Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 30, 2024

☐	Transition report pursuant to Section 13 or 15(d) of the Exchange Act for the transition period from ☐ to ☐

Commission file number: 1-9009

Tofutti Brands Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		13-3094658
(State of Incorporation)		(I.R.S. Employer Identification No.)

50 Jackson Drive, Cranford, New Jersey 07016

(Address of Principal Executive Offices)

(908) 272-2400

(Registrant’s Telephone Number, including area code)

Securities registered pursuant to Section 12(g) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		TOFB		None

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant: (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 ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of May 14, 2024 the Registrant had 5,153,706 shares of Common Stock, par value $0.01, outstanding.

TOFUTTI BRANDS INC.

INDEX

		Page
Part I - Financial Information:

Item 1.	Unaudited Condensed Financial Statements	3

	Unaudited Condensed Balance Sheets – March 30, 2024 and December 30, 2023	3

	Unaudited Condensed Statements of Operations - Thirteen Weeks ended March 30, 2024 and April 1, 2023	4

	Unaudited Condensed Statements of Changes in Stockholders’ Equity - Thirteen Weeks ended March 30, 2024 and April 1, 2023	5

	Unaudited Condensed Statements of Cash Flows - Thirteen Weeks ended March 30, 2024 and April 1, 2023	6

	Notes to Unaudited Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	16

Part II - Other Information:

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17

Item 3.	Defaults Upon Senior Securities	17

Item 4.	Mine Safety Disclosures	17

Item 5.	Other Information	17

Item 6.	Exhibits	17

Signatures		18

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

TOFUTTI BRANDS INC.

Unaudited Condensed Balance Sheets

(in thousands, except share and per share figures)

	March 30, 2024		December 30, 2023
Assets
Current assets:
Cash	$	351	$	837
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $495 and $525.		889		828
Inventories		2,453		2,475
Prepaid expenses and other current assets		97		93
Total current assets		3,790		4,233

Operating lease right-of-use assets		66		81
Finance lease right-of-use asset		32		36
Deferred tax assets		246		246
Other assets		19		19
Total assets	$	4,153	$	4,615

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	209	$	237
Accrued expenses		407		541
Finance lease liability, current portion		15		15
Total current liabilities		631		793

Operating lease liabilities, net of current portion		—		7
Finance lease liability, net of current portion		19		23
Total liabilities		650		823

Stockholders’ equity:
Preferred stock - par value $.01 per share; authorized 100,000 shares, none issued and outstanding		—		—
Common stock - par value $.01 per share; authorized 15,000,000 shares, 5,153,706 shares issued and outstanding		52		52
Additional paid-in capital		337		323
Retained earnings		3,114		3,417
Total stockholders’ equity		3,503		3,792
Total liabilities and stockholders’ equity	$	4,153	$	4,615

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Operations

(in thousands, except per share figures)

	Thirteen weeks ended March 30, 2024			Thirteen weeks ended April 1, 2023

Net sales	$	2,212		$	2,490
Cost of sales		1,742			1,884
Gross profit		470			606

Operating expenses:
Selling and warehouse		214			271
Marketing		134			95
Research and development		42			28
General and administrative		382			302
Total operating expenses		772			696

Loss from operations		(302	)		(90	)

Loss before interest expense and income taxes		(302	)		(90	)
Interest expense		1			1
Loss before income tax		(303	)		(91	)
Provision for income taxes		—			11

Net loss	$	(303	)	$	(102	)

Weighted average common shares outstanding:
Basic		5,154			5,154
Diluted		5,154			5,154

Earnings (loss) per common share:
Basic	$	(0.06	)	$	(0.02	)
Diluted	$	(0.06	)	$	(0.02	)

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Changes in Stockholders’ Equity

(in thousands)

	Common Stock		Additional Paid-in Capital		Retained Earnings			Total
	Thirteen weeks ended March 30, 2024
	Common Stock		Additional Paid-in Capital		Retained Earnings			Total

December 30, 2023	$	52	$	323	$	3,417		$	3,792
Stock-based compensation		—		14		—			14
Net loss		—		—		(303	)		(303	)
March 30, 2024	$	52	$	337	$	3,114		$	3,503

	Thirteen weeks ended April 1, 2023
	Common Stock		Additional Paid-in Capital		Retained Earnings			Total

December 31, 2022	$	52	$	263	$	3,783		$	4,098
Balance	$	52	$	263	$	3,783		$	4,098
Stock-based compensation		—		20		—			20
Net loss		—		—		(102	)		(102	)
April 1, 2023	$	52	$	283	$	3,681		$	4,016
Balance	$	52	$	283	$	3,681		$	4,016

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS INC.

Unaudited Condensed Statements of Cash Flows

(in thousands)

	Thirteen weeks ended March 30, 2024			Thirteen weeks ended April 1, 2023

Cash (used in) operating activities, net	$	(482	)	$	(650	)

Cash (used in) financing activities, net		(4	)		(4	)

Net (decrease) increase in cash		(486	)		(654	)

Cash at beginning of period		837			1,072

Cash at end of period	$	351		$	418

Supplemental cash flow information:
Interest paid on finance leases	$	1		$	1

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Note 1: Basis of Presentation

The accompanying unaudited condensed financial information, in the opinion of management, reflects all adjustments (which include only normally recurring adjustments) necessary to present fairly the Company’s financial position, operating results and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for the thirteen-week period ended March 30, 2024 are not necessarily indicative of the results to be expected for the full year or any other period.

The Company’s fiscal year is either a fifty-two or fifty-three-week period which ends on the Saturday closest to December 31^st.

Note 2: Recently Issued Accounting Standards

The Company considers the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s balance sheets or statements of operations.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendments in this Update require a new topic to be added (Topic 326) to the Accounting Standards Codification (“ASC”) and removes the thresholds that entities apply to measure credit losses on financial instruments measured at amortized cost, such as loans, trade receivables, reinsurance recoverables, off-balance-sheet credit exposures, and held-to-maturity securities. Under current U.S. GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. The guidance under ASU 2016-13 will remove all current recognition thresholds and will require entities under the new current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The new CECL model is based upon expected losses rather than incurred losses. Additionally, the credit loss recognition guidance for available-for-sale securities is amended and will require that credit losses on such debt securities should be recognized as an allowance for credit losses rather than a direct write-down of amortized cost balance. As the Company is a smaller reporting company, the ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements.

Note 3: Inventories

Inventories consist of the following:

Schedule of Inventories

	March 30, 2024		December 30, 2023
Finished products	$	1,377	$	1,366
Raw materials and packaging		1,076		1,109
Inventories, net	$	2,453	$	2,475

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Note 4: Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes.

The Company recognized an income tax expense of $0 and an income tax expense of $11 for the thirteen week periods ended March 30, 2024 and April 1, 2023, respectively. The Company recorded a valuation allowance of $82 for the thirteen week period ended March 30, 2024.

Note 5: Earnings (Loss) Per Share

Basic earnings per common share (“EPS”) applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares outstanding. If there is a loss from operations, diluted EPS is computed in the same manner as basic EPS is computed.

The following table sets forth the computation of basic and diluted earnings per share:

	Thirteen weeks ended March 30, 2024			Thirteen weeks ended April 1, 2023
Net loss, numerator, basic computation	$	(303	)	$	(102	)
Net loss, numerator, diluted computation	$	(303	)	$	(102	)

Weighted average shares - denominator basic computation		5,154			5,154
Weighted average shares, as adjusted - denominator diluted computation		5,154			5,154
Loss per common share - basic	$	(0.06	)	$	(0.02	)
Loss per common share - diluted	$	(0.06	)	$	(0.02	)

The following are securities excluded from weighted-average shares used to calculate diluted earnings (loss) per common share, as the result of including them to calculate diluted EPS is anti-dilutive:

Thirteen weeks

Ended

March 30, 2024

Thirteen weeks

Ended

April 1, 2023

Shares subject to outstanding common stock options

250,000

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Note 6: Share Based Compensation

On June 10, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan provides for grants of various types of awards that are designed to attract and retain highly qualified personnel who will contribute to the success of the Company and to provide incentives to participants in the 2014 Plan that are linked directly to increases in shareholder value which will therefore inure to the benefit of all shareholders of the Company. Such grants can be, but are not limited to, options, stock appreciation rights, restricted stock, performance grants, stock bonuses, and any other type of award that is consistent with the purposes of the 2014 Plan. Employees and officers of the Company are eligible to receive incentive stock options while corporate directors are only eligible to receive non-qualified options.

The 2014 Plan made 250,000 shares of common stock available for awards. The 2014 Plan also permits performance-based 2014 awards paid under it to be tax deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, as “performance-based compensation.” No stock options were issued in 2023 and 250,000 were issued in 2022, respectively, and 250,000 non-qualified options were outstanding as of December 30, 2023 and December 31, 2022, respectively. The exercise price of all options granted in 2022 is $0.95 per share, the market price at the close of business on the date of the grant. 83,333 of the options vested at the respective grant date, 83,333 vested in December 2023, and 83,334 will vest in December 2024. In the event of a sale of the Company at any time prior to December 22, 2024, all remaining unvested options shall vest immediately. All options expire on December 21, 2027.

The following is a summary of stock option activity from December 30, 2023 to March 30, 2024:

Schedule of Stock Option Activity

	NON-QUALIFIED OPTIONS
	Shares		Weighted Average Exercise Price ($)
Outstanding at December 30, 2023		250,000		0.95
Granted		—		—
Exercised		—		—
Outstanding at March 30, 2024		250,000		0.95
Exercisable at March 30, 2024		166,666		0.95

The following table summarizes information about stock options outstanding at March 30, 2024:

Range of

Exercise Prices ($)

Number

Outstanding

Weighted Average Remaining Life

(in years)

Weighted Average

Exercise

Price($)

Number

Exercisable

0.95

250,000

3.75

0.95

83,333

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula. Expected volatilities and risk-free interest rates are based upon the expected life of the grant. The interest rates used are the U.S. Treasury yield curve in effect at the time of the grant.

During fiscal year ended December 31, 2022, 250,000 options were granted, with 83,333 of the options vesting at the respective grant date, 83,333 vesting in December 2023, and 83,334 vesting in December 2024. At the date of grant, expected volatility was 82.65%, a risk-free rate of 3.79%, 0% expected dividends, and an expected term of five years.

As of March 30, 2024 and April 1, 2023, the intrinsic value of the options outstanding and exercisable options was $0 and $13, respectively, and there was $35 of total unrecognized compensation cost. Total stock-based compensation for the thirteen weeks ended March 30, 2024 was $14, which is recorded in general and administrative expenses on the statement of operations.

250,000 options will expire on December 22, 2027 if not exercised by that date.

Note 7: Revenue

Performance obligations relating to the delivery of food products are satisfied when the goods are shipped to the customer and net of all applicable discounts, as follows: Payment term discounts, off-invoice allowance, manufacturer chargeback, freight allowance, spoilage discounts, and product returns.

Revenues by geographical region are as follows:

Schedule of Disaggregation Revenue

	Thirteen weeks ended March 30, 2024		Thirteen weeks ended April 1, 2023
Revenues by geography:
Americas	$	2,125	$	2,421
Europe		—		4
Asia Pacific and Africa		—		57
Middle East		87		8
Revenues	$	2,212	$	2,490

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Approximately 90% of the Americas’ revenue in the thirteen week period in 2024 and 90% in the thirteen week period in 2023 is attributable to sales in the United States. All of the Company’s assets are located in the United States.

Net sales by major product category:

	Thirteen weeks ended March 30, 2024		Thirteen weeks ended April 1, 2023
Frozen desserts and foods	$	403	$	390
Cheeses		1,809		2,100
Revenues	$	2,212	$	2,490

Note 8: Leases

The Company’s facilities are located in a one-story facility in Cranford, New Jersey. The 6,200 square foot facility houses its administrative offices, a warehouse, walk-in freezer and refrigerator, and a product development laboratory and test kitchen. The Company’s original lease agreement expired on July 1, 1999, but it continues to occupy the premises on a monthly basis. Any changes by either the landlord or the Company remains subject to a six-month notification period. The Company currently has no plans to enter into a long-term lease agreement for the facility. Rent expense was $27 and $23 for the thirteen weeks ended March 30, 2024 and April 1, 2023, respectively. The Company rents warehouse storage space at various outside facilities. Outside warehouse expenses were $82 for the thirteen weeks ended March 30, 2024 and $75 for the thirteen weeks ended April 1, 2023. The Company rents copiers under finance leases. In 2022, the Company terminated two copier leases, and entered into one additional lease, which still exists as of March 30, 2024. Payments for copiers amounted to $4 for both the thirteen weeks ended March 30, 2024, and April 1, 2023.

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has one operating lease for the facilities it currently occupies with a remaining lease term of approximately one year. The Company and the landlord each have a reciprocal right to terminate the lease with six months’ notice to the other party. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease. The current portion of lease liabilities is included in accrued expenses on the balance sheets.

Under Topic 842, finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method. The Company has a finance lease consisting of a copier lease with a term of four years. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease.

Leases with an initial term of twelve months or less are not recorded on the balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company has combined the lease and non-lease components in determining the lease liabilities and right-of-use assets.

The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rates on of between 5.5% and 6.5% for all leases.

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

ROU lease assets and lease liabilities for our operating leases were recorded in the balance sheet as follows:

	As of March 30, 2024			As of December 30, 2023
Operating lease right-of-use assets	$	66		$	81

Current portion of lease liabilities		59			74
Operating lease liabilities, net of current portion		—			7
Total lease liability	$	59		$	81

Weighted average remaining lease term (in years)		0.95			1.2
Weighted average discount rate		5.5	%		5.5	%

ROU lease asset and lease liability for our finance lease were recorded in the balance sheet as follows:

	As of March 30, 2024			As of December 30, 2023
Finance lease right-of-use assets	$	32		$	36

Current portion of lease liabilities		15			15
Operating lease liabilities, net of current portion		19			23
Finance lease liabilities, net of current portion		19			23
Total lease liability	$	34		$	38

Weighted average remaining lease term (in years)		2.1			2.4
Weighted average discount rate		6.5	%		6.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of March 30, 2024 are as follows:

Schedule of Future Lease Payments

	Operating lease liabilities			Finance lease liability			Total
2024		60			12			72
2025		—			18			18
2026		—			7			7
Total future minimum lease payments		60			37			97
Present value adjustment		(1	)		(3	)		(4	)
Total	$	59		$	34		$	93

TOFUTTI BRANDS INC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying financial statements.

The discussion and analysis which follows in this Quarterly Report and in other reports and documents and in oral statements made on our behalf by our management and others may contain trend analysis and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to future events and financial results. These include statements regarding our earnings, projected growth and forecasts, and similar matters which are not historical facts. We remind stockholders that forward-looking statements are merely predictions and therefore are inherently subject to uncertainties and other factors which could cause the actual future events or results to differ materially from those described in the forward-looking statements. These uncertainties and other factors include, among other things, business conditions in the food industry and general economic conditions, both domestic and international; lower than expected customer orders; competitive factors; changes in product mix or distribution channels; and resource constraints encountered in developing new products. The forward-looking statements contained in this Quarterly Report and made elsewhere by or on our behalf should be considered in light of these factors.

Critical Accounting Estimates

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The policies discussed below are considered by management to be critical to an understanding of our financial statements because their application places the most significant demands on management’s judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies are described in the following paragraphs. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

Revenue Recognition. We primarily sell plant-based, vegan, dairy-free soy-based cheeses and frozen desserts. We recognize revenue when control over the products transfers to our customers, deemed to be the performance obligation, which generally occurs when the product is shipped or picked up from one of our distribution locations by the customer. We account for product shipping, handling and insurance as fulfillment activities with revenues for these activities recorded within net revenue and costs recorded within cost of sales. Revenues are recorded net of trade and sales incentives and estimated product returns. Known or expected pricing or revenue adjustments, such as trade discounts, rebates or returns, are estimated at the time of sale. We base these estimates of expected amounts principally on historical utilization and redemption rates. Estimates that affect revenue, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized.

Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration. As such, we do not capitalize contract inception costs and we capitalize product fulfillment costs in accordance with U.S. GAAP and our inventory policies. We generally do not have any unbilled receivables at the end of a period.

Accounts Receivable. The majority of our accounts receivables are due from distributors (domestic and international) and retailers. Credit is extended based on evaluation of a customers’ financial condition and, generally, collateral is not required. Accounts receivable are most often due within 30 to 90 days and are stated at amounts due from customers net of an allowance for doubtful accounts and reserve for sales promotions. Accounts outstanding longer than the contractual payment terms are considered past due. We determine whether an allowance is necessary by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss history, the customer’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. We write-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the bad debt expense account. We do not accrue interest on accounts receivable past due.

Inventory. Inventory is stated at lower of cost or net realizable value determined by first in first out (FIFO) method. Inventories in excess of future demand are written down and charged to the provision for inventories. At the point of which loss is recognized, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the newly established cost basis.

Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded if there is uncertainty as to the realization of deferred tax assets. We will recognize a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for financial reporting purposes.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendments in this Update require a new topic to be added (Topic 326) to the Accounting Standards Codification (“ASC”) and removes the thresholds that entities apply to measure credit losses on financial instruments measured at amortized cost, such as loans, trade receivables, reinsurance recoverables, and off-balance-sheet credit exposures, and held-to-maturity securities. Under current U.S. GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. The guidance under ASU 2016-13 will remove all current recognition thresholds and will require entities under the new current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The new CECL model is based upon expected losses rather than incurred losses. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of ASU 2016-13 did not have a material impact on our unaudited condensed consolidated financial statements.

Results of Operations

Thirteen Weeks Ended March 30, 2024 Compared with Thirteen Weeks Ended April 1, 2023

Net sales for the thirteen weeks ended March 30, 2024 decreased by $278,000, or 11%, from net sales of $2,490,000 for the thirteen weeks ended April 1, 2023. Sales of our vegan cheese products decreased to $1,809,000 in the thirteen weeks ended March 30, 2024 from $2,100,000 in the thirteen weeks ended April 1, 2023, due to increased competition in the vegan cheese category. Sales of our frozen dessert products increased slightly to $403,000 in the thirteen weeks ended March 30, 2024 from $390,000 for the thirteen weeks ended April 1, 2023.

Our gross profit decreased significantly to $470,000 for the thirteen weeks ended March 30, 2024 from $606,000 for the thirteen weeks ended April 1, 2023, due principally to the reduction in sales. Our gross profit percentage was 21% for the thirteen weeks ending March 30, 2024 compared to 24% for the thirteen weeks ending April 1, 2023. Our gross profit percentage decreased partly due to the fact that our frozen dessert product sales accounted for a higher percentage of total sales. Our gross profit percentage is significantly lower on frozen dessert products versus our cheese products. Finally, continued cost increases in certain key ingredients and packaging negatively affected our gross profit and gross profit percentage.

Freight out expense, a significant part of our cost of sales, decreased by $35,000, or 16%, to $179,000, for the thirteen weeks ended March 30, 2024 compared with $212,000 or 9% for the thirteen weeks April 1, 2023. Freight out expense was 8% of sales for the thirteen weeks ended March 30, 2024 compared to 9% of sales for the thirteen weeks ended April 1, 2023. We anticipate that our freight expense as a percentage of sales will remain constant for the balance of this year.

Selling expenses decreased by $57,000, or 21%, to $214,000 for the thirteen weeks ended March 30, 2024 from $271,000 for the thirteen weeks ended April 1, 2023. The decrease was due to decreases in meetings and convention expense of $27,000, messenger costs of $6,000, and commission expense of $38,000, which were partially offset by an increase in outside warehouse rental expense of $7,000. The decrease in commission expense was caused by the decrease in sales and as the result of lowering the commission rate on the majority of our commissionable sales from 5% to 4% for the 2024 period.

Marketing expenses increased by $39,000, or 41%, to $134,000 for the thirteen weeks ended March 30, 2024 from $95,000 for the thirteen weeks ended April 1, 2023. The increase was primarily due to increases in advertising expense of $22,000, and promotion expense of $31,000, which were partially offset by a decrease in point of sale materials expense of $6,000. The increase in advertising expense was due to a timing issue compared to last year’s expense.

Product development costs, which consist principally of salary expenses and laboratory costs, increased by $14,000, or 50%, to $42,000 for the thirteen weeks ended March 30, 2024 from $28,000 for the thirteen weeks ended April 1, 2023 due to a $9,000 increase in professional fees and outside services, and depreciation expenses of $4,000. We anticipate our product development costs for the balance of the year will continue at a slightly higher level as compared to the 2023 period due to higher professional fees and outside services.

General and administrative expenses increased by $80,000, or 26%, to $382,000 for the thirteen weeks ended March 30, 2024 from $302,000 for the thirteen weeks ended April 1, 2023, primarily due to an increase in professional fees and outside services expense of $55,000, an increase in insurance expenses of $10,000, and equipment repairs of $5,000. We anticipate our general and administrative expense will continue at a higher level compared to the 2023 period due to higher professional fees and outside services.

Income tax expense was $0 for the thirteen weeks ended March 30, 2024 and $11,000 for the thirteen weeks ended April 1, 2023. There was no income tax expense due to the net loss during the thirteen weeks ended March 30, 2024.

Liquidity and Capital Resources

As of March 30, 2024, we had approximately $351,000 in cash and our working capital was approximately $3,159,000, compared with approximately $837,000 in cash and working capital of $3,861,000 at December 30, 2023. The decrease in cash and working capital is primarily as a result of the net loss for the current period, and the decrease in current liabilities.

The following table summarizes our cash flows for the periods presented:

	Thirteen Weeks ended March 30, 2024			Thirteen Weeks ended April 1, 2023
Net cash used in operating activities	$	(482	)	$	(650	)
Net cash used in financing activities		(4	)		(4	)
Net decrease in cash and cash equivalents		(486	)		(654	)

Net cash used in operating activities for the thirteen weeks ended March 30, 2024 was $486,000 compared to $650,000 used in operating activities for the thirteen weeks ended April 1, 2023. Net cash used in operating activities for the thirteen weeks ended March 30, 2024 was primarily a result of a net loss of $361,000, and the decrease in current liabilities of $163,000.

We believe our existing cash on hand of $480,000 as of May 9, 2024, existing working capital and the expected cash flows expected from operations, will be sufficient to support our operating and capital requirements for the next twelve months.

Inflation and Seasonality

We do not believe that our operating results have been materially affected by inflation during the preceding two years. There can be no assurance, however, that our operating results will not be affected by inflation in the future. Our business is subject to minimal seasonal variations with slightly increased sales historically in the second and third quarters of the fiscal year. We expect to continue to experience slightly higher sales in the second and third quarters, and slightly lower sales in the fourth and first quarters, as a result of reduced sales of dairy free frozen desserts during those periods.

Off-balance Sheet Arrangements

None.

Contractual Obligations

We had no material contractual obligations as of March 30, 2024.

Recently Issued Accounting Standards

See Note 2 to the unaudited condensed financial statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We do not believe that our exposure to market risk related to the effect of changes in interest rates, foreign currency exchange rates, commodity prices and other market risks with regard to instruments entered into for trading or for other purposes is material.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of March 30, 2024, our Company’s chief executive and financial officer conducted an evaluation regarding the effectiveness of our Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures, our chief executive and financial officer concluded that our disclosure controls and procedures were not effective as March 30, 2024.

Disclosure Controls and Internal Controls. As provided in Rule 13a-14 of the General Rules and Regulations under the Securities and Exchange Act of 1934, as amended, Disclosure Controls are defined as meaning controls and procedures that are designed with the objective of insuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, designed and reported within the time periods specified by the SEC’s rules and forms. Disclosure Controls include, within the definition under the Exchange Act, and without limitation, controls and procedures to insure that information required to be disclosed by us in our reports is accumulated and communicated to our management, including our chief executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure. Internal Controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported, all to permit the preparation of our financial statements in conformity with generally accepted accounting principles.

Management’s Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of the interim Chief Executive Officer and Chief Financial Officer and effected by our 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 generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting 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 that the degree of compliance with the policies or procedures may deteriorate.

Management’s evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment.

Based on the evaluation under the frameworks described above, Mr. Kass, our chief executive and chief financial officer, has concluded that our internal control over financial reporting was ineffective as of March 30, 2024 because of the following material weaknesses in internal controls over financial reporting:

	●	A continuing lack of sufficient resources and an insufficient level of monitoring and oversight, which may restrict our ability to gather, analyze and report information relative to the financial statements, including but not limited to accounting estimates, reserves, allowances, and income tax matters, in a timely manner.

	●	The limited size of the accounting department makes it impracticable to achieve an optimum separation of duties and monitoring of internal controls.

To date, we have been unable to remediate these weaknesses, which stem from our small workforce of four persons at April 1, 2023.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the period covered by this report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material litigation.

Item 1A. Risk Factors

There have been no material changes to the Company’s “Risk Factors” set forth in its Annual Report on Form 10-K for the year ended December 30, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

31.1		Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
31.2		Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.
32.1		Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Schema Document
101.CAL		Inline XBRL Calculation Linkbase Document
101.DEF		Inline XBRL Definition Linkbase Document
101.LAB		Inline XBRL Labels Linkbase Document
101.PRE		Inline XBRL Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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.

	TOFUTTI BRANDS INC.
	(Registrant)

	/s/ Steven Kass
	Steven Kass
	Chief Executive Officer and
	Chief Accounting and Financial Officer

Date: May 14, 2024

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Steven Kass, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tofutti Brands Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2024

/s/ Steven Kass
Steven Kass
Chief Executive Officer

* The originally executed copy of this Certification will be maintained at the Company’s offices and will be made available for inspection upon request.

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Steven Kass, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tofutti Brands Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2024

/s/ Steven Kass
Steven Kass
Chief Financial Officer

* The originally executed copy of this Certification will be maintained at the Company’s offices and will be made available for inspection upon request.

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tofutti Brands Inc. (the “Company”) on Form 10-Q for the period ending March 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven Kass, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Steven Kass
Steven Kass
Chief Executive Officer

Date: May 14, 2024

* The originally executed copy of this Certification will be maintained at the Company’s offices and will be made available for inspection upon request.

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tofutti Brands Inc. (the “Company”) on Form 10-Q for the period ending March 30, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven Kass, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Steven Kass
Steven Kass
Chief Financial Officer

Date: May 14, 2024

* The originally executed copy of this Certification will be maintained at the Company’s offices and will be made available for inspection upon request.

Cover - shares	3 Months Ended
Cover - shares	Mar. 30, 2024	May 14, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 30, 2024
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-28
Entity File Number	1-9009
Entity Registrant Name	Tofutti Brands Inc.
Entity Central Index Key	0000730349
Entity Tax Identification Number	13-3094658
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	50 Jackson Drive
Entity Address, City or Town	Cranford
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07016
City Area Code	(908)
Local Phone Number	272-2400
Trading Symbol	TOFB
Title of 12(g) Security	Common Stock, par value $0.01 per share
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		5,153,706

Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 30, 2023
Current assets:
Cash	$ 351	$ 837
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $495 and $525.	889	828
Inventories	2,453	2,475
Prepaid expenses and other current assets	97	93
Total current assets	3,790	4,233
Operating lease right-of-use assets	66	81
Finance lease right-of-use asset	32	36
Deferred tax assets	246	246
Other assets	19	19
Total assets	4,153	4,615
Current liabilities:
Accounts payable	209	237
Accrued expenses	407	541
Finance lease liability, current portion	15	15
Total current liabilities	631	793
Operating lease liabilities, net of current portion		7
Finance lease liability, net of current portion	19	23
Total liabilities	650	823
Stockholders’ equity:
Preferred stock - par value $.01 per share; authorized 100,000 shares, none issued and outstanding
Common stock - par value $.01 per share; authorized 15,000,000 shares, 5,153,706 shares issued and outstanding	52	52
Additional paid-in capital	337	323
Retained earnings	3,114	3,417
Total stockholders’ equity	3,503	3,792
Total liabilities and stockholders’ equity	$ 4,153	$ 4,615

Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 30, 2023
Statement of Financial Position [Abstract]
Allowance for doubtful accounts and sales promotions on accounts receivable	$ 495	$ 525
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000	100,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	5,153,706	5,153,706
Common stock, shares outstanding	5,153,706	5,153,706

Condensed Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Income Statement [Abstract]
Net sales	$ 2,212	$ 2,490
Cost of sales	1,742	1,884
Gross profit	470	606
Operating expenses:
Selling and warehouse	214	271
Marketing	134	95
Research and development	42	28
General and administrative	382	302
Total operating expenses	772	696
Loss from operations	(302)	(90)
Loss before interest expense and income taxes	(302)	(90)
Interest expense	1	1
Loss before income tax	(303)	(91)
Provision for income taxes		11
Net loss	$ (303)	$ (102)
Weighted average common shares outstanding:
Basic	5,154	5,154
Diluted	5,154	5,154
Earnings (loss) per common share:
Basic	$ (0.06)	$ (0.02)
Diluted	$ (0.06)	$ (0.02)

Condensed Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2022	$ 52	$ 263	$ 3,783	$ 4,098
Stock-based compensation		20		20
Net loss			(102)	(102)
Balance at Apr. 01, 2023	52	283	3,681	4,016
Balance at Dec. 30, 2023	52	323	3,417	3,792
Stock-based compensation		14		14
Net loss			(303)	(303)
Balance at Mar. 30, 2024	$ 52	$ 337	$ 3,114	$ 3,503

Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Statement of Cash Flows [Abstract]
Cash (used in) operating activities, net	$ (482)	$ (650)
Cash (used in) financing activities, net	(4)	(4)
Net (decrease) increase in cash	(486)	(654)
Cash at beginning of period	837	1,072
Cash at end of period	351	418
Supplemental cash flow information:
Interest paid on finance leases	$ 1	$ 1

Basis of Presentation

3 Months Ended

Mar. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Note 1: Basis of Presentation

The Company’s fiscal year is either a fifty-two or fifty-three-week period which ends on the Saturday closest to December 31^st.

Recently Issued Accounting Standards

3 Months Ended

Mar. 30, 2024

Accounting Changes and Error Corrections [Abstract]

Recently Issued Accounting Standards

Note 2: Recently Issued Accounting Standards

Inventories

3 Months Ended

Mar. 30, 2024

Inventory Disclosure [Abstract]

Inventories

Note 3: Inventories

Inventories consist of the following:

Schedule of Inventories

	March 30, 2024		December 30, 2023
Finished products	$	1,377	$	1,366
Raw materials and packaging		1,076		1,109
Inventories, net	$	2,453	$	2,475

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Income Taxes

3 Months Ended

Mar. 30, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 4: Income Taxes

Earnings (Loss) Per Share

3 Months Ended

Mar. 30, 2024

Earnings (loss) per common share:

Earnings (Loss) Per Share

Note 5: Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Thirteen weeks ended March 30, 2024			Thirteen weeks ended April 1, 2023
Net loss, numerator, basic computation	$	(303	)	$	(102	)
Net loss, numerator, diluted computation	$	(303	)	$	(102	)

Weighted average shares - denominator basic computation		5,154			5,154
Weighted average shares, as adjusted - denominator diluted computation		5,154			5,154
Loss per common share - basic	$	(0.06	)	$	(0.02	)
Loss per common share - diluted	$	(0.06	)	$	(0.02	)

Thirteen weeks

Ended

March 30, 2024

Thirteen weeks

Ended

April 1, 2023

Shares subject to outstanding common stock options

250,000

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Share Based Compensation

3 Months Ended

Mar. 30, 2024

Share-Based Payment Arrangement [Abstract]

Share Based Compensation

Note 6: Share Based Compensation

The following is a summary of stock option activity from December 30, 2023 to March 30, 2024:

Schedule of Stock Option Activity

	NON-QUALIFIED OPTIONS
	Shares		Weighted Average Exercise Price ($)
Outstanding at December 30, 2023		250,000		0.95
Granted		—		—
Exercised		—		—
Outstanding at March 30, 2024		250,000		0.95
Exercisable at March 30, 2024		166,666		0.95

The following table summarizes information about stock options outstanding at March 30, 2024:

Range of

Exercise Prices ($)

Number

Outstanding

Weighted Average Remaining Life

(in years)

Weighted Average

Exercise

Price($)

Number

Exercisable

0.95

250,000

3.75

0.95

83,333

250,000 options will expire on December 22, 2027 if not exercised by that date.

Revenue

3 Months Ended

Mar. 30, 2024

Revenue from Contract with Customer [Abstract]

Revenue

Note 7: Revenue

Revenues by geographical region are as follows:

Schedule of Disaggregation Revenue

	Thirteen weeks ended March 30, 2024		Thirteen weeks ended April 1, 2023
Revenues by geography:
Americas	$	2,125	$	2,421
Europe		—		4
Asia Pacific and Africa		—		57
Middle East		87		8
Revenues	$	2,212	$	2,490

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

Net sales by major product category:

	Thirteen weeks ended March 30, 2024		Thirteen weeks ended April 1, 2023
Frozen desserts and foods	$	403	$	390
Cheeses		1,809		2,100
Revenues	$	2,212	$	2,490

Leases

3 Months Ended

Mar. 30, 2024

Leases

Leases

Note 8: Leases

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

ROU lease assets and lease liabilities for our operating leases were recorded in the balance sheet as follows:

	As of March 30, 2024			As of December 30, 2023
Operating lease right-of-use assets	$	66		$	81

Current portion of lease liabilities		59			74
Operating lease liabilities, net of current portion		—			7
Total lease liability	$	59		$	81

Weighted average remaining lease term (in years)		0.95			1.2
Weighted average discount rate		5.5	%		5.5	%

ROU lease asset and lease liability for our finance lease were recorded in the balance sheet as follows:

	As of March 30, 2024			As of December 30, 2023
Finance lease right-of-use assets	$	32		$	36

Current portion of lease liabilities		15			15
Operating lease liabilities, net of current portion		19			23
Finance lease liabilities, net of current portion		19			23
Total lease liability	$	34		$	38

Weighted average remaining lease term (in years)		2.1			2.4
Weighted average discount rate		6.5	%		6.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of March 30, 2024 are as follows:

Schedule of Future Lease Payments

	Operating lease liabilities			Finance lease liability			Total
2024		60			12			72
2025		—			18			18
2026		—			7			7
Total future minimum lease payments		60			37			97
Present value adjustment		(1	)		(3	)		(4	)
Total	$	59		$	34		$	93

Inventories (Tables)

3 Months Ended

Mar. 30, 2024

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following:

Schedule of Inventories

	March 30, 2024		December 30, 2023
Finished products	$	1,377	$	1,366
Raw materials and packaging		1,076		1,109
Inventories, net	$	2,453	$	2,475

Earnings (Loss) Per Share (Tables)

3 Months Ended

Mar. 30, 2024

Earnings (loss) per common share:

Schedule of Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share:

	Thirteen weeks ended March 30, 2024			Thirteen weeks ended April 1, 2023
Net loss, numerator, basic computation	$	(303	)	$	(102	)
Net loss, numerator, diluted computation	$	(303	)	$	(102	)

Weighted average shares - denominator basic computation		5,154			5,154
Weighted average shares, as adjusted - denominator diluted computation		5,154			5,154
Loss per common share - basic	$	(0.06	)	$	(0.02	)
Loss per common share - diluted	$	(0.06	)	$	(0.02	)

Schedule of Securities Excluded From Weighted Average Shares

Thirteen weeks

Ended

March 30, 2024

Thirteen weeks

Ended

April 1, 2023

Shares subject to outstanding common stock options

250,000

Share Based Compensation (Tables)

3 Months Ended

Mar. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

The following is a summary of stock option activity from December 30, 2023 to March 30, 2024:

Schedule of Stock Option Activity

	NON-QUALIFIED OPTIONS
	Shares		Weighted Average Exercise Price ($)
Outstanding at December 30, 2023		250,000		0.95
Granted		—		—
Exercised		—		—
Outstanding at March 30, 2024		250,000		0.95
Exercisable at March 30, 2024		166,666		0.95

Schedule of Information About Stock Options

The following table summarizes information about stock options outstanding at March 30, 2024:

Range of

Exercise Prices ($)

Number

Outstanding

Weighted Average Remaining Life

(in years)

Weighted Average

Exercise

Price($)

Number

Exercisable

0.95

250,000

3.75

0.95

83,333

Revenue (Tables)

3 Months Ended

Mar. 30, 2024

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation Revenue

Revenues by geographical region are as follows:

Schedule of Disaggregation Revenue

	Thirteen weeks ended March 30, 2024		Thirteen weeks ended April 1, 2023
Revenues by geography:
Americas	$	2,125	$	2,421
Europe		—		4
Asia Pacific and Africa		—		57
Middle East		87		8
Revenues	$	2,212	$	2,490

Net sales by major product category:

	Thirteen weeks ended March 30, 2024		Thirteen weeks ended April 1, 2023
Frozen desserts and foods	$	403	$	390
Cheeses		1,809		2,100
Revenues	$	2,212	$	2,490

Leases (Tables)

3 Months Ended

Mar. 30, 2024

Leases

Schedule of ROU Lease Assets and Liabilities For Operating Lease

ROU lease assets and lease liabilities for our operating leases were recorded in the balance sheet as follows:

	As of March 30, 2024			As of December 30, 2023
Operating lease right-of-use assets	$	66		$	81

Current portion of lease liabilities		59			74
Operating lease liabilities, net of current portion		—			7
Total lease liability	$	59		$	81

Weighted average remaining lease term (in years)		0.95			1.2
Weighted average discount rate		5.5	%		5.5	%

Schedule of ROU Lease Assets and Liabilities For Finance Leases

ROU lease asset and lease liability for our finance lease were recorded in the balance sheet as follows:

	As of March 30, 2024			As of December 30, 2023
Finance lease right-of-use assets	$	32		$	36

Current portion of lease liabilities		15			15
Operating lease liabilities, net of current portion		19			23
Finance lease liabilities, net of current portion		19			23
Total lease liability	$	34		$	38

Weighted average remaining lease term (in years)		2.1			2.4
Weighted average discount rate		6.5	%		6.5	%

Schedule of Future Lease Payments

Future lease payments included in the measurement of lease liabilities on the balance sheet as of March 30, 2024 are as follows:

Schedule of Future Lease Payments

	Operating lease liabilities			Finance lease liability			Total
2024		60			12			72
2025		—			18			18
2026		—			7			7
Total future minimum lease payments		60			37			97
Present value adjustment		(1	)		(3	)		(4	)
Total	$	59		$	34		$	93

Schedule of Inventories (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 30, 2023
Inventory Disclosure [Abstract]
Finished products	$ 1,377	$ 1,366
Raw materials and packaging	1,076	1,109
Inventories, net	$ 2,453	$ 2,475

Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details Narrative) - USD ($) $ in Thousands	Mar. 30, 2024	Apr. 01, 2023
Income Tax Disclosure [Abstract]
Income tax expense		$ 11
Valuation allowance	$ 82

Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Earnings (loss) per common share:
Net loss, numerator, basic computation	$ (303)	$ (102)
Net loss, numerator, diluted computation	$ (303)	$ (102)
Weighted average shares - denominator basic computation	5,154	5,154
Weighted average shares, as adjusted - denominator diluted computation	5,154	5,154
Loss per common share - basic	$ (0.06)	$ (0.02)
Loss per common share - diluted	$ (0.06)	$ (0.02)

Schedule of Securities Excluded From Weighted Average Shares (Details) - shares	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Common Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares subject to outstanding common stock options	250,000	250,000

Schedule of Stock Option Activity (Details)	3 Months Ended
Schedule of Stock Option Activity (Details)	Mar. 30, 2024 $ / shares shares
Share-Based Payment Arrangement [Abstract]
Non-qualified options, outstanding, beginning balance \| shares	250,000
Non-qualified options, weighted average exercise price beginning balance \| $ / shares	$ 0.95
Non-qualified options, granted \| shares
Non-qualified options, weighted average exercise price, granted \| $ / shares
Non-qualified options, exercised \| shares
Non-qualified options, weighted average exercise price, exercised \| $ / shares
Non-qualified options, outstanding, ending balance \| shares	250,000
Non-qualified options, weighted average exercise price ending balance \| $ / shares	$ 0.95
Non-qualified options,exercisable \| shares	166,666
Non-qualified options, weighted average exercise price, exercisable \| $ / shares	$ 0.95

Schedule of Information About Stock Options (Details)	3 Months Ended
Schedule of Information About Stock Options (Details)	Mar. 30, 2024 $ / shares shares
Share-Based Payment Arrangement [Abstract]
Range of exercise prices \| $ / shares	$ 0.95
Number of options, outstanding \| shares	250,000
Weighted average remaining life (in years)	3 years 9 months
Weighted average exercise price \| $ / shares	$ 0.95
Number of options, exercisable \| shares	83,333

Share Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 30, 2024	Dec. 31, 2022	Dec. 30, 2023	Apr. 01, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock options, granted
Number of shares outstanding	250,000		250,000
Options expiration date	Dec. 22, 2027
Intrinsic value of options outstanding	$ 0			$ 13
Intrinsic value of options exercisable	0			$ 13
Unrecognized compensation cost	$ 35
Number of shares options will expire	250,000
General and Administrative Expense [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Share based compensation	$ 14
Non-Qualified Options [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares outstanding		250,000	250,000
2014 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock available for awards	250,000
Stock options, granted		250,000
Exercise price		$ 0.95
Number of options vested	83,333	83,333
Options expiration date	Dec. 21, 2027
Expected volatility		82.65%
Risk-free interest rate		3.79%
Expected dividends		0.00%
Expected term		5 years
2014 Equity Incentive Plan [Member] \| December 2023 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options will vest in future	83,333	83,333
2014 Equity Incentive Plan [Member] \| December 2024 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options will vest in future	83,334	83,334

Schedule of Disaggregation Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Disaggregation of Revenue [Line Items]
Revenues	$ 2,212	$ 2,490
Frozen Desserts and Foods [Member]
Disaggregation of Revenue [Line Items]
Revenues	403	390
Cheeses [Member]
Disaggregation of Revenue [Line Items]
Revenues	1,809	2,100
Americas [Member]
Disaggregation of Revenue [Line Items]
Revenues	2,125	2,421
Europe [Member]
Disaggregation of Revenue [Line Items]
Revenues		4
Asia Pacific and Africa [Member]
Disaggregation of Revenue [Line Items]
Revenues		57
Middle East [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 87	$ 8

Revenue (Details Narrative) - Revenue Benchmark [Member] - Geographic Concentration Risk [Member]	3 Months Ended
	Mar. 30, 2024	Apr. 01, 2023
Americas [Member]
Disaggregation of Revenue [Line Items]
Concentration risk percentage	90.00%
UNITED STATES
Disaggregation of Revenue [Line Items]
Concentration risk percentage		90.00%

Schedule of ROU Lease Assets and Liabilities For Operating Lease (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 30, 2023
Leases
Operating lease right-of-use assets	$ 66	$ 81
Current portion of lease liabilities	59	74
Operating lease liabilities, net of current portion		7
Total lease liability	$ 59	$ 81
Weighted average remaining lease term (in years)	11 months 12 days	1 year 2 months 12 days
Weighted average discount rate	5.50%	5.50%

Schedule of ROU Lease Assets and Liabilities For Finance Leases (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 30, 2023
Leases
Finance lease right-of-use assets	$ 32	$ 36
Current portion of lease liabilities	15	15
Finance lease liabilities, net of current portion	19	23
Total lease liability	$ 34	$ 38
Weighted average remaining lease term (in years)	2 years 1 month 6 days	2 years 4 months 24 days
Weighted average discount rate	6.50%	6.50%

Schedule of Future Lease Payments (Details) - USD ($) $ in Thousands	Mar. 30, 2024	Dec. 30, 2023
Leases
Operating lease liabilities, 2024	$ 60
Finance lease liability, 2024	12
Operating lease and Financing lease, 2024	72
Operating lease liabilities, 2025
Finance lease liability, 2025	18
Operating lease and Financing lease, 2025	18
Operating lease liabilities, 2026
Finance lease liability, 2026	7
Operating lease and Financing lease, 2026	7
Operating lease liabilities, future minimum lease payments	60
Finance lease liability, future minimum lease payments	37
Operating lease and Financing lease, future minimum lease payments	97
Operating lease liabilities, Present value adjustment	(1)
Finance lease liability, Present value adjustment	(3)
Operating lease and Financing lease, Present value adjustment	(4)
Operating lease liabilities, Total	59	$ 81
Finance lease liability, Total	34	$ 38
Operating lease and Financing lease, Liabilities	$ 93

Leases (Details Narrative) $ in Thousands	3 Months Ended
Leases (Details Narrative) $ in Thousands	Mar. 30, 2024 USD ($) ft²	Apr. 01, 2023 USD ($)
Area of real estate property \| ft²	6,200
Rent expense	$ 27	$ 23
Outside warehouse expense	82	75
Payments for rent copiers	$ 4	$ 4
Minimum [Member]
Incremental borrowing rate, percentage	5.50%
Maximum [Member]
Incremental borrowing rate, percentage	6.50%