Leases

6 Months Ended

Jul. 02, 2022

Leases

Leases

Note 9: Leases

The Company’s facilities are 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 July 2, 2022 and July 3, 2021. Rent expense was $40 for the twenty-six weeks ended July 2, 2022 and July 3, 2021. 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 $96 for the thirteen weeks ended July 2, 2022 and $137 for the thirteen weeks ended July 3, 2021 and $191 for the twenty-six weeks ended July 2, 2022 and $249 for the twenty-six weeks ended July 3, 2021.

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease. The current portion of lease liabilities is included in accrued expenses on the condensed balance sheets.

The Company’s lease agreements generally do not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. At the time of adoption of Topic 842, the Company used the incremental borrowing rate of 5.5% for all leases that commenced prior to that date.

TOFUTTI BRANDS INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(In thousands, except for share and per share data)

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

	As of			As of
	July 2, 2022			January 1, 2022
Operating lease right-of-use assets	$	147		$	203
Current portion of lease liabilities		123			123
Operating lease liabilities		35			95
Total lease liability	$	158		$	218
Weighted average remaining lease term (in years)		2.6			3.0
Weighted average discount rate		5.5	%		5.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of July 2, 2022 are as follows:

	As of
	July 2, 2022
2022 (remaining)	$	54
2023		110
Total future minimum lease payments		164
Less: Present value adjustment		(6	)
Total	$	158