SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OR
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1995
Commission File Number: 1-9009
TOFUTTI BRANDS INC.
(Name of small business issuer in its charter)
Delaware 13-3094658
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 Jackson Drive, Cranford, New Jersey 07016
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (908) 272-2400
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $.01 per share American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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, and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $5,023,000
The aggregate market value of voting stock held by non-affiliates computed by
reference to the closing sale price of such stock, as reported by the American
Stock Exchange, on March 12, 1996 was $2,264,000.
As of March 12, 1996, the Registrant had 6,053,567 shares of Common Stock, par
value $.01, outstanding.
Transitional Small Business Disclosure Format Yes No x .
<PAGE>
PART I
Item 1. Description of Business
GENERAL
Tofutti Brands Inc., a Delaware corporation (the "Company") is engaged
in the development, production and marketing of TOFUTTI (registered trademark)
brand non-dairy frozen desserts and other food products. TOFUTTI products are
non-dairy, soya-based products which contain no butterfat, cholesterol or
lactose. Butterfat and cholesterol are perceived by some medical experts and a
significant number of consumers as causing health problems. In addition, some
studies have shown that lactose intolerance, the inability to metabolize milk
and dairy products, is present to varying degrees in a significant number of
people. All dairy products have lactose, or milk sugar. Most human beings are
born with a supply of lactase, an enzyme essential for digesting lactose. With
age, the body's supply of lactase may diminish, which may cause difficulty in
the digestion of lactose. TOFUTTI products are 100% milk free yet offer the same
texture and full-bodied taste as their dairy counterparts. TOFUTTI products are
also free of cholesterol and derive their fat from soy and corn, both naturally
lower in saturated fat than dairy products.
TOFUTTI products are an alternative for dairy-conscious individuals
with lactose intolerance or for those health-oriented people with a desire to
keep cholesterol intake in check. The Company's products enable such individuals
to enjoy products similar to dairy products without their downside health risks.
Although the Company believes the absence of lactose and butterfat in TOFUTTI
products makes them attractive to persons with lactose intolerance or heart
disease, the Company has not conducted any studies regarding the efficacy of
TOFUTTI products as they relate to lactose intolerance and heart disease and
makes no representation as to the accuracy of studies performed by others.
Since May 1982, the Company has been engaged in the sale of a liquid
mix for the processing of TOFUTTI in numerous flavors by soft serve machines at
retail locations. In June 1984, the Company commenced selling hard frozen
TOFUTTI. In 1987, the Company introduced a low fat version of Tofutti called
Lite Lite (registered trademark), in both hard frozen and soft serve forms.
During 1988, the Company introduced two soya-based, non-dairy products, EGG
WATCHERS (registered trademark) and BETTER THAN CREAM CHEESE (registered
trademark). SOUR SUPREME (registered trademark), a non-dairy sour cream, was
introduced at the end of 1991. During 1993, the Company introduced BETTER THAN
YOGURT (registered trademark), containing non-dairy acidophilus cultures. This
product replaced the hard frozen Lite Lite line and became the low fat
alternative to premium TOFUTTI. In 1993 the Company also introduced TOFUTTI
FRUTTI (registered trademark), a cholesterol-free, fat-free frozen dessert
sweetened only with fruit juice that is currently being sold in health food
stores. On November 1, 1993, the Company signed a licensing agreement with
Papetti's Hygrade Egg Products, Inc. ("Papetti's"), the Company's then-EGG
WATCHERS co-packer. The agreement granted Papetti's
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exclusive worldwide manufacturing and distribution rights for TOFUTTI EGG
WATCHERS. During 1994, the Company increased its distribution in the natural
health market. The Company also saw significant increases in its TOFUTTI CUTIE
novelty sales.
The Company made several new product introductions in 1995. During the
spring the Company introduced two new stick novelties, TOFUTTI TEDDY FUDGE BARS
(registered trademark), a low fat fudge bar and TOFUTTI CHOCOLATE FUDGE TREAT, a
sugar-free, fatfree chocolate fudge bar. During the summer, the Company added a
Wildberry CUTIE to its mini sandwich novelty line. In early fall 1995, the
Company introduced its new pint sorbet line and introduced chocolate enrobed
novelty slices, featuring the TOFUTTI CUTIE PIE, later in the fall. The Company
introduced non-dairy tofu-filled TOFUTTI TORTELLINI and MINI RAVIOLI in December
1995. The Company also changed its BETTER THAN YOGURT product line to low fat
TOFUTTI non-dairy frozen dessert.
TOFUTTI PRODUCT LINE
* Premium TOFUTTI non-dairy frozen dessert, available in prepacked pints,
three-gallon cans and soft serve mix, is sold nationally in
supermarkets, grocery stores, retail shops and restaurants. The Company
currently offers seven flavors of premium hard frozen TOFUTTI:
Chocolate Supreme, Wildberry Supreme, Vanilla, Vanilla Almond Bark
(registered trademark), Vanilla Fudge, Chocolate Cookies Supreme
(registered trademark)
and Better Pecan (registered trademark).
* TOFUTTI low fat non-dairy frozen dessert offers the calorie-conscious
consumer a creamy dessert that is 98% fat free and less than 120
calories per serving. Sold nationally in pints, LOW FAT TOFUTTI is
offered in a number of flavors including Vanilla Fudge, Chocolate
Fudge, Coffee Marshmallow Swirl, Strawberry Banana and Peach Mango.
* TOFUTTI FRUTTI (registered trademark) in pint containers is a
non-dairy, cholesterolfree, fat-free frozen dessert sweetened only with
fruit juice, with non-dairy active acidophilus cultures. Three flavors,
Apricot Mango, Vanilla Apple Orchard and Three Berry, are being
distributed to health food stores.
* Cool & refreshing TOFUTTI SORBETS in pint containers offer the consumer
a natural fruit sorbet dessert and come in six flavors: Chocolate,
Strawberry, Orange Peach Mango, Lemon, Coffee and Raspberry Tea.
* TOFUTTI CUTIES (registered trademark) are bite-size frozen sandwiches
combining a chocolate, vanilla or wildberry filling between two
chocolate wafers. Half the size of traditional ice cream sandwiches,
TOFUTTI CUTIES offer a portion controlled treat.
* TOFUTTI FRUTTI (registered trademark) stick novelties have 180 calories
per bar and combine creamy vanilla with a tangy sorbet covered in
chocolate.
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* TEDDY FUDGE POPS (registered trademark) and CHOCOLATE FUDGE TREATS are
stick novelties that offer the consumer the same taste as real fudge
bars. The TEDDY FUDGE POP has 70 calories and 1 gram of fat per bar,
while the CHOCOLATE FUDGE TREAT has only 30 calories per bar and is fat
and sugar free.
* TOFUTTI SLICES are specialty novelties that come either chocolate
coated or plain. The TOFUTTI CUTIE PIE combines a rich vanilla center
with a chocolate coating, while the WILDBERRY SORBET combines creamy
vanilla with a tangy sorbet covered in chocolate. Both also come
uncoated and are available in bulk pack for institutional sale or
retail pack for supermarkets.
* EGG WATCHERS (registered trademark) is a fat-free replacement for whole
eggs that has the taste, nutrition and versatility of whole eggs
without the cholesterol and with 60% less calories and fat. EGG
WATCHERS can be used in virtually all recipes that require whole eggs.
* BETTER THAN CREAM CHEESE (registered trademark) is similar in taste and
texture to traditional cream cheese but is milk and butterfat-free and
contains no cholesterol. Available in plain, French onion, herbs and
chives and wildberry, the product is distributed in several key markets
including metropolitan New York, New England, Los Angeles, San
Francisco, Canada, England, Panama and Australia. It is also being
distributed nationally to health food stores through the Company's
health food distribution network. It is sold in 8 oz. retail packages
and 30 lb. bulk boxes.
* SOUR SUPREME (registered trademark) complements BETTER THAN CREAM
CHEESE (registered trademark) in that it is similar in taste and
texture to traditional sour cream but is milk and butterfat-free and
contains no cholesterol. It is currently sold in 30 lb. bulk packages
to food service distributors and bakers and in 12 oz. retail packages
in metropolitan New York, New England, Los Angeles, San Francisco,
Canada, England, Panama and Australia. It is also being distributed
nationally to health food stores through the Company's health food
distribution network.
* TOFUTTI TORTELLINI and MINI RAVIOLI are bite-sized frozen pasta filled
with TOFUTTI BETTER THAN CREAM CHEESE and sold in 15 oz. bags for
supermarkets and 10 lb. boxes for institutional sales.
PRODUCTION
All of the Company's products are manufactured by co-packers to whom
the Company supplies certain key ingredients for the manufacturing process. The
Company's co-packers manufacture and package the Company's products and in
certain instances, warehouse such products pending shipment. The chart below
indicates certain information with respect to the production of the Company's
products:
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<TABLE>
<CAPTION>
PRODUCTION
PRODUCT MANUFACTURER LOCATION STARTED
- ------- ------------ -------- -------
<S> <C> <C> <C>
Soft serve Welsh Farms Long Valley, New Jersey 1982
Hard frozen dessert Kemps Foods, Inc. Lancaster, Pennsylvania 1984
Better Than Cream Cheese Frank Hahn, Inc. Enosburg Falls, Vermont 1988
Sour Supreme Frank Hahn, Inc. Enosburg Falls, Vermont 1988
Egg Watchers Papetti's Hygrade Egg Elizabeth, New Jersey 1988
Products
Chocolate Enrobed Deering Ice Cream Portland, Maine 1995
Novelties
Tofu Filled Pasta John's Ravioli New Rochelle, New York 1995
</TABLE>
The Company does not have any written production agreements with its
co-packers and does not anticipate that it would encounter any material
difficulty in obtaining alternative production sources, at a comparable cost, if
one or all of its contract manufacturers decide to terminate their relationships
with the Company.
In order to protect its formulas, the Company has entered into
confidentiality arrangements with its contract manufacturers and their
employees. There can be no assurance that such confidentiality arrangements can
or will be maintained, or that the Company's 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 ("KOF-K") of Teaneck, New Jersey provides the
Company's 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. The ability of the Company to continue developing,
marketing and distributing its products is therefore dependent upon its
continued compliance with the requirements of rabbinic certification. All
TOFUTTI products meet the requirements for certification as kosher-parve.
MARKETING AND DISTRIBUTION
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. Generally, all products marketed by the Company are sold either through
independent unaffiliated food brokers, distributors and sometimes on a direct
basis to retail chain accounts. Food brokers act as agents for the Company
within designated territories or for specific accounts and receive commissions,
which average 5% of net sales.
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On April 1, 1993, the Company entered into an exclusive distribution
agreement with Haagen-Dazs, a subsidiary of Grand Metropolitan Ltd., for the
distribution of its non-dairy frozen dessert products in the New York
metropolitan area. During 1995, sales to Haagen-Dazs distributors nationwide
totaled $663,000 or 13% of sales as compared to $946,000 or 18% of sales in
1994. Sales to the New York metropolitan area Haagen-Dazs distributor
represented 8% of sales in 1995 as compared to 13% of sales in 1994. On February
27, 1996, the Company informed Haagen-Dazs that its services would be terminated
effective March 31, 1996 and that the Mattus Ice Cream Company would begin
distributing in the metropolitan New York area.
In September 1993, Haagen-Dazs began distributing the Company's frozen
dessert products in Florida and in 1994 began distributing in Atlanta and San
Francisco. During 1995, the Company expanded its distribution in the national
health food market, which now includes nineteen distributors. Sales to the
Company's health food distributors in 1995 were $1,549,000 or 31% of sales, as
compared to $946,000 or 18% of sales in 1994. In 1995, the Company had sales of
$609,000 or 12% of sales to Trader Joe's, a West Coast based health food
supermarket chain. The Company expects the trend in the national health food
market to continue in 1996. The Company continues to have a strong presence in
the kosher market, with sales of $496,000 or 10% of sales in 1995, as compared
with $554,000 or 11% of sales in 1994. The Company currently sells its frozen
desserts in most major markets in the United States, including Atlanta, Boston,
Dallas, Philadelphia, Cleveland, Cincinnati, Detroit, Denver, Phoenix, Los
Angeles, San Francisco and Seattle.
During 1995, the Company shipped TOFUTTI non-dairy products to
distributors in Canada, England, Belgium, France, Germany, The Netherlands,
Sweden, Panama, Martinique, Mexico, Israel and Australia. Sales to foreign
countries totaled $661,000 or 13% of sales in 1995, versus $826,000 or 16% of
sales in 1994. The large decrease in export sales was due primarily to a
reduction in sales to the Company's European distributor, which was partially
offset by increased sales to other foreign customers. The Company's future
export sales could be adversely affected by an increase in value of the U.S.
dollar, which could increase the local currency prices for its products.
RESEARCH AND DEVELOPMENT
During the last two years, David Mintz, Chief Executive Officer and
Reuben Rapoport, Director of Product Development, have devoted substantial time
and effort to the development of new products and the reformulation of the
Company's current products. In 1995 and 1994, the Company's research and
development expenses were $176,000 and $185,000, respectively.
Such amounts do not include any portion of Mr. Mintz's salary.
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COMPETITION
TOFUTTI frozen desserts compete with all forms of ice cream products,
yogurt-based desserts and other soya-based frozen desserts. The Company believes
it has the most complete line of non-dairy frozen dessert products and is a
leader in this market. Other soya-based frozen dessert products are presently
being sold in both soft serve and hard frozen form throughout the United States
by established manufacturers and distributors of ice cream and other frozen
dessert products. The ice cream and frozen dessert industry is highly
competitive and most companies with whom the Company competes are substantially
larger and have significantly greater resources than the Company. The Company's
other products also face substantial competition, from both non-dairy and dairy
competitive products marketed by companies with significantly greater resources
than the Company.
GOVERNMENT REGULATION
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 the Company
seeks to market does not conform to an applicable standard, special permission
to market such a product is required.
The Company's United States product labels are subject to regulation by
the United States Food and Drug Administration ("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. The Company's labels, ingredients
and manufacturing processes are subject to inspection by the FDA. In 1994,
federal laws relating to food product labeling were amended to require food
product companies to make numerous changes in their product labeling. The
Company believes that it is in compliance with current labeling requirements.
The Food, Drug and Cosmetic Act and rules and regulations promulgated
by the FDA thereunder, contain no specific Federal standard of identity which is
applicable to TOFUTTI. TOFUTTI 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.
Food manufacturing facilities are subject to inspections by various
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. The Company has
applied for and received a wholesale frozen desserts manufacturer's license from
the New York
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Department of Agriculture and Markets. This license does not authorize the
Company to manufacture its frozen dessert products directly. The license is
presently valid only to the extent that the Company's products are manufactured
at its present contract production facilities in Maine, New Jersey, New York,
Pennsylvania and Vermont. Manufacturing at any other facility would, to the
extent that Company's products are distributed in New York, require separate
approval by the New York Department of Agriculture and Markets. Other states
have similar rules requiring pre-clearance or notification of any change in a
manufacturing location. The Company's Cranford, New Jersey facility is subject
to inspection by the New Jersey-Kosher Enforcement Bureau and Environmental
Health Services.
The Company believes it and its distributors and co-packers are in
compliance in all material respects with governmental regulations regarding its
current products and has obtained the material governmental permits, licenses,
qualifications and approvals required for its operations. The Company's
compliance with Federal, state and local environmental laws has not materially
affected it either economically or in the manner in which it conducts its
business. However, there can be no assurance that the Company, its distributors
and 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
the Company's products to consumers.
TRADEMARKS AND PATENTS
The Company has registered its trademark, TOFUTTI (registered
trademark), and other trademarks for its frozen desserts and other products in
the United States and approximately 40 foreign countries. The Company believes
its trademarks are an important means of establishing consumer recognition for
its products.
Although the Company believes that its formulas and processes are
proprietary, the Company has not sought patent protection for such technology.
Instead, the Company is relying on the complexity of its technology, on trade
secrecy laws, and on confidentiality agreements. The Company believes that its
technology has been independently developed and does not infringe the patents of
others.
EMPLOYEES
On December 30, 1995, the Company employed seven people on a full-time
basis, compared with eight people as of December 31, 1994. The Company considers
its relations with its employees to be good.
Item 2. Description of Properties
In August 1989, the Company moved into a modern one-story facility in
Cranford, New Jersey. The 6,200 square foot facility houses the Company's
administrative offices, a warehouse, walk-in freezer and refrigerator, and a
product development laboratory and test kitchen. On January 3, 1994, the Company
signed a five-year lease extension which expires July 1, 1999, with
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an annual rent of $68,000 for the first three years and $74,000 for the last two
years. Management believes that the Cranford facility will continue to satisfy
the Company's space requirements for the foreseeable future.
Item 3. Legal Proceedings
The Company is not a party to any material litigation.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock has traded on the American Stock Exchange
under the symbol TOF since October 29, 1985. The following table sets forth the
high and low sales prices as reported on the American Stock Exchange for the two
most recent fiscal years:
Quarter Ended High Low
April 2, 1994.......................... $ 1-5/8 $ 13/16
July 2, 1994........................... 1-5/8 7/8
October 1, 1994........................ 1-3/8 7/8
December 31, 1994...................... 1-3/8 7/8
April 1, 1995.......................... 1 13/16
July 1, 1995........................... 7/8 9/16
September 30, 1995..................... 1-1/2 5/8
December 30, 1995...................... 15/16 9/16
As of March 12, 1996, there were approximately 1,177 holders of record
of the Company's Common Stock. The Company has not paid and has no present
intention of paying cash dividends on its common stock in the foreseeable
future.
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Item 6. Management's Discussion and Analysis
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 financial
statements.
Fifty-two Weeks Ended December 30, 1995 Compared with Fifty-two Weeks Ended
December 31, 1994
Net sales for the fifty-two weeks ended December 30, 1995 were
$5,023,000, a decrease of $194,000 from the sales level realized for the
fifty-two weeks ended December 31, 1994. In the 1995 period, sales of hard pack
TOFUTTI decreased by $297,000, while food product sales increased by $103,000.
The hard pack sales decrease consisted of a decline in pint sales of $912,000 to
$2,301,000 in 1995, while the Company's novelty sales increased to $1,705,000 in
1995, up from $1,062,000 in 1994. The Company's gross profit for the current
year decreased by $75,000 due primarily to the sales decrease, while its gross
profit percentage was unchanged from 1994 at 40%.
Based on its recent sales trend, the Company believes that its revenues
will remain stable or improve slightly in 1996. The Company expects continued
sales increases in its novelty product line and in its natural health food
business.
Selling expenses increased to $848,000 for the current fiscal period
compared with $746,000 for the comparable 1994 period. The primary cause of the
increase was an additional provision for bad debt and increased warehouse and
freight expenses. The increased freight expense is attributable to an increase
in shipments to the mid-western and western United States, with a decline in
shipments to the east coast. Marketing and sales promotion expenses decreased in
1995 to $276,000 from $389,000 in 1994. This decrease was due principally to the
Company's 1994 third quarter radio advertising campaign in New York and Boston
that was not repeated in 1995.
Research and development expenses remained relatively flat in 1995 as
compared to 1994. General and administrative expenses were $661,000 for the
current period compared with $677,000 for the comparable period in 1994.
Interest expense was $12,000 for the fifty-two weeks ended December 30,
1995 compared with $14,000 for the fifty-two weeks ended December 31, 1994.
There was no federal income tax payable in either 1995 or 1994 as a
result of the utilization of a portion of the Company's tax loss carryforward in
both years.
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Liquidity and Capital Resources
At December 30, 1995, the Company's working capital was $662,000, a
decrease of $2,000 from December 31, 1994. At the end of the fifty-two week
period, accounts receivable decreased by $63,000 from December 31, 1994,
principally reflecting the lower level of sales in December 1995 as compared to
December 1994. Inventories increased by $70,000, reflecting the additional
finished goods inventory for the Company's new products. Accounts payable
decreased to $364,000 from $474,000, while accrued liabilities increased to
$186,000 from $62,000 in 1994. The increase in accrued liabilities reflects an
accrual at year end for allowances and promotion expenses associated with
Haagen-Dazs sales in the metropolitan New York area. In the most recent fiscal
year, stockholders' equity increased by $82,000, of which $10,000 was due to the
purchase of 16,000 shares of stock by employees of the Company under the
Company's 1993 Stock Option Plan.
The Company does not have any material capital commitments and
contemplates no material expenditures in the foreseeable future. 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 was able to fund its level of operations in 1995 from its
current resources. Any substantial increase or decrease in operations will
require additional working capital. Although the Company has had discussions and
intends to have future ones with interested parties concerning additional
financing for the Company, no assurance can be given that such working capital
will be available if required. Management believes that if its operations
continue in a manner consistent with its results for 1995, it will have
sufficient financial resources to continue its operations throughout the coming
year.
In October 1995, the FASB issued SFAS No. 123 "Accounting for
Stock-Based Compensation", which establishes a fair value based method of
accounting for employee stock options or similar equity instruments. Under SFAS
No. 123, entities can recognize stock-based compensation expense in the basic
financial statements using either (i) the intrinsic value based approach set
forth in APB Opinion No. 25 or (ii) the fair value based method introduced in
SFAS No. 123. Entities electing to remain with the accounting in APB Opinion 25
must make proforma disclosures of net income and earnings per share, as if the
fair value based method of accounting defined in SFAS No. 123 had been applied.
Management has not yet determined which method the Company will use to measure
stock-based compensation.
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Item 7. Financial Statements
Index to Financial Statements
Independent Auditors' Report..............................................F-1
Financial Statements:
Balance Sheets
December 30, 1995 and December 31, 1994.......................F-2
Statements of Operations and Accumulated Deficit
Fifty-two weeks ended
December 30, 1995 and December 31, 1994.......................F-3
Statements of Cash Flows
Fifty-two weeks ended
December 30, 1995 and December 31, 1994.......................F-4
Notes to Financial Statements....................................F-5
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Independent Auditors' Report
The Board of Directors
Tofutti Brands Inc.:
We have audited the accompanying balance sheets of Tofutti Brands Inc. as of
December 30, 1995 and December 31, 1994, and the related statements of
operations and accumulated deficit, and cash flows for the fifty-two week
periods ended December 30, 1995 and December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tofutti Brands Inc. as of
December 30, 1995 and December 31, 1994 and the results of their operations and
their cash flows for the fifty-two week periods ended December 30, 1995 and
December 31, 1994, in conformity with generally accepted accounting principles.
s/KPMG Peat Marwick LLP
New York, New York
March 25, 1996
F-1
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<TABLE>
TOFUTTI BRANDS INC.
BALANCE SHEETS
(000's omitted except for share and per share data)
<CAPTION>
December 30, December 31,
Assets 1995 1994
------------ ------------
<S> <C> <C>
Current Assets:
Cash $ 12 7
Accounts receivable (net of reserves of $242 in
1995 and $171 in 1994) (Note 2) 1,006 1,069
Inventories (Note 3) 196 126
Prepaid expense 11 10
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Total current assets 1,225 1,212
Fixed assets (net of accumulated depreciation) (Note 4) -- --
Deferred taxes (Note 11) 264 244
Other assets (Note 5) 56 30
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Total assets $ 1,545 1,486
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Legal settlement payable - current portion (Note 6) 13 12
Accounts payable 364 474
Accrued expenses (Note 7) 186 62
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Total current liabilities 563 548
Legal settlement payable (Note 6) 81 94
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Total liabilities 644 642
Stockholders' equity (Notes 8 and 9):
Preferred stock - par value $.01 per share;
authorized 100,000 shares, none issued -- --
Common stock - par value $.01 per share;
authorized 15,000,000 shares, issued and
outstanding 6,053,567 shares at 12/30/95 and
6,037,567 shares at 12/31/94 61 60
Paid-in capital 3,503 3,494
Accumulated deficit (2,663) (2,710)
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Total stockholders' equity 901 844
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Commitments (Note 10) -- --
Total liabilities and stockholders' equity $ 1,545 1,486
======= =======
<FN>
The accompanying notes are an integral part of these
financial statements.
</FN>
</TABLE>
F-2
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TOFUTTI BRANDS INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
(000's omitted except for per share data)
Fifty-two weeks Fifty-two weeks
ended ended
December 30, 1995 December 31, 1994
----------------- -----------------
Net sales $ 5,023 5,217
Cost of sales 3,022 3,141
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Gross profit 2,001 2,076
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Operating expenses:
Selling 848 746
Marketing and sales promotion 276 389
Research and development 176 185
General and administrative 661 677
------- -------
1,961 1,997
------- -------
Operating income 40 79
Interest expense 12 14
------- -------
Income before tax benefit 28 65
Income tax benefit (Note 11) 19 57
------- -------
Net income 47 122
Accumulated deficit, beginning of year (2,710) (2,832)
------- -------
Accumulated deficit, end of year (2,663) (2,710)
======= =======
Net income per share $ .01 .02
======= =======
Weighted average number of common shares
outstanding 6,071 6,057
======= =======
The accompanying notes are an integral part of these
financial statements.
F-3
<PAGE>
TOFUTTI BRANDS INC.
STATEMENTS OF CASH FLOWS
(000's omitted)
Fifty-two Fifty-two
weeks ended weeks ended
December 30, December 31,
1995 1994
------------- ------------
Cash flows from operating activities:
Net income $ 47 122
Net adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization -- 6
Deferred taxes (20) (57)
Provision for bad debts 100 18
Change in assets and liabilities:
(Increase) in accounts receivable (37) (541)
(Increase) decrease in inventories (70) 3
(Increase) in prepaid expense (1) (2)
(Increase) in other assets (26) (14)
(Decrease) increase in accounts payable (110) 342
Increase (decrease) increase in accrued expenses 124 (14)
----- -----
Net cash provided by (used in) operating
activities 7 (137)
----- -----
Cash flows from financing activities:
Repayment of legal settlement payable (12) (12)
Issuance of common stock 10 21
----- -----
Net cash (used in) provided by financing
activities (2) 9
----- -----
Net increase (decrease) in cash 5 (128)
Cash at beginning of period 7 135
----- -----
Cash at end of period $ 12 7
===== =====
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 12 14
The accompanying notes are an integral part of these
financial statements.
F-4
<PAGE>
TOFUTTI BRANDS INC.
NOTES TO FINANCIAL STATEMENTS
(000's omitted except for share and per share data)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Tofutti Brands Inc. (the "Company") is engaged in the development, production
and marketing of nondairy frozen desserts and other food products.
REVENUE RECOGNITION
The Company recognizes revenue when goods are shipped from its production
facilities or outside warehouses.
NET INCOME PER SHARE OF COMMON STOCK
Net income per share of common stock is based upon the weighted average number
of common shares outstanding in each year. Dilution from common stock
equivalents amount to less than 3%.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by the
first-in, first-out method.
FIXED ASSETS
Fixed assets are carried at cost. Depreciation is computed using the
straight-line method. When assets are retired or otherwise disposed of, the cost
and related accumulated depreciation are removed from the accounts, and any
resulting gain or loss is recognized in income for the period. The cost of
maintenance and repairs is charged to income as incurred; significant renewals
and betterments are capitalized.
INCOME TAXES
Income taxes are accounted for under the asset and liability method. 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 and operating
loss and tax credit carryforwards. 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.
F-5
<PAGE>
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Financial Accounting Standards Board's (FASB) Statement No. 107,
"Disclosures about Fair Value of Financial Instruments," defines the fair value
of a financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties.
Cash, accounts receivable, accounts payable, accrued expenses and legal
settlement payable as of December 30, 1995 and December 31, 1994 are stated at
their carrying values. The carrying amounts approximate fair value because of
the short-term maturity of those instruments or because the interest rates
approximate market rates of interest.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles 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. Actual results could differ from those estimates.
(2) ACCOUNTS RECEIVABLE
The Company accounts for its bad debts using the reserve method. The reserve for
bad debts consists of the following:
December 30, December 31,
1995 1994
---- ----
Beginning balance $171 153
Additions charged to expense 100 18
Less: Write off 29 --
---- ----
$242 171
==== ====
(3) Inventories
Inventories consist of:
December 30, December 31,
1995 1994
---- ----
Finished products $108 76
Raw materials and
packaging 88 50
---- ----
$196 126
==== ====
F-6
<PAGE>
(4) Fixed Assets
Fixed assets consist of the following:
December 30, December 31, Useful
1995 1994 Lives
---- ---- -----
Machinery and equipment $30 30 5 yr
Leasehold improvements 29 29 5 yr
-- ----
59 59
Less accumulated depreciation 59 59
-- --
$-- --
=== ==
(5) Other Assets
On October 17, 1994, the Company's Board of Directors adopted a resolution
wherein the Corporation was authorized to purchase a $1,000 split dollar
insurance plan on the life of a member of David Mintz's family. Mr. Mintz is
Chairman and President of the Company. The purpose of this transaction is to
provide the Mintz estate with funds sufficient to pay any estate taxes levied
upon the transfer of Mr. Mintz's Tofutti stock, which would otherwise have
necessitated a sale of the stock. The sale of such stock might have the negative
effect of significantly decreasing the market price of the stock to the
detriment of other shareholders. Upon the death of the family member, the
Company is to receive a complete refund of all its premiums paid plus interest
at 4%.
(6) Legal Settlement Payable
On May 1, 1991 the Company and its former commission agent, NEMP Corporation,
settled a lawsuit which was commenced in 1989. Under the terms of the
settlement, the Company agreed to pay NEMP $2 per month for a period of ten
years, which includes intrest at an imputed rate of 12% per annum. If there is a
change in ownership in the Company, NEMP will receive an additional $120. As of
December 30, 1995, the balance of the settlement was $94 and is shown as a
liability in the Company's balance sheet, the current portion of which is $13.
It is estimated that the monthly payments will not have a material impact on the
Company's future cash flow.
The Company is not a party to any material legal proceedings at present.
F-7
<PAGE>
(7) Accrued Expenses
Accrued expenses consist of the following:
December 30, December 31,
1995 1994
---- ----
Advertising $ - 5
Professional fees 25 25
Selling 134 5
Inventory purchases 27 25
Other -- 2
---- ----
Total $186 62
==== ====
(8) Stockholders' Equity
During 1995, common stock and paid-in capital increased by $10 due to the
exercise of stock options to purchase 16,000 shares by employees of the Company.
(9) Stock Options
The 1993 Stock Option Plan (the "1993 Plan") provides for the granting to key
employees of incentive stock options, within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, and for the granting of nonstatutory
options to key employees and consultants. The 1993 Plan is currently
administered by the Board of Directors, which determines the terms and
conditions of the options granted under the 1993 Plan, including the exercise
price, number of shares subject to the option and the exercisability thereof. A
total of 400,000 shares have been reserved for issuance under the 1993 Plan. At
December 30, 1995, 138,000 shares were subject to outstanding options and
212,000 shares, representing less than 4% of the Common Stock outstanding,
remained available for future grant.
The following is a summary of stock option activity from January 1, 1994 to
December 30, 1995:
<TABLE>
<CAPTION>
INCENTIVE OPTIONS NON-QUALIFIED OPTIONS
Shares Option Price Shares Option Price
------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1, 1994 99,000 $.625 $.6875 89,000 $.625
Exercisable at January 1, 1994 - - - - -
Exercised - - - (34,000) $.625
Outstanding at December 31, 1994 99,000 $.625 $.6875 55,000 $.625
Exercisable at December 31, 1994 66,000 $.625 $.6875 26,000 $.625
Exercised (16,000) $.625 - - -
Outstanding at December 30, 1995 83,000 $.625 $.6875 55,000 $.625
Exercisable at December 30, 1995 83,000 $.625 $.6875 55,000 $.625
</TABLE>
F-8
<PAGE>
(10) Lease Obligation
Future minimum lease payments under an existing operating lease which expires on
July 1, 1999 are as follows:
Period ending Amount
December 28, 1996 $ 68
December 27, 1997 71
December 26, 1998 74
Thru July 1, 1999 37
--
Total $250
====
Annual net rental expenses aggregated $68 for each of the fifty-two week periods
ended December 30, 1995 and December 31, 1994.
(11) Income Taxes
The components of income tax benefits for 1995 and 1994 are as follows:
1995 1994
---- ----
Current tax expense $ 1 --
Deferred tax benefit (20) (57)
---- ----
$(19) (57)
==== ====
Total income tax expense for the fifty-two week periods ended December 30, 1995
and December 31, 1994 differs from the amount computed using the Federal
statutory rate due to a change in the valuation allowance of $30 and $64 in 1995
and 1994, respectively, relating principally to the utilization of net operating
loss carryforwards.
Deferred tax assets at December 30, 1995 and December 31, 1994 are as follows:
December 30, December 31,
1995 1994
---- ----
Allowance for doubtful accounts $ 92 66
Inventory 63 32
Settlement reserve 41 41
Loss carryforwards 695 762
---- ----
Gross deferred tax assets 891 901
Valuation allowance 627 657
---- ----
Deferred tax asset $264 244
==== ====
F-9
<PAGE>
Based upon the level of projected future taxable income over the periods which
the deferred tax asset is deductible, management believes it is more likely than
not the Company will realize the benefits of these deductible differences, net
of the existing valuation allowances at December 30, 1995. The amount of the
deferred tax asset considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the carryforward period are
reduced.
The Company has loss carryforwards of approximately $715 and $1,271 which will
expire in 2004 and 2005, respectively, if the Company does not generate
sufficient taxable income. The Company also has unused tax credits of
approximately $24.
(12) Business Concentrations
During the fifty-two week periods ended December 30, 1995 and December 31, 1994,
the Company derived approximately 87% and 84%, respectively, of its net sales
domestically. The remaining sales of 13% and 16% in 1995 and 1994, respectively,
were exports to various other countries. Sales to two customers represented 12%
and 8% of net sales in 1995, respectively. In 1994, sales to a single customer
represented 13% of net sales.
F-10
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 9. Directors and Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The Directors and Executive Officers of the Company are:
Name Age Position
- ---- --- --------
David Mintz......... 64 Chairman of the Board of Directors,
Chief Executive Officer
Steven Kass......... 44 Chief Financial Officer, Secretary and
Treasurer
Reuben Rapoport..... 65 Director of Production and Product
Development and Director
Franklyn Snitow..... 49 Director
Bernard Koster...... 61 Director
David Mintz has been Chairman of the Board and Chief Executive Officer
of the Company and its predecessor since August 1981.
Steven Kass has been Chief Financial Officer of the Company since
November 1986 and the Secretary and Treasurer since January 1987.
Reuben Rapoport has been the Director of Production and Product
Development of the Company since January 1984 and a Director of the Company
since July 1983.
Franklyn Snitow has been a Director of the Company since 1987. He has
been a partner in the New York City law firm of Snitow & Pauley, the Company's
general counsel, since 1985.
Bernard Koster has been a Director of the Company since March 1993. He
has been counsel to the New Jersey law firm of Litwin and Holsinger since
January 1993. Since February 1990, Mr. Koster has also acted as an independent
business consultant. From 1980 to 1990, Mr. Koster was president of Kartsun
Ltd., a private company engaged in venture capital formation.
-13-
<PAGE>
All Directors of the Company 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. There are no family
relationships between Directors and executive officers of the Company. All of
the executive officers devote their full time to the operations of the Company.
Compliance with Section 16(a) of The Exchange Act. Section 16(a) of the
Securities Exchange Act of 1934, as amended, requires the Company's officers and
directors, and persons who own more than ten-percent of its Common Stock, to
file initial statements of beneficial ownership (Form 3), and statements of
changes in beneficial ownership (Forms 4 or 5), of Common Stock and other equity
securities of the Company with the Securities and Exchange Commission (the
"SEC") and the American Stock Exchange. Officers, directors and greater than
ten-percent stockholders are required by SEC regulation to furnish the Company
with copies of all such forms they file.
To the Company's knowledge, based solely on its review of the copies of
such forms received by it, or written representations from certain reporting
persons that no additional forms were required for those persons, the Company
believes that during fiscal 1995 its officers, directors and greater than
ten-percent beneficial owners complied with all applicable filing requirements.
Item 10. Executive Compensation
The following table sets forth information concerning the total
compensation during the last three fiscal years for the Company's executive
officers whose total salary in fiscal 1995 totaled $100,000 or more:
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation
Compensation Securities Underlying
Name and Principal Position Year Salary ($) Options (#)
- --------------------------- ---- ---------- -----------
David Mintz, Chief Executive Officer 1995 $125,000 -
and Chairman of the Board 1994 125,000 -
1993 127,404 75,000
Rick W. Malloy, Executive Vice 1995 100,000 -
President (1) 1994 100,000 -
1993 101,923 -
The aggregate value of all other perquisites and other personal
benefits furnished in each of the last three years to each of these executive
officers was less than 10% of their salary for such year.
- ---------------
(1) Mr. Malloy resigned as an officer in 1995.
-14-
<PAGE>
On October 17, 1994, the Company's Board of Directors adopted a
resolution wherein the Corporation was authorized to purchase a $1,000,000 split
dollar insurance plan on the life of a member of David Mintz's family. Mr. Mintz
is Chairman and Chief Executive Officer of the Company. The purpose of this
transaction is to provide the Mintz estate with funds sufficient to pay any
estate taxes levied upon the transfer of Mr. Mintz's Tofutti stock, which would
have otherwise necessitated a sale of the stock. The sale of such stock might
have a negative effect of significantly decreasing the market price of the stock
to the detriment of other shareholders. Upon the death of the family member, the
Company is to receive a complete refund of all its premiums paid plus interest
at 4%.
There are currently no employment agreements between the Company and
any of its officers. The Company has not paid any cash remuneration to Mr.
Snitow or Mr. Koster for their services as Directors in the last three years.
STOCK OPTIONS
The following table provides information concerning stock options held
in 1995 by each of the executive officers named above in the Summary
Compensation Table. There were no options granted to any officers in 1995.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
---------------------------------------------
<CAPTION>
Number of Shares
Shares Underlying Unexercised Value of Unexercised in the
Acquired on Value Options at FY-End (#) Money Options at FY-End ($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------ ------------------------- --------------------------
<S> <C> <C> <C> <C>
David Mintz,
Chief Executive Officer - - 75,000 (E) $4,688 (E)
Rick W. Malloy,
Executive Vice President - - - -
<FN>
- --------
(E) Exercisable options
</FN>
</TABLE>
-15-
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of March 12, 1996, certain
information regarding the Company's Common Stock $.01 par value, for each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock, for each executive officer
named in the Summary Compensation Table, for each of the Company's Directors and
for the executive officers and Directors of the Company as a group:
Amount of
Name Beneficial Ownership Percent of Class
- ---- -------------------- ----------------
David Mintz........................ 3,090,440 (1) 49.9%
Franklyn Snitow.................... 30,000 (2) *
Reuben Rapoport.................... 20,000 *
Bernard Koster..................... 16,000 (3) *
Rick W. Malloy..................... - *
All Executive Officers and
Directors as a group (6 persons)... 3,156,440 (4) 51.0%
- -------------
The address of all individuals except Messrs. Koster and Snitow is c/o
Tofutti Brands, Inc., 50 Jackson Drive, Cranford, New Jersey 07016. The address
of Mr. Snitow is 345 Madison Avenue, New York, NY 10017 and the address of Mr.
Koster is 1450 Broadway, New York, New York 10018. Each person listed above has
sole voting and/or investment power of the shares attributed to him.
* Less than 1%.
(1) Includes 75,000 shares issuable upon the exercise of currently
exercisable stock options.
(2) Includes 30,000 shares issuable upon the exercise of currently
exercisable stock options.
(3) Includes 16,000 shares issuable upon the exercise of currently
exercisable stock options.
(4) Includes 121,000 shares issuable upon the exercise of currently
exercisable stock options.
Item 12. Certain Relationships and Related Transactions
Franklyn Snitow, a director of the Company, is a member of the law firm
of Snitow & Pauley, which firm provided minimal legal services on behalf of the
Company in 1995.
-16-
<PAGE>
Item 13. 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.
23.1 Consent of Independent Auditors.
(b) Reports on Form 8-K filed during the last quarter of the period
covered by this report:
None.
- --------------
* 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.
-17-
<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 on March 22, 1996.
TOFUTTI BRANDS INC.
(Registrant)
/s/ David Mintz
David Mintz
Chairman of the Board and
Chief Executive Officer
Date: March 22, 1996
In Accordance with the Securities Exchange Act of 1934, this Report has
been signed below on March 22, 1996, by the following persons on behalf of the
Registrant and in the capacities indicated.
/s/ David Mintz
David Mintz
Chairman of the Board
and Chief Executive Officer
/s/ Steven Kass
Steven Kass
Secretary, Treasurer and
Chief Financial Officer
/s/ Bernard Koster
Bernard Koster
Director
/s/ Reuben Rapoport
Reuben Rapoport
Director
/s/ Franklyn Snitow
Franklyn Snitow
Director
-18-
<PAGE>
EXHIBIT INDEX
Exhibit Page
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.
23.1 Consent of Independent Auditors.
* 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.
-19-
<PAGE>
EXHIBIT 23.1
-20-
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
The Board of Directors
Tofutti Brands Inc.:
We consent to the incorporation by reference in the Registration Statement (No.
33-72654) on Form S-8 of Tofutti Brands Inc. of our report dated March 25, 1996,
relating to the balance sheets of Tofutti Brands Inc. as of December 30, 1995
and December 31, 1994 and the related statements of operations and accumulated
deficit, and cash flows for the fifty-two week periods ended December 30, 1995
and December 31, 1994 which report appears in the December 30, 1995 annual
report on Form 10-KSB of Tofutti Brands Inc.
s/KPMG Peat Marwick LLP
New York, New York
March 25, 1996
-21-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-30-1995
<PERIOD-END> Dec-30-1995
<CASH> 12,000
<SECURITIES> 0
<RECEIVABLES> 1,248,000
<ALLOWANCES> 242,000
<INVENTORY> 196,000
<CURRENT-ASSETS> 1,225,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,545,000
<CURRENT-LIABILITIES> 563,000
<BONDS> 81,000
0
0
<COMMON> 61,000
<OTHER-SE> 840,000
<TOTAL-LIABILITY-AND-EQUITY> 1,545,000
<SALES> 0
<TOTAL-REVENUES> 5,023,000
<CGS> 3,022,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,961,000
<LOSS-PROVISION> 100,000
<INTEREST-EXPENSE> 12,000
<INCOME-PRETAX> 28,000
<INCOME-TAX> (19,000)
<INCOME-CONTINUING> 47,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,000
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
