Item 9A. Controls and Procedures
ITEM 9A. 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
detected.
As of December 31, 2024 (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, 2024 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;
·
provide reasonable assurance that our transactions are recorded as necessary to permit preparation of our consolidated 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 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
policies or procedures may deteriorate.
28
Management, including our Chief Executive Officer
and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2024.
In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) in Internal Control - Integrated Framework (2013). Based on this assessment, management has concluded that our internal
control over financial reporting was effective as of December 31, 2024.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over
financial reporting that occurred during 2024 that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION
During the quarter ended December 31, 2024, 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.
ITEM 9C. DISCLOSURE REGARDING
FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
29
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this Item 10 will be included
in our definitive Proxy Statement to be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K and is incorporated herein by reference.
Code of Conduct and Code of Ethics
We have adopted a Code of Conduct applicable to
all members of the Board, executive officers, and employees and a Code of Ethics applicable to all members of the Board and executive
officers, including our principal executive officer and principal financial officer. The Code of Conduct and the Code of Ethics are available
on our available on our website at www.lifewaykefir.com. Information contained on the website is not incorporated by reference in, or
considered part of, this proxy statement. We intend to disclose on our website any amendments to, or any waivers under, the Code of Ethics
that are required to be disclosed by the rules of the SEC or Nasdaq.
ITEM 11.
EXECUTIVE COMPENSATION
Information required by this Item 11 will be included
in our definitive Proxy Statement to be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by this Item 12 will be included
in our definitive Proxy Statement to be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K and is incorporated herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Information required by this Item 13 will be included
in our definitive Proxy Statement to be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K and is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item 14 will be included
in our definitive Proxy Statement to be filed no later than 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K and is incorporated herein by reference.
30
PART IV
ITEM 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULES
1.
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.
2.
Financial Statement Schedules – Separate financial statement schedules have been omitted either because they are not applicable or because the required information is included in the consolidated financial statements
3.
Exhibits.
No.
Description
Form
Period Ending
Exhibit
Filing
Date
3.1
Articles of Incorporation, as amended and currently in effect
10-K
12/31/2013
3.2
4/2/2014
3.2
Certificate of Designations of Series A Junior Participating Preferred Stock of Lifeway Foods, Inc., effective as of November 4, 2024
10-Q
9/30/2024
3.1
11/14/2024
3.3
Second Amended and Restated Bylaws
10-K
12/31/2022
3.1
3/27/2023
4.1
Description of Securities
Filed Herewith
4.2
Shareholder Rights Agreement, dated as of November 4, 2024, by and between Lifeway Foods, Inc. and Computershare Trust Company, N.A., as rights agent
8-A
4.1
11/5/2024
10.1**
Stockholders’ Agreement dated October 1, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky and certain other parties
8-K
10.11
10/12/1999
10.2**
Letter
Agreement dated December 24, 1999 by and among Danone Foods, Inc., Lifeway Foods, Inc., Michael Smolyansky
and certain other parties
8-K
10.12
1/12/2000
10.3+
Employment Agreement, dated September 12, 2002, between Lifeway Foods, Inc. and Julie Smolyansky
10-QSB/A
No. 2
9/30/2002
10.14
4/30/2003
10.4
Amended and Restated Loan and Security Agreement dated as of May 7, 2018 among Lifeway Foods, Inc., Fresh Made, Inc., The Lifeway Kefir Shop, LLC, Lifeway Wisconsin, Inc., and CIBC Bank USA, as Lender.
8-K
10.1
5/11/2018
10.5
Employment Agreement by and between the Company and Amy Feldman, dated as of October 29, 2018
8-K
10.1
11/1/2018
10.6
Employment Agreement by and between the Company and Eric Hanson, dated as of January 18, 2019
8-K
10.1
1/23/2019
10.7
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.
10-K
12/31/2018
10.10
4/15/2019
31
No.
Description
Form
Period Ending
Exhibit
Filing
Date
10.08
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.
8-K
10.1
12/10/2019
10.09
Third Modification to Amended and Restated Loan and Security Agreement dated as of September 30, 2020 among Lifeway Foods, Inc., Fresh Made, Inc., The Lifeway Kefir Shop, LLC, Lifeway Wisconsin, Inc., and CIBC Bank USA, as Lender.
10-Q
9/30/2020
10.1
10/6/2020
10.10
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
8-K
10.1
8/20/2021
10.11
Fifth Modification to Amended and Restated Loan and Security Agreement, dated as of February 5, 2025, by and among Lifeway Foods, Inc., Fresh Made, Inc., Lifeway Wisconsin, Inc., and CIBC Bank USA, as Lender
8-K
10.1
2/7/2025
10.12+
Lifeway Foods, Inc. Omnibus Incentive Plan
8-K
10.2
12/18/2015
10.13+
Notice of Restricted Stock Unit Award
8-K
10.3
12/18/2015
10.14+
Notice of Performance Unit Award
8-K
10.4
12/18/2015
10.15+
Notice of Restricted Stock Award
8-K
10.5
12/18/2015
10.16+
Notice of Non-Qualified Stock Option Award
8-K
10.6
12/18/2015
10.17
Settlement Agreement dated as of July 27, 2022, between the Company and Edward Smolyansky and Ludmila Smolyansky
8-K
10.1
7/29/2022
10.18
Amendment to Settlement Agreement dated as of July 27, 2022, between the Company and Edward Smolyansky and Ludmila Smolyansky
10-K
10.20
3/27/2023
10.19+
Lifeway Foods, Inc. 2022 Omnibus Incentive Plan
8-K
10.1
9/2/2022
10.20+
Form of Notice of Restricted Stock Award under the Lifeway Foods, Inc. 2022 Non-Employee Director Equity and Deferred Compensation Plan
10-Q
9/30/2022
10.6
11/14/2022
10.21+
Form of Notice of Restricted Stock Unit Award under the Lifeway Foods, Inc. 2022 Omnibus Incentive Plan
10-Q
9/30/2022
10.7
11/14/2022
10.22+
Form of Notice of Performance-Based Restricted Stock Unit Award under the 2022 Omnibus Incentive Plan
10-Q
9/30/2022
10.8
11/14/2022
32
No.
Description
Form
Period Ending
Exhibit
Filing
Date
10.23+
Lifeway Foods, Inc. 2022 2022 Non-Employee Director Equity and Deferred Compensation Plan
8-K
10.2
9/2/2022
10.24+
Form of Notice of Restricted Stock Unit Award under the Lifeway Foods, Inc. 2022 Non-Employee Director Equity and Deferred Compensation Plan
10-Q
9/30/2022
10.6
11/14/2022
10.25+
First Amendment to the 2022 Non-Employee Director Equity and Deferred Compensation Plan
10-Q
6/30/2024
10.1
8/13/2024
10.26+
Restricted Stock Unit Award Agreement, dated as of April 27, 2022, by and between the Company and Jason Scher
10-K
12/31/2022
10.29
3/27/2023
10.27+
Amended and Restated Employment Agreement, dated as of December 23, 2024, by and between the Company and Julie Smolyansky
8-K
10.1
12/23/2024
10.28+
Retention Bonus Agreement, dated as of December 23, 2024, by and between the Company and Julie Smolyansky
8-K
10.2
12/23/2024
19.1
Lifeway Foods, Inc. Policy on Insider Trading
Filed Herewith
21
List of Subsidiaries of the Registrant
23.1
Consent of Grant Thornton LLP
Filed Herewith
24.1
Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K)
31.1
Rule 13a-14(a)/15d-14(a) Certification of Julie Smolyansky
31.2
Rule 13a-14(a)/15d-14(a) Certification of Eric Hanson
32.1*
Section 1350 Certification of Julie Smolyansky
32.2*
Section 1350 Certification of Eric Hanson
97
Lifeway Foods, Inc. Incentive Compensation Clawback Policy
Filed Herewith
99.1*
Press release dated March 14, 2025 reporting the Company’s financial results for year ended December 31, 2024 .
101*
The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, formatted in inline XBRL, include: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.
__________________
+
Indicates a management contract or compensatory plan or arrangement.
*
This exhibit is furnished and not deemed filed with the Securities and Exchange Commission, and is not incorporated by reference into any filing of Lifeway Foods, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of filing this Form 10-K and irrespective of any general incorporation language contained in such filing.
**
The Company believes this agreement is null and void but has included it in this Exhibit List for completeness.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
33
SIGNATURES
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.
Date: March 14, 2025
By:
/s/ Julie Smolyansky
Julie Smolyansky
Chief Executive Officer, President, and Director
Date: March 14, 2025
By:
/s/ Eric Hanson
Eric Hanson
Chief Financial & Accounting Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual
whose signature appears below hereby constitutes and appoints Julie Smolyansky and Eric Hanson, and each of them individually, his or
her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to (i) act on, sign and file with the Securities and Exchange Commission any and
all amendments to this Report together with all schedules and exhibits thereto, (ii) act on, sign and file with the Securities and Exchange
Commission any and all exhibits to this Report and any and all exhibits and schedules thereto, (iii) act on, sign and file any and all
such certificates, notices, communications, reports, instruments, agreements and other documents as may be necessary or appropriate in
connection therewith and (iv) take any and all such actions which may be necessary or appropriate in connection therewith, granting unto
such agents, proxies and attorneys-in-fact, and each of them individually, full power and authority to do and perform each and every act
and thing necessary or appropriate to be done, as fully for all intents and purposes as he or she might or could do in person, and hereby
approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact, any of them or any of his, her or their substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
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.
Date: March 14, 2025
/s/ Julie Smolyansky
Julie Smolyansky
Chief Executive Officer, President, and Director
(Principal Executive Officer)
Date: March 14, 2025
/s/ Eric Hanson
Eric Hanson
Chief Financial & Accounting Officer
(Principal Financial & Accounting Officer)
Date: March 14, 2025
/s/ Jason Scher
Jason Scher
Director
Date: March 14, 2025
/s/ Pol Sikar
Pol Sikar
Director
Date: March 14, 2025
/s/ Jody Levy
Jody Levy
Director
Date: March 14, 2025
/s/ Dorri McWhorter
Dorri McWhorter
Director
Date: March 14, 2025
/s/ Juan Carlos Dalto
Juan Carlos Dalto
Director
Date: March 14, 2025
/s/ Perfecto Sanchez
Perfecto Sanchez
Director
34