TOFB 10-Q Quarterly Report March 28, 2015

TOFUTTI BRANDS INC

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10-Q 1 t82354_10q.htm FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 28, 2015

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

Commission file number: 1-9009

Tofutti Brands Inc.

(Exact Name of Registrant as Specified in Its Charter)


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

50 Jackson Drive, Cranford, New Jersey 07016

(Address of Principal Executive Offices)

(908) 272-2400

(Registrant’s Telephone Number, including area code)

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site , if any, 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 x No o

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

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 11, 2015 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.	Financial Statements	3

		Condensed Balance Sheets – March 28, 2015 (Unaudited) and December 27, 2014	3

		Condensed Statements of Operations - (Unaudited) - Thirteen Week Periods ended March 28, 2015 and March 29, 2014	4

		Condensed Statements of Cash Flows - (Unaudited) - Thirteen Week Periods ended March 28, 2015 and March 29, 2014	5

		Notes to Condensed Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	13

	Item 4.	Controls and Procedures	14

Part II - Other Information:

	Item 1.	Legal Proceedings	16

	Item 1A.	Risk Factors	16

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16

	Item 3.	Defaults Upon Senior Securities	16

	Item 4.	Mine Safety Disclosures	16

	Item 5.	Other Information	16

	Item 6.	Exhibits	16

		Signatures	17

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

TOFUTTI BRANDS INC.

Condensed Balance Sheets

(in thousands, except share and per share figures)


	March 28, 2015		December 27, 2014*
Assets
Current assets:
Cash and cash equivalents	$	29	$	341
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $290 and $275, respectively		1,783		1,914
Inventories, net of reserve of $150 and $150, respectively		1,982		1,852
Prepaid expenses		43		71
Deferred costs		102		105
Total current assets		3,939		4,283

Fixed assets (net of accumulated depreciation of $4 and $2, respectively)		25		27

Other assets		16		16
	$	3,980	$	4,326

Liabilities and Stockholders’ Equity
Current liabilities:
Note payable-current	$	5	$	5
Accounts payable		1,440		1,367
Accrued expenses		227		264
Deferred revenue		111		114
		1,783		1,750

Note payable—long-term		20		22
Total liabilities		1,803		1,772

Commitments and contingencies		--		--

Stockholders’ equity:
Preferred stock - par value $.01 per share; authorized 100,000 shares, none issued		--		--
Common stock - par value $.01 per share; authorized 15,000,000 shares, issued and outstanding 5,153,706 shares at March 28, 2015, and 5,153,706 shares at December 27, 2014		52		52
Additional paid-in capital		--		--
Retained earnings		2,125		2,502
Total stockholders’ equity		2,177		2,554
Total liabilities and stockholders’ equity	$	3,980	$	4,326

* Derived from audited financial information.

See accompanying notes to condensed financial statements.

TOFUTTI BRANDS, INC.

Condensed Statements of Operations

(Unaudited)

(in thousands, except per share figures)


	Thirteen weeks ended March 28, 2015			Thirteen weeks ended March 29, 2014

Net sales	$	3,143		$	3,857
Cost of sales		2,398			2,567
Gross profit		745			1,290

Operating expenses:
Selling		400			386
Marketing		123			127
Research and development		140			189
General and administrative		454			476
		1,117			1,178

(Loss) income before income taxes		(372	)		112

Income tax expense		(5	)		(6	)

Net (loss) income	$	(377	)	$	106

Weighted average common shares outstanding:
Basic		5,154			5,154
Diluted

Net (loss) income per common share:
Basic and diluted	$	(0.07	)	$	0.02

See accompanying notes to condensed financial statements.

TOFUTTI BRANDS INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)


	Thirteen weeks ended March 28, 2015			Thirteen weeks ended March 29, 2014

Cash flows used in operating activities, net	$	(310	)	$	(29	)

Cash flows used in financing, net		(2	)		--

Net decrease in cash and cash equivalents		(312	)		(29	)

Cash and cash equivalents at beginning of period		341			214

Cash and cash equivalents at end of period	$	29		$	185

Supplemental cash flow information:
Income taxes paid	$	5		$	6

See accompanying notes to condensed financial statements.

TOFUTTI BRANDS INC.

N OTES TO FINANCIAL STATEMENTS

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

Note 1: Liquidity and Capital Resources

At March 28, 2015, Tofutti Brands, Inc. (“Tofutti” or the “Company”) had approximately $29 in cash compared to $341 at December 27, 2014. Net cash used in operating activities for the thirteen weeks ended March 28, 2015 was $310 compared to $29 used in operating activities for the thirteen weeks ended March 29, 2014. Net cash used in operating activities for the thirteen weeks ended March 28, 2015 was primarily a result of the net loss for the period.

The Company has historically financed operations and met capital requirements primarily through positive cash flow from operations. However, due to the net losses and cash used in operations in the previous two fiscal years and the first quarter of fiscal 2015, the Company will likely require additional financing in order to accomplish or exceed their business plans for future periods. The Company continues to implement cost cutting measures in fiscal year 2015 as a way to increase profitability and operating cash flow in future periods.

The Company’s ability to introduce successful new products may be adversely affected by a number of factors, such as unforeseen cost and expenses, economic environment, increased competition, and other factors beyond the Company’s control. Management cannot provide assurance that the Company will operate profitably in the future, or that it will not require significant additional financing in order to accomplish or exceed the objectives of its business plan. Consequently, the Company’s historical operating results cannot be relied on as an indicator of future performance, and management cannot predict whether the Company will obtain or sustain positive operating cash flow or generate net income in the future.

Note 2: Description of Business

Tofutti is engaged in one business segment, the development, production and marketing of non-dairy frozen desserts and other food products.

The Company reports on operating segments in accordance with standards for public companies to report information about operating segments and geographic distribution of sales in financial statements. While the Company has multiple products and or product groups, its goal is to focus on non-dairy foods. The Company’s chief operating decision maker tracks revenue by product groups, but does not track more granular operating results by product group as many of the ingredients are similar amongst these groups. As a result, the Company has determined that it has only one operating segment, which is the development, production and marketing of soy-based, non-dairy frozen desserts, frozen food products and soy-based cheese products.

Note 3: Basis of Presentation

The accompanying financial information is unaudited, but, 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 condensed balance sheet amounts as of December 27, 2014 are derived from our audited financial statements for the year ended December 27, 2014. The financial information should be read in conjunction with the audited financial statements and notes thereto for the year ended December 27, 2014 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The results of operations for the thirteen week period ended March 28, 2015 are not necessarily indicative of the results to be expected for the full year or any other period.

TOFUTTI BRANDS INC.

NOTES TO FINANCIAL STATEMENTS

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

The Company operates on a fiscal year which ends on the Saturday closest to December 31st.

Note 4: Recent Accounting Pronouncements

There have been no recent accounting pronouncements or changes in accounting pronouncements during the thirteen weeks ended March 28, 2015, as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014, that are of material significance, or have potential material significance, to the Company.

Note 5: Inventories

The composition of inventories is as follows:


	March 28, 2015		December 27, 2014
Finished products	$	1,463	$	1,290
Raw materials and packaging		519		562
	$	1,982	$	1,852

Note 6: 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. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. As of the periods ended March 28, 2015 and December 27, 2014, the Company recorded a full valuation allowance on its deferred tax asset balances.

Note 7: Earnings Per Share

Basic earnings per common share has been computed by dividing net income by the weighted average number of common shares outstanding. Diluted earnings per common share for the periods ended March 28, 2015 and March 29, 2014 have been computed by dividing net income by the weighted average number of common shares outstanding and common stock equivalents, which include options outstanding during the same period.

TOFUTTI BRANDS INC.

N OTES TO FINANCIAL STATEMENTS

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

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


	Thirteen Weeks Ended March 28, 2015			Thirteen Weeks Ended March 29, 2014
Numerator
Net (loss) income-basic and diluted	$	(377	)	$	106
Denominator
Denominator for basic and diluted earnings per share weighted average shares		5,154			5,154

(Loss) gain per share Basic and diluted	$	(0.07	)	$	0.02

Note 8: Fixed Assets

Fixed assets consist of the following:


	March 28, 2015			December 27, 2014
Automobile	$	29		$	29

		29			29
Less: accumulated depreciation		(4	)		(2	)
Fixed assets, net	$	25		$	27

Depreciation expense for the thirteen weeks ended March 28, 2015 and year ended December 27, 2014 was $2 and $2, respectively. There was no depreciation expense for the thirteen weeks ended March 29, 2014.

Note 9: Share Based Compensation

On June 10, 2014, the shareholders of the Company approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan provides for grants of various types of awards that are designed to attract and retain highly qualified personnel who will contribute to the success of the Company and to provide incentives to participants in the 2014 Plan that are linked directly to increases in shareholder value which will therefore inure to the benefit of all shareholders of the Company. The Company intends to rely on a combination of multi-year performance awards, options and other stock-based awards for these purposes.

The 2014 Plan made 250,000 shares of Common Stock available for awards. As of March 28, 2015, the Company had not issued any awards under the 2014 Plan. The 2014 Plan also permits performance-based 2014 awards paid under it to be tax deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended, as “performance-based compensation.”

TOFUTTI BRANDS INC.

NOTES TO FINANCIAL STATEMENTS

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

Note 10: Note Payable

In September 2014, the Company obtained an auto loan of approximately $29 from a bank. The loan requires 60 monthly payments of $0.535 through August 2019. Interest is charged at a fixed nominal rate of 4.64%. The loan is collateralized by the underlying automobile.


	March 28, 2015		December 27, 2014
Note payable	$	25	$	27
Less current maturity		5		5
Note payable, net of current maturity	$	20	$	22

Note 11: Sales by Geographic Region and Product Category


Revenues by geographical region are as follows (in thousands):

	March 28, 2015		March 29, 2014
Revenues by geography:
Americas	$	2,909	$	3,368
Europe		90		286
Asia Pacific and Africa		47		108
Middle East		97		95
	$	3,143	$	3,857

Approximately 95% of the Americas revenue in the 2015 period and 93% in the 2014 period is attributable to sales in the United States. All of the Company’s assets are located in the United States.


Net sales by major product category (in thousands):

	March 28, 2015		March 29, 2014
Frozen Desserts	$	839	$	1,190
Cheeses		2,215		2,552
Frozen Foods		89		115
	$	3,143	$	3,857

TOFUTTI BRANDS INC.

Item 2.

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying financial statements.

The discussion and analysis which follows in this Quarterly Report and in other reports and documents and in oral statements made on our behalf by our management and others may contain trend analysis and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to future events and financial results. These include statements regarding our earnings, projected growth and forecasts, and similar matters which are not historical facts. We remind stockholders that forward-looking statements are merely predictions and therefore are inherently subject to uncertainties and other factors which could cause the actual future events or results to differ materially from those described in the forward-looking statements. These uncertainties and other factors include, among other things, business conditions in the food industry and general economic conditions, both domestic and international; lower than expected customer orders; competitive factors; changes in product mix or distribution channels; and resource constraints encountered in developing new products. The forward-looking statements contained in this Quarterly Report and made elsewhere by or on our behalf should be considered in light of these factors.

Critical Accounting Policies

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these 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 recognize revenue when goods are shipped from our production facilities or outside warehouses and the following four criteria have been met: (i) the product has been shipped and we have no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is probable. We record as deductions against sales all trade discounts, returns and allowances that occur in the ordinary course of business, when the sale occurs. To the extent we charge our customers for freight expense, it is included in revenues. The amount of freight costs charged to customers has not been material to date.

Accounts Receivable . The majority of our accounts receivables are due from distributors (domestic and international) and retailers. Credit is extended based on evaluation of a customers’ financial condition and, generally, collateral is not required. Accounts receivable are most often due within 30 to 90 days and are stated at amounts due from customers net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. We determine whether an allowance is necessary by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss history, the customer’s current ability to pay its obligation, and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the bad debt expense account. We do not accrue interest on accounts receivable past due .

Deferred Revenue and Costs . Deferred revenue represents amounts from sales of our products that have been billed and shipped, but for which the transactions have not met our revenue recognition criteria. The cost of the related products have been recorded as deferred costs on our balance sheet.

Inventory. Inventory is stated at lower of cost or market 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.

Fixed Assets. Fixed assets consist of a company automobile used for advertising and trade show purposes. Amortization is provided by charges to income using the straight-line method over the useful life of five years.

Income Taxes . The carrying value of deferred tax assets assumes that we will be able to generate sufficient future taxable income to realize the deferred tax assets based on estimates and assumptions. If these estimates and assumptions change in the future, we may be required to record a valuation allowance against deferred tax assets which could result in additional income tax expense. 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. Our federal and state tax returns are open to examination for the years 2012 through 2014 .

Results of Operations

Thirteen Weeks Ended March 28, 2015 Compared with Thirteen Weeks Ended March 29, 2014

Net sales for the thirteen weeks ended March 28, 2015 were $3,143,000, a decrease of $714,000, or 19%, from net sales of $3,857,000 for the thirteen weeks ended March 29, 2014. The decrease in sales was primarily due to the decrease of sales in our frozen dessert product line to $839,000 in the thirteen weeks ended March 28, 2015 from $1,190,000 for the thirteen weeks ended March 29, 2014. Our frozen dessert business continues to be negatively impacted by the overall sluggishness in ice cream category sales. Sales of soy-cheese products decreased to $2,215,000 in the 2015 period from $2,552,000 in the 2014 period, primarily as a result of substantially higher sales allowances in the 2015 period as compared to the 2014 period. Sales of frozen food entrée products decreased to $89,000 in the 2015 thirteen week period from $115,000 in the 2014 thirteen week period, primarily as a result of production and sales issues related to the transition to our new nine slice pizza package from the existing three slice package . We experienced sales declines in all categories of products, which we believe were largely attributable to the timing of sales which will be posted in the second quarter of 2015 instead of the first quarter and the impact of sales allowance discounts in the first quarter of 2015 that were approximately $220,000 greater than in the corresponding period in 2014. We expect that these discount programs, which we believe are necessary to support the distribution of our products, will be significantly lower in subsequent periods of fiscal 2015.

Our gross profit decreased to $745,000 in the period ended March 28, 2015 from $1,290,000 in the period ended March 29, 2014. The reduction in gross profit was due to the lower level of sales and lower gross profit percentage in the current period. Our gross profit percentage was 24% for the period ending March 28, 2015 compared to 33% for the period ending March 29, 2014. The decrease in our gross profit percentage was primarily due to the $220,000 increase in sales allowances and discounts in the first quarter of 2015. If sales allowances and discounts in 2015 were equal to those of the corresponding period in 2014, our gross profit percentage in the 2015 period would have been 29%. Freight out expense, a significant part of our cost of sales, increased by $17,000, or 8%, to $224,000 for the thirteen weeks ended March 28, 2015 compared with $207,000 for the thirteen weeks ended March 29, 2014. As a percentage of sales, freight out expense increased to 7% in the 2015 thirteen week period from 5% for the 2014 thirteen week period. We expect freight out expense as a percentage of sales to be greater in 2015 as compared to 2014. While the cost of fuel has declined, other demographic and industry factors, such as the severe drought in California, have forced carriers to significantly increase their freight rates nationally.

Selling expenses increased by $14,000, or 4%, to $400,000 for the thirteen weeks ended March 28, 2015 compared to $386,000 for the thirteen weeks ended March 29, 2014. This increase was due principally to a $12,000 increase in outside warehouse expense due to the higher level of inventory. We anticipate that our selling expenses will decline for the balance of 2015 as we institute several cost cutting measures in our sales operations, such as lowering the commission rate paid to outside food brokers, reducing the number of trade shows we participate in, and reducing our outside warehouse expense by decreasing our inventory.

Marketing expenses decreased by $4,000, or 3%, to $123,000 for the thirteen weeks ended March 28, 2015 compared to $127,000 for the thirteen weeks ended March 29, 2014 due principally to decreases in artwork and plates expense of $19,000, television and radio advertising expense of $7,000, and public relations expense of $7,000, which were partially offset by increases in newspaper advertising expense of $21,000 and promotion expense of $11,000. We anticipate greater reductions in marketing expenses throughout the balance of 2015, specifically in the areas of artwork and plates expense, public relations and promotions.

Research and development costs, which consist principally of salary expenses and laboratory costs, decreased by $49,000, or 26%, to $140,000 for the thirteen weeks ended March 28, 2015 from $189,000 for the thirteen weeks ended March 29, 2014, due to decreases in payroll expense of $33,000 and professional fees and outside services expense of $20,000, which were partially offset by an increase in lab costs and supplies of $5,000. The decrease in payroll expense was due to a reduction in the number of employees working in research and development. We anticipate a similar reduction in research and development expense over the balance of the year, specifically in the areas of payroll expense and professional fees and outside services expense.

General and administrative expenses decreased by $22,000, or 5%, to $454,000 for the thirteen weeks ended March 28, 2015 compared with $476,000 for the thirteen weeks ended March 29, 2014 due principally to decreases in travel and auto expense of $9,000, professional fees and outside services expense of $25,000, and building and maintenance and repair expense of $5,000, which were partially offset by increases in public relations expense of $5,000 and general insurance expense of $15,000. We anticipate the same or greater reductions in general and administrative expenses throughout the balance of 2015, specifically in the areas of payroll expense and professional fees and outside services expense.

For the thirteen weeks ended March 28, 2015, we recognized income tax expense of $5,000 compared to income tax expense of $6,000 for the thirteen weeks ended March 29, 2014. We have a history of losses and have a full valuation allowance on our deferred tax assets. We did not record tax expense other than minimum state taxes for the thirteen weeks ending March 28, 2015 and March 29, 2014.

Liquidity and Capital Resources

As of March 28, 2015, we had approximately $29,000 in cash and cash equivalents and our working capital was approximately $2.2 million, compared with approximately $341,000 in cash and cash equivalents and working capital of $2.5 million at December 27, 2014.

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


	Thirteen Weeks ended March 28, 2015			Thirteen Weeks ended March 29, 2014
Net cash used in operating activities	$	(310,000	)	$	(29,000	)
Net cash used in financing activities		(2,000	)		--
Net change in cash and cash equivalents	$	(312,000	)	$	(29,000	)

Net cash used in operating activities for the thirteen weeks ended March 28, 2015 was $310,000 compared to $29,000 used in operating activities for the thirteen weeks ended March 29, 2014. Net cash used in operating activities for the thirteen weeks ended March 28, 2015 was primarily a result of the net loss for the period and an increase in inventory, which was partially offset by the increase in accounts payable for the period. Inventory increased as a result of purchases by us of finished goods in preparation for the historically stronger second and third quarter selling periods. Accounts payable increased primarily as a result of the inventory purchases made during the thirteen weeks ended March 28, 2015. While we believe that we will be able to fund our operations during the next twelve months from our working capital and from cash generated from operations, we intend to seek additional financing to improve our financial position .

Inflation and Seasonality

We do not believe that our operating results have been materially affected by inflation during the preceding two years. There can be no assurance, however, that our operating results will not be affected by inflation in the future. Our business is subject to minimal seasonal variations with slightly increased sales historically in the second and third quarters of the fiscal year. We expect to continue to experience slightly higher sales in the second and third quarters, and slightly lower sales in the fourth and first quarters, as a result of reduced sales of nondairy frozen desserts during those periods.

Off-balance Sheet Arrangements

None.

Contractual Obligations

We had no material contractual obligations as of March 28, 2015.

Recent Accounting Pronouncements

See Note 4 to the unaudited condensed consolidated 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, 2015, our company’s chief executive officer and chief 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 officer and chief financial officer concluded that our disclosure controls and procedures were not effective as March 28, 2015.

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 insure 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 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 their evaluation under the frameworks described above, our chief executive officer and chief financial officer have concluded that our internal control over financial reporting was ineffective as of March 28, 2015 because of the following material weaknesses in internal controls over financial reporting:

●

a 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 and income tax assertions in a timely manner.

●

The limited size of the accounting department makes it impracticable to achieve an optimum separation of duties.

We are seeking ways to remediate these weaknesses, which stem from our small workforce, which consisted of eleven employees at March 28, 2015 , that will not require us to hire additional personnel.

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.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

We are not a party to any material litigation.

Item 1A.

Risk Factors

There have been no material changes to the Company’s “Risk Factors” set forth in its Annual Report on Form 10-K for the year ended December 27, 2014.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Default Upon Senior Securities

None.

Item 4.

Mine Safety Disclosures

None.

Item 5.

Other Information

None.

Item 6.

Exhibits

31.1	Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

31.2	Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended.

32.1	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Instance Document*

101.SCH

Schema Document*

101.CAL

Calculation Linkbase Document*

101.DEF

Definition Linkbase Document*

101.LAB

Labels Linkbase Document*

101.PRE

Presentation Linkbase Document*

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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/David Mintz
	David Mintz
	President

	/s/Steven Kass
	Steven Kass
	Chief Accounting and Financial Officer

Date: May 18, 2015

TABLE OF CONTENTS

Part I - Financial Information Item 1. Financial Statements Note 1: Liquidity and Capital Resources Note 2: Description Of Business Note 3: Basis Of Presentation Note 4: Recent Accounting Pronouncements Note 5: Inventories Note 6: Income Taxes Note 7: Earnings Per Share Note 8: Fixed Assets Note 9: Share Based Compensation Note 10: Note Payable Note 11: Sales By Geographic Region and Product Category Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part II - Other Information Item 1. Legal Proceedings Item 1A. Risk Factors Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 3. Default Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. Exhibits

TOFB 10-Q Quarter ended March 28, 2015