What changed in this filing

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Item 1A. Risk Factors

2026-03-17 compared with 2025-03-14 · 225 added, 236 removed, 353 unchanged (57% of the section changed)

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RISKS RELATED TO OUR BUSINESS

Our product categories face a high level of

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

We compete with a limited number of other domestic

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

However, our kefir-based products compete

with other dairy products, notably spoonable and drinkable yogurt, and, increasingly, with non-dairy probiotic products that incorporate

kefir cultures but are not kefir.

We face significant competition for limited retailer shelf space in each of our product categories.

Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness

of marketing, promotional activity, and our ability to identify and satisfy consumer tastes and preferences.

We believe that our brands

have benefited in many cases from being the first to introduce products in their categories, and their success has attracted competition

from other food and beverage companies that produce branded products, as well as from private label competitors.

Some of our competitors,

such as Danone, General Mills, Chobani, Hain Celestial Group, and Nestle, have substantial financial and marketing resources.

These competitors

and others may be able to introduce innovative products more quickly or market their products more successfully than we can, which could

cause our growth rate to be slower than we anticipate and could cause sales to decline.

Our product categories face a high level

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

We compete with a limited number of other

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

However, our kefir-based

products compete with other dairy products, notably spoonable and drinkable yogurt, and, increasingly, with non-dairy probiotic

products that incorporate kefir cultures but are not kefir.

We face significant competition for limited retailer shelf space in each

of our product categories.

Competition in our product categories is based on product innovation, product quality, price, brand

recognition and loyalty, effectiveness of marketing, promotional activity, and our ability to identify and satisfy consumer tastes

and preferences.

We believe that our brands have benefited in many cases from being the first to introduce products in their

categories, and their success has attracted competition from other food and beverage companies that produce branded products, as

well as from private label competitors.

Some of our competitors, such as Danone, General Mills, Chobani, Hain Celestial Group,

Horizon and Nestle, have substantial financial and marketing resources.

These competitors and others may be able to introduce

innovative products more quickly or market their products more successfully than we can, which could cause our growth rate to be

slower than we anticipate and could cause sales to decline.

We also compete with producers of non-dairy products

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to compete successfully with other branded or private label offerings, demand for our products and our sales volumes could be negatively

Additionally, due to high levels of competition, certain

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

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

Additionally, due to high levels of competition,

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

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

We may not be able to successfully implement our business strategy

for our brands on a timely basis or at all.

We believe that our future success depends, in part,

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

product categories;

We believe that our future success depends, in

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

in our product categories;

drive increased sales;

acquire or establish new brands;

and create strategic alliances including potential joint ventures.

and create strategic alliances including potential

joint ventures.

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

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

If we fail to execute these and other important elements

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

One key element of our business strategy is to introduce

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

However, consumer

tastes and preferences change rapidly, and evolve over time.

If we fail to execute these and other important

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

One key element of our business strategy is to

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

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

Factors that may affect consumer tastes and preferences include:

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

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

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

Any of these events could adversely

affect our financial results and our business.

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

proves unsuccessful.

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

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

implement our business strategy.

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

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

Any of these events could

adversely affect our financial results and our business.

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

ultimately proves unsuccessful.

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

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

or successfully implement our business strategy.

Interruption of our supply chain could affect

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costs and capital expenditures.

We have several supply agreements with suppliers and

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

For certain items, we

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

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

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

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

Although other sources are available

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

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

and distribute products.

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

of operations.

We have several supply agreements with suppliers

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

For certain items,

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

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

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

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

Although other sources

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

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

ability to manufacture and distribute products.

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

condition or results of operations.

Disruption of our manufacturing or distribution

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

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

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

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

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

If we cannot maintain

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

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

The success of our business depends, in part,

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

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

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

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

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

affect our business.

Furthermore, damage or disruption to our manufacturing

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

We rely on a limited number of production and distribution

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

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

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

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

Furthermore, our insurance coverage may not be adequate

to cover all related costs.

We rely on a limited number of production and

distribution facilities.

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

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

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

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

Furthermore, our insurance coverage

may not be adequate to cover all related costs.

Our information technology systems are also critical

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

These threats and other events could disrupt our operations,

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

could require significant management attention

and resources;

These threats and other events could disrupt our

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

could require significant management

attention and resources;

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

and could negatively impact our reputation

among our customers and the public.

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

or liquidity.

Our debt and financial obligations could adversely

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

and could negatively impact

our reputation among our customers and the public.

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

of operations, or liquidity.

Our debt and financial obligations could

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

Although the Company does not have any indebtedness

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senior to those of our common stock, and, in the case of equity and equity-linked securities, our existing stockholders may experience

Although the Company believes that the Stockholders’ Agreement, dated as of October 1, 1999 (and as amended on December

24, 1999 and as extended in certain respects in eight extensions executed by certain of the parties to the Stockholders’ Agreement,

the last of which was dated as of December 31, 2009 (the “Stockholders’ Agreement”)), by and among Danone North America

Public Benefit Corporation or an affiliate thereof (collectively, “Danone”), Lifeway and certain Lifeway shareholders, is

invalid, the Stockholders’ Agreement purports to limit the Company’s ability to issue shares of Company common stock or convertible

securities outside of specified, limited situations without providing Danone a right of first refusal, in the case of issuances of Company

common stock, or first obtaining Danone’s prior consent, in the case of issuances of securities convertible into Company common

stock in excess of a specified amount.

If the Stockholders’ Agreement is valid or if third parties are unwilling to participate

in transactions due to the uncertainty relating to the validity of the Stockholders’ Agreement, the Company may not be able to raise

additional funds through the issuance of equity or equity-linked securities.

As of December 31, 2024, we had $0 outstanding under

the Revolving Credit Facility and note payable.

Our loan agreements contain certain restrictions and requirements that among other things:

As of December 31, 2025, we had $0 outstanding

under the Revolving Credit Facility.

Our loan agreement contains certain restrictions and requirements that among other things:

require us to maintain a quarterly fixed charge coverage ratio and minimum working capital ratio;

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impose on us financial and operational restrictions.

Our ability to meet our debt service obligations will

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

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

sell our assets, borrow more money or raise equity.

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

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

Our Revolving Credit Facility bears interest at variable

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

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

Our ability to meet our debt service obligations

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

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

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

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

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

Our Revolving Credit Facility bears interest at

variable rates.

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

Our loan agreements also contain provisions that restrict our ability

borrow money or guarantee debt;

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A substantial portion of our common stock

is held by members of the Smolyansky family and Danone, and they have the ability to control the outcome of matters submitted for stockholder

Our four largest shareholders, Julie Smolyansky

is held by members of the Smolyansky family, Danone and Divisadero Street Partners, L.P.

(“Divisadero”), and they have the

ability to control the outcome of matters submitted for stockholder approval.

Our five largest shareholders, Julie Smolyansky

(the Company’s chief executive officer and the daughter of our founder), Edward Smolyansky (our former chief operations officer

and son of our founder), Ludmila Smolyansky (a former member of our Board and the widow of our founder) and Danone, beneficially owned

approximately 18%, 21%, 8% and 23% of the Company’s outstanding common stock, respectively, as of December 31, 2024.

these shareholders, together, could significantly influence any matter requiring approval by our stockholders, including the election

or removal of all of our directors, amendments to our articles of incorporation and the approval or rejection of any merger, change of

control, or other significant corporate transaction.

It is unlikely that any person interested in acquiring Lifeway will be able to do

so without obtaining the consent of some combination of Julie Smolyansky, Edward Smolyansky, Ludmila Smolyansky and Danone.

The interests

of the Smolyansky family members and Danone could differ from those of other stockholders in ways that could be adverse to the interests

of other stockholders.

By exercising their influence, such stockholders could cause Lifeway to take actions that are at odds with the

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

Additionally, concentration of ownership could also harm the market price of our common stock if investors perceive disadvantages

in owning stock in a company of which a substantial portion of common stock is beneficially owned by a small number of stockholders.

and son of our founder), Ludmila Smolyansky (a former member of our Board and the widow of our founder), Danone North America PBC and

its affiliates (collectively, “Danone”) and Divisadero, beneficially owned approximately 18%, 20%, 6%, 23% and 9% of the Company’s

outstanding common stock, respectively, as of December 31, 2025.

Certain of these shareholders, together, could significantly influence

any matter requiring approval by our stockholders, including the election or removal of all of our directors, amendments to our articles

of incorporation and the approval or rejection of any merger, change of control, or other significant corporate transaction.

It is unlikely

that any person interested in acquiring Lifeway will be able to do so without obtaining the consent of some combination of Julie Smolyansky,

Edward Smolyansky, Ludmila Smolyansky, Danone and Divisadero.

The interests of the Smolyansky family members, Danone and Divisadero could

differ from those of other stockholders in ways that could be adverse to the interests of other stockholders.

By exercising their influence,

such stockholders could cause Lifeway to take actions that are at odds with the investment goals of institutional, short-term, non-voting,

or other non-controlling investors, or that have a negative effect on our stock price.

Additionally, concentration of ownership could

also harm the market price of our common stock if investors perceive disadvantages in owning stock in a company of which a substantial

portion of common stock is beneficially owned by a small number of stockholders.

Our business could be adversely affected

as a result of proposals to acquire the Company or other actions taken by stockholders related to a possible acquisition of the Company.

In September 2024, Danone publicly made an unsolicited

proposal to acquire all of the shares of Company common stock that it did not already own for $25.00 per share of Company common stock,

subject to due diligence, among other things.

Then in November 2024, Danone revised its proposal to $27.00 per share of Company common

Our Board carefully considered the initial proposal and the revised proposal in consultation with the Company’s independent

financial and legal advisors, and ultimately determined that both proposals substantially undervalued the Company and were not in the

best interests of the Company or its stockholders or other stakeholders.

These proposals, similar proposals that we may receive in the

future and any other actions by stockholders or others relating to a potential change of control transaction involving the Company could

interfere with our ability to execute our strategic plans, make it more difficult to attract and retain qualified executives and employees,

cause management distraction, require us to utilize more resources than anticipated towards review of strategic alternatives and result

in the loss of potential business opportunities, any of which could have a material negative impact on the Company.

In addition, our business

and operations may be harmed to the extent that our customers or suppliers or others believe that we cannot effectively compete in the

marketplace without completing a transaction, or if there is customer, supplier or employee uncertainty surrounding the future direction

of our product offerings and our strategy.

There can be no assurance that any such transaction will be completed now or in the future.

We have had to, and may continue to be required

to, incur fees and other expenses related to Danone’s proposals, including for third-party advisors.

Further, Danone’s proposals,

similar future proposals that we may receive in the future or any actual or perceived actions by our stockholders or others relating to

a potential transaction involving the Company may cause significant fluctuations in our stock price based upon temporary or speculative

market perceptions or other factors that do not necessarily reflect the Company’s underlying fundamentals and prospects.

The actions of certain of our stockholders

Proposals to acquire the Company that we may receive

in the future and any other actions by stockholders or others relating to a potential change of control transaction involving the Company

could interfere with our ability to execute our strategic plans, make it more difficult to attract and retain qualified executives and

employees, cause management distraction, require us to utilize more resources than anticipated towards review of strategic alternatives

and result in the loss of potential business opportunities, any of which could have a material negative impact on the Company.

our business and operations may be harmed to the extent that our customers or suppliers or others believe that we cannot effectively compete

in the marketplace without completing a transaction, or if there is customer, supplier or employee uncertainty surrounding the future

direction of our product offerings and our strategy.

There can be no assurance that any such transaction will be completed now or in the

Any proposals that we may receive in the future

or any actual or perceived actions by our stockholders or others relating to a potential transaction involving the Company may cause significant

fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect

the Company’s underlying fundamentals and prospects.

The actions of certain of our shareholders

could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and adversely impact our stock

We value constructive input from investors and

regularly engage in dialogue with our stockholders regarding strategy and performance.

regularly engage in dialogue with our shareholders regarding strategy and performance.

Our Board and management team are committed to

acting in the best interests of all of our stockholders.

Two of the Company’s largest stockholders,

Edward Smolyansky and Ludmila Smolyansky, filed a Schedule 13D/A with the U.S.

Securities and Exchange Commission (the “SEC”)

on August 14, 2024 announcing their intention, among other things, to nominate seven director candidates for election to our Board and

replace seven of the eight members of our Board.

Edward and Ludmila Smolyansky subsequently filed a preliminary consent solicitation statement

with the SEC in furtherance of this objective, and they have made public statements critical of our Board, management and strategy, repeatedly

called for the sale of the Company and publicly supported a sale of the Company for $25 per share.

A contested election with respect to

the Company’s directors could require us to incur substantial legal, public relations and other advisory fees and proxy solicitation

Further, we may choose to initiate, or may become subject to, litigation as a result of proposals by Edward and Ludmila Smolyansky

or other stockholders or proxy contests or matters relating thereto, which would serve as a further distraction to our Board and management

and could require us to incur significant additional costs.

We may be subject to continued or similar activism

in the future, which could cause us to incur significant expense, hinder execution of our business strategy and adversely impact the market

price of Company common stock.

Stockholder actions, including potential proxy contests, require significant time and attention by management

and our Board, potentially interfering with our ability to execute our strategic plan.

Such stockholder action could give rise to perceived

acting in the best interests of all of our shareholders.

We may be subject to shareholder activism in the

future, including nominations of candidates for election to our Board to replace current Board members or other shareholder proposals,

which could cause us to incur significant expense, hinder execution of our business strategy and adversely impact the market price of

Company common stock.

Shareholder actions, including potential proxy contests, require significant time and attention by management and

our Board, potentially interfering with our ability to execute our strategic plan.

Such shareholder action could give rise to perceived

uncertainties as to our future, adversely affect our relationships with our employees, customers or suppliers and make it more difficult

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These perceived uncertainties may also be exploited by our competitors

or other stockholders, which could result in lost business opportunities and make it more difficult to execute on our long-term strategic

or other shareholders, which could result in lost business opportunities and make it more difficult to execute on our long-term strategic

If customers choose to delay, defer or reduce transactions with us or do business with our competitors instead of us, then our business,

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We may be required to incur significant legal fees and other expenses

related to stockholder actions, and the attention of our management may be diverted by such actions.

related to shareholder actions, and the attention of our management may be diverted by such actions.

Any of these impacts could materially

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the ability of our Board to function effectively could be adversely affected, which could in turn adversely affect our ability to effectively

and timely implement our strategic plan and create additional value for our stockholders, and adversely affect our business, operating

and timely implement our strategic plan and create additional value for our shareholders, and adversely affect our business, operating

results and financial condition.

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Agreement may be protracted and costly.

As previously disclosed by the Company, the Company

believes that the Stockholders’ Agreement is void ab initio and unenforceable.

Danone has filed suit in the Circuit Court

of Cook County, Law Division, in part, to enforce the Stockholders’ Agreement.

The litigation regarding the Stockholders’

Agreement may be protracted and expensive, and under certain circumstances, the Company may be required to reimburse Danone for its legal

fees incurred in connection with such litigation.

Further, the uncertainty relating to the status of the Stockholders’ Agreement

may cause third parties to refuse to engage in activities that are purportedly prohibited by the Stockholders’ Agreement.

Danone has filed suit in the Circuit Court of Cook County, Law Division,

in part, to enforce the Stockholders’ Agreement.

Pursuant to the Cooperation Agreement, the parties have jointly sought a stay of

the pending litigation relating.

If such litigation is recommenced, it may be protracted and expensive, and under certain circumstances,

the Company may be required to reimburse Danone for its legal fees incurred in connection with such litigation.

Our shareholder rights plan includes terms

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Company common stock having a market value of twice that amount.

The Rights Agreement expires on November 4, 2025, unless earlier terminated

or the Rights are redeemed or exchanged by the Board.

Additional information regarding the Rights Agreement is contained in the Company’s

Current Report on Form 8-K filed with the SEC on November 5, 2024.

The Rights Agreement was originally scheduled to expire on November 4,

On October 29, 2025, the Company and the Rights Agent entered into the Amendment No.

1 to Shareholder Rights Agreement (the “Amendment”)

which extended the scheduled expiration of the Rights Agreement to October 29, 2026, unless earlier terminated or the Rights are redeemed

or exchanged by the Board.

Additional information regarding the Rights Agreement and the Amendment are contained in the Company’s

Current Report on Form 8-K filed with the SEC on November 5, 2024 and the Company’s Current Report on Form 8-K filed with the SEC

on October 30, 2025, respectively.

The Rights Agreement will cause substantial dilution

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product orders, payment patterns and default rates and increase our bad debt expense.

The increasing use of artificial intelligence

technologies by our competitors, customers, and suppliers could impact our competitive position.

Artificial intelligence (“AI”) and

machine learning technologies are rapidly evolving and are increasingly being adopted across industries, including in manufacturing.

competitors, customers, and suppliers may adopt AI technologies that could affect our competitive position.

If we fail to effectively

adopt and integrate AI technologies, or if our competitors do so more successfully, we could experience a decline in our competitive position.

We may also face risks from AI technologies used

by third parties, including vendors, customers, and service providers, over which we have limited control.

Any material disruption to

our supply chain or competitive disadvantage resulting from third-party AI adoption could adversely affect our business, financial condition,

and results of operations.

RISKS RELATED TO OUR INDUSTRY

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

The sale of food products for human consumption involves

the risk of injury to consumers.

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

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

the storage, processing, handling or transportation phases.

The sale of food products for human consumption

involves the risk of injury to consumers.

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

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

during the storage, processing, handling or transportation phases.

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

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illness, or death.

Under certain circumstances, we may be required to

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

Under certain circumstances, we may be required

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

our business.

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

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and facilities.

We rely on independent certification, such as certifications

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

The loss of any independent

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

company, which could harm our business.

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

of our customers require us to maintain.

We rely on independent certification, such as

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

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

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

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

that some of our customers require us to maintain.

We must comply with the requirements of independent

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

Increases in the cost of milk could reduce our

gross margin and profit.

Conventional and organic milk, our primary raw material,

is an agricultural commodity that is subject to price fluctuations.

Conventional milk prices were higher in fiscal 2024 than the prior

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

The supply and price of milk may be impacted

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

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

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

at a fixed price.

Increases in the cost of milk could reduce

our gross margin and profit.

Conventional and organic milk, our primary raw

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

Conventional milk prices were lower in fiscal 2025 than

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

The supply and price of milk

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

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

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

commitments at a fixed price.

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

As a result, increases in the

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

As a result, increases

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

In addition, the dairy industry continues to experience

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negatively affected.

Reduced availability of raw materials and other

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

Reduced availability of raw materials and

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

Our business depends heavily on raw materials

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

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

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

In 2024, costs to us increased modestly due to inflationary price increases.

However, for market conditions or competitive reasons, our customer pricing actions may lag input cost changes, or we may not be able

to pass along the full effect of increases in raw materials and other input costs as we incur them.

and other inputs in addition to conventional and organic raw milk, such as cultures, flavoring, packaging material, and other commodities.

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

access to raw materials from any of these suppliers.

For market conditions or competitive reasons, our customer pricing actions may lag

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

The organic ingredients we use in some of our

2 unchanged sentences

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

Our business is subject to various food, environmental,

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

affect our business.

Our business operations are subject to numerous requirements

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

safety matters.

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

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

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

Our activities, both in and outside of the

United States, are subject to extensive regulation.

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

Our business is subject to various food,

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

adversely affect our business.

Our business operations are subject to numerous

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

health and safety matters.

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

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

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

Our activities, both in and

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

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

FDA, USDA, the U.S.

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

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

in the foreign countries in which we do business.

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

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

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

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

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

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

cleanup of contamination in the environment.

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

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

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

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

authorities in the foreign countries in which we do business.

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

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

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

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

These laws and regulations govern, among other things, air

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

and the cleanup of contamination in the environment.

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

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

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

We are also subject to federal laws and regulations

18 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors