded that a valuation allowance against our deferred tax assets was not considered necessary. As of December 31, 2025 and 2024, the Company did not have an unrecognized tax liability.
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.
Additionally, some customers received 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.
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.
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 consulting revenue stream is predominantly project based and not recurring in nature.
However, we may first assess the qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the estimated fair value of our reporting units with the reporting unit’s carrying amount, including goodwill.
However, we may first assess the qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The first step of the impairment test involves comparing the estimated fair value of our reporting unit(s) with the reporting unit’s carrying amount, including goodwill.
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.
We had deferred revenue of approximately $1.5 million and $1.7 million at December 31, 2025 and 2024, 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 2026.
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.
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.
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.
Liquidity and Capital Resources At December 31, 2025, we had cash and cash equivalents of approximately $3.2 million compared to approximately $2.0 million at December 31, 2024. Our working capital at December 31, 2025 was approximately $3.2 million compared to approximately $2.4 million at December 31, 2024.
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.
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.
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.
The LOC provided for $75,080 in working capital. The interest rate was at the Wall Street Journal prime rate plus 1.50% and was adjusted daily. Principal and interest were payable upon demand, but if demand was not made, then annual payments of accrued interest only were due, with the principal balance due upon maturity.
Off Balance Sheet Arrangements As of December 31, 2024, we had no off-balance sheet arrangements of any type.
Off Balance Sheet Arrangements As of December 31, 2025, we had no off-balance sheet arrangements of any type.
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.
Net Income and Per Share Information As a result of the foregoing, net income for the year ended December 31, 2025 was approximately $1.5 million or $0.30 per basic and per diluted common share, compared to approximately $2.1 million or $0.40 per basic and diluted common share in 2024.
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.
Net cash provided by operating activities during 2025 was approximately $1.6 million compared to $2.7 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 and changes in current assets and liabilities.
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.
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, 2025 decreased approximately $0.5 million, or 2.2% compared to 2024.
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.
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.
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.
As of December 31, 2025 and 2024, we had approximately $2.9 million of goodwill. During the fourth quarter of 2025 and 2024, we performed a qualitative assessment on our unit(s) and concluded that the fair value of the reporting unit(s) exceeded their carrying value.
Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate. We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates.
Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate. We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use.
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, 2024, the effective interest rate was 9.0%. The LOC was collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”), a subsidiary of WFCF. As of December 31, 2024, there were no amounts outstanding under this LOC. The Company decided not to renew the LOC at April 12, 2025.
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.
Product Sales Product sales are primarily generated from the sale of cattle identification ear tags. 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.
For stock awards, fair value is the closing stock price for the Company’s common stock on the grant date.
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.
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.
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 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%.
Income Tax Expense For the years ended December 31, 2025 and 2024, we recorded income tax expense of approximately $0.7 million and $0.9 million, respectively. The effective tax rate for the year ended December 31, 2025 and 2024 was 31.1% and 28.8%, respectively, compared to a federal corporate rate of 21.0%.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 to our consolidated financial statements set forth in Item 8 of this Annual Report on Form 10-K for a detailed description of recent accounting pronouncements.
However, such assumptions are inherently uncertain and actual results could differ from those estimates. 30 RECENT ACCOUNTING PRONOUNCEMENTS See Note 2 to our consolidated financial statements set forth in Item 8 of this Annual Report on Form 10-K for a detailed description of recent accounting pronouncements.
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.
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.
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.
We continue to see some new customer growth, but our customers are ordering less tags due to smaller beef cow herd size. According to the USDA statistics, overall beef cow inventories have declined from 28.9 million head on January 1, 2023 to 28.2 million head on January 1, 2024 and is now estimated at less than 28 million head.
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.
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 progress toward satisfaction of the annual assessment based on the percentage of activities/phases or input reviews completed under the annual assessment.
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.
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. We have ownership of and control over our digital assets and use a third-party custodial service to secure it.
Accordingly, we evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events or circumstances continue to support an indefinite useful life.
Accordingly, we evaluate the remaining useful life of an intangible asset that is not being amortized each reporting period to determine whether events or circumstances continue to support an indefinite useful life. 29 In addition, an intangible asset that is not subject to amortization shall be tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired.
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.
For the year ended December 31, 2025, professional service revenue decreased approximately $0.2 million over 2024. Cost of Revenue Costs of verification and certification revenues (for services and product sales) for the year ended December 31, 2025 were approximately $14.5 million compared to approximately $14.2 million in 2024.
We generate revenue primarily from the sale of our verification solutions, consulting services and hardware sales. We sell our products and services directly to customers at various levels in the livestock and agricultural supply chains. Verification and certification service revenue primarily consists of fees charged for verification audits and other verification services that the Company performs for customers.
We conduct both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural products are accurate. We generate revenue primarily from the sale of our verification solutions, consulting services and hardware sales. We sell our products and services directly to customers at various levels in the livestock and agricultural supply chains.
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.
Accordingly, the return occurred in the first quarter of 2026 and will be recorded as a reduction of compensation costs within Selling, general and administrative expenses in the Consolidated Statements of Income. 23 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.
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.
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.
Management has discussed the development, selection and disclosure of the critical accounting policies and estimates with the Audit Committee of the Board of Directors. Information regarding our other accounting policies is included in Note 2 to our consolidated financial statements set forth in Item 8 of this Annual Report on Form 10-K.
Information regarding our other accounting policies is included in Note 2 to our consolidated financial statements set forth in Item 8 of this Annual Report on Form 10-K. 25 Revenue Verification and Certification Revenue We offer a range of products and services to maintain identification, traceability, and verification systems.
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 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.
In addition, an intangible asset that is not subject to amortization shall be tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Entities testing an indefinite-lived intangible asset for impairment have the option of performing a qualitative assessment before calculating the fair value of the asset.
Entities testing an indefinite-lived intangible asset for impairment have the option of performing a qualitative assessment before calculating the fair value of the asset.
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.
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. Selling, general and administrative expenses Selling, general and administrative expenses for the year ended December 31, 2025 decreased approximately $53,000 compared to 2024.
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.
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. 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 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.
The Company received dividend income of $100,000 and $400,000 for the years ended December 31, 2025 and 2024, respectively, from Progressive Beef representing a distribution of their earnings. Gain on Sale of Assets On July 22, 2025, the Company entered into a Redemption and Purchase Agreement (the “Agreement”) with Progressive Beef, LLC and BHS, LLC (the “Buyer”).
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.
Net cash provided in the 2025 period was approximately $1.7 due primarily to the sale of the Company’s equity investment in Progressive Beef. Net cash used in financing activities during 2025 was approximately $2.1 million compared to $3.2 million in the 2024 period.
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 .
The amendments in this ASU require a cumulative-effect adjustment to the opening balance of retained earnings. 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.
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.
Gross margin for the year ended December 31, 2025 decreased to 38.8% compared to 41.9% in 2024. Our margins are generally impacted by various costs such as cost of products, salaries and benefits, insurance and taxes.
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.
Additionally, increases in salaries and benefits, insurance and taxes spread over a decline in our revenue compared to the prior year negatively impacted margins. New customer growth helps offset the inflationary impacts on our margins, to some extent. Costs of professional services revenues for the years ended December 31, 2025 and 2024 were approximately $0.9 and $1.0 million, respectively.
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.
The decline in cash provided by operating activities for 2025 was primarily due to absorption of increasing costs of services and products over a reduction in revenue. Net cash provided by investing activities during 2025 was approximately $1.7 million compared to net cash used by investing activities during 2024 of $0.2 million.
These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. We have not made any material changes in the accounting methodology used to evaluate impairment of goodwill during the past two years.
These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to estimate industry economic factors and the profitability of future business strategies. 28 Effective January 2025, our operations team implemented some internal restructuring and consolidation throughout the Company to better align business functions and improve efficiency, as well as promote stronger unity in our brand identity because of our many past acquisitions.
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.
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 year ended December 31, 2025 decreased approximately $0.2 million or 4.9% compared to 2024.
Removed
Overall, the increase is due primarily to increased customer awareness and demand for our product offerings.
Added
We continue to experience new customer growth and bundling opportunities, but offsetting this growth are supply-side dynamics within the cattle industry. The beef side of our business has been impacted the most significantly resulting in total verification revenues declining about 6.5% in the fourth quarter of 2025 compared to 2024.
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
We know the cattle industry is cyclical in nature and based on the data from the USDA, we appear to be at the bottom of a contraction phase within the cattle cycle, however, we are still seeing signs of further contraction in the cattle industry in early 2026. We are also facing rapidly changing trade and tariff uncertainties.
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. 22 Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags.
Added
Because of the tight cattle supply, ranchers are receiving the highest cattle prices per head in a decade without verification; and beef packers are reluctant to incur additional costs of verification to their supply chain because of the high costs of acquiring cattle for slaughter. To expand supply, herds must be rebuilt within the United States and via imports.
Removed
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.
Added
But rebuilding of the herd takes time and is impacted by many factors including drought conditions in different regions, the price of inputs and interest rates. We are encouraged because premiums for verified cattle remain strong in the marketplace above commodity cattle prices in spite of significant pressure on beef packer margins.
Removed
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.
Added
Verified product attributes like animal care, sustainability and natural continued to be demanded and our programs allow supply chains to meet this growing customer demand. We are also optimistic about the recent launch of our Raisewell Certified Standard, which was developed to meet growing consumer and retailer demand for responsibly raised proteins.
Removed
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.
Added
The tight cattle supply and weakened demand for verified cattle is negatively impacting our product sales.
Removed
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.
Added
The decline in our margins is primarily due to inflationary price increases passed on to us by our cattle ear tag manufacturers, while simultaneously, dealing with market conditions that foster a competitive environment for selling cattle ear tags.
Removed
Revenue Recognition Verification and Certification Segment We offer a range of products and services to maintain identification, traceability, and verification systems. We conduct both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops and agricultural products are accurate.
Added
For the year ended December 31, 2025, gross margin decreased to 26.0% from 26.5% in 2024. Increases in salaries and benefits, insurance and taxes spread over a decline in our revenue compared to the prior year negatively impacted our margins.
Removed
We recognize revenue utilizing an input method to measure progress toward satisfaction of the annual assessment based on the percentage of activities/phases or input reviews completed under the annual assessment. Product sales are primarily generated from the sale of cattle identification ear tags.
Added
In the fourth quarter of 2025, the Company paid executive management approximately $0.4 million in discretionary bonuses based on previous internal projections that indicated strong fourth quarter revenue. These projections were made prior to the unexpected announcement that a large midwestern packing plant would cease operations, resulting in a negative impact to the Company’s fourth quarter revenue.
Removed
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
Based on this information, executive management, acting in the best interests of the Company, determined to return their bonuses to the Company.
Removed
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
Pursuant to the Agreement, the Buyer redeemed the 10% membership interests in Progressive Beef owned by the Company effective as of June 30, 2025, in exchange for approximately $1.8 million cash and the Buyer’s surrender of 12,585 shares of the Company’s common stock with a total value of $0.1 million.
Removed
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.
Added
The transaction resulted in approximately a $0.9 million gain on the sale of our investment recorded in the Other Income / Expense section of the Consolidated Statement of Operations for the year ended December 31, 2025. The Buyer and the Company each made customary representations and warranties in the Agreement.
Removed
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).
Added
Net cash used in the 2025 and 2024 periods was primarily for the repurchase of common shares under the Stock Buyback Plan and a private purchase of common shares in 2024. 24 Over the past several years, our growth has been funded primarily through cashflows from operations.
Removed
If the current carrying value of a digital asset significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the digital assets in the amount equal to the difference between their carrying values and the price determined.
Added
Management has discussed the development, selection and disclosure of the critical accounting policies and estimates with the Audit Committee of the Board of Directors.

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