|                      |   |
|---------------------------|--------|
| Lifeway Foods, Inc.       |   |
| Phone: 877.281.3874       |   |
| Email: info@Lifeway.net   |   |
|  Investor Relations: |   |
|                      |   |
| ICR                       |   |
|                      |   |
| Katie Turner              |   |
| John Mills646.277.1228    |   |

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|                                    |   | (Unaudited) |             |
|-----------------------------------------|--------|-------------|------------------|
|                                    |   | March 31    |             |
|                                    |   | 2011        |             |   | 2010 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |
| Sales                                   |   | $           | 19,047,266       |   |   |   |   |   | $ | 15,964,159 |   |   |   |   |
| Less: discounts and allowances          |   |        | ( 1,743,363 | ) |   |   |   |   |   | ( 1,075,013 | ) |   |   |   |
| Net Sales                               |   |        | 17,303,903       |   |   |   | 17,303,903 |   |   |   | 14,889,146 |   |   |   | 14,889,146 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                      |   |        |             |   |   |   | 9,651,271 |   |   |   |   |   |   |   | 8,076,612 |   |
| Depreciation expense                    |   |        |             |   |   |   | 376,514 |   |   |   |   |   |   |   | 403,375 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total cost of goods sold                |   |        |             |   |   |   | 10,027,785 |   |   |   |   |   |   |   | 8,479,987 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                            |   |        |             |   |   |   | 7,276,118 |   |   |   |   |   |   |   | 6,409,159 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling expenses                        |   |        |             |   |   |   | 2,221,808 |   |   |   |   |   |   |   | 1,994,847 |   |
| General and administrative              |   |        |             |   |   |   | 1,592,729 |   |   |   |   |   |   |   | 1,490,157 |   |
| Amortization expense                    |   |        |             |   |   |   | 195,959 |   |   |   |   |   |   |   | 175,760 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Operating Expenses                |   |        |             |   |   |   | 4,010,496 |   |   |   |   |   |   |   | 3,660,764 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                  |   |        |             |   |   |   | 3,265,622 |   |   |   |   |   |   |   | 2,748,395 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                 |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest and dividend income            |   |        |             |   |   |   | 17,593 |   |   |   |   |   |   |   | 54,508 |   |
| Rental income                           |   |        |             |   |   |   | --- |   |   |   |   |   |   |   | 1,235 |   |
| Interest expense                        |   |        |             |   |   |   | ( 62,130 | ) |   |   |   |   |   |   | ( 95,942 | ) |
| Loss on disposition of equipment        |   |        |             |   |   |   | --- |   |   |   |   |   |   |   | --- |   |
| Gain (loss) on sale of investments, net |   |        |             | ( 2,597 | ) |   |   |   |   |   |   | ( 29,259 | ) |
| Total other income (expense)            |   |        |             |   |   |   | ( 47,134 | ) |   |   |   |   |   |   | ( 69,458 | ) |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income before provision for             |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    income taxes          |   |        |             |   |   |   | 3,218,488 |   |   |   |   |   |   |   | 2,678,937 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes              |   |        |             |   |   |   | 1,292,717 |   |   |   |   |   |   |   | 910,248 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                              |   |        |             |   |   | $ | 1,925,771 |   |   |   |   |   |   | $ | 1,768,689 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted earnings              |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| per common share                        |   |        |             |   |   |   | 0.12 |   |   |   |   |   |   |   | 0.11 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of              |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   shares outstanding          |   |        |             |   |   |   | 16,489,954 |   |   |   |   |   |   |   | 16,761,774 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income                              |   |        |             |   |   | $ | 1,925,771 |   |   |   |   |   |   | $ | 1,768,689 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income              |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (loss), net of tax:                     |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized gains (losses) on            |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| investments (net of tax)                |   |        |             |   |   |   | 73,325 |   |   |   |   |   |   |   | 46,143 |   |
| Less reclassification adjustment        |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| for (gains) losses included in          |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net income (net of taxes)               |   |        |             |   |   |   | --- |   |   |   |   |   |   |   | 17,175 |   |
|                                    |   |        |             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income                    |   |        |             |   |   | $ | 1,999,096 |   |   |   |   |   |   | $ | 1,832,007 |   |

----

|                                                      |   | March 31, |             |
|-----------------------------------------------------------|--------|-----------|------------------|
|                                                      |   | 2011      |             |   | 2010 |   |
|                                                      |   |      |             |   |   |   |
| Cash flows from operating activities:                     |   |      |             |   |   |   |
| Net income                                                |   | $         | 1,925,771        |   |   | $ | 1,768,689 |   |
| Adjustments to reconcile net income to net                |   |      |             |   |   |   |   |   |
| cash flows from operating activities, net of acquisition: |   |      |             |   |   |   |   |   |
| Depreciation and amortization                             |   |      | 572,473          |   |   |   | 579,135 |   |
| (Gain) Loss on sale of investments, net                   |   |      | 2,597            |   |   |   | 29,259 |   |
| Loss on disposition of assets                             |   |      | ---              |   |   |   | --- |   |
| Deferred income taxes                                     |   |      | ( 144,039   | ) |   |   | ( 222,915 | ) |
| Treasury stock issued for compensation                    |   |      | ---              |   |   |   | 31,159 |   |
| Increase (Decrease) in allowance for doubtful accounts    |   |      | 20,000           |   |   |   | --- |   |
| (Increase) Decrease in operating assets:                  |   |      |             |   |   |   |   |   |
| Accounts receivable                                       |   |      | ( 1,573,284 | ) |   |   | ( 1,726,610 | ) |
| Other receivables                                         |   |      | 29,801           |   |   |   | 677 |   |
| Inventories                                               |   |      | ( 766,680   | ) |   |   | ( 572,849 | ) |
| Refundable income taxes                                   |   |      | 906,748          |   |   |   | 832,063 |   |
| Prepaid expenses and other current assets                 |   |      | 63,635           |   |   |   | 2,250 |   |
| Increase (decrease) in operating liabilities:             |   |      |             |   |   |   |   |   |
| Accounts payable                                          |   |      | ( 402,392   | ) |   |   | 352,627 |   |
| Accrued expenses                                          |   |      | 86,382           |   |   |   | 22,919 |   |
| Income taxes                                              |   |      | 430,246          |   |   |   | --- |   |
| Net cash provided by operating activities                 |   |      | 1,151,258        |   |   |   | 1,096,404 |   |
|                                                      |   |      | 54,854           |   |   |   |   |   |
| Cash flows from investing activities:                     |   |      |             |   |   |   |   |   |
| Purchases of investments                                  |   |      | ( 452,409   | ) |   |   | ( 356,498 | ) |
| Proceeds from sale of investments                         |   |      | 234,388          |   |   |   | 531,455 |   |
| Proceeds from redemption of certificates of deposit       |   |      | ---              |   |   |   |   |   |
| Purchases of property and equipment                       |   |      | ( 353,455   | ) |   |   | ( 603,015 | ) |
| Acquisition of the assets of First Juice                  |   |      | ---              |   |   |   | --- |   |
| Net cash provided (used) in investing activities          |   |      | ( 571,476   | ) |   |   | ( 428,058 | ) |
|                                                      |   |      | 249,560          |   |   |   |   |   |
| Cash flows from financing activities:                     |   |      |             |   |   |   |   |   |
| Proceeds of note payable                                  |   |      | ---              |   |   |   | --- |   |
| Checks written in excess of bank balances                 |   |      | ( 274,137   | ) |   |   | 190,482 |   |
| Purchases of treasury stock                               |   |      | ( 846,290   | ) |   |   | ( 340,105 | ) |
| Repayment of notes payable                                |   |      | ( 613,503   | ) |   |   | ( 496,953 | ) |
| Net cash (used in) provided by in financing activities    |   |      | ( 1,733,930 | ) |   |   | ( 646,576 | ) |
|                                                      |   |      |             |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents      |   |      | ( 1,154,148 | ) |   |   | 21,770 |   |
|                                                      |   |      |             |   |   |   |   |   |
| Cash and cash equivalents at the beginning of the period  |   |      | 3,229,939        |   |   |   | 630,407 |   |
|                                                      |   |      |             |   |   |   |   |   |
| Cash and cash equivalents at the end of the period        |   | $         | 2,075,791        |   |   | $ | 652,177 |   |