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Liquidity and Capital Resources
12 Months Ended
Dec. 31, 2016
Liquidity and Capital Resources [Abstract]  
Liquidity and Capital Resources

NOTE 1: LIQUIDITY AND CAPITAL RESOURCES

 

At December 31, 2016, Tofutti Brands, Inc. (the “Company”) had approximately $132 in cash compared to $55 at January 2, 2016. Net cash used in operating activities for the year ended December 31, 2016 was $418 compared to $280 used in operating activities for the year ended January 2, 2016. Net cash provided by operating activities for the year ended December 31, 2016 was primarily the result of our net income of $421 offset by increases in accounts receivable and inventory of $897 and $92, respectively.

 

Cash provided by financing activities was $495 for the fiscal year ended December 31, 2016 compared to $6 used in financing activities for the fiscal year ended January 2, 2016. Net cash provided by financing activities for the fiscal year ended December 31, 2016 was the result of a $500 loan from the Company’s Chairman of the Board 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 in order to provide the Company with additional working capital, on January 6, 2016, David Mintz, the Company’s Chairman and Chief Executive, provided it with a loan of $500,000. 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. Initially due December 31, 2017, the loan has been extended until December 31, 2018.

 

The Company’s ability to introduce 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.

 

On September 30, 2016, the Company announced that it had engaged a financial advisor and is pursuing strategic alternatives to enhance shareholder value, including a possible sale or other form of business combination. There can be no assurance that any transaction will be consummated.