What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-14 compared with 2024-03-20 · 391 added, 402 removed, 539 unchanged (60% of the section changed)

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND

SUPPLEMENTARY DATA

Report of Independent Registered Accounting Firm (PCAOB ID 248 )

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Notes to Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

Board of Directors and Stockholders

Lifeway Foods, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Lifeway

(an Illinois corporation) and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated

statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023,

and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present

fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations

and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally

accepted in the United States of America.

We have audited the accompanying consolidated

balance sheets of Lifeway Foods, Inc.

(an Illinois corporation) and subsidiaries (the “Company”) as of December 31, 2024

and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in

the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended

December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public

accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to

be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations

of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit

of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control

over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control

over financial reporting.

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal

control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters are matters arising from the current period

audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to

accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex

The critical audit matters are matters arising from

the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,

subjective, or complex judgments.

We determined that there are no critical audit matters.

GRANT THORNTON LLP

We have served as the Company’s auditor since 2022.

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Total current liabilities

Line of credit

Operating lease liabilities

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Gain (loss) on sale of property and equipment

Other income (expense)

Total other income (expense)

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AND SUBSIDIARIES

Consolidated Statements of Stockholders’

Consolidated Statements of Stockholders’ Equity

For the Years Ended December 31, 2024 and 2023

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Balance, January 1, 2023

Treasury stock purchased

Issuance of common stock in connection with stock-based compensation

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Issuance of common stock in connection with stock-based compensation

Issuance of common stock on exercise of stock options

Stock-based compensation

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Bad debt expense

Deferred revenue

Stock-based compensation

Deferred income taxes

(Gain) loss on sale of property and equipment

Loss (gain) on sale of property and equipment

(Increase) decrease in operating assets:

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Proceeds from sale of equipment

Acquisition, net of cash acquired

Purchase of investments

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Repayment of note payable

Purchase of treasury stock

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

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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.

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.

Revenue Recognition

Lifeway sells food and beverage products across

select product categories to customers predominantly within the United States (see Note 13 – Disaggregation of Revenue, Significant

Customers, and Geographic Information).

Lifeway sells food and beverage products across select

product categories to customers predominantly within the United States (see Note 13 – Disaggregation of Revenue, Significant Customers,

and Geographic Information).

The Company also sells bulk cream, a byproduct of its fluid milk manufacturing process.

In accordance

with ASC 606, Revenue from Contracts with Customers, Lifeway recognizes revenue when control over the products transfers to its customers,

In accordance with

ASC 606, Revenue from Contracts with Customers, Lifeway recognizes revenue when control over the products transfers to its customers,

which generally occurs upon delivery to its customers or their common carriers.

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to which the Company expects to be entitled to receive in exchange for these goods or services, using the five-step method required by

For the Company, the contract is the approved

sales order, which may also be supplemented by other agreements that formalize various terms and conditions with customers.

applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the

customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining

to the customer.

Performance obligations promised in a contract

are identified based on the goods or services that will be transferred to the customer, which is the delivery of food and beverage products

For the Company, the contract is the approved sales

order, which may also be supplemented by other agreements that formalize various terms and conditions with customers.

The Company applies

judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s

historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

Performance obligations promised in a contract are

identified based on the goods or services that will be transferred to the customer, which is the delivery of food and beverage products

which provide immediate benefit to the customer.

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Any taxes collected on behalf of government authorities are excluded from net revenues.

Variable consideration, which includes known or

expected pricing or revenue adjustments, such as trade discounts, allowances for non-saleable products, product returns, trade incentives

and coupon redemption, is estimated utilizing the most likely amount method.

Key sales terms, such as pricing and quantities

ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration.

As such, the Company does not capitalize contract inception costs and it capitalizes product fulfillment costs in accordance with U.S.

GAAP and its inventory policies.

It generally does not receive noncash consideration for the sale of goods, nor does it grant payment

financing terms greater than one year.

Variable consideration, which includes known or expected

pricing or revenue adjustments, such as trade discounts, allowances for non-saleable products, product returns, trade incentives and coupon

redemption, is estimated utilizing the most likely amount method.

Key sales terms, such as pricing and quantities ordered,

are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration.

such, the Company does not capitalize contract inception costs and it capitalizes product fulfillment costs in accordance with U.S.

and its inventory policies.

It generally does not receive noncash consideration for the sale of goods, nor does it grant payment financing

terms greater than one year.

Accounts Receivable

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economic condition of specific customers.

All account receivables have an original term of less than one year.

Customer balances are written

off after all collection efforts are exhausted.

Estimated product returns, which have not been material, are deducted from sales at the

time of revenue recognition.

All accounts receivables have an original term of less than one year.

Customer balances are

written off after all collection efforts are exhausted.

Estimated product returns, which have not been material, are deducted from sales

at the time of revenue recognition.

The Company does not charge interest on past due accounts receivable.

Inventories are stated at the lower of cost or

net realizable value, valued on a first in, first out basis (“FIFO”).

The costs of finished goods inventories include raw

materials, direct labor, and overhead costs.

Accounts receivable, less allowances was $ 15,424 , $ 13,875 and $ 11,414 ,

as of December 31, 2024, 2023, and 2022 respectively.

Inventories are stated at the lower of cost or net

realizable value, valued on a first in, first out basis (“FIFO”).

The costs of finished goods inventories include raw materials,

direct labor, and overhead costs.

Inventories are stated net of reserves for excess or obsolete inventory.

Property, plant and equipment

Property, plant and equipment are recorded at

Property, plant and equipment are recorded at cost.

Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets as follows:

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extend the life of the assets, are expensed as incurred.

Goodwill represents the excess purchase price

over the fair value of the net tangible and other identifiable intangible assets acquired.

Goodwill is not amortized, but it is subject

to an annual assessment for impairment, which the Company performs on its one reporting unit during the fourth quarter (as of December

Goodwill represents the excess purchase price over

the fair value of the net tangible and other identifiable intangible assets acquired.

Goodwill is not amortized, but it is subject to

an annual assessment for impairment, which the Company performs on its one reporting unit during the fourth quarter (as of December 31),

or more frequently if events occur or circumstances change such that it is more likely than not that an impairment may exist.

In testing goodwill for impairment, the Company

has the option to perform a qualitative test (also known as “Step 0”) or a quantitative test (“Step 1”).

the Step 0 test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of

the reporting unit is less than its carrying value.

In testing goodwill for impairment, the Company has

the option to perform a qualitative test (also known as “Step 0”) or a quantitative test (“Step 1”).

Step 0 test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the

reporting unit is less than its carrying value.

Qualitative factors may include, but are not limited to, economic conditions, industry

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amount of the reporting unit exceeds its fair value up to the amount of goodwill allocated to the reporting unit.

Under a Step 1 quantitative test, we estimate

the fair value of our one reporting unit using a combination of the fair values derived from both the income approach and the market approach.

Under a Step 1 quantitative test, we estimate the

fair value of our one reporting unit using a combination of the fair values derived from both the income approach and the market approach.

Under the income approach, the Company uses a discounted cash flow methodology which requires management to make significant estimates

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related to the business’s ability to execute on the projected cash flows.

For the market approach, the Company uses the guideline public

company method.

The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly

traded companies with similar operating and investment characteristics.

The Company also reconciles the fair value of its reporting unit

to its current market capitalization, allowing for a reasonable control premium.

For the market approach, the Company uses the guideline

public company method.

The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable

publicly traded companies with similar operating and investment characteristics.

The Company also reconciles the fair value of its reporting

unit to its current market capitalization, allowing for a reasonable control premium.

Intangible Assets

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Customer relationships

All amortization expense related to intangible assets is recorded in

Amortization expense in the consolidated statements of operations.

Amortizable intangible assets are evaluated for

impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Lifeway conducts more

frequent impairment assessments if certain conditions exist, such as a change in the competitive landscape, any internal decisions to

pursue new or different strategies, a loss of a significant customer, or a significant change in the marketplace including changes in

the prices paid for its products or changes in the size of the market for its products.

If an evaluation of the undiscounted cash flows

indicates impairment, the asset is written down to its estimated fair value, which is generally based on discounted future cash flows.

If the estimated remaining useful life of an intangible asset is changed, the remaining carrying amount of the intangible asset is amortized

prospectively over the revised remaining useful life.

All amortization expense related to intangible assets is recorded in Amortization

expense in the consolidated statements of operations.

Amortizable intangible assets are evaluated for impairment

whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Lifeway conducts more frequent impairment

assessments if certain conditions exist, such as a change in the competitive landscape, any internal decisions to pursue new or different

strategies, a loss of a significant customer, or a significant change in the marketplace including changes in the prices paid for its

products or changes in the size of the market for its products.

If an evaluation of the undiscounted cash flows indicates impairment,

the asset is written down to its estimated fair value, which is generally based on discounted future cash flows.

If the estimated remaining

useful life of an intangible asset is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the

revised remaining useful life.

Fair value measurements

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upon the lowest level of input that is available and significant to the fair value measurement:

Level 1 – Quoted prices in

active markets for identical assets or liabilities.

Level 2 – Observable inputs

other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities

Level 1 – Quoted prices in active

markets for identical assets or liabilities.

Level 2 – Observable inputs other

than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities

in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term

of the assets or liabilities.

Level 3 – Inputs that are

generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing

the asset or liability.

Lifeway’s financial assets and liabilities

that are not carried at fair value on a recurring basis include cash and cash equivalents, accounts receivable, other receivables, accounts

Level 3 – Inputs that are generally

unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset

or liability.

Lifeway’s financial assets and liabilities that

are not carried at fair value on a recurring basis include cash and cash equivalents, accounts receivable, other receivables, accounts

payable, accrued expenses and revolving line of credit for which carrying value approximates fair value.

The Company records its investments in equity

securities without a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable

price changes in orderly transactions for the identical or a similar investment of the same issuer.

As of December 31, 2023, and 2022,

the Company has one equity investment without a readily determinable fair value which is recorded at $ 1,800 in other assets on the consolidated

balance sheet.

The investment cost of $ 1,800 for this equity investment includes a cumulative unrealized gain of $ 1,731 resulting from

an observable price change in 2019.

There were no upward or downward observable price change adjustments to the equity investment cost

during 2023 or 2022.

The Provision for income taxes includes federal,

state, local and foreign income taxes currently payable, and those deferred because of temporary differences between the financial statement

The Company records its investments in equity securities

without a readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes

in orderly transactions for the identical or a similar investment of the same issuer.

As of December 31, 2024, and 2023, the Company has

one equity investment without a readily determinable fair value which is recorded at $ 1,800 in other assets on the consolidated balance

The investment cost of $ 1,800 for this equity investment includes a cumulative unrealized gain of $ 1,731 resulting from an observable

price change in 2019.

There were no upward or downward observable price change adjustments to the equity investment cost during 2024 or

The Provision for income taxes includes federal, state,

local and foreign income taxes currently payable, and those deferred because of temporary differences between the financial statement

and tax bases of assets and liabilities.

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Share-based compensation

Share-based compensation expense is recognized

for equity awards over the vesting period based on their grant date fair value.

The fair value of restricted stock and performance share

awards are equal to the closing price of Lifeway’s stock on the date of grant.

The Company does not estimate forfeitures in measuring

the grant date fair value, but rather account for forfeitures as they occur.

Share-based compensation expense is recognized for

equity awards over the vesting period based on their grant date fair value.

The fair value of restricted stock and performance share awards

are equal to the closing price of Lifeway’s stock on the date of grant.

The Company does not estimate forfeitures in measuring the

grant date fair value, but rather account for forfeitures as they occur.

The fair value of stock options are measured using

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Advertising costs

Advertising costs are expensed as incurred and

reported in Selling expense in the Company’s consolidated statements of operations.

Total advertising expense was $ 3,733 and $ 3,353

for the years ended December 31, 2023 and 2022, respectively.

Advertising costs are expensed as incurred and reported

in Selling expense in the Company’s consolidated statements of operations.

Total advertising expense was $ 5,447 and $ 3,733 for the

years ended December 31, 2024 and 2023, respectively.

Earnings per common share

Basic earnings per common share is computed

by dividing net income available to common stockholders by the weighted average number of common shares issued and outstanding

during the reporting period.

Diluted earnings per common share is computed by dividing net income available to common stockholders

by the weighted average number of common shares issued and outstanding and the effect of all dilutive common stock equivalents related

to the Company’s outstanding stock-based compensation awards outstanding during the reporting period.

The Company is managed as a single reportable

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.

Basic earnings per common share is computed by dividing

net income available to common stockholders by the weighted average number of common shares issued and outstanding during the reporting

Diluted earnings per common share is computed by dividing net income available to common stockholders by the weighted average

number of common shares issued and outstanding and the effect of all dilutive common stock equivalents related to the Company’s

outstanding stock-based compensation awards outstanding during the reporting period.

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

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In November 2024, the Financial Accounting Standards

Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

Segment Reporting (Topic 280):

to Reportable Segment Disclosures.

The new guidance requires entities to report incremental information about significant segment expenses

included in a segment’s profit or loss measure as well as the name and title of the chief operating decision maker.

also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually.

The new standard is effective for our annual period ending December 31, 2024 and our interim periods during the fiscal year ending December

The guidance does not affect recognition or measurement in the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No.

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.

standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities.

The guidance is effective for our fiscal year ending December 31, 2024.

The guidance does not affect recognition or measurement in the

Board (“FASB”) issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation

Disclosures (Topic 220-40):

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.

In October 2021, the FASB issued ASU No.

Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

The new guidance

provides a single comprehensive accounting model on revenue recognition for contracts with customers and requires that the acquirer in

a business combination recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic

606 (Revenue from Contracts with Customers).

The amendments in this ASU are effective for fiscal years beginning after December 15, 2022.

The Company adopted this standard during the first quarter of 2023.

The adoption did not have a material impact on the Company’s

Upon adoption, the impact of ASU 2024-03 will be limited to certain notes to the Consolidated

Financial Statements.

In March 2020, the FASB issued ASU No.

Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The new guidance provides

optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions that reference LIBOR

or another reference rate expected to be discontinued because of reference rate reform.

The guidance will be effective prospectively as

of March 12, 2020 through December 31, 2022 and interim periods within those fiscal years.

The ASU was effective upon issuance and allowed

companies to adopt the amendments on a prospective basis through December 31, 2024.

The Company adopted this standard during the first

quarter of 2023.

The adoption did not have a material impact on the Company’s financial statements.

In June 2016, the FASB issued ASU No.

Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, in November 2018 issued

an amendment, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, and in November 2019 issued

two amendments, ASU 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases

Effective Dates, and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments – Credit Losses.

series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather

than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables.

This may result

in the earlier recognition of allowances for losses.

The guidance should be applied on either a prospective transition or modified-retrospective

approach depending on the subtopic.

The guidance is effective for annual periods beginning after December 15, 2022, including interim

periods within those fiscal years, with early adoption permitted.

The Company adopted this standard during the first quarter of 2023.

The adoption did not have a material impact on the Company’s financial statements.

In December 2023, the FASB issued ASU No.

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.

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 2023, the FASB issued Accounting Standards

Update (“ASU”) No.

Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The new standard

requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure

as well as the name and title of the chief operating decision maker.

The new standard also requires interim disclosures related to reportable

segment profit or loss and assets that had previously only been disclosed annually.

The new standard is effective for our annual period

ending December 31, 2024 and our interim periods during the fiscal year ending December 31, 2025.

The Company adopted this standard during

the fourth quarter of 2024.

The new standard did not affect recognition or measurement in the Company’s consolidated financial statements.

Note 3 – Inventories, net

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Balance at December 31, 2024

Balance at December 31, 2023

Accumulated impairment losses

Balance at December 31, 2023

The Company performed an annual Step 0 impairment

assessment for its single reporting unit as of December 31, 2023, noting no impairment loss.

The Company performed an annual Step 1 impairment

assessment for its single reporting unit as of December 31, 2022, noting no impairment loss.

Approximately $1,664 of goodwill is deductible

for income tax purposes.

assessment for its single reporting unit as of December 31, 2024 and 2023, noting no impairment loss.

Approximately $1,664 of goodwill is deductible for

income tax purposes.

Intangible Assets

The gross carrying amounts and accumulated amortization of intangible

assets consisted of the following:

Schedule of finite-lived intangible assets

The gross carrying amounts and accumulated amortization of intangible assets

consisted of the following:

Schedule of other intangible assets

December 31, 2024

December 31, 2023

Customer lists and other customer related intangibles

Customer lists and other customer

related intangibles

Customer relationship

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for the next five years is as follows:

Schedule of estimated amortization expense on intangible assets

The weighted-average remaining amortization

expense period for the customer relationship and brand name intangible assets is 12.6

years, respectively, as of December 31, 2023.

The weighted-average remaining amortization expense period for total intangible assets

years as of December 31, 2023.

Schedule of future amortization expense on intangible assets

The weighted-average remaining amortization expense

period for the customer relationship and brand name intangible assets is 11.6 and 11.9 years, respectively, as of December 31, 2024.

weighted-average remaining amortization expense period for total intangible assets is 11.8 years as of December 31, 2024.

Note 6 – Accrued Expenses

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Note payable consisted of the following:

Schedule of debt

Schedule of note payable

Term loan due August 18, 2026.

Interest (6.29% at December 31, 2023) payable monthly.

Interest payable monthly.

Unamortized deferred financing costs

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Total long-term portion

The scheduled maturities of the term loan, excluding deferred financing

costs, at December 31, 2023 are as follows:

Schedule of maturities of long-term debt

Total term loan

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

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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 Credit Agreement provides for, among other things, a $ 5,000 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 $ 5,000 (the “Revolving Credit

Facility”) and an incremental facility not to exceed $ 5,000 .

The termination date of the term loan is August 18, 2026 , unless earlier

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%, 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 %.

bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 2.07%.

Interest is payable monthly in arrears .

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 continues to provide 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.

1.25 to 1.00, and a minimum working capital financial covenant, as defined, of no less than $11,250, 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

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December 31, 2024.

Deferred Financing Costs

As of December 31, 2023, net unamortized deferred

financing costs of $ 17 related to the term loan were included as a direct deduction from outstanding long-term debt.

See Footnote 15 – Subsequent Events, for the

February 2025 credit agreement amendment which increased the revolving loan commitment from $ 5,000 to $ 25,000 .

Note 8 – Leases

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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.

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.

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.

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.

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

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Present value of lease liabilities

The weighted-average remaining lease term for

its operating leases was 3.6 years as of December 31, 2023.

The weighted average discount rate of its operating leases was 9.85 % as of

December 31, 2023.

The weighted-average remaining lease term for its

operating leases was 3.4 years as of December 31, 2024.

The weighted average discount rate of its operating leases was 8.51 % as of December

Cash paid for amounts included in the measurement of lease liabilities was $ 89 and $ 94 for the year ended December 31, 2024

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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

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

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

The provision for income taxes consists of the

Provision for income taxes

The provision for income taxes consists of the following:

Schedule of provision for income taxes

For the Years Ended December 31,

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Provision for income taxes

The following is a reconciliation of income tax expense computed at

The following is a reconciliation of income tax expense

computed at the U.S.

federal statutory tax rate to income tax expense reported in the consolidated statement of operations:

Reconciliation to effective rate for income taxes

Schedule of reconciliation to effective rate for income taxes

Federal income tax at statutory rate

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Provision for income taxes

The tax effects of temporary differences giving

rise to deferred income tax assets and liabilities were:

The tax effects of temporary differences giving rise

to deferred income tax assets and liabilities were:

Schedule of deferred tax assets and liabilities

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State net operating losses

A reconciliation of the beginning and ending amount

of unrecognized tax benefits is as follows:

Reconciliation of amount of unrecognized tax benefits

Balance at January 1

Additions based on tax positions of prior years

Settlement for tax positions of prior years

Balance at December 31

Lifeway is subject to U.S.

federal income tax

as well as income tax in multiple state and city jurisdictions.

With limited exceptions, Lifeway’s calendar year 2020 and subsequent

federal and state tax years remain open by statute.

federal income tax as well

as income tax in multiple state and city jurisdictions.

With limited exceptions, Lifeway’s calendar year 2021 and subsequent federal

and state tax years remain open by statute.

As of December 31, 2024, the unrecognized tax benefit is $ 0 .

The amount of interest and penalties recognized

in the consolidated statements of operations was $ 0 during 2023 and 2022, respectively.

The amount of interest and penalties recognized in

the consolidated statements of operations was $ 0 during 2024 and 2023, respectively.

The amount of accrued interest and penalties recognized

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stock appreciation rights, unrestricted stock, restricted stock, restricted stock units, performance shares and performance units to qualifying

Under the Plan, the Board or its Audit and Corporate Governance Committee approves stock awards to executive officers and certain

senior executives, generally in the form of restricted stock or performance shares.

The number of performance shares that participants

may earn depends on the extent to which the corresponding performance goals have been achieved.

Stock awards generally vest over a three-year

performance or service period.

At December 31, 2023, no shares remain available for 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.

At December 31, 2024, no shares remain available for award under the 2015 Omnibus Incentive Plan as it was terminated on August

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.

On August 31, 2022, Lifeway stockholders approved

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Earned and deferred, at December 31, 2024

For the years ended December 31, 2023 and 2022

total pre-tax stock-based compensation expense recognized in the consolidated statements of operations was $ 506 and $ 279 , respectively.

For the years ended December 31, 2023 and 2022 tax-related benefits of $ 142 and $ 78 , respectively, were also recognized.

For the years ended December 31, 2024 and 2023 total

pre-tax stock-based compensation expense recognized in the consolidated statements of operations was $ 904 and $ 506 , respectively.

the years ended December 31, 2024 and 2023 tax-related benefits of $ 253 and $ 142 , respectively, were also recognized.

Future compensation

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31, 2024 and 2023, $ 24 and $ 105 was expensed as stock-based compensation expense in the consolidated statements of operations.

December 31, 2023, the total remaining unearned compensation was $ 24 , which will be recognized in 2024, subject to vesting.

As of December

31, 2024, all stock-based compensation expense has been recognized.

2021 Equity Award

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of operations, respectively.

As of December 31, 2023, the total remaining unearned compensation was $ 40 , which will be recognized in 2024,

subject to vesting.

As of December 31, 2024, all stock-based compensation expense has been recognized.

2022 Equity Award

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as stock-based compensation expense in the consolidated statements of operations, respectively.

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.

As of December 31, 2024, all stock-based

compensation expense has been recognized.

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

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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.

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

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.

have a grant date fair value of $13.73 per share.

For the twelve months ended December 31, 2024 and 2023, $ 445 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

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Retirement Benefits

Lifeway has a defined contribution plan which

is available to substantially all full-time employees.

Under the terms of the plan we match employee contributions under a prescribed

For the years ended December 31, 2023 and 2022 total contribution expense recognized in the consolidated statements of operations

was $ 499 and $ 446 , respectively.

Lifeway has a defined contribution plan which is available

to substantially all full-time employees.

Under the terms of the plan we match employee contributions under a prescribed formula.

the years ended December 31, 2024 and 2023 total contribution expense recognized in the consolidated statements of operations was $ 650

and $ 499 , 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

Schedule of weighted average number of shares

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

(In thousands)

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Weighted average diluted common shares outstanding

– Disaggregation of Revenue, Significant Customers and Geographic Information

Note 13 – Segment, Customer and Geographic Information

Segment Information

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 discrete financial information at the consolidated level 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.

The following table summarizes the reported segment

revenue, segment profit, and significant segment expenses for the years ended December 31, 2024 and 2023.

Schedule of segment revenue

Cost of goods sold

Depreciation expense

Total cost of goods sold

Selling expenses

General and administrative

Amortization expense

Total operating expenses

Income from operations

Other income (expense):

Interest expense

Gain (loss) on sale of property and equipment

Total other income (expense)

Income before provision for income taxes

Provision for income taxes

The following table summarizes the reported segment

total assets as of December 31, 2024 and 2023.

Schedule of segment

Total assets for reportable segment

Adjustments and reconciling items

Consolidated total assets

Products from which the reportable segment derives

Lifeway’s primary product is drinkable kefir.

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for the years ended December 31:

Schedule of sales of products by category

Schedule of segment products by category

Drinkable Kefir other than ProBugs

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food industry located within the United States.

Two major customers accounted for approximately 24 % and 22 % of net sales for the years

ended December 31, 2023 and 2022, respectively.

Two major customers accounted for 25 % and 28 % of accounts receivable as of December 31,

Two major customers accounted for a total of 25 % and 24 % of net sales for the years ended

December 31, 2024 and 2023, respectively.

Two major customers accounted for a total of 26 % and 25 % of accounts receivable as of December

31, 2024 and 2023, respectively.

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products are shipped by Lifeway.

All the Company’s long-lived assets are

in the United States.

Note 14 – Share repurchases

Stock Purchase Agreement

On November 7, 2022, the Company entered into

a Stock Purchase Agreement with Ludmila Smolyansky (“Ms.

Smolyansky”), to purchase 850,340 shares of Lifeway common stock

The shares were repurchased during the fourth quarter of 2022.

Pursuant to the Stock Purchase Agreement, (i)

Smolyansky sold the shares at a purchase price of $4.70 per share, which represents a twenty percent (20.0%) discount to the average

closing price of the common stock on Nasdaq over the five (5) trading day period ended on the trading day immediately preceding the date

of the Stock Purchase Agreement and (ii) Ms.

Smolyansky used a portion of the proceeds to satisfy in full certain obligations of Ms.

which are secured by previously disclosed pledges of common stock, causing all such pledges to be released.

The purchased shares are held

in treasury by the Company.

As a closing condition to the Stock Purchase Agreement,

Smolyansky and Mr.

Smolyansky delivered an executed amendment (the “Amendment”) to that certain Settlement Agreement dated

as of July 27, 2022 (the “Settlement Agreement”), between the Company and Ms.

Smolyansky and Mr.

to the Amendment, Ms.

Smolyansky and Mr.

Smolyansky each agree, among other things, to (i) grant the Company a right of first refusal,

subject to Danone North America Public Benefit Corporation’s (“Danone”) right of first refusal, on substantially similar

terms as Danone (ii) extend the standstill and all related terms under the Proxy Settlement Agreement through the date of the 2024 annual

meeting of the Company’s shareholders (the “Standstill”);

and (iii) to appear in person or by proxy and vote their respective

remaining shares of common stock beneficially owned, individually or otherwise, and controlled by either of them and over which they have

power and authority to vote during the Standstill (a) in accordance with the recommendations of the Board at any special meeting or annual

meeting of the shareholders with respect to any proposal(s) not related to the sale of the Company or all or substantially all of the

assets of the Company;

and (b) in proportion to the vote of the other shareholders with respect to any proposal relating to any vote on

the sale of the Company or all or substantially all of the assets of the Company.

Note 15 – Related party transactions

Consulting Services

Lifeway obtained consulting services from Ludmila

Smolyansky, a former member and former Chairperson of the Company’s Board of Directors.

On January 4, 2022, the Company notified

Smolyansky that it was terminating the consultancy agreement effective January 17, 2022.

Service fees earned are included in general

and administrative expenses in the accompanying consolidated statements of operations and were $ 0 and $ 22 during the years ended December

31, 2023 and 2022, respectively.

Endorsement Agreement

Lifeway was also a party to an endorsement agreement,

dated as March 14, 2016, by and between the Company and Ludmila Smolyansky, a former member and former Chairperson of the Company’s

Board of Directors (the “Endorsement Agreement”) under which it paid Ms.

Smolyansky a royalty based on the sale of certain

Lifeway products, not to exceed $50 in any fiscal month.

On September 6, 2022, the Company entered into

an agreement (the “Termination Agreement”) with Ms.

Smolyansky that terminated the Endorsement Agreement as of September 6,

Pursuant to the Termination

Agreement, the Company and Ms.

Smolyansky have agreed, among other things, that (i) the Company paid Ms.

Smolyansky a lump sum payment

of $ 400,000 , (ii) Ms.

Smolyansky will no longer have any further claims against the Company under

the Endorsement Agreement, and (iii) the Endorsement Agreement was terminated and of no further force or effect except for the provisions

thereof that expressly survive termination.

Royalties earned are included in selling expenses

in the accompanying consolidated statements of operations and were $ 0 and $ 400 during the years ended December 31, 2023 and 2022, respectively.

Stock Purchase Agreement

See the November 2022 stock purchase agreement between Ms.

and the Company in Note 14.

All the Company’s long-lived assets are in the

United States.

Note 14 – Shareholder Rights Plan

On November 4, 2024, the Company adopted a Shareholder

Rights Agreement (the “Rights Agreement”) and designated 40 shares of preferred stock as Series A Junior Participating Preferred

Stock, none of which are issued 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.

Note 15 – Subsequent Events

On February 5, 2025, the

Company entered into the Fifth Modification to the Amended and Restated Loan and Security Agreement (the “Fifth Modification”)

with its current lender.

The Fifth Modification, among other things, (i) increased the commitment for revolving loans under the Credit

Agreement from $5,000 to $25,000, with interest payable at either the lender Base Rate (the Prime Rate minus 1.00%) or the SOFR plus 1.75%,

(ii) extended the termination date of the Credit Agreement to February 5, 2028 and (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 commencing with the fiscal quarter ending March 31, 2025.

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.

On February 21, 2025, the Company’s $1,800

equity investment in Simple Mills was liquidated as a result of the sale of Simple Mills.

The Company anticipates cash proceeds of approximately

$5,150, and to recognize a gain on the sale of investment of approximately $3,350 during the first fiscal quarter of 2025.

CHANGES IN AND DISAGREEMENTS

1 unchanged sentence

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 8. Financial Statements and Supplementary Data