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Segments, Products and Customers

9 Months Ended

Sep. 30, 2016

Note 13 - Segments, Products and Customers

The Company manufactures probiotic, cultured, functional dairy health food products. The Company's primary product is kefir, a dairy beverage similar to but distinct from yogurt, in several flavors and in several package configurations. In addition to the drinkable products, Lifeway manufactures "Lifeway Farmer Cheese," a line of various farmer cheeses.

The Company has determined that it has one reportable segment based on how the Company's chief operating decision maker manages the business and in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing company performance, has been identified collectively as the Chief Financial Officer, the Chief Operating Officer, the Chief Executive Officer and Chairman of the board of directors. Substantially all of the consolidated revenues of the Company relate to the sale of fermented dairy products which are produced using the same processes and materials and are sold to consumers through a network of distributors and retailers in the United States.

Net sales of products by category were as follows:

	Nine months ended September 30,				Three months ended September 30,
	2016		2015		2016		2015
Cream and Drinkable Kefir other than ProBugs	$	80,135	$	76,723	$	25,533	$	25,902
Pro Bugs		4,962		5,999		1,606		1,702
Lifeway Farmer Cheese		7,579		5,125		2,479		1,661
Frozen Kefir		1,015		1,195		372		334

Net Sales	$	93,691	$	89,042	$	29,990	$	29,599

Significant Customers --Sales are predominately to companies in the retail food industry, located within the United States. Two major customers accounted for approximately 23% and 22% of net sales for the nine months ended September 30, 2016 and 2015, respectively and 22% and 20% of net sales for the three months ended September 30, 2016 and 2015 respectively.