U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 30, 1996
Transition report under Section 13 or 15(d) of the Exchange Act for
the transition period from to
Commission file number: 1-9009
Tofutti Brands Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3094658
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(State of Incorporation) (I.R.S. Employer
Identification No.)
50 Jackson Drive, Cranford, New Jersey 07016
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(Address of Principal Executive Offices)
(908) 272-2400
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(Issuer's Telephone Number, Including Area Code)
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(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 6, 1996 the Issuer had 6,053,567 shares of Common Stock, par
value $.01, outstanding
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
TOFUTTI BRANDS INC.
INDEX
Page
Part I - Financial Information:
Condensed Balance Sheets - March 30, 1996
(Unaudited) and December 30, 1995 (Audited) 3
Condensed Statements of Operations -
(Unaudited) - Thirteen Week Period ended
March 30, 1996 and Thirteen Week Period
ended April 1, 1995 4
Condensed Statements of Cash Flows -
(Unaudited) - Thirteen Week Period
ended March 30, 1996 and Thirteen Week
Period ended April 1, 1995 5
Notes to Condensed Financial Statements -
(Unaudited) 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operation 7-8
Part II - Other Information:
Item 4. Submission of Matters to a Vote
of Shareholders 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
2
<PAGE>
TOFUTTI BRANDS INC.
Condensed Balance Sheets
(000's omitted)
March 30, December 30,
1996 1995
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 10 12
Accounts receivable (net of reserve of
$251 in 1996 and $242 in 1995) 851 1,006
Inventories 226 196
Prepaid expenses 8 11
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Total current assets 1,095 1,225
Deferred taxes 264 264
Other assets 56 56
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Total assets $ 1,415 1,545
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Legal settlement payable - current portion $ 13 13
Accounts payable 365 364
Accrued liabilities 46 186
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Total current liabilities 424 563
Long-term debt - legal settlement 77 81
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Total liabilities 501 644
Stockholders' equity:
Preferred stock -- --
Common stock 61 61
Paid-in capital 3,503 3,503
Retained (deficit) (2,650) (2,663)
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Total stockholders' equity 914 901
------- -------
Total liabilities and stockholders'
equity $ 1,415 1,545
======= =======
See accompanying notes to condensed financial statements.
3
<PAGE>
TOFUTTI BRANDS INC.
Condensed Statement of Operations
(Unaudited)
(000's omitted)
Thirteen Thirteen
weeks weeks
ended ended
March 30,1996 April 1,1995
Net sales $1,095 1,024
Cost of sales 654 584
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Gross profit 441 440
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Operating expenses:
Selling 160 172
Marketing and sales promotion 42 37
Research and development 42 42
General and administrative 180 173
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424 424
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Operating income 17 16
Interest expense 3 3
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Income before income
tax expense 14 13
Income tax expense 1 --
------ ------
Net income $ 13 13
====== ======
Net income per share $ -- --
====== ======
Weighted average number of
shares outstanding 6,071 6,084
====== ======
See accompanying notes to condensed financial statements.
4
<PAGE>
TOFUTTI BRANDS INC.
Condensed Statements of Cash Flows
(Unaudited)
(000's omitted)
Thirteen Thirteen
weeks weeks
ended ended
March 30,1996 April 1,1995
Cash flows from operating
activities, net $ 2 103
Cash flows from investing activities - -
Cash flows from financing activities - -
Net increase (decrease) in
cash and cash equivalents 2 103
Cash at beginning of period 10 7
---- ----
Cash at end of period $ 12 110
==== ====
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 3 3
See accompanying notes to condensed financial statements.
5
<PAGE>
TOFUTTI BRANDS INC.
Notes to Condensed Financial Statements
(Unaudited)
(000's omitted)
(1) Basis of Presentation
The accompanying financial information is unaudited, but, in the
opinion of management, reflects all adjustments (which include only
normally recurring adjustments) necessary to present fairly the
Company's financial position, operating results and cash flows for the
periods presented. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. The financial information should be read in conjunction
with the audited financial statements and notes thereto for the year
ended December 30, 1995 included in the Company's Annual Report on Form
10-KSB filed with the Securities and Exchange Commission. The results
of operations for the thirteen week period ended March 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
(2) Inventories
The composition of inventories is as follows:
March 30, Dec. 30,
1996 1995
Raw materials and packaging
supplies $ 81 108
Finished goods 145 88
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$ 226 196
===== ====
6
<PAGE>
TOFUTTI BRANDS INC.
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 the Company's financial position and operating
results during the periods included in the accompanying condensed financial
statements.
Results of Operations
Thirteen Weeks Ended March 30, 1996 Compared with Thirteen Weeks
Ended April 1, 1995
Net sales for the thirteen weeks ended March 30, 1996 were $1,095,000, an
increase of $71,000 from the sales level realized for the thirteen weeks ended
April 1, 1995. In the 1996 period sales of hard pack Tofutti decreased by
$3,000, while food products sales increased by $74,000. The gross profit
remained constant despite the increase in sales; however, the gross profit
percentage for the current period declined compared to the previous period due
to an increase in food product sales versus frozen dessert sales, and an
increase in Cutie novelty sales and a decrease in pint sales. The gross profit
obtained on sales of Cuties is less than that on sales of pints, as is the gross
profit on food product sales compared to hard pack sales.
The Company anticipates a continuing increase in sales during the second and
third quarters of the current fiscal year due to the introduction of new
products and expanded distribution. Such increase is dependent upon market
acceptance of these products, for which no assurance can be given.
Selling expenses decreased to $160,000 for the current fiscal quarter compared
with $172,000 for the comparable period last year. This decrease is due
principally to a reduction in payroll expense. Marketing and sales promotion
expenses increased slightly to $42,000 from $37,000 in 1995 due to an increase
in radio advertising and the purchase of point of sale material during the
current quarter.
Research and development costs, which consist principally of salary expenses,
remained constant at $42,000 for the thirteen weeks ended March 30, 1996.
7
<PAGE>
General and administrative expenses increased slightly to $180,000 for the
current quarter compared with $173,000 for the comparable period in 1995.
Interest expense was unchanged at $3,000 for the current quarter.
Liquidity and Capital Resources
At March 30, 1996, the Company's working capital was $671,000, an increase of
$9,000 from December 30, 1995. At the end of the thirteen week period, accounts
receivable decreased by $155,000 from December 30, 1995. Inventories increased
by $30,000 reflecting an increase in finished goods inventory at outside
warehouses, while prepaid expenses decreased by $3,000. Other assets and
deferred taxes were unchanged from December 30, 1995. Accounts payable increased
by $1,000, while accrued liabilities decreased by $140,000. The Company does not
have any material capital commitments.
As a result of the Company's inability to secure additional financing or equity
capital, it has not had sufficient funds to fully implement the marketing of its
new products. This has hindered the Company in its efforts to increase the sales
of its products. The Company continues to fund its operations from current
resources. Based on recent sales trends and the planned introduction of new
products in the second and third quarters of this year, the Company believes
that its revenues will improve in 1996. Management believes that it will have
sufficient financial resources to continue its operations through the coming
year.
8
<PAGE>
PART II - OTHER INFORMATION
TOFUTTI BRANDS INC.
Item 4. Submission of Matters to a Vote of Shareholders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1* Certificate of Incorporation, as amended through February
1986.
3.1.1** March 1986 Amendment to Certificate of Incorporation
3.2* By-laws
4.1*** Copy of the Company's 1993 Stock Option Plan
10.1**** Copy of Legal Settlement between the Company and the NEMP
Corporation
(b) Reports on Form 8-K filed during the last quarter of the
period covered by this report:
None
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* Filed as an exhibit to the Registrant's Form 10-K for the fiscal year
ended July 31, 1985 and hereby incorporated by reference thereto.
** Filed as an exhibit to the Registrant's Form 10-K for the fiscal year
ended August 2, 1986 and hereby incorporated by reference thereto.
*** Filed as an exhibit to the Company's Form 10-KSB for the fiscal year
ended January 1, 1994 and hereby incorporated by reference thereto.
**** Filed as an exhibit to the Registrant's Form 10-K for the fiscal year
ended December 28, 1991 and hereby incorporated by reference thereto.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TOFUTTI BRANDS INC.
(Registrant)
s/David Mintz
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David Mintz
President
s/Steven Kass
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Steven Kass
Chief Financial Officer
Date: May 8, 1996
10
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-28-1996
<PERIOD-END> Mar-30-1996
<CASH> 10,000
<SECURITIES> 0
<RECEIVABLES> 1,102,000
<ALLOWANCES> 251,000
<INVENTORY> 226,000
<CURRENT-ASSETS> 1,095,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,415,000
<CURRENT-LIABILITIES> 424,000
<BONDS> 77,000
0
0
<COMMON> 61,000
<OTHER-SE> 853,000
<TOTAL-LIABILITY-AND-EQUITY> 1,415,000
<SALES> 0
<TOTAL-REVENUES> 1,095,000
<CGS> 654,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 424,000
<LOSS-PROVISION> 9,000
<INTEREST-EXPENSE> 3,000
<INCOME-PRETAX> 14,000
<INCOME-TAX> 1,000
<INCOME-CONTINUING> 13,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,000
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
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