LWAY 10-K & 10-Q changes, risk factors and insider trading

We compete with a limited number of other domestic domestic kefir producers and consequently face a small amount of direct competition for kefir products. However, our kefir-based products compete with other dairy products, notably spoonable and drinkable yogurt, and, increasingly, with non-dairy probiotic products that incorporate kefir cultures but are not kefir. We face significant competition for limited retailer shelf space in each of our product categories. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, and our ability to identify and satisfy consumer tastes and preferences. We believe that our brands have benefited in many cases from being the first to introduce products in their categories, and their success has attracted competition from other food and beverage companies that produce branded products, as well as from private label competitors. Some of our competitors, such as Danone, General Mills, Chobani, Hain Celestial Group, Horizon and Nestle, have substantial financial and marketing resources. These competitors and others may be able to introduce innovative products more quickly or market their products more successfully than we can, which could cause our growth rate to be slower than we anticipate and could cause sales to decline.

Although the Company does not have any indebtedness outstanding as of December 31, 2024,2025, the Company may incur indebtedness in the future. Outstanding debt obligations could adversely affect our financial condition and limit our ability to successfully implement our business strategy. Furthermore, from time to time, we may need additional financing to support our business and pursue our business strategy, including strategic acquisitions. Our ability to obtain additional financing, if and when required, will depend on our operating performance, the condition of the capital markets, and other factors. We cannot assure that additional financing will be available to us on favorable terms when required, or at all. If we raise additional funds through the issuance of equity, equity-linked, or debt securities, those securities may have rights, preferences, or privileges senior to those of our common stock, and, in the case of equity and equity-linked securities, our existing stockholders may experience dilution. Although the Company believes that the Stockholders’ Agreement, dated as of October 1, 1999 (and as amended on December 24, 1999 and as extended in certain respects in eight extensions executed by certain of the parties to the Stockholders’ Agreement, the last of which was dated as of December 31, 2009 (the “Stockholders’ Agreement”)), by and among Danone North America Public Benefit Corporation or an affiliate thereof (collectively, “Danone”), Lifeway and certain Lifeway shareholders, is invalid, the Stockholders’ Agreement purports to limit the Company’s ability to issue shares of Company common stock or convertible securities outside of specified, limited situations without providing Danone a right of first refusal, in the case of issuances of Company common stock, or first obtaining Danone’s prior consent, in the case of issuances of securities convertible into Company common stock in excess of a specified amount. If the Stockholders’ Agreement is valid or if third parties are unwilling to participate in transactions due to the uncertainty relating to the validity of the Stockholders’ Agreement, the Company may not be able to raise additional funds through the issuance of equity or equity-linked securities.

As of December 31, 2024,2025, we had $0 outstanding under under the Revolving Credit Facility and note payable.Facility. Our loan agreementsagreement containcontains certain restrictions and requirements that among other things:

A substantial portion of our common stock is held by members of the Smolyansky familyfamily, Danone and Danone,Divisadero Street Partners, L.P. (“Divisadero”), and they have the ability to control the outcome of matters submitted for stockholder approval.

Our fourfive largest shareholders, Julie Smolyansky (the Company’s chief executive officer and the daughter of our founder), Edward Smolyansky (our former chief operations officer and son of our founder), Ludmila Smolyansky (a former member of our Board and the widow of our founder), Danone North America PBC and its affiliates (collectively, “Danone”) and Danone,Divisadero, beneficially owned approximately 18%, 21%,20%, 8%6%, 23% and 23%9% of the Company’s outstanding common stock, respectively, as of December 31, 2024.2025. Certain of these shareholders, together, could significantly influence any matter requiring approval by our stockholders, including the election or removal of all of our directors, amendments to our articles of incorporation and the approval or rejection of any merger, change of control, or other significant corporate transaction. It is unlikely that any person interested in acquiring Lifeway will be able to do so without obtaining the consent of some combination of Julie Smolyansky, Edward Smolyansky, Ludmila SmolyanskySmolyansky, Danone and Danone.Divisadero. The interests of the Smolyansky family membersmembers, Danone and DanoneDivisadero could differ from those of other stockholders in ways that could be adverse to the interests of other stockholders. By exercising their influence, such stockholders could cause Lifeway to take actions that are at odds with the investment goals of institutional, short-term, non-voting, or other non-controlling investors, or that have a negative effect on our stock price. Additionally, concentration of ownership could also harm the market price of our common stock if investors perceive disadvantages in owning stock in a company of which a substantial portion of common stock is beneficially owned by a small number of stockholders.

In September 2024, Danone publicly made an unsolicited proposalProposals to acquire all of the shares of Company common stock that it did not already own for $25.00 per share of Company common stock, subject to due diligence, among other things. Then in November 2024, Danone revised its proposal to $27.00 per share of Company common stock. Our Board carefully considered the initial proposal and the revised proposal in consultation with the Company’s independent financial and legal advisors, and ultimately determined that both proposals substantially undervalued the Company and were not in the best interests of the Company or its stockholders or other stakeholders. These proposals, similar proposals that we may receive in the future and any other actions by stockholders or others relating to a potential change of control transaction involving the Company could could interfere with our ability to execute our strategic plans, make it more difficult to attract and retain qualified executives and employees, employees, cause management distraction, require us to utilize more resources than anticipated towards review of strategic alternatives and result in the loss of potential business opportunities, any of which could have a material negative impact on the Company. In addition, our business and operations may be harmed to the extent that our customers or suppliers or others believe that we cannot effectively compete in the marketplace without completing a transaction, or if there is customer, supplier or employee uncertainty surrounding the future direction direction of our product offerings and our strategy. There can be no assurance that any such transaction will be completed now or in the future.

We have had to, and may continue to be required to, incur fees and other expenses related to Danone’s proposals, including for third-party advisors. Further, Danone’s proposals, similar futureAny proposals that we may receive in the future or any actual or perceived actions by our stockholders or others relating to a potential transaction involving the Company may cause significant fluctuations in our stock price based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the Company’s underlying fundamentals and prospects.

The actions of certain of our stockholdersshareholders could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation and adversely impact our stock price.

We value constructive input from investors and regularly engage in dialogue with our stockholdersshareholders regarding strategy and performance. Our Board and management team are committed to acting in the best interests of all of our stockholders.shareholders.

We may be subject to continuedshareholder activism in the future, including nominations of candidates for election to our Board to replace current Board members or similarother activismshareholder proposals, in the future, which could cause us to incur significant expense, hinder execution of our business strategy and adversely impact the market price of Company common stock. StockholderShareholder actions, including potential proxy contests, require significant time and attention by management and and our Board, potentially interfering with our ability to execute our strategic plan. Such stockholdershareholder action could give rise to perceived uncertainties as to our future, adversely affect our relationships with our employees, customers or suppliers and make it more difficult to attract and retain qualified personnel and business partners. These perceived uncertainties may also be exploited by our competitors or other stockholders,shareholders, which could result in lost business opportunities and make it more difficult to execute on our long-term strategic plan. If customers choose to delay, defer or reduce transactions with us or do business with our competitors instead of us, then our business, financial condition and operating results would be adversely affected. We may be required to incur significant legal fees and other expenses related to stockholdershareholder actions, and the attention of our management may be diverted by such actions. Any of these impacts could materially and adversely affect our business, operating results and financial condition, and the market price of Company common stock could be subject to significant fluctuation or otherwise be adversely affected. If individuals are elected or appointed to our Board with a specific agenda, the ability of our Board to function effectively could be adversely affected, which could in turn adversely affect our ability to effectively and timely implement our strategic plan and create additional value for our stockholders,shareholders, and adversely affect our business, operating results and financial condition.

As previously disclosed by the Company, the Company believes that the Stockholders’ Agreement is void ab initio and unenforceable. Danone has filed suit in the Circuit Court of Cook County, Law Division, in part, to enforce the Stockholders’ Agreement. ThePursuant to the Cooperation Agreement, the parties have jointly sought a stay of the pending litigation regardingrelating. theIf Stockholders’ Agreementsuch litigation is recommenced, it may be protracted and expensive, and under certain circumstances, the Company may be required to reimburse Danone for its legal fees incurred in connection with such litigation. Further, the uncertainty relating to the status of the Stockholders’ Agreement may cause third parties to refuse to engage in activities that are purportedly prohibited by the Stockholders’ Agreement.

On November 4, 2024, in response to Danone’s original proposal and Danone’s substantial ownership position in the Company, our Board approved and adopted the Shareholder Rights Agreement with Computershare Trust Company, N.A., as rights agent (the “Rights Agreement”), and declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of Company common stock to stockholders of record at the close of business on November 18, 2024. Each Right entitles its holder, subject to the terms of the Rights Agreement, to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock, no par value, of the Company at an exercise price of $130.00 per Right, subject to adjustment. Rights will generally become exercisable only if any person or entity (or any persons or entities acting as a group) acquires 20% or more of the outstanding shares of Company common stock (or, to the extent any person, entity or group beneficially owned 20% or more of the outstanding shares of Company common stock as of immediately prior to the first public announcement of the adoption of the Rights Agreement, such person, entity or group acquires any additional shares). If Rights become exercisable, all holders of Rights (other than the person, entity or group triggering the Rights Agreement, whose Rights will become void and will not be exercisable) will have the right to purchase from the Company for $130.00, subject to certain potential adjustments, shares of Company common stock having a market value of twice that amount. The Rights Agreement expireswas originally scheduled to expire on November 4, 2025. On October 29, 2025, the Company and the Rights Agent entered into the Amendment No. 1 to Shareholder Rights Agreement (the “Amendment”) which extended the scheduled expiration of the Rights Agreement to October 29, 2026, unless earlier terminated or the Rights are redeemed or exchanged by the Board. Additional information regarding the Rights Agreement isand the Amendment are contained in the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2024.2024 and the Company’s Current Report on Form 8-K filed with the SEC on October 30, 2025, respectively.

Conventional and organic milk, our primary raw material, material, is an agricultural commodity that is subject to price fluctuations. Conventional milk prices were higherlower in fiscal 20242025 than the prior year, and there can be no assurance that such prices will remain at these levels in the future. The supply and price of milk may be impacted by, among other things, weather, natural disasters, real or perceived supply shortages, lower dairy and crop yields, general increases increases in farm inputs and costs of production, political and economic conditions, labor actions, government actions, and trade barriers. Increases Increases in the market price for milk or over-order premiums charged by producers may also impact our ability to enter into purchase commitments commitments at a fixed price. There can be no assurance that our purchasing practices will mitigate future price risk. As a result, increases in the cost of milk could have an adverse impact on our profitability.

Our business depends heavily on raw materials and other inputs in addition to conventional and organic raw milk, such as sweeteners,cultures, diesel fuel,flavoring, packaging material, resin, and other commodities. commodities. Our raw materials are generally sourced from third-party suppliers, and we are not assured of continued supply, pricing, or exclusive access to raw materials from any of these suppliers. In 2024, costs to us increased modestly due to inflationary price increases. However, forFor market conditions or competitive reasons, our customer pricing actions may lag input cost changes, or we may not be able to pass along the full effect of increases in raw materials and other input costs as we incur them.

Gross profit as a percentage of net sales decreasedincreased to 26.0%27.4% during the year ended December 31, 20242025 from 26.5%26.0% during the same period in 2023.2024. The decreaseincrease versus the prior year was driven by higher volumes of our branded products, which provided manufacturing efficiencies and the unfavorablefavorable impact of conventional milk pricing, and to a lesser extent the increase in other input costs, partially offset by favorable transportation costs.pricing.

General and administrative expenses increased $6,309$2,164 to $19,439$21,603 during the year ended December 31, 20242025 from $13,130$19,439 during the same period in 2023.2024. LegalThe Company incurred approximately $6,200 of legal and professional fees associated with Danone’s unsolicited purchase proposal and non-routine stockholder action during 2025. During 2024, the Company incurred approximately $4,500 of legal and theprofessional Danonefees associated with Danone’s unsolicited purchase proposal, non-routine stockholder action, and the CEO retention bonus awarded in the fourth quarter of 2024, account for approximately 75% of the increase. General and administrative stock-based compensation expense increased $784 compared to the same period in 2023.2024.

The effective income tax rate was 35.4%29.6% in 2024 2025 compared to 31.7%35.4% in 2023. 2024. The statutory Federalfederal and state tax rates remained consistent from 20232024 to 2024.2025. The Company consistently reflects non-deductible non-deductible items such as non-deductible officer compensation expense, non-deductible compensation expense related to equity incentive awards awards, and separate state tax rates from year to year. Although similar items were reflected in 2024,2025, the percentage effect is different primarily primarily due to the increasedecrease in certain non-deductible compensation in 20242025 compared to 2023. The increase is partially offset by the difference in pre-tax income in 2024 compared to 2023.2024.

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, and while it has been impacted by the macroeconomic challenges with commodity inflation and other input cost increases, the Company believes that its cash flow from operations, revolving credit facility, and cash and cash equivalents equivalents will continue to provide sufficient liquidity for its working capital needs, capital resource requirements, and growth initiatives and and to ensure the continuation of the Company as a going concern.

The Company’s most significant ongoing ongoing short-term cash requirements relate primarily to funding operations (including expenditures for raw materials, labor, manufacturing and and distribution, trade and promotions, advertising and marketing, and income tax liabilities) as well as expenditures for property, plant,plant and and equipment.

Net cash provided by operating activities was $10,948 $12,962 in 20242025 compared to $16,941$12,962 in 2023.2024. The decrease was primarily due to lower cash earnings driven by non-routine stockholder action, and the change in working capital.

Net cash used in investing activities was $6,682 in 2024 compared to $4,410 in 2023. The increase in cash used reflects our planned capital spending increase during 2024 compared to 2023. Our capital spending is focused in three core areas: growth, cost reduction, and facility improvements. Growth capital spending supports increased productioncapacity capacity,expansion and new product innovation and enhancements. Cost reduction and facility improvements support manufacturing efficiency, safety, and productivity. We continue to make capital expenditures primarily to modernize manufacturing facilities and support productivity initiatives.

Net cash used in financing activities was $65 $2,750 in 20242025 compared to $3,777$2,750 in 2023.2024. The cash used in 2025 represents credit agreement amendment expenses incurred during the first quarter. The cash used in 2024 represented the quarterly principal payments under the term loan.loan, Thewhich Company was paid the outstanding term loan balance of $2,250 in full during the second quarter of 2024.

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 $5,000 term loan to be repaid in quarterly installments of principal and interest over a term of five years, a revolving line of credit up to a maximum of $5,000 $25,000 (the “Revolving Credit Facility”) and an incremental facility not to exceed $5,000. The termination date of the term loan is August 18, 2026, unless earlierrevolving terminated. The term loan was terminated during the second quarter of 2024 upon payment of the outstanding loan balance in full. The termination date of the revolving credit facility is JuneFebruary 30,5, 2025,2029, unless earlier terminated.

As of December 31, 2024,2025, the Company had $0 outstanding under the Revolving Credit Facility and note payable.Facility. The Company had $5,000$25,000 available for future borrowings under the Revolving Credit Facility as of December 31, 2024.2025.

All outstanding amounts under the loansrevolving line of credit bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 2.07%.1.75%. Interest is payable monthly in arrears. Lifeway is also required to pay a quarterly unused line fee of 0.20%0.25% on the Revolving Credit Facility, and in conjunction with the issuance of any letters of credit, a letter of credit fee of 0.20%.1.00%.

We do not have any off-balance sheet financing arrangements as defined in Item 303(a)(4) of Regulation S-K.arrangements.

The Company has one reporting unit within its single single reportable segment. We review and evaluate our goodwill for potential impairment at a minimum annually, as of December 31, or more frequently frequently if circumstances indicate that impairment is possible. We completed our annual goodwill impairment analysis as of December 31, 2024.2025. Our assessment did not result in an impairment.

We offer various trade promotions and sales incentive programs to customers and consumers. From time to time, we grant certain sales discounts to customers which are classified as a reduction in sales. The measurement and recognition of discounts and allowances involve the use of judgmentjudgment, and our estimates are made based on historical experience and specific customer program accruals. Differences between estimated and actual discount and allowance costs are normally not material and are recognized in earnings in the period such differences are determined. The process for analyzing trade promotion programs could impact our results of operations and trade spending accruals depending on how actual results of the programs compare to original estimates. As of December 31, 2024,2025, we had $1,590$1,730 of accrued discounts and allowances.

Certain employeesmembers of management and non-employee directors receive various forms of share-based payment awards, and we recognize compensation expense for these awards based on their grant date fair values. The grant date fair value of Restricted Stock Units (“RSUs”) and Performance Share Unit (“PSUs”) awards is equal to the Company’s closing stock price on the grant date. The Company granted RSU and PSU awards during 20242025 to employees. The PSU awards are contingent upon the achievement of strategic milestones during a three-year measurement period. The expense recognition of of PSU awards therefore requires management to make judgements and estimates at the end of each reporting period as to the cumulative three-year three-year milestone achievements. Changes in managementsmanagement’s estimate of the three-year cumulative milestone achievements are recognized as change in management estimate in a subsequent period. We do not estimate forfeitures in measuring the grant date fair value of RSUs and PSUs,PSUs but rather account for forfeitures as they occur. Forfeitures have historically been immaterial. See Note 11 to our consolidated financial financial statements for further detail.

We continue to monitor macroeconomic conditions and global trade developments, including inflation in key input costs, recently implemented tariffs, and the potential for additional or modified tariffs or export controls. These evolving global trade policies may contribute to increased supply chain complexity, commodity cost volatility, and broader economic uncertainty. We do not currently expect these conditions tariffs to have a material adverse impact on our operations or financial results. We are primarily a United States based manufacturer sourcing a vast majority of our inputs domestically. In addition, all our domestically produced products are sold to customers in the United States. We expect the accelerating consumer focus on health and wellness to drive increased demand for our products.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended June March 31,30, 2025

Net sales were at $63,012$66,893 for the three-month period period ended MarchJune 31,30, 2026, an increase of $16,921$12,992 or 36.7%24.1% versus prior year. The net sales increase was primarily driven by higher volumes volumes of our branded drinkable kefir.

Gross profit as a percentage of net sales was 19.5% 27.5% and 24.0%28.6% in the three-month period ended MarchJune 31,30, 2026 and 2025, respectively. The increasedecrease versus the prior year was driven by the favorable unfavorable impact of milk pricing and manufacturingto efficienciesa resultinglesser fromextent increasedthe productionunfavorable volumes.impact of resin-based packaging inputs and transportation costs.

Selling expenses increased by $1,490$2,916 to $6,188$7,634 during the three-month period ended June 30, 2026 from $4,718 during the same period in 2025. Selling expenses as a percentage of net sales increased to 11.4% in the three-month period ended MarchJune 31,30, 2026 from $4,6988.8% during the same period in 2025. The increase is primarily a result of our our continued investments in marketing activities to drive brand awareness and sales volumes. Selling expenses as a percentage of net sales decreased to 9.8% in the three-month period ended March 31, 2026 from 10.2% during the same period in 2025.

General and administrative expenses increased $95 $75 to $4,703$4,657 during the three-month period ended MarchJune 31,30, 2026 from $4,628$4,752 during the same period in 2025. General and administrative expenses expenses as a percentage of net sales decreased to 7.5%7.0% in the three-month period ended MarchJune 31,30, 2026 from 10.0%8.8% during the same period in 2025. During the firstsecond quarter of 2025,2026, the Company incurred approximately $985$375 of legal and professional fees associated with Danone’sthe sale of unsolicitedDanone purchaseUSA proposalPublic andBenefit non-routineCorporation's stockholderholdings action.of common stock of Lifeway Foods, Inc. in an underwritten transaction.

Income taxes were recognized at effective rates of 25.3%68.7% and 28.7%28.1% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. TheStatutory changeFederal inand the Company’s effectivestate tax raterates remained consistent isfrom primarily2025 drivento by2026. theThe increaseCompany inhas pre-taxitems bookthat incomeare andnondeductible changesor inare thediscrete amountadjustments ofto tax expense. The Company consistently reflects non-deductible officer compensation andexpense, non-deductible stock-based compensation expense.expense and separate state tax rates from period to period. Although similar items were reflected in 2026, the percentage effect is different due to the difference in pre-tax income in 2026 compared to 2025.

The Company’s effective tax rate may change from period to period based on recurring and non-recurring factors including the relative mix of pre-tax earnings (or losses), the jurisdictional mix of earnings, enacted tax legislation, state income taxes, the impact of non-deductible items, changes in valuation allowances, settlement of tax audits, and the expiration of the statute of limitations in relation to unrecognized tax benefits. The Company records discrete income tax items such as enacted tax rate changes and completed tax audits in the period in which they occur.

Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing, and financing activities. The Company remains in a strong financial position, and believes that its cash flow from operations, revolving credit facility, interim funding agreement, and cash and cash equivalents will continue to provide sufficient liquidity for its working capital needs, capital resource requirements, and growth initiatives and to ensure the continuation of the Company as a going concern.

If additional borrowings are needed, $3,000 $18,000 was available under the Revolving Credit Facility and $22,000 was available under the Interim Funding Agreement as of MarchJune 31,30, 2026 (see Note 7, Debt).

Net cash provided by operating activities was $4,378$4,039 and $3,762 during the three-monthsix-month period ended MarchJune 31,30, 2026 comparedand to2025, net cash used in operating activities of $150 in the same period in 2025.respectively. The increase was primarily due increasedto the increase in cash earnings, partiallyearnings offset by the change in working capital.

Net cash used in investing activities was $11,041$19,282 during the three-monthsix-month period ended MarchJune 31,30, 2026 compared to net cash provided by investing activities of $2,933$795 in the same period in 2025.

The increase in purchases of property and equipment is primarily driven by the expansion of manufacturing capacity and modernization of our Waukesha, Wisconsin facility. This project will enable Lifeway to meet increasing sales demand and will double the facility’s manufacturing capacity and improve packaging efficiency, as well as other operational improvements. The Company currently estimates investing approximately $48,500.$50,500. As of MarchJune 31,30, 2026, $31,267$38,917 is included on the consolidated balance sheet in property, plant and equipment, with $3,691 in-service and recorded in machinery and equipmentequipment, $7,348 in-service and $27,576recorded in leasehold improvements, and $27,878 recorded in construction in process. The cumulative cash paid for this project is $31,267$38,917 as of MarchJune 31,30, 2026. The project will be funded primarily through cash on-hand and cash flow from operations, with further requirements available under the Company’s revolving credit facility.facility and interim funding agreement. The projectability to manufacture and package at the increased scale is expected to begin in January 2027, and the total project expected to be completed during the fourthfirst fiscal quarter of 2026.2027.

Net cash provided by financing activities was $16,759 $6,696during andthe six-month period ended June 30, 2026 compared to net cash used in financing activities wasof $65 duringin the three-monthsame period endedin March 31, 2026 and 2025, respectively.2025. The cash provided by during 2026 primarily represents the line of credit borrowing in connection with the Waukesha Wisconsin facility expansion and modernization project. During the second quarter of 2026, the Company repurchased $4,937 of treasury stock in connection with the sale of Danone USA Public Benefit Corporation's holdings of common stock of Lifeway Foods, Inc. in an underwritten transaction. During the first quarter of 2026, to comply with the Company’s contractual obligations in place at the time prohibiting the Company from issuing equity to the Chief Executive Officer and certain of her affiliates, the Company settled previously vested restricted stock units held by the Chief Executive Officer in cash. The cash used in 2025 represented credit agreement amendment expenses incurred during the first quarter.

As of MarchJune 31,30, 2026, the Company had $7,000$22,000 outstanding under the Revolving Credit Facility. The Company had $18,000$3,000 available for future borrowings under the Revolving Credit Facility as of MarchJune 31,30, 2026.

All outstanding amounts under the revolving line of of credit bear interest at the Secured Overnight Financing Rate (“SOFR”), plus 1.75% (5.54%5.48% as of MarchJune 31,30, 2026). Interest is is payable monthly in arrears. Lifeway is also required to pay a quarterly unused line fee of 0.25% on the Revolving Credit Facility, and and in conjunction with the issuance of any letters of credit, a letter of credit fee of 1.00%.

The Company is in compliance with all applicable financial financial debt covenants as of MarchJune 31,30, 2026. See Note 7 to our Consolidated Financial Statements for additional information regarding regarding our indebtedness and related agreements.

A description of the Company’s critical accounting accounting policies and estimates is contained in its Annual Report on Form 10-K for the year ended December 31, 2025. There were no material changes changes to the Company’s critical accounting policies and estimates in the threesix months ended MarchJune 31,30, 2026.