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Liquidity and Capital Resources
12 Months Ended
Dec. 30, 2017
Liquidity and Capital Resources [Abstract]  
Liquidity and Capital Resources

NOTE 1: LIQUIDITY AND CAPITAL RESOURCES

 

At December 30, 2017, Tofutti Brands, Inc. (the “Company”) had approximately $1,414 in cash compared to $132 at December 31, 2016. Net cash provided by operating activities for the year ended December 30, 2017 was $1,288 compared to $418 used in operating activities for the year ended December 31, 2016. Net cash provided by operating activities for the year ended December 30, 2017 was primarily the result of our net income of $704 and decreases in accounts receivable and inventory of $840 and $82, respectively. These decreases were partially offset by a decrease in accounts payable and accrued liabilities of $436 and deferred revenue of $14.

 

Cash used in financing activities was $6 for the fiscal year ended December 30, 2017 compared to $495 provided by financing activities for the fiscal year ended December 31, 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 net losses and cash used in operations in prior years 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. 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. In any event of default, as defined in the promissory note, without any action on the part of Mr. Mintz, the interest rate will increase to 12% per annum and the entire principal and interest balance under the loan, and all of the Company’s other obligations under the loan, will be immediately due and payable, and Mr. Mintz will be entitled to seek and institute any and all remedies available to him. Initially due December 31, 2017, the loan has been extended until December 31, 2019.

 

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 was pursuing strategic alternatives to enhance shareholder value, including a possible sale or other form of business combination. In August 2017 the Company announced that it had terminated its engagement with the financial advisor that was assisting it.