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 September 28, 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.)

 

105 Newfield Ave, Suite H, Edison, New Jersey 088337

(Address of Principal Executive Offices)

 

[phone]

(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 November 18, 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 – September 28, 2024 and December 30, 2023	3
	Unaudited Condensed Statements of Operations -Thirteen and Thirty-nine weeks ended September 28, 2024 and September 30, 2023	4
	Unaudited Condensed Statements of Changes in Stockholders’ Equity - Thirteen and Thirty-nine weeks ended September 28, 2024 and September 30, 2023	5
	Unaudited Condensed Statements of Cash Flows - Thirty-nine weeks ended September 28, 2024 and September 30, 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	17
Part II - Other Information:
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	18
Signatures		19

 

2

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

TOFUTTI BRANDS INC.

Condensed Balance Sheets

(in thousands, except share and per share figures)

 

		September 28, 2024 (Unaudited)				December 30, 2023
Assets
Current assets:
Cash		$	176			$	837
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $495 and $525, respectively			821				828
Inventories			2,130				2,475
Prepaid expenses and other current assets			126				93
Total current assets			3,253				4,233
Operating lease right-of-use asset			355				81
Finance lease right-of-use asset			25				36
Deferred tax assets			246				246
Other assets			31				19
Total assets		$	3,910			$	4,615
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable			—				237
Accrued expenses			284				541
Finance lease liability, current portion			8				15
Total current liabilities			292				793
Operating lease liabilities, net of current portion			308				7
Finance lease liability, net of current portion			20				23
Total liabilities			620				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			363				323
Retained earnings			2,875				3,417
Total stockholders’ equity			3,290				3,792
Total liabilities and stockholders’ equity		$	3,910			$	4,615

 

See accompanying notes to unaudited condensed financial statements.

 

3

 

 

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Operations

(in thousands, except per share figures)

 

		Thirteen weeks ended September 28, 2024				Thirteen weeks ended September 30, 2023				Thirty-nine weeks ended September 28, 2024				Thirty-nine weeks ended September 30, 2023
Net sales		$	1,986			$	2,515			$	6,481			$	7,724
Cost of sales			1,501				1,729				4,860				5,665
Gross profit			485				786				1,621				2,059
Operating expenses:
Selling and warehouse			207				210				671				802
Marketing			83				103				297				287
Research and development			28				28				92				111
General and administrative			374				333				1,097				1,018
			692				674				2,157				2,218
Income (loss) from operations			(207	)			112				(536	)			(159	)
Income (loss) before interest expense and income taxes			(207	)			112				(536	)			(159	)
Interest expense			—				1				1				3
Income (loss) before income tax			(207	)			111				(537	)			(162	)
Income tax expense			—				1				5				148
Net income (loss)		$	(207	)		$	110			$	(542	)		$	(310	)
Weighted average common shares outstanding:
Basic			5,154				5,154				5,154				5,154
Diluted			5,154				5,154				5,154				5,154
Income (loss) per common share:
Basic		$	(0.04	)		$	0.02			$	(0.1	)		$	(0.06	)
Diluted		$	(0.04	)		$	0.02			$	(0.1	)		$	(0.06	)

 

See accompanying notes to unaudited condensed financial statements.

 

4

 

 

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Changes in Stockholders’ Equity

(in thousands)

 

		Thirteen and thirty-nine weeks ended September 28, 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
Stock-based compensation			—				13				—				13
Net loss			—				—				(32	)			(32	)
June 29, 2024		$	52				350				3,082				3,484
Stock-based compensation			—				13				—				13
Net loss			—				—				(207	)			(207	)
September 28, 2024		$	52				363				2,875				3,290

 

		Thirteen and thirty-nine weeks ended September 30, 2023
		Common Stock				Additional Paid-in Capital				Retained Earnings				Total
December 31, 2022		$	52				263				3,783				4,098
Stock-based compensation			—				20				—				20
Net loss			—				—				(102	)			(102	)
April 1, 2023		$	52				283				3,681				4,016
Stock-based compensation			—				13				—				13
Net loss			—				—				(318	)			(318	)
July 1, 2023		$	52				296				3,363				3,711
Stock-based compensation			—				14				—				14
Net income			—				—				110				110
September 30, 2023		$	52				310				3,473				3,835

 

See accompanying notes to unaudited condensed financial statements.

 

5

 

 

TOFUTTI BRANDS INC.

Unaudited Condensed Statements of Cash Flows

(in thousands)

 

		Thirty-nine weeks ended				Thirty-nine weeks ended
		28-Sep-24				30-Sep-23
Cash used in operating activities, net		$	(655	)		$	(337	)
Cash used in financing activities, net			(6	)			(8	)
Net decrease in cash		$	(661	)		$	(345	)
Cash at beginning of period			837				1,072
Cash at end of period		$	176			$	727
Supplemental cash flow information:
Acquisition of right of use assets for lease obligations		$	371			$	—
Income taxes paid		$	7			$	—
Interest paid on finance leases		$	1			$	—

 

See accompanying notes to unaudited condensed financial statements.

 

6

 

 

TOFUTTI BRANDS INC.

Notes to Unaudited Condensed Financial Statements

(in thousands, except 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 and thirty-nine-week period ended September 28, 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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.

 

Note 3: Inventories

 

Inventories consist of the following:

 

		September 28, 2024				December 30, 2023
Finished products		$	1,215			$	1,366
Raw materials and packaging			915				1,109
		$	2,130			$	2,475

 

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 $5 and an income tax expense of $148 for the thirty-nine week periods ended September 28, 2024 and September 30, 2023, respectively. The Company recorded a valuation allowance of $143 for the thirty-nine week period ended September 28, 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.

 

7

 

 

TOFUTTI BRANDS INC.

Notes to Unaudited Condensed Financial Statements

(in thousands, except share and per share data)

 

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

 

		Thirteen weeks ended September 28, 2024				Thirteen weeks ended September 30, 2023				Thirty-nine weeks ended September 28, 2024				Thirty-nine weeks ended September 30, 2023
Income (loss), numerator, basic computation		$	(207	)		$	110			$	(542	)		$	(310	)
Net income (loss), numerator, diluted computation		$	(207	)		$	110			$	(542	)		$	(310	)
Weighted average shares - denominator basic computation			5,154				5,154				5,154				5,154
Weighted average shares, as adjusted - denominator diluted computation			5,154				5,154				5,154				5,154
Income (loss) per common share - basic		$	(0.04	)		$	0.02			$	(0.1	)		$	(0.06	)
Income (loss) per common share - diluted		$	(0.04	)		$	0.02			$	(0.1	)		$	(0.06	)

 

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 September 28, 2024				Thirteen weeks Ended September 30, 2023
Shares subject to outstanding common stock options			250,000				250,000

 

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.” 0 and 250,000 stock options were issued in 2023 and 2022, respectively, and 250,000 non-qualified options were outstanding as of September 28, 2024. 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 will vest 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 22, 2027. No additional options were made available or granted during the thirty-nine weeks ended September 28, 2024.

 

The following is a summary of stock option activity from December 30, 2023 to September 28, 2024:

 

		NON-QUALIFIED OPTIONS
		Shares				Weighted Average Exercise Price ($)
Outstanding at December 30, 2023			250,000				0.95
Granted			—				—
Exercised			—				—
Outstanding at September 28, 2024			250,000				0.95
Exercisable at September 28, 2024			166,666				0.95

 

8

 

 

TOFUTTI BRANDS INC.

Notes to Unaudited Condensed Financial Statements

(in thousands, except share and per share data)

 

The following table summarizes information about stock options outstanding from December 30, 2023 to September 28, 2024:

 

Range of Exercise Prices ($)				Number Outstanding				Weighted Average Remaining Life (in years)				Weighted Average Exercise Price($)				Number Exercisable
$	0.95				250,000				3.25			$	0.95				166,666

 

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 the 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.

 

The expected term was determined based on the reasoning that all previously granted options have been held to expiration. Additionally, all 5 members who were granted options are board members or an officer, and the expectation is that they are holding these options to expiration or until any such liquidation event would take place which is not estimable.

 

As of September 28, 2024, and September 30, 2023 the intrinsic value of the options outstanding and exercisable options was $0 and $12, respectively, and there was $9 of total unrecognized compensation cost. Total stock-based compensation for both of the thirteen weeks ended September 28, 2024, and September 30, 2023 was $13, which is recorded in general and administrative expenses on the statement of operations. Total stock-based compensation was $40 and $47 for the thirty-nine weeks ended September 28, 2024, and September 30, 2023, respectively.

 

The 250,000 options outstanding 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:

 

		Thirteen weeks ended September 28, 2024				Thirteen weeks ended September 30, 2023				Thirty-nine weeks ended September 28, 2024				Thirty-nine weeks ended September 30, 2023
Revenues by geography:
Americas		$	1,896			$	2,345			$	6,120			$	7,352
Europe			5				122				84				133
Asia Pacific and Africa			—				—				—				57
Middle East			85				48				277				182
		$	1,986			$	2,515			$	6,481			$	7,724

 

Approximately 92% of the Americas’ revenue for the thirteen weeks ended September 28, 2024 is attributable to sales in the United States compared with 93% of the Americas’ revenue for the thirteen weeks ended September 30, 2023. For the thirty-nine week period ended September 28, 2024 approximately 91% of the Americas’ revenue is attributable to sales in the United States compared to 91% for the thirty-nine week period ended September 30, 2023. All of the Company’s assets are located in the United States.

 

9

 

 

TOFUTTI BRANDS INC.

Notes to Unaudited Condensed Financial Statements

(in thousands, except share and per share data)

 

Net sales by major product category:

 

		Thirteen weeks ended September 28, 2024				Thirteen weeks ended September 30, 2023				Thirty-nine Weeks ended September 28, 2024				Thirty-nine Weeks ended September 30, 2023
Frozen desserts and foods		$	338			$	405			$	1,098			$	1,232
Cheeses			1,648				2,110				5,383				6,492
		$	1,986			$	2,515			$	6,481			$	7,724

 

Note 8: Leases

 

Through September 1, 2024, the Company’s facilities were located in a one-story 6,200 square foot facility in Cranford, New Jersey. The facility housed the Company’s 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 continued to occupy the premises on a monthly basis. In September, the company left the lease and derecognized the associated right of use asset and liability. Rent expense was $42 and $23 for the thirteen weeks ended September 28, 2024 and September 30, 2023, and $97 and $69 for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively. The Company also rents warehouse storage space at various outside facilities. Outside warehouse expenses were $90. for the thirteen weeks ended September 28, 2024 and $85 for the thirteen weeks ended September 30, 2023, and $271 and $246 for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively. The Company rents a copier and mail machine under a finance lease. In 2022, the Company entered into a copier and mail machine lease, which still exists as of September 28, 2024. Payments for the copier and mail machine amounted to $4 and $0 for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively and $4 and $6 for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively.

 

We recently signed a five-year lease to move our offices into a one-story facility in Edison, New Jersey. The lease commenced on July 1 2024, with an option to extend for an additional five years at the end of the lease. Annual rent for the lease escalates by 3% year over year until the end of the lease term. We completed the move into the new facility in September 2024. The 5,100 square foot facility houses our administrative offices, a warehouse, freezers, and refrigerators.

 

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. 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 condensed 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.

 

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. At the time of adoption of Topic 842, the Company used the incremental borrowing rate of 5.5% for all leases that commenced prior to that date.

 

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

 

		As of				As of
		September 28, 2024				December 30, 2023
Operating lease right-of-use assets		$	355			$	81
Current portion of lease liabilities			55				74
Operating lease liabilities, net of current portion			308				7
Total lease liability		$	363			$	81
Weighted average remaining lease term (in years)			4.9				1.2
Weighted average discount rate			5.5	%			5.5	%

 

10

 

 

TOFUTTI BRANDS INC.

Notes to Unaudited Condensed Financial Statements

(in thousands, except share and per share data)

 

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

 

		As of				As of
		September 28, 2024				December 30, 2023
Finance lease right-of-use asset		$	25			$	36
Current portion of lease liabilities			8				15
Finance lease liabilities, net of current portion			20				23
Total lease liabilities		$	28			$	38
Weighted average remaining lease term (in years)			1.6				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 September 28, 2024 are as follows:

 

		Operating lease liabilities				Finance lease liability				Total
2024 (remainder of the year)		$	20			$	3			$	23
2025			82				18				100
2026			84				7				91
2027			86				—				86
2028			89				—				89
2029			61				—				61
Total future minimum lease payments			422				28				450
Present value adjustment			(59	)			—				(59	)
Total		$	363			$	28			$	391

 

Note 9: Accrued Expenses

 

Accrued expenses and other current liabilities consist of the following:

 

		As of				As of
		September 28, 2024				December 30, 2023
Accrued payroll and other benefits		$	—			$	—
Accrued professional fees			11				11
Uncertain tax position			216				211
Operating lease liability			55				81
Accrued purchases			2				238
Total accrued expenses		$	284			$	541

 

 

11

 

 

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 vegan and 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. Management closely monitors outstanding balances during the year and allocates an allowance account if appropriate. The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables and contract assets. The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical and current analysis of such financial instruments.

 

12

 

 

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.

 

Leases. Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. We have operating leases primarily consisting of facilities with remaining lease terms of approximately one to three years. 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, we have combined the lease and non-lease components in determining the lease liabilities and right of use assets.

 

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

 

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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.

 

Results of Operations

 

Thirteen Weeks Ended September 28, 2024 Compared with Thirteen Weeks Ended September 30, 2023

 

Net sales for the thirteen weeks ended September 28, 2024 decreased by $529,000, or 21%, to $1,986,000, from net sales of $2,515,000 for the thirteen weeks ended September 30, 2023. Sales of our vegan cheese products decreased to $1,648,000 in the thirteen weeks ended September 28, 2024 from $2,110,000 in the thirteen weeks ended September 30, 2023. Sales of our frozen dessert products decreased to $338,000 in the thirteen weeks ended September 28, 2024 from $405,000 for the thirteen weeks ended September 30, 2023. The decrease in the sales of our vegan cheese products was due to the continued introduction of competitive products in the vegan cheese category and a decline of our export cheese business. The decrease in frozen dessert product sales was due to a decrease in sales of our frozen dessert pints.

 

13

 

 

Our gross profit was $485,000 for the thirteen weeks ended September 28, 2024 and $786,000 for the thirteen weeks ended September 30, 2023. Our gross profit percentage decreased to 24% for the thirteen weeks ending September 28, 2024 compared to 31% for the thirteen weeks ending September 30, 2023. Our gross profit and gross profit percentage were negatively impacted by the decrease in frozen dessert product sales, and was due to a decrease in sales of our vegan cheese products and frozen dessert pints and increased promotional activity to combat the increased competition in the vegan cheese market. We anticipate that our gross profit and gross profit percentage will remain lower than in 2023 for the remainder of 2024.

 

Freight expense, a significant part of our cost of sales, decreased by $17,000, or 10%, to $156,000 for the thirteen weeks ended September 28, 2024 compared with $173,000 for the thirteen weeks ended September 30, 2023. The decrease in freight expense was due to the decrease in sales. Freight expense was 8% of sales for the thirteen weeks ended September 28, 2024 compared to 6% of sales for the thirteen weeks ended September 30, 2023. We anticipate our freight expense, as a percentage of sales, will remain slightly higher than that of 2023 for the balance of this year.

 

Selling and warehouse expenses decreased slightly by $3,000, or 1%, to $207,000 for the thirteen weeks ended September 28, 2024 from $210,000 for the thirteen weeks ended September 30, 2023. The decrease was due to decreases in commission expense of $10,000, meetings and convention expense of $11,000, and sample shipping expenses of $3,000 which were partially offset by an increase in outside warehouse rental expenses of $5,000, an increase in payroll expense of $5,000, and an increase in travel, entertainment, and auto expense of $10,000. The decrease in commission expense is due to the decrease in sales for the thirteen-weeks ended September 28, 2024 compared with the thirteen-weeks ended September 30, 2023.

 

Marketing expenses decreased by $20,000, or 19%, to $83,000 for the thirteen weeks ended September 28, 2024 from $103,000 for the thirteen weeks ended September 30, 2023. The decrease was primarily due to decreases in artwork and plates expense of $3,000 and advertising expense of $18,000. We anticipate that our marketing expenses for the balance of this year will be comparable to the corresponding periods in fiscal 2023.

 

Product development costs were $28,000 for both the thirteen week periods ended September 28, 2024 and September 30, 2023. We anticipate our product development costs for the remainder of 2024 will continue at a lower level than the corresponding 2023 period as we have reduced our research and development work.

 

General and administrative expenses increased by $41,000, or 12%, to $374,000 for the thirteen weeks ended September 28, 2024 from $333,000 for the thirteen weeks ended September 30, 2023, primarily due to increases in payroll expense of $8,000, office supply expense of $11,000, security and fire alarm expense of $9,000, and building rental expense of $19,000, equipment rental expense of $4,000 and general insurance expense of $6,000, which were partially offset by a decrease in IT expense of $10,000 and professional and outside services expense of $10,000. Building rent, security and fire alarm, and office expenses increased due to additional expenses associated with the move to our new facility. These are one-time expenses that will be offset by future savings in operational expenses.

 

Income tax expense was $0 for the thirteen weeks ended September 28, 2024 and $1,000 for the thirteen weeks ended September 30, 2023.

 

14

 

 

Thirty Nine Weeks Ended September 28, 2024 Compared with Thirty Nine Weeks Ended September 30, 2023

 

Net sales for the thirty-nine weeks ended September 28, 2024 decreased by $1,243,000, or 16%, to $6,481,000, from net sales of $7,724,000 for the thirty-nine weeks ended September 30, 2023. Sales of our vegan cheese products decreased to $5,383,000 in the thirty-nine weeks ended September 28, 2024 from $6,492,000 for the thirty-nine weeks ended September 30, 2023. Sales of our frozen dessert products decreased to $1,098,000 for the thirty-nine weeks ended September 28, 2024 from $1,232,000 for the thirty-nine weeks ended September 30, 2023. The significant reduction in sales for the current thirty-nine week period was primarily due to the decrease in our vegan cheese sales caused by increased competition in the vegan cheese category and a decline in our export cheese business.

 

Our gross profit decreased to $1,621,000 for the thirty-nine weeks ended September 28, 2024 from $2,059,000 for the thirty-nine weeks ended September 30, 2023, while our gross profit percentage was 25% for the thirty-nine weeks ending September 28, 2024 compared to 27% for the thirty-nine weeks ending September 30, 2023. The decrease in our gross profit and gross profit percentage was due to the reduction in sales.

 

Freight expense, a significant part of our cost of sales, decreased by $98,000, or 16%, to $513,000 for the thirty-nine weeks ended September 28, 2024 compared with $611,000 for the thirty-nine weeks September 30, 2023 due to the reduction in sales. Freight expense was 8% of sales for the thirty-nine weeks ended September 28, 2024 and for the thirty-nine weeks ended September 30, 2023.

 

Selling and warehouse expenses decreased by $131,000, or 16%, to $671,000 for the thirty-nine weeks ended September 28, 2024 from $802,000 for the thirty-nine weeks ended September 30, 2023. The decrease was primarily attributable to decreases in meetings and convention expense of $55,000, commission expense of $86,000, bad debt expense of $15,000, and sample shipping expenses of $26,000, which were partially offset by an increase in outside warehouse rental expenses of $25,000, payroll expenses of $15,000, and travel, entertainment, and auto expenses of $11,000. The decrease in commission expense is due to the decrease in sales and a reduction to the commission rate we pay to our brokers from 5% to 4% for the thirty-nine weeks ended September 28, 2024 compared with the thirty-nine weeks ended September 30, 2023.

 

Marketing expenses increased slightly by $10,000, or 3%, to $297,000 for the thirty-nine weeks ended September 28, 2024 from $287,000 for the thirty-nine weeks ended September 30, 2023. The increase was primarily due to increases in promotions expense of $36,000, point of sale material expense of $16,000 and artwork and plate expense of $5,000, which were partially offset by decreases in advertising expense of $11,000, and public relations expense of $5,000.

 

Product development costs were $92,000 for the thirty-nine weeks ended September 28, 2024 and $111,000 for the thirty-nine weeks ended September 30, 2023. The decrease was due primarily to a decrease in professional fees and outside services expenses of $11,000 and lab costs and supplies expense of $8,000.

 

General and administrative expenses increased by 8%, or $79,000, to $1,097,000 for the thirty-nine weeks ended September 28, 2024 from $1,018,000 for the thirty-nine weeks ended September 30, 2023. This increase was primarily due to increases in payroll expense of $28,000, security and fire alarm expense of $9,000, office supply expense of $19,000, equipment repairs expense of $5,000, telephone expense of $5,000, building rental expense of $27,000, and general insurance expense of $12,000, which were partially offset by decreases in public relations expense of $19,000, IT expense of $9,000, and stock option expense of $7,000. Our increase in payroll expense was due primarily to an increase in group insurance expense.

 

Income tax expense was $5,000 for the thirty-nine weeks ended September 28, 2024 and $148,000 for the thirty-nine weeks ended September 30, 2023.

 

Liquidity and Capital Resources

 

As of September 28, 2024, we had approximately $176,000 in cash and our working capital was approximately $2,961,000, compared with approximately $837,000 in cash and working capital of $3,440,000 at December 30, 2023.

 

15

 

 

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

 

		Thirty-nine weeks ended				Thirty-nine weeks ended
		28-Sep-24				30-Sep-23
Cash used in operating activities, net		$	(655	)		$	(337	)
Cash used in financing activities, net			(6	)			(8	)
Net decrease in cash		$	(661	)		$	(345	)

 

Net cash used in operating activities for the thirty-nine weeks ended September 28, 2024 was $661,000 compared to $345,000 used in operating activities for the thirty-nine weeks ended September 30, 2023. Net cash used in operating activities for the thirty-nine weeks ended September 28, 2024 was primarily a result of the net loss of $528,000 and decreases in current liabilities of $501,000, which were partially offset by decreases in inventories of $345,000.

 

We believe our existing cash on hand at September 28, 2024, existing working capital and the cash flows expected from operations, will be sufficient to support our operating and capital requirements during 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 September 28, 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.

 

16

 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures. As of September 28, 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 of September 28, 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 ensure 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 September 28, 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 five persons at September 28, 2024.

 

17

 

 

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

 

During the three months ended September 28, 2024, no director or executive officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

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).

 

18

 

 

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
	Chief Accounting and Financial Officer
Date: November 18, 2024

 

19

 

 

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: November 18, 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.;

 

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: November 18, 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 September 28, 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: November 18, 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 September 28, 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: November 18, 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	9 Months Ended
	Sep. 28, 2024	Nov. 18, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 28, 2024
Document Fiscal Period Focus	Q3
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	105 Newfield Ave
Entity Address, Address Line Two	Suite H
Entity Address, City or Town	Edison
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	088337
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
Entity Listing, Par Value Per Share	$ 0.01

Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Current assets:
Cash	$ 176	$ 837
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $495 and $525, respectively	821	828
Inventories	2,130	2,475
Prepaid expenses and other current assets	126	93
Total current assets	3,253	4,233
Operating lease right-of-use asset	355	81
Finance lease right-of-use asset	25	36
Deferred tax assets	246	246
Other assets	31	19
Total assets	3,910	4,615
Current liabilities:
Accounts payable		237
Accrued expenses	284	541
Finance lease liability, current portion	8	15
Total current liabilities	292	793
Operating lease liabilities, net of current portion	308	7
Finance lease liability, net of current portion	20	23
Total liabilities	620	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	363	323
Retained earnings	2,875	3,417
Total stockholders’ equity	3,290	3,792
Total liabilities and stockholders’ equity	$ 3,910	$ 4,615

Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 28, 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
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
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		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Income Statement [Abstract]
Net sales	$ 1,986	$ 2,515	$ 6,481	$ 7,724
Cost of sales	1,501	1,729	4,860	5,665
Gross profit	485	786	1,621	2,059
Operating expenses:
Selling and warehouse	207	210	671	802
Marketing	83	103	297	287
Research and development	28	28	92	111
General and administrative	374	333	1,097	1,018
Total operating expenses	692	674	2,157	2,218
Income (loss) from operations	(207)	112	(536)	(159)
Income (loss) before interest expense and income taxes	(207)	112	(536)	(159)
Interest expense		1	1	3
Income (loss) before income tax	(207)	111	(537)	(162)
Income tax expense		1	5	148
Net income (loss)	$ (207)	$ 110	$ (542)	$ (310)
Weighted average common shares outstanding:
Basic	5,154	5,154	5,154	5,154
Diluted	5,154	5,154	5,154	5,154
Income (loss) per common share:
Basic	$ (0.04)	$ 0.02	$ (0.1)	$ (0.06)
Diluted	$ (0.04)	$ 0.02	$ (0.1)	$ (0.06)

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 income (loss)			(102)	(102)
Balance at Apr. 01, 2023	52	283	3,681	4,016
Balance at Dec. 31, 2022	52	263	3,783	4,098
Net income (loss)				(310)
Balance at Sep. 30, 2023	52	310	3,473	3,835
Balance at Apr. 01, 2023	52	283	3,681	4,016
Stock-based compensation		13		13
Net income (loss)			(318)	(318)
Balance at Jul. 01, 2023	52	296	3,363	3,711
Stock-based compensation		14		14
Net income (loss)			110	110
Balance at Sep. 30, 2023	52	310	3,473	3,835
Balance at Dec. 30, 2023	52	323	3,417	3,792
Stock-based compensation		14		14
Net income (loss)			(303)	(303)
Balance at Mar. 30, 2024	52	337	3,114	3,503
Balance at Dec. 30, 2023	52	323	3,417	3,792
Net income (loss)				(542)
Balance at Sep. 28, 2024	52	363	2,875	3,290
Balance at Mar. 30, 2024	52	337	3,114	3,503
Stock-based compensation		13		13
Net income (loss)			(32)	(32)
Balance at Jun. 29, 2024	52	350	3,082	3,484
Stock-based compensation		13		13
Net income (loss)			(207)	(207)
Balance at Sep. 28, 2024	$ 52	$ 363	$ 2,875	$ 3,290

Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Statement of Cash Flows [Abstract]
Cash used in operating activities, net	$ (655)	$ (337)
Cash used in financing activities, net	(6)	(8)
Net decrease in cash	(661)	(345)
Cash at beginning of period	837	1,072
Cash at end of period	176	727
Supplemental cash flow information:
Acquisition of right of use assets for lease obligations	371
Income taxes paid	7
Interest paid on finance leases	$ 1

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 28, 2024	Jun. 29, 2024	Mar. 30, 2024	Sep. 30, 2023	Jul. 01, 2023	Apr. 01, 2023	Sep. 28, 2024	Sep. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (207)	$ (32)	$ (303)	$ 110	$ (318)	$ (102)	$ (542)	$ (310)

Insider Trading Arrangements	3 Months Ended
	Sep. 28, 2024
Trading Arrangements, by Individual [Table]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Basis of Presentation	9 Months Ended
	Sep. 28, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	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 and thirty-nine-week period ended September 28, 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 31st.

Recently Issued Accounting Standards	9 Months Ended
	Sep. 28, 2024
Accounting Changes and Error Corrections [Abstract]
Recently Issued Accounting Standards	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 November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company is currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.   In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.

Inventories	9 Months Ended
	Sep. 28, 2024
Inventory Disclosure [Abstract]
Inventories	Note 3: Inventories   Inventories consist of the following:       September 28, 2024     December 30, 2023   Finished products   $ 1,215     $ 1,366   Raw materials and packaging     915       1,109     $ 2,130     $ 2,475

Income Taxes	9 Months Ended
	Sep. 28, 2024
Income Tax Disclosure [Abstract]
Income Taxes	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 $5 and an income tax expense of $148 for the thirty-nine week periods ended September 28, 2024 and September 30, 2023, respectively. The Company recorded a valuation allowance of $143 for the thirty-nine week period ended September 28, 2024.

Earnings (Loss) Per Share	9 Months Ended
	Sep. 28, 2024
Income (loss) per common share:
Earnings (Loss) Per Share	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.     TOFUTTI BRANDS INC. Notes to Unaudited Condensed Financial Statements (in thousands, except share and per share data)   The following table sets forth the computation of basic and diluted earnings per share:       Thirteen weeks ended September 28, 2024     Thirteen weeks ended September 30, 2023     Thirty-nine weeks ended September 28, 2024     Thirty-nine weeks ended September 30, 2023   Income (loss), numerator, basic computation   $ (207 )   $ 110     $ (542 )   $ (310 ) Net income (loss), numerator, diluted computation   $ (207 )   $ 110     $ (542 )   $ (310 ) Weighted average shares - denominator basic computation     5,154       5,154       5,154       5,154   Weighted average shares, as adjusted - denominator diluted computation     5,154       5,154       5,154       5,154   Income (loss) per common share - basic   $ (0.04 )   $ 0.02     $ (0.1 )   $ (0.06 ) Income (loss) per common share - diluted   $ (0.04 )   $ 0.02     $ (0.1 )   $ (0.06 )   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 September 28, 2024     Thirteen weeks Ended September 30, 2023   Shares subject to outstanding common stock options     250,000       250,000

Share Based Compensation	9 Months Ended
	Sep. 28, 2024
Share-Based Payment Arrangement [Abstract]
Share Based Compensation	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.” 0 and 250,000 stock options were issued in 2023 and 2022, respectively, and 250,000 non-qualified options were outstanding as of September 28, 2024. The exercise price of all options granted in 2022 is $0.95 per share, the market price at the close of business on the date of the grant. 83,333 of the options vested at the respective grant date, 83,333 will vest in December 2023, and 83,334 will vest in December 2024. In the event of a sale of the Company at any time prior to December 22, 2024, all remaining unvested options shall vest immediately. All options expire on December 22, 2027. No additional options were made available or granted during the thirty-nine weeks ended September 28, 2024.   The following is a summary of stock option activity from December 30, 2023 to September 28, 2024:       NON-QUALIFIED OPTIONS       Shares     Weighted Average Exercise Price ($)   Outstanding at December 30, 2023     250,000       0.95   Granted     —       —   Exercised     —       —   Outstanding at September 28, 2024     250,000       0.95   Exercisable at September 28, 2024     166,666       0.95       TOFUTTI BRANDS INC. Notes to Unaudited Condensed Financial Statements (in thousands, except share and per share data)   The following table summarizes information about stock options outstanding from December 30, 2023 to September 28, 2024:   Range of Exercise Prices ($)     Number Outstanding     Weighted Average Remaining Life (in years)     Weighted Average Exercise Price($)     Number Exercisable   $ 0.95       250,000       3.25     $ 0.95       166,666     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 the 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.   The expected term was determined based on the reasoning that all previously granted options have been held to expiration. Additionally, all 5 members who were granted options are board members or an officer, and the expectation is that they are holding these options to expiration or until any such liquidation event would take place which is not estimable.   As of September 28, 2024, and September 30, 2023 the intrinsic value of the options outstanding and exercisable options was $0 and $12, respectively, and there was $9 of total unrecognized compensation cost. Total stock-based compensation for both of the thirteen weeks ended September 28, 2024, and September 30, 2023 was $13, which is recorded in general and administrative expenses on the statement of operations. Total stock-based compensation was $40 and $47 for the thirty-nine weeks ended September 28, 2024, and September 30, 2023, respectively.   The 250,000 options outstanding will expire on December 22, 2027 if not exercised by that date.

Revenue	9 Months Ended
	Sep. 28, 2024
Revenue from Contract with Customer [Abstract]
Revenue	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:       Thirteen weeks ended September 28, 2024     Thirteen weeks ended September 30, 2023     Thirty-nine weeks ended September 28, 2024     Thirty-nine weeks ended September 30, 2023   Revenues by geography:                                 Americas   $ 1,896     $ 2,345     $ 6,120     $ 7,352   Europe     5       122       84       133   Asia Pacific and Africa     —       —       —       57   Middle East     85       48       277       182     $ 1,986     $ 2,515     $ 6,481     $ 7,724     Approximately 92% of the Americas’ revenue for the thirteen weeks ended September 28, 2024 is attributable to sales in the United States compared with 93% of the Americas’ revenue for the thirteen weeks ended September 30, 2023. For the thirty-nine week period ended September 28, 2024 approximately 91% of the Americas’ revenue is attributable to sales in the United States compared to 91% for the thirty-nine week period ended September 30, 2023. All of the Company’s assets are located in the United States.     TOFUTTI BRANDS INC. Notes to Unaudited Condensed Financial Statements (in thousands, except share and per share data)   Net sales by major product category:       Thirteen weeks ended September 28, 2024     Thirteen weeks ended September 30, 2023     Thirty-nine Weeks ended September 28, 2024     Thirty-nine Weeks ended September 30, 2023   Frozen desserts and foods   $ 338     $ 405     $ 1,098     $ 1,232   Cheeses     1,648       2,110       5,383       6,492     $ 1,986     $ 2,515     $ 6,481     $ 7,724

Leases	9 Months Ended
	Sep. 28, 2024
Leases
Leases	Note 8: Leases   Through September 1, 2024, the Company’s facilities were located in a one-story 6,200 square foot facility in Cranford, New Jersey. The facility housed the Company’s 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 continued to occupy the premises on a monthly basis. In September, the company left the lease and derecognized the associated right of use asset and liability. Rent expense was $42 and $23 for the thirteen weeks ended September 28, 2024 and September 30, 2023, and $97 and $69 for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively. The Company also rents warehouse storage space at various outside facilities. Outside warehouse expenses were $90. for the thirteen weeks ended September 28, 2024 and $85 for the thirteen weeks ended September 30, 2023, and $271 and $246 for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively. The Company rents a copier and mail machine under a finance lease. In 2022, the Company entered into a copier and mail machine lease, which still exists as of September 28, 2024. Payments for the copier and mail machine amounted to $4 and $0 for the thirteen weeks ended September 28, 2024 and September 30, 2023, respectively and $4 and $6 for the thirty-nine weeks ended September 28, 2024 and September 30, 2023, respectively.   We recently signed a five-year lease to move our offices into a one-story facility in Edison, New Jersey. The lease commenced on July 1 2024, with an option to extend for an additional five years at the end of the lease. Annual rent for the lease escalates by 3% year over year until the end of the lease term. We completed the move into the new facility in September 2024. The 5,100 square foot facility houses our administrative offices, a warehouse, freezers, and refrigerators.   Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. 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 condensed 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.   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. At the time of adoption of Topic 842, the Company used the incremental borrowing rate of 5.5% for all leases that commenced prior to that date.   ROU lease assets and lease liabilities for our operating leases were recorded in the balance sheet as follows:       As of     As of       September 28, 2024     December 30, 2023   Operating lease right-of-use assets   $ 355     $ 81                     Current portion of lease liabilities     55       74   Operating lease liabilities, net of current portion     308       7   Total lease liability   $ 363     $ 81                     Weighted average remaining lease term (in years)     4.9       1.2   Weighted average discount rate     5.5 %     5.5 %     TOFUTTI BRANDS INC. Notes to Unaudited Condensed Financial Statements (in thousands, except share and per share data)   ROU lease asset and lease liability for our finance lease were recorded in the balance sheet as follows:       As of     As of       September 28, 2024     December 30, 2023   Finance lease right-of-use asset   $ 25     $ 36                     Current portion of lease liabilities     8       15   Finance lease liabilities, net of current portion     20       23   Total lease liabilities   $ 28     $ 38                     Weighted average remaining lease term (in years)     1.6       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 September 28, 2024 are as follows:       Operating lease liabilities     Finance lease liability     Total   2024 (remainder of the year)   $ 20     $ 3     $ 23   2025     82       18       100   2026     84       7       91   2027     86       —       86   2028     89       —       89   2029     61       —       61   Total future minimum lease payments     422       28       450   Present value adjustment     (59 )     —     (59 ) Total   $ 363     $ 28     $ 391

Accrued Expenses	9 Months Ended
	Sep. 28, 2024
Payables and Accruals [Abstract]
Accrued Expenses	Note 9: Accrued Expenses   Accrued expenses and other current liabilities consist of the following:       As of     As of       September 28, 2024     December 30, 2023   Accrued payroll and other benefits   $ —     $ —   Accrued professional fees     11       11   Uncertain tax position     216       211   Operating lease liability     55       81   Accrued purchases     2       238                     Total accrued expenses   $ 284     $ 541

Inventories (Tables)	9 Months Ended
	Sep. 28, 2024
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories consist of the following:       September 28, 2024     December 30, 2023   Finished products   $ 1,215     $ 1,366   Raw materials and packaging     915       1,109     $ 2,130     $ 2,475

Earnings (Loss) Per Share (Tables)	9 Months Ended
	Sep. 28, 2024
Income (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 September 28, 2024     Thirteen weeks ended September 30, 2023     Thirty-nine weeks ended September 28, 2024     Thirty-nine weeks ended September 30, 2023   Income (loss), numerator, basic computation   $ (207 )   $ 110     $ (542 )   $ (310 ) Net income (loss), numerator, diluted computation   $ (207 )   $ 110     $ (542 )   $ (310 ) Weighted average shares - denominator basic computation     5,154       5,154       5,154       5,154   Weighted average shares, as adjusted - denominator diluted computation     5,154       5,154       5,154       5,154   Income (loss) per common share - basic   $ (0.04 )   $ 0.02     $ (0.1 )   $ (0.06 ) Income (loss) per common share - diluted   $ (0.04 )   $ 0.02     $ (0.1 )   $ (0.06 )
Schedule of Securities Excluded From Weighted Average Shares	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 September 28, 2024     Thirteen weeks Ended September 30, 2023   Shares subject to outstanding common stock options     250,000       250,000

Share Based Compensation (Tables)	9 Months Ended
	Sep. 28, 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 September 28, 2024:       NON-QUALIFIED OPTIONS       Shares     Weighted Average Exercise Price ($)   Outstanding at December 30, 2023     250,000       0.95   Granted     —       —   Exercised     —       —   Outstanding at September 28, 2024     250,000       0.95   Exercisable at September 28, 2024     166,666       0.95
Schedule of Information About Stock Options	The following table summarizes information about stock options outstanding from December 30, 2023 to September 28, 2024:   Range of Exercise Prices ($)     Number Outstanding     Weighted Average Remaining Life (in years)     Weighted Average Exercise Price($)     Number Exercisable   $ 0.95       250,000       3.25     $ 0.95       166,666

Revenue (Tables)	9 Months Ended
	Sep. 28, 2024
Revenue from Contract with Customer [Abstract]
Schedule of Disaggregation Revenue	Revenues by geographical region are as follows:       Thirteen weeks ended September 28, 2024     Thirteen weeks ended September 30, 2023     Thirty-nine weeks ended September 28, 2024     Thirty-nine weeks ended September 30, 2023   Revenues by geography:                                 Americas   $ 1,896     $ 2,345     $ 6,120     $ 7,352   Europe     5       122       84       133   Asia Pacific and Africa     —       —       —       57   Middle East     85       48       277       182     $ 1,986     $ 2,515     $ 6,481     $ 7,724   Net sales by major product category:       Thirteen weeks ended September 28, 2024     Thirteen weeks ended September 30, 2023     Thirty-nine Weeks ended September 28, 2024     Thirty-nine Weeks ended September 30, 2023   Frozen desserts and foods   $ 338     $ 405     $ 1,098     $ 1,232   Cheeses     1,648       2,110       5,383       6,492     $ 1,986     $ 2,515     $ 6,481     $ 7,724

Leases (Tables)	9 Months Ended
	Sep. 28, 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     As of       September 28, 2024     December 30, 2023   Operating lease right-of-use assets   $ 355     $ 81                     Current portion of lease liabilities     55       74   Operating lease liabilities, net of current portion     308       7   Total lease liability   $ 363     $ 81                     Weighted average remaining lease term (in years)     4.9       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     As of       September 28, 2024     December 30, 2023   Finance lease right-of-use asset   $ 25     $ 36                     Current portion of lease liabilities     8       15   Finance lease liabilities, net of current portion     20       23   Total lease liabilities   $ 28     $ 38                     Weighted average remaining lease term (in years)     1.6       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 September 28, 2024 are as follows:       Operating lease liabilities     Finance lease liability     Total   2024 (remainder of the year)   $ 20     $ 3     $ 23   2025     82       18       100   2026     84       7       91   2027     86       —       86   2028     89       —       89   2029     61       —       61   Total future minimum lease payments     422       28       450   Present value adjustment     (59 )     —     (59 ) Total   $ 363     $ 28     $ 391

Accrued Expenses (Tables)	9 Months Ended
	Sep. 28, 2024
Payables and Accruals [Abstract]
Schedule of Accrued expenses and other current liabilities	Accrued expenses and other current liabilities consist of the following:       As of     As of       September 28, 2024     December 30, 2023   Accrued payroll and other benefits   $ —     $ —   Accrued professional fees     11       11   Uncertain tax position     216       211   Operating lease liability     55       81   Accrued purchases     2       238                     Total accrued expenses   $ 284     $ 541

Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Inventory Disclosure [Abstract]
Finished products	$ 1,215	$ 1,366
Raw materials and packaging	915	1,109
Inventories, net	$ 2,130	$ 2,475

Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income tax expense		$ 1	$ 5	$ 148
Valuation allowance	$ 143		$ 143

Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Income (loss) per common share:
Income (loss), numerator, basic computation	$ (207)	$ 110	$ (542)	$ (310)
Net income (loss), numerator, diluted computation	$ (207)	$ 110	$ (542)	$ (310)
Weighted average shares - denominator basic computation	5,154	5,154	5,154	5,154
Weighted average shares, as adjusted - denominator diluted computation	5,154	5,154	5,154	5,154
Income (loss) per common share - basic	$ (0.04)	$ 0.02	$ (0.1)	$ (0.06)
Income (loss) per common share - diluted	$ (0.04)	$ 0.02	$ (0.1)	$ (0.06)

Schedule of Securities Excluded From Weighted Average Shares (Details) - shares	3 Months Ended
	Sep. 28, 2024	Sep. 30, 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)	9 Months Ended
	Sep. 28, 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)	9 Months Ended
	Sep. 28, 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 3 months
Weighted average exercise price | $ / shares	$ 0.95
Number of options, exercisable | shares	166,666

Share Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023	Dec. 30, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock options, granted
Number of shares outstanding	250,000		250,000		250,000
Options expiration date			Dec. 22, 2027
Intrinsic value of options outstanding	$ 0	$ 12	$ 0	$ 12
Intrinsic value of options exercisable	0	12	0	12
Unrecognized compensation cost	9		9
Rent expense			$ 40	$ 47
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	$ 13	$ 13
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		250,000
Stock options, granted					0	250,000
Exercise price						$ 0.95
Number of options vested			83,333			83,333
Options expiration date	Dec. 22, 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			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			83,334

Schedule of Disaggregation Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Revenues	$ 1,986	$ 2,515	$ 6,481	$ 7,724
Frozen Desserts and Foods [Member]
Disaggregation of Revenue [Line Items]
Revenues	338	405	1,098	1,232
Cheeses [Member]
Disaggregation of Revenue [Line Items]
Revenues	1,648	2,110	5,383	6,492
Americas [Member]
Disaggregation of Revenue [Line Items]
Revenues	1,896	2,345	6,120	7,352
Europe [Member]
Disaggregation of Revenue [Line Items]
Revenues	5	122	84	133
Asia Pacific and Africa [Member]
Disaggregation of Revenue [Line Items]
Revenues				57
Middle East [Member]
Disaggregation of Revenue [Line Items]
Revenues	$ 85	$ 48	$ 277	$ 182

Revenue (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Revenue Benchmark [Member] | Geographic Concentration Risk [Member] | Americas [Member]
Disaggregation of Revenue [Line Items]
Concentration risk percentage	92.00%	93.00%	91.00%	91.00%

Schedule of ROU Lease Assets and Liabilities For Operating Lease (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Leases
Operating lease right-of-use assets	$ 355	$ 81
Current portion of lease liabilities	55	74
Operating lease liabilities, net of current portion	308	7
Total lease liability	$ 363	$ 81
Weighted average remaining lease term (in years)	4 years 10 months 24 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	Sep. 28, 2024	Dec. 30, 2023
Leases
Finance lease right-of-use asset	$ 25	$ 36
Current portion of lease liabilities	8	15
Finance lease liabilities, net of current portion	20	23
Total lease liabilities	$ 28	$ 38
Weighted average remaining lease term (in years)	1 year 7 months 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	Sep. 28, 2024	Dec. 30, 2023
Leases
Operating lease liabilities, 2024	$ 20
Finance lease liability, 2024	3
Operating lease and Financing lease, 2024	23
Operating lease liabilities, 2025	82
Finance lease liability, 2025	18
Operating lease and Financing lease, 2025	100
Operating lease liabilities, 2026	84
Finance lease liability, 2026	7
Operating lease and Financing lease, 2026	91
Operating lease liabilities, 2027	86
Finance lease liability, 2027
Operating lease and Financing lease, 2027	86
Operating lease liabilities, 2028	89
Finance lease liability, 2028
Operating lease and Financing lease, 2028	89
Operating lease liabilities, 2029	61
Finance lease liability, 2029
Operating lease and Financing lease, 2029	61
Operating lease liabilities, future minimum lease payments	422
Finance lease liability, future minimum lease payments	28
Operating lease and Financing lease, future minimum lease payments	450
Operating lease liabilities, Present value adjustment	(59)
Finance lease liability, Present value adjustment
Operating lease and Financing lease, Present value adjustment	(59)
Operating lease liabilities, Total	363	$ 81
Finance lease liability, Total	28	$ 38
Operating lease and Financing lease, Liabilities	$ 391

Leases (Details Narrative) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2024 USD ($) ft²	Sep. 30, 2023 USD ($)	Sep. 28, 2024 USD ($) ft²	Sep. 30, 2023 USD ($)	Jul. 01, 2024 ft²
Area of real estate property | ft²	6,200		6,200
Rent expense	$ 42	$ 23	$ 97	$ 69
Warehouse expenses	90	85	271	246
Payments for rent copiers	$ 4	$ 0	$ 4	$ 6
Lease term					5 years
Option to extend lease term	option to extend for an additional five years at the end of the lease
Lease annual rent description	Annual rent for the lease escalates by 3% year over year until the end of the lease term.
Area of land | ft²					5,100
Minimum [Member]
Incremental borrowing rate, percentage			5.50%

Schedule of Accrued expenses and other current liabilities (Details) - USD ($) $ in Thousands	Sep. 28, 2024	Dec. 30, 2023
Payables and Accruals [Abstract]
Accrued payroll and other benefits
Accrued professional fees	11	11
Uncertain tax position	216	211
Operating lease liability	55	81
Accrued purchases	2	238
Total accrued expenses	$ 284	$ 541

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