Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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 September 30, 2023

☐	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 November 3, 2023, was 5,543,871.

Where Food Comes From, Inc.

Table of Contents

September 30, 2023

Part 1 - Financial Information

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 4.	Controls and Procedures	26

Part II - Other Information

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 6.	Exhibits	28

Where Food Comes From, Inc.

Consolidated Balance Sheets

	September 30, 2023			December 31, 2022
(Amounts in thousands, except per share amounts)	(Unaudited)

Assets
Current assets:
Cash and cash equivalents	$	3,813		$	4,368
Accounts receivable, net of allowance		2,291			2,172
Inventory		1,120			888
Prepaid expenses and other current assets		495			463
Total current assets		7,719			7,891
Property and equipment, net		848			998
Right-of-use assets, net		2,379			2,607
Equity investments		1,191			991
Intangible and other assets, net		2,097			2,340
Goodwill, net		2,946			2,946
Deferred tax assets, net		508			523
Total assets	$	17,688		$	18,296

Liabilities and Equity
Current liabilities:
Accounts payable	$	722		$	640
Accrued expenses and other current liabilities		1,345			769
Deferred revenue		1,713			1,278
Current portion of finance lease obligations		13			9
Current portion of operating lease obligations		310			341
Total current liabilities		4,103			3,037
Finance lease obligations, net of current portion		44			37
Operating lease obligation, net of current portion		2,522			2,745
Total liabilities		6,669			5,819

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; 6,511 (2023) and 6,501 (2022) shares issued, and 5,574 (2023) and 5,775 (2022) shares outstanding		6			6
Additional paid-in-capital		12,232			12,145
Treasury stock of 937 (2023) and 727 (2022) shares		(10,184	)		(7,263	)
Retained earnings		8,965			7,589
Total equity		11,019			12,477
Total liabilities and stockholders’ equity	$	17,688		$	18,296

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 September 30,
(Amounts in thousands, except per share amounts)	2023			2022

Revenues:
Verification and certification service revenue	$	5,359		$	5,169
Product sales		1,221			1,588
Consulting revenue		431			508
Total revenues		7,011			7,265
Costs of revenues:
Costs of verification and certification services		3,123			2,900
Costs of products		681			826
Costs of consulting		341			359
Total costs of revenues		4,145			4,085
Gross profit		2,866			3,180
Selling, general and administrative expenses		1,920			2,106
Income from operations		946			1,074
Other income/(expense):
Dividend income from Progressive Beef		50			50
Other income, net		16			1
Gain on sale of assets		-			-
Impairment of digital assets		-			(42	)
Loss on foreign currency exchange		(2	)		-
Interest expense		(1	)		-
Income before income taxes		1,009			1,083
Income tax expense		286			298
Net income	$	723		$	785

Per share - net income:
Basic	$	0.13		$	0.13
Diluted	$	0.13		$	0.13

Weighted average number of common shares outstanding:
Basic		5,599			5,936
Diluted		5,658			6,016

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

Where Food Comes From, Inc.

Consolidated Statements of Operations

(Unaudited)


	Nine months ended September 30,
(Amounts in thousands, except per share amounts)	2023			2022
Revenues:
Verification and certification service revenue	$	13,944		$	12,917
Product sales		3,130			3,473
Consulting revenue		1,330			2,362
Total revenues		18,404			18,752
Costs of revenues:
Costs of verification and certification services		8,055			7,261
Costs of products		1,804			1,885
Costs of consulting		1,030			1,899
Total costs of revenues		10,889			11,045
Gross profit		7,515			7,707
Selling, general and administrative expenses		5,741			5,697
Income from operations		1,774			2,010
Other income/(expense):
Dividend income from Progressive Beef		150			150
Other income, net		36			2
Gain on sale of assets		5			-
Impairment of digital assets		-			(42	)
Loss on foreign currency exchange		(6	)		(35	)
Interest expense		(3	)		(2	)
Income before income taxes		1,956			2,083
Income tax expense		580			579
Net income	$	1,376		$	1,504

Per share - net income:
Basic	$	0.25		$	0.25
Diluted	$	0.24		$	0.25

Weighted average number of common shares outstanding:
Basic		5,605			6,019
Diluted		5,669			6,101

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

Where Food Comes From, Inc.

Consolidated Statements of Cash Flows

(Unaudited)


	Nine months ended September 30,
(Amounts in thousands)	2023			2022

Operating activities:
Net income	$	1,376		$	1,504
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		488			583
Impairment of digital assets		-			42
Gain on sale of assets		(5	)		-
Stock-based compensation expense		38			102
Deferred tax expense / (benefit)		15			(59	)
Bad debt expense		39			40
Changes in operating assets and liabilities:
Accounts receivable		(158	)		(713	)
Inventory		(232	)		(107	)
Prepaid expenses and other assets		(32	)		(682	)
Accounts payable		82			503
Accrued expenses and other current liabilities		584			1,560
Deferred revenue		435			240
Right of use assets and liabilities, net		(17	)		(7	)
Net cash provided by operating activities		2,613			3,006

Investing activities:
Investment in BlueTrace		(200	)		-
Purchase of digital assets		-			(178	)
Purchases of property, equipment and software development costs		(87	)		(41	)
Net cash used in investing activities		(287	)		(219	)

Financing activities:
Repayments of finance lease obligations		(9	)		(7	)
Proceeds from stock option exercise		49			19
Stock repurchase under Stock Buyback Plan		(2,921	)		(2,207	)
Net cash used in financing activities		(2,881	)		(2,195	)
Net change in cash		(555	)		592
Cash at beginning of period		4,368			5,414
Cash at end of period	$	3,813		$	6,006

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

Where Food Comes From, Inc.

Consolidated Statement of Equity

(Unaudited)

						Additional
	Common Stock					Paid-in		Treasury			Retained
(Amounts in thousands)	Shares			Amount		Capital		Stock			Earnings		Total

Balance at December 31, 2021		6,071		$	6	$	11,955	$	(3,807	)	$	5,595	$	13,749
Stock-based compensation expense		2			-		51		-			-		51
Repurchase of common shares under Stock Buyback Plan		(34	)		-		-		(422	)		-		(422	)
Net income		-			-		-		-			497		497
Balance at March 31, 2022		6,039		$	6	$	12,006	$	(4,229	)	$	6,092	$	13,875

Stock-based compensation expense		-			-		32		-			-		32
Stock options exercised		1			-		7		-			-		7
Repurchase of common shares under Stock Buyback Plan		(61	)		-		-		(648	)		-		(648	)
Net income		-			-		-		-			222		222
Balance at June 30, 2022		5,979		$	6	$	12,045	$	(4,877	)	$	6,314	$	13,488
Balance		5,979		$	6	$	12,045	$	(4,877	)	$	6,314	$	13,488

Stock-based compensation expense		-			-		19		-			-		19
Stock options exercised		3			-		12		-			-		12
Repurchase of common shares under Stock Buyback Plan		(109	)		-		-		(1,137	)		-		(1,137	)
Net income		-			-		-		-			785		785
Balance at September 30, 2022		5,873		$	6	$	12,076	$	(6,014	)	$	7,099	$	13,167
Balance		5,873		$	6	$	12,076	$	(6,014	)	$	7,099	$	13,167

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

Where Food Comes From, Inc.

Consolidated Statement of Equity

(Unaudited)

						Additional
	Common Stock					Paid-in		Treasury			Retained
(Amounts in thousands)	Shares			Amount		Capital		Stock			Earnings		Total

Balance at December 31, 2022		5,775		$	6	$	12,145	$	(7,263	)	$	7,589	$	12,477
Stock-based compensation expense		-			-		15		-			-		15
Repurchase of common shares under Stock Buyback Plan		(90	)		-		-		(1,230	)		-		(1,230	)
Net income		-			-		-		-			121		121
Balance at March 31, 2023		5,685		$	6	$	12,160	$	(8,493	)	$	7,710	$	11,383

Stock-based compensation expense		-			-		17		-			-		17
Stock options exercised		7			-		46		-			-		46
Repurchase of common shares under Stock Buyback Plan		(61	)		-		-		(836	)		-		(836	)
Net income		-			-		-		-			532		532
Balance at June 30, 2023		5,631		$	6	$	12,223	$	(9,329	)	$	8,242	$	11,142
Balance		5,631		$	6	$	12,223	$	(9,329	)	$	8,242	$	11,142

Stock-based compensation expense		-			-		6		-			-		6
Stock options exercised		3			-		3		-			-		3
Repurchase of common shares under Stock Buyback Plan		(60	)		-		-		(855	)		-		(855	)
Net income		-			-		-		-			723		723
Balance at September 30, 2023		5,574		$	6	$	12,232	$	(10,184	)	$	8,965	$	11,019
Balance		5,574		$	6	$	12,232	$	(10,184	)	$	8,965	$	11,019

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

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1 - The Company and Basis of Presentation

Business Overview

Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). We are an independent, third-party food verification company conducting both on-site and desk audits to verify that claims being made about livestock, food, other high-value specialty crops, agricultural and aquaculture products are accurate. We care about food, agricultural and aquaculture, how it is grown and raised, the quality of what we eat, what farmers and ranchers do, and authentically telling that story to the consumer. 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. We strive to ensure that everyone involved in the food business - from growers and farmers to retailers, restaurants and shoppers – can count on WFCF to provide authentic and transparent information about the food we eat and how, where, and by whom it is produced.

We also provide 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. 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.

Most of our customers are located throughout the United States.

Basis of Presentation

Our unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the results of operations, financial position and cash flows of Where Food Comes From, Inc. and its subsidiaries, Where Food Comes From Organic, Inc. (“WFCFO”), Validus Verifications Services, LLC (“Validus”), SureHarvest Services, Inc. (“SureHarvest”), and Postelsia Holdings, Ltd. (“Postelsia”) (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. All significant intercompany transactions and amounts have been eliminated. The results of businesses acquired are included in the consolidated financial statements from the date of the acquisition. Actual results could differ from the estimates.

The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements and footnotes thereto for the year ended December 31, 2022, included in our Form 10-K filed on February 23, 2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, we believe that the disclosures are adequate to make the information presented not misleading. Certain prior year amounts have been reclassified to conform to current year presentation. Net income and shareholders’ equity were not affected by these reclassifications. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of our financial position and results of operations. The consolidated operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for any other interim period of any future year.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Seasonality

Our business is subject to seasonal fluctuations annually. Significant portions of our verification and certification service revenue are typically realized during late May through early October when the calf marketings and the growing seasons are at their peak.

Additionally, the cattle industry is cyclical by nature based on factors impacting current and future supplies such as drought-induced feedlot placements, higher cow and heifer slaughter, and lower auction receipts. The production lags inherent to this industry lead to long-lasting impacts of production decisions. For example, increased liquidation implies tighter supplies for next year. Similarly, times of herd expansion are typically a multi-year period. These cycles typically last roughly 10 years. The beginning of 2023 marks the ninth year of the current cycle that began in 2014. We are currently in the contraction phase of the cycle after peaking in 2018-2019. How long we continue to contract will be directly impacted by drought and pasture conditions.

Because of the seasonality of the business and cyclical nature of our industry, results for any quarter are not necessarily indicative of the results that may be achieved for any other quarter or for the full fiscal year.

Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) Accounting Standards Codification is the sole source of authoritative GAAP other than SEC issued rules and regulations that apply only to SEC registrants. The FASB issues an Accounting Standards Update (ASU) to communicate changes to the codification. The Company considers the applicability and impact of all ASU’s.

In July 2023, the FASB issues ASU 2023-03, which amends Presentation of Financial Statements (Topic 205), Income Statement-Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation-Stock Compensation (Topic 718). The ASU updated the Compensation-Stock Compensation (Topic 718) to recognize compensation cost resulting from share-based payment transactions be recognized in financial statements at fair value. The updates were effective July 14, 2023. The adoption of the standard will have no material impact on the financial statements.

In October 2023, the FASB issued ASU 2023-06, which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (“Codification”). The ASU updated and simplified disclosure requirements the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” ASU 2023-06 applies to all reporting entities and will only become effective if the SEC removes the related disclosure or presentation requirement from its existing regulations by June 30, 2027.

Note 2 – Basic and Diluted Net Income per Share

Basic net income per share was computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and restricted stock awards are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

The following is a reconciliation of the share data used in the basic and diluted income per share computations (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Basic:
Weighted average shares outstanding		5,599		5,936		5,605		6,019

Diluted:
Weighted average shares outstanding		5,599		5,936		5,605		6,019
Weighted average effects of dilutive securities		59		80		64		82
Total		5,658		6,016		5,669		6,101

Antidilutive securities:		17		17		17		17

The effect of the inclusion of the antidilutive shares would have resulted in an increase in earnings per share. Accordingly, the weighted average shares outstanding have not been adjusted for antidilutive shares.

Note 3 – Equity Investments

For the three and nine months ended September 30, 2023 and 2022, the Company received dividend income from Progressive Beef of $50,000 and $150,000, respectively, representing a distribution of their earnings. The income is reflected within the “Other income/(expense)” section of the Company’s Consolidated Statement of Operations for the three and nine months ended September 30, 2023 and 2022.

On March 29, 2023, the Company made an equity investment of $0.2 million in a private placement of ShellFish Solutions, Inc. dba BlueTrace, Inc. (“BlueTrace”) Series Seed 2 Preferred Stock. The Company accounts for its investment in BlueTrace at cost, in accordance with Accounting Standard Update (“ASU”) 2016-01: Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.

We determine the fair value of our investments on a quarterly basis in accordance with ASC 820, Fair Value Measurement, based on a qualitative assessment (Level 2 inputs). We perform an analysis each quarter to identify whether significant events or changes in circumstances, indicate that it is more likely than not that our investments are permanently impaired. In determining if an impairment has occurred, we consider the following:

	●	investment’s earnings performance, credit rating, asset quality, or business prospects of the investee;
	●	has there been significant adverse changes in the regulatory, economic, or technological environment of the investee;
	●	has there been a significant adverse in the general market condition of either the geographical area or the industry in which the investee operates; and,
	●	has there been a bona fide offer to purchase or sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of our investment.

If the current carrying value of each individual investment significantly exceeds the fair value so determined, a permanent impairment loss has occurred with respect to the individual investment in the amount equal to the difference between the carrying value and the price determined.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Impairment losses are recognized within the Other income/(expense) section in the consolidated statements of operations in the period in which the impairment is identified. The impaired investment is written down to the fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale(s), at which point they are presented net of any impairment losses for the same investment held within Other income/(expense). In determining the gain to be recognized upon sale, we calculate the difference between the sales price and carrying value of the investment sold immediately prior to sale.

Note 4 – Intangible and Other Assets

The following table summarizes our intangible and other assets (amounts in thousands, except useful life):

Schedule of Intangible and Other Assets

	September 30,		December 31,		Estimated
	2023		2022		Useful Life
Intangible assets subject to amortization:
Tradenames and trademarks	$	417	$	417	2.5 - 8.0 years
Accreditations		75		75	5.0 years
Customer relationships		3,659		3,664	3.0 - 15.0 years
Patents		970		970	4.0 years
Non-compete agreements		121		121	5.0 years
Intangible and other assets, gross		5,242		5,247
Less accumulated amortization		3,746		3,511
Intangible and other assets, Net		1,496		1,736
Cryptocurrency (not subject to amortization)		116		116
Tradenames/trademarks (not subject to amortization)		465		465
Intangible assets		2,077		2,317
Other assets		20		23
Intangible and other assets:	$	2,097	$	2,340

For the three and nine months ended September 30, 2023 , we have not sold any digital assets and have not recognized any impairment losses. For the three and nine months ended September 30, 2022, we have not sold any digital assets and have recognized an impairment loss of $42,000. Our digital assets are initially recorded at cost and are subsequently remeasured on the consolidated balance sheet at cost, net of any impairment losses incurred since acquisition, if applicable. As of September 30, 2023 and December 31, 2022, the carrying value of our digital assets held was $116,000.

Note 5 – Accrued Expenses and Other Current Liabilities

The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):

	September 30,		December 31,
	2023		2022

Income and sales taxes payable	$	38	$	14
Payroll related accruals		1,007		326
Customer deposits		91		35
Professional fees and other expenses		209		394
	$	1,345	$	769

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 6 – Notes Payable

Unison Revolving Line of Credit

The Company has a revolving line of credit (“LOC”) agreement which matures April 12, 2025. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due on maturity. As of September 30, 2023 and December 31, 2022, the effective interest rate was 10.0% and 9.0%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of September 30, 2023, and December 31, 2022, there were no amounts outstanding under this LOC.

Note 7 – Stock-Based Compensation

In addition to cash compensation, the Company may compensate certain service providers, including employees, directors, consultants, and other advisors, with equity-based compensation in the form of stock options, stock awards and restricted stock awards. The Company recognizes all equity-based compensation as stock-based compensation expense based on the fair value of the compensation measured at the grant date. For stock options, fair value is calculated at the date of grant using the Black-Scholes-Merton option pricing model. For stock awards and restricted stock awards, fair value is the closing stock price for the Company’s common stock on the grant date. The expense is recognized over the vesting period of the grant. For the periods presented, all stock-based compensation expense was classified as a component within selling, general and administrative expense in the Company’s consolidated statements of operations.

The amount of stock-based compensation expense is as follows (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Stock options	$	6	$	19	$	38	$	82
Stock awards		-		-		-		20
Total	$	6	$	19	$	38	$	102
Stock-based compensation expense	$	6	$	19	$	38	$	102

During the three and nine months ended September 30, 2023 and 2022, no stock options were awarded. During the three and nine months ended September 30, 2023, no common stock was awarded. During the three months ended September 30, 2022, no common stock was awarded. During the nine months ended September 30, 2022, the Company awarded 1,500 shares of the Company’s common stock at a fair market value price of $13.45 per share to an employee of the Company.

The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):

Years ended December 31st:	Unvested stock options		Unvested restricted stock awards		Total unrecognized compensation expense
2023 (remaining three months)	$	5	$	-	$	5
2024		11		-		11
2025		-		-		-
	$	16	$	-	$	16

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Equity Incentive Plans

Our 2006 Equity Incentive Plan (the “2006 Plan”) and 2016 Equity Incentive Plan (the “2016 Plan,” and together with the 2006 Plan, the “Plans”) provide for the issuance of stock-based awards to employees, officers, directors and consultants. The Plans permit the granting of stock awards and stock options. The vesting of stock-based awards is generally subject to the passage of time and continued employment through the vesting period.

Stock Option Activity

Stock option activity under our Equity Incentive Plans is summarized as follows:

Schedule of Stock Option Activity

				Weighted avg.		Weighted avg.		Weighted avg. remaining
	Number of awards			exercise price per share		grant date fair value per share		contractual life (in years)		Aggregate intrinsic value

Outstanding, December 31, 2022		92,347		$	8.67	$	7.77		5.31	$	502,688
Granted		-		$	-	$	-		-
Exercised		(10,229	)	$	4.80	$	4.97		-
Expired/Forfeited		(6,250	)	$	10.20	$	10.06		-
Outstanding, September 30, 2023		75,868		$	9.07	$	7.96		5.21	$	392,923
Exercisable, September 30, 2023		70,195		$	8.61	$	7.72		5.00	$	390,597
Unvested, September 30, 2023		5,673		$	13.57	$	10.90		7.75	$	2,326

The aggregate intrinsic value represents the total pre-tax intrinsic value (the aggregate difference between the closing price of our common stock on September 30, 2023 and the exercise price for the in-the-money options) that would have been received by the option holders if all the in-the-money options had been exercised on September 30, 2023.

Stock Activity

There has not been any non-vested stock award activity under our Equity Incentive Plans for the three and nine months ended September 30, 2023 and 2022.

Note 8 – Income Taxes

Deferred tax assets and liabilities have been determined based upon the differences between the financial statement amounts and the tax bases of assets and liabilities as measured by enacted tax rates expected to be in effect when these differences are expected to reverse. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The provision or benefit for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. For the three and nine months ended September 30, 2023 we recorded an income tax expense of approximately $286,000 and $580,000, respectively, compared to income tax expense of $298,000 and $579,000 for the same 2022 periods.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 9 - Revenue Recognition

Disaggregation of Revenue

We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, (iii) consulting revenue.

Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).


	Three months ended September 30, 2023								Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals
Revenues:
Verification and certification service revenue	$	5,359	$	-	$	-	$	5,359	$	5,169	$	-	$	-	$	5,169
Product sales		1,221		-		-		1,221		1,588		-		-		1,588
Consulting revenue		-		431		-		431		-		508		-		508
Total revenues	$	6,580	$	431	$	-	$	7,011	$	6,757	$	508	$	-	$	7,265


	Nine months ended September 30, 2023								Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals
Revenues:
Verification and certification service revenue	$	13,944	$	-	$	-	$	13,944	$	12,917	$	-	$	-	$	12,917
Product sales		3,130		-		-		3,130		3,473		-		-		3,473
Consulting revenue		-		1,330		-		1,330		-		2,362		-		2,362
Total revenues	$	17,074	$	1,330	$	-	$	18,404	$	16,390	$	2,362	$	-	$	18,752

Contract Balances

As of September 30, 2023 and December 31, 2022, accounts receivable from contracts with customers, net of allowance for doubtful accounts, was approximately $2.3 and $2.2 million, respectively.

As of September 30, 2023 and December 31, 2022, deferred revenue from contracts with customers was approximately $1.7 and $1.3 million, respectively. The balance of the contract liabilities at September 30, 2023 and December 31, 2022 are expected to be recognized as revenue within one year or less of the invoice date.

The following table reflects the changes in our contract liabilities during the nine month period ended September 30, 2023 (amounts in thousands):

Deferred revenue:
Unearned revenue December 31, 2022	$	1,278
Unearned billings		2,765
Revenue recognized		(2,330	)
Unearned revenue September 30, 2023	$	1,713

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Note 10 – Leases

The components of lease expense were as follows (amounts in thousands):

Schedule of Lease Expense

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	119	$	122	$	364	$	368
Finance lease cost
Amortization of assets		4		2		11		7
Interest on finance lease obligations		1		1		4		2
Variable lease cost		-		-		-		-
Total net lease cost	$	124	$	125	$	379	$	377

Included in the table above, for the three and nine months ended September 30, 2023 and 2022, is $0.1 and $0.3 million, respectively, of operating lease cost for our corporate headquarters. This space is being leased from The Move, LLC. Our CEO and President, each a related party to WFCF, have a 24.3% jointly-held ownership interest in The Move, LLC.

Supplemental balance sheet information related to leases was as follows (amounts in thousands):


	September 30, 2023						December 31, 2022
Operating leases:	Related Party		Other		Total		Related Party		Other		Total
Operating lease ROU assets	$	2,212	$	112	$	2,324	$	2,369	$	193	$	2,562

Current operating lease liabilities	$	242	$	68	$	310	$	224	$	117	$	341
Noncurrent operating lease liabilities		2,472		50		2,522		2,656		89		2,745
Total operating lease liabilities	$	2,714	$	118	$	2,832	$	2,880	$	206	$	3,086

Finance leases:	September 30, 2023			December 31, 2022
Property and equipment, at cost	$	76		$	70
Accumulated amortization		(21	)		(25	)
Property and equipment, net	$	55		$	45

Current obligations of finance leases	$	13		$	9
Finance leases, net of current obligations		44			37
Total finance lease liabilities	$	57		$	46

Weighted average remaining lease term (in years):
Operating leases		7.6			8.2
Finance leases		3.9			4.4

Weighted average discount rate:
Operating leases		5.8	%		5.8	%
Finance leases		8.2	%		7.8	%

Supplemental cash flow and other information related to leases was as follows (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	126	$	127	$	380	$	378
Operating cash flows from finance leases	$	1	$	1	$	4	$	2
Financing cash flows from finance leases	$	3	$	3	$	9	$	9

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	-	$	-	$	-	$	-

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Maturities of lease liabilities were as follows (amounts in thousands):

Years Ending December 31st,	Operating Leases			Finance Leases
2023 (three remaining months)	$	127		$	4
2024		446			18
2025		435			19
2026		430			14
2027		430			12
Thereafter		1,648			-
Total lease payments		3,516			67
Less amount representing interest		(684	)		(10	)
Total lease obligations		2,832			57
Less current portion		(310	)		(13	)
Long-term lease obligations	$	2,522		$	44

Note 11 – Commitments and Contingencies

Legal proceedings

From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable.

Note 12 - Segments

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. 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 consulting reportable segment. SureHarvest, which includes Postelsia, is the sole operating unit under the consulting reportable segment. This segment primarily includes consulting service revenues.

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

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (amounts in thousands):

Schedule of Operating Segments


	Three months ended September 30, 2023											Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment		Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999	$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367		885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366	$	885		$	21,332

Revenues:
Verification and certification service revenue	$	5,359	$	-		$	-		$	5,359		$	5,169	$	-	$	-		$	5,169
Product sales		1,221		-			-			1,221			1,588		-		-			1,588
Consulting revenue		-		431			-			431			-		508		-			508
Total revenues	$	6,580	$	431		$	-		$	7,011		$	6,757	$	508	$	-		$	7,265
Costs of revenues:
Costs of verification and certification services		3,123		-			-			3,123			2,900		-		-			2,900
Costs of products		681		-			-			681			826		-		-			826
Costs of consulting		-		341			-			341			-		359		-			359
Total costs of revenues		3,804		341			-			4,145			3,726		359		-			4,085
Gross profit		2,776		90			-			2,866			3,031		149		-			3,180
Depreciation & amortization		111		42			-			153			149		42		-			191
Other operating expenses		1,682		85			-			1,767			1,855		60		-			1,915
Segment operating income/(loss)	$	983	$	(37	)	$	-		$	946		$	1,027	$	47	$	-		$	1,074
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		65		(2	)		-			63			9		-		-			9
Income tax expense		-		-			(286	)		(286	)		-		-		(298	)		(298	)
Net income/(loss)	$	1,048	$	(39	)	$	(286	)	$	723		$	1,036	$	47	$	(298	)	$	785

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)


	Nine months ended September 30, 2023											Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367			885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366		$	885		$	21,332

Revenues:
Verification and certification service revenue	$	13,944	$	-		$	-		$	13,944		$	12,917	$	-		$	-		$	12,917
Product sales		3,130		-			-			3,130			3,473		-			-			3,473
Consulting revenue		-		1,330			-			1,330			-		2,362			-			2,362
Total revenues	$	17,074	$	1,330		$	-		$	18,404		$	16,390	$	2,362		$	-		$	18,752
Costs of revenues:
Costs of verification and certification services		8,055		-			-			8,055			7,261		-			-			7,261
Costs of products		1,804		-			-			1,804			1,885		-			-			1,885
Costs of consulting		-		1,030			-			1,030			-		1,899			-			1,899
Total costs of revenues		9,859		1,030			-			10,889			9,146		1,899			-			11,045
Gross profit		7,215		300			-			7,515			7,244		463			-			7,707
Depreciation & amortization		361		127			-			488			443		140			-			583
Other operating expenses		5,027		226			-			5,253			4,929		185			-			5,114
Segment operating income/(loss)	$	1,827	$	(53	)	$	-		$	1,774		$	1,872	$	138		$	-		$	2,010
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		187		(5	)		-			182			108		(35	)		-			73
Income tax expense		-		-			(580	)		(580	)		-		-			(579	)		(579	)
Net income/(loss)	$	2,014	$	(58	)	$	(580	)	$	1,376		$	1,980	$	103		$	(579	)	$	1,504

Note 13 – Supplemental Cash Flow Information


	Nine months ended September 30,
(Amounts in thousands)	2023		2022
Cash paid during the year:
Interest expense	$	-	$	-
Income taxes	$	659	$	648

Note 14 – Subsequent Events

The Company has had no material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

This information should be read in conjunction with the consolidated financial statements and the notes included in Item 1 of Part I of this Quarterly Report and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Form 10−K for the fiscal year ended December 31, 2022. The following discussion and analysis includes historical and certain forward−looking information that should be read together with the accompanying consolidated financial statements, related footnotes and the discussion below of certain risks and uncertainties that could cause future operating results to differ materially from historical results or from the expected results indicated by forward−looking statements.

Business Overview

Where Food Comes From, Inc. and its subsidiaries (“WFCF,” the “Company,” “our,” “we,” or “us”) is a leading trusted resource for third-party verification of food production practices in North America. The Company estimates that 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, including IMI Global (“IMI”), Where Food Comes From Organic (“WFCFO”), and Validus Verification Services (“Validus”). In order to have credibility, product claims such as gluten-free, non-GMO, non-hormone treated, humane handling, and others require verification by an independent third-party such as WFCF. The Company’s principal business is conducting both on-site and desk audits to verify that claims being made about livestock, aquaculture, crops and other food products are accurate.

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, agricultural and aquaculture industries and drive sustainable value creation.

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. 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. The Company’s shares of common stock trade on the NASDAQ Capital Market (“NASDAQ”), under the stock ticker symbol, “WFCF.”

The Company’s original name – Integrated Management Information, Inc. (d.b.a. IMI Global) – was changed to Where Food Comes From, Inc. in 2012 to better reflect the Company’s mission. Early growth was attributable to source and age verification services for beef producers that wanted access to markets overseas following the discovery of “mad cow” disease in the U.S. Over the years, WFCF has expanded its portfolio to include verification and software services for most food groups and over 50 programs and organizations. This growth has been achieved both organically and through the acquisition of other companies.

Pandemics, the Inflationary Environment and other Weather Related Risks

We continue to monitor risks related to pandemics, inflation and weather, as well as other risks closely and will react accordingly, while keeping the interest of our customers, employees and shareholders in mind. Please refer to our risk factors included in our Form 10-K for the fiscal year ended December 31, 2022 for additional information related to all of our risks.

Environmental, Social and Governance (“ESG”) and Human Capital Resources

ESG

We take environmental and social responsibility very seriously. It’s the entire reason we spend day in and day out helping farmers, ranchers and brands around the world provide transparency to their consumers. Communicating authentic, sustainable, and traceable stories directly impacts our future.

We believe that sound corporate governance is critical to helping us achieve our goals, including with respect to ESG. We continue to evolve a governance framework that exercises appropriate oversight of responsibilities at all levels throughout the company and manages its affairs consistent with high principles of business ethics. Our internal ESG Council is made up of leaders from across our company, and regularly presents to our Executive Team, which oversees our ESG impacts, initiatives, and priorities.

Human Capital Resources

Our greatest asset is our people, and we continue to attract the best and brightest with our competitive pay and benefits package. As of September 30, 2023, we had 96 total employees, of which 86 were full-time employees. Approximately 76% of our workforce is comprised of female and other minority employees.

We are committed to providing a workplace where our employees feel respected and appreciated. Our Human Resource department (“HR”) conducts a new hire orientation, so employees know whom to contact with questions or concerns. HR has an open door policy and is actively involved in driving culture and engagement alongside business leaders.

Our policies are designed to promote fairness and respect for everyone. We hire, evaluate, and promote employees based on their skills and performance. Everyone is expected to be trustworthy, demonstrate excellence in their performance, and collaborate with others. With this in mind, we will not tolerate certain behaviors. These include harassment, retaliation, violence, intimidation, and discrimination of any kind on the basis of race, color, religion, national origin, gender, sexual orientation, gender identity, gender expression, age, disability or veteran status.

To continue innovating, we must ensure we have a talented and engaged workforce with ample opportunity to contribute to our mission and grow professionally. We are focused on intentionally creating pathways to career opportunities across WFCF through strategic initiatives such as internships and leadership training.

At WFCF, our employees show up passionate about making a difference in the world and for each other. With a majority-minority workforce, empowering our employee resource groups to take charge in driving initiatives that attract, develop, and retain our passionate workforce is vital to our continued success.

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.

Liquidity and Capital Resources

At September 30, 2023, we had cash and cash equivalents of approximately $3.8 million compared to approximately $4.4 million at December 31, 2022. Our working capital at September 30, 2023 and December 31, 2022 was approximately $3.6 million and $4.9 million, respectively.

Net cash provided by operating activities for the nine months ended September 30, 2023 was approximately $2.6 million compared to $3.0 million during the same period in 2022. Net cash provided by operating activities is driven by our net income and adjusted by non-cash items. Non-cash adjustments primarily include depreciation, amortization of intangible assets, stock-based compensation expense, and deferred taxes. Fluctuations are primarily due to operating performance offset by the timing of cash receipts and cash disbursements. The cash provided by operating activities for the period ending September 30, 2023 was primarily driven by a change in inventory, accrued expenses and other current liabilities, and deferred revenue. The cash provided by operating activities for the period ending September 30, 2022 was primarily driven by a change in accrued expenses and other current liabilities, accounts receivable and prepaid expenses and other assets.

Net cash used in investing activities for the nine months ended September 30, 2023 and 2022 was approximately $0.3 and $0.2 million, respectively. Net cash used in the period ending September 30, 2023 was primarily related to our equity investment in BlueTrace. Net cash used in the period ending September 30, 2022 was primarily for the purchase of digital assets.

Net cash used in financing activities for the nine months ended September 30, 2023 and 2022 was approximately $2.9 million and $2.2 million, respectively. Cash used for the periods ending September 30, 2023 and 2022, was primarily due to the repurchase of common shares under the Stock Buyback Plan.

Over the past several years, our growth has been funded primarily through cash flows 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.

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. 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. We believe that our various sources of capital, including cash flow from operating activities, overall improvement in our performance, and our ability to obtain additional financing, are adequate to finance current operations. We are not aware of any other event or trend that would negatively affect our liquidity. In the event such a trend develops, we believe that there are sufficient financing avenues available to us and from our internal cash-generating capabilities to adequately manage our ongoing business.

The culmination of all our efforts has brought significant opportunities to us, including increased investor confidence and renewed interest in our company, as well as the potential to develop business relationships with long-term strategic partners. 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 and bundling opportunities in our product offerings within national and international markets, as well as potential acquisitions. 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. The LOC provides for $75,080 in working capital. The interest rate is at the Wall Street Journal prime rate plus 1.50% and is adjusted daily. Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due upon maturity. As of September 30, 2023 and December 31, 2022, the effective interest rate was 10.0% and 9.0%, respectively. The LOC is collateralized by all the business assets of Where Food Comes From Organic, Inc. (“WFCFO”). As of September 30, 2023, and December 31, 2022, there were no amounts outstanding under this LOC.

Off-Balance Sheet Arrangements

As of September 30, 2023, we had no off-balance sheet arrangements of any type.

RESULTS OF OPERATIONS

Three and nine months ended September 30, 2023 compared to the same period in fiscal year 2022

The following table shows information for reportable operating segments (amounts in thousands):

	Three months ended September 30, 2023											Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment		Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999	$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367		885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366	$	885		$	21,332

Revenues:
Verification and certification service revenue	$	5,359	$	-		$	-		$	5,359		$	5,169	$	-	$	-		$	5,169
Product sales		1,221		-			-			1,221			1,588		-		-			1,588
Consulting revenue		-		431			-			431			-		508		-			508
Total revenues	$	6,580	$	431		$	-		$	7,011		$	6,757	$	508	$	-		$	7,265
Costs of revenues:
Costs of verification and certification services		3,123		-			-			3,123			2,900		-		-			2,900
Costs of products		681		-			-			681			826		-		-			826
Costs of consulting		-		341			-			341			-		359		-			359
Total costs of revenues		3,804		341			-			4,145			3,726		359		-			4,085
Gross profit		2,776		90			-			2,866			3,031		149		-			3,180
Depreciation & amortization		111		42			-			153			149		42		-			191
Other operating expenses		1,682		85			-			1,767			1,855		60		-			1,915
Segment operating income/(loss)	$	983	$	(37	)	$	-		$	946		$	1,027	$	47	$	-		$	1,074
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		65		(2	)		-			63			9		-		-			9
Income tax expense		-		-			(286	)		(286	)		-		-		(298	)		(298	)
Net income/(loss)	$	1,048	$	(39	)	$	(286	)	$	723		$	1,036	$	47	$	(298	)	$	785

	Nine months ended September 30, 2023											Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367			885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366		$	885		$	21,332

Revenues:
Verification and certification service revenue	$	13,944	$	-		$	-		$	13,944		$	12,917	$	-		$	-		$	12,917
Product sales		3,130		-			-			3,130			3,473		-			-			3,473
Consulting revenue		-		1,330			-			1,330			-		2,362			-			2,362
Total revenues	$	17,074	$	1,330		$	-		$	18,404		$	16,390	$	2,362		$	-		$	18,752
Costs of revenues:
Costs of verification and certification services		8,055		-			-			8,055			7,261		-			-			7,261
Costs of products		1,804		-			-			1,804			1,885		-			-			1,885
Costs of consulting		-		1,030			-			1,030			-		1,899			-			1,899
Total costs of revenues		9,859		1,030			-			10,889			9,146		1,899			-			11,045
Gross profit		7,215		300			-			7,515			7,244		463			-			7,707
Depreciation & amortization		361		127			-			488			443		140			-			583
Other operating expenses		5,027		226			-			5,253			4,929		185			-			5,114
Segment operating income/(loss)	$	1,827	$	(53	)	$	-		$	1,774		$	1,872	$	138		$	-		$	2,010
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		187		(5	)		-			182			108		(35	)		-			73
Income tax expense		-		-			(580	)		(580	)		-		-			(579	)		(579	)
Net income/(loss)	$	2,014	$	(58	)	$	(580	)	$	1,376		$	1,980	$	103		$	(579	)	$	1,504

Verification and Certification Segment

Verification and certification service revenues consist of fees charged for verification audits and other verification services that the Company performs for customers. Fees earned from our WFCF labeling program are also included in our verification and certification revenues as it represents a value-added extension of our source verification. Verification and certification service revenue for the three and nine months ended September 30, 2023 improved 3.7% and 8.0%, respectively, compared with the same periods in 2022. 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. We also believe inflationary pressure on packers, producers, growers, brands, and retailers is putting downward pressure on verified and certified foods as consumers have switched to lower priced food products.

Our product sales are an ancillary part of our verification and certification services and represent sales of cattle identification ear tags. Product sales for the three and nine months ended September 30, 2023 decreased $0.4 million and $0.3 million. respectively, compared to the same periods in 2022. We continue to see some new customer growth, but our customers are ordering less tags due to smaller beef cow herd size. According to the USDA July 2023 statistics, overall beef cow inventories have declined over 3% compared to last year. 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.

Segment costs of revenues for the three and nine months ended September 30, 2023 were approximately $3.8 million and $9.9 million, respectively, compared to approximately $3.7 million and $9.1 million, respectively, for the same periods in 2022. Gross margin for the three and nine months ended September 30, 2023 was 42.2% and 42.3%, respectively, compared to 44.9% and 44.2%, respectively, in 2022. Our margins are generally impacted by various fixed costs such as cost of products, salaries and benefits, insurance and taxes. We continue to experience inflationary increases in the costs of products shipped and increases in compensation related costs due to a tight labor market impacting our margins. New customer growth helps offset some of the inflationary impacts on our margins, to an extent.

Other operating expenses for the three months ended September 30, 2023 decreased by approximately 9.3% and for the nine months ended September 30, 2023 increased 2.0%, compared to the same periods in 2022. The decrease for the three months ended September 30, 2023 was primarily due to decreases in charitable contributions paid, professional fees incurred and in performance incentive accruals over the comparable period ended 2022.

Consulting Segment

Consulting revenue primarily represents fees earned from a wide range of professional consulting services and technology solutions that support our verification business and generate incremental revenue specific to the food and agricultural industry. Our consulting revenue stream is predominately project based and not recurring in nature. Consulting revenue for the three and nine months ended September 30, 2023 decreased approximately $77,000 and $1.0 million, respectively, compared to the same periods in 2022. The nine months ended September 30, 2022 period included a significant short-term engagement with a Japanese party to promote Japanese seafood products into the American supply chain during 2022.

Costs of revenues for our consulting segment for the three and nine months ended September 30, 2023 was approximately $0.3 million and $1.0 million, respectively, compared to approximately $0.4 million and $1.9 million, respectively for the same periods in 2022. Gross margin for the three months ended September 30, 2023 decreased to 20.9% compared to 29.3% for the same period in 2022. Gross margin for the nine months ended September 30, 2023 improved to 22.6% compared to 19.6% for the same period in 2022. Because our consulting revenue is predominately project based, margins are greatly impacted by the timing of the project work and the fixed and/or variable labor necessary to complete the project. The 2022 margins were negatively impacted by an increased use of contract labor to support the short-term consulting engagement mentioned above.

In addition to advisory services, our consulting segment provides technology solutions as a platform to support data driven analysis. The information derived helps deliver meaningful insights for food and agriculture businesses, potentially leading up to third party certification. While our consulting segment is not a significant contributor to our bottom line, we believe it is a valuable service offering to support all aspects of food and agriculture. It also helps further diversify our business, strengthen our position, and understand trends in the food, agriculture, and aquaculture industries.

Dividend Income from Progressive Beef

For the three and nine months ended September 30, 2023 and 2022, the Company received dividend income of $50,000 and $150,000, respectively, from Progressive Beef representing a distribution of their earnings.

Income Tax Expense

The provision for income taxes is recorded at the end of each interim period based on the Company’s best estimate of its effective income tax rate expected to be applicable for the full fiscal year. For the three and nine months ended September 30, 2023, we recorded income tax expense of approximately $286,000 and $580,000, respectively, compared to income tax expense of $298,000 and $579,000 for the same periods in 2022.

Net Income and Per Share Information

As a result of the foregoing, net income attributable to WFCF shareholders for the three and nine months ended September 30, 2023 was approximately $0.7 million and $1.4 million, respectively, and $0.13 and $0.25, respectively, per basic share and $0.13 and $0.24, respectively, per diluted common share. Compared to net income of approximately $0.8 million and $1.5 million, respectively, and $0.13 and $0.25, respectively, per basic and diluted common share for the same periods in 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, including our principal executive and financial officers, have conducted an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures,” as such term is defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act, to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information we are required to disclose in such reports is accumulated and communicated to management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. We believe that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

There have not been any other changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

Our business is subject to a number of risks, including those identified in Item 1A. — “Risk Factors” of our 2022 Annual Report on Form 10−K, that could have a material effect on our business, results of operations, financial condition and/or liquidity and that could cause our operating results to vary significantly from period to period. As of September 30, 2023, the Company recognizes matters specific to pandemics, the inflationary environment and weather-related risks may have a continued economic impact on the Company, but management does not know and cannot estimate what the long-term financial impact may be. We may also disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

On September 30, 2019, our Board of Directors approved a new plan to buyback up to 2.5 million additional shares of our common stock from the open market (“Stock Buyback Plan”). Activity for the three months ended September 30, 2023 is as follows:

	Number of Shares		Cost of Shares (in thousands)		Average Cost per Share
Shares purchased - July 2023		22,300	$	314	$	14.06
Shares purchased - August 2023		20,333		289	$	14.24
Shares purchased - September 2023		17,904		252	$	14.09
Total		60,537	$	855

ITEM 6. EXHIBITS

(a) Exhibits

Number		Description
31.1		Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 9, 2023	Where Food Comes From, Inc.

	By:	/s/ John K. Saunders
		Chief Executive Officer

	By:	/s/ Dannette Henning
		Chief Financial Officer

EXHIBIT 31.1

I, John Saunders, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Where Food Comes From, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2023

/s/ John Saunders
John Saunders, Chief Executive Officer

EXHIBIT 31.2

I, Dannette Henning, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Where Food Comes From, Inc.

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2023

/s/ Dannette Henning
Dannette Henning, Chief Financial Officer

EXHIBIT 32.1

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, John Saunders the Chief Executive Officer of Where Food Comes From, Inc. (the “Company”), hereby certifies that, to his knowledge:

	(i)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2023

/s/ John Saunders
John Saunders, Chief Executive Officer

EXHIBIT 32.2

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Dannette Henning, the Chief Financial Officer of Where Food Comes From, Inc. (the “Company”), hereby certifies that, to her knowledge:

	(i)	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	(ii)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 9, 2023

/s/ Dannette Henning
Dannette Henning, Chief Financial Officer

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 03, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2023
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-31
Entity File Number	001-40314
Entity Registrant Name	WHERE FOOD COMES FROM, INC.
Entity Central Index Key	0001360565
Entity Tax Identification Number	43-1802805
Entity Incorporation, State or Country Code	CO
Entity Address, Address Line One	202 6th Street
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Castle Rock
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80104
City Area Code	(303)
Local Phone Number	895-3002
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	WFCF
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,543,871

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 3,813	$ 4,368
Accounts receivable, net of allowance	2,291	2,172
Inventory	1,120	888
Prepaid expenses and other current assets	495	463
Total current assets	7,719	7,891
Property and equipment, net	848	998
Right-of-use assets, net	2,379	2,607
Equity investments	1,191	991
Intangible and other assets, net	2,097	2,340
Goodwill, net	2,946	2,946
Deferred tax assets, net	508	523
Total assets	17,688	18,296
Current liabilities:
Accounts payable	722	640
Accrued expenses and other current liabilities	1,345	769
Deferred revenue	1,713	1,278
Current portion of finance lease obligations	13	9
Current portion of operating lease obligations	310	341
Total current liabilities	4,103	3,037
Finance lease obligations, net of current portion	44	37
Operating lease obligation, net of current portion	2,522	2,745
Total liabilities	6,669	5,819
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; 6,511 (2023) and 6,501 (2022) shares issued, and 5,574 (2023) and 5,775 (2022) shares outstanding	6	6
Additional paid-in-capital	12,232	12,145
Treasury stock of 937 (2023) and 727 (2022) shares	(10,184)	(7,263)
Retained earnings	8,965	7,589
Total equity	11,019	12,477
Total liabilities and stockholders’ equity	$ 17,688	$ 18,296

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	95,000,000	95,000,000
Common stock, shares issued	6,511,000	6,501,000
Common stock, shares outstanding	5,574,000	5,775,000
Treasury stock, shares	937,000	727,000

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues:
Total revenues	$ 7,011,000	$ 7,265,000	$ 18,404,000	$ 18,752,000
Costs of revenues:
Total costs of revenues	4,145,000	4,085,000	10,889,000	11,045,000
Gross profit	2,866,000	3,180,000	7,515,000	7,707,000
Selling, general and administrative expenses	1,920,000	2,106,000	5,741,000	5,697,000
Income from operations	946,000	1,074,000	1,774,000	2,010,000
Other income/(expense):
Dividend income from Progressive Beef	50,000	50,000	150,000	150,000
Other income, net	16,000	1,000	36,000	2,000
Gain on sale of assets			5,000
Impairment of digital assets		(42,000)		(42,000)
Loss on foreign currency exchange	(2,000)		(6,000)	(35,000)
Interest expense	(1,000)		(3,000)	(2,000)
Income before income taxes	1,009,000	1,083,000	1,956,000	2,083,000
Income tax expense	286,000	298,000	580,000	579,000
Net income	$ 723,000	$ 785,000	$ 1,376,000	$ 1,504,000
Per share - net income:
Basic	$ 0.13	$ 0.13	$ 0.25	$ 0.25
Diluted	$ 0.13	$ 0.13	$ 0.24	$ 0.25
Weighted average number of common shares outstanding:
Basic	5,599	5,936	5,605	6,019
Diluted	5,658	6,016	5,669	6,101
Verification And Certification Service Revenue [Member]
Revenues:
Total revenues	$ 5,359,000	$ 5,169,000	$ 13,944,000	$ 12,917,000
Costs of revenues:
Total costs of revenues	3,123,000	2,900,000	8,055,000	7,261,000
Product Sales [Member]
Revenues:
Total revenues	1,221,000	1,588,000	3,130,000	3,473,000
Costs of revenues:
Total costs of revenues	681,000	826,000	1,804,000	1,885,000
Consulting Revenue [Member]
Revenues:
Total revenues	431,000	508,000	1,330,000	2,362,000
Costs of revenues:
Total costs of revenues	$ 341,000	$ 359,000	$ 1,030,000	$ 1,899,000

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Operating activities:
Net income	$ 1,376,000	$ 1,504,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	488,000	583,000
Impairment of digital assets		42,000
Gain on sale of assets	(5,000)
Stock-based compensation expense	38,000	102,000
Deferred tax expense / (benefit)	15,000	(59,000)
Bad debt expense	39,000	40,000
Changes in operating assets and liabilities:
Accounts receivable	(158,000)	(713,000)
Inventory	(232,000)	(107,000)
Prepaid expenses and other assets	(32,000)	(682,000)
Accounts payable	82,000	503,000
Accrued expenses and other current liabilities	584,000	1,560,000
Deferred revenue	435,000	240,000
Right of use assets and liabilities, net	(17,000)	(7,000)
Net cash provided by operating activities	2,613,000	3,006,000
Investing activities:
Investment in BlueTrace	(200,000)
Purchase of digital assets		(178,000)
Purchases of property, equipment and software development costs	(87,000)	(41,000)
Net cash used in investing activities	(287,000)	(219,000)
Financing activities:
Repayments of finance lease obligations	(9,000)	(7,000)
Proceeds from stock option exercise	49,000	19,000
Stock repurchase under Stock Buyback Plan	(2,921,000)	(2,207,000)
Net cash used in financing activities	(2,881,000)	(2,195,000)
Net change in cash	(555,000)	592,000
Cash at beginning of period	4,368,000	5,414,000
Cash at end of period	$ 3,813,000	$ 6,006,000

Consolidated Statement of Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock, Common [Member]	Retained Earnings [Member]
Balance at Dec. 31, 2021	$ 13,749	$ 6	$ 11,955	$ (3,807)	$ 5,595
Balance, shares at Dec. 31, 2021		6,071,000
Stock-based compensation expense	51		51
Stock-based compensation expense, shares		2,000
Repurchase of common shares under Stock Buyback Plan	(422)			(422)
Repurchase of common shares under Stock Buyback Plan, shares		(34,000)
Net income	497				497
Balance at Mar. 31, 2022	13,875	$ 6	12,006	(4,229)	6,092
Balance, shares at Mar. 31, 2022		6,039,000
Balance at Dec. 31, 2021	13,749	$ 6	11,955	(3,807)	5,595
Balance, shares at Dec. 31, 2021		6,071,000
Net income	1,504
Balance at Sep. 30, 2022	13,167	$ 6	12,076	(6,014)	7,099
Balance, shares at Sep. 30, 2022		5,873,000
Balance at Mar. 31, 2022	13,875	$ 6	12,006	(4,229)	6,092
Balance, shares at Mar. 31, 2022		6,039,000
Stock-based compensation expense	32		32
Repurchase of common shares under Stock Buyback Plan	(648)			(648)
Repurchase of common shares under Stock Buyback Plan, shares		(61,000)
Net income	222				222
Stock options exercised	7		7
Stock options exercised, shares		1,000
Balance at Jun. 30, 2022	13,488	$ 6	12,045	(4,877)	6,314
Balance, shares at Jun. 30, 2022		5,979,000
Stock-based compensation expense	19		19
Repurchase of common shares under Stock Buyback Plan	(1,137)			(1,137)
Repurchase of common shares under Stock Buyback Plan, shares		(109,000)
Net income	785				785
Stock options exercised	12		12
Stock options exercised, shares		3,000
Balance at Sep. 30, 2022	13,167	$ 6	12,076	(6,014)	7,099
Balance, shares at Sep. 30, 2022		5,873,000
Balance at Dec. 31, 2022	12,477	$ 6	12,145	(7,263)	7,589
Balance, shares at Dec. 31, 2022		5,775,000
Stock-based compensation expense	15		15
Repurchase of common shares under Stock Buyback Plan	(1,230)			(1,230)
Repurchase of common shares under Stock Buyback Plan, shares		(90,000)
Net income	121				121
Balance at Mar. 31, 2023	11,383	$ 6	12,160	(8,493)	7,710
Balance, shares at Mar. 31, 2023		5,685,000
Balance at Dec. 31, 2022	12,477	$ 6	12,145	(7,263)	7,589
Balance, shares at Dec. 31, 2022		5,775,000
Net income	$ 1,376
Stock options exercised, shares	10,229
Balance at Sep. 30, 2023	$ 11,019	$ 6	12,232	(10,184)	8,965
Balance, shares at Sep. 30, 2023		5,574,000
Balance at Mar. 31, 2023	11,383	$ 6	12,160	(8,493)	7,710
Balance, shares at Mar. 31, 2023		5,685,000
Stock-based compensation expense	17		17
Repurchase of common shares under Stock Buyback Plan	(836)			(836)
Repurchase of common shares under Stock Buyback Plan, shares		(61,000)
Net income	532				532
Stock options exercised	46		46
Stock options exercised, shares		7,000
Balance at Jun. 30, 2023	11,142	$ 6	12,223	(9,329)	8,242
Balance, shares at Jun. 30, 2023		5,631,000
Stock-based compensation expense	6		6
Repurchase of common shares under Stock Buyback Plan	(855)			(855)
Repurchase of common shares under Stock Buyback Plan, shares		(60,000)
Net income	723				723
Stock options exercised	3		3
Stock options exercised, shares		3,000
Balance at Sep. 30, 2023	$ 11,019	$ 6	$ 12,232	$ (10,184)	$ 8,965
Balance, shares at Sep. 30, 2023		5,574,000

The Company and Basis of Presentation

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

The Company and Basis of Presentation

Note 1 - The Company and Basis of Presentation

Business Overview

Most of our customers are located throughout the United States.

Basis of Presentation

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Seasonality

Recent Accounting Pronouncements

Basic and Diluted Net Income per Share

9 Months Ended

Sep. 30, 2023

Per share - net income:

Basic and Diluted Net Income per Share

Note 2 – Basic and Diluted Net Income per Share

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

The following is a reconciliation of the share data used in the basic and diluted income per share computations (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Basic:
Weighted average shares outstanding		5,599		5,936		5,605		6,019

Diluted:
Weighted average shares outstanding		5,599		5,936		5,605		6,019
Weighted average effects of dilutive securities		59		80		64		82
Total		5,658		6,016		5,669		6,101

Antidilutive securities:		17		17		17		17

Equity Investments

9 Months Ended

Sep. 30, 2023

Investments, All Other Investments [Abstract]

Equity Investments

Note 3 – Equity Investments

	●	investment’s earnings performance, credit rating, asset quality, or business prospects of the investee;
	●	has there been significant adverse changes in the regulatory, economic, or technological environment of the investee;
	●	has there been a significant adverse in the general market condition of either the geographical area or the industry in which the investee operates; and,
	●	has there been a bona fide offer to purchase or sell, or a completed auction process for the same or similar investment for an amount less than the carrying amount of our investment.

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Intangible and Other Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible and Other Assets

Note 4 – Intangible and Other Assets

The following table summarizes our intangible and other assets (amounts in thousands, except useful life):

Schedule of Intangible and Other Assets

	September 30,		December 31,		Estimated
	2023		2022		Useful Life
Intangible assets subject to amortization:
Tradenames and trademarks	$	417	$	417	2.5 - 8.0 years
Accreditations		75		75	5.0 years
Customer relationships		3,659		3,664	3.0 - 15.0 years
Patents		970		970	4.0 years
Non-compete agreements		121		121	5.0 years
Intangible and other assets, gross		5,242		5,247
Less accumulated amortization		3,746		3,511
Intangible and other assets, Net		1,496		1,736
Cryptocurrency (not subject to amortization)		116		116
Tradenames/trademarks (not subject to amortization)		465		465
Intangible assets		2,077		2,317
Other assets		20		23
Intangible and other assets:	$	2,097	$	2,340

Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

Note 5 – Accrued Expenses and Other Current Liabilities

The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):

	September 30,		December 31,
	2023		2022

Income and sales taxes payable	$	38	$	14
Payroll related accruals		1,007		326
Customer deposits		91		35
Professional fees and other expenses		209		394
	$	1,345	$	769

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Notes Payable

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Notes Payable

Note 6 – Notes Payable

Unison Revolving Line of Credit

Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 7 – Stock-Based Compensation

The amount of stock-based compensation expense is as follows (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Stock options	$	6	$	19	$	38	$	82
Stock awards		-		-		-		20
Total	$	6	$	19	$	38	$	102
Stock-based compensation expense	$	6	$	19	$	38	$	102

The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):

Years ended December 31st:	Unvested stock options		Unvested restricted stock awards		Total unrecognized compensation expense
2023 (remaining three months)	$	5	$	-	$	5
2024		11		-		11
2025		-		-		-
	$	16	$	-	$	16

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Equity Incentive Plans

Stock Option Activity

Stock option activity under our Equity Incentive Plans is summarized as follows:

Schedule of Stock Option Activity

				Weighted avg.		Weighted avg.		Weighted avg. remaining
	Number of awards			exercise price per share		grant date fair value per share		contractual life (in years)		Aggregate intrinsic value

Outstanding, December 31, 2022		92,347		$	8.67	$	7.77		5.31	$	502,688
Granted		-		$	-	$	-		-
Exercised		(10,229	)	$	4.80	$	4.97		-
Expired/Forfeited		(6,250	)	$	10.20	$	10.06		-
Outstanding, September 30, 2023		75,868		$	9.07	$	7.96		5.21	$	392,923
Exercisable, September 30, 2023		70,195		$	8.61	$	7.72		5.00	$	390,597
Unvested, September 30, 2023		5,673		$	13.57	$	10.90		7.75	$	2,326

Stock Activity

There has not been any non-vested stock award activity under our Equity Incentive Plans for the three and nine months ended September 30, 2023 and 2022.

Income Taxes

9 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 8 – Income Taxes

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Revenue Recognition

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Note 9 - Revenue Recognition

Disaggregation of Revenue

We have identified three material revenue categories in our business: (i) verification and certification service revenue, (ii) product sales, (iii) consulting revenue.

Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).


	Three months ended September 30, 2023								Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals
Revenues:
Verification and certification service revenue	$	5,359	$	-	$	-	$	5,359	$	5,169	$	-	$	-	$	5,169
Product sales		1,221		-		-		1,221		1,588		-		-		1,588
Consulting revenue		-		431		-		431		-		508		-		508
Total revenues	$	6,580	$	431	$	-	$	7,011	$	6,757	$	508	$	-	$	7,265


	Nine months ended September 30, 2023								Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals
Revenues:
Verification and certification service revenue	$	13,944	$	-	$	-	$	13,944	$	12,917	$	-	$	-	$	12,917
Product sales		3,130		-		-		3,130		3,473		-		-		3,473
Consulting revenue		-		1,330		-		1,330		-		2,362		-		2,362
Total revenues	$	17,074	$	1,330	$	-	$	18,404	$	16,390	$	2,362	$	-	$	18,752

Contract Balances

As of September 30, 2023 and December 31, 2022, accounts receivable from contracts with customers, net of allowance for doubtful accounts, was approximately $2.3 and $2.2 million, respectively.

The following table reflects the changes in our contract liabilities during the nine month period ended September 30, 2023 (amounts in thousands):

Deferred revenue:
Unearned revenue December 31, 2022	$	1,278
Unearned billings		2,765
Revenue recognized		(2,330	)
Unearned revenue September 30, 2023	$	1,713

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Leases

9 Months Ended

Sep. 30, 2023

Leases

Leases

Note 10 – Leases

The components of lease expense were as follows (amounts in thousands):

Schedule of Lease Expense

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	119	$	122	$	364	$	368
Finance lease cost
Amortization of assets		4		2		11		7
Interest on finance lease obligations		1		1		4		2
Variable lease cost		-		-		-		-
Total net lease cost	$	124	$	125	$	379	$	377

Supplemental balance sheet information related to leases was as follows (amounts in thousands):


	September 30, 2023						December 31, 2022
Operating leases:	Related Party		Other		Total		Related Party		Other		Total
Operating lease ROU assets	$	2,212	$	112	$	2,324	$	2,369	$	193	$	2,562

Current operating lease liabilities	$	242	$	68	$	310	$	224	$	117	$	341
Noncurrent operating lease liabilities		2,472		50		2,522		2,656		89		2,745
Total operating lease liabilities	$	2,714	$	118	$	2,832	$	2,880	$	206	$	3,086

Finance leases:	September 30, 2023			December 31, 2022
Property and equipment, at cost	$	76		$	70
Accumulated amortization		(21	)		(25	)
Property and equipment, net	$	55		$	45

Current obligations of finance leases	$	13		$	9
Finance leases, net of current obligations		44			37
Total finance lease liabilities	$	57		$	46

Weighted average remaining lease term (in years):
Operating leases		7.6			8.2
Finance leases		3.9			4.4

Weighted average discount rate:
Operating leases		5.8	%		5.8	%
Finance leases		8.2	%		7.8	%

Supplemental cash flow and other information related to leases was as follows (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	126	$	127	$	380	$	378
Operating cash flows from finance leases	$	1	$	1	$	4	$	2
Financing cash flows from finance leases	$	3	$	3	$	9	$	9

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	-	$	-	$	-	$	-

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

Maturities of lease liabilities were as follows (amounts in thousands):

Years Ending December 31st,	Operating Leases			Finance Leases
2023 (three remaining months)	$	127		$	4
2024		446			18
2025		435			19
2026		430			14
2027		430			12
Thereafter		1,648			-
Total lease payments		3,516			67
Less amount representing interest		(684	)		(10	)
Total lease obligations		2,832			57
Less current portion		(310	)		(13	)
Long-term lease obligations	$	2,522		$	44

Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 11 – Commitments and Contingencies

Legal proceedings

Segments

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segments

Note 12 - Segments

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)

The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (amounts in thousands):

Schedule of Operating Segments


	Three months ended September 30, 2023											Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment		Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999	$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367		885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366	$	885		$	21,332

Revenues:
Verification and certification service revenue	$	5,359	$	-		$	-		$	5,359		$	5,169	$	-	$	-		$	5,169
Product sales		1,221		-			-			1,221			1,588		-		-			1,588
Consulting revenue		-		431			-			431			-		508		-			508
Total revenues	$	6,580	$	431		$	-		$	7,011		$	6,757	$	508	$	-		$	7,265
Costs of revenues:
Costs of verification and certification services		3,123		-			-			3,123			2,900		-		-			2,900
Costs of products		681		-			-			681			826		-		-			826
Costs of consulting		-		341			-			341			-		359		-			359
Total costs of revenues		3,804		341			-			4,145			3,726		359		-			4,085
Gross profit		2,776		90			-			2,866			3,031		149		-			3,180
Depreciation & amortization		111		42			-			153			149		42		-			191
Other operating expenses		1,682		85			-			1,767			1,855		60		-			1,915
Segment operating income/(loss)	$	983	$	(37	)	$	-		$	946		$	1,027	$	47	$	-		$	1,074
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		65		(2	)		-			63			9		-		-			9
Income tax expense		-		-			(286	)		(286	)		-		-		(298	)		(298	)
Net income/(loss)	$	1,048	$	(39	)	$	(286	)	$	723		$	1,036	$	47	$	(298	)	$	785

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)


	Nine months ended September 30, 2023											Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367			885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366		$	885		$	21,332

Revenues:
Verification and certification service revenue	$	13,944	$	-		$	-		$	13,944		$	12,917	$	-		$	-		$	12,917
Product sales		3,130		-			-			3,130			3,473		-			-			3,473
Consulting revenue		-		1,330			-			1,330			-		2,362			-			2,362
Total revenues	$	17,074	$	1,330		$	-		$	18,404		$	16,390	$	2,362		$	-		$	18,752
Costs of revenues:
Costs of verification and certification services		8,055		-			-			8,055			7,261		-			-			7,261
Costs of products		1,804		-			-			1,804			1,885		-			-			1,885
Costs of consulting		-		1,030			-			1,030			-		1,899			-			1,899
Total costs of revenues		9,859		1,030			-			10,889			9,146		1,899			-			11,045
Gross profit		7,215		300			-			7,515			7,244		463			-			7,707
Depreciation & amortization		361		127			-			488			443		140			-			583
Other operating expenses		5,027		226			-			5,253			4,929		185			-			5,114
Segment operating income/(loss)	$	1,827	$	(53	)	$	-		$	1,774		$	1,872	$	138		$	-		$	2,010
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		187		(5	)		-			182			108		(35	)		-			73
Income tax expense		-		-			(580	)		(580	)		-		-			(579	)		(579	)
Net income/(loss)	$	2,014	$	(58	)	$	(580	)	$	1,376		$	1,980	$	103		$	(579	)	$	1,504

Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2023

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Note 13 – Supplemental Cash Flow Information


	Nine months ended September 30,
(Amounts in thousands)	2023		2022
Cash paid during the year:
Interest expense	$	-	$	-
Income taxes	$	659	$	648

Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Note 14 – Subsequent Events

The Company has had no material, significant or unusual transactions or events from the financial statement date through the issuance of the financial statements.

Basic and Diluted Net Income per Share (Tables)

9 Months Ended

Sep. 30, 2023

Per share - net income:

Schedule of Reconciliation of Basic and Diluted Income Per Share Computations

The following is a reconciliation of the share data used in the basic and diluted income per share computations (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Basic:
Weighted average shares outstanding		5,599		5,936		5,605		6,019

Diluted:
Weighted average shares outstanding		5,599		5,936		5,605		6,019
Weighted average effects of dilutive securities		59		80		64		82
Total		5,658		6,016		5,669		6,101

Antidilutive securities:		17		17		17		17

Intangible and Other Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible and Other Assets

The following table summarizes our intangible and other assets (amounts in thousands, except useful life):

Schedule of Intangible and Other Assets

	September 30,		December 31,		Estimated
	2023		2022		Useful Life
Intangible assets subject to amortization:
Tradenames and trademarks	$	417	$	417	2.5 - 8.0 years
Accreditations		75		75	5.0 years
Customer relationships		3,659		3,664	3.0 - 15.0 years
Patents		970		970	4.0 years
Non-compete agreements		121		121	5.0 years
Intangible and other assets, gross		5,242		5,247
Less accumulated amortization		3,746		3,511
Intangible and other assets, Net		1,496		1,736
Cryptocurrency (not subject to amortization)		116		116
Tradenames/trademarks (not subject to amortization)		465		465
Intangible assets		2,077		2,317
Other assets		20		23
Intangible and other assets:	$	2,097	$	2,340

Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2023

Payables and Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

The following table summarizes our accrued expenses and other current liabilities as of (amounts in thousands):

	September 30,		December 31,
	2023		2022

Income and sales taxes payable	$	38	$	14
Payroll related accruals		1,007		326
Customer deposits		91		35
Professional fees and other expenses		209		394
	$	1,345	$	769

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation Expense

The amount of stock-based compensation expense is as follows (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Stock options	$	6	$	19	$	38	$	82
Stock awards		-		-		-		20
Total	$	6	$	19	$	38	$	102
Stock-based compensation expense	$	6	$	19	$	38	$	102

Schedule of Unrecognized Compensation Cost from Unvested Awards

The estimated unrecognized compensation cost from unvested awards which will be recognized ratably over the remaining vesting phase is as follows (amounts in thousands):

Years ended December 31st:	Unvested stock options		Unvested restricted stock awards		Total unrecognized compensation expense
2023 (remaining three months)	$	5	$	-	$	5
2024		11		-		11
2025		-		-		-
	$	16	$	-	$	16

Schedule of Stock Option Activity

Stock option activity under our Equity Incentive Plans is summarized as follows:

Schedule of Stock Option Activity

				Weighted avg.		Weighted avg.		Weighted avg. remaining
	Number of awards			exercise price per share		grant date fair value per share		contractual life (in years)		Aggregate intrinsic value

Outstanding, December 31, 2022		92,347		$	8.67	$	7.77		5.31	$	502,688
Granted		-		$	-	$	-		-
Exercised		(10,229	)	$	4.80	$	4.97		-
Expired/Forfeited		(6,250	)	$	10.20	$	10.06		-
Outstanding, September 30, 2023		75,868		$	9.07	$	7.96		5.21	$	392,923
Exercisable, September 30, 2023		70,195		$	8.61	$	7.72		5.00	$	390,597
Unvested, September 30, 2023		5,673		$	13.57	$	10.90		7.75	$	2,326

Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenue Attributable to Each of Our Identified Revenue Categories

Revenue attributable to each of our identified revenue categories is disaggregated in the table below (amounts in thousands).


	Three months ended September 30, 2023								Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals
Revenues:
Verification and certification service revenue	$	5,359	$	-	$	-	$	5,359	$	5,169	$	-	$	-	$	5,169
Product sales		1,221		-		-		1,221		1,588		-		-		1,588
Consulting revenue		-		431		-		431		-		508		-		508
Total revenues	$	6,580	$	431	$	-	$	7,011	$	6,757	$	508	$	-	$	7,265


	Nine months ended September 30, 2023								Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals		Verification and Certification Segment		Consulting Segment		Eliminations and Other		Consolidated Totals
Revenues:
Verification and certification service revenue	$	13,944	$	-	$	-	$	13,944	$	12,917	$	-	$	-	$	12,917
Product sales		3,130		-		-		3,130		3,473		-		-		3,473
Consulting revenue		-		1,330		-		1,330		-		2,362		-		2,362
Total revenues	$	17,074	$	1,330	$	-	$	18,404	$	16,390	$	2,362	$	-	$	18,752

Schedule of Changes in Contract Liabilities

The following table reflects the changes in our contract liabilities during the nine month period ended September 30, 2023 (amounts in thousands):

Deferred revenue:
Unearned revenue December 31, 2022	$	1,278
Unearned billings		2,765
Revenue recognized		(2,330	)
Unearned revenue September 30, 2023	$	1,713

Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases

Schedule of Lease Expense

The components of lease expense were as follows (amounts in thousands):

Schedule of Lease Expense

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	119	$	122	$	364	$	368
Finance lease cost
Amortization of assets		4		2		11		7
Interest on finance lease obligations		1		1		4		2
Variable lease cost		-		-		-		-
Total net lease cost	$	124	$	125	$	379	$	377

Schedule of Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows (amounts in thousands):


	September 30, 2023						December 31, 2022
Operating leases:	Related Party		Other		Total		Related Party		Other		Total
Operating lease ROU assets	$	2,212	$	112	$	2,324	$	2,369	$	193	$	2,562

Current operating lease liabilities	$	242	$	68	$	310	$	224	$	117	$	341
Noncurrent operating lease liabilities		2,472		50		2,522		2,656		89		2,745
Total operating lease liabilities	$	2,714	$	118	$	2,832	$	2,880	$	206	$	3,086

Finance leases:	September 30, 2023			December 31, 2022
Property and equipment, at cost	$	76		$	70
Accumulated amortization		(21	)		(25	)
Property and equipment, net	$	55		$	45

Current obligations of finance leases	$	13		$	9
Finance leases, net of current obligations		44			37
Total finance lease liabilities	$	57		$	46

Weighted average remaining lease term (in years):
Operating leases		7.6			8.2
Finance leases		3.9			4.4

Weighted average discount rate:
Operating leases		5.8	%		5.8	%
Finance leases		8.2	%		7.8	%

Schedule of Supplemental Cash Flow Information Related to Leases

Supplemental cash flow and other information related to leases was as follows (amounts in thousands):

	2023		2022		2023		2022
	Three months ended September 30,				Nine months ended September 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	126	$	127	$	380	$	378
Operating cash flows from finance leases	$	1	$	1	$	4	$	2
Financing cash flows from finance leases	$	3	$	3	$	9	$	9

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	-	$	-	$	-	$	-

Schedule of Maturities of Operating Lease and Finance Lease Liabilities

Maturities of lease liabilities were as follows (amounts in thousands):

Years Ending December 31st,	Operating Leases			Finance Leases
2023 (three remaining months)	$	127		$	4
2024		446			18
2025		435			19
2026		430			14
2027		430			12
Thereafter		1,648			-
Total lease payments		3,516			67
Less amount representing interest		(684	)		(10	)
Total lease obligations		2,832			57
Less current portion		(310	)		(13	)
Long-term lease obligations	$	2,522		$	44

Segments (Tables)

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Schedule of Operating Segments

The Company eliminates intercompany transfers between segments for management reporting purposes. The following table shows information for reportable operating segments (amounts in thousands):

Schedule of Operating Segments


	Three months ended September 30, 2023											Three months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment		Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999	$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367		885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366	$	885		$	21,332

Revenues:
Verification and certification service revenue	$	5,359	$	-		$	-		$	5,359		$	5,169	$	-	$	-		$	5,169
Product sales		1,221		-			-			1,221			1,588		-		-			1,588
Consulting revenue		-		431			-			431			-		508		-			508
Total revenues	$	6,580	$	431		$	-		$	7,011		$	6,757	$	508	$	-		$	7,265
Costs of revenues:
Costs of verification and certification services		3,123		-			-			3,123			2,900		-		-			2,900
Costs of products		681		-			-			681			826		-		-			826
Costs of consulting		-		341			-			341			-		359		-			359
Total costs of revenues		3,804		341			-			4,145			3,726		359		-			4,085
Gross profit		2,776		90			-			2,866			3,031		149		-			3,180
Depreciation & amortization		111		42			-			153			149		42		-			191
Other operating expenses		1,682		85			-			1,767			1,855		60		-			1,915
Segment operating income/(loss)	$	983	$	(37	)	$	-		$	946		$	1,027	$	47	$	-		$	1,074
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		65		(2	)		-			63			9		-		-			9
Income tax expense		-		-			(286	)		(286	)		-		-		(298	)		(298	)
Net income/(loss)	$	1,048	$	(39	)	$	(286	)	$	723		$	1,036	$	47	$	(298	)	$	785

Where Food Comes From, Inc.

Notes to the Consolidated Financial Statements

(Unaudited)


	Nine months ended September 30, 2023											Nine months ended September 30, 2022
	Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals			Verification and Certification Segment		Consulting Segment			Eliminations and Other			Consolidated Totals
Assets:
Goodwill	$	1,947	$	999		$	-		$	2,946		$	1,947	$	999		$	-		$	2,946
All other assets, net		5,252		2,686			6,804			14,742			14,134		3,367			885			18,386
Total assets	$	7,199	$	3,685		$	6,804		$	17,688		$	16,081	$	4,366		$	885		$	21,332

Revenues:
Verification and certification service revenue	$	13,944	$	-		$	-		$	13,944		$	12,917	$	-		$	-		$	12,917
Product sales		3,130		-			-			3,130			3,473		-			-			3,473
Consulting revenue		-		1,330			-			1,330			-		2,362			-			2,362
Total revenues	$	17,074	$	1,330		$	-		$	18,404		$	16,390	$	2,362		$	-		$	18,752
Costs of revenues:
Costs of verification and certification services		8,055		-			-			8,055			7,261		-			-			7,261
Costs of products		1,804		-			-			1,804			1,885		-			-			1,885
Costs of consulting		-		1,030			-			1,030			-		1,899			-			1,899
Total costs of revenues		9,859		1,030			-			10,889			9,146		1,899			-			11,045
Gross profit		7,215		300			-			7,515			7,244		463			-			7,707
Depreciation & amortization		361		127			-			488			443		140			-			583
Other operating expenses		5,027		226			-			5,253			4,929		185			-			5,114
Segment operating income/(loss)	$	1,827	$	(53	)	$	-		$	1,774		$	1,872	$	138		$	-		$	2,010
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)		187		(5	)		-			182			108		(35	)		-			73
Income tax expense		-		-			(580	)		(580	)		-		-			(579	)		(579	)
Net income/(loss)	$	2,014	$	(58	)	$	(580	)	$	1,376		$	1,980	$	103		$	(579	)	$	1,504

Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2023

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Cash Flow Information


	Nine months ended September 30,
(Amounts in thousands)	2023		2022
Cash paid during the year:
Interest expense	$	-	$	-
Income taxes	$	659	$	648

Schedule of Reconciliation of Basic and Diluted Income Per Share Computations (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Basic:
Weighted average shares outstanding	5,599	5,936	5,605	6,019
Diluted:
Weighted average shares outstanding	5,599	5,936	5,605	6,019
Weighted average effects of dilutive securities	59	80	64	82
Total	5,658	6,016	5,669	6,101
Antidilutive securities:	17	17	17	17

Equity Investments (Details Narrative) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Mar. 29, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Subsidiary, Sale of Stock [Line Items]
Dividend income		$ 50	$ 50	$ 150	$ 150
Equity investment in private placement				$ 200
Private Placement [Member] \| Equity Method Investments [Member]
Subsidiary, Sale of Stock [Line Items]
Equity investment in private placement	$ 200

Schedule of Intangible and Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Intangible assets subject to amortization:
Intangible and other assets, gross	$ 5,242	$ 5,247
Less accumulated amortization	3,746	3,511
Intangible and other assets, Net	1,496	1,736
Cryptocurrency (not subject to amortization)	116	116
Tradenames/trademarks (not subject to amortization)	465	465
Intangible assets	2,077	2,317
Other assets	20	23
Intangible and other assets:	2,097	2,340
Trademarks and Trade Names [Member]
Intangible assets subject to amortization:
Intangible and other assets, gross	$ 417	417
Minimum [Member] \| Trademarks and Trade Names [Member]
Intangible assets subject to amortization:
Estimated useful lives of intangible assets	2 years 6 months
Minimum [Member] \| Customer Relationships [Member]
Intangible assets subject to amortization:
Estimated useful lives of intangible assets	3 years
Maximum [Member] \| Trademarks and Trade Names [Member]
Intangible assets subject to amortization:
Estimated useful lives of intangible assets	8 years
Maximum [Member] \| Customer Relationships [Member]
Intangible assets subject to amortization:
Estimated useful lives of intangible assets	15 years
Accreditations [Member]
Intangible assets subject to amortization:
Intangible and other assets, gross	$ 75	75
Estimated useful lives of intangible assets	5 years
Customer Relationships [Member]
Intangible assets subject to amortization:
Intangible and other assets, gross	$ 3,659	3,664
Patents [Member]
Intangible assets subject to amortization:
Intangible and other assets, gross	$ 970	970
Estimated useful lives of intangible assets	4 years
Noncompete Agreements [Member]
Intangible assets subject to amortization:
Intangible and other assets, gross	$ 121	$ 121
Estimated useful lives of intangible assets	5 years

Intangible and Other Assets (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment loss		$ 42,000		$ 42,000
Digital assets held	$ 116,000		$ 116,000		$ 116,000

Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Payables and Accruals [Abstract]
Income and sales taxes payable	$ 38	$ 14
Payroll related accruals	1,007	326
Customer deposits	91	35
Professional fees and other expenses	209	394
Accrued expenses and other current liabilities	$ 1,345	$ 769

Notes Payable (Details Narrative) - USD ($)	9 Months Ended
Notes Payable (Details Narrative) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Line of Credit Facility [Line Items]
Line of credit, working capital	$ 75,080
Line of credit, outstanding amount	$ 0	$ 0
Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Revolving line of credit, maturity date	Apr. 12, 2025
Line of credit, prime interest rate	1.50%
Line of credit, interest rate	10.00%	9.00%

Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense	$ 6	$ 19	$ 38	$ 102
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense	6	19	38	82
Employee Stock Award [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation expense				$ 20

Schedule of Unrecognized Compensation Cost from Unvested Awards (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested stock options	$ 16
Unvested restricted stock awards
Total unrecognized compensation expense	16
2023 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested stock options	5
Unvested restricted stock awards
Total unrecognized compensation expense	5
2024 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested stock options	11
Unvested restricted stock awards
Total unrecognized compensation expense	11
2025 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unvested stock options
Unvested restricted stock awards
Total unrecognized compensation expense

Schedule of Stock Option Activity (Details) - USD ($)	9 Months Ended
Schedule of Stock Option Activity (Details) - USD ($)	Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]
Number of awards Outstanding, Balance	92,347
Weighted avg. exercise price per share, Balance	$ 8.67
Weighted avg. grant date fair value per share, Balance	$ 7.77
Weighted avg. remaining contractual life (in years), Balance	5 years 3 months 21 days
Aggregate intrinsic value, Balance	$ 502,688
Number of awards, Granted
Weighted avg. exercise price per share, Granted
Weighted avg. grant date fair value per share, Granted
Number of awards, Exercised	(10,229)
Weighted avg. exercise price per share, Exercised	$ 4.80
Weighted avg. grant date fair value per share, Exercised	$ 4.97
Number of awards Expired/Forfeited	(6,250)
Weighted avg. exercise price per share, Expired/Forfeited	$ 10.20
Weighted avg. grant date fair value per share, Expired/Forfeited	$ 10.06
Number of awards Outstanding, Balance	75,868
Weighted avg. exercise price per share, Balance	$ 9.07
Weighted avg. grant date fair value per share, Balance	$ 7.96
Weighted avg. remaining contractual life (in years), Balance	5 years 2 months 15 days
Aggregate intrinsic value, Balance	$ 392,923
Number of awards, Exercisable	70,195
Weighted avg. exercise price per share, Exercisable	$ 8.61
Weighted avg. grant date fair value per share, Exercisable	$ 7.72
Weighted avg. remaining contractual life (in years), Exercisable	5 years
Aggregate intrinsic value, Exercisable	$ 390,597
Number of awards, Unvested	5,673
Weighted avg. exercise price per share, Unvested	$ 13.57
Weighted avg. grant date fair value per share, Unvested	$ 10.90
Weighted avg. remaining contractual life (in years), Unvested	7 years 9 months
Aggregate intrinsic value, Unvested	$ 2,326

Stock-Based Compensation (Details Narrative) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of common stock shares awarded	0	0	0	1,500
Fair market value price		$ 13.45		$ 13.45
Employees [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Number of common stock shares awarded	0	0	0	0

Income Taxes (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
Income Taxes (Details Narrative) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income tax, expense	$ 286,000	$ 298,000	$ 580,000	$ 579,000

Schedule of Revenue Attributable to Each of Our Identified Revenue Categories (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total revenues	$ 7,011	$ 7,265	$ 18,404	$ 18,752
Verification And Certification Service Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues	5,359	5,169	13,944	12,917
Product Sales [Member]
Disaggregation of Revenue [Line Items]
Total revenues	1,221	1,588	3,130	3,473
Consulting Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues	431	508	1,330	2,362
Verification and Certification Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	6,580	6,757	17,074	16,390
Verification and Certification Segment [Member] \| Verification And Certification Service Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues	5,359	5,169	13,944	12,917
Verification and Certification Segment [Member] \| Product Sales [Member]
Disaggregation of Revenue [Line Items]
Total revenues	1,221	1,588	3,130	3,473
Verification and Certification Segment [Member] \| Consulting Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues
Consulting Segment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	431	508	1,330	2,362
Consulting Segment [Member] \| Verification And Certification Service Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues
Consulting Segment [Member] \| Product Sales [Member]
Disaggregation of Revenue [Line Items]
Total revenues
Consulting Segment [Member] \| Consulting Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues	431	508	1,330	2,362
Eliminations and Other [Member]
Disaggregation of Revenue [Line Items]
Total revenues
Eliminations and Other [Member] \| Verification And Certification Service Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues
Eliminations and Other [Member] \| Product Sales [Member]
Disaggregation of Revenue [Line Items]
Total revenues
Eliminations and Other [Member] \| Consulting Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues

Schedule of Changes in Contract Liabilities (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Revenue from Contract with Customer [Abstract]
Unearned revenue December 31, 2022	$ 1,278
Unearned billings	2,765
Revenue recognized	(2,330)
Unearned revenue September 30, 2023	$ 1,713

Revenue Recognition (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Allowance for doubtful accounts, net	$ 2,300	$ 2,200
Deferred revenue	$ 1,713	$ 1,278

Schedule of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases
Operating lease cost	$ 119	$ 122	$ 364	$ 368
Amortization of assets	4	2	11	7
Interest on finance lease obligations	1	1	4	2
Variable lease cost
Total net lease cost	$ 124	$ 125	$ 379	$ 377

Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Defined Benefit Plan Disclosure [Line Items]
Operating lease ROU assets	$ 2,324	$ 2,562
Current operating lease liabilities	310	341
Noncurrent operating lease liabilities	2,522	2,745
Total operating lease liabilities	2,832	3,086
Property and equipment, at cost	76	70
Accumulated amortization	(21)	(25)
Property and equipment, net	55	45
Current obligations of finance leases	13	9
Finance leases, net of current obligations	44	37
Total finance lease liabilities	$ 57	$ 46
Weighted average remaining operating lease term (in years)	7 years 7 months 6 days	8 years 2 months 12 days
Weighted average remaining finance lease term (in years)	3 years 10 months 24 days	4 years 4 months 24 days
Operating leases weighted average discount rate	5.80%	5.80%
Finance leases weighted average discount rate	8.20%	7.80%
Related Party [Member]
Defined Benefit Plan Disclosure [Line Items]
Operating lease ROU assets	$ 2,212	$ 2,369
Current operating lease liabilities	242	224
Noncurrent operating lease liabilities	2,472	2,656
Total operating lease liabilities	2,714	2,880
Other [Member]
Defined Benefit Plan Disclosure [Line Items]
Operating lease ROU assets	112	193
Current operating lease liabilities	68	117
Noncurrent operating lease liabilities	50	89
Total operating lease liabilities	$ 118	$ 206

Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases
Operating cash flows from operating leases	$ 126	$ 127	$ 380	$ 378
Operating cash flows from finance leases	1	1	4	2
Financing cash flows from finance leases	3	3	9	9
Right of use assets obtained in exchange for lease liabilities: Operating leases

Schedule of Maturities of Operating Lease and Finance Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Lessee, Operating Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2023 (three remaining months)	$ 127
Operating Leases, 2024	446
Operating Leases, 2025	435
Operating Leases, 2026	430
Operating Leases, 2027	430
Operating Leases, Thereafter	1,648
Operating Leases, Total lease payments	3,516
Operating Leases, Less amount representing interest	(684)
Operating Leases, Total lease obligations	2,832	$ 3,086
Operating Leases, Less current portion	(310)	(341)
Operating Leases, Long-term lease obligations	2,522	2,745
Finance Lease, Liability, to be Paid, Fiscal Year Maturity [Abstract]
2023 ((three remaining months)	4
Finance Leases, 2024	18
Finance Leases, 2025	19
Finance Leases, 2026	14
Finance Leases, 2027	12
Finance Leases, Thereafter
Finance Leases, Total lease payments	67
Finance Leases, Less amount representing interest	(10)
Finance Leases, Total lease obligations	57	46
Finance Leases, Less current portion	(13)	(9)
Finance Leases, Long-term lease obligations	$ 44	$ 37

Leases (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Leases (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Lessee, Lease, Description [Line Items]
Operating lease cost	$ 119	$ 122	$ 364	$ 368
The Move LLC [Member]
Lessee, Lease, Description [Line Items]
Ownership interest percentage	24.30%		24.30%
Corporate Headquarters [Member]
Lessee, Lease, Description [Line Items]
Operating lease cost	$ 100	$ 300	$ 100	$ 300

Schedule of Operating Segments (Details) - USD ($)	3 Months Ended						9 Months Ended
Schedule of Operating Segments (Details) - USD ($)	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Assets:
Goodwill	$ 2,946,000			$ 2,946,000			$ 2,946,000	$ 2,946,000
All other assets, net	14,742,000			18,386,000			14,742,000	18,386,000
Total assets	17,688,000			21,332,000			17,688,000	21,332,000
Revenues:
Total revenues	7,011,000			7,265,000			18,404,000	18,752,000
Costs of revenues:
Total costs of revenues	4,145,000			4,085,000			10,889,000	11,045,000
Gross profit	2,866,000			3,180,000			7,515,000	7,707,000
Depreciation & amortization	153,000			191,000			488,000	583,000
Other operating expenses	1,767,000			1,915,000			5,253,000	5,114,000
Segment operating income/(loss)	946,000			1,074,000			1,774,000	2,010,000
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)	63,000			9,000			182,000	73,000
Income tax expense	(286,000)			(298,000)			(580,000)	(579,000)
Net income/(loss)	723,000	$ 532,000	$ 121,000	785,000	$ 222,000	$ 497,000	1,376,000	1,504,000
Service [Member]
Revenues:
Total revenues	5,359,000			5,169,000			13,944,000	12,917,000
Costs of revenues:
Total costs of revenues	3,123,000			2,900,000			8,055,000	7,261,000
Product [Member]
Revenues:
Total revenues	1,221,000			1,588,000			3,130,000	3,473,000
Costs of revenues:
Total costs of revenues	681,000			826,000			1,804,000	1,885,000
Consulting Revenue [Member]
Revenues:
Total revenues	431,000			508,000			1,330,000	2,362,000
Costs of revenues:
Total costs of revenues	341,000			359,000			1,030,000	1,899,000
Verification and Certification Segment [Member]
Assets:
Goodwill	1,947,000			1,947,000			1,947,000	1,947,000
All other assets, net	5,252,000			14,134,000			5,252,000	14,134,000
Total assets	7,199,000			16,081,000			7,199,000	16,081,000
Revenues:
Total revenues	6,580,000			6,757,000			17,074,000	16,390,000
Costs of revenues:
Total costs of revenues	3,804,000			3,726,000			9,859,000	9,146,000
Gross profit	2,776,000			3,031,000			7,215,000	7,244,000
Depreciation & amortization	111,000			149,000			361,000	443,000
Other operating expenses	1,682,000			1,855,000			5,027,000	4,929,000
Segment operating income/(loss)	983,000			1,027,000			1,827,000	1,872,000
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)	65,000			9,000			187,000	108,000
Income tax expense
Net income/(loss)	1,048,000			1,036,000			2,014,000	1,980,000
Verification and Certification Segment [Member] \| Service [Member]
Revenues:
Total revenues	5,359,000			5,169,000			13,944,000	12,917,000
Costs of revenues:
Total costs of revenues	3,123,000			2,900,000			8,055,000	7,261,000
Verification and Certification Segment [Member] \| Product [Member]
Revenues:
Total revenues	1,221,000			1,588,000			3,130,000	3,473,000
Costs of revenues:
Total costs of revenues	681,000			826,000			1,804,000	1,885,000
Verification and Certification Segment [Member] \| Consulting Revenue [Member]
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues
Consulting Segment [Member]
Assets:
Goodwill	999,000			999,000			999,000	999,000
All other assets, net	2,686,000			3,367,000			2,686,000	3,367,000
Total assets	3,685,000			4,366,000			3,685,000	4,366,000
Revenues:
Total revenues	431,000			508,000			1,330,000	2,362,000
Costs of revenues:
Total costs of revenues	341,000			359,000			1,030,000	1,899,000
Gross profit	90,000			149,000			300,000	463,000
Depreciation & amortization	42,000			42,000			127,000	140,000
Other operating expenses	85,000			60,000			226,000	185,000
Segment operating income/(loss)	(37,000)			47,000			(53,000)	138,000
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)	(2,000)						(5,000)	(35,000)
Income tax expense
Net income/(loss)	(39,000)			47,000			(58,000)	103,000
Consulting Segment [Member] \| Service [Member]
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues
Consulting Segment [Member] \| Product [Member]
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues
Consulting Segment [Member] \| Consulting Revenue [Member]
Revenues:
Total revenues	431,000			508,000			1,330,000	2,362,000
Costs of revenues:
Total costs of revenues	341,000			359,000			1,030,000	1,899,000
Eliminations and Other [Member]
Assets:
Goodwill
All other assets, net	6,804,000			885,000			6,804,000	885,000
Total assets	6,804,000			885,000			6,804,000	885,000
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues
Gross profit
Depreciation & amortization
Other operating expenses
Segment operating income/(loss)
Other items to reconcile segment operating income (loss) to net income/(loss):
Other income / (expense)
Income tax expense	(286,000)			(298,000)			(580,000)	(579,000)
Net income/(loss)	(286,000)			(298,000)			(580,000)	(579,000)
Eliminations and Other [Member] \| Service [Member]
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues
Eliminations and Other [Member] \| Product [Member]
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues
Eliminations and Other [Member] \| Consulting Revenue [Member]
Revenues:
Total revenues
Costs of revenues:
Total costs of revenues