TOFUTTI BRANDS INC
For the period ended Dec 28, 2024. Filed Mar 28, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 28, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-30; filed 2024-04-03.
0001493152-24-012992
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-28; filed 2025-03-28.
0001641172-25-001291
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 57 previous paragraphs and 59 current paragraphs.
30 unchanged; 21 reworded; 8 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
Recent Accounting Pronouncements and Adoption
Current report
In November 2023, the FASB issued ASU 2023-07,Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for annual reporting periods beginning after December 15, 2023, and interim periods beginning after December 15, 2024. The Company’s adoption of this standard effective for the fiscal year ending December 28, 2024 resulted in increased disclosures in the notes to its financial statements.
Current report
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of these standards will have on it financial statements.
Current report
In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740) – Improvements to Income Tax Disclosures (ASU 2023-09). ASU 2023-09 requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The ASU’s amendments are effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its financial statements.
Current report
Our gross profit for the year ended December 28, 2024, decreased by $546,000 to $2,251,000 from $2,797,000 for the fiscal year ended December 30, 2023. Our gross profit percentage for the fiscal year ended December 28, 2024 was 26% compared to 28% for the fiscal year ended December 30, 2023. The decrease in gross profit percentage was caused primarily by the decrease in sales and the increase in the cost of packaging and certain key ingredients. During the fourth quarter of 2024, we instituted a general price increase which became effective at the start of fiscal year 2025.
Current report
General and administrative expenses increased by $50,000, or 4%, to $1,441,000 for the year ended December 28, 2024 from $1,391,000 for the year ended December 30, 2023. The increase was primarily due to increases in office supplies expense of $22,000, travel, entertainment, and auto expense of $15,000, equipment repair expense of $5,000, security and fire alarm expense of $8,000, building rent expense of $26,000, and general insurance expense of $13,000. These increases were partially offset by decreases in professional fees and outside service expenses of $18,000, public relations expense of $21,000 and non-cash stock options expense of $6,000.
Current report
Income taxes for the year ended December 28, 2024 was $251,000 compared to income taxes of $126,000 for the year ended December 30, 2023. The increase was attributed to revaluation of the deferred tax asset.
Current report
As a result of the foregoing we recorded a net loss of $860,000 in the year ended December 28, 2024 as compared with a net loss of $366,000 in the year ended December 30, 2023.
Removed paragraphs (6)
Previous report
Recent Accounting Pronouncements
Previous report
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendments in this Update require a new topic to be added (Topic 326) to the Accounting Standards Codification (“ASC”) and removes the thresholds that entities apply to measure credit losses on financial instruments measured at amortized cost, such as loans, trade receivables, reinsurance recoverables, and off-balance-sheet credit exposures, and held-to-maturity securities. Under current U.S. GAAP, entities generally recognize credit losses when it is probable that the loss has been incurred. The guidance under ASU 2016-13 will remove all current recognition thresholds and will require entities under the new current expected credit loss (“CECL”) model to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that an entity expects to collect over the instrument’s contractual life. The new CECL model is based upon expected losses rather than incurred losses. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption and implementation of this ASU has not had a material effect on our financial statements.
Previous report
We operate on a fiscal year ending on the Saturday closest to December 31. Fiscal years for the financial statements included in this report are the fifty-two week periods ended December 30, 2023 (fiscal 2023) and December 31, 2022 (fiscal 2022).
Previous report
Our gross profit for the year ended December 30, 2023 increased by $455,000 to $2,797,000 from $2,342,000 for the fiscal year ended December 31, 2022. Our gross profit percentage for the fiscal year ended December 30, 2023 was 28% compared to 18% for the fiscal year ended December 31, 2022. The significant increase in our gross profit and gross profit percentage were caused by two factors. First, our sales promotion and allowance expense decreased by $482,000, or 32% to $1,032,000 for fiscal year ended December 30, 2023 from $1,514,000 for the fiscal year ended December 31, 2022 due primarily to the reduction in sales and management’s decision to eliminate certain high cost promotion programs. Sales promotion and allowance expense was 10% of net sales for fiscal 2023 compared with 12% of net sales for fiscal 2022. We anticipate that our sales promotion and allowance expense as a percentage of sales will be consistent in fiscal 2024 to fiscal 2023.
Previous report
General and administrative expenses decreased slightly by $13,000, or 1%, to $1,391,000 for the year ended December 30, 2023 from $1,404,000 for the year ended December 31, 2022. The decrease was primarily due to decreases in professional fees and outside services expense of $7,000, public relations expenses of $19,000, and building maintenance and repair of $17,000, which were partially offset by an increase in payroll expense of $31,000. We anticipate that our total general and administrative expenses for fiscal 2024 will be consistent with those in fiscal 2023.
Previous report
Income tax for the year ended December 30, 2023 was $249,000 compared to income tax benefits of $228,000 for the year ended December 31, 2022.
Reworded paragraphs (21)
Previous wording
We reported a net loss of $366,000 in fiscal 2023, and have not been consistently profitable in recent years. Our cash decreased to $837,000 as of December 30, 2023 from $1,072,000 as of December 31, 2022 and our working capital decreased to $3,440,000 as of December 30, 2023 from $3,625,000 as of December 31, 2022. The lack of sufficient working capital in the future could negatively impact our ability to introduce and adequately promote new products. To the extent that we incur operating losses in the future or are unable to generate free cash flows from our business, we may not have sufficient working capital to fund our operations and will be required to obtain additional financing. Such financing may not be available, or, if available, may not be on terms satisfactory to us. If we are unable to maintain revenues, we may not be able sustain profitable operations in the future or generate positive cash flows from our operations.
Current wording
We reported a net loss of $860,000 in fiscal 2024, and have not been consistently profitable in recent years. Our cash decreased to $462,000 as of December 28, 2024, from $837,000 as of December 30, 2023 and our working capital decreased to $2,893,000 as of December 28, 2024 from $3,440,000 as of December 30, 2023. The lack of sufficient working capital in the future could negatively impact our ability to introduce and adequately promote new products. To the extent that we incur operating losses in the future or are unable to generate free cash flows from our business, we may not have sufficient working capital to fund our operations and will be required to obtain additional financing. Such financing may not be available, or, if available, may not be on terms satisfactory to us. If we are unable to maintain revenues, we may not be able sustain profitable operations in the future or generate positive cash flows from our operations.
Previous wording
A significant portion of our sales are to several key distributors, which are large distribution companies with numerous divisions and subsidiaries who act independently. Such distributors as a group accounted for 37% and 47% of our net sales for the fiscal years ended December 30, 2023 and December 31, 2022, respectively. Although we believe that the business associated with any of our primary distributors can be readily transferred to other distributors or directly to supermarket warehouses, if necessary, no assurance can be given that a change in distributors would not be disruptive to our business, which could have a material adverse effect on our business and results of operations.
Current wording
A significant portion of our sales are to several key distributors, which are large distribution companies with numerous divisions and subsidiaries who act independently. Such distributors as a group accounted for 33% and 37% of our net sales for the fiscal years ended December 28, 2024 and December 30, 2023, respectively. Although we believe that the business associated with any of our primary distributors can be readily transferred to other distributors or directly to supermarket warehouses, if necessary, no assurance can be given that a change in distributors would not be disruptive to our business, which could have a material adverse effect on our business and results of operations.
Previous wording
We depend on a limited number of suppliers for ingredients, packaging materials and the production of our products. We do not produce any of our own products. For the years ended December 30, 2023 and December 31, 2022, we purchased approximately 57% and 49%, respectively, of our finished goods from Franklin Foods, including ourBETTER THAN CREAM CHEESE, WHIPPED BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM,andBETTER THAN RICOTTA products, and purchased approximately 9% and 14%, respectively, of our finished goods from College Circle Creamery (formerly Luke’s Ice Cream), our frozen dessert novelty co-packer. Any disruption in supply could have a material adverse effect on our company.
Current wording
We depend on a limited number of suppliers for ingredients, packaging materials and the production of our products. We do not produce any of our own products. For the years ended December 28, 2024 and December 30, 2023, we purchased approximately 41% and 57%, respectively, of our finished goods from Franklin Foods, including ourBETTER THAN CREAM CHEESE, WHIPPED BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM,andBETTER THAN RICOTTA products, and purchased approximately 13% and 9%, respectively, of our finished goods from College Circle Creamery, our frozen dessert novelty co-packer. Any disruption in supply could have a material adverse effect on our company.
Previous wording
We have a complex network of suppliers, co-manufacturing locations, distribution networks, and information systems that support our ability to consistently provide our products to our customers. Factors that are hard to predict or beyond our control, such as weather, raw material shortages, natural disasters, fires or explosions, terrorism, or health pandemics, such as COVID-19, could damage or disrupt our operations or our suppliers’, co-packers’ or distributors’ operations. These disruptions may require additional resources to restore our supply chain or distribution network. If we cannot respond to disruptions in our operations, whether by finding alternative suppliers or replacing capacity at key manufacturing or distribution locations, or if we are unable to quickly repair damage to our information, production, or supply systems, we may be late in delivering, or be unable to deliver, products to our customers and may also be unable to track orders, inventory, receivables, and payables. If that occurs, our customers’ confidence in us and long-term demand for our products could decline. Any of these events could materially and adversely affect our product sales, financial condition, and operating results.
Current wording
We have a complex network of suppliers, co-manufacturing locations, distribution networks, and information systems that support our ability to consistently provide our products to our customers. Factors that are hard to predict or beyond our control, such as weather, raw material shortages, natural disasters, fires or explosions, terrorism, or health pandemics, could damage or disrupt our operations or our suppliers’, co-packers’ or distributors’ operations. These disruptions may require additional resources to restore our supply chain or distribution network. If we cannot respond to disruptions in our operations, whether by finding alternative suppliers or replacing capacity at key manufacturing or distribution locations, or if we are unable to quickly repair damage to our information, production, or supply systems, we may be late in delivering, or be unable to deliver, products to our customers and may also be unable to track orders, inventory, receivables, and payables. If that occurs, our customers’ confidence in us and long-term demand for our products could decline. Any of these events could materially and adversely affect our product sales, financial condition, and operating results.
Previous wording
Upon the death of Mr. Mintz, our continued success is significantly dependent on the services of Steven Kass (age 72), who is serving as our Chief Executive and Financial Officer. The loss of his services would have a material adverse effect on our business and results of operations.
Current wording
Upon the death of Mr. Mintz in 2021, our continued success is significantly dependent on the services of Steven Kass (age 73), who is serving as our Chief Executive and Financial Officer. The loss of his services would have a material adverse effect on our business and results of operations.
Previous wording
As of fiscal year end December 30, 2023, our ability to handle customer and consumer communications, schedule production and order ingredients necessary for our production has not materially changed. Nor have we experienced any significant change in the timeliness of payments of our invoices. Our cash position as of March 25, 2024 was approximately $561,000.
Current wording
As of fiscal year end December 28, 2024, our ability to handle customer and consumer communications, schedule production and order ingredients necessary for our production has not materially changed. Nor have we experienced any significant change in the timeliness of payments of our invoices. Our cash position as of March 25, 2025 was approximately $626,000.
Previous wording
Net sales for the fiscal year ended December 30, 2023 were $10,068,000, a decrease of $2,759,000 or 22%, from net sales of $12,827,000 for the fiscal year ended December 31, 2022. Sales of our frozen dessert product lines decreased to $1,514,000 in the fiscal year ended December 30, 2023 from $1,876,000 in fiscal 2022. Sales of plant-based cheese products also decreased to $8,564,000 in the fiscal year ended December 30, 2023 from $10,951,000 in the fiscal year ended December 31, 2022. Sales of our plant-based cheese products were significantly negatively impacted by increased competition with the introduction of new vegan cheese products from a number of other companies. Our future product sales of plant-based cheese products could be negatively impacted by the further introduction of other competitive products. Sales of our frozen dessert products have been negatively impacted by the industry-wide decline in ice cream sales.
Current wording
We operate on a fiscal year ending on the Saturday closest to December 31. Net sales for the fiscal year ended December 28, 2024 were $8,820,000, a decrease of $1,248,000 or 12%, from net sales of $10,068,000 for the fiscal year ended December 30, 2023. Sales of plant-based cheese products decreased to $7,428,000 in the fiscal year ended December 28, 2024 from $8,564,000 in the fiscal year ended December 30, 2023. Sales of our plant-based cheese products were significantly negatively impacted by increased competition with the introduction of new vegan cheese products by a number of other companies with significantly greater resources than us. Our future product sales of plant-based cheese products could be negatively impacted by the further introduction of other competitive products. Sales of our frozen dessert product lines decreased to $1,392,000 in the fiscal year ended December 28, 2024 from $1,504,000 in fiscal 2023. Sales of our frozen dessert products, which are part of the ice cream food category, have been negatively impacted by the industry-wide decline in ice cream sales.
Previous wording
Freight out expense decreased significantly by $386,000 to $773,000 for the year ended December 30, 2023 compared with $1,159,000 for the year ended December 31, 2022 due to the significant reduction in sales. Freight out cost as a percentage of sales was 8% and 9% for the years ended December 30, 2023 and December 31, 2022, respectively. Due to the continued high cost of petroleum, we anticipate that our freight out expense will continue at a high percentage of sales in 2024, similar to fiscal year 2023.
Current wording
Freight out expense decreased significantly by $91,000 to $682,000 for the year ended December 28, 2024 compared with $773,000 for the year ended December 30, 2023 due to the significant reduction in sales. Freight out expense as a percentage of sales was 8% in the years ended December 28, 2024 and December 30, 2023.
Previous wording
Selling and warehousing expenses decreased by $93,000, or 8%, to $1,054,000 for the fiscal year ended December 30, 2023 from $1,147,000 for the fiscal year ended December 31, 2022. This decrease was primarily attributable to decreases in outside warehouse rental expense of $23,000, commission expense of $148,000, and bad debt expense of $31,000, which were partially offset by increases in delivery and shipping supply expenses of $20,000 and meeting and convention expense of $87,000. We anticipate that our selling expense will continue at the same level in 2024. The increase in meeting and convention expense was due to the resumption of the Company’s participation in trade and distribution shows. The decrease in commission expense is due to the decrease in sales during the current fiscal year end.
Current wording
Selling and warehousing expenses decreased by $185,000, or 18%, to $869,000 for the fiscal year ended December 28, 2024 from $1,054,000 for the fiscal year ended December 30, 2023. This decrease was primarily attributable to decreases in commission expense of $99,000, bad debt expense of $15,000, meetings and convention expense of $61,000, and delivery and shipping supply expenses of $25,000, which were partially offset by an increase in outside warehouse rental expenses of $20,000. The decrease in commission expenses is due to the decrease in sales.
Previous wording
Marketing expenses decreased in the fiscal year ended December 30, 2023 by $140,000, or 25%, to $424,000 compared to $564,000 in the fiscal period ended December 31, 2022 due to decreases in promotion expense of $41,000, non-capitalizable artwork and plate expense of $96,000, and point of sale material expense of $9,000. We anticipate that our marketing expenses for 2024 will remain consistent with fiscal 2023.
Current wording
Marketing expenses decreased slightly in the fiscal year ended December 28, 2024 by $8,000, or 2%, to $416,000 compared to $424,000 in the fiscal period ended December 30, 2023 due to decreases in advertising expense of $34,000, point of sale material expense of $14,000 and public relations expense of $5,000, which were partially offset by an increase in promotion expense of $33,000 and artwork and gift expense of $11,000.
Previous wording
Research and development expenses increased by $23,000, or 16%, to $166,000 in the fiscal year ended December 30, 2023 from $143,000 in the fiscal year ended December 31, 2022. The increase was primarily attributable to an increase in professional fees and outside services expense of $17,000.
Current wording
Research and development expenses decreased by $34,000, or 20%, to $132,000 in the fiscal year ended December 28, 2024 from $166,000 in the fiscal year ended December 30, 2023. The decrease was primarily attributable to a decrease in professional fees and outside services expense of $24,000.
Previous wording
Overall, total operating expenses decreased by $223,000, or 7%, to $3,035,000 for the year ended December 30, 2023 compared to total operating expenses of $3,258,000 in the year ended December 31, 2022. We expect our operating expenses for fiscal 2024 to consistent with those of fiscal 2023.
Current wording
Overall, total operating expenses decreased by $177,000, or 6%, to $2,858,000 for the year ended December 28, 2024 compared to total operating expenses of $3,035,000 in the year ended December 30, 2023. We expect our operating expenses in fiscal 2025 will be consistent with those of fiscal 2024.
Previous wording
As a result of the foregoing we recorded an operating loss of $238,000 in the year ended December 30, 2023 as compared with operating loss of $916,000 in the year ended December 31, 2022.
Current wording
As a result of the foregoing we recorded an operating loss of $607,000 in the year ended December 28, 2024 as compared with an operating loss of $238,000 in the year ended December 30, 2023.
Previous wording
Income before income taxes was $201,000 in the year ended December 30, 2023 as compared with loss before income taxes of $753,000 in the year ended December 31, 2022.
Current wording
Loss before income taxes for the year ended December 28, 2024 was $609,000 compared to loss before income taxes of $240,000 for the year ended December 30, 2023.
Previous wording
At December 30, 2023, we had approximately $837,000 in cash, and our working capital was $3,440,000 as compared to $1,072,000 and $3,625,000 at December 31, 2022. We principally operate our business on the cash flows from our operations and currently have no borrowings.
Current wording
At December 28, 2024, we had approximately $462,000 in cash, and our working capital was $2,893,000 as compared to $837,000 and $3,440,000 at December 30, 2023. We principally operate our business on the cash flows from our operations and currently have no borrowings.
Previous wording
Cash used in operating activities for the fiscal year ended December 30, 2023 was $225,000 compared to $616,000 used in operating activities for the fiscal year ended December 31, 2022. Cash used in operating activities was primarily due to the net loss of $366,000 and a decrease in current liabilities of $502,000, partially offset by a decrease in accounts receivable of $447,000 and a decrease in deferred tax assets of $121,000.
Current wording
Cash used in operating activities for the fiscal year ended December 28, 2024 was $358,000 compared to $225,000 used in operating activities for the fiscal year ended December 30, 2023. Cash used in operating activities was primarily due to the net loss of $860,000, an increase in accounts receivable of $176,000 and a decrease in current liabilities of $245,000, partially offset by a decrease in inventory of $596,000.
Previous wording
Cash used in financing activities was $10,000 for the fiscal years ended December 30, 2023, and December 31, 2022. Cash used in financing activities was due to payments made on our financing lease.
Current wording
Cash used in financing activities was $17,000 for the fiscal year ended December 28, 2024, and $10,000 in the fiscal year ended December 30, 2023. Cash used in financing activities was due to payments made on our finance lease.
Previous wording
As a result of the foregoing, our cash decreased to $837,000 at December 30, 2023 from $1,072,000 at December 31, 2022.
Current wording
As a result of the foregoing, our cash decreased to $462,000 at December 28, 2024 from $837,000 at December 30, 2023.
Previous wording
We believe our existing cash on hand at December 30, 2023, our existing working capital, and our expected cash flows from operations will be sufficient to support our operating and capital requirements for at least the next twelve months dating from the issuance of the financial statements.
Current wording
We believe our existing cash on hand and working capital as of December 28, 2024, and our expected cash flows from operations will be sufficient to support our operating and capital requirements for at least the next twelve months.
Previous wording
We had no material contractual obligations at December 30, 2023.
Current wording
We had no material contractual obligations at December 28, 2024 other than our lease in Edison, New Jersey.
Previous wording
When available, we will invest our excess cash, should there be any, in highly rated money market funds which are subject to changes in short-term interest rates. We do not believe that our foreign currency exposure is significant as our export sales are transacted in U.S. dollars. We did not enter into any foreign exchange contracts in the year ended December 30, 2023.
Current wording
When available, we will invest our excess cash, should there be any, in highly rated money market funds which are subject to changes in short-term interest rates. We do not believe that our foreign currency exposure is significant as all our export sales are transacted in U.S. dollars. We did not enter into any foreign exchange contracts in the year ended December 28, 2024.