10-Q

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 October 2, 2021

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

Commission file number: 1-9009

Tofutti Brands Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

50 Jackson Drive, Cranford, New Jersey 07016

(Address of Principal Executive Offices)

(908) 272-2400

(Registrant’s Telephone Number, including area code)

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

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

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒
Smaller reporting company ☒	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

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

Yes ☐ No ☒

As of November 15, 2021, 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
	Condensed Balance Sheets – October 2, 2021 and January 2, 2021	3
	Condensed Statements of Income - Thirteen and Thirty-Nine Weeks ended October 2, 2021 and September 26, 2020	4
	Condensed Statements of Changes in Stockholders’ Equity - Thirteen and Thirty-Nine Weeks ended October 2, 2021 and September 26, 2020	5
	Condensed Statements of Cash Flows - Thirty-Nine Weeks ended October 2, 2021 and September 26, 2020	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	17
Item 4.	Controls and Procedures	17
Part II - Other Information:
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	19
Signatures		20

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

TOFUTTI BRANDS, INC.

Unaudited Condensed Balance Sheets

(in thousands, except share and per share figures)

	October 2,		January 2,
	2021		2021
Assets
Current assets:
Cash	$	3,009	$	1,459
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $322 and $457, respectively		1,413		2,078
Inventories		1,686		1,997
Prepaid expenses and other current assets		66		88
Total current assets		6,174		5,622
Equipment, net		41		135
Operating lease right-of-use assets		142		224
Deferred tax assets		96		83
Other assets		23		19
Total assets	$	6,476	$	6,083
Liabilities and Stockholders’ Equity
Current liabilities:
SBA loan payable	$	165	$	112
Income taxes payable		2		117
Accounts payable		770		219
Accrued expenses		351		535
Total current liabilities		1,288		983
Convertible note payable-long term-related party		500		500
SBA loan payable, net of current portion		-		53
Operating lease liabilities		36		123
Total liabilities		1,824		1,659
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, issued and outstanding 5,153,706 shares		52		52
Additional paid in capital		207		207
Retained earnings		4,393		4,165
Total stockholders’ equity		4,652		4,424
Total liabilities and stockholders’ equity	$	6,476	$	6,083

See accompanying notes to unaudited condensed financial statements

3

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Income

(in thousands, except per share figures)

	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	weeks ended		weeks ended		weeks ended		weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales	$	3,356	$	3,152	$	9,533	$	9,621
Cost of sales		2,538		2,119		6,956		6,577
Gross profit		818		1,033		2,577		3,044
Operating expenses:
Selling and warehouse		282		283		909		881
Marketing		38		38		173		210
Research and development		24		50		99		194
General and administrative		331		411		1,097		1,229
		675		782		2,278		2,514
Income before interest expense and income taxes		143		251		299		530
Interest expense		7		6		19		19
Income before income tax		136		245		280		511
Income tax expense		16		25		52		101
Net income	$	120	$	220	$	228	$	410
Weighted average common shares outstanding
Basic		5,154		5,154		5,154		5,154
Diluted		5,436		5,436		5,154		5,436
Earnings per common share:
Basic	$	0.02	$	0.04	$	0.04	$	0.08
Diluted	$	0.02	$	0.04	$	0.04	$	0.08

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 October 2, 2021
			Additional Paid-		Retained
	Common Stock		in Capital		Earnings		Total
January 2, 2021	$	52	$	207	$	4,165	$	4,424
Net income		-		-		80		80
April 3, 2021		52		207		4,245		4,504
Net income		-		-		28		28
July 3, 2021		52		207		4,273		4,532
Net income		-		-		120		120
October 2, 2021	$	52	$	207	$	4,393	$	4,652

	Thirteen and Thirty-Nine Weeks ended September 26, 2020
			Additional Paid-		Retained
	Common Stock		in Capital		Earnings		Total
December 28, 2019	$	52	$	207	$	3,569	$	3,828
Net income		-		-		50		50
March 28, 2020		52		207		3,619		3,878
Net income		-		-		140		140
June 27, 2020		52		207		3,759		4,018
Net income		-		-		220		220
September 26, 2020	$	52	$	207	$	3,979	$	4,238

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
	October 2, 2021		September 26, 2020
Cash provided by operating activities, net	$	1,500	$	720
Cash provided by investing activities, net		50		-
Cash provided by financing activities, net		-		165
Net increase in cash		1,550		885
Cash at beginning of period		1,459		514
Cash at end of period	$	3,009	$	1,399
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid	$	120	$	7
Interest paid	$	-	$	19
Operating cash flows:
Cash paid for amounts in the measurement of operating lease liability	$	-	$	75

See accompanying notes to unaudited condensed financial statements

6

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

Note 1: Basis of Presentation

The accompanying unaudited condensed financial information, in the opinion of management, reflects all adjustments (which include only normally recurring adjustments) necessary to present fairly the Company’s financial position, operating results and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The results of operations for the thirteen-week and thirty-nine-week periods ended October 2, 2021 are not necessarily indicative of the results to be expected for the full year or any other period.

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

Note 2: Recently Issued Accounting Standards

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

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendments in this Update require a new topic to be added (Topic 326) to the Accounting Standards Codification (“ASC”) and removes the thresholds that entities apply to measure credit losses on financial instruments measured at amortized cost, such as loans, trade receivables, reinsurance recoverables, and off-balance-sheet credit exposures, and held-to-maturity securities. Under current U.S. GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. The guidance under ASU 2016-13 will remove all current recognition thresholds and will require entities under the new current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The new CECL model is based upon expected losses rather than incurred losses. Additionally, the credit loss recognition guidance for available-for-sale securities is amended and will require that credit losses on such debt securities should be recognized as an allowance for credit losses rather than a direct write-down of amortized cost balance. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the effect that this new guidance will have on our financial statements and related disclosures.

In October 2021, the FASB issued ASU 2021-07—Compensation—Stock Compensation (Topic 718): Determining the Current Price of an Underlying Share for Equity-Classified Share-Based Awards. The measurement objective in Topic 718 for share-based awards is fair value based, and the current price input is measured at fair value. This input is used in determining an award’s fair value. The practical expedient in this Update allows a non-public entity to determine the current price of a share underlying an equity classified share-based award using the reasonable application of a reasonable valuation method. The practical expedient in this Update is effective prospectively for all qualifying awards granted or modified during fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application, including application in an interim period, is permitted for financial statements that have not yet been issued or made available for issuance as of October 25, 2021. The Company is currently evaluating the impact of adopting this guidance.

7

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

Note 3: Inventories

Inventories consist of the following:

	October 2, 2021		January 2, 2021
Finished products	$	1,172	$	1,320
Raw materials and packaging		514		677
	$	1,686	$	1,997

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.

Note 5: Earnings Per Share

Basic net income per share is calculated using the weighted average number of common shares outstanding during the periods. Diluted earnings per share is calculated by dividing earnings by the weighted number of common shares outstanding, which would account for a potential 282,486 shares to be issued upon conversion and have been included for the thirteen weeks ended October 2, 2021 and September 26, 2020, and for the thirty-nine weeks ended September 26, 2020. The effects of the 282,486 shares to be issued upon conversion are not included in the diluted earnings per share calculation for the thirty-nine weeks ended October 2, 2021 as their effects are anti-dilutive.

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

	Thirteen		Thirteen		Thirty-nine		Thirty-nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income, numerator, basic computation	$	120	$	220	$	228	$	410
Interest expense		7		6		-		19
Net income, numerator, diluted computation	$	127	$	226	$	228	$	429
Weighted average shares - denominator basic computation		5,154		5,154		5,154		5,154
Effect of convertible note		282		282		-		282
Weighted average shares, as adjusted - denominator diluted computation		5,436		5,436		5,154		5,436
Earnings per common share - basic	$	0.02	$	0.04	$	0.04	$	0.08
Earnings per common share - diluted	$	0.02	$	0.04	$	0.04	$	0.08

Note 6: Equipment

Equipment consists of the following:

	October 2, 2021		January 2, 2021
Manufacturing equipment installed at co-packer	$	48	$	150
Less: accumulated depreciation		7		15
Equipment, net	$	41	$	135

8

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

Depreciation expense for the thirteen and thirty-nine weeks ended October 2, 2021 was $2 and $7, respectively. Depreciation expense for the thirteen and thirty-nine weeks ended September 26, 2020 was $3 and $8, respectively.

During September 2021, the Company sold manufacturing equipment with a cost of $102 and accumulated depreciation of $15 for total proceeds of $50. The $37 loss on this sale has been presented as a component of general and administrative expenses on the condensed statements of income for the thirteen and thirty-nine weeks ended October 2, 2021.

Note 7: 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. The Company intends to rely on a combination of multi-year performance awards, options and other stock-based awards for these purposes.

The 2014 Plan made 250,000 shares of common stock available for awards. The 2014 Plan also permits performance-based 2014 awards paid under it to be tax deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, as “performance-based compensation.” No stock options were issued in 2020 or 2021 and no options were outstanding as of October 2, 2021 and September 26, 2020.

Note 8: Notes Payable

Small Business Administration (SBA) Loan

On May 4, 2020 the Company received from the SBA a loan of $165 from the Paycheck Protection Program at an interest rate of 1%. The Company has applied for loan forgiveness and is awaiting the results. Interest and payments have been deferred until the SBA completes its review of the forgiveness application. The current portion of the loan was $165 as of October 2, 2021 and the loan will expire on May 4, 2022. No demand for repayment of the loan has been made as of November 12, 2021.

Related Party

On January 6, 2016, David Mintz, the Company’s former Chairman and Chief Executive, who passed away in February 2021, provided the Company with a loan of $500 with an annual interest rate of 5% payable on a quarterly basis. The loan, which was originally set to expire on December 31, 2017 was extended to December 31, 2022 effective January 10, 2020. The original loan was convertible into shares of 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 first entered into. The extended loan is, at the option of the holder, convertible into the Company’s common stock at a conversion price of $1.77 per share, the closing price of the Company’s common stock on the date of the extension of the promissory note. No other terms of the loan were modified. Interest expense incurred to the related party was $7 and $19 for the thirteen and thirty-nine week periods ended October 2, 2021 and $6 and $19 for the thirteen and thirty-nine week periods ended September 26, 2020, respectively.

9

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

	October 2, 2021		January 2, 2021
Note payable-related party	$	500	$	500
Less current maturity		—		—
Note payable related party, net of current maturity	$	500	$	500

Note 9: 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		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks ended		Weeks ended		Weeks ended		Weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues by geography:
Americas	$	3,221	$	2,954	$	8,968	$	9,180
Europe		105		24		164		124
Asia Pacific and Africa		-		12		130		42
Middle East		30		162		271		275
	$	3,356	$	3,152	$	9,533	$	9,621

Approximately 92% of the Americas’ revenue in 2021 and 2020 is attributable to sales in the United States in both the thirteen and thirty-nine week periods. All of the Company’s assets are located in the United States.

Net sales by major product category:

	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks ended		Weeks ended		Weeks ended		Weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Frozen Desserts and Foods	$	540	$	497	$	1,500	$	1,605
Cheeses		2,816		2,655		8,033		8,016
	$	3,356	$	3,152	$	9,533	$	9,621

Note 10: Leases

The Company is located in a one-story facility in Cranford, New Jersey. The 6,200 square foot facility houses its administrative offices, a warehouse, walk-in freezer and refrigerator, and a product development laboratory and test kitchen. The Company’s original lease agreement expired on July 1, 1999, but it continues to occupy the premises on a monthly basis. Any changes by either the landlord or the Company remains subject to a six-month notification period. The Company currently has no plans to enter into a long-term lease agreement for the facility. Rent expense was $20 for the thirteen weeks ended October 2, 2021 and $13 for the thirteen weeks ended September 26, 2020. Rent expense was $60 for the thirty-nine weeks ended October 2, 2021 and $51 for the thirty-nine weeks ended September 26, 2020. The Company’s management believes that the Cranford facility will continue to satisfy its space requirements for the foreseeable future and that, if necessary, such space can be replaced without a significant impact to the business. The Company rents warehouse storage space at various outside facilities. Outside warehouse expenses were $115 for the thirteen weeks ended October 2, 2021 and $116 for the thirteen weeks ended September 26, 2020 and $364 or the thirty-nine weeks ended October 2, 2021 and $343 for the thirty-nine weeks ended September 26, 2020.

10

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases primarily consisting of one facility and office equipment with remaining lease terms of approximately two to four years. The Company does not have the option to terminate the leases early.

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

The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rate on December 29, 2018 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
	October 2, 2021			January 2, 2021
Operating lease right-of-use assets	$	142		$	224
Current portion of lease liabilities		111			113
Operating lease liabilities		36			123
Total lease liability	$	147		$	236
Weighted average remaining lease term (in years)		1.4			2.1
Weighted average discount rate		5.5	%		5.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of October 2, 2021 are as follows:

	As of
	October 2, 2021
2021 (remaining)	$	29
2022		116
2023		8
Total future minimum lease payments		153
Present value adjustment		6
Total	$	147

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 Policies

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

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 Developments

On February 24, 2021 David Mintz, our founder, Chief Executive Officer and Chairman of the Board of Directors, passed away. Steven Kass, Chief Financial Officer, was appointed interim CEO by our Board of Directors and was confirmed as permanent CEO by the Board on April 27, 2021.

An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now spread globally. This outbreak has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, prolonged quarantines, order cancellations, supply chain disruptions, increased costs for raw materials, and lower consumer demand, and other significant economic impacts, as well as general concern and uncertainty.

The current severity of the pandemic and the uncertainty regarding the length of its effects could have negative consequences for our company. To date, the effects of the pandemic have affected certain aspects of our operations. All of our co-packing facilities are currently operating normally, and the pandemic has not constrained any of our production requirements. The cost of certain key ingredients has increased substantially due to short-term supply issues related to COVID-19. We continue to be able to schedule trucks for delivery and a large majority of our customers are still operating and ordering our products as before. Additionally, our freight costs have increased due to a driver shortage caused by COVID-19. Our ability to collect money, pay bills, handle customer and consumer communications, schedule production, and order ingredients necessary for our production has not been materially impacted. However, due to the future uncertainty of potential cost increases affecting various aspects of our operations, we have initiated a series of sales price increases commencing in the fourth quarter of this year to help offset these cost increases.

13

To date, the pandemic has had minimal impact on our sales. The majority of our sales relate to retail products sold in supermarkets. Supermarket sales in general have seen a substantial surge in business due to the pandemic, as consumers stock up on all products that they would normally purchase. The only negative effect to our business to date has been with respect to our food service sales to retail outlets, such as restaurants and small food shops, which account for a small part of our total business and with respect to our inability to regain our level of export sales to foreign jurisdictions. Our marketing efforts have also been constrained due to social distancing restrictions and other current government rules and regulations that preclude face to face sales meeting, attendance at trade shows and the initiation of new promotions.

To date we have not experienced a significant change in the timeliness of payments of our invoices and our cash position of approximately $3,009,000 as of October 2, 2021 has improved since our fiscal year end

Results of Operations

Thirteen Weeks Ended October 2, 2021 Compared with Thirteen Weeks Ended September 26, 2020

Net sales for the thirteen weeks ended October 2, 2021 were $3,356,000, an increase of $204,000, or 6%, from net sales of $3,152,000 for the thirteen weeks ended September 26, 2020. The increase is mainly attributable to increases in sales in our vegan cheese categories and frozen desserts. Sales of vegan cheese products increased by $161,000 to $2,816,000 in the 2021 period from $2,655,000 in the 2020 period. Frozen dessert sales increased by $43,000 to $540,000 in the thirteen weeks ended October 2, 2021 from $497,000 for the thirteen weeks ended September 26, 2020.

Our gross profit decreased to $818,000 in the thirteen weeks ended October 2, 2021 from $1,033,000 in the thirteen weeks ended October 2, 2021. Our gross profit percentage was 24% for the thirteen weeks ending October 2, 2021 compared to 33% for the thirteen weeks ending September 26, 2020. Sudden cost increases due to COVID-related supply chain issues for ingredients used in the production of our products have negatively impacted our gross profit. We anticipate these ingredient cost increases will continue for the balance of the year and at least into the first half of 2022.

Our gross profit percentage was also negatively impacted by an increase in freight expense, which is a component of cost of sales. Freight expense, a significant part of our cost of sales, increased by $39,000, or 16%, to $277,000 for the thirteen weeks ended October 2, 2021 compared with $238,000 for the thirteen weeks ended September 26, 2020. As a percentage of sales, freight expense was 8% percent for both the thirteen weeks ended October 2, 2021 and the thirteen weeks ended September 26, 2020. Our freight expense was negatively impacted by a significant increase in freight rates caused by a shortage of drivers due to COVID-19, increased fuel costs, and the continued implementation of the 2019 Electronic Logging Device rules and regulations, or ELD, which limit the number of hours a truck driver can drive in a 24-hour period for over the road carriers. We expect this increase in freight expense to continue for the balance of 2021 and into 2022.

Selling expenses decreased by $1,000 to $282,000 for the thirteen weeks ended October 2, 2021 from $283,000 for the thirteen weeks ended September 26, 2020. We anticipate that our selling expenses will remain at the same level for the remainder of 2021.

Marketing expenses were $38,000 for both the thirteen weeks ended October 2, 2021 and the thirteen weeks ended September 26, 2020. We anticipate that our marketing expenses will remain at the same level for the remainder of fiscal 2021.

Research and development costs decreased by $26,000, or 52%, to $24,000 for the thirteen weeks ended October 2, 2021 from $50,000 for the thirteen weeks ended September 26, 2020, primarily due to decreases in payroll expense of $7,000, lab costs and supplies expense of $6,000, and professional fees and outside services expense of $5,000. Because we do not anticipate that our research and development department will resume operations at the pre-COVID level in 2021, we expect that product development costs will remain significantly lower for the remainder of fiscal 2021.

14

General and administrative expenses decreased by $80,000, or 19%, to $331,000 for the thirteen weeks ended October 2, 2021 from $411,000 for the thirteen weeks ended September 26, 2020. The decrease in general and administrative expenses was due to a decrease in payroll expense of $122,000, public relations expense of $8,000, equipment rental of $6,000, and general insurance expense of $11,000, which were partially offset by increases in professional fees and outside services expense of $34,000, IT expense of $7,000, and a one-time loss on the sale of equipment of $36,000. The decrease in payroll expense was due to the elimination of Mr. Mintz’s salary at the start of the second quarter. The increase in IT expenses was due to an upgrade of our ransomware protection systems.

Income tax expense increased by $9,000 of 36%, to $16,000 for the thirteen weeks ended October 2, 2021 from $25,000 for the thirteen weeks ended September 26, 2020 resulting from the lower pre-tax income during this period compared to prior year.

Thirty-nine Weeks Ended October 2, 2021 Compared with Thirty-nine Weeks Ended September 26, 2020

Net sales for the thirty-nine weeks ended October 2, 2021 were $9,533,000, a decrease of $88,000 from net sales of $9,621,000 for the thirty-nine weeks ended September 26, 2020. Sales of vegan cheese products increased slightly to $8,033,000 in the 2021 period from $8,016,000 in the 2020 period. Sales of our frozen dessert and frozen food products decreased to $1,500,000 for the thirty-nine weeks ended October 2, 2021 from $1,605,000 for the thirty-nine weeks ended September 26, 2020. The decrease in our sales for the 2021 thirty-nine-week period was mostly due to the decrease in frozen dessert sales resulting from the discontinuance of our Yours Truly cones and Marry Me bars in the 2021 period due to the two products’ declining sales.

Our gross profit decreased by $467,000 or 15% to $2,577,000 in the thirty-nine weeks ended October 2, 2021 from $3,044,000 in the thirty-nine-week period ended September 26, 2020. Our gross profit percentage was 27% for the thirty-nine weeks ended October 2, 2021 compared to 32% for the thirty-nine weeks ended September 26, 2020. Freight expense increased by $57,000, or 8%, to $775,000 for the thirty-nine weeks ended October 2, 2021 compared with $718,000 for the thirty-nine weeks ended September 26, 2020. As a percentage of sales, freight expense was 8% percent for the thirty-nine weeks ended October 2, 2021 compared to 7% percent for the thirty-nine weeks ended September 26, 2020. We anticipate our gross profit and gross profit percentage will continue to be negatively impacted for the balance of 2021 and into 2022 due to the significant ingredient cost increases caused by COVID-19 supply chain issues.

Selling expenses increased by $28,000, or 3%, to $909,000 for the thirty-nine weeks ended October 2, 2021 from $881,000 for the thirty-nine weeks ended September 26, 2020. This increase was due principally to increases in outside warehouse rental expense of $19,000 and bad debt expense of $10,000.

Marketing expenses decreased by $37,000, or 18%, to $173,000 for the thirty-nine weeks ended October 2, 2021 from $210,000 for the thirty-nine weeks ended September 26, 2020, due to a decrease in promotion expense of $49,000, which was partially offset by an increase in advertising expense of $8,000.

Research and development costs decreased by $95,000, or 49%, to $99,000 for the thirty-nine weeks ended October 2, 2021 from $194,000 for the thirty-nine weeks ended September 26, 2020, due primarily to decreases in payroll expense of $44,000, equipment repair expense of $14,000 and professional fees and outside services expense of $28,000.

General and administrative expenses decreased by $132,000, or 11%, to $1,097,000 for the thirty-nine weeks ended October 2, 2021 from $1,229,000 for the thirty-nine weeks ended September 26, 2020. This decrease was a result of decreases in payroll expense of $259,000, public relation expense of $8,000, and general insurance expense of $17,000, which were partially offset by increases in professional fees and outside services expense of $104,000 and the loss on the sale of equipment of $37,000. The decrease in payroll expense was due to the elimination of Mr. Mintz’s salary at the start of the second quarter. The increase in professional fees and outside services expense was due to a one-time fee charged by our former accountants.

Income tax expense was $52,000 for the thirty-nine weeks ended October 2, 2021 compared to $101,000 for the thirty-nine weeks ended September 26, 2020 resulting from the lower pre-tax income during this period compared to prior year.

15

Liquidity and Capital Resources

As of October 2, 2021, we had approximately $3,009,000 in cash and our working capital was approximately $4,886,000, compared with approximately $1,459,000 in cash and working capital of $4,639,000 at January 2, 2021.

Small Business Administration Loan

On May 4, 2020, we were granted a loan (the “Loan”) from Valley National Bank in the aggregate amount of approximately $165,000, pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020. The term of the loan is two years, with monthly payments due the first day of each month, beginning seven months from the date of initial disbursement, or December 1, 2020, whichever is earlier. Interest accrues at 1% per year, effective on the date of initial disbursement. In addition, a portion of the loan may be forgiven under provisions under the CARES Act based on payments for payroll, rent and utilities during the period subsequent to obtaining the loan. The Company has applied for loan forgiveness and is awaiting the results.

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

	Thirty-nine Weeks ended October 2, 2021		Thirty-nine Weeks ended September 26, 2020
Net cash provided by operating activities	$	1,500,000	$	720,000
Net cash provided by investing activities		50,000		-
Net cash provided by financing activities		-		165,000
Net increase in cash and cash equivalents	$	1,550,000	$	885,000

Net cash provided by operating activities was $1,500,000 for the thirty-nine weeks ended October 2, 2021 compared to $720,000 for the thirty-nine weeks ended September 26, 2020. Net cash provided by operating activities for the thirty-nine weeks ended October 2, 2021 was primarily a result of a result of our net income of $228,000, a gain on sale of equipment of $37,000 a decrease in accounts receivable of $665,000, a decrease in inventory of $311,000, and an increase of accounts payable of $551,000, offset by a decrease in accrued expenses of $184,000 and income taxes payable of $115,000. Net cash provided by investing activities was $50,000 for the thirty-nine weeks ended October 2, 2021 compared to $0 for the thirty-nine weeks ended September 26, 2020. Net cash provided by investing activities for the thirty-nine weeks ended October 2, 2021 was a result of selling equipment. Net cash provided by financing activities was $0 for the thirty-nine weeks ended October 2, 2021 compared to $165,000 for the thirty-nine weeks ended September 26, 2020 as a result of a loan pursuant to the Paycheck Protection Program under the CARES Act in 2020.

We believe our existing working capital and cash on hand at October 2, 2021, 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, other than the COVID related ingredient costs increases and freight expenses. There can be no assurance, however, that our operating results will not be materially 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 nondairy frozen desserts during those periods.

16

Off-balance Sheet Arrangements

None.

Contractual Obligations

We had no material contractual obligations as of October 2, 2021.

Recently Issued Accounting Standards

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of October 2, 2021, 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 October 2, 2021.

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.

17

On February 24, 2021 David Mintz, our founder, Chief Executive Officer and Chairman of the Board of Directors, passed away. Steven Kass, Chief Financial Officer, was appointed interim CEO by our Board of Directors and was confirmed as permanent CEO by the Board on April 27, 2021.

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 October 2, 2021 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. As of the date of this filing we employ five people.

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.

18

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 January 2, 2021.

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

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

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

19

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 and Financial Officer

Date: November 16, 2021

20

EX-31.1

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 16, 2021

/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.

EX-31.2

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 16, 2021

/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.

EX-32.1

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 October 2, 2021 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 16, 2021

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

EX-32.2

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 October 2, 2021 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 16, 2021

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

XML

Cover - shares	9 Months Ended
	Oct. 02, 2021	Nov. 15, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Oct. 02, 2021
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--01-01
Entity File Number	1-9009
Entity Registrant Name	Tofutti Brands Inc.
Entity Central Index Key	0000730349
Entity Tax Identification Number	13-3094658
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	50 Jackson Drive
Entity Address, City or Town	Cranford
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07016
City Area Code	(908)
Local Phone Number	272-2400
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	TOFB
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

XML

Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Current assets:
Cash	$ 3,009	$ 1,459
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $322 and $457, respectively	1,413	2,078
Inventories	1,686	1,997
Prepaid expenses and other current assets	66	88
Total current assets	6,174	5,622
Equipment, net	41	135
Operating lease right-of-use assets	142	224
Deferred tax assets	96	83
Other assets	23	19
Total assets	6,476	6,083
Current liabilities:
SBA loan payable	165	112
Income taxes payable	2	117
Accounts payable	770	219
Accrued expenses	351	535
Total current liabilities	1,288	983
Convertible note payable-long term-related party	500	500
SBA loan payable, net of current portion		53
Operating lease liabilities	36	123
Total liabilities	1,824	1,659
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, issued and outstanding 5,153,706 shares	52	52
Additional paid in capital	207	207
Retained earnings	4,393	4,165
Total stockholders’ equity	4,652	4,424
Total liabilities and stockholders’ equity	$ 6,476	$ 6,083

XML

Condensed Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Statement of Financial Position [Abstract]
Accounts Receivable, Allowance for Credit Loss, Current	$ 322	$ 457
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

XML

Condensed Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Income Statement [Abstract]
Net sales	$ 3,356	$ 3,152	$ 9,533	$ 9,621
Cost of sales	2,538	2,119	6,956	6,577
Gross profit	818	1,033	2,577	3,044
Operating expenses:
Selling and warehouse	282	283	909	881
Marketing	38	38	173	210
Research and development	24	50	99	194
General and administrative	331	411	1,097	1,229
Total operating expenses	675	782	2,278	2,514
Income before interest expense and income taxes	143	251	299	530
Interest expense	7	6	19	19
Income before income tax	136	245	280	511
Income tax expense	16	25	52	101
Net income	$ 120	$ 220	$ 228	$ 410
Weighted average common shares outstanding
Basic	5,154	5,154	5,154	5,154
Diluted	5,436	5,436	5,154	5,436
Earnings per common share:
Basic	$ 0.02	$ 0.04	$ 0.04	$ 0.08
Diluted	$ 0.02	$ 0.04	$ 0.04	$ 0.08

XML

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. 28, 2019	$ 52	$ 207	$ 3,569	$ 3,828
Net income			50	50
Balance at Mar. 28, 2020	52	207	3,619	3,878
Balance at Dec. 28, 2019	52	207	3,569	3,828
Net income				410
Balance at Sep. 26, 2020	52	207	3,979	4,238
Balance at Mar. 28, 2020	52	207	3,619	3,878
Net income			140	140
Balance at Jun. 27, 2020	52	207	3,759	4,018
Net income			220	220
Balance at Sep. 26, 2020	52	207	3,979	4,238
Balance at Jan. 02, 2021	52	207	4,165	4,424
Net income			80	80
Balance at Apr. 03, 2021	52	207	4,245	4,504
Balance at Jan. 02, 2021	52	207	4,165	4,424
Net income				228
Balance at Oct. 02, 2021	52	207	4,393	4,652
Balance at Apr. 03, 2021	52	207	4,245	4,504
Net income			28	28
Balance at Jul. 03, 2021	52	207	4,273	4,532
Net income			120	120
Balance at Oct. 02, 2021	$ 52	$ 207	$ 4,393	$ 4,652

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Condensed Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020
Statement of Cash Flows [Abstract]
Cash provided by operating activities, net	$ 1,500	$ 720
Cash provided by investing activities, net	50
Cash provided by financing activities, net		165
Net increase in cash	1,550	885
Cash at beginning of period	1,459	514
Cash at end of period	3,009	1,399
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid	120	7
Interest paid		19
Cash paid for amounts in the measurement of operating lease liability		$ 75

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Basis of Presentation

9 Months Ended

Oct. 02, 2021

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 periods ended October 2, 2021 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.

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Recently Issued Accounting Standards

9 Months Ended

Oct. 02, 2021

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 June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendments in this Update require a new topic to be added (Topic 326) to the Accounting Standards Codification (“ASC”) and removes the thresholds that entities apply to measure credit losses on financial instruments measured at amortized cost, such as loans, trade receivables, reinsurance recoverables, and off-balance-sheet credit exposures, and held-to-maturity securities. Under current U.S. GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. The guidance under ASU 2016-13 will remove all current recognition thresholds and will require entities under the new current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The new CECL model is based upon expected losses rather than incurred losses. Additionally, the credit loss recognition guidance for available-for-sale securities is amended and will require that credit losses on such debt securities should be recognized as an allowance for credit losses rather than a direct write-down of amortized cost balance. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the effect that this new guidance will have on our financial statements and related disclosures.

In October 2021, the FASB issued ASU 2021-07—Compensation—Stock Compensation (Topic 718): Determining the Current Price of an Underlying Share for Equity-Classified Share-Based Awards. The measurement objective in Topic 718 for share-based awards is fair value based, and the current price input is measured at fair value. This input is used in determining an award’s fair value. The practical expedient in this Update allows a non-public entity to determine the current price of a share underlying an equity classified share-based award using the reasonable application of a reasonable valuation method. The practical expedient in this Update is effective prospectively for all qualifying awards granted or modified during fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application, including application in an interim period, is permitted for financial statements that have not yet been issued or made available for issuance as of October 25, 2021. The Company is currently evaluating the impact of adopting this guidance.

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

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Inventories

9 Months Ended

Oct. 02, 2021

Inventory Disclosure [Abstract]

Inventories

Note 3: Inventories

Inventories consist of the following:

	October 2, 2021		January 2, 2021
Finished products	$	1,172	$	1,320
Raw materials and packaging		514		677
	$	1,686	$	1,997

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Income Taxes

9 Months Ended

Oct. 02, 2021

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.

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Earnings Per Share

9 Months Ended

Oct. 02, 2021

Earnings per common share:

Earnings Per Share

Note 5: Earnings Per Share

Basic net income per share is calculated using the weighted average number of common shares outstanding during the periods. Diluted earnings per share is calculated by dividing earnings by the weighted number of common shares outstanding, which would account for a potential 282,486 shares to be issued upon conversion and have been included for the thirteen weeks ended October 2, 2021 and September 26, 2020, and for the thirty-nine weeks ended September 26, 2020. The effects of the 282,486 shares to be issued upon conversion are not included in the diluted earnings per share calculation for the thirty-nine weeks ended October 2, 2021 as their effects are anti-dilutive.

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

	Thirteen		Thirteen		Thirty-nine		Thirty-nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income, numerator, basic computation	$	120	$	220	$	228	$	410
Interest expense		7		6		-		19
Net income, numerator, diluted computation	$	127	$	226	$	228	$	429
Weighted average shares - denominator basic computation		5,154		5,154		5,154		5,154
Effect of convertible note		282		282		-		282
Weighted average shares, as adjusted - denominator diluted computation		5,436		5,436		5,154		5,436
Earnings per common share - basic	$	0.02	$	0.04	$	0.04	$	0.08
Earnings per common share - diluted	$	0.02	$	0.04	$	0.04	$	0.08

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Equipment

9 Months Ended

Oct. 02, 2021

Property, Plant and Equipment [Abstract]

Equipment

Note 6: Equipment

Equipment consists of the following:

	October 2, 2021		January 2, 2021
Manufacturing equipment installed at co-packer	$	48	$	150
Less: accumulated depreciation		7		15
Equipment, net	$	41	$	135

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

Depreciation expense for the thirteen and thirty-nine weeks ended October 2, 2021 was $2 and $7, respectively. Depreciation expense for the thirteen and thirty-nine weeks ended September 26, 2020 was $3 and $8, respectively.

During September 2021, the Company sold manufacturing equipment with a cost of $102 and accumulated depreciation of $15 for total proceeds of $50. The $37 loss on this sale has been presented as a component of general and administrative expenses on the condensed statements of income for the thirteen and thirty-nine weeks ended October 2, 2021.

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Share Based Compensation

9 Months Ended

Oct. 02, 2021

Share-based Payment Arrangement [Abstract]

Share Based Compensation

Note 7: 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. The Company intends to rely on a combination of multi-year performance awards, options and other stock-based awards for these purposes.

The 2014 Plan made 250,000 shares of common stock available for awards. The 2014 Plan also permits performance-based 2014 awards paid under it to be tax deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, as “performance-based compensation.” No stock options were issued in 2020 or 2021 and no options were outstanding as of October 2, 2021 and September 26, 2020.

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Notes Payable

9 Months Ended

Oct. 02, 2021

Debt Disclosure [Abstract]

Notes Payable

Note 8: Notes Payable

Small Business Administration (SBA) Loan

On May 4, 2020 the Company received from the SBA a loan of $165 from the Paycheck Protection Program at an interest rate of 1%. The Company has applied for loan forgiveness and is awaiting the results. Interest and payments have been deferred until the SBA completes its review of the forgiveness application. The current portion of the loan was $165 as of October 2, 2021 and the loan will expire on May 4, 2022. No demand for repayment of the loan has been made as of November 12, 2021.

Related Party

On January 6, 2016, David Mintz, the Company’s former Chairman and Chief Executive, who passed away in February 2021, provided the Company with a loan of $500 with an annual interest rate of 5% payable on a quarterly basis. The loan, which was originally set to expire on December 31, 2017 was extended to December 31, 2022 effective January 10, 2020. The original loan was convertible into shares of 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 first entered into. The extended loan is, at the option of the holder, convertible into the Company’s common stock at a conversion price of $1.77 per share, the closing price of the Company’s common stock on the date of the extension of the promissory note. No other terms of the loan were modified. Interest expense incurred to the related party was $7 and $19 for the thirteen and thirty-nine week periods ended October 2, 2021 and $6 and $19 for the thirteen and thirty-nine week periods ended September 26, 2020, respectively.

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

	October 2, 2021		January 2, 2021
Note payable-related party	$	500	$	500
Less current maturity		—		—
Note payable related party, net of current maturity	$	500	$	500

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Revenue

9 Months Ended

Oct. 02, 2021

Segment Reporting [Abstract]

Revenue

Note 9: 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		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks ended		Weeks ended		Weeks ended		Weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues by geography:
Americas	$	3,221	$	2,954	$	8,968	$	9,180
Europe		105		24		164		124
Asia Pacific and Africa		-		12		130		42
Middle East		30		162		271		275
	$	3,356	$	3,152	$	9,533	$	9,621

Approximately 92% of the Americas’ revenue in 2021 and 2020 is attributable to sales in the United States in both the thirteen and thirty-nine week periods. All of the Company’s assets are located in the United States.

Net sales by major product category:

	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks ended		Weeks ended		Weeks ended		Weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Frozen Desserts and Foods	$	540	$	497	$	1,500	$	1,605
Cheeses		2,816		2,655		8,033		8,016
	$	3,356	$	3,152	$	9,533	$	9,621

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Leases

9 Months Ended

Oct. 02, 2021

Leases

Leases

Note 10: Leases

The Company is located in a one-story facility in Cranford, New Jersey. The 6,200 square foot facility houses its administrative offices, a warehouse, walk-in freezer and refrigerator, and a product development laboratory and test kitchen. The Company’s original lease agreement expired on July 1, 1999, but it continues to occupy the premises on a monthly basis. Any changes by either the landlord or the Company remains subject to a six-month notification period. The Company currently has no plans to enter into a long-term lease agreement for the facility. Rent expense was $20 for the thirteen weeks ended October 2, 2021 and $13 for the thirteen weeks ended September 26, 2020. Rent expense was $60 for the thirty-nine weeks ended October 2, 2021 and $51 for the thirty-nine weeks ended September 26, 2020. The Company’s management believes that the Cranford facility will continue to satisfy its space requirements for the foreseeable future and that, if necessary, such space can be replaced without a significant impact to the business. The Company rents warehouse storage space at various outside facilities. Outside warehouse expenses were $115 for the thirteen weeks ended October 2, 2021 and $116 for the thirteen weeks ended September 26, 2020 and $364 or the thirty-nine weeks ended October 2, 2021 and $343 for the thirty-nine weeks ended September 26, 2020.

TOFUTTI BRANDS, INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases primarily consisting of one facility and office equipment with remaining lease terms of approximately two to four years. The Company does not have the option to terminate the leases early.

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

The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rate on December 29, 2018 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
	October 2, 2021			January 2, 2021
Operating lease right-of-use assets	$	142		$	224
Current portion of lease liabilities		111			113
Operating lease liabilities		36			123
Total lease liability	$	147		$	236
Weighted average remaining lease term (in years)		1.4			2.1
Weighted average discount rate		5.5	%		5.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of October 2, 2021 are as follows:

	As of
	October 2, 2021
2021 (remaining)	$	29
2022		116
2023		8
Total future minimum lease payments		153
Present value adjustment		6
Total	$	147

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Inventories (Tables)

9 Months Ended

Oct. 02, 2021

Inventory Disclosure [Abstract]

Schedule of Inventories

Inventories consist of the following:

	October 2, 2021		January 2, 2021
Finished products	$	1,172	$	1,320
Raw materials and packaging		514		677
	$	1,686	$	1,997

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Earnings Per Share (Tables)

9 Months Ended

Oct. 02, 2021

Earnings per common share:

Schedule of Earnings Per Share, Basic and Diluted

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

	Thirteen		Thirteen		Thirty-nine		Thirty-nine
	Weeks Ended		Weeks Ended		Weeks Ended		Weeks Ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income, numerator, basic computation	$	120	$	220	$	228	$	410
Interest expense		7		6		-		19
Net income, numerator, diluted computation	$	127	$	226	$	228	$	429
Weighted average shares - denominator basic computation		5,154		5,154		5,154		5,154
Effect of convertible note		282		282		-		282
Weighted average shares, as adjusted - denominator diluted computation		5,436		5,436		5,154		5,436
Earnings per common share - basic	$	0.02	$	0.04	$	0.04	$	0.08
Earnings per common share - diluted	$	0.02	$	0.04	$	0.04	$	0.08

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Equipment (Tables)

9 Months Ended

Oct. 02, 2021

Property, Plant and Equipment [Abstract]

Schedule of Equipment

Equipment consists of the following:

	October 2, 2021		January 2, 2021
Manufacturing equipment installed at co-packer	$	48	$	150
Less: accumulated depreciation		7		15
Equipment, net	$	41	$	135

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Notes Payable (Tables)

9 Months Ended

Oct. 02, 2021

Debt Disclosure [Abstract]

Schedule of Related Party Notes Payable

	October 2, 2021		January 2, 2021
Note payable-related party	$	500	$	500
Less current maturity		—		—
Note payable related party, net of current maturity	$	500	$	500

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Revenue (Tables)

9 Months Ended

Oct. 02, 2021

Segment Reporting [Abstract]

Schedule of Revenues by Geographical Region

Revenues by geographical region are as follows:

	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks ended		Weeks ended		Weeks ended		Weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Revenues by geography:
Americas	$	3,221	$	2,954	$	8,968	$	9,180
Europe		105		24		164		124
Asia Pacific and Africa		-		12		130		42
Middle East		30		162		271		275
	$	3,356	$	3,152	$	9,533	$	9,621

Summary of Net Sales by Major Product Category

Net sales by major product category:

	Thirteen		Thirteen		Thirty-Nine		Thirty-Nine
	Weeks ended		Weeks ended		Weeks ended		Weeks ended
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Frozen Desserts and Foods	$	540	$	497	$	1,500	$	1,605
Cheeses		2,816		2,655		8,033		8,016
	$	3,356	$	3,152	$	9,533	$	9,621

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Leases (Tables)

9 Months Ended

Oct. 02, 2021

Leases

Schedule of ROU Lease Assets and Liabilities for Operating Leases

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

	As of			As of
	October 2, 2021			January 2, 2021
Operating lease right-of-use assets	$	142		$	224
Current portion of lease liabilities		111			113
Operating lease liabilities		36			123
Total lease liability	$	147		$	236
Weighted average remaining lease term (in years)		1.4			2.1
Weighted average discount rate		5.5	%		5.5	%

Schedule of Future Minimum Rental Commitments

Future lease payments included in the measurement of lease liabilities on the balance sheet as of October 2, 2021 are as follows:

	As of
	October 2, 2021
2021 (remaining)	$	29
2022		116
2023		8
Total future minimum lease payments		153
Present value adjustment		6
Total	$	147

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Schedule of Inventories (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Inventory Disclosure [Abstract]
Finished products	$ 1,172	$ 1,320
Raw materials and packaging	514	677
Inventories, net	$ 1,686	$ 1,997

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Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Earnings per common share:
Net income, numerator, basic computation	$ 120	$ 220	$ 228	$ 410
Interest expense	7	6		19
Net income, numerator, diluted computation	$ 127	$ 226	$ 228	$ 429
Weighted average shares - denominator basic computation	5,154	5,154	5,154	5,154
Effect of convertible note	282	282		282
Weighted average shares, as adjusted - denominator diluted computation	5,436	5,436	5,154	5,436
Earnings per common share - basic	$ 0.02	$ 0.04	$ 0.04	$ 0.08
Earnings per common share - diluted	$ 0.02	$ 0.04	$ 0.04	$ 0.08

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Earnings Per Share (Details Narrative) - shares	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Earnings per common share:
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	282,486	282,486	282,486	282,486

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Schedule of Equipment (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Property, Plant and Equipment [Abstract]
Manufacturing equipment installed at co-packer	$ 48	$ 150
Less: accumulated depreciation	7	15
Equipment, net	$ 41	$ 135

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Equipment (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 30, 2021	Sep. 26, 2020	Jan. 02, 2021
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 2,000	$ 3,000	$ 7,000		$ 8,000
Cost on manufacturing equipment	41,000		41,000			$ 135,000
Accumulated depreciation	7,000		7,000			$ 15,000
Loss of sale of equipment	$ 37		$ 37
Equipment [Member]
Property, Plant and Equipment [Line Items]
Cost on manufacturing equipment				$ 102
Accumulated depreciation				15
Proceeds from sale of equipments				$ 50

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Share Based Compensation (Details Narrative)	Oct. 02, 2021 shares
2014 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	250,000

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Schedule of Related Party Notes Payable (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Debt Disclosure [Abstract]
Note payable-related party	$ 500	$ 500
Less current maturity
Note payable related party, net of current maturity	$ 500	$ 500

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Notes Payable (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
	May 04, 2020	Jan. 10, 2020	Jan. 06, 2016	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020	Jan. 02, 2021
Short-term Debt [Line Items]
SBA loan payable				$ 165		$ 165		$ 112
Interest expense debt				7	$ 6	19	$ 19
David Mintz [Member]
Short-term Debt [Line Items]
Loan payable interest rate			5.00%
Financing received through convertible note payable-related party			$ 500
Loan convertible into common stock at conversion price per share			$ 4.01
David Mintz [Member] | Promissory Note [Member]
Short-term Debt [Line Items]
Loan convertible into common stock at conversion price per share			$ 1.77
David Mintz [Member] | Extended Maturity [Member]
Short-term Debt [Line Items]
Loans payable maturity date, description		expire on December 31, 2017 was extended to December 31, 2022
Paycheck Protection Program [Member] | Valley National Bank [Member]
Short-term Debt [Line Items]
Loan borrowed	$ 165
Loan payable interest rate	1.00%
SBA loan payable				$ 165		$ 165
Loans payable maturity date	May 04, 2022

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Schedule of Revenues by Geographical Region (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 3,356	$ 3,152	$ 9,533	$ 9,621
Americas [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	3,221	2,954	8,968	9,180
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	105	24	164	124
Asia Pacific and Africa [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues		12	130	42
Middle East [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 30	$ 162	$ 271	$ 275

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Summary of Net Sales by Major Product Category (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2021	Sep. 26, 2020	Oct. 02, 2021	Sep. 26, 2020
Revenue from External Customer [Line Items]
Net sales	$ 3,356	$ 3,152	$ 9,533	$ 9,621
Frozen Desserts and Foods [Member]
Revenue from External Customer [Line Items]
Net sales	540	497	1,500	1,605
Veegan Cheese Products [Member]
Revenue from External Customer [Line Items]
Net sales	$ 2,816	$ 2,655	$ 8,033	$ 8,016

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Revenue (Details Narrative)	9 Months Ended
	Oct. 02, 2021
Americas [Member] | Revenue Benchmark [Member] | Customer Concentration Risk [Member]
Revenue, Major Customer [Line Items]
Percentage of revenue	92.00%

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Schedule of ROU Lease Assets and Liabilities for Operating Leases (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Leases
Operating lease right-of-use assets	$ 142	$ 224
Current portion of lease liabilities	111	113
Operating lease liabilities	36	123
Total lease liability	$ 147	$ 236
Weighted average remaining lease term (in years)	1 year 4 months 24 days	2 years 1 month 6 days
Weighted average discount rate	5.50%	5.50%

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Schedule of Future Minimum Rental Commitments (Details) - USD ($) $ in Thousands	Oct. 02, 2021	Jan. 02, 2021
Leases
2021 (remaining)	$ 29
2022	116
2023	8
Total future minimum lease payments	153
Present value adjustment	6
Total	$ 147	$ 236

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Leases (Details Narrative) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 02, 2021 USD ($) ft²	Sep. 26, 2020 USD ($)	Oct. 02, 2021 USD ($) ft²	Sep. 26, 2020 USD ($)	Dec. 29, 2018
Leases
Area of Real Estate Property | ft²	6,200		6,200
Payments for Rent	$ 20	$ 13	$ 60	$ 51
Outside warehouse expense	$ 115	$ 116	$ 364	$ 343
Incremental borrowing rate, percentage					5.50%