Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 15, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 000-17363 | ||
Entity Registrant Name | LIFEWAY FOODS, INC. | ||
Entity Central Index Key | 0000814586 | ||
Entity Tax Identification Number | 36-3442829 | ||
Entity Incorporation, State or Country Code | IL | ||
Entity Address, Address Line One | 6431 West Oakton St | ||
Entity Address, City or Town | Morton Grove | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60053 | ||
City Area Code | (847) | ||
Local Phone Number | 967-1010 | ||
Title of 12(b) Security | Common Stock, No Par Value | ||
Trading Symbol | LWAY | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 47,381,148 | ||
Entity Common Stock, Shares Outstanding | 14,690,987 | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Auditor Firm ID | 248 | ||
Auditor Name | GRANT THORNTON LLP | ||
Auditor Location | Chicago, Illinois |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 13,198 | $ 4,444 |
Accounts receivable, net of allowance for credit losses and discounts & allowances of $1,270 and $1,820 at December 31, 2023 and 2022, respectively | 13,875 | 11,414 |
Inventories, net | 9,104 | 9,631 |
Prepaid expenses and other current assets | 2,019 | 1,445 |
Refundable income taxes | 0 | 44 |
Total current assets | 38,196 | 26,978 |
Property, plant and equipment, net | 22,764 | 20,905 |
Operating lease right-of use asset | 192 | 174 |
Goodwill | 11,704 | 11,704 |
Intangible assets, net | 6,898 | 7,438 |
Other assets | 1,900 | 1,800 |
Total assets | 81,654 | 68,999 |
Current liabilities | ||
Current portion of note payable | 1,250 | 1,250 |
Accounts payable | 9,976 | 7,979 |
Accrued expenses | 4,916 | 3,813 |
Accrued income taxes | 474 | 0 |
Total current liabilities | 16,616 | 13,042 |
Line of credit | 0 | 2,777 |
Note payable | 1,483 | 2,477 |
Operating lease liabilities | 118 | 104 |
Deferred income taxes, net | 3,001 | 3,029 |
Total liabilities | 21,218 | 21,429 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity | ||
Preferred stock, no par value; 2,500 shares authorized; none issued | 0 | 0 |
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 14,691 and 14,645 shares outstanding at 2023 and 2022 | 6,509 | 6,509 |
Paid-in capital | 4,825 | 3,624 |
Treasury stock, at cost | (16,695) | (16,993) |
Retained earnings | 65,797 | 54,430 |
Total stockholders’ equity | 60,436 | 47,570 |
Total liabilities and stockholders’ equity | $ 81,654 | $ 68,999 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ / shares in Thousands, $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for credit losses and discounts | $ 1,270 | $ 1,820 |
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 2,500 | 2,500 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 40,000 | 40,000 |
Common stock, shares issued | 17,274 | 17,274 |
Common stock, shares outstanding | 14,691 | 14,645 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Statement [Abstract] | ||
Net sales | $ 160,123 | $ 141,568 |
Cost of goods sold | 115,060 | 112,350 |
Depreciation expense | 2,622 | 2,432 |
Total cost of goods sold | 117,682 | 114,782 |
Gross profit | 42,441 | 26,786 |
Selling expenses | 11,776 | 11,304 |
General and administrative | 13,130 | 12,593 |
Amortization expense | 540 | 540 |
Total operating expenses | 25,446 | 24,437 |
Income from operations | 16,995 | 2,349 |
Other income (expense): | ||
Interest expense | (384) | (267) |
Gain (loss) on sale of property and equipment | 34 | (241) |
Other income (expense) | 4 | 0 |
Total other income (expense) | (346) | (508) |
Income before provision for income taxes | 16,649 | 1,841 |
Provision for income taxes | 5,282 | 917 |
Net income | $ 11,367 | $ 924 |
Net earnings per common share: | ||
Basic | $ 0.77 | $ 0.06 |
Diluted | $ 0.75 | $ 0.06 |
Weighted average common shares outstanding: | ||
Basic | 14,667 | 15,396 |
Diluted | 15,103 | 15,718 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Treasury Stock, Common [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2021 | $ 6,509 | $ (13,436) | $ 2,552 | $ 53,506 | $ 49,131 |
Beginning balance, shares at Dec. 31, 2021 | 17,274 | (1,839) | |||
Treasury stock purchased | $ (3,997) | (3,997) | |||
Treasury stock purchased, shares | (850) | ||||
Issuance of common stock in connection with stock-based compensation | $ 440 | (558) | (118) | ||
Issuance of common stock in connection with stock-based compensation, shares | 60 | ||||
Stock-based compensation | 1,630 | 1,630 | |||
Net Income | 924 | 924 | |||
Ending balance, value at Dec. 31, 2022 | $ 6,509 | $ (16,993) | 3,624 | 54,430 | 47,570 |
Ending balance, shares at Dec. 31, 2022 | 17,274 | (2,629) | |||
Issuance of common stock in connection with stock-based compensation | $ 298 | (364) | (66) | ||
Issuance of common stock in connection with stock-based compensation, shares | 46 | ||||
Stock-based compensation | 1,565 | 1,565 | |||
Net Income | 11,367 | 11,367 | |||
Ending balance, value at Dec. 31, 2023 | $ 6,509 | $ (16,695) | $ 4,825 | $ 65,797 | $ 60,436 |
Ending balance, shares at Dec. 31, 2023 | 17,274 | (2,583) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 11,367 | $ 924 |
Adjustments to reconcile net income to operating cash flow: | ||
Depreciation and amortization | 3,162 | 2,972 |
Non-cash interest expense | 6 | 6 |
Bad debt expense | 2 | 0 |
Deferred revenue | 0 | (28) |
Stock-based compensation | 1,497 | 1,109 |
Deferred income taxes | (28) | (172) |
(Gain) loss on sale of property and equipment | (34) | 241 |
(Increase) decrease in operating assets: | ||
Accounts receivable | (2,463) | (1,483) |
Inventories | 527 | (1,345) |
Prepaid expenses and other current assets | (574) | (191) |
Refundable income taxes | 44 | 300 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | 1,859 | 1,945 |
Accrued expenses | 1,102 | 434 |
Accrued income taxes | 474 | (725) |
Net cash provided by operating activities | 16,941 | 3,987 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (4,351) | (3,449) |
Proceeds from sale of equipment | 41 | 0 |
Acquisition, net of cash acquired | 0 | (580) |
Purchase of investments | (100) | 0 |
Net cash used in investing activities | (4,410) | (4,029) |
Cash flows from financing activities: | ||
Repayment of line of credit | (2,777) | 0 |
Repayment of note payable | (1,000) | (750) |
Purchase of treasury stock | 0 | (3,997) |
Net cash used in financing activities | (3,777) | (4,747) |
Net increase (decrease) in cash and cash equivalents | 8,754 | (4,789) |
Cash and cash equivalents at the beginning of the period | 4,444 | 9,233 |
Cash and cash equivalents at the end of the period | 13,198 | 4,444 |
Supplemental cash flow information: | ||
Cash paid for income taxes, net of (refunds) | 4,792 | 1,121 |
Cash paid for interest | 415 | 247 |
Non-cash investing activities | ||
Accrued purchase of property and equipment | 137 | 424 |
Right-of-use assets obtained in exchange for lease obligations | $ 94 | $ 83 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure [Table] | ||
Net Income (Loss) Attributable to Parent | $ 11,367 | $ 924 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual [Table] | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of presentation
Basis of presentation | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | Note 1 – Basis of presentation The 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”). The consolidated financial statements include all of the assets, liabilities and results of operations of Lifeway Foods, Inc. and its wholly owned subsidiaries (collectively “Lifeway” or the “Company”). All inter-company balances and transactions have been eliminated in the consolidated financial statements. |
Summary of significant accounti
Summary of significant accounting policies | 12 Months Ended |
Dec. 31, 2023 | |
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 use judgement 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 the reported amounts of net sales 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. 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. The Company places its cash and cash equivalents with high credit quality financial institutions. Lifeway has not experienced any losses in such accounts and believes the financial risks associated with these financial instruments are minimal. Revenue Recognition Lifeway sells food and beverage products across select product categories to customers predominantly within the United States (see Note 13 – Disaggregation of Revenue, Significant Customers, and Geographic Information). The Company also sells bulk cream, a byproduct of its fluid milk manufacturing process. In accordance with ASC 606, Revenue from Contracts with Customers, Lifeway recognizes revenue when control over the products transfers to its customers, which generally occurs upon delivery to its 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 and beverage products which provide immediate benefit to the customer. Lifeway accounts 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 includes known or expected pricing or revenue adjustments, such as trade discounts, allowances for non-saleable products, product returns, trade incentives and coupon redemption, is estimated utilizing the most likely amount method. Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration. As such, the Company does not capitalize contract inception costs and it capitalizes product fulfillment costs in accordance with U.S. GAAP and its inventory policies. It generally does not receive noncash consideration for the sale of goods, nor does it grant payment financing terms greater than one year. Accounts Receivable Lifeway provides credit terms to customers in-line with industry standards and maintains allowances for potential credit losses based on historical collection experiences and the current economic condition of specific customers. All account receivables have an original term of less than one year. Customer balances are written off after all collection efforts are exhausted. Estimated product returns, which have not been material, are deducted from sales at the time of revenue recognition. The Company does not charge interest on past due accounts receivable. 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: Schedule of property and equipment, estimated useful lives Asset Useful Life Buildings and improvements 10 – 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 The Company performs 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. Goodwill Goodwill represents the excess purchase price over the fair value of the net tangible and other identifiable intangible assets acquired. Goodwill is not amortized, but it is subject to an annual assessment for impairment, which the Company performs on its one reporting unit during the fourth quarter (as of December 31), or more frequently if events occur or circumstances change such that it is more likely than not that an impairment may exist. In testing goodwill for impairment, the Company has the option to perform a qualitative test (also known as “Step 0”) or a quantitative test (“Step 1”). Under the Step 0 test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other entity and reporting unit specific events. If after assessing these qualitative factors, the Company determines it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, then performing the Step 1 quantitative test is necessary. Step 1 of the quantitative test requires comparison of the fair value of the Company’s one reporting unit to the carrying value. If the carrying value of the reporting unit is less than the fair value, no impairment exists. Otherwise, the Company would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value up to the amount of goodwill allocated to the reporting unit. Under a Step 1 quantitative test, we estimate the fair value of our one reporting unit using a combination of the fair values derived from both the income approach and the market approach. Under the income approach, the Company uses a discounted cash flow methodology which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. 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. For the market approach, the Company uses the guideline public company method. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics. The Company also reconciles the fair value of its reporting unit to its current market capitalization, allowing for a reasonable control premium. Intangible Assets 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 estimated useful lives as follows: Schedule of intangible assets useful lives Asset Useful Life Recipes 4 years Brand names 15 years Formula 10 years Customer lists 5-10 years Customer relationships 15 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 marketplace including changes in the prices paid for its products or changes in the size of the market for its products. If an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is generally based on discounted future cash flows. If the estimated remaining useful life of an intangible asset is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Fair value measurements 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. As of December 31, 2023, and 2022, the Company has one equity investment without a readily determinable fair value which is recorded at $ 1,800 1,800 1,731 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 analyzes 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. The Company recognizes 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. It applies a more likely than not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, Lifeway recognizes 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 and performance share awards are equal to the closing price of Lifeway’s stock on the date of grant. The Company does not estimate forfeitures in measuring the grant date fair value, but rather account for forfeitures as they occur. The fair value of stock options are measured using 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. The Company utilized this simplified method as it did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The Company issues share-based equity awards from treasury shares. Treasury stock Treasury stock is recorded using the cost method. Advertising costs Advertising costs are expensed as incurred and reported in Selling expense in the Company’s consolidated statements of operations. Total advertising expense was $ 3,733 3,353 Earnings per common share Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares issued and outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares issued and outstanding and the effect of all dilutive common stock equivalents related to the Company’s outstanding stock-based compensation awards outstanding during the reporting period. Segments The Company is managed as a single reportable segment. The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. Substantially all of Lifeway’s consolidated revenues relate to the sale of cultured dairy products that it produces using the same processes and materials and are sold to consumers through a common network of distributors and retailers in the United States. Recent accounting pronouncements Issued but not yet effective In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure as well as the name and title of the chief operating decision maker. The guidance also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually. The new standard is effective for our annual period ending December 31, 2024 and our interim periods during the fiscal year ending December 31, 2025. The guidance does not affect recognition or measurement in the Company’s consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for our fiscal year ending December 31, 2024. The guidance does not affect recognition or measurement in the Company’s consolidated financial statements. Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance provides a single comprehensive accounting model on revenue recognition for contracts with customers and requires that the acquirer in a business combination recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). The amendments in this ASU are effective for fiscal years beginning after December 15, 2022. The Company adopted this standard during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial statements. In March 2020, the FASB issued 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 U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance will be effective prospectively as of March 12, 2020 through December 31, 2022 and interim periods within those fiscal years. The ASU was effective upon issuance and allowed companies to adopt the amendments on a prospective basis through December 31, 2024. The Company adopted this standard during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial statements. In June 2016, the FASB issued ASU No. 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. The Company adopted this standard during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial statements. |
Inventories, net
Inventories, net | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories, net | Note 3 – Inventories, net Schedule of inventories December 31, 2023 2022 Ingredients $ 2,929 $ 2,859 Packaging 3,014 3,233 Finished goods 3,161 3,539 Total inventories, net $ 9,104 $ 9,631 |
Property, Plant and Equipment,
Property, Plant and Equipment, net | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment, net | Note 4 – Property, Plant and Equipment, net Schedule of property, plant and equipment December 31, 2023 2022 Land $ 1,565 $ 1,565 Buildings and improvements 21,661 19,341 Machinery and equipment 33,573 32,786 Vehicles 705 640 Office equipment 1,072 979 Construction in process 2,154 1,180 60,730 56,491 Less accumulated depreciation (37,966 ) (35,586 ) Total property, plant and equipment, net $ 22,764 $ 20,905 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 5 – Goodwill and Intangible Assets Goodwill Goodwill consisted of the following: Schedule of goodwill Total Balance at December 31, 2022 Goodwill $ 12,948 Accumulated impairment losses (1,244 ) Balance at December 31, 2022 $ 11,704 Balance at December 31, 2023 Goodwill $ 12,948 Accumulated impairment losses (1,244 ) Balance at December 31, 2023 $ 11,704 The Company performed an annual Step 0 impairment assessment for its single reporting unit as of December 31, 2023, noting no no Approximately $1,664 of goodwill is deductible for income tax purposes. Intangible Assets The gross carrying amounts and accumulated amortization of intangible assets consisted of the following: Schedule of finite-lived intangible assets December 31, 2023 December 31, 2022 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Recipes $ 44 $ (44 ) $ – $ 44 $ (44 ) $ – Customer lists and other customer related intangibles 4,529 (4,529 ) – 4,529 (4,529 ) – Customer relationship 3,385 (1,372 ) 2,013 3,385 (1,212 ) 2,173 Brand names 7,948 (3,063 ) 4,885 7,948 (2,683 ) 5,265 Formula 438 (438 ) – 438 (438 ) – Total intangible assets, net $ 16,344 $ (9,446 ) $ 6,898 $ 16,344 $ (8,906 ) $ 7,438 Estimated amortization expense on intangible assets for the next five years is as follows: Schedule of estimated amortization expense on intangible assets Year Amortization 2024 $ 540 2025 $ 540 2026 $ 540 2027 $ 540 2028 $ 540 The weighted-average remaining amortization expense period for the customer relationship and brand name intangible assets is 12.6 12.9 12.8 |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Note 6 – Accrued Expenses Accrued expenses consisted of the following: Schedule of accrued expenses December 31, 2023 2022 Payroll and incentive compensation $ 3,853 $ 2,925 Real estate taxes 442 394 Accrued utilities 241 121 Current portion of operating lease liabilities 74 70 Other 306 303 Total accrued expenses $ 4,916 $ 3,813 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 7 – Debt Note payable consisted of the following: Schedule of debt December 31, 2023 2022 Term loan due August 18, 2026. Interest (6.29% at December 31, 2023) payable monthly. $ 2,750 $ 3,750 Unamortized deferred financing costs (17 ) (23 ) Total note payable 2,733 3,727 Less current portion (1,250 ) (1,250 ) Total long-term portion $ 1,483 $ 2,477 The scheduled maturities of the term loan, excluding deferred financing costs, at December 31, 2023 are as follows: Schedule of maturities of long-term debt 2024 $ 1,250 2025 1,000 2026 500 Total term loan $ 2,750 Credit Agreement The Company is party to an Amended and Restated Loan and Security Agreement (as amended and modified from time to time, the “Credit Agreement”) with its existing lender and certain of its subsidiaries. The Credit Agreement provides for, among other things, a $ 5 5 5 August 18, 2026 June 30, 2025 All outstanding amounts under the Credit Agreement bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 2.07%, payable monthly in arrears. 0.20 0.20 The Credit Agreement includes customary representations, warranties, and covenants, including financial covenants requiring the Company to maintain a fixed charge coverage ratio of no less than 1.25 to 1.00, and a minimum working capital financial covenant, as defined, of no less than $11.25 million, in each of the fiscal quarters ending through the expiration date. The Credit Agreement continues to provide for events of default, including failure to repay principal and interest when due and failure to perform or violation of the provisions or covenants of the agreement, as a result of which amounts due under the Credit Agreement may be accelerated. The loans and all other amounts due and owed under the Credit Agreement and related documents are secured by substantially all of the Company’s assets. Lifeway was in compliance with the fixed charge coverage ratio and minimum working capital covenants at December 31, 2023. Revolving Credit Facility As of December 31, 2023, the Company had $ 0 5,000 Deferred Financing Costs As of December 31, 2023, net unamortized deferred financing costs of $ 17 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Leases | Note 8 – Leases The Company leases 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 one year to six years. The Company includes lease extension options, if applicable and reasonably certain to be exercised, in the 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. Lifeway does not currently have leases which meet the finance lease classification as defined under ASC 842. 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, it directs the use of the asset and obtains substantially all the economic benefits of the asset. Right-of-use assets and lease liabilities are measured and recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Lifeway has elected the practical expedient to combine lease and non-lease components into a single component for all of its leases. When the Company is unable to determine an implicit interest rate, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments for those leases. Lifeway includes options to extend or terminate the lease in the measurement of the right-of-use asset and lease liability when it is reasonably certain that it will exercise such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company does not record leases with an initial 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 $ 138 229 Future maturities of lease liabilities were as follows: Schedule of future maturities of lease liabilities Year Operating Leases 2024 $ 89 2025 55 2026 31 2027 21 2028 17 Thereafter 10 Total lease payments 223 Less: Interest (31 ) Present value of lease liabilities $ 192 The weighted-average remaining lease term for its operating leases was 3.6 9.85 94 151 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9 – Commitments and Contingencies Litigation Lifeway is involved in various legal proceedings, claims, disputes, regulatory matters, audits, and proceedings arising in the ordinary course of, or incidental, to the Company’s business, including commercial disputes, product liabilities, intellectual property matters and employment-related matters. Lifeway records provisions in the consolidated financial statements for pending legal matters when it believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. The Company evaluates, on a periodic basis, developments in legal matters that could affect the amount of any accrual and developments that would make a loss contingency both probable and reasonably estimable. If a loss contingency is not both probable and estimable, it does not establish an accrued liability. Currently, none of its accruals for outstanding legal matters are material individually or in the aggregate to its financial position and it is management’s opinion that the ultimate resolution of these outstanding legal matters will not have a material adverse effect on its business, financial condition, results of operations, or cash flows. However, if the Company is ultimately required to make payments in connection with an adverse outcome, it is possible that such contingency could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows. |
Income taxes
Income taxes | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 10 – Income taxes The provision for income taxes consists of the following: Provision for income taxes For the Years Ended December 31, 2023 2022 Current: Federal $ 3,591 $ 645 State and local 1,719 444 Total current 5,310 1,089 Deferred (28 ) (172 ) Provision for income taxes $ 5,282 $ 917 The following is a reconciliation of income tax expense computed at the U.S. federal statutory tax rate to income tax expense reported in the consolidated statement of operations: Reconciliation to effective rate for income taxes 2023 2022 Amount Percentage Amount Percentage Federal income tax at statutory rate $ 3,496 21.0 $ 392 21.0 State and local tax, net 1,126 6.8 287 15.4 Other permanent differences 17 0.1 8 0.4 Section 162m 435 2.6 229 12.2 Stock based compensation 203 1.2 127 6.8 Change in tax rates 5 0.0 (83 ) ( 4.4 ) Other – – (43 ) ( 2.3 ) Provision for income taxes $ 5,282 31.7 $ 917 49.1 The tax effects of temporary differences giving rise to deferred income tax assets and liabilities were: Schedule of deferred tax assets and liabilities December 31, 2023 2022 Deferred tax liabilities attributable to: Accumulated depreciation and amortization $ (3,519 ) $ (3,394 ) Unrealized gains (469 ) (472 ) Total deferred tax liabilities (3,988 ) (3,866 ) Deferred tax assets attributable to: Net operating losses 6 6 Accrued compensation 403 287 Incentive compensation 301 194 Inventory 280 328 Allowances for doubtful accounts and discounts 3 5 Other (6 ) 17 Total net deferred tax assets 987 837 Net deferred tax liabilities $ (3,001 ) $ (3,029 ) The following table details the Company’s tax attributes related to net operating losses for which it has recorded deferred tax assets. Schedule of tax attributes related to net operating losses 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: Reconciliation of amount of unrecognized tax benefits 2023 2022 Balance at January 1 $ – $ 396 Additions based on tax positions of prior years – – Settlement for tax positions of prior years – (396 ) Balance at December 31 $ – $ – Lifeway is subject to U.S. federal income tax as well as income tax in multiple state and city jurisdictions. With limited exceptions, Lifeway’s calendar year 2020 and subsequent federal and state tax years remain open by statute. As of December 31, 2023, the unrecognized tax benefit is $ 0 The amount of interest and penalties recognized in the consolidated statements of operations was $ 0 0 |
Stock-based and Other Compensat
Stock-based and Other Compensation | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based and Other Compensation | Note 11 – Stock-based and Other Compensation Omnibus Incentive Plan In December 2015, Lifeway stockholders approved the 2015 Omnibus Incentive Plan, which authorized the issuance of an aggregate of 3.5 On August 31, 2022, Lifeway stockholders approved the 2022 Plan. Under the 2022 Plan, the Compensation Committee of the Board of Directors may grant awards of various types of compensation, including, nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards and other stock-based awards. The maximum number of shares authorized to be awarded under the 2022 Plan is 3.25 Awards granted under the 2022 Plan are generally subject to a minimum vesting period of at least one year. Awards may be subject to cliff-vesting or graded-vesting conditions, with graded vesting starting no earlier than one year after the grant date. The Plan Administrator may provide for shorter vesting periods in an award agreement for no more than five percent of the maximum number of shares authorized for issuance under the 2022 Plan. As of December 31, 2023, 2.77 Stock Options The following table summarizes stock option activity during the year ended December 31, 2023: Schedule of stock option activity Options Weighted Weighted Aggregate (In thousands) Outstanding at December 31, 2022 41 $ 10.42 3.22 $ – Granted – – – Exercised – – – Forfeited – – – Outstanding at December 31, 2023 41 10.42 2.21 121 Exercisable at December 31, 2023 41 10.42 2.21 121 Restricted Stock Units A Restricted Stock Unit (“RSU”) represents the right to receive one share of common stock in the future. RSUs have no exercise price. The following table summarizes RSU activity during the year ended December 31, 2023. Schedule of RSU Activity Restricted Stock Units Weighted Average Grant Date Fair Value (In thousands) Nonvested, at December 31, 2022 164 $ 5.69 Granted 85 8.14 Shares issued upon vesting (37 ) 4.57 Forfeited (5 ) 6.25 Nonvested, at December 31, 2023 207 6.89 Earned and deferred, at December 31, 2023 66 5.75 For the years ended December 31, 2023 and 2022 total pre-tax stock-based compensation expense recognized in the consolidated statements of operations was $ 506 279 142 78 682 1.4 Long-Term Incentive Plan Compensation Lifeway has established long-term incentive-based compensation programs for certain senior executives and key employees pursuant to the terms of its incentive plans. 2020 CEO Incentive Award During 2020, Lifeway awarded a long-term equity-based incentive of $ 750 105 229 24 2021 Equity Award The 2021 long-term equity incentive plan compensation is based on Lifeway’s achievement of adjusted EBITDA performance versus the respective target established by the Board for 2021. Under the 2021 plan, collectively the participants earned equity-based incentive compensation of $ 1,069 194 449 40 2022 Equity Award Under the 2022 long-term incentive plan, participants can earn a specified number of target level Performance Share Units (“PSUs”) contingent upon the achievement of strategic milestones during the three-year measurement period, which is fiscal year 2022 to 2024. The strategic milestones are 1) 3-year cumulative net revenue, and 2) 3-year cumulative adjusted EBITDA. The target number of PSU awards are weighted 50% on net revenue and 50% on adjusted EBITDA. Collectively, the participants can earn 125,066 PSUs at the target level. Participants may earn more or less than the target number of shares based on actual results, however the minimum and maximum number of shares that can be earned are bound by minimum and maximum thresholds of net revenue and adjusted EBITDA. The PSU awards will be earned and will vest, if at all, after the end of the three-year measurement period based on achievement of the milestones. The PSU awards do not vest during the three-year measurement period. The PSUs have a grant date fair value of $6.25 dollars per share. For the twelve months ended December 31, 2023, and 2022, $ 473 151 The 2022 long-term incentive plan also granted restricted stock unit awards that contain only a service condition and vest on the passage of time in three equal installments on each of the first three anniversaries of the August 31, 2022 grant date. The stock-based compensation expense for these awards is included in the Restricted Stock Units section above. 2023 Equity Award Under the 2023 long-term incentive plan, participants can earn a specified number of target level Performance Share Units (“PSUs”) contingent upon the achievement of strategic milestones during the three-year Measurement Period, which is fiscal year 2023 to 2025. The strategic milestones are 1) 3-year cumulative net revenue, and 2) 3-year cumulative adjusted EBITDA. The target number of PSU awards are weighted 50% on net revenue and 50% on adjusted EBITDA. Collectively, the participants can earn 115,622 PSUs at the target level. Participants may earn more or less than the target number of shares based on actual results, however the minimum and maximum number of shares that can be earned are bound by minimum and maximum thresholds of net revenue and adjusted EBITDA. The PSU awards will be earned and will vest, if at all, after the end of the three-year measurement period based on achievement of the milestones. The PSU awards do not vest during the three-year measurement period. The PSUs have a grant date fair value of $6.88 dollars per share. For the twelve months ended December 31, 2023 and 2022, $ 219 0 The 2023 long-term incentive plan also granted restricted stock unit awards that contain only a service condition and vest on the passage of time in three equal installments on each of the first three anniversaries of the June 16, 2023 grant date. The stock-based compensation expense for these awards is included in the Restricted Stock Units section above. Non-Employee Director Plan On August 31, 2022, Lifeway stockholders approved the 2022 Non-Employee Director Equity and Deferred Compensation Plan (the “2022 Director Plan”), which authorizes the grant of restricted stock units (“RSUs”), which will vest on such schedule as the Company, in its sole discretion, shall determine. Each non-employee director of the Company is eligible to be a participant in the 2022 Director Plan until they no longer serve as a non-employee director. As of the date of each annual shareholder meeting, the Company may grant each director a number of RSUs for such year and set the vesting schedule for the RSUs granted. Whether and how many RSUs the Company will grant to directors in any year is subject to the sole discretion of the Company and shall in any event be subject to the 2022 Director Plan’s overall share limits. The maximum aggregate number of shares of common stock that may be issued under the 2022 Directors Plan is 500 thousand shares. As of December 31, 2023, 431 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, 2023 and 2022 total contribution expense recognized in the consolidated statements of operations was $ 499 446 |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2023 | |
Net earnings per common share: | |
Earnings Per Share | Note 12 - Earnings Per Share The following table summarizes the effects of the share-based compensation awards on the weighted average number of shares outstanding used in calculating diluted earnings per share: Schedule of weighted average number of shares Year Ended December 31, 2023 2022 (In thousands) Weighted average common shares outstanding 14,667 15,396 Assumed exercise/vesting of equity awards 436 322 Weighted average diluted common shares outstanding 15,103 15,718 |
Disaggregation of Revenue, Sign
Disaggregation of Revenue, Significant Customers and Geographic Information | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Disaggregation of Revenue, Significant Customers and Geographic Information | Note 13 – Disaggregation of Revenue, Significant Customers and Geographic Information Lifeway’s primary product is drinkable kefir. The Company manufactures (directly or through a co-manufacturer) and markets products under the Lifeway, Fresh Made, and GlenOaks Farms brand names, as well as under private labels on behalf of certain customers. The Company’s product categories are: · Drinkable kefir, a cultured dairy product sold in a variety of organic and non-organic sizes, flavors, and types. · European-style soft cheeses, including farmer cheese, white cheese, and Sweet Kiss. · Cream and other, which primarily consists of cream, a byproduct of raw milk processing. · Drinkable yogurt, sold in a variety of sizes and flavors. · ProBugs, a line of kefir products designed for children. · Other dairy, which primarily consists of Fresh Made butter and sour cream. Net sales of products by category were as follows for the years ended December 31: Schedule of sales of products by category 2023 2022 In thousands $ % $ % Drinkable Kefir other than ProBugs 127,726 80 110,247 78 Cheese 13,781 9 12,651 9 Cream and other 7,382 4 7,465 5 Drinkable Yogurt 6,236 4 6,105 4 ProBugs Kefir 3,429 2 3,403 3 Other dairy 1,569 1 1,697 1 Net Sales 160,123 100 141,568 100 Significant Customers Sales are predominately to companies in the retail food industry located within the United States. Two major customers accounted for approximately 24 22 25 28 Geographic Information Net sales outside the of the United States represented less than 1% of total consolidated net sales in 2023 and 2022, respectively. Net sales are determined based on the destination where the products are shipped by Lifeway. All the Company’s long-lived assets are in the United States. |
Share repurchases
Share repurchases | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Share repurchases | Note 14 – Share repurchases Stock Purchase Agreement On November 7, 2022, the Company entered into a Stock Purchase Agreement with Ludmila Smolyansky (“Ms. Smolyansky”), to purchase 850,340 Pursuant to the Stock Purchase Agreement, (i) Ms. Smolyansky sold the shares at a purchase price of $4.70 per share, which represents a twenty percent (20.0%) discount to the average closing price of the common stock on Nasdaq over the five (5) trading day period ended on the trading day immediately preceding the date of the Stock Purchase Agreement and (ii) Ms. Smolyansky used a portion of the proceeds to satisfy in full certain obligations of Ms. Smolyansky, which are secured by previously disclosed pledges of common stock, causing all such pledges to be released. The purchased shares are held in treasury by the Company. As a closing condition to the Stock Purchase Agreement, Ms. Smolyansky and Mr. Smolyansky delivered an executed amendment (the “Amendment”) to that certain Settlement Agreement dated as of July 27, 2022 (the “Settlement Agreement”), between the Company and Ms. Smolyansky and Mr. Smolyansky. Pursuant to the Amendment, Ms. Smolyansky and Mr. Smolyansky each agree, among other things, to (i) grant the Company a right of first refusal, subject to Danone North America Public Benefit Corporation’s (“Danone”) right of first refusal, on substantially similar terms as Danone (ii) extend the standstill and all related terms under the Proxy Settlement Agreement through the date of the 2024 annual meeting of the Company’s shareholders (the “Standstill”); and (iii) to appear in person or by proxy and vote their respective remaining shares of common stock beneficially owned, individually or otherwise, and controlled by either of them and over which they have power and authority to vote during the Standstill (a) in accordance with the recommendations of the Board at any special meeting or annual meeting of the shareholders with respect to any proposal(s) not related to the sale of the Company or all or substantially all of the assets of the Company; and (b) in proportion to the vote of the other shareholders with respect to any proposal relating to any vote on the sale of the Company or all or substantially all of the assets of the Company. |
Related party transactions
Related party transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 15 – Related party transactions Consulting Services Lifeway obtained consulting services from Ludmila Smolyansky, a former member and former Chairperson of the Company’s Board of Directors. On January 4, 2022, the Company notified Ms. Smolyansky that it was terminating the consultancy agreement effective January 17, 2022. Service fees earned are included in general and administrative expenses in the accompanying consolidated statements of operations and were $ 0 22 Endorsement Agreement Lifeway was also a party to an endorsement agreement, dated as March 14, 2016, by and between the Company and Ludmila Smolyansky, a former member and former Chairperson of the Company’s Board of Directors (the “Endorsement Agreement”) under which it paid Ms. Smolyansky a royalty based on the sale of certain Lifeway products, not to exceed $50 in any fiscal month. On September 6, 2022, the Company entered into an agreement (the “Termination Agreement”) with Ms. Smolyansky that terminated the Endorsement Agreement as of September 6, 2022. Pursuant to the Termination Agreement, the Company and Ms. Smolyansky have agreed, among other things, that (i) the Company paid Ms. Smolyansky a lump sum payment of $ 400,000 will no longer have any further claims against the Company under the Endorsement Agreement, and (iii) the Endorsement Agreement was terminated and of no further force or effect except for the provisions thereof that expressly survive termination. Royalties earned are included in selling expenses in the accompanying consolidated statements of operations and were $ 0 400 Stock Purchase Agreement See the November 2022 stock purchase agreement between Ms. Smolyansky and the Company in Note 14. |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to use judgement 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 the reported amounts of net sales 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. |
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. The Company places its cash and cash equivalents with high credit quality financial institutions. Lifeway has not experienced any losses in such accounts and believes the financial risks associated with these financial instruments are minimal. |
Revenue Recognition | Revenue Recognition Lifeway sells food and beverage products across select product categories to customers predominantly within the United States (see Note 13 – Disaggregation of Revenue, Significant Customers, and Geographic Information). The Company also sells bulk cream, a byproduct of its fluid milk manufacturing process. In accordance with ASC 606, Revenue from Contracts with Customers, Lifeway recognizes revenue when control over the products transfers to its customers, which generally occurs upon delivery to its 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 and beverage products which provide immediate benefit to the customer. Lifeway accounts 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 includes known or expected pricing or revenue adjustments, such as trade discounts, allowances for non-saleable products, product returns, trade incentives and coupon redemption, is estimated utilizing the most likely amount method. Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration. As such, the Company does not capitalize contract inception costs and it capitalizes product fulfillment costs in accordance with U.S. GAAP and its inventory policies. It generally does not receive noncash consideration for the sale of goods, nor does it grant payment financing terms greater than one year. |
Accounts Receivable | Accounts Receivable Lifeway provides credit terms to customers in-line with industry standards and maintains allowances for potential credit losses based on historical collection experiences and the current economic condition of specific customers. All account receivables have an original term of less than one year. Customer balances are written off after all collection efforts are exhausted. Estimated product returns, which have not been material, are deducted from sales at the time of revenue recognition. The Company does not charge interest on past due accounts receivable. |
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: Schedule of property and equipment, estimated useful lives Asset Useful Life Buildings and improvements 10 – 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 The Company performs 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. |
Goodwill | Goodwill Goodwill represents the excess purchase price over the fair value of the net tangible and other identifiable intangible assets acquired. Goodwill is not amortized, but it is subject to an annual assessment for impairment, which the Company performs on its one reporting unit during the fourth quarter (as of December 31), or more frequently if events occur or circumstances change such that it is more likely than not that an impairment may exist. In testing goodwill for impairment, the Company has the option to perform a qualitative test (also known as “Step 0”) or a quantitative test (“Step 1”). Under the Step 0 test, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, but are not limited to, economic conditions, industry and market considerations, cost factors, overall financial performance of the reporting unit and other entity and reporting unit specific events. If after assessing these qualitative factors, the Company determines it is “more-likely-than-not” that the fair value of the reporting unit is less than the carrying value, then performing the Step 1 quantitative test is necessary. Step 1 of the quantitative test requires comparison of the fair value of the Company’s one reporting unit to the carrying value. If the carrying value of the reporting unit is less than the fair value, no impairment exists. Otherwise, the Company would recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value up to the amount of goodwill allocated to the reporting unit. Under a Step 1 quantitative test, we estimate the fair value of our one reporting unit using a combination of the fair values derived from both the income approach and the market approach. Under the income approach, the Company uses a discounted cash flow methodology which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. 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. For the market approach, the Company uses the guideline public company method. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics. The Company also reconciles the fair value of its reporting unit to its current market capitalization, allowing for a reasonable control premium. |
Intangible Assets | 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 estimated useful lives as follows: Schedule of intangible assets useful lives Asset Useful Life Recipes 4 years Brand names 15 years Formula 10 years Customer lists 5-10 years Customer relationships 15 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 marketplace including changes in the prices paid for its products or changes in the size of the market for its products. If an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value, which is generally based on discounted future cash flows. If the estimated remaining useful life of an intangible asset is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. |
Fair value measurements | 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. As of December 31, 2023, and 2022, the Company has one equity investment without a readily determinable fair value which is recorded at $ 1,800 1,800 1,731 |
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 analyzes 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. The Company recognizes 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. It applies a more likely than not threshold to the recognition and derecognition of uncertain tax positions. Accordingly, Lifeway recognizes 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 and performance share awards are equal to the closing price of Lifeway’s stock on the date of grant. The Company does not estimate forfeitures in measuring the grant date fair value, but rather account for forfeitures as they occur. The fair value of stock options are measured using 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. The Company utilized this simplified method as it did not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. 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 Advertising costs are expensed as incurred and reported in Selling expense in the Company’s consolidated statements of operations. Total advertising expense was $ 3,733 3,353 |
Earnings per common share | Earnings per common share Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares issued and outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares issued and outstanding and the effect of all dilutive common stock equivalents related to the Company’s outstanding stock-based compensation awards outstanding during the reporting period. |
Segments | Segments The Company is managed as a single reportable segment. The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), reviews financial information on an aggregate basis for purposes of allocating resources and assessing financial performance, as well as for making strategic operational decisions and managing the organization. Substantially all of Lifeway’s consolidated revenues relate to the sale of cultured dairy products that it produces using the same processes and materials and are sold to consumers through a common network of distributors and retailers in the United States. |
Recent accounting pronouncements | Recent accounting pronouncements Issued but not yet effective In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance requires entities to report incremental information about significant segment expenses included in a segment’s profit or loss measure as well as the name and title of the chief operating decision maker. The guidance also requires interim disclosures related to reportable segment profit or loss and assets that had previously only been disclosed annually. The new standard is effective for our annual period ending December 31, 2024 and our interim periods during the fiscal year ending December 31, 2025. The guidance does not affect recognition or measurement in the Company’s consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for our fiscal year ending December 31, 2024. The guidance does not affect recognition or measurement in the Company’s consolidated financial statements. Adopted In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The new guidance provides a single comprehensive accounting model on revenue recognition for contracts with customers and requires that the acquirer in a business combination recognize and measure contract assets and liabilities acquired in a business combination in accordance with Topic 606 (Revenue from Contracts with Customers). The amendments in this ASU are effective for fiscal years beginning after December 15, 2022. The Company adopted this standard during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial statements. In March 2020, the FASB issued 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 U.S. GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance will be effective prospectively as of March 12, 2020 through December 31, 2022 and interim periods within those fiscal years. The ASU was effective upon issuance and allowed companies to adopt the amendments on a prospective basis through December 31, 2024. The Company adopted this standard during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial statements. In June 2016, the FASB issued ASU No. 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. The Company adopted this standard during the first quarter of 2023. The adoption did not have a material impact on the Company’s financial statements. |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment, estimated useful lives | Schedule of property and equipment, estimated useful lives Asset Useful Life Buildings and improvements 10 – 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 | Schedule of intangible assets useful lives Asset Useful Life Recipes 4 years Brand names 15 years Formula 10 years Customer lists 5-10 years Customer relationships 15 years |
Inventories, net (Tables)
Inventories, net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Schedule of inventories December 31, 2023 2022 Ingredients $ 2,929 $ 2,859 Packaging 3,014 3,233 Finished goods 3,161 3,539 Total inventories, net $ 9,104 $ 9,631 |
Property, Plant and Equipment_2
Property, Plant and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property, plant and equipment | Schedule of property, plant and equipment December 31, 2023 2022 Land $ 1,565 $ 1,565 Buildings and improvements 21,661 19,341 Machinery and equipment 33,573 32,786 Vehicles 705 640 Office equipment 1,072 979 Construction in process 2,154 1,180 60,730 56,491 Less accumulated depreciation (37,966 ) (35,586 ) Total property, plant and equipment, net $ 22,764 $ 20,905 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | Schedule of goodwill Total Balance at December 31, 2022 Goodwill $ 12,948 Accumulated impairment losses (1,244 ) Balance at December 31, 2022 $ 11,704 Balance at December 31, 2023 Goodwill $ 12,948 Accumulated impairment losses (1,244 ) Balance at December 31, 2023 $ 11,704 |
Schedule of finite-lived intangible assets | Schedule of finite-lived intangible assets December 31, 2023 December 31, 2022 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Recipes $ 44 $ (44 ) $ – $ 44 $ (44 ) $ – Customer lists and other customer related intangibles 4,529 (4,529 ) – 4,529 (4,529 ) – Customer relationship 3,385 (1,372 ) 2,013 3,385 (1,212 ) 2,173 Brand names 7,948 (3,063 ) 4,885 7,948 (2,683 ) 5,265 Formula 438 (438 ) – 438 (438 ) – Total intangible assets, net $ 16,344 $ (9,446 ) $ 6,898 $ 16,344 $ (8,906 ) $ 7,438 |
Schedule of estimated amortization expense on intangible assets | Schedule of estimated amortization expense on intangible assets Year Amortization 2024 $ 540 2025 $ 540 2026 $ 540 2027 $ 540 2028 $ 540 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | Schedule of accrued expenses December 31, 2023 2022 Payroll and incentive compensation $ 3,853 $ 2,925 Real estate taxes 442 394 Accrued utilities 241 121 Current portion of operating lease liabilities 74 70 Other 306 303 Total accrued expenses $ 4,916 $ 3,813 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Schedule of debt December 31, 2023 2022 Term loan due August 18, 2026. Interest (6.29% at December 31, 2023) payable monthly. $ 2,750 $ 3,750 Unamortized deferred financing costs (17 ) (23 ) Total note payable 2,733 3,727 Less current portion (1,250 ) (1,250 ) Total long-term portion $ 1,483 $ 2,477 |
Schedule of maturities of long-term debt | Schedule of maturities of long-term debt 2024 $ 1,250 2025 1,000 2026 500 Total term loan $ 2,750 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Schedule of future maturities of lease liabilities | Schedule of future maturities of lease liabilities Year Operating Leases 2024 $ 89 2025 55 2026 31 2027 21 2028 17 Thereafter 10 Total lease payments 223 Less: Interest (31 ) Present value of lease liabilities $ 192 |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | Provision for income taxes For the Years Ended December 31, 2023 2022 Current: Federal $ 3,591 $ 645 State and local 1,719 444 Total current 5,310 1,089 Deferred (28 ) (172 ) Provision for income taxes $ 5,282 $ 917 |
Reconciliation to effective rate for income taxes | Reconciliation to effective rate for income taxes 2023 2022 Amount Percentage Amount Percentage Federal income tax at statutory rate $ 3,496 21.0 $ 392 21.0 State and local tax, net 1,126 6.8 287 15.4 Other permanent differences 17 0.1 8 0.4 Section 162m 435 2.6 229 12.2 Stock based compensation 203 1.2 127 6.8 Change in tax rates 5 0.0 (83 ) ( 4.4 ) Other – – (43 ) ( 2.3 ) Provision for income taxes $ 5,282 31.7 $ 917 49.1 |
Schedule of deferred tax assets and liabilities | Schedule of deferred tax assets and liabilities December 31, 2023 2022 Deferred tax liabilities attributable to: Accumulated depreciation and amortization $ (3,519 ) $ (3,394 ) Unrealized gains (469 ) (472 ) Total deferred tax liabilities (3,988 ) (3,866 ) Deferred tax assets attributable to: Net operating losses 6 6 Accrued compensation 403 287 Incentive compensation 301 194 Inventory 280 328 Allowances for doubtful accounts and discounts 3 5 Other (6 ) 17 Total net deferred tax assets 987 837 Net deferred tax liabilities $ (3,001 ) $ (3,029 ) |
Schedule of tax attributes related to net operating losses | Schedule of tax attributes related to net operating losses Tax Attributes Gross Amount Net Amount Expiration Years State net operating losses $ 116 $ 6 2035 $ 6 |
Reconciliation of amount of unrecognized tax benefits | Reconciliation of amount of unrecognized tax benefits 2023 2022 Balance at January 1 $ – $ 396 Additions based on tax positions of prior years – – Settlement for tax positions of prior years – (396 ) Balance at December 31 $ – $ – |
Stock-based and Other Compens_2
Stock-based and Other Compensation (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Schedule of stock option activity Options Weighted Weighted Aggregate (In thousands) Outstanding at December 31, 2022 41 $ 10.42 3.22 $ – Granted – – – Exercised – – – Forfeited – – – Outstanding at December 31, 2023 41 10.42 2.21 121 Exercisable at December 31, 2023 41 10.42 2.21 121 |
Schedule of RSU Activity | Schedule of RSU Activity Restricted Stock Units Weighted Average Grant Date Fair Value (In thousands) Nonvested, at December 31, 2022 164 $ 5.69 Granted 85 8.14 Shares issued upon vesting (37 ) 4.57 Forfeited (5 ) 6.25 Nonvested, at December 31, 2023 207 6.89 Earned and deferred, at December 31, 2023 66 5.75 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Net earnings per common share: | |
Schedule of weighted average number of shares | Schedule of weighted average number of shares Year Ended December 31, 2023 2022 (In thousands) Weighted average common shares outstanding 14,667 15,396 Assumed exercise/vesting of equity awards 436 322 Weighted average diluted common shares outstanding 15,103 15,718 |
Disaggregation of Revenue, Si_2
Disaggregation of Revenue, Significant Customers and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Segment Reporting [Abstract] | |
Schedule of sales of products by category | Schedule of sales of products by category 2023 2022 In thousands $ % $ % Drinkable Kefir other than ProBugs 127,726 80 110,247 78 Cheese 13,781 9 12,651 9 Cream and other 7,382 4 7,465 5 Drinkable Yogurt 6,236 4 6,105 4 ProBugs Kefir 3,429 2 3,403 3 Other dairy 1,569 1 1,697 1 Net Sales 160,123 100 141,568 100 |
Summary Of Significant Accoun_4
Summary Of Significant Accounting Policies (Details - Property useful lives) | 12 Months Ended |
Dec. 31, 2023 | |
Building and Building Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 10 – 39 years |
Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 – 12 years |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 – 7 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | Shorter of expected useful life or lease term |
Summary Of Significant Accoun_5
Summary Of Significant Accounting Policies (Details - Intangible Useful lives) | 12 Months Ended |
Dec. 31, 2023 | |
Recipes [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 4 years |
Brand Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 15 years |
Formula [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 10 years |
Customer Lists [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 5-10 years |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of intangible assets | 15 years |
Summary of significant accoun_6
Summary of significant accounting policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Other assets | $ 1,800 | $ 1,800 | |
Investment cost | 1,800 | ||
Cumulative unrealized gain | $ 1,731 | ||
Advertising expenses | $ 3,733 | $ 3,353 |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Ingredients | $ 2,929 | $ 2,859 |
Packaging | 3,014 | 3,233 |
Finished goods | 3,161 | 3,539 |
Total inventories, net | $ 9,104 | $ 9,631 |
Property, Plant and Equipment_3
Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 60,730 | $ 56,491 |
Less accumulated depreciation | (37,966) | (35,586) |
Total property, plant and equipment, net | 22,764 | 20,905 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,565 | 1,565 |
Building and Building Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 21,661 | 19,341 |
Machinery and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 33,573 | 32,786 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 705 | 640 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,072 | 979 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,154 | $ 1,180 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details - Goodwill) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning balance, before accumulated impairment loses | $ 12,948 | $ 12,948 |
Accumulated impairment losses | (1,244) | (1,244) |
Ending balance | $ 11,704 | $ 11,704 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Details - Finite lived) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 16,344 | $ 16,344 |
Accumulated Amortization | (9,446) | (8,906) |
Net Carrying Amount | 6,898 | 7,438 |
Recipes [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 44 | 44 |
Accumulated Amortization | (44) | (44) |
Net Carrying Amount | 0 | 0 |
Customer Lists And Other Customer Related Intangibles [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 4,529 | 4,529 |
Accumulated Amortization | (4,529) | (4,529) |
Net Carrying Amount | 0 | 0 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,385 | 3,385 |
Accumulated Amortization | (1,372) | (1,212) |
Net Carrying Amount | 2,013 | 2,173 |
Brand Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 7,948 | 7,948 |
Accumulated Amortization | (3,063) | (2,683) |
Net Carrying Amount | 4,885 | 5,265 |
Formula [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 438 | 438 |
Accumulated Amortization | (438) | (438) |
Net Carrying Amount | $ 0 | $ 0 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Details - Amortization expense on intangible assets) $ in Thousands | Dec. 31, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 540 |
2025 | 540 |
2026 | 540 |
2027 | 540 |
2028 | $ 540 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill, Impairment Loss | $ 0 | $ 0 |
Weighted average remaining contractual term | 12 years 9 months 18 days | |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining contractual term | 12 years 7 months 6 days | |
Brand Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted average remaining contractual term | 12 years 10 months 24 days |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Payroll and incentive compensation | $ 3,853 | $ 2,925 |
Real estate taxes | 442 | 394 |
Accrued utilities | 241 | 121 |
Current portion of operating lease liabilities | 74 | 70 |
Other | 306 | 303 |
Total accrued expenses | $ 4,916 | $ 3,813 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Term loan due August 18, 2026. Interest (6.29% at December 31, 2023) payable monthly. | $ 2,750 | $ 3,750 |
Unamortized deferred financing costs | (17) | (23) |
Total note payable | 2,733 | 3,727 |
Less current portion | (1,250) | (1,250) |
Total long-term portion | $ 1,483 | $ 2,477 |
Debt (Details - Maturities)
Debt (Details - Maturities) $ in Thousands | Dec. 31, 2023 USD ($) |
Debt Disclosure [Abstract] | |
2024 | $ 1,250 |
2025 | 1,000 |
2026 | 500 |
Total term loan | $ 2,750 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Short-Term Debt [Line Items] | ||
Unused revolving line of credit fee | 0.20% | |
Letter of credit fee percentage | 0.20% | |
Line of credit outstanding balance | $ 0 | |
Deferred financing costs | 17 | $ 23 |
Credit Agreement Term Loan [Member] | ||
Short-Term Debt [Line Items] | ||
Termination loans | $ 5,000 | |
Debt instrument maturity date | Aug. 18, 2026 | |
Revolving Credit Facility [Member] | ||
Short-Term Debt [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000 | |
Debt instrument maturity date | Jun. 30, 2025 | |
Available for future borrowings | $ 5,000 | |
Incremental Facility [Member] | ||
Short-Term Debt [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 5,000 | |
Credit Agreement [Member] | ||
Short-Term Debt [Line Items] | ||
Debt instrument interest rate terms | Secured Overnight Financing Rate (“SOFR”), plus 2.07%, payable monthly in arrears. |
Leases (Details)
Leases (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Leases | |
2024 | $ 89 |
2025 | 55 |
2026 | 31 |
2027 | 21 |
2028 | 17 |
Thereafter | 10 |
Total lease payments | 223 |
Less: Interest | (31) |
Present value of lease liabilities | $ 192 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Total lease expense | $ 138 | $ 229 |
Weighted average remaining lease term | 3 years 7 months 6 days | |
Weighted average discount rate | 9.85% | |
Operating lease liabilities | $ 94 | $ 151 |
Income taxes (Details - Provisi
Income taxes (Details - Provision) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Current: | ||
Federal | $ 3,591 | $ 645 |
State and local | 1,719 | 444 |
Total current | 5,310 | 1,089 |
Deferred | (28) | (172) |
Provision for income taxes | $ 5,282 | $ 917 |
Income taxes (Details - Reconci
Income taxes (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective Income Tax Rate Reconciliation at Federal Statutory Income Tax Rate, Amount | $ 3,496 | $ 392 |
Federal income tax expense computed at the statutory rate, percentage | 21% | 21% |
Tax reconciliation not required | 21% | 21% |
State and local tax expense, net | $ 1,126 | $ 287 |
State and local tax expense, net, percentage | 6.80% | 15.40% |
Other permanent differences | $ 17 | $ 8 |
Other permanent differences, percentage | 0.10% | 0.40% |
Section 162m | $ 435 | $ 229 |
Section 162m, percentage | 2.60% | 12.20% |
Stock based compensation | $ 203 | $ 127 |
Stock based compensation, percentage | 1.20% | 6.80% |
Change in tax rates | $ 5 | $ (83) |
Change in tax rates, percentage | 0% | 4.40% |
Other | $ 0 | $ (43) |
Other, percentage | 0% | 2.30% |
Provision for income taxes | $ 5,282 | $ 917 |
Provision for income taxes, percentage | 31.70% | 49.10% |
Income taxes (Details - Deferre
Income taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax liabilities attributable to: | ||
Accumulated depreciation and amortization | $ (3,519) | $ (3,394) |
Unrealized gains | (469) | (472) |
Total deferred tax liabilities | (3,988) | (3,866) |
Deferred tax assets attributable to: | ||
Net operating losses | 6 | 6 |
Accrued compensation | 403 | 287 |
Incentive compensation | 301 | 194 |
Inventory | 280 | 328 |
Allowances for doubtful accounts and discounts | 3 | 5 |
Other | (6) | 17 |
Total net deferred tax assets | 987 | 837 |
Net deferred tax liabilities | $ (3,001) | $ (3,029) |
Income taxes (Details - Tax att
Income taxes (Details - Tax attributes related to net operating losses ) - State [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Operating Loss Carryforwards [Line Items] | |
State net operating losses, gross | $ 116 |
State net operating losses, net | $ 6 |
State net operating losses, expiration date | 2035 |
Income taxes (Details - Unrecog
Income taxes (Details - Unrecognized tax benefits) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits, beginning balance | $ 0 | $ 396,000 |
Additions based on tax positions of prior years | 0 | 0 |
Reduction for tax positions of prior years | 0 | (396,000) |
Unrecognized tax benefits, ending balance | $ 0 | $ 0 |
Income taxes (Details Narrative
Income taxes (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized Tax Benefits | $ 0 | $ 0 | $ 396,000 |
Income tax examination penalties and interest expense | 0 | 0 | |
Income tax examination penalties and interest accrued | $ 0 | $ 0 |
Stock-based and Other Compens_3
Stock-based and Other Compensation (Details - Option Activity) - Equity Option [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Options outstanding, beginning balance | 41 | |
Weighted average exercise price, options outstanding, beginning balance | $ 10.42 | |
Weighted average remaining contractural life, outstanding ending | 2 years 2 months 15 days | 3 years 2 months 19 days |
Aggregate intrinsic value, options outstanding | $ 121 | $ 0 |
Options granted | 0 | |
Weighted average exercise price, options granted | $ 0 | |
Options exercised | 0 | |
Weighted average exercise price, options exercised | $ 0 | |
Options forfeited | 0 | |
Weighted average exercise price, options forfeited | $ 0 | |
Options outstanding, ending balance | 41 | 41 |
Weighted average exercise price, options outstanding, ending balance | $ 10.42 | $ 10.42 |
Options exercisable | 41 | |
Weighted average exercise price, Exercisable | $ 10.42 | |
Weighted average remaining contractural life, exercisable | 2 years 2 months 15 days | |
Aggregate intrinsic value, options exercisable | $ 121 |
Stock-based and Other Compens_4
Stock-based and Other Compensation (Details - Restricted Stock Units) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Restricted stock units beginning, balance | shares | 164 |
Weighted average grant date fair value outstanding, beginning balance | $ / shares | $ 5.69 |
Restricted stock units granted | shares | 85 |
Weighted average grant date fair value, granted | $ / shares | $ 8.14 |
Restricted stock units shares issued upon vesting | shares | (37) |
Weighted average grant date fair value, shares issued upon vesting | $ / shares | $ 4.57 |
Restricted stock units forfeited | shares | (5) |
Weighted average grant date fair value, forfeited | $ / shares | $ 6.25 |
Restricted stock units ending, balance | shares | 207 |
Weighted average grant date fair value outstanding, ending balance | $ / shares | $ 6.89 |
Restricted stock units vested and deferred | shares | 66 |
Weighted average grant date fair value, vested and deferred | $ / shares | $ 5.75 |
Stock-based and Other Compens_5
Stock-based and Other Compensation (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Aug. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Restricted Stock Units (RSUs) [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share-based compensation | $ 506 | $ 279 | |||
Tax related benefits | 142 | 78 | |||
Unearned compensation | $ 682 | ||||
Weighted average recognition term | 1 year 4 months 24 days | ||||
C E O 2020 Award [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share-based compensation | $ 105 | 229 | |||
Unearned compensation | 24 | ||||
Long-term equity-based incentive | $ 750 | ||||
2021 Equity Award [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share-based compensation | 194 | 449 | |||
Unearned compensation | 40 | ||||
Long-term equity-based incentive | $ 1,069 | ||||
2022 Equity Award [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share-based compensation | 473 | 151 | |||
2023 Equity Award [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Share-based compensation | $ 219 | 0 | |||
Omnibus 2015 [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of shares authorized for issuance | 3,500 | ||||
Omnibus 2022 Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of shares authorized for issuance | 3,250 | ||||
Number of shares avilable for issuance | 2,770 | ||||
2022 Director Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Number of shares avilable for issuance | 431 | ||||
Defined Contribution Plan [Member] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Contribution expense | $ 499 | $ 446 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Net earnings per common share: | ||
Weighted average common shares outstanding | 14,667 | 15,396 |
Assumed exercise/vesting of equity awards | 436 | 322 |
Weighted average diluted common shares outstanding | 15,103 | 15,718 |
Disaggregation of Products and
Disaggregation of Products and Customers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue, Major Customer [Line Items] | ||
Total sales | $ 160,123 | $ 141,568 |
Drinkable Kefir Other Than ProBugs [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 127,726 | $ 110,247 |
Drinkable Kefir Other Than ProBugs [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 80% | 78% |
Cheese [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 13,781 | $ 12,651 |
Cheese [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 9% | 9% |
Cream and Other [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 7,382 | $ 7,465 |
Cream and Other [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 4% | 5% |
Drinkable Yogurt [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 6,236 | $ 6,105 |
Drinkable Yogurt [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 4% | 4% |
Probugs Kefir [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 3,429 | $ 3,403 |
Probugs Kefir [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 2% | 3% |
Other Dairy [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 1,569 | $ 1,697 |
Other Dairy [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 1% | 1% |
Total Net Sales [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales | $ 160,123 | $ 141,568 |
Total Net Sales [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue, Major Customer [Line Items] | ||
Total sales percentage | 100% | 100% |
Disaggregation of Revenue, Si_3
Disaggregation of Revenue, Significant Customers and Geographic Information (Details Narrative) - Two Customers [Member] - Customer Concentration Risk [Member] | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue Benchmark [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk, Percentage | 24% | 22% |
Accounts Receivable [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration Risk, Percentage | 25% | 28% |
Share repurchases (Details Narr
Share repurchases (Details Narrative) shares in Thousands | 12 Months Ended |
Dec. 31, 2023 shares | |
Ludmila Smolyansky [Member] | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
Stock repurchased during period shares | 850,340 |
Related party transactions (Det
Related party transactions (Details Narrative) - Ludmila Smolyansky [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Other general and administrative expense | $ 0 | $ 22 |
Termination expense payable | 400,000 | |
Royalty expense | $ 0 | $ 400 |