UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Commission file number: 1-9009

Tofutti Brands Inc.

(Exact Name of Registrant as Specified in Its Charter)

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

(Address of Principal Executive Offices)

(908) 272-2400

(Registrant’s Telephone Number, including area code)

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

N/A

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

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

Yes ☒ No ☐

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

Yes ☒ No ☐

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

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

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

Yes ☐ No ☒

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

TOFUTTI BRANDS INC.

INDEX

Item 1. Financial Statements

TOFUTTI BRANDS INC.

Unaudited Condensed Balance Sheets

(in thousands, except share and per share figures)

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Operations

(in thousands, except per share figures)

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS, INC.

Unaudited Condensed Statements of Changes in Stockholders’ Equity

(in thousands)

See accompanying notes to unaudited condensed financial statements.

TOFUTTI BRANDS INC.

Unaudited Condensed Statements of Cash Flows

(in thousands)

See accompanying notes to unaudited condensed financial statement

TOFUTTI BRANDS INC.

Notes to Unaudited Condensed Financial Statements

(in thousands, except share and per share data)

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

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

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

Critical Accounting Estimates

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The policies discussed below are considered by management to be critical to an understanding of our financial statements because their application places the most significant demands on management’s judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. Specific risks for these critical accounting policies are described in the following paragraphs. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment.

Revenue Recognition. We primarily sell vegan and dairy-free soy-based cheeses and frozen desserts. We recognize revenue when control over the products transfers to our customers, deemed to be the performance obligation, which generally occurs when the product is shipped or picked up from one of our distribution locations by the customer. We account for product shipping, handling and insurance as fulfillment activities with revenues for these activities recorded within net revenue and costs recorded within cost of sales. Revenues are recorded net of trade and sales incentives and estimated product returns. Known or expected pricing or revenue adjustments, such as trade discounts, rebates or returns, are estimated at the time of sale. We base these estimates of expected amounts principally on historical utilization and redemption rates. Estimates that affect revenue, such as trade incentives and product returns, are monitored and adjusted each period until the incentives or product returns are realized.

Key sales terms, such as pricing and quantities ordered, are established on a frequent basis such that most customer arrangements and related incentives have a one year or shorter duration. As such, we do not capitalize contract inception costs and we capitalize product fulfillment costs in accordance with U.S. GAAP and our inventory policies. We generally do not have any unbilled receivables at the end of a period.

Accounts Receivable. The majority of our accounts receivables are due from distributors (domestic and international) and retailers. Management closely monitors outstanding balances during the year and allocates an allowance account if appropriate. The Company estimates and records a provision for its expected credit losses related to its financial instruments, including its trade receivables and contract assets. The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses. Forward-looking information is also considered in the evaluation of current expected credit losses. However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of expected losses, approximates fair value and therefore, relies more on historical and current analysis of such financial instruments.

Inventory. Inventory is stated at lower of cost or net realizable value determined by first in first out (FIFO) method. Inventories in excess of future demand are written down and charged to the provision for inventories. At the point of which loss is recognized, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the newly established cost basis.

Leases. Under Topic 842, operating lease expense is generally recognized evenly over the term of the lease. We have operating leases primarily consisting of facilities with remaining lease terms of approximately one to three years. Leases with an initial term of twelve months or less are not recorded on the balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, we have combined the lease and non-lease components in determining the lease liabilities and right of use assets.

Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded if there is uncertainty as to the realization of deferred tax assets. We will recognize a tax benefit in the financial statements for an uncertain tax position only if management’s assessment is that the position is “more likely than not” (i.e., a likelihood greater than 50 percent) to be allowed by the tax jurisdiction based solely on the technical merits of the position. The term “tax position” refers to a position in a previously filed tax return or a position expected to be taken in a future tax return that is reflected in measuring current or deferred income tax assets and liabilities for financial reporting purposes.

The Company learned in February 2026 that the owner of our primary co-packer for our key products intends to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. While management is actively searching for an alternative co-packer, there is no assurance a suitable replacement can be found. In addition, we have had declining revenues, recurring losses from operations and cash outflows from operations in the last few years. These conditions result in substantial doubt about our ability to continue as a going concern.

Recent Accounting Pronouncements and Adoption

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

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company plans to adopt this standard in fiscal 2027 and will provide the additional disclosures required by ASU 2024-03.

In July 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets”, which provides all entities, including public business entities, with a practical expedient, which allows the entity to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The adoption of this standard did not have a material impact on our financial statements.

Results of Operations

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

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

Our gross profit decreased to $469,000 for the thirteen weeks ended March 28, 2026 from $589,000 for the thirteen weeks ended March 29, 2025. Our gross profit percentage was 30% for the thirteen weeks ending March 28, 2026 compared to 37% for the thirteen weeks ending March 29, 2025. There were significant ingredient and packaging cost increases that took place in the first quarter of 2026 that were not present in the first quarter of 2025.

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

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

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

Product development costs increased slightly by $7,000, or 16%, to $51,000 for the thirteen weeks ended March 28, 2026 from $44,000 for the thirteen weeks ended March 29, 2025 due to a $5,000 increase in professional fees and outside services expense. We anticipate our product development costs for the balance of the year will continue at a slightly higher level as compared to the 2025 period due to higher professional fees and outside services expense.

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

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

Liquidity and Capital Resources

The Company learned in February 2026 that the owner of our primary co-packer for our key products intends to close its plant effective July 31, 2026. The products produced by this facility accounted for approximately 80% of our sales for the year ended December 27, 2025. While management is actively searching for an alternative co-packer, there is no assurance a suitable replacement can be found. In addition, we have had declining revenues, recurring losses from operations and cash outflows from operations in the last few years. These conditions result in substantial doubt about our ability to continue as a going concern.

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

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

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

Inflation and Seasonality

While we do not believe that our operating results have been materially affected by inflation during the preceding two years, there can be no assurance that our operating results will not be affected by inflation in the future. Although we have not experienced adverse price increases on our imports or exports due to tariffs, there is no guarantee that future tariffs will not negatively impact our business. Our business is subject to minimal seasonal variations with slightly increased sales historically in the second and third quarters of the fiscal year. We expect to continue to experience slightly higher sales in the second and third quarters, and slightly lower sales in the fourth and first quarters, as a result of reduced sales of dairy free frozen desserts during those periods.

Off-balance Sheet Arrangements

None.

Contractual Obligations

We had no material contractual obligations as of March 28, 2026.

Recently Issued Accounting Standards

See Note 2 to the unaudited condensed financial statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We do not believe that our exposure to market risk related to the effect of changes in interest rates, foreign currency exchange rates, commodity prices and other market risks with regard to instruments entered into for trading or for other purposes is material.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of March 28, 2026, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of March 28, 2026 because of the material weaknesses in internal control over financial reporting described below.

The material weaknesses related to: (i) a continuing lack of sufficient resources and an insufficient level of monitoring and oversight, which may restrict our ability to gather, analyze and report information relative to the financial statements, including accounting estimates, reserves, allowances and income tax matters, in a timely manner; and (ii) the limited size of our accounting department, which makes it impracticable to achieve an optimum separation of duties and monitoring of internal controls. To date, we have been unable to remediate these weaknesses, which stem from our small workforce.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended March 28, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material litigation.

Item 1A. Risk Factors

Increased commodity costs could decrease our profit margins which could adversely affect our business.

Our profitability depends, in part, on our ability to anticipate and react to changes in the price and availability of food commodities. Prices may be affected due to market changes, increased competition, the general risk of inflation, the impacts of tariffs or the responses of other governments, consumers or suppliers to U.S. imposed tariffs, shortages or interruptions in supply due to weather, disease or other conditions beyond our control, or other reasons. While we have been able to partially offset inflation and other changes in the costs of commodities by increasing prices, there can be no assurance that we will be able to continue to do so in the future.

Additionally, with elevated inflationary pressures across the business, we face an above average risk that we will have to renegotiate contracts and agreements with suppliers on a more frequent basis. Shortened windows of certainty can impact our ability to plan our business from a supply and profitability perspective and we face greater risk of margin volatility.

There have been no other material changes to the Company’s “Risk Factors” set forth in its Annual Report on Form 10-K for the year ended December 27, 2025.

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

None.

Item 3. Default Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

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

Item 6. Exhibits

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.