TOFUTTI BRANDS INC

Previous wording

Net sales for the thirteen weeks ended June 29, 2024 decreased by $436,000, or 16%, to $2,283,000, from net sales of $2,719,000 for the thirteen weeks ended July 1, 2023. Sales of our vegan cheese products decreased to $1,926,000 in the thirteen weeks ended June 29, 2024 from $2,283,000 in the thirteen weeks ended July 1, 2023. Sales of our frozen dessert products decreased to $357,000 in the thirteen weeks ended June 29, 2024 from $436,000 for the thirteen weeks ended July 1, 2023. The decrease in frozen dessert product sales was due to a decrease in sales of our frozen dessert pints. The decrease in the sales of our vegan cheese products was due to continued introduction of competitive products in the vegan cheese category and a decline of our export cheese business.

Current wording

Net sales for the thirteen weeks ended September 28, 2024 decreased by $529,000, or 21%, to $1,986,000, from net sales of $2,515,000 for the thirteen weeks ended September 30, 2023. Sales of our vegan cheese products decreased to $1,648,000 in the thirteen weeks ended September 28, 2024 from $2,110,000 in the thirteen weeks ended September 30, 2023. Sales of our frozen dessert products decreased to $338,000 in the thirteen weeks ended September 28, 2024 from $405,000 for the thirteen weeks ended September 30, 2023. The decrease in the sales of our vegan cheese products was due to the continued introduction of competitive products in the vegan cheese category and a decline of our export cheese business. The decrease in frozen dessert product sales was due to a decrease in sales of our frozen dessert pints.

Previous wording

Our gross profit was $667,000 for both the thirteen weeks ended June 29, 2024 and the thirteen weeks ended July 1, 2023. Our gross profit percentage increased to 29% for the thirteen weeks ending June 29, 2024 compared to 25% for the thirteen weeks ending July 1, 2023. Our gross profit dollars and gross profit percentage were positively impacted by a decrease in our sales promotion and allowance expenses to $249,000 in the second quarter of this year as compared to $273,000 in the second quarter of the prior fiscal year. We anticipate that our gross profit dollars and gross profit percentage will remain consistent for the balance of 2024.

Current wording

Our gross profit was $485,000 for the thirteen weeks ended September 28, 2024 and $786,000 for the thirteen weeks ended September 30, 2023. Our gross profit percentage decreased to 24% for the thirteen weeks ending September 28, 2024 compared to 31% for the thirteen weeks ending September 30, 2023. Our gross profit and gross profit percentage were negatively impacted by the decrease in frozen dessert product sales, and was due to a decrease in sales of our vegan cheese products and frozen dessert pints and increased promotional activity to combat the increased competition in the vegan cheese market. We anticipate that our gross profit and gross profit percentage will remain lower than in 2023 for the remainder of 2024.

Previous wording

Freight expense, a significant part of our cost of sales, increased slightly by $6,000, or 4%, to $179,000 for the thirteen weeks ended June 29, 2024 compared with $173,000 for the thirteen weeks ended July 1, 2023. Freight expense was 8% of sales for the thirteen weeks ended June 29, 2024 compared to 6% of sales for the thirteen weeks ended July 1, 2023. We anticipate that our freight expense will continue at a higher rate for the balance of 2024.

Current wording

Freight expense, a significant part of our cost of sales, decreased by $17,000, or 10%, to $156,000 for the thirteen weeks ended September 28, 2024 compared with $173,000 for the thirteen weeks ended September 30, 2023. The decrease in freight expense was due to the decrease in sales. Freight expense was 8% of sales for the thirteen weeks ended September 28, 2024 compared to 6% of sales for the thirteen weeks ended September 30, 2023. We anticipate our freight expense, as a percentage of sales, will remain slightly higher than that of 2023 for the balance of this year.

Previous wording

Selling expenses decreased by $70,000, or 22%, to $250,000 for the thirteen weeks ended June 29, 2024 from $320,000 for the thirteen weeks ended July 1, 2023. The decrease was due to decreases in commission expense of $38,000, meetings and convention expense of $18,000, bad debt expense of $16,000, and sample shipping expenses of $11,000 which were partially offset by an increase in outside warehouse rental expenses of $13,000. The decrease in commission expense is due to the decrease in sales for the thirteen-weeks ended June 29,2024 compared with the thirteen-weeks ended July 1, 2023.

Current wording

Selling and warehouse expenses decreased slightly by $3,000, or 1%, to $207,000 for the thirteen weeks ended September 28, 2024 from $210,000 for the thirteen weeks ended September 30, 2023. The decrease was due to decreases in commission expense of $10,000, meetings and convention expense of $11,000, and sample shipping expenses of $3,000 which were partially offset by an increase in outside warehouse rental expenses of $5,000, an increase in payroll expense of $5,000, and an increase in travel, entertainment, and auto expense of $10,000. The decrease in commission expense is due to the decrease in sales for the thirteen-weeks ended September 28, 2024 compared with the thirteen-weeks ended September 30, 2023.

Previous wording

Marketing expenses decreased by $10,000, or 11%, to $79,000 for the thirteen weeks ended June 29, 2024 from $89,000 for the thirteen weeks ended July 1, 2023. The decrease was primarily due to decreases in artwork and plates expense of $3,000, and advertising expense $14,000, which were partially offset by an increase in promotion expense of $7,000. We anticipate that our marketing expenses for the balance of the year will be comparable to the corresponding periods in fiscal year 2023.

Current wording

Marketing expenses decreased by $20,000, or 19%, to $83,000 for the thirteen weeks ended September 28, 2024 from $103,000 for the thirteen weeks ended September 30, 2023. The decrease was primarily due to decreases in artwork and plates expense of $3,000 and advertising expense of $18,000. We anticipate that our marketing expenses for the balance of this year will be comparable to the corresponding periods in fiscal 2023.

Previous wording

Product development costs, which consist principally of salary expenses and laboratory costs, decreased by $34,000, or 61%, to $22,000 for the thirteen weeks ended June 29, 2024 from $56,000 for the thirteen weeks ended July 1, 2023. The decrease was primarily due to a decrease in professional fees and outside services expense of $24,000 and lab costs and supplies expense of $7,000. We anticipate our product development costs will continue at a lower level than the corresponding 2023 periods as we have reduced our research and development work.

Current wording

Product development costs were $28,000 for both the thirteen week periods ended September 28, 2024 and September 30, 2023. We anticipate our product development costs for the remainder of 2024 will continue at a lower level than the corresponding 2023 period as we have reduced our research and development work.

Previous wording

Income tax expense was $5,000 for the thirteen weeks ended June 29, 2024 and $136,000 for the thirteen weeks ended July 1, 2023.

Current wording

Income tax expense was $0 for the thirteen weeks ended September 28, 2024 and $1,000 for the thirteen weeks ended September 30, 2023.

Previous wording

Net sales for the twenty-six weeks ended June 29, 2024 decreased by $713,000, or 14%, to $4,495,000, from net sales of $5,208,000 for the twenty-six weeks ended July 1, 2023. Sales of our vegan cheese products decreased to $3,735,000 in the twenty-six weeks ended June 29, 2024 from $4,382,000 for the twenty-six weeks ended July 1, 2023. Sales of our frozen dessert products decreased to $764,000 for the twenty-six weeks ended June 29, 2024 from $826,000 for the twenty-six weeks ended July 1, 2023. The significant reduction in sales for the current twenty-six week period was primarily due to the decrease in our vegan cheese sales caused by increased competition in the vegan cheese category and a decline in our export cheese business.

Current wording

Net sales for the thirty-nine weeks ended September 28, 2024 decreased by $1,243,000, or 16%, to $6,481,000, from net sales of $7,724,000 for the thirty-nine weeks ended September 30, 2023. Sales of our vegan cheese products decreased to $5,383,000 in the thirty-nine weeks ended September 28, 2024 from $6,492,000 for the thirty-nine weeks ended September 30, 2023. Sales of our frozen dessert products decreased to $1,098,000 for the thirty-nine weeks ended September 28, 2024 from $1,232,000 for the thirty-nine weeks ended September 30, 2023. The significant reduction in sales for the current thirty-nine week period was primarily due to the decrease in our vegan cheese sales caused by increased competition in the vegan cheese category and a decline in our export cheese business.

Previous wording

Our gross profit decreased to $1,136,000 for the twenty-six weeks ended June 29, 2024 from $1,273,000 for the twenty-six weeks ended July 1, 2023, while our gross profit percentage was 25% for the twenty-six weeks ending June 29, 2024 compared to 24% for the twenty-six weeks ending July 1, 2023. The decrease in gross profit dollars was due to the reduction in sales. The increase in our gross profit percentage was due to a $85,000 decrease in sales promotion and allowance expense to $442,000 in fiscal 2024, from $527,000 in fiscal 2023. We anticipate that our gross margin percentage will remain unchanged or slightly increase for the balance of the fiscal year.

Current wording

Our gross profit decreased to $1,621,000 for the thirty-nine weeks ended September 28, 2024 from $2,059,000 for the thirty-nine weeks ended September 30, 2023, while our gross profit percentage was 25% for the thirty-nine weeks ending September 28, 2024 compared to 27% for the thirty-nine weeks ending September 30, 2023. The decrease in our gross profit and gross profit percentage was due to the reduction in sales.

Previous wording

Freight expense, a significant part of our cost of sales, decreased by $28,000, or 8%, to $357,000 for the twenty-six weeks ended June 29, 2024 compared with $385,000 for the twenty-six weeks July 1, 2023. Freight expense was 8% of sales for the twenty-six weeks ended June 29, 2024 and for the twenty-six weeks ended July 1, 2023.

Current wording

Freight expense, a significant part of our cost of sales, decreased by $98,000, or 16%, to $513,000 for the thirty-nine weeks ended September 28, 2024 compared with $611,000 for the thirty-nine weeks September 30, 2023 due to the reduction in sales. Freight expense was 8% of sales for the thirty-nine weeks ended September 28, 2024 and for the thirty-nine weeks ended September 30, 2023.

Previous wording

Selling expenses decreased by $128,000, or 22%, to $464,000 for the twenty-six weeks ended June 29, 2024 from $592,000 for the twenty-six weeks ended July 1, 2023. The decrease was primarily attributable to decreases in meetings and convention expense of $44,000, commission expense of $76,000, bad debt expense of $15,000, and sample shipping expenses of $23,000, which were partially offset by an increase in outside warehouse rental expenses of $20,000 and payroll expenses of $10,000. The decrease in commission expense is due to the decrease in sales and a reduction to the commission rate we pay to our brokers from 5% to 4% for the twenty-six weeks ended June 29, 2024 compared with the twenty-six weeks ended July 1, 2023.

Current wording

Selling and warehouse expenses decreased by $131,000, or 16%, to $671,000 for the thirty-nine weeks ended September 28, 2024 from $802,000 for the thirty-nine weeks ended September 30, 2023. The decrease was primarily attributable to decreases in meetings and convention expense of $55,000, commission expense of $86,000, bad debt expense of $15,000, and sample shipping expenses of $26,000, which were partially offset by an increase in outside warehouse rental expenses of $25,000, payroll expenses of $15,000, and travel, entertainment, and auto expenses of $11,000. The decrease in commission expense is due to the decrease in sales and a reduction to the commission rate we pay to our brokers from 5% to 4% for the thirty-nine weeks ended September 28, 2024 compared with the thirty-nine weeks ended September 30, 2023.

Previous wording

Marketing expenses increased by $29,000, or 16%, to $213,000 for the twenty-six weeks ended June 29, 2024 from $184,000 for the twenty-six weeks ended July 1, 2023. The increase was primarily due to increases in promotions expense of $37,000 and advertising expense of $7,000, which were partially offset by a decrease in point of sale material expense of $14,000.

Current wording

Marketing expenses increased slightly by $10,000, or 3%, to $297,000 for the thirty-nine weeks ended September 28, 2024 from $287,000 for the thirty-nine weeks ended September 30, 2023. The increase was primarily due to increases in promotions expense of $36,000, point of sale material expense of $16,000 and artwork and plate expense of $5,000, which were partially offset by decreases in advertising expense of $11,000, and public relations expense of $5,000.

Previous wording

Product development costs, which consist principally of salary expenses and laboratory costs, were $64,000 for the twenty-six weeks ended June 29, 2024 and $83,000 for the twenty-six weeks ended July 1, 2023. The decrease was due primarily to a decrease in professional fees and outside services expenses of $15,000 and lab costs and supplies expense of $6,000.

Current wording

Product development costs were $92,000 for the thirty-nine weeks ended September 28, 2024 and $111,000 for the thirty-nine weeks ended September 30, 2023. The decrease was due primarily to a decrease in professional fees and outside services expenses of $11,000 and lab costs and supplies expense of $8,000.

Previous wording

General and administrative expenses increased by 6%, or $38,000, to $724,000 for the twenty-six weeks ended June 29, 2024 from $686,000 for the twenty-six weeks ended July 1, 2023. This increase was primarily due to increases in payroll expense of $20,000, professional fees and outside services expense of $12,000, office supply expense of $7,000, equipment repairs expense of $5,000, and general insurance expense of $6,000, which were partially offset by decreases in public relations expense of $21,000. Our increase in payroll expense was due primarily to an increase in group insurance expense.

Current wording

General and administrative expenses increased by 8%, or $79,000, to $1,097,000 for the thirty-nine weeks ended September 28, 2024 from $1,018,000 for the thirty-nine weeks ended September 30, 2023. This increase was primarily due to increases in payroll expense of $28,000, security and fire alarm expense of $9,000, office supply expense of $19,000, equipment repairs expense of $5,000, telephone expense of $5,000, building rental expense of $27,000, and general insurance expense of $12,000, which were partially offset by decreases in public relations expense of $19,000, IT expense of $9,000, and stock option expense of $7,000. Our increase in payroll expense was due primarily to an increase in group insurance expense.

Previous wording

Income tax expense was $5,000 for the twenty-six weeks ended June 29, 2024 and $146,000 for the thirteen weeks ended July 1, 2023.

Current wording

Income tax expense was $5,000 for the thirty-nine weeks ended September 28, 2024 and $148,000 for the thirty-nine weeks ended September 30, 2023.

Previous wording

As of June 29, 2024, we had approximately $489,000 in cash and our working capital was approximately $3,105,000, compared with approximately $837,000 in cash and working capital of $3,440,000 at December 30, 2023.

Current wording

As of September 28, 2024, we had approximately $176,000 in cash and our working capital was approximately $2,961,000, compared with approximately $837,000 in cash and working capital of $3,440,000 at December 30, 2023.

Previous wording

Net cash used in operating activities for the twenty-six weeks ended June 29, 2024 was $344,000 compared to $485,000 used in operating activities for the twenty-six weeks ended July 1, 2023. Net cash used in operating activities for the twenty-six weeks ended June 29, 2024 was primarily a result of the net loss of $335,000 and decreases in current assets other than cash of $313,000, primarily inventory, which were offset by decreases in current liabilities, primarily accounts payable and accrued expenses, of $383,000.

Current wording

Net cash used in operating activities for the thirty-nine weeks ended September 28, 2024 was $661,000 compared to $345,000 used in operating activities for the thirty-nine weeks ended September 30, 2023. Net cash used in operating activities for the thirty-nine weeks ended September 28, 2024 was primarily a result of the net loss of $528,000 and decreases in current liabilities of $501,000, which were partially offset by decreases in inventories of $345,000.