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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001072613-03-001463.txt : 20030821
<SEC-HEADER>0001072613-03-001463.hdr.sgml : 20030821
<ACCEPTANCE-DATETIME>20030821172233
ACCESSION NUMBER:		0001072613-03-001463
CONFORMED SUBMISSION TYPE:	10QSB/A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20030630
FILED AS OF DATE:		20030821

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LIFEWAY FOODS INC
		CENTRAL INDEX KEY:			0000814586
		STANDARD INDUSTRIAL CLASSIFICATION:	DAIRY PRODUCTS [2020]
		IRS NUMBER:				363442829
		STATE OF INCORPORATION:			IL
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10QSB/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-17363
		FILM NUMBER:		03860816

	BUSINESS ADDRESS:	
		STREET 1:		6431 W OAKTON
		CITY:			MORTON GROVE
		STATE:			IL
		ZIP:			60053
		BUSINESS PHONE:		7089671010

	MAIL ADDRESS:	
		STREET 1:		6431 W OAKTON
		CITY:			MORTON GROVE
		STATE:			IL
		ZIP:			60053
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB/A
<SEQUENCE>1
<FILENAME>form10qsba_12187.txt
<DESCRIPTION>FORM 10-QSB/A FOR PERIOD DATED JUNE, 30, 2003
<TEXT>
================================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-QSB/A
                                 AMENDMENT NO. 1
(Mark One)

   [X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2003

   [ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

             For the transition period from __________ to __________

                         Commission file number: 0-17363

                               LIFEWAY FOODS, INC.
                 -----------------------------------------------
        (Exact name of small business issuer as specified in it charter)

            ILLINOIS                                      36-3442829
- -------------------------------                 -------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

                 6431 WEST OAKTON, MORTON GROVE, ILLINOIS 60053
                 ----------------------------------------------
                    (Address of principal executive offices)

                                 (847) 967-1010
                            -------------------------
                           (issuer's telephone number)

               --------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes  [X]  No  [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 14, 2002, the issuer had
4,218,444 shares of common stock, no par value, outstanding.

Transitional Small Business Disclosure Format (Check one):  Yes  [ ]  No  [X]
================================================================================
<PAGE>

             EXPLANATION FOR FILING OF FORM 10-QSB/A AMENDMENT NO. 1

The purpose of this Form 10-QSB/A Amendment No. 1 is to amend the previously
filed Form 10-QSB of Lifeway Foods, Inc. (the "Company" or "Lifeway") for the
quarter ended June 30, 2003 to correct several errors in the income statement
and notes to financial statements. The changes set forth in this Amendment No. 1
are merely to correct errors that are transpositional or typographical in nature
and do not materially affect the financial statements of the Company for the
quarter ended June 30, 2003, as provided in the Form 10-QSB filed on August 14,
2003.

On Lifeway's income statement, the line item for unrealized gains on marketable
securities (net of tax benefit) in the three months ended June 30, 2003 column
is being corrected to $790,315 from $220,572. The previous figure of $220,572,
as mistakenly set forth, is the net difference between $790,315 and $569,743,
which is the subtracted reclassification adjustment for losses included in net
income (the line item immediately below). Likewise, the same line item in the
column for the six months ended June 30, 2003 is being corrected to $821,040
from $455,040. The previous figure of $455,040, as mistakenly set forth, is the
net difference between $821,040 and $366,000, which is the subtracted
reclassification adjustment for losses included in net income (the line item
immediately below).

In Note 7 ("Provision for Income Taxes") to Lifeway's Notes to Consolidated
Financial Statements, three changes are set forth in this Amendment No. 1 to
correct the three transposition or typographical errors set forth in the Form
10-QSB filed on August 14, 2003 in the table regarding the reconciliation of the
provision for income taxes and the income tax computed at the statutory rate.
The depreciation line item in the column for the six months ended June 30, 2003
is being corrected to $14,653 from ($14,653), the "other" line item for the
same column is being corrected to ($9,915) from ($8,784) and the "other" line
item in the column for the six months ended June 30, 2002 is being corrected to
($14,791) from ($12,143).


<PAGE>

ITEM 1. FINANCIAL STATEMENTS
<TABLE><CAPTION>
             LIFEWAY FOODS, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
             INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002 AND THE YEAR ENDED DECEMBER 31, 2002


                                                         (Unaudited)                        (Unaudited)
                                                      Three Months Ended                  Six Months Ended
                                                            June 30,                          June 30,                December 31,
                                                     2003             2002             2003             2002              2002
<S>                                              <C>              <C>              <C>              <C>              <C>
Sales                                            $ 3,775,853      $ 3,002,583      $ 7,084,410      $ 5,890,436      $ 12,212,236
Cost of goods sold                                 1,733,935        1,760,500        3,559,891        3,283,781         6,744,086

Gross profit                                       2,041,918        1,242,083        3,524,519        2,606,655         5,468,150

Operating expenses                                   938,160          734,171        1,782,776        1,382,711         2,890,504

Income from operations                             1,103,758          507,912        1,741,743        1,223,944         2,577,646

Other income (expense):
Interest and dividend income                          36,730           53,363           70,174           90,637           187,358
Interest expense                                      (7,777)         (19,241)         (15,421)         (39,332)          (74,675)
Gain (loss) on sale of marketable
  securities, net                                     15,848            3,319         (330,709)          39,339            17,554
Gain on sale of assets                                   ---              ---        1,246,287
                                                                                                            ---               ---
Other than temporary reductions
    of marketable securities                             ---              ---                                            (235,861)
                                                                                           ---              ---
Total other income                                    44,801           37,441          970,331           90,644          (105,624)

Income before provision for
   income taxes                                    1,148,559          545,353        2,712,074        1,314,588         2,472,022

Provision for income taxes                           457,477          193,697        1,027,718          515,374           943,338

Net income                                          $691,082         $351,656       $1,684,356         $799,214       $ 1,528,684

Earnings per share common share                         0.16             0.08             0.40             0.19              0.37

Weighted average shares
  outstanding                                      4,218,444        4,269,137        4,218,444        4,269,137         4,265,761

COMPREHENSIVE INCOME (LOSS)
- ---------------------------

Net income                                          $691,082         $351,656       $1,684,356         $799,214       $ 1,528,684
Other comprehensive income (loss),
   net of tax:
Unrealized gains (losses) on
  marketable securities (net of tax benefits)        790,315         (461,598)         821,040         (697,190)         (716,160)

Less reclassification adjustment
    for gains (losses) included in net income       (569,743)          (3,790)        (366,000)           1,985           110,038

Comprehensive income (loss)                         $911,654        $(113,732)      $2,139,396         $104,009        $  922,562
</TABLE>
<PAGE>

LIFEWAY FOODS, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003 AND 2002

Note 7 - PROVISION FOR INCOME TAXES

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


                                             (Unaudited)            For the
                                       For the Six Months Ended    Year Ended
                                               June 30,           December 31,
                                      ------------  ------------  ------------
                                          2003          2002          2002
                                      ------------  ------------  ------------
Federal income tax expense            $    788,283  $    421,034  $    840,487
  computed at the statutory rate
State taxes, expense                       181,967        95,390       177,986
Temporary book/tax differences                 ---           ---           ---
  Depreciation                              14,653        14,533        15,893
  Other than temporary reductions
     on marketable securities                  ---           ---        97,175
  Other                                     (9,915)      (14,791)      (15,538)
Permanent book/tax differences              52,730          (792)     (172,665)
                                      ------------  ------------  ------------
Provision for income taxes            $  1,027,718  $    515,374  $    943,338
                                      ============  ============  ============








<PAGE>

ITEM 7. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

Exhibit
Number      Description
- ------      -----------

3.4         Amended and Restated By-laws (Incorporated by reference to Exhibit
            No. 3.5 of Lifeway's Current Report on Form 8-K dated and filed on
            December 10, 2002).

3.5         Articles of Incorporation, as amended and currently in effect
            (Incorporated by reference to Exhibit 3.5 of Lifeway's Quarterly
            Report on Form 10-QSB for the quarter ended June 30, 2000 and filed
            on August 8, 2000).

10.1        Lifeway Foods, Inc. Consulting and Services Compensation Plan, dated
            June 5, 1995 (Incorporated by reference to Lifeway's Registration
            Statement on Form S-8, File No. 33-93306).

10.10       Stock Purchase Agreement with Danone Foods, Inc., dated October 1,
            1999 (Incorporated by reference to Exhibit 10.10 of the Registrant's
            Current Report on Form 8-K dated October 1, 1999, and filed October
            12, 1999).

10.11       Stockholders' Agreement with Danone Foods, Inc. dated October 1,
            1999 (Incorporated by reference to Exhibit 10.11 of the Registrant's
            Current Report on Form 8-K dated October 1, 1999, and filed October
            12, 1999).

10.12       Letter Agreement dated December 24, 1999 amending the Stockholders'
            Agreement with Danone Foods, Inc. dated October 1, 1999.
            (Incorporated by reference to Exhibit 10.12 of the Registrant's
            Current Report on Form 8-K dated December 24, 1999 and filed January
            11, 2000).

10.13       Support Agreement with The Dannon Company, Inc. dated December 24,
            1999 (Incorporated by reference to Exhibit 10.13 of the Registrant's
            Current Report on Form 8-K dated December 24, 1999 and filed January
            11, 2000).

10.14       First Amendment to Support Agreement with The Dannon Company, Inc.,
            dated February 11, 2003 (Incorporated by reference to Exhibit 10.14
            of the Registrant's Quarterly Report for the quarter ended March 31,
            2003 on Form 10-QSB dated and filed May 15, 2003).

10.15       Employment Agreement, dated September 12, 2002, between Lifeway
            Foods, Inc. and Julie Smolyansky (Incorporated by reference to
            Exhibit 10.14 of Amendment No. 2 filed April 30, 2003 to Lifeway's
            Quarterly Report on Form 10-QSB/A for the quarter ended September
            30, 2002).

11          Statement re: computation of per share earnings. (Incorporated by
            reference to Note 2 of the Consolidated Financial Statements
            included in the Form 10-QSB for the quarter ended June 30, 2003,
            filed on August 14, 2003).

21.2        List of Subsidiaries of the Registrant. (Incorporated by reference
            to Exhibit 21.2 of Lifeway's Annual Report on Form 10-KSB for the
            year ended December 31, 1998 and filed on March 31, 1999).

31.1        Rule 13a-14(a)/15d-14(a) Certification.

32.1        Section 1350 Certification.

(b) Reports on Form 8-K.

    None.

<PAGE>

                                    SIGNATURE

In accordance with the requirements of the Exchange Act, the Company caused this
Amendment to be signed on its behalf by the undersigned, thereunto duly
authorized.

Date: August 21, 2003

                                    LIFEWAY FOODS, INC.

                                    By: /s/ Julie Smolyansky
                                    -------------------------------------
                                    Julie Smolyansky
                                    Chief Executive Officer, Chief Financial and
                                    Accounting Officer, President, Treasurer and
                                    Director




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>exhibit31-1_12187.txt
<DESCRIPTION>CERTIFICATION OF CHIEF EXECUTIVE OFFICER - 302
<TEXT>

                                                                    EXHIBIT 31.1
                                                                    ------------

                     RULE 13a-14(a)/15d-14(a) CERTIFICATION

I, Julie Smolyansky, certify that:

1.   I have reviewed this Amendment No.1 to the quarterly report 2003 of Lifeway
     Foods, Inc. on Form 10-QSB for the quarter ended June 30;

2.   Based on my knowledge, this Amendment 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
     Amendment;

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

4.   I am responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for
     the small business issuer 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 small
          business issuer, including its consolidated subsidiaries, is made
          known to us by others within those entities, particularly during the
          period for which this Amendment is being prepared;

     b.   Evaluated the effectiveness of the small business issuer's disclosure
          controls and procedures and presented in the report amended by this
          Amendment our conclusions about the effectiveness of the disclosure
          controls and procedures, as of the end of the period covered by this
          Amendment based on such evaluation; and

     c.   Disclosed in the report amended by this Amendment any change in the
          small business issuer's internal control over financial reporting that
          occurred during the small business issuer's most recent fiscal quarter
          (the small business issuer's fourth fiscal quarter in the case of an
          annual report) that has materially affected, or is reasonably likely
          to materially affect, the small business issuer's internal control
          over financial reporting.

5.   I have disclosed, based on my most recent evaluation of internal control
     over financial reporting, to the small business issuer's auditors and the
     audit committee of the small business issuer'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 small business issuer'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
          controls.


Date: August 21, 2003

                                    /s/ Julie Smolyansky
                                    ----------------------------------
                                    Julie Smolyansky
                                    Chief Executive Officer, Chief Financial and
                                    Accounting Officer, President, Treasurer and
                                    Director



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>exhibit32-1_12187.txt
<DESCRIPTION>CERTIFICATION OF CHIEF EXECUTIVE OFFICER - 906
<TEXT>

                                                                    EXHIBIT 32.1
                                                                    ------------

                           SECTION 1350 CERTIFICATION

I, Julie Smolyansky, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that this Amendment
No.1 on Form 10-QSB/A to the Quarterly Report of Lifeway Foods, Inc. (the
"Company") on Form 10-QSB for the fiscal quarter ended June 30, 2003:

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

     (2)  that the information contained in the Amendment fairly presents, in
          all material respects, the financial condition and results of
          operations of the Company.

This written statement is being furnished to the Securities and Exchange
Commission as an exhibit to such Form 10-QSB/A. A signed original of this
written statement required by Section 906 has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.



                                    /s/ Julie Smolyansky
                                    ----------------------------------
                                    Julie Smolyansky

                                    Chief Executive Officer, Chief Financial and
                                    Accounting Officer, President, Treasurer and
                                    Director


Date: August 21, 2003





</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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