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Item 9A. Controls and Procedures

2024-03-20 compared with 2023-03-27 · 56 added, 62 removed, 118 unchanged (50% of the section changed)

AND PROCEDURES

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, principal financial officer and principal accounting

officer, as appropriate, to allow timely decisions regarding required financial disclosure.

In designing and evaluating the disclosure

controls and procedures, we recognize 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

As of December 31, 2022 (the “Evaluation Date”),

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

have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance level

as of December 31, 2022 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.

Management’s Annual 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, principal financial officer and principal

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 internal control over financial reporting includes those policies and

procedures that:

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, principal financial officer and principal

accounting officer, as appropriate, to allow timely decisions regarding required financial disclosure.

In designing and evaluating the

disclosure controls and procedures, we recognize 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 December 31, 2023 (the “Evaluation

Date”), 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 have concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance

level as of December 31, 2023 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.

Management’s Annual 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, principal financial officer

and principal 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 internal control over financial reporting includes those

policies and procedures that:

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

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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 consolidated 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

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.

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control over financial reporting was effective as of December 31, 2023.

Remediation of the Material Weakness

During 2022, management evaluated our policies

and procedures related to accounting for deferred income taxes and goodwill of acquired intangible assets.

We have implemented controls

to ensure that (i) the goodwill allocation associated with any acquired intangible assets are properly accounted for and disclosed in

the period of acquisition, and (ii) the deferred income tax effects of acquired intangible assets are properly accounted for and disclosed

in the period of acquisition.

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 2022 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Changes in Internal Control over Financial

There were no changes in our internal control

over financial reporting that occurred during 2023 that have materially affected, or are reasonably likely to materially affect, our

internal control over financial reporting.

OTHER INFORMATION

During the quarter ended December 31, 2023, no director or officer

of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,”

as each term is defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING

FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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Form 10-K and is incorporated herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

EXHIBITS, FINANCIAL

STATEMENT SCHEDULES

A list of the Financial Statements and Financial Statement Schedules filed as part of this Report is set forth in Part II, Item 8, which list is incorporated herein by reference.

1 unchanged sentence

Period Ending

Amended and Restated Bylaws

Filed Herewith

Articles of Incorporation, as amended and currently in effect

Second Amended and Restated Bylaws

Stockholders’ Agreement dated October 1, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky and certain other parties

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and Julie Smolyansky

Endorsement Agreement by and between the Company and Ludmila Smolyansky, dated as of March 14, 2016

Termination Agreement dated as of August 30, 2022, between the Company and Ludmila Smolyansky

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First Modification to Amended and Restated Loan and Security Agreement dated as of April 10, 2019 among Lifeway Foods, Inc., Fresh Made, Inc., The Lifeway Kefir Shop, LLC, Lifeway Wisconsin, Inc., and CIBC Bank USA, as Lender.

Period Ending

Second Modification to Amended and Restated Loan and Security Agreement, effective as of December 10, 2019 by and among Lifeway Foods, Inc., Fresh Made, Inc., The Lifeway Kefir Shop, LLC, Lifeway Wisconsin, Inc., and CIBC Bank USA, as Lender.

1 unchanged sentence

Fourth Modification to Amended and Restated Loan and Security Agreement, dated as of August 18, 2021, by and among Lifeway Foods, Inc., Fresh Made, Inc., The Lifeway Kefir Shop, LLC, Lifeway Wisconsin, Inc., and CIBC Bank USA, as Lender

Amended and Restated Consulting Agreement dated December 28, 2020 by and between the Company and Ludmila Smolyansky

Lifeway Foods, Inc.

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Amendment to Settlement Agreement dated as of July 27, 2022, between the Company and Edward Smolyansky and Ludmila Smolyansky

Filed Herewith

Lifeway Foods, Inc.

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Form of Notice of Performance-Based Restricted Stock Unit Award under the 2022 Omnibus Incentive Plan

Period Ending

Lifeway Foods, Inc.

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Settlement Agreement dated as of September 1, 2022, between the Company and Edward Smolyansky

Stock Purchase Agreement dated as of November 7, 2022, between the Company and Ludmila Smolyansky.

Restricted Stock Unit Award Agreement, dated as of April 27, 2022, by and between the Company and Jason Scher.

Filed Herewith

List of Subsidiaries of the Registrant

Consent of Grant Thornton LLP

Consent of Mayer Hoffman McCann P.C.

Rule 13a-14(a)/15d-14(a) Certification of Julie Smolyansky

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Not applicable.

Pursuant to the requirements of Section 13 or 15(d)

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.

Pursuant to the requirements of Section 13 or

15(d) 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.

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Chief Financial & Accounting Officer

Pursuant to the requirements of the Securities Exchange

Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

March 20, 2024

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March 20, 2024

Ludmila Smolyansky

March 27, 2023

/s/ Jason Scher

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures