LIFEWAY FOODS, INC. FORM 10-K/A

 true Revisions to Part III and other minor edits 2024 FY 0000814586

 2024-01-01
 2024-12-31

 LWAY:CommonStockNoParValueMember

 2024-01-01
 2024-12-31

 LWAY:PreferredStockPurchaseRightsMember

 2024-01-01
 2024-12-31

 2024-06-30

 2025-04-25

 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 Form 10-K/A

 Amendment No. 1

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2024

 or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ____________ to
____________

 Commission file number: 000-17363

 LIFEWAY FOODS, INC.

 (Exact name of registrant as specified in its
charter)

 Illinois

 36-3442829

 (State or other jurisdiction of

 (I.R.S. Employer

 incorporation or organization)

 Identification No.)

 6431 West Oakton St., Morton Grove, Illinois 60053

 (Address of principal executive offices) (Zip
Code)

 ( 847) 967-1010

 (Registrant's telephone number, including
area code)

 Securities registered under Section 12(b) of
the Exchange Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, No Par Value

 LWAY

 Nasdaq Global Market

 Preferred Stock Purchase Rights

 None

 Nasdaq Global Market

 Securities registered under Section 12(g) of
the Exchange Act:

 None

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of "large accelerated filer", "accelerated filer," "smaller reporting company"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes No

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

is a shell company (as defined in Rule 12b-2 of the Act). Yes No

 The aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the stock was last sold as of June 30, 2024 ($12.77 per
share as quoted on the Nasdaq Global Market) was $ 74,355,253.

 As of April 25, 2025, 15,203,241 shares of the
registrant's common stock, no par value, were outstanding.

 Explanatory Note

 Unless otherwise noted or as the context otherwise
requires, the term "the Company," "we," "us," or "our" refers to Lifeway Foods, Inc. and
its subsidiaries.

 This Amendment No. 1 to Form 10–K (this
"Amendment") amends the Company's Annual Report on Form 10–K of for the fiscal year ended December 31, 2024 (the
"Original Filing"), originally filed with the Securities and Exchange Commission (the "SEC") on March 14, 2025.
We are filing this Amendment to include the information required by Part III (Items 10, 11, 12, 13 and 14) of Form 10-K. The reference
on the cover of the Original Filing to the incorporation by reference to portions of our definitive proxy statement to be filed no later
than 120 after the close of the fiscal year covered by the Original Filing is hereby deleted.

 The Original Filing continues to speak as of the
date of the Original Filing. Except as described above and except that we have updated the number of outstanding shares of our common
stock on the cover page of this report, this Amendment does not amend or modify any other information set forth in the Original Form 10-K
and we have not updated or modified disclosures included therein to reflect any events which occurred subsequent to the filing of the
Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Form 10-K and with our other filings made
with the SEC subsequent to the filing of the Original Form 10-K.

 Pursuant to Rule 12b-15 under the Securities
Exchange Act of 1934, as amended, this Amendment No. 1 also contains new certifications by our principal executive officer and principal
financial officer as required by Section 302 of the Sarbanes-Oxley Act of 2002. Accordingly, Item 15 of Part IV is amended to include
the currently dated certifications as exhibits.

 i

 Page

 Item 10.

 Directors, Executive Officers
 and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain
 Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and
 Related Transactions and Director Independence

 Item 14.

 Principal Accountant Fees
 and Services

 Item 15.

 Exhibits, Financial Statement Schedules

 Signatures

 ii

 ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 Information About Our Directors and Executive Officers

 Each of the Company's directors serve until
the next annual meeting of shareholders and until a successor is elected and qualified, or until such director's earlier death,
retirement, resignation or removal. The Company's executive officers serve in accordance with their employment agreements as further
described in Item 11, Employment agreements, severance, and change-in-control arrangements between Lifeway and Named Executive Officers
– NEO Employment Agreements. Provided below is a brief description of our executive officers' and directors' business
experience during the past five years.

 Julie Smolyansky, Chief Executive Officer, President, Secretary and Director

 Age: 49

 Director Since: 2002

 Chairperson

 JULIE SMOLYANSKY was appointed as a Director and
elected President and Chief Executive Officer of Lifeway by the Board to fill the vacancies in those positions created by the death of
her father, Michael Smolyansky, in June 2002. She was appointed as Secretary effective as of January 1, 2020. She is a graduate with a
bachelor's degree from the University of Illinois at Chicago. Prior to her appointment, Ms. Smolyansky spent six years as Lifeway's
Director of Sales and Marketing. Ms. Smolyansky also served as Lifeway's Chief Financial Officer and Treasurer from 2002 to 2004.
Under her leadership, Lifeway has brought its products into the mainstream, boosted annual revenues tenfold, and expanded distribution
throughout the United States, Mexico, the United Kingdom, and Ireland, as well as portions of Central and South America and the Caribbean.
She has been named to Fortune Business's '40 under 40,' Fortune's 55 Most Influential Women on Twitter and Fast
Company's Most Creative People in Business 1000. She holds no other directorships in any other reporting company. Ms. Smolyansky
is the daughter of Ludmila Smolyansky (Former Director), and sister of Edward Smolyansky (Former Chief Operating Officer of the Company).
The Smolyansky family maintains a controlling interest in the Company, and the Board believes it is appropriate to provide for continuity
of the representation of the Smolyansky family on the Board as a component of Lifeway's succession planning strategy. Ms. Smolyansky
has served as Chairperson of the Board since August 2022.

 Key Attributes,
Experience and Skills:

 Ms. Smolyansky brings to the Board over twenty
years of extensive experience in the dairy and consumer packaged goods industries including advertising; marketing and communications;
public relations; digital, social, and event marketing; and consumer insights. Ms. Smolyansky provides the Board with unique perspectives
and invaluable, in-depth knowledge of Lifeway, including strategic growth opportunities; personnel; relationships with key customers and
suppliers; competitive product positioning; history; Company culture; and all other aspects of Lifeway's operations. As the Chief
Executive Officer of a publicly traded company, Ms. Smolyansky brings experience working with the investor community and financial institutions.
In addition, as a member of our founding family, Ms. Smolyansky is a recognized and prominent visionary and leader in the dairy and probiotic
products industry with an in-depth knowledge of manufacturers, distributors, and retailers across all of our channels of distribution.

 Juan Carlos ("JC") Dalto, Director

 Age: 60

 Director Since: 2022

 Independent

 JC DALTO was elected as a Director of the Company
in August 2022. He has over 30 years of experience in the agriculture and food and beverage industries. In 2000, Mr. Dalto became the
CEO of Danone in Portugal, in 2002 the President and CEO of Danone in Italy, and in 2004 the Chairman, President and CEO of Danone North
America - The Dannon Company, Inc. He has gone on to hold Director, Country/Regional President and CEO positions at numerous international
corporations, such as Danone, The Pillsbury Company, Kraft Foods and Stonyfield Farm. From 2012 to 2015, Mr. Dalto served as Chief Executive
Officer of JDE Brazil (formerly, D.E. Master Blenders 1753). From 2017 to 2020, Mr. Dalto served as Chief Executive Officer of Savencia
Fromage & Dairy Latin America. Mr. Dalto served as the President of Dole Sunshine Company - Dole Packaged Foods LLC, Americas from
January 2021 through September 2022, where he worked on a movement toward zero fruit loss and zero fossil-based plastic packaging by 2025,
and net zero carbon emissions by 2030. From October 2022 through present Mr. Dalto has served as the Chief Executive Officer of Savencia
Fromage & Dairy, Americas. Mr. Dalto serves on the boards of directors of Milkaut S.A., Argentina. Mr. Dalto has extensive experience
in de-commoditizing agri-business derived foods and drinks into added-value, functional, nutritional, health and wellness products, and
has executed on sustainable and profitable growth business models in his previous roles. Mr. Dalto previously attended the Buenos Aires
Institute of Technology and has post-graduate degrees from the University of Michigan and the London Business School. Mr. Dalto is also
a certified Professional Coach from Integral Coaching Canada and has organized and led campaigns leading to Global Environmental Change
in Latin America.

 Mr. Dalto's has deep industry, brand management
and growth experience in the consumer-packaged goods sector. His business insights as a Board member will provide significant value to
the Lifeway brand and support the Lifeway mission to grow profitably, sustainably and consciously and make Mr. Dalto well qualified for
service on our Board.

 Jody Levy, Director

 Age: 46

 Director Since: 2020

 Independent Director

 Member, Audit and Corporate Governance Committee

 Member, Compensation Committee

 JODY LEVY was elected as a director of Lifeway
to fill a vacancy on the Board on February 11, 2020. Ms. Levy is an entrepreneur, having founded many different types of companies. She
has also acted as chief executive officer of companies at all stages of development from inception to operating with $200mm in annual
revenue. In 2013, Ms. Levy founded World Waters, LLC, the parent company of WTRMLN WTR and served as its Creative Director and Chief Executive
Officer from founding until the company's sale in 2020. Ms. Levy is currently the chief executive officer and a director of Summit
Group Endeavors LLC (since January 2021) and Summit Series LLC (since September 2020), related companies that produce annual ideas conference
for the thought leaders of our time. Since January 2021, Ms. Levy has also been a director of Summit Junto LLC, an entity related to Summit
Group Endeavors LLC and Summit Series LLC, which produces global events. In 2020, Ms. Levy founded, and has since served as chief executive
officer of LabElymental, a company that helps people get healthy and happy, and NeroPraxis, a mind repatterning meditation app. As chief
executive officer of companies at all stages of development, Ms. Levy has lead all departments within a company and understands the department
functions and the intersection among them and how to optimize, manage and scale corporate efficiency and production. Ms. Levy has been
a partner in, and advisor to, GEM&BOLT Mezcal since 2014. She also served as a director of Pinata, a company that offers a system
for data driven task management for work, from 2017 to 2019. Ms. Levy has a Bachelor of Arts from School of the Art Institute of Chicago.
Ms. Levy devotes as much time as necessary to Lifeway business and currently holds no other directorships in any other reporting company.

 Ms. Levy's breadth of experience in manufacturing,
marketing and sale of consumer packaged goods, specifically health foods, as well as her financial expertise, depth of knowledge about
all aspects of manufacturing companies and her leadership experience make her well qualified to be a member of our Board.

 Dorri McWhorter, Director

 Age: 51

 Director Since: 2020

 Independent Director

 Audit Committee Financial Expert

 Member, Audit and Corporate Governance Committee

 Member, Compensation Committee

 DORRI MCWHORTER was elected as a Director of the
Company in August 2020. Ms. McWhorter became CEO of YMCA Chicago in 2021. From 2013 until 2021, Ms. McWhorter was the CEO of YWCA Metropolitan
Chicago transforming the organization from a traditional social service organization to 21st Century social enterprise. Increasing impact
and organizational sustainability, YWCA Metropolitan Chicago's operating budget quadrupled. The organization has been an active
contributor to many critical initiatives across the region, and under Ms. McWhorter's leadership, YWCA Metropolitan Chicago expanded
its service footprint to 10 new locations, completed seven mergers and acquisitions, implemented paid family leave and developed a retirement
plan to include retirement options for thousands of childcare providers and small business owners. Ms. McWhorter led the effort to develop
an exchange-traded fund (ETF) for women's empowerment (NYSE: WOMN) in partnership with Impact Shares, which is the first non-profit
investment advisor to develop an ETF product. Ms. McWhorter is a 2019 Inductee in the Chicago Innovation Hall of Fame. Ms. McWhorter is
also a Certified Public Accountant (CPA). Prior to joining the YWCA, she was a partner at Crowe Horwath, LLP, one of the largest accounting
firms in the U.S. She also held senior positions with Snap-on Incorporated and Booz Allen Hamilton.

 Ms. McWhorter serves on the boards of directors
of William Blair Funds and Skyway Concession Company (Chicago Skyway), NexPoint Capital, and LanzaTech Global Inc. (NASDAQ: LNZA). She
is also active in the accounting profession and serves on the Financial Accounting Standards Advisory Council and having served as a member
of the Board of Directors of the American Institute of Certified Public Accountants (AICPA) and a past Chairperson of the Board of Directors
for the Illinois CPA Society. Ms. McWhorter also serves as Co-Chair of the Advisory Board of the First Women's Bank. Ms. McWhorter
received a BBA from the University of Wisconsin-Madison, an MBA from Northwestern University's Kellogg School of Management, and
an honorary Doctor of Humane Letters from Lake Forest College.

 Ms. McWhorter's breadth of experience in
health platforms, and her financial and accounting expertise and business experience as Chief Executive Officer make her a valuable addition
to our Board. In addition, Ms. McWhorter has been an operational, team, and project leader; and served as a senior executive, board member
and community leader for over twenty years. Her experience has provided her with a broad understanding of the financial, and strategic
issues facing health related companies like ours. Her industry and financial experience make her well qualified for service on our Board.

 Perfecto Sanchez, Director

 Age: 41

 Director Since: 2022

 Independent Director

 Member, Audit and Corporate Governance Committee

 PERFECTO SANCHEZ was elected as a Director of
the Company in August 2022. He is a West Point graduate and decorated U.S Army Veteran with two combat tours to Iraq. He started his corporate
career at Kraft Heinz, where he launched MiO Liquid Water Enhancer, which grossed over $100 million in its first year and is regarded
as one of Kraft's most successful innovations to date. In 2013, Mr. Sanchez joined Danone where he led portfolio strategy and trade
finance for over half of the dairy portfolio and then ultimately went on to lead the Danone Waters Customer Marketing Team for North America.
In 2014, Mr. Sanchez launched his own marketing consulting firm called Keep The Change, a growth consulting initiative with a purpose.
At Keep The Change, Mr. Sanchez serves as the chief executive officer and head of growth. He and his team build social impact initiatives
across a myriad of different sectors from working with local governments to billion-dollar startups. Mr. Sanchez currently serves on the
board of directors at TechTarget Inc. (Nasdaq: TTGT), a publicly traded company, and as an Advisor at International Crisis Group and Build
in Tulsa. He is also an Ambassador of Mission Blue, a global coalition aimed at protecting marine life.

 Mr. Sanchez's has deep industry, brand management and growth
experience in the consumer-packaged goods sector. His business insights as a Board member will provide significant value to the Lifeway
brand and support the Lifeway mission to grow profitably, sustainably and consciously and make Mr. Sanchez well qualified for service
on our Board.

 Jason Scher, Director

 Age: 50

 Director Since: 2012

 Lead Independent Director

 Chairperson, Audit and Corporate Governance Committee

 Audit Committee Financial Expert

 Chairperson, Compensation Committee

 JASON SCHER was elected as a Director of the Company
in July 2012. Mr. Scher is a principal at JAMP, LLP, an angel investment fund. From 2016 to present Mr. Scher has been a principal investor
and advisor focused on early-stage companies. From 2004 until 2016, Mr. Scher was the Chief Operating Officer of Vosges Haut-Chocolat,
a leading manufacturer of super premium chocolate and confections in the US. From 2000 to 2004, Mr. Scher was a principal in RP3 Development,
a New York based construction management and development company that performed work nationwide. Prior to that, Mr. Scher was employed
by COSI Sandwich Bar in their real estate and construction group. Mr. Scher devotes as much time as necessary to the business of the Company
and currently holds no other directorships in any other reporting company.

 Mr. Scher brings manufacturing, financial and
strategic experience to the Board, including a record of operational excellence in the food industry, and strategic experience across
multiple industries from real estate to retail to the Board. In addition, he has advised a private company board; been an operational,
team, and project leader; and served as a senior executive for nearly twenty years. His experience has provided him with a broad understanding
of the operational, financial, and strategic issues facing public companies like ours. His industry, operational, and financial experience
makes him well qualified for service on our Board.

 Pol Sikar, Director

 Age: 77

 Director Since: 1986

 Independent Director

 Member, Audit and Corporate Governance Committee

 POL SIKAR has served as a Lifeway director since
our inception in February 1986. He holds a master's degree from the Odessa State Institute of Civil Engineering in Russia. For more
than 40 years, he has been President and a major shareholder of Montrose Glass & Mirror Co., a company providing glass and mirror
products to the wholesale and retail trade in the greater Chicago area. Mr. Sikar devotes as much time as necessary to the business of
the Company and currently holds no other directorships in any other reporting company.

 Mr. Sikar brings a historical perspective to
the Board along with executive and entrepreneurial experiences that provide Lifeway with insights into operational and strategic planning,
and financial matters. His longtime service and institutional knowledge about Lifeway provide him with a broad understanding of the operational,
financial, and strategic issues facing public companies like ours. His executive, operational, and financial experience make him well
qualified for service on our Board.

 Eric Hanson, Chief Financial Officer and Treasurer

 Age: 50

 Executive Officer Since: 2018

 ERIC HANSON is our Chief Financial and Accounting
Officer and Treasurer. Mr. Hanson has served as our Chief Accounting Officer since May 2018, and as our Corporate Controller since July
2016. He also served as our interim Chief Financial Officer from May 2018 through August 2018 before we permanently appointed him to that
position in November 2018. Prior to joining Lifeway, he served as Director of External Reporting for The Azek Company in Skokie, Illinois
from 2014 through July 2016; and as Audit Manager for Deloitte & Touche, LLP in Chicago, Illinois from 2012 through 2014. He also
held various senior financial positions with Crowe Horwath from 2003 through 2012 and has over 20 years of financial reporting experience.
Mr. Hanson holds a Bachelor of Science in Finance from the University of Illinois and an MBA from Northwestern University's Kellogg
School of Management.

 Code of Conduct, Code of Ethics And Availability
of Corporate Governance Documents

 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, principal financial officer and principal accounting officer. Our Corporate
Governance Guidelines, the Code of Conduct, the Code of Ethics, committee charters, and other corporate governance documents 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.

 Delinquent Section 16(a) Reports

 Section 16(a) of the Exchange Act requires our
directors, executive officers, and persons who beneficially own more than 10% of Lifeway's Common Stock to file reports of ownership
and changes in ownership with the SEC and to furnish us with copies of all such reports they file. Based on our review of the copies of
such forms that we received, or written representations from certain reporting persons, we believe that none of our directors, executive
officers, or persons who beneficially own more than 10% of Lifeway's Common Stock failed to comply with Section 16(a) reporting
requirements in the fiscal year ended December 31, 2024, with the exception of Jason Scher, who had two late Form 4 filings reporting
one transaction late on each and one late Form 4 filing reporting 2 transactions late, Pol Sikar, who had one late Form 4 filing reporting
one transaction late, Julie Smolyansky, who had two late Form 4 filings reporting one transaction late on each, Amy Feldman, who had one
late Form 4 filing reporting one late transaction, Eric Hanson, who had one late Form 4 reporting one late transaction and Edward Smolyansky,
who had one late Form 4 filing reporting one transaction late.

 Audit and Corporate Governance Committee

 To eliminate unnecessary redundancies in our independent
committee structure given the size of our company and Board, we have chosen to combine our audit and nominating committees into an Audit
and Corporate Governance Committee. The Audit and Corporate Governance Committee, comprised of a majority of the Board's independent
directors, fulfills the Board's delegated audit and nominating duties as a single, integrated committee.

 Mr. Scher serves as the Chairperson of the Audit
and Corporate Governance Committee and Lead Independent Director and Ms. Levy, Ms. McWhorter, Mr. Sanchez and Mr. Sikar serve as members
of the Audit and Corporate Governance Committee.

 The Board has determined that each member of
the Audit and Corporate Governance Committee (1) is "independent" as defined by applicable SEC rules and the listing standards
of Nasdaq, (2) has not participated in the preparation of our financial statements or those of any of our current subsidiaries at any
time during the past three years, and (3) is able to read and understand fundamental financial statements, including a balance sheet,
income statement, and cash flow statement. In addition, the Board determined that Mr. Scher and Ms. McWhorter are financially literate
and financially sophisticated, as those terms are defined under the rules of Nasdaq, and were "audit committee financial experts,"
as defined by applicable SEC rules.

 Audit and Corporate Governance

 The Audit and Corporate Governance Committee oversees
the adequacy and effectiveness of our internal controls and meets with Lifeway's internal and independent auditors to review these
internal controls and to discuss other financial reporting matters. The Audit and Corporate Governance Committee is also responsible for
the selection, appointment, compensation, and oversight of both our independent auditors and our internal audit function. Our internal
audit function reports directly to the Audit and Corporate Governance Committee, and not management. The Audit and Corporate Governance
Committee reviews the financial reporting and accounting principles and standards and the audited financial statements to be included
in the annual report. It also reviews the quarterly financial results and related disclosures. Additionally, the Audit and Corporate Governance
Committee is responsible for the review and oversight of all related party transactions and other potential conflict of interest situations
between and among Lifeway and its officers, directors, employees, and principal shareholders. The Audit and Corporate Governance Committee
relies on the expertise and knowledge of management, our internal auditor, and our independent auditor in carrying out these oversight
responsibilities.

 Director Nominations

 The Audit and Corporate Governance Committee selects,
evaluates, and recommends to the Board qualified candidates for election or appointment to the Board, including by identifying individuals
qualified to become Board members and members of Board committees; and recommending to the Board director nominees for the next annual
meeting of shareholders or for appointment to vacancies on the Board. The Audit and Corporate Governance Committee also provides oversight
to management when Lifeway conducts succession planning or searches for individuals to serve as executive officers.

 The Audit and Corporate Governance Committee does
not have specific minimum qualifications that it believes that a director nominee must meet. However, the Audit and Corporate Governance
Committee believes that director candidates should, among other things, possess high degrees of integrity and honesty; have literacy in
financial and business matters; have no material affiliations with our direct competitors, suppliers, or vendors; and preferably have
experience in our business and other relevant business fields (for example, finance, accounting, law and banking). As a matter of policy,
the Audit and Corporate Governance Committee considers diversity together with other factors when evaluating candidates but does not have
a specific diversity requirement.

 Compensation Committee

 The Compensation Committee is a standing committee
of the Board. The Compensation Committee's principal purposes are to review and approve corporate goals and objectives relevant
to compensation of the Company's Named Executive Officers (as defined below), make recommendations regarding compensation for non-employee
directors and administer the Company's incentive and equity compensation plans. The Compensation Committee's objectives and
philosophy with respect to the fiscal 2023 executive compensation program, and the actions taken by the Compensation Committee in fiscal
2024 with respect to the compensation of our Named Executive Officers, are described below in "Compensation Overview."

 The Compensation Committee also is responsible
for evaluating and making recommendations to the Board regarding non-employee director compensation. In addition, the Compensation Committee
is responsible for conducting an annual risk evaluation of the Company's compensation practices, policies and programs.

 Mr. Scher serves as the Chairperson of the Compensation
Committee and Ms. Levy and Ms. McWhorter serve as members of the Compensation Committee.

 Insider Trading Policy

 We have adopted an insider trading policy and
procedures governing the purchase, sale, and other dispositions of our securities by directors, officers, and employees that we believe
are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq listing standards.
Our insider trading policy states, among other things, that our directors, officers, and employees are prohibited from trading in such
securities while in possession of material, nonpublic information. Our directors, officers and certain employees likely to obtain material
nonpublic information on a regular basis (collectively, "Pre-Clearance Persons") are also prohibited from engaging in, among
other things, short sales, hedging of stock ownership positions, trading in options, puts, calls, or other derivative instruments relating
to our common stock, buying our common stock on margin or pledging Lifeway's common stock as collateral for a loan without prior
approval of the majority of the Company's Board's disinterested independent directors and provided that no pledge of Company
securities will be approved if the number of Company securities so pledged, when taken together in the aggregate with any other pledged
Company securities of such person, exceed the lesser of (x) 10% of Company's securities beneficially owned by such person and (y)
1% of the then outstanding securities of the Company.

 Director Recommendations by Shareholders

 Consistent with the Board's Corporate Governance
Guidelines, the Board will consider any candidates recommended by shareholders on the same basis that it considers recommendations from
other sources. The recommendation must, at a minimum, include evidence of the shareholder's ownership of Lifeway stock, along with
the candidate's name and qualifications for service as a Board member, and a document signed by the candidate indicating the candidate's
willingness to serve, if elected. The Board and our Audit and Corporate Governance Committee will evaluate such recommendations in accordance
with the Audit and Corporate Governance Committee's charter, the Bylaws and the director nominee criteria described above. In considering
a candidate submitted by shareholders, the Board will take into consideration the needs of the Board and the qualifications of the candidate.
Nevertheless, just as with recommendations from other sources, the Board may choose not to consider an unsolicited recommendation if no
vacancy exists on the Board and/or the Board does not perceive a need to increase number of directors on the Board.

 ITEM 11.
EXECUTIVE COMPENSATION

 Compensation Overview

 Although SEC rules do not require smaller reporting
companies to include a Compensation Discussion and Analysis in their Form 10-K or proxy statement, Lifeway believes that additional information
beyond that required by smaller reporting companies is beneficial to shareholders. Accordingly, we elect each year to voluntarily disclose
additional information to provide shareholders with information regarding current executive compensation. Such information will be provided
in the proxy statement to be filed by the Company with the SEC in connection with the Company's 2025 Annual Meeting of Shareholders.

 NEO Summary Compensation for Fiscal Years 2023 and 2024

 The following table sets forth certain information
concerning compensation received by Lifeway's NEOs, consisting of our Chief Executive Officer and the two other most highly paid
executive officers for services rendered in all capacities during fiscal year 2023 and 2024.

 Summary Compensation Table

 Name and Principal Position(s)

 Year

 Salary

 ($)

 Stock

Awards (1)

($)

 Nonequity incentive plan compensation

 ($)

 All Other Compensation (2) ($)

 Total

 ($)

 Chief Executive Officer,

 2024

 1,000,000

 750,000

 1,600,000

 2,022,124

 5,372,124

 President and Secretary

 2023

 1,000,000

 750,000

 1,600,000

 22,200

 3,372,200

 Chief Financial and

 2024

 390,000

 156,000

 273,000

 27,000

 846,000

 Accounting Officer,

 Treasurer

 2023

 370,000

 148,000

 259,000

 28,000

 805,000

 Amy Feldman

 Senior Executive Vice

 2024

 355,000

 124,249

 248,500

 43,464

 771,213

 President - Sales

 2023

 340,000

 119,000

 238,000

 43,464

 740,464

 ______________________

 (1)

 Stock Awards are grants of shares with
 performance based or time-based vesting requirements made pursuant to the 2022 Omnibus Plan. The amounts reported in this column
 represent the grant date fair value of such awards consistent with the estimate of aggregate compensation cost, at target levels, to
 be recognized in accordance with FASB ASC Topic 718 over the service period for the stock awards granted for the relevant fiscal
 year.

 (2)

 Details about "All Other Compensation" are set forth in the table below.

 All Other Compensation Details

 Name and Principal Position(s)

 Year

 Retirement Plan Contributions (A)

($)

 Auto Allowance (B)

($)

 All Other Perks

 ($)

 Other

 ($)

 Total

 ($)

 Chief Executive

 2024

 13,200

 5,324

 3,600

 (C)

 2,000,000

 (E)

 2,022,124

 Officer, President and Secretary

 2023

 13,200

 5,400

 3,600

 (C)

 –

 22,200

 Chief Financial and

 2024

 13,200

 10,200

 3,600

 (C)

 –

 27,000

 Accounting Officer, Treasurer

 2023

 13,200

 10,200

 4,600

 (C)

 –

 28,000

 Amy Feldman

 Senior Executive

 2024

 10,671

 10,200

 22,594

 (D)

 –

 43,464

 Vice President – Sales

 2023

 10,671

 10,200

 22,594

 (D)

 –

 43,464

 (A)

 Consists of Lifeway's matching contributions to the Lifeway Foods Inc. 401(k) Profit Sharing Plan and Trust on behalf of the NEO.

 (B)

 Consists of personal use of vehicle taxable compensation for Ms. Smolyansky and auto allowance for Mr. Hanson and Ms. Feldman.

 (C)

 Consists of internet/telecommunications services allowance and a home office stipend.

 (D)

 Consists of internet/telecommunications services and health insurance benefits allowance.

 (E)

 Consists of CEO retention bonus.

 Employment agreements, severance, and change-in-control arrangements
between Lifeway and Named Executive Officers

 NEO Employment Agreements

 Julie Smolyansky serves Lifeway pursuant to an
amended and restated employment agreement dated as of December 23, 2024 (the "Smolyansky Employment Agreement"), pursuant
to which the Ms. Smolyansky serves as Chief Executive Officer of the Company and is responsible for such duties as are commensurate with
her position and office as may from time to time be reasonably assigned to her by the Board, including without limitation, the responsibilities
of President and Secretary of the Company. Pursuant to the Smolyansky Employment Agreement, Ms. Smolyansky is entitled to receive a base
salary of $1,000,000 per year, subject to annual review, and will also be eligible for an annual bonus upon the achievement of applicable
performance targets set by the Compensation Committee and subject to such other terms and conditions of the Company's annual bonus
program as in effect from time to time, with an annual bonus opportunity, at target, equal to 80% of the Executive's then effective
annual base salary. She is also eligible to participate in the 2022 Omnibus Incentive Plan, subject to the terms of the 2022 Omnibus Incentive
Plan, as determined by the Compensation Committee, in its sole discretion. Pursuant to the Smolyansky Employment Agreement, Ms. Smolyansky
will also receive an annual grant under the 2022 Omnibus Incentive Plan with a target value equal to 75% of the Executive's then
effective annual base salary, and to the extent the Company is unable to deliver shares upon the vesting of any such grant in accordance
with its terms, the Company shall pay to the Executive cash in an amount equal to the value of the vested shares (and in lieu of the vested
shares) at the time of such vesting. The Company may review and adjust (but not downward) the base salary from time to time, based upon
her performance. Ms. Smolyansky's base salary was $1,000,000 in 2024 and $1,000,000 in 2023. The term of the Smolyansky Employment
Agreement ends upon the Ms. Smolyansky's death or Disability (as defined in the Smolyansky Employment Agreement) or upon termination
by Ms. Smolyansky or the Company at any time.

 Upon termination of the Smolyansky Employment
Agreement (i) by the Company without Cause (as defined in the Smolyansky Employment Agreement) or by the Executive for Good Reason (as
defined in the Smolyansky Employment Agreement), provided in each case that the Company receives from the Ms. Smolyansky a general release
of claims against the Company and its subsidiaries, affiliates, stockholders, directors, officers, employees, agents, successors, and
assigns (the "Release") within 60 days following termination, or (ii) as a result of the Ms. Smolyansky's death,

 (a) the
Company shall pay Ms. Smolyansky an amount (the "Severance Pay") equal to the sum of (I) two times her base salary, at the
rate in effect immediately prior to such termination of employment, plus (II) an amount equal to two times the greater of her target annual
bonus for the year in which the termination of employment occurs or her highest bonus for the two years preceding the termination of employment;
and

 (b) unless
otherwise provided for in the 2022 Omnibus Incentive Plan or any award agreement, any and all outstanding equity awards previously granted
to the Executive that remain unearned, unvested, or otherwise unpaid ("Equity Awards"), and which remain outstanding immediately
prior to the date of termination of the Executive's employment, shall remain outstanding and shall immediately become vested in
full upon the Release becoming irrevocable.

 If within the one month prior to or 12 months
following a Change in Control (as defined in the Smolyansky Employment Agreement), the Ms. Smolyansky's employment is terminated
by the Company without Cause or by the Executive for Good Reason (a "CIC Termination of Employment"), the Executive is entitled
to the Severance Pay (although at a rate of three times, rather than two times, her base salary and the greater of her target annual bonus
for the year in which the termination of employment occurs or her highest bonus for the two years preceding the termination of employment).

 The Smolyansky Employment Agreement contains several
restrictive covenants to the benefit of the Company, including a two-year non-competition provision and a two-year non-solicitation provision.
Upon a CIC Termination of Employment, the Company shall pay the Executive an amount equal to the value of the non-competition obligations
(the "Non-Competition Payment"), as determined by an unrelated third party that is in the business of valuing non-competition
payments. The Severance Pay shall count toward the Non-Competition Payment, and all costs for obtaining and defending the valuation shall
be borne by the Company.

 The Employment Agreement also clarifies that the
Company is the sole owner of all intellectual property made or conceived by the Executive arising out of the Executive's employment
by the Company, except that the Executive owns and retains all rights in respect of The Kefir Cookbook. The Executive also granted the
Company a royalty-free license to utilize The Kefir Cookbook and the contents for its marketing purposes.

 Eric Hanson serves Lifeway pursuant to an employment
agreement dated as of November 19, 2018. The agreement renews automatically for successive terms of one year on January 1, unless pursuant
to the agreement it is terminated earlier or the Board or Compensation Committee gives timely notice of non-renewal. Mr. Hanson's
base salary was $390,000 in 2024 and $370,000 in 2023. His base salary is subject to annual review by the Compensation Committee and the
Board. Pursuant to his employment agreement, Mr. Hanson is also eligible for certain cash, equity, and other incentive awards based on
the satisfaction of the Board's pre-established performance goals. In 2024 and 2023, the Board set bonus targets for him in compliance
with the 2022 Omnibus Incentive Plan. Lifeway may terminate Mr. Hanson's employment for any lawful reason, with or without Cause,
and Mr. Hanson may resign for or without Good Reason (each as defined in his employment agreement).

 Amy Feldman served Lifeway pursuant to an employment
agreement dated as of October 29, 2018. As of February 28, 2025, Amy Feldman is no longer employed by the Company. Her departure is part
of the Company's ongoing organizational restructuring, which includes the elimination of the Senior Executive Vice President of
Sales position held by Amy Feldman. The elimination of this position constitutes a termination without cause under Ms. Feldman's
employment agreement with the Company.

 Pursuant to the employment agreements with Mr.
Hanson and Ms. Feldman, upon Non-Renewal, termination without Cause, or by his or her resignation with Good Reason (as defined in each
of their respective employment agreements), the applicable employee will be entitled to certain payments and benefits shown in the tables
below. Receipt of any severance amounts under each of their employment agreement is conditioned on execution of an enforceable general
release of claims in a form satisfactory to Lifeway.

 Non-Renewal

 Termination without Cause

or Resignation for Good Reason

 Termination for Cause or Resignation Without Good Reason

 Base Salary

 Three months after termination date

 The remainder of the term or 6 months, whichever is greater

 Through termination date

 Bonus Payments

 Greater of (i) bonus for fiscal year of termination date and (ii) bonus paid for fiscal year prior to termination date

 Greater of (i) bonus for fiscal year of termination date and (ii) bonus paid for fiscal year prior to termination date

 None

 Outstanding Equity Awards

 Vested but unsettled outstanding equity awards

 Accelerated vesting of all outstanding equity awards

 Vested but unsettled outstanding equity awards

 Health Insurance

 Company-paid COBRA premiums through the earliest of (i) three calendar months after termination date, (ii) the date executive becomes eligible for group health insurance through another employer, or (iii) the date executive ceases to be eligible for COBRA coverage

 Company-paid COBRA premiums through the earliest of (i) six calendar months after termination date, (ii) the date executive becomes eligible for group health insurance through another employer, or (iii) the date executive ceases to be eligible for COBRA coverage

 None

 Financial Services or Transition-Related

 None

 $10,000

 None

 Omnibus Plan Change of Control Provisions

 Unless otherwise provided in an award agreement or otherwise determined
by the Compensation Committee, upon a Change of Control (as defined in the 2022 Omnibus Plan) the following shall occur:

 For awards other than performance awards, a Replacement Award (that is, an award with a value and terms that are at least as favorable as the outstanding award) may be issued;

 For awards other than performance awards, if a Replacement Award is not issued and the Company's common stock ceases to be publicly traded after the Change of Control, such awards shall be immediately vested and/or exercisable upon such Change of Control;

 For unearned performance awards, the award shall be (i) earned on a pro-rata basis at the higher of actual or target performance and (ii) measured as of the end of the calendar quarter before the Change of Control date or, if the award is stock-price based, as of the effective date of the Change of Control;

 For earned but unvested performance awards, the award shall be immediately vested and payable as of the Change of Control; and

 For awards other than performance awards, if the Company's common stock continues to be publicly traded after a Change of Control, such awards shall continue under their applicable terms, unless otherwise determined by the Compensation Committee.

 Notwithstanding the forgoing, in the case of awards
other than performance awards, the Compensation Committee may cancel such awards, and the award holders shall receive shares or cash equal
to the difference between the amount shareholders receive for their shares and the purchase price per share, if any, under the award.

 If, in connection with a change in control, a
Participant's payment of any awards will cause the Participant to be liable for federal excise tax levied on certain "excess
parachute payments," then either (i) all payments otherwise due; or (ii) the reduced payment amount to avoid an excess parachute
payment, whichever will provide the Participant with the greater after- tax economic benefit taking into account any applicable excise
tax, shall be paid to the Participant. In no event will any Participant be entitled to receive any kind of gross-up payment or reimbursement
for any excise taxes payable in connection with Change of Control payments.

 Capitalized terms used in this section but not
defined herein have the meanings assigned to them in the 2022 Omnibus Plan.

 There are no other agreements with the NEOs that
provide for payments in connection with resignation, retirement, termination of employment, or change in control other than the employment
agreements described above.

 Non-Employee Director Equity and Deferred Compensation Plan

 Unless otherwise determined by the Plan Administrator in connection
with a grant, a change in control shall have the following effects on outstanding awards:

 On a change in control in which a Director receives a replacement award with a value and terms that are at least as favorable as the Director's outstanding awards (a "Replacement Award"), the Director's outstanding awards shall remain outstanding subject to the terms of the Replacement Award.

 On a change in control in which the Company's shares cease to be publicly traded, the Director's outstanding awards shall become immediately vested unless the Director receives Replacement Awards.

 On a change in control in which the Company's shares continue to be public traded, a Director's outstanding awards shall remain outstanding and be treated as Replacement Awards.

 Notwithstanding the forgoing, the 2022 Plan Administrator
may determine that any or all outstanding awards granted under the 2022 Directors Plan will be canceled and terminated upon a change in
control, and that in connection with such cancellation and termination, the Director shall receive for each RSU subject to such award,
a cash payment (or the delivery of shares of stock, other securities or a combination of cash, stock and securities equivalent to such
cash payment) equal to the consideration received by shareholders of the Company for a share of common stock in such change in control.

 Capitalized terms used in this section but not
defined herein have the meanings assigned to them in the 2022 Non-Employee Director Plan.

 There are no other agreements with the directors
that provide for payments in connection with resignation, retirement, termination of service, or change in control.

 Equity Compensation Plans

 The following table sets forth certain information,
as of December 31, 2023, regarding the shares of Lifeway's common stock authorized for issuance under our 2015 Omnibus Plan, our
2022 Omnibus Plan and our 2022 Non-Employee Director Plan.

 Plan category

 (a)

Number of securities to be issued upon exercise of outstanding options, warrants and rights

 (b)

Weighted-average exercise price of outstanding options, warrants and rights

 (c)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))

 Equity compensation plans approved by security holders

 29,650

 $

 10.42

 3,029,995

 Equity compensation plans not approved by security holders

 –

 $

 –

 –

 Total

 29,650

 $

 10.42

 3,029,995

 On March 29, 2016, Lifeway filed a registration
statement on Form S-8 with the SEC in connection with the 2015 Omnibus Plan covering 3,500,000 shares of our common stock. The 2015 Omnibus
Plan has since been terminated for future issuances and replaced by our 2022 Omnibus Plan. A total of 29,650 options to purchase common
stock remain awarded and unexercised under the 2015 Omnibus Plan which will remain in place until all such awards are terminated or exercised.

 Our shareholders adopted the 2022 Omnibus Plan
at our annual meeting of shareholders on August 31, 2022. Pursuant to the 2022 Omnibus Plan, we may issue common stock, options to purchase
common stock, stock appreciation rights, restricted stock, restricted stock units, performance share units, performance shares, cash-based
awards and other stock-based awards to our employees. The Compensation Committee has the discretion to determine the option price, number
of shares, grant date, and vesting terms of awards granted under the 2022 Omnibus Plan. On May 24, 2023, the Company filed a registration
statement on Form S-8 with the SEC in connection with the 2022 Omnibus Plan covering 3,247,855 shares of our common stock. A total of
2,636,514 shares were eligible for award under the 2022 Omnibus Plan as of December 31, 2024.

 Our shareholders adopted the 2022 Non-Employee
Director Equity and Deferred Compensation Plan at our annual meeting of shareholders on August 31, 2022. Pursuant to the 2022 Director
Plan, we may issue restricted stock units to our non-employees Directors. The Board has the discretion to determine the number of restricted
stock units granted, grant date, and vesting terms of awards granted under the 2022 Director Plan. The Company filed a registration statement
on Form S-8 with the SEC in connection with the 2022 Director Plan covering 500,000 shares of our common stock. A total of 393,081 shares
were eligible for award under the 2022 Director Plan as of December 31, 2024.

 Outstanding Equity Awards at Fiscal Year End

 The following table provides information regarding
each unexercised stock option and unvested restricted stock award held by our NEOs as of December 31, 2024.

 Stock awards

 Name

 Number of shares or units of stock that have not vested
 (#)(1)

 Market value of shares of units of stock that have not vested
 ($)(2)

 Equity
 incentive
 plan awards: Number of
 unearned
 shares, units or other rights that have not vested
 (#)(3)

 Equity
 incentive
 plan awards: Market or payout value of
 unearned
 shares, units or other rights that have not vested
 ($)(2)

 55,766
 (4)

 $
 1,382,997

 282,927

 $
 7,016,590

 11,055
 (5)

 $
 274,164

 55,140

 $
 1,367,472

 Amy Feldman

 8,881
 (6)

 $
 220,249

 44,437
 (7)

 $
 1,102,038

 (1)

 Represents time-based restricted stock awards pursuant to Lifeway's 2022 Omnibus Plan.

 (2)

 The market values of these stock awards are calculated by multiplying the number of unvested/unearned shares held by the applicable NEO by the closing price of our common stock on December 31, 2024, the last trading day of our fiscal year, which was $24.80.

 (3)

 Performance share units will vest as
 soon as practicable after the end of the three year performance period at the time that the Compensation Committee determines the
 number of PSUs earned by the applicable participant based on the performance metrics met. Numbers presented represent the number of
 target units.

 (4)

 Of such shares, 6,070 vested on January 10, 2025; 12,113 will vest on June 16, 2025; 13,334 will vest on August 31, 2025; 6,070 will vest on January 10, 2026; 12,111 will vest on June 16, 2026; and 6,068 will vest on January 10, 2027.

 (5)

 Of such shares, 1,263 vested on January 10, 2025; 22,267 vested on 2,390 will vest on June 16, 2025; 2,488 will vest on August 31, 2025; 1,263 will vest on January 10, 2026; 2,390 will vest on June 16, 2026; and 1,261 will vest on January 10, 2027.

 (6)

 Of such shares, 1,006 vested on January 10, 2025; 1,922 shares will vest on June 16, 2025; 2,022 will vest on August 31, 2025; 1,006 will vest on January 10, 2026; 1,921 will vest on June 16, 2026; and 1,004 will vest on January 10, 2027. All such shares were forfeited as of February 28, 2025, when Ms. Feldman ceased to be employed by the Company.

 (7)

 All such shares were forfeited as of February 28, 2025, when Ms. Feldman ceased to be employed by the Company.

 Fiscal Year 2024 Director Compensation

 The table below describes the cash and stock award
portions of the annual retainer earned or paid to each non-employee director who served in fiscal year 2024. Julie Smolyansky received
no compensation for her service as director. We have excluded her from the table because we fully describe her compensation in the "NEO
Summary Compensation for Fiscal Years 2024 and 2023" section.

 Name

 Fees Earned
 in Cash ($)(1)

 Stock Awards (2)(3)
 ($)

 All Other
 Compensation
 ($)

 Total
 ($)

 J.C. Dalto

 45,000

 –

 95,000

 68,000

 –

 118,000

 68,000

 –

 118,000

 57,500

 –

 107,500

 Jason Scher (4)

 91,000

 –

 141,000

 57,500

 –

 107,500

 (1)

 Annual fees to directors are paid quarterly in arrears. The annual fee schedule applicable during Fiscal Year 2024 is as follows:

 Non-Employee Director Fee Schedule

 Annual Cash Retainer

 $
 45,000

 Annual Equity Compensation

 $

 Audit Committee Chair Retainer

 $
 12,500

 Audit Committee Member Retainer

 $
 12,500

 Compensation Committee Chair Retainer

 $
 10,500

 Compensation Committee Member Retainer

 $
 10,500

 (2)

 Amounts set forth herein represent the aggregate
 grant date fair value computed in accordance with FASB ASC Topic 718.

 (3)

 Details about the amounts in the "Stock Awards" column are set forth in the table below. One-third of the restricted stock awards to each non-employee director set forth below vested or will vest on each of July 1, 2025, 2026 and 2027.

 Stock Awards Detail

 Name

 Vested Stock
 Award
 ($)

 Restricted Stock Unit
 Award
 ($)

 Total
 ($)

 J.C. Dalto

 –

 –

 –

 –

 Jason Scher

 –

 –

 (4)

 Mr. Scher deferred all compensation that would have been paid to him in fiscal year 2024 pursuant to the Company's 2022 Non-Employee Director Plan.

 Committee Interlocks and Insider Participation

 During fiscal year 2024, the Compensation Committee
consisted of Mr. Scher, Ms. Levy and Ms. McWhorter. None of these members was, at any time during fiscal year 2024, or at any previous
time, a Lifeway officer or employee.

 None of Lifeway's executive officers served
as a member of the board of directors or compensation committee of any other entity that has one or more of its executive officers serving
as a member of Lifeway's Board. No member of the Compensation Committee has or had any relationship with us requiring disclosure
under Item 404 of SEC Regulation S-K.

 ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 Equity Compensation Plan Information

 See Item 11, Equity Compensation Plans, for information regarding our equity plan compensation information.

 Security Ownership of Certain Beneficial Owners
and Management

 As of April 25, 2025, Lifeway's
directors and Named Executive Officers beneficially own, directly or indirectly, in the aggregate, approximately 19.40% of its
outstanding Common Stock. These shareholders have significant influence over our business affairs, with the ability to control
matters requiring approval by our shareholders including election of directors and matters such as approvals of mergers or other
business combinations.

 The following table sets forth, as of April 25,
2025, certain information with respect to the beneficial ownership of the Common Stock for (i) each person, or group of affiliated persons,
known by Lifeway to beneficially own more than 5% of the outstanding shares of our Common Stock, (ii) each of our directors, (iii) each
of our Named Executive Officers, and (iv) all of our directors and executive officers as a group.

 Shares Beneficially Owned (b)

 Name and Address (a)

 Number

 Percent

 Directors, Nominees and Named Executive Officers

 2,721,934

 (c)

 17.89%

 Juan Carlos ("JC") Dalto

 5,212

 (d)

 *

 25,491

 *

 21,429

 *

 4,751

 *

 Jason Scher

 96,683

 (e)

 *

 26,858

 *

 42,612

 *

 Amy Feldman

 21,132

 (f)

 *

 All directors and executive officers as a group

 (9 persons)

 2,966,102

 (c)-(f)

 19.40%

 5% Holders

 Danone North America PBC
 1 Maple Avenue
 White Plains, NY 10605

 3,454,756

 22.72%

 Edward Smolyansky

 1219 N. Wells St.

Chicago, IL 60610

 3,159,975

 (g)

 20.78%

 Ludmila Smolyansky

C/o Edward Smolyansky

1219 N. Wells St.

Chicago, IL 60610

 930,666

 (h)

 6.12%

 ____________

 *

 Less than 1%

 (a)

 Unless otherwise indicated, the business address of each person or entity named in the table is c/o Lifeway Foods, Inc., 6431 West Oakton St., Morton Grove, IL 60053.

 (b)

 Applicable percentage of ownership is based on 15,203,241 shares of Common Stock outstanding as of April 25, 2025. Beneficial ownership is determined in accordance with SEC rules and includes voting and investment power with respect to shares. Shares of Common Stock subject to options, warrants, or other convertible securities exercisable within 60 days after April 25, 2025 are deemed outstanding for computing the percentage ownership of the person holding such options, warrants, or other convertible securities, but are not deemed outstanding for computing the percentage of any other person. Except as otherwise noted, the named beneficial owner has the sole voting and investment power with respect to the shares of Common Stock shown. The information in this table is based solely on statements in filings with the SEC or other information made available to the Company that is deemed reliable.

 (c)

 Includes (i) 12,113 shares of common stock issuable upon
 vesting of RSUs on June 16, 2025, (ii) 22,216 shares held by Ms. Smolyansky on behalf of minor children, (iii) 5,122 shares held by
 Ms. Smolyansky's spouse, and (iv) 500,000 shares held by Smolyansky Family Holdings, LLC (the "Smolyansky LLC")
 of which Ms. Smolyansky beneficially owns 50%.

 (d)

 Includes 461 shares of common stock underlying phantom stock which represents compensation that has been deferred and may be issued within 60 days of April 25, 2025 if Mr. Dalto ceases to be a director.

 (e)

 Includes 71,185 shares of common stock underlying phantom stock which represents compensation that has been deferred and may be issued within 60 days of April 25, 2025 if Mr. Scher ceases to be a director.

 (f)

 Includes 19,324 shares of common stock held indirectly by the Amy Feldman Trust of which Ms. Feldman is the sole trustee.

 (g)

 Includes (i) 500,000 shares held by Smolyansky Family Holdings, LLC (the "Smolyansky LLC") of which Mr. Smolyansky beneficially owns 50% and (i) 1,233,333 shares held by the Edward Smolyansky Trust 2/2/16, (iii) 100,000 shares held by Mr. Smolyansky on behalf of a minor child. Mr. Smolyansky shares the power to vote and dispose of the shares held by the Smolyansky LLC with Julie Smolyansky and (iv) 75,000 shares held by The Ludmila and Edward Smolyansky Family Foundation, of which the Mr. Smolyansky and his spouse are directors.

 (h)

 Includes (i) 913,323 shares held by the Ludmila Smolyansky Trust 2/1/05, of which Ms. L. Smolyansky is the trustee, (ii) 17,343 shares held by The Smolyansky Family Foundation, of which Ms. L. Smolyansky is the trustee. The previously disclosed pledge of Ms. L. Smolyansky's shares has been released and (iii) 75,000 shares held by The Ludmila and Edward Smolyansky Family Foundation, of which the Ms. Ludmila Smolyansky is a director.

 ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

 Jason Burdeen, Julie Smolyansky's spouse,
is employed by the Company as the CEO's Chief of Staff. Mr. Burdeen does not have an employment agreement. In 2024, Mr. Burdeen's
total compensation was $313,800, including (i) a base salary of $200,000, (ii) a short-term incentive cash bonus award of $100,000, based
on satisfaction of the Board's pre-established performance goals (iii) an auto allowance of $10,200, (iv) an internet/telecommunication
allowance of $3,600, (v) 1,456 RSUs awarded on January 10, 2024, of which 486 vested on January 10, 2025, 486 will vest on January 10,
2026 and 484 will vest on January 10, 2027, and (vi) PSUs awarded on January 10, 2024 which may be earned at the end of a three-year performance
period based on the achievement of performance goals with respect to Cumulative Revenue and Cumulative Adjusted EBITDA, both weighted
equally.

 The pre-established PSU thresholds, targets and
maximum thresholds for each of the financial metrics is not disclosed as disclosing the long-term targets for those metrics prospectively
would give substantial insight into the Company's confidential, forward-looking strategies, and could therefore place the Company
and its shareholders at a competitive disadvantage.

 Each metric has a threshold, target and maximum
performance achievement level and associated payout. If our performance meets or exceeds the performance threshold, then a varying number
of shares from the threshold (50% of the target number of shares) up to the maximum (150% of the target number of shares) may be earned.
No shares are earned if the performance threshold is not met.

 The PSUs vest and become issuable to the employee
at the end of the three-year performance measurement period. Employees forfeit their PSUs if they are not employed at the time the PSUs
are awarded and issued.

 The following table sets forth the PSU awards
granted under the 2022 Omnibus Plan to Mr. Burdeen in 2024 as part of our long term incentive program at each of the threshold, target
and maximum thresholds.

 Threshold PSUs

 Target PSUs

 Maximum PSUs

 Target Value

 1,456

 2,913

 4,369

 $40,000

 PSUs were calculated by dividing the award value
by the fair market value on the date the award was approved.

 The Compensation Committee is responsible for
determining and approving Mr. Burdeen's compensation annually.

 On December 23, 2024, the Company and Julie Smolyansky
entered into a Retention Bonus Agreement (the "Retention Bonus Agreement") pursuant to which the Company agreed to pay a one-time
cash retention bonus of $2,000,000 (the "Retention Bonus") to Ms. Smolyansky, subject to applicable withholding and deductions
and the Ms. Smolyansky agreed if she terminates her employment with the Company without Good Reason (as defined in the Smolyansky Employment
Agreement) prior to December 20, 2026, she will be required to repay the after-tax value of the Retention Bonus (the "Repayment
Obligation"). Subject to Ms. Smolyansky's continued employment with the Company, the Repayment Obligation shall terminate
with respect to 12.5% of the Retention Bonus on each three-month anniversary of the date of the Retention Bonus Agreement.

 We have determined that there were no related
party transactions in excess of $120,000 since January 1, 2024, or currently proposed, involving Lifeway except as discussed above.

 Director Independence

 At least annually and in connection with any individuals
being nominated to serve on the Board, the Board reviews the independence of each director or nominee and affirmatively determines whether
each director or nominee qualifies as independent. The Board believes that shareholder interests are best served by having a number of
objective, independent representatives on the Board. A majority of the current Board, consisting of Mr. Dalto, Ms. Levy, Ms. McWhorter,
Mr. Sanchez, Mr. Scher and Mr. Sikar and are "independent directors" as defined in the listing standards of Nasdaq and none
of them have relationships to Lifeway that are material to that director's ability to be independent from management in connection
with the duties of a board member.

 Each of the Audit and Corporate Governance Committee
and the Compensation Committee is composed solely of independent directors. In addition, the Board and each committee have complete and
open access to any member of management and the authority to retain independent legal, financial, and other advisors as they deem appropriate
without consulting or obtaining the approval of any member of management. The Board and each committee also hold regularly scheduled executive
sessions of only independent directors to promote discussion among the independent directors and assure independent oversight of management.

 ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 AUDIT AND CORPORATE GOVERNANCE COMMITTEE

 AUDIT REPORT

 The Board has the ultimate authority for effective
corporate governance, including oversight of Lifeway's management. The Audit and Corporate Governance Committee assists the Board
in fulfilling its responsibilities by overseeing, among other things, Lifeway's accounting and financial reporting processes (including
the internal audit function), the audits of Lifeway's consolidated financial statements and internal control over financial reporting,
the qualifications and performance of the independent registered public accounting firm engaged as Lifeway's independent auditor,
and the performance and continued retention of Lifeway's internal auditor.

 The Audit and Corporate Governance Committee relies
on the expertise and knowledge of management, the internal auditor, and the independent auditor in carrying out its oversight responsibilities.
Management is responsible for the preparation, presentation, and integrity of Lifeway's consolidated financial statements, accounting
and financial reporting principles, internal control over financial reporting, and disclosure controls and procedures designed to ensure
compliance with accounting standards, applicable laws, and regulations. Together with Lifeway's internal auditor, management is
also responsible for objectively reviewing and evaluating the adequacy, effectiveness, and quality of Lifeway's system of internal
control. Lifeway's independent auditor, Grant Thornton, is responsible for performing an independent audit of the Company's
consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles
generally accepted in the United States.

 During fiscal year 2024, the Audit and Corporate
Governance Committee fulfilled its responsibilities as set forth in its charter and further described above in the "Board Committees"
section. The Audit and Corporate Governance Committee has reviewed and discussed with management, and the independent auditor, Lifeway's
audited consolidated financial statements and related footnotes for the fiscal year ended December 31, 2024, and the independent auditor's
report on those financial statements. Management represented to the Audit and Corporate Governance Committee that Lifeway's consolidated
financial statements were prepared in accordance with accounting principles generally accepted in the United States. Grant Thornton presented
the matters required to be discussed with the Audit and Corporate Governance Committee by Public Company Accounting Oversight Board standards
and Rule 2-07 of SEC Regulation S-X. This review included a discussion with management, the internal auditor, and the independent auditor
of the quality (not merely the acceptability) of Lifeway's accounting principles, the reasonableness of significant estimates and
judgments, and the disclosures in Lifeway's consolidated financial statements, including the disclosures relating to critical accounting
policies.

 Based on the reviews and discussions described
above, the Audit and Corporate Governance Committee recommended to the Board that the audited consolidated financial statements be included
in Lifeway's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 for filing with the SEC.

 Respectfully Submitted,

 AUDIT AND CORPORATE GOVERNANCE COMMITTEE

 Jason Scher, Chairperson

 THE FOREGOING AUDIT AND CORPORATE GOVERNANCE COMMITTEE
AUDIT REPORT SHALL NOT BE "SOLICITING MATERIAL" OR BE DEEMED FILED WITH THE SEC, NOR SHALL SUCH INFORMATION BE INCORPORATED
BY REFERENCE INTO ANY FILING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT WE SPECIFICALLY INCORPORATE
IT BY REFERENCE INTO SUCH FILING.

 Fees Billed by Independent Registered Public Account Firm

 The following table sets forth the fees for professional
audit services rendered by Grant Thornton in connection with fiscal years ended December 31, 2024 and 2023 and fees billed for other services
rendered by Grant Thornton during those periods:

 Fees Billed by Independent Registered Public Accounting Firm

 Type of Fees

 2024

 2023

 (1) Audit Fees

 $
 441,388

 $
 441,180

 (2) Audit-Related Fees

 –

 –

 (3) Tax Fees

 –

 –

 (4) All Other Fees

 –

 –

 $
 441,388

 $
 441,180

 In the above table, in accordance with the SEC's
definitions and rules, "audit fees" are fees Lifeway paid to its independent registered public accountant for professional
services in connection with the audit of our consolidated financial statements for the fiscal years ended December 31, 2024 and 2023 included
in Form 10-K, for the review of the unaudited financial statements included in Form 10-Qs within those fiscal years, and for services
that are normally provided by the accountant in connection with statutory and regulatory filings or engagements; "audit-related
fees" are fees for work performed during those fiscal years for assurance and related services that are reasonably related to the
performance of the audit or review of our consolidated financial statements; "tax fees" are fees for work performed during
those fiscal years for tax compliance, tax advice, and tax planning; and "all other fees" are fees for work performed during
those fiscal years for any services not included in the first three categories. All of the services set forth in sections (1) through
(4) above were approved by the Audit and Corporate Governance Committee in accordance with its charter.

 For the fiscal years ended December 31, 2024 and
2023, we retained certain firms other than Grant Thornton for tax compliance, tax advice, tax planning and other accounting advice.

 Pre-Approval of Audit and Non-Audit Services

 Lifeway's Audit and Corporate Governance
Committee has adopted policies and procedures for pre-approving all non-audit work performed by its auditors. The policy sets forth the
procedures and conditions for both pre-approval of audit-related services to be performed by its auditors (assurance and related services
that are reasonably related to the performance of the auditors' review of the financial statements or that are traditionally performed
by the independent auditor) and specific pre-approval for all other services for the current fiscal year consistent with the SEC's
rules on auditor independence. The Audit and Corporate Governance Committee is asked to pre-approve the engagement of the independent
auditor and the projected fees for audit services for the current fiscal year during the first quarter of each year.

 Unless a type of service has received general
pre-approval, it will require specific pre-approval by the Audit and Corporate Governance Committee if it is to be provided by the auditors.
Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit and
Corporate Governance Committee. In determining whether to approve a particular audit or permitted non-audit service, the Audit and Corporate
Governance Committee will consider, among other things, whether the service is consistent with maintaining the independence of the independent
registered public accounting firm. The Audit and Corporate Governance Committee will also consider whether the independent registered
public accounting firm is best positioned to provide the most effective and efficient service to us and whether the service might be expected
to enhance our ability to manage or control risk or improve audit quality. Specifically, the Audit and Corporate Governance Committee
has not pre-approved the use of Grant Thornton for non-audit services. There was no non-audit work performed by Grant Thornton for the
fiscal years ended December 31, 2024 or December 31, 2023.

 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

 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

 9/30/2024

 3.1

 11/14/2024

 3.3

 Second Amended and Restated Bylaws

 12/31/2022

 3.1

 3/27/2023

 4.1

 Description of Securities

 4.1

 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

 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

 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.

 10.1

 5/11/2018

 10.5

 Employment Agreement by and between the Company and Amy Feldman, dated as of October 29, 2018

 10.1

 11/1/2018

 10.6

 Employment Agreement by and between the Company and Eric Hanson, dated as of January 18, 2019

 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.

 12/31/2018

 10.10

 4/15/2019

 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.

 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.

 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

 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

 10.1

 2/7/2025

 10.12+

 Lifeway Foods, Inc. Omnibus Incentive Plan

 10.2

 10.13+

 Notice of Restricted Stock Unit Award

 10.3

 10.14+

 Notice of Performance Unit Award

 10.4

 10.15+

 Notice of Restricted Stock Award

 10.5

 10.16+

 Notice of Non-Qualified Stock Option Award

 10.6

 10.17

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

 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

 12/31/2022

 10.20

 3/27/2023

 10.19+

 Lifeway Foods, Inc. 2022 Omnibus Incentive Plan

 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

 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

 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

 9/30/2022

 10.8

 11/14/2022

 No.

 Description

 Form

 Period Ending

 Exhibit

 Filing

 Date

 10.23+

 Lifeway Foods, Inc. 2022 2022 Non-Employee Director Equity and Deferred Compensation Plan

 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

 9/30/2022

 10.6

 11/14/2022

 10.25+

 First Amendment to the 2022 Non-Employee Director Equity and Deferred Compensation Plan

 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

 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

 10.1

 12/23/2024

 10.28+

 Retention Bonus Agreement, dated as of December 23, 2024, by and between the Company and Julie Smolyansky

 10.2

 12/23/2024

 19.1

 Lifeway Foods, Inc. Policy on Insider Trading

 19.1

 List of Subsidiaries of the Registrant

 12/31/2023

 3/20/2024

 23.1

 Consent of Grant Thornton LLP

 23.1

 24.1

 Power of Attorney (incorporated by reference to the signature page of our Annual Report on Form 10-K)

 24.1

 31.1

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

 Filed Herewith

 31.2

 Rule 13a-14(a)/15d-14(a) Certification of Eric Hanson

 Filed Herewith

 32.1*

 Section 1350 Certification of Julie Smolyansky

 32.1

 32.2*

 Section 1350 Certification of Eric Hanson

 32.2

 Lifeway Foods, Inc. Incentive Compensation Clawback Policy

 99.1*

 Press release dated March 14, 2025 reporting the Company's financial results for year ended December 31, 2024.

 99.1

 101*

 104*

 __________________

 +

 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.

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to the Company's Annual Report
on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 LIFEWAY FOODS, INC.

 By:

 /s/ Julie Smolyansky

 Chief Executive Officer, President, and Director

 By:

 /s/ Eric Hanson

 Chief Financial & Accounting Officer

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this Amendment No. 1 to the Company's Annual Report on Form 10-K has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.

 /s/ Julie Smolyansky

 Chief Executive Officer, President, and Director

 (Principal Executive Officer)

 /s/ Eric Hanson

 Chief Financial & Accounting Officer

 (Principal Financial & Accounting Officer)

 *

 Jason Scher

 *

 *

 *

 *

 Juan Carlos Dalto

 *

 * By: /s/ Julie Smolyansky

 Attorney-In-Fact