What changed in this filing

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Item 1. Business

2025-03-14 compared with 2024-03-20 · 100 added, 105 removed, 173 unchanged (54% of the section changed)

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at the time of manufacture.

We manufacture (directly or through co-packers)

and market products under the Lifeway, Fresh Made and GlenOaks Farms brand names, as well as under private labels on behalf of certain

We manufacture (directly or through co-packers) and

market products under the Lifeway, Fresh Made and GlenOaks Farms brand names, as well as under private labels on behalf of certain customers.

Our product categories are:

Drinkable kefir, sold in a variety of organic and non-organic sizes, flavors, and types;

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 consists primarily of cream, a byproduct of making our kefir;

ProBugs, a line of kefir products designed for children;

Drinkable yogurt, sold in a variety of sizes and flavors;

ProBugs, a line of kefir products designed for children;

Other dairy, which consists primarily of Fresh Made butter and sour cream.

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of the Lifeway organization into fresh categories and into additional channels of trade, such as Convenience;

Lifeway considers research and development of

new products to be a significant part of our overall business philosophy.

Where possible, we leverage our existing staff and facilities

to conduct our innovation, research, and development efforts, rather than maintaining a dedicated research and development staff and facilities

Lifeway considers research and development of new

products to be a significant part of our overall business philosophy.

Where possible, we leverage our existing staff and facilities to

conduct our innovation, research, and development efforts, rather than maintaining a dedicated research and development staff and facilities

or relying solely on third parties.

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During 2024 and 2023, approximately 94% and 93%

of our revenue, respectively, was derived from products manufactured at our own facilities.

our revenue, respectively, was derived from products manufactured at our own facilities.

We currently operate the following manufacturing

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Lifeway’s primary market is the United States;

however, certain of our distributors based in the United States sell our products to retailers in Mexico and portions of South America

however, certain distributors based in the United States sell our products to retailers in Mexico, portions of Central and South America

and the Caribbean.

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scheduling and coordinating promotions, merchandising, centralized ordering, and data collection services.

We use a combination of sales incentives, trade

promotions, and consumer promotions to market our products.

Sales Incentives and Trade Promotion

We use a combination of sales incentives, trade promotions,

and consumer promotions to market our products.

Sales Incentives and Trade Promotion Allowances

Lifeway offers various sales incentives and trade

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These sales incentives

and trade promotion programs typically include rebates, in-store display and demo allowances, allowances for non-saleable product, coupons,

and other trade promotional activities.

Trade promotions support price features, displays, and other merchandising of our products by

our retail and distributor customers.

and trade promotion programs include rebates, in-store display and demo allowances, allowances for non-saleable product, coupons, and

other trade promotional activities.

Trade promotions support price features, displays, and other merchandising of our products by our

retail and distributor customers.

We record these arrangements as a reduction to net sales in our consolidated statements of operations.

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and other similar forms of promotions.

Our marketing efforts are aimed at stimulating

demand with new and existing consumers by elevating awareness and consumption of kefir and probiotics, as well as enhancing our brand

Our marketing efforts are aimed at stimulating demand

with new and existing consumers by elevating awareness and consumption of kefir and probiotics, as well as enhancing our brand equity.

Our awareness marketing seeks to promote the positive nutritional attributes and flavor of our products.

Lifeway competes with a limited number of other

domestic kefir producers and consequently faces a small amount of direct competition for kefir products.

However, Lifeway’s kefir-based

products compete with other dairy products, such as spoonable and drinkable yogurt, and, increasingly, with non-dairy probiotic products.

Many of our competitors are well-established and have significantly greater financial resources than Lifeway to promote their products.

Lifeway competes with a limited number of other domestic

kefir producers and consequently faces a small amount of direct competition for kefir products.

However, Lifeway’s kefir-based products

compete with other dairy products, such as spoonable and drinkable yogurt, and, increasingly, with non-dairy probiotic products.

of our competitors are well-established and have significantly greater financial resources than Lifeway to promote their products.

We purchase our ingredients such as milk, cultures,

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In addition, we purchase significant quantities of ingredients and product packaging

materials and natural gas and electricity to operate our facilities.

Purchases are made through purchase orders or contracts, and price,

delivery terms, and product specifications vary.

The prices for our principal inputs can fluctuate based on economic, weather, and other

Lifeway believes it has access to alternative suppliers for critical ingredients, packaging, and other input requirements.

materials and utilities, such as natural gas and electricity to operate our facilities.

Purchases are made through purchase orders or

contracts, and price, delivery terms, and product specifications vary.

The prices for our principal inputs can fluctuate based on economic,

weather, and other conditions.

Lifeway believes it has access to alternative suppliers for critical ingredients, packaging, and other

input requirements.

MAJOR CUSTOMERS

During the year ended December 31, 2024, two customers

collectively accounted for approximately 24% of our total net sales.

Two customers collectively accounted for approximately 25% of net

accounts receivable as of December 31, 2023.

accounted for a total of 25% of our total net sales.

Two customers accounted for a total of 26% of net accounts receivable as of December

Lifeway has determined that it has one reportable

segment based on how our chief operating decision maker manages the business and, in a manner, consistent with the internal reporting

provided to the chief operating decision maker.

The chief operating decision maker, who is responsible for allocating resources and assessing

Company performance, has been identified as the Chief Executive Officer.

Substantially all our consolidated revenues relate to the sale

of cultured dairy products that we produce using the same processes and materials and are sold to consumers through a common network of

distributors and retailers in the United States.

Since October 1999, Danone North America Public

Benefit Corporation, through predecessors, affiliates and/or subsidiaries (collectively “Danone”), has been the beneficial

owner of 20% or more of the outstanding common stock of Lifeway.

Lifeway and Danone are parties to a Stockholders’ Agreement dated

October 1, 1999, which as amended provides Danone the right to designate one director nominee, provides Danone with anti-dilutive rights

relating to certain future offerings and issuances of capital stock, and grants Danone limited registration rights.

segment based on how our chief operating decision maker manages the business and in a manner consistent with the internal reporting provided

to the chief operating decision maker.

The chief operating decision maker, who is responsible for allocating resources and assessing Company

performance, has been identified as the Chief Executive Officer.

Substantially all our consolidated revenues relate to the sale of cultured

dairy products that we produce using the same processes and materials and are sold to consumers through a common network of distributors

and retailers in the United States.

INTELLECTUAL PROPERTY

We believe that our rights in our trademarks and

service marks are important to our marketing efforts to develop brand recognition and differentiate our brand from our competitors and

are a valuable part of our business.

We believe that our rights in our trademarks and service

marks are important to our marketing efforts to develop brand recognition and differentiate our brand from our competitors and are a valuable

part of our business.

We own many domestic and international trademarks and service marks.

In addition, we own numerous

registered and unregistered copyrights, registered domain names, and proprietary trade secrets, trade dress, technology, know-how, processes,

and other proprietary rights that are not registered.

Depending on the jurisdiction, trademarks are generally valid as long as they are

in use and/or their registrations are properly maintained, and they have not been found to have become generic.

Registrations of trademarks

can also generally be renewed indefinitely as long as the trademarks are in use.

We also have licenses to use certain trademarks inside

and outside of the United States and to certain product formulas, all subject to the terms of the agreements under which such licenses

In addition, we own numerous registered and

unregistered copyrights, registered domain names, and proprietary trade secrets, trade dress, technology, know-how, processes, and other

proprietary rights that are not registered.

Depending on the jurisdiction, trademarks are generally valid as long as they are in use and/or

their registrations are properly maintained, and they have not been found to have become generic.

Registrations of trademarks can also

generally be renewed indefinitely as long as the trademarks are in use.

We also have licenses to use certain trademarks inside and outside

of the United States and to certain product formulas, all subject to the terms of the agreements under which such licenses are granted.

Lifeway’s policy is to pursue registration of intellectual property whenever appropriate.

We 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 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.

We regard the Lifeway family of trademarks and other intellectual property

as having substantial value and as being an important factor in the marketing of our products.

The loss of such protection would have

a material adverse impact on our operations and share price.

Lifeway is subject to extensive regulation by

federal, state, and local governmental authorities.

In the United States, agencies governing the manufacture, marketing, and distribution

of our products include, among others, the Federal Trade Commission (“FTC”), the United States Food & Drug Administration

(“FDA”), the United States Department of Agriculture (“USDA”), the United States Environmental Protection Agency

(“EPA”), the Occupational Safety and Health Administration (“OSHA”), and their state and local equivalents.

various statutes, these agencies prescribe, among other things, the requirements and standards for quality, safety, and representation

of our products to consumers.

and by policing

third-party misuses of our intellectual property.

We regard the Lifeway family of trademarks and other intellectual property as having

substantial value and as being an important factor in the marketing of our products.

The loss of such protection would have a material

adverse impact on our operations and share price.

Lifeway is subject to extensive regulation by federal,

state, and local governmental authorities.

In the United States, agencies governing the manufacture, marketing, and distribution of our

products include, among others, the Federal Trade Commission (“FTC”), the United States Food & Drug Administration (“FDA”),

the United States Department of Agriculture (“USDA”), the United States Environmental Protection Agency (“EPA”),

the Occupational Safety and Health Administration (“OSHA”), and their state and local equivalents.

Under various statutes,

these agencies prescribe, among other things, the requirements and standards for quality, safety, and representation of our products to

We are also subject to federal laws and regulations relating to our products and production.

as required by the National Organic Program (“NOP”), we rely on third parties to certify certain of our products and production

locations as organic.

Additionally, our facilities are subject to various laws and regulations regarding the release of material into

the environment and the protection of the environment in other ways.

Internationally, we are subject to the laws and

regulatory authorities of the foreign jurisdictions in which we manufacture and sell our products, including the Food Standards Agency

in the United Kingdom;

For example, as required by the

National Organic Program (“NOP”), we rely on third parties to certify certain of our products and production locations as

Additionally, our facilities are subject to various laws and regulations regarding the release of material into the environment

and the protection of the environment in other ways.

Internationally, we are subject to the laws and regulatory

authorities of the foreign jurisdictions in which we manufacture and sell our products, including the Food Standards Agency in the United

the National Service of Health, Food Safety and Agro-Food Quality (known by its Spanish-language acronym “SENASICA”)

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and the European Food Safety Authority, which supports the European Commission, as well as individual country, province, state, and local

Changes in these laws or regulations, or the introduction of new laws

or regulations, could increase the costs of doing business for the Company, our customers, or suppliers, or restrict our actions, causing

our results of operations to be adversely affected.

Changes in these laws or regulations, or the introduction

of new laws or regulations, could increase the costs of doing business for the Company, our customers, or suppliers, or restrict our actions,

causing our results of operations to be adversely affected.

MILK INDUSTRY REGULATION

Our primary raw material is milk.

government establishes minimum prices for raw milk purchased in federally regulated areas.

Some states have established their own rules

for determining minimum prices.

The federal government

establishes minimum prices for raw milk purchased in federally regulated areas.

Some states have established their own rules for determining

minimum prices.

The federal government announces prices for raw milk each month.

We are subject to federal government

regulations that establish minimum prices for milk, and we also pay producer (“over-order”) premiums, federal order administration

costs, and other related charges that vary by milk product, location, and supplier.

Lifeway takes appropriate precautions to ensure

the safety of our products.

In addition to routine inspections by state and federal regulatory agencies, including the USDA and FDA, we

have instituted Company-wide systems that address topics such as supplier control;

We are subject to federal government regulations that

establish minimum prices for milk, and we also pay producer (“over-order”) premiums, federal order administration costs, and

other related charges that vary by milk product, location, and supplier.

Lifeway takes appropriate precautions to ensure the

safety of our products.

In addition to routine inspections by state and federal regulatory agencies, including the USDA and FDA, we have

instituted Company-wide systems that address topics such as supplier control;

ingredient, packaging, and product specifications;

preventive maintenance;

pest control;

and sanitation.

Each of our facilities also has in place a hazard analysis critical control points

(“HACCP”) plan that identifies critical pathways for contaminants and mandates control measures that must be used to prevent,

eliminate or reduce relevant food-borne hazards.

To the extent that the federal Food Safety Modernization Act applies to Lifeway’s

business, we develop food safety plans and implement preventive measures to protect against food contamination.

We also maintain a product

recall plan, including lot identifiability and traceability measures that allow us to act quickly to reduce the risk of consumption of

any product that we suspect may pose a health issue.

Each of our facilities also has in place a hazard analysis critical control points (“HACCP”)

plan that identifies critical pathways for contaminants and mandates control measures that must be used to prevent, eliminate or reduce

relevant food-borne hazards.

To the extent that the federal Food Safety Modernization Act applies to Lifeway’s business, we develop

food safety plans and implement preventive measures to protect against food contamination.

We also maintain a product recall plan, including

lot identifiability and traceability measures that allow us to act quickly to reduce the risk of consumption of any product that we suspect

may pose a health issue.

We maintain various types of insurance, including

product liability and product recall coverages, which we believe to be sufficient to cover potential product liabilities.

We have also implemented the SQF program at our

Illinois and Wisconsin facilities.

SQF is a fully integrated food safety and quality management protocol designed specifically for the

We have also implemented the SQF program at our Illinois

and Wisconsin facilities.

SQF is a fully integrated food safety and quality management protocol designed specifically for the food sector.

The SQF Code, based on universally accepted CODEX Alimentarius, HACCP guidelines and the Global Food Safety Initiative (“GFSI”)

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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 1. Business