UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: ~~September~~March 3031, ~~2024~~ 2025

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

For the transition period from __________ to __________

Commission File Number: ~~000~~001-~~17363~~42398

LIFEWAY FOODS, INC.

(Exact name of registrant as specified in its charter)

Illinois

36-3442829

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

6431 West Oakton, Morton Grove, IL 60053

(Address of principal executive offices, zip code)

(847) 967-1010

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, No Par Value LWAY ~~NASDAQ~~Nasdaq Global Market Preferred Stock Purchase Rights ~~n/a~~None ~~NASDAQ~~Nasdaq Global Market

Securities registered under Section 12(g) of the Exchange Act:

None

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. 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 such files). 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)

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

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 ☐ No ☒

Number of shares of Common Stock, no par value, outstanding as of ~~November~~May 6, ~~2024~~2025: 1415,~~816~~203,~~470~~241.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2017
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2622
Item 4.	Controls and Procedures.	2622
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	2723
Item 1A.	Risk Factors.	2723
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2723
Item 3.	Defaults Upon Senior Securities.	2723
Item 5.	Other Information.	2723
Item 6.	Exhibits.	2724
	Signatures.	2825

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

~~September~~March 3031, ~~2024~~2025 and December 31, ~~2023~~2024

(In thousands)

	September 30, 2024			December 31,
	March 31, 2025			December 31,
	(Unaudited)			~~2023~~2024
Current assets
Cash and cash equivalents	$	2019,~~558~~446		$	1316,~~198~~728
Accounts receivable, net of allowance for credit losses and discounts & allowances of $1,320 and $1,270 at September 30, 2024 and December 31, 2023 respectively		13,495			13,875
Accounts receivable, net of allowance for credit losses and discounts & allowances of $2,030 and $1,590 at March 31, 2025 and December 31, 2024, respectively		16,684			15,424
Inventories, net		89,~~441~~241			98,~~104~~678
Prepaid expenses and other current assets		12,~~893~~007			2,~~019~~144
Refundable income taxes		~~379~~–			–631
Total current assets		4447,~~766~~378			3843,~~196~~605
Property, plant and equipment, net		2628,~~310~~112			2226,~~764~~862
Operating lease right-of-use asset		~~136~~109			~~192~~118
Goodwill		11,704			11,704
Intangible assets, net		6,~~493~~223			6,~~898~~358
Other assets		~~1,900~~141			1,900
Total assets	$	9193,~~309~~667		$	8190,~~654~~547
Current liabilities
Current portion of note payable	$	–		$	1,250
Accounts payable	$	11,635		$	10,401
Accounts payable		11,117			9,976
Accrued expenses		3,939			5,103
Accrued expenses		5,589			4,916
Accrued income taxes		795			–
Accrued income taxes		–			474
Total current liabilities		16,369			15,504
Total current liabilities		16,706			16,616
Operating lease liabilities		68			70
Note payable		–			1,483
Deferred income taxes, net		3,062			3,062
Operating lease liabilities		79			118
Total liabilities		19,499			18,636
Deferred income taxes, net		3,001			3,001
Total liabilities		19,786			21,218
Commitments and contingencies (Note 9)		–
Stockholders’ equity
Preferred stock, no par value; 2,500 shares authorized; no shares issued or outstanding at September 30, 2024 and December 31, 2023		–			–
Preferred stock, no par value; 2,500 shares authorized; none issued		–			–
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 14,816 and 14,691 outstanding at September 30, 2024 and December 31, 2023, respectively		6,509			6,509
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 15,203 and 15,100 outstanding at March 31, 2025 and December 31, 2024, respectively		6,509			6,509
Paid-in capital		5,915			4,825
Treasury stock, at cost		(13,383	)		(14,052	)
Treasury stock, at cost		(15,883	)		(16,695	)
Paid-in capital		2,680			4,632
Retained earnings		7478,~~982~~362			6574,~~797~~822
Total stockholders' equity		71,523			60,436
Total stockholders’ equity		74,168			71,911
Total liabilities and stockholders' equity	$	91,309		$	81,654
Total liabilities and stockholders’ equity	$	93,667		$	90,547

See accompanying notes to consolidated financial statements

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

For the three ~~and nine~~ months ended ~~September 30~~March 31, ~~2024~~ 2025 and ~~2023~~2024

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,						Nine months Ended September 30,
	2025			2024
	2024			2023			2024			2023
Net Sales	$	46,091		$	44,634
Net sales	$	46,095		$	40,896		$	139,886		$	118,030
Cost of goods sold		34,254			32,438
Cost of goods sold		33,508			29,099			101,127			85,428
Depreciation expense		802			661
Depreciation expense		720			654			2,082			1,953
Total cost of goods sold		35,056			33,099
Total cost of goods sold		34,228			29,753			103,209			87,381
Gross profit		11,035			11,535
Gross profit		11,867			11,143			36,677			30,649
Selling expense		4,698			3,700
Selling expense		3,979			2,884			11,256			8,974
General and administrative expense		4,628			4,136
General and administrative expense		3,564			3,085			11,877			10,028
Amortization expense		135			135
Amortization expense		135			135			405			405
Total operating expenses		9,461			7,971
Total operating expenses		7,678			6,104			23,538			19,407
Income from operations		1,574			3,564
Income from operations		4,189			5,039			13,139			11,242
Other income (expense):
Other income (expense):
Interest expense		(14	)		(51	)
Interest expense		(4	)		(109	)		(102	)		(322	)
Gain on sales of investments		3,352			–
Gain on sale of property and equipment		3			–			3			33
Other income (expense), net		54			(5	)
Other income (expense), net		138			(1	)		153			(1	)
Total other income (expense)		3,392			(56	)
Total other income (expense)		137			(110	)		54			(290	)
Income before provision for income taxes		4,966			3,508
Income before provision for income taxes		4,326			4,929			13,193			10,952
Provision for income taxes		1,426			1,082
Provision for income taxes		1,350			1,517			4,008			3,554
Net income	$	3,540		$	2,426
Net income	$	2,976		$	3,412		$	9,185		$	7,398
Net earnings per common share:
Net earnings per common share:
Basic	$	0.23		$	0.17
Basic	$	0.20		$	0.23		$	0.62		$	0.50
Diluted	$	0.23		$	0.16
Diluted	$	0.19		$	0.23		$	0.60		$	0.49
Weighted average common shares outstanding:
Weighted average common shares outstanding:
Basic		15,134			14,691
Basic		14,801			14,677			14,740			14,659
Diluted		15,333			15,222
Diluted		15,265			15,101			15,194			15,063

See accompanying notes to consolidated financial statements

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)

	Common Stock
	Issued				In treasury						Paid-In			Retained		Total
	Shares		$		Shares			$			Capital			Earnings		Equity
Balance, January 1, 2023		17,274	$	6,509		(2,629	)	$	(16,993	)	$	3,624		$	54,430	$	47,570
Balance, January 1, 2024		17,274	$	6,509		(2,583	)	$	(16,695	)	$	4,825		$	65,797	$	60,436
Stock-based compensation		–		–		–			–			~~343~~673			–		~~343~~673
Net income		–		–		–			–			–			~~830~~2,426		~~830~~2,426
Balance, March 31, 2023		17,274	$	6,509		(2,629	)	$	(16,993	)	$	3,967		$	55,260	$	48,743
Balance, March 31, 2024		17,274	$	6,509		(2,583	)	$	(16,695	)	$	5,498		$	68,223	$	63,535
Issuance of common stock in connection with stock-based compensation		–		–		11			73			(112	)		–		(39	)
Stock-based compensation		–		–		–			–			312			–		312
Net income		–		–		–			–			–			3,156		3,156
Balance, June 30, 2023		17,274	$	6,509		(2,618	)	$	(16,920	)	$	4,167		$	58,416	$	52,172
Issuance of common stock in connection with stock-based compensation		–		–		35			225			(252	)		–		(27	)
Stock-based compensation		–		–		–			–			423			–		423
Net income		–		–		–			–			–			3,412		3,412
Balance, September 30, 2023		17,274	$	6,509		(2,583	)	$	(16,995	)	$	4,338		$	61,828	$	55,980

(continued)

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

(Unaudited)

(In thousands)

	Common Stock
	Issued				In treasury						Paid-In			Retained		Total
	Shares		$		Shares			$			Capital			Earnings		Equity
Balance, January 1, 2024		17,274	$	6,509		(2,583	)	$	(16,695	)	$	4,825		$	65,797	$	60,436
Balance, January 1, 2025		17,274	$	6,509		(2,174	)	$	(14,052	)	$	4,632		$	74,822	$	71,911
Stock-based compensation		–		–		–			–			673			–		673
Issuance of Common Stock		–		–		103			669			(2,278	)		–		(1,609	)
Net income		–		–		–			–			–			2,426		2,426
Stock-based compensation		–		–		–			–			326			–		326
Balance, March 31, 2024		17,274	$	6,509		(2,583	)	$	(16,695	)	$	5,498		$	68,223	$	63,535
Net income		–		–		–			–			–			3,540		3,540
Issuance of common stock in connection with stock-based compensation		–		–		89			575			(739	)		–		(164	)
Balance, March 31, 2025		17,274	$	6,509		(2,071	)	$	(13,383	)	$	2,680		$	78,362	$	74,168
Issuance of common stock on exercise of stock options		–		–		11			70			36			–		106
Stock-based compensation		–		–		–			–			737			–		737
Net income		–		–		–			–			–			3,783		3,783
Balance, June 30, 2024		17,274	$	6,509		(2,483	)	$	(16,050	)	$	5,532		$	72,006	$	67,997
Issuance of common stock in connection with stock-based compensation		–		–		26			167			(220	)		–		(53	)
Stock-based compensation		–		–		–			–			603			–		603
Net income		–		–		–			–			–			2,976		2,976
Balance, September 30, 2024		17,274	$	6,509		(2,457	)	$	(15,883	)	$	5,915		$	74,982	$	71,523

See accompanying notes to consolidated financial statements

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine months ended September 30,
	Three months ended March 31,
	2024			2023
	2025			2024
Cash flows from operating activities:
Net income	$	93,~~185~~540		$	72,~~398~~426
Adjustments to reconcile net income to operating cash flow:
Depreciation and amortization		~~2,487~~937			~~2,358~~796
Stock-based compensation		~~1,898~~326			~~1,078~~673
Non-cash interest expense		173			52
Bad debt expense		–			2
Gain on sale of investments		(3,352	)		–
Gain on sale of equipment		(3	)		(33	)
Fair value loss on investment		20			–
(Increase) decrease in operating assets:
Accounts receivable		~~379~~(1,259	)		(1,~~683~~189	)
Inventories		~~663~~(563	)		~~310~~974
Refundable income taxes		(379	)		(216	)
Prepaid expenses and other current assets		136			31
Prepaid expenses and other current assets		125			(176	)
Refundable income taxes		631			(378	)
Increase (decrease) in operating liabilities:
Accounts payable		~~949~~1,401			~~928~~(6	)
Accrued expenses		~~694~~(2,765	)		(1,~~673~~309	)
Accrued income taxes		~~(474~~795	)		~~500~~(474	)
Net cash provided by operating activities		15,541			12,144
Net cash (used in) provided by operating activities		(150	)		1,546
Cash flows from investing activities:
Purchases of property and equipment		(52,~~445~~219	)		(32,~~146~~469	)
Proceeds from sales or equipment		14			40
Proceeds from sale of investments		5,152			–
Purchase of investments		–			(100	)
Net cash provided by (used in) investing activities		2,933			(2,469	)
Net cash used in investing activities		(5,431	)		(3,206	)
Cash flows from financing activities:
Repayment of note payable		~~(2,750~~–	)		(~~750~~250	)
Net cash used in financing activities		(2,750	)		(750	)
Payment of deferred financing costs		(65	)		–
Net increase in cash and cash equivalents		7,360			8,188
Net cash used in financing activities		(65	)		(250	)
Cash and cash equivalents at the beginning of the period		13,198			4,444
Net increase (decrease) in cash and cash equivalents		2,718			(1,173	)
Cash and cash equivalents at the end of the period	$	20,558		$	12,632
Cash and cash equivalents at the beginning of the period		16,728			13,198
Cash and cash equivalents at the end of the period	$	19,446		$	12,025
Supplemental cash flow information:
Cash paid for income taxes, net of (refunds)	$	~~4,861~~–		$	31,~~270~~934
Cash paid for interest	$	9511		$	~~343~~50
Non-cash investing activities
Accrued purchase of property and equipment	$	~~331~~239		$	~~194~~192
Increase in right-of-use assets and operating lease obligations	$	–		$	86
Right-of-use assets obtained in exchange for lease obligations	$	8		$	–

See accompanying notes to consolidated financial statements

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

(In thousands, except per share data)

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) for interim financial information, and do not include certain information and footnote disclosures required for complete, audited financial statements. In the opinion of management, these statements include all adjustments necessary for a fair presentation of the results of all interim periods reported herein. The consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K for the fiscal year ended December 31, ~~2023 filed by Lifeway Foods, Inc~~2024. ~~(together with all of its wholly-owned subsidiaries unless the context otherwise requires, the “Company”).~~ Results of ~~operations~~ operations for any interim period are not necessarily indicative of future or annual results.

Principles of consolidation

The consolidated financial statements include the accounts of Lifeway Foods, Inc. and all its wholly- owned subsidiaries. (collectively “Lifeway” or the “Company”). All significant intercompany accounts and transactions have been eliminated.

Note 2 – Summary of Significant Accounting Policies

Our significant accounting policies, which are summarized in detail in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2023~~2024, have not materially changed. The following is a description of certain of our significant accounting policies.

Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the reserve for promotional allowances, the valuation of goodwill and intangible assets, stock-based and incentive compensation, and deferred income taxes.

Cash and cash equivalents

Lifeway considers cash and all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates or equals fair value due to their short-term nature.

Lifeway from time to time may have bank deposits in excess of insurance limits of the Federal Deposit Insurance Corporation. The Company places its cash and cash equivalents with high credit quality financial institutions. Lifeway has not experienced any losses in such accounts and believes the financial risks associated with these financial instruments are minimal.

Advertising and promotional costs

Advertising costs are expensed as incurred and reported in Selling expense in the Company’s consolidated statement of operations. Total advertising expense was $~~4,131 and $~~2,~~884 for~~136 ~~the nine months ended September 30, 2024~~ and ~~2023, respectively. Total advertising expense was~~ $1,~~599 and $878~~ 372 for the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively.

Fair value measurements

In February 2025, the Company’s $1,800 equity investment in Simple Mills was liquidated as a result of the sale of Simple Mills. The Company received cash proceeds of $5,152 and recognized a gain on the sale of investment of $3,352 during the three months ended March 31, 2025.

Segments

The Company is managed as a single reportable segment. The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. Substantially all of Lifeway’s consolidated revenues relate to the sale of cultured dairy products that it produces using the same processes and materials and are sold to consumers through a common network of distributors and retailers in the United States.

Recent accounting pronouncements

Issued but not yet effective

In November ~~2023~~2024, the Financial Accounting Standards Board (“FASB”) issued ~~Accounting~~ASU ~~Standards~~2024-03, ~~Update~~Income ~~(“ASU”)~~Statement ~~No.~~– ~~2023-07:~~Reporting ~~Segment~~Comprehensive ~~Reporting~~Income – Expense Disaggregation Disclosures (Topic ~~280~~220-40): ~~Improvements to~~Disaggregation ~~Reportable~~of ~~Segment~~Income ~~Disclosures~~Statement Expenses. The new standard requires ~~entities~~additional todisclosure ~~report~~of ~~incremental~~certain ~~information about significant segment expenses~~amounts included in athe ~~segment’s~~expense ~~profit~~captions orpresented ~~loss~~on ~~measure as well as~~ the ~~name~~Statement ~~and~~of ~~title~~Operations ofas ~~the~~well ~~chief~~as ~~operating~~disclosures ~~decision~~about ~~maker~~selling expenses. The new standard ~~also~~is ~~requires~~effective ~~interim~~on ~~disclosures~~a ~~related~~prospective tobasis, ~~reportable~~with ~~segment~~the ~~profit~~option orfor ~~loss~~retrospective ~~and~~application, ~~assets that had previously only been disclosed annually. The new standard is effective~~ for our annual period ending December 31, ~~2024~~2027, and our interim periods during the fiscal year ending December 31, ~~2025~~2028. The new standard does not affect recognition or measurement in the Company’s consolidated financial statements. Upon adoption, the impact of ASU 2024-03 will be limited to certain notes to the Consolidated Financial Statements.

In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The new standard is effective for our fiscal year ending December 31, 2025, and our interim periods during the fiscal year ending December 31, 2026. The guidance does not affect recognition or measurement in the Company’s consolidated financial statements. Upon adoption, the impact of ASU 2023-09 will be limited to certain notes to the Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Topic 220): Disaggregation of Income Statement Expenses. The new standard requires additional disclosure of certain amounts included in the expense captions presented on the Statement of Operations as well as disclosures about selling expenses. The new standard is effective on a prospective basis, with the option for retrospective application, for our annual period ending December 31, 2027 and our interim periods during the fiscal year ending December 31, 2028. The new standard does not affect recognition or measurement in the Company’s consolidated financial statements.

Note 3 – Inventories, net

Inventories consisted of the following:

Schedule of inventories
	March 31, 2025		December 31, 2024
Ingredients	$	2,673	$	2,519
Packaging		2,836		2,855
Finished goods		3,732		3,304
Total inventories, net	$	9,241	$	8,678

Schedule of inventories
	September 30, 2024		December 31, 2023
Ingredients	$	2,360	$	2,929
Packaging		2,532		3,014
Finished goods		3,549		3,161
Total inventories, net	$	8,441	$	9,104

Note 4 – Property, Plant and Equipment, net

Property, plant and equipment consisted of the following:


	March 31, 2025			December 31, 2024
Land	$	1,565		$	1,565
Buildings and improvements		23,738			23,520
Machinery and equipment		38,002			38,181
Vehicles		477			477
Office equipment		758			758
Construction in process		3,927			2,163
		68,467			66,664
Less accumulated depreciation		(40,355	)		(39,802	)
Total property, plant and equipment, net	$	28,112		$	26,862

Schedule of property, plant and equipment
	September 30, 2024			December 31, 2023
Land	$	1,565		$	1,565
Buildings and improvements		22,667			21,661
Machinery and equipment		36,222			33,573
Vehicles		626			705
Office equipment		1,072			1,072
Construction in process		3,843			2,154
		65,995			60,730
Less accumulated depreciation		(39,685	)		(37,966	)
Total property, plant and equipment, net	$	26,310		$	22,764

Note 5 – Goodwill and Intangible Assets

Goodwill

Goodwill consisted of the following:

Schedule of goodwill
	Total
Balance at December 31, 2023
Balance at December 31, 2024
Goodwill	$	12,948
Accumulated impairment losses		(1,244	)
	$	11,704

Balance at September 30, 2024
Balance at March 31, 2025
Goodwill	$	12,948
Accumulated impairment losses		(1,244	)
	$	11,704

109

Intangible Assets

Other intangible assets, net consisted of the following:

Schedule of other intangible assets, net
Schedule of other intangible assets
	September 30, 2024							December 31, 2023
	March 31, 2025							December 31, 2024
	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount
Recipes	$	44	$	(44	)	$	–	$	44	$	(44	)	$	–
Customer lists and other customer related intangibles		4,529		(4,529	)		–		4,529		(4,529	)		–
Customer relationships		3,385		(1,~~492~~572	)		1,~~893~~813		3,385		(1,~~372~~532	)		21,~~013~~853
Brand names		7,948		(3,~~348~~538	)		4,~~600~~410		7,948		(3,~~063~~443	)		4,~~885~~505
Formula		438		(438	)		–		438		(438	)		–
Total intangible assets, net	$	16,344	$	(910,~~851~~121	)	$	6,~~493~~223	$	16,344	$	(9,~~446~~986	)	$	6,~~898~~358

Estimated amortization expense on intangible assets for the next five years is as follows:

Schedule of estimated amortization expense on intangible assets
Schedule of future amortization expense on intangible assets
Year	Amortization
Three months ended December 31, 2024	$	135
Nine months ended December 31, 2025	$	405
2025	$	540
2026	$	540
2027	$	540
2028	$	540
2029	$	540

The weighted-average remaining amortization expense period for the customer relationship and brand name intangible assets is 11.83 and 1211.16 years, respectively, as of ~~September~~March 3031, ~~2024~~2025. ~~The~~ The weighted-average remaining amortization expense period for total intangible assets is 1211.05 years as of ~~September~~March 3031, ~~2024~~2025.

Note 6 – Accrued Expenses

Accrued expenses consisted of the following:

Schedule of accrued expense
Schedule of accrued expenses
	September 30, 2024		December 31, 2023
	March 31, 2025		December 31, 2024
Payroll and incentive compensation	$	42,~~747~~902	$	34,~~853~~188
Real estate taxes		~~410~~364		~~442~~468
Utilities		~~209~~284		~~241~~193
Current portion of operating lease liabilities		5741		7447
Other		~~166~~348		~~306~~207
Total accrued expenses	$	53,~~589~~939	$	45,~~916~~103

1110

Note 7 – Debt

Note payable consisted of the following:

Schedule of note payable
	September 30, 2024		December 31, 2023
Term loan due August 18, 2026. Interest payable monthly.	$	–	$	2,750
Unamortized deferred financing costs		–		(17	)
Total note payable		–		2,733
Less current portion		–		(1,250	)
Total long-term portion	$	–	$	1,483

The Company paid the outstanding term loan balance of $2,250 in full during the second quarter of 2024 and expensed the remaining unamortized deferred financing costs.

Credit Agreement

The Company is party to an Amended and Restated Loan and Security Agreement (as amended and modified from time to time, the “Credit Agreement”) with its existing lender and certain of its subsidiaries. The Credit Agreement provides for, among other things, a $5 million term loan to be repaid in quarterly installments of principal and interest over a term of five years, a revolving line of credit up to a maximum of $5 million (the “Revolving Credit Facility”) and an incremental facility not to exceed $5 million. The termination date of the term loan is August 18, 2026, unless earlier terminated. The termination date of the revolving credit facility is June 30, 2025, unless earlier terminated.

All outstanding amounts under the Credit Agreement bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 2.07%. Interest is payable monthly in arrears. Lifeway is also required to pay a quarterly unused revolving line of credit fee of 0.20% and, in conjunction with the issuance of any letters of credit, a letter of credit fee of 0.20%.

The Credit Agreement includes customary representations, warranties, and covenants, including financial covenants requiring the Company to maintain a fixed charge coverage ratio of no less than 1.25 to 1.00, and a minimum working capital financial covenant, as defined, of no less than $11.25 million, in each of the fiscal quarters ending through the expiration date. The Credit Agreement provides for events of default, including failure to repay principal and interest when due and failure to perform or violation of the provisions or covenants of the agreement, as a result of which amounts due under the Credit Agreement may be accelerated. The loans and all other amounts due and owed under the Credit Agreement and related documents are secured by substantially all of the Company’s assets.

Lifeway was in compliance with the fixed charge coverage ratio and minimum working capital covenants at September 30, 2024.

Revolving Credit Facility

AsOn ofFebruary ~~September 30~~5, ~~2024~~2025, the Company ~~had~~entered $0into ~~outstanding under~~the Fifth Modification to the ~~Revolving~~Amended ~~Credit~~and ~~Facility~~Restated Loan and Security Agreement (the “Fifth Modification”) with its current lender. The ~~Company~~Fifth ~~had~~Modification, among other things, (i) increased the commitment for revolving loans under the Credit Agreement from $5,000 ~~available~~to ~~for~~$25,000, ~~future~~with ~~borrowings~~interest ~~under~~payable at either the ~~Revolving~~lender Base Rate (the Prime Rate minus 1.00%) or the SOFR plus 1.75%, (ii) extended the termination date of the Credit ~~Facility~~Agreement asto February 5, 2028, (iii) replaced the quarterly minimum working capital financial covenant with a financial covenant to maintain a maximum cash flow leverage ratio of no greater than 2.00 to 1.00 for each fiscal quarter ~~September~~commencing 30with the fiscal quarter ending March 31, ~~2024~~2025, (iv) increased the quarterly unused revolving line of credit fee to 0.25%, and (v) increased the letter of credit fee to 1.00%. The remaining material terms and conditions of the Credit Agreement remain substantially unchanged. The Company had no outstanding borrowings at the time of entry into the Fifth Modification.

12As of March 31, 2025, the Company had $0 outstanding under the Revolving Credit Facility. The Company had $25,000 available for future borrowings under the Revolving Credit Facility as of March 31, 2025.

Lifeway was in compliance with the fixed charge coverage ratio and maximum cash flow leverage ratio covenants at March 31, 2025.

Note 8 – Leases

The Company leases certain machinery and equipment with fixed base rent payments and variable costs based on usage. Remaining lease terms for these leases range from less than one year to ~~five~~six years. The Company includes lease extension options, if applicable and reasonably certain to be exercised, in the calculation of the right-of-use asset and lease liabilities. Lifeway includes only fixed payments for lease components in the measurement of the right-of-use asset and lease liability. Variable lease payments are those that vary because of changes in facts or circumstances occurring after the ~~commencement~~ commencement date, other than the passage of time. There are no residual value guarantees. Lifeway does not currently have leases which meet the finance lease classification as defined under ASC 842.

Lifeway treats contracts as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange for consideration, it directs the use of the asset and obtains substantially all the economic benefits of the asset.

Right-of-use assets and lease liabilities are measured and recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Lifeway has elected the practical expedient to combine lease and non-lease components into a single component for all of its leases. When the Company is unable to determine an implicit interest rate, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments for those leases. Lifeway includes options to extend or terminate the lease in the measurement of the right-of-use asset and lease liability when it is reasonably certain that it will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company does not record leases with an initial term of 12 months or less on the balance sheet. Expense for these short-term leases is recorded on a straight-line basis over the lease term. Total lease expense was $~~110~~37 and $~~102~~35 (including short term leases) for the ~~nine months ended September 30, 2024 and 2023, respectively. Total lease expense was $33 and $41 (including short term leases) for the~~ three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively.

Future maturities of lease liabilities were as follows:

Schedule of future maturities of lease liabilities
Year	Operating Leases
Three months ended December 31, 2024	$	21
Nine months ended December 31, 2025	$	38
2025		55
2026		35
2026		31
2027		25
2027		21
2028		17
Thereafter		10
2029		10
Total lease payments		155
Thereafter		-
Less: Interest		(19	)
Total lease payments		125
Present value of lease liabilities	$	136
Less: Interest		(16	)
Present value of lease liabilities	$	109

The weighted-average remaining lease term for its operating leases was 3.43 years as of ~~September~~March 3031, ~~2024~~2025. The weighted average discount rate of its operating leases was 8.9479% as of ~~September~~ ~~30, 2024. Cash paid for amounts included in the measurement of lease liabilities was $68 and $70 for the nine months ended September~~March 3031, ~~2024 and 2023, respectively~~2025. Cash paid for amounts included in the measurement of lease liabilities was $2219 and $24 for the three months ended ~~September~~March 3031, 2025 ~~2024~~ and ~~2023~~2024, respectively.

Note 9 – Commitments and contingencies

Litigation

Lifeway isfrom ~~involved~~time to time, may be involved in various legal proceedings, claims, disputes, regulatory matters, audits, and proceedings arising in the ordinary course of, or incidental, to, the Company’s business, including commercial disputes, product liabilities, intellectual property matters and employment-related matters.

Lifeway records provisions in the consolidated financial statements for pending legal matters when it believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. The Company evaluates, on a periodic basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, it does not establish an accrued liability. Currently, none of its accruals for outstanding legal matters are material individually or in the aggregate to its financial position and it is management’s opinion that the ultimate resolution of these outstanding legal matters will not have a material adverse effect on its business, financial condition, results of operations, or cash flows. However, if the Company is ultimately required to make payments in connection with an adverse outcome, it is possible that such contingency could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

Note 10 – Income taxes

Income taxes were recognized at effective rates of 3028.47% and 3230.58% for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively. ~~Income~~The ~~taxes~~change ~~were~~in ~~recognized~~the atCompany’s effective ~~rates~~tax rate ofis ~~31.2%~~primarily ~~and~~driven ~~30.8%~~by ~~for~~changes in the ~~three~~amount ~~months~~of ~~ended~~non-deductible ~~September~~officer ~~30,~~compensation ~~2024~~ and ~~2023,~~non-deductible ~~respectively~~stock-based compensation expense.

The Company calculates the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full year, excluding unusual or infrequently occurring discrete items, and applies that rate to income (loss) before provision for income taxes for the period.

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. 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 2024, the percentage effect is different due to the difference in pre-tax income in 2024 compared to 2023.

~~Unrecognized tax benefits were $0 at September 30, 2024 and 2023. The Company does not expect material changes to its unrecognized tax benefits during the next twelve months.~~12

Note 11 – Stock-based and Other Compensation

~~Omnibus~~Employee Incentive ~~Plan~~and Non-Employee Director Plans

InThe ~~December~~Board ~~2015~~of Directors adopted, ~~Lifeway~~and the Company’s stockholders approved , the ~~2015~~“Lifeway Foods, Inc. 2022 Omnibus Incentive Plan,” ~~which~~(the ~~authorized~~“Plan”). Under the ~~issuance~~Plan, ofthe anCompensation Committee ~~aggregate~~may grant awards of ~~3.5~~various ~~million~~types ~~shares~~of tocompensation, ~~satisfy~~including ~~awards~~nonqualified ofstock options, incentive stock options, stock appreciation rights, ~~unrestricted stock,~~ restricted stock, restricted stock units, performance shares, ~~and~~ performance units ~~to qualifying employees. Under the 2015 Omnibus Incentive Plan~~, ~~the~~cash-based ~~Board~~awards ofand ~~Directors~~other ~~or its Compensation Committee approves~~ stock-based awards to ~~executive officers~~qualifying ~~and certain senior executives, generally in the form of restricted stock or performance shares~~employees. The maximum number of ~~performance~~ shares ~~that~~ ~~participants~~authorized ~~may~~to ~~earn~~be ~~depends~~awarded onunder the ~~extent~~Plan tois ~~which the corresponding performance goals have been achieved~~3.25 ~~Stock awards generally vest over a three-year performance or service period~~million. AtAs ~~September~~of 30March 31, ~~2024~~2025, no2.62 million shares remain available ~~for~~to award under the ~~2015 Omnibus Incentive~~ Plan ~~as it was terminated on August 31, 2022~~. However, any outstanding awards under the 2015 Omnibus Incentive Plan are unaffected by the termination of the 2015 Omnibus Incentive Plan or by the approval of the 2022 Omnibus Incentive Plan (the “2022 Plan”) as described below.

14Lifeway stockholders approved the 2022 Non-Employee Director Equity and Deferred Compensation Plan (the “2022 Director Plan”), which authorizes the grant of restricted stock units. The maximum aggregate number of shares that may be issued under the 2022 Director Plan is 500 thousand. As of March 31, 2025, 392 thousand shares remain available to award under the 2022 Director Plan.

OnTotal ~~August 31, 2022, Lifeway stockholders approved the 2022 Plan. Under the 2022 Plan, the Compensation Committee of the Board of Directors may grant awards of various types of~~ compensation~~, including,~~ ~~nonqualified~~expense ~~stock~~related ~~options,~~to ~~incentive~~ stock ~~options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash~~-based payments ~~awards~~ and ~~other stock-based awards. The maximum number of shares authorized to be awarded under~~ the ~~2022~~related ~~Plan~~income istax ~~3.25~~benefit ~~million~~recognized ~~shares~~in ofnet ~~common~~income ~~stock,~~are ~~which~~as ~~includes shares that remained available under the now terminated 2015 Omnibus Incentive Plan.~~follows:

Awards granted under the 2022 Plan are generally subject to a minimum vesting period of at least one year. Awards may be subject to cliff-vesting or graded-vesting conditions, with graded vesting starting no earlier than one year after the grant date. The Plan Administrator may provide for shorter vesting periods in an award agreement for no more than five percent of the maximum number of shares authorized for issuance under the 2022 Plan. As of September 30, 2024, 2.64 million shares remain available to award under the 2022 Plan.


	Three Months Ended
	March 31,
	2025		2024
	(In Thousands)
Compensation expense related to stock-based payments	$	326	$	673
Related income tax benefit		91		65

Stock Options

The following table summarizes stock option activity during the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025:

Schedule of stock option activity
	Options			Weighted average exercise price		Weighted average remaining contractual life		Aggregate intrinsic value
	(In thousands)	~~(In thousands)~~
Outstanding at December 31, 2023		41		$	10.42		2.21	$	121
Outstanding at December 31, 2024		30		$	10.42		1.21	$	426
Granted		–			–		–		–
Exercised		~~(11~~–	)		~~10.41~~–		–		–
Forfeited		–			–		–		–
Outstanding at September 30, 2024		30		$	10.42		1.46	$	460
Outstanding at March 31, 2025		30		$	10.42		0.96	$	416
Exercisable at September 30, 2024		30		$	10.42		1.46	$	460
Exercisable at March 31, 2025		30		$	10.42		0.96	$	416

Restricted Stock Units

A Restricted ~~Stock~~stock ~~Unit~~unit ~~(“RSU”)~~awards ~~represents the~~generally ~~right~~vest tobased on ~~receive~~the ~~one~~passage ~~share~~ of ~~common~~time ~~stock~~ in ~~the~~approximately ~~future.~~three ~~RSUs~~equal ~~have~~installments noon ~~exercise~~each ~~price. The grant date fair value~~ of the ~~awards~~first ~~is determined~~three byanniversaries ~~the~~of ~~Company’s closing stock price on~~ the grant date. ~~Lifeway~~Certain ~~expenses~~non-employee directors ~~RSUs~~have ~~over~~elected ~~the~~to ~~vesting~~defer ~~period.~~receipt ~~The~~of ~~following table~~their ~~summarizes~~awards ~~RSU~~until ~~activity~~their ~~during~~departure from the ~~three~~Board ~~months~~of ~~ended September 30, 2024~~Directors.

Schedule of RSUs activity
	Restricted Stock Units			Weighted Average Grant Date Fair Value
		(In thousands)
Outstanding at December 31, 2023		207		$	6.89
Granted		57			13.12
Shares issued upon vesting		(35	)		7.27
Forfeited		–			–
Outstanding at September 30, 2024		229		$	8.38
Vested and deferred at September 30, 2024		109		$	7.02

The following table summarizes restricted stock unit activity during the three months ended March 31, 2025.

Schedule of RSU activity
	Restricted Stock Units			Weighted Average Grant Date Fair Value
	(In thousands)
Outstanding at December 31, 2024		190		$	8.77
Granted		18			24.53
Shares issued upon vesting		(11	)		13.73
Forfeited		(8	)		8.47
Outstanding at March 31, 2025		189		$	10.00
Vested and deferred at March 31, 2025		73		$	7.88

~~For~~Unrecognized ~~the~~compensation ~~nine~~expense ~~months~~related ~~ended~~to ~~September 30, 2024 and~~nonvested ~~2023~~restricted ~~total pre-tax~~ stock~~-based~~ ~~compensation~~units ~~expense recognized in the consolidated statements of operations~~ was $~~703~~887 ~~and~~as ~~$356,~~of ~~respectively. For~~March ~~the nine months ended September 30~~31, ~~2024~~2025 and ~~2023~~will ~~tax-related~~be ~~benefits of $197 and $100, respectively, were also~~ recognized. ~~For~~over ~~the three~~a ~~months~~weighted ~~ended~~average ~~September~~period ~~30, 2024 and 2023 total pre-tax stock-based compensation expense recognized in the consolidated statements~~ of ~~operations~~1.3 ~~was $235 and $154, respectively~~years. ~~For~~The ~~the~~grant ~~three~~date fair ~~months~~value ~~ended September 30, 2024 and 2023 tax-related benefits~~ of ~~$66~~the ~~and $43,~~awards ~~respectively,~~is ~~were~~equal ~~also recognized. Future compensation expense related~~ to ~~restricted~~the ~~stock~~Company’s ~~units~~closing ~~was~~price ~~$793 as of September 30, 2024 and will be recognized~~ on ~~a weighted average basis over~~ the ~~next~~grant 1date.~~25 years.~~

~~Long-Term~~Performance ~~Incentive Plan Compensation~~Units

~~Lifeway~~Performance ~~has~~unit ~~established~~awards ~~long-term~~are ~~incentive-based compensation~~granted ~~programs~~to ~~for~~ certain members ~~senior~~of ~~executives~~management. ~~and~~These ~~key~~awards ~~employees~~include ~~pursuant~~both toservice ~~the~~and ~~terms~~performance ~~of its incentive plans~~conditions.

~~2020~~For ~~CEO~~performance ~~Incentive~~unit ~~Award~~ awards granted in fiscal years 2023 through 2025, performance goals are established upfront and are measured over a cumulative three-year measurement period. The performance goals are 1) 3-year cumulative net revenue, and 2) 3-year cumulative adjusted EBITDA. The target number of performance unit awards are weighted 50% on net revenue and 50% on adjusted EBITDA. Participants may earn more or less than the target number of units, and are bound by minimum and maximum thresholds of net revenue and adjusted EBITDA. The PSU awards will be earned and will vest, if at all, after the end of the three-year measurement period. These awards will be converted to stock upon vesting.

~~During~~The ~~the~~following ~~fourth~~table ~~quarter~~summarizes ~~2020, Lifeway awarded a long-term equity-based incentive of $750 to its Chief Executive Officer (the “2020 CEO Award”) depending on Lifeway’s 2020~~ performance ~~levels compared to the respective targets. The equity-based incentive compensation is payable in restricted stock that~~unit ~~vests~~activity ~~one-third~~during ~~in April 2022, one-third in April 2023, and one-third in April 2024. The issuance of vested equity awards is subject to approval under~~ the Stock Purchase Agreement dated October 1, 1999. For the nine months ended September 30, 2024 and 2023, $24 and $87 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively. For the three months ended ~~September~~ ~~30,~~March ~~2024 and 2023~~31, ~~$0 and $18 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively~~2025. ~~As of September 30, 2024, all compensation has been recognized.~~

2021 Equity Award

Schedule of performance units
	Performance Units			Weighted Average Grant Date Fair Value
	(In thousands)
Nonvested at December 31, 2024		306		$	8.08
Granted ⁽¹⁾		91			13.45
Shares issued upon vesting		(168	)		6.25
Forfeited		(30	)		8.01
Nonvested at March 31, 2025		199		$	12.10

~~The~~(1) ~~2021~~Includes ~~long-term~~55 ~~equity~~thousand ~~incentive~~additional ~~plan~~shares ~~compensation is~~granted ~~based~~in onconnection ~~Lifeway’s~~with ~~achievement of adjusted EBITDA performance versus~~ the ~~respective~~vesting ~~target established by the Board~~ of ~~Directors for 2021. Under~~ the ~~2021~~2022 ~~plan,~~award ~~collectively~~in ~~the~~2025 ~~participants~~due ~~earned~~to ~~equity~~above-~~based incentive compensation of $1,069 based on Lifeway’s achievement of the respective financial~~ target. ~~The~~performance ~~equity-based incentive compensation is payable~~ in ~~restricted~~accordance ~~stock~~with ~~that vests one-third in April 2022, one-third in April 2023, and one-third in April 2024. For~~ the ~~nine~~terms ~~months ended September 30, 2024 and 2023, $40 and $161 was expensed as stock-based compensation expense in the consolidated statements~~ of ~~operations, respectively. For~~ the ~~three months ended September 30, 2024 and 2023, $0 and $33 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively~~award. ~~As of September 30, 2024, all compensation has been recognized.~~

~~2022~~Unrecognized ~~Equity~~compensation ~~Award~~expense related to nonvested performance units is estimated to be approximately $2,076 as of March 31, 2025 and are expected to be recognized over a weighted average period of 1.4 years. The grant date fair value of the awards is equal to the Company’s closing price on the grant date.

Under the 2022 long-term incentive plan, participants can earn a specified number of target level Performance Share Units (“PSUs”) contingent upon the achievement of strategic milestones during the three-year Measurement Period, which is fiscal year 2022 to 2024. The strategic milestones are 1) 3-year cumulative net revenue, and 2) 3-year cumulative adjusted EBITDA. The target number of PSU awards are weighted 50% on net revenue and 50% on adjusted EBITDA. Collectively, the participants can earn 125,066 PSUs at the target level. Participants may earn more or less than the target number of shares based on actual results, however the minimum and maximum number of shares that can be earned are bound by minimum and maximum thresholds of net revenue and adjusted EBITDA. The PSU awards will be earned and will vest, if at all, after the end of the three-year measurement period based on achievement of the milestones. The PSU awards do not vest during the three-year measurement period. The PSUs have a grant date fair value of $6.25 per share. For the nine months ended September 30, 2024 and 2023, $420 and $356 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively. For the three months ended September 30, 2024 and 2023, $132 and $116 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively.14

The 2022 long-term incentive plan also granted restricted stock unit awards that contain only a service condition and vest on the passage of time in three equal installments on each of the first three anniversaries of the August 31, 2022 grant date. The stock-based compensation expense for these awards is included in the Restricted Stock Units section above.

2023 Equity Award

Under the 2023 long-term incentive plan, participants can earn a specified number of target level Performance Share Units (“PSUs”) contingent upon the achievement of strategic milestones during the three-year Measurement Period, which is fiscal year 2023 to 2025. The strategic milestones are 1) 3-year cumulative net revenue, and 2) 3-year cumulative adjusted EBITDA. The target number of PSU awards are weighted 50% on net revenue and 50% on adjusted EBITDA. Collectively, the participants can earn 115,622 PSUs at the target level. Participants may earn more or less than the target number of shares based on actual results, however the minimum and maximum number of shares that can be earned are bound by minimum and maximum thresholds of net revenue and adjusted EBITDA. The PSU awards will be earned and will vest, if at all, after the end of the three-year measurement period based on achievement of the milestones. The PSU awards do not vest during the three-year measurement period. The PSUs have a grant date fair value of $6.88 per share. For the nine months ended September 30, 2024 and 2023, $377 and $118 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively. For the three months ended September 30, 2024 and 2023, $122 and $102 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively.

The 2023 long-term incentive plan also granted restricted stock unit awards that contain only a service condition and vest on the passage of time in three equal installments on each of the first three anniversaries of the June 16, 2023 grant date. The stock-based compensation expense for these awards is included in the Restricted Stock Units section above.

2024 Equity Award

Under the 2024 long-term incentive plan, participants can earn a specified number of target level Performance Share Units (“PSUs”) contingent upon the achievement of strategic milestones during the three-year Measurement Period, which is fiscal year 2024 to 2026. The strategic milestones are 1) 3-year cumulative net revenue, and 2) 3-year cumulative adjusted EBITDA. The target number of PSU awards are weighted 50% on net revenue and 50% on adjusted EBITDA. Collectively, the participants can earn 64,986 PSUs at the target level. Participants may earn more or less than the target number of shares based on actual results, however the minimum and maximum number of shares that can be earned are bound by minimum and maximum thresholds of net revenue and adjusted EBITDA. The PSU awards will be earned and will vest, if at all, after the end of the three-year measurement period based on achievement of the milestones. The PSU awards do not vest during the three-year measurement period. The PSUs have a grant date fair value of $13.73 per share. For the nine months ended September 30, 2024 and 2023, $334 and $0 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively. For the three months ended September 30, 2024 and 2023, $113 and $0 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively.

The 2024 long-term incentive plan also granted restricted stock unit awards that contain only a service condition and vest on the passage of time in three equal installments on each of the first three anniversaries of the January 10, 2024 grant date. The stock-based compensation expense for these awards is included in the Restricted Stock Units section above.

Non-Employee Director Plan

On August 31, 2022, Lifeway stockholders approved the 2022 Non-Employee Director Equity and Deferred Compensation Plan, as amended by Amendment No. 1 approved by the Board on June 7, 2024 (the “2022 Director Plan”), which authorizes the grant of restricted stock units (“RSUs”), which will vest on such schedule as the Company, in its sole discretion, shall determine. Each non-employee director of the Company is eligible to be a participant in the 2022 Director Plan until they no longer serve as a non-employee director. As of the date of each annual shareholder meeting, or such other date as the Board shall determine, the Company may grant each director a number of RSUs for such year and set the vesting schedule for the RSUs granted. Whether and how many RSUs the Company will grant to directors in any year is subject to the sole discretion of the Company and shall in any event be subject to the 2022 Director Plan’s overall share limits. The maximum aggregate number of shares of common stock that may be issued under the 2022 Director Plan is 500 thousand shares. As of September 30, 2024, 394 thousand shares remain available to award under the 2022 Director Plan. The aggregate fair market value of shares underlying RSU compensation that may be issued as RSU compensation to a director in any year shall not exceed $170. In addition to the grant of RSUs, the 2022 Director Plan also provides for the deferral by electing participants of all or part of their cash and/or RSU compensation (in 10% increments) into a deferred RSU account as RSUs. Deferred benefits are paid in a lump sum upon the applicable director’s departure from the Board of Directors.

Retirement Benefits

Lifeway has a defined contribution plan which is available to substantially all full-time employees. Under the terms of the plan, the Company matches employee contributions under a prescribed formula. ~~For~~ ~~the nine months ended September 30, 2024 and 2023 total contribution expense recognized in the consolidated statements of operations was $495 and $364, respectively.~~ For the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, total contribution expense recognized in the consolidated statements of operations was $~~133~~261 and $~~106~~193, respectively.

Note 12 - Earnings Per Share

The following table summarizes the effects of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings per share:

Schedule of weighted average number of shares outstanding

Three Months Ended

~~Nine months Ended~~

September 30,

March 31,

2024

2023

2024

2023

2025

2024

(In thousands)

(In Thousands)

Weighted average common shares outstanding

1415,~~801~~134

14,~~677~~691

~~14,740~~

~~14,659~~

Assumed exercise/vesting of equity awards

~~464~~199

~~424~~531

~~454~~

~~404~~

Weighted average diluted common shares outstanding

15,~~265~~333

15,~~101~~222

~~15,194~~

~~15,063~~

Note 13 – Disaggregation of Revenue and Significant Customers

The Company has one reportable segment, which manufactures and distributes cultured dairy products. Our products are produced using the same processes and materials and are sold to consumers through a common network of distributors and retailers. The Company derives revenue primarily in North America and manages the business activities on a consolidated basis. The business activities include selling cultured dairy products across various channels including retail-direct, distributor, and direct store delivery in a refrigerated format. We operate our business with a centralized financial systems infrastructure, and we share centralized resources for procurement and general and administrative activities. The accounting policies of the segment are the same as those described in the Summary of Significant Accounting Policies for the Company. Refer to Note 1 for additional information.

The Chief Executive Officer (“CEO”) has been identified as our Chief Operating Decision Maker (“CODM”). The Company manages operations on a company-wide basis, thereby making determinations as to the allocation of resources as one segment. The CODM uses consolidated single-segment financial information to assess performance for the segment and decides how to allocate resources based on the Company’s consolidated net income (loss), which is reported on the Consolidated Statement of Operations. The measure of segment assets is reported on the Consolidated Balance Sheet as total assets.

Products from which the reportable segment derives its revenue

Lifeway’s primary product is drinkable kefir. The Company manufactures (directly or through a co-manufacturer) and markets products under the Lifeway, Fresh Made, and GlenOaks Farms brand names, as well as under private labels on behalf of certain customers.

The Company’s product categories are:

	·	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.

~~Net sales of products by category were as follows for the nine months ended September 30:~~15

Schedule of net sales of products by category
	2024				2023
In thousands	$		%		$		%
Drinkable Kefir other than ProBugs		115,280		82%		94,174		80%
Cheese		10,476		8%		10,074		9%
Cream and other		6,202		4%		5,362		4%
Drinkable Yogurt		4,419		3%		4,760		4%
ProBugs Kefir		2,494		2%		2,490		2%
Other dairy		1,015		1%		1,170		1%
Net Sales		139,886		100%		118,030		100%

Net sales of products by category were as follows for the three months ended March 31:


	2025				2024
In thousands	$		%		$		%

Drinkable Kefir other than ProBugs		38,050		83%		36,533		82%
Cheese		3,812		8%		3,515		8%
Cream and other		2,459		5%		1,816		4%
Drinkable Yogurt		634		1%		1,536		3%
ProBugs Kefir		746		2%		866		2%
Other dairy		390		1%		368		1%
Net Sales		46,091		100%		44,634		100%

Net sales of products by category were as follows for the three months ended September 30:

	2024				2023
In thousands	$		%		$		%
Drinkable Kefir other than ProBugs		37,737		82%		33,035		81%
Cheese		3,584		8%		3,353		8%
Cream and other		2,215		5%		1,811		4%
Drinkable Yogurt		1,501		3%		1,485		4%
ProBugs Kefir		744		1%		820		2%
Other dairy		314		1%		392		1%
Net Sales		46,095		100%		40,896		100%

Significant Customers

Sales are predominately to companies in the retail food industry located within the United States. Two major customers accounted for a total of ~~approximately 25~~24% and 2325% of net sales for the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively. ~~Two major customers accounted for a total of approximately 24% of net sales for the three months ended September 30, 2024 and 2023.~~

Geographic Information

Net sales outside the of the United States represented less than 1% of total consolidated net sales for the ~~nine months and~~ three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024. Net sales ~~outside of the United States~~ are determined based on the destination where ~~ownership~~the ~~transfers~~products toare ~~the~~shipped ~~customer~~by Lifeway.

All the Company’s long-lived assets are in the United States.

Note 14 – ~~Subsequent~~Shareholder ~~Events~~Rights Plan

On November 4, 2024, the Company ~~entered into~~adopted a Shareholder Rights Agreement (the “Rights Agreement”) ~~with~~and ~~Computershare~~designated ~~Trust~~40 ~~Company,~~shares N.of preferred stock as Series A. Junior Participating Preferred Stock, asnone ~~rights~~of ~~agent~~which ~~(the~~are ~~“Rights~~issued ~~Agreement”)~~or outstanding as of December 31, 2024. Pursuant to the Rights Agreement, the Company’s board of directors declared a dividend of one preferred share purchase right (each a “Right”) for each outstanding share of Company common stock to stockholders of record as of the close of business on November 18, 2024. Each Right entitles its holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of one share of Series A Junior Participating Preferred Stock, no par value, of the Company at an exercise price of $130.00 per Right, subject to adjustment. Rights will attach to any shares of Company common stock that become outstanding after November 18, 2024 and prior to the earlier of the Distribution Time (as defined in the Rights Agreement) and the redemption or expiration of the Rights, and in certain other circumstances described in the Rights Agreement. The Right expires at the end of November 4, 2025, or earlier if exercised.

1916

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, ~~2023~~2024 (the “Form 10-K”). Unless otherwise specified, any description of “our”, “we”, and “us” in this MD&A refer to Lifeway Foods, Inc. (“Lifeway”) and our wholly-owned subsidiaries.

Cautionary Statement Regarding Forward-Looking Statements

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:

	·	Expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory investigations and proceedings, if any;
	·	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.

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:

· Changes in the pricing of commodities; · The actions and decisions of our competitors and customers, including those related to price competition; · Our ability to successfully implement our business strategy; · The effects of government regulation; · Disruptions to our supply chain, or our manufacturing and distribution capabilities, including those due to cybersecurity threats; · Adverse economic conditions in the United States, our primary market, or any of the other jurisdictions in which we conduct significant business in the future, and resultant changes in consumer spending; 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, ~~2023~~2024 , Part II, Item 1A of this Form 10-Q and that are described from time to time in our other periodic reports filed with the SEC.

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.

2017

Business Overview

Lifeway was founded in 1986 by Michael Smolyansky, ten years after he and his family emigrated from Eastern Europe to the United States. Lifeway was the first to successfully introduce kefir to the U.S. consumer on a commercial scale, initially catering to ethnic consumers in the Chicago, Illinois metropolitan area. Lifeway has grown to become the largest producer and marketer of kefir in the U.S. and an important player in the broader market spaces of probiotic-based products and natural, “better for you” foods.

Our primary product is drinkable kefir, a cultured dairy product. Lifeway Kefir is tart and tangy, high in protein, calcium and vitamin D. The Company manufactures (directly or through a co-manufacturer) and markets products under the Lifeway, Fresh Made, and GlenOaks Farms brand names, as well as under private labels on behalf of certain customers.

The Company’s product categories are:

	·	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.

~~Products~~Recent Developments and Trends

InDebt October 2024, we began to roll out our first products with 100% lactose free labeling. Our products were already up to 99% lactose free, so we are pleased to further attract consumers with our new Organic Whole Milk Flavor Fusion items that have this added benefit, along with decreased sugar content. New on-trend flavors like Hot Honey, Matcha Latte, and Passionfruit Lychee – just to name a few – are amazing additions to our portfolio. The entire lineup is loaded with high-quality bioavailable nutrients, and plays to our strengths, as our organic products have been incredibly successful to date.Refinancing

WeOn ~~expect~~February ~~health~~5, ~~and~~2025, the ~~wellness~~Company ~~trends~~entered into the Fifth Modification to ~~continue~~the Amended and Restated Loan and Security Agreement (the “Fifth Modification”) towith beits acurrent ~~tailwind~~lender. The Fifth Modification, among other things, (i) increased the commitment for ~~our~~revolving ~~entire~~loans ~~premium~~under ~~product~~the ~~portfolio~~Credit Agreement from $5,000 to $25,000, with interest payable at either the lender Base Rate (the Prime Rate minus 1.00%) Weor ~~plan~~the SOFR plus 1.75%, (ii) extended the termination date of the Credit Agreement to ~~continue~~February 5, 2028 and (iii) replaced the quarterly minimum working capital financial covenant with a financial covenant to ~~invest~~maintain ~~behind~~a ~~our~~maximum ~~key~~cash ~~products~~flow leverage ratio of no greater than 2.00 to ~~capture~~1.00 ~~more~~for each fiscal quarter commencing with the fiscal quarter ending March 31, 2025. The remaining material terms and ~~more~~conditions of the Credit Agreement remain substantially unchanged. The Company had no outstanding borrowings at the time of ~~this~~entry ~~growing~~into ~~market,~~the Fifth Modification.

Distribution Strategy

In September 2024, we announced our first expansion of Kefir distribution in the South African market. In November 2024, we announced our expansion within Dubai and the UAE. The offering of 32oz Lifeway Kefir, 8oz Lactose-Free Lifeway Kefir, ProBugs and farmer cheese, exported from the United States, is expected to begin shipping in the fourth quarter of 2024 and will become available in supermarkets and hypermarkets in Dubai and across the Emirates. We are taking a measured, and thoughtful approach to global expansion, as we seek markets that are primed for success and can be accessed without a major initial investment.

Unsolicited Offer

On November 5, 2024, we announced that our board of directors (our “Board”) determined after careful and thorough consideration, in consultation with its independent financial and legal advisors, that the unsolicited proposal made on September 23, 2024 by Danone North America PBC (“Danone”) to acquire all of the shares of the Company that it does not already own for $25.00 per share substantially undervalues the Company and is not in the best interests of the Company and its stockholders or other stakeholders. In connection with that determination, we entered into a Shareholder Rights Agreement with Computershare Trust Company, N.A., as rights agent (the “Rights Agreement”). Pursuant to the Rights Agreement, our Board declared a dividend of one preferred share purchase right (each a “Right”) for each outstanding share of Company common stock to stockholders of record as of the close of business on November 18, 2024. Each Right entitles its holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of one share of Series A Junior Participating Preferred Stock, no par value, of the Company at an exercise price of $130.00 per Right, subject to adjustment. Rights will attach to any shares of Company common stock that become outstanding after November 18, 2024 and prior to the earlier of the Distribution Time (as defined in the Rights Agreement) and the redemption or expiration of the Rights, and in certain other circumstances described in the Rights Agreement.

Trends and Uncertainties

Current Macroeconomic Environment

We ~~have~~continue ~~not~~to ~~experienced~~monitor ~~significant~~macroeconomic ~~supply chain~~conditions ~~disruptions~~and orglobal ~~labor~~trade ~~supply~~developments, ~~shortages~~including ~~and~~inflation ~~have~~in ~~continued~~key toinput ~~satisfy~~costs, ~~customer~~recently implemented tariffs, and ~~consumer~~the ~~demand~~potential for ~~our~~additional or ~~products~~modified tariffs or export controls. ~~Management~~These ~~continues to~~evolving ~~proactively~~global ~~manage~~trade ~~the~~policies may contribute to increased supply chain complexity, commodity cost volatility, and ~~transportation~~broader ofeconomic ~~materials~~uncertainty. We ~~used~~do not currently expect these conditions to ~~produce~~have ~~and~~a ~~package~~material adverse impact on our ~~products,~~operations ~~staffing,~~or ~~and~~financial ~~transportation~~ results. We are primarily a United States based manufacturer sourcing a vast majority of our inputs domestically. In addition, all our domestically produced products are sold to customers. ~~This~~in ~~proactive~~the ~~planning~~United ~~has~~States. ~~allowed~~We expect the ~~Company~~accelerating consumer focus on health and wellness to ~~meet~~drive increased demand for our products.

Results of Operations

Three Months Ended ~~September~~March 3031, ~~2024~~2025 Compared to Three Months Ended March ~~September 30~~31, ~~2023~~2024

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

	Three Months Ended September 30,
	Three Months Ended March 31,
	2024						2023
	2025						2024
	$	$		%	%		$	$		%	%
Net sales		46,~~095~~091			100.0%			4044,~~896~~634			100.0%
Cost of goods sold		3334,~~508~~254			7274.73%			2932,~~099~~438			7172.27%
Depreciation expense		~~720~~802			1.67%			~~654~~661			1.65%
Total cost of goods sold		3435,~~228~~056			7476.30%			2933,~~753~~099			7274.82%
Gross profit		11,~~867~~035			2524.70%			11,~~143~~535			2725.28%
Selling expense		3,979			8.6%			2,884			7.1%
Selling expenses		4,698			10.2%			3,700			8.3%
General & administrative expense		34,~~564~~628			710.70%			34,~~085~~136			79.53%
Amortization expense		135			0.3%			135			0.3%
Total operating expenses		79,~~678~~461			1620.65%			67,~~104~~971			1417.9%
Income from operations		41,~~189~~574			93.15%			53,~~039~~564			127.39%
Other income (expense):
Interest expense		(414	)		(0.0%	)		(~~109~~51	)		(0.31%	)
Gain on sale of property and equipment		3			0.0%			–			0.0%
Gain on sales of investments		3,352			7.3%			–			–
Other income (expense), net		~~138~~54			0.31%			(15	)		0.0%
Total other income (expense)		~~137~~3,392			07.34%			(~~110~~56	)		(0.31%	)
Income before provision for income taxes		4,~~326~~966			910.49%			43,~~929~~508			127.08%
Provision for income taxes		1,~~350~~426			23.91%			1,~~517~~082			32.74%
Net income		23,~~976~~540			67.58%			32,~~412~~426			85.34%

Net Sales

Net sales were at $46,~~095~~091 for the three-month period ended ~~September~~March 3031, ~~2024~~2025, an increase of $51,~~199~~457 or 123.73% versus prior year. The net sales increase was primarily driven by higher volumes of of our branded drinkable kefir, partially offset by the planned trade promotion investment to support incremental distribution of farmers cheese and kefir. The first quarter 2024 benefited from a customer relationship we strategically exited in the third quarter of 2024, and a significant distributor shifting from Lifeway delivered to customer pick-up in late 2024, which results in lower net sales and lower freight out expense. On a comparable basis adjusting for these two factors, the Company’s net sales increased approximately 11% in the first quarter of 2025 compared to the same period in 2024.

Gross Profit

Gross profit as a percentage of net sales was 25 24.70% and 2725.28% in the three-month period ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively. The decrease versus the prior year was ~~primarily due~~driven toby the unfavorable impact of milk pricing, ~~partially~~and ~~offset~~increased bytrade ~~favorable transportation costs~~promotions.

22Selling Expenses

Selling ~~Expense~~expenses increased by $998 to $4,698 during the three-month period ended March 31, 2025 from $3,700 during the same period in 2024. Selling expenses as a percentage of net sales increased to 10.2% in the three-month period ended March 31, 2025 from 8.3% during the same period in 2024. The increase is primarily a result of our continued investments in marketing activities to drive brand awareness and sales volumes.

~~Selling~~General ~~expenses~~and ~~increased~~Administrative by $1,095 to $3,979 during the three-month period ended September 30, 2024 from $2,884 during the same period in 2023. Selling expenses as a percentage of net sales increased to 8.6% in the three-month period ended September 30, 2024 from 7.1% during the same period in 2023. The increase is primarily driven by our continued investments in marketing activities.Expenses

General and ~~Administrative~~administrative ~~Expense~~expenses increased $492 to $4,628 during the three-month period ended March 31, 2025 from $4,136 during the same period in 2024. The increase is primarily driven by professional fees associated with non-routine stockholder action and the Danone unsolicited purchase proposal.

General and administrative expenses increased $479 to $3,564 during the three-month period ended September 30, 2024 from $3,085 during the same period in 2023. General and administrative expenses as a percentage of net sales increased to 7.7% in the three-month period ended September 30, 2024 from 7.5% during the same period in 2023.

Provision for Income Taxes

~~The~~Income ~~provision~~taxes ~~for~~were ~~income~~recognized ~~taxes~~at ~~was~~effective ~~$1,350~~rates of 28.7% and ~~$1,517~~ ~~during~~30.8% for the three months ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively. The change in the Company’s effective tax rate is primarily driven by changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.

The Company’s effective ~~income~~ tax rate ~~for~~may ~~the three months~~change ~~ended~~from ~~September~~period ~~30, 2024 was 31.2% compared~~ to ~~30.8% in the same~~ period ~~last~~based ~~year.~~on ~~The~~recurring ~~statutory Federal~~ and ~~state~~non-recurring ~~tax~~factors ~~rates~~including ~~remained consistent~~the ~~from~~relative ~~2024~~mix toof ~~2023.~~pre-tax ~~The~~earnings ~~Company~~(or ~~has~~losses), ~~items~~the ~~that~~jurisdictional mix ~~are~~of ~~nondeductible~~earnings, orenacted ~~are~~tax ~~discrete~~legislation, ~~adjustments~~state toincome ~~tax~~taxes, ~~expense.~~the ~~The~~impact ~~Company~~of ~~consistently reflects~~ non-deductible ~~officer compensation expense~~items, ~~non-deductible~~changes ~~compensation~~in ~~expense~~valuation ~~related~~allowances, ~~to equity incentive awards and separate~~settlement ~~state~~of tax ~~rates~~audits, ~~from~~and ~~period~~the toexpiration ~~period.~~of ~~Although~~the ~~similar~~statute ~~items~~of ~~were~~limitations ~~reflected~~ in ~~2023,~~relation ~~the percentage effect is different due~~ to ~~the~~unrecognized ~~difference in pre-~~tax ~~income in 2024 compared to 2023~~benefits.

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

Nine months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

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

	Nine months Ended September 30,
	2024						2023
	$			%			$			%
Net sales		139,886			100.0%			118,030			100.0%
Cost of goods sold		101,127			72.3%			85,428			72.4%
Depreciation expense		2,082			1.5%			1,953			1.7%
Total cost of goods sold		103,209			73.8%			87,381			74.1%
Gross profit		36,677			26.2%			30,649			25.9%
Selling expense		11,256			8.0%			8,974			7.6%
General & administrative expense		11,877			8.5%			10,028			8.5%
Amortization expense		405			0.3%			405			0.3%
Total operating expenses		23,538			16.8%			19,407			16.4%
Income from operations		13,139			9.4%			11,242			9.5%
Other income (expense):
Interest expense		(102	)		(0.1%	)		(322	)		(0.3%	)
Gain on sale of property and equipment		3			0.0%			33			0.0%
Other income (expense), net		153			0.1%			(1	)		0.0%
Total other income (expense)		54			0.0%			(290	)		(0.3%	)
Income before provision for income taxes		13,193			9.4%			10,952			9.2%
Provision for income taxes		4,008			2.9%			3,554			3.0%
Net income		9,185			6.5%			7,398			6.2%

Net Sales

Net sales were at $139,886 for the nine-month period ended September 30, 2024, an increase of $21,856 or 18.5% versus prior year. The net sales increase was primarily driven by higher volumes of our branded drinkable kefir.

Gross Profit

Gross profit as a percentage of net sales was 26.2% and 25.9% during the nine-month period ended September 30, 2024 and 2023, respectively. The increase versus the prior year was primarily due to the higher volumes of our branded products, which provided manufacturing efficiencies and favorable fixed cost absorption.

Selling Expense

Selling expense increased by $2,282 to $11,256 during the nine-month period ended September 30, 2024 from $8,974 during the same period in 2023. Selling expenses as a percentage of net sales increased to 8.0% in the three-month period ended September 30, 2024 from 7.6% during the same period in 2023.

General and Administrative Expense

General and administrative expense increased $1,849 to $11,877 during the nine-month period ended September 30, 2024 from $10,028 during the same period in 2023. The increase is primarily driven by stock-based incentive compensation and non-routine stockholder action expense.

Provision for Income Taxes

The provision for income taxes was $4,008 and $3,554 during the nine months ended September 30, 2024 and 2023, respectively.

The effective income tax rate for the nine months ended September 30, 2024 was 30.4% compared to 32.5% in the same period last year. The statutory Federal and state tax rates remained consistent from 2024 to 2023. 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 2023, the percentage effect is different due to the difference in pre-tax income in 2024 compared to 2023.

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

Liquidity and Capital Resources

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 facility, and cash and cash equivalents will continue to provide ~~sufficient~~ 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, $25,000 was available under the Revolving Credit Facility as of March 31, 2025 (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, if a serious economic or credit market crisis ensues, it could have a negative effect on our liquidity, results of operations and financial condition.

IfThe ~~additional~~Company’s ~~borrowings~~most ~~are needed,~~significant ~~$5,000~~ongoing ~~was~~short-term ~~available~~cash ~~under~~requirements ~~the~~relate ~~Revolving~~primarily ~~Credit~~to ~~Facility~~funding asoperations of(including ~~September~~expenditures ~~30,~~for ~~2024~~raw ~~(see~~materials, ~~Note 7~~labor, ~~Debt). We are in compliance with the terms~~manufacturing ofand ~~the~~distribution, ~~Credit~~trade ~~Agreement~~ and ~~expect~~promotions, toadvertising ~~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~~marketing, ~~we have been successful in generating cash~~ and ~~obtaining~~tax ~~financing~~liabilities) as ~~needed.~~well ~~However,~~as ifexpenditures afor ~~serious economic or credit market crisis ensues~~property, itplant ~~could have a negative effect on our liquidity, results of operations~~ and ~~financial condition~~ equipment.

~~The Company’s most significant ongoing short~~Long-term cash requirements primarily relate ~~primarily~~ to funding ~~operations~~long-term ~~(including~~debt ~~expenditures~~repayments ~~for~~(see ~~raw~~Note ~~materials~~7, ~~labor,~~Debt) ~~manufacturing~~ and ~~distribution,~~deferred ~~trade~~income ~~and~~taxes ~~promotions,~~(see ~~advertising~~Note ~~and marketing~~10, ~~and~~Income ~~income~~Taxes, ~~tax~~in ~~liabilities)~~our asAnnual ~~well as expenditures for property, plant~~Report ~~and~~on ~~equipment~~Form 10-K).

~~Long-term cash requirements primarily relate to funding deferred income taxes (see Note 10, Income Taxes, in our Annual Report on Form 10-K).~~20

Cash Flow

The following table is derived from our Consolidated Statement of Cash Flows:

	Nine months Ended September 30,
	Three months Ended March 31,
Net Cash Flows Provided By (Used In):	~~2024~~2025			~~2023~~2024
Operating activities	$	~~15,541~~(150	)	$	~~12.144~~1,546
Investing activities	$	(52,~~431~~933	)	$	(32,~~206~~469	)
Financing activities	$	(~~2,750~~65	)	$	(~~750~~250	)

Operating Activities

Net cash ~~provided~~used byin operating activities was ~~$15,541~~ $150 during the ~~nine~~three-month period ended ~~September~~March 3031, ~~2024~~2025 compared to net cash provided by operating activities of $121,~~144~~546 in the same period in ~~2023~~2024. The ~~increase~~decrease iswas primarily due tolower ~~higher~~ cash earnings ~~driven~~and bythe ~~increased~~change ~~product~~in ~~volumes~~working capital.

Investing Activities

Net cash ~~used~~provided inby investing activities was $52,~~431~~ 933 during the ~~nine~~three-month period ended ~~September~~March 3031, ~~2024~~2025 compared to net cash used in investing activities of $32,~~206~~469 in the same period in ~~2023~~2024. The ~~increase~~decrease in cash used reflects ~~our~~ ~~planned~~cash ~~capital~~proceeds ~~spending~~of ~~increase~~$5,152 ~~during~~received ~~2024~~in ~~compared~~the tofirst ~~2023~~quarter of 2025 from the sale of our Simple Mills investment. Our capital spending is focused in three core areas: growth, cost reduction, and facility improvements. Growth capital spending supports capacity expansion and new product innovation and enhancements. Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity. ~~We continue to make capital expenditures primarily to modernize manufacturing facilities and support productivity initiatives.~~

Financing Activities

Net cash used in financing activities was $~~2,750~~65 and $~~750~~250 during the ~~nine~~three-month period ended ~~September~~March 3031, ~~2024~~2025 and ~~2023~~2024, respectively. The cash used ~~represents~~in ~~the~~2025 ~~quarterly~~represents ~~principal~~credit agreement ~~payments~~amendment ~~under~~expenses incurred during the ~~term~~first ~~loan~~quarter. The ~~Company~~cash ~~paid~~used in 2024 represented the ~~outstanding~~quarterly ~~term~~principal ~~loan~~payments ~~balance~~under ofthe $2term loan,~~250~~ which was paid in full during the second quarter of 2024.

Debt Obligations

~~The~~As ~~Company~~of isMarch ~~party~~31, ~~to an Amended and Restated Loan and Security Agreement (as amended and modified from time to time~~2025, the ~~“Credit~~Company ~~Agreement”)~~had ~~with its existing lender and certain of its subsidiaries. The Credit Agreement provides for, among other things, a~~ $50 ~~million term loan to be repaid in quarterly installments~~outstanding ofunder ~~principal and interest over a term of five years, a revolving line of credit up to a maximum of $5 million (~~the “Revolving Credit ~~Facility”)~~ ~~and an incremental facility not to exceed $5 million~~Facility. The ~~termination~~Company ~~date~~had ~~of the term loan is August 18~~$25,000 ~~2026,~~available ~~unless earlier~~for ~~terminated.~~future ~~The~~borrowings ~~term~~under ~~loan was terminated during~~ the ~~second~~Revolving ~~quarter~~Credit ofFacility ~~2024~~as ~~upon payment~~ of ~~the outstanding loan balance in full.~~ ~~The~~March ~~termination date of the revolving credit facility is June 30~~31, 2025~~, unless earlier terminated~~.

AsThe ofCredit ~~September~~Agreement 30includes customary representations, warranties, ~~2024~~and covenants, including financial covenants requiring the Company ~~had~~to $0maintain ~~outstanding under~~a ~~the~~fixed ~~Revolving~~charge ~~Credit~~coverage ~~Facility~~ratio ~~and~~of ~~note~~no ~~payable~~less than 1.25 ~~The~~to ~~Company~~1.00, ~~had~~and ~~$5,000~~a ~~available~~maximum cash flow leverage ratio of no greater than 2.00 to 1.00 for ~~future~~each ~~borrowings~~fiscal ~~under~~quarter ~~the~~commencing ~~Revolving~~with ~~Credit~~the fiscal ~~Facility~~quarter asending ofMarch ~~September 30~~31, ~~2024~~2025.

~~All~~The ~~outstanding~~Company ~~amounts~~is ~~under~~in ~~the~~compliance ~~loans~~with ~~bear~~all ~~interest~~applicable atfinancial ~~the~~debt ~~Secured~~covenants ~~Overnight~~as ~~Financing~~of ~~Rate~~March ~~(“SOFR”)~~31, ~~plus 2~~2025.~~07%.~~ ~~Interest~~See isNote ~~payable~~7 ~~monthly in arrears. Lifeway is also required~~ to ~~pay~~our aConsolidated ~~quarterly~~Financial ~~unused~~Statements ~~line~~for ~~fee~~additional ofinformation ~~0.20%~~regarding our onindebtedness ~~the Revolving Credit Facility,~~ and inrelated ~~conjunction with the issuance of any letters of credit, a letter of credit fee of 0~~agreements.~~20%.~~

The Company is in compliance with all applicable financial debt covenants as of September 30, 2024. See Note 7 to our Consolidated Financial Statements for additional information regarding our indebtedness and related agreements.21

Recent Accounting Pronouncements

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

Critical Accounting Policies and Estimates

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, ~~2023~~2024. There were no material changes to the Company’s critical accounting policies and estimates in the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The Company has established disclosure ~~controls~~ 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 ~~September 30~~March 31, ~~2024~~2025. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30~~ March 31, ~~2024~~2025.

Changes in Internal Control over Financial Reporting

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 ~~September~~March 3031, ~~2024~~2025 that has materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

2722

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 1A. RISK FACTORS.

~~The~~There ~~risk~~have ~~factors~~been ~~disclosed~~no ~~under~~material ~~Part~~changes I,from ~~Item 1A of~~ the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 should be considered together with the information included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, and should not be limited to those referenced herein or therein. The following risks and uncertainties supplement the risk factors ~~found~~disclosed ~~under~~in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2023~~2024.

Our business could be adversely affected as a result of uncertainty regarding proposals or other actions taken by stockholders related to the consideration of a possible future transaction.

On September 23, 2024, Danone North America PBC made an unsolicited proposal to acquire all of the shares of Company common stock that Danone does not already own for $25.00 per share (the “Proposal”). On November 4, 2024, we announced that our Board determined that the proposal substantially undervalues the Company and is not in the best interests of the Company and its stockholders or other stakeholders. Addressing the Proposal, similar future proposals and any other actions by stockholders or others relating to a potential change of control transaction involving the Company could interfere with our ability to execute our strategic plans, make it more difficult to attract and retain qualified executives and employees, cause management distraction, require us to utilize more resources than anticipated towards review of strategic alternatives and result in the loss of potential business opportunities, any of which could have a material negative impact on the Company. In addition, our business and operations may be harmed to the extent that our customers, suppliers and others believe that we cannot effectively compete in the marketplace without completing a transaction, or there is customer, supplier or employee uncertainty surrounding the future direction of our product offerings and our strategy on a continued basis. There can be no assurance that any transaction will be completed now or in the future.

We have had to, and may continue to be forced to, incur fees and other expenses related to the Proposal, including for third-party advisors. Further, the Proposal, similar future proposals and any actual or perceived actions by our stockholders or others relating to a potential transaction involving the Company may cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the Company’s underlying fundamentals and prospects.

Our shareholder rights plan includes terms and conditions that could discourage a takeover or other transaction that stockholders may consider favorable.

On November 4, 2024, in response to the Proposal and Danone’s substantial ownership position in the Company, our Board approved and adopted the Rights Agreement and declared a dividend of one Right for each outstanding share of Company common stock to stockholders of record at the close of business on November 18, 2024. Each Right entitles its holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, no par value, of the Company at an exercise price of $130.00 per Right, subject to adjustment. Rights will generally become exercisable only if any person or entity (or any persons or entities acting as a group) acquires 20% or more of the outstanding shares of Company common stock (or, to the extent any person, entity or group beneficially owned 20% or more of the outstanding shares of Company common stock as of immediately prior to the first public announcement of the adoption of the Rights Agreement, such person, entity or group acquires any additional shares). If Rights become exercisable, all holders of Rights (other than the person, entity or group triggering the Rights Agreement, whose Rights will become void and will not be exercisable) will have the right to purchase from the Company for $130.00, subject to certain potential adjustments, shares of Company common stock having a market value of twice that amount. The Rights Agreement expires on November 4, 2025, unless earlier terminated or the Rights are redeemed or exchanged by the Board. Additional information regarding the Rights Agreement is contained in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on November 5, 2024.

The Rights Agreement will cause substantial dilution to any person, entity or group that acquires beneficial ownership of 20% or more of the outstanding shares of Company common stock (or, to the extent any person, entity or group beneficially owned 20% or more of the outstanding shares of Company common stock as of immediately prior to the first public announcement of the adoption of the Rights Agreement, such person, entity or group acquires any additional shares). As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to discourage any person, entity or group from gaining a control or control-like position in the Company or engaging in other tactics, potentially disadvantaging the interests of the Company’s stockholders, without negotiating with the Board and without paying an appropriate control premium to all stockholders. The Rights Agreement has similar provisions to those of other plans adopted by publicly-held companies in comparable circumstances. It is intended to protect stockholders’ interests, including by providing the Board sufficient time to make informed judgments and take actions that are in the best interests of all of the Company’s stockholders and other stakeholders. Nevertheless, the Rights Agreement may be considered to have certain anti-takeover effects, including potentially discouraging a third party from attempting to obtain a substantial position in the Company common stock or seeking to obtain control of the Company and discouraging a takeover attempt that stockholders may consider favorable or that could result in a premium over the market price of Company common stock. Even in the absence of a takeover attempt, the Rights Agreement may adversely affect the prevailing market price of Company common stock if it is viewed as discouraging takeover attempts in the future.

The actions of certain of our stockholders could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and adversely impact our stock price.

We value constructive input from investors and regularly engage in dialogue with our stockholders regarding strategy and performance. Our Board and management team are committed to acting in the best interests of all of our stockholders.

Two of the Company’s stockholders, Edward Smolyansky (our former Chief Operations Officer and the son of our founder) and Ludmila Smolyansky (a former member of our Board and the widow of our founder (together with Mr. Smolyansky (the “Family Stockholders”)), filed a Schedule 13D/A with the SEC on August 14, 2024 announcing their intention, among other things, to nominate seven director candidates for election to our Board and replace seven of the eight members of our Board. The Family Stockholders subsequently filed a preliminary consent solicitation statement with the SEC in furtherance of this objective, and they have made public statements critical of our Board, management and strategy and repeatedly called for the sale of the Company. A contested election with respect to the Company’s directors could require us to incur substantial legal, public relations and other advisory fees and proxy solicitation expenses. Further, we may choose to initiate, or may become subject to, litigation as a result of proposals by the Family Stockholders or other stockholders or proxy contests or matters relating thereto, which would serve as a further distraction to our Board and management and could require us to incur significant additional costs.

We may be subject to continued or similar activism in the future, which could cause us to incur significant expense, hinder execution of our business strategy and adversely impact the market price of Company common stock. Stockholder actions, including potential proxy contests, require significant time and attention by management and our Board, potentially interfering with our ability to execute our strategic plan. Such stockholder action could give rise to perceived uncertainties as to our future, adversely affect our relationships with our employees, customers or suppliers and make it more difficult to attract and retain qualified personnel and business partners. These perceived uncertainties may also be exploited by our competitors and/or other stockholders, which could result in lost business opportunities and make it more difficult to execute on our long-term strategic plan. If customers choose to delay, defer or reduce transactions with us or do business with our competitors instead of us, then our business, financial condition and operating results would be adversely affected. We may be required to incur significant legal fees and other expenses related to stockholder actions, and the attention of our management may be diverted by such actions. Any of these impacts could materially and adversely affect our business, operating results and financial condition, and the market price of Company common stock could be subject to significant fluctuation or otherwise be adversely affected. If individuals are elected or appointed to our Board with a specific agenda or who do not agree with our strategic plan, the ability of our Board to function effectively could be adversely affected, which could in turn adversely affect our ability to effectively and timely implement our strategic plan and create additional value for our stockholders, and/or adversely affect our business, operating results and financial condition.

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

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5. OTHER INFORMATION.

During the quarter ended ~~September~~March 3031, ~~2024~~2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

ITEM 6. EXHIBITS.

No.	Description	Form	Period Ending	Exhibit	Filing Date
3.1	Certificate of Designations of Series A Junior Participating Preferred Stock of Lifeway Foods, Inc.	Filed Herewith
4.1	Shareholder Rights Agreement, dated as of November 4, 2024, by and between Lifeway Foods, Inc. and Computershare Trust Company, N.A., as rights agent (which includes the Form of Rights Certificate as Exhibit B thereto)	8-A		4.1	11/5/2024
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 ~~November~~May 1413, ~~2024~~2025 reporting Lifeway’s financial results for the three months ended ~~September~~March 3031, ~~2024~~2025*	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).

* 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.

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).

30* 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.

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.

	LIFEWAY FOODS, INC.
Date: Nov 14, 2024	By:	/s/ Julie Smolyansky
Date: May 13, 2025	By:	/s/ Julie Smolyansky
		Julie Smolyansky
		Chief Executive Officer, President, and Director
		(Principal Executive Officer)
Date: Nov 14, 2024	By:	/s/ Eric Hanson
Date: May 13, 2025	By:	/s/ Eric Hanson
		Eric Hanson
		Chief Financial & Accounting Officer
		(Principal Financial and Accounting Officer)

3125

Filing Compare · Lifeway Foods, Inc.