What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-12 compared with 2025-05-13 · 128 added, 78 removed, 427 unchanged (33% of the section changed)

3 unchanged sentences

Consolidated Balance Sheets

March 31, 2025 and December 31, 2024

June 30, 2025 and December 31, 2024

(In thousands)

March 31, 2025

June 30, 2025

Current assets

Cash and cash equivalents

Accounts receivable, net of allowance for credit losses and discounts & allowances of $ 2,030 and $ 1,590 at March 31, 2025 and December 31, 2024, respectively

Accounts receivable, net of allowance for credit losses and discounts & allowances of $ 1,760 and $ 1,590 at June 30, 2025 and December 31, 2024, respectively

Inventories, net

8 unchanged sentences

Accrued expenses

Accrued income taxes

Total current liabilities

8 unchanged sentences

17,274 shares issued;

15,203 and 15,100 outstanding at March 31, 2025 and December 31, 2024, respectively

15,221 and 15,100 outstanding at June 30, 2025 and December 31, 2024, respectively

Treasury stock, at cost

7 unchanged sentences

Consolidated Statements of Operations

For the three months ended March 31, 2025

For the three and six months ended June

30, 2025 and 2024

(In thousands, except per share data)

Three Months Ended

Six Months Ended

Cost of goods sold

8 unchanged sentences

Interest expense

Gain on sales of investments

Fair Value Loss on investments

Gain on sale of investments

Other income (expense), net

12 unchanged sentences

Balance, March 31, 2024

Issuance of common stock in connection with stock-based compensation

Issuance of common stock on exercise of stock options

Stock-based compensation

Balance, June 30, 2024

LIFEWAY FOODS, INC.

6 unchanged sentences

Balance, March 31, 2025

Issuance of common stock in connection with stock-based compensation

Stock-based compensation

Balance, June 30, 2025

See accompanying notes to consolidated financial

3 unchanged sentences

(In thousands)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Non-cash interest expense

Gain on sale of equipment

Gain on sale of investments

8 unchanged sentences

Accrued income taxes

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Proceeds from sale of equipment

Proceeds from sale of investments

4 unchanged sentences

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

57 unchanged sentences

Total advertising expense was $ 4,418 and $ 2,531

for the three months ended March 31, 2025 and 2024, respectively.

for the six months ended June 30, 2025 and 2024, respectively.

Total advertising expense was $ 2,282 and $ 1,159 for the three months ended

June 30, 2025 and 2024, respectively.

Fair value measurements

2 unchanged sentences

The Company received cash proceeds of $ 5,206 and recognized

a gain on the sale of investment of $ 3,352 during the three months ended March 31, 2025.

a gain on the sale of investment of $ 3,407 during the six months ended June 30, 2025.

The Company received cash proceeds of $ 54 and recognized

a gain on the sale of investment of $ 54 during the three months ended June 30, 2025.

The Company is managed as a single reportable

35 unchanged sentences

Total inventories, net

4 – Property, Plant and Equipment, net

Note 4 – Property, Plant and Equipment, net

Schedule of property, plant and equipment

10 unchanged sentences

Accumulated impairment losses

Balance at March 31, 2025

Balance at June 30, 2025

Accumulated impairment losses

2 unchanged sentences

Schedule of other intangible assets

March 31, 2025

June 30, 2025

December 31, 2024

Customer lists and other customer

related intangibles

Customer lists and other customer related intangibles

Customer relationships

3 unchanged sentences

Schedule of future amortization expense on intangible assets

Nine months ended December 31, 2025

Six months ended December 31, 2025

The weighted-average remaining amortization expense

period for the customer relationship and brand name intangible assets is 11.3 and 11.6 years, respectively, as of March 31, 2025.

weighted-average remaining amortization expense period for total intangible assets is 11.5 years as of March 31, 2025.

period for the customer relationship and brand name intangible assets is 11.1 and 11.4 years, respectively, as of June 30, 2025.

weighted-average remaining amortization expense period for total intangible assets is 11.3 years as of June 30, 2025.

Note 6 – Accrued Expenses

18 unchanged sentences

The Company had no outstanding borrowings at the time of entry into the Fifth Modification.

As of March 31, 2025, the Company had $ 0 outstanding

As of June 30, 2025, the Company had $ 0 outstanding

under the Revolving Credit Facility.

The Company had $ 25,000 available for future borrowings under the Revolving Credit Facility as of

March 31, 2025.

June 30, 2025.

Lifeway was in compliance with the fixed charge

coverage ratio and maximum cash flow leverage ratio covenants at March 31, 2025.

coverage ratio and maximum cash flow leverage ratio covenants at June 30, 2025.

Note 8 – Leases

18 unchanged sentences

Lifeway has elected the practical expedient to combine lease and non-lease components into a single component for all of its leases.

When the Company is unable to determine an implicit interest rate, it uses its incremental borrowing rate based on the information available

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.

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.

2 unchanged sentences

Expense for these short-term leases is recorded on a straight-line basis over the lease

Total lease expense was $ 37 and $ 35 (including short term leases) for the three months ended March 31, 2025 and 2024, respectively.

Total lease expense was $ 95 and $ 77 (including short term leases) for the six months ended June 30, 2025 and 2024, respectively.

Total lease expense was $ 58 and $ 42 (including short term leases) for the three months ended June 30, 2025 and 2024, respectively.

Future maturities of lease liabilities were as

1 unchanged sentence

Operating Leases

Nine months ended December 31, 2025

Six months ended December 31, 2025

Total lease payments

1 unchanged sentence

The weighted-average remaining lease term for

its operating leases was 3.3 years as of March 31, 2025.

The weighted average discount rate of its operating leases was 8.79 % as of March

Cash paid for amounts included in the measurement of lease liabilities was $ 19 and $ 24 for the three months ended March 31,

its operating leases was 4.8 years as of June 30, 2025.

The weighted average discount rate of its operating leases was 12.27 % as of June

Cash paid for amounts included in the measurement of lease liabilities was $ 47 and $ 46 for the six months ended June 30, 2025

and 2024, respectively.

Cash paid for amounts included in the measurement of lease liabilities was $ 28 and $ 22 for the three months ended

June 30, 2025 and 2024, respectively.

Note 9 – Commitments and contingencies

Lifeway from time to time, may be involved

in various legal proceedings, claims, disputes, regulatory matters, audits, and proceedings arising in the ordinary course of, or

incidental, to the Company’s business, including commercial disputes, product liabilities, intellectual property matters and

employment-related matters.

Lifeway from time to time, may be involved in

various legal proceedings, claims, disputes, regulatory matters, audits, and proceedings arising in the ordinary course of, or incidental,

to the Company’s business, including commercial disputes, product liabilities, intellectual property matters and employment-related

Lifeway records provisions in the consolidated

13 unchanged sentences

Income taxes were recognized at effective rates

of 28.7 % and 30.8 % for the three months ended March 31, 2025 and 2024, respectively.

The change in the Company’s effective tax rate

is primarily driven by changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.

of 28.4 % and 30.0 % for the six months ended June 30, 2025 and 2024, respectively.

Income taxes were recognized at effective rates of 28.1 %

and 29.4 % for the three months ended June 30, 2025 and 2024, respectively.

The change in the Company’s effective tax rate is primarily

driven by changes in the amount of non-deductible officer compensation and non-deductible stock-based compensation expense.

The Company calculates the provision for income

12 unchanged sentences

2022 Omnibus Incentive Plan” (the “Plan”).

Under the Plan, the Compensation

Committee may grant awards of various types of compensation, including nonqualified stock options, incentive stock options, stock appreciation

rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards

to qualifying employees.

Under the Plan, the

Compensation Committee may grant awards of various types of compensation, including nonqualified stock options, incentive stock options,

stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards and other

stock-based awards to qualifying employees.

The maximum number of shares authorized to be awarded under the Plan is 3.25 million.

As of March 31, 2025, 2.62

million shares remain available to award under the Plan.

June 30, 2025, 2.57 million shares remain available to award under the Plan.

Lifeway stockholders approved the 2022 Non-Employee

1 unchanged sentence

The maximum aggregate number of shares that may be issued under the 2022 Director Plan is 500 thousand.

As of March 31, 2025, 392

As of June 30, 2025, 390

thousand shares remain available to award under the 2022 Director Plan.

3 unchanged sentences

Three Months Ended

Six Months Ended

(In Thousands)

2 unchanged sentences

Stock Options

The following table summarizes stock option activity during the three

months ended March 31, 2025:

The following table summarizes stock option activity during the six

months ended June 30, 2025:

Schedule of stock option activity

4 unchanged sentences

Outstanding at December 31, 2024

Outstanding at March 31, 2025

Exercisable at March 31, 2025

Outstanding at June 30, 2025

Exercisable at June 30, 2025

Restricted Stock Units

4 unchanged sentences

The following table summarizes restricted stock

unit activity during the three months ended March 31, 2025.

unit activity during the six months ended June 30, 2025.

Schedule of RSU activity

3 unchanged sentences

Shares issued upon vesting

Outstanding at March 31, 2025

Vested and deferred at March 31, 2025

Outstanding at June 30, 2025

Vested and deferred at June 30, 2025

Unrecognized compensation expense related to nonvested

restricted stock units was $ 887 as of March 31, 2025 and will be recognized over a weighted average period of 1.3 years.

restricted stock units was $ 687 as of June 30, 2025 and will be recognized over a weighted average period of 1.2 years.

The grant date

15 unchanged sentences

The following table summarizes performance unit

activity during the three months ended March 31, 2025.

activity during the six months ended June 30, 2025.

Schedule of performance units

3 unchanged sentences

Shares issued upon vesting

Nonvested at March 31, 2025

55 thousand additional shares granted in connection with the vesting of the 2022 award in

2025 due to above-target performance in accordance with the terms of the award.

Nonvested at June 30, 2025

Includes 55 thousand additional shares granted in connection with the vesting of the 2022 award in 2025 due to above-target performance in accordance with the terms of the award.

Unrecognized compensation expense related to nonvested

performance units is estimated to be approximately $ 2,076 as of March 31, 2025 and are expected to be recognized over a weighted average

performance units is estimated to be approximately $ 1,775 as of June 30, 2025 and are expected to be recognized over a weighted average

period of 1.16 years.

1 unchanged sentence

Retirement Benefits

Lifeway has a defined contribution plan which

is available to substantially all full-time employees.

Under the terms of the plan, the Company matches employee contributions under a

prescribed formula.

For the three months ended March 31, 2025 and 2024, total contribution expense recognized in the consolidated statements

of operations was $ 261 and $ 193 , respectively.

Lifeway has a defined contribution plan

which is available to substantially all full-time employees.

Under the terms of the plan, the Company matches employee contributions

under a prescribed formula.

For the six months ended June 30, 2025 and 2024, total contribution expense recognized in the

consolidated statements of operations was $ 413 and $ 362 , respectively.

For the three months ended June 30, 2025 and 2024, total

contribution expense recognized in the consolidated statements of operations was $ 152 and $ 169 , respectively.

Note 12 - Earnings Per Share

The following table summarizes the effects of the share-based compensation

awards on the weighted average number of shares outstanding used in calculating diluted earnings per share:

The following table summarizes the effects of

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

Schedule of weighted average number of shares outstanding

Three Months Ended

Six Months Ended

(In thousands)

24 unchanged sentences

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 measure of segment assets is reported on the Consolidated Balance Sheet

as total assets.

Products from which the reportable segment

derives its revenue

Lifeway’s primary product is drinkable

The Company manufactures (directly or through a co-manufacturer) and markets products under the Lifeway, Fresh Made, and GlenOaks

Farms brand names, as well as under private labels on behalf of certain customers.

Lifeway’s primary product is drinkable kefir.

The Company manufactures (directly or through a co-manufacturer) and markets products under the Lifeway, Fresh Made, and GlenOaks Farms

brand names, as well as under private labels on behalf of certain customers.

The Company’s product categories are:

6 unchanged sentences

Net sales of products by category were as follows

for the three months ended March 31:

for the six months ended June 30:

Schedule of segment products by category

1 unchanged sentence

Cream and other

ProBugs Kefir

Drinkable Yogurt

Net sales of products by category were as follows

for the three months ended June 30:

Drinkable Kefir other than ProBugs

Cream and other

ProBugs Kefir

Drinkable Yogurt

Significant Customers

1 unchanged sentence

food industry located within the United States.

Two major customers accounted for a total of 24 % and 25 % of net sales for the three months

ended March 31, 2025 and 2024, respectively.

Two customers accounted for a total of approximately 25 % and 26 % of net sales for

the six months ended June 30, 2025 and 2024, respectively.

Two customers accounted for a total of 25 % and 27 % of net sales for the

three months ended June 30, 2025 and 2024, respectively.

Geographic Information

Net sales outside the of the United States represented

less than 1% of total consolidated net sales for the three months ended March 31, 2025 and 2024.

Net sales are determined based on the

destination where the products are shipped by Lifeway.

less than 1% of total consolidated net sales for the six months and three months ended June 30, 2025 and 2024.

Net sales are determined

based on the destination where the products are shipped by Lifeway.

All the Company’s long-lived assets are

14 unchanged sentences

The Right expires at the end of November 4, 2025, or earlier if exercised.

Note 15 – Subsequent Events

Income Tax Legislation

The One Big Beautiful Bill Act (“OBBBA”),

which includes a broad range of tax reform provisions, was enacted on July 4, 2025 and the Company continues to evaluate the impact on

its financial position.

We currently do not expect the OBBB Act to have a material impact on our estimated annual effective tax rate or

cash flows in the current fiscal year.

Organic Milk Supply

To increase the supply of organic milk available

to the Company for the manufacture of finished goods, the Company is purchasing mature dairy cows (or the “herd”) which will

be managed by a third-party dairy facility (the “Dairy”), and expects to enter into a supply and purchase agreement (“SPA”)

with a COOP (the “COOP”) to purchase the milk produced by the herd.

The Company purchased 224 mature dairy cows during

July 2025 for $694 and will consider further mature dairy cow purchases in the future.

On July 1, 2025, the Company entered into a thirty-nine

month agreement (the “Herd Agreement”) with a third-party Dairy who will manage care of the herd, milk the herd, and sell

the milk to a COOP, with which Lifeway will have a separate supply and purchase agreement.

The Dairy will make monthly payments to Lifeway

over the agreement period in exchange for its right to sell milk produced by the herd to the COOP and has a right to purchase the herd

at the end of the agreement period for a nominal amount.

The Company is currently assessing the appropriate

accounting treatment for the purchase of the herd and agreement with the Dairy.

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-Q

Item 1. Financial Statements