UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the Quarterly period ended March 31, 2022

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ____________ to _____________

Commission File No. 001-40314

WHERE FOOD COMES FROM, INC.

(exact name of registrant as specified in its charter)

Colorado

43-1802805

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

202 6^th Street, Suite 400

Castle Rock, CO 80104

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(303) 895-3002

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a small reporting company. See definitions of “large accelerated filer” and “accelerated filer” and “smaller reporting entity” in Rule 12b-2 of the Exchange Act.

Large accelerated filer:	☐	Accelerated filer:	☐
Non-accelerated filer:	☐	Smaller reporting company:	☒
Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		WFCF		The NASDAQ Stock Market LLC

The number of shares of the registrant’s common stock, $0.001 par value per share, outstanding as of April 29, 2022, was 6,023,841.

Where Food Comes From, Inc.

Table of Contents

March 31, 2022

Part 1 - Financial Information

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 4.	Controls and Procedures	21

Part II - Other Information

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 6.	Exhibits	22

Where Food Comes From, Inc.

Consolidated Balance Sheets

	March 31,			December 31,
(Amounts in thousands, except per share amounts)	2022			2021
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	6,093		$	5,414
Accounts receivable, net of allowance		2,200			2,178
Inventory		815			767
Prepaid expenses and other current assets		381			325
Total current assets		9,489			8,684
Property and equipment, net		1,210			1,295
Right-of-use assets, net		2,744			2,823
Investment in Progressive Beef		991			991
Intangible and other assets, net		2,491			2,581
Goodwill, net		2,946			2,946
Deferred tax assets, net		483			464
Total assets	$	20,354		$	19,784

Liabilities and Equity
Current liabilities:
Accounts payable	$	594		$	447
Accrued expenses and other current liabilities		1,324			710
Deferred revenue		1,277			1,513
Current portion of finance lease obligations		12			13
Current portion of operating lease obligations		314			313
Total current liabilities		3,521			2,996
Finance lease obligations, net of current portion		17			19
Operating lease obligation, net of current portion		2,941			3,020
Total liabilities		6,479			6,035
Commitments and contingencies		-
Equity:
Preferred stock, $0.001 par value; 5,000 shares authorized; none issued or outstanding		-			-
Common stock, $0.001 par value; 95,000 shares authorized; 6,491 (2022) and 6,489 (2021) shares issued, and 6,039 (2022) and 6,071 (2021) shares outstanding		6			6
Additional paid-in-capital		12,006			11,955
Treasury stock of 452 (2022) and 419 (2021) shares		(4,229	)		(3,807	)
Retained earnings		6,092			5,595
Total equity		13,875			13,749
Total liabilities and stockholders’ equity	$	20,354		$	19,784

The accompanying notes are an integral part of these consolidated financial statements.

Where Food Comes From, Inc.

Consolidated Statements of Operations

(Unaudited)


	Three months ended March 31,
(Amounts in thousands, except per share amounts)	2022			2021
Revenues:
Verification and certification service revenue	$	3,784		$	3,263
Product sales		1,007			724
Software and related consulting revenue		1,365			453
Total revenues		6,156			4,440
Costs of revenues:
Costs of verification and certification services		2,036			1,793
Costs of products		537			457
Costs of software and related consulting		1,186			328
Total costs of revenues		3,759			2,578
Gross profit		2,397			1,862
Selling, general and administrative expenses		1,774			1,773
Income from operations		623			89
Other income/(expense):
Dividend income from Progressive Beef		50			30
Other income, net		-			1
Loan forgiveness from Paycheck Protection Program		-			1,037
Gain on sale of assets		-			9
Loss on foreign currency exchange		(12	)		(2	)
Interest expense		(1	)		(3	)
Income before income taxes		660			1,161
Income tax expense		163			11
Net income	$	497		$	1,150

Per share - net income:
Basic	$	0.08		$	0.19
Diluted	$	0.08		$	0.19

Weighted average number of common shares outstanding:
Basic

SEC Form 10-Q filed by Where Food Comes From Inc.