Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 15, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Lifeway Foods, Inc. | ||
Entity Central Index Key | 0000814586 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 15,604,480 | ||
Entity Public Float | $ 9,390,506 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Small Business | true | ||
Entity Emerging Growth | false | ||
Entity Shell Company | false | ||
Enitity Interactive Data Current | Yes | ||
Entity Incorporation State County Code | IL | ||
Entity File Number | 000-17363 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 7,926 | $ 3,836 |
Accounts receivable, net of allowance for doubtful accounts and discounts & allowances of $1,350 and $1,100 at December 31, 2020 and 2019, respectively | 8,002 | 6,692 |
Inventories, net | 6,930 | 6,392 |
Prepaid expenses and other current assets | 1,163 | 1,598 |
Refundable income taxes | 31 | 681 |
Total current assets | 24,052 | 19,199 |
Property, plant and equipment, net | 21,048 | 22,274 |
Operating lease right-of-use asset | 345 | 738 |
Intangible assets | ||
Goodwill and indefinite-lived intangibles | 12,824 | 12,824 |
Other intangible assets, net | 0 | 152 |
Total intangible assets | 12,824 | 12,976 |
Other assets | 1,800 | 1,800 |
Total assets | 60,069 | 56,987 |
Current liabilities | ||
Accounts payable | 5,592 | 5,282 |
Accrued expenses | 2,196 | 4,087 |
Accrued income taxes | 653 | 154 |
Total current liabilities | 8,441 | 9,523 |
Line of credit | 2,768 | 2,745 |
Operating lease liabilities | 165 | 488 |
Deferred income taxes, net | 1,764 | 922 |
Other long-term liabilities | 77 | 58 |
Total liabilities | 13,215 | 13,736 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock, no par value; 2,500 shares authorized; no shares issued or outstanding at 2020 and 2019 | 0 | 0 |
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 15,604 and 15,710 shares outstanding at 2020 and 2019 | 6,509 | 6,509 |
Paid-in-capital | 2,600 | 2,380 |
Treasury stock, at cost | (12,450) | (12,601) |
Retained earnings | 50,195 | 46,963 |
Total stockholders' equity | 46,854 | 43,251 |
Total liabilities and stockholders' equity | $ 60,069 | $ 56,987 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Allowance for doubtful accounts and discounts | $ 1,350 | $ 1,100 |
Stockholders' equity | ||
Preferred stock, no par value | ||
Preferred stock, shares authorized | 2,500 | 2,500 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, no par value | ||
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 17,274 | 17,274 |
Common stock, shares outstanding | 15,604 | 15,710 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Statement [Abstract] | ||
Net sales | $ 102,026 | $ 93,662 |
Cost of goods sold | 72,006 | 68,367 |
Depreciation expense | 3,087 | 3,146 |
Total cost of goods sold | 75,093 | 71,513 |
Gross profit | 26,933 | 22,149 |
Selling expenses | 10,197 | 11,062 |
General and administrative | 11,661 | 12,828 |
Amortization expense | 152 | 192 |
Total operating expenses | 22,010 | 24,082 |
Income (loss) from operations | 4,923 | (1,933) |
Other income (expense): | ||
Interest expense | (118) | (249) |
Fair value gain on investments | 0 | 1,731 |
Realized gain on investments, net | 4 | 1,413 |
(Loss) gain on sale of property and equipment | (28) | 189 |
Other income | 47 | 84 |
Total other (expense) income | (95) | 3,168 |
Income before provision for income taxes | 4,828 | 1,235 |
Provision for income taxes | 1,596 | 782 |
Net income | $ 3,232 | $ 453 |
Basic earnings per common share | $ 0.21 | $ 0.03 |
Diluted earnings per common share | $ 0.21 | $ 0.03 |
Weighted average number of shares outstanding - Basic | 15,597 | 15,748 |
Weighted average number of shares outstanding - Diluted | 15,766 | 15,804 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | In treasury | Paid-In Capital | Retained Earnings | Total |
Beginning Balance, shares at Dec. 31, 2018 | 17,274 | ||||
Beginning Balance, Treasury stock shares at Dec. 31, 2018 | (1,460) | ||||
Beginning Balance, value at Dec. 31, 2018 | $ 6,509 | $ (12,970) | $ 2,303 | $ 46,563 | $ 42,405 |
Cumulative impact of change in accounting principles, net of tax | (53) | (53) | |||
Issuance of common stock in connection with stock-based compensation, shares | 107 | ||||
Issuance of common stock in connection with stock-based compensation, value | $ 907 | (438) | 469 | ||
Treasury stock purchased, shares | (211) | ||||
Treasury stock purchased, value | $ (538) | (538) | |||
Stock-based compensation | 515 | 515 | |||
Net income | 453 | 453 | |||
Ending Balance, shares at Dec. 31, 2019 | 17,274 | ||||
Ending Balance, Treasury stock shares at Dec. 31, 2019 | (1,564) | ||||
Ending Balance, value at Dec. 31, 2019 | $ 6,509 | $ (12,601) | 2,380 | 46,963 | 43,251 |
Issuance of common stock in connection with stock-based compensation, shares | 74 | ||||
Issuance of common stock in connection with stock-based compensation, value | $ 556 | (62) | 494 | ||
Treasury stock purchased, shares | (179) | ||||
Treasury stock purchased, value | $ (405) | (405) | |||
Stock-based compensation | 282 | 282 | |||
Net income | 3,232 | 3,232 | |||
Ending Balance, shares at Dec. 31, 2020 | 17,274 | ||||
Ending Balance, Treasury stock shares at Dec. 31, 2020 | (1,669) | ||||
Ending Balance, value at Dec. 31, 2020 | $ 6,509 | $ (12,450) | $ 2,600 | $ 50,195 | $ 46,854 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net income | $ 3,232 | $ 453 |
Adjustments to reconcile net income to operating cash flow: | ||
Depreciation and amortization | 3,239 | 3,338 |
Non-cash interest expense | 23 | 23 |
Non-cash rent expense | (37) | (17) |
Bad debt expense | (6) | 7 |
Deferred revenue | (91) | (97) |
Reserve for inventory obsolescence | 0 | (52) |
Stock-based compensation | 393 | 838 |
Deferred income taxes | 841 | 533 |
Fair value gain on investment | 0 | (1,731) |
Net gain on sale of investment | 0 | (1,413) |
(Loss) gain on sale of property and equipment | 28 | (189) |
(Increase) decrease in operating assets: | ||
Accounts receivable | (1,304) | (423) |
Inventories | (538) | (523) |
Refundable income taxes | 649 | 2,067 |
Prepaid expenses and other current assets | 423 | (526) |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 311 | 710 |
Accrued expenses | (1,278) | 783 |
Operating lease asset amortization/liability | 0 | (17) |
Accrued income taxes | 500 | 47 |
Net cash provided by operating activities | 6,385 | 3,811 |
Cash flows from investing activities: | ||
Purchases of investments | 0 | (15) |
Proceeds from sale of investments | 0 | 1,509 |
Purchases of property and equipment | (1,895) | (1,178) |
Proceeds from sale of property and equipment | 5 | 522 |
Net cash (used in) provided by investing activities | (1,890) | 838 |
Cash flows from financing activities: | ||
Purchase of treasury stock | (405) | (538) |
Repayment of line of credit | 0 | (3,273) |
Net cash used in financing activities | (405) | (3,811) |
Net increase in cash and cash equivalents | 4,090 | 838 |
Cash and cash equivalents at the beginning of the period | 3,836 | 2,998 |
Cash and cash equivalents at the end of the period | 7,926 | 3,836 |
Supplemental cash flow information: | ||
Cash paid for income taxes, net of (refunds) | (426) | (1,865) |
Cash paid for interest | 99 | 259 |
Non-cash investing and financing activities | ||
Right-of-use assets recognized at ASU 2016-02 transition | 0 | 944 |
Operating lease liability recognized at ASU 2016-02 transition | 0 | 997 |
Increase (decrease) in right-of-use assets and operating lease liabilities | (44) | 305 |
Issuance of common stock under equity incentive plans | $ 522 | $ 0 |
1. Basis of presentation
1. Basis of presentation | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Note 1 – Basis of presentation The accompanying consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Our consolidated financial statements include all of the assets, liabilities and results of operations of Lifeway’s wholly owned subsidiaries (collectively “Lifeway” or the “Company”). All inter-company balances and transactions have been eliminated in the consolidated financial statements. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of significant accounting policies Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the reserve for promotional allowances, the valuation of goodwill and intangible assets, stock-based and incentive compensation, and deferred income taxes. Going Concern The Company follows the guidance in Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements - Going Concern which requires management to assess an entity’s ability to continue as a going concern and to provide related disclosure in certain circumstances. There were no conditions or events, when considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Revenue Recognition We sell food and beverage products across select product categories to customers predominantly within the United States (see Note 12, Segments, Products and Customers). We also sell bulk cream, a byproduct of our fluid milk manufacturing process. In accordance with ASC 606, Revenue from Contracts with Customers, we recognize revenue when control over the products transfers to our customers, which generally occurs upon delivery to our customers or their common carriers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, using the five-step method required by ASC 606. 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 products which provide immediate benefit to the customer. We account for product shipping and handling as fulfillment activities with revenues for these activities recorded within net revenue and costs recorded within cost of goods sold. Any taxes collected on behalf of government authorities are excluded from net revenues. Variable consideration, which typically includes volume-based rebates, 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, we do not capitalize contract inception costs and we capitalize product fulfillment costs in accordance with U.S. GAAP and our inventory policies. We do not have any significant deferred revenue or unbilled receivables at the end of a period. We generally do not receive noncash consideration for the sale of goods, nor do we grant payment financing terms greater than one year. Accounts Receivable We provide credit terms to customers in-line with industry standards and maintain allowances for potential credit losses based on historical experience. 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. Cash and cash equivalents Lifeway considers cash and all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which 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. Lifeway has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to its cash and cash equivalents. Inventories 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 cost. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets as follows: Asset Useful Life Buildings and improvements 31 and 39 years Machinery and equipment 5 – 12 years Office equipment 3 – 7 years Vehicles 5 years Leasehold improvements Shorter of expected useful life or lease term We perform impairment tests when circumstances indicate that the carrying value of an asset may not be recoverable. Expenditures for repairs and maintenance, which do not improve or extend the life of the assets, are expensed as incurred. Intangible Assets Goodwill and indefinite-lived intangible assets Goodwill represents the excess purchase price over the fair value of the net tangible and other identifiable intangible assets acquired. We estimate the fair value of our one reporting unit annually (as of December 31), or more frequently if certain conditions exist, using a combination of the fair values derived from both the income approach and the market approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on our estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used to determine the present value of future cash flows is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. 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 resulting fair value, based on the income and market approaches, is then compared to the carrying value to determine if impairment is necessary. We assess whether indefinite-lived intangible asset impairment exists using both qualitative and quantitative assessments annually in the fourth quarter or more frequently, if certain conditions exist. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, based on this qualitative assessment, we determine it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount or if we elect not to perform a qualitative assessment, a quantitative assessment is performed to determine whether an indefinite-lived intangible asset impairment exists. We test the indefinite-lived intangible assets for impairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess of the carrying value over the amount of fair value is recognized as an impairment. Any such impairment would be recognized in full in the reporting period in which it has been identified. Definite lived intangible assets Intangible assets acquired in a business combination are recorded at their estimated fair values at the date of acquisition. Identifiable intangible assets with finite lives are amortized over their estimate useful lives as follows: Asset Useful Life Recipes 4 years Trade names 8-15 years Formula 10 years Customer lists 5-10 years Customer relationships 12 years 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 market place including changes in the prices paid for our products or changes in the size of the market for our 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 Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Level 2 – Level 3. 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. During October 2019, the Company sold approximately 45.6% of one of its investments recorded under the cost method and recognized a $1,438 gain on sale of investment, which is recorded in other income (expense) on the consolidated statements of operations. The Company also recorded an unrealized gain of $1,731 resulting from the observable price change of this transaction, which is recorded in other income (expense) on the consolidated statements of operations. As of December 31, 2020, and 2019, the Company has one investment without a readily determinable fair value which is recorded at $1,800 in other assets on the consolidated balance sheet. Income taxes 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. Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the year in which the deferred tax assets or liabilities are expected to be realized or settled. The principal sources of temporary differences are different depreciation and amortization methods for financial statement and tax purposes, incentive compensation, unrealized gain, capitalization of indirect inventory costs for tax purposes, reserves for excess and obsolete inventory and the allowance for doubtful accounts. Valuation allowances are recorded to reduce deferred tax assets when it is more likely not that a tax benefit will not be realized. Deferred income tax expense or benefit is based on the changes in the asset or liability from period to period. Lifeway has analyzed filing positions in all the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. We recognize the income tax benefit from an uncertain tax position when it is more likely than not that, based on technical merits, the position will be sustained upon examination, including resolutions of any related appeals or litigation processes. We apply a more likely than not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, we recognize the amount of tax benefit that has a greater than 50% likelihood of being ultimately realized upon settlement. Future changes in judgment related to the expected ultimate resolution of uncertain tax positions will affect earnings in the period of such change. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. The total amount of unrecognized tax benefits can change due to audit settlements, tax examination activities, statute expirations and the recognition and measurement criteria under accounting for uncertainty in income taxes. Lifeway recognizes penalties and interest related to unrecognized tax benefits in the provision (benefit) for income taxes in the consolidated statements of operations. 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 awards is equal to the closing price of our stock on the date of grant. We do not estimate forfeitures in measuring the grant date fair value, but rather account for forfeitures as they occur. The Company issues share based equity awards from treasury shares. Treasury stock Treasury stock is recorded using the cost method. Advertising costs Lifeway expenses advertising costs as incurred and reported in Selling expense in our consolidated statements of operations. For the years ended December 31, 2020 and 2019 total advertising expenses were $2,407 and $3,394, respectively. Earnings (loss) per common share Basic earnings (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares issued and outstanding during the reporting period. Diluted earnings (loss) per common share is computed by dividing net income (loss) 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. For the years ended December 31, 2020 and 2019, there were 169 and 56 common stock equivalents outstanding, respectively. Recent accounting pronouncements Issued by not yet effective In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, 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 generally accepted accounting principles (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. Management is currently evaluating the impact that the new guidance will have on the consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance is intended to enhance and simplify various aspects of the accounting for income taxes. The new guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. In June 2016, the FASB issued ASU No. 2016-13, 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 (Topic 842): Effective Dates, and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The 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. Management is currently evaluating the impact that the new guidance will have on the consolidated financial statements. |
3. Inventories, net
3. Inventories, net | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Note 3 – Inventories, net Inventories consisted of the following: December 31, 2020 2019 Ingredients $ 1,725 $ 1,942 Packaging 2,234 2,230 Finished goods 2,971 2,220 Total inventories, net $ 6,930 $ 6,392 |
4. Property, Plant and Equipmen
4. Property, Plant and Equipment, net | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Note 4 – Property, Plant and Equipment, net Property, plant and equipment consisted of the following: December 31, 2020 2019 Land $ 1,565 $ 1,565 Buildings and improvements 17,834 17,332 Machinery and equipment 31,707 30,670 Vehicles 778 778 Office equipment 857 851 Construction in process 228 362 52,969 51,558 Less accumulated depreciation (31,921 ) (29,284 ) Total property, plant and equipment, net $ 21,048 $ 22,274 |
5. Goodwill and Intangible Asse
5. Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5 – Goodwill and Intangible Assets Goodwill and indefinite-lived intangible assets consisted of the following: December 31, 2020 2019 Goodwill $ 10,368 $ 10,368 Accumulated impairment losses (1,244 ) (1,244 ) Goodwill 9,124 9,124 Brand names 3,700 3,700 Goodwill and indefinite lived intangible assets $ 12,824 $ 12,824 Goodwill The Company performed the annual impairment assessment of goodwill for our single reporting unit as of December 31, 2020 and 2019, noting no impairment loss. Considerable management judgment is necessary to evaluate goodwill for impairment. We estimate fair value using widely accepted valuation techniques including discounted cash flows and market multiples analysis with respect to our single reporting unit. These valuation approaches are dependent upon a number of factors, including estimates of future growth rates, our cost of capital, capital expenditures, income tax rates, and other variables. Assumptions used in our valuations were consistent with our internal projections and operating plans. Our discounted cash flows forecast could be negatively impacted by 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 market place including changes in the prices paid for our products or changes in the size of the market for our products. Additionally, under the market approach analysis, we used significant other observable inputs including various guideline company comparisons. We base our fair value estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain. Changes in these estimates or assumptions could materially affect the determination of fair value and the conclusions of the quantitative goodwill test for our one reporting unit. Indefinite-lived Intangible Assets The Company performed the annual impairment assessment on the indefinite-lived intangible asset as of December 31, 2020 and 2019, resulting in no impairment losses. Finite-lived Intangible Assets Other intangible assets, net consisted of the following: December 31, 2020 2019 Recipes $ 44 $ 44 Customer lists and other customer related intangibles 4,529 4,529 Customer relationships 985 985 Trade names 2,248 2,248 Formula 438 438 8,244 8,244 Accumulated amortization (8,244 ) (8,092 ) Intangible assets, net $ – $ 152 |
6. Accrued Expenses
6. Accrued Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Note 6 – Accrued Expenses Accrued expenses consisted of the following: December 31, 2020 2019 Payroll and incentive compensation $ 1,366 $ 3,009 Real estate taxes 341 398 Current portion of operating lease liabilities 179 285 Other 310 395 Total accrued expenses $ 2,196 $ 4,087 |
7. Debt
7. Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Note 7 – Debt Line of Credit On May 7, 2018, Lifeway entered into an Amended and Restated Loan and Security Agreement (the “Revolving Credit Facility”) with its existing lender. On April 10, 2019, effective March 31, 2019, Lifeway entered into the First Modification to the Amended and Restated Loan and Security Agreement (the “Modified Revolving Credit Facility”) with its existing lender. Under the amendment, the Modified Revolving Credit Facility provides for a revolving line of credit up to a maximum of $9 million (the “Revolving Loan”) with an incremental facility not to exceed $5 million (the “Incremental Facility” and together with the Revolving Loan, the “Loans”). On December 10, 2019, Lifeway entered into the Second Modification to the Amended and Restated Loan and Security Agreement, as amended, (the “Second Modification”) with its existing lender. The Second Modification amends the Amended and Restated Loan and Security Agreement, as amended, by redefining the “Borrowing Base” and further clarifying the definitions of “Eligible Accounts” and “Eligible Inventory.” The “Borrowing Base” under this amendment means, generally, an amount equal to the sum of (a) 85% of the unpaid amount of all eligible accounts receivable, plus (b) 50% of the value of all eligible inventory. The Second Modification also addresses the calculation of interest after the potential discontinuance of LIBOR and its replacement with a replacement benchmark interest rate. On September 30, 2020, Lifeway entered into the Third Modification to the Amended and Restated Loan and Security Agreement, as amended, (the “Third Modification”) with its existing lender. The Third Modification amends the Amended and Restated Loan and Security Agreement, as amended, by removing the monthly borrowing base reporting requirement effective September 30, 2020, including a covenant to maintain a quarterly minimum working capital financial covenant, as defined, of no less than $11.25 million each of the fiscal quarters commencing the fiscal quarter ending December 31, 2020 through the expiration date, and eliminating the tier interest pricing structure. The Amended and Restated Loan and Security Agreement continues to provide Lifeway with a revolving line of credit up to a maximum of $5 million (the “Revolving Loan”) and provides the Borrowers with an incremental facility not to exceed $5 million (the “Incremental Facility” and together with the Revolving Loan, the “Loans”). The Termination Date of the Revolving Loan was extended to June 30, 2025, unless earlier terminated. Except as described above, as amended, the Modified Revolving Credit Facility remains substantively unchanged and in full force and effect, including customary representations, warranties, and covenants on the part of Lifeway, including financial covenants requiring us to maintain a fixed charge coverage ratio of no less than 1.25 to 1.00 each of the fiscal quarters ending through the expiration date. The Modified Revolving Credit Facility 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 Modified Revolving Credit Facility may be accelerated. The loans and all other amounts due and owed under the Revolving Credit Facility and related documents are secured by substantially all of our assets. As of December 31, 2020, we had $2,768 net of $9 of unamortized deferred financing costs, outstanding under the Revolving Credit Facility. We had $2,223 available for future borrowings as of December 31, 2020. As amended, all outstanding amounts under the Loans bear interest, at Lifeway’s election, at either the lender Base Rate (the Prime Rate minus 1.00%) or the LIBOR plus 1.95%, payable monthly in arrears. Lifeway is also required to pay a quarterly unused line fee of 0.20% and, in conjunction with the issuance of any letters of credit, a letter of credit fee of 0.20%. Lifeway’s interest rate on debt outstanding under our Revolving Credit Facility as of December 31, 2020 was 2.10%. We were in compliance with the fixed charge coverage ratio and minimum working capital covenants at December 31, 2020. |
8. Leases
8. Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | Note 8 – Leases Lifeway has operating leases for two retail stores for its Lifeway Kefir Shop subsidiary and office space which includes fixed base rent payments as well as variable rent payments to reimburse the landlord for operating expenses and taxes. The Company terminated its office space leases in June 2020. The Company also lease certain machinery and equipment with fixed base rent payments and variable costs based on usage. Remaining lease terms for these leases range from less than 1 year to 4 years. Some of our leases include options to extend the leases for up to 5 years and have been included in our calculation of the right-of-use asset and lease liabilities. Lifeway includes only fixed payments for lease components in the measurement of the right-of-use asset and lease liability. Variable lease payments are those that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time. There are no residual value guarantees. We do not currently have leases which meet the finance lease classification as defined under ASC 842. We do not record leases with an initial term of 12 months or less on the balance sheet. Expense for these short-term leases is recorded on a straight-line basis over the lease term. Total lease expense was $440 and $688 (including short term leases) for the years ended December 31, 2020 and 2019, respectively. Lifeway treats contracts as a lease when the contract conveys the right to use a physically distinct asset for a period of time in exchange for consideration, we direct the use of the asset and obtain 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. We have elected the practical expedient to combine lease and non-lease components into a single component for all of its leases. For many of our leases such as real estate leases, we are unable to determine an implicit rate; therefore, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments for those leases. We include 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 we will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Future maturities of lease liabilities were as follows Year Operating Leases 2021 $ 198 2022 154 2023 18 2024 2 Total lease payments 372 Less: Interest (28 ) Present value of lease liabilities $ 344 The weighted-average remaining lease term for our operating leases was 2.0 years as of December 31, 2020. The weighted average discount rate of our operating leases was 7.75% as of December 31, 2020. Cash paid for amounts included in the measurement of lease liabilities was $384 for the year ended December 31, 2020. |
9. Commitments And Contingencie
9. Commitments And Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Note 9 – Commitments and Contingencies Litigation Lifeway is engaged in various legal actions, claims, audits, and proceedings arising in the normal course of business, including commercial disputes, product liabilities, intellectual property matters and employment-related matters resulting from our business activities. We record accruals for outstanding legal matters when we believe it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. We evaluate, 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, we do not establish an accrued liability. Currently, none of our accruals for outstanding legal matters are material individually or in the aggregate to our 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 our business, financial condition, results of operations, or cash flows. However, if we ultimately are required to make payments in connection with an adverse outcome, it is possible that it could have a material adverse effect on our business, financial condition, results of operations or cash flows. Lifeway’s contingencies are subject to substantial uncertainties, including for each such contingency the following, among other factors: (i) the procedural status of the case; (ii) whether the case has or may be certified as a class action suit; (iii) the outcome of preliminary motions; (iv) the impact of discovery; (v) whether there are significant factual issues to be determined or resolved; (vi) whether the proceedings involve a large number of parties and/or parties and claims in multiple jurisdictions or jurisdictions in which the relevant laws are complex or unclear; (vii) the extent of potential damages, which are often unspecified or indeterminate; and (viii) the status of settlement discussions, if any, and the settlement posture of the parties. Consequently, Lifeway cannot predict with any reasonable certainty the timing or outcome of such contingencies, and we are unable to estimate a possible loss or range of loss. |
10. Income taxes
10. Income taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 10 – Income taxes The provision (benefit) for income taxes consists of the following: For the Years Ended December 31, 2020 2019 Current: Federal $ 398 $ (27 ) State and local 357 276 Total current 755 249 Deferred 841 533 Provision for income taxes $ 1,596 $ 782 A reconciliation of the U.S. federal statutory rate to the effective tax rate used in the provision for income taxes is as follows: 2020 2019 Amount Percentage Amount Percentage Federal income tax at statutory rate $ 1,015 21.0% $ 259 21.0% State and local tax, net 428 8.9% 180 14.5% Other permanent differences 12 0.3% 14 1.1% Section 162m 296 6.1% 105 8.5% Stock based compensation 157 3.2% 149 12.1% Uncertain tax positions (43 ) (0.9% ) 79 6.4% Change in tax rates (245 ) (5.0% ) 8 0.7% Change in tax estimate - 0.0% (12 ) (1.0% ) Other (24 ) (0.5% ) – 0.0% Provision for income taxes $ 1,596 33.1% $ 782 63.3% The tax effects of temporary differences giving rise to deferred income tax assets and liabilities are as follows: December 31, 2020 2019 Deferred tax liabilities attributable to: Accumulated depreciation and amortization $ (2,101 ) $ (2,015 ) Unrealized gains (467 ) (465 ) Total deferred tax liabilities (2,568 ) (2,480 ) Deferred tax assets attributable to: Net operating losses 6 507 Accrued compensation 149 89 Incentive compensation 168 473 Inventory 323 312 Allowances for doubtful accounts and discounts 109 115 Deferred revenue 15 40 Other 34 22 Total net deferred tax assets 804 1,558 Net deferred tax liabilities $ (1,764 ) $ (922 ) The following table details the Company's tax attributes related to net operating losses for which it has recorded deferred tax assets. Tax Attributes Gross Amount Net Amount Expiration Years State net operating losses $ 116 $ 6 2035 $ 6 A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2020 2019 Balance at January 1 $ 142 $ 63 Additions based on tax positions of prior years – 79 Reduction for tax positions of prior years (47 ) – Balance at December 31 $ 95 $ 142 Lifeway is subject to U.S. federal income tax as well as income tax in multiple state and city jurisdictions. With limited exceptions, our calendar year 2017 and subsequent federal and state tax years remain open by statute. The amount of unrecognized tax benefits that, if recognized, would impact the annual effective tax rate was not significant 2.0% The amount of interest and penalties recognized in the consolidated statements of operations was $(16) and $41 during 2020 and 2019, respectively. The amount of accrued interest and penalties recognized in the consolidated balance sheets was $44 and $60 at December 31, 2020 and 2019, respectively. |
11. Stock-based and Other Compe
11. Stock-based and Other Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Note 11 – Stock-based and Other Compensation In December 2015, Lifeway stockholders approved the 2015 Omnibus Incentive Plan, which authorized the issuance of an aggregate of 3.5 million shares to satisfy awards of stock options, stock appreciation rights, unrestricted stock, restricted stock, restricted stock units, performance shares and performance units to qualifying employees. 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, 2020, 3.317 million shares remain available under the Omnibus Incentive Plan. While we plan to continue to issue awards pursuant to the Plan at least annually, we may choose to suspend the issuance of new awards in the future and may grant additional awards at any time including issuing special grants of restricted stock, restricted stock units, and stock options to attract and retain new and existing executives. Stock Options The following table summarizes stock option activity during the year ended December 31, 2020: Options Weighted Weighted Aggregate Outstanding at December 31, 2019 41 $ 10.42 6.22 $ – Granted – – – Exercised – – – – Forfeited – – – – Outstanding at December 31, 2020 41 $ 10.42 5.22 $ – Exercisable at December 31, 2020 41 $ 10.42 5.22 $ – As of December 31, 2019, all outstanding options were vested and there was no remaining unearned compensation expense. For the year ended December 31, 2019 total stock-based compensation expense recognized in the consolidated statements of operations was $1. For the year ended December 31, 2019, no tax-related benefits were recognized. We measure the fair value of stock options using the Black-Scholes option pricing model. The expected term of options granted was based on the weighted average time of vesting and the end of the contractual term. We utilized this simplified method as we did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. Restricted Stock Awards A Restricted Stock Award (“RSA”) represents the right to receive one share of common stock in the future. RSAs have no exercise price. The grant date fair value of the awards is equal to our closing stock price on the grant date. The following table summarizes RSA activity during the year ended December 31, 2020. RSA’s Outstanding at December 31, 2019 47 Granted 57 Shares issued upon vesting (13 ) Forfeited (13 ) Outstanding at December 31, 2020 78 Weighted average grant date fair value per share outstanding $ 3.06 We expense RSA’s over the service period. For the years ended December 31, 2020 and 2019 total stock-based compensation expense recognized in the consolidated statements of operations was $83 and $109, respectively. For the years ended December 31, 2020 and 2019 tax-related benefits of $22 and $30, respectively, were also recognized. As of December 31, 2020, the total remaining unearned compensation related to non-vested RSA’s was $134, which is expected to be amortized over the weighted-average remaining service period of 1.36 years. Long-Term Incentive Plan Compensation Lifeway established long-term incentive-based compensation programs for fiscal year 2017 (the “2017 Plan”) and for fiscal year 2019 (the “2019 Plan”) for certain senior executives and key employees (the “participants”). Under both the 2017 Plan, long-term incentive compensation is based on Lifeway’s achievement of certain sales and adjusted EBITDA performance levels versus respective targets established by the Board for each fiscal year. Under the 2019 Plan, long-term equity incentive compensation is based on Lifeway’s achievement of four strategic milestones over a three-year period from Fiscal 2019 through Fiscal 2021. 2017 Plan Under the 2017 Plan, collectively the participants had the opportunity to earn cash and equity-based incentive compensation in amounts ranging from $0 to $11,025 depending on Lifeway’s performance levels compared to the respective targets and the participants performance compared to their individual objectives. The equity portion of the incentive compensation is payable in restricted stock that vests one-third in each of the three years from the 2017 grant dates. For the years ended December 31, 2020 and 2019, $49 and $288 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively. As of December 31, 2020, there was no remaining expense. 2019 Plan Under the 2019 Plan, collectively the participants have the opportunity to earn equity-based incentive compensation in amounts ranging from $0 to $1,733 depending on Lifeway’s performance levels compared to the respective targets. The equity-based incentive compensation is payable in restricted stock that vests 50% of unvested shares in year one, 50% of unvested shares in year two, and 100% of remaining unvested shares in year three from the 2019 grant date. For the years ended December 31, 2020 and 2019, $112 and $51 was expensed under the 2019 Plan as stock-based compensation expense in the consolidated statements of operations, respectively. 2019 Retention Award During 2019, we awarded a special retention grant (the “2019 Retention Award”) of restricted stock to senior executives and key employees (the “participants”). The equity-based incentive compensation is payable in restricted stock that vests one-third in March 2019, one-third in March 2020 and one-third in March 2021. For the years ended December 31, 2020 and 2019, $87 and $342 was expensed as stock-based compensation expense in the consolidated statements of operations, respectively. As of December 31, 2020, the total remaining unearned compensation was $14, which will be recognized in 2021, subject to vesting. 2020 CEO Incentive Award During the fourth quarter 2020, we awarded a long-term equity-based incentive of $750 to our Chief Executive Officer (the “2020 CEO Award”) depending on Lifeways 2020 performance levels compared to the respective targets. The equity-based incentive compensation is payable in restricted stock that vests one-third in March 2022, one-third in March 2023, and one-third in March 2024. The issuance of vested equity awards is subject to approval under the Stock Purchase Agreement dated October 1, 1999. For the year ended December 31, 2020, $50 was expensed as stock-based compensation expense in the consolidated statements of operations. As of December 31, 2020, the total remaining unearned compensation was $700, of which $364 will be recognized in 2021, $221 in 2022, $98 in 2023, and $17 in 2024, respectively, subject to vesting. 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 formula. For the years ended December 31, 2020 and 2019 total contribution expense recognized in the consolidated statements of operations was $420 and $367, respectively. |
12. Segments, Products and Cust
12. Segments, Products and Customers | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Segments, Products and Customers | Note 12 – Segments, Products and Customers Lifeway’s primary product is drinkable kefir, a cultured dairy product. Lifeway Kefir is tart and tangy, high in protein, calcium and vitamin D. Thanks to our exclusive blend of kefir cultures, each cup of kefir contains 12 live and active cultures and 25 to 30 billion beneficial CFU (Colony Forming Units) at the time of manufacture. We manufacture (directly or through co-packers) and market products under the Lifeway and Fresh Made brand names, as well as under private labels on behalf of certain customers. Our product categories are: · Drinkable Kefir, sold in a variety of organic and non-organic sizes, flavors, and types, including low-fat, non-fat, whole milk, protein, and BioKefir (a 3.5 oz. kefir with additional probiotic cultures). · European-style soft cheeses, including farmer cheese, white cheese, and Sweet Kiss. · Cream and other, which consists primarily of cream, a byproduct of making our kefir. · ProBugs, a line of kefir products designed for children. · Other Dairy, which includes Cupped Kefir and Icelandic Skyr, a line of strained kefir and yogurt products in resealable cups. · Frozen Kefir, available in soft serve and pint-size containers. Lifeway has determined that it has one reportable segment based on how our chief operating decision maker manages the business and in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing our performance, has been identified collectively as the Chief Financial Officer, the Chief Operating Officer, the Chief Executive Officer, and Chairperson of the board of directors. Substantially all of our consolidated revenues relate to the sale of cultured dairy products that we produce using the same processes and materials and are sold to consumers through a common network of distributors and retailers in the United States. Net sales of products by category were as follows for the years ended December 31: 2020 2019 In thousands $ % $ % Drinkable Kefir other than ProBugs $ 81,437 80% $ 71,822 77% Cheese 12,905 13% 11,459 12% Cream and other 2,872 3% 4,228 4% ProBugs Kefir 2,733 2% 2,780 3% Other dairy 1,594 1% 1,756 2% Frozen Kefir (a) 485 1% 1,617 2% Net Sales $ 102,026 100% $ 93,662 100% (a) Includes Lifeway Kefir Shop sales Significant Customers |
13. Share repurchase program
13. Share repurchase program | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Share repurchase program | Note 13 – Share repurchase program On September 24, 2015, Lifeway’s Board of Directors authorized a stock repurchase program (the “2015 stock repurchase program”) under which we may, from time to time, repurchase shares of our common stock for an aggregate purchase price not to exceed the lesser of $3,500 or 250 shares. On November 1, 2017, the Board amended the 2015 stock repurchase program (the “2017 amendment”), by adding to (i.e., exclusive of the shares previously authorized under the 2015 stock repurchase program) the authorization the lesser of $5,185 or 625 shares. Under the amended authorization, share repurchases may be executed through various means, including without limitation in the open market or in privately negotiated transactions, in accordance with all applicable securities laws and regulations, including without limitation Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The extent to which Lifeway repurchases its shares and the timing of such repurchases will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations. The repurchase program does not obligate us to purchase any shares, and the program may be terminated, suspended, increased, or decreased by our Board in its discretion at any time. Pursuant to the share repurchase program, during the year ended December 31, 2020, the Company repurchased 179 shares at a cost of $405 or approximately $2.27 per share. During the year ended December 31, 2019, the Company repurchased 211 shares at a cost of $538 or approximately $2.55 per share. During the year, the Company reached the amended threshold of 625 shares and therefore no shares of common stock remain available to be purchased under the 2017 Repurchase Plan Amendment as of December 31, 2020. |
14. Related party transactions
14. Related party transactions | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 14 – Related party transactions Lifeway obtains consulting services from the Chairperson of its board of directors. Fees earned are included in general and administrative expenses in the accompanying consolidated statements of operations and were $1,000 during the years ended December 31, 2020 and 2019. On December 28, 2020, Lifeway entered into an amended and restated consulting agreement (the “Agreement”), effective as of December 31, 2020, with the Chairperson. Under the terms and conditions of the Agreement, the Chairperson will continue to provide consulting services with respect to, among other things, our business strategy, international expansion and product management and expansion. For the services, the Company will pay an annual service fee of $500. The Chairperson will also be eligible for an annual performance fee target of $500 based on the achievement of specified performance criteria. The Chairpersons annual service fee and target bonus amounts are subject to periodic change by the Compensation Committee of the Company’s Board of Directors on 30 days’ prior written notice to the Chairperson. The Agreement shall continue until either party provides at least a 10-day written notice of termination. Lifeway is also a party to a royalty agreement with the Chairperson of its board of directors under which we pay the Chairperson a royalty based on the sale of certain Lifeway products, not to exceed $50 in any fiscal month. Royalties earned are included in selling expenses in the accompanying consolidated statements of operations and were $600 and $588 during the years ended December 31, 2020 and 2019, respectively. |
15. COVID-19
15. COVID-19 | 12 Months Ended |
Dec. 31, 2020 | |
Notes to Financial Statements | |
COVID-19 | a |
2. Significant Accounting Polic
2. Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Use Of Estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the reserve for promotional allowances, the valuation of goodwill and intangible assets, stock-based and incentive compensation, and deferred income taxes. |
Going Concern | Going Concern The Company follows the guidance in Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements - Going Concern which requires management to assess an entity’s ability to continue as a going concern and to provide related disclosure in certain circumstances. There were no conditions or events, when considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. |
Revenue Recognition | Revenue Recognition We sell food and beverage products across select product categories to customers predominantly within the United States (see Note 12, Segments, Products and Customers). We also sell bulk cream, a byproduct of our fluid milk manufacturing process. In accordance with ASC 606, Revenue from Contracts with Customers, we recognize revenue when control over the products transfers to our customers, which generally occurs upon delivery to our customers or their common carriers. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods or services, using the five-step method required by ASC 606. 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 products which provide immediate benefit to the customer. We account for product shipping and handling as fulfillment activities with revenues for these activities recorded within net revenue and costs recorded within cost of goods sold. Any taxes collected on behalf of government authorities are excluded from net revenues. Variable consideration, which typically includes volume-based rebates, 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, we do not capitalize contract inception costs and we capitalize product fulfillment costs in accordance with U.S. GAAP and our inventory policies. We do not have any significant deferred revenue or unbilled receivables at the end of a period. We generally do not receive noncash consideration for the sale of goods, nor do we grant payment financing terms greater than one year. |
Accounts Receivable | Accounts Receivable We provide credit terms to customers in-line with industry standards and maintain allowances for potential credit losses based on historical experience. 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. |
Cash And Cash Equivalents | Cash and cash equivalents Lifeway considers cash and all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which 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. Lifeway has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to its cash and cash equivalents. |
Inventories | Inventories 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 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: Asset Useful Life Buildings and improvements 31 and 39 years Machinery and equipment 5 – 12 years Office equipment 3 – 7 years Vehicles 5 years Leasehold improvements Shorter of expected useful life or lease term We perform impairment tests when circumstances indicate that the carrying value of an asset may not be recoverable. Expenditures for repairs and maintenance, which do not improve or extend the life of the assets, are expensed as incurred. |
Intangible Assets | Intangible Assets Goodwill and indefinite-lived intangible assets Goodwill represents the excess purchase price over the fair value of the net tangible and other identifiable intangible assets acquired. We estimate the fair value of our one reporting unit annually (as of December 31), or more frequently if certain conditions exist, using a combination of the fair values derived from both the income approach and the market approach. Under the income approach, we calculate the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on our estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used to determine the present value of future cash flows is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the business's ability to execute on the projected cash flows. 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 resulting fair value, based on the income and market approaches, is then compared to the carrying value to determine if impairment is necessary. We assess whether indefinite-lived intangible asset impairment exists using both qualitative and quantitative assessments annually in the fourth quarter or more frequently, if certain conditions exist. The qualitative assessment involves determining whether events or circumstances exist that indicate it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If, based on this qualitative assessment, we determine it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount or if we elect not to perform a qualitative assessment, a quantitative assessment is performed to determine whether an indefinite-lived intangible asset impairment exists. We test the indefinite-lived intangible assets for impairment by comparing the carrying value to the fair value based on current revenue projections of the related operations, under the relief from royalty method. Any excess of the carrying value over the amount of fair value is recognized as an impairment. Any such impairment would be recognized in full in the reporting period in which it has been identified. Definite lived intangible assets Intangible assets acquired in a business combination are recorded at their estimated fair values at the date of acquisition. Identifiable intangible assets with finite lives are amortized over their estimate useful lives as follows: Asset Useful Life Recipes 4 years Trade names 8-15 years Formula 10 years Customer lists 5-10 years Customer relationships 12 years 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 market place including changes in the prices paid for our products or changes in the size of the market for our 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 | Fair value measurements Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 – Level 2 – Level 3. 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. During October 2019, the Company sold approximately 45.6% of one of its investments recorded under the cost method and recognized a $1,438 gain on sale of investment, which is recorded in other income (expense) on the consolidated statements of operations. The Company also recorded an unrealized gain of $1,731 resulting from the observable price change of this transaction, which is recorded in other income (expense) on the consolidated statements of operations. As of December 31, 2020, and 2019, the Company has one investment without a readily determinable fair value which is recorded at $1,800 in other assets on the consolidated balance sheet. |
Income Taxes | Income taxes 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. Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using enacted tax rates expected to apply to taxable income in the year in which the deferred tax assets or liabilities are expected to be realized or settled. The principal sources of temporary differences are different depreciation and amortization methods for financial statement and tax purposes, incentive compensation, unrealized gain, capitalization of indirect inventory costs for tax purposes, reserves for excess and obsolete inventory and the allowance for doubtful accounts. Valuation allowances are recorded to reduce deferred tax assets when it is more likely not that a tax benefit will not be realized. Deferred income tax expense or benefit is based on the changes in the asset or liability from period to period. Lifeway has analyzed filing positions in all the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. We recognize the income tax benefit from an uncertain tax position when it is more likely than not that, based on technical merits, the position will be sustained upon examination, including resolutions of any related appeals or litigation processes. We apply a more likely than not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, we recognize the amount of tax benefit that has a greater than 50% likelihood of being ultimately realized upon settlement. Future changes in judgment related to the expected ultimate resolution of uncertain tax positions will affect earnings in the period of such change. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. The total amount of unrecognized tax benefits can change due to audit settlements, tax examination activities, statute expirations and the recognition and measurement criteria under accounting for uncertainty in income taxes. Lifeway recognizes penalties and interest related to unrecognized tax benefits in the provision (benefit) for income taxes in the consolidated statements of operations. |
Share-based compensation | 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 awards is equal to the closing price of our stock on the date of grant. We do not estimate forfeitures in measuring the grant date fair value, but rather account for forfeitures as they occur. The Company issues share based equity awards from treasury shares. |
Treasury Stock | Treasury stock Treasury stock is recorded using the cost method. |
Advertising costs | Advertising costs Lifeway expenses advertising costs as incurred and reported in Selling expense in our consolidated statements of operations. For the years ended December 31, 2020 and 2019 total advertising expenses were $2,407 and $3,394, respectively. |
Earnings (Loss) Per Common Share | Earnings (loss) per common share Basic earnings (loss) per common share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares issued and outstanding during the reporting period. Diluted earnings (loss) per common share is computed by dividing net income (loss) 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. For the years ended December 31, 2020 and 2019, there were 169 and 56 common stock equivalents outstanding, respectively. |
Recent Accounting Pronouncements | Recent accounting pronouncements Issued by not yet effective In March 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-04, 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 generally accepted accounting principles (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. Management is currently evaluating the impact that the new guidance will have on the consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The new guidance is intended to enhance and simplify various aspects of the accounting for income taxes. The new guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. In June 2016, the FASB issued ASU No. 2016-13, 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 (Topic 842): Effective Dates, and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses. The 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. Management is currently evaluating the impact that the new guidance will have on the consolidated financial statements. |
2. Summary Of Significant Acc_2
2. Summary Of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule Of Property And Equipment, Estimated Useful Lives | Asset Useful Life Buildings and improvements 31 and 39 years Machinery and equipment 5 – 12 years Office equipment 3 – 7 years Vehicles 5 years Leasehold improvements Shorter of expected useful life or lease term |
Schedule Of Intangible Assets Useful Lives | Asset Useful Life Recipes 4 years Trade names 8-15 years Formula 10 years Customer lists 5-10 years Customer relationships 12 years |
3. Inventories, net (Tables)
3. Inventories, net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule Of Inventories | December 31, 2020 2019 Ingredients $ 1,725 $ 1,942 Packaging 2,234 2,230 Finished goods 2,971 2,220 Total inventories, net $ 6,930 $ 6,392 |
4. Property, Plant and Equipm_2
4. Property, Plant and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | December 31, 2020 2019 Land $ 1,565 $ 1,565 Buildings and improvements 17,834 17,332 Machinery and equipment 31,707 30,670 Vehicles 778 778 Office equipment 857 851 Construction in process 228 362 52,969 51,558 Less accumulated depreciation (31,921 ) (29,284 ) Total property, plant and equipment, net $ 21,048 $ 22,274 |
5. Goodwill and Intangible As_2
5. Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill and indefinite-lived intangible assets | December 31, 2020 2019 Goodwill $ 10,368 $ 10,368 Accumulated impairment losses (1,244 ) (1,244 ) Goodwill 9,124 9,124 Brand names 3,700 3,700 Goodwill and indefinite lived intangible assets $ 12,824 $ 12,824 |
Schedule of other intangible assets | December 31, 2020 2019 Recipes $ 44 $ 44 Customer lists and other customer related intangibles 4,529 4,529 Customer relationships 985 985 Trade names 2,248 2,248 Formula 438 438 8,244 8,244 Accumulated amortization (8,244 ) (8,092 ) Intangible assets, net $ – $ 152 |
6. Accrued Expenses (Tables)
6. Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule Of Accrued Expenses | December 31, 2020 2019 Payroll and incentive compensation $ 1,366 $ 3,009 Real estate taxes 341 398 Current portion of operating lease liabilities 179 285 Other 310 395 Total accrued expenses $ 2,196 $ 4,087 |
8. Leases (Tables)
8. Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Future maturities of lease liabilities | Future maturities of lease liabilities were as follows Year Operating Leases 2021 $ 198 2022 154 2023 18 2024 2 Total lease payments 372 Less: Interest (28 ) Present value of lease liabilities $ 344 |
10. Income taxes (Tables)
10. Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | For the Years Ended December 31, 2020 2019 Current: Federal $ 398 $ (27 ) State and local 357 276 Total current 755 249 Deferred 841 533 Provision for income taxes $ 1,596 $ 782 |
Reconciliation to effective rate for income taxes | 2020 2019 Amount Percentage Amount Percentage Federal income tax at statutory rate $ 1,015 21.0% $ 259 21.0% State and local tax, net 428 8.9% 180 14.5% Other permanent differences 12 0.3% 14 1.1% Section 162m 296 6.1% 105 8.5% Stock based compensation 157 3.2% 149 12.1% Uncertain tax positions (43 ) (0.9% ) 79 6.4% Change in tax rates (245 ) (5.0% ) 8 0.7% Change in tax estimate - 0.0% (12 ) (1.0% ) Other (24 ) (0.5% ) – 0.0% Provision for income taxes $ 1,596 33.1% $ 782 63.3% |
Schedule of deferred tax assets and liabilities | December 31, 2020 2019 Deferred tax liabilities attributable to: Accumulated depreciation and amortization $ (2,101 ) $ (2,015 ) Unrealized gains (467 ) (465 ) Total deferred tax liabilities (2,568 ) (2,480 ) Deferred tax assets attributable to: Net operating losses 6 507 Accrued compensation 149 89 Incentive compensation 168 473 Inventory 323 312 Allowances for doubtful accounts and discounts 109 115 Deferred revenue 15 40 Other 34 22 Total net deferred tax assets 804 1,558 Net deferred tax liabilities $ (1,764 ) $ (922 ) |
Schedule of tax attributes related to net operating losses | The following table details the Company's tax attributes related to net operating losses for which it has recorded deferred tax assets. Tax Attributes Gross Amount Net Amount Expiration Years State net operating losses $ 116 $ 6 2035 $ 6 |
Reconciliation of amount of unrecognized tax benefits | 2020 2019 Balance at January 1 $ 142 $ 63 Additions based on tax positions of prior years – 79 Reduction for tax positions of prior years (47 ) – Balance at December 31 $ 95 $ 142 |
11. Stock-based and Other Com_2
11. Stock-based and Other Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock option activity table | Options Weighted Weighted Aggregate Outstanding at December 31, 2019 41 $ 10.42 6.22 $ – Granted – – – Exercised – – – – Forfeited – – – – Outstanding at December 31, 2020 41 $ 10.42 5.22 $ – Exercisable at December 31, 2020 41 $ 10.42 5.22 $ – |
RSA activity table | RSA’s Outstanding at December 31, 2019 47 Granted 57 Shares issued upon vesting (13 ) Forfeited (13 ) Outstanding at December 31, 2020 78 Weighted average grant date fair value per share outstanding $ 3.06 |
12. Segments, Products and Cu_2
12. Segments, Products and Customers (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of sales of products by category | 2020 2019 In thousands $ % $ % Drinkable Kefir other than ProBugs $ 81,437 80% $ 71,822 77% Cheese 12,905 13% 11,459 12% Cream and other 2,872 3% 4,228 4% ProBugs Kefir 2,733 2% 2,780 3% Other dairy 1,594 1% 1,756 2% Frozen Kefir (a) 485 1% 1,617 2% Net Sales $ 102,026 100% $ 93,662 100% |
2. Summary Of Significant Acc_3
2. Summary Of Significant Accounting Policies (Details - Property useful lives) | 12 Months Ended |
Dec. 31, 2020 | |
Buildings And improvements [Member] | |
Property and equipment, useful life | 31 and 39 years |
Machinery And Equipment [Member] | |
Property and equipment, useful life | 5-12 years |
Office Equipment [Member] | |
Property and equipment, useful life | 3-7 years |
Vehicles [Member] | |
Property and equipment, useful life | 5 years |
Leasehold improvements [Member] | |
Property and equipment, useful life | Shorter of expected useful life or lease term |
2. Summary Of Significant Acc_4
2. Summary Of Significant Accounting Policies (Details - Intangible Useful lives) | 12 Months Ended |
Dec. 31, 2020 | |
Recipes [Member] | |
Intangible assets, useful lives | 4 years |
Trade Names [Member] | Minimum [Member] | |
Intangible assets, useful lives | 8 years |
Trade Names [Member] | Maximum [Member] | |
Intangible assets, useful lives | 15 years |
Formula [Member] | |
Intangible assets, useful lives | 10 years |
Customer lists [Member] | Minimum [Member] | |
Intangible assets, useful lives | 8 years |
Customer lists [Member] | Maximum [Member] | |
Intangible assets, useful lives | 10 years |
Customer Relationships [Member] | Minimum [Member] | |
Intangible assets, useful lives | 8 years |
Customer Relationships [Member] | Maximum [Member] | |
Intangible assets, useful lives | 12 years |
2. Summary Of Significant Acc_5
2. Summary Of Significant Accounting Policies (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Gain on sale of investment | $ 1,438 | |
Unrealized gain on investment | $ 0 | 1,731 |
Investments | 1,800 | |
Advertising expenses | $ 2,407 | $ 3,394 |
Antidilutive shares excluded from EPS computation | 169 | 56 |
3. Inventories, net (Details)
3. Inventories, net (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Ingredients | $ 1,725 | $ 1,942 |
Packaging | 2,234 | 2,230 |
Finished goods | 2,971 | 2,220 |
Total inventories, net | $ 6,930 | $ 6,392 |
4. Property, Plant and Equipm_3
4. Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property and equipment, gross | $ 52,969 | $ 51,558 |
Less accumulated depreciation | (31,921) | (29,284) |
Total property, plant and equipment, net | 21,048 | 22,274 |
Land [Member] | ||
Property and equipment, gross | 1,565 | 1,565 |
Buildings And improvements [Member] | ||
Property and equipment, gross | 17,834 | 17,332 |
Machinery And Equipment [Member] | ||
Property and equipment, gross | 31,707 | 30,670 |
Vehicles [Member] | ||
Property and equipment, gross | 778 | 778 |
Office Equipment [Member] | ||
Property and equipment, gross | 857 | 851 |
Construction In Progress [Member] | ||
Property and equipment, gross | $ 228 | $ 362 |
5. Goodwill and Intangible As_3
5. Goodwill and Intangible Assets (Details - Indefinite assets) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, gross | $ 10,368 | $ 10,368 |
Accumulated impairment loss | (1,244) | (1,244) |
Goodwill, net | 9,124 | 9,124 |
Brand names | 3,700 | 3,700 |
Goodwill & indefinite lived intangible assets | $ 12,824 | $ 12,824 |
5. Goodwill and Intangible As_4
5. Goodwill and Intangible Assets (Details - Finite lived) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Cost | $ 8,244 | $ 8,244 |
Accumulated Amortization | (8,209) | (8,092) |
Other Intangible assets, net | 0 | 152 |
Recipes [Member] | ||
Cost | 44 | 44 |
Customer Lists And Other Customer Related Intangibles [Member] | ||
Cost | 4,529 | 4,529 |
Customer Relationships [Member] | ||
Cost | 985 | 985 |
Trade Names [Member] | ||
Cost | 2,248 | 2,248 |
Formula [Member] | ||
Cost | $ 438 | $ 438 |
6. Accrued Expenses (Details)
6. Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Payroll and incentive compensation | $ 1,366 | $ 3,009 |
Real estate taxes | 341 | 398 |
Current portion of operating lease liabilities | 179 | 285 |
Other | 310 | 395 |
Total accrued expenses | $ 2,196 | $ 4,087 |
7. Debt (Details Narrative)
7. Debt (Details Narrative) - Revolving Credit Facility [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Sep. 30, 2020 | |
Line of credit expiration date | Jun. 30, 2025 | |
Line of credit balance | $ 2,768 | |
Unamortized financing costs | 9 | |
Line of credit available | $ 2,223 | |
Credit line effective interest rate | 2.10% | |
Revolving Loan [Member] | ||
Revolving credit facility maximum borrowing capacity | $ 5,000 | |
Incremental Facility [Member] | ||
Revolving credit facility maximum borrowing capacity | $ 5,000 |
8. Leases (Details)
8. Leases (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 198 |
2022 | 154 |
2023 | 18 |
2024 | 2 |
Total Lease payments | 372 |
Less: Interest | (28) |
Present value of lease liabilities | $ 344 |
8. Leases (Details Narrative)
8. Leases (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Lease expense | $ 440 | $ 688 |
Weighted average remaining lease term | 2 years | |
Weighted average discount rate | 7.75% | |
Operating lease cost | $ 384 |
10. Income taxes (Details - Pro
10. Income taxes (Details - Provision) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | ||
Federal | $ 398 | $ (27) |
State and local | 357 | 276 |
Total current | 755 | 249 |
Deferred | 841 | 533 |
Provision (benefit) for income taxes | $ 1,596 | $ 782 |
10. Inccome taxes (Details - Re
10. Inccome taxes (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal income tax expense at statutory rate | $ 1,015 | $ 259 |
State and local tax expense, net | 428 | 180 |
Other permanent differences | 12 | 14 |
Section 162m | 296 | 105 |
Stock based compensation | 157 | 149 |
Uncertain tax positions | (43) | 79 |
Change in tax rates | (245) | 8 |
Change in tax estimate | 0 | (12) |
Other | (24) | 0 |
Provision for income taxes | $ 1,596 | $ 782 |
Federal income tax expense computed at the statutory rate, percentage | 21.00% | 21.00% |
State and local tax expense, net, percentage | 8.90% | 14.50% |
Other permanent differences, percentage | 0.30% | 1.10% |
Section 162m, percentage | 6.10% | 8.50% |
Stock based compensation, percentage | 3.20% | 12.10% |
Uncertain tax positions, percentage | (0.90%) | 6.40% |
Change in tax rates, percentage | (5.00%) | 0.70% |
Change in tax estimate, percentage | 0.00% | (1.00%) |
Other, percentage | 0.50% | 0.00% |
Provision for income taxes, percentage | 33.10% | 63.30% |
10. Income taxes (Details - Def
10. Income taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax liabilities attributable to: | ||
Accumulated depreciation and amortization | $ (2,101) | $ (2,015) |
Unrealized gains | (467) | (465) |
Total deferred tax liabilities | (2,568) | (2,480) |
Deferred tax assets attributable to: | ||
Net operating losses | 6 | 507 |
Accrued compensation | 149 | 89 |
Incentive compensation | 168 | 473 |
Inventory | 323 | 312 |
Allowances for doubtful accounts and discounts | 109 | 115 |
Deferred revenue | 15 | 40 |
Other | 34 | 22 |
Total net deferred tax assets | 804 | 1,558 |
Net deferred tax liabilities | $ (1,764) | $ (922) |
10. Income taxes (Details - Tax
10. Income taxes (Details - Tax attributes related to net operating losses ) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Income Tax Disclosure [Abstract] | |
State net operating losses, gross | $ 116 |
State net operating losses, net | $ 804 |
NOL expiration date | Dec. 31, 2035 |
10. Income taxes (Details - Unr
10. Income taxes (Details - Unrecognized tax benefits) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits, beginning balance | $ 142 | $ 63 |
Additions based on tax positions of prior years | 0 | 79 |
Reduction for tax positions of prior years | (47) | 0 |
Unrecognized tax benefits, ending balance | $ 95 | $ 142 |
10. Income taxes (Details Narra
10. Income taxes (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Interest and penalties expense | $ (16) | $ 41 |
Accrued interest and penalties | $ 44 | $ 60 |
11. Stock-based Compensation (D
11. Stock-based Compensation (Details - Option Activity) - Options [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Options outstanding, beginning balance | 41 | |
Options granted | 0 | |
Options exercised | 0 | |
Options forfeited | 0 | |
Options outstanding, ending balance | 41 | 41 |
Weighted average exercise price, options outstanding, beginning balance | $ 10.42 | |
Weighted average exercise price, options granted | ||
Weighted average exercise price, options exercised | ||
Weighted average exercise price, options forfeited | ||
Weighted average exercise price, options outstanding, ending balance | $ 10.42 | $ 10.42 |
Weighted average remaining contractural life, outstanding | 5 years 5 months 20 days | 6 years 2 months 19 days |
Weighted average remaining contractural life, exercisable | 5 years 5 months 20 days | |
Aggregate intrinsic value, options outstanding | $ 0 | |
Aggregate intrinsic value, options exercisable | $ 0 |
11. Stock-based Compensation _2
11. Stock-based Compensation (Details - RSA Activity) - Restricted Stock Awards [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
RSA's outstanding, beginning balance | 47 |
RSA's granted | 57 |
Shares issued upon vesting | (13) |
RSA's forfeited | (13) |
RSA's outstanding, ending balance | 78 |
Weighted average grant date fair value per share | $ / shares | $ 3.06 |
11. Stock-based Compensation _3
11. Stock-based Compensation (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Options [Member] | ||
Share-based compensation | $ 1 | |
Restricted Stock Awards [Member] | ||
Share-based compensation | $ 83 | 109 |
Tax-related benefits | 22 | 30 |
Unearned compensation related to non-vested RSA's | $ 134 | |
Weighted average period for unrecognized compensation | 1 year 4 months 9 days | |
2019 Retention Award [Member] | ||
Share-based compensation | $ 87 | 342 |
Unearned compensation related to non-vested stock options | 14 | |
Compensation expense expected in 2021 | 14 | |
2020 CEO Award [Member] | ||
Share-based compensation | 50 | |
Unearned compensation related to non-vested stock options | 700 | |
Compensation expense expected in 2021 | 364 | |
Compensation expense expected in 2022 | 221 | |
Compensation expense expected in 2023 | 98 | |
Compensation expense expected in 2024 | 17 | |
Long-term equity-based incentive | $ 750 | |
2015 Omnibus Incentive Plan [Member] | ||
Stock authorized for issuance | 3,500 | |
Shares available for issuance | 3,317 | |
2017 Plan [Member] | ||
Share-based compensation | $ 49 | 288 |
Unearned compensation related to non-vested stock options | 0 | |
2019 Plan [Member] | ||
Share-based compensation | 112 | 51 |
Defined Contribution Plan [Member] | ||
Contribution expense | $ 420 | $ 367 |
12. Segments, Products and Cu_3
12. Segments, Products and Customers (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | ||
Total sales | $ 102,026 | $ 93,662 | |
Total sales percentage | 100.00% | 100.00% | |
Drinkable Kefir Other Than ProBugs [Member] | |||
Total sales | $ 81,437 | $ 71,822 | |
Total sales percentage | 80.00% | 77.00% | |
Cheese [Member] | |||
Total sales | $ 12,905 | $ 11,459 | |
Total sales percentage | 13.00% | 12.00% | |
Cream and Other [Member] | |||
Total sales | $ 2,872 | $ 4,228 | |
Total sales percentage | 3.00% | 4.00% | |
ProBugs Kefir [Member] | |||
Total sales | $ 2,733 | $ 2,780 | |
Total sales percentage | 2.00% | 3.00% | |
Other Dairy [Member] | |||
Total sales | $ 1,594 | $ 1,756 | |
Total sales percentage | 1.00% | 2.00% | |
Frozen Kefir [Member] | |||
Total sales | [1] | $ 485 | $ 1,617 |
Total sales percentage | [1] | 1.00% | 2.00% |
[1] | Includes Lifeway Kefir Shop sales |
12. Segments, Products and Cu_4
12. Segments, Products and Customers (Details Narrative) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Concentration percentage | 100.00% | 100.00% |
Sales Revenue, Net [Member] | Two Customers [Member] | ||
Concentration percentage | 21.00% | 22.00% |
Sales Revenue, Net [Member] | Ten Largest Customers [Member] | ||
Concentration percentage | 63.00% | 57.00% |
Accounts Receivable [Member] | Two Customers [Member] | ||
Concentration percentage | 22.00% | 17.00% |
13. Share RepurchaseProgram (De
13. Share RepurchaseProgram (Detail Narrative) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of shares authorized to be repurchased | 625 | |
Amount of shares authorized to be repurchased | $ 5,185 | |
Amount remaining available under the repurchase plan | $ 0 | |
Treasury Stock, Common [Member] | ||
Stock repurchased during period, shares | 179 | 211 |
Payments for stock repurchased | $ 405 | $ 538 |
14. Related party transactions
14. Related party transactions (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Consulting fees | $ 1,000 | $ 1,000 |
Royalty expense | $ 600 | $ 588 |