LEASES

12 Months Ended

Dec. 28, 2024

NOTE 5: LEASES

Through September 1, 2024, the Company’s facilities were located in a one-story 6,200 square foot facility in Cranford, New Jersey. The facility housed the Company’s administrative offices, a warehouse, walk-in freezer and refrigerator, and a product development laboratory and test kitchen. The Company’s original lease agreement expired on July 1, 1999, but it continued to occupy the premises on a monthly basis. In September, the Company left the facility and derecognized the associated right of use asset and liability. In 2024, we signed a five-year lease for a one-story facility in Edison, New Jersey. The lease commenced on July 1, 2024, with an option to extend for an additional five years at the end of the lease. Annual rent for the lease escalates by 3% year over year until the end of the lease term. We completed the move into the new facility in September 2024. The 5,100 square foot facility houses our administrative offices, a warehouse, freezers, and refrigerators. Rent expense was $118 in fiscal 2024 and $93 in fiscal 2023. The Company’s management believes that the Edison facility will continue to satisfy its space requirements for the immediate future and if necessary, such space can be replaced without a significant impact to the business. The Company rents warehouse storage space at various outside facilities. Outside warehouse expenses amounted to $359 and $339 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively. The Company rents a copier and mail machine under a finance lease. In 2022, the Company entered into a copier and mail machine lease, which still exists as of December 28, 2024. Payments for the copier and mail machine amounted to $17 and $10 for the fiscal years ended December 28, 2024 and December 30, 2023, respectively.

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

Under Topic 842, finance lease cost includes amortization, which is recognized on a straight-line basis over the expected life of the leased asset, and interest expense, which is recognized following an effective interest rate method. The Company has a finance lease consisting of a copier lease with a term of four years. The standard requires a lessee to record a right-of-use asset and a corresponding lease liability at the inception of the lease.

Leases with an initial term of twelve months or less are not recorded on the balance sheet. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company has combined the lease and non-lease components in determining the lease liabilities and right-of-use assets.

The Company’s lease agreement does not provide an implicit borrowing rate; therefore, an internal incremental borrowing rate is determined based on information available at lease commencement date for purposes of determining the present value of lease payments. The Company used the incremental borrowing rates on of between 5.5% and 6.5% for all leases.

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

	As of			As of
	December 28, 2024			December 30, 2023
Operating lease right-of-use assets	$	340		$	81

Current portion of lease liabilities		64			74
Operating lease liabilities, net of current portion		283			7
Total operating lease liabilities	$	347		$	81

Weighted average remaining lease term (in years)		4.7			1.2
Weighted average discount rate		5.5	%		5.5	%

TOFUTTI BRANDS INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

ROU lease asset and lease liability for our finance lease were recorded in the balance sheet as follows:

	As of			As of
	December 28, 2024			December 30, 2023
Finance lease right-of-use asset	$	21		$	36

Current portion of financing lease liabilities		16			15
Financing lease liabilities, net of current portion		6			23
Total financing lease liabilities	$	22		$	38

Weighted average remaining lease term (in years)		1.4			2.4
Weighted average discount rate		6.5	%		6.5	%

Future lease payments included in the measurement of lease liabilities on the balance sheet as of December 28, 2024, for the following three fiscal years and thereafter are as follows:

SCHEDULE OF FUTURE LEASE PAYMENTS

	Operating lease liabilities			Finance lease liability			Total
2025	$	82		$	17		$	99
2026		84			7			91
2027		87			—			87
2028		89			—			89
2029		53			—			53
Total future minimum lease payments		395			24			419
Present value adjustment		(48	)		(2	)		(50	)
Total	$	347		$	22		$	369

TOFUTTI BRANDS INC.

NOTES TO FINANCIAL STATEMENTS

(In thousands, except for share and per share data)

TOFUTTI BRANDS INC 10-K/A