TOFB 10-Q
Tofutti Brands Inc (TOFB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended |
| Transition report pursuant to Section 13 or 15(d) of the Exchange Act for the transition period from ☐ to ☐ |
Commission
file number:
(Exact Name of Registrant as Specified in Its Charter)
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
(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 | ||
| 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.
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).
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 ☐ | |
| 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 August 11, 2026 the Registrant had shares of Common Stock, par value $, outstanding.
TOFUTTI BRANDS INC.
INDEX
| 2 |
Item 1. Financial Statements
TOFUTTI BRANDS INC.
Unaudited Condensed Balance Sheets
(in thousands, except share and per share figures)
| June 27, 2026 | December 27, 2025 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for doubtful accounts and sales promotions of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Operating lease right-of-use assets | ||||||||
| Finance lease right-of-use asset | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Operating lease liability, current portion | ||||||||
| Finance lease liability, current portion | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total liabilities | $ | $ | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - par value $ per share; authorized shares, issued and outstanding | ||||||||
| Common stock - par value $ per share; authorized shares, shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements.
| 3 |
TOFUTTI BRANDS INC.
Unaudited Condensed Statements of Operations
(in thousands, except per share figures)
Thirteen weeks ended June 27, 2026 | Thirteen weeks ended June 28, 2025 | Twenty-six weeks ended June 27, 2026 | Twenty-six weeks ended June 28, 2025 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and warehouse | ||||||||||||||||
| Marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss before interest expense and income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ||||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (benefit) expense | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Loss per common share | ||||||||||||||||
| Basic | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying notes to unaudited condensed financial statements.
| 4 |
TOFUTTI BRANDS INC.
Unaudited Condensed Statements of Changes in
Stockholders’ Equity (in thousands)
| Thirteen and twenty-six weeks ended June 28, 2025 | ||||||||||||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Total | |||||||||||||
| December 29, 2024 | $ | |||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||
| March 29, 2025 | $ | |||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||
| June 28, 2025 | $ | |||||||||||||||
See accompanying notes to unaudited condensed financial statements.
| Thirteen and twenty-six weeks ended June 27, 2026 | ||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Total | |||||||||||||
| December 27, 2025 | $ | |||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||
| March 28, 2026 | $ | |||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||
| June 27, 2026 | $ | |||||||||||||||
See accompanying notes to unaudited condensed financial statements.
| 5 |
TOFUTTI BRANDS INC.
Unaudited Condensed Statements of Cash Flows
(in thousands)
Twenty-six weeks ended June 27, 2026 | Twenty-six weeks ended June 28, 2025 | |||||||
| Cash (used in) operating activities, net | $ | ( | ) | $ | ( | ) | ||
| Cash (used in) financing activities, net | ( | ) | ( | ) | ||||
| Net (decrease) in cash | ( | ) | ( | ) | ||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax payments | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements.
| 6 |
TOFUTTI BRANDS INC.
Notes to Unaudited Condensed Financial Statements
(in thousands, except 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 twenty-six week periods ended June 27, 2026 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 31st.
The Company learned in February 2026 that the owner of its primary co-packer for the Company’s key products intended to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. We have been successful in reaching a co-packing manufacturing agreement with the new owner of the facility and manufacturing business. Our relations with him commence on September 15, 2026 and will be under the same terms and pricing as we had with the previous owner. We believe that we have sufficient inventory on hand to meet our projected sales until September 15, 2026 and beyond.
The accompanying
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As of June 27, 2026, we had cash of approximately $
Based on the Company’s current operating forecast, existing cash and anticipated cash flows from operations are not expected to be sufficient to fund the Company’s operating requirements and meet its obligations as they become due during the one-year period following the date these financial statements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans intends to address the Company’s liquidity requirements include:
| ● | Reducing payroll, professional fees, discretionary spending, and other operating expenses; | |
| ● | Deferring nonessential capital expenditures and other planned investments; | |
| ● | Pursuing initiatives to increase sales, improve gross margins, obtain new customers and expand sales to existing customers; | |
| ● | Accelerating the collection of amounts receivable and negotiating extended payment terms with certain vendors and creditors; | |
| ● | Seeking additional funding through debt financing, equity financing, strategic investment, or other capital raising transactions; and | |
| ● | Evaluating strategic alternatives, including potential business combinations, asset sales, or other transactions intended to provide additional liquidity. |
The Company’s ability to successfully execute these plans is subject to significant risks and uncertainties. ln particular, improvements in sales and operating results may not occur within the time frame anticipated by management. The availability and terms of any financing are uncertain and may not be within the Company’s control.
Accordingly, management has concluded that its plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date these financial statements are issued. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
The Company’s fiscal year is either a fifty-two or fifty-three-week period which ends on the Saturday closest to December 31st.
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 November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026. The Company intends to adopt this standard when required and believes it will not have a material effect upon our operations or report in interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.
In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets,” which provides all entities, including public business entities, with a practical expedient, which allows the entity to assume that the current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The adoption of this standard did not have a material impact on our financial statements.
Note 3: Inventories
Inventories consist of the following:
| June 27, 2026 | December 27, 2025 | |||||||
| Finished products | $ | $ | ||||||
| Raw materials and packaging | ||||||||
| Total Inventory | $ | $ | ||||||
| 7 |
TOFUTTI BRANDS INC.
Notes to Unaudited Condensed Financial Statements
(in thousands, except share and per share data)
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.
The
Company recognized an income tax benefit of $
Basic earnings per common share (“EPS”) applicable to common stockholders is computed by dividing earnings applicable to common stockholders by the weighted-average number of common shares outstanding. If there is a loss from operations, diluted EPS is computed in the same manner as basic EPS is computed.
| Thirteen weeks ended June 27, 2026 | Thirteen weeks ended June 28, 2025 | Twenty-six weeks ended June 27, 2026 | Twenty-six weeks ended June 28, 2025 | |||||||||||||
| Loss, numerator, basic computation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss, numerator, diluted computation | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares - denominator basic computation | ||||||||||||||||
| Weighted average shares, as adjusted - denominator diluted computation | ||||||||||||||||
| Loss per common share - basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per common share - diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Thirteen weeks Ended | Thirteen weeks Ended | |||||||
| June 27, 2026 | June 28, 2025 | |||||||
| Shares subject to outstanding common stock options | ||||||||
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 ensure to the benefit of all shareholders of the Company. Such grants can be, but are not limited to, options, stock appreciation rights, restricted stock, performance grants, stock bonuses, and any other type of award that is consistent with the purposes of the 2014 Plan. Employees and officers of the Company are eligible to receive incentive stock options while corporate directors are only eligible to receive non-qualified options.
| 8 |
TOFUTTI BRANDS INC.
Notes to Unaudited Condensed Financial Statements
(in thousands, except share and per share data)
The 2014 Plan made shares of common stock available for awards. No stock options have been granted since 2022. In 2022, stock options were issued, and as of June 27, 2026, non-qualified stock options remain outstanding. The exercise price of all options granted in 2022 is $ per share, the market price at the close of business on the date of the grant. All options expire on December 22, 2027.
| NON-QUALIFIED OPTIONS | ||||||||
| Shares | Weighted
Average | |||||||
| Outstanding at December 27, 2025 | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Outstanding at June 27, 2026 | ||||||||
| Exercisable at June 27, 2026 | ||||||||
Range of Exercise Prices ($) | Number Outstanding | Weighted Average Remaining Life (in years) | Weighted Average Exercise Price($) | Number Exercisable | ||||||||||||||
| $ | $ | |||||||||||||||||
Note 7: Net Sales
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.
Net sales by geographical region are as follows:
| Revenues by geography: | Thirteen weeks ended June 27, 2026 | Thirteen weeks ended June 28, 2025 | Twenty-six
weeks ended June 27, 2026 | Twenty-six weeks ended June 28, 2025 | ||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||
| Europe | ||||||||||||||||
| Asia Pacific and Africa | ||||||||||||||||
| Middle East | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Approximately
| 9 |
TOFUTTI BRANDS INC.
Notes to Unaudited Condensed Financial
Statements (in thousands, except share and per share data)
Net sales by major product category:
Thirteen weeks ended June 27, 2026 | Thirteen weeks ended June 28, 2025 | Twenty-six Weeks ended June 27, 2026 | Twenty-six Weeks ended June 28, 2025 | |||||||||||||
| Frozen desserts and foods | $ | $ | $ | $ | ||||||||||||
| Cheeses | ||||||||||||||||
| Total Sales | $ | $ | $ | $ | ||||||||||||
Note 8: Leases
In
2024, we signed a five-year lease to move our offices into a one-story facility in Edison, New Jersey. The
Outside
warehouse rental expense was $
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.
Under Topic 842, finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method. The Company has a finance lease consisting of a copier lease with a term of four years. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease.
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 rates of between
| 10 |
TOFUTTI BRANDS INC.
Notes to Unaudited Condensed Financial Statements
(in thousands, except 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 | |||||||
June 27, 2026 | December 27, 2025 | |||||||
| Operating lease right-of-use assets | $ | $ | ||||||
| Current portion of lease liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total lease liability | $ | $ | ||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate | % | % | ||||||
ROU lease asset and lease liability for our finance lease were recorded in the balance sheet as follows:
| As of | As of | |||||||
June 27, 2026 | December 27, 2025 | |||||||
| Finance lease right-of-use asset | $ | $ | ||||||
| Current portion of lease liabilities | ||||||||
| Total finance lease liabilities | $ | $ | ||||||
| Weighted average remaining lease term (in years) | — | |||||||
| Weighted average discount rate | % | |||||||
Future lease payments included in the measurement of lease liabilities on the balance sheet as of June 27, 2026 are as follows:
Operating lease liabilities | Finance lease liability | Total | ||||||||||
| 2026 (remainder of the year) | $ | $ | $ | |||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| 2029 | ||||||||||||
| Total future minimum lease payments | ||||||||||||
| Less present value adjustment | ||||||||||||
| Total | $ | |||||||||||
Note 9: Commitments and Contingencies
The Company sells its products throughout the United States and in approximately twelve foreign countries and may be impacted by any future public health crises beyond its control. This could disrupt its operations and negatively impact sales of its products. The Company’s customers, suppliers and co-packers may experience similar disruption. Our selling prices may be affected due to market changes, increased competition, the general risk of inflation, the impacts of tariffs or the responses of other governments, consumers or suppliers to U.S. imposed tariffs, shortages or interruptions in supply due to weather, disease or other conditions beyond our control, or other reasons.
| 11 |
TOFUTTI BRANDS INC.
Notes to Unaudited Condensed Financial Statements
(in thousands, except share and per share data)
Note 10: Accrued Expenses
Accrued expenses and other current liabilities consist of the following:
| As of | As of | |||||||
June 27, 2026 | December 27, 2025 | |||||||
| Accrued professional fees | ||||||||
| Uncertain tax position | ||||||||
| Expense accrual | ||||||||
| Total accrued expenses | $ | $ | ||||||
Note 11: Related Party Transactions
During
the thirteen weeks ending June 27, 2026 and June 28, 2025, we paid The CFO Squad $
Note 12: Segment Information
The
Company views its operations and manages its business in
Steven Kass, the Company’s Chief Executive Officer and Chief Financial Officer is the Chief Operating Decision Maker (“CODM”). The CODM evaluates performance and makes operating decisions about allocating resources based on net loss and cash balances presented in the accompanying statement of operations and balance sheet, respectively.
The measure of segment assets is reported on the balance sheets as total assets. Any long-lived assets are located in the United States.
NOTE 13: Customer Concentrations
As
of June 27, 2026 two customers accounted for
For
the thirteen weeks ended June 27, 2026 three customers represented
| 12 |
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 Estimates
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these 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 and frozen desserts. 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 receivables are due from distributors (domestic and international) and retailers. Management closely monitors outstanding balances during the year and allocates an allowance account if appropriate. The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables and contract assets. The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical and current analysis of such financial instruments.
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.
| 13 |
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.
The Company learned in February 2026 that the owner of our primary co-packer for our key products intends to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. We have been successful in reaching a co-packing manufacturing agreement with the new owner of the facility and manufacturing business. Our relations with him commence on September 15th and will be under the same terms and pricing as we had with the previous owner. We believe that we have sufficient inventory on hand to meet our projected sales until September 15, 2026 and beyond.
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 twenty-six week periods ended June 27, 2026 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 31st.
Going Concern
The Company learned in February 2026 that the owner of its primary co-packer for the Company’s key products intended to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. We have been successful in reaching a co-packing manufacturing agreement with the new owner of the facility and manufacturing business. Our relations with him commence on September 15, 2026 and will be under the same terms and pricing as we had with the previous owner. We believe that we have sufficient inventory on hand to meet our projected sales until September 15, 2026 and beyond.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of June 27, 2026, we had cash of approximately $121,000. During the last few years, we have experienced recurring losses and cash outflows from operations. For the six months ended June 27, 2026 our net sales decreased to $3,345,000 from $3,620,000 in the 2025 six month period and we incurred a net loss of $373,000 in the six months ended June 27, 2026 compared to a net loss of $169,000 for the six months ended June 28, 2025. The Company’s declining sales, increasing operating losses, continuing use of cash in operations, and limited available cash resources have adversely affected its liquidity.
Based on the Company’s current operating forecast, existing cash and anticipated cash flows from operations are not expected to be sufficient to fund the Company’s operating requirements and meet its obligations as they become due during the one-year period following the date these financial statements.. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans intends to address the Company’s liquidity requirements include:
| ● | Reducing payroll, professional fees, discretionary spending, and other operating expenses; | |
| ● | Deferring nonessential capital expenditures and other planned investments; | |
| ● | Pursuing initiatives to increase sales, improve gross margins, obtain new customers and expand sales to existing customers; | |
| ● | Accelerating the collection of amounts receivable and negotiating extended payment terms with certain vendors and creditors; | |
| ● | Seeking additional funding through debt financing, equity financing, strategic investment, or other capital raising transactions; and | |
| ● | Evaluating strategic alternatives, including potential business combinations, asset sales, or other transactions intended to provide additional liquidity. |
The Company’s ability to successfully execute these plans is subject to significant risks and uncertainties. ln particular, improvements in sales and operating results may not occur within the time frame anticipated by management. The availability and terms of any financing are uncertain and may not be within the Company’s control. Accordingly, management has concluded that its plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date these financial statements are issued. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
Recent Accounting Pronouncements and Adoption
Our 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 our balance sheets or statements of operations.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026. The Company intends to adopt this standard when required and believes it will not have a material effect upon our operations or report in interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.
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In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which provides all entities, including public business entities, with a practical expedient, which allows the entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The adoption of this standard did not have a material impact on our financial statements.
Results of Operations
Thirteen Weeks Ended June 27, 2026 Compared with Thirteen Weeks Ended June 28, 2025
Net sales for the thirteen weeks ended June 27, 2026 decreased by $241,000, or 12% to $1,788,000 from net sales of $2,029,000 for the thirteen weeks ended June 28, 2025. Sales of our vegan cheese products decreased to $1,558,000 in the thirteen weeks ended June 27, 2026 from $1,708,000 in the thirteen weeks ended June 28, 2025. Sales of our frozen dessert products decreased to $230,000 in the thirteen weeks ended June 27, 2026 from $321,000 for the thirteen weeks ended June 28, 2025.
Our gross profit decreased to $454,000 for the thirteen weeks ended June 27, 2026 from $618,000 for the thirteen weeks ended June 27, 2026 due primarily to the reduction in sales. Our gross profit percentage was 25% for the thirteen weeks ending June 27, 2026 compared to 30% for the thirteen weeks ending June 28, 2025. There were significant ingredient and packaging cost increases that took place in the first quarter of 2026 that were not present in the first quarter of 2025. The increase in packaging costs is due to the significant increase in oil during the second quarter of this year. The increase in ingredients costs is due to tariffs on several of the Company’s most important ingredients.
Freight out expense, a significant part of our cost of sales, decreased by $30,000, or 24%, to $99,000, for the thirteen weeks ended June 27, 2026 compared with $119,000 for the thirteen weeks ended June 28, 2025 due primarily to the reduction in sales. Freight out expense was 5% of sales for the thirteen weeks ended June 27, 2026 compared to 6% of sales for the thirteen weeks ended June 28, 2025.
Selling expenses increased slightly by $11,000, or 6%, to $199,000 for the thirteen weeks ended June 27, 2026 from $188,000 for the thirteen weeks ended June 28, 2025. This increase was due to increases in meetings and convention expense of $8,000 and bad debt expense of $28,000, which were partially offset by decrease in travel, entertainment and auto expenses of $12,000 and outside warehouse rental expense of $22,000. The decrease in outside warehouse rental expense is due to the decrease in our inventories during the fiscal period.
Marketing expenses decreased by $25,000, or 28%, to $64,000 for the thirteen weeks ended June 27, 2026 from $89,000 for the thirteen weeks ended June 28, 2025. The decrease was due primarily to decreases in promotions expense of $19,000, and artwork and plate expense of $10,000. We anticipate that our marketing expenses will continue at the same level for the balance of 2026.
Product development costs decreased slightly by $9,000, or 23%, to $30,000 for the thirteen weeks ended June 27, 2026 from $39,000 for the thirteen weeks ended June 28, 2025 due to a $5,000 decrease in professional fees and outside services expense. We anticipate our product development costs for the balance of the year will continue at a comparable level as compared to the 2025 period.
General and administrative expenses decreased by $23,000, or 7%, to $286,000 for the thirteen weeks ended June 27, 2026 from $309,000 for the thirteen weeks ended June 28, 2025, due to decreases in professional fees and outside service expense of $15,000 and public relation expense of $13,000. These decreases were partially offset by an increase in payroll expense of $9,000. The increase in payroll expense was caused by an increase in the Company’s group health insurance premiums.
The Company recorded an income tax benefit of $7 for the thirteen weeks ended June 27, 2026 and $0 for the thirteen weeks ended June 28, 2025 due to the receipt of a federal income tax refund in the 2026 period.
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Twenty -Six Weeks Ended June 27, 2026, Compared with Twenty -Six Weeks Ended June 28, 2025
Net sales for the twenty-six weeks ended June 27, 2026 decreased by $275,000, or 8%, to $3,345,000 from net sales of $3,620,000 for the twenty-six weeks ended June 28, 2025. Sales of our vegan cheese products decreased by $161,000 to $2,920,000 in the twenty-six weeks ended June 27, 2026 from $3,081,000 in the twenty-six weeks ended June 28, 2025. Sales of our frozen dessert products decreased by $114,000 for the twenty-six weeks ended June 27, 2026 compared to $539,000 for the twenty-six weeks ended June 28, 2025.
Our gross profit decreased to $923,000 for the twenty-six weeks ended June 27, 2026 from $1,207,000 for the twenty-six weeks ended June 28, 2025. Our gross profit percentage was 28% for the twenty-six weeks ending June 27, 2026 compared to 33% for the twenty-six weeks ending June 28, 2025. Impacting our gross profit were ingredient and packaging cost increases that took place in the second quarter of 2026 that were not present in the second quarter of 2025. The increase in packaging costs is due to the significant increase in oil during the second quarter of this year. The increase in ingredients costs is due to tariffs on several of the Company’s most important ingredients.
Freight out expense, a significant part of our cost of sales, decreased by $92,000, or 33%, to $189,000, for the twenty-six weeks ended June 27, 2026 compared with $281,000 for the twenty-six weeks June 28, 2025 primarily due to the reduction in sales. Freight out expense was 6% of sales for the twenty-six weeks ended June 27, 2026 compared to 8% of sales for the twenty-six weeks ended June 28, 2025.
Selling expenses increased by $31,000, or 8%, to $436,000 for the twenty-six weeks ended June 27, 2026 from $405,000 for the twenty-six weeks ended June 28, 2025. This increase was due to increases in meetings and convention expense of $13,000, bad debt expense of $28,000, commission expense of $14,000, which were partially offset by a decrease in outside warehouse rental expense of $17,000 and travel, entertainment and auto expense of $11,000.
Marketing expenses decreased by $73,000, or 35%, to $137,000 for the twenty-six weeks ended June 27, 2026 from $210,000 for the twenty-six weeks ended June 28, 2025. The decrease was primarily due to decreases in advertising expense of $26,000, artwork and plate expense of $22,000 and promotion expense of $18,000.
Product development costs decreased slightly by $3,000, or 4%, to $80,000 for the twenty-six weeks ended June 27, 2026 from $83,000 for the twenty-six weeks ended June 28, 2025.
General and administrative expenses decreased by $23,000, or 3%, to $647,000 for the twenty-six weeks ended June 27, 2026 from $670,000 for the twenty-six weeks ended June 28, 2025, due to a decrease in general insurance expense of $39,000, which was partially offset by an increase in payroll expense of $17,000. The increase in payroll expense was caused by an increase in the Company’s group health insurance premiums.
We had an income tax benefit of $5,000 for the twenty-six weeks ended June 27, 2026 compared to an income tax expense of $7,000 for the twenty-six weeks ended June 28, 2025.
Liquidity and Capital Resources
The Company learned in February 2026 that the owner of our primary co-packer for our key products intended to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. We have been successful in reaching a co-packing manufacturing agreement with the new owner of the facility and manufacturing business. Our relations with him commence on September 15th and will be under the same terms and pricing as we had with the previous owner.
During the last few years, we have experienced recurring losses and cash outflows from operations. These conditions have raised substantial doubt about our ability to continue as a going concern.
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 twenty-six week periods ended June 27, 2026 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 31st.
The Company learned in February 2026 that the owner of its primary co-packer for the Company’s key products intended to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. We have been successful in reaching a co-packing manufacturing agreement with the new owner of the facility and manufacturing business. Our relations with him commence on September 15, 2026 and will be under the same terms and pricing as we had with the previous owner. We believe that we have sufficient inventory on hand to meet our projected sales until September 15, 2026 and beyond.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of June 27, 2026, we had cash of approximately $121,000. During the last few years, we have experienced recurring losses and cash outflows from operations. For the six months ended June 27, 2026 our net sales decreased to $3,345,000 from $3,620,000 in the 2025 six month period and we incurred a net loss of $373,000 in the six months ended June 27, 2026 compared to a net loss of $169,000 for the six months ended June 28, 2025. The Company’s declining sales, increasing operating losses, continuing use of cash in operations, and limited available cash resources have adversely affected its liquidity.
Based on the Company’s current operating forecast, existing cash and anticipated cash flows from operations are not expected to be sufficient to fund the Company’s operating requirements and meet its obligations as they become due during the one-year period following the date these financial statements.. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans intends to address the Company’s liquidity requirements include:
| ● | Reducing payroll, professional fees, discretionary spending, and other operating expenses; | |
| ● | Deferring nonessential capital expenditures and other planned investments; | |
| ● | Pursuing initiatives to increase sales, improve gross margins, obtain new customers and expand sales to existing customers; | |
| ● | Accelerating the collection of amounts receivable and negotiating extended payment terms with certain vendors and creditors; | |
| ● | Seeking additional funding through debt financing, equity financing, strategic investment, or other capital raising transactions; and | |
| ● | Evaluating strategic alternatives, including potential business combinations, asset sales, or other transactions intended to provide additional liquidity. |
The Company’s ability to successfully execute these plans is subject to significant risks and uncertainties. ln particular, improvements in sales and operating results may not occur within the time frame anticipated by management. The availability and terms of any financing are uncertain and may not be within the Company’s control. Accordingly, management has concluded that its plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern for the one-year period following the date these financial statements are issued. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern.
As of June 27, 2026, we had approximately $121,000 in cash and our working capital was approximately $1,758,000, compared with approximately $347,000 in cash and working capital of $2,126,000 at December 27, 2025. As of August 11, 2026, we had approximately $139,000 in cash. We will need to raise additional working capital from the sale of equity or debt in order to support our operations, for which there is no guarantee that we will be successful.
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The following table summarizes our cash flows for the periods presented:
Twenty-six Weeks ended | Twenty-six Weeks ended | |||||||
| June 27, 2026 | June 28, 2025 | |||||||
| Cash (used in) provided by operating activities, net | $ | (218,000 | ) | $ | (108,000 | ) | ||
| Cash (used in) financing activities, net | (8,000 | ) | (4,000 | ) | ||||
| Net increase (decrease) in cash | $ | (226,000 | ) | $ | (112,000 | ) | ||
Net cash used in operating activities for the twenty-six weeks ended June 27, 2026 was $218,000 compared to $108,000 used in operating activities for the twenty-six weeks ended June 28, 2025. Net cash used in operating activities for the twenty-six weeks ended June 27, 2026 was primarily a result of the net loss of $373,000 and a reduction in liabilities of $249,000, which were partially offset by a decrease in accounts receivable of $248,000 and inventory of $116,000. Net cash used in operations for the twenty-six weeks ended June 28, 2025 was primarily a result of the net loss of $169,000 and an increase in inventory of $448,000 which were partially offset by a decrease in account receivables of $274,000 and an increase in liabilities of $54,000.
Inflation and Seasonality
While we do not believe that our operating results have been materially affected by inflation during the preceding two years, there can be no assurance that our operating results will not be affected by inflation in the future. Although we have not experienced adverse price increases on our imports or exports due to tariffs, there is no guarantee that future tariffs will not negatively impact our business. 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 dairy free frozen desserts during those periods.
Off-balance Sheet Arrangements
None.
Contractual Obligations
We had no material contractual obligations as of June 27, 2026.
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 June 27, 2026, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 27, 2026 because of the material weaknesses in internal control over financial reporting described below.
The material weaknesses related to: (i) 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 accounting estimates, reserves, allowances and income tax matters, in a timely manner; and (ii) the limited size of our accounting department, which 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.
Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended June 27, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material litigation.
Item 1A. Risk Factors
Increased commodity costs could decrease our profit margins which could adversely affect our business.
Our profitability depends, in part, on our ability to anticipate and react to changes in the price and availability of food commodities. Prices may be affected due to market changes, increased competition, the general risk of inflation, the impacts of tariffs or the responses of other governments, consumers or suppliers to U.S. imposed tariffs, shortages or interruptions in supply due to weather, disease or other conditions beyond our control, or other reasons. While we have been able to partially offset inflation and other changes in the costs of commodities by increasing prices, there can be no assurance that we will be able to continue to do so in the future.
Additionally, with elevated inflationary pressures across the business, we face an above average risk that we will have to renegotiate contracts and agreements with suppliers on a more frequent basis. Shortened windows of certainty can impact our ability to plan our business from a supply and profitability perspective and we face greater risk of margin volatility.
There have been no other material changes to the Company’s “Risk Factors” set forth in its Annual Report on Form 10-K for the year ended December 27, 2025 other than with respect to our reliance on a co-packer that was scheduled to go out of business. As indicated above, we believe this risk has been resolved.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
During
the quarter ended June 27, 2026, no director or executive officer of the Company
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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 Schema Document | |
| 101.CAL | Inline XBRL Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Definition Linkbase Document | |
| 101.LAB | Inline XBRL Labels Linkbase Document | |
| 101.PRE | Inline XBRL Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
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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 Officer | |
| Chief Accounting and Financial Officer | |
| Date: August 11, 2026 |
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