TOFUTTI ANNOUNCES RESULTS FOR THIRTEEN AND TWENTY-SIX WEEKS ENDED JULY 2, 2022

Rhea-AI Summary

Tofutti Brands Inc. (OTCQX: TOFB) reported net sales of $2,979,000 for the thirteen weeks ended July 2, 2022, a slight decrease from $3,027,000 in the same period last year. Vegan cheese sales rose to $2,526,000, while frozen desserts saw a decline to $453,000.

Gross profit dropped significantly to $525,000 from $758,000, with a gross profit margin of 18%. Factors include rising ingredient and freight costs due to supply chain issues and high petroleum prices. The company experienced a net loss of $208,000, or $0.04 per share, compared to a net income of $28,000 last year.

Positive

• Vegan cheese sales increased to $2,526,000 from $2,497,000 year-over-year.
• The company anticipates higher sales in the upcoming fiscal year due to implemented price increases.

Negative

• Net sales decreased from $3,027,000 to $2,979,000 year-over-year.
• Gross profit declined significantly from $758,000 to $525,000.
• Gross profit percentage fell from 25% to 18%.
• Net loss of $208,000, compared to a net income of $28,000 in the same quarter last year.
• Anticipated continued negative impact on gross profit for the remainder of the fiscal year.

Cranford, New Jersey, Aug. 16, 2022 (GLOBE NEWSWIRE) -- TOFUTTI BRANDS INC. (OTCQX Symbol: TOFB) issued its results for the thirteen and twenty-six weeks ended July 2, 2022 today.

Tofutti Brands reported net sales of $2,979,000 for the thirteen weeks ended July 2, 2022 compared to net sales of $3,027,000 for the thirteen weeks ended July 3, 2021. Sales of our vegan cheese products increased slightly to $2,526,000 in the thirteen weeks ended July 2, 2022 from $2,497,000 in the thirteen weeks ended July 3, 2021. Sales of our frozen dessert and frozen food products, which consist primarily of frozen dessert products, decreased to $453,000 in the thirteen weeks ended July 2, 2022 from $530,000 for the thirteen weeks ended July 3, 2021. We anticipate an increase in sales dollars over the balance of the current fiscal year as the price increases we implemented take effect.

Our gross profit decreased significantly to $525,000 for the thirteen weeks ended July 2, 2022 from $758,000 for the thirteen weeks ended July 3, 2021. Our gross profit percentage was 18% for the thirteen weeks ending July 2, 2022 compared to 25% for the thirteen weeks ending July 3, 2021. The decrease in both our gross profit and gross profit percentage were caused by the substantial increases in certain ingredients and freight expense. These substantial cost increases were due primarily to the lingering supply chain issues caused by the Covid-19 pandemic and the record high cost of petroleum. Besides causing substantial increases in our freight expenses, the high cost of petroleum has also directly impacted the costs of certain ingredients and packaging such as the plastic packaging we use for our spreadable cheese products. Our gross profit dollars and gross profit percentage were also negatively impacted by an increase in our sales promotion and allowance expenses to $403,000 in the second quarter of this year as compared to $336,000 in the second quarter of prior fiscal year. We anticipate that our gross profit dollars and gross profit percentage will continue to be negatively affected for the balance of fiscal year 2022.

We had a net loss of $208,000, or a $0.04 loss per share (basic and diluted), for the thirteen weeks ended July 2, 2022 compared to net income of $28,000, or $0.01 (basic and diluted) per share, for the thirteen weeks ended July 3, 2021.

As of July 2, 2022, we had approximately $1,176,000 in cash and our working capital was approximately $4,259,000, compared with approximately $1,698,000 in cash and working capital of $4,326,000 at January 1, 2022. The decrease in cash during the twenty-six weeks ended July 2, 2022 was primarily due to reduced accounts receivable collections and increased inventory on hand.

Mr. Steven Kass, Chief Executive and Financial Officer of the Company stated, “We look forward to improved results in the second half of 2022 as the price increases we have announced take effect and expect that our cash position will also improve."

About Tofutti Brands Inc.

Founded in 1981, Tofutti Brands Inc. develops and distributes a complete line of plant-based products. The Company sells more than twenty-five (25) dairy-free foods including cheese products and frozen desserts. Tofutti Brands Inc. is a proven innovator in the food industry and has developed a full line of delicious and healthy dairy-free foods. Available throughout the United States and in more than fifteen (15) countries, Tofutti Brands answers the call of millions of people who are allergic or intolerant to dairy or wish to maintain a kosher or vegan diet. Tofutti’s product line includes plant-based ice cream pints, cones, Tofutti Cutie^® sandwiches and novelty

Forward-Looking Statements

Some of the statements in this press release concerning the Company’s future prospects are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Actual results may vary significantly based upon a number of factors including, but not limited to the impact of COVID-19 on the economy and our operations, business conditions both domestic and international, competition, changes in product mix or distribution channels, resource constraints encountered in promoting and developing new products and other risk factors detailed in the Company’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K.

Company Contact:	Steve Kass
	Chief Executive/Financial Officer
	(908) 272-2400
	(908) 272-9492 (Fax)

TOFUTTI BRANDS, INC.
Unaudited Condensed Statements of Operations
(in thousands, except per share figures)

		Thirteen weeks ended July 2, 2022				Thirteen weeks ended July 3, 2021				Twenty-six weeks ended July 2, 2022				Twenty-six weeks ended July 3, 2021
Net sales		$	2,979			$	3,027			$	6,442			$	6,177
Cost of sales			2,454				2,269				5,060				4,418
Gross profit			525				758				1,382				1,759
Operating expenses:
Selling and warehouse			309				303				573				627
Marketing			111				66				267				135
Research and development			42				36				82				75
General and administrative			349				319				686				766
			811				724				1,608				1,603
Income (loss) from operations			(286	)			34				(226	)			156
Other income:
SBA loan forgiveness			—				—				165				—
Income (loss) before interest expense and income taxes			(286	)			34				(61	)			156
Interest expense			—				6				—				12
(Loss) income before income tax			(286	)			28				(61	)			144
Income tax expense			(78	)			—				(58	)			36
Net income (loss)		$	(208	)		$	28			$	(3	)		$	108
Weighted average common shares outstanding:
Basic			5,154				5,154				5,154				5,154
Diluted			5,154				5,436				5,154				5,436
Earnings (loss) per common share:
Basic		$	(0.04	)		$	0.01			$	(0.00	)		$	0.02
Diluted		$	(0.04	)		$	0.01			$	(0.00	)		$	0.02

TOFUTTI BRANDS INC.
Unaudited Condensed Balance Sheets
(in thousands, except share and per share figures)

		July 2, 2022				January 1, 2022
Assets
Current assets:
Cash		$	1,176			$	1,698
Accounts receivable, net of allowance for doubtful accounts and sales promotions of $465 and $435, respectively			1,122				1,336
Inventories			2,574				1,874
Prepaid expenses and other current assets			41				98
Total current assets			4,913				5,006
Operating lease right-of-use assets			147				203
Deferred tax assets			174				112
Other assets			19				21
Total assets		$	5,253			$	5,342
Liabilities and Stockholders’ Equity
Current liabilities:
SBA loan payable		$	—			$	165
Income taxes payable			43				46
Accounts payable			231				122
Accrued expenses			380				347
Total current liabilities			654				680
Operating lease liabilities			35				95
Total liabilities			689				775
Stockholders’ equity:
Preferred stock - par value $.01 per share; authorized 100,000 shares, none issued and outstanding			—				—
Common stock - par value $.01 per share; authorized 15,000,000 shares, 5,153,706 shares issued and outstanding			52				52
Additional paid-in capital			207				207
Retained earnings			4,305				4,308
Total stockholders’ equity			4,564				4,567
Total liabilities and stockholders’ equity		$	5,253			$	5,342

FAQ

What were Tofutti Brands' net sales for the thirteen weeks ended July 2, 2022?

Tofutti Brands reported net sales of $2,979,000 for the thirteen weeks ended July 2, 2022.

How did Tofutti Brands' vegan cheese sales perform in Q2 2022?

Vegan cheese sales increased slightly to $2,526,000 for the thirteen weeks ended July 2, 2022.

What was the net loss reported by Tofutti Brands for Q2 2022?

Tofutti Brands reported a net loss of $208,000, or $0.04 loss per share, for the thirteen weeks ended July 2, 2022.

What factors negatively impacted Tofutti Brands' gross profit in Q2 2022?

The gross profit decline was primarily due to increased ingredient and freight costs caused by supply chain issues and high petroleum prices.

What is Tofutti Brands' outlook for the second half of 2022?

The company anticipates improved results and cash position due to recent price increases.