What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-03-20 compared with 2023-03-27 · 238 added, 235 removed, 249 unchanged (66% of the section changed)

10 unchanged sentences

RISKS RELATED TO OUR BUSINESS

Our product categories face a high level of

competition, which could negatively impact our sales and results of operations.

Our product categories face a high level

of competition, which could negatively impact our sales and results of operations.

We compete with a limited number of other domestic

24 unchanged sentences

could be negatively impacted.

Additionally, due to high levels of competition, certain

of our key retailers may demand price concessions on our products or may become more resistant to price increases for our products.

price competition and resistance to price increases have had, and may continue to have, a negative effect on our results of operations.

Additionally, due to high levels of competition,

certain of our key retailers may demand price concessions on our products or may become more resistant to price increases for our products.

Increased price competition and resistance to price increases have had, and may continue to have, a negative effect on our results of

We may not be able to successfully implement our business strategy

for our brands on a timely basis or at all.

We believe that our future success depends, in part,

on our ability to implement our strategy of leveraging our existing brands with our new products to maintain our market position in our

product categories;

We believe that our future success depends, in

part, on our ability to implement our strategy of leveraging our existing brands with our new products to maintain our market position

in our product categories;

drive increased sales;

acquire or establish new brands;

and create strategic alliances including potential joint ventures.

and create strategic alliances including potential

joint ventures.

Our ability to implement this strategy depends, among other things, on our ability to:

8 unchanged sentences

integrate acquired brands, products, or joint ventures into our company and our business strategy.

If we fail to execute these and other important elements

of our business strategy, our business and results of operations could be adversely affected.

One key element of our business strategy is to introduce

timely, new, cost-effective, and appealing products and to innovate successfully within our existing product categories.

However, consumer

tastes and preferences change rapidly, and evolve over time.

If we fail to execute these and other important

elements of our business strategy, our business and results of operations could be adversely affected.

One key element of our business strategy is to

introduce timely, new, cost-effective, and appealing products and to innovate successfully within our existing product categories.

consumer tastes and preferences change rapidly, and evolve over time.

Factors that may affect consumer tastes and preferences include:

12 unchanged sentences

innovation is also affected by our ability to launch new or improved products successfully and on a timely and cost-effective basis.

We may have to pay cash, incur debt, or issue equity,

equity-linked, or debt securities to fund our business strategy, or may be unable to fund that strategy.

Any of these events could adversely

affect our financial results and our business.

We could experience similar effects if we invest resources in a strategy that ultimately

proves unsuccessful.

If, due to a failure of our strategy or any other reason, consumer demand for our products declines, our sales volumes,

results of operations, and our business could be negatively affected, and we may not be able to create or sustain growth or successfully

implement our business strategy.

We may have to pay cash, incur debt, or issue

equity, equity-linked, or debt securities to fund our business strategy, or may be unable to fund that strategy.

Any of these events could

adversely affect our financial results and our business.

We could experience similar effects if we invest resources in a strategy that

ultimately proves unsuccessful.

If, due to a failure of our strategy or any other reason, consumer demand for our products declines, our

sales volumes, results of operations, and our business could be negatively affected, and we may not be able to create or sustain growth

or successfully implement our business strategy.

Interruption of our supply chain could affect

1 unchanged sentence

costs and capital expenditures.

We have several supply agreements with suppliers and

co-packers that require them to provide us with specific finished goods, including packaging and kefir.

For some of these products, we

essentially rely on a single supplier or co-packer as our sole source for the item.

The failure for any reason of any such sole source

or other co-packer to fulfill its obligations under the applicable agreements with us or the termination or renegotiation of any such

sourcing agreement could result in disruptions to our supply of finished goods and have an adverse effect on our results of operations.

Additionally, our suppliers and co-packers are subject to risk, including labor disputes, union organizing activities, financial liquidity,

inclement weather, natural disasters, supply constraints, and general economic and political conditions that could limit their ability

to timely provide us with acceptable products, which could disrupt our supply of finished goods, or require that we incur additional expense

by providing financial accommodations to the supplier or co-packer or taking other steps to seek to minimize or avoid supply disruption,

such as establishing new arrangements with other providers.

A new arrangement may not be available on terms as favorable to us as our

existing arrangements, if at all.

Our inability to maintain sufficient internal capacity

or establish satisfactory co-packing, warehousing and distribution arrangements could limit our ability to operate our business or implement

our strategic plan and could negatively affect our sales volumes and results of operations.

We have several supply agreements with suppliers

and co-packers that require them to provide us with certain ingredients, packaging, other inputs, and finished goods.

For certain items,

we rely on a single supplier or co-packer as our sole source for the item.

Our suppliers and co-packers are subject to risk, including

labor disputes, union organizing activities, financial liquidity, inclement weather, natural disasters, supply constraints, and general

economic and political conditions that could limit their ability to timely provide us with acceptable product.

Although other sources

are available for these items, if our current sources are unable to fulfill our needs for any reason, we may not be able to timely engage

a replacement source that can timely provide us with acceptable products or on terms favorable to us or at all, which could disrupt our

ability to manufacture and distribute products.

Such disruptions could have a material adverse effect on our business, consolidated financial

condition or results of operations.

Disruption of our manufacturing or distribution

chains or information technology systems, including disruption due to cybersecurity threats, could adversely affect our business.

The success of our business depends, in part, on maintaining

a strong production platform and we rely primarily on internal production resources to fulfill our manufacturing needs.

Our ongoing initiatives

to expand our production platform and our productive capacity could fail to achieve such objectives and, in any case, could increase our

operating costs beyond our expectations and could require significant additional capital expenditures.

If we cannot maintain sufficient

production, warehousing, and distribution capacity, either internally or through third party agreements, we may be unable to meet customer

demand and/or our manufacturing, distribution, and warehousing costs may increase, which could negatively affect our business.

The success of our business depends, in part,

on maintaining a strong production platform and we rely primarily on internal production resources to fulfill our manufacturing needs.

Our ongoing initiatives to expand our production platform and our productive capacity could fail to achieve such objectives and, in any

case, could increase our operating costs beyond our expectations and could require significant additional capital expenditures.

cannot maintain sufficient production, warehousing, and distribution capacity, either internally or through third party agreements, we

may be unable to meet customer demand and/or our manufacturing, distribution, and warehousing costs may increase, which could negatively

affect our business.

Furthermore, damage or disruption to our manufacturing

2 unchanged sentences

or other reasons could impair our ability to manufacture or distribute our products.

We rely on a limited number of production and distribution

A disruption in operations at any of these facilities or any other disruption in our supply chain relating to common carriers,

supply of raw materials and finished goods, or otherwise, whether as a result of casualty, natural disaster, power loss, telecommunications

failure, cybersecurity threat, terrorism, labor shortages, contractual disputes or other causes, could significantly impair our ability

to operate our business and adversely affect our relationship with our customers.

Furthermore, our insurance coverage may not be adequate

to cover all related costs.

We rely on a limited number of production and

distribution facilities.

A disruption in operations at any of these facilities or any other disruption in our supply chain relating to

common carriers, supply of raw materials and finished goods, or otherwise, whether as a result of casualty, natural disaster, power loss,

telecommunications failure, cybersecurity threat, terrorism, labor shortages, contractual disputes or other causes, could significantly

impair our ability to operate our business and adversely affect our relationship with our customers.

Furthermore, our insurance coverage

may not be adequate to cover all related costs.

Our information technology systems are also critical

20 unchanged sentences

information or corruption of data, or harm to facilities or personnel.

These threats and other events could disrupt our operations,

or the operations of our customers, suppliers, subcontractors and other third parties;

could require significant management attention

and resources;

These threats and other events could disrupt our

operations, or the operations of our customers, suppliers, subcontractors and other third parties;

could require significant management

attention and resources;

could result in the loss of business, regulatory actions and potential liability;

and could negatively impact our reputation

among our customers and the public.

Any of these outcomes could have a negative impact on our financial condition, results of operations,

or liquidity.

Our debt and financial obligations could adversely

affect our financial condition, our ability to obtain future financing, and our ability to operate our business.

We have outstanding debt obligations that could adversely

affect our financial condition and limit our ability to successfully implement our business strategy.

Furthermore, from time to time,

we may need additional financing to support our business and pursue our business strategy, including strategic acquisitions.

to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the

capital markets, and other factors.

We cannot assure that additional financing will be available to us on favorable terms when required,

If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights,

preferences, or privileges senior to those of our common stock, and, in the case of equity and equity-linked securities, our existing

stockholders may experience dilution.

As of December 31, 2022, we had $2.77 million outstanding

and could negatively impact

our reputation among our customers and the public.

Any of these outcomes could have a negative impact on our financial condition, results

of operations, or liquidity.

Our debt and financial obligations could

adversely affect our financial condition, our ability to obtain future financing, and our ability to operate our business.

We have outstanding debt obligations that could

adversely affect our financial condition and limit our ability to successfully implement our business strategy.

Furthermore, from time

to time, we may need additional financing to support our business and pursue our business strategy, including strategic acquisitions.

Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition

of the capital markets, and other factors.

We cannot assure that additional financing will be available to us on favorable terms when

required, or at all.

If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities

may have rights, preferences, or privileges senior to those of our common stock, and, in the case of equity and equity-linked securities,

our existing stockholders may experience dilution.

As of December 31, 2023, we had $0 outstanding

under the Revolving Credit Facility and $2.73 million outstanding under the note payable, net of $17 thousand of unamortized deferred

5 unchanged sentences

impose on us financial and operational restrictions.

Our ability to meet our debt service obligations will

depend on our future performance, which will be affected by the other risk factors described in this Annual Report on Form 10-K.

do not generate enough cash flow to pay our debt service obligations, we may be required to refinance all or part of our existing debt,

sell our assets, borrow more money or raise equity.

There is no guarantee that we will be able to take any of these actions on a timely

basis, on terms satisfactory to us, or at all.

Our Revolving Credit Facility and term loan bear interest

at variable rates.

If market interest rates increase, it will increase our debt service requirements, which could adversely affect our

Our loan agreements also contain provisions that restrict our ability to:

Our ability to meet our debt service obligations

will depend on our future performance, which will be affected by the other risk factors described in this Annual Report on Form 10-K.

If we do not generate enough cash flow to pay our debt service obligations, we may be required to refinance all or part of our existing

debt, sell our assets, borrow more money or raise equity.

There is no guarantee that we will be able to take any of these actions on a

timely basis, on terms satisfactory to us, or at all.

Our Revolving Credit Facility and term loan bear

interest at variable rates.

If market interest rates increase, it will increase our debt service requirements, which could adversely affect

our cash flow.

Our loan agreements also contain provisions that restrict our ability

borrow money or guarantee debt;

14 unchanged sentences

or an inability to attract such management and other personnel, could negatively impact our business.

We depend on the skills, working relationships, and

continued services of key personnel, including our experienced senior management team.

We also depend on our ability to attract and retain

qualified personnel to operate and expand our business.

We depend on the skills, working relationships,

and continued services of key personnel, including our experienced senior management team.

We also depend on our ability to attract and

retain qualified personnel to operate and expand our business.

If we lose one or more members of our senior management team whose responsibilities

1 unchanged sentence

operations could be negatively affected.

Employee strikes and other labor-related disruptions

may adversely affect our operations.

We have a union contract governing the terms and conditions

of employment for a significant portion of our workforce.

Although we believe union relations since the union’s certification as

the exclusive bargaining representative of this portion of our workforce have been amicable, there is no assurance that this will continue

in the future or that we will not be subject to future union organizing activity.

There are potential adverse effects of labor disputes

with our own employees or by others who provide warehousing, transportation, and distribution, both domestic and foreign, of our raw materials

or other products.

Strikes or work stoppages or other business interruptions could occur if we are unable to renew collective bargaining

agreements on satisfactory terms or enter into new agreements on satisfactory terms, which could impair manufacturing and distribution

of our products or result in a loss of sales, which could adversely impact our business, financial condition, or results of operations.

The terms and conditions of existing, renegotiated, or new collective bargaining agreements could also increase our costs or otherwise

affect our ability to fully implement future operational changes to enhance our efficiency or to adapt to changing business needs or strategy.

Employee strikes and other labor-related

disruptions may adversely affect our operations.

We have a union contract governing the terms and

conditions of employment for a significant portion of our manufacturing workforce in Illinois.

Although we believe union relations since

the union’s certification as the exclusive bargaining representative of this portion of our workforce have been amicable, there

is no assurance that this will continue in the future or that we will not be subject to future union organizing activity.

There are potential

adverse effects of labor disputes with our own employees or by others who provide warehousing, transportation, and distribution, both

domestic and foreign, of our raw materials or other products.

Strikes or work stoppages or other business interruptions could occur if

we are unable to renew collective bargaining agreements on satisfactory terms or enter into new agreements on satisfactory terms, which

could impair manufacturing and distribution of our products or result in a loss of sales, which could adversely impact our business, financial

condition, or results of operations.

The terms and conditions of existing, renegotiated, or new collective bargaining agreements could

also increase our costs or otherwise affect our ability to fully implement future operational changes to enhance our efficiency or to

adapt to changing business needs or strategy.

Our intellectual property rights are valuable, and any inability

to protect them could reduce the value of our products and brands.

We consider our intellectual property rights, particularly

our trademarks, but also our copyrights, registered domain names, and proprietary trade secrets, technology, know-how, processes and other

proprietary rights to be a significant and valuable aspect of our business.

We attempt to protect our intellectual property rights by

relying on a combination of trademark, copyright, trade dress, trade secret, and other intellectual property laws, and domain name dispute

resolution systems;

We consider our intellectual property rights,

particularly our trademarks, but also our copyrights, registered domain names, and proprietary trade secrets, technology, know-how, processes

and other proprietary rights to be a significant and valuable aspect of our business.

We attempt to protect our intellectual property

rights by relying on a combination of trademark, copyright, trade dress, trade secret, and other intellectual property laws, and domain

name dispute resolution systems;

as well as licensing agreements, third-party confidentiality, nondisclosure, and assignment agreements;

and by policing

third-party misuses of our intellectual property.

Our failure to obtain or maintain adequate protection of our intellectual property rights,

or any change in law or other changes that serve to lessen or remove the current legal protections of our intellectual property, may diminish

our competitiveness and could materially harm our business.

and by policing third-party misuses of our intellectual property.

Our failure to obtain or maintain adequate protection of our intellectual

property rights, or any change in law or other changes that serve to lessen or remove the current legal protections of our intellectual

property, may diminish our competitiveness and could materially harm our business.

We also face the risk of claims that we have infringed

20 unchanged sentences

investment goals of institutional, short-term, non-voting, or other non-controlling investors, or that have a negative effect on our stock

Danone has certain rights under the Shareholder

Agreement which give Danone the ability to control or influence the outcome of certain matters, including our ability to compensate our

officers and directors in accordance with market standards, to undertake certain offerings of securities, and to consummate mergers and

acquisitions or other strategic alternatives for the Company.

Although Danone holds less than 25% of our common stock, the rights

Danone has under the Shareholder Agreement may prevent us from offering market standard compensation to our officers and directors or

prevent third parties from making offers to enter into certain strategic transactions.

Danone’s exercise of their rights under the

Shareholder Agreement have prevented us from consummating the issuance of certain equity as part of market standard compensation terms

and amounts to certain officers and directors which could prevent us from attracting and retaining qualified key personnel.

Additionally,

it is possible that any offers to acquire Lifeway or purchase Lifeway equity in an offering will be made at reduced prices, if made at

all, as a result of certain of Danone’s rights under the Shareholder Agreement, including, without limitation, its right of first

refusal on shares issued by the Company.

Danone’s interests may not always be aligned with other stockholders’ interests.

By exercising its rights under the Shareholder Agreement, Danone could prevent Lifeway from taking actions that are consistent with the

investment goals of institutional, short-term, non-voting, or other non-controlling investors, or that would have a positive effect on

our stock price.

Our business could be negatively affected as a result of the

actions of stockholders.

Our business could be negatively affected as

a result of stockholder actions, which could cause us to incur significant expense, hinder execution of our business strategy, and impact

Our business could be negatively affected as a

result of stockholder actions, which could cause us to incur significant expense, hinder execution of our business strategy, and impact

the trading value of our securities.

8 unchanged sentences

RISKS RELATED TO OUR INDUSTRY

The consolidation of our customers or the loss

of any of our largest customers could negatively impact our sales and results of operations.

The consolidation of our customers or the

loss of any of our largest customers could negatively impact our sales and results of operations.

Customers, such as supermarkets and food distributors,

5 unchanged sentences

material adverse impact on our business.

Two of our customers together accounted for 22% of

our net sales in the fiscal year ended December 31, 2022.

Two of our customers together accounted for 24%

of our net sales in the fiscal year ended December 31, 2023.

Where we enter into written agreements with our customers, they are generally

17 unchanged sentences

and product liability claims, which could harm our reputation, force us to recall products and incur substantial costs.

The sale of food products for human consumption involves

the risk of injury to consumers.

Such injuries may result from tampering by unauthorized third parties, inadvertent mislabeling, product

contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced during

the storage, processing, handling or transportation phases.

The sale of food products for human consumption

involves the risk of injury to consumers.

Such injuries may result from tampering by unauthorized third parties, inadvertent mislabeling,

product contamination or spoilage, including the presence of foreign objects, substances, chemicals, other agents, or residues introduced

during the storage, processing, handling or transportation phases.

We also may be subject to liability if our products or production processes

1 unchanged sentence

illness, or death.

Under certain circumstances, we may be required to

recall or withdraw products, suspend production of our products, or cease operations, which may lead to a material adverse effect on our

Under certain circumstances, we may be required

to recall or withdraw products, suspend production of our products, or cease operations, which may lead to a material adverse effect on

our business.

In addition, customers may cancel orders for such products as a result of such events.

17 unchanged sentences

and facilities.

We rely on independent certification, such as certifications

of our products as “organic,” or “gluten-free,” to differentiate our products from others.

The loss of any independent

certifications could adversely affect our market position as a probiotic-based product and natural, “better for you” foods

company, which could harm our business.

We rely on independent SQF certification at some of our facilities, a certification that some

of our customers require us to maintain.

We rely on independent certification, such as

certifications of our products as “organic,” or “gluten-free,” to differentiate our products from others.

loss of any independent certifications could adversely affect our market position as a probiotic-based product and natural, “better

for you” foods company, which could harm our business.

We rely on independent SQF certification at some of our facilities, a certification

that some of our customers require us to maintain.

We must comply with the requirements of independent

9 unchanged sentences

to carry some or all of them, which could negatively affect our sales and results of operations.

Increases in the cost of raw milk could reduce

our gross margin and profit.

Conventional and organic raw milk, our primary raw

Increases in the cost of milk could

reduce our gross margin and profit.

Conventional and organic milk, our primary raw

material, is an agricultural commodity that is subject to price fluctuations.

Both conventional and organic milk prices in fiscal 2022

were higher than the prior year, and there can be no assurance that such prices will remain at these levels in the future.

and price of raw milk may be impacted by, among other things, weather, natural disasters, real or perceived supply shortages, lower dairy

and crop yields, general increases in farm inputs and costs of production, political and economic conditions, labor actions, government

actions, and trade barriers.

Increases in the market price for raw milk or over-order premiums charged by producers may also impact our

ability to enter into purchase commitments at a fixed price.

There can be no assurance that our purchasing practices will mitigate future

As a result, increases in the cost of raw milk could have an adverse impact on our profitability.

Conventional milk prices were lower in fiscal 2023 than

the prior year, and there can be no assurance that such prices will remain at these levels in the future.

The supply and price of milk

may be impacted by, among other things, weather, natural disasters, real or perceived supply shortages, lower dairy and crop yields, general

increases in farm inputs and costs of production, political and economic conditions, labor actions, government actions, and trade barriers.

Increases in the market price for milk or over-order premiums charged by producers may also impact our ability to enter into purchase

commitments at a fixed price.

There can be no assurance that our purchasing practices will mitigate future price risk.

As a result, increases

in the cost of milk could have an adverse impact on our profitability.

In addition, the dairy industry continues to experience

periodic imbalances between supply and demand for organic raw milk.

periodic imbalances between supply and demand for organic milk.

Industry regulation and the costs of organic farming compared to costs

of conventional farming can impact the supply of organic raw milk in the market.

Oversupply levels of organic raw milk can increase competitive

of conventional farming can impact the supply of organic milk in the market.

Oversupply levels of organic milk can increase competitive

pressure on our products and pricing, while supply shortages can cause higher input costs and reduce our ability to deliver product to

5 unchanged sentences

negatively affected.

Reduced availability of raw materials and other

inputs, as well as increased costs for them, could adversely affect us.

Our business depends heavily on raw materials and

other inputs in addition to conventional and organic raw milk, such as sweeteners, diesel fuel, packaging material, resin, and other commodities.

Our raw materials are generally sourced from third-party suppliers, and we are not assured of continued supply, pricing, or exclusive

access to raw materials from any of these suppliers.

In 2022, costs to us increased primarily due to inflationary price increases of other

ingredients, packaging materials, and freight.

However, for market conditions or competitive reasons, our pricing actions may also lag

input cost changes, or we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur

The organic ingredients we use in some of our products

are less plentiful and available from a fewer number of suppliers than their conventional counterparts.

Competition with other manufacturers

in the procurement of organic product ingredients may increase in the future if consumer demand for organic products increases.

Our business is subject to various food, environmental,

and health and safety laws and regulations, which may increase our compliance costs, subject us to liabilities, or otherwise adversely

affect our business.

Our business operations are subject to numerous requirements

in the United States relating to food safety, production, and marketing, as well as the protection of the environment, and health and

safety matters.

The food production and marketing industry is subject to a variety of federal, state, local, and foreign laws and regulations,

including food safety requirements related to the ingredients, manufacture, processing, storage, marketing, advertising, labeling, and

distribution of our products, as well as those related to worker health and workplace safety.

Our activities, both in and outside of the

United States, are subject to extensive regulation.

We are regulated by, among other federal and state authorities, the FDA, USDA, the

Reduced availability of raw materials and

other inputs, as well as increased costs for them, could adversely affect us.

Our business depends heavily on raw materials

and other inputs in addition to conventional and organic raw milk, such as sweeteners, diesel fuel, packaging material, resin, and other

Our raw materials are generally sourced from third-party suppliers, and we are not assured of continued supply, pricing,

or exclusive access to raw materials from any of these suppliers.

In 2023, costs to us increased primarily due to inflationary price increases

of other ingredients, packaging materials, and freight.

However, for market conditions or competitive reasons, our pricing actions may

also lag input cost changes, or we may not be able to pass along the full effect of increases in raw materials and other input costs as

we incur them.

The organic ingredients we use in some of our

products are less plentiful and available from a fewer number of suppliers than their conventional counterparts.

Competition with other

manufacturers in the procurement of organic product ingredients may increase in the future if consumer demand for organic products increases.

Our business is subject to various food,

environmental, and health and safety laws and regulations, which may increase our compliance costs, subject us to liabilities, or otherwise

adversely affect our business.

Our business operations are subject to numerous

requirements in the United States relating to food safety, production, and marketing, as well as the protection of the environment, and

health and safety matters.

The food production and marketing industry is subject to a variety of federal, state, local, and foreign laws

and regulations, including food safety requirements related to the ingredients, manufacture, processing, storage, marketing, advertising,

labeling, and distribution of our products, as well as those related to worker health and workplace safety.

Our activities, both in and

outside of the United States, are subject to extensive regulation.

We are regulated by, among other federal and state authorities, the

FDA, USDA, the U.S.

Federal Trade Commission (“FTC”), and the U.S.

Departments of Commerce, and Labor, as well as by similar authorities

in the foreign countries in which we do business.

Environmental laws including the Clean Air Act, the Clean Water Act, the Comprehensive

Environmental Response, Compensation and Liability Act of 1980, as amended, and the National Organic Standards of the U.S.

of Agriculture, as well as similar state and local statutes and regulations in the United States and in each of the foreign countries

in which we do business apply to our business operations as well.

These laws and regulations govern, among other things, air emissions

and the discharge of wastewater and other pollutants, the use of refrigerants, the handling and disposal of hazardous materials, and the

cleanup of contamination in the environment.

In addition, the marketing and advertising of our

products could make us the target of claims relating to alleged false or deceptive advertising under federal, state, and foreign laws

and regulations, and we may be subject to initiatives that limit or prohibit the marketing and advertising of our products to children.

Departments of Commerce, and Labor, as well as by similar

authorities in the foreign countries in which we do business.

Environmental laws including the Clean Air Act, the Clean Water Act, the

Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and the National Organic Standards of the U.S.

Department of Agriculture, as well as similar state and local statutes and regulations in the United States and in each of the foreign

countries in which we do business apply to our business operations as well.

These laws and regulations govern, among other things, air

emissions and the discharge of wastewater and other pollutants, the use of refrigerants, the handling and disposal of hazardous materials,

and the cleanup of contamination in the environment.

In addition, the marketing and advertising of our products could make us the target

of claims relating to alleged false or deceptive advertising under federal, state, and foreign laws and regulations, and we may be subject

to initiatives that limit or prohibit the marketing and advertising of our products to children.

We are also subject to federal laws and regulations

17 unchanged sentences

our business.

RISKS RELATED TO COVID-19 AND OTHER

PANDEMIC OR DISEASE OUTBREAKS

Pandemics or disease outbreaks, such

as the COVID-19 pandemic, may disrupt consumption and trade patterns, supply chains, available labor supply, and production processes,

which could materially affect our operations and results of operations.

The ultimate impact that the COVID-19 pandemic

or any future pandemic or disease outbreak will have on our business and our consolidated results of operations is uncertain.

To date we have seen increased customer

and consumer demand for our products.

We have not experienced significant supply chain disruptions or labor supply shortages and we have

continued to be able to satisfy customer and consumer demand for our products.

However, the COVID-19 pandemic, or any future pandemic,

may limit the availability of, or increase the cost of, employees, ingredients, packaging and other inputs necessary to produce our products,

and our operations may be negatively impacted.

In 2022, our costs increased primarily due to inflationary price increases of milk, other

ingredients, packaging materials, and freight.

However, because of market conditions or for competitive reasons, our pricing actions may

sometimes lag input cost changes, or we may not be able to pass along the full effect of increases in raw materials and other input costs

as we incur them.

In 2022, social distancing, shelter-in-place

and work-from-home mandates and recommendations have begun to be reduced or eliminated.

The increased customer demand we have realized

over the past two years as consumers increased their at-home consumption and e-commerce purchasing during the COVID-19 pandemic may change

or decrease due to the decrease in social distancing and stay-at-home and work-from-home mandates and recommendations.

We are unable to

predict the nature and timing of when such change may occur, if at all.

The ultimate impact

of the COVID-19 pandemic on our business will depend on many factors, including, among others, whether additional waves of COVID-19 or

different variants of COVID-19 will affect the United States and other markets and the duration of any social distancing and stay home

and work from home mandates or recommendations that may occur as a result of such COVID-19 wave or variant;

our ability and the ability

of our suppliers to continue to maintain production despite unprecedented demand in the food industry, supply chain disruptions, tight

labor markets and increased raw materials and packaging costs;

and the extent to which macroeconomic conditions resulting from the pandemic

and the pace of the subsequent recovery impact consumer eating and shopping habits.

We cannot predict the duration or scope of the disruption

or the impact of any recovery from the impacts of COVID-19.

Therefore, the financial impact cannot be reasonably estimated at this time.

Future pandemics

or disease outbreaks could similarly adversely affect economies and financial markets, consumer spending and confidence levels and result

in an economic downturn that affects customer demand for our products.

Our efforts to manage and mitigate these risks may be unsuccessful,

and the effectiveness of these efforts depends on factors beyond our control, including the duration and severity of any pandemic or disease

outbreak, as well as third party actions taken to contain its spread and mitigate public health effects.

UNRESOLVED STAFF COMMENTS

General economic or geopolitical conditions, including inflationary

conditions, Russia’s invasion of Ukraine, the Israel Gaza conflict, and the impact of pandemics such as COVID-19, may disrupt our business,

including, among other things, consumption patterns, supply chain, and production processes, each of which could materially and adversely

affect our business, financial condition and results of operations.

The United States and other key international

economies have experienced significant economic and market downturns in the past, and are likely to experience additional cyclical downturns

from time to time in which economic activity is impacted by falling demand for a variety of goods and services, restricted credit, poor

liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, inflation, bankruptcies and overall

uncertainty with respect to the economy.

These economic conditions can arise suddenly and the full impact of such conditions can be difficult

to predict, such as the future expectations in this inflationary environment.

In addition, geopolitical and domestic political developments,

such as existing and potential trade wars and other events beyond our control, such as Russia’s invasion of Ukraine, can increase

levels of political and economic unpredictability globally and increase the volatility of global financial markets.

The actual or perceived

effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern, such as COVID-19, could also materially

and adversely affect the Company’s business, financial condition and results of operations.

Adverse and uncertain economic conditions, such

as those caused by inflation or the COVID-19 pandemic, may impact distributor, retailer and consumer demand for our products.

our ability to manage normal commercial relationships with our suppliers, distributors, retailers, consumers and creditors may suffer.

Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns.

Distributors and retailers

may become more conservative in response to these conditions and seek to reduce their inventories.

Our results of operations depend upon,

among other things, our ability to maintain and increase sales volume with existing distributors and retailer customers, our ability to

attract new consumers, the financial condition of our consumers, and our ability to provide products that appeal to consumers at attractive

Prolonged unfavorable economic conditions may have an adverse effect on the Company’s sales, which could materially and

adversely affect its business, financial condition and results of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors