Tofutti Brands (TOFB) flags going concern risk after Q1 loss and key co‑packer exit

Rhea-AI Filing Summary

Tofutti Brands Inc. reports weaker first-quarter 2026 results and raises serious questions about its future. Net sales slipped to $1,557,000 from $1,591,000, while net loss widened to $255,000 from $162,000. Gross profit fell to $469,000 and margin contracted to 30% from 37% due mainly to higher ingredient and packaging costs.

Liquidity tightened, with cash declining to $63,000 and working capital to about $1,876,000 as of March 28, 2026, after $279,000 of operating cash outflows. Management discloses that its primary co‑packer, which produced products representing about 80% of 2025 sales, plans to close its plant effective July 31, 2026. They are seeking an alternative but state there is no assurance of success.

Given the supplier risk, declining revenues, recurring operating losses and cash outflows, the company concludes there is substantial doubt about its ability to continue as a going concern. Management also reports that disclosure controls and procedures remain ineffective because of ongoing material weaknesses in internal control over financial reporting.

Positive

• None.

Negative

• Going concern uncertainty: Management states that declining revenues, recurring operating losses, cash outflows and supplier risk create substantial doubt about Tofutti Brands’ ability to continue as a going concern.
• Key supplier shutdown: The primary co‑packer, whose facility produced products representing about 80% of 2025 sales, plans to close its plant effective July 31, 2026, with no assured replacement.
• Worsening profitability and cash flow: Net loss widened to $255,000, gross margin fell to 30% from 37%, and operating activities used $279,000 of cash in the quarter.
• Strained liquidity: Cash fell to $63,000 and working capital declined to approximately $1,876,000 as of March 28, 2026.
• Internal control weaknesses: Disclosure controls and procedures were deemed not effective due to material weaknesses tied to limited resources and lack of segregation of duties.
• Customer concentration: Two customers accounted for 43% of accounts receivable, and individual customers represented 20% and 14% of total sales in the quarter.

Insights

Credit and restructuring analyst

Going concern warning and key supplier loss create high financial risk.

Tofutti Brands posted a first-quarter 2026 net loss of $255,000 on net sales of $1,557,000, with gross margin compressing to 30%. Operating cash flow swung to a $279,000 outflow, and cash dropped to $63,000, signaling tighter liquidity.

The business faces a structural threat: its primary co‑packer, whose plant produced products representing about 80% of 2025 sales, plans to close on July 31, 2026. Management is searching for a replacement but explicitly notes no assurance a suitable co‑packer will be found.

Combined with declining revenues, recurring losses and cash outflows, management concludes there is substantial doubt about the company’s ability to continue as a going concern. Material weaknesses in internal control over financial reporting remain unresolved. Subsequent filings will be important to understand any co‑packer replacement and liquidity developments.

Key Figures

Net sales Q1 2026: $1,557,000 Net loss Q1 2026: $255,000 Gross margin: 30% +5 more

8 metrics

Net sales Q1 2026 $1,557,000 Thirteen weeks ended March 28, 2026 vs $1,591,000 prior year

Net loss Q1 2026 $255,000 Thirteen weeks ended March 28, 2026 vs $162,000 prior year

Gross margin 30% Thirteen weeks ended March 28, 2026 vs 37% prior year

Cash balance $63,000 As of March 28, 2026; down from $347,000 at December 27, 2025

Working capital $1,876,000 As of March 28, 2026; previously $2,126,000 at December 27, 2025

Operating cash flow Q1 2026 ($279,000) Cash used in operating activities vs $148,000 provided prior year

Sales via primary co-packer 80% of sales Products from plant accounted for about 80% of 2025 sales

Customer concentration 20% and 14% Two customers’ shares of total sales in thirteen weeks ended March 28, 2026

Key Terms

going concern, co-packer, material weaknesses, incremental borrowing rate, +2 more

6 terms

going concern financial

"These conditions result in substantial doubt about our ability to continue as a going concern."

A going concern is a business that is expected to continue its operations and meet its obligations for the foreseeable future, rather than shutting down or selling off assets. This assumption matters to investors because it indicates stability and ongoing profitability, making the business a more reliable investment. Think of it as believing a restaurant will stay open and serve customers, rather than closing down suddenly.

co-packer financial

"the owner of our primary co-packer for our key products intends to close its plant effective July 31, 2026."

A co-packer is an outside company that makes, fills, labels and packages physical products for a brand rather than the brand doing it itself — think of it as a hired kitchen that cooks and plates a restaurant’s recipes. For investors, co-packers matter because they shape production costs, speed to market, product quality and supply-chain risk: using them can let a business scale without big factory spending but creates dependency that can affect sales and profit margins.

material weaknesses financial

"our disclosure controls and procedures were not effective as of March 28, 2026 because of the material weaknesses in internal control over financial reporting"

Material weaknesses are significant flaws in a company’s systems for ensuring its financial reports are accurate and reliable. Like a broken lock on a safe, they increase the chance that financial statements contain big errors or omissions, which can mislead investors about performance and risk; discovering one often raises questions about management oversight, may lead to restated results, and can affect investor confidence and a company’s valuation.

incremental borrowing rate financial

"an internal incremental borrowing rate is determined based on information available at lease commencement date"

Rule 10b5-1 trading arrangement regulatory

"no director or executive officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement”"

valuation allowance financial

"The Company recorded a full valuation allowance on the deferred tax asset as of March 28, 2026."

A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 28, 2026

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

Commission file number: 1-9009

Tofutti Brands Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

105 Newfield Ave, Suite H, Edison, New Jersey 08837

(Address of Principal Executive Offices)

(908) 272-2400

(Registrant’s Telephone Number, including area code)

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

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

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

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

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

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

Yes ☐ No ☒

As of May 18, 2026 the Registrant had 5,153,706 shares of Common Stock, par value $0.01, outstanding.

TOFUTTI BRANDS INC.

INDEX

		Page
Part I - Financial Information:
Item 1.	Unaudited Condensed Financial Statements	3
	Unaudited Condensed Balance Sheets – March 28, 2026 and December 27, 2025	3
	Unaudited Condensed Statements of Operations -Thirteen weeks ended March 28, 2026 and March 29, 2025	4
	Unaudited Condensed Statements of Changes in Stockholders’ Equity - Thirteen weeks ended March 28, 2026 and March 29, 2025	5
	Unaudited Condensed Statements of Cash Flows – Thirteen weeks ended March 28, 2026 and March 29, 2025	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	16
Item 4.	Controls and Procedures	16
Part II - Other Information:
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Mine Safety Disclosures	17
Item 5.	Other Information	17
Item 6.	Exhibits	17
Signatures		18

2

Item 1. Financial Statements

TOFUTTI BRANDS INC.

Unaudited Condensed Balance Sheets

(in thousands, except share and per share figures)

		March 28, 2026				December 27, 2025
Assets
Current assets:
Cash		$	63			$	347
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $217 and $208			763				915
Inventories			1,936				1,729
Prepaid expenses and other current assets			92				91
Total current			2,854				3,082
Operating lease right-of-use assets			257				274
Finance lease right-of-use asset			1				7
Other assets			21				21
Total assets		$	3,133			$	3,384
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	651			$	586
Accrued expenses			254				294
Operating lease liability, current portion			72				70
Finance lease liability, current portion			1				6
Total current liabilities			978				956
Operating lease liabilities, net of current portion			202				220
Total liabilities		$	1,180			$	1,176
Stockholders’ equity:
Preferred stock - par value $.01 per share; authorized 100,000 shares, none issued and outstanding			-				-
Common stock - par value $.01 per share; authorized 15,000,000 shares, 5,153,706 shares issued and outstanding			52				52
Additional paid-in capital			377				377
Retained earnings			1,524				1,779
Total stockholders’ equity			1,953				2,208
Total liabilities and stockholders’ equity		$	3,133			$	3,384

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 March 28, 2026				Thirteen weeks ended March 29, 2025
Net sales		$	1,557			$	1,591
Cost of sales			1,088				1,002
Gross profit			469				589
Operating expenses:
Selling and warehouse			239				217
Marketing			73				121
Research and development			51				44
General and administrative			359				368
Total operating expenses			722				750
Loss from operations			(253	)			(161	)
Interest expense			1				1
Loss before income tax			(254	)			(162	)
Provision for income taxes			1				—
Net loss		$	(255	)		$	(162	)
Weighted average common shares outstanding:
Basic			5,154				5,154
Diluted			5,154				5,154
Earnings (loss) per common share:
Basic		$	(0.05	)		$	(0.03	)
Diluted		$	(0.05	)		$	(0.03	)

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 weeks ended March 29, 2025
		Common Stock				Additional Paid-in Capital				Retained Earnings				Total
December 29, 2024		$	52			$	377			$	2,557			$	2,986
Net loss			—				—				(162	)			(162	)
March 29, 2025		$	52			$	377			$	2,395			$	2,824

		Thirteen weeks ended March 28, 2026
		Common Stock				Additional Paid-in Capital				Retained Earnings				Total
December 27, 2025		$	52			$	377			$	1,779			$	2,208
Net loss			—				—				(255	)			(255	)
March 28, 2026		$	52				377				1,524				1,953

See accompanying notes to unaudited condensed financial statements.

5

TOFUTTI BRANDS INC.

Unaudited Condensed Statements of Cash Flows

(in thousands)

		Thirteen weeks ended March 28, 2026				Thirteen weeks ended March 29, 2025
Cash (used in) provided by operating activities, net		$	(279	)		$	148
Cash (used in) financing activities, net			(5	)			(1	)
Net (decrease) increase in cash			(284	)			147
Cash at beginning of period			347				462
Cash at end of period		$	63			$	609
Supplemental cash flow information:
Interest paid		$	—			$	1

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 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. While management is actively searching for an alternative co-packer, there is no assurance a suitable replacement can be found. In addition, we have had declining revenues, recurring losses from operations and cash outflows from operations in the last few years. These conditions result in 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 period ended March 28, 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 31^st.

Note 2: Recently Issued Accounting Standards

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

In 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.

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:

 Schedule of Inventories

		March 28, 2026				December 27, 2025
Finished products		$	988			$	1,158
Raw materials and packaging			948				571
Total Inventory		$	1,936			$	1,729

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 $1 for the thirteen-week periods ended March 28, 2026 and $0 for the thirteen weeks ended March 29, 2025. The Company recorded a full valuation allowance on the deferred tax asset as of March 28, 2026.

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 March 28, 2026				Thirteen weeks ended March 29, 2025
Net Loss, numerator, basic computation		$	(255	)		$	(162	)
Net Loss, numerator, diluted computation			(255	)			(162	)
Weighted average shares - denominator basic computation			5,154				5,154
Weighted average shares, as adjusted - denominator diluted computation			5,154				5,154
Net Loss per common share - basic		$	(0.05	)		$	(0.03	)
Net Loss per common share - diluted		$	(0.05	)		$	(0.03	)

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 March 28, 2026				Thirteen weeks Ended March 29, 2025
Shares subject to outstanding common stock options			250,000				250,000

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 250,000 shares of common stock available for awards. No stock options have been granted since 2022. In 2022, 250,000 stock options were issued, and as of March 28, 2026, 250,000 non-qualified stock options remain outstanding. The exercise price of all options granted in 2022 is $0.95 per share, the market price at the close of business on the date of the grant. All options expire on December 22, 2027.

The following is a summary of stock option activity from December 27, 2025 to March 28, 2026:

 Schedule of Stock Option Activity

		Shares				Weighted Average Exercise Price ($)
Outstanding at December 27, 2025			250,000				0.95
Granted			—				—
Exercised			—				—
Outstanding at March 28, 2026			250,000				0.95
Exercisable at March 28, 2026			250,000				0.95

The following table summarizes information about stock options outstanding from December 27, 2025 to March 28, 2026:

   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
$	0.95				250,000				1.75			$	0.95				250,000

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 March 28, 2026				Thirteen weeks ended March 29, 2025
Revenues by geography:
Americas		$	1,519			$	1,499
Middle East			2				92
Europe			36				-
Total Net Sales		$	1,557			$	1,591

Approximately 95% of the Americas’ revenue for the thirteen weeks ended March 28, 2026 is attributable to sales in the United States compared with 94% of the Americas’ revenue for the thirteen weeks ended March 29, 2025. All of the Company’s assets are located in the United States.

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 March 28, 2026				Thirteen weeks ended March 29, 2025
Frozen desserts		$	195			$	218
Cheeses			1,362				1,373
Total Net Sales		$	1,557			$	1,591

Note 8: Leases

In 2024, the Company signed a 5five-year lease to move our offices into a one-story facility in Edison, New Jersey. The 5,100 square foot facility houses our administrative offices, a warehouse, freezers, and refrigerators. The lease commenced on July 1, 2024, with an option to extend for an additional five years at the end of the lease. Annual rent for the lease escalates by 3% year over year until the end of the lease term. We completed the move into the new facility in September 2024. The Company determined that this lease met the criteria for classification as an operating lease under ASC 842. Rent expense was $22 for the thirteen weeks ended March 28, 2026 and $21 for the thirteen weeks ended March 29, 2025. The Company also rents warehouse storage space at various outside facilities. Outside warehouse expenses were $82 for the thirteen weeks ended March 28, 2026 and $77 for the thirteen weeks ended March 29, 2025. The Company has determined that these warehouse leases do not fall within the scope of ASC 842, as they are either month-to-month leases or have terms of 12 months or less. The Company rents a copier and mail machine under a finance lease. In 2022, the Company entered into a copier and mail machine lease, which still exists as of March 28, 2026. Payments for the copier and mail machine amounted to $2 for both the thirteen weeks ended March 28, 2026 and the thirteen weeks ended March 29, 2025.

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 5.5% and 6.5% for all leases.

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
		March 28, 2026				December 27, 2025
Operating lease right-of-use assets		$	257			$	274
Current portion of lease liabilities			72				70
Operating lease liabilities, net of current portion			202				220
Total lease liability		$	274			$	290
Weighted average remaining lease term (in years)			3.3				3.6
Weighted average discount rate			5.5	%			5.5	%

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
		March 28, 2026				December 27, 2025
Finance lease right-of-use asset		$	1			$	7
Current portion of lease liabilities			1				6
Total finance lease liabilities		$	1			$	6
Weighted average remaining lease term (in years)			.1				.4
Weighted average discount rate			6.5	%			6.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of March 28, 2026 are as follows:

 Schedule of Future Lease Payments

		Operating lease liabilities				Finance lease liability				Total
2026 (remainder of the year)		$	69			$	1			$	70
2027			87				—				87
2028			89				—				89
2029			53				—				53
Total future minimum lease payments			298				1				299
Less present value adjustment			24				—				24
Total		$	274			$	1			$	275

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. 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
		March 28, 2026				December 27, 2025
Accrued professional fees			9				-
Uncertain tax position			214				213
Inventory and expense accrual			31				81
Total accrued expenses		$	254			$	294

Note 11: Related Party Transactions

During the thirteen weeks ending March 28, 2026 and March 29, 2025, we paid The CFO Squad $6 and $2, respectively, for financial services. Joseph Himy is the Managing Director of The CFO Squad and a member of our Board of Directors. No amounts were accrued in our balance sheet for services provided by the CFO Squad during the thirteen weeks ended March 28, 2026, and March 29, 2025.

Note 12: Segment Information

The Company views its operations and manages its business in one reportable segment, which is the development, production and marketing of soy and other vegetable protein- based, dairy free cheese and frozen food products.

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 March 28, 2026 two customers accounted for 43% of our accounts receivable. Two customers accounted for 44% of our accounts receivable as of December 27, 2025.

One customer represented 20% and another customer accounted for 14% of total sales, for the thirteen weeks ended March 28, 2026. For the thirteen weeks ending March 29, 2025, one customer represented 24% and another customer accounted for 16% of total sales.

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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.

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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.

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. While management is actively searching for an alternative co-packer, there is no assurance a suitable replacement can be found. In addition, we have had declining revenues, recurring losses from operations and cash outflows from operations in the last few years. These conditions result in substantial doubt about our ability 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, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company plans to adopt this standard in fiscal 2027 and will provide the additional disclosures required by ASU 2024-03.

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.

14

Results of Operations

Thirteen Weeks Ended March 28, 2026 Compared with Thirteen Weeks Ended March 29, 2025

Net sales for the thirteen weeks ended March 28, 2026 decreased by $34,000, or 2%, from net sales of $1,591,000 for the thirteen weeks ended March 29, 2025 to $1,557,000 for the thirteen weeks ended March 28, 2026. Sales of our vegan cheese products decreased slightly to $1,362,000 in the thirteen weeks ended March 28, 2026 from $1,373,000 in the thirteen weeks ended March 29, 2025. Sales of our frozen dessert products decreased to $195,000 in the thirteen weeks ended March 28, 2026 from $218,000 for the thirteen weeks ended March 29, 2025.

Our gross profit decreased to $469,000 for the thirteen weeks ended March 28, 2026 from $589,000 for the thirteen weeks ended March 29, 2025. Our gross profit percentage was 30% for the thirteen weeks ending March 28, 2026 compared to 37% for the thirteen weeks ending March 29, 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.

Freight out expense, a significant part of our cost of sales, decreased by $19,000, or 17%, to $90,000, for the thirteen weeks ended March 28, 2026 compared with $109,000 for the thirteen weeks March 29, 2025. Freight out expense was 6% of sales for the thirteen weeks ended March 28, 2026 compared to 7% of sales for the thirteen weeks ended March 29, 2025. We anticipate that the freight expense, as a percentage of sales, will increase for the balance of 2026 due to the ongoing fuel cost increases caused by the hostilities in Iran.

Selling expenses increased by $22,000, or 10%, to $239,000 for the thirteen weeks ended March 28, 2026 from $217,000 for the thirteen weeks ended March 29, 2025. This increase was due to increases in meetings and convention expense of $6,000 and outside warehouse retail expense of $5,000.

Marketing expenses decreased by $48,000, or 40%, to $73,000 for the thirteen weeks ended March 28, 2026 from $121,000 for the thirteen weeks ended March 29, 2025. The decrease was due primarily to decreases in advertising expense of $34,000, and artwork and plate expense of $12,000. We anticipate that our marketing promotion expenses will continue at the same level for the balance of 2026.

Product development costs increased slightly by $7,000, or 16%, to $51,000 for the thirteen weeks ended March 28, 2026 from $44,000 for the thirteen weeks ended March 29, 2025 due 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 2025 period due to higher professional fees and outside services expense.

General and administrative expenses decreased by $9,000, or 2%, to $359,000 for the thirteen weeks ended March 28, 2026 from $368,000 for the thirteen weeks ended March 29, 2025, due to a decrease in general insurance expense of $35,000, which was partially offset by increases in professional fees and outside service expense of $15,000 and public relation expense of $12,000.

Income tax expense was $1 for the thirteen weeks ended March 28, 2026 and $0 for the thirteen weeks ended March 29, 2025 due to the net losses incurred during both periods.

Liquidity and Capital Resources

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. While management is actively searching for an alternative co-packer, there is no assurance a suitable replacement can be found. In addition, we have had declining revenues, recurring losses from operations and cash outflows from operations in the last few years. These conditions result in substantial doubt about our ability to continue as a going concern.

As of March 28, 2026, we had approximately $63,000 in cash and our working capital was approximately $1,876,000, compared with approximately $347,000 in cash and working capital of $2,126,000 at December 27, 2025. As of May 14, 2026, we had approximately $366,000 in cash.

15

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

		Thirteen Weeks ended				Thirteen Weeks ended
		March 28, 2026				March 29, 2025
Cash (used in) provided by operating activities, net		$	(279,000	)		$	148,000
Cash (used in) financing activities, net			(5,000	)			(1,000	)
Net increase (decrease) in cash		$	(284,000	)		$	147,000

Net cash used in operating activities for the thirteen weeks ended March 28, 2026 was $279,000 compared to $148,000 provided by operating activities for the thirteen weeks ended March 29, 2025. The decrease in net cash used by operating activities for the thirteen weeks ended March 28, 2026 was primarily a result of net loss of $255,000 and an increase in inventory of $207,000, which was partially offset by a decrease in accounts receivable of $152,000.

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 March 28, 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 March 28, 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 March 28, 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 March 28, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

16

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.

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 March 28, 2026, no director or executive officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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).

17

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: May 18, 2026

18

FAQ

How did Tofutti Brands (TOFB) perform in Q1 2026?

Tofutti Brands reported net sales of $1,557,000 and a net loss of $255,000 for the thirteen weeks ended March 28, 2026. Sales declined slightly from $1,591,000 and the prior-year net loss was $162,000, reflecting weaker profitability and cost pressures.

Why did Tofutti Brands (TOFB) issue a going concern warning?

Management cites declining revenues, recurring operating losses and cash outflows, combined with the planned shutdown of its primary co‑packer, as reasons for substantial doubt about continuing as a going concern. These factors raise uncertainty about the company’s ability to meet obligations over time.

What is the impact of the co-packer plant closure on Tofutti Brands (TOFB)?

The owner of Tofutti Brands’ primary co‑packer plans to close its plant on July 31, 2026. Products from this facility accounted for approximately 80% of 2025 sales. Management is seeking an alternative co‑packer but explicitly notes there is no assurance a suitable replacement will be found.

What is Tofutti Brands’ (TOFB) liquidity position as of March 28, 2026?

As of March 28, 2026, Tofutti Brands held about $63,000 in cash and working capital of approximately $1,876,000. Operating activities used $279,000 of cash in the quarter, compared with $148,000 of operating cash provided in the prior-year period.

Did Tofutti Brands (TOFB) experience margin pressure in Q1 2026?

Yes. Gross profit fell to $469,000 and gross margin decreased to 30% from 37% a year earlier. Management attributes the decline mainly to significant ingredient and packaging cost increases, partly offset by lower freight out expenses as a percentage of sales.

What internal control issues did Tofutti Brands (TOFB) report?

Management concluded disclosure controls and procedures were not effective as of March 28, 2026 due to material weaknesses. These relate to insufficient resources, limited monitoring and oversight, and a small accounting department that makes adequate segregation of duties impracticable.

How concentrated are Tofutti Brands’ (TOFB) customers?

Customer concentration is significant. As of March 28, 2026, two customers accounted for 43% of accounts receivable. During the quarter, one customer represented 20% of total sales and another accounted for 14%, indicating reliance on a small number of large buyers.