[10-Q] TOFUTTI BRANDS INC Quarterly Earnings Report
Tofutti Brands (TOFB) filed its Q3 10‑Q, reporting lower sales but stronger margins. Net sales were $1,907,000 versus $1,986,000 a year ago, while the net loss narrowed to $137,000 from $207,000. Year to date, sales were $5,527,000 versus $6,481,000, reflecting softer demand in vegan cheeses and frozen desserts. Gross profit improved to $519,000 in the quarter, with margin rising to 27% from 24%, helped by price increases and lower promotional allowances.
Operating costs trended lower in general and administrative, and operating cash flow turned positive at $174,000 for the year to date versus a $655,000 use last year. Cash was $630,000 with working capital of $2,598,000, and management states current resources should support needs over the next twelve months. The company reported material weaknesses and concluded disclosure controls and internal control over financial reporting were ineffective as of September 27, 2025. Shares outstanding were 5,153,706 as of November 11, 2025.
- None.
- Revenue down 15% year to date to
$5,527,000 versus$6,481,000 , reflecting declines in vegan cheeses and frozen desserts. - Internal controls ineffective as of September 27, 2025, with material weaknesses cited in monitoring, oversight, and segregation of duties.
Insights
Sales declined, margins improved, controls remain weak.
Tofutti Brands posted softer revenue but better unit economics. Q3 net sales were
Cash generation improved: operating cash flow was
Governance and reporting risk persists: management concluded disclosure controls and internal control over financial reporting were ineffective, citing resource constraints and limited segregation of duties. Actual impact will depend on execution and sales trends disclosed in future periods.
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 November 11, 2025 the Registrant had
TOFUTTI BRANDS INC.
INDEX
| Page | ||
| Part I - Financial Information: | ||
| Item 1. | Unaudited Condensed Financial Statements | 3 |
| Condensed Balance Sheets – September 27, 2025 (Unaudited) and December 28, 2024 | 3 | |
| Unaudited Condensed Statements of Operations -Thirteen and Thirty-nine weeks ended September 27, 2025 and September 28, 2024 | 4 | |
| Unaudited Condensed Statements of Changes in Stockholders’ Equity - Thirteen and Thirty-nine weeks ended September 27, 2025 and September 28, 2024 | 5 | |
| Unaudited Condensed Statements of Cash Flows – Thirty-nine weeks ended September 27, 2025 and September 28, 2024 | 6 | |
| Notes to Unaudited Condensed Financial Statements | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 |
| 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 |
Item 1. Financial Statements
TOFUTTI BRANDS INC.
Condensed Balance Sheets
(in thousands, except share and per share figures)
| September 27, 2025 (Unaudited) | December 28, 2024 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net of allowance for credit losses and sales promotions of $ | ||||||||
| Inventories | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current | ||||||||
| 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 | ||||||||
| Finance lease liability, net of current portion | — | |||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 9) | - | - | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - par value $ | — | - | ||||||
| Common stock - par value $ | ||||||||
| 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 September 27, 2025 | Thirteen weeks ended September 28, 2024 | Thirty-nine weeks ended September 27, 2025 | Thirty-nine weeks ended September 28, 2024 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and warehouse | ||||||||||||||||
| Marketing | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total Operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before interest expense and income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | — | — | ||||||||||||||
| Loss before income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax 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)
| Common Stock | Additional Paid-in Capital | Retained Earnings | Total | |||||||||||||
| Thirteen and thirty-nine weeks ended September 28, 2024 | ||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Total | |||||||||||||
| December 30, 2023 | $ | |||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||
| March 30, 2024 | $ | |||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||
| June 29, 2024 | $ | |||||||||||||||
Stock-based compensation | ||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||
| September 28, 2024 | $ | |||||||||||||||
| Thirteen and thirty-nine weeks ended September 27, 2025 | ||||||||||||||||
| Common Stock | Additional Paid-in Capital | Retained Earnings | Total | |||||||||||||
| December 29, 2024 | $ | $ | $ | $ | ||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||
| March 29, 2025 | $ | $ | $ | $ | ||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||
| June 28, 2025 | $ | $ | $ | $ | ||||||||||||
| Balance | $ | $ | $ | $ | ||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||
| September 27, 2025 | $ | $ | $ | $ | ||||||||||||
| Balance | $ | $ | $ | $ | ||||||||||||
See accompanying notes to unaudited condensed financial statements.
| 5 |
TOFUTTI BRANDS INC.
Unaudited Condensed Statements of Cash Flows
(in thousands)
Thirty-nine
weeks | Thirty-nine
weeks | |||||||
| Cash provided by (used in) operating activities, net | $ | $ | ( | ) | ||||
| Cash used in financing activities, net | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid on finance leases | $ | $ | ||||||
| Acquisition of right of use assets for lease obligations | $ | — | $ | |||||
See accompanying notes to unaudited condensed financial statement
| 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 period ended September 27, 2025 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.
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, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of these standards will have on it financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.
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 amendments in ASU No. 2025-05 should be applied prospectively and are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently assessing the impact of adopting this standard on the Company’s unaudited Condensed Consolidated Financial Statements.
Note 3: Inventories
Inventories consist of the following:
Schedule of Inventories
| September 27, 2025 | December 28, 2024 | |||||||
| 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 income tax expense of $
Note 5: Earnings (Loss) Per Share
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.
The following table sets forth the computation of basic and diluted earnings per share:
Schedule of Computation of Basic and Diluted Earnings Per Share
Thirteen weeks ended September 27, 2025 | Thirteen weeks ended September 28, 2024 | Thirty-nine weeks ended September 27, 2025 | Thirty-nine weeks ended September 28, 2024 | |||||||||||||
| 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 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following are securities excluded from weighted-average shares used to calculate diluted Net loss per common share, as the result of including them to calculate diluted EPS is anti-dilutive:
Schedule of Securities Excluded From Weighted Average Shares
Thirteen weeks Ended September 27, 2025 | Thirteen weeks Ended September 28, 2024 | |||||||
| Shares subject to outstanding common stock options | ||||||||
Note 6: 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 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
The following is a summary of stock option activity from December 28, 2024 to September 27, 2025:
Schedule of Stock Option Activity
| NON-QUALIFIED OPTIONS | ||||||||
| Shares | Weighted Average Exercise Price ($) | |||||||
| Outstanding at December 28, 2024 | $ | |||||||
| Granted | — | — | ||||||
| Exercised | — | — | ||||||
| Outstanding at September 27, 2025 | $ | |||||||
| Exercisable at September 27, 2025 | $ | |||||||
The following table summarizes information about stock options outstanding from December 29, 2024 to September 27, 2025:
Schedule of Information about Stock Options Outstanding
Range of Exercise Prices ($) | Number Outstanding | Weighted Average Remaining Life (in years) | Weighted Average Exercise Price($) | Number Exercisable | ||||||||||||||
| $ | $ | |||||||||||||||||
As
of September 27, 2025 and September 28, 2024 the intrinsic value of the options outstanding and exercisable options was $
Note 7: 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:
Schedule of Revenues By Geographical Region
Thirteen weeks ended September 27, 2025 | Thirteen weeks ended September 28, 2024 | Thirty-nine weeks ended September 27, 2025 | Thirty-nine weeks ended September 28, 2024 | |||||||||||||
| Revenues by geography: | ||||||||||||||||
| Americas | $ | $ | $ | $ | ||||||||||||
| Europe | ||||||||||||||||
| Asia Pacific and Africa | — | — | — | |||||||||||||
| Middle East | ||||||||||||||||
| Total Revenue | $ | $ | $ | $ | ||||||||||||
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:
Schedule of Net Sales By Major Product Category
Thirteen weeks ended September 27, 2025 | Thirteen weeks ended September 28, 2024 | Thirty-nine Weeks ended September 27, 2025 | Thirty-nine Weeks ended September 28, 2024 | |||||||||||||
| Frozen desserts and foods | $ | $ | $ | $ | ||||||||||||
| Cheeses | ||||||||||||||||
| Total Sales | $ | $ | $ | $ | ||||||||||||
Note 8: Leases
In
2024, the Company signed a
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
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:
Schedule of ROU Lease Assets and Liabilities for Operating Lease
| As of | As of | |||||||
| September 27, 2025 | December 28, 2024 | |||||||
| 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:
Schedule of ROU Lease Assets and Liabilities for Finance Leases
| As of | As of | |||||||
| September 27, 2025 | December 28, 2024 | |||||||
| Finance lease right-of-use asset | $ | $ | ||||||
| Current portion of lease liabilities | ||||||||
| Finance lease liabilities, net of current portion | — | |||||||
| 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 September 27, 2025 are as follows:
Schedule of Future Lease Payments
Operating lease liability | Finance lease liability | Total | ||||||||||
| 2025 (remainder of the year) | $ | $ | $ | |||||||||
| 2026 | ||||||||||||
| 2027 | — | |||||||||||
| 2028 | — | |||||||||||
| 2029 | — | |||||||||||
| Total future minimum lease payments | ||||||||||||
| 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 its operations 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. While there are no current tariffs that have affected any of the Company’s imports or exports, uncertainty regarding their implementation has already influenced the purchasing decisions of some of our domestic and international customers.
| 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:
Schedule of Accrued Expenses and Other Current Liabilities
| As of | As of | |||||||
| September 27, 2025 | December 28, 2024 | |||||||
| Accrued payroll and other benefits | $ | $ | - | |||||
| Inventory and other expenses | - | |||||||
| Accrued professional fees | - | |||||||
| Uncertain tax position | ||||||||
| Total accrued expenses | $ | $ | ||||||
Note 11: Related Party Transactions
During
the thirteen weeks ending September 27, 2025 and September 28, 2024, we paid 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 September 27, 2025 two customers accounted for
Three
customers accounted for
| 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.
| 13 |
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 Accounting Pronouncements
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, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of these standards will have on it financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.
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 amendments in ASU No. 2025-05 should be applied prospectively and are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted in both interim and annual reporting periods in which financial statements have not yet been issued or made available for issuance. The Company is currently assessing the impact of adopting this standard on the Company’s unaudited Condensed Consolidated Financial Statements.
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Results of Operations
Thirteen Weeks Ended September 27, 2025 Compared with Thirteen Weeks Ended September 28, 2024
Net sales for the thirteen weeks ended September 27, 2025 decreased by $79,000, or 4%, from net sales of $1,986,000 for the thirteen weeks ended September 28, 2024 to $1,907,000 for the thirteen weeks ended September 27, 2025. Sales of our vegan cheese products decreased slightly to $1,632,000 in the thirteen weeks ended September 27, 2025 from $1,648,000 in the thirteen weeks ended September 28, 2024. Sales of our frozen dessert products decreased to $275,000 in the thirteen weeks ended September 27, 2025 from $338,000 for the thirteen weeks ended September 28, 2024.
Our gross profit increased to $519,000 for the thirteen weeks ended September 27, 2025 from $485,000 for the thirteen weeks ended September 28, 2024. Our gross profit percentage increased to 27% for the thirteen weeks ending September 27, 2025 compared to 24% for the thirteen weeks ending September 28, 2024. The increase was due to a price increase instituted at the beginning of fiscal year 2025.
Freight out expense, a significant part of our cost of sales, decreased by $20,000, to $136,000, for the thirteen weeks ended September 27, 2025 compared with $156,000 for the thirteen weeks September 28, 2024. The decrease in Freight out expense was due to the reduction in sales. Freight out expense was 7% of sales for the thirteen weeks ended September 27, 2025 compared to 8% for the thirteen weeks ended September 28, 2024.
Selling expenses increased slightly by $10,000, or 5%, to $217,000 for the thirteen weeks ended September 27, 2025 from $207,000 for the thirteen weeks ended September 28, 2024. This increase was primarily due to increases in bad debt expense of $9,000 and outside warehouse rental expense of $4,000, which were partially offset by a decrease in commission expense of $5,000. We anticipate that our selling expense will continue at the same level for the balance of 2025.
Marketing expenses increased by $12,000, or 15%, to $95,000 for the thirteen weeks ended September 27, 2025 from $83,000 for the thirteen weeks ended September 28, 2024. The increase was primarily due to an increase in promotion expense of $12,000. We anticipate that our marketing promotion expenses will continue at the same level for the balance of 2025.
Research and development increased slightly by $3,000, or 11%, to $31,000 for the thirteen weeks ended September 27, 2025 from $28,000 for the thirteen weeks ended September 28, 2024 due primarily to a $5,000 increase in professional fees and outside services expense. We anticipate our product development costs for the balance of the year will continue at a slightly higher level as compared to the 2024 period due to higher professional fees and outside services expense.
General and administrative expenses decreased by $65,000, or 17%, to $309,000 for the thirteen weeks ended September 27, 2025 from $374,000 for the thirteen weeks ended September 28, 2024, primarily due to decreases in stock option expense of $13,000, real and personal property tax expense of $3,000, building expense of $20,000, waste removal expense of $5,000, office supply expense of $12,000, equipment rental expense of $6,000, and public relations expense of $13,000. These decreases were partially offset by an increase in professional fees and outside services expense of $10,000. We anticipate our general and administrative expense will continue at a lower level compared to 2024 for the remainder of this fiscal year.
Income tax expense was $4 for the thirteen weeks ended September 27, 2025 and $0 for the thirteen weeks ended September 28, 2024.
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Thirty-nine Weeks Ended September 27, 2025, Compared with Thirty-nine Weeks Ended September 28, 2024
Net sales for the thirty-nine weeks ended September 27, 2025 decreased by $954,000, or 15%, to $5,527,000 from net sales of $6,481,000 for the thirty-nine weeks ended September 28, 2024. Sales of our vegan cheese products decreased to $4,713,000 in the thirty-nine weeks ended September 27, 2025 from $5,383,000 in the thirty-nine weeks ended September 28, 2024, due to increased competition in the vegan cheese category. Sales of our frozen dessert products decreased to $814,000 in the thirty-nine weeks ended September 27, 2025 from $1,098,000 for the thirty-nine weeks ended September 28, 2024. The decrease was due to a reduction in the sales of pints in the current fiscal year.
Our gross profit increased to $1,726,000 for the thirty-nine weeks ended September 27, 2025 by $105,000 from $1,621,000 for the thirty-nine weeks ended September 28, 2024, due principally to significant price increases we implemented at the end of 2024. Our gross profit percentage was 31% for the thirty-nine weeks ending September 27, 2025 compared to 25% for the thirty-nine weeks ending September 28, 2024. Ingredient and packaging cost increases that took place in the first thirty-nine weeks of 2024 and negatively impacted the gross profit in the 2024 period were not present in the first three quarters of 2025. Our gross profit and gross profit percentage were also positively impacted by a decrease of $91,000 in sales and promotional allowance expense to $531,000 for the thirty-nine weeks ended September 27, 2025 from $622,000 for the thirty-nine weeks ended September 28, 2024.
Freight out expense decreased by $96,000, or 19%, to $417,000, for the thirty-nine weeks ended September 27, 2025 compared with $513,000 for the thirty-nine weeks September 28, 2024. Freight out expense was 8% of sales for the thirty-nine weeks ended September 27, 2025 and the thirty-nine weeks ended September 28, 2024. The significant reduction in freight expense was due to the significant decrease in sales in the 2025 period.
Selling expenses decreased by $49,000, or 7%, to $622,000 for the thirty-nine weeks ended September 27, 2025 from $671,000 for the thirty-nine weeks ended September 28, 2024, due to decreases in meetings and convention expense of $37,000, and commission expense of $12,000.
Marketing expenses increased slightly by $8,000, or 3%, to $305,000 for the thirty-nine weeks ended September 27, 2025 from $297,000 for the thirty-nine weeks ended September 28, 2024. Increases in artwork and plate expense of $19,000, and promotion expenses of $21,000, were partially offset by a decrease in advertising expense of $29,000.
Research and development costs, increased by $21,000, or 23%, to $113,000 for the thirty-nine weeks ended September 27, 2025 from $92,000 for the thirty-nine weeks ended September 28, 2024 due primarily to an increase in professional fees and outside services expense of $23,000.
General and administrative expenses decreased by $118,000, or 11%, to $979,000 for the thirty-nine weeks ended September 27, 2025 from $1,097,000 for the thirty-nine weeks ended September 28, 2024, primarily due to decreases in stock option expense of $40,000, payroll expense of $6,000, building rental expense of $32,000, real and personal property tax expense of $19,000, waste removal of $13,000, public relations expense of $12,000, and office supplies expense of $20,000. These decreases were partially offset by increases in professional fees and outside services expense of $20,000, and general insurance expenses of $12,000.
Income tax expense was $12 for the thirty-nine weeks ended September 27, 2025 and $5 for the thirty-nine weeks ended September 28, 2024.
Liquidity and Capital Resources
As of September 27, 2025, we had approximately $630,000 in cash and our working capital was approximately $2,598,000, compared with approximately $462,000 in cash and working capital of $2,893,000 at December 28, 2024.
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The following table summarizes our cash flows for the periods presented:
Thirty-nine Weeks ended | Thirty-nine Weeks ended | |||||||
| September 27, 2025 | September 28, 2024 | |||||||
| Cash provided by (used in) operating activities, net | $ | 174 | $ | (655 | ) | |||
| Cash used in financing activities, net | (6 | ) | (6 | ) | ||||
| Net increase (decrease) in cash | $ | 168 | $ | (661 | ) | |||
Net cash provided by operating activities for the thirty-nine weeks ended September 27, 2025 was $174,000 compared to $655 used in operating activities for the thirty-nine weeks ended September 28, 2024. Net cash provided by operating activities for the thirty-nine weeks ended September 27, 2025 was primarily a result of a decrease in accounts receivable of $202,000 and an increase of current liabilities of $595,000, which were partially offset by an increase in inventories of $352,000 and the net loss of $306,000.
We believe our existing cash on hand at September 27, 2025, existing working capital 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 have faced inflationary price increases in the costs of some of our imported commodities and in freight costs. 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. While there are no current tariffs that have affected any of the Company’s imports or exports, uncertainty regarding their implementation by the U.S. and certain foreign countries has already influenced the purchasing decisions of some of our domestic and international customers. 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 September 27, 2025.
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 September 27, 2025, 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 of September 27, 2025.
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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.
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 September 27, 2025 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 of five persons at September 27, 2025.
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.
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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, including among other things. 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. Uncertainty regarding their implementation by the U.S. and certain foreign countries has already influenced the purchasing decisions of some of our domestic and international customers.
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.
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
During
the three months ended September 27, 2025, no director or executive officer of the Company
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: November 11, 2025 |
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FAQ
How did Tofutti (TOFB) perform in Q3?
What were TOFB’s year-to-date results?
Did margins improve for Tofutti?
What is TOFB’s cash and liquidity position?
Are there any control or governance issues disclosed?
Were there any legal proceedings or significant new risks?
How many TOFB shares are outstanding?
