10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)
x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  March 31, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 000-17363

LIFEWAY FOODS, INC.

(Exact Name of Registrant as Specified in its Charter)

Illinois	36-3442829
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

 6431 West Oakton, Morton Grove, IL 60053

(Address of Principal Executive Offices, Zip Code)

(847) 967-1010

(Registrant’s Telephone Number, Including Area Code) 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x   No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes  x   No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o	Accelerated filer o	Non-accelerated filer  o	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  o   No  x

As of May 13, 2013, 16,346,017 shares of the registrant’s common stock, no par value, were outstanding.

LIFEWAY FOODS, INC.

Table of Contents

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	20
Item 4.	Controls and Procedures.	20
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	22
Item 1 A.	Risk Factors.	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	22
Item 3.	Defaults Upon Senior Securities.	22
Item 4.	Removed and Reserved.	22
Item 5.	Other Information.	22
Item 6.	Exhibits.	22
	Signatures.	23
	Index of Exhibits.	24

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PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

March 31, 2013 and 2012 (Unaudited) and December 31, 2012

	(Unaudited) March 31,						December 31,
	2013			2012			2012
ASSETS
Current assets
Cash and cash equivalents	$	2,739,957		$	1,156,539		$	2,286,226
Investments		2,062,343			1,723,836			1,869,888
Certificates of deposits in financial institutions		250,000			300,000			450,000
Inventories		7,080,899			5,205,457			5,939,186
Accounts receivable, net of allowance for doubtful
accounts and discounts		11,915,981			8,484,371			8,723,737
Prepaid expenses and other current assets		92,827			39,880			97,138
Other receivables		5,165			155,937			8,825
Deferred income taxes		295,701			357,963			234,687
Refundable income taxes		84,828			---			84,828
Total current assets	$	24,527,701		$	17,423,983		$	19,694,515
Property and equipment, net		14,917,260			15,031,364			14,986,776
Intangible assets
Goodwill and other non-amortizable brand assets		14,068,091			14,068,091			14,068,091
Other intangible assets, net of accumulated amortization of
$4,020,598 and $3,276,645 at March 31, 2013 and 2012 and $3,842,756
At December 31, 2012, respectively		4,285,403			5,029,355			4,463,242
Total intangible assets		18,353,494			19,097,446			18,531,333
Other Assets
Long-term accounts receivable net of current portion		294,000			276,050			294,000
Total assets	$	58,092,455		$	51,828,843		$	53,506,624
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Checks written in excess of bank balances	$	0		$	333,446		$	0
Current maturities of notes payable		543,591			789,933			542,981
Accounts payable		6,465,801			4,597,466			4,256,725
Accrued expenses		1,197,883			755,187			1,155,677
Accrued income taxes		462,593			279,402			254,311
Total current liabilities		8,669,868			6,755,434			6,209,694
Notes payable		4,820,160			5,363,750			4,955,945
Deferred income taxes		2,909,134			3,394,957			3,028,518
Total liabilities		16,399,162			15,514,141			14,194,157
Stockholders' equity
Common stock, no par value; 20,000,000 shares authorized;
17,273,776 shares issued; 16,346,017 shares outstanding at
March 31, 2013; 17,273,776 shares issued; 16,390,417 shares
outstanding at March 31, 2012; 17,273,776 shares issued; 16,346,017 shares
outstanding at December 31, 2012		6,509,267			6,509,267			6,509,267
Paid-in-capital		2,032,516			2,032,516			2,032,516
Treasury stock, at cost		(8,187,682	)		(7,783,580	)		(8,187,682	)
Retained earnings		41,270,416			35,526,285			38,904,777
Accumulated other comprehensive income (loss), net of taxes		68,776			30,214			53,591
Total stockholders' equity		41,693,293			36,314,702			39,312,469
Total liabilities and stockholders' equity	$	58,092,455		$	51,828,843		$	53,506,626

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

March 31, 2013 and 2012 (Unaudited) and December 31, 2012

	(Unaudited)
	Three Months Ended
	March 31,
	2013						2012
							(as restated)
Sales	$	27,590,622		$			$	21,545,896		$
Less: discounts and allowances		(3,203,591	)					(2,148,699	)
Net sales		24,387,031			24,387,031			19,397,197			19,397,197
Cost of goods sold					15,402,875						12,906,722
Depreciation expense					394,125						399,045
Total cost of goods sold					15,797,000						13,305,767
Gross profit					8,590,030						6,091,430
Selling expenses					2,813,572						2,721,973
General and administrative					1,868,100						1,308,222
Amortization expense					177,842						188,705
Total operating expenses					4,859,514						4,218,900
Income from operations					3,730,517						1,872,530
Other income (expense):
Interest and dividend income					15,009						11,573
Rental income					3,269						3,000
Interest expense					(36,299)						(50,186)
Gain (loss) on sale of investments, net					64,335						17,985
Other Expense					0						0
Total other income (expense)					46,314						17,628
Income before provision for
income taxes					3,776,831						1,854,902
Provision for income taxes					1,411,192						759,913
Net income				$	2,365,639					$	1,094,989
Basic and diluted earnings
per common share					.14						.07
Weighted average number of
shares outstanding					16,346,017						16,397,998
COMPREHENSIVE INCOME
Net income				$	2,365,639					$	1,094,989
Other comprehensive income
(loss), net of tax:
Unrealized gains on
investments (net of tax)					51,535						29,000
Less reclassification adjustment for (gains)
losses included in
net income (net of taxes)					(36,349	)					10,162
Comprehensive income				$	2,380,824					$	1,134,151

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended March 31, 2013 and 2012 (Unaudited)

and For the Year Ended December 31, 2012

	Common Stock, No Par Value																	Accumulated
	20,000,000 Shares					# of Shares												Other
	Authorized					of												Comprehensive
	# of Shares		# of Shares			Treasury		Common		Paid In		Treasury			Retained			Income (Loss),
	Issued		Outstanding			Stock		Stock		Capital		Stock			Earnings			Net of Tax			Total
Balances at December 31, 2011		17,273,776		16,409,317			864,459	$	6,509,267	$	2,032,516	$	(7,606,974	)	$	34,431,296		$	(8,948	)	$	35,357,157
Redemption of stock		0		(63,300	)		63,300		0		0		(580,708	)		0			0			(580,708	)
Other comprehensive income (loss):
Unrealized gains on securities, net of taxes		0		0			0		0		0		0			0			62,539			62,539
Net income for the year ended
December 31, 2012		0		0			0		0		0		0			5,619,798			0			5,619,798
Dividends ($.07) per share		0		0			0		0		0		0			(1,146,317	)		0			(1,146,317	)
Balances at December 31, 2012		17,273,776		16,346,017			927,759	$	6,509,267	$	2,032,516	$	(8,187,682	)	$	38,904,777		$	53,591		$	39,312,469
Balances at January 1, 2012		17,273,776		16,409,317			864,459	$	6,509,267	$	2,032,516	$	(7,606,974	)	$	34,431,296		$	(8,948	)	$	35,357,157
Redemption of stock		0		(18,900	)		18,900		0		0		(176,606	)		0			0			(176,606	)
Other comprehensive income (loss):
Unrealized gains on securities, net of taxes		0		0			0		0		0		0			0			39,162			39,162
Net income for the three months ended
March 31, 2012		0		0			0		0		0		0			1,094,989			0			1,094,989
Dividends ($.07) per share		0		0			0		0		0		0			0			0			0
Balances at March 31, 2012		17,273,776		16,390,417			883,359	$	6,509,267	$	2,032,516	$	(7,783,580	)	$	35,526,285		$	30,214		$	36,314,702
Balances at January 1, 2013		17,273,776		16,346,017			927,759	$	6,509,267	$	2,032,516	$	(8,187,682	)	$	38,904,777		$	53,591		$	39,312,469
Redemption of stock		0							0		0					0			0			0
Other comprehensive income (loss):
Unrealized gains on securities, net of taxes		0		0			0		0		0		0			0			15,185			15,185
Net income for the three months ended
March 31, 2013		0		0			0		0		0		0			2,365,639			0			2,365.639
Dividends ($.07) per share		0		0			0		0		0		0			0			0			0
Balances at March 31, 2013		17,273,776		16,346,017		$	927,759	$	6,509,267	$	2,032,516	$	(8,187,682	)	$	41,270,416		$	68,776		$	41,693,293

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2013 and 2012 (Unaudited)

	(Unaudited)
	March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	2,365,639		$	1,094,989
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization		571,967			587,750
Loss (gain) on sale of investments, net		(64,335	)		(17,985	)
Deferred income taxes		(192,090)			(185,805)
Bad Debt Expense		51,819			6,384
(Increase) decrease in operating assets:
Accounts receivable		(3,244,063	)		(526,979)
Other receivables		3,660			68,267
Inventories		(1,141,713	)		(250,982)
Refundable income taxes		0			41,316
Prepaid expenses and other current assets		4,311			39,750
Increase (decrease) in operating liabilities:
Accounts payable		2,209,076			211,227
Accrued expenses		42,206			201,462
Income taxes payable		208,282			279,402
Net cash provided by operating activities		814,759			1,548,796
Cash flows from investing activities:
Purchases of investments		(1,271,516	)		(318,123)
Proceeds from sale of investments		1,170,271			404,028
Redemption of certificates of deposits		200,000			0
Purchases of property and equipment		(324,608	)		(231,243)
Net cash used in investing activities		(225,853	)		(145,338)
Cash flows from financing activities:
Checks written in excess of bank balances		0			(258,594)
Purchases of treasury stock		0			(176,606)
Repayment of notes payable		(135,175	)		(926,869)
Net cash used in financing activities		(135,175	)		(1,362,069)
Net (decrease) increase in cash and cash equivalents		453,731			41,389
Cash and cash equivalents at the beginning of the period		2,286,226			1,115,150
Cash and cash equivalents at the end of the period	$	2,739,957		$	1,156,539

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 1 – NATURE OF BUSINESS

Lifeway Foods, Inc. (the “Company” or “Lifeway”) commenced operations in February 1986 and incorporated under the laws of the state of Illinois on May 19, 1986. The Company’s principal business activity is the production of dairy products. Specifically, the Company produces Kefir, a drinkable product which is similar to but distinct from yogurt, in several flavors sold under the name “Lifeway’s Kefir;” a plain farmer’s cheese sold under the name “Lifeway’s Farmer’s Cheese;” a fruit sugar-flavored product similar in consistency to cream cheese sold under the name of “Sweet Kiss;” and a dairy beverage, similar to Kefir, with increased protein and calcium, sold under the name “Basics Plus.” The Company also produces a vegetable-based seasoning under the name “Golden Zesta.” The Company currently distributes its products throughout the Chicago Metropolitan area and various cities on the East Coast through local food stores. In addition, products are sold throughout the United States and Ontario, Canada by distributors. The Company also distributes some of its products to Eastern Europe.

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows:

Basis of presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by general accepted accounting principles for complete financial statements.  However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Helios Nutrition, Ltd., Pride of Main Street, L.L.C., Starfruit, L.L.C., Fresh Made, Inc. and Starfruit Franchisor, L.L.C. All significant intercompany accounts and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the allowance for doubtful accounts, the valuation of investment securities, the valuation of goodwill, intangible assets, and deferred taxes.

Revenue Recognition

Sales of Company produced dairy products are recorded at the time of shipment and the following four criteria have been met: (i) The product has been shipped and the Company has no significant remaining obligations; (ii) Persuasive evidence of an agreement exists; (iii) The price to the buyer is fixed or determinable and (iv) Collection is probable. In addition, shipping costs invoiced to the customers are included in net sales and the related cost in cost of sales. Discounts and allowances are reported as a reduction of gross sales unless the allowance is attributable to an identifiable benefit separable from the purchase of the product, the value of which can be reasonably estimated, which would be charged to the appropriate expense account.

Customer Concentration

Sales are predominately to companies in the retail food industry, located within the United States of America. Two major customers accounted for approximately 31 percent and 31 percent of gross sales for the three months ended March 31, 2013 and 2012, respectively.   These customers accounted for approximately 36 percent, 30 percent, and 30 percent of accounts receivable as of March 31, 2013, March 31, 2012, and December 31, 2012, respectively.

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

Cash and cash equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.

The Company maintains cash deposits at several institutions located in the greater Chicago, Illinois and Philadelphia, Pennsylvania metropolitan areas.

Investments

All investment securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses on available-for-sale securities are reported as a separate component of stockholders’ equity. Amortization, accretion, interest and dividends, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are recorded in other income. All of the Company's securities are subject to a periodic impairment evaluation. This evaluation depends on the specific facts and circumstances. Factors that we consider in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for possible recovery in the market value of the investment.

Accounts receivable

Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral. Balances expected to be paid beyond one year are classified as long-term.

Accounts receivable are recorded at invoice amounts, and reduced to their estimated net realizable value by recognition of an allowance for doubtful accounts and anticipated discounts. The Company’s estimate of the allowances for doubtful accounts and anticipated discounts are based upon historical experience, its evaluation of the current status and contract terms of specific receivables, and unusual circumstances, if any. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company’s credit terms. Accounts considered uncollectible are charged against the allowance.

Inventories

Inventories are stated at the lower of cost or market, cost being determined by the first-in, first-out method.

Property and equipment

Property and equipment is stated at depreciated cost or fair value where depreciated cost is not recoverable. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized.

Property and equipment is being depreciated over the following useful lives:

Category	Years
Buildings and improvements	31 and 39
Machinery and equipment	5 – 12
Office equipment	5 – 7
Vehicles	5

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

Intangible assets acquired in business combinations

The Company accounts for intangible assets at historical cost. Intangible assets acquired in a business combination are recorded under the purchase method of accounting at their estimated fair values at the date of acquisition. 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 is reviewed for impairment at least annually. Brand assets represent the fair value of brands acquired. Brand assets have an indefinite life and therefore are not amortized, rather are reviewed periodically for impairment. The Company amortizes other intangible assets over their estimated useful lives, as disclosed in the table below.

The Company reviews intangible assets and their related useful lives at least once per year to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. The Company conducts more frequent impairment assessments if certain conditions exist, including: a change in the competitive landscape, any internal decisions to pursue new or different strategies, a loss of a significant customer, or a significant change in the market place including changes in the prices paid for the Company’s products or changes in the size of the market for the Company’s products.

If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life.

Intangible assets are being amortized over the following useful lives:

Category	Years
Recipes	4
Customer lists and other customer related intangibles	7-10
Lease agreement	7
Trade names	15
Formula	10
Customer relationships	12

Income taxes

Deferred income taxes are the result of temporary differences that arise from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

The principal sources of temporary differences are different depreciation and amortization methods for financial statement and tax purposes, unrealized gains or losses related to investments, capitalization of indirect costs for tax purposes, purchase price adjustments, and the recognition of an allowance for doubtful accounts for financial statement purposes.

The Company has analyzed filing positions in all of 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 only periods subject to examination for the Company’s federal returns are the 2010 and 2011 tax years. The Company believes that its income tax filing positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

Treasury stock

Treasury stock is recorded using the cost method.

Advertising and promotional costs

The Company expenses advertising costs as incurred. For the three months ended March 31, 2013 and 2012 total advertising expenses were $606,398 and $755,666, respectively.

Earnings per common share

Earnings per common share were computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. For the three months ended March 31, 2013 and 2012, diluted and basic earnings per share were the same, as the effect of dilutive securities options outstanding was not significant.

Correction of Prior Year Amounts

Management has restated the unaudited statements of income and comprehensive income for interim period ending March 31, 2012.  During the period ending March 31, 2012, amounts related to costs of production of inventory were not presented as part of cost of goods sold and were erroneously included as general and administrative operation expenses in our previously issued financial statements (see Note 14).

There was no impact on previously reported income, consolidated balance sheets or consolidated statement of cash flows.

Note 3 – INTANGIBLE ASSETS

Intangible assets, and the related accumulated amortization, consist of the following:

	March 31, 2013				March 31, 2012				December 31, 2012
	Cost		Accumulated Amortization		Cost		Accumulated Amortization		Cost		Accumulated Amortization
Recipes	$	43,600	$	43,600	$	43,600	$	43,600	$	43,600	$	43,600
Customer lists and other customer related intangibles		4,504,200		2,137,640		4,504,200		1,666,438		4,504,200		2,025,736
Lease acquisition		87,200		87,200		87,200		87,200		87,200		87,200
Customer relationship		985,000		544,222		985,000		465,135		985,000		526,701
Trade names		2,248,000		915,936		2,248,000		766,068		2,248,000		878,469
Formula		438,000		292,000		438,000		248,200		438,000		281,050
	$	8,306,000	$	4,020,598	$	8,306,000	$	3,276,645	$	8,306,000	$	3,842,756

Amortization expense is expected to be approximately the following for the 12 months ending March 31:

2014	$	711,367
2015		711,367
2016		711,367
2017		682,166
2018		667,567
Thereafter		801,568
	$	4,285,402

Amortization expense during the three months ended March 31, 2013 and 2012 was $177,842 and $188,705, respectively.

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 4 – INVESTMENTS

The cost and fair value of investments classified as available for sale are as follows:

March 31, 2013	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	769,743	$	126,498	$	(8,861	)	$	887,380
Preferred Securities		100,005		0		(405	)		99,600
Corporate Bonds		1,070,867		13,355		(8,859	)		1,075,363
Total	$	1,940,615	$	139,853	$	(18,125	)	$	2,062,343

March 31, 2012	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	525,657	$	77,348	$	(3,519)		$	599,486
Mutual Funds		56,840		959		(105)			57,694
Preferred Securities		189,452		10,950		(5,152)			195,250
Corporate Bonds		870,671		11,312		(10,577)			871,406
Total	$	1,642,620	$	100,569	$	(19,353)		$	1,723,836
December 31, 2012	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	639,974	$	90,875	$	( 5,190	)	$	725,659
Corporate Bonds		1,135,064		16,212		( 7,047	)		1,144,229
Total	$	1,775,038	$	107,087	$	( 12,237	)	$	1,869,888

Proceeds from the sale of investments were $1,170,271 and $404,028 for the three months ended March 31, 2013 and 2012, respectively.

Gross gains of $66,218 and $22,349 and gross losses of $1,882 and $4,364 were realized on these sales during the three months ended March 31, 2013 and 2012, respectively.

The following table shows the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2013 and 2012 and at December 31, 2012:

	Less Than 12 Months					12 Months or Greater					Total
March 31, 2013	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	138,409	$	(6,916	)	$	33,371	$	(1,945	)	$	171,780	$	(8,861	)
Preferred Securities		99,600		(405	)		0		0			99,600		(405	)
Corporate Bonds		519,549	$	(8,075	)		72,715		(784	)		592,264		(8,859	)
	$	757,558	$	(15,396	)	$	106,086	$	(2,729	)	$	863,644	$	(18,125	)

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 4 – INVESTMENTS - Continued

	Less Than 12 Months					12 Months or Greater					Total
March 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	20,346	$	( 1,535	)	$	3,184	$	( 1,984	)	$	23,530	$	( 3,519	)
Mutual Funds		0		0			3,073		( 105	)		3,073		( 105	)
Preferred Securities		0		0			59,300		( 5,152	)		59,300		( 5,152	)
Corporate Bonds		262,923		( 10,577	)		0		0			262,923		( 10,577	)
	$	283,269	$	( 12,112	)	$	65,557	$	( 7,241	)	$	348,826	$	( 19,353	)

	Less Than 12 Months					12 Months or Greater					Total
December 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	63,620	$	( 3,745	)	$	21,910	$	( 1,445	)	$	85,530	$	( 5,190	)
Corporate Bonds		301,229		( 2,721	)		193,930		( 4,326	)		495,159		( 7,047	)
	$	364,849	$	( 6,466	)	$	215,840	$	( 5,771	)	$	580,689	$	( 12,237	)

Equities, Mutual Funds, Preferred Securities, and Corporate Bonds -The Company's investments in equity securities, mutual funds, preferred securities, and corporate bonds consist of investments in common stock, preferred stock and debt securities of companies in various industries. As of March 31, 2013, there were ten equity securities, one option on equity securities, one preferred equity security, and eight corporate bond securities that had unrealized losses. The Company evaluated the near-term prospects of the issuer in relation to the severity and duration of the impairment. Based on that evaluation and the Company's ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the Company did not consider any material investments to be other-than-temporarily impaired at March 31, 2013.

Note 5 – INVENTORIES

Inventories consist of the following:

	March 31,				December 31,
	2013		2012		2012
Finished goods	$	2,785,838	$	2,091,004	$	2,462,548
Production supplies		3,025,400		2,082,194		2,599,668
Raw materials		1,269,661		1,032,259		876,970
Total inventories	$	7,080,899	$	5,205,457	$	5,939,186

Note 6 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	March 31,				December 31,
	2013		2012		2012
Land	$	1,178,160	$	1,178,160	$	1,178,160
Buildings and improvements		11,972,226		11,656,233		11,904,919
Machinery and equipment		15,865,429		14,777,420		15,185,204
Vehicles		1,350,608		1,347,228		1,346,078
Office equipment		429,013		404,905		411,773
Construction in process		167,775		111,039		612,468
		30,963,211		29,474,985		30,638,602
Less accumulated depreciation		16,045,951		14,443,621		15,651,826
Total property and equipment	$	14,917,260	$	15,031,364	$	14,986,776

Depreciation expense during the three months ended March 31, 2013 and 2012 was $394,125 and $399,045, respectively.

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 7 – ACCRUED EXPENSES

Accrued expenses consist of the following:

	March 31,				December 31,
	2013		2012		2012
Accrued payroll and payroll taxes	$	477,559	$	490,137	$	356,280
Accrued property tax		225,308		250,342		302,573
Other		495,016		14,708		496,824
	$	1,197,883	$	755,187	$	1,155,677

Note 8 – NOTES PAYABLE

Notes payable consist of the following:

	March 31,				December 31
	2013		2012		2012
Note payable to Private Bank in monthly installments of $42,222, plus variable interest rate, currently at 2.709%, with a balloon payment for the remaining balance. Collateralized by substantially all assets of the Company.  In May 2013, the Company refinanced this note under similar terms which extended the maturity date to May 31, 2018.	$	5,238,889	$	5,745,556	$	5,365,556
Line of credit with Private Bank at variable interest rate, currently at 3.25%. The agreement has been extended with terms allowing borrowings up to $2.0 million. Collateralized by substantially all assets of the Company.   In May 2013, the Company refinanced this Line of Credit.  The agreement has been extended with terms allowing borrowings up to $5.0 million and matures on May 31, 2014.		0		250,000		0
Notes payable to Ford Credit Corp. payable in monthly installments of $1,778.23 at 5.99%, due July 2015, secured by transportation equipment.		46,291		64,200		50,871
Note payable to Fletcher Jones of Chicago, Ltd LLC in monthly installments of $1,768.57 at 6.653%, due May 24, 2017, secured by transportation equipment.		78,571		93,927		82,499
Total notes payable		5,363,751		6,153,683		5,498,926
Less current maturities		543,591		789,933		542,981
Total long-term portion	$	4,820,160	$	5,363,750	$	4,955,945

In accordance with the Private Bank agreements referenced above, the Company is subject to minimum fixed charged ratio and tangible net worth thresholds.

Maturities of notes payables are as follows:

Twelve Months Ended March 31,
2014	$	543,591
2015		544,573
2016		532,585
2017		526,879
2018		510,569
Thereafter		2,705,554
Total	$	5,363,751

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 9 – COMMITMENTS AND CONTINGENCIES

The Company leases four stores for its Starfruit subsidiary. Total expense for these leases was approximately $59,205, $58,264 and $379,348 for the three months ended March 31, 2013 and 2012 and for the year ended December 31, 2012, respectively. The Company is also responsible for additional rent equal to real estate taxes and other operating expenses. Future annual minimum base rental payments for the leases as of March 31, 2013 are approximately as follows:

2014	$	100,969
2015		44,469
2016		45,802
2017		47,176
2018		48,591
Thereafter		37,257
Total	$	324,264

Note 10 – PROVISION FOR INCOME TAXES

The provision for income taxes consists of the following:

	For the Three Months Ended
	March 31,
	2013			2012
Current:
Federal	$	1,176,711		$	633,372
State and local		426,571			312,346
Total current		1,603,282			945,718
Deferred		(192,090	)		(185,805	)
Provision for income taxes	$	1,411,192		$	759,913

A reconciliation of the provision for income taxes and the income tax computed at the statutory rate is as follows:

	For the Three Months Ended
	March 31,
	2013						2012
	Amount			Percentage			Amount			Percentage
Federal income tax expense computed at the statutory rate	$	1,284,123			34.0	%	$	630,667			34.0	%
State and local tax expense, net		281,160			7.4	%		215,169			11.6	%
U.S. domestic manufacturers’ deduction & other permanent differences		(154,091	)		(4.0	)%		(52,493	)		(2.8	)%
Change in tax estimate		0			0.0	%		(33,430	)		(1.8	)%
Provision for income taxes	$	1,411,192			37.4	%	$	759,913			41.0	%

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 10 – PROVISION FOR INCOME TAXES - Continued

Amounts for deferred tax assets and liabilities are as follows:

	March 31,						December 31,
	2013			2012			2012
Non-current deferred tax assets (liabilities) arising from: Temporary differences -
Accumulated depreciation and amortization
from purchase accounting adjustments	$	(3,017,346	)	$	( 3,562,647	)	$	( 3,164,716	)
Capital loss carry-forwards		108,212			167,690			136,198
Total non-current net deferred tax liabilities		(2,909,134	)		( 3,394,957	)		( 3,028,518	)
Current deferred tax assets arising from:
Unrealized losses (gain) on investments		(52,952	)		( 35,329	)		( 41,260	)
Inventory		316,028			232,324			265,072
Allowance for doubtful accounts and  discounts		32,625			4,350			10,875
Allowance for promotions		0			65,249			0
Capital loss carry-back		0			91,369			0
Total current deferred tax assets		295,701			357,963			234,687
Net deferred tax liability	$	(2,613,433	)	$	( 3,036,994	)	$	( 2,793,831	)

Note 11 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest and income taxes are as follows:

	For the Three Months Ended
	March 31,
	2013		2012
Interest	$	36,326	$	64,172
Income taxes	$	1,395,093	$	625,055

Note 12 – STOCK AWARD AND STOCK OPTION PLANS

The Company has a registration statement filed with the Securities and Exchange Commission in connection with a Consulting Service Compensation Plan covering up to 1,200,000 of the Company’s common stock shares. Pursuant to such Plan, the Company may issue common stock or options to purchase common stock to certain consultants, service providers, and employees of the Company. The option price, number of shares, grant date, and vesting terms are determined at the discretion of the Company’s Board of Directors.

As of December 31, 2012 and at March 31, 2013 and 2012, there were no stock options outstanding or exercisable. There were approximately 940,000 shares available for issuance under the Plan at March 31, 2013.

- 15 -

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 13 – FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

Level 1. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2. Inputs to the valuation methodology include the following:

● Quoted prices for similar assets or liabilities in active markets;

● Quoted prices for identical or similar assets or liabilities in inactive markets;

● Inputs other than quoted prices that are observable for the asset or liability;

● Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used as of March 31, 2013 and 2012.

The majority of the Company’s short-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s valuation of its Level 1 investments, which include mutual funds, is based on quoted market prices in active markets for identical securities. The Company’s valuation of its Level 2 investments, which include certificates of deposits, is based on other observable inputs, specifically a valuation model which utilized vendor pricing for similar securities.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 13 – FAIR VALUE MEASUREMENTS – Continued

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets at fair value as of March 31, 2013 and 2012 and for the year ended December 31, 2012. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

	Assets and Liabilities at Fair Value as of March 31, 2013
	Level 1		Level 2		Level 3		Total
Cash	$	2,739,957	$	0	$	0	$	2,739,957
Certificate of Deposits		0		237,175		0		237,175
Stocks		887,380		0		0		887,380
Preferred Securities		99,600		0		0		99,600
Corporate Bonds		0		1,075,363		0		1,075,363
Notes Payable		0		5,363,751		0		5,363,751

	Assets and Liabilities at Fair Value as of March 31, 2012
	Level 1		Level 2		Level 3		Total
Cash	$	1,156,540	$	0	$	0	$	823,093
Mutual Funds:		0		0		0		0
Equity Income		57,694		0		0		57,694
Bonds		0		0		0		0
Certificate of Deposits		0		280,482		0		280,482
Stocks		599,486		0		0		599,486
Preferred Stock		195,250		0		0		195,250
Corporate Bonds		0		871,406		0		871,406
Notes Payable		0		6,153,683		0		6,153,683

	Assets and Liabilities as Fair Value as of December 31, 2012
	Level 1		Level 2		Level 3		Total
Cash	$	2,286,226	$	0	$	0	$	2,286,226
Certificate of Deposits		0		439,982		0		439,982
Stocks		725,670		0		0		725,670
Corporate Bonds		0		1,144,229		0		1,144,229
Notes Payable		0		5,498,926		0		5,498,926

The Company’s financial assets and liabilities also include accounts receivable, other receivables and, accounts payable for which carrying value approximates fair value. All such assets are valued using level 2 inputs.

Note 14 – RESTATEMENT OF 2012 QUARTERLY CONSOLIDATED FINANCIAL STATEMENT

The consolidated statements of income for the year-to-date period ended March 31, 2012, that were previously included in our Quarterly Reports on Forms 10-Q filed in 2012, were restated as a result of erroneous presentation of production activity within general and administrative operating expenses.

These restatements result in increases in cost of goods sold and corresponding decreases in general and administrative operating expenses. These restatements had no impact on our previously reported net income, condensed consolidated balance sheets or consolidated statements of cash flows.

As detailed in the table below, these restatements impact the following consolidated statement of income line items:

	(Unaudited) Three Months Ended March 31, 2012
	As Previously Reported		Adjustment			As Restated
Income Statement
Net Sales	$	19,397,197	$	—		$	19,397,197
COGS	$	12,637,386	$	668,381		$	13,305,767
Gross Profit	$	6,759,811	$	(668,381	)	$	6,091,430
Operating Expenses	$	4,887,281	$	(668,381	)	$	4,218,900
Income from Operations	$	1,872,530	$	—		$	1,872,530

- 17 -

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

March 31, 2013 and 2012

and December 31, 2012

Note 15 – LITIGATION

The Company is named a party to lawsuits in the normal course of business. In the opinion of management, the resolution of these lawsuits will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Note 16 – RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards (“IFRS”). ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. ASU 2011-04 became effective for the Company on January 1, 2012. Management adopted this statement effective January 1, 2012.

Note 17 – SUBSEQUENT EVENT

On May 15, 2013, the Company entered into an agreement to acquire the Golden Guernsey dairy plant in Waukesha, WI.   The acquisition will increase the production capacity of Lifeway by approximately 170,000 square feet.   The purchase price is approximately $7.4 million and the acquisition is expected to close on June 10, 2013.

- 18 -

ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Comparison of Quarter Ended March 31, 2013 to Quarter Ended March 31, 2012

The following analysis should be read in conjunction with the unaudited financial statements of the Company and related notes included elsewhere in this quarterly report and the audited financial statements and Management’s Discussion and Analysis contained in our Form 10-K, for the fiscal year ended December 31, 2012.

Results of Operations

Total consolidated gross sales increased by $6,044,725 (approximately 28%) to $27,590,621 during the three-month period ended March 31, 2013 from $21,545,896 during the same three-month period in 2012.  This increase is primarily attributable to increased sales and awareness of the Company’s flagship line, Kefir, as well as ProBugs®Organic Kefir for kids and BioKefir™.

Total consolidated net sales increased by $4,989,833 (approximately 26%) to $24,387,030 during the three-month period ended March 31, 2013 from $19,397,197 during the same three-month period in 2012.  Net sales are recorded as gross sales less promotional activities such as slotting fees paid, couponing, spoilage and promotional allowances as well as early payment terms given to customers. The total allowance for promotions and discounts during the three-month period ended March 31, 2013 was $3,203,591 or 12% of gross sales, compared to the total allowance for promotions and discounts during the three-month period ended March 31, 2012 of $2,148,699 or 10% of gross sales.

Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 63% during the first quarter of 2013, compared to approximately 67% during the same period in 2012. The decrease was primarily attributable to the decreased cost of conventional milk, the Company’s largest raw material.  The total cost of milk was approximately 5% lower during the first quarter 2013 when compared to the same period in 2012.

Operating expenses as a percentage of net sales were approximately 20% during the first quarter of 2013, compared to approximately 22% during the same period in 2012.  This was primarily attributable to an increase in selling related expenses, which increased by $91,599, (approximately 3%) to $2,813,572 during the first quarter of 2013, from $2,721,973 during the same period in 2012.

The company reported income from operations of $3,730,517 during the first quarter of 2013, an improvement of $1,857,986 from $1,872,530 during the same period in 2012.

Provision for income tax was $1,411,192, or a 37% effective rate for the first quarter of 2013 compared to a provision for income tax of 759,913, or a 41% effective tax rate during the same period in 2012.  Income taxes are discussed in Note 10 to the Notes to the Financial Statements.

Total net income was $2,365,638 or $0.14 per diluted share for the three-month period ended March 31, 2013 compared to $1,094,989 or $0.07 per diluted share in the same period in 2012.

Liquidity and Capital Resources

Sources and Uses of Cash

Net cash provided by operating activities was $814,758 during the three-months ended March 31, 2013 compared to net cash provided by operating activities of $1,548,796 in the same period in 2012.  This decrease is primarily attributable to the increase of $1,997,849 in accounts payable in the first quarter of 2013 as compared to the prior year first quarter.

Net cash used in investing activities was $225,853 during the three-months ended March 31, 2013 compared to net cash used in investing activities of $145,338 in the same period in 2012. This decrease is primarily due to a increase in purchases of investments of $953,393 in the first quarter of 2013.

The Company had a net increase of cash and cash equivalents of $1,583,418 during the three month period ended March 31, 2013 compared to the same period in 2012 and an increase of  $453,730 as compared to the December 31, 2012 cash and cash equivalent balance.  The Company had cash and cash equivalents of $2,739,956 as of March 31, 2013 compared to cash and cash equivalents of $1,156,539 as of March 31, 2012.

- 19 -

Assets and Liabilities

Total assets were $58,092,455 as of March 31, 2013, which is an increase of $6,263,612 when compared to March 31, 2012.  This is primarily due to accounts receivable, net of allowance for doubtfulaccounts and discounts of $11,915,981 as of March 31, 2013, which is an increase of $ 3,431,610 when compared to March 31, 2012.

Total current liabilities were $8,669,868 as of March 31, 2013, which is an increase of $1,914,434 when compared to March 31, 2012. This is primarily due to a $1,868,335 increase in accounts payable.

Notes payable decreased by $543,590 as of March 31, 2013, when compared to March 31, 2012.  The balance of the notes payable as of March 31, 2013 was $4,820,160.

Total stockholder’s equity was $41,693,293 as of March 31, 2013, which is an increase of $5,378,591 when compared to March 31, 2012.  This is primarily due the increase in retained earnings of $5,744,131 when compared to March 31, 2012.

We previously held significant portions of our assets in investment securities. All of our marketable securities are classified as available-for-sale on our balance sheet.  All of these securities are stated thereon at market value as of the end of the applicable period. Gains and losses on the portfolio are determined by the specific identification method.

We anticipate being able to fund the Company’s foreseeable liquidity requirements internally. We continue to explore potential acquisition opportunities in our industry in order to boost sales while leveraging our distribution system to consolidate and lower costs.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure material information required to be disclosed in our reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the disclosure controls and procedures, we recognized that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2013 in ensuring that information required to be disclosed by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the Exchange Act rules and forms due to the material weakness described below. As a result, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, management believes the consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Management's Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is identified in Exchange Act Rules 13a-15(f). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive officer and principal financial and accounting officer, and effected by the Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Our control over financial reporting includes those policies and procedures that:

- 20 -

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

● provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our financial statements in accordance with accounting principles generally accepted in the United States of America, and that our receipts and expenditures of the company are being made only in accordance with authorizations of our management and our directors; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

Internal control over financial reporting has inherent limitations which may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or because the level of compliance with related policies or procedures may deteriorate.

Management has evaluated the effectiveness of our internal control over financial reporting as of March 31, 2013. In making the assessment, management used the framework in “Internal Control –Integrated Framework” promulgated by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as the “COSO” criteria. Based on that assessment, our principal executive officer and principal financial and accounting officer concluded that our internal control over financial reporting was not effective as of March 31, 2013 because a material weakness existed in our internal control over financial reporting related to the classification of certain costs and expenses. Specifically, the Company and its auditors determined during the audit of our financial statements that, in connection with the preparation of the Company's Annual Report on Form 10-K for fiscal year ended December 31, 2012, certain post-closing adjustments were required with respect to our classification of certain direct manufacturing costs from general and administrative to cost of goods sold, primarily consisting of utilities, wage related expenses and overhead.

As a result, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, management believes the consolidated financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented. This quarterly report on Form 10-Q does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Remediation of Material Weakness

In light of the material weakness described above, we took steps to remediate our material weakness. Management enhanced the review process by improving real time general ledger monitoring and wage detail in the financial statement functionality of our accounting software, allowing for improved internal review of the source information which goes in to the completion of the financial statements. More specifically, management has focused on improving specific coding of direct expenses as compared to general and administrative expenses.

Management is committed to continuous improvement of the Company’s internal control processes. Under the direction of the Audit Committee, management will continue to review and make changes it deems necessary to the overall design of the Company’s internal control over financial reporting, including implementing further improvements in policies and procedures and taking additional measures to address any control deficiencies.

Changes in Internal Control over Financial Reporting

Except as discussed above there were no changes in our internal control over financial reporting that occurred during the first quarter of 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 21 -

PART II – OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS.

Lifeway is not party to any material pending legal proceedings. Lifeway is from time to time engaged in litigation matters arising in the ordinary course of business none of which presently is expected to have a material adverse effect on its business results or operations.

ITEM 1A.   RISK FACTORS.

Not applicable.

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

PURCHASES OF THE COMPANY’S SECURITIES

Period	(a) Total Numbers of Shares (or Units) Purchased	(b) Average Price Paid per Share (or Unit)	(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
October 1 to October 31, 2012	0	$0	0	146,200
November 1 to November 30, 2012	0	$0	0	146,200
December 1 to December 31, 2012	0	$0	0	146,200
Total	0	$0	0	146,200

* On January 20, 2011, the Company approved a share repurchase program for up to 250,000 shares with a plan expiration date of one year from the date of the first purchase. On February 6, 2012, the Company approved a new share repurchase program for up to 200,000 shares with a plan expiration date of one year from the date of the first purchase. Lifeway repurchased 63,300 shares of the Company’s securities in 2012 pursuant to these programs at a total cost of $580,708. As of the date of this filing these plans were both expired. A new share repurchase program has not been approved for 2013.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5.     OTHER INFORMATION.

On May 14, 2013 the Company,  The Private Bank and Trust Company (the “Bank”), Fresh Made, Inc. (“Fresh Made”), Helios Nutrition Limited (“Helios”), Pride of Main Street Dairy, LLC (“Pride”) and Starfruit, LLC (“Starfruit” and together with Fresh Made, Helios and Pride, the “Subsidiaries”) entered into a Seventh Modification ( the “Seventh Modification”) of that certain Loan and Security Agreement dated as of February 6, 2009 by and among the Company, the Bank, and the Subsidiaries, as amended by that certain First Modification to Loan and Security Agreement dated as of August 13, 2009, as amended by that certain Second Modification to Loan and Security Agreement dated as of November 12, 2009, as amended by that certain Third Modification to Loan and Security Agreement dated as of February 6, 2010, as amended by that certain Fourth Modification to Loan and Security Agreement dated as of April 20, 2011, as amended by that certain Fifth Modification to Loan and Security Agreement dated as of June 20, 2011, and as amended by that certain Sixth Modification to Loan and Security Agreement dated as of June 13, 2012 (as modified and amended, the “Loan Agreement”). Pursuant to the Seventh Modification, (i) the Revolving Loan Maturity Date is extended from May 31, 2013 to May 31, 2014, (ii) the Revolving Loan Commitment is increased to $5,000,000 from $3,000,000, (iii) the Term Loan Maturity Date is extended from February 6, 2014 to May 31, 2018.

ITEM 6.     EXHIBITS.

3.1	Articles of Incorporation, as amended.
10.1	Seventh Modification to Loan and Security Agreement dated May 14, 2013, by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC.
31.1	Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Press Release dated May 15, 2013.
101	Interactive Data Files.

- 22 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LIFEWAY FOODS, INC.
Date: May 15, 2013	By:	/s/ Julie Smolyansky
		Julie Smolyansky
		Chief Executive Officer, President, and Director
Date: May 15, 2013	By:	/s/ Edward P. Smolyansky
		Edward P. Smolyansky
		Chief Financial and Accounting Officer, Treasurer, Chief Operating Officer and Secretary

- 23 -

INDEX OF EXHIBITS

3.1	Articles of Incorporation, as amended.
10.1	Seventh Modification to Loan and Security Agreement dated May 14, 2013, by and among The PrivateBank and Trust Company, Lifeway Foods, Inc., Fresh Made, Inc., Helios Nutrition Limited, Pride of Main Street Dairy, LLC and Starfruit, LLC.
31.1	Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Officer’s Certificate Pursuant to 15 U.S.C. 7241, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Press Release dated May 15, 2013.
101	Interactive Data Files.

- 24 -

EX-3.1

EXHIBIT 3.1

ARTICLES OF AMENDMENT

1.           CORPORATE NAME:           Lifeway Foods, Inc.                                                                                                                                

2.           MANNER OF ADOPTION OF AMENDMENT:

The following amendment of the Articles of Incorporation was adopted on June 16, 2006 in the manner indicated below, (“X” one box only)

£ By a majority of the incorporators, provided no directors were named in the articles of Incorporation and no directors have been elected;

£ By a majority of the board of directors, in accordance with Section 10.10, the corporation having Issued no shares as of the time of adoption of this amendment;

£ By a majority of the board of directors, in accordance with Section 10.16, shares having been issued but shareholder action not being required for the adoption of the amendment;

£ By the shareholders, in accordance with Section 10.20, a resolution of the board of directors having been duly adopted and submitted to the shareholders. At a meeting of shareholders, not less than the minimum number of votes required by statute and by the articles of incorporation were voted in favor of the amendment;

S By the shareholders, In accordance with Sections 10.20 and 7.10, a resolution of the board of directors haling been duty adopted and submitted to the shareholders. A consent in writing has been signed by shareholders having not less than the minimum number of votes required by statute and by the articles of incorporation. Shareholders who have not consented in writing have been given notice in accordance with Section 7.10:

£ By the shareholders, in accordance with Sections 10.20 and 7.10, a resolution of the board of directors having been duly adopted and submitted to the shareholders. A consent In writing has been signed by all the shareholders entitled to vote on this amendment

3.           TEXT OF AMENDMENT:

a. When amendment effects a name change, insert the new corporate name below. Use Page 2 for all other amendments.

Article I: The name of the corporation is:

(NEW NAME)

All changes other than name, include on page 2

(over)

C-173.13

Text of Amendment

b. (if amendment affects the corporate purpose, the amended purpose is required to be set forth in its entirety.  If there is not sufficient space to do so, add one or more sheets of this size.)

RESOLVED, that the Articles of Incorporation be amended to read as follows:

ARTICLE FOUR Paragraph 1:  The number of shares the corporation is authorized to issue shall be:

Class                                  Par Value                    Number of Shares Authorized

Common                                no par                           20,000,000

Preferred                               no par                             2,500,000

4. The manner. if not set forth in Article 3b, in which any exchange, reclassification or cancellation of issued shares, or a reduction of the number of authorized shares of any class below the number of issued shares of that class, provided for or affected by this amendment, is as follows: (If not applicable, insert “No change”)

No change.

5. (a) The manner, if not set forth in Article 3b, in which said amendment effects a change in the amount of paid-in capital (Paid-in capital replaces the terms Stated Capital and Paid-in Surplus and is equal to the total of these accounts) is as follows: (If not applicable, insert “No change)

No change.

(b) The amount of paid-in capital (Paid-in Capital replaces the terms Stated Capital end Paid-in Surplus and is equal to the total of these accounts) as changed by this amendment is as follows: (If not applicable, insert “No change)

No change.

	Before Amendment		After Amendment
Paid-in Capital	$	6,186,426	$	6,186,426

6. The undersigned corporation has cause these articles to be signed by a duly authorized officer who affirms, under penalties of perjury, that the facts stated herein are true.

Dated:    Aug. 14                ,  2008                                    Lifeway Foods, Inc.                                                      

(Month & Day)     (Year)                     (Exact Name of Corporation at date of execution)

                         /s/  Julie Smolyansky 

(Any Authorized Officer’s Signature)

Julie Smolyansky - President

(Type or Print Name and Title)

 ARTICLES OF AMENDMENT

Pursuant to the provisions of "The Business Corporation Act of 1983", the

undersigned corporation hereby adopts these Articles of Amendment to its

Articles of Incorporation.

ARTICLE ONE:                The name of the corporation is LIFEWAY FOODS, INC.

ARTICLE TWO:                The following amendment of the Articles of

Incorporation was adopted on June 17, 2000 in the manner indicated below.

                           By a majority of the incorporators, provided no

                           directors were named in the articles of incorporation

                           and no directors have been elected; or by a majority

                           of the board of directors, in accordance with Section

                           10.10, the corporation having issued no shares as of

                           the time of adoption of this amendment;

                           By a majority of the board of directors, in

                           accordance with Section 10.15, shares having been

                           issued but shareholder action not being required for

                           the adoption of the amendment;

                   X     By the shareholders, in accordance with Section

                           10.20, a resolution of the board of directors having

                           been duly adopted and submitted to the shareholders.

                           At a meeting of shareholders, not less than the

                           minimum number of votes required by statute and by

                           the articles of incorporation were voted in favor of

                           the amendment;

                           By the shareholders, in accordance with Sections

                           10.20 and 7.10, a resolution of the board of

                           directors having been duly adopted and submitted to

                           the shareholders. A consent in writing has been

                           signed by shareholders having not less than the

                           minimum number of votes required by statute and by

                           the articles of incorporation. Shareholders who have

                           not consented in writing have been given notice in

                           accordance with Section 7.10;

                           By the shareholders, in accordance with Sections

                           10.20 and 7.10, a resolution of the board of

                           directors have been duly adopted and submitted to the

                           shareholders. A consent in writing has been signed by

                           all the shareholders entitled to vote on this amendment.

RESOLUTION

         RESOLVED, that the Articles of Incorporation dated May 13, 1986 be

amended to add the following sentence immediately following the existing

provision relating to preemptive rights:

                "Notwithstanding anything contained herein to the contrary, the

                Corporation shall have the power to grant preemptive rights to

                any of its shareholders by contract."

                and further;

RESOLVED, that the text of the entire provision, as amended, will read as

follows:

                "Additionally resolved that a shareholder of the Corporation

                shall not be entitled to a preemptive right to purchase,

                subscribe for, or otherwise acquire any unissued shares of stock

                of the Corporation, or any options or warrants to purchase,

                subscribe for or otherwise acquire any such unissued shares or

                any shares, bonds, notes, debentures, or other securities

                convertible into or carrying options or warrants to purchase,

                subscribe for or otherwise acquire any such unissued shares.

                Notwithstanding anything contained herein to the contrary, the

                Corporation shall have the power to grant preemptive rights to

                any of its shareholders by contract."

ARTICLE THREE:                      The manner in which any exchange, reclassification or

                                                      cancellation of issued shares, or a reduction of the

                                                      number of authorized shares of any class below the

                                                      number of issued shares of that class, provided for

                                                      or effected by this amendment, is as follows: (If not

                                                      applicable, insert "No change")

                                                                                      NO CHANGE

ARTICLE FOUR:               (a)    The manner in which said amendment effects a

                                                      change in the amount of paid-in capital (Paid-in

                                                      capital replaces the terms Stated Capital and Paid in

                                                      Surplus and is equal to the total of these accounts)

                                                      is as follows: (If not applicable, insert "No

                                                      change")

                                                                                      NO CHANGE

                                             (b)    The amount of paid-in capital (Paid-in capital

                                                      replaces the terms Stated Capital and Paid in Surplus

                                                      and is equal to the total of these accounts) as

                                                      changed by this amendment is as follows: (If not

                                                      applicable, insert "No change")

                                                                                      NO CHANGE

                                                      Before Amendment               After Amendment

                                                      ------------------------            ----------------------

(1)    The undersigned corporation has caused these articles to be signed by

         its duly authorized officers, each of whom affirm, under penalties of

         perjury, that the facts stated herein are true.

Dated    June 17, 2000

                                              LIFEWAY FOODS, INC.

                                              By  /s/ Michael Smolyansky

                                                    -------------------------------

                                                   Michael Smolyansky, President

Attested By  /s/ Valeriy Nikolenko

                     --------------------------

                     Valeriy Nikolenko, Secretary

                              ARTICLES OF AMENDMENT

Pursuant to the provisions of "The Business Corporation Act of 1983", the

undersigned corporation hereby adopts these Articles of Amendment to its

Articles of Incorporation.

ARTICLE ONE:                  The name of the corporation is   LIFEWAY FOODS, INC.

ARTICLE TWO:                  The following amendment of the Articles of

                                              Incorporation was adopted on May 8 , 1987 in the

                                              manner indicated below.

                                              By a majority of the incorporators, provided no

                                              directors were named in the articles of incorporation

                                              and no directors have been elected; or by a majority

                                              of the board of directors, in accordance with Section

                                              10.10, the corporation having issued no shares as of

                                              the time of adoption of this amendment;

                                              By a majority of the board of directors, in

                                              accordance with Section 10.15, shares having been

                                              issued but shareholder action not being required for

                                              the adoption of the amendment;

                            X               By the shareholders, in accordance with Section

                                              10.20, a resolution of the board of directors having

                                              been duly adopted and submitted to the shareholders.

                                              At a meeting of shareholders, not less than the

                                              minimum number of votes required by statute and by

                                              the articles of incorporation were voted in favor of

                                              the amendment;

                                              By the shareholders, in accordance with Sections

                                              10.20 and 7.10, a resolution of the board of

                                              directors having been duly adopted and submitted to

                                              the shareholders. A consent in writing has been

                                              signed by shareholders having not less than the

                                              minimum number of votes required by statute and by

                                              the articles of incorporation. Shareholders who have

                                              not consented in writing have been given notice in

                                              accordance with Section 7.10;

                                              By the shareholders, in accordance with Sections

                                              10.20 and 7.10, a resolution of the board of

                                              directors have been duly adopted and submitted to the

                                              shareholders. A consent in writing has been signed by

                                              all the shareholders entitled to vote on this

                                              amendment.

                                                                Resolution

         RESOLVED, that the Articles of Incorporation be amended to read as

follows:

ARTICLE FOUR Paragraph 1: The authorization shares shall be:

CLASS                          PAR VALUE               NUMBER OF SHARES AUTHORIZED

--------                          ---------------               ----------------------------------------------

COMMON                           NPV                                   10,000,000

PREFERRED                       NPV                                     2,500,000

ARTICLE THREE:                      The manner in which any exchange, reclassification or

                                                      cancellation of issued shares, or a reduction of the

                                                      number of authorized shares of any class below the

                                                      sued shares of that class, provided for or

                                                      effected by this amendment, is as follows: (If not

                                                      applicable, insert "No change")

NO CHANGE

ARTICLE FOUR:                (a)    The manner in which said amendment effects a

                                                      change in the amount of paid-in capital (Paid-in

                                                      capital replaces the terms Stated Capital and Paid in

                                                      Surplus and is equal to the total of these accounts)

                                                      is as follows: (If not applicable, insert "No

                                                      change")

NO CHANGE

                                              (b)    The amount of paid-in capital (Paid-in capital

                                                       replaces the terms Stated Capital and Paid in Surplus

                                                       and is equal to the total of these accounts) as

                                                       changed by this amendment is as follows: (If not

                                                       applicable, insert "No change")

                                                                                          NO CHANGE

                                                                Before Amendment           After Amendment

                            Paid-in Capital         ________________        _______________

(1) The undersigned corporation has caused these articles to be signed by its

duly authorized officers, each of whom affirm, under penalties of perjury, that

the facts stated herein are true.

Dated:  June 26, 1989

LIFEWAY FOODS, INC.

Attested by  /s/ George Allen                                By    /s/ Michael Smolyansky

                     -------------------------                                --------------------------------

                     George Allen, Secretary                            Michael Smolyansky, President

 ARTICLES OF AMENDMENT

Pursuant to the provisions of "The Business Corporation Act of 1983", the undersigned corporation hereby adopts these Articles of Amendment to its Articles of Incorporation.

ARTICLE ONE:                  The name of the corporation is  LIFEWAY FOODS, INC.

ARTICLE TWO:                 The following amendment of the Articles of

                            Incorporation was adopted on May 8, 1987 in the manner indicated

                            below.

                           By a majority of the incorporators, provided no

                           directors were named in the articles of incorporation

                           and no directors have been elected; or by a majority

                           of the board of directors, in accordance with Section

                           10.10, the corporation having issued no shares as of

                           the time of adoption of this amendment;

                           By a majority of the board of directors, in

                           accordance with Section 10.15, shares having been

                           issued but shareholder action not being required for

                           the adoption of the amendment;

                           By the shareholders, in accordance with Section

                           10.20, a resolution of the board of directors having

                           been duly adopted and submitted to the shareholders.

                           At a meeting of shareholders, not less than the

                           minimum number of votes required by statute and by

                           the articles of incorporation were voted in favor of

                           the amendment;

                     X   By the shareholders, in accordance with Sections

                           10.20 and 7.10, a resolution of the board of

                           directors having been duly adopted and submitted to

                           the shareholders. A consent in writing has been

                           signed by shareholders having not less than the

                           minimum number of votes required by statute and by

                           the articles of incorporation. Shareholders who have

                           not consented in writing have been given notice in

                           accordance with Section 7.10;

                           By the shareholders, in accordance with Sections

                           10.20 and 7.10, a resolution of the board of

                           directors have been duly adopted and submitted to the

                           shareholders. A consent in writing has been signed by

                           all the shareholders entitled to vote on this amendment.

Resolution

RESOLVED: THAT BY RESOLUTION OF THE BOARD OF DIRECTORS, AFFIRMED BY A UNANIMOUS VOTE BY THE SHAREHOLDERES OF THE CORPORATION, THE CORPORATE OFFICERS, DIRECTORS, AND SHAREHOLDERS HEREBY AGREE THAT THE NUMBER OF SHARES OF CORPORATE STOCK, AUTHORIZED TO BE ISSUED, SHALL BE INCREASED TO 10,000,000 SHARES.

ADDITIONALLY, IT IS RESOLVED THAT THE COMPANY'S AUTHORIZED CAPITAL IS TO INCLUDE 2,500,000 SHARES OF PREFERRED STOCK, WITH NO PAR VALUE. THE BOARD OF DIRECTORS IS GRANTED DISCRETION UNDER THE ARTICLES OF INCORPORATION OF THE COMPANY TO ASSIGN RIGHTS AND PRIVILEDGES TO THE SHARES OF PREFERRED STOCK.

ADDITIONALLY, IT IS RESOLVED THAT THE CORPORATION MAY DIVIDE AND ISSUE THE PREFERRED SHARES IN SERIES. PREFERRED SHARES OF EACH SERIES WHEN ISSUED SHALL BE DESIGNATED TO DISTINGUISH THEM FROM THE SHARES OF ALL OTHER SERIES. THE BOARD OF DIRECTORS IS HEREBY EXPRESSLY VESTED WITH AUTHORITY TO DIVIDE THE CLASS OF PREFERRED SHARES INTO SERIES AND TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF THE SHARES OF ANY SUCH SERIES SO ESTABLISHED TO THE FULL EXTENT PERMITTED BY THE ARTICLES OF INCORPORATION AND ALL AMENDMENTS MADE THERETO, AND THE LAWS OF THE STATE OF ILLINOIS IN RESPECT OF THE FOLLOWING:

(A)  THE NUMBER OF SHARES TO CONSTITUTE SUCH SERIES, AND THE DISTINCTIVE DESIGNATIONS THEREOF;

(B)  THE RATE AND PREFERENCE OF DIVIDENDS, IF ANY, THE TIME OF PAYMENT OF DIVIDENDS ARE CUMULATIVE AND THE DATE FROM WHICH ANY DIVIDEND SHALL ACCRUE;

(C)  WHETHER SHARES MAY BE REDEEMED AND, IF REDEEMED TO BE RETIRED AS CANCELLED SHARES OF THE CORPORATION OR SUCH SHARES MAY CONSTITUTE AUTHORIZED BUT UNISSUED SHARES;

(D)  THE AMOUNT PAYABLE UPON SHARES IN EVENT OF INVOLUNTARY LIQUIDATION;

(E)  THE AMOUNT PAYABLE UPON SHARES IN EVENT OF VOLUNTARY LIQUIDATION;

(F)  SINKING FUND OR OTHER PROVISIONS, IF ANY FOR THE REDEMPTION OR PURCHASE OF SHARES;

(G) THE TERMS AND CONDITIONS ON WHICH SHARES MAY BE   CONVERTED, IF THE SHARES OF ANY SERIES ARE ISSUED WITH THE PRIVILEGE OF CONVERSION;

(H)  VOTING POWERS, IF ANY; AND,

(I)   ANY OTHER RELATIVE RIGHTS AND PREFERENCES OF SHARES OF SUCH SERIES INCLUDING, WITHOUT LIMITATION, ANY RESTRICTION ON AN INCREASE IN THE NUMBER OF SHARES OF ANY SERIES THERETOFORE AUTHORIZED AND ANY LIMITATION OR RESTRICTION OF RIGHTS OR POWERS TO WHICH SHARES OF ANY FUTURE SERIES SHALL BE SUBJECT.

ADDITIONALLY RESOLVED THAT CUMLATIVE VOTING IN THE ELECTION OF DIRECTORS SHALL NOT BE PERMITTED BY THE CORPORATION.  

ADDITIONALLY RESOLVED THAT A SHAREHOLDER OF THE CORPORATION SHALL NOT BE ENTITLED TO A PREEMPTIVE RIGHT TO PURCHASE, SUBSCRIBE FOR, OR OTHERWISE ACQUIRE ANY UNISSUED SHARES OF STOCK OF THE CORPORATION, OR ANY OPTIONS OR WARRANTS TO PURCHASE, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SUCH UNISSUED SHARES OR ANY SHARES, BONDS, NOTES, DEBENTURES, OR OTHER SECURITIES CONVERTIBLE INTO OR CARRYING OPTIONS OR WARRANTS TO PURCHASE, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SUCH UNISSUED SHARES.

THE AFOREMENTIONED RESOLUTIONS HAVE BEEN ADOPTED BY THE DIRECTORS OF THE CORPORATION, BY UNANIMOUS VOTE HELD THE 8TH DAY OF MAY, 1987.

ARTICLE THREE:                      The manner in which any exchange, reclassification or

                                                      cancellation of issued shares, or a reduction of the

                                                      number of authorized shares of any class below the

                                                      number of issued shares of that class, provided for

                                                       or effected by this amendment, is as follows: (If not

                                                      applicable, insert "No change")

                                                                NO CHANGE

ARTICLE FOUR:               (a)    The manner in which said amendment effects a

                                                      change in the amount of paid-in capital (Paid-in

                                                      capital replaces the terms Stated Capital and Paid in

                                                      Surplus and is equal to the total of these accounts)

                                                      is as follows: (If not applicable, insert "No

                                                      change")

                                                                NO CHANGE

                                             (b)    The amount of paid-in capital (Paid-in capital

                                                      replaces the terms Stated Capital and Paid in Surplus

                                                      and is equal to the total of these accounts) as

                                                      changed by this amendment is as follows: (If not

                                                      applicable, insert "No change")

                                                                NO CHANGE

                                                            Before Amendment                       After Amendment

                    Paid-in Capital                   $1,000.00                                        $1,000.00

(1)     The undersigned corporation has caused these articles to be signed by

           its duly authorized officers, each of whom affirm, under penalties of

           perjury, that the facts stated herein are true.

Dated:  May 8, 1987                                                              LIFEWAY FOODS, INC.

      Attested by  /s/ Edward Pucossi                                      By  /s/ Michael Smolyansky

                          -------------------------------                                -------------------------------

                          Edward Pucossi, Secretary                                 Michael Smolyansky, President

                                                ARTICLES OF INCORPORATION

Pursuant to the provisions of "The Business Corporation Act of 1983", the

undersigned incorporator(s) hereby adopt the following Articles of

Incorporation.

ARTICLE ONE:                  The name of the corporation is LIFEWAY FOODS, INC.

ARTICLE TWO:                 The name and address of the initial registered agent and its registered

                                             office are:

                           Registered Agent:  LAWRENCE H. BINDEROW

                           Registered Office:  105 WEST MADISON STREET, SUITE 1204

                                                             CHICAGO, IL 60602          COOK COUNTY

ARTICLE THREE:              The purpose or purposes for which the corporation is

                                              organized are:

THE TRANSACTION OF ANY AND ALL LAWFUL BUSINESSES FOR WHICH CORPORATIONS MAY BE INCORPORATED UNDER THE ILLINOIS BUSINESS CORPORATION ACT.

ARTICLE FOUR:  Paragraph 1: The authorized shares shall be:

CLASS                  PAR VALUE PER SHARE             NUMBER OF SHARES AUTHORIZED

--------                  ------------------------------              ---------------------------------------------

Common                            NPV                                                               5,000,000

                              Paragraph 2:   The preferences, qualifications, limitations, restrictions and the special or relative rights in respect of the shares of each class are:

                                                                              NONE

ARTICLE FIVE:   The number of shares to be issued initially, and the consideration to be received by the corporation therefor, are:

                       PAR VALUE        NUMBER OF SHARES                CONSIDERATION

CLASS           PER SHARE        PROPOSED TO BE ISSUED       RECEIVED THERFOR

--------            --------------        ---------------------------------       --------------------------

Common             NPV                             1,000                                          $1,000.00

                           ---------------------------------------------------------------------------------

                                                                                               TOTAL    $1,000.00

ARTICLE SIX:  OPTIONAL

                           The number of directors constituting the initial

                           board of directors of the corporation is TWO and the

                           names and addresses of the persons who are to serve

                           as directors until the first annual meeting of

                           shareholders or until their successors be elected and

                           qualify are:

                            NAME                                                    RESIDENTIAL ADDRESS

                           ---------------------------------------------------------------------------------------

                            Michael Smolyansky             5246 Foster Avenue, Skokie, IL 60077

                           ---------------------------------------------------------------------------------------

                            Edward Pucossi                     1607 West Thome, Chicago, IL 60645

                           --------------------------------------------------------------------------------------

ARTICLE SEVEN:  OPTIONAL

                           (a)      It is estimated that the value of all property to be

                                     owned by the  corporation for the following year

                                     wherever located will be:                        $_________

                           (b)      It is estimated that the value of the property to be

                                     located within the State of Illinois during the following

                                     year will be:                                              $_________

                           (c)      It is estimated that the gross  amount of business

                                     which will be transacted by the corporation during the

                                     following year will be:                             $_________

                           (d)      It is estimated that the gross amount of business which

                                     will be transacted from places of business in the State

                                     of Illinois during the following year will be:

                                                                                                         $_________

ARTICLE EIGHT:  OTHER PROVISIONS

                           Attach a separate sheet of this size for any other

                           provision to be included in the Articles of

                           Incorporation, e.g., authorizing pre-emptive rights;

                           denying cumulative voting; regulating internal

                           affairs; voting majority requirements; fixing a

                           duration other than perpetual; etc.

NAMES & ADDRESSES OF INCORPORATORS

         The undersigned incorporator(s) hereby declare(s), under penalties of

perjury, that the statements made in the foregoing Articles of Incorporation are

true.

DATED:  May 13, 1986

      SIGNATURES AND NAMES                        POST OFFICE ADDRESS

     1.  /s/ Michael Smolyansky                                     1.  5246 FOSTER AVENUE

        -----------------------------------------------              ----------------------------------------------

            MICHAEL SMOLYANSKY                                 SKOKIE,            ILLINOIS         60077

        -----------------------------------------------              ----------------------------------------------

           Name                                                                        City/Town            Date            Zip

     2.  /s/ Ed Pucossi                                                     2.    1607 WEST THOME

        -----------------------------------------------              ----------------------------------------------

             Signature                                                                   Street

        EDWARD PUCOSSI                                                 CHICAGO,           ILLINOIS         60645

        -----------------------------------------------              ----------------------------------------------

        Name                                                                          City/Town            Date            Zip

EX-10.1

EXHIBIT 10.1

SEVENTH MODIFICATION TO

LOAN AND SECURITY AGREEMENT

This Seventh Modification to Loan and Security Agreement (this “Amendment”) is entered into as of May 14, 2013, by and among THE PRIVATEBANK AND TRUST COMPANY (the “Bank”), LIFEWAY FOODS, INC., an Illinois corporation (“Lifeway”), FRESH MADE, INC., a Pennsylvania corporation (“FMI”), HELIOS NUTRITION LIMITED, a Minnesota corporation (“Helios”), PRIDE OF MAIN STREET DAIRY, LLC, a Minnesota limited liability company (“Pride”), and STARFRUIT, LLC, an Illinois limited liability company (“Starfruit” and together with Lifeway, FMI, Helios and Pride being sometimes collectively referred to as the “Borrowers).

RECITALS

WHEREAS, the Bank and the Borrowers previously entered into a Loan and Security Agreement dated February 6, 2009, as amended by that certain First Modification to Loan and Security Agreement dated as of August 13, 2009, by that certain Second Modification to Loan and Security Agreement dated November 12, 2009, by that certain Third Modification to Loan and Security Agreement dated February 6, 2010, by that certain Fourth Modification to Loan and Security Agreement dated as of April 20, 2011, by that certain Fifth Modification to Loan and Security Agreement dated as of June 20, 2011 and by that certain Sixth Modification to Loan and Security Agreement dated as of June 13, 2012 (as modified, the “Loan Agreement”), pursuant to which the Bank made available to the Borrowers a credit facility.

WHEREAS, the Borrowers desire, and the Bank is willing, to (a) extend the Revolving Loan Maturity Date and Term Loan Maturity Date, and (b) increase the amount of the Revolving Loan Commitment, all upon and subject to the terms and conditions set forth in this Amendment; and

WHEREAS, this Amendment shall constitute a Loan Document and these Recitals shall be construed as part of this Amendment.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

1.Definitions. (a) Undefined Terms. Unless the context otherwise provides or requires, capitalized terms used herein which are not defined herein shall have the meanings ascribed to them in the Loan Agreement; provided, however, that all references in the Loan Agreement to (a) “Obligations” shall, in addition to the definition set forth in the Loan Agreement include, but not be limited to, the duties and obligations of the Borrowers under this Amendment, and (b) “Loan Documents” shall, in addition to the definition set forth in the Loan Agreement include, but not be limited to, this Amendment and the documents and instruments to be delivered pursuant to this Amendment.

(b)Additional Defined Terms. When used herein and in the Loan Agreement, the following additional terms are added to Section 1 (Definitions) of the Loan Agreement and shall have the following meanings:

“GGD” shall mean Golden Guernsey Dairy Cooperative, a Wisconsin cooperative.

“GGD Acquisition” shall mean the purchase by one or more of the Borrowers (or a Wholly-Owned Subsidiary of a Borrower) of certain assets of GGD.

“GGD Purchase Agreement” shall mean the asset purchase agreement or other document evidencing the GGD Acquisition.

(c)Amended and Restated Defined Term. When used herein and in the Loan Agreement, the following term shall have the following amended and restated meanings:

“Revolving Loan Commitment” shall mean Five Million and 00/100 Dollars ($5,000,000.00).”

“Revolving Loan Maturity Date” shall mean May 31, 2014, unless extended by the Bank pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the Revolving Note.”

“Term Loan Maturity Date” shall mean May 31, 2018, unless extended by the Bank pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by the Bank it its sole and absolute discretion in substitution for the Term Note.”

2.Amendment to Loans and Notes.

(a)The Revolving Loan is hereby extended to the Revolving Loan Maturity Date. The Revolving Note is hereby amended by (a) deleting all references to February 6, 2010 (subsequently amended to May 31, 2013) and replacing such references with May 31, 2014, (b) deleting all references to “Five Million” (subsequently amended to “Three Million”) and replacing such references with “Five Million” and (c) deleting all references to “$5,000,000” (subsequently amended to $3,000,000) and replacing such references with “$5,000,000”.

(b)The Term Loan is hereby extended to the Term Loan Maturity Date. The Term Note is hereby amended by deleting all references to February 6, 2014 and replacing such references with May 31, 2018.

(c)Except as specifically set forth herein, the Revolving Note, the Term Note and the Loan Documents previously delivered by the Borrowers shall remain in full force and effect and are hereby ratified and confirmed in all respects. The indebtedness evidenced by the Revolving Note and Term Note (as hereby amended by this Seventh Modification) is continuing indebtedness of the Borrowers and nothing herein shall be deemed to constitute a payment, settlement or novation of the Revolving Note or Term Note, or to release or otherwise adversely affect any lien or security interest securing such indebtedness or any rights of the Bank against any party primarily or secondarily liable for such indebtedness.

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(d)The Borrowers covenant and agree to cause the Lien for contributions filed under the Illinois Unemployment Insurance Act as Document 0632007237 to be released by filing a release with the Cook County, Illinois, Recorder of Deeds and the unpaid amounts which gave rise to such Lien to be paid, in each case on or before June 12, 2013. The failure to comply with this Section 2(d) shall constitute an Event of Default. Without limiting the generality of the foregoing, if such Lien is not released and amount paid by such date, the Bank shall have the right, but not the obligation, to pay such amounts on behalf of Borrowers and the amounts so paid by the Bank will be deemed a Revolving Loan (initially advanced as a Prime Loan) secured by the Collateral and otherwise subject to the terms of the Loan Agreement and other Loan Documents.

3.Representations and Warranties of Borrowers.

(a)The Recitals in this Amendment are true and correct in all respects.

(b)All representations and warranties of each Borrower in the Loan Agreement and in the other Loan Documents to which each Borrower is a party are incorporated herein in full by this reference and are true and correct in all material respects as of the date hereof, except to the extent that any such representation or warranty expressly relates to an earlier date.

(c)After giving effect to this Amendment, no Event of Default or Unmatured Event of Default has occurred and is continuing.

(d)Each Borrower has the power, and has been duly authorized by all requisite action, to execute and deliver this Amendment. This Amendment has been duly executed by each Borrower.

(e)This Amendment is the legal, valid and binding obligation of each Borrower, enforceable against each Borrower and each of the other Borrowers in accordance with their respective terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or similar law affecting creditors’ rights generally.

(f)The execution, delivery and performance of this Amendment do not and will not (i) violate any law, rule, regulation or court order to which any of the Borrowers is subject; (ii) conflict with or result in a breach of the certificate of formation or incorporation, bylaws, limited liability company agreement or other organizational documents of any of the Borrowers or any other agreement or instrument to which it is party or by which the properties of any of the Borrowers is bound; or (iii) result in the creation or imposition of any Lien on any property of any of the Borrowers, whether now owned or hereafter acquired, other than Liens in favor of the Bank.

(g)No consent or authorization of, filing with or other act by or in respect of any Person is required in connection with the execution, delivery or performance by each of the Borrowers, or the validity or enforceability, of this Amendment, or the consummation of the transactions contemplated hereby.

3

4.Conditions Precedent to Effectiveness. This Amendment shall be effective on the date when each of the following conditions shall have been satisfied in the sole discretion of the Bank:

(a)Amendment. Each of the Borrowers and the Bank shall have delivered to the Bank executed counterparts of this Amendment;

(b)Mortgage Amendment. Lifeway shall have executed an Amendment to the Mortgage in form and substance acceptable to the Bank.

(c)Secretary and Manager Certificates. With respect to each Borrower (i) good standing certificates in its state of incorporation (or formation) and in each other state requested by the Bank; and (ii) certification that the certificates delivered by such Borrower on or about April 20, 2011, remain in full force and effect (it being understood that the Bank may conclusively rely on each such certificate until formally advised by a like certificate of any changes therein), all certified by its secretary or an assistant secretary or manager (or similar officer) as being in full force and effect without modification; and

(d)Other Documents. The Borrowers shall have delivered to the Bank such other agreements, certificates, instruments and other documents as the Bank may reasonably request to accomplish the purposes of this Amendment.

5.Consent to GGD Acquisition.

(a)Notwithstanding anything to the contrary in Sections 9.3, 9.4, 9.5 and 9.13 of the Loan Agreement, in the event that any Borrower desires to enter into the GGD Purchase Agreement and consummate the transactions contemplated thereby, the Bank hereby consents to the consummation of the GGD Acquisition pursuant to and in accordance with the GGD Purchase Agreement; provided, however, that (a) the terms of the GGD Purchase Agreement and any documents to be executed in connection therewith are provided to the Bank prior to the consummation of the GGD Acquisition and are acceptable in form and substance to the Bank, in its reasonable discretion, (b) the Borrowers shall execute and deliver to the Bank such further documents as the Bank shall reasonably require in connection with the GGD Acquisition including, without limitation, a collateral assignment to the Bank of the Borrowers’ indemnification rights under the GGD Purchase Agreement, and (c) in the event the Borrowers elect to acquire the assets of GGD through a Wholly-Owned Subsidiary of the Borrower, then such Wholly-Owned Subsidiary will execute a joinder to the Loan Agreement and other Loan Documents pursuant to which such Wholly-Owned Subsidiary will become a “Borrower” (and the assets so acquired, together with all other assets of such Wholly-Owned Subsidiary, will become part of the Collateral) thereunder on such terms and conditions as are acceptable to the Bank in its reasonable discretion.

(b)Limitations on Bank Consents. The consents made by the Bank pursuant to this Section 5 shall not constitute a consent to any other inaction or action by the Borrowers, nor shall it operate as a waiver of any other right, power, or remedy of the Bank under, or of any provision  contained in, the Loan Agreement or any other Loan Document or under applicable law (all of which rights and remedies are hereby expressly reserved by the Bank), except as specifically provided herein.

4

6.Reference to and Effect on Loan Documents.

(a)Ratification. Except as specifically provided in this Amendment, the Loan Agreement and the other Loan Documents shall remain in full force and effect and each Borrower hereby ratifies and confirms each such Loan Document.

(b)No Waiver. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver or forbearance of any right, power or remedy of the Bank under the Loan Agreement or any of the other Loan Documents, or, except as expressly provided in herein, constitute a consent, waiver or modification with respect to any provision of the Loan Agreement or any of the other Loan Documents. Upon the effectiveness of this Amendment each reference in (a) the Loan Agreement to “this Agreement,” “hereunder,” “hereof,” or words of similar import and (b) any other Loan Document to “the Agreement” shall, in each case and except as otherwise specifically stated therein, mean and be a reference to the Loan Agreement as amended and modified hereby.

7.Entire Agreement. This Amendment, including all annexes, exhibits, schedules and other documents incorporated by reference herein or delivered in connection herewith, constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all other understandings, oral or written, with respect to the subject matter hereof.

8.Fees and Expenses. As provided in the Loan Agreement, the Borrowers agree to pay on demand all fees, costs and expenses incurred by the Bank in connection with the preparation, execution and delivery of this Amendment.

9.Severability. Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.

10.Conflict of Terms. Except as otherwise provided in this Amendment, if any provision contained in this Amendment is in conflict with, or inconsistent with, any provision in any of the other Loan Documents, the provision contained in this Amendment shall govern and control.

11.Successors and Assigns. This Amendment shall inure to the benefit of and be binding upon the successors and permitted assigns of the Bank and shall be binding upon the successors and assigns of each Borrower.

12.Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which taken together shall be one and the same instrument. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart. Delivery of an executed signature page of this Amendment by facsimile transmission or electronic transmission (such as fax or e-mail) shall be as effective as delivery of a manually executed counterpart thereof.

5

13.Headings. The paragraph headings used in this Amendment are for convenience only and shall not affect the interpretation of any of the provisions hereof.

14.Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS SET FORTH IN THE CREDIT AGREEMENT, OR, IF NO JURISDICTION IS SET FORTH THEREIN, BY THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS.

15.Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE. OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS AMENDMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION. EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OF THE BORROWERS FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. EACH OF THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

16.Waiver of Jury Trial. THE BANK AND EACH OF THE BORROWERS, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AMENDMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BANK AND ANY OF THE BORROWERS ARE ADVERSE PARTIES, AND EACH AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO THIS AMENDMENT.

6

17.Release of Claims. In consideration of the execution and delivery of this Amendment by the Bank, the sufficiency of which is acknowledged, and excepting only the contractual obligations respecting future performance by the Bank arising under the Loan Agreement and the Loan Documents, each of the Borrowers hereby irrevocably releases and forever discharges the Bank and each of its affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, representatives and attorneys (each, a “Released Person”) of and from all damages, losses, claims, demands, liabilities, obligations, actions and causes of action whatsoever which such Borrowers may now have or claim to have on and as of the date hereof against any Released Person, whether presently known or unknown, liquidated or unliquidated, suspected or unsuspected, contingent or non-contingent, and of every nature and extent whatsoever (collectively, “Claims”). Each Borrower jointly and severally represents and warrants to the Bank that it has not granted or purported to grant to any other Person any interest whatsoever in any Claim, as security or otherwise. The Borrowers shall jointly and severally indemnify, defend and hold harmless each Released Person from and against any and all Claims and any loss, cost, liability, damage or expense (including reasonable attorneys’ fees and expenses) incurred by any Released Person in investigating, preparing for, defending against, providing evidence or producing documents in connection with or taking other action in respect of any commenced or threatened Claim.

EACH BORROWER AGREES TO ASSUME THE RISK OF ANY AND ALL UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS, CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS WHICH ARE RELEASED, WAIVED AND DISCHARGED BY THIS AMENDMENT. EACH BORROWER HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS WHICH IT MIGHT OTHERWISE HAVE UNDER ANY CIVIL CODE OR ANY SIMILAR LAW, TO THE EXTENT SUCH LAW MAY BE APPLICABLE, WITH REGARD TO THE RELEASE OF SUCH UNKNOWN, UNANTICIPATED OR MISUNDERSTOOD DEFENSES, CLAIMS, CONTRACTS, LIABILITIES, INDEBTEDNESS AND OBLIGATIONS. TO THE EXTENT THAT SUCH LAWS MAY BE APPLICABLE, EACH BORROWER WAIVES AND RELEASES ANY RIGHT OR DEFENSE WHICH IT MIGHT OTHERWISE HAVE UNDER ANY OTHER LAW OR ANY APPLICABLE JURISDICTION WHICH MIGHT LIMIT OR RESTRICT THE EFFECTIVENESS OR SCOPE OF ANY OF THEIR WAIVERS OR RELEASES HEREUNDER.

[Signature page follows]

7

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first written above.

THE BANK:

THE PRIVATEBANK AND TRUST COMPANY

By:       /s/ Douglas W. Beuhl                                     

             Douglas W. Beuhl, Authorized Officer

THE BORROWERS:

LIFEWAY FOODS, INC.

By:        /s/ Edward Smolyansky                                                                   

Title:     CFO                                                                                       

FRESH MADE, INC.

By:        /s/ Edward Smolyansky                                                                   

Title:     CFO                                                                                       

HELIOS NUTRITION LIMITED

By:        /s/ Edward Smolyansky                                                                   

Title:     CFO                                                                                       

PRIDE OF MAIN STREET DAIRY, LLC

By:        /s/ Edward Smolyansky                                                                   

Title:     CFO                                                                                       

STARFRUIT, LLC

By:        /s/ Edward Smolyansky                                                                   

Title:     CFO                                                                                       

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION OF C.E.O.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 I, Julie Smolyansky, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lifeway Foods, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:   May 15, 2013                                                  By:  /s/ Julie Smolyansky                          

Julie Smolyansky

Chief Executive Officer, President and Director

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION OF C.F.O.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward P. Smolyansky, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Lifeway Foods, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2013                                                    By:  /s/ Edward P. Smolyansky                                       

Edward P. Smolyansky

Chief Financial and Accounting  Officer,

Treasurer, Chief Operating Officer and Secretary

EX-32.1

EXHIBIT 32.1

SECTION 906 CERTIFICATION OF C.E.O.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Lifeway Foods, Inc. (the “Company”) for the period ended March 31, 2013 as filed with the SEC (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:

1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:   May 15, 2013                                                  By:     /s/ Julie Smolyansky                                        

Julie Smolyansky

Chief Executive Officer, President and Director

EX-32.2

EXHIBIT 32.2

SECTION 906 CERTIFICATION OF C.F.O.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Lifeway Foods, Inc. (the “Company”) for the period ended March 31, 2013 as filed with the SEC (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:   May 15, 2013                                                  By:     /s/ Edward P. Smolyansky                     

Edward P. Smolyansky

Chief Financial and Accounting Officer,

Treasurer, Chief Operating Officer and Secretary

EX-99.1

EXHIBIT 99.1

Lifeway Foods Announces Record First Quarter 2013 Financial Results

Morton Grove, IL — May 15, 2013 — Lifeway Foods, Inc., (Nasdaq: LWAY), a leading supplier of cultured dairy products known as kefir and organic kefir, today announced results for the first quarter ended March 31, 2013.

First Quarter 2013 Highlights

●   Net sales increased approximately 26% to $24.4 million for the quarter

●   Gross profit increased approximately 41% and gross profit margin increased to 35% for the quarter

●   Record earnings per diluted share of $0.14 for the quarter

●   Cash and cash equivalents increased $1.6 million to $2.7 million for the quarter

“We started the year off strong as our record sales increase, combined with a lower cost of milk and management of our expenses enabled us to see a 100% increase in earnings the first quarter of 2013,” said Julie Smolyansky, CEO of Lifeway Foods, Inc. “We continue to add new distribution in the US and to expand Lifeway’s kefir probiotic reach beyond dairy aisles into other areas of the store. We continue to focus on expanding our complementary product portfolio to appeal to the increasingly health conscious consumer. Looking ahead, we are prudently targeting new markets like the UK and remain optimistic about our future growth long-term both domestically and internationally.”

First Quarter Results

First quarter of 2013 gross sales increased approximately 28% to $27.6 million compared to $21.6 million for the first quarter of 2012.  This increase is primarily attributable to increased sales and awareness of the Company’s flagship line, Kefir, as well as ProBugs® Organic Kefir for kids and BioKefir™.

First quarter total consolidated net sales increased approximately 26% to $24.4 million from $19.4 million in the first quarter of 2012.  Net sales are recorded as gross sales less promotional activities such as slotting fees paid, couponing, spoilage and promotional allowances as well as early payment terms given to customers.  The total allowance for promotions and discounts in the first quarter of 2013 was approximately $3.2 million or 12% of gross sales, compared to $2.2 million or approximately 10% of gross sales in the same period last year.

Cost of goods sold as a percentage of net sales, excluding depreciation expense, were approximately 63% during the first quarter of 2013, compared to approximately 67% during the same period in 2012. Gross profit for the first quarter of 2012 increased 41% to approximately $8.6 million, compared to approximately $6.1 million in the first quarter of the prior year. The gross profit margin increased to 35% in the first quarter 2013 versus 31% in the first quarter of 2012. The increase was primarily attributable to the decreased cost of conventional milk, the Company’s largest raw material.  The total cost of milk was approximately 5% lower during the first quarter 2013 when compared to the same period in 2012.

Operating expenses as a percentage of net sales were approximately 20% during the first quarter of 2013, compared to approximately 22% during the same period in 2012.  This was primarily attributable to an increase in selling related expenses, which increased approximately 3% to $2.8 million during the first quarter of 2013, from $2.7 million during the same period in 2012.

The Company reported income from operations of $3.7 million during the first quarter of 2013, an improvement of $1.9 million from $1.9 million during the same period in 2012.

Provision for income tax was $1.4 million or a 37% effective tax rate for the first quarter compared to a provision for income tax of $0.8 million or a 41% effective tax rate during the same period in 2012.

Total net income was $2.4 million, or $0.14 per diluted share, for the three-month period ended March 31, 2013 compared to $1.1 million, or $0.07 per diluted share, in the same period in 2012.

Balance Sheet/Cash Flow Highlights

The Company had a net increase of cash and cash equivalents of $1.6 million during the three-month period ended March 31, 2013 compared to the same period in 2012 and an increase of $0.5 million as compared to the December 31, 2012 cash and equivalent balance. The Company had cash and cash equivalents of $2.7 million as of March 31, 2013 compared to cash and cash equivalents of $1.2 million as of March 31, 2012.

Total stockholder’s equity was $41.7 million as of March 31, 2013, which is an increase of $5.4 million when compared to March 31, 2012.  This is primarily due the increase in retained earnings of $5.7 million when compared to March 31, 2012.

Conference Call

The Company will host a conference call to discuss these results with additional comments and details today, Wednesday, May 15, 2013 at 4:30 p.m. ET. The call will be broadcast live over the Internet hosted at the Investor Relations section of Lifeway Foods’ website at www.lifeway.net, and will be archived online through May 29, 2013. In addition, listeners may dial 877-407-3982 in North America, and international listeners may dial 201-493-6780. Participants from the Company will be Julie Smolyansky, President and Chief Executive Officer, and Edward Smolyansky, Chief Financial Officer and Chief Operating Officer.

About Lifeway Foods

Lifeway Foods, Inc. (Nasdaq: LWAY), recently named one of Fortune Small Business' Fastest Growing Companies for the fifth consecutive year, is America's leading supplier of the cultured dairy products known as kefir and organic kefir. Lifeway Kefir is a dairy beverage that contains 10 exclusive live and active probiotic cultures plus ProBoost™. In addition to its line of Kefir products, the company produces a variety of Frozen Kefir and probiotic cheese products. Lifeway also sells frozen kefir, kefir smoothies and kefir parfaits through its Starfruit™ retail stores.

Find Lifeway Foods, Inc. on Facebook: www.facebook.com/lifewaykefir

Follow Lifeway Foods on Twitter: http://twitter.com/lifeway_kefir

YouTube: http://www.youtube.com/user/lifewaykefir

Forward Looking Statements

This news release contains forward-looking statements. Investors are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, competitive pressures and other important factors detailed in the Company's reports filed with the Securities and Exchange Commission.

Contact:

Lifeway Foods, Inc.

Phone: 877.281.3874

Email: info@Lifeway.net

Investor Relations:

ICR

Katie Turner

John Mills

646.277.1228

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition

March 31, 2013 and 2012 (Unaudited) and December 31, 2012

	(Unaudited) March 31,						December 31,
	2013			2012			2012
ASSETS
Current assets
Cash and cash equivalents	$	2,739,957		$	1,156,539		$	2,286,226
Investments		2,062,343			1,723,836			1,869,888
Certificates of deposits in financial institutions		250,000			300,000			450,000
Inventories		7,080,899			5,205,457			5,939,186
Accounts receivable, net of allowance for doubtful
accounts and discounts		11,915,981			8,484,371			8,723,737
Prepaid expenses and other current assets		92,827			39,880			97,138
Other receivables		5,165			155,937			8,825
Deferred income taxes		295,701			357,963			234,687
Refundable income taxes		84,828			—			84,828
Total current assets	$	24,527,701		$	17,423,983		$	19,694,515
Property and equipment, net		14,917,260			15,031,364			14,986,776
Intangible assets
Goodwill and other non-amortizable brand assets		14,068,091			14,068,091			14,068,091
Other intangible assets, net of accumulated amortization of
$4,020,598 and $3,276,645 at March 31, 2013 and 2012 and $3,842,756
At December 31, 2012, respectively		4,285,403			5,029,355			4,463,242
Total intangible assets		18,353,494			19,097,446			18,531,333
Other Assets
Long-term accounts receivable net of current portion		294,000			276,050			294,000
Total assets	$	58,092,455		$	51,828,843		$	53,506,624
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Checks written in excess of bank balances	$	0		$	333,446		$	0
Current maturities of notes payable		543,591			789,933			542,981
Accounts payable		6,465,801			4,597,466			4,256,725
Accrued expenses		1,197,883			755,187			1,155,677
Accrued income taxes		462,593			279,402			254,311
Total current liabilities		8,669,868			6,755,434			6,209,694
Notes payable		4,820,160			5,363,750			4,955,945
Deferred income taxes		2,909,134			3,394,957			3,028,518
Total liabilities		16,399,162			15,514,141			14,194,157
Stockholders' equity
Common stock, no par value; 20,000,000 shares authorized;
17,273,776 shares issued; 16,346,017 shares outstanding at
March 31, 2013; 17,273,776 shares issued; 16,390,417 shares
outstanding at March 31, 2012; 17,273,776 shares issued; 16,346,017 shares
outstanding at December 31, 2012		6,509,267			6,509,267			6,509,267
Paid-in-capital		2,032,516			2,032,516			2,032,516
Treasury stock, at cost		(8,187,682	)		(7,783,580	)		(8,187,682	)
Retained earnings		41,270,416			35,526,285			38,904,777
Accumulated other comprehensive income (loss), net of taxes		68,776			30,214			53,591
Total stockholders' equity		41,693,293			36,314,702			39,312,469
Total liabilities and stockholders' equity	$	58,092,455		$	51,828,843		$	53,506,626

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

March 31, 2013 and 2012 (Unaudited) and December 31, 2012

	(Unaudited)
	Three Months Ended
	March 31,
	2013						2012
							(as restated)
Sales	$	27,590,622		$			$	21,545,896		$
Less: discounts and allowances		(3,203,591	)					(2,148,699	)
Net sales		24,387,031			24,387,031			19,397,197			19,397,197
Cost of goods sold					15,402,875						12,906,722
Depreciation expense					394,125						399,045
Total cost of goods sold					15,797,000						13,305,767
Gross profit					8,590,030						6,091,430
Selling expenses					2,813,572						2,721,973
General and administrative					1,868,100						1,308,222
Amortization expense					177,842						188,705
Total operating expenses					4,859,514						4,218,900
Income from operations					3,730,517						1,872,530
Other income (expense):
Interest and dividend income					15,009						11,573
Rental income					3,269						3,000
Interest expense					(36,299)						(50,186)
Gain (loss) on sale of investments, net					64,335						17,985
Other Expense					0						0
Total other income (expense)					46,314						17,628
Income before provision for
income taxes					3,776,831						1,854,902
Provision for income taxes					1,411,192						759,913
Net income				$	2,365,639					$	1,094,989
Basic and diluted earnings
per common share					.14						.07
Weighted average number of
shares outstanding					16,346,017						16,397,998
COMPREHENSIVE INCOME
Net income				$	2,365,639					$	1,094,989
Other comprehensive income
(loss), net of tax:
Unrealized gains on
investments (net of tax)					51,535						29,000
Less reclassification adjustment for (gains)
losses included in
net income (net of taxes)					(36,349	)					10,162
Comprehensive income				$	2,380,824					$	1,134,151

LIFEWAY FOODS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2013 and 2012 (Unaudited)

	(Unaudited)
	March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	2,365,639		$	1,094,989
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization		571,967			587,750
Loss (gain) on sale of investments, net		(64,335	)		(17,985	)
Deferred income taxes		(192,090)			(185,805)
Bad Debt Expense		51,819			6,384
(Increase) decrease in operating assets:
Accounts receivable		(3,244,063	)		(526,979)
Other receivables		3,660			68,267
Inventories		(1,141,713	)		(250,982)
Refundable income taxes		0			41,316
Prepaid expenses and other current assets		4,311			39,750
Increase (decrease) in operating liabilities:
Accounts payable		2,209,076			211,227
Accrued expenses		42,206			201,462
Income taxes payable		208,282			279,402
Net cash provided by operating activities		814,759			1,548,796
Cash flows from investing activities:
Purchases of investments		(1,271,516	)		(318,123)
Proceeds from sale of investments		1,170,271			404,028
Redemption of certificates of deposits		200,000			0
Purchases of property and equipment		(324,608	)		(231,243)
Net cash used in investing activities		(225,853	)		(145,338)
Cash flows from financing activities:
Checks written in excess of bank balances		0			(258,594)
Purchases of treasury stock		0			(176,606)
Repayment of notes payable		(135,175	)		(926,869)
Net cash used in financing activities		(135,175	)		(1,362,069)
Net (decrease) increase in cash and cash equivalents		453,731			41,389
Cash and cash equivalents at the beginning of the period		2,286,226			1,115,150
Cash and cash equivalents at the end of the period	$	2,739,957		$	1,156,539

XML

Summary Of Significant Accounting Policies (Schedule Of Property And Equipment, Estimated Useful Lives) (Details)	3 Months Ended
	Mar. 31, 2013
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Maximum [Member] | Building And Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	39 years
Maximum [Member] | Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	12 years
Maximum [Member] | Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	7 years
Minimum [Member] | Building And Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	31 years
Minimum [Member] | Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years
Minimum [Member] | Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, useful life	5 years

XML

Provision For Income Taxes (Reconciliation Of The Provision For Income Taxes At Statutory Rate) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Provision For Income Taxes [Abstract]
Federal income tax expense computed at the statutory rate	$ 1,284,123	$ 630,667
Federal income tax expense computed at the statutory rate, percentage	34.00%	34.00%
State and local tax expense, net	281,160	215,169
State and local tax expense, percentage	7.40%	11.60%
U.S. domestic manufacturers' deduction & other permanent differences	(154,091)	(52,493)
U.S. domestic manufacturers' deduction & other permanent differences, percentage	(4.00%)	(2.80%)
Change in tax estimate	0	(33,430)
Change in tax estimate, percentage	0.00%	(1.80%)
Provision for income taxes, percentage	37.40%	41.00%
Provision for income taxes	$ 1,411,192	$ 759,913

XML

Accrued Expenses (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Accrued Expenses [Abstract]
Accrued payroll and payroll taxes	$ 477,559	$ 356,280	$ 490,137
Accrued property tax	225,308	302,573	250,342
Other	495,016	496,824	14,708
Total accrued expenses	$ 1,197,883	$ 1,155,677	$ 755,187

XML

Provision For Income Taxes (Schedule Of Deferred Tax Assets And Liabilities) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Provision For Income Taxes [Abstract]
Accumulated depreciation and amortization from purchase accounting adjustments	$ (3,017,346)	$ (3,164,716)	$ (3,562,647)
Capital loss carry-forwards	108,212	136,198	167,690
Total non-current net deferred tax liabilities	(2,909,134)	(3,028,518)	(3,394,957)
Unrealized losses (gains) on investments	(52,952)	(41,260)	(35,329)
Inventory	316,028	265,072	232,324
Allowance for doubtful accounts and discounts	32,625	10,875	4,350
Allowance for promotions	0	0	65,249
Capital loss carry-back	0	0	91,369
Total current deferred tax assets	295,701	234,687	357,963
Net deferred tax liability	$ (2,613,433)	$ (2,793,831)	$ (3,036,994)

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Inventories (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Inventories [Abstract]
Finished goods	$ 2,785,838	$ 2,462,548	$ 2,091,004
Production supplies	3,025,400	2,599,668	2,082,194
Raw materials	1,269,661	876,970	1,032,259
Total inventories	$ 7,080,899	$ 5,939,186	$ 5,205,457

XML

Commitments And Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Commitments And Contingencies [Abstract]

Schedule Of Annual Minimum Base Rental Payments

2014	$	100,969
2015		44,469
2016		45,802
2017		47,176
2018		48,591
Thereafter		37,257
Total	$	324,264

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Stock Award And Stock Option Plans (Narrative) (Details)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Stock Award And Stock Option Plans [Abstract]
Common stock shares under the Consulting Service Compensation Plan	1,200,000
Number of shares available for issuance	940,000
Stock options outstanding	0	0	0
Stock options exercisable	0	0	0

XML

Summary Of Significant Accounting Policies (Policy)

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies [Abstract]

Basis Of Presentation

Basis of presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by general accepted accounting principles for complete financial statements.  However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

Principles Of Consolidation

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Helios Nutrition, Ltd., Pride of Main Street, L.L.C., Starfruit, L.L.C., Fresh Made, Inc. and Starfruit Franchisor, L.L.C. All significant intercompany accounts and transactions have been eliminated.

Use Of Estimates

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the allowance for doubtful accounts, the valuation of investment securities, the valuation of goodwill, intangible assets, and deferred taxes.

Revenue Recognition

Revenue Recognition

Sales of Company produced dairy products are recorded at the time of shipment and the following four criteria have been met: (i) The product has been shipped and the Company has no significant remaining obligations; (ii) Persuasive evidence of an agreement exists; (iii) The price to the buyer is fixed or determinable and (iv) Collection is probable. In addition, shipping costs invoiced to the customers are included in net sales and the related cost in cost of sales. Discounts and allowances are reported as a reduction of gross sales unless the allowance is attributable to an identifiable benefit separable from the purchase of the product, the value of which can be reasonably estimated, which would be charged to the appropriate expense account.

Customer Concentration

Customer Concentration

Sales are predominately to companies in the retail food industry, located within the United States of America. Two major customers accounted for approximately 31 percent and 29 percent of gross sales for the three months ended March 31, 2013 and 2012, respectively. These customers accounted for approximately 36 percent, 30 percent, and 30 percent of accounts receivable as of March 31, 2013, March 31, 2012, and December 31, 2012, respectively.

Cash And Cash Equivalents

Cash and cash equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.

The Company maintains cash deposits at several institutions located in the greater Chicago, Illinois and Philadelphia, Pennsylvania metropolitan areas.

Investments

Investments

All investment securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses on available-for-sale securities are reported as a separate component of stockholders' equity. Amortization, accretion, interest and dividends, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are recorded in other income. All of the Company's securities are subject to a periodic impairment evaluation. This evaluation depends on the specific facts and circumstances. Factors that we consider in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for possible recovery in the market value of the investment.

Accounts Receivable

Accounts receivable

Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral. Balances expected to be paid beyond one year are classified as long-term.

Accounts receivable are recorded at invoice amounts, and reduced to their estimated net realizable value by recognition of an allowance for doubtful accounts and anticipated discounts. The Company's estimate of the allowances for doubtful accounts and anticipated discounts are based upon historical experience, its evaluation of the current status and contract terms of specific receivables, and unusual circumstances, if any. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company's credit terms. Accounts considered uncollectible are charged against the allowance.

Inventories

Inventories

Inventories are stated at the lower of cost or market, cost being determined by the first-in, first-out method.

Property And Equipment

Property and equipment

Property and equipment is stated at depreciated cost or fair value where depreciated cost is not recoverable. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized.

Property and equipment is being depreciated over the following useful lives:

Category	Years
Buildings and improvements	31 and 39
Machinery and equipment	5 – 12
Office equipment	5 – 7
Vehicles	5

Intangible Assets Acquired In Business Combinations

Intangible assets acquired in business combinations

The Company accounts for intangible assets at historical cost. Intangible assets acquired in a business combination are recorded under the purchase method of accounting at their estimated fair values at the date of acquisition. 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 is reviewed for impairment at least annually. Brand assets represent the fair value of brands acquired. Brand assets have an indefinite life and therefore are not amortized, rather are reviewed periodically for impairment. The Company amortizes other intangible assets over their estimated useful lives, as disclosed in the table below.

The Company reviews intangible assets and their related useful lives at least once per year to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. The Company conducts more frequent impairment assessments if certain conditions exist, including: a change in the competitive landscape, any internal decisions to pursue new or different strategies, a loss of a significant customer, or a significant change in the market place including changes in the prices paid for the Company's products or changes in the size of the market for the Company's products.

If the estimate of an intangible asset's remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life.

Intangible assets are being amortized over the following useful lives:

Category	Years
Recipes	4
Customer lists and other customer related intangibles	7-10
Lease agreement	7
Trade names	15
Formula	10
Customer relationships	12

Income Taxes

Income taxes

Deferred income taxes are the result of temporary differences that arise from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

The principal sources of temporary differences are different depreciation and amortization methods for financial statement and tax purposes, unrealized gains or losses related to investments, capitalization of indirect costs for tax purposes, purchase price adjustments, and the recognition of an allowance for doubtful accounts for financial statement purposes.

The Company has analyzed filing positions in all of 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 only periods subject to examination for the Company's federal returns are the 2010 and 2011 tax years. The Company believes that its income tax filing positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.

Treasury Stock

Treasury stock

Treasury stock is recorded using the cost method.

Advertising And Promotional Costs

Advertising and promotional costs

The Company expenses advertising costs as incurred. For the three months ended March 31, 2013 and 2012 total advertising expenses were $606,398 and $755,666, respectively.

Earnings Per Common Share

Earnings per common share

Earnings per common share were computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. For the three months ended March 31, 2013 and 2012, diluted and basic earnings per share were the same, as the effect of dilutive securities options outstanding was not significant.

Correction of Prior Year Amounts

Correction of Prior Year Amounts

Management has restated the unaudited statements of income and comprehensive income for interim period ending March 31, 2012. During the period ending March 31, 2012, amounts related to cost of production of inventory were not presented as part of cost of goods sold and were erroneously included as general and administrative operation expenses in our previously issued financial statements (see Note 14).

There was no impact on previously reported income, consolidated balance sheets or consolidated statement of cash flows.

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Notes Payable (Maturities Of Notes Payable) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Notes Payable [Abstract]
2014	$ 543,591
2015	544,573
2016	532,585
2017	526,879
2018	510,569
Thereafter	2,705,554
Total	$ 5,363,751	$ 5,498,926	$ 6,153,683

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Intangible Assets (Amortization Expense On Future Intangible Assets) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Intangible Assets [Abstract]
2014	$ 711,367
2015	711,367
2016	711,367
2017	682,166
2018	667,567
Thereafter	801,568
Intangible Assets	4,285,402
Amortization expense	$ 177,842	$ 188,705

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Restatement Of 2012 Quarterly Consolidated Financial Statement (Tables)

3 Months Ended

Mar. 31, 2013

Restatement Of 2012 Quarterly Consolidated Financial Statement [Abstract]

Schedule of Revisions To Previously Filed Statements

	(Unaudited) Three Months Ended March 31, 2012
	As Previously Reported		Adjustment			As Restated
Income Statement
Net Sales	$	19,397,197	$	—		$	19,397,197
COGS	$	12,637,386	$	668,381		$	13,305,767
Gross Profit	$	6,759,811	$	(668,381	)	$	6,091,430
Operating Expenses	$	4,887,281	$	(668,381	)	$	4,218,900
Income from Operations	$	1,872,530	$	—		$	1,872,530

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Commitments And Contingencies (Schedule Of Annual Minimum Base Rental Payments)(Details) (USD $)	Mar. 31, 2013
Commitments And Contingencies [Abstract]
2014	$ 100,969
2015	44,469
2016	45,802
2017	47,176
2018	48,591
Thereafter	37,257
Total	$ 324,264

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Property And Equipment (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 30,963,211	$ 29,474,985	$ 30,638,602
Less accumulated depreciation	16,045,951	14,443,621	15,651,826
Total property and equipment	14,917,260	15,031,364	14,986,776
Depreciation expense	394,125	399,045
Land [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,178,160	1,178,160	1,178,160
Building And Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	11,972,226	11,656,233	11,904,919
Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	15,865,429	14,777,420	15,185,204
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	429,013	404,905	411,773
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,350,608	1,347,228	1,346,078
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 167,775	$ 111,039	$ 612,468

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Summary Of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows:

Basis of presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by general accepted accounting principles for complete financial statements.  However, such information reflects all adjustments (consisting of normal recurring adjustments), which are, in the opinion of Management, necessary for fair statement of results for the interim periods.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Helios Nutrition, Ltd., Pride of Main Street, L.L.C., Starfruit, L.L.C., Fresh Made, Inc. and Starfruit Franchisor, L.L.C. All significant intercompany accounts and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the consolidated financial statements include the allowance for doubtful accounts, the valuation of investment securities, the valuation of goodwill, intangible assets, and deferred taxes.

Revenue Recognition

Sales of Company produced dairy products are recorded at the time of shipment and the following four criteria have been met: (i) The product has been shipped and the Company has no significant remaining obligations; (ii) Persuasive evidence of an agreement exists; (iii) The price to the buyer is fixed or determinable and (iv) Collection is probable. In addition, shipping costs invoiced to the customers are included in net sales and the related cost in cost of sales. Discounts and allowances are reported as a reduction of gross sales unless the allowance is attributable to an identifiable benefit separable from the purchase of the product, the value of which can be reasonably estimated, which would be charged to the appropriate expense account.

Customer Concentration

Sales are predominately to companies in the retail food industry, located within the United States of America. Two major customers accounted for approximately 31 percent and 29 percent of gross sales for the three months ended March 31, 2013 and 2012, respectively. These customers accounted for approximately 36 percent, 30 percent, and 30 percent of accounts receivable as of March 31, 2013, March 31, 2012, and December 31, 2012, respectively.

Cash and cash equivalents

All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents.

The Company maintains cash deposits at several institutions located in the greater Chicago, Illinois and Philadelphia, Pennsylvania metropolitan areas.

Investments

All investment securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses on available-for-sale securities are reported as a separate component of stockholders' equity. Amortization, accretion, interest and dividends, realized gains and losses, and declines in value judged to be other-than-temporary on available-for-sale securities are recorded in other income. All of the Company's securities are subject to a periodic impairment evaluation. This evaluation depends on the specific facts and circumstances. Factors that we consider in determining whether an other-than-temporary decline in value has occurred include: the market value of the security in relation to its cost basis; the financial condition of the investee; and the intent and ability to retain the investment for a sufficient period of time to allow for possible recovery in the market value of the investment.

Accounts receivable

Credit terms are extended to customers in the normal course of business. The Company performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral. Balances expected to be paid beyond one year are classified as long-term.

Accounts receivable are recorded at invoice amounts, and reduced to their estimated net realizable value by recognition of an allowance for doubtful accounts and anticipated discounts. The Company's estimate of the allowances for doubtful accounts and anticipated discounts are based upon historical experience, its evaluation of the current status and contract terms of specific receivables, and unusual circumstances, if any. Accounts are considered past due if payment is not made on a timely basis in accordance with the Company's credit terms. Accounts considered uncollectible are charged against the allowance.

Inventories

Inventories are stated at the lower of cost or market, cost being determined by the first-in, first-out method.

Property and equipment

Property and equipment is stated at depreciated cost or fair value where depreciated cost is not recoverable. Depreciation is computed using the straight-line method. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in income for the period. The cost of maintenance and repairs is charged to income as incurred; significant renewals and betterments are capitalized.

Property and equipment is being depreciated over the following useful lives:

Category	Years
Buildings and improvements	31 and 39
Machinery and equipment	5 – 12
Office equipment	5 – 7
Vehicles	5

Intangible assets acquired in business combinations

The Company accounts for intangible assets at historical cost. Intangible assets acquired in a business combination are recorded under the purchase method of accounting at their estimated fair values at the date of acquisition. 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 is reviewed for impairment at least annually. Brand assets represent the fair value of brands acquired. Brand assets have an indefinite life and therefore are not amortized, rather are reviewed periodically for impairment. The Company amortizes other intangible assets over their estimated useful lives, as disclosed in the table below.

The Company reviews intangible assets and their related useful lives at least once per year to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. The Company conducts more frequent impairment assessments if certain conditions exist, including: a change in the competitive landscape, any internal decisions to pursue new or different strategies, a loss of a significant customer, or a significant change in the market place including changes in the prices paid for the Company's products or changes in the size of the market for the Company's products.

If the estimate of an intangible asset's remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life.

Intangible assets are being amortized over the following useful lives:

Category	Years
Recipes	4
Customer lists and other customer related intangibles	7-10
Lease agreement	7
Trade names	15
Formula	10
Customer relationships	12

Income taxes

Deferred income taxes are the result of temporary differences that arise from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

The principal sources of temporary differences are different depreciation and amortization methods for financial statement and tax purposes, unrealized gains or losses related to investments, capitalization of indirect costs for tax purposes, purchase price adjustments, and the recognition of an allowance for doubtful accounts for financial statement purposes.

The Company has analyzed filing positions in all of 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 only periods subject to examination for the Company's federal returns are the 2010 and 2011 tax years. The Company believes that its income tax filing positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded.

Treasury stock

Treasury stock is recorded using the cost method.

Advertising and promotional costs

The Company expenses advertising costs as incurred. For the three months ended March 31, 2013 and 2012 total advertising expenses were $606,398 and $755,666, respectively.

Earnings per common share

Earnings per common share were computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. For the three months ended March 31, 2013 and 2012, diluted and basic earnings per share were the same, as the effect of dilutive securities options outstanding was not significant.

Correction of Prior Year Amounts

Management has restated the unaudited statements of income and comprehensive income for interim period ending March 31, 2012. During the period ending March 31, 2012, amounts related to cost of production of inventory were not presented as part of cost of goods sold and were erroneously included as general and administrative operation expenses in our previously issued financial statements (see Note 14).

There was no impact on previously reported income, consolidated balance sheets or consolidated statement of cash flows.

XML

Investments (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Proceeds from sale of investments	$ 1,170,271	$ 404,028
Gross realized gains	66,218	22,349
Gross realized losses	$ 1,882	$ 4,364
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number Of Investment Securities	10
Option on Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number Of Investment Securities	1
Preferred Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Number Of Investment Securities	1
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Number Of Investment Securities	8

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Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Schedule Of Inventories

	March 31,				December 31,
	2013		2012		2012
Finished goods	$	2,785,838	$	2,091,004	$	2,462,548
Production supplies		3,025,400		2,082,194		2,599,668
Raw materials		1,269,661		1,032,259		876,970
Total inventories	$	7,080,899	$	5,205,457	$	5,939,186

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Investments (Tables)

3 Months Ended

Mar. 31, 2013

Investments [Abstract]

Schedule Of Cost And Fair Value Of Available For Sale Investments

March 31, 2013	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	769,743	$	126,498	$	(8,861	)	$	887,380
Preferred Securities		100,005		0		(405	)		99,600
Corporate Bonds		1,070,867		13,355		(8,859	)		1,075,363
Total	$	1,940,615	$	139,853	$	(18,125	)	$	2,062,343

March 31, 2012	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	525,657	$	77,348	$	(3,519)		$	599,486
Mutual Funds		56,840		959		(105)			57,694
Preferred Securities		189,452		10,950		(5,152)			195,250
Corporate Bonds		870,671		11,312		(10,577)			871,406
Total	$	1,642,620	$	100,569	$	(19,353)		$	1,723,836
December 31, 2012	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	639,974	$	90,875	$	(5,190	)	$	725,659
Corporate Bonds		1,135,064		16,212		(7,047	)		1,144,229
Total	$	1,775,038	$	107,087	$	(12,237	)	$	1,869,888

Schedule Of Gross Unrealized Loss On Investments

	Less Than 12 Months					12 Months or Greater					Total
March 31, 2013	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	138,409	$	(6,916	)	$	33,371	$	(1,945	)	$	171,780	$	(8,861	)
Preferred Securities		99,600		(405	)		0		0			99,600		(405	)
Corporate Bonds		519,549	$	(8,075	)		72,715		(784	)		592,264		(8,859	)
	$	757,558	$	(15,396	)	$	106,086	$	(2,729	)	$	863,644	$	(18,125	)

	Less Than 12 Months					12 Months or Greater					Total
March 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	20,346	$	( 1,535	)	$	3,184	$	( 1,984	)	$	23,530	$	( 3,519	)
Mutual Funds		0		0			3,073		( 105	)		3,073		( 105	)
Preferred Securities		0		0			59,300		( 5,152	)		59,300		( 5,152	)
Corporate Bonds		262,923		( 10,577	)		0		0			262,923		( 10,577	)
	$	283,269	$	( 12,112	)	$	65,557	$	( 7,241	)	$	348,826	$	( 19,353	)

	Less Than 12 Months					12 Months or Greater					Total
December 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	63,620	$	( 3,745	)	$	21,910	$	( 1,445	)	$	85,530	$	( 5,190	)
Corporate Bonds		301,229		( 2,721	)		193,930		( 4,326	)		495,159		( 7,047	)
	$	364,849	$	( 6,466	)	$	215,840	$	( 5,771	)	$	580,689	$	( 12,237	)

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Supplemental Cash Flow Information (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Supplemental Cash Flow Information [Abstract]
Interest	$ 36,326	$ 64,172
Income taxes	$ 1,395,093	$ 625,055

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Investments (Schedule Of Cost And Fair Value Of Available For Sale Investments) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Cost	$ 1,940,615	$ 1,775,038	$ 1,642,620
Unrealized Gains	139,853	107,087	100,569
Unrealized Losses	(18,125)	(12,237)	(19,353)
Fair Value	2,062,343	1,869,888	1,723,836
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	769,743	639,974	525,657
Unrealized Gains	126,498	90,875	77,348
Unrealized Losses	(8,861)	(5,190)	(3,519)
Fair Value	887,380	725,659	599,486
Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost			56,840
Unrealized Gains			959
Unrealized Losses			(105)
Fair Value			57,694
Preferred Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	100,005		189,452
Unrealized Gains	0		10,950
Unrealized Losses	(405)		(5,152)
Fair Value	99,600		195,250
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost	1,070,867	1,135,064	870,671
Unrealized Gains	13,355	16,212	11,312
Unrealized Losses	(8,859)	(7,047)	(10,577)
Fair Value	$ 1,075,363	$ 1,144,229	$ 871,406

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Property And Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property And Equipment [Abstract]

Schedule Of Property And Equipment

	March 31,				December 31,
	2013		2012		2012
Land	$	1,178,160	$	1,178,160	$	1,178,160
Buildings and improvements		11,972,226		11,656,233		11,904,919
Machinery and equipment		15,865,429		14,777,420		15,185,204
Vehicles		1,350,608		1,347,228		1,346,078
Office equipment		429,013		404,905		411,773
Construction in process		167,775		111,039		612,468
		30,963,211		29,474,985		30,638,602
Less accumulated depreciation		16,045,951		14,443,621		15,651,826
Total property and equipment	$	14,917,260	$	15,031,364	$	14,986,776

XML

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2013

Accrued Expenses [Abstract]

Schedule Of Accrued Expenses

	March 31,				December 31,
	2013		2012		2012
Accrued payroll and payroll taxes	$	477,559	$	490,137	$	356,280
Accrued property tax		225,308		250,342		302,573
Other		495,016		14,708		496,824
	$	1,197,883	$	755,187	$	1,155,677

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Nature Of Business

3 Months Ended

Mar. 31, 2013

Nature Of Business [Abstract]

Nature Of Business

Note 1 – NATURE OF BUSINESS

Lifeway Foods, Inc. (the "Company" or "Lifeway") commenced operations in February 1986 and incorporated under the laws of the state of Illinois on May 19, 1986. The Company's principal business activity is the production of dairy products. Specifically, the Company produces Kefir, a drinkable product which is similar to but distinct from yogurt, in several flavors sold under the name "Lifeway's Kefir;" a plain farmer's cheese sold under the name "Lifeway's Farmer's Cheese;" a fruit sugar-flavored product similar in consistency to cream cheese sold under the name of "Sweet Kiss;" and a dairy beverage, similar to Kefir, with increased protein and calcium, sold under the name "Basics Plus." The Company also produces a vegetable-based seasoning under the name "Golden Zesta." The Company currently distributes its products throughout the Chicago Metropolitan area and various cities on the East Coast through local food stores. In addition, products are sold throughout the United States and Ontario, Canada by distributors. The Company also distributes some of its products to Eastern Europe.

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Notes Payable (Tables)

3 Months Ended

Mar. 31, 2013

Notes Payable [Abstract]

Schedule Of Notes Payable

	March 31,				December 31
	2013		2012		2012
Note payable to Private Bank in monthly installments of $42,222, plus variable interest rate, currently at 2.709%, with a balloon payment for the remaining balance. Collateralized by substantially all assets of the Company. In May 2013, the Company refinanced this note under similar terms which extended the maturity date to May 31, 2018.	$	5,238,889	$	5,745,556	$	5,365,556
Line of credit with Private Bank at variable interest rate, currently at 3.25%. The agreement has been extended with terms allowing borrowings up to $2.0 million. Collateralized by substantially all assets of the Company. In May 2013, the Company refinanced this Line of Credit. The agreement has been extended with terms allowing borrowings up to $5.0 million and matues on May 31, 2014.		0		250,000		0
Notes payable to Ford Credit Corp. payable in monthly installments of $1,778.23 at 5.99%, due July 2015, secured by transportation equipment.		46,291		64,200		50,871
Note payable to Fletcher Jones of Chicago, Ltd LLC in monthly installments of $1,768.57 at 6.653%, due May 24, 2017, secured by transportation equipment.		78,571		93,927		82,499
Total notes payable		5,363,751		6,153,683		5,498,926
Less current maturities		543,591		789,933		542,981
Total long-term portion	$	4,820,160	$	5,363,750	$	4,955,945

Maturities Of Notes Payable

Twelve Months Ended March 31,
2014	$	543,591
2015		544,573
2016		532,585
2017		526,879
2018		510,569
Thereafter		2,705,554
Total	$	5,363,751

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Summary Of Significant Accounting Policies (Schedule Of Intangible Assets Useful Lives) (Details)	3 Months Ended
	Mar. 31, 2013
Recipes [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	4 years
Lease Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	7 years
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	15 years
Formula [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	10 years
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	12 years
Maximum [Member] | Customer Lists And Other Customer Related Intangibles [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	10 years
Minimum [Member] | Customer Lists And Other Customer Related Intangibles [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, useful lives	7 years

XML

Provision For Income Taxes (Summary Of The Provision For Income Taxes) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Provision For Income Taxes [Abstract]
Federal	$ 1,176,711	$ 633,372
State and local	426,571	312,346
Total current	1,603,282	945,718
Deferred	(192,090)	(185,805)
Provision for income taxes	$ 1,411,192	$ 759,913

XML

Consolidated Statements Of Financial Condition (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Current assets
Cash and cash equivalents	$ 2,739,957	$ 2,286,226	$ 1,156,539
Investments	2,062,343	1,869,888	1,723,836
Certificates of deposits in financial institutions	250,000	450,000	300,000
Inventories	7,080,899	5,939,186	5,205,457
Accounts receivable, net of allowance for doubtful accounts and discounts	11,915,981	8,723,737	8,484,371
Prepaid expenses and other current assets	92,827	97,138	39,880
Other receivables	5,165	8,825	155,937
Deferred income taxes	295,701	234,687	357,963
Refundable income taxes	84,828	84,828
Total current assets	24,527,701	19,694,515	17,423,983
Property and equipment, net	14,917,260	14,986,776	15,031,364
Intangible assets
Goodwill and other non amortizable brand assets	14,068,091	14,068,091	14,068,091
Other intangible assets, net of accumulated amortization of $4,020,598 and $3,276,645 at March 31, 2013 and 2012 and $3,3842,756 At December 31, 2012, respectively	4,285,403	4,463,242	5,029,355
Total intangible assets	18,353,494	18,531,333	19,097,446
Other Assets
Long-term accounts receivable net of current portion	294,000	294,000	276,050
Total assets	58,092,455	53,506,624	51,828,843
Current liabilites
Checks written in excess of bank balances	0	0	333,446
Current maturities of notes payable	543,591	542,981	789,933
Accounts payable	6,465,801	4,256,725	4,597,466
Accrued expenses	1,197,883	1,155,677	755,187
Accrued income taxes	462,593	254,311	279,402
Total current liabilities	8,669,868	6,209,694	6,755,434
Notes payable	4,820,160	4,955,945	5,363,750
Deferred income taxes	2,909,134	3,028,518	3,394,957
Total liabilities	16,399,162	14,194,157	15,514,141
Stockholders' equity
Common stock, no par value; 20,000,000 shares authorized; 17,273,776 shares issued; 16,346,017 shares outstanding at March 31, 2013; 17,273,776 shares issued; 16,390,417 shares outstanding at March 31, 2012; 17,273,776 shares issued; 16,346,017 shares outstanding at December 31, 2012	6,509,267	6,509,267	6,509,267
Paid-in-capital	2,032,516	2,032,516	2,032,516
Treasury stock, at cost	(8,187,682)	(8,187,682)	(7,783,580)
Retained earnings	41,270,416	38,904,777	35,526,285
Accumulated other comprehensive income (loss), net of taxes	68,776	53,591	30,214
Total stockholders' equity	41,693,293	39,312,469	36,314,702
Total liabilities and stockholders' equity	$ 58,092,455	$ 53,506,626	$ 51,828,843

XML

Investments (Schedule Of Gross Unrealized Loss On Investments) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	$ 757,558	$ 364,849	$ 283,269
Less Than 12 Months, Unrealized Losses	(15,396)	(6,466)	(12,112)
12 Months or Greater, Fair Value	106,086	215,840	65,557
12 Months or Greater, Unrealized Losses	(2,729)	(5,771)	(7,241)
Total, Fair Value	863,644	580,689	348,826
Total, Unrealized Losses	(18,125)	(12,237)	(19,353)
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	138,409	63,620	20,346
Less Than 12 Months, Unrealized Losses	(6,916)	(3,745)	(1,535)
12 Months or Greater, Fair Value	33,371	21,910	3,184
12 Months or Greater, Unrealized Losses	(1,945)	(1,445)	(1,984)
Total, Fair Value	171,780	85,530	23,530
Total, Unrealized Losses	(8,861)	(5,190)	(3,519)
Mutual Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value			0
Less Than 12 Months, Unrealized Losses			0
12 Months or Greater, Fair Value			3,073
12 Months or Greater, Unrealized Losses			(105)
Total, Fair Value			3,073
Total, Unrealized Losses			(105)
Preferred Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	99,600		0
Less Than 12 Months, Unrealized Losses	(405)		0
12 Months or Greater, Fair Value	0		59,300
12 Months or Greater, Unrealized Losses	0		(5,152)
Total, Fair Value	99,600		59,300
Total, Unrealized Losses	(405)		(5,152)
Corporate Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	519,549	301,229	262,923
Less Than 12 Months, Unrealized Losses	(8,075)	(2,721)	(10,577)
12 Months or Greater, Fair Value	72,715	193,930	0
12 Months or Greater, Unrealized Losses	(784)	(4,326)	0
Total, Fair Value	592,264	495,159	262,923
Total, Unrealized Losses	$ (8,859)	$ (7,047)	$ (10,577)

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Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Consolidated Statements Of Changes In Stockholders' Equity [Abstract]
Dividends paid per share	$ 0.07	$ 0.07	$ 0.07

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Restatement Of 2012 Quarterly Consolidated Financial Statement (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net Sales	$ 24,387,031	$ 19,397,197
COGS	15,797,000	13,305,767
Gross profit	8,590,030	6,091,430
Operating Expenses	4,859,514	4,218,900
Income from operations	3,730,517	1,872,530
As Previously Reported [Member]
Net Sales		19,397,197
COGS		12,637,386
Gross profit		6,759,811
Operating Expenses		4,887,281
Income from operations		1,872,530
Adjustment [Member]
COGS		668,381
Gross profit		(668,381)
Operating Expenses		$ (668,381)

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Supplemental Cash Flow Information (Tables)

3 Months Ended

Mar. 31, 2013

Supplemental Cash Flow Information [Abstract]

Summary Of Cash Paid For Interest And Income Taxes

	For the Three Months Ended
	March 31,
	2013		2012
Interest	$	36,326	$	64,172
Income taxes	$	1,395,093	$	625,055

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Litigation

3 Months Ended

Mar. 31, 2013

Commitments And Contingencies [Abstract]

Litigation

Note 15 – LITIGATION

The Company is named a party to lawsuits in the normal course of business. In the opinion of management, the resolution of these lawsuits will not have a material adverse effect on the Company's consolidated financial position or results of operations.

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Schedule Of Fair Value Assets And Liabilities As Classified

	Assets and Liabilities at Fair Value as of March 31, 2013
	Level 1		Level 2		Level 3		Total
Cash	$	2,739,957	$	0	$	0	$	2,739,957
Certificate of Deposits		0		237,175		0		237,175
Stocks		887,380		0		0		887,380
Preferred Securities		99,600		0		0		99,600
Corporate Bonds		0		1,075,363		0		1,075,363
Notes Payable		0		5,363,751		0		5,363,751

	Assets and Liabilities at Fair Value as of March 31, 2012
	Level 1		Level 2		Level 3		Total
Cash	$	1,156,540	$	0	$	0	$	823,093
Mutual Funds:		0		0		0		0
Equity Income		57,694		0		0		57,694
Bonds		0		0		0		0
Certificate of Deposits		0		280,482		0		280,482
Stocks		599,486		0		0		599,486
Preferred Stock		195,250		0		0		195,250
Corporate Bonds		0		871,406		0		871,406
Notes Payable		0		6,153,683		0		6,153,683

	Assets and Liabilities as Fair Value as of December 31, 2012
	Level 1		Level 2		Level 3		Total
Cash	$	2,286,226	$	0	$	0	$	2,286,226
Certificate of Deposits		0		439,982		0		439,982
Stocks		725,670		0		0		725,670
Corporate Bonds		0		1,144,229		0		1,144,229
Notes Payable		0		5,498,926		0		5,498,926

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Subsequent Event

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

Subsequent Event

Note 17 – SUBSEQUENT EVENT

On May 15, 2013, the Company entered into an agreement to acquire the Golden Guernsey dairy plant in Waukesha, WI.   The acquisition will increase the production capacity of Lifeway by approximately 170,000 square feet.   The purchase price is approximately $7.4 million and the acquisition is expected to close on June 10, 2013.

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Consolidated Statements Of Cash Flows (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 2,365,639	$ 1,094,989
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	571,967	587,750
Loss (gain) on sale of investments, net	(64,335)	(17,985)
Deferred income taxes	(192,090)	(185,805)
Bad Debt Expense	51,819	6,384
(Increase) decrease in operating assets:
Accounts receivable	(3,244,063)	(526,979)
Other receivables	3,660	68,267
Inventories	(1,141,713)	(250,982)
Refundable income taxes	0	41,316
Prepaid expenses and other current assets	4,311	39,750
Increase (decrease) in operating liabilities:
Accounts payable	2,209,076	211,227
Accrued expenses	42,206	201,462
Income taxes payable	208,282	279,402
Net cash provided by operating activities	814,759	1,548,796
Cash flows from investing activities:
Purchases of investments	(1,271,516)	(318,123)
Proceeds from sale of investments	1,170,271	404,028
Redemption of certificates of deposits	200,000	0
Purchases of property and equipment	(324,608)	(231,243)
Net cash used in investing activities	(225,853)	(145,338)
Cash flows from financing activities:
Checks written in excess of bank balances	0	(258,594)
Purchases of treasury stock	0	(176,606)
Repayment of notes payable	(135,175)	(926,869)
Net cash used in financing activities	(135,175)	(1,362,069)
Net (decrease) increase in cash and cash equivalents	453,731	41,389
Cash and cash equivalents at the beginning of the period	2,286,226	1,115,150
Cash and cash equivalents at the end of the period	$ 2,739,957	$ 1,156,539

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Consolidated Statements Of Financial Condition (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Consolidated Statements Of Financial Condition [Abstract]
Accumulated Amortization	$ 4,020,598	$ 3,842,756	$ 3,276,645
Common stock, no par value
Common stock, shares authorized	20,000,000	20,000,000	20,000,000
Common stock, shares issued	17,273,776	17,273,776	17,273,776
Common stock, shares outstanding	16,346,017	16,346,017	16,390,417

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Provision For Income Taxes

3 Months Ended

Mar. 31, 2013

Provision For Income Taxes [Abstract]

Provision For Income Taxes

Note 10 – PROVISION FOR INCOME TAXES

The provision for income taxes consists of the following:

	For the Three Months Ended
	March 31,
	2013			2012
Current:
Federal	$	1,176,711		$	633,372
State and local		426,571			312,346
Total current		1,603,282			945,718
Deferred		(192,090	)		(185,805	)
Provision for income taxes	$	1,411,192		$	759,913

A reconciliation of the provision for income taxes and the income tax computed at the statutory rate is as follows:

	For the Three Months Ended
	March 31,
	2013						2012
	Amount			Percentage			Amount			Percentage
Federal income tax expense computed at the statutory rate	$	1,284,123			34.0	%	$	630,667			34.0	%
State and local tax expense, net		281,160			7.4	%		215,169			11.6	%
U.S. domestic manufacturers' deduction & other permanent differences		(154,091	)		(4.0	)%		(52,493	)		(2.8	)%
Change in tax estimate		0			0.0	%		(33,430	)		(1.8	)%
Provision for income taxes	$	1,411,192			37.4	%	$	759,913			41.0	%

Amounts for deferred tax assets and liabilities are as follows:

	March 31,						December 31,
	2013			2012			2012
Non-current deferred tax assets (liabilities) arising from: Temporary differences -
Accumulated depreciation and amortization
from purchase accounting adjustments	$	(3,017,346	)	$	( 3,562,647	)	$	( 3,164,716	)
Capital loss carry-forwards		108,212			167,690			136,198
Total non-current net deferred tax liabilities		(2,909,134	)		( 3,394,957	)		( 3,028,518	)
Current deferred tax assets arising from:
Unrealized losses (gain) on investments		(52,952	)		( 35,329	)		( 41,260	)
Inventory		316,028			232,324			265,072
Allowance for doubtful accounts and  discounts		32,625			4,350			10,875
Allowance for promotions		0			65,249			0
Capital loss carry-back		0			91,369			0
Total current deferred tax assets		295,701			357,963			234,687
Net deferred tax liability	$	(2,613,433	)	$	( 3,036,994	)	$	( 2,793,831	)

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Document And Entity Information	3 Months Ended
	Mar. 31, 2013	May 13, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Entity Registrant Name	LIFEWAY FOODS INC
Entity Central Index Key	0000814586
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		16,346,017

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Supplemental Cash Flow Information

3 Months Ended

Mar. 31, 2013

Supplemental Cash Flow Information [Abstract]

Supplemental Cash Flow Information

Note 11 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest and income taxes are as follows:

	For the Three Months Ended
	March 31,
	2013		2012
Interest	$	36,326	$	64,172
Income taxes	$	1,395,093	$	625,055

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Consolidated Statements Of Income And Comprehensive Income (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Statements Of Income And Comprehensive Income [Abstract]
Sales	$ 27,590,622	$ 21,545,896
Less: discounts and allowances	(3,203,591)	(2,148,699)
Net sales	24,387,031	19,397,197
Cost of goods sold	15,402,875	12,906,722
Depreciation expense	394,125	399,045
Total cost of goods sold	15,797,000	13,305,767
Gross profit	8,590,030	6,091,430
Selling expenses	2,813,572	2,721,973
General and administrative	1,868,100	1,308,222
Amortization expense	177,842	188,705
Total operating expenses	4,859,514	4,218,900
Income from operations	3,730,517	1,872,530
Other income (expense):
Interest and dividend income	15,009	11,573
Rental income	3,269	3,000
Interest expense	(36,299)	(50,186)
Gain (loss) on sale of investments, net	64,335	17,985
Other Expense
Total other income (expense)	46,314	17,628
Income before provision for income taxes	3,776,831	1,854,902
Provision for income taxes	1,411,192	759,913
Net income	2,365,639	1,094,989
Basic and diluted earnings per common share	$ 0.14	$ 0.07
Weighted average number of shares outstanding	16,346,017	16,397,998
COMPREHENSIVE INCOME
Net income	2,365,639	1,094,989
Other comprehensive income (loss), net of tax:
Unrealized gains on investments (net of tax)	51,535	29,000
Less reclassification adjustment for (gains) losses included in net income (net of taxes)	(36,349)	10,162
Comprehensive income	$ 2,380,824	$ 1,134,151

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Inventories

3 Months Ended

Mar. 31, 2013

Inventories [Abstract]

Inventories

Note 5 – INVENTORIES

Inventories consist of the following:

	March 31,				December 31,
	2013		2012		2012
Finished goods	$	2,785,838	$	2,091,004	$	2,462,548
Production supplies		3,025,400		2,082,194		2,599,668
Raw materials		1,269,661		1,032,259		876,970
Total inventories	$	7,080,899	$	5,205,457	$	5,939,186

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Investments

3 Months Ended

Mar. 31, 2013

Investments [Abstract]

Investments

Note 4 – INVESTMENTS

The cost and fair value of investments classified as available for sale are as follows:

March 31, 2013	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	769,743	$	126,498	$	(8,861	)	$	887,380
Preferred Securities		100,005		0		(405	)		99,600
Corporate Bonds		1,070,867		13,355		(8,859	)		1,075,363
Total	$	1,940,615	$	139,853	$	(18,125	)	$	2,062,343

March 31, 2012	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	525,657	$	77,348	$	(3,519)		$	599,486
Mutual Funds		56,840		959		(105)			57,694
Preferred Securities		189,452		10,950		(5,152)			195,250
Corporate Bonds		870,671		11,312		(10,577)			871,406
Total	$	1,642,620	$	100,569	$	(19,353)		$	1,723,836
December 31, 2012	Cost		Unrealized Gains		Unrealized Losses			Fair Value
Equities	$	639,974	$	90,875	$	(5,190	)	$	725,659
Corporate Bonds		1,135,064		16,212		(7,047	)		1,144,229
Total	$	1,775,038	$	107,087	$	(12,237	)	$	1,869,888

Proceeds from the sale of investments were $1,170,271 and $404,028 for the three months ended March 31, 2013 and 2012, respectively.

Gross gains of $66,218 and $22,349 and gross losses of $1,882 and $4,364 were realized on these sales during the three months ended March 31, 2013 and 2012, respectively.

The following table shows the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2013 and 2012 and at December 31, 2012:

	Less Than 12 Months					12 Months or Greater					Total
March 31, 2013	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	138,409	$	(6,916	)	$	33,371	$	(1,945	)	$	171,780	$	(8,861	)
Preferred Securities		99,600		(405	)		0		0			99,600		(405	)
Corporate Bonds		519,549	$	(8,075	)		72,715		(784	)		592,264		(8,859	)
	$	757,558	$	(15,396	)	$	106,086	$	(2,729	)	$	863,644	$	(18,125	)

	Less Than 12 Months					12 Months or Greater					Total
March 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	20,346	$	( 1,535	)	$	3,184	$	( 1,984	)	$	23,530	$	( 3,519	)
Mutual Funds		0		0			3,073		( 105	)		3,073		( 105	)
Preferred Securities		0		0			59,300		( 5,152	)		59,300		( 5,152	)
Corporate Bonds		262,923		( 10,577	)		0		0			262,923		( 10,577	)
	$	283,269	$	( 12,112	)	$	65,557	$	( 7,241	)	$	348,826	$	( 19,353	)

	Less Than 12 Months					12 Months or Greater					Total
December 31, 2012	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Equities	$	63,620	$	( 3,745	)	$	21,910	$	( 1,445	)	$	85,530	$	( 5,190	)
Corporate Bonds		301,229		( 2,721	)		193,930		( 4,326	)		495,159		( 7,047	)
	$	364,849	$	( 6,466	)	$	215,840	$	( 5,771	)	$	580,689	$	( 12,237	)

Equities, Mutual Funds, Preferred Securities, and Corporate Bonds -The Company's investments in equity securities, mutual funds, preferred securities, and corporate bonds consist of investments in common stock, preferred stock and debt securities of companies in various industries. As of March 31, 2013, there were ten equity securities, one option on equity securities, one preferred equity security, and eight corporate bond securities that had unrealized losses. The Company evaluated the near-term prospects of the issuer in relation to the severity and duration of the impairment. Based on that evaluation and the Company's ability and intent to hold these investments for a reasonable period of time sufficient for a forecasted recovery of fair value, the Company did not consider any material investments to be other-than-temporarily impaired at March 31, 2013.

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2013

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 16 – RECENT ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS." This pronouncement was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards ("IFRS"). ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. ASU 2011-04 became effective for the Company on January 1, 2012. Management adopted this statement effective January 1, 2012.

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Stock Award And Stock Option Plans

3 Months Ended

Mar. 31, 2013

Stock Award And Stock Option Plans [Abstract]

Stock Award And Stock Option Plans

Note 12 – STOCK AWARD AND STOCK OPTION PLANS

The Company has a registration statement filed with the Securities and Exchange Commission in connection with a Consulting Service Compensation Plan covering up to 1,200,000 of the Company's common stock shares. Pursuant to such Plan, the Company may issue common stock or options to purchase common stock to certain consultants, service providers, and employees of the Company. The option price, number of shares, grant date, and vesting terms are determined at the discretion of the Company's Board of Directors.

As of December 31, 2012 and at March 31, 2013 and 2012, there were no stock options outstanding or exercisable. There were approximately 940,000 shares available for issuance under the Plan at March 31, 2013.

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Notes Payable

3 Months Ended

Mar. 31, 2013

Notes Payable [Abstract]

Notes Payable

Note 8 – NOTES PAYABLE

Notes payable consist of the following:

	March 31,				December 31
	2013		2012		2012
Note payable to Private Bank in monthly installments of $42,222, plus variable interest rate, currently at 2.709%, with a balloon payment for the remaining balance. Collateralized by substantially all assets of the Company. In May 2013, the Company refinanced this note under similar terms which extended the maturity date to May 31, 2018.	$	5,238,889	$	5,745,556	$	5,365,556
Line of credit with Private Bank at variable interest rate, currently at 3.25%. The agreement has been extended with terms allowing borrowings up to $2.0 million. Collateralized by substantially all assets of the Company. In May 2013, the Company refinanced this Line of Credit. The agreement has been extended with terms allowing borrowings up to $5.0 million and matues on May 31, 2014.		0		250,000		0
Notes payable to Ford Credit Corp. payable in monthly installments of $1,778.23 at 5.99%, due July 2015, secured by transportation equipment.		46,291		64,200		50,871
Note payable to Fletcher Jones of Chicago, Ltd LLC in monthly installments of $1,768.57 at 6.653%, due May 24, 2017, secured by transportation equipment.		78,571		93,927		82,499
Total notes payable		5,363,751		6,153,683		5,498,926
Less current maturities		543,591		789,933		542,981
Total long-term portion	$	4,820,160	$	5,363,750	$	4,955,945

In accordance with the Private Bank agreements referenced above, the Company is subject to minimum fixed charged ratio and tangible net worth thresholds.

Maturities of notes payables are as follows:

Twelve Months Ended March 31,
2014	$	543,591
2015		544,573
2016		532,585
2017		526,879
2018		510,569
Thereafter		2,705,554
Total	$	5,363,751

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Subsequent Event (Details) (Golden Guernsey [Member], Subsequent Event [Member], USD $) In Millions, unless otherwise specified	0 Months Ended
	May 15, 2013 sqft
Golden Guernsey [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Acquisition agreement date	May 15, 2013
Production capacity space, increase	170,000
Purchase price	$ 7.4
Acquisition agreement expected close date	Jun. 10, 2013

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Property And Equipment

3 Months Ended

Mar. 31, 2013

Property And Equipment [Abstract]

Property And Equipment

Note 6 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	March 31,				December 31,
	2013		2012		2012
Land	$	1,178,160	$	1,178,160	$	1,178,160
Buildings and improvements		11,972,226		11,656,233		11,904,919
Machinery and equipment		15,865,429		14,777,420		15,185,204
Vehicles		1,350,608		1,347,228		1,346,078
Office equipment		429,013		404,905		411,773
Construction in process		167,775		111,039		612,468
		30,963,211		29,474,985		30,638,602
Less accumulated depreciation		16,045,951		14,443,621		15,651,826
Total property and equipment	$	14,917,260	$	15,031,364	$	14,986,776

Depreciation expense during the three months ended March 31, 2013 and 2012 was $394,125 and $399,045, respectively.

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Accrued Expenses

3 Months Ended

Mar. 31, 2013

Accrued Expenses [Abstract]

Accrued Expenses

Note 7 –ACCRUED EXPENSES

Accrued expenses consist of the following:

	March 31,				December 31,
	2013		2012		2012
Accrued payroll and payroll taxes	$	477,559	$	490,137	$	356,280
Accrued property tax		225,308		250,342		302,573
Other		495,016		14,708		496,824
	$	1,197,883	$	755,187	$	1,155,677

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Commitments And Contingencies

3 Months Ended

Mar. 31, 2013

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Note 9 – COMMITMENTS AND CONTINGENCIES

The Company leases four stores for its Starfruit subsidiary. Total expense for these leases was approximately $59,205, $58,264 and $379,348 for the three months ended March 31, 2013 and 2012 and for the year ended December 31, 2012, respectively. The Company is also responsible for additional rent equal to real estate taxes and other operating expenses. Future annual minimum base rental payments for the leases as of March 31, 2013 are approximately as follows:

2014	$	100,969
2015		44,469
2016		45,802
2017		47,176
2018		48,591
Thereafter		37,257
Total	$	324,264

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Provision For Income Taxes (Tables)

3 Months Ended

Mar. 31, 2013

Provision For Income Taxes [Abstract]

Summary Of The Provision For Income Taxes

	For the Three Months Ended
	March 31,
	2013			2012
Current:
Federal	$	1,176,711		$	633,372
State and local		426,571			312,346
Total current		1,603,282			945,718
Deferred		(192,090	)		(185,805	)
Provision for income taxes	$	1,411,192		$	759,913

Reconciliation Of The Provision For Income Taxes At Statutory Rate

	For the Three Months Ended
	March 31,
	2013						2012
	Amount			Percentage			Amount			Percentage
Federal income tax expense computed at the statutory rate	$	1,284,123			34.0	%	$	630,667			34.0	%
State and local tax expense, net		281,160			7.4	%		215,169			11.6	%
U.S. domestic manufacturers' deduction & other permanent differences		(154,091	)		(4.0	)%		(52,493	)		(2.8	)%
Change in tax estimate		0			0.0	%		(33,430	)		(1.8	)%
Provision for income taxes	$	1,411,192			37.4	%	$	759,913			41.0	%

Schedule Of Deferred Tax Assets And Liabilities

	March 31,						December 31,
	2013			2012			2012
Non-current deferred tax assets (liabilities) arising from: Temporary differences -
Accumulated depreciation and amortization
from purchase accounting adjustments	$	(3,017,346	)	$	( 3,562,647	)	$	( 3,164,716	)
Capital loss carry-forwards		108,212			167,690			136,198
Total non-current net deferred tax liabilities		(2,909,134	)		( 3,394,957	)		( 3,028,518	)
Current deferred tax assets arising from:
Unrealized losses (gain) on investments		(52,952	)		( 35,329	)		( 41,260	)
Inventory		316,028			232,324			265,072
Allowance for doubtful accounts and  discounts		32,625			4,350			10,875
Allowance for promotions		0			65,249			0
Capital loss carry-back		0			91,369			0
Total current deferred tax assets		295,701			357,963			234,687
Net deferred tax liability	$	(2,613,433	)	$	( 3,036,994	)	$	( 2,793,831	)

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Commitments And Contingencies (Narrative) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Commitments And Contingencies [Abstract]
Total expenses on leases	$ 59,205	$ 379,348	$ 58,264

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Restatement Of 2012 Quarterly Consolidated Financial Statement

3 Months Ended

Mar. 31, 2013

Restatement Of 2012 Quarterly Consolidated Financial Statement [Abstract]

Restatement Of 2012 Quarterly Consolidated Financial Statement

Note 14 – RESTATEMENT OF 2012 QUARTERLY CONSOLIDATED FINANCIAL STATEMENT

The consolidated statements of income for the year-to-date period ended March 31, 2012, that were previously included in our Quarterly Reports on Forms 10-Q filed in 2012 were restated as a result of erroneous presentation of production activity within general and administrative operating expenses.

These restatements result in increases in cost of goods sold and corresponding decreases in general and administrative operating expenses. These restatements had no impact on our previously reported net income, condensed consolidated balance sheets or consolidated statements of cash flows.

As detailed in the table below, these restatements impact the following consolidated statement of income line items:

	(Unaudited) Three Months Ended March 31, 2012
	As Previously Reported		Adjustment			As Restated
Income Statement
Net Sales	$	19,397,197	$	—		$	19,397,197
COGS	$	12,637,386	$	668,381		$	13,305,767
Gross Profit	$	6,759,811	$	(668,381	)	$	6,091,430
Operating Expenses	$	4,887,281	$	(668,381	)	$	4,218,900
Income from Operations	$	1,872,530	$	—		$	1,872,530

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Summary Of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2013

Summary Of Significant Accounting Policies [Abstract]

Schedule Of Property And Equipment, Estimated Useful Lives

Category	Years
Buildings and improvements	31 and 39
Machinery and equipment	5 – 12
Office equipment	5 – 7
Vehicles	5

Schedule Of Intangible Assets Useful Lives

Category	Years
Recipes	4
Customer lists and other customer related intangibles	7-10
Lease agreement	7
Trade names	15
Formula	10
Customer relationships	12

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Notes Payable (Schedule Of Notes Payable) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Debt Instrument [Line Items]
Total notes payable	$ 5,363,751	$ 5,498,926	$ 6,153,683
Less current maturities	543,591	542,981	789,933
Total long-term portion	4,820,160	4,955,945	5,363,750
Note Payable to Private Bank [Member]
Debt Instrument [Line Items]
Total notes payable	5,238,889	5,365,556	5,745,556
Debt instrument, monthly installments	42,222
Variable interest rate	2.709%
Maturity date	Feb. 06, 2014
Line Of Credit With Private Bank [Member]
Debt Instrument [Line Items]
Total notes payable	0	0	250,000
Variable interest rate	3.25%
Maturity date	May 31, 2014
Line of credit, maximum borrowing capacity	5,000,000	2,000,000
Notes Payable To Ford Credit Corp. [Member]
Debt Instrument [Line Items]
Total notes payable	46,291	50,871	64,200
Debt instrument, monthly installments	1,778.23
Variable interest rate	5.99%
Note Payable To Fletcher Jones Of Chicago, Ltd LLC [Member]
Debt Instrument [Line Items]
Total notes payable	78,571	82,499	93,927
Debt instrument, monthly installments	$ 1,768.57
Variable interest rate	6.653%
Maturity date	May 24, 2017

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Intangible Assets (Schedule Of Accumulated Amortization Of Intangible Assets) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Finite-Lived Intangible Assets [Line Items]
Cost	$ 8,306,000	$ 8,306,000	$ 8,306,000
Accumulated Amortization	4,020,598	3,842,756	3,276,645
Recipes [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	43,600	43,600	43,600
Accumulated Amortization	43,600	43,600	43,600
Customer Lists And Other Customer Related Intangibles [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	4,504,200	4,504,200	4,504,200
Accumulated Amortization	2,137,640	2,025,736	1,666,438
Lease Acquisitions [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	87,200	87,200	87,200
Accumulated Amortization	87,200	87,200	87,200
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	985,000	985,000	985,000
Accumulated Amortization	544,222	526,701	465,135
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	2,248,000	2,248,000	2,248,000
Accumulated Amortization	915,936	878,469	766,068
Formula [Member]
Finite-Lived Intangible Assets [Line Items]
Cost	438,000	438,000	438,000
Accumulated Amortization	$ 292,000	$ 281,050	$ 248,200

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Consolidated Statements Of Changes In Stockholders' Equity (USD $)	Common Stock [Member]	Paid In Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss), Net Of Tax [Member]	Total
Balance at Dec. 31, 2011	$ 6,509,267	$ 2,032,516	$ (7,606,974)	$ 34,431,296	$ (8,948)	$ 35,357,157
Balance, treasury stock, shares at Dec. 31, 2011			864,459
Balance, shares outstanding at Dec. 31, 2011	16,409,317
Balance, shares issued at Dec. 31, 2011	17,273,776
Redemption of stock, shares	(18,900)		18,900
Redemption of stock	0	0	(176,606)	0	0	(176,606)
Other comprehensive income (loss):
Unrealized gains on securities, net of taxes	0	0	0	0	39,162	39,162
Net income	0	0	0	1,094,989	0	1,094,989
Dividends ($.07) per share	0	0	0	0	0	0
Balance at Mar. 31, 2012	6,509,267	2,032,516	(7,783,580)	35,526,285	30,214	36,314,702
Balance, treasury stock, shares at Mar. 31, 2012			883,359
Balance, shares issued at Mar. 31, 2012	17,273,776					17,273,776
Balance, shares outstanding at Mar. 31, 2012	16,390,417					16,390,417
Balance at Dec. 31, 2011	6,509,267	2,032,516	(7,606,974)	34,431,296	(8,948)	35,357,157
Balance, treasury stock, shares at Dec. 31, 2011			864,459
Balance, shares outstanding at Dec. 31, 2011	16,409,317
Balance, shares issued at Dec. 31, 2011	17,273,776
Redemption of stock, shares	(63,300)		63,300
Redemption of stock	0	0	(580,708)	0	0	(580,708)
Other comprehensive income (loss):
Unrealized gains on securities, net of taxes	0	0	0	0	62,539	62,539
Net income	0	0	0	5,619,798	0	5,619,798
Dividends ($.07) per share	0	0	0	(1,146,317)	0	(1,146,317)
Balance at Dec. 31, 2012	6,509,267	2,032,516	(8,187,682)	38,904,777	53,591	39,312,469
Balance, treasury stock, shares at Dec. 31, 2012			927,759
Balance, shares issued at Dec. 31, 2012	17,273,776					17,273,776
Balance, shares outstanding at Dec. 31, 2012	16,346,017					16,346,017
Redemption of stock, shares	0
Redemption of stock	0	0		0	0	0
Other comprehensive income (loss):
Unrealized gains on securities, net of taxes	0	0	0	0	15,185	15,185
Net income	0	0	0	2,365,639	0	2,365,639
Dividends ($.07) per share	0	0	0	0	0	0
Balance at Mar. 31, 2013	$ 6,509,267	$ 2,032,516	$ (8,187,682)	$ 41,270,416	$ 68,776	$ 41,693,293
Balance, treasury stock, shares at Mar. 31, 2013			927,759
Balance, shares issued at Mar. 31, 2013	17,273,776					17,273,776
Balance, shares outstanding at Mar. 31, 2013	16,346,017					16,346,017

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Intangible Assets

3 Months Ended

Mar. 31, 2013

Intangible Assets [Abstract]

Intangible Assets

Note 3 – INTANGIBLE ASSETS

Intangible assets, and the related accumulated amortization, consist of the following:

	March 31, 2013				March 31, 2012				December 31, 2012
	Cost		Accumulated Amortization		Cost		Accumulated Amortization		Cost		Accumulated Amortization
Recipes	$	43,600	$	43,600	$	43,600	$	43,600	$	43,600	$	43,600
Customer lists and other customer related intangibles		4,504,200		2,137,640		4,504,200		1,666,438		4,504,200		2,025,736
Lease acquisition		87,200		87,200		87,200		87,200		87,200		87,200
Customer relationship		985,000		544,222		985,000		465,135		985,000		526,701
Trade names		2,248,000		915,936		2,248,000		766,068		2,248,000		878,469
Formula		438,000		292,000		438,000		248,200		438,000		281,050
	$	8,306,000	$	4,020,598	$	8,306,000	$	3,276,645	$	8,306,000	$	3,842,756

Amortization expense is expected to be approximately the following for the 12 months ending March 31:

2014	$	711,367
2015		711,367
2016		711,367
2017		682,166
2018		667,567
Thereafter		801,568
	$	4,285,402

Amortization expense during the three months ended March 31, 2013 and 2012 was $177,842 and $188,705, respectively.

XML

Fair Value Measurements (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes Payable	$ 5,363,751	$ 5,498,926	$ 6,153,683
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes Payable	0	0	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes Payable	5,363,751	5,498,926	6,153,683
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notes Payable	0	0	0
Cash [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	2,739,957	2,286,226	823,093
Cash [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	2,739,957	2,286,226	1,156,540
Cash [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Cash [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Equity Income [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			57,694
Equity Income [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			57,694
Equity Income [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			0
Equity Income [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			0
Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			0
Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			0
Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			0
Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value			0
Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	237,175	439,982	280,482
Certificates of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Certificates of Deposit [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	237,175	439,982	280,482
Certificates of Deposit [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Common Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	887,380	725,670	599,486
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	887,380	725,670	599,486
Common Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Common Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Preferred Stock [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	99,600		195,250
Preferred Stock [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	99,600		195,250
Preferred Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0		0
Preferred Stock [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0		0
Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	1,075,363	1,144,229	871,406
Corporate Bonds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	0	0	0
Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	1,075,363	1,144,229	871,406
Corporate Bonds [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets at fair value	$ 0	$ 0	$ 0

XML

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Intangible Assets [Abstract]

Schedule Of Accumulated Amortization Of Intangible Assets

	March 31, 2013				March 31, 2012				December 31, 2012
	Cost		Accumulated Amortization		Cost		Accumulated Amortization		Cost		Accumulated Amortization
Recipes	$	43,600	$	43,600	$	43,600	$	43,600	$	43,600	$	43,600
Customer lists and other customer related intangibles		4,504,200		2,137,640		4,504,200		1,666,438		4,504,200		2,025,736
Lease acquisition		87,200		87,200		87,200		87,200		87,200		87,200
Customer relationship		985,000		544,222		985,000		465,135		985,000		526,701
Trade names		2,248,000		915,936		2,248,000		766,068		2,248,000		878,469
Formula		438,000		292,000		438,000		248,200		438,000		281,050
	$	8,306,000	$	4,020,598	$	8,306,000	$	3,276,645	$	8,306,000	$	3,842,756

Amortization Expense On Future Intangible Assets

2014	$	711,367
2015		711,367
2016		711,367
2017		682,166
2018		667,567
Thereafter		801,568
	$	4,285,402

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Summary Of Significant Accounting Policies (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Summary Of Significant Accounting Policies [Abstract]
Percentage of gross sales	31.00%	29.00%
Percentage Of Accounts Receivable	36.00%	30.00%	30.00%
Total advertising expenses	$ 606,398	$ 755,666
Cost of goods sold	15,402,875	12,906,722
General and administrative	$ 1,868,100	$ 1,308,222

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 13 – FAIR VALUE MEASUREMENTS

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 820, Fair Value Measurements and Disclosures, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

Level 1. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2. Inputs to the valuation methodology include the following:

Quoted prices for similar assets or liabilities in active markets;

Quoted prices for identical or similar assets or liabilities in inactive markets;

Inputs other than quoted prices that are observable for the asset or liability;

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

Level 3. Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used as of March 31, 2013 and 2012.

The majority of the Company's short-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company's valuation of its Level 1 investments, which include mutual funds, is based on quoted market prices in active markets for identical securities. The Company's valuation of its Level 2 investments, which include certificates of deposits, is based on other observable inputs, specifically a valuation model which utilized vendor pricing for similar securities.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Company's financial assets at fair value as of March 31, 2013 and 2012 and for the year ended December 31, 2012. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

	Assets and Liabilities at Fair Value as of March 31, 2013
	Level 1		Level 2		Level 3		Total
Cash	$	2,739,957	$	0	$	0	$	2,739,957
Certificate of Deposits		0		237,175		0		237,175
Stocks		887,380		0		0		887,380
Preferred Securities		99,600		0		0		99,600
Corporate Bonds		0		1,075,363		0		1,075,363
Notes Payable		0		5,363,751		0		5,363,751

	Assets and Liabilities at Fair Value as of March 31, 2012
	Level 1		Level 2		Level 3		Total
Cash	$	1,156,540	$	0	$	0	$	823,093
Mutual Funds:		0		0		0		0
Equity Income		57,694		0		0		57,694
Bonds		0		0		0		0
Certificate of Deposits		0		280,482		0		280,482
Stocks		599,486		0		0		599,486
Preferred Stock		195,250		0		0		195,250
Corporate Bonds		0		871,406		0		871,406
Notes Payable		0		6,153,683		0		6,153,683

	Assets and Liabilities as Fair Value as of December 31, 2012
		Level 1		Level 2		Level 3		Total
Cash		$	2,286,226	$	0	$	0	$	2,286,226
Certificate of Deposits			0		439,982		0		439,982
Stocks			725,670		0		0		725,670
Corporate Bonds			0		1,144,229		0		1,144,229
Notes Payable			0		5,498,926		0		5,498,926

The Company's financial assets and liabilities also include accounts receivable, other receivables and, accounts payable for which carrying value approximates fair value. All such assets are valued using level 2 inputs.