Where Food Comes From, Inc. (WFCF) Annual Report: Summary for Investors

This summary offers a concise overview of Where Food Comes From, Inc. (WFCF)'s annual report for the fiscal year ended December 31, 2025. It highlights the company's operations, financial performance, strategic direction, and important considerations for investors.

Item 1. Business Overview

Where Food Comes From, Inc. (WFCF) leads the way as an independent company that verifies and certifies claims within the food and agricultural industries. WFCF's mission is clear: ensure the accuracy and integrity of food production claims, building transparency and trust across the entire supply chain.

Core Services:

• Verification & Certification: WFCF performs on-site audits and evaluations to confirm products meet various industry standards. These include organic, non-GMO, animal welfare, sustainability, gluten-free, and specific origin claims.
• Professional Consulting: WFCF offers expert guidance to food businesses on best practices, regulatory compliance, optimizing their supply chains, and market access strategies.
• Technology Solutions: WFCF develops and provides its own software platforms and data management tools. These tools enhance traceability, improve supply chain transparency, and enable efficient record-keeping for clients.
• Proprietary Labeling: Through its "Where Food Comes From Source Verified®" label, WFCF allows consumers to easily access verified information about their food's origin and production methods.

WFCF's services span a diverse range of agricultural and food products, including livestock (beef, lamb), fresh produce, dairy, wine, and various finished consumer goods.

Competitive Landscape: Both specialized and generalist firms compete in the verification and certification market. WFCF stands out with its deep industry expertise, comprehensive services, proprietary technology, and established reputation for integrity and reliability. Its tailored verification programs and "Source Verified" label offer clear advantages in a market where consumers increasingly demand transparency and regulations grow more complex. Significant barriers to entry exist, including the need for specialized accreditations, a strong network of auditors, and substantial investment in technology and data management systems.

Item 1A. Risk Factors

Investors should carefully consider these key risks, which could significantly impact WFCF's business, financial condition, and operating results:

• Competition: The market for food verification and certification services is competitive. Increased competition from existing providers or new entrants could lead to pricing pressure, reduced market share, or slower growth.
• Regulatory Changes: Extensive and evolving regulations govern the food and agricultural industries regarding food safety, labeling, traceability, and environmental standards. Adverse changes in these regulations, or WFCF's inability to adapt, could reduce demand for its services or increase operational costs.
• Dependence on Food Industry Health: The health and stability of the agricultural and food processing sectors directly impact WFCF's business. Economic downturns, disease outbreaks, supply chain disruptions, or major shifts in consumer spending within the food industry could negatively affect client demand for verification services.
• Operational Risks and Reputation: The integrity and reputation of WFCF's verification processes are paramount. Any perceived or actual lapse in the accuracy, impartiality, or reliability of its services could severely damage client trust, lead to lawsuits, and harm its brand and financial performance.
• Technology Adoption and Advancement: While WFCF leverages technology, it faces the ongoing challenge of keeping pace with rapid technological advancements and ensuring client adoption of its platforms. Failure to innovate or effectively integrate new technologies could diminish its competitive advantage.

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Highlights

As of June 30, 2025, the total market value of WFCF's common stock owned by the public (non-affiliates) was approximately $27.6 million, based on a closing stock price of $11.06 per share. As of February 18, 2026, approximately 5.05 million shares of the company's common stock were outstanding.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Highlights

Management highlights the company's strong financial performance, the market trends fueling its growth, its healthy financial position, and strategies for continued expansion.

Overview of Financial Performance (Fiscal Year Ended December 31, 2025): WFCF delivered impressive financial results in 2025, proving its strategy works and demand for its services is strong.

• Revenue Growth: Total sales for the fiscal year reached $24.9 million, representing a significant 15.8% increase compared to $21.5 million in 2024. This growth continues a long-term trend: sales expanded from $1.1 million in 2006 to $24.9 million in 2025, an average annual growth rate of nearly 18% over 19 years.
• Profitability:
  • Gross Profit was $12.0 million, yielding a healthy 48.2% gross margin. This reflects efficient service delivery and cost management.
  • Net Income for the year increased to $3.5 million, or $0.69 per diluted share, up from $2.8 million ($0.55 per diluted share) in 2024, demonstrating how well revenue growth translates into profit.

Key Factors and Trends Affecting Our Business: Management attributes the company's sustained growth to several powerful and enduring trends in the food industry:

1. Consumer Demand for Transparency: Consumers increasingly prefer detailed information about food origin, production methods, and ethical standards. This drives demand for third-party verification services, which build crucial trust.
2. Retailer and Restaurant Differentiation: Food businesses increasingly rely on verified claims to differentiate products, meet consumer expectations, and mitigate reputational risks in a competitive market.
3. Increasing Regulatory Complexity: The global landscape of food traceability, export requirements, and specific labeling mandates (like non-GMO or organic) continues to expand. This requires companies to seek expert assistance in navigating compliance.
4. Booming Organic Market: The organic food market's substantial growth, projected from approximately $279 billion in 2024 to over $568 billion by 2029, significantly fuels demand for WFCF's organic verification services.

Liquidity and Capital Resources: WFCF maintains a strong financial position, providing ample liquidity for operations and strategic investments.

• Cash Flow from Operations: The company generated $4.0 million in cash flow from operations during 2025, highlighting its operational efficiency and ability to fund its own growth.
• Balance Sheet: As of December 31, 2025, WFCF reported $7.0 million in cash and cash equivalents and manageable total debt of $2.0 million. This strong cash position and low debt offer financial flexibility.

Strategic Initiatives and Future Outlook: Management is pursuing a multi-faceted strategy to seize market opportunities and maintain its growth:

• Expand Food Coverage: Broadening verification services into new categories such as beverages, seafood, and additional produce types to capture a larger share of the diverse food market.
• Serve the Entire Food Chain: Offering comprehensive solutions across all segments of the food supply chain, from primary producers to distributors, processors, restaurants, and ingredient suppliers.
• Drive Organic Growth: Attracting new clients with bundled services, creating custom verification programs, and using high client retention to secure steady, recurring revenue.
• Strategic Acquisitions: Actively seeking acquisitions that broaden its customer base, add new services, or introduce new food groups, speeding up market penetration.
• Leverage Technology: Continued investment in proprietary technology platforms to improve operational efficiency, expand service offerings, and provide advanced data insights to clients.

The company is optimistic about its market position and growth.

Significant Transactions: In July 2025, WFCF completed a "Redemption and Purchase Agreement" related to Progressive Beef LLC, a company it initially acquired in 2018. This transaction completed the acquisition of the remaining minority stake in Progressive Beef, giving WFCF full ownership and control of this important asset and its programs.

Conclusion

Where Food Comes From, Inc. is strategically positioned within a critical and expanding niche of the food industry, driven by increasing demands for transparency, sustainability, and regulatory compliance. The company's consistent financial performance, robust balance sheet, and clear strategic vision underscore its potential for continued success. While inherent industry risks exist, WFCF's strong operational foundation and alignment with powerful market trends make it an attractive option for investors interested in the evolving food supply chain.