Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

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

Indicate by check mark whether the registrant has submitted electronically 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 ~~[ ]~~☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ~~[X]~~☒

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.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ~~[ ]~~☐

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

The aggregate market value of the voting stock held by non-affiliates of the Registrant as of the most recently completed second fiscal quarter: ~~$3,632,000~~$7,347,419

As of April ~~19, 2021,~~1, 2022, the issuer had 5,153,706 shares of common stock, par value $0.01, outstanding.

We are engaged in the development, production and marketing of ~~TOFUTTI®~~TOFUTTI^® brand dairy free, vegan frozen desserts, cheeses and other food products. TOFUTTI products are soy and other vegetable protein-based, vegan, dairy free products which contain no butterfat, cholesterol or lactose.

As used in this annual report, the terms “we,” “us” and “our” mean Tofutti Brands Inc., unless otherwise indicated. Statements made in this annual report concerning the contents of any contract, agreement or other document are summaries of such contracts, agreements or documents and are not complete descriptions of all of their terms. If we filed any of these documents as an exhibit to this annual report or to any previous filling with the Securities and Exchange Commission, you may read the document itself for a complete recitation of its terms.

Except for the historical information contained in this annual report, the statements contained in this annual report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act, as amended, and the Private Securities Litigation Reform Act of 1995, as amended, with respect to our business, financial condition and results of operations. Such forward-looking statements reflect our current view with respect to future events and financial results. We urge you to consider that statements which use the terms “anticipate,” “believe,” “do not believe,” “expect,” “plan,” “intend,” “estimate,” “anticipate” and similar expressions are intended to identify forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements expressed or implied by such forward-looking statements. Such forward-looking statements are also included in Item 1. “Business” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements to reflect new information, future events or circumstances, or otherwise after the date hereof. We have attempted to identify significant uncertainties and other factors affecting forward-looking statements in the Risk Factors section that appears in Item 1A. “Risk Factors.”

We operate on a fiscal year ending on the Saturday closest to December 31. Fiscal years for the financial statements included herein are the fifty-two week period ended January 1, 2022 (fiscal 2021) and the fifty-three week period ended January 2, 2021 (fiscal 2020) ~~and the fifty-two week period ended December 28, 2019 (fiscal 2019)~~.

We are engaged in the development, production and marketing of ~~TOFUTTI®~~TOFUTTI^® brand dairy free, vegan frozen ~~desserts, cheeses~~dessert and ~~other food~~cheese products. All TOFUTTI products are vegan, dairy free, ~~products which~~ contain no butterfat ~~cholesterol~~ or ~~lactose~~cholesterol and use soy and other vegetable proteins. Our products are 100% dairy free yet offer the same texture and full-bodied taste as their dairy counterparts. Our products are also free of cholesterol and derive their fat from corn and palm oils, each naturally lower in saturated fat than dairy products. ~~With the exception of Mintz’s Blintzes, all~~All of our products are completely vegan and our vegan cheese products are gluten free as well. In addition, all of our products are certified kosher-parve and all of our vegan cheese products are also certified halal.

We were organized under the laws of the State of New York in 1981 and became a Delaware corporation in 1984. Our registered office and principal executive offices are located at 50 Jackson Drive, Cranford, New Jersey 07016, our telephone number is 908-272-2400. Our internet website address is www.tofutti.com. The information on our website is not incorporated by reference into this annual report.

Our objective is to be a leading provider of dairy free, vegan food products, primarily cheese products and frozen desserts, to supermarkets, health food stores, and food service customers in the United States and abroad. We intend to continue to introduce new products that offer good taste while containing no butterfat, cholesterol or dairy to these markets.

We focus our marketing efforts ~~toward~~towards those consumers who find our products essential to their everyday diets because of health, lifestyle or religious reasons. As part of this strategy, we seek to achieve brand awareness through product innovation, eye-catching packaging, trade advertising, and a strong word-of-mouth marketing program. We believe that our ability to offer a wide range of dairy free, vegan, and kosher-parve products will continue to provide us with a competitive advantage.

We offer a broad product line of vegan, dairy free products that use soy or other vegetable-based proteins. Our dairy free products include cheeses, frozen desserts, ~~cheeses~~ and ~~spreads, and other frozen food products.~~spreads.

TOFUTTI products are sold and distributed across the United States and internationally, and can be found in gourmet specialty shops, kosher supermarkets, natural/health food stores, and national and regional supermarket chains. ~~All of our~~Our products are sold by independent unaffiliated food brokers to distributors and sometimes on a direct basis to retail chain accounts or to warehouse accounts that directly service chain accounts. Such direct accounts include Safeway/Albertsons, ~~Kroger,~~ Fred Meyer, DeMoulas/Market Basket, and Wakefern Food Corp. Food brokers act as our agents within designated territories or for specific accounts and receive commissions, which average 5% of net collected sales. Certain key domestic, kosher, and food service accounts and all international accounts are handled directly by us. Our products are also sold in approximately ~~twenty~~fifteen other countries.

We currently sell our dairy-free vegan cheese products and frozen dessert products in most major markets in the United States, including Atlanta, Baltimore, Boston, Charlotte, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Houston, Jacksonville, Kansas City, Los Angeles, Miami, Milwaukee, Minneapolis, Nashville, New York, Orlando, Philadelphia, Phoenix, Portland, Richmond, Salt Lake City, San Diego, San Francisco, Seattle, St. Louis, Tampa and Washington, D.C.

We currently distribute most of our products by allowing customers to pick-up products from outside storage facilities. We do not own, lease or otherwise maintain any vehicles involved in the shipping of our products. From our co-packing facilities, we either ship direct to our customers or we ship to outside public storage facilities from where our customers are able to pick up their orders. Use of outside storage facilities in several key locations in the United States allows us to provide our customers with products in a timely fashion. Currently, we use two warehouses in New Jersey, one for our frozen dessert ~~and food products~~ and one for our cheese products, and one warehouse in northern California for both categories of products.

In addition to ice cream and cheese distributors, our products are handled by most major national and regional natural and/or gourmet specialty distributors in the country. We distribute our products through ~~thirty-nine (39)~~approximately forty (40) distributors to the national health food market.

Our sales to health food accounts in fiscal ~~2020 increased~~2021 decreased to $6,404,000, or 51% of total sales, from approximately $7,643,000, or 55% of total sales ~~from approximately $6,436,000, or 49% of total sales~~ in fiscal ~~2019, due to the increase in both frozen dessert and cheese product sales to health food accounts.~~2020. Our sales to the kosher market increased to $789,000, or 6% of sales, in fiscal 2021, from sales of approximately to $678,000, or 6% of sales, in fiscal 2020, from sales of approximately to $651,000, or 5% of sales, in fiscal 2019. The increase in our health food account sales was also due to increased public awareness of healthier alternative vegan products.2020.

The following table presents the geographical breakdown of our sales in our largest domestic markets for the last two fiscal years.

During fiscal ~~2020,~~2021, we shipped our products to distributors in Australia, Canada, Egypt, Estonia, the UK, France, Israel, Mexico, and Panama. Sales to foreign distributors ~~decreased~~increased to $1,594,000, or 13% of sales, in fiscal 2021, from $1,470,000, or 11% of sales, in fiscal ~~2020, from $1,725,000, or 13% of sales, in fiscal 2019. During fiscal 2020, our foreign~~2020. Our export business ~~was~~is still being negatively impacted by a very strong U.S. dollar which made our products more expensive in local currency. Our export business to the United Kingdom and the rest of Europe was also severely negatively impacted by still unresolved Brexit issues and the bankruptcy in December 2019 of our long-term UK ~~distributor.~~distributor and various COVID-19 supply chain issues in certain foreign countries. We conduct all of our foreign business in U.S. dollars. Accordingly, our future export sales could be adversely affected by an increase in the value of the U.S. dollar against local currencies, which could increase the local currency price of our products.

TOFUTTI frozen desserts compete with all forms of ice cream products, yogurt-based desserts and other plant-based frozen desserts. We believe that we are a leader in the dairy free frozen dessert product market and offer the most complete line of dairy free frozen dessert products. Other plant-based frozen dessert products are presently being sold throughout the United States by established ~~manufacturers and~~ distributors of ice cream and other frozen dessert products. Similarly, our cheese products compete with all types of cheese products, both vegan and dairy. The ~~ice cream~~cheese and frozen dessert ~~industry is~~categories are highly competitive and most companies with whom we compete are substantially larger and have significantly greater resources than us. ~~All of our~~Our products face substantial competition from dairy free and dairy products marketed by companies with significantly greater resources than we have. ~~Similar to our frozen desserts, all our vegan cheese products face stiff competition within their category from both dairy cheese products and plant-based cheese products.~~

In most product categories, we compete not only with widely advertised branded products, but also with generic and private label products that are generally sold at lower prices. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, and the ability to identify and satisfy consumer preferences. Our market share and ability to grow our revenue could also be adversely impacted if we are not successful in introducing innovative products in response to changing consumer demands or by new product introductions of our competitors. If we are unable to build and sustain brand equity by offering recognizably superior product quality, we may be unable to maintain premium pricing over competitive products. We believe that we are able to compete effectively due to our ability to offer an array of vegan cheese products, and dairy free frozen desserts ~~and other food products~~ that contain no butterfat, cholesterol or ~~lactose and are 100%~~ dairy, ~~free,~~ yet offer the same texture and full-bodied taste as their dairy counterparts.

All of our current products were developed by us in our own laboratory. In fiscal ~~2020~~2021 and ~~2019,~~2020, our product development expenses were approximately $124,000 and $240,000, ~~and $324,000,~~ respectively. ~~Product development expenses in 2020 and 2019 did not include Mr. Mintz’s salary.~~ Our product development expenses decreased sharply in 2020, and again in 2021, as a result of precautions taken to prevent the spread of ~~COVID-19.~~COVID-19 within our company. We do not intend to reopen the laboratory to its previous level of operations. However, all required quality control requirements are still being performed as needed. All product development costs are expensed as incurred and are recorded as operating expenses in our financial statements.

We believe that all of our products are produced under the strictest quality control procedures that are available in each manufacturing facility used by us. These quality control procedures include, but are not limited to, the cleaning processes utilized prior to running our products; spot line inspections during production; in-house laboratory testing as required by government agencies; supervision of all our production by our kosher supervisory service; supervision of all our vegan cheese production by our halal supervisory service; and random testing by outside independent laboratories to ensure that our internal quality control procedures, guidelines, ingredients, and nutritional reporting requirements are being properly followed.

All of our products are produced by co-packers to whom we supply certain key ingredients and packaging for the manufacturing processes. Our co-packing facilities are fully licensed and must comply with all state and federal laws and regulations. Additionally, our production facilities are certified as SQF facilities. The Safe Quality Food (SQF) Program is a rigorous and credible safety and quality program of on-going audits and certifications that is being required by more and more food distributors and retailers before they will accept a new food product into their facility or store. We currently utilize ~~five~~four co-packers, all of whom were able to continue the production of our products during the course of the COVID-19 pandemic. Our co-packers manufacture and package our products and, in certain instances, warehouse such products pending shipment. For certain key product categories, such as dairy free vegan cheeses and dairy free frozen desserts, we have more than one co-packer. In selecting an appropriate co-packer, we take into account all of the preceding factors, plus cost considerations such as product processing fees and freight and warehouse expenses.

For the fiscal years ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ we purchased approximately ~~40%~~50% and ~~52%~~40% of our finished goods, respectively, from Franklin Foods, our co-packer for our BETTER THAN CREAM CHEESE, WHIPPED BETTER THAN CREAM CHEESE, SOUR SUPREME, and BETTER THAN RICOTTA products, and ~~16%~~11% and ~~19%~~16%, respectively, of our finished goods from Luke’s Ice Cream, our frozen dessert novelty co-packer.

We do not have any written production agreements with our co-packers and do not anticipate that we would encounter any material difficulty in obtaining alternative production sources, at a comparable cost, if one or all of our co-packers decide to terminate their relationships with us. Nevertheless, any disruption in supply could have a material adverse effect on our company.

In order to protect our formulas, we have entered into confidentiality arrangements with our co-packers and some of our co-packers’ employees. All of our employees, including officers, sign similar confidentiality agreements. There can be no assurance that such confidentiality arrangements can or will be maintained, or that our trade secrets, know-how and marketing ability cannot be obtained by others, or that others do not now possess similar or even more effective capabilities.

KOF-K Kosher Supervision, or KOF-K, of Teaneck, New Jersey provides us with our kosher certification service. Before KOF-K will permit its certification, evidenced by its symbol, to be placed on a product, KOF-K must approve both the ingredients contained in the product and the facility processing the product. Approval of the manufacturing facilities we use include periodic inspections, and in most cases, on-site supervision of actual production. We pay a yearly renewal fee for certification and ongoing fees throughout the year for supervisory services for each production run. We believe that our ability to successfully market and distribute our products is dependent upon our continued compliance with the requirements of rabbinical certification. All TOFUTTI^® products meet the requirements for certification as kosher-parve.

In early 2013, we completed a halal certification process at Franklin Foods, the co-packer of our BETTER THAN CREAM CHEESE, WHIPPED BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM and BETTER THAN RICOTTA products and at Whitehall Specialties, the co-packer of our vegan cheese ~~slices and bulk~~ ~~BETTER THAN MOZZARELLA~~ ~~products.~~slices. This certification is provided by the Islamic Food and Nutrition Council of America (IFANCA) of Park Ridge, Illinois and currently applies only to those products manufactured by Franklin Foods and Whitehall Specialties. Before IFANCA will permit its certification to be placed on a product, which is evidenced by its symbol, IFANCA must approve both the ingredients contained in the product and the facility processing the product. Approval of the manufacturing facilities we use includes periodic inspections. There is a yearly renewal fee for certification. All TOFUTTI^® vegan cheese products meet the requirements for certification as halal.

We have registered our trademark, ~~TOFUTTI®~~TOFUTTI^®, and other trademarks for our frozen desserts and other products in the United States and approximately thirty-two foreign countries. We believe our trademarks are an important means of establishing consumer recognition for our products and we will vigorously oppose any unauthorized use of our trademarks. We are not currently involved in any trademark litigation.

Although we believe that our formulas and processes are proprietary, we have not sought patent protection for such technology. Instead, we are relying on the complexity of our technology, on trade secrecy laws and on confidentiality agreements. We believe that our technology has been independently developed and does not infringe the patents of others.

Companies engaged in the manufacture, packaging and distribution of food items are subject to extensive regulation by various government agencies which, pursuant to statutes, rules, and regulations, prescribe quality, purity, manufacturing and labeling requirements. Food products are often subject to “standard of identity” requirements, which are promulgated at either the Federal or state level to determine the permissible qualitative and quantitative ingredient content of food. To the extent that any product that we seek to market does not conform to an applicable standard, special permission to market such a product is required.

Our United States product labels are subject to regulation by the United States Food and Drug Administration, or the FDA. Such regulations include standards for product descriptions, nutritional claims, label format, minimum type sizes, content and location of nutritional information panels, nutritional comparisons, and ingredient content panels. Our labels, ingredients and manufacturing processes are subject to inspection by the FDA. We believe that we are in compliance with current labeling requirements and conduct periodic reviews to make certain that such compliance is on-going.

The Food, Drug and Cosmetic Act, the Food Safety Modernization Act and rules and regulations promulgated by the FDA thereunder, contain no specific Federal standard of identity which is applicable to our products. Our frozen dessert products meet the New York State standard of identity for “parevine,” which has been adopted by at least eight other states. Many states require registration and label review before food products can be sold. While approval in one jurisdiction generally indicates the products will meet with approval in other jurisdictions, there is no assurance that approval from other jurisdictions will be forthcoming. Additionally, many of our major customers now require that any food products that they purchase be produced in Safe Quality Food, or SQF, manufacturing facilities. The SQF program is recognized by the Global Food Safety Initiative and provides a rigorous system to manage food safety risks and provide safe products use by companies in the food industry. All of our current co-packers are SQF certified or have completed the certification process and are awaiting final approval by the certifying organization.

Food manufacturing facilities are subject to inspections by various safety, health and environmental regulatory authorities. A finding of a failure to comply with one or more regulatory requirements can result in the imposition of sanctions including the closing of all or a portion of a company’s facilities, subject to a period during which the company can remedy the alleged violations. Our Cranford, New Jersey facility is subject to inspection by the New Jersey-Kosher Enforcement Bureau and the New Jersey Environmental Health Services. We believe that we, our distributors and our co-packers are in compliance in all material respects with governmental regulations regarding our current products and have obtained the material governmental permits, licenses, qualifications and approvals required for our operations. Our compliance with Federal, state and local environmental laws has not materially affected us either economically or in the manner in which we conduct our business. However, there can be no assurance that our company, our distributors and our co-packers will be able to comply with such laws and regulations in the future or that new governmental laws and regulations will not be introduced that could prevent or temporarily inhibit the development, distribution and sale of our products to consumers.

New government laws and regulations may be introduced in the future that could result in additional compliance costs, seizures, confiscations, recalls or monetary fines, any of which could prevent or inhibit the development, distribution and sale of our products. If we fail to comply with applicable laws and regulations, we may be subject to civil remedies, including fines, injunctions, recalls or seizures, as well as potential criminal sanctions, which could have a material adverse effect on our business, results of operations and financial condition.

We have successfully operated our business with a limited number of employees for over a decade. We employed ~~eight~~five persons as of January 1, 2022. In fiscal 2020 we employed six persons on a full-time ~~basis until March 2020 due to the pandemic, after which we employed six persons. In fiscal 2019 we employed eight persons on a full-time~~ basis. ~~As of March 31, 2021, we employed four persons.~~ We consider our employees to be among the most valuable assets of our company.

We believe that an engaged workforce is key to maintaining our ability to innovate. During fiscal ~~2020,~~2021, we took the necessary precautions in response to the recent COVID-19 outbreak, including offering our employees flexibility to work from home and mandatory social distancing requirements in the workplace. We are committed to providing a safe work environment for our employees in compliance with applicable regulations.

Investing in our common stock involves a high degree of risk and uncertainty. You should carefully consider the risks and uncertainties described below before investing in our common stock. If any of the following risks actually occur, our business prospects, financial condition and results of operations could be harmed. In that case, the value of our common stock could decline, and you could lose all or part of your investment.

David Mintz, our founder, Chairman of the Board, Chief Executive Officer and the developer of all of our products died in February 2021 and we may be unable to adequately replace him.

On February 24, 2021, David Mintz, our founder, Chief Executive Officer and Chairman of the Board ~~Chief Executive Officer and the developer~~ of ~~all of our products,~~Directors, passed away. ~~Our CFO,~~ Steven Kass, ~~has been~~Chief Financial Officer, was appointed ~~interim CEO. While we intend to appoint a~~CEO by our Board of Directors and was confirmed as permanent ~~successor to Mr. Mintz in his executive roles, we~~CEO by the Board on April 27, 2021. We may be unable to find someone who will be able to succeed ~~him~~Mr. Mintz in his role as our head of research and development. The loss of his services could have a material adverse effect on our business and results of operations.

We ~~may not be able to maintain profitable operations in~~depend on a limited number of suppliers for ingredients, packaging materials and the ~~future. We may not have sufficient working capital to fund~~production of our ~~operations in the future.~~products.

The lack of sufficient working capital in the past has negatively impacted our ability to introduce and adequately promote new products. As of January 2, 2021, we had $1,459,000 in cash and our working capital was $4,639,000. Our cash increased by $945,000 from December 28, 2019. 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 adequate funds are not available to us, our business, and results of operations and financial condition will be adversely affected.

~~Interruptions in the supply of products from our co-packers and suppliers could adversely affect our revenues.~~

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 fiscal years ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ we purchased approximately ~~40%~~50% and ~~52%~~40%, respectively, of our finished goods from Franklin Foods, including our BETTER THAN CREAM CHEESE, WHIPPED BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM, and BETTER THAN RICOTTA products, and purchased approximately ~~16%~~11% and ~~19%~~16%, respectively, of our finished goods from Luke’s Ice Cream, our frozen dessert novelty co-packer. Any disruption in supply could have a material adverse effect on our company.

We have little control over the suppliers of ingredients to our co-packers. Disruptions in these relationships may reduce our sales and revenues. Overall difficulty of suppliers meeting product demand, interruptions in the supply chain, obstacles or delays in the process of renegotiating or renewing agreements with preferred suppliers, financial difficulties experienced by suppliers, or the deficiency, lack, or poor quality of alternative suppliers could adversely impact our sales which, in turn, would adversely affect our business and operating results. We believe that, if necessary, we could obtain available alternative sources of supply for each of our products. Depending on the product, that might entail using more than one source of supply.

Our operations may be adversely affected by failure to maintain or renegotiate distribution, supply or manufacturing agreements on favorable terms.

We have a number of distribution, supply and co-packing agreements for our ~~supplies~~suppliers and products. These agreements vary depending on the particular ~~supply~~supplier and/or product. There can be no assurance that we will be able to renew these agreements on favorable terms or that these agreements will not be terminated. Termination of these agreements or failure to renew these agreements on favorable terms could have a negative effect on our results of operations and financial condition.

We may not be able to maintain profitable operations in the future. We may not have sufficient working capital to fund our operations in the future.

The lack of sufficient working capital in the past has negatively impacted our ability to introduce and adequately promote new products. As of January 1, 2022, we had $1,698,000 in cash and our working capital was $4,326,000. 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 adequate funds are not available to us, our business, and results of operations and financial condition will be adversely affected.

Our operating costs are subject to fluctuations which could affect our business results.

The principal raw materials that we use are commodities that experience price volatility caused by external conditions such as weather, product scarcity, limited sources of supply, commodity market fluctuations, currency fluctuations, changes in governmental agricultural and energy policies and regulations, and more recently by potential COVID-19 supply chain disruption. Commodity price changes may result in unexpected increases in raw material, packaging, and energy costs. Therefore, our success is dependent, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings projects and sourcing decisions. In the manufacturing and general overhead areas, we need to maintain key manufacturing and supply arrangements, including any key sole supplier and manufacturing plant arrangements.

Our business and results of operations may be negatively impacted by the spread of COVID-19.

~~In December2019,~~An outbreak of infectious respiratory illness caused by a novel ~~strain~~coronavirus known as COVID-19 was first detected in China in December 2019 and has now spread globally. This outbreak has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, prolonged quarantines, order cancellations, supply chain disruptions, increased costs for raw materials, and lower consumer demand, and other significant economic impacts, as well as general concern and uncertainty.

The current severity of the ~~Coronavirus, COVID-19, was reported to~~pandemic and the uncertainty regarding the length of its effects could have ~~surfaced in Wuhan, China, which has evolved into a pandemic. This situation and preventative or protective actions that governments have taken to counter~~negative consequences for our company. To date, the effects of the pandemic have ~~resulted in~~affected certain aspects of our operations. All of our co-packing facilities are currently operating normally, and the pandemic has not constrained any of our production requirements. The cost of certain key ingredients and packaging has increased substantially due to short-term supply issues related to COVID-19. We continue to be able to schedule trucks for delivery and a ~~period~~large majority of ~~business disruption, including delays in shipments of products~~our customers are still operating and raw materials. COVID-19 has spread to over 180 countries, including the United States, and efforts to contain the spread of COVID-19 have intensified. To the extent the impact of COVID-19 continues or worsens, the demand forordering our products ~~may be negatively impacted,~~as before. Additionally, our freight costs have increased due to a driver shortage caused by COVID-19. In response to these cost increases and ~~we and our co-packers may have difficulty obtaining~~ the ~~materials necessary~~potential for ~~the production~~additional cost increases affecting various aspects of our ~~products. In addition,~~operations, we have initiated a series of sales price increases commencing in the ~~production facilities~~fourth quarter of 2021 and continuing into the first quarter of 2022 to help offset these cost increases.

The pandemic has had a negative impact on our sales, specifically with respect to our food service sales to retail outlets, such as restaurants and small food shops, which account for a small part of our ~~co-packers may be closed for sustained periods~~total business and with respect to our inability to regain our level of ~~time and industry-wide shipment of products may be negatively impacted. COVID-19 has~~export sales to certain foreign jurisdictions. Our marketing efforts have also ~~impacted our sales efforts as our ability to make sales calls is constrained. Our research and development activities were disrupted~~been constrained due to ~~our efforts~~social distancing restrictions and other current government rules and regulations that preclude face to ~~prevent~~face sales meeting, attendance at trade shows and the ~~spread~~initiation of ~~COVID-19 in our research and development facility.~~ new promotions.

Our ability to ~~promote sales through promotional activities~~handle customer and consumer communications, schedule production, and order ingredients necessary for our production has ~~also~~not been ~~constrained as many supermarkets are understaffed, resulting~~materially impacted. Nor have we experienced a significant change in the ~~cancelation~~timeliness of ~~some sales promotional discounts. Trade food shows~~payments of our invoices and ~~sales conferences, major events used to introduce and sell~~ our ~~products, have been postponed indefinitely. The length and severity~~cash position of ~~the pandemic could also affect~~ approximately $1,796,426 as of March 25, 2022 has improved since our ~~regular sales, which could in turn result in reduced sales and a lower gross margin.~~fiscal year end.

We are indebted to the estate of our former Chairman and Chief Executive Officer pursuant to a promissory note which is secured by substantially all of our assets. Any failure to meet our obligations under the note could materially harm our business, financial condition and results of operations.

On January 6, 2016, we received a $500,000 convertible loan from Mr. David Mintz, our Chairman of the Board and Chief Executive Officer, who passed away on February 24, 2021. Initially due on December 31, 2017, the loan has been extended until ~~December 31, 2022.~~ The loan is convertible into our common stock at a conversion price of $1.77 per share, the closing price of our common stock on the OTCQB on the date the promissory note was extended. The loan bears interest at 5% per annum and may be prepaid in whole or in part at any time without premium or penalty.

In the event we are unable to repay the loan, or if there is an event of default, without any action on the part of the estate of Mr. Mintz, the interest rate will increase to 12% per annum and the entire principal and interest balance under the loan, and all of our other obligations under the loan, will be immediately due and payable, and the estate of Mr. Mintz will be entitled to seek and institute any and all available remedies. ~~Any failure to meet our obligations under the note could materially harm our business, financial condition and results of operations.~~

Successful customer relationships are vital to our business and continued growth.

We must maintain strong relationships with our existing customers and build relationships with new customers in order to ensure our products are well presented to our consumers and available for purchase in major markets. The strength of our customer relationships also affects our ability to obtain pricing and competitive trade terms. Failure to maintain strong relationships with customers could negatively impact our terms of business with affected customers and reduce the availability of our products to consumers.

We rely on Steven Kass, our Chief ~~Financial Officer~~Executive and ~~Interim Chief Executive~~Financial Officer to manage our business.

Our future success is significantly dependent on the services of Steven Kass (age ~~69)~~70), our Chief Executive and Financial ~~Officer, who was also appointed as our interim Chief Executive Officer upon the death of Mr. David Mintz.~~Officer. The loss of his services would have a material adverse effect on our business and results of operations.

As a branded goods business, our success depends on the value and relevance of our brand and products to consumers and on our ability to innovate and remain competitive.

Consumer tastes, preferences and behaviors are constantly changing and our ability to anticipate and respond to these changes and to continue to maintain loyalty to our brand and products is vital to our business. If we are unable to innovate effectively, our sales or margins could be materially adversely affected.

The successful introduction of innovative products and packaging on a periodic basis has become increasingly important to our ability to maintain and grow our sales. Accordingly, the continued acceptance of our current products and the future degree of market acceptance of any of products, which may be accompanied by significant promotional expenditures, is likely to have an important impact on our future financial results.

Our suppliers are subject to federal, state and local government regulations that could adversely affect our business and financial position.

Virtually all food manufacturing operations are subject to regulation by various federal, state and local government entities and agencies. As producers of food products for human consumption, our suppliers are subject to stringent production, packaging, quality, labeling and distribution standards, including regulations mandated by the Federal Food, Drug and Cosmetic Act, the Food Safety Modernization Act, the FDA, OSHA, the EPA and the USDA. Future regulation by various federal, state or local governmental entities or agencies could, among other things, increase our suppliers’ cost of production, cause them to incur unexpected expenditures or encumber productivity, any of which may adversely affect our business and financial results.

We may not be able to compete effectively in the highly competitive frozen dessert, dairy free cheese food and health food markets.

The vegan and dairy free frozen dessert, cheese and health food markets are highly competitive. In addition, many of our principal competitors are large, diversified companies with resources significantly greater than ours. We expect strong competition to continue, including competition for adequate distribution and competition for the limited shelf space for the dairy free frozen dessert and dairy free cheese food categories in supermarkets and other retail food outlets. Competition in our product categories is based on product innovation, product quality, price, brand recognition and loyalty, effectiveness of marketing, promotional activity, and the ability to identify and satisfy consumer preferences. Our market share and ability to grow our revenue could also be adversely impacted if we are not successful in introducing innovative products in response to changing consumer demands or by new product introductions of our competitors. If we are unable to build and sustain brand equity by offering recognizably superior product quality, we may be unable to maintain premium pricing over competitive products.

From time to time, we and our customers experience price pressure in some of our markets as a result of competitors’ promotional pricing practices as well as general market conditions. Our failure to match or exceed our competitors’ cost reductions through innovative products and other improvements could weaken our competitive position. Competition is based on product quality, reliability, food safety, distribution effectiveness, brand loyalty, price, effective promotional activities, the ability to identify and satisfy emerging consumer preferences and the ability to provide ancillary support services. We may not be able to compete effectively with these larger, more diversified companies.

A material change in consumer demand for our products could have a significant impact on our business.

We are a consumer food products company and rely on continued demand for our products. To achieve business goals, we must develop and sell products that appeal to consumers. If demand and growth rates fall substantially below expected levels or our market share declines significantly in these businesses, our results could be negatively impacted. This could occur due to unforeseen negative economic or political events or to changes in consumer trends and habits.

Breaches of network or information technology security could have an adverse effect on our business.

We rely heavily on IT systems to manage critical functions such as operations, data storage and retrieval, revenue recognition, budgeting, forecasting, financial reporting and other administrative functions. Cyber-attacks or other breaches of network or information technology, or IT, may cause equipment failures or disrupt our systems and operations. In particular, both unsuccessful and successful cyber-attacks on companies have increased in frequency, scope and potential harm in recent years. A party who is able to compromise the security measures on our networks or the security of our infrastructure could, among other things, misappropriate our proprietary information and the personal information of our customers and employees, cause interruptions or malfunctions in our or our customers’ operations, cause delays or interruptions to our ability to meet customer needs, cause us to breach our legal, regulatory or contractual obligations, create an inability to access or rely upon critical business records or cause other disruptions in our operations. These breaches may result from human errors, equipment failure, or fraud or malice on the part of employees or third parties. Our exposure to cybersecurity threats and negative consequences of cybersecurity breaches will likely increase as we store increasing amounts of customer data. While no actual or attempted attacks have had a material impact on our operations or financial condition, we cannot provide any assurance that our business operations will not be negatively materially affected by such attacks in the future.

We seek to protect against such threats and may be required to expend significant financial resources to alleviate problems caused by physical, electronic, and cyber security breaches. As techniques used to breach security are growing in frequency and sophistication and are generally not recognized until launched against a target, regardless of our protection efforts, we may not be able to implement security measures in a timely manner or, if and when implemented, these measures could be circumvented. Any breaches that may occur could expose us to increased risk of lawsuits, loss of existing or potential future customers, harm to our reputation and increases in our security costs, which could have a material adverse effect on our financial performance and operating results.

In the event of a breach resulting in loss of data, such as personally identifiable information or other such data protected by data privacy or other laws, we may be liable for damages, fines and penalties for such losses under applicable regulatory frameworks despite not handling the data. Furthermore, if a high-profile security breach or cyber-attack occurs with respect to another provider of mission-critical data center facilities, our customers and potential customers may lose trust in the security of these business models generally, which could harm our reputation and brand image as well as our ability to retain existing customers or attract new ones. In addition, the regulatory framework around data custody, data privacy and breaches vary by jurisdiction and is an evolving area of law. We may not be able to limit our liability or damages in the event of such a loss.

While we maintain insurance coverage for some of these events, the potential liabilities associated with these events could exceed the insurance coverage we maintain. A failure to protect the privacy of customer and employee confidential data against breaches of network or IT security could result in damage to our reputation. Any of these occurrences could result in a material adverse effect on our results of operations and financial condition.

~~Our operating costs are subject to fluctuations which could affect our business results.~~

The principal raw materials that we use are commodities that experience price volatility caused by external conditions such as weather, product scarcity, limited sources of supply, commodity market fluctuations, currency fluctuations, and changes in governmental agricultural and energy policies and regulations. Commodity price changes may result in unexpected increases in raw material, packaging, and energy costs. Therefore, our success is dependent, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings projects and sourcing decisions. In the manufacturing and general overhead areas, we need to maintain key manufacturing and supply arrangements, including any key sole supplier and manufacturing plant arrangements.

Economic conditions adversely affecting consumer discretionary spending may negatively impact our business and operating results.

We believe that our revenues and profitability are strongly correlated to consumer discretionary spending, which is influenced by general economic conditions, unemployment levels, and the availability of discretionary income. In an economic downturn or in the event of the continued spread of COVID-19, our business and results of operations could be materially and adversely affected.

Sales to our major customers fluctuate widely from period to period and there is no way to accurately predict that their sales pattern from one year will be repeated in the corresponding period of the next fiscal year. Due to the foregoing factors, in some future quarter our operating results may be below the expectations of investors. In such event, it is likely that the price of our common stock would be materially adversely affected.

Increasing scrutiny and changing expectations from investors, lenders, customers and other market participants with respect to our Environmental, Social and Governance, or ESG, policies may impose additional costs on us or expose us to additional risks.

Companies across all industries are facing increasing scrutiny relating to their ESG policies. Investors, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. The increased focus and activism related to ESG may hinder our access to capital, as investors and lenders may reconsider their capital investment allocation as a result of their assessment of our ESG practices. If we do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition and price our company’s shares could be materially and adversely affected.

We have no registered patents. The absence of patent protection could adversely affect our results of operations.

We rely upon the confidentiality of our formulas and our know-how rather than upon patent protection. There is no assurance that such confidentiality can or will be maintained or that our know-how cannot be obtained by others or that others do not now possess similar or even more effective capabilities. The failure to maintain the confidentiality of our know-how could adversely affect our operating results.

Unanticipated business disruptions could adversely affect our ability to provide our products to our customers.

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 the ~~new~~ coronavirus, COVID-19, ~~that originated in China,~~ could damage or disrupt our operations or our suppliers’, co-manufacturers’ 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.

In fiscal ~~2020,~~2021, approximately ~~11%~~13% of our revenues were from international sales. Although we intend to expand our international operations, we cannot be certain that we will be able to maintain or increase international market demand for our products. To the extent that we cannot do so in a timely manner, our business, operating results and financial condition will be adversely affected. International operations are subject to inherent risks, including the following:

Negative developments in any of these areas in one or more countries could result in a reduction in demand for our products, the cancellation or delay of orders already placed, difficulty in collecting receivables, and a higher cost of doing business, any of which could adversely affect our business, results of operations or financial condition.

Our foreign transactions are always in U.S. dollars. Therefore, our future export sales could be adversely affected by an increase in the value of the U.S. dollar, which could increase the local currency price of our products. There can be no assurance such fluctuations in the future will not materially and adversely affect our revenues from international sales and, consequently, our business, operating results and financial condition.

Incidents involving food-borne illnesses, food tampering, or food contamination involving our products or our supply chain could create negative publicity and significantly harm our operating results.

While we, our ingredient suppliers and our co-packers dedicate substantial resources to food safety matters to enable customers to enjoy safe, quality food products, food safety events, including instances of food-borne illness (such as salmonella or E. Coli), have occurred in the food industry in the past, and could occur in the future. Instances or reports, whether true or not, of food-safety issues, such as food-borne illnesses, food tampering, food contamination or mislabeling, either during the growing, manufacturing, packaging, storing, or preparation of products, have in the past severely injured the reputations of companies in the frozen desert and dairy sectors and could affect us as well. Any report linking us, our suppliers or co-packers to food-borne illnesses or food tampering, contamination, mislabeling, or other food-safety issues could damage the value of our brands immediately and severely hurt sales of our products and possibly lead to product liability claims, litigation (including class actions), or other damages. In addition, food safety incidents, whether or not involving our brands, could result in negative publicity for the industry or market segments in which we operate. Increased use of social media could create and/or amplify the effects of negative publicity. This negative publicity may reduce demand for our products.

Product liability suits, if brought, could have a material adverse effect on our business.

From time to time in the normal course of our business, we become subject to product liability claims. If a product liability claim exceeding our insurance coverage were to be successfully asserted against us, it could harm our business. We cannot assure you that such coverage will be sufficient to insure against claims which may be brought against us, or that we will be able to maintain such insurance or obtain additional insurance covering existing or new products. As a marketer of food products, we are subject to the risk of claims for product liability. We maintain general product liability and umbrella insurance ~~coverage~~coverages and generally require that our co-packers maintain product liability insurance ~~with~~naming us as a co-insured. Similarly, most of our customers require us to name them as additional insureds as well, and in some cases we are required to sign hold harmless and indemnification agreements.

Our failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our financial results and the market price of our common stock.

The Sarbanes-Oxley Act of 2002 imposes certain duties on us and our executives and directors. Our efforts to comply with the requirements of Section 404 have resulted in increased general and administrative expense and a diversion of management time and attention, and we expect these efforts to require the continued commitment of resources. Section 404 of the Sarbanes-Oxley Act requires us to provide management’s annual review and evaluation of our internal control over financial reporting in connection with the filing of our Annual Report on Form 10-K for each fiscal year. Based on our evaluation under the frameworks described above, our ~~interim~~ chief executive ~~officer~~ and ~~chief~~ financial officer concluded that our internal control over financial reporting was ineffective as of January 2, 2021 because of the following material weaknesses in internal controls over financial reporting:

Our failure to maintain effective internal controls over financial reporting could result in investigation or sanctions by regulatory authorities and could have a material adverse effect on our operating results, investor confidence in our reported financial information, and the market price of our common stock.

Our principal shareholder has the ability to control the policies and management of our company.

The estate of our founder, former Chairman of the Board and Chief Executive Officer, David Mintz, holds 2,630,440 shares of common stock representing approximately 51.0% of the outstanding shares. Until such time as the estate is settled and as long as the estate maintains a controlling interest in our company, it will have the ability to exercise a controlling influence over our business and affairs, including any determinations with respect to potential mergers or other business combinations involving us, our acquisition or disposition of assets, our incurrence of indebtedness, our issuance of any additional common shares or other equity securities, our repurchase or redemption of common shares and our payment of dividends. Similarly, as long as the estate of Mr. Mintz has a controlling interest in our company, it will have the power to determine the outcome of matters submitted to a vote of our shareholders, including the power to elect all of the members of our board of directors and prevent an acquisition or any other change in control of us.

Trading on the ~~OTCQB~~OTCQX tier of the OTC Markets may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Since October 24, 2016, our common stock has been quoted on the OTCQB tier of the electronic quotation system operated by OTC Markets. On January 10, 2022, our common stock was upgraded to the OTCQX tier. Trading in stock quoted on the OTC Markets is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Markets is not a stock exchange, and trading of securities on the OTC Markets is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange like the NYSE MKT. Accordingly, shareholders may have difficulty reselling any of their shares and the lack of liquidity may negatively impact our ability to pursue strategic alternatives.

Penny stock rules will limit the ability of our stockholders to sell their stock.

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors.” The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder’s ability to buy and sell our stock.

In addition to the penny stock rules described above, FINRA has adopted rules that require that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative, low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for its shares.

Volatility of the market price of our common stock could adversely affect our shareholders and us.

The market price of our common stock has been subject to fluctuations in the past and may be subject to wide fluctuations in response to numerous factors, including the following:

In addition, in recent years the stock market has been highly volatile. Many of these factors are beyond our control and may materially adversely affect the market price of our ordinary shares, regardless of our performance. In the past, following periods of market volatility, shareholders have often instituted securities class action litigation relating to the stock trading and price volatility of the company in question. If we were involved in any securities litigation, it could result in substantial cost to us to defend and divert resources and the attention of management from our business.

Our policy is to retain earnings, if any, for use in our business and, for this reason, we do not intend to pay cash dividends on our shares of common stock in the foreseeable future.

Our facilities are located in a one-story facility in Cranford, New Jersey. The 6,200 square foot facility houses our administrative offices, a warehouse, walk-in freezer and refrigerator, and a product development laboratory and test kitchen. Our lease agreement expired in 1999, but we continue to occupy the premises under the terms of that agreement, subject to a six-month notification period from us and the landlord with respect to any changes. We currently have no plans to enter into a long-term lease agreement for the facility. Our rent expense was $79,000 in fiscal 2021 and $78,000 in fiscal ~~2020 and $77,000 in fiscal 2019.~~2020. Our management believes that the Cranford facility will continue to satisfy our space requirements for the foreseeable future. We rent warehouse storage space at various outside facilities. Outside warehouse expenses amounted to ~~$467,000~~$459,000 and ~~$458,000~~$467,000 during fiscal 2021 and 2020, ~~and 2019,~~ respectively.

Our common stock was listed on the American Stock Exchange, or the AMEX, on October 29, 1985 and traded on the AMEX or its successor, NYSE MKT, under the symbol TOF, until October 24, 2016 when our common stock began to be quoted on the OTCQB tier of the electronic quotation system operated by OTC Markets under the symbol TOFB. On January 10, 2022, our stock was upgraded to the OTCQX tier.

Each share ranks equally as to dividends, voting rights, participation in assets on winding-up and in all other respects. No shares have been or will be issued subject to call or assessment. There are no preemptive rights, provisions for redemption or for either cancellation or surrender, or provisions for sinking or purchase funds.

~~The closing price for our common stock on April 16, 2021, as reported on the OTCQB, was $2.96.~~

As of ~~April 16, 2021,~~March 25, 2022, there were approximately ~~322~~306 direct holders of record of our common stock.

We have not paid and have no present intention of paying cash dividends on our common stock in the foreseeable future.

Our shareholders adopted our 2014 Equity Incentive Plan (the “Plan”) on June 10, 2014. As of January 2, 2021, we had issued 80,000 non-qualified stock option awards under the Plan, all of which expired in 2020. No option awards were granted in the two fiscal years ended January ~~2, 2021.~~1, 2022.

The Plan provides for grants of various types of awards (“Awards”) that are designed to attract and retain highly qualified employees and directors who will contribute to the success of the company and to provide incentives to participants in this Plan that are linked directly to increases in shareholder value which will, therefore, inure to the benefit of all of our shareholders. The Plan will expire on June 9, 2024. The Plan makes 250,000 shares of our common stock available for Awards under the Plan. The Plan also permits performance-based Awards paid under the Plan to be tax deductible to the company as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Plan is administered in accordance with the requirements of Section 162(m) of the Code (but only to the extent necessary and desirable to qualify Awards under the Plan as “performance-based compensation” under Section 162(m)) and, to the extent applicable, Rule 16b-3 under the Exchange Act (“Rule 16b-3”), by the Board or, at the Board’s sole discretion, by the compensation or any other committee of the Board, as appointed by the Board (the “Administrator”).

Incentive stock options, or ISOs, may be granted only to employees (including officers and directors who are also employees) of the company. Options and stock appreciation rights may be granted only to eligible participants as to whom company shares constitute “service recipient stock,” within the meaning of the regulations under Section 409A of the Code. All other Awards may be granted to employees, officers and directors of the company. An Eligible Participant may be granted more than one Award under the Plan.

The Plan allows us to grant ISOs to our employees and non-statutory stock options, stock appreciation rights, restricted stock, performance grants, stock bonuses and any other types of equity-based awards to our employees, officers and directors. We believe that our ability to grant this broad array of equity incentives is critical to secure, retain and motivate our employees and directors and to respond to market conditions and best practices, while at the same time balancing such issuances and the potential dilution to our stockholders.

No options or stock appreciation rights were granted or exercised in the two fiscal years ended January 1, 2022. There are currently no outstanding stock options or stock appreciation rights.

We did not purchase any shares of our common stock in the thirteen weeks ended January ~~2, 2021~~1, 2022 (the fourth quarter of fiscal ~~2020)~~2021).

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 audited financial statements.

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, frozen desserts and other food products. 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. 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 and reserve for sales promotions. 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.

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.

Fixed Assets. During fiscal 2018 and 2019, we spent $150,000 on equipment to be used at our new co-packer’s frozen dessert facility. Our co-packer began using this equipment in connection with the production of frozen stick novelty items in the third quarter of 2019 ~~and continues to do so~~through the third quarter of 2021. This equipment was sold and disposed of in 2021. Depreciation iswas provided by charges to income using the straight-line method over the estimated useful life of ten years. There were no fixed asset additions in fiscal ~~2020.~~2021.

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.

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 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. We are currently evaluating the effect that this new guidance will have on our financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in an Equity’s Own Equity. For convertible instruments, the Board decided to reduce the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. The Board concluded that eliminating certain accounting models simplifies the accounting for convertible instruments, reduces complexity for preparers and practitioners, and improves the decision usefulness and relevance to financial statement users. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Our operations and the operating metrics discussed below have been and will likely continue to be affected by certain key factors as well as certain historical events and actions. The key factors affecting our business and results of operations include among others, our lack of sufficient working capital, dependence on a few key distributors for a significant portion of our sales, dependence on several key suppliers to produce our products, our reliance on a limited number of key executives to manage our business, and competition. For further discussion of the factors affecting our results of operations, see “Risk Factors.”

We may not be able to maintain profitability in the future and may not have sufficient working capital to fund our operations in the future.

While our operations have been profitable in the last few years, we incurred losses in prior years. Our cash increased to ~~$1,459,000~~$1,698,000 while our working capital ~~increased~~decreased to ~~$4,669,000~~$4,326,000 as of January 1, 2022 from $4,639,000 as of January 2, 2021. 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.

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 ~~54%~~48% and ~~44%~~54% of our net sales for the fiscal years ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ 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.

Interruptions in the supply of products from our co-packers and suppliers could adversely affect our revenues.

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 January 1, 2022 and January 2, ~~2021and December 28, 2019,~~2021, we purchased approximately ~~40%~~50% and ~~52%~~40%, respectively, of our finished goods from Franklin Foods, including our BETTER THAN CREAM CHEESE, WHIPPED BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM, and BETTER THAN RICOTTA products, and purchased approximately ~~16%~~11% and ~~19%~~16%, respectively, of our finished goods from Luke’s Ice Cream, our frozen dessert novelty co-packer. Any disruption in supply could have a material adverse effect on our company.

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.

We rely on ~~a limited number of key executives~~Steven Kass to manage our business.

Upon the death of Mr. Mintz, our continued success is significantly dependent on the services of Steven Kass (age ~~69)~~70), who is ~~presently~~ serving as our ~~interim~~ Chief Executive ~~Officer~~ and ~~as our Chief~~ Financial Officer. The loss of his services would have a material adverse effect on our business and results of operations.

The dairy free, vegan frozen dessert, ~~and food~~cheese and health food markets are highly competitive. In addition, many of our principal competitors are large, diversified companies with resources significantly greater than ours. We expect strong competition to continue, including competition for adequate distribution and competition for the limited shelf space for the frozen dessert and dairy free cheese food categories in supermarkets and other retail food outlets.

On February 24, 2021 David Mintz, our founder, Chief Executive Officer and Chairman of the Board of Directors, passed away. Steven Kass, Chief Financial Officer, was appointed interim CEO by our Board of Directors.

An outbreak of an infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now spread globally. This outbreak has resulted in travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, ~~disruption of and delays in healthcare service preparation and delivery,~~ prolonged quarantines, order cancellations, supply chain disruptions, increased costs for raw materials, and lower consumer demand, ~~layoffs, defaults~~ and other significant economic impacts, as well as general concern and uncertainty. The impact of this outbreak has adversely affected the economies of many nations and the entire global economy and may impact our company in ways that cannot necessarily be foreseen. Other infectious illness outbreaks that may arise in the future could have similar impacts. Public health crises caused by the outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally.

The ~~current~~ severity of the pandemic and the uncertainty regarding the length of its effects could have negative consequences for our company. To date, the effects of the pandemic have ~~not materially~~ affected certain aspects of our ~~company’s~~ operations. All of our co-packing facilities are currently operating normally, and the pandemic has not constrained any of our production requirements. The cost of certain key ingredients and packaging has increased substantially due to short-term supply issues related to COVID-19. We continue to be able to schedule trucks for delivery and a large majority of our customers are still operating and ordering our products as before.

~~Most~~ Additionally, our freight costs have increased due to a driver shortage caused by COVID-19. In response to these cost increases and the potential for additional cost increases affecting various aspects of our ~~administrative functions are being performed remotely. A small crew maintains~~operations, we have initiated a series of sales price increases commencing in the ~~office for those functions that cannot be handled remotely. Our ability~~fourth quarter of 2021 and continuing into the first quarter of 2022 to ~~collect money, pay bills, handle customer and consumer communications, schedule production, and order ingredients necessary for our production has not been impacted. To date, the~~help offset these cost increases.

The pandemic has had ~~minimal~~a negative impact on our ~~sales. The majority of our~~ sales, relate to retail products sold in supermarkets. Supermarket sales in general have seen a substantial surge in business due to the pandemic, as consumers stock up on all products that they would normally purchase. The only negative effect to our business to date has beenspecifically with respect to our food service sales to retail outlets, such as restaurants and small food shops, which account for a small part of our total business and with respect to our inability to regain our level of ~~export sales to foreign jurisdictions.~~retail sales. Our marketing efforts have also been constrained due to social distancing restrictions and other current government rules and regulations that preclude face to face sales meeting, attendance at trade shows and the initiation of new promotions.

Our ability to handle customer and consumer communications, schedule production, and order ingredients necessary for our production has not been materially impacted. Nor have ~~not~~we experienced a significant change in the timeliness of payments of our invoices and our cash position ~~remains stable with~~of approximately ~~$1,459,000 of cash~~$1,796,426 as of March 25, 2022 has improved since our fiscal year end January ~~2, 2021.~~1, 2022.

Depending on the length and severity of the pandemic, Covid-19 may ultimately have a significant impact on our operations and ability to maintain our current level of operations without a further infusion of capital, which may not be available to us.

Fiscal Year Ended January 1, 2022 Compared with Fiscal Year Ended January 2, 2021 ~~Compared with Fiscal Year Ended December 28, 2019~~

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 period ended January 1, 2022 (fiscal 2021) and the fifty-three week period ended January 2, 2021 (fiscal 2020) ~~and the fifty-two week period ended December 28, 2019 (fiscal 2019)~~.

Net sales for the fiscal year ended January ~~2, 2021~~1, 2022 were ~~$13,815,000, an increase~~$12,590,000, a decrease of ~~$685,000~~$1,225,000 or 5%9%, from net sales of ~~$13,130,000~~$13,815,000 for the fiscal year ended ~~December 28, 2019.~~January 2, 2021. Sales of our frozen dessert and frozen food product lines ~~increased~~decreased to $1,829,000 in the fiscal year ended January 1, 2022 from $2,146,000 in fiscal ~~2020 from $1,889,000 in fiscal 2019.~~2020. Sales of vegan cheese products ~~increased~~decreased to $10,761,000 in the fiscal year ended January 1, 2022 from $11,669,000 in the fiscal ~~2020 from $11,241,000 in fiscal 2019 due to an increase in~~year ended January 2, 2021. Overall, our sales ~~of our food service sized~~ ~~BETTER THAN CREAM CHEESE~~ ~~and~~ ~~BETTER THAN SOUR CREAM~~ ~~products. Domestic sales of our cheese products increased while our export cheese business was negatively impacted by political uncertainty in the UK and its impact on the UK’s currency. It was also~~were negatively impacted by the ~~continued effects~~discontinuance of ~~the bankruptcy of~~several frozen desserts and cheese products in 2021, and various COVID-19 issues affecting our UK master distributer in December 2019. Since our master distributor in the UK managed our sales for the rest of Europe, our sales there have been negatively impacted by the issues in the UK and our inability to obtain a successor distributor.product distribution.

Our gross profit for the year ended January 1, 2022 decreased by $911,000 to $3,342,000 from $4,253,000 for the fiscal year ended January 2, ~~2021 increased by $216,000 to $4,253,000 from $4,037,000.~~2021. Our gross profit percentage for ~~both~~ the ~~years~~fiscal year ended January 1, 2022 was 27% compared to 31% for the fiscal year ended January 2, ~~2021 and December 28, 2019 was 31%.~~2021. Sales promotion and allowance expense was $1,487,000 for the fiscal year ended January 1, 2022 compared to $1,582,000 for the fiscal year ended January 2, 2021. The dollar decline in gross profit was due principally to the decline in total sales accompanied by increases in ingredient and packaging costs. The increases in our ingredient and packaging costs, caused by supply chain issues related to Covid-19, negatively impacted our gross profit percentage for fiscal year 2021.

Freight out expense increased by $22,000 or 2% to $1,059,000 for the year ended January 1, 2022 compared with $1,037,000 for the year ended January 2, 2021 compared to $1,378,000 for the year ended December 28, 2019. We intend to increase gross profitability in future periods through selective price increases and selective ingredient replacements to lower-cost alternatives.

~~Freight out expense increased by $94,000 to $1,037,000, or 8%, for the year ended January 2, 2021 compared with $943,000 for the year ended December 28, 2019.~~2021. Freight out expense increased due to ~~the increase in net sales and~~ significant increases in freight rates across all methods of shipping due to increases in fuel costs and the reduction in vehicle availability due to the pandemic. Freight out cost as a percentage of sales ~~in fiscal 2020~~ was 8% ~~compared to approximately 7% in fiscal 2019.~~for both the years ended January 1, 2022 and January 2, 2021. We anticipate that freight out expense in fiscal ~~2021~~year 2022 will continue at this higher ~~level.~~level or increase further.

Selling and warehousing expenses ~~decreased~~increased by ~~$445,000,~~$19,000, or ~~27%~~2%, to $1,206,000 for the fiscal year ended January 1, 2022 from $1,187,000 for the fiscal ~~2020 from $1,632,000 in fiscal 2019.~~year ended January 2, 2021. This ~~decrease~~increase was primarily attributable to ~~decreases~~increases in commission expense of ~~$82,000,~~$35,000, travel, entertainment, and auto expense of ~~$48,000, messenger expense of $13,000, meetings and conventions expense of $33,000, payroll expense of $76,000~~$10,000, and bad debt expense of ~~$210,000. These decreases~~$10,000, which were partially offset by ~~an increase~~decreases in payroll expense of $30,000 and outside warehouse rental expense of ~~$10,000. The decrease~~$8,000.

Marketing expenses increased in ~~bad debt expense was primarily a result of writing off~~ the ~~receivables of our UK master distributor at~~fiscal year ended January 1, 2022 by $23,000, or 9%, to $281,000 from $258,000 in the ~~end of~~ fiscal ~~2019. We anticipate that selling expenses as a percentage of sales in fiscal~~year ended January 2, 2021 ~~will decline from those in fiscal 2020~~ due to ~~continued Covid-related reductions in travel and other sales activities.~~

~~Marketing expenses decreased in fiscal 2020 by $89,000, or 26%, to $258,000 from $347,000 in fiscal 2019 due to a decrease~~an increase in promotion expense of ~~$95,000~~$23,000 and artwork and plate expense of ~~$16,000,~~$15,000, which ~~was~~were partially offset by ~~an increase~~a decrease in advertising expense of ~~$27,000.~~$19,000. We expect that marketing expenses in the following fiscal ~~2021~~year will remain at the same level as in ~~fiscal 2020.~~the year ended January 1, 2022.

Research and development expenses decreased by ~~$84,000,~~$116,000, or ~~26%~~48%, to $124,000 in the fiscal year ended January 1, 2022 from $240,000 in the fiscal ~~2020 from $324,000 in fiscal 2019.~~year ended January 2, 2021. The decrease was primarily attributable to decreases in payroll expense of ~~$50,000,~~$45,000, lab costs and supplies expense of ~~$38,000, and~~$14,000, uniform rental expense of ~~$14,000, which were partially offset by an increase in~~$8,000, and equipment repairs of $14,000, and professional fees and outside service expense of ~~$12,000.~~$37,000. Because we do not anticipate our research and development department resuming operations at the pre-Covid level, ~~in 2021,~~ we expect that product development costs will remain constant or decline slightly in fiscal ~~2021.~~2022.

General and administrative expenses ~~increased~~decreased by ~~$66,000,~~$203,000, or 4%12%, to $1,489,000 for the year ended January 1, 2022 from $1,692,000 for ~~fiscal 2020 from $1,626,000 for fiscal 2019.~~the year ended January 2, 2021. The ~~increase~~decrease was primarily due to ~~increases~~decreases in payroll expense of ~~$31,000, professional fees~~$365,000, general insurance expense of $55,000, auto, travel, and ~~outside services expenses~~entertainment of $19,000, office supply expense of $12,000, and equipment rental expense of ~~$6,000, office supplies expense of $9,000, and general insurance expense of $57,000,~~$7,000, which were partially offset by ~~decreases~~increases in IT expense of $20,000, professional fees and ~~travel, entertainment and auto~~outside service expense of ~~$33,000. General insurance~~$149,000, franchise tax expense ~~increased due to increases in our general package insurance policy~~of $7,000, and ~~our directors~~the loss on the sale and ~~officers’ liability policy.~~disposal of equipment of $75,000. We expect that general and administrative expenses will decrease in fiscal ~~2021.~~2022.

Overall, total operating expenses in fiscal ~~2020~~2021 decreased by ~~$552,000,~~$278,000, or ~~14%~~8%, to ~~$3,377,000~~$3,100,000 for the year ended January 1, 2022 compared to total operating expenses of ~~$3,929,000~~$3,377,000 in ~~fiscal 2019.~~the year ended January 2, 2021. We anticipate our operating expenses ~~to continue at lower than historical levels due to ongoing Covid restrictions.~~will remain constant in fiscal 2022.

Income before income taxes ~~increased~~decreased to ~~$851,000~~$217,000 in ~~fiscal 2020~~the year ended January 1, 2022 as compared with income before income taxes of ~~$83,000~~$851,000 in ~~fiscal 2019.~~the year ended January 2, 2021.

Provision for income taxes for the ~~2020 fiscal period~~year ended January 1, 2021 was ~~$255,000~~$74,000 compared to income tax expense of ~~$5,000~~$255,000 for the ~~2019 fiscal period.~~year ended January 2, 2021 resulting from the lower pre-tax income during this period compared to prior year.

At January ~~2, 2021,~~1, 2022, we had approximately ~~$1,459,000~~$1,698,000 in cash, and our working capital was ~~$4,639,000.~~$4,326,000.

In order to provide our company with additional working capital, on January 6, 2016, David Mintz, our former Chairman and Chief Executive Officer, provided our company with a convertible loan of ~~$500,000 which is secured by substantially all of our assets. The loan has been extended until~~ $500,000. On December ~~31, 2022~~. ~~Interest of 5% is payable on a quarterly basis without compounding. The loan may be prepaid in whole or in part at any time without premium or penalty. During the original term of~~22, 2021, the loan itbalance of $500,000 plus accrued interest of $25,000 was ~~convertible into shares of our common stock at a conversion price of $4.01 per share,~~paid by the closing price of our common stock on the NYSE MKT on the date the promissory note was entered into. The extended loan is convertible into our common stock at a conversion price of $1.77 per share at the option of the holder, the closing price of our common stock on the OTCQB on the date the promissory note was extended. See “Certain Relationships and Related Transactions, and Director Independence.”Company to Mr. Mintz’s estate.

Cash provided by operating activities for the fiscal year ended January ~~2, 2021~~1, 2022 was ~~$780,000~~$689,000 compared to ~~$15,000 used in~~$780,000 provided by operating activities for the fiscal year ended ~~December 28, 2019.~~January 2, 2021. Cash provided by operating activities was primarily from net income ~~from operations.~~of $143,000, a loss on sale and disposal of equipment of $75,000, a provision for bad debts and sales promotions of $20,000, a decrease in accounts receivable of $722,000, and a decrease in inventory of $123,000, offset by a decrease of accounts payable and accrued expenses of $285,000, decrease in operating lease liabilities of $28,000, and a decrease in income taxes payable of $71,000.

Cash provided by investing activities was $50,000 for the fiscal year ended January 1, 2022 compared to cash used in investing activities ~~was~~of $0 for the fiscal year ended January 2, ~~2021 compared~~2021. Cash provided by investing activities in the fiscal year ended January 1, 2022 was due to ~~cash~~proceeds from the sale of equipment.

Cash used in ~~investing~~financing activities ~~of $29,000~~ for the fiscal year ended ~~December 28, 2019.~~January 1, 2022 was $500,000 compared to cash provided of $165,000 for the fiscal year ended January 2, 2021. Cash used in ~~investing~~financing activities in the fiscal ~~2019~~year ended January 1, 2022 was due to ~~fixed asset purchases.~~

~~Cash~~the repayment of a convertible note of $500,000 that had been provided to us by Mr. Mintz, and cash provided from financing activities for the fiscal year ended January 2, 2021 was ~~$165,000 and $0 for~~from proceeds of the ~~fiscal year ended December 28, 2019. Cash provided by financing activities in fiscal 2020 was from a Paycheck Protection Program (“PPP”) loan provided from borrowings from the SBA.~~government sponsored COVID-19 SBA Loan.

As a result of the foregoing, our cash increased to $1,698,000 at January 1, 2022 from $1,459,000 at January 2, ~~2021 from $514,000 at December 28, 2019.~~2021.

We believe our existing cash on hand at January ~~2, 2021,~~1, 2022, 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.

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 dairy free frozen desserts during those periods.

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 January ~~2, 2021.~~1, 2022.

We have audited the accompanying balance ~~sheet~~sheets of Tofutti Brands Inc (the “Company”) as of January 1, 2022 and January 2, 2021, the related statements of income, stockholders’ equity, and cash flows, for the fiscal ~~year~~years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 1, 2022 and January 2, 2021, and the results of its operations and its cash flows for the fiscal ~~year~~years then ended, in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audit.~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audit provides~~audits provide a reasonable basis for our opinion.

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

As described in Note 1 to the financial statements, ~~the Company recognizes revenue when control over the products transfers to its customers, which is deemed to be the performance obligation.~~ 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 the sale. The Company bases these estimates of expected amounts principally on historical utilization and redemption rates. Estimates that affect revenue and trade receivables, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized. Considering the estimation and judgement required by management in determining these amounts, our audit of these estimates require a ~~high~~ degree of auditor judgement regarding these qualitative factors.

The primary procedures we performed to address this critical audit matter included:

Our audit procedures related to ~~the revenue recognition and~~significant estimates of ~~trade incentives~~sales discounts and ~~product returns~~allowances included the following, among others:

We have audited the accompanying balance sheet of Tofutti Brands, Inc. (the “Company”) as of December 28, 2019, and the related statements of income, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2019 and the results of its operations and its cash flows for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Fiscal Years ended January 1, 2022 and January 2, 2021 ~~and December 28, 2019~~

NOTE 1: DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Operating Segments - 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. The Company has determined that it has only one operating segment, which is the development, production and marketing of soy and other vegetable protein- based, dairy free frozen desserts, frozen food products and soy and other vegetable protein-based cheese products.

Fiscal Year - The Company operates on a fiscal year ending on the Saturday closest to December 31st. Fiscal years for the financial statements included herein are the ~~fifty-three~~fifty-two week and ~~fifty-two~~fifty-three week fiscal periods ended January 1, 2022 and January 2, 2021, fiscal 2021 and ~~December 28, 2019,~~ fiscal 2020, ~~and fiscal 2019,~~ respectively.

Estimates and Uncertainties - The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Significant estimates include allowance for doubtful accounts and sales promotion ~~accruals, inventory reserves and reserves for uncertain tax positions.~~accruals. Actual results could differ from those estimates.

~~Fixed Assets –~~ Additions are recorded at cost. Depreciation is provided by charges to income using the straight-line method over the estimated useful life of the equipment, which is ten years. Ordinary maintenance and repair costs are expensed in the year incurred.

~~Revenue Recognition~~ – The Company primarily sells dairy free, vegan cheeses, frozen desserts and other food products. The Company recognizes revenue when control over the products transfers to its customers, deemed to be the performance obligation, which generally occurs upon delivery or shipment of the products. The Company accounts 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. The Company bases 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. The Company generally does not have any unbilled receivables at the end of a period.

~~Concentration of Credit/Sales Risk~~ - Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and unsecured trade receivables. During the year, the Company’s cash balance at one of the two financial institutions it utilizes exceeded the FDIC limit of $250.

The Company performs ongoing evaluations of its customers’ financial condition and does not require collateral. Management believes that credit risk beyond the established allowances at January 2, 2021 is limited.

During the fiscal years ended January 2, 2021 and December 28, 2019, the Company derived approximately 89% and 87% of its net sales domestically. The remaining sales in both periods were exports to foreign countries. The accounts receivable balance of two customers represented approximately 54% of total accounts receivable at January 2, 2021 and the accounts receivable balance of two customers represented approximately 39% of total accounts receivable at December 28, 2019. In addition, a significant portion of the Company’s 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 54% and 44% of the Company’s net sales for the fiscal years ended January 2, 2021 and December 28, 2019.

Accounts Receivable - The majority of the Company’s 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 and reserve for sales promotion. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the bad debt expense. The Company does not accrue interest on accounts receivable past due.

Inventories - 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 or approaching expiration are written down and charged to the provision for inventories.

The Company purchased approximately ~~40%~~50% and ~~52%~~40% of its finished products from one supplier and ~~16%~~11% and ~~19%~~16% of its finished products from another supplier during the periods ended January 1, 2022 and January 2, 2021, respectively.

Equipment, net – Additions are recorded at cost. Depreciation is provided by charges to income using the straight-line method over the estimated useful life of the equipment, which is ten years. Ordinary maintenance and ~~December 28, 2019, respectively.~~repair costs are expensed in the year incurred.

Revenue Recognition – The Company accounts for revenue recognition in accordance with accounting guidance codified as FASB ASC 606 “Revenue from Contracts with Customers” (“ASC 606”), as amended regarding revenue from contracts with customers. Under the standard an entity is required to recognize revenue to depict the transfer of promised goods to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods.

Under ASC 606, revenue is recognized as the customer obtains control of the goods and services promised in the contract (i.e., performance obligations). In evaluating our contracts with our customers under ASC 606, we have determined that there is no future performance obligation once delivery has occurred.

The Company primarily sells dairy free, vegan cheeses, frozen desserts and other food products. The Company recognizes revenue when control over the products transfers to its customers, deemed to be the performance obligation, which generally occurs upon delivery or shipment of the products. The Company accounts 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. The Company bases 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. The Company generally does not have any unbilled receivables at the end of a period.

Concentration of Credit/Sales Risk - Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash and unsecured trade receivables. During the year, the Company’s cash balance at one of the two financial institutions it utilizes exceeded the FDIC limit of $250.

During the fiscal years ended January 1, 2022 and January 2, 2021, the Company derived approximately 87% and 89%, respectively, of its net sales domestically. The remaining sales in both periods were exports to foreign countries. The accounts receivable balance of two customers represented approximately 55% of total accounts receivable at January 1, 2022 and the accounts receivable balance of two customers represented approximately 54% of total accounts receivable at January 2, 2021. In addition, a significant portion of the Company’s 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 45% and 54% of the Company’s net sales for the fiscal years ended January 1, 2022 and January 2, 2021, respectively.

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. The Company 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)~~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.

Earnings Per Share - Basic earnings per common share has been computed by dividing earnings by the weighted average number of common shares outstanding, which would account for a potential 282,486 shares ~~to be issued~~issuable upon ~~conversion. The~~conversion of the $500,000 convertible note for the fiscal year ended January 2, 2021. The 282,486 shares issuable upon conversion of the convertible note was included in the calculation of fully diluted ~~earnings. For~~earnings for the fiscal year ended ~~December 28, 2019, stock equivalents~~January 2, 2021. The weighted average effects of ~~80,000~~the 282,486 shares ~~and a convertible note for 124,688 shares were excluded from~~issuable upon conversion was not included in the diluted earnings per share ~~calculations since~~calculation for the ~~effect was~~year ended January 1, 2022 as the effects were anti-dilutive.

Fair Value of Financial Instruments - The fair value of financial instruments, which primarily consist of cash, accounts receivable, SBA note payable, accounts payable and accrued expenses are stated at their carrying values. The carrying amounts approximate fair value because of the short-term nature of those instruments.

Small Business Administration (SBA) Loan- On May 2, 2020 the Company received a loan of $165 from the SBA ~~a loan of $165 from~~pursuant to the Paycheck Protection Program at an interest rate of 1%1%. Interest and payments were deferred until March 4, 2021. ~~While the Company anticipates that most, if not all of this loan will be forgiven there is no certainty that will be the case.~~ The current portion of the loan was ~~$112~~ $165 as of January ~~2, 2021~~1, 2022 and the loan will expire on May 2, 2022. On January 12, 2022, the Company was informed by the SBA that the entire amount of the loan had been forgiven. The Company will record forgiveness of debt income of $165 in fiscal year 2022.

Freight Costs - Freight costs to ship inventory to customers and to outside warehouses amounted to ~~$1,037~~$1,059 and ~~$920~~$1,037 during the fiscal years ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ respectively. Such costs are included in costs of ~~sales.~~sales on the statements of income.

Advertising Costs - The Company expenses advertising costs as they are incurred. Advertising expenses amounted to ~~$209~~$190 and ~~$182~~$209 during the fiscal years January 1, 2022 and January 2, 2021, respectively, and ~~December 28, 2019, respectively.~~are included in marketing on the statements of income.

Product Development Costs - Costs of new product development and product redesign are charged to expense as incurred. Product development costs amounted to ~~$240~~$124 and ~~$324~~$240 during the fiscal years ended January 1, 2022 and January 2, 2021, ~~and December 29, 2018,~~ respectively.

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

In 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. Additionally, the credit loss recognition guidance for available-for-sale securities is amended and will require that credit losses on such debt securities should be recognized as an allowance for credit losses rather than a direct write-down of amortized cost balance. ~~The~~As the Company is a smaller reporting company, the ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. We are currently evaluating the effect that this new guidance will have on our financial statements and related disclosures.

January 2,
2021 December 28,
2019
Finished products $ 1,320 $ 1,187
Raw materials and packaging 677 742
$ 1,997 $ 1,929

Depreciation expense for both the years ended January 1, 2022 and January 2, 2021 was $10.

During September 2021, the Company sold manufacturing equipment with a cost of $102 and accumulated depreciation of $15 for total proceeds of $50. As of the year ended January 1, 2022, the Company disposed of the remaining balance of the equipment due to the discontinuance of the frozen dessert products manufactured using this equipment. The $75 loss on this sale and disposal has been presented as a component of general and administrative expenses on the statements of income for the fiscal year ended January 1, 2022.

On May 2, 2020 the Company received from the SBA a loan of $165 from the Paycheck Protection Program at an interest rate of 1%. Interest and payments were deferred until March 4, 2021 The current portion of the loan was $165 as of January 2, 2021 and the loan would have expired on May 2, 2022. Subsequent to year end, on January 12, 2022, the Company was informed by the SBA that the entire amount of the loan had been forgiven. The Company will record forgiveness of debt income of $165 in fiscal year 2022.

On January 6, 2016, David Mintz, the Company’s former Chairman and Chief Executive, provided the Company with a loan of $500. The loan was extended until December ~~28, 2019~~31, 2021 and was, ~~$10~~at the option of the holder, convertible into the Company’s common stock at a conversion price of $1.77 per share, the closing price of the Company’s common stock on the date of the extension of the promissory note. Interest expense incurred to the related party was $25 for both fiscal years ended January 1, 2022 and ~~$5, respectively.~~January 2, 2021. On December 22, 2021, the entire loan of $500 plus accrued interest of $25 was paid by the Company to Mr. Mintz’s estate.

~~The Company’s~~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. 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.” ~~The Company had~~No stock options were issued ~~80,000 non-qualified stock option awards under~~in 2021 or 2020 and no options were outstanding as of January 1, 2022 and January 2, 2021.

Performance obligations relating to the ~~2014 Plan,~~delivery of food products are satisfied when the goods are shipped to the customer and net of all ~~of which expired~~applicable discounts, as follows: Payment term discounts, off-invoice allowance, manufacturer chargeback, freight allowance, spoilage discounts, and product returns.

Approximately 87% in fiscal ~~2020.~~2021 and 89% in fiscal 2020 of the Americas revenue is attributable to the United States. All of the Company’s assets are located in the United States.

~~The following is a summary of stock option activity from December 29, 2018 to January 2, 2021:~~

The Company’s facilities are located in a one-story facility in Cranford, New Jersey. The 6,200 square foot facility houses its administrative offices, a warehouse, walk-in freezer and refrigerator, and a product development laboratory and test kitchen. The Company’s original lease agreement expired on July 1, 1999, but it continues to occupy the premises on a monthly basis. Any changes by either the landlord or the Company remains subject to a six-month notification period. The Company currently has no plans to enter into a long-term lease agreement for the facility. Rent expense was ~~$78~~$79 in fiscal ~~2020~~2021 and ~~$77~~$78 in fiscal ~~2019.~~2020. The Company’s management believes that the Cranford facility will continue to satisfy its space requirements for the foreseeable future and if necessary, such space can be replaced without a significant impact to the business. The Company rents warehouse storage space at various outside facilities. Outside warehouse expenses amounted to ~~$468~~$459 or the fiscal year ended January 1, 2022 compared to $468 for the fiscal year ended January 2, ~~2021 compared to $458 for the year ended December 28, 2019.~~2021.

Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. The Company has operating leases primarily consisting of facilities with remaining lease terms of approximately two to four years. The Company does not have the option to terminate the leases early. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease. The current portion of lease liabilities is included in accrued expenses on the balance sheets.

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, the Company has combined the lease and non-lease components in determining the lease liabilities and ROU assets.

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 rate on December 29, 2018 of ~~5.5%~~5.5% for all leases that commenced prior to that date.

ROU lease assets and lease liabilities for our operating leases were recorded in the balance sheet as follows:

As of As of
January 2, 2021 December 28, 2019
Operating lease right-of-use assets $ 224 $ 252

Current portion of lease liabilities 113 106
Operating lease liabilities 123 156
Total lease liabilities $ 236 $ 262

Weighted average remaining lease term (in years) 2.1 2.6
Weighted average discount rate 5.5 % 5.5 %

Future lease payments included in the measurement of lease liabilities on the balance sheet as of January ~~2, 2021,~~1, 2022, for the following three fiscal years and thereafter are as follows:

The components of income tax expense for the fiscal years ended January 1, 2022 and January 2, 2021 ~~and December 28, 2019~~ are as follows:

A reconciliation between the expected federal tax expense at the statutory tax rate of ~~21%~~21% and the Company’s actual tax expense for the fiscal years ended January 1, 2022 and January 2, 2021, ~~and December 28, 2019,~~ respectively, follows:

SCHEDULE OF RECONCILIATION BETWEEN THE EXPECTED FEDERAL TAX EXPENSE AT STATUTORY TAX RATE

January 2, 2021 December 28, 2019
Federal income tax $ 179 $ 17
State income taxes, net of federal income tax benefit 76 1
Permanent items — 5
Other — (18 )
$ 255 $ 5

Deferred tax assets for the fiscal years ended January 1, 2022 and January 2, 2021 ~~and December 28, 2019~~ consist of the following components:

At January ~~2, 2021~~1, 2022 the Company had $0$0 federal net operating loss carryforwards and $0$0 of state operating loss carryforwards.

The Company will recognize a tax provision 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)~~percent) to be sustained 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 following table indicates the changes to the Company’s uncertain tax positions for the fiscal years ended January 1, 2022 and January 2, ~~2021 and December 28, 2019:~~2021:

The Company accounts for penalties or interest related to uncertain tax positions as part of its provision for income taxes. The amount of uncertain tax positions that would affect the effective tax rate if they were recognized is ~~$172.~~$180. The liability at January ~~2, 2021~~1, 2022 of uncertain tax positions is included in accrued expenses. The Company is no longer subject to federal and state examinations for fiscal years before ~~2017.~~2019.

On January 6, 2016, David Mintz, the Company’s former Chairman and Chief Executive, provided the Company with a loan of $500. The loan, which was originally set to expire on December 31, 2017 has been extended to December 31, 2022 effective January 10, 2020. The original loan was convertible into shares of the Company’s common stock at a conversion price of $4.01 per share, the closing price of its common stock on the NYSE MKT on the date the promissory note was first entered into. The extended loan is, at the option of the holder, convertible into the Company’s common stock at a conversion price of $1.77 per share, the closing price of the Company’s common stock on the date of the extension of the promissory note. No other terms of the loan were modified. Commencing March 31, 2016, interest of 5% is payable on a quarterly basis without compounding. The loan may be prepaid in whole or in part at any time without premium or penalty. In any event of default, as defined in the promissory note, without any action on the part of the estate of Mr. Mintz, the interest rate will increase to 12% per annum and the entire principal and interest balance under the loan, and all of the Company’s other obligations under the loan, will be immediately due and payable, and the estate of Mr. Mintz will be entitled to seek and institute any and all remedies available to it.

The Company sells its products throughout the United States and in approximately 15fifteen foreign countries and may be impacted by 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. In December 2019, a novel strain of the Coronavirus, COVID-19, was reported to have surfaced in Wuhan, China, which has evolved into a pandemic. This situation and preventative or protective actions that governments have taken to counter the effects of the pandemic have resulted in a period of business disruption, including delays in shipments of products and raw materials. COVID-19 has spread to over 180 countries, including the United States, and efforts to contain the spread of COVID-19 have intensified. To the extent the impact of COVID-19 continues or worsens, the demand for the Company’s products may be negatively impacted, and it and its co-packers may have difficulty obtaining the materials necessary for the production of its products. In addition, the production facilities of the Company’s co-packers may be closed for sustained periods of time and industry-wide shipment of products may be negatively impacted. COVID-19 has also impacted the Company’s sales efforts as its ability to make sales calls is constrained. The Company’s ability to promote sales through promotional activities has also been constrained as many supermarkets are understaffed and unable to change pricing for items in stock, resulting in the cancelation of all sales promotional discounts for the foreseeable future. Trade food shows and sales conferences, major events used to introduce and sell the Company’s products, have been postponed indefinitely. The length and severity of the pandemic could also affect the Company’s regular sales, which could in turn result in reduced sales and a lower gross margin.

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.

~~Approximately 89% in fiscal 2020 and 92% in fiscal 2019 of the Americas revenue is attributable to the United States. All of the Company’s assets are located in the United States.~~

~~As reported in a Current Report on Form 8-K dated January 19, 2021 (“ the January Form 8-K”), EisnerAmper LLP (“EisnerAmper”) resigned as our independent registered public accounting firm.~~None.

The audit reports of EisnerAmper on our financial statements for the fiscal years ended December 29, 2018 and December 28, 2019 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 29, 2018 and December 28, 2019, and through the subsequent interim period preceding EisnerAmper’s resignation, there were no disagreements between the Company and EisnerAmper on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of EisnerAmper would have caused them to make reference thereto in their reports on our financial statements for such years. During the fiscal years ended December 29, 2018 and December 28, 2019, and through the subsequent interim period preceding EisnerAmper’s resignation, there were no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K, except that the Company’s internal control over financial reporting was not effective due to the existence of the following material weaknesses, as disclosed in the Company’s Annual Reports on Form 10-K for the fiscal years December 29, 2018 and December 28, 2019:

We provided EisnerAmper with our disclosures in the January 8-K disclosing their resignation and requested in writing that EisnerAmper furnish us with a letter addressed to the Securities and Exchange Commission stating whether they agree with such disclosure. A copy of EisnerAmper’s response was filed as Exhibit 16.1 to the January 8-K.

~~On March 4, 2021 we reported in a Current Report on Form 8-K that on February 16, 2021, our Audit Committee agreed to appoint~~ ~~Mazars USA LLP (“Mazars”)~~ as our new independent registered public accounting firm. Following completion of Mazars’ client acceptance procedures an engagement letter with Mazars was executed on March 3, 2021. Mazars’ appointment is for the fiscal year ended January 2, 2021.

During our two most recent fiscal years ended December 28, 2019 and January 2, 2021 and for the subsequent interim period through February 16, 2021, neither we nor anyone on our behalf consulted Mazars regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of Regulation SK of the rules and regulations of the U.S. Securities and Exchange Commission.

Evaluation of Disclosure Controls and Procedures. As of January ~~2, 2021,~~1, 2022, our company’s ~~interim~~ 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 ~~interim~~ chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective with respect to the material weaknesses, as described below in our internal control over financial reporting, that have not been fully remediated as of the end of the fiscal year ~~2020.~~2021.

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 ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, designed and reported within the time periods specified by the SEC’s rules and forms. Disclosure Controls include, within the definition under the Exchange Act, and without limitation, controls and procedures to ensure that information required to be disclosed by us in our reports is accumulated and communicated to our management, including our ~~interim~~ 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 inconformity with generally accepted accounting principles.

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 Committee of Sponsoring Organizations of the Treadway Commission, or COSO, framework, an integrated framework (2013) for the evaluation of internal controls issued by COSO, to identify the risks and control objectives related to the evaluation of our control environment.

On February 24, 2021 David Mintz, ~~the Company’s~~our founder, Chief Executive Officer and ~~CEO passed away. Our~~Chairman of the Board of Directors, ~~has appointed~~passed away. Steven Kass, Chief Financial Officer, was appointed interim CEO by our ~~CFO,~~Board of Directors and was confirmed as ~~interim CEO.~~permanent CEO by the Board on April 27, 2021.

Based on the evaluation under the frameworks described above, Mr. Kass, our ~~interim~~ chief executive ~~officer~~ and ~~chief~~ financial officer, has concluded that our internal control over financial reporting was ineffective as of January ~~2, 2021~~1, 2022 because of the following material weaknesses in internal controls over financial reporting:

~~We are continuing to seek ways~~To date, we have been unable to remediate these weaknesses, which stem from our small ~~workforce and limited resources.~~workforce. As of the date of this filing we employ five people.

No change in our internal control over financial reporting occurred during the quarter ended January ~~2, 2021~~1, 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Steven Kass has been our Chief Financial Officer since November 1986 and Secretary and Treasurer since January 1987. Mr. Kass assumed the position of interim Chief Executive Officer in March 2021, ~~subsequent to the death of our former Chairman of~~and was confirmed as permanent CEO by the Board ~~and Chief Executive Officer.~~on April 27, 2021.

Joseph N. Himy was elected to serve as a member of our Board of Directors and the Audit Committee on October 30, 2013 by our Board of Directors. He resigned as a member of our Audit Committee on August 16, 2021. He has been Managing Director of The CFO Squad, a financial and business advisory firm providing outsourced CFO advisory and regulatory consulting services primarily for public companies since August 2011. From May 2008 until August 2011, Mr. Himy was Chief Financial Officer of Vyteris, Inc., manufacturer of the first active transdermal patch approved by the U.S. Food and Drug Administration for the pain associated with blood draws, intravenous cannulations and laser ablation of superficial skin lesions. Prior to May 2008 and from October 2004, Mr. Himy held various other positions at Vyteris, including Corporate Controller and VP of Finance. Mr. Himy received a B.S. degree in Accounting from Brooklyn College of the City University of New York and is a certified public accountant. Mr. Himy’s accounting and financial and corporate governance experience background enhances the breadth of experience of the board of directors.

Scott Korman has served as a member of our Board of Directors since December 2011 and is a member of our Audit Committee. Mr. Korman founded Nashone, Inc., a private equity firm, in 1984 and is its President. Nashone is also involved in financial advisory, turnaround and general management assignments. Mr. Korman previously served as Chairman of Da-Tech Corporation, a Pennsylvania based contract electronics manufacturer. He previously served as Chairman and CEO of Best Manufacturing Group LLC., a leading manufacturer and distributor of uniforms, napery, service apparel, and hospitality and healthcare textiles. Mr. Korman also served as President and CEO of Welsh Farms Inc., a full-service dairy, processing and distributing milk, ice cream mix and ice cream products. Mr. Korman received a B.S. degree in Economics from the University of Pennsylvania Wharton School in 1977. He also serves on the boards of various not-for-profit groups and was the founder of the Englewood Business Forum. Mr. Korman’s experience as a CEO of a frozen dessert company enhances the breadth of experience of the board of directors.

Efraim Mintz was elected to serve as a member of our Board of Directors on December 29, 2020 by our Board of Directors. He was also appointed to serve on the Audit Committee. He is the founding Executive Director of the Rohr Jewish Learning Institute (JLI), the largest network of adult education, providing accredited courses, seminars, and multiple educational offerings in 2,000 chapters across the globe since 1999. He is also the founder of the Wellness Institute, offering mental health educational offerings and trainings for social workers, educators, and parents. He oversees a network of trained and certified course developers and instructors delivering courses accredited by the American Medical Association (AMA), the American Bar Association (in over 35 states), and the American Psychological Association (APA). He oversees a staff of 70 program coordinators, faculty members, department heads, creative marketing and web developers and directs a network of education departments for teens, university students, women’s studies, online learning and accredited continuing professional education.

Franklyn Snitow has been a director since ~~1987.~~1987 and was appointed to serve on the Audit Committee on August 16, 2021. He ~~has been~~is currently a partner in the New York ~~City~~City/Baltimore law firm ~~Snitow Kanfer & Holtzer, LLP, our general counsel since 1985.~~of Offit Kurman. Mr. Snitow’s legal and corporate governance background enhances the breadth of experience of the board of directors.

All directors hold office until the next Annual Meeting of Stockholders and until their successors have been elected and qualified. Officers serve at the pleasure of the Board of Directors. All of the executive officers devote their full time to our operations.

There are currently no employment agreements between us and any of our officers.

There are no family relationships between any of our directors and executive officers. Mr. David Mintz was the uncle of Efraim Mintz, a member of our Board of Directors.

From time to time we may be subject to various claims and contingencies in the ordinary course of business, including those related to litigation, business transactions, employee-related matters and taxes, and others. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we will record a liability for the loss. In addition to the estimated loss, the recorded liability includes probable and estimable legal costs associated with the claim or potential claim. There is no assurance that such matters will not materially and adversely affect our business, financial position, and results of operations or cash flows.

The Audit Committee of the Board of Directors is comprised of Mr. ~~Himy,~~Snitow, Mr. Korman and Mr. Mintz. ~~Mr. Efraim Mintz became a member of the Audit Committee upon his election to the Board.~~ The Board of Directors has determined that ~~all of the Audit Committee members~~Messrs. Snitow and Korman are independent directors, as that term is defined under the enhanced independence standards for audit committee members in the Exchange Act. The Board of Directors has also determined that ~~each of Mr. Himy and~~ Mr. Korman is an Audit Committee Financial Expert as that term is defined in rules issued pursuant to the Sarbanes-Oxley Act of 2002.

Our board of directors does not currently have a nominating and corporate governance committee or other committee performing a similar function, nor do we have any formal written policies outlining the factors and process relating to the selection of nominees for consideration for membership on our board of directors by our directors or our stockholders.

Section 16(a) of the Exchange Act, as amended, requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common stock and other of our equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by Commission regulations to furnish us with copies of all Section 16(a) reports they file.

To our knowledge, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons that no additional forms were required for those persons, we believe that during fiscal ~~2020~~2021 all persons subject to these reporting requirements filed the required reports on a timely basis.

We have adopted a Code of Business Conduct and Ethics, which applies to directors, officers, employees and agents of our company. We have also adopted a Code of Ethics for Senior Officers, which applies to our chief executive officer, and all senior financial officers of our company, including the chief financial officer, chief accounting officer or controller, or persons performing similar functions. The Code of Business Conduct and Ethics and the Code of Ethics for Senior Officers are publicly available on our website at www.tofutti.com and printed copies are available upon request. If we make any substantive amendments to the Code of Business Conduct and Ethics or the Code of Ethics or grant any waivers, including any implicit waiver, from a provision of these codes to our chief executive officer, chief financial officer or corporate controller or our directors, we will disclose the nature of such amendment or waiver on our website.

The following table sets forth information concerning the total compensation during the last three fiscal years for our named executive officers whose total salary in fiscal ~~2019~~2021 totaled $100,000 or more:

The aggregate value of all other perquisites and other personal benefits furnished to each of these executive officers was less than $10,000 in both the ~~2020~~2021 and ~~2019~~2020 fiscal years.

We do not currently have any employment agreements with our executive officers. We do not anticipate having employment contracts with executive officers and key personnel in the future.

During the fiscal year ended January ~~2, 2021,~~1, 2022, no grants were made under our 2014 Equity Incentive Plan.

Our non-employee directors earned director compensation in fiscal year ended January ~~2, 2021~~1, 2022 based on the number of meetings attended. ~~Mr. Neal Axelrod,~~The chairman of the audit committee ~~until his death in October 2020, received $1,500~~receives $2,000 per audit committee meeting ~~attended. Other~~and other members of the audit committee receive $1,000 per meeting attended. All other non-employee directors are entitled to $500 per meeting attended.

The following table sets forth the compensation received by each of the Company’s non-employee directors for the year ended January ~~2, 2021.~~1, 2022. Each non-employee director is deemed to be independent under the Exchange Act Rule 10A-3.

Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation ($) All Other Compensation ($) Total ($)
Neal S. Axelrod* 9,000 — — — — — 9,000
Joseph N. Himy 7,000 — — — — — 7,000
Scott Korman 7,000 — — — — — 7,000
Efraim Mintz** — —
Franklyn Snitow — — — — — — —

* Through October 2020.

** As of December 29, 2020.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following tables set forth as of ~~April 16, 2021~~March 25, 2022 certain information regarding the ownership of our common stock, $0.01 par value, for each person known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, for each executive officer named in the Summary Compensation Table, for each of our directors and for our executive officers and directors as a group:

Security Ownership of Certain Beneficial Owners and Management

Name and Address of Beneficial Owner(1)	Amount and Nature of Beneficial Owner(2)			Percent of Class(3)
Estate of David Mintz		2,630,440	(4)		51.0	%
Steven Kass		220,000			4.3	%
Franklyn Snitow		33,100			*
Joseph N. Himy		—			*
Scott Korman		—			*
Efraim Mintz		—	(4)		*
All Executive Officers and Directors as a group (5 persons in fiscal 2021)		253,100			4.7	%

Name and
Address of Beneficial Owner(1) Amount and
Nature of Beneficial Owner(2) Percent of Class(3)
Estate of David Mintz 2,912,926 (4) 53.6 %
Steven Kass 220,000 4.1 %
Franklyn Snitow 33,100 *
Joseph N. Himy — *
Scott Korman — *
Efraim Mintz *
All Executive Officers and Directors as a group (6 persons in fiscal 2020) 253,100 4.7 %

* Less than 1%.

(1)

The address of the Estate of Mr. David Mintz and Messrs. Joseph Himy, Steven Kass, and Efraim Mintz ~~and Frank Snitow~~ is c/o Tofutti Brands Inc., 50 Jackson Drive, Cranford, New Jersey 07016. The address of Mr. Snitow is 805 3^rd Avenue, 12 Floor, New York, New York 10022. The address of Mr. Korman is c/o Nashone, Inc., 175 Elm Road, Englewood, NJ 07361. Each of these persons has sole voting and/or investment power of the shares attributed to him.

~~(2)~~

(2)

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock relating to options currently exercisable or exercisable within 60 days of ~~April 16, 2021~~March 25, 2022 are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially owned by them.

(3)	Based on 5,153,706 shares issued and outstanding as of ~~April 16, 2021.~~March 25, 2022.
~~(4)~~	~~Includes 282,486 shares issuable upon conversion of a $500,000 note between the estate of~~
(4)	Mr. Mintz ~~and~~is acting as the ~~company.~~executor of the Estate of David Mintz, but disclaims any beneficial interest in the shares of common stock held by the Estate.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

In order to provide our company with additional working capital, on January 6, 2016, David Mintz, our then Chairman and Chief Executive, provided us with a loan of $500,000, which has been extended to come due on December 31, 2022. Commencing March 31, 2016, interest of 5% is payable on a quarterly basis without compounding. The loan may be prepaid in whole or in part at any time without premium or penalty. The loan is convertible into our common stock at a conversion price of $1.77 per share, the closing price of our common stock on the OTCQB on the date the promissory note was extended.

In On December 22, 2021, the ~~event~~entire loan of ~~default, as defined in~~$500,000 plus accrued interest of $25,000 was paid by the ~~promissory note, without any action on the part of~~Company to Mr. Mintz’s estate, for which Mr. Efraim Mintz acts as executor.

During fiscal 2021, we paid The CFO Squad $4,000 for financial services. Mr. Himy is the ~~interest rate will increase to 12% per annum and the entire principal and interest balance under the loan, and all~~Managing Director of ~~our other obligations under the loan, will be immediately due and payable, and the estate of Mr. Mintz will be entitled to seek and institute any and all remedies available to him.~~ The ~~loan is secured by is secured by substantially all of our assets.~~ CFO Squad.

Item 14.

Principal Accounting Fees and Services.

Set forth below are the aggregate fees billed by Mazars, our independent registered accounting firm, for the fiscal years ended January 1, 2022 and January 2, 2021 for services rendered by them as our independent registered accounting firm for such years.

	Fiscal 2021		Fiscal 2020
Audit fees	$	115,000	$	-
Audit-related fees		-		-
Total Audit & Audit-related fees	$	115,000	$	-
Tax fees		-
All other fees		-		-
Total fees	$	115,000	$	-

In addition, set forth below are the aggregate fees billed by EisnerAmper LLP, our former independent registered accounting firm, for the fiscal years ended January 1, 2022 and January 2, 2021 ~~and December 28, 2019~~ for services rendered by them as our independent registered accounting firm for such years.

	Fiscal 2020		Fiscal 2019		Fiscal 2021		Fiscal 2020
Audit fees	$	114,400	$	93,600	$	60,000	$	114,000
Audit-related fees		-		-		-		-
Total Audit & Audit-related fees	$	114,400	$	93,600	$	60,000	$	114,000
Tax fees				-		-
All other fees		-		-		-		-
Total fees	$	114,400	$	93,600	$	60,000	$	114,000

~~In addition, Mazars USA LLP has billed us $50,000 for the fiscal year ended January 2, 2021 for services rendered to us subsequent to January 2, 2021 as our independent registered accounting firm.~~

Audit fees consist of fees billed for services rendered for the audit of our financial statements and review of our financial statements included in our quarterly reports on Form 10-Q and services provided in connection with other statutory or regulatory filings.

Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported under Audit fees. No such fees were billed in fiscal ~~2020~~2021 or ~~2019.~~2020.

Tax fees consist of fees billed for professional services related to the preparation of our U.S. federal and state income tax returns and tax advice. No such fees were billed by ~~EisnerAmper LLP~~Mazars in fiscal ~~2020~~2021 or ~~2019.~~2020. The Audit Committee pre-approved all Audit-related fees. After considering the provision of services encompassed within the above disclosures about fees, the Audit Committee has determined that the provision of such services is compatible with maintaining ~~EisnerAmper’s~~Mazars’ independence.

The Audit Committee’s policy is to pre-approve all audit and non-audit related services, tax services and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee has delegated the pre-approval authority to its chairperson when expedition of services is necessary. The independent registered public accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval and the fees for the services performed to date.

Item 15.

Exhibits, Financial Statement Schedules.

~~(a)~~	~~Financial Statements~~

(a)	Financial Statements

	See Item 8.

(b)	Financial Statement Schedules

	None.

(c)	Exhibits

~~(c)~~3.1	~~Exhibits~~

~~3.1~~	Certificate of Incorporation, as amended through June 1993(1)
~~3.2~~	~~By-laws(2)~~
~~4.1~~3.2	By-laws(2)

4.1	Tofutti Brands Inc. 2014 Equity Incentive Plan(3)
~~10.1~~	~~Promissory Note(4)~~
~~10.2~~23.1	~~Security Agreement(5)~~
~~23.1~~	Consent of Mazars USA LLP
~~23.2~~	~~Consent of EisnerAmper LLP~~
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~~
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~~
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~~
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~~101.INS	~~Schema~~Inline XBRL Instance Document
~~101.CAL~~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 (embedded within the Inline XBRL document)

(1)	Filed as Exhibit 3.1 to the Registrant’s Form 10-K for the fiscal year ended December 30, 2017 and hereby incorporated by reference thereto.

(2)	Filed as Exhibit 3.2 to the Registrant’s Form 10-K for the fiscal year ended December 30, 2017 and hereby incorporated by reference thereto.

(3)	Filed as Appendix A to the Proxy Statement filed as the Registrant’s Schedule 14A filed May 14, 2014 and hereby incorporated by reference thereto.

~~(4)~~	~~Filed as Exhibit 10.1 to the Registrant’s Form 8-K bearing a cover date of January 10, 2020 and hereby incorporated by reference thereto.~~

~~(5)~~	~~Filed as Exhibit 10.2 to the Registrant’s Form 8-K bearing a cover date of January 10, 2020 and hereby incorporated by reference thereto.~~

~~SIGNATURES~~

Item 16.

Form 10-K Summary

We have elected not to provide summary information.

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 on April ~~19, 2021.~~1, 2022.

	TOFUTTI BRANDS INC.
	(Registrant)

	/s/ Steven Kass
	Steven Kass ~~Interim~~
	Chief Executive Officer

In accordance with the Securities Exchange Act of 1934, this Report has been signed below on April ~~19, 2021~~1, 2022 by the following persons on behalf of the Registrant and in the capacities indicated.

/s/ Steven Kass
Steven Kass ~~Interim~~
Chief Executive Officer, Secretary, Treasurer and Chief Financial and Principal Accounting Officer

/s/ Joseph Himy
Joseph Himy
Director

/s/ Efraim Mintz
Efraim Mintz ~~Director~~
Director
~~/s/ Joseph N. Himy~~
~~Joseph N. Himy~~ ~~Director~~

/s/ Scott Korman
Scott Korman ~~Director~~
Director

/s/ Franklyn Snitow
Franklyn Snitow ~~Director~~
Director

3841

~~[X]~~☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the fiscal year ended January ~~2, 2021~~1, 2022

~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


50 Jackson Drive, Cranford, New Jersey		07016
(Address of principal executive offices)		~~07016~~ (Zip Code)

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

Large accelerated filer ~~[ ]~~☐	Accelerated filer ~~[ ]~~☐
Non-accelerated filer ~~[ ]~~ ☐ (Do not check if a smaller reporting company)
Smaller reporting company ~~[X]~~☒	Emerging growth company ~~[ ]~~☐

PART I		34
Item 1.	Business.	34
Item 1A.	Risk Factors.	1011
Item 1B.	Unresolved Staff Comments.	1920
Item 2.	Properties.	1921
Item 3.	Legal Proceedings.	1921
Item 4.	Mine Safety Disclosures.	1921
PART II		1921
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	19
~~Item 6.~~	~~Selected Financial Data.~~	21
Item 6.	Reserved.	22
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2122
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	2829
Item 8.	Financial Statements and Supplementary Data.	2930
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	3031
Item 9A.	Controls and Procedures.	3031
Item 9B.	Other Information.	3132
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	32
PART III		3233
Item 10.	Directors, Executive Officers and Corporate Governance.	3233
Item 11.	Executive Compensation.	3435
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	3537
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	3638
Item 14.	Principal Accounting Fees and Services.	3638
PART IV
Item 15.	Exhibits, Financial Statement Schedules.	3739
Item 16.	Form 10-K Summary.	40
SIGNATURES		3841

♦	~~Premium~~ ~~TOFUTTI®~~ ~~dairy free frozen dessert, available in pre-packed pints, three-gallon cans, and soft serve mix, is sold nationally in supermarkets, health food stores, retail shops, and restaurants. Premium~~ ~~TOFUTTI~~ ~~was the first dairy free frozen dessert to be marketed to the general public through supermarkets. We currently offer six flavors of premium, hard frozen~~ ~~TOFUTTI~~ ~~in pints, three flavors in three-gallon bulk cans and one soft-serve flavor.~~

♦	~~TOFUTTI CUTIES®~~, our best-selling frozen dessert product, are bite size frozen sandwiches combining a choice of one of three different fillings between two chocolate wafers. Half the size of traditional ice cream sandwiches, ~~TOFUTTI CUTIES~~ ~~offer consumers a portion controlled treat. Unlike ice cream sandwiches,~~ ~~CUTIES~~ are totally dairy free, without butterfat or cholesterol, yet with the same great taste that makes ice cream sandwiches one of the bestselling novelties in the freezer case. Tofutti Cuties come in three flavors: vanilla, chocolate and mint chocolate chip. Like all our frozen dessert products, they are completely trans-fat free, including the wafers.

♦	~~YOURS TRULY~~ ~~cones have a generous scoop of creamy vanilla~~ ~~TOFUTTI~~ ~~set in a chocolate-coated crispy cone, then topped with a deep, rich chocolate coating and topped with a crispy chocolate cookie crunch.~~

♦	~~Our~~ ~~TOFUTTI MARRY ME® BARS~~ ~~are stick novelties that feature creamy vanilla~~ ~~TOFUTTI~~ ~~surrounded by a dark chocolate coating. Made with organic sugar and with no gluten added,~~ ~~MARRY M~~E ~~BARS~~ ~~satisfy important diet requirements of certain consumers with that great~~ ~~TOFUTTI~~ ~~taste.~~

♦
♦	TOFUTTI WHIPPED BETTER THAN CREAM CHEESE is the whipped version of our original BETTER THAN CREAM CHEESE available in a 14 oz. container. It is available in many supermarkets and health food stores.

♦	BETTER THAN SOUR ~~CREAM®~~CREAM^® is similar in taste and texture to traditional sour cream, but is dairy free, butterfat-free, gluten-free and contains no cholesterol. BETTER THAN SOUR CREAM has the versatility of sour cream with the added benefit of being dairy free. The 12 oz. retail packages are available in plain and guacamole. The plain version is also available in 5 lb. containers for food service customers. Like BETTER THAN CREAM CHEESE, BETTER THAN SOUR CREAM is available nationally in many health food stores, select supermarkets and ~~select supermarkets.~~food service outlets.

♦	TOFUTTI DIPPITY DO DAH DIPS incorporate our BETTER THAN SOUR CREAM with ~~four~~three exciting flavors for use as dips for snacking. Those flavors are Roasted Garlic, Garden Cucumber, and French Onion and ~~Cheddar Jalapeno~~are available in 12 oz. retail containers.

♦
♦	TOFUTTI AMERICAN VEGAN CHEESE SLICES™ offer consumers a delicious dairy free, gluten-free, vegan alternative to regular cheese slices and contain no trans fatty acids. Available as individually wrapped slices in 8 oz. packages, TOFUTTI AMERICAN VEGAN CHEESE SLICES are sold in most health food stores and select ~~supermarkets and come in two flavors: Mozzarella and American. The Mozzarella version is also available in 40 lb. blocks for food service customers.~~supermarkets.

♦	BETTER THAN RICOTTA ~~CHEESE®~~CHEESE^®, our dairy free ricotta cheese alternative, offers consumers a dairy-free and gluten-free alternative that tastes and works just like real ricotta cheese in all their favorite recipes. Available in 1614 oz. retail containers, BETTER THAN RICOTTA is available nationally in supermarkets and health food stores.

♦	Premium TOFUTTI ~~BLINTZES~~ ^®~~are~~ dairy free frozen ~~crepes filled with~~ ~~TOFUTTI BETTER THAN CREAM CHEESE~~ ~~that are dairy and cholesterol free, yet taste just like real cheese blintzes. Our~~ ~~BLINTZES~~ ~~are~~dessert, available in ~~freezer cases~~pre-packed pints, three-gallon cans, and soft serve mix, is sold nationally in ~~select~~ supermarkets, ~~and~~ health food stores, retail shops, and ~~can~~restaurants. Premium TOFUTTI was the first dairy free frozen dessert to be ~~served hot, warm,~~marketed to the general public through supermarkets. We currently offer six flavors of premium, hard frozen TOFUTTI in pints, three flavors in three-gallon bulk cans and one soft-serve flavor.

♦	TOFUTTI CUTIES^®, our best-selling frozen dessert product, are bite size frozen sandwiches combining a choice of one of three different fillings between two chocolate wafers. Half the size of traditional ice cream sandwiches, TOFUTTI CUTIES offer consumers a portion-controlled treat. Unlike ice cream sandwiches, CUTIES are totally dairy free, without butterfat or ~~slightly chilled as a main meal or a snack.~~cholesterol, yet with the same great taste that makes ice cream sandwiches one of the bestselling novelties in the freezer case. Tofutti Cuties come in three flavors: vanilla, chocolate and mint chocolate chip.

	Fiscal Year ended January 2, 2021					Fiscal Year ended December 28, 2019					Fiscal Year ended January 1, 2022					Fiscal Year ended January 2, 2021
	Sales		% of total Sales			Sales		% of total Sales			Sales		% of total Sales			Sales		% of total Sales
	(Dollars in thousands)										(Dollars in thousands)
Metropolitan New York											$	2,368		19	%	$	1,600		12	%
California	$	2,333		17	%	$	1,860		14	%		1,934		15	%		2,333		17	%
Midwest		2,198		16	%		1,993		15	%		1,756		14	%		2,198		16	%
Metropolitan New York		1,600		12	%		1,884		14	%
Northwest												832		7	%		816		6	%
Mid-Atlantic		1,380		10	%		1,025		8	%		793		6	%		1,380		10	%
Northwest		816		6	%		814		6	%
Florida		790		6	%		788		6	%		712		6	%		790		6	%
New England												576		5	%		647		5	%
Upstate New York		782		6	%		681		5	%		574		5	%		782		6	%
Southwest												570		5	%		615		4	%
Southeast		651		5	%		508		4	%		410		3	%		651		5	%
New England		647		5	%		959		7	%
Southwest		615		4	%		400		3	%
Rocky Mountains		324		2	%		296		2	%		258		2	%		324		2	%

●	different and changing regulatory requirements in the jurisdictions in which we currently operate or may operate in the future;

●	the impact of possible recessionary environments in multiple foreign markets;

●	export restrictions, tariffs and other trade barriers;

●	difficulties in managing and supporting foreign operations;

●	longer payment cycles;

●	difficulties in collecting accounts receivable;

●	political and economic changes, hostilities and other disruptions in regions where we currently sell our products or may sell our products in the future;

●	seasonal reductions in business activities; and

●	on-going Covid-19 restrictions imposed by foreign governments.

	●	a continuing lack of sufficient resources and an insufficient level of monitoring and oversight, which may restrict our ability to gather, analyze and report information relative to the financial statements, including but not limited to accounting estimates, reserves, allowances, and income tax matters, in a timely manner.

	●	The limited size of the accounting department makes it impracticable to achieve an optimum separation of duties and monitoring of internal controls.

	●	actual or anticipated variations in our quarterly operating results or those of our competitors;

	●	announcements by us or our competitors of new and enhanced products;

	●	developments or disputes concerning proprietary rights;

	●	introduction and adoption of new industry standards;

	●	market conditions or trends in our industry;

	●	announcements by us or our competitors of significant acquisitions;

	●	entry into strategic partnerships or joint ventures by us or our competitors;

	●	additions or departures of key personnel;

	●	political and economic conditions, such as a recession or interest rate or currency rate fluctuations or political events; and

	●	other events or factors in any of the countries in which we do business, including those resulting from war, incidents of terrorism, natural disasters, pandemics or responses to such events.

Cash Flows	Fiscal Year ended
	January 2, 2021		December 28, 2019
	(In thousands)
Net cash provided by (used in) operating activities	$	780	$	(15	)
Net cash used in investing activities		—		(29	)
Net cash provided financing activities		165		—
Net increase (decrease) in cash		945		(44	)
Cash at beginning of year		514		558
Cash at end of year	$	1,459	$	514

	Fiscal Year ended
	January 1, 2022			January 2, 2021
	(In thousands)
Net cash provided by operating activities	$	689		$	780
Net cash provided by investing activities – sale and disposal of equipment		50			—
Net cash (used in) provided by financing activities		(500	)		165
Net increase in cash		239			945
Cash at beginning of year		1,459			514
Cash at end of year	$	1,698		$	1,459

~~Reports~~Report of Independent Registered ~~Public~~ Accounting ~~Firms~~Firm (Mazars USA LLP, Edison, NJ, PCAOB ID 339)	F-1 ~~– F-2~~

Financial Statements:

Balance Sheets	F-3

Statements of Income	F-4

Statements of Changes in Stockholders’ Equity	F-5

Statements of Cash Flows	F-6

Notes to Financial Statements	F-7

	●	We obtained an understanding of the Company’s ~~revenue recognition process, including the~~ evaluation of the historical application of sales discounts and ~~returns.~~allowances.

	●	We performed audit procedures that included, among others, ~~testing revenue transactions during the year and evaluating the identification of performance obligations and ensuring that gross revenue is appropriately stated. Our~~ testing of the significant estimates surrounding sales discounts and allowance included an understanding of all sales promotions, and other discounts available during the year, analysis of credit memos, including those subsequent to year end, and an historical analysis of accrued sales allowances and discounts compared to the current trends.

	January 2, 2021		December 28, 2019		January 1, 2022		January 2, 2021
Assets
Current assets:
Cash	$	1,459	$	514	$	1,698	$	1,459
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $457 and $407, respectively		2,078		1,819
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $435 and $407, respectively						1,336		2,078
Inventories		1,997		1,929		1,874		1,997
Prepaid expenses and other current assets		88		120		98		88
Total current assets		5,622		4,382		5,006		5,622

Equipment, net		135		145		-		135
Operating lease right-of-use assets		224		252		203		224
Deferred tax assets		83		217		112		83
Other assets		19		30		21		19
Total assets	$	6,083	$	5,026	$	5,342	$	6,083

Liabilities and Stockholders’ Equity
Current liabilities:
SBA loan payable	$	112		—	$	165	$	112
Income taxes payable		117		—		46		117
Accounts payable		219		167		122		219
Accrued expenses		535		375		347		535
Total current liabilities		983		542		680		983

Convertible note payable-long term-related party		500		500		-		500
SBA loan payable, net of current portion		53		—		-		53
Operating lease liabilities		123		156
Operating lease liabilities, net of current portion						95		123
Total liabilities		1,659		1,198		775		1,659

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, issued and outstanding 5,153,706 shares		52		52
Preferred stock - par value $.01 per share; authorized 100,000 shares, NaN 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		207		207		207		207
Retained earnings		4,165		3,569		4,308		4,165
Total stockholders’ equity		4,424		3,828		4,567		4,424
Total liabilities and stockholders’ equity	$	6,083	$	5,026	$	5,342	$	6,083

	Fiscal year ended January 2, 2021		Fiscal year ended December 28, 2019		Fiscal year ended January 1, 2022		Fiscal year ended January 2, 2021

Net sales	$	13,815	$	13,130	$	12,590	$	13,815
Cost of sales		9,562		9,093		9,248		9,562
Gross profit		4,253		4,037		3,342		4,253

Operating expenses:
Selling and warehousing		1,187		1,632		1,206		1,187
Marketing		258		347		281		258
Product development costs		240		324		124		240
General and administrative		1,692		1,626		1,489		1,692
Total operating expenses		3,377		3,929		3,100		3,377

Income from operations		876		108
Interest expense- related party		25		25

Income before interest expense and income taxes						242		876
Interest expense						25		25
Income before provision for income taxes		851		83		217		851

Provision for income taxes		255		5		74		255

Net income	$	596	$	78	$	143	$	596

Weighted average common shares outstanding:
Basic		5,154		5,154		5,154		5,154
Diluted		5,456		5,154		5,154		5,456
Net income per common share:
Basic	$	0.12	$	0.02	$	0.03	$	0.12
Diluted	$	0.11	$	0.02	$	0.03	$	0.11

	Common Stock				Additional Paid-In		Retained		Total Stockholders’		Shares		Amount		Capital		Earnings		Equity
	Shares		Amount		Capital		Earnings		Equity		Common Stock				Additional Paid-In		Retained		Total Stockholders’
Balances December 29, 2018		5,153,706	$	52	$	207	$	3,491	$	3,750
Net income		—		—		—		78		78
											Shares		Amount		Capital		Earnings		Equity
Balances December 28, 2019		5,153,706		52		207		3,569		3,828		5,153,706	$	52	$	207	$	3,569	$	3,828
Net income		—		—		—		596		596		—		—		—		596		596
Balances January 2, 2021		5,153,706	$	52	$	207	$	4,165	$	4,424		5,153,706		52		207		4,165		4,424
Net income												-		-		-		143		143
Balances January 1, 2022												5,153,706	$	52	$	207	$	4,308	$	4,567

	Fiscal Year ended January 2, 2021			Fiscal Year ended December 28, 2019			Fiscal Year ended January 1, 2022			Fiscal Year ended January 2, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	596		$	78		$	143		$	596
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation		10			5			10			10
Non-cash change in right of use assets and lease liabilities								(7	)		(5	)
Loss on sale and disposal of equipment								75			-
Provision for bad debts and sales promotions		50			260			20			50
Deferred taxes		134			—			(29	)		134

Change in assets and liabilities:
Accounts receivable		(309	)		49			722			(309	)
Inventories		(68	)		(215	)		123			(68	)
Prepaid expenses		32			(38	)		(10	)		32
Operating lease right of use assets		28			54
Other assets		11			(14	)		(2	)		11
Income taxes payable		117			—			(71	)		117
Accounts payable and accrued expenses		212			(194	)		(285	)		212
Operating lease liabilities		(33	)		—
Net cash flows provided by (used in) operating activities		780			(15	)
Net cash flows provided by operating activities								689			780

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		—			(29	)
Proceeds from sale of equipment								50			—
Net cash flows provided by investing activities								50			-

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Payment of convertible note payable								(500	)		-
Borrowings from SBA loan		165			—			-			165
Net cash flows (used in) provided by financing activities								(500	)		165

NET CHANGE IN CASH		945			(44	)		239			945
CASH AT BEGINNING OF YEAR		514			558			1,459			514
CASH AT END OF YEAR	$	1,459		$	514		$	1,698		$	1,459

SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid	$	—		$	5		$	180		$	—
Interest paid- related party	$	25		$	25		$	25		$	25

OPERATING CASH FLOWS:
Cash paid for the amounts in the measurement of operating lease liability	$	—		$	99
Right of use assets obtained in exchange for the operating lease liability	$	—		$	361

	January 1, 2022		January 2, 2021
Finished products	$	1,218	$	1,320
Raw materials and packaging		656		677
Inventories, net	$	1,874	$	1,997

	January 2, 2021		December 28, 2019
Manufacturing equipment installed at co-packer	$	150	$	150
Less: accumulated depreciation		15		5
Equipment, net	$	135	$	145

	January 1, 2022		January 2, 2021
Note payable-related party	$	—	$	500
Less current maturity		—		—
Note payable related party, net of current maturity	$	—	$	500

	January 1, 2022		January 2, 2021
Revenues by geographical region are as follows:

	January 1, 2022		January 2, 2021
Revenues by geography:
Americas	$	11,864	$	13,272
Europe		183		147
Middle East		334		331
Asia Pacific and Africa		209		65
Revenues	$	12,590	$	13,815

	January 1, 2022		January 2, 2021
Net sales by major product category:

	January 1, 2022		January 2, 2021
Cheeses	$	10,761	$	11,669
Frozen Desserts and Foods		1,829		2,146
Revenues	$	12,590	$	13,815

	NON-QUALIFIED OPTIONS
	Shares		Weighted Average Exercise Price ($)
Outstanding at December 29, 2018		80,000		4.42
Granted		—		—
Exercised		—		—
Outstanding and exercisable at December 28, 2019		80,000		4.42
Expired during fiscal year 2020		80,000		—
Outstanding and exercisable at January 2, 2021		—		—

	As of			As of
	January 1, 2022			January 2, 2021
Operating lease right-of-use assets	$	203		$	224

Current portion of lease liabilities		123			113
Operating lease liabilities, net of current portion		95			123
Total lease liabilities	$	218		$	236

Weighted average remaining lease term (in years)		3.0			2.1
Weighted average discount rate		5.5	%		5.5	%

	January 1, 2022		January 2, 2021
Federal income tax	$	46	$	179
State income taxes, net of federal income tax benefit		18		76
Permanent items		3		—
Other		7		—
Total income tax expense	$	74	$	255

	January 2, 2021			December 28, 2019		January 1, 2022			January 2, 2021
Allowance for doubtful accounts	$	83		$	98	$	88		$	83
Right of use asset		67			—		(57	)		(67	)
Lease liabilities		(67	)		—		61			67
Inventory		—			30		1			—
Federal and state net operating loss		—			39
Other		—			50
Fixed assets							19			—
Deferred tax asset, net	$	83		$	217	$	112		$	83

Balance at December 29, 2018	$	172
Balance at December 28, 2019			$	172
Increase due to reserves and tax positions related to current year		—		—

Balance at December 28, 2019	$	172

Balance at January 2, 2021	$	172	$	172
Increase due to reserves and tax positions related to current year				8
Balance at January 1, 2022			$	180

●	A continuing lack of sufficient resources and an insufficient level of monitoring and oversight, which may restrict our ability to gather, analyze and report information relative to the financial statements, including but not limited to accounting estimates, reserves, allowances, and income tax matters, in a timely manner.

●	~~The limited size of the accounting department makes it impracticable to achieve an optimum separation of duties and monitoring of internal controls.~~

Name	Age	Position

Steven Kass	6970	~~Interim~~ Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
Joseph N. Himy	5051	Director
Scott Korman	6061	Director
Efraim Mintz	5152	Director
Franklyn Snitow	7374	Director

Name and Principal Position	Fiscal Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total($)		Fiscal Year		Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)		Total($)
David Mintz*		2020		459,000		—		—		—		—		—		459,000		2021		104,000		—		—		—		—		—		104,000
Chief Executive Officer		2019		450,000		—		—		—		—		—		450,000
and Director		2018		450,000		—		—		—		—		—		450,000
Chief Executive Officer and Director																		2020		459,000		—		—		—		—		—		459,000

Steven Kass		2020		127,000		—		—		—		—		—		127,000		2021		151,000		—		—		—		—		—		151,000
Chief Financial Officer		2019		125,000		—		—		—		—		—		125,000		2020		127,000		—		—		—		—		—		127,000
		2018		125,000		—		—		—		—		—		125,000
And Chief Executive Officer**