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Liquidity and Capital Resources
3 Months Ended
Apr. 02, 2016
Liquidity and Capital Resources [Abstract]  
Liquidity and Capital Resources

Note 1: Liquidity and Capital Resources

 

At April 2, 2016, Tofutti Brands, Inc. (“Tofutti” or the “Company”) had approximately $94 in cash compared to $55 at January 2, 2016. Net cash used in operating activities for the thirteen weeks ended April 2, 2016 was $460 compared to $310 used in operating activities for the thirteen weeks ended March 28, 2015. Net cash provided by financing activities for the thirteen weeks ended April 2, 2016 was $499 compared to $2 used in financing activities for the thirteen weeks ended March 28, 2015. Net cash provided by operating activities for the thirteen weeks ended April 2, 2016 was primarily a result of the loan provided by the Company’s Chairman and Chief Executive Officer.

 

The Company has historically financed operations and met capital requirements primarily through positive cash flow from operations. However, due to the net loss and cash used in operations for the year ended January 2, 2016 and in order to provide the Company with additional working capital, David Mintz, the Company’s Chairman and Chief Executive Officer, provided it with a loan on January 6, 2016 of $500 which is due on December 31, 2017. Commencing March 31, 2016, interest of 5% is payable on a quarterly basis without compounding. The loan may be prepaid in whole or in part at any time without premium or penalty. The loan is convertible into the Company’s common stock at a conversion price of $4.01 per share, the closing price of its common stock on the NYSE MKT on the date the promissory note was entered into.

 

The Company’s ability to introduce and support successful new products may be adversely affected by a number of factors, such as unforeseen cost and expenses, economic environment, increased competition, and other factors beyond the Company’s control. Management cannot provide assurance that the Company will operate profitably in the future, or that it will not require significant additional financing in order to accomplish or exceed the objectives of its business plan. Consequently, the Company’s historical operating results cannot be relied on to be an indicator of future performance, and management cannot predict whether the Company will obtain or sustain positive operating cash flow or generate net income in the future.