Lifeway Foods(LWAY) - 2021 Q4 - Annual Report

PART I Item 1. Business Lifeway Foods, Inc. is the largest U.S. kefir producer, marketing probiotic dairy products, focusing on innovation and operating four manufacturing facilities - Lifeway Foods, Inc., founded in 1986, is the largest U.S. producer and marketer of kefir, expanding into probiotic and natural foods[24] Net Sales by Product Category (2021 vs. 2020) | In thousands | 2021 ($ in thousands) | 2021 (%) | 2020 ($ in thousands) | 2020 (%) | | :----------------------------- | :------- | :------- | :------- | :------- | | Drinkable Kefir other than ProBugs | 95,850 | 80% | 81,437 | 80% | | Cheese | 12,612 | 11% | 12,905 | 13% | | Cream and other | 3,582 | 3% | 2,872 | 3% | | ProBugs Kefir | 3,178 | 3% | 2,733 | 2% | | Drinkable Yogurt | 2,223 | 2% | – | 0% | | Other dairy (a) | 1,620 | 1% | 2,079 | 2% | | Net Sales | 119,065| 100% | 102,026| 100% | - In 2021, Lifeway acquired the Glen Oaks drinkable yogurt product line and launched an oat-based kefir, demonstrating a focus on product innovation and category expansion[30] - Approximately 98% of 2021 revenue originated from products manufactured at Lifeway's own facilities in Morton Grove, IL; Waukesha, WI; Niles, IL; and Philadelphia, PA[31] - Sales outside the United States constituted approximately 2% of net sales in 2021, primarily via distributors in Mexico, South America, the Caribbean, UK, Ireland, and the Middle East[39] - Two major customers collectively represented approximately 23% of total net sales and 32% of net accounts receivable as of December 31, 2021[50] Item 1A. Risk Factors Lifeway faces intense competition, strategic execution risks, supply chain disruptions, financial obligations, internal control weaknesses, and pandemic-related uncertainties - Lifeway faces significant competition from dairy and non-dairy probiotic products, with competitors often possessing greater financial and marketing resources, potentially impacting sales and profitability[67][68] - The company's business strategy, reliant on product innovation and market expansion, is vulnerable to rapidly changing consumer tastes, dietary trends, and potential competitor mislabeling[70][72] - Supply chain interruptions, including reliance on single suppliers and disruptions to manufacturing or distribution facilities (e.g., natural disasters, cybersecurity threats), could adversely affect operations and increase costs[75][77][78][79][80] - As of December 31, 2021, Lifeway had $2.77 million outstanding under its Revolving Credit Facility and $4.47 million under a note payable, with restrictive loan covenants limiting financial flexibility[83][85][86] - A material weakness in internal control over financial reporting was identified, stemming from an understatement of deferred income tax liabilities and goodwill from a 2009 acquisition, necessitating financial statement restatement[93][94][95] - The COVID-19 pandemic increased customer demand but also caused inflationary price increases for milk, ingredients, packaging, and freight, with future impacts on demand and costs remaining uncertain[113][114][115] Item 1B. Unresolved Staff Comments There are no unresolved staff comments from the SEC Item 2. Properties Lifeway Foods operates four owned manufacturing and distribution facilities, deemed adequate for current needs with potential for additional space Lifeway Foods Facilities | Location | Owned / Leased | Principal Use | | :---------------------- | :------------- | :----------------------------------------------- | | Morton Grove, Illinois | Owned | Production of kefir and cheese, principal executive offices | | Waukesha, Wisconsin | Owned | Production of kefir, administrative offices | | Niles, Illinois | Owned | Distribution center, administrative offices | | Philadelphia, Pennsylvania | Owned | Production of kefir and cheese, administrative offices | Item 3. Legal Proceedings Lifeway is involved in routine litigation matters but believes none are likely to have a material adverse effect on its financial position or results of operations - Lifeway is engaged in routine litigation, but management believes no matter is reasonably likely to have a material adverse effect on its financial position or results of operations[120] Item 4. Mine Safety Disclosures This item is not applicable to Lifeway Foods, Inc PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Lifeway's common stock trades on Nasdaq under 'LWAY'; the company does not routinely pay dividends but repurchased 250,000 shares in 2021 - Lifeway's common stock is listed on the Nasdaq Global Market under the symbol 'LWAY', with trading commencing on March 29, 1988[124] - Lifeway does not routinely declare and pay dividends, with no dividends declared or paid in fiscal 2021 or 2020[126][127] Issuer Purchases of Equity Securities (2020-2021) | Period | Total number of shares purchased | Average price paid per share ($) | Total number of shares purchased as part of a publicly announced program (a) | Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs ($ in thousands) | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------- | | Fiscal Year 2020 | 178,417 | 2.27 | 178,417 | 3,560 | | Fiscal Year 2021 | 250,000 | 6.33 | 250,000 | – | - On June 24, 2021, the Board authorized a plan to repurchase up to 250,000 shares at no more than $10 per share, fully executed by December 31, 2021, at a cost of $1,583,000[129] Item 6. [RESERVED] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Lifeway's 2021 financial performance, including a restatement, 16.7% net sales growth, decreased gross profit, and liquidity management - Lifeway restated its consolidated financial statements for 2020 and 2021 to correct a material error from a 2009 acquisition, which understated deferred income tax liabilities and goodwill by $1.18 million[132][198] - The COVID-19 pandemic increased customer and consumer demand for Lifeway's products but also caused inflationary price increases for milk, ingredients, packaging, and freight in 2021[137] Key Financial Results (2021 vs. 2020) | Metric | 2021 ($ in thousands) | 2021 (%) | 2020 ($ in thousands) | 2020 (%) | | :-------------------------- | :-------------------- | :------- | :-------------------- | :------- | | Net sales | 119,065 | 100.0% | 102,026 | 100.0% | | Total cost of goods sold | 90,355 | 75.9% | 75,093 | 73.6% | | Gross profit | 28,710 | 24.1% | 26,933 | 26.4% | | Total operating expenses | 22,830 | 19.2% | 22,010 | 21.6% | | Income from operations | 5,880 | 4.9% | 4,923 | 4.8% | | Net income | 3,311 | 2.8% | 3,232 | 3.1% | | Basic earnings per common share | 0.21 | | 0.21 | | | Diluted earnings per common share | 0.21 | | 0.21 | | - Net sales increased by $17,039 (16.7%) in 2021, primarily due to higher volumes of branded drinkable kefir (69% of increase) and the acquisition of Glen Oaks Farms (11% of increase), along with the Farmers to Families Food Box program (20% of increase)[141] - Gross profit as a percentage of net sales decreased from 26.4% in 2020 to 24.1% in 2021, mainly due to unfavorable milk pricing and inflationary increases in other ingredients, packaging, and freight costs[142] - Net cash provided by operating activities decreased by $241 thousand to $6,144 thousand in 2021, while net cash used in investing activities increased by $5,832 thousand to $7,722 thousand, largely due to the $5,800 thousand acquisition of Glen Oaks Farms, Inc[154][155] - As of December 31, 2021, Lifeway had $2,777 thousand outstanding under its Revolving Credit Facility and $4,470 thousand under a note payable, with $2,223 thousand available for future borrowings[160] Restatement of Previously Issued Consolidated Financial Statements Lifeway restated prior financial statements to correct a material error related to deferred income tax liabilities and goodwill from a 2009 acquisition - Lifeway restated its consolidated financial statements for 2020 and 2021 to correct a material error from a 2009 acquisition, which understated deferred income tax liabilities and goodwill by $1.18 million[132][198] - The restatement had no impact on the Consolidated Statements of Operations, Cash Flows, or Stockholders' Equity for 2021 and 2020, nor on opening retained earnings as of January 1, 2020[132][198] Recent Developments Recent developments include increased demand and inflationary costs due to COVID-19, with proactive planning mitigating operational disruptions - The COVID-19 pandemic led to increased customer and consumer demand but also resulted in inflationary price increases for milk, ingredients, packaging, and freight in 2021[137] - Lifeway's proactive planning avoided disruptions in manufacturing, production, transportation, and sales, meeting increased demand without delay during the pandemic[136] - Increased demand from at-home consumption and e-commerce during COVID-19 may change or decrease as social distancing mandates are reduced, creating uncertainty for future sales[138] Results of Operations Lifeway reported 16.7% net sales growth in 2021, driven by kefir volumes and acquisitions, despite a decrease in gross profit margin due to inflationary costs Key Financial Results (2021 vs. 2020) | Metric | 2021 ($ in thousands) | 2021 (%) | 2020 ($ in thousands) | 2020 (%) | | :-------------------------- | :-------------------- | :------- | :-------------------- | :------- | | Net sales | 119,065 | 100.0% | 102,026 | 100.0% | | Total cost of goods sold | 90,355 | 75.9% | 75,093 | 73.6% | | Gross profit | 28,710 | 24.1% | 26,933 | 26.4% | | Selling expenses | 11,097 | 9.3% | 10,197 | 10.0% | | General & administrative expenses | 11,611 | 9.8% | 11,661 | 11.4% | | Amortization expense | 122 | 0.1% | 152 | 0.2% | | Total operating expenses | 22,830 | 19.2% | 22,010 | 21.6% | | Income from operations | 5,880 | 4.9% | 4,923 | 4.8% | | Net income | 3,311 | 2.8% | 3,232 | 3.1% | | Basic earnings per common share | 0.21 | | 0.21 | | | Diluted earnings per common share | 0.21 | | 0.21 | | - Net sales increased by $17,039 thousand (16.7%) to $119,065 thousand in 2021, driven by higher branded drinkable kefir volumes, the Glen Oaks Farms acquisition, and the Farmers to Families Food Box program[141] - Gross profit margin decreased from 26.4% in 2020 to 24.1% in 2021, primarily due to higher milk prices and inflationary increases in ingredients, packaging, and freight costs, partially offset by improved labor efficiency[142] - Selling expenses increased by $900 thousand to $11,097 thousand in 2021 due to increased advertising and marketing, while general and administrative expenses slightly decreased by $50 thousand to $11,611 thousand[143][144] - The effective income tax rate increased from 33.1% in 2020 to 41.0% in 2021, influenced by non-deductible officer compensation, equity incentive awards, and separate state tax rates[146] - Net income for 2021 was $3,311 thousand, a slight increase from $3,232 thousand in 2020, with basic and diluted EPS remaining constant at $0.21[151] Liquidity and Capital Resources Lifeway expects to meet liquidity needs through operating cash flows and its revolving credit facility, with capital spending focused on growth and efficiency - Lifeway expects to meet liquidity and capital requirements through operating cash flows, its revolving credit facility, and cash equivalents, with $2,223 thousand available under the Revolving Credit Facility as of December 31, 2021[152] Cash Flow Summary (2021 vs. 2020) | Cash Flow Activity | 2021 ($ in thousands) | 2020 ($ in thousands) | | :----------------------------- | :-------------------- | :-------------------- | | Net cash provided by operating activities | 5,564 | 6,385 | | Net cash used in investing activities | (7,142) | (1,890) | | Net cash provided by (used in) financing activities | 2,885 | (405) | | Net increase in cash and cash equivalents | 1,307 | 4,090 | - Net cash used in investing activities increased significantly in 2021 to $7,142 thousand, primarily due to the $5,800 thousand acquisition of Glen Oaks Farms, Inc., funded by a new $5,000 thousand term loan and existing cash[155] - As of December 31, 2021, Lifeway had $4,500 thousand outstanding on a term loan due August 2026 and $2,777 thousand outstanding under its Revolving Credit Facility, with an interest rate of 2.15% on outstanding debt[160][48] Critical Accounting Estimates Critical accounting estimates include goodwill, indefinite-lived brand assets, sales discounts, share-based compensation, and income taxes - Goodwill totaled $11,704 thousand as of December 31, 2021, with annual impairment analyses using income and market approaches resulting in no impairment[166] - The company's indefinite-lived brand name intangible assets, totaling $3,700 thousand, were assessed for impairment using the relief from royalty method, with no impairment found in 2021[167] - In Q4 2021, Lifeway changed the estimated useful life of its indefinite-lived brand name intangible asset from indefinite to 15 years, effective January 1, 2022, which will result in future amortization expense[202][239] - Sales discounts and allowances, accrued at $1,170 thousand as of December 31, 2021, are estimated based on historical experience and specific customer program accruals[168] - Share-based compensation expense is recognized based on grant date fair values, with stock option fair values estimated using the Black-Scholes model and restricted stock awards based on closing stock price[169][227] - Income taxes are accounted for under the asset and liability method, recognizing deferred income tax assets and liabilities for temporary differences, with a valuation allowance recorded if a tax benefit is unlikely to be realized[170][171][225] Recent Accounting Pronouncements Lifeway is evaluating the impact of recent ASUs on business combinations, reference rate reform, and financial instruments - Lifeway is evaluating the impact of ASU No. 2021-08 (Business Combinations: Accounting for Contract Assets and Liabilities from Contracts with Customers), effective for fiscal years beginning after December 15, 2022[231] - The company is also evaluating ASU No. 2020-04 (Reference Rate Reform) and ASU No. 2016-13 (Financial Instruments – Credit Losses), with respective effective dates[232][233] Item 7A. Quantitative and Qualitative Disclosures about Market Risk This item is not applicable to Lifeway Foods, Inc Item 8. Financial Statements and Supplementary Data This section presents Lifeway's audited consolidated financial statements for 2021 and 2020, including restated 2020 figures and detailed notes on accounting policies and specific accounts - The 2020 financial statements have been restated to correct a misstatement related to deferred income tax liabilities and goodwill, as discussed in Note 1[178] Consolidated Balance Sheets (December 31, 2021 vs. 2020) | (In thousands) | 2021 ($ in thousands) | 2020 (As Restated) ($ in thousands) | | :----------------------------- | :------- | :--------------------- | | Current assets | | | | Cash and cash equivalents | 9,233 | 7,926 | | Accounts receivable, net | 9,930 | 8,002 | | Inventories, net | 8,285 | 6,930 | | Prepaid expenses and other current assets | 1,254 | 1,163 | | Refundable income taxes | 344 | 31 | | Total current assets | 29,046 | 24,052 | | Property, plant and equipment, net | 20,130 | 21,048 | | Operating lease right-of use asset | 216 | 345 | | Intangible assets | | | | Goodwill and indefinite-lived intangibles | 15,404 | 14,004 | | Other intangible assets, net | 4,278 | – | | Total intangible assets | 19,682 | 14,004 | | Other Assets | 1,800 | 1,800 | | Total assets | 70,874 | 61,249 | | Current liabilities | | | | Current portion of note payable | 1,000 | – | | Accounts payable | 6,614 | 5,592 | | Accrued expenses | 3,724 | 2,196 | | Accrued income taxes | 725 | 653 | | Total current liabilities | 12,063 | 8,441 | | Line of credit | 2,777 | 2,768 | | Note Payable | 3,470 | – | | Operating lease liabilities | 85 | 165 | | Deferred income taxes, net | 3,201 | 2,944 | | Other long-term liabilities | 147 | 77 | | Total liabilities | 21,743 | 14,395 | | Stockholders' equity | | | | Common stock | 6,509 | 6,509 | | Paid-in capital | 2,552 | 2,600 | | Treasury stock, at cost | (13,436) | (12,450) | | Retained earnings | 53,506 | 50,195 | | Total stockholders' equity | 49,131 | 46,854 | | Total liabilities and stockholders' equity | 70,874 | 61,249 | Consolidated Statements of Operations (2021 vs. 2020) | (In thousands, except per share data) | 2021 ($ in thousands) | 2020 (As Restated) ($ in thousands) | | :------------------------------------ | :------- | :--------------------- | | Net sales | 119,065 | 102,026 | | Total cost of goods sold | 90,355 | 75,093 | | Gross profit | 28,710 | 26,933 | | Selling expenses | 11,097 | 10,197 | | General and administrative | 11,611 | 11,661 | | Amortization expense | 122 | 152 | | Total operating expenses | 22,830 | 22,010 | | Income from operations | 5,880 | 4,923 | | Total other income (expense) | (264) | (95) | | Income before provision for income taxes | 5,616 | 4,828 | | Provision for income taxes | 2,305 | 1,596 | | Net income | 3,311 | 3,232 | | Basic earnings per common share | 0.21 | 0.21 | | Diluted earnings per common share | 0.21 | 0.21 | Consolidated Statements of Cash Flows (2021 vs. 2020) | (In thousands) | 2021 ($ in thousands) | 2020 (As Restated) ($ in thousands) | | :-------------------------------------------- | :------- | :--------------------- | | Net cash provided by operating activities | 5,564 | 6,385 | | Net cash used in investing activities | (7,142) | (1,890) | | Net cash provided by (used in) financing activities | 2,885 | (405) | | Net increase in cash and cash equivalents | 1,307 | 4,090 | | Cash and cash equivalents at the beginning of the period | 7,926 | 3,836 | | Cash and cash equivalents at the end of the period | 9,233 | 7,926 | Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Lifeway Foods, Inc. reported no changes in or disagreements with accountants on accounting and financial disclosure matters Item 9A. Controls and Procedures Lifeway's management concluded that its disclosure controls were effective, but internal control over financial reporting was not effective due to a material weakness related to a 2009 acquisition, prompting a remediation plan - As of December 31, 2021, Lifeway's principal executive and financial officers concluded that disclosure controls and procedures were effective at a reasonable assurance level[305] - Management concluded that internal control over financial reporting was not effective as of December 31, 2021, due to a material weakness[309] - The material weakness stemmed from a 2009 Fresh Made, Inc. acquisition error, where a deferred income tax liability and corresponding goodwill increase were not recorded, resulting in a $1.18 million understatement of both[311][312] - Management has initiated a remediation plan to enhance controls over income taxes and goodwill for acquired intangible assets, aiming to ensure proper accounting and periodic reconciliation[314] Item 9B. Other Information This item contains no additional information Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections This item is not applicable to Lifeway Foods, Inc PART III Item 10. Directors, Executive Officers and Corporate Governance This section details Lifeway's Board, executive officers, corporate governance framework, independent committee oversight, and the Smolyansky family's controlling interest - The Board of Directors includes Ludmila Smolyansky (Chairperson), Julie Smolyansky (CEO), Edward Smolyansky (former COO), and independent directors Pol Sikar, Jason Scher, Jody Levy, and Dorri McWhorter[320][322][324][326][328][331][333] - The Smolyansky family controls 49.61% of Lifeway's common stock, granting them significant influence over stockholder approval matters, including director elections and corporate transactions[92] - The Audit and Corporate Governance Committee oversees internal controls, financial reporting, and director nominations, with Mr. Scher and Ms. McWhorter identified as audit committee financial experts[340][342][344][345] - The Compensation Committee, composed of independent directors, reviews and approves executive compensation, recommends non-employee director compensation, and administers incentive and equity plans[348][349] - Executive officers include Julie Smolyansky (CEO), Eric Hanson (CFO & Chief Accounting Officer), and Amy Feldman (Senior Executive Vice President of Sales)[350][351][352] Item 11. Executive Compensation Lifeway's executive compensation aligns with shareholder interests and business growth, featuring performance-based incentives, independent oversight, and specific compensation details for NEOs and directors - Lifeway's executive compensation program aims to attract and motivate talented executives, align with shareholder interests, and promote business growth, focusing on performance-based compensation[358][360] - Following shareholder feedback, Lifeway established an independent Compensation Committee, refined performance review processes, and rationalized total compensation, leading to aggregate compensation reductions for NEOs and Ludmila Smolyansky[354][355][359] NEO Summary Compensation (2021 vs. 2020) | Name and Principal Position(s) | Year | Salary ($) | Stock Awards ($) | Nonequity incentive plan compensation ($) | All Other Compensation ($) | Total ($) | | :----------------------------- | :--- | :--------- | :--------------- | :--------------------------------------- | :------------------------- | :-------- | | Julie Smolyansky, CEO | 2021 | 1,000,000 | 783,409 | 957,000 | 25,758 | 2,766,167 | | | 2020 | 1,000,000 | 800,320 | 250,000 | 23,856 | 2,324,176 | | Edward Smolyansky, Former COO | 2021 | 500,000 | 33,409 | – | 9,194 | 542,603 | | | 2020 | 1,000,000 | 50,320 | – | 9,582 | 1,059,902 | | Eric Hanson, CFO | 2021 | 325,000 | 130,451 | 142,000 | 13,232 | 610,683 | | | 2020 | 325,000 | 25,160 | 75,000 | 15,000 | 440,160 | - For fiscal 2021, CEO Julie Smolyansky and CFO Eric Hanson were eligible for annual cash incentive awards based on Adjusted EBITDA, with actual performance exceeding targets, resulting in payouts of approximately 190% of target for each[370][374] - Equity incentive awards for the CEO and former COO are subject to consent from Danone SA due to a Shareholders' Agreement, which has historically led to delays or cancellations of awards[395][396][397] Fiscal Year 2021 Director Compensation | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | All Other Compensation ($) | Total ($) | | :---------------- | :------------------------------ | :--------------- | :------------------------- | :-------- | | Ludmila Smolyansky | – | – | 1,105,427 | 1,105,427 | | Jason Scher | – | 30,000 | 197,500 | 227,500 | | Jody Levy | 147,502 | 30,000 | – | 177,502 | | Dorri McWhorter | 117,502 | 30,000 | – | 147,502 | | Pol Sikar | 117,502 | 30,000 | – | 147,502 | - Ludmila Smolyansky's 'All Other Compensation' in 2021 included $505,427 for consulting services (terminated January 2022) and $600,000 in royalty payments[404][285][286] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of July 6, 2022, Lifeway's directors and NEOs collectively beneficially own 50.34% of common stock, granting significant influence, with Danone North America PBC holding 22.33% - As of July 6, 2022, Lifeway's directors, director nominees, and Named Executive Officers beneficially own approximately 50.34% of outstanding Common Stock, granting them significant influence over company affairs[420] Beneficial Ownership of Common Stock (July 6, 2022) | Name and Address (a) | Shares Beneficially Owned (b) (Number) | Percent | | :------------------------------- | :------------------------------------- | :------ | | Julie Smolyansky | 2,357,262 | 15.10% | | Edward Smolyansky | 2,473,553 | 15.99% | | Ludmila Smolyansky | 3,413,984 | 22.06% | | Eric Hanson | 40,487 | * | | Jason Scher | 54,819 | * | | Pol Sikar | 27,290 | * | | Jody Levy | 12,069 | * | | Dorri McWhorter | 9,361 | * | | All directors and executive officers as a group (8 persons) | 7,888,825 | 50.34% | | Danone North America PBC | 3,454,756 | 22.33% | - Julie Smolyansky and Edward Smolyansky share voting and disposal power over 500,000 shares held by Smolyansky Family Holdings, LLC[423] - A significant portion of shares held by Julie Smolyansky, Edward Smolyansky, and Ludmila Smolyansky are pledged to a lender under full recourse loan agreements[423] Item 13. Certain Relationships and Related Transactions and Director Independence Lifeway engages in related party transactions primarily with the Smolyansky family, including consulting and royalty payments, and compensation to the CEO's spouse - Ludmila Smolyansky received $505,427 in 2021 for consulting services under an agreement terminated effective January 17, 2022[424][426] - Ludmila Smolyansky also received $600,000 in royalty payments in 2021 for the use of her name, image, and likeness on certain Lifeway products, capped at $50,000 per fiscal month[425][426] - Jason Burdeen, spouse of CEO Julie Smolyansky, is employed as the CEO's Chief of Staff and received $132,000 in total compensation in 2021[427] - Director Jason Scher converted his $227,500 cash and restricted stock compensation for fiscal year 2021 into Restricted Stock Units (RSUs), with up to 40,625 shares of common stock to be issued upon payment, subject to shareholder approval[428] Item 14. Principal Accountant Fees and Services Lifeway paid Mayer Hoffman McCann P.C. (MHM) $671,323 in audit fees for 2021, including non-recurring procedures for a restatement, with all services pre-approved by the Audit and Corporate Governance Committee Fees Billed by Independent Registered Public Accounting Firm (MHM) | Type of Fees | 2021 ($) | 2020 ($) | | :----------- | :------- | :------- | | Audit Fees | 671,323 | 448,767 | | Audit-Related Fees | – | – | | Tax Fees | – | – | | All Other Fees | – | – | | Total | 671,323| 448,767| - The 2021 audit fees included $120,000 for non-recurring audit procedures related to the company's restatement of fiscal year ended December 31, 2020[431] - The Audit and Corporate Governance Committee pre-approves all audit and non-audit services, and MHM performed no non-audit work for Lifeway in fiscal years 2021 or 2020[436][437] PART IV Item 15. Exhibits, Financial Statement Schedules This section lists all exhibits and financial statement schedules filed as part of the 10-K report, including organizational documents, agreements, and incentive plans - The report includes a list of financial statements and financial statement schedules, with separate schedules omitted as information is included in the consolidated financial statements[442] - Exhibits include key agreements such as Amended and Restated Bylaws, Articles of Incorporation, Stockholders' Agreement with Danone, employment agreements, and various loan and security agreements[441][443] Item 16. Form 10-K Summary This item is not applicable to Lifeway Foods, Inc