SEC Info - Lifeway Foods, Inc. - ‘10-Q’ for 6/30/22

Page	(sequential)		(alphabetic)	↑Top
		Alternative Formats (Word, et al.) Controls and Procedures Defaults Upon Senior Securities Exhibits Financial Information Financial Statements Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Other Information Part I -- Financial Information Part Ii -- Other Information Quantitative and Qualitative Disclosures About Market Risk Risk Factors Signatures Table of Contents Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Part I -- Financial Information
"	Financial Statements
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Quantitative and Qualitative Disclosures About Market Risk
"	Controls and Procedures
"	Part Ii -- Other Information
"	Legal Proceedings
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Defaults Upon Senior Securities
"	Exhibits
"	Signatures

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. i Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted 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). i Yes ☒ No ☐

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ i No ☒

Number of shares of Common Stock, no par value, outstanding as of September 19, 2022: i 15,496,859.

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

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) in this Form 10-Q is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes, and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Form 10-K”). Unless otherwise specified, any description of “our”, “we”, and “us” in this MD&A refer to Lifeway Foods, Inc. and our subsidiaries.

In addition to historical information, this quarterly report contains “forward-looking” statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of words such as “anticipate,” “from time to time,” “intend,” “plan,” “ongoing,” “realize,” “should,” “may,” “could," "believe," "future," "depend," "expect," "will," "result," "can," "remain," "assurance," "subject to," "require," "limit," "impose," "guarantee," "restrict," "continue," "become," "predict," "likely," "opportunities," "effect," "change," "predict," and "estimate,” and similar terms or terminology, or the negative of such terms or other comparable terminology. Examples of forward-looking statements include, among others, statements we make regarding:

Forward looking statements are based on management’s beliefs, assumptions, estimates and observations of future events based on information available to our management at the time the statements are made and include any statements that do not relate to any historical or current fact. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements due in part to the risks, uncertainties, and assumptions that include:

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors could also have material adverse effects on future results. The Company intends these forward-looking statements to speak only at the date made. Except as otherwise required to be disclosed in periodic reports required to be filed by public companies with the SEC pursuant to the SEC's rules, Lifeway has no duty to update these statements, and it undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

We have seen increased customer and consumer demand for our products during the pandemic as consumers increased their food purchases for in-home consumption. We have not experienced significant supply chain disruptions or labor supply shortages and have continued to satisfy customer and consumer demand for our products. Management continues to proactively manage the supply and transportation of materials used to make and package our products, staffing, and transportation of our products to customers. This proactive planning has allowed the Company to avoid disruption to its manufacturing facilities and production, transportation, and sales and to meet the increased demand. The Company has maintained full production capacity available at all locations and does not anticipate manufacturing or staffing disruptions in the near term.

However, the COVID-19 pandemic, or any future pandemic, may limit the availability of, or increase the cost of, employees, ingredients, packaging and other inputs necessary to produce our products, and our operations may be negatively impacted. In 2022, our costs increased primarily due to inflationary price increases of milk, other ingredients, packaging materials, and transportation to our customers. However, because of market conditions or for competitive reasons, our pricing actions may sometimes lag input cost changes, or we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them.

During 2022, social distancing, shelter-in-place and work-from-home mandates and recommendations have continued to be reduced or eliminated. The increased customer demand for our products as consumers increased their at-home consumption and e-commerce purchasing during the COVID-19 pandemic may change or decrease due to the decrease in social distancing and stay-at-home and work-from-home mandates and recommendations. We are unable to predict the nature and timing of when such change may occur, if at all.

The following table presents certain information concerning our financial results, including information presented as a percentage of consolidated net sales:

Net sales finished at $33,491 for the three-month period ended June 30, 2022, an increase of $4,329 or 14.8% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir and the impact of price increases implemented during the first quarter of 2022, and to a lesser extent the favorable impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

Gross profit as a percentage of net sales was 17.0% during the three-month period ended June 30, 2022. Gross profit percentage was 26.3% in the prior year. The decrease versus the prior year was primarily due to the unfavorable impact of milk pricing, and to a lesser extent the increased pricing of freight and other inputs, partially offset by the decrease in depreciation expense. We expect to see continued pressure in milk pricing and other input costs during the fiscal year 2022.

Selling expenses decreased by $84 to $2,482 during the three-month period ended June 30, 2022 from $2,566 during the same period in 2021.

General and administrative expenses increased $222 to $2,839 during the three-month period ended June 30, 2022 from $2,617 during the same period in 2021. The increase is primarily a result of increased legal and professional fees, which includes expense related to the fiscal year 2020 Form 10-K restatement, partially offset by lower consulting expense to our Chairperson of the Board of Directors.

The provision for income taxes was $65 and $731 during the three months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the three months ended June 30, 2022 was 35.3% compared to 31.1% in the same period last year. The statutory Federal and state tax rates remained consistent from 2021 to 2022. The Company has items that are nondeductible or are discrete adjustments to tax expense. The company consistently reflects non-deductible officer compensation expense, non-deductible compensation expense related to equity incentive awards and separate state tax rates from period to period. Although similar items were reflected in 2022, the percentage effect is different due to the difference in pre-tax (loss) income in 2022 compared to 2021.

The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the relative mix of pre-tax earnings (or losses), the jurisdictional mix of earnings, enacted tax legislation, state income taxes, the impact of non-deductible items, changes in valuation allowances, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits. The Company records discrete income tax items such as enacted tax rate changes and completed tax audits in the period in which they occur.

Income taxes are discussed in Note 10 in the Notes to the Consolidated Financial Statements.

The following table presents certain information concerning our financial results, including information presented as a percentage of consolidated net sales:

Net sales finished at $67,590 for the six-month period ended June 30, 2022, an increase of $9,052 or 15.5% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir and the impact of price increases implemented during the quarter, and to a lesser extent the favorable impact of our acquisition of GlenOaks Farms during the third quarter of 2021.

Gross profit as a percentage of net sales was 16.7% during the six-month period ended June 30, 2022. Gross profit percentage was 26.9% in the prior year. The decrease versus the prior year was primarily due to the unfavorable impact of milk pricing, and to a lesser extent the increased pricing of freight and other inputs, partially offset by the decrease in depreciation expense. We expect to see continued pressure in milk pricing and other input costs during the fiscal year 2022.

Selling expenses decreased by $104 to $5,684 during the six-month period ended June 30, 2022 from $5,788 during the same period in 2021.

General and administrative expenses increased $623 to $6,131 during the six-month period ended June 30, 2022 from $5,508 during the same period in 2021. The increase is primarily a result of increased legal and professional fees, which includes expense related to the fiscal year 2020 Form 10-K restatement, partially offset by lower consulting expense to our Chairperson of the Board of Directors.

The provision for income taxes was $(132) and $1,324 during the six months ended June 30, 2022 and 2021, respectively.

The effective income tax rate for the six months ended June 30, 2022 was 14.5% compared to 31.2% in the same period last year. The statutory Federal and state tax rates remained consistent from 2021 to 2022. The Company has items that are nondeductible or are discrete adjustments to tax expense. The company consistently reflects non-deductible officer compensation expense, non-deductible compensation expense related to equity incentive awards and separate state tax rates from period to period. Although similar items were reflected in 2022, the percentage effect is different due to the difference in pre-tax (loss) income in 2022 compared to 2021.

Income taxes are discussed in Note 10 in the Notes to the Consolidated Financial Statements.

Management assesses the Company's liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, and while it has been impacted by the macroeconomic challenges with commodity inflation and other input cost increases, the Company believes that its cash flow from operations, revolving credit and term loan facility, and cash and cash equivalents will continue to provide sufficient liquidity for its working capital needs, capital resource requirements, and growth initiatives and to ensure the continuation of the Company as a going concern.

If additional borrowings are needed, $2,223 was available under the Revolving Credit Facility as of June 30, 2022 (see Note 7, Debt). We are in compliance with the terms of the Credit Agreement and expect to meet foreseeable financial requirements. The success of our business and financing strategies will continue to provide us with the financial flexibility to take advantage of various opportunities as they arise. To date, we have been successful in generating cash and obtaining financing as needed. However, in connection with the COVID-19 pandemic or other circumstances, if a serious economic or credit market crisis ensues, it could have a negative effect on our liquidity, results of operations and financial condition.

The Company’ most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and distribution, trade and promotions, advertising and marketing, and income tax liabilities) as well as expenditures for property, plant and equipment.

Long-term cash requirements primarily relate to funding long-term debt repayments (see Note 7, Debt) and deferred income taxes (see Note 10, Income Taxes, in our Annual Report on Form 10-K).

Given the dynamic nature of COVID-19, we will continue to assess our liquidity needs while continuing to manage our discretionary spending and investment strategies. The ultimate impact that the COVID-19 pandemic or any future pandemic or disease outbreak will have on our business and our consolidated results of operations is uncertain.

Net cash used in operating activities was $529 during the six-month period ended June 30, 2022 compared to net cash provided by operating activities of $3,647 in the same period in 2021. The decrease was primarily due to lower cash earnings, which reflect the impact of input and freight cost inflation in 2022, and the change in working capital.

Net cash used in investing activities was $1,710 during the six-month period ended June 30, 2022 compared to $1,161 in the same period in 2021. The increase in cash used reflects higher capital spending. Our capital spending is focused in three core areas: growth, cost reduction, and facility improvements. Growth capital spending supports new product innovation and enhancements. Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity.

Net cash used in financing activities was $500 during the six-month period ended June 30, 2022 compared to net cash provided by financing activities of $0 in the same period in 2021. The increase in cash used relates to quarterly principal payments under the term loan entered into during August 2021 in connection with the acquisition of GlenOaks Farms, Inc.

As of June 30, 2022, the Company had $2,777 outstanding and $2,223 available for future borrowings under the revolving line of credit. Under the credit agreement, the Revolving Credit facility matures on June 30, 2025. The were no letters of credit issued or outstanding as of June 30, 2022.

The Company had $3,973 outstanding under the note payable, net of $27 of unamortized deferred financing fees, as of June 30, 2022,

The Company’s interest rate on debt outstanding under the revolving line of credit and note payable as of June 30, 2022 was 3.07% and 3.55%, respectively.

The Company is in compliance with all applicable financial debt covenants as of June 30, 2022. See Note 7 to our Consolidated Financial Statements for additional information regarding our indebtedness and related agreements.

Information regarding recent accounting pronouncements is provided in Note 2 – Summary of Significant Accounting Policies.

A description of the Company's critical accounting policies and estimates is contained in its Annual Report on Form 10-K for the year ended December 31, 2021. There were no material changes to the Company’s critical accounting policies and estimates in the six months ended June 30, 2022, except for the change in estimated useful life of one brand name intangible asset which is disclosed in Note 5 – Goodwill and Intangible assets.

The Company has established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Management, together with our CEO and CFO, evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2022. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2022.

As previously disclosed under “Item 9A—Controls and Procedures” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, we concluded that our internal control over financial reporting was not effective based on the material weakness identified.

Our remediation efforts were ongoing during the three months ended June 30, 2022. Remediation generally requires making changes to how controls are designed and implemented and then adhering to those changes for a sufficient period of time such that the effectiveness of those changes is demonstrated with an appropriate amount of consistency. We have continued to emphasize the importance of, and monitor the sustained compliance with, the execution of our internal controls over financial reporting. The Company has continued to work with its third-party service provider to ensure that our accounting and reporting for income taxes is accurate. If not remediated the deficiency could result in material misstatements to our consolidated financial statements.

Other than as described in the preceding paragraph, there have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2022 that has materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

Information regarding legal preceding is available in Note 9, Commitment and Contingencies.

There have been no material changes from the risk factors disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

* The exhibits deemed furnished with this Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act., whether made before or after the date of the filing of this Form 10-Q and irrespective of any general incorporation language contained in such filing.

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.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
i Common Stock, No Par Value	i LWAY	i Nasdaq Global Market

	Large accelerated Filer ☐	Accelerated Filer ☐
	i Non-accelerated Filer ☒	Smaller reporting company i ☒
	Emerging growth company i ☐

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	25
Item 4.	Controls and Procedures.	25

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	26
Item 1A.	Risk Factors.	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	26
Item 3.	Defaults Upon Senior Securities.	26
Item 5.	Other Information.	26
Item 6.	Exhibits.	26
	Signatures.	27


	June 30, 2022			December 31,
	Unaudited			2021
Current assets
Cash and cash equivalents	$	i 6,494		$	i 9,233
Accounts receivable, net of allowance for doubtful accounts and discounts & allowances of $ i 1,220 and $ i 1,170 at June 30, 2022 and December 31, 2021 respectively		i 10,354			i 9,930
Inventories, net		i 8,436			i 8,285
Prepaid expenses and other current assets		i 1,100			i 1,254
Refundable income taxes		i 784			i 344
Total current assets		i 27,168			i 29,046

Property, plant and equipment, net		i 20,595			i 20,130
Operating lease right-of-use asset		i 179			i 216
Goodwill		i 11,704			i 11,704
Intangible assets, net		i 7,708			i 7,978
Other assets		i 1,800			i 1,800
Total assets	$	i 69,154		$	i 70,874

Current liabilities
Current portion of note payable	$	i 1,000		$	i 1,000
Accounts payable		i 6,859			i 6,614
Accrued expenses		i 3,166			i 3,724
Accrued income taxes		i –			i 725
Total current liabilities		i 11,025			i 12,063
Line of credit		i 2,777			i 2,777
Note payable		i 2,973			i 3,470
Operating lease liabilities		i 86			i 85
Deferred income taxes, net		i 3,201			i 3,201
Other long-term liabilities		i –			i 147
Total liabilities		i 20,062			i 21,743

Commitments and contingencies		–			–

Stockholders' equity
Preferred stock, i i no / par value; i i 2,500 / shares authorized; i i i i no / / / shares issued or outstanding at June 30, 2022 and December 31, 2021		i –			i –
Common stock, i i no / par value; i i 40,000 / shares authorized; i i 17,274 / shares issued; i 15,473 and i 15,435 outstanding at June 30, 2022 and December 31, 2021, respectively		i 6,509			i 6,509
Paid-in capital		i 3,008			i 2,552
Treasury stock, at cost		( i 13,156	)		( i 13,436	)
Retained earnings		i 52,731			i 53,506
Total stockholders' equity		i 49,092			i 49,131

Total liabilities and stockholders' equity	$	i 69,154		$	i 70,874


	Six months ended June 30,
	2022			2021
Cash flows from operating activities:
Net (loss) income	$	( i 775	)	$	i 2,924
Adjustments to reconcile net (loss) income to operating cash flow:
Depreciation and amortization		i 1,513			i 1,454
Non-cash interest expense		i 3			i 9
Non-cash rent expense		i –			i 51
Bad debt expense		i –			( i 1	)
Deferred revenue		( i 15	)		( i 15	)
Stock-based compensation		i 547			i 301
Loss on sale of property and equipment		i –			i 83
(Increase) decrease in operating assets:
Accounts receivable		( i 424	)		( i 1,154	)
Inventories		( i 151	)		( i 361	)
Refundable income taxes		( i 440	)		( i 323	)
Prepaid expenses and other current assets		i 154			i 255
Increase (decrease) in operating liabilities:
Accounts payable		i 246			( i 305	)
Accrued expenses		( i 462	)		i 1,276
Accrued income taxes		( i 725	)		( i 547	)
Net cash (used in) provided by operating activities		( i 529	)		i 3,647

Cash flows from investing activities:
Purchases of property and equipment		( i 1,710	)		( i 1,161	)
Net cash used in investing activities		( i 1,710	)		( i 1,161	)

Cash flows from financing activities:
Repayment of note payable		( i 500	)		i –
Net cash used in financing activities		( i 500	)		i –

Net (decrease) increase in cash and cash equivalents		( i 2,739	)		i 2,486

Cash and cash equivalents at the beginning of the period		i 9,233			i 7,926

Cash and cash equivalents at the end of the period	$	i 6,494		$	i 10,412

Supplemental cash flow information:
Cash paid for income taxes, net	$	i 640		$	i 2,194
Cash paid for interest	$	i 88		$	i 33

Non-cash investing activities
Increase (decrease) in right-of-use assets and operating lease obligations	$	i 36		$	i 27

Lifeway Foods, Inc. – ‘10-Q’ for 6/30/22

On: Monday, 9/26/22, at 9:00am ET · For: 6/30/22 · Accession #: 1683168-22-6576 · File #: 0-17363

Previous ‘10-Q’: ‘10-Q’ on 8/26/22 for 3/31/22 · Next: ‘10-Q’ on 11/14/22 for 9/30/22 · Latest: ‘10-Q’ on 11/13/23 for 9/30/23

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

This is an HTML Document rendered as filed. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Schedule of inventories
	June 30, 2022		December 31, 2021
Ingredients	$	i 2,220	$	i 2,279
Packaging		i 2,707		i 2,723
Finished goods		i 3,509		i 3,283
Total inventories	$	i 8,436	$	i 8,285

Schedule of property, plant and equipment
	June 30, 2022			December 31, 2021
Land	$	i 1,565		$	i 1,565
Buildings and improvements		i 18,079			i 17,920
Machinery and equipment		i 32,620			i 32,073
Vehicles		i 640			i 640
Office equipment		i 900			i 900
Construction in process		i 1,360			i 417
		i 55,164			i 53,515
Less accumulated depreciation		( i 34,569	)		( i 33,385	)
Total property, plant and equipment, net	$	i 20,595		$	i 20,130

Schedule of goodwill
	Total
Balance at December 31, 2021, before accumulated impairment loses	$	i 12,948
Accumulated impairment losses		( i 1,244	)
Balance at December 31, 2021	$	i 11,704
Balance at June 30, 2022	$	i 11,704

Schedule of amortization expense on intangible assets
Year	Amortization
Six months ended December 31, 2022	$	i 270
2023	$	i 540
2024	$	i 540
2025	$	i 540
2026	$	i 540

Schedule of accrued expenses
	June 30, 2022		December 31, 2021
Payroll and incentive compensation	$	i 2,305	$	i 2,951
Real estate taxes		i 415		i 359
Current portion of operating lease liabilities		i 93		i 131
Other		i 353		i 283
Total accrued expenses	$	i 3,166	$	i 3,724

Schedule of debt
	June 30, 2022			December 31, 2021
Term loan due August 18, 2026. Interest (3.55% at June 30, 2022) payable monthly.	$	i 4,000		$	i 4,500
Unamortized deferred financing costs		( i 27	)		( i 30	)
Total note payable		i 3,973			i 4,470
Less current portion		( i 1,000	)		( i 1,000	)
Total long-term portion	$	i 2,973		$	i 3,470

Schedule of maturities of long-term debt
Six months ended December 31, 2022	$	i 500
2023		i 1,000
2024		i 1,000
2025		i 1,000
2026		i 500
Total term loan	$	i 4,000

Future maturities of lease liabilities
Year	Operating Leases
Six months ended June 30, 2022	$	i 77
2023		i 63
2024		i 46
2025		i 22
2026		i 6
Thereafter		i –
Total lease payments		i 214
Less: Interest		( i 35	)
Present value of lease liabilities	$	i 179

Schedule of RSA Activity
	Restricted Stock Awards			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		i 94		$	i 4.50
Granted		i 1			i 5.60
Shares issued upon vesting		( i 5	)		i 3.65
Forfeited		i –			i –
Outstanding at June 30, 2022		i 90		$	i 4.52
Vested and deferred at June 30, 2022		i 35		$	i 5.60

	·	Drinkable Kefir, a cultured dairy product sold in a variety of organic and non-organic sizes, flavors, and types.
	·	European-style soft cheeses, including farmer cheese, white cheese, and Sweet Kiss.
	·	Cream and other, which primarily consists of cream, a byproduct of raw milk processing.
	·	Drinkable Yogurt, sold in a variety of sizes and flavors.
	·	ProBugs, a line of kefir products designed for children.
	·	Other Dairy, which primarily consists of Fresh Made butter and sour cream.

	·	Expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings;
	·	Strategy for acquisitions, customer retention, growth, product development, market position, financial results and reserves; Estimates of the amounts of sales allowances and discounts to our customers and consumers;
	·	Our belief that we will maintain compliance with our loan agreements and have sufficient liquidity to fund our business operations.

	·	The actions of our competitors and customers, including those related to price competition;
	·	The decisions of customers or consumers;
	·	Our ability to successfully implement our business strategy;
	·	Changes in the pricing of commodities
	·	The effects of government regulation;
	·	The impact of the COVID-19 outbreak on our business, suppliers, consumers, customers, and employees;
	·	Disruptions to our supply chain, or our manufacturing and distribution capabilities, including those due to cybersecurity threats and the COVD-19 outbreak; and
	·	Such other factors as discussed throughout Part I, Item 1 “Business”; Part I, Item 1A “Risk Factors”; and Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021 and that are described from time to time in our filings with the SEC.

	Three Months Ended June 30,
	2022						2021
	$			%			$			%
Net sales		33,491			100.0%			29,162			100.0%

Cost of goods sold		27,207			81.2%			20,846			71.5%
Depreciation expense		587			1.8%			639			2.2%
Total cost of goods sold		27,794			83.0%			21,485			73.7%

Gross profit		5,697			17.0%			7,677			26.3%

Selling expenses		2,482			7.4%			2,566			8.8%
General & administrative expenses		2,839			8.5%			2,617			9.0%
Amortization expense		135			0.4%			–			0.0%
Total operating expenses		5,456			16.3%			5,183			17.8%

Income from operations		241			0.7%			2,494			8.6%

Other (expense) income:
Interest expense		(52	)		(0.2%	)		(20	)		(0.1%	)
Loss on sales or property and equipment		–			0.0%			(76	)		(0.2%	)
Other (expense) income, net		(4	)		0.0%			(49	)		(0.2%	)
Total other (expense) income		(56	)		(0.2%	)		(145	)		(0.5%	)

Income before provision for income taxes		185			0.5%			2,349			8.1%

Provision for income taxes		65			0.2%			731			2.5%

Net income		120			0.3%			1,618			5.5%

	Six Months Ended June 30,
	2022			2021
Net cash (used in) provided by operating activities	$	(529	)	$	3,647
Net cash used in investing activities	$	(1,710	)	$	(1,161	)
Net cash used in financing activities	$	(500	)	$	–

No.	Description	Form	Period Ending	Exhibit	Filing Date

31.1	Rule 13a-14(a)/15d-14(a) Certification of Julie Smolyansky	Filed Herewith

31.2	Rule 13a-14(a)/15d-14(a) Certification of Eric Hanson	Filed Herewith

32.1	Section 1350 Certification of Julie Smolyansky*	Furnished Herewith

32.2	Section 1350 Certification of Eric Hanson*	Furnished Herewith

99.1	Press release dated September 26, 2022 reporting Lifeway’s financial results for the six months ended June 30, 2022.*	Furnished Herewith

101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 (formatted in IXBRL, and included in exhibit 101).

	LIFEWAY FOODS, INC.



Date: September 26, 2022	By:	/s/ *Julie Smolyansky*
		Julie Smolyansky
		Chief Executive Officer, President, and Director
		(Principal Executive Officer)



Date: September 26, 2022	By:	/s/ *Eric Hanson*
		Eric Hanson
		Chief Financial & Accounting Officer
		(Principal Financial and Accounting Officer)

This ‘10-Q’ Filing	Date	Other Filings

	8/18/26
	6/30/25
	12/31/22
	12/15/22
Filed on:	9/26/22
	9/19/22
	9/6/22	3, 4, 8-K
For Period end:	6/30/22	NT 10-Q
	3/31/22	10-Q, NT 10-K, NT 10-Q
	1/17/22
	1/4/22	8-K
	1/1/22
	12/31/21	10-K, NT 10-K
	8/18/21	8-K
	6/30/21	10-Q
	3/31/21	10-Q
	1/1/21
	12/31/20	10-K, 10-K/A, 4
	12/28/20	8-K
	3/12/20
	12/31/19	10-K, 10-K/A, 8-K, NT 10-K
	3/14/16	8-K
	10/1/99	8-K
		List all Filings